Legal issues

Community News

Pension Funds Sue Shell Seeking Damages, Governance Changes

Two pension funds filed suit Friday against more than two dozen directors and officers of the Royal Dutch/Shell Group and their accounting and audit firms PricewaterhouseCoopers International and KPMG International. The suit follows the company downgrading its proven oil and natural gas reserves four times since Jan. 9. The company reduced reserves as of Dec. 31, 2002 by about 23 percent, or 4.47 billion barrels of oil equivalent.
Technology

Anti-Spyware Bill Moves Forward

The House on Energy and Commerce subcommittee has approved the newly renamed “Securely Protect Yourself Against Cyber Trespass” Act, (SPY ACT). This act will now move to full committee and then, if approved, to the House for a full vote. The bill was authored by U.S. Rep. Mary Bono (R-Calif.), who said in a statement, "Passage of the SPY ACT today represents a cooperative effort to bring commonsense legislation forward to protect consumers from the threat of spyware.
Community News

Top Mistakes Companies Make in Computer Crime Prevention

Re-published with permission from White-Collar Crime Fighter, www.wccfighter.com. I've been working with large companies on information security and internal computer crime for more than five years and have been in law enforcement for more than 15 years as a detective investigator as well as a detective commander.To this day I am amazed that top managers of Fortune 1,000 companies are still in the same boat when it comes to computer crime: No one thinks their employees would ever abuse their company's computers to steal

Gemstar-TV Guide Settles SEC Action for $10M

On Wednesday, The Securities and Exchange Commission filed a complaint in federal court in Los Angeles charging Gemstar-TV Guide International, Inc. with improperly reporting its highly touted interactive program guide licensing and advertising revenues in its financial statements from 1999 through 2002.Gemstar agreed to settle the case by, among other things, paying a $10 million civil penalty. That money will be distributed to harmed shareholders pursuant to Section 308 of the Sarbanes-Oxley Act of 2002.
Tax

Industry Leaders Form Group to Combat Online Fraud

A “superhero slate” of cross-industry leaders in retail, telecommunications, financial services, banking and technology have joined forces to eliminate the threat of phishing to e-mail and e-commerce. The Trusted Electronic Communication Forum (TECF) said in a statement that the group formed as a “collaborative endeavor with the mission to help mitigate the risks posed by phishing, spoofing and other tactics of online identity fraud.” The group will also focus on finding an immediate cross-geographic and industry-wide standard to protect consumers and businesses.
A&A

Jury Awards $6.4M in Damages against Payroll Service Provider

Last week, a Los Angeles Superior Court jury returned a verdict for $6.4 million in favor of a Texas firm called The Payroll Partnership LP and two of its sister companies against Rapid Payroll, Inc., a wholly owned subsidiary of Paychex, Inc., the nation's #2 payroll processing firm.The jury found Paychex subsidiary Rapid Payroll liable for breaching software licensing agreements related to a personal computer based payroll processing system called "Rapid Pay." The lawyer for The Payroll Partnership LP, Stephen Wald of the Boston law firm Craig and Macauley, stated, "We are delighted wi
Tax

Angry Investors Sue Deutsche Bank Over Tax Shelter Advice

German financial giant Deutsche Bank faces two lawsuits from investors, who were sold tax shelters that the Internal Revenue Service declared invalid in August 2000.The tax shelters in question are known as Cobra, which stands for currency options bring reward alternatives, and MLA, which stands for market-linked deposit. The two shelters are nearly identical, the New York Times reported. The plaintiffs in both cases owe the federal government tens of millions of dollars and seek to recover fees, interest and penalties, the Times reported.In the case of Cobra or Cobra Swaps, Robert L.
Tax

Embattled HealthSouth Names New Chief Operating Officer

HealthSouth Corp. announced this week the appointment of Mike Snow, age 49, to the position of Chief Operating Officer (COO), effective June 30, 2004. Snow, who most recently served as the President of the Gulf Coast Division of HCA, will be responsible for the day-to-day operations of the company on an ongoing basis. Snow has an extensive background in the healthcare industry.

Mutual Fund Agrees to Pay $100 Million to Settle Improper Trade Practices

This week, Pilgrim Baxter & Associates, investment advisor to the PBHG Funds, confirmed that the firm has reached agreements with the U.S. Securities and Exchange Commission (SEC) and the Office of the New York State Attorney General to settle charges related to past trading activity. The settlement agreements address past trading activity in the PBHG Funds, which led to the appointment of new leadership at Pilgrim Baxter in November 2003.
Tax

Indictment Against Lay Could be Imminent

In a development first reported by the Houston Chronicle, it appears prosecutors may be close to an indictment against former Enron Corp. chairman Kenneth Lay, for allegedly urging employees and investors to buy Enron stock even as he knew the company was on the verge of collapse.The Washington Post reported the development stating that an indictment against Lay, 62, would cap a two-and-a-half year investigation into the collapse of the Houston-based energy giant, once the nation’s seventh-largest company in terms of revenue.
Practice Management

Court of Appeals Upholds Arthur Andersen's Conviction in Enron Case

A federal appellate court has upheld a jury’s conviction of Arthur Andersen LLP for obstructing a Securities and Exchange Commission investigation of its client Enron. The former Big Five accounting firm was convicted June 15, 2002, and the 5th U.S.
Community News

KPMG Tax Shelter Helped Companies Cut Tax Liability by $1.7 Billion

As tax shelters became the subject of increasing scrutiny, finding out who bought them became equally interesting to the IRS and the media. Newly disclosed KPMG documents show a client list of 29 prominent American business.Companies such as Delta Air Lines, Whirlpool Corp., Clear Channel Communications Inc., WorldCom Inc., Tenet Healthcare Corp. and the U.S.

New Trial Set for Ex-Tyco Executives Kozlowski, Swartz

January 18 is the date set by New York State Supreme Court Justice Michael Obus to retry former Tyco executives Dennis Kozlowski and Mark Swartz on corruption charges. Their first trial ended in mistrial more than two months ago. Kozlowski and Swartz, Tyco's former CEO and CFO, respectively, are accused of looting Tyco of about $600 million. The charges against them include grand larceny, securities fraud and possession of stolen property, among other crimes. Both men have pleaded not guilty to the charges.
Technology

SEC Sues Former Network Associates CFO

The Securities and Exchange Commission on Wednesday filed suit against a former CFO of Network Associates for fraud and insider trading.The SEC accuses Prabhat Goyal, who resigned at the end of 2000, of using the company’s distributors to overstate sales, the Financial Times reported. Court papers filed in federal court also say that Goyal used a Network Associates subsidiary to buy back inventory that had been sold to the company’s distributors.
Tax

Couple Claims Government Agents Tried to Influence Jury

The possibility that Internal Revenue Service agents and Justice Department lawyers "glared" at jurors during a recent trial will be the subject of a federal appeals court hearing, the New York Times reported.A Nevada couple, on trial for tax evasion, claims the federal officers attempted to intimidate the jurors into reaching their guilty verdict. The hearing could result in the overturning of the tax evasion convictions of Martin Rutherford, a Reno chiropractor, and his wife, Nanja.

Past Scandals Make Securities Law More Enticing for Many

With the recent swell in accounting scandals, securities law has become an increasingly enticing profession for current and upcoming lawyers. Private firms are willing to pay hefty prices for lawyers that specialize in securities-fraud law, especially those with experience at the Securities and Exchange Commission (SEC). This experience is extremely valuable to many corporations as the demand for lawyers to assist with fraud continues to shoot upward.
Tax

Constitutional Challenges to State Taxes Can Go to Federal Court

Tax credits in more than 40 states are now vulnerable to federal court challenges after a Supreme Court ruling Monday.The court ruled 5-4 that taxpayers can use federal courts to make constitutional challenges to state taxes, the Associated Press reported. A group of Arizona taxpayers sued the state in federal court to oppose income tax credits given to residents who donate money to private schools.The taxpayers argued that the tax credits are an unconstitutional promotion of religion.
Community News

Vegas Firm Permanently Barred from Tax Returns

The National Audit Defense Network of Las Vegas, which last month closed its doors and filed a petition to liquidate its operations, has been permanently stopped from preparing federal tax returns.According to United Press International, the Treasury Department said the telemarketing firm’s alleged abusive tax schemes have cost the U.S. Treasury about $324 million in the last three years. The Justice Department on Thursday said it intends to contact NADN's customers who purchased the firm’s tax schemes or received bad advice.
Community News

Tyco Faces Follow-On Suit over Settlement

As part of their 2001 settlement with Tyco International Ltd., an investor group was given company shares.

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