Legal issues

Tax

SEC Charges TV Azteca and Its Chairman Ricardo Salinas Pliego with Fraud

The Securities and Exchange Commission this week filed civil fraud charges against TV Azteca S.A. de C.V. (TV Azteca or the company), a Mexican issuer whose American depository receipts trade on the NYSE, its parent company, Azteca Holdings, S.A., de C.V. (Azteca Holdings), and three current and former TV Azteca officers and directors, Ricardo Salinas Pliego, Pedro Padilla Longoria, and Luis Echarte Fernandez.
Tax

Ex-WorldCom Directors Agree to Pay from Own Pockets

In an unprecedented legal move that could send shock waves through board rooms around the country, 10 ex-directors of the former WorldCom Inc.
Tax

Six Convicted in Far Reaching International Tax Fraud Case

Eileen J. O’Connor, Assistant Attorney General, United States Justice Department, Tax Division, John McKay, United States Attorney for the Western District of Washington, and Mark W. Everson, Internal Revenue Service Commissioner, announced last week that after seven weeks of trial, six persons associated with Anderson’s Ark and Associates (AAA), were convicted in connection with one of the most far ranging fraudulent tax schemes ever prosecuted. The jury was unable to reach a verdict on four other defendants.
Tax

Law Firm to Pay $81.55 Million to Settle Tax Shelter Claims

The national law firm of Jenkens & Gilchrist, PC, has agreed to pay $81.55 million in a class action settlement to resolve claims against the firm related to its tax shelter work. This week's settlement concludes negotiations that took over 14 months to complete and represents two significant modifications to the initial settlement, reached in April 2004.
Community News

Deloitte Claims Grant Thornton Held Back Parmalat Information

Big Four accounting firm Deloitte has accused a smaller rival, Grant Thornton, of hindering its audit of Parmalat, the once-mighty Italian dairy giant that collapsed amid accusations of widespread fraud.
Community News

Charges Against Deloitte & Touche Dismissed in Ahold Matter

Deloitte & Touche is off the hook in a class action suit brought by investors of Dutch retailer Ahold NV, thanks to a federal judge's move to dismiss claims that Deloitte engaged in deceptive conduct and recklessly disregarded misstatements in Ahold's financial documents, the Baltimore Business Journal reported.
Tax

Defendants Hindered Tax Collection With 'Empty Shell' Corporations

The Justice Department announced this week that a federal court in Oklahoma has permanently barred four Oklahoma City residents -- Joseph Wolf, Cecil Fisher, Louise Qualls, and Eric Wolf -- from operating or working for so-called “professional employer organizations” or “employee leasing” companies. Judge Joe Heaton of the U.S.
Community News

New Fannie Mae Executive Vows to 'Put Things Right'

Investors are hoping that management changes at Fannie Mae will bolster the company's reputation with regulators and Congress.Fannie Mae's board last Tuesday replaced the two top executives and fired its auditor, KPMG, as pressure mounted to make big changes in light of the company's accounting standards violations and the Securities and Exchange Commission's order for a restatement of possibly $9 billion.Chief Executive Officer Franklin D. Raines and Chief Financial Officer Timothy Howard were temporarily replaced by, respectively, Daniel H.
Community News

E&Y to Pay $125M to Settle Claims Over Failed Illinois Bank

Ernst & Young LLP will pay $125 million to settle claims stemming from its involvement in the failure of an Illinois savings bank, according to a consent order with the Office of Thrift Supervision.

California Sues Edward D. Jones Over Mutual Fund Deals

California Attorney General Bill Lockyer has filed suit on behalf of the state against brokerage firm Edward D.
Tax

Professional Fees in Enron Bankruptcy Top $780M

Advisers that led Enron through its complex bankruptcy case have asked a judge to approve more than $780 million in fees. That figure includes $164 million requested by New York law firm Weil Gotshal & Manges. If the request is approved, it will be more than any law firm has been awarded in a bankruptcy case, according to data compiled by Bloomberg. The largest bankruptcy in the U.S.
Tax

IRS Accepts Settlement Offer on Contingent Liability Tax Shelter

The Internal Revenue Service announced last week that it has successfully resolved a pending dispute with Hercules Incorporated, over a listed tax shelter transaction. This transaction, known as a contingent liability transaction, is at issue in a case pending in the United States Tax Court.In Notice 2001-17, the Service listed the contingent liability transaction, and set forth the IRS’s position that the strategy failed to comply with statutory requirements and lacked economic substance or effect. The contingent liability transaction was designed to shelter capital gains.

SEC Charges Walt Disney with Disclosure Violations

The Securities and Exchange Commission on Monday instituted settled enforcement proceedings against The Walt Disney Company (Disney). The Commission charged Disney for failing to disclose certain related party transactions between Disney and its directors, and for failing to disclose certain compensation paid to a Disney director. Under the settlement, Disney consented to the entry of an Order that it cease and desist from violating the proxy solicitation and periodic reporting provisions of the federal securities laws.
Tax

Franklin Advisors Announces $20M Settlement

On Monday, The Securities and Exchange Commission (SEC) filed settled charges against Franklin Advisers, Inc. (FA) and Franklin Templeton Distributors, Inc. (FTDI) (collectively, Franklin), the investment adviser and principal underwriter and distributor affiliated with the Franklin Templeton mutual funds, alleging that Franklin, without proper disclosure, used fund assets to compensate brokerage firms for recommending the Franklin Templeton mutual funds over others to their clients.
Tax

Federal Court Shuts Down Multi-State 'Warehouse Banking' Tax Scheme

The Justice Department announced on Thursday that a federal court has permanently shut down a tax evasion scheme operated by Anthony L. Hargis, of Fountain Valley, California. Hargis and his business, Anthony L. Hargis & Co., or ALH, helped customers attempt to hide assets and income from the IRS. In permanently enjoining the scheme, sometimes referred to as a “warehouse bank,” Judge David O. Carter of the U.S.

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Before Sarbanes-Oxley, the law stated that investors who were made aware of fraudulent activities had to file lawsuits against the misbehaving companies within one year of discovering the fraud and within three years of the actual fraudulent activity.
Tax

Trucker, Tax Preparer Sued for $350M Fraudulent Tax Schemes

Charles B. Eden, a St. Louis truck driver and tax return preparer who allegedly lists improper deductions on his customers’ income tax returns was sued by the Justice Department this week. The civil injunction suit, filed in the U.S. District Court in St. Louis, alleges that Eden prepared returns that fraudulently claimed deductions for non-existent or grossly inflated charitable donations and business expenses. The suit was filed December 2, but not announced until today, after Eden was served with a copy of the complaint.
Community News

Tax Guru Imprisoned for Promoting Off-shore Tax Havens

The U.S. Attorney's Office for the Northern District of California announced that Jerome Schneider, 53, a resident of Vancouver, B.C. Canada, was sentenced to six months in prison this week by Judge Susan Illston in San Francisco for his role in a conspiracy to defraud the Internal Revenue Service. Mr. Schneider was ordered to pay a fine of $4,000 and a $100 special assessment. He had previously paid $100,000 in restitution. Mr.
Tax

IRS Challenges Tribune Co. Over Business Deals

The Internal Revenue Service contends that the Tribune Co. owes $915 million for transactions connected with its purchase of the Times Mirror Co. in 2000.The business deals involved Times Mirror's divestiture of two publishing units in 1998. When the Tribune Co. acquired Times Mirror and its flagship newspaper, the Los Angeles Times, it also inherited its tax problems.According to the Los Angeles Times, the trial between the IRS and the Tribune Co. began Monday in U.S.
Community News

Holiday Parties May Pose Legal Pitfalls for Businesses and Private Party Givers

December may bring more than holiday cheer for many Americans. A survey released today reveals that holiday parties in homes and offices may result in trips to the courtroom for some. A nationwide survey assessed Americans' vulnerability to common legal pitfalls during the holiday season. Harris Interactive conducted the survey.Hosting a Party at Home Involves More Than Planning A MenuNearly one-in-four (24%) adults do not know that a party host who serves alcohol to a clearly inebriated guest may be legally responsible if that person goes on to hurt or kill someone in a car accident.

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