Legal issues

Community News

Former E&Y Audit Partner Jailed for SOX Violations

Back in October of 2004, Thomas Trauger pled guilty to falsifying records in a federal investigation in violation of the Sarbanes-Oxley Act. He admitted as part of this plea that he knowingly altered, destroyed and falsified records with the intent to impede and obstruct an investigation by the Securities and Exchange Commission (SEC). This is one of the first cases of document destruction brought under the recently enacted Sarbanes-Oxley Act. U.S. Attorney Kevin V.

SEC Sues Morgan Stanley, Goldman Sachs for Unlawful IPO Practices

The Securities and Exchange Commission (SEC) announced the filing in federal district court of separate settled civil injunctive actions against Morgan Stanley & Co. Incorporated (Morgan Stanley) and Goldman, Sachs & Co. (Goldman Sachs) relating to the firms' allocations of stock to institutional customers in initial public offerings (IPOs) underwritten by the firms during 1999 and 2000.
Tax

Get Ready, Get Set, Start Shredding

If fears of identity theft haven't sent you to the nearest office supply store to buy a shredder, a new law may be just the push you need.A law that goes into effect June 1 says that you must “destroy” personal information — shred it, burn it or pulverize it — of all people you employ, even if it's just one person and it's the gardener, USA Today reported.
Tax

High Court Rules Full Damage Awards Taxable

John W. Banks II, settled an employment discrimination case against the California Department of Education for $464,000, with $150,000 of that going to his lawyer under their fee agreement. The Supreme Court ruled Monday that Banks is liable for taxes on the full amount, even though a good portion was paid to his attorney, the New York Times reported.The justices ruled 8-0, with Chief Justice William H. Rehnquist not participating, to overturn decisions by the federal appeals courts in San Francisco and Cincinnati.
Tax

'Accounting Fraud' Penthouse Uncovered

Penthouse International Inc.
Community News

NY Comptroller Issues Scathing Report on Accounting Firm

A school district in New York has sued its outside accounting firm for $12 million, asserting that millions of dollars in misspent funds went undetected.The lawsuit, along with a stinging report by New York State Comptroller Alan G. Hevesi, has prompted about 50 other Long Island school districts that used Miller, Lilly and Pierce to consider firing the East Setauket-based firm, according to Suffolk Life newspapers.The Roslyn School District contends that the firm missed the fact that the school superintendent, business manager and others misspent funds.
Tax

Judge Rules BDO Arbitration Clauses Unenforceable

A federal judge has ruled that because contracts BDO Seidman LLP had with tax-shelter clients were fraudulent, the contracts' arbitration clauses are unenforceable, which means the case will be heard in court, the Wall Street Journal reported.U.S. District Court Judge Shira Scheindlin of New York signed the ruling on Jan.
Tax

Five Tax Preparers Brought Up on Charges for Falsifying Client Returns

The Justice Department this week asked a federal court to bar five Louisiana residents from preparing federal tax returns. The government’s complaint alleges that Eddie Ferrand, of Monroe, prepares false or fraudulent tax returns through his business, “Mr.

Former ImClone CEO Waksal and Father to Settle SEC Insider Trading Case

Samuel Waksal, the former CEO of ImClone Systems Inc., and his father, Jack Waksal, have agreed to a final resolution of the insider trading case brought against them by the Securities and Exchange Commission. In documents filed on Wednesday with the federal court in Manhattan, Sam Waksal and Jack Waksal, without admitting or denying the allegations in the Commission's complaint, consented to pay more than $5 million in disgorgement and civil penalties from their unlawful trades in ImClone securities.
Practice Management

WorldCom Class-Action Suit Against Andersen to Proceed

In the last few weeks there has been good news and bad news for defunct accounting firm Arthur Andersen LLP as it strives to repair its reputation.Last month the Supreme Court agreed to hear an appeal of the company's June 2002 obstruction of justice conviction. That's the good news. This week, a federal judge in New York ruled against a motion to dismiss a class action suit brought against Andersen by WorldCom Inc., the Wall Street Journal reported.
Tax

'Survivor's' Hatch Faces Jail, Fines in Tax Evasion Case

Richard Hatch might have been television's first “Survivor,” but the IRS has a different name for Hatch: alleged tax cheat.The Associated Press reported that Hatch, a resident of Newport, RI, was charged last week with failing to report his $1.01 million earnings from the show as well as some $321,000 he was paid by a Boston radio station for 2001 appearances.
Community News

Business Roundtable Supports Auditor Liability Cap

At a time when U.S. firms are more reliant than ever on quality accounting and auditing services, the influential Business Roundtable is supporting liability caps for auditors.The Roundtable is worried that the Big Four accounting firms could soon shrink to three or fewer firms if Congress doesn't act to stem the liabilities the firms face when things go wrong.
Community News

EEOC Brings Suit that Could Affect Partnership Age Limits

A suit filed last week by federal civil-rights lawyers could change the way aging partners are treated in CPA firms and other private practices that attempt to drive out older partners.The suit was filed Thursday against Chicago-based Sidley Austin Brown & Wood, one of the nation's largest law firms, alleging age discrimination in a case that could sharply curtail the ability of private partnerships to force out older members, the Chicago Tribune reported.The suit by the Equal Employment Opportunity Commission challenges the assumption that partners are not protected by anti-discriminati

Ahold Problems Surface Again; Nine Charged in Scheme

The Securities and Exchange Commission filed enforcement actions last week against nine individuals alleging they aided and abetted a massive financial fraud by signing and returning materially false audit confirmations sent to them by the auditors of the U.S. Foodservice, Inc. subsidiary of Royal Ahold (Koninklijke Ahold N.V.). The actions filed name as defendants Mark A. Bailin, Kenneth H. Bowman, Timothy Neal Daly, Michael J. Hannigan, Peter O. Marion, John Nettle, Gordon Redgate, Bruce Robinson and Michael Rogers.
Community News

Judge Rules that PricewaterhouseCoopers Withheld Evidence

A federal magistrate judge in Ohio has concluded that PricewaterhouseCoopers withheld evidence in an accounting fraud trial brought by an audit client.According to The New York Times, United States Magistrate Judge Patricia A. Hemann recommended a default judgment against the accounting firm for failing to turn over evidence sought by Telxon Corporation, which makes bar code readers.
Tax

Justice Dept. Bars TN Woman From Preparing Tax Returns, Demands Client List

The Justice Department announced this week that a federal court has permanently barred Linda Hendrieth, of Memphis, Tennessee, from preparing income tax returns or claims for refunds. The final judgment, requires Hendrieth to notify her customers of the judgment and to provide to the government the names, addresses, and taxpayer identification numbers of her customers. "People who prepare false or fraudulent tax returns cheat their customers and unfairly shift the tax burden to honest American taxpayers," said Eileen J.
A&A

Class-Action Suit Against H&R Block to Proceed

The Supreme Court has cleared the way for a class-action suit that accuses H&R Block, the nation's largest tax-preparation company, of charging as many as 17 million customers inflated interest on refund loans, the Houston Chronicle reported, citing news wires.The suit contends that H&R Block charged as much as 100 percent in interest on the refund loans and customers were not told that the company profited from the loans, which were advances on estimated tax refunds, the Chronicle reported.The high court this week let stand a lower court's decision that the case should go forward as a c
Tax

Enron Directors Agree to Pay Part of $168M Settlement

Ten ex-directors of Enron Corp. have agreed to pay $13 million of their own money as part of a $168 million settlement of a lawsuit filed by shareholders who lost their investments after Enron's 2001 implosion, according to the Wall Street Journal.The agreement, announced Friday, is similar to one reached by former directors of WorldCom Inc.
Community News

Supreme Court to Hear Appeal of Andersen Conviction

The Andersen accounting firm scored a big victory in its ongoing efforts to overturn a criminal conviction stemming from its involvement in the Enron debacle, with the Supreme Court agreeing to hear an appeal in April.
Tax

LA Sues Travel Websites for Underpaying Hotel Taxes

Los Angeles leaders have accused Internet travel companies of costing the city millions of dollars a year by underpaying hotel taxes. AdvertisementAccountingWEB is pleased to bring you tools that can help systematize the accounting department of a small company, corporate business or a public accounting firm.

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