It's not actually fraud if there is some ostensible service they're performing. Business units within businesses 'pay' each other for 'services' all the time. Ditto for subsidiaries. Whether something is fraud might come down to intent alone.

The line between legal and illegal business transactions can be murky as hell.

That's what all these accounting rules exist to stop. No, you can't pretend that equipment breaking doesn't happen. No, you need to account for fixing the roof etc.

The difference between fraud and not fraud is if you can reach an agreement with auditors that it’s not fraud.

it's only fraud if somebody finds out

I'm fairly certain he's describing the economy.

There are so many companies like this which are just moving money around rapidly in and out with little to no actual profit. Finance sector is easily gamed.

For example, anyone can become a billionaire; just start a company, issue 1 billion shares at slightly above $1 each, keep most of them for yourself; release just 10K shares to the market and then let traders trade those same shares back and forth among themselves at high frequency... With just over $10k each, they can keep moving 10k shares back and forth 10k times per day... They call it "High frequency trading."

There you have it; now you have a billion dollar company with a healthy trade volume of $100 million per day... Your stock is in-demand! And you just needed to find two traders with just $10k in the bank and a trading platform with low fees... Becoming a billionaire is not that difficult.

You can apply the same principle to revenue... Just increase the velocity of money in and out of your company and you can hit any financial target you want.

Doesn't mean it's a solid scheme but everyone likes the numbers they're seeing. Nobody is paying attention to actual buying power.