Legal issues

Community News

High Court Refuses to Review Car Magnate Lawsuit

A 13-year-old lawsuit by car dealership magnate Bruton Smith has been brought to a close by the U.S. Supreme Court, which affirmed a lower court ruling that Smith had no standing to sue the federal government over losing millions in the 1990 failure of North Carolina Federal Savings and Loan.Smith, who is CEO of Speedway Motorsports Inc., which owns six NASCAR tracks, was seeking $28 million in damages and $3 million in restitution, the Associated Press reported. Smith lost his 49.9 percent investment in NCF Financial Corp., a holding company for N.C. Federal, which collapsed. N.C.
Tax

Bragging About Tax Evasion on the Radio is a Bad Idea

Turns out the Internal Revenue Service (IRS) listens to the radio. At least they do in New York. So when K-Rock DJ Crazy Cabbie, otherwise known as Lee Mroszak, bragged to listeners on the Howard Stern show that he beat the government out of more than $100,000 in taxes, he was busted. The IRS checked and, sure enough, Lee Mroszak owed them money. So much money, that he has been sentenced to 12-months in jail for tax evasion. Or maybe that’s for stupidity.
Community News

H&R Block Proposes Settlement to Tax Refund Suit

H&R Block and its banking partner, HSBC Taxpayer Financial Services Inc., have agreed to settle a class-action lawsuit alleging they gouged consumers by offering “tax refund anticipation loans,” with interest rates exceeding 100 percent. The proposed settlement of $360 million, was filed Monday in U.S. District Court in the Northern District of Illinois. U.S. District Judge Elaine E. Bucklo, who rejected a proposed settlement in 2003, must approve the settlement covering more the 55 million transactions made by 28 million customers.
A&A

Impending Bankruptcy Changes Push Up Filings

A major overhaul of the bankruptcy law is prompting more people to file for protection now to avoid going through a more difficult and expensive procedure in the fall.Bankruptcy filings in March jumped nearly 60 percent from February, according to Cardweb.com, which tracks the credit and debit card industries. Attorneys who specialize in bankruptcy law say the increase is directly related to the new law, which takes effect Oct.
Tax

AIG Execs Subject of State, Federal Probe

If the former chief executive is found responsible for accounting irregularities at American International Group Inc., as a Wall Street Journal report suggests, the company could try to recover some of his pay under the Sarbanes-Oxley Act.The Journal reported that former top executive Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith may have been behind some of the improper accounting that will eventually result in more than four years of earnings restatements.
Tax

FBI Begins Wider Look at Insurers' Accounting Practices

The Federal Bureau of Investigation is reviewing accounting practices across the insurance industry to determine whether it may become “the next big one,” in terms of corporate scandals, an FBI assistant director told the New York Times.The comments of Chris Swecker, who oversees the FBI's financial crimes unit, came as agents across the country were instructed to look for accounting irregularities similar to ones ensnaring American International Group, which is being investigated by multiple state and federal authorities."I'm not going to say it is the next crisis, but I will say we
A&A

Judge Orders SBA to Comply with FOIA Request

What’s in the final report released last year by the Small Business Administration’s (SBA) Office of Advocacy that they don’t want the public to see? The American Small Business League (ASBL) would like to know, too. They requested a copy of the report under the Freedom of Information Act (FOIA). The SBA denied the request. On April 29, a judge ordered the SBA to turn the report over.The court order was the result of a complaint filed on October 6, 2004 in the U.S. District Court for Northern California by the ASBL.

New Bankruptcy Law Is Good/Bad News for Small Business

Individuals aren’t the only ones likely to find it more difficult to keep creditors at bay under the new bankruptcy law. That is both good news and bad news for small businesses. The good news: the bankruptcy filing process has been streamlined and small business owners will find it easier to collect on debts incurred by individuals and other businesses that have filed for bankruptcy. The bad news: tougher rules apply and it may be harder to reorganize under Chapter 11.President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act on April 20.
Tax

States Probe AIG's Workers' Compensation Contributions

Problems at American International Group (AIG) intensified this week as New York Attorney General Eliot Spitzer announced plans to audit the insurance giant to ensure it has paid its fair share of workers' compensation premiums, the Associated Press reported.Spitzer's announcement came on the heels of news reported Tuesday by The New York Times that AIG has uncovered at least $1 billion more in accounting problems.

Supreme Court Hears Agruments In Andersen Trial

As attorneys for the government and accounting firm Arthur Andersen squared off before the U.S. Supreme Court this week, it is clear that emotions are still running high for those once connected to the venerable Big Five accounting firm.Andersen is appealing it's 2002 conviction for obstruction of justice before the high court.
Community News

High Court Taking on Andersen Conviction Wednesday

The U.S. Supreme Court is set to hear arguments Wednesday on whether Arthur Andersen's obstruction of justice conviction should be overturned because jury instructions were too broad.The question centers on whether U.S. District Court Judge Melinda Harmon gave instructions that were so loose that jurors could convict companies that innocently followed their own document-destruction policies rather than those that intentionally hid information from investigators, the Houston Chronicle reported.The Supreme Court decided earlier this year to take up the case after the 5th U.S.
Technology

Lawmakers Take Up Tough ID Theft Bill

A series of high-profile security breaches has prompted lawmakers to consider requiring companies to notify consumers if their personal information has been lost, stolen or otherwise released.“The fact of the matter is that your buying habits, your bank accounts, your Social Security number, your driver's license - all of your personal data - today is being collected, collated, distributed, bought, sold - without your knowledge or consent,” said Sen. Dianne Feinstein, D-Calif., in a statement.

Scrutinizing Accounting in the Retail Industry

The ever-changing world of vendor accounting is particularly susceptible to abuse. It is no surprise that under the increased scrutiny of the Sarbanes-Oxley era, problems with vendor accounting are affecting the retail industry as demonstrated by a probe by the Securities and Exchange Commission (SEC) into retail giant Saks, Inc.Saks announced in March that the SEC was probing vendor markdown allowances and the adequacy of Saks internal investigation into the matter at one of six merchandising divisions of it Saks Fifth Avenue stores.

Bush Targets State Medicaid Accounting Practice

If the Bush administration has its way, Congress will take steps this year to end an accounting practice in states that some say is tantamount to money laundering.The accounting trick, used by California for instance, will yield the state $2 billion more in federal Medicaid money than it would otherwise receive, the Washington Post reported.The trick goes something like this: cash-strapped California counties, public universities and government hospitals find $1.9 billion to send to the state capitol, under the guise of a local contribution to Medicaid.
Community News

Accountants, Spencer Reed Settle Lawsuit

The lawsuit filed by Spencer Reed Group Inc. accusing accounting firm Grant Thornton LLP of miscalculating the company’s corporate taxes and the personal tax return of the late founder by several thousand dollars has been settled.Jackson County Circuit Court filings do not indicate a settlement amount although the March 26 stipulation for dismissal with prejudice requires Grant Thornton to pay court costs.
Practice Management

Survey: Audits Up for Wage-and-Hour Violations

One in five employers has been audited at least once for violating the federal wage-and-hour law, according to a recent survey by Business and Legal Reports Inc.Advertisement

Supreme Court Protects IRAs in Bankruptcy Filings

If you are facing a bankruptcy proceeding, you can rest a little easier now that the Supreme Court has ruled your individual retirement accounts (IRAs) can't be seized.The court's unanimous decision puts IRAs on the list with Social Security benefits, 401(k)s and pension as assets that may not be touched by creditors in a bankruptcy case.However, President Bush has indicated his support for a bill working its way through Congress that would make it difficult for many people to declare bankruptcy, the Wall Street Journal reported.With more than 1.6 million people filing for bankruptcy
Tax

Federal Judge: IRS Can't Have BDO Seidman Tax Shelter Papers

A federal judge ruled last week that the Internal Revenue Service had failed to prove that Chicago accounting firm BDO Seidman had engaged in widespread illegal tax shelter practices and the firm does not have to turn over sensitive documents to the government, the New York Times reported.The ruling last Wednesday by Judge James F.
Tax

FBI Starts Investigation into Delphi Books

The FBI has started an investigation into irregular accounting practices at Delphi, the world's largest auto parts supplier.Delphi, based in Troy, Mich., announced last week that it had incorrectly accounted for $237 million in cash payments made in 2000 to General Motors, its former parent company. The errors, Delphi said, resulted in overstatement of pretax income by about $61 million in 2001, the Detroit News reported.The probe stems from an investigation launched by the Securities and Exchange Commission in August.

Buffet Faces Questioning in AIG Flap

The nation's second wealthiest man, billionaire investor Warren Buffet, has indicated he will cooperate in the investigation into a deal made by one of his companies, but claims he was never briefed on the details of the deal, according to his company Berkshire Hathaway Inc.Executives of both Berkshire Hathaway and its insurance arm, General Reinsurance, have "voluntarily given interviews" with investigating authorities, and Buffett himself will do so "shortly," the company's statement said.

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