Legal issues

Tax

Judge Fines Investment Fund for Avoiding Taxes

In a decision that observers are calling a significant victory in the fight against abusive tax shelters, a federal judge has ruled that Long Term Capital Management used bogus transactions to avoid $40 million in taxes.Long Term Capital Management, the now-defunct investment firm that received a $3.6 billion bailout, wrongly claimed about $106 million in tax deductions in 1997, Judge Janet Bond Arterton of U.S. District Court in Connecticut ruled Friday.The Internal Revenue Service was correct to reject the deductions, the judge ruled, because they had no real economic value.
Tax

Inmate Accused of Filing Bogus Tax Returns in $73,000 Scam

Using a copy machine and correction fluid, an inmate at Missouri Eastern Correctional Center created 66 false tax returns that cost taxpayers more than $73,000, a federal indictment says.AdvertisementAccounting Department Policy Groups Offered By PolicySoftOver 200 accounting department
Practice Management

Tips for Loss Prevention Policies; Employee Theft Solutions

by Stuart R. Buttrick, Baker & Daniels. It goes without saying that all employers are concerned about employee theft. As a result, employers are constantly looking for tools to prevent their, or their employees', property from becoming the victim of "sticky fingers." One of the most common practices used by employers to combat workplace theft is to search employees' personal belongings. However, as will be discussed below, there are a host of legal considerations that employers must take into account before it embarks on employee searches.
Tax

Crackdown on Internet Fraud Slams Spammers

Federal and state law enforcement agencies have teamed together in recent weeks to arrest or charge dozens of people with crimes related to online scams, the New York Times reported.Since Congress passed a law last year that calls for fines and prison sentences for those convicted of sending fake e-mails, efforts have multiplied to fight spammers. Some Internet abusers send millions of junk e-mail messages; others commit identity theft; some perpetrate credit card fraud and other financial crimes.
Practice

CPAs are Called Upon to Self-Report on Quality Control Issues

Certified public accountants are being asked to report on their own firms' quality control procedures as well as their clients'. New model rules issued by the National Association of State Boards of Accountancy (NASBA), would have licensed public accounting firms submitting to their state licensing boards adverse quality control reviews of their operations, as well as having individual CPAs notify the licensing boards of civil charges brought against them involving fraud, violation of standards of practice or misappropriation of funds.
Tax

Sex Addiction Drives Florida CPA to 'Moral and Ethical Bankruptcy'

Small businesses, elderly investors, a church group and the Palm Beach County Police Benevolent Association were among the victims of a scheme that paid for the sex addiction of a Broward County certified public accountant, the Sun-Sentinal reported.Thomas E. Sewell was sentenced Monday in Fort Lauderdale by U.S.
Tax

Former IRS Lawyers Suspended For Tax Shelter Case

The bar associations in Oregon and Arkansas have suspended the law licenses of two former Internal Revenue Service lawyers for two years, the New York Times reported.The state organizations' actions come after a federal court ruled last year that the two defrauded the courts to help the IRS prevail in 1,300 tax shelter cases, many of them involving airline pilots, the Times reported.Oregon suspended the license of W. Kenneth McWade and Arkansas suspended the license William A. Simms. In addition, the U.S.
Community News

SEC Bans Former HealthSouth Exec From Practicing Accounting

The Securities and Exchange Commission has banned a former HealthSouth executive from working as an accountant at a public company.The SEC's Monday action against Kenneth K. Livesay, assistant comptroller at HealthSouth from 1989 to 1999, comes as Livesay faces accusations of ordering employees to record false assets for the Birmingham-based company, the Washington Post reported.Livesay accepted the ban without admitting or denying wrongdoing, the SEC said.
Tax

Janus Finalizes $226M Settlement on Fraud Charges

The Securities and Exchange Commission (SEC) announced on Wednesday a settled enforcement action against Janus Capital Management LLC (JCM), for entering into undisclosed market timing agreements with certain investors. The Commission ordered JCM to pay disgorgement of $50 million and civil penalties of $50 million, for a total payment of $100 million. JCM also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual-fund governance reforms.Stephen M.
Community News

Parmalat Seeks $10 Billion from Ex-Auditors

Failed dairy giant Parmalat continued efforts to save itself Wednesday by filing suit against its former auditors for more than $10 billion.According to the Wall Street Journal, bankruptcy administrator Enrico Bondi is working to recover sizable damages for creditors, swap creditors' debt for equity and create a “pared-down, cleaned-up, newly listed Parmalat.”Wednesday's suit was filed against Deloitte & Touche Tohmatsu International and Grant Thornton International in Circuit Court of Cook County, Ill.
Community News

Professional Fees in WorldCom Case Top $600 Million

The biggest bankruptcy case in U.S. history has piled up the biggest-ever bill for professional fees - $613 million.Consultants, lawyers and other advisers who guided MCI Inc. through its bankruptcy proceedings are asking the U.S. Bankruptcy Court in New York to approve the fees. More than half the $613 million will go to KPMG LLP, Deloitte & Touche LLP and Deloitte Consulting LLP, who are seeking $173 million, $142 million and $32 million, respectively.U.S. Bankruptcy Judge Arthur J. Gonzalez, however, has the discretion to reduce the fees, Bloomberg reported.
Tax

Large Databases Can Mean Big-Time Fraud

Storing massive amounts of credit card information in one place proved to be a costly mistake for BJ's Wholesale Club Inc. earlier this year.Thousands of credit card numbers were stolen in what may have been the biggest retail fraud of its kind. Secret Service agents say the suspects arrested in the case may be connected to an international identity theft ring."There are some pretty heavy losses out there," Greg Smith, president of the Pennsylvania State Employees Credit Union, told the Associated Press.
Tax

Ex-IRS Agent Pleads Guilty to Tax Scheme

A former IRS agent who told her clients that her inside knowledge of the agency would prevent detection of a fraudulent deduction has pleaded guilty to attempting to interfere with the administration of IRS laws, the Associated Press reported.Marissa Hyde, 43, told U.S. District Court Judge Ted Stewart that she “made a mistake” by using the fraudulent deduction on behalf of clients of her company Accounting and Business Consulting, located in Layton, Utah.Hyde admitted she had tried to cheat the government by creating a false deduction for her clients, the AP reported.
Community News

Ernst & Young's Survival Threatened by Equitable Life Case

Back in the heady days of the 1990s, it was unimaginable that the existence of even one of the Big Five accounting firms could ever be threatened.
Community News

Man Pleads Guilty to Sending IRS Agent Letter Containing Suspicious Powder

A Santee, California man has pleaded guilty to twice sending threatening letters containing white powder to an IRS agent who was auditing him.James Robert Harer, a self-employed contractor, was responsible for the evacuation of the federal building in downtown San Diego last summer after the second letter was sent to IRS agent Vickie Hom. The powder turned out to be laundry detergent in one case and roach killer in the other, the San Diego Union Tribune reported."Your lies have cost me," one letter said. "You lie so that you can receive your bonus money.
Tax

KPMG Faces Yet Another Suit Over Tax Shelters

KPMG's tax shelter woes expanded when the investors and officers of a Boca Raton web-hosting company filed an eight-figure lawsuit over tax shelter advice they received in the 1990s from the Big Four firm, the Boca Raton News reported.The suit, filed in late June in Palm Beach Circuit Court, claims that KPMG and law firm Sidley Austin Brown & Wood tricked Best Communications into investing millions of dollars in a succession of tax-avoidance schemes, according to attorneys Edward Ricci and Benjamin Salzillo.

American Bar Association Opposes New Sentencing Rules

The U.S. Sentencing Commission's plan to reward wayward companies for giving up private legal documents to prosecutors does not have the support of the American Bar Association.On Tuesday, the ABA voted to contest the proposed new sentencing rules that will take effect in November, unless Congress intervenes. They were approved this spring by the U.S.
Tax

Enron's Kenneth Lay Asks to Forgo Jury Trial

Update 8-12-04: According to a Washington Post reporter, a judge denied a September 14th trial start date and said that he would wait until additional motions were filed late in September or October.
Community News

Court Rules Tax Protester Can’t Sell His Book of Tax Advice

A federal appeals court has ruled that a well-known tax protester cannot sell his book, "The Federal Mafia," because it encourages people to commit fraud.Irwin Schiff, 76, of Las Vegas, who authored the book and owns a book store, may be able to sell a new version of the book if he removes the parts that push his tax evasion products and services, the New York Times reported Tuesday. Anyone but Schiff and two of his associates can sell the $38 book, the court ruled.Schiff has gone to federal prison twice for tax crimes.
A&A

New Faces in Bankruptcy Court: The Middle-Aged

Just when many baby boomers expected to be settling into their comfortable homes earned from a lifetime of hard work, they’re finding themselves in bankruptcy court instead.The reasons are numerous; the circumstances complicated. Bankruptcy attorneys are accustomed to helping young people who have overextended themselves with credit card debt and the expenses of starting a new home and family. The faces they see now, however, are lined with a history of hard work and the burden of caring for both their children and their parents.

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