Legal issues

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.
Technology

Accenture Contract Threatened by Congressional Action

Congress is taking aim at the practice of companies incorporating offshore to avoid paying U.S. taxes, with a multi-billion dollar Homeland Security contract threatened by a provision attached to the department’s budget.The House Appropriations Committee approved a $32 billion budget for the Homeland Security Department but attached a provision that bars the multi-billion dollar contract awarded last week to a coalition of companies led by the U.S.
Tax

Judge Seals Public Document in MCI/KPMG Tax Shelter Matter

One of MCI’s outside law firms mistakenly disclosed that the Securities and Exchange Commission is looking into MCI’s retention of KPMG LLP as its independent auditor, the Wall Street Journal reported.Acting on MCI’s request, the judge presiding over the telecommunications company’s bankruptcy-court proceedings has stemmed public disclosure of a court filing by MCI’s outside law firm Piper Rudnick LLP of Baltimore that referred to the inquiry.The inquiry involves the aggressive tax-shelter strategy that KPMG sold to MCI in the 1990s when MCI was known as WorldCom and Arthur And
Tax

Ex-CEO of Long Island Tech Company Declared Fugitive

The indicted former chief executive of Symbol Technologies Inc. was declared a fugitive Wednesday after apparently returning to his native Croatia and refusing to return to the U.S.Tomo Razmilovic’s lawyer told federal prosecutors that his client would not face arraignment, the Associated Press reported. He had been living in England since leaving the company two years ago, and prosecutors believe he left for Croatia.The former president of the Long Island-based maker of bar-code scanners and wireless networks faces securities fraud and other charges.
Community News

Ex-WorldCom CFO Pleads Guilty to Conspiracy; Sentencing Delayed

The former chief financial officer of WorldCom, Scott Sullivan, has pleaded guilty to one count of conspiracy to commit securities fraud.Sullivan entered his plea Monday in Hinds County, Miss., before Circuit Judge Bobby DeLaughter. Sentencing was delayed, the Associated Press reported. Sullivan faces up to five years in prison and a fine of $5,000, the state attorney general's office said.
Tax

Judge Postpones First Enron Criminal Trial

The first Enron criminal trial has been postponed until August, when it became apparent to the judge that the trial would not fit in the available time slot, even if all parties worked on Saturdays.The Associated Press reported that U.S. District Judge Ewing Werlein sent home the 100 citizens gathered for jury selection, which was set to begin this week, in the trial of two former Enron executives and four former Merrill Lynch & Co. executives.Werlein has a vacation set to begin on July 12. After a 90-minute meeting with attorneys for both sides, he has reset jury selection for Aug.
Practice Management

Seven Steps to the Litigation-Free Zone

While CPAs and finance professionals can’t control the malpractice insurance market, there is still plenty they can do to limit their liability and risk, and to protect their practices. Some cautious steps might even help to keep higher premiums at bay.Here are some pointers from the pros:Prepare—and use—a solid engagement letter - "It’s the ‘Rules of War’ drawn up during peacetime," says Aon’s Dave Sukert. A good engagement letter clearly defines the scope of the work, as well as the responsibilities of both accountant and client.
Tax

Former Home Depot Contractor Files Whistleblower Suit

A former Home Depot subcontractor is suing the Atlanta-based home improvement giant, claiming his contract was terminated after he pointed out accounting irregularities, the Associated Press reported.Raymond Hammond filed suit May 26 in Mecklenburg County Superior Court in North Carolina claiming that in November 1999 he told Home Depot co-founders Bernie Marcus and Arthur Blank in a memo that the company had overpaid him for every installation he did for Home Depot stores in upstate New York, the AP reported.He says he received e-mails from about 70 other Home Depot window and kitchen i
Practice Management

Judges Unpredictable When it Comes to Sentencing White-Collar Criminals

Federal judges are handing down wildly different sentences to corporate criminals. While a former Dynergy Inc. tax executive got 24 years in prison after his March trial for fraud offenses in Texas, three HealthSouth executives who entered guilty pleas to similar crimes in Alabama got off without jail time last week."I don't know what messages the judge is trying to send to white-collar criminals," said U.S. Attorney Alice Martin, the lead prosecutor on the HealthSouth case.
Tax

Symbol Technologies to Pay $37M SEC Fine for Accounting Fraud

On Thursday, the Securities and Exchange Commission charged Symbol Technologies, Inc. with securities fraud and related violations of the reporting, record-keeping and internal control provisions of the federal securities laws. Eleven former Symbol executives were also charged in connection with their roles in the fraud.
Tax

Enron Traders Gloat over Misdeeds During California Power Crisis

Taped telephone conversations among Enron traders reveal open discussions about manipulating the California power market, taking generating units offline to raise prices and even stealing from grandmothers.A utility outside of Seattle obtained the audiotapes from the Justice Department, which is investigating Enron’s part in the electricity market crisis that brought blackouts and skyrocketing prices to California in 2000-2001. The Snohomish County Public Utility District is suing Enron, saying it was overcharged during the crisis and should receive refunds.
Tax

IRS Accused of Failing to Aggressively Track Tax-Exempt Organizations

Campaign-finance watchdog groups are questioning the ability of the Internal Revenue Service to track soft-money fundraising in light of a multi-million-dollar mistake by the Republican Governors Association.They also say the IRS has little incentive to enforce accurate reporting because the organization is tax-exempt under tax code section 527.
Tax

Lecture Circuit Beckons Some Ex-White-Collar Criminals

Some former white-collar criminals are finding that crime does pay, with lucrative speaking careers following prison terms.Those who have a compelling story to tell and who are willing to take responsibility for their misdeeds are highly sought after on the speaking circuit where they can make thousands of dollars per speech, the New York Times reported.Those interested in hearing from ex-cons include business schools, professional associations and corporations, the Times reported."It's a powerful message," Kellie McElhany, professor of corporate management at the Haas School of Busin
Tax

Lesser-Known Enron Executives Face First Criminal Trial

The first Enron case to go before a jury does not involve famous names or deals that led to the company’s spectacular demise."It’s not about Andy Fastow, it’s not about Jeff Skilling, it’s not about Ken Lay. But I think the public thinks that it is," defense attorney Dan Cogdell told Reuters.
Tax

Rite Aid Former Chief Executive Sentenced to Eight Years in Jail

The son of the man who founded the Rite Aid drugstore chain will spend eight years in prison for his role in one of the biggest fraud cases to hit corporate America, Reuters reported.Glass, 50, the company’s former chief executive, was also sentenced yesterday to three years of supervised release after he completes his prison term, according to Thomas Marino, U.S. attorney for the Middle District of Pennsylvania. As part of his plea deal, Grass, the fourth of six former Rite Aid executives to be sentenced, will pay $500,000 in fines and will forfeit $3 million to the government.
Tax

Case Against WorldCom's Ebbers Expands With New Indictment

The government’s case against former WorldCom Inc. chief executive Bernard J. Ebbers grew on Monday when a new 31-page indictment was handed up by a Manhattan grand jury with seven new changes of false Securities and Exchange Commission filings, the Washington Post reported. The seven new changes are added to the charges Ebbers, 62, already faces, including one count each of conspiracy, securities fraud and false filing in the role he allegedly played in the nation’s largest accounting scandal.
Community News

Audit Firm Settles $50 Million Class-Action Suit

In a case that illustrates what used to be common practice before Sarbanes-Oxley became law, Big Four accounting firm PricewaterhouseCoopers agreed to pay $50 million to settle a class action suit involving its former audit client Raytheon.New York State Comptroller Alan Hevesi’s office issued a statement announcing the settlement agreement.
Tax

First Rite Aid Executive Sentenced in Accounting Scandal

Former Rite Aid Corp. executive Eric Sorkin became the first of six former top company officials to be sentenced in an accounting scandal at the drug store chain.Sorkin, 55, was sentenced yesterday to spend five months in jail and five months house arrest, to be followed by two years of probation. He was also ordered to pay a $5,000 fine.
Tax

Grand Jury Investigating Ernst & Young Tax Shelter Sales

Federal investigators have launched a criminal investigation into Ernst & Young’s tax shelter practices, despite the $15 million settlement the firm reached on the matter last year with the Internal Revenue Service, the Wall Street Journal reported.A grand jury has been impaneled and it is believed the investigation is in its earliest stages. Often charges do not result from grand jury investigations.
Community News

NY Attorney General Spitzer Sues Grasso and NYSE

New York Attorney General Eliot Spitzer yesterday sued former New York Stock Exchange Chief Executive Richard Grasso to try to recoup nearly $100 million of the $188.5 million the exchange paid him before he resigned last September.At a Manhattan press conference, Spitzer called Grasso’s compensation process "rigged," and "wholly inappropriate and illegal." He said that Grasso, who was also the NYSE chairman, at turns misled and intimidated some of the exchange's board members, Reuters reported.

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