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Legal issues


Somali Tax Preparers Accused of Seeking Unwarranted Refunds

The Internal Revenue Service and Minnesota tax officials are looking into 3,500 questionable tax returns filed on behalf of Somali immigrants.Eleven tax preparers, themselves Somalis, are suspected of taking advantage of the recent immigrants’ confusion about the U.S. tax code, language difficulties and blind trust, community leaders told the Associated Press. The state stopped payment on about $3 million in unearned refunds, claimed by tax preparers who inflated their clients’ income, created fictional dependents or made improper business deductions."I'm shocked.
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BDO Seidman Sued by Banco Espirito Santo over $170 Million Fraud

Chicago-based BDO Seidman is being sued by Banco Espirito Santo International Ltd. over an alleged $170 million fraud that the accounting firm allegedly failed to uncover. Banco Espirito claims that BDO signed off on "obviously false financial statements," the Associated Press reported.BDO Seidman, the auditor for E.S.

Georgia Man Sues IRS, Says Blacks Should Not Pay Taxes

A black Columbus attorney believes the Internal Revenue Service should stop taxing black Americans and give them a refund on all taxes paid since 1913.William Wright, 64, filed a lawsuit this week in U.S. District Court in Columbus, seeking $25,000 in taxes he’s paid since 1963. He also wants a refund for all black taxpayers since the tax code was passed in 1913 and a moratorium on taxes in the future, according to the Columbus Ledger-Enquirer.Wright contends that because the 1913 law applies to "citizens and aliens," blacks should be exempt from paying taxes.
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Former Enron Executive Pleads Guilty, More to Come

Paula Rieker, the former second in command of Enron Corp.’s investor relations division pleaded guilty yesterday to insider trading charges for cashing out stock options after hearing that Enron’s broadband unit would post big losses, the Washington Post reported.Rieker, 49, agreed to enter a guilty plea and to cooperate with the government’s ongoing investigation, the Securities and Exchange Commission stated and the Post reported. She was arraigned yesterday morning and was due to plead guilty before U.S.

IRS Victorious in Tax Shelter Battle, $75M Class Action May Begin

A federal judge this week in Chicago gave the IRS yet another win in the ongoing effort to breach attorney-client privilege in pursuit of tax shelter users and the professionals who aid them. According to the Washington Post, a Judge told the firm of Jenkens & Gilchrist to begin complying this week with IRS summonses, requesting client names. The judge also cautioned the clients themselves that they will be subject to penalties if they make privilege claims in court that are found to be frivolous.In a statement, IRS Mark W.

20 Ways You Can Detect Fraud

Here is a list of items to help you detect fraud in your company or a client's company. 1. Unusual BehaviorThe perpetrator will often display unusual behavior, that when taken as a whole is a strong indicator of fraud. The fraudster may not ever take a vacation or call in sick in fear of being caught. He or she may not assign out work even when overloaded. Other symptoms may be changes in behavior such as increased drinking, smoking, defensiveness, and unusual irritability and suspiciousness.2.
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Former Qwest Executive to be Tried Again on Fraud Charges

Federal prosecutors announced Friday they will retry former Qwest Communications sales executive Thomas Hall on charges he improperly booked about $34 million in revenue as part of a 2001 deal, Dow Jones Newswires reported.A jury deadlocked on all 11 counts against Hall last month, ending a nine-week trial. U.S. District Judge Robert Blackburn was informed that prosecutors plan to retry the case. Prosecutors also said that Grant Graham, another former executive in the same case, has reached a plea agreement.
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Defunct Arthur Andersen the Target of Lawsuit, Disciplinary Action

A prominent political couple in California are seeking $34 million from Arthur Andersen LLP, alleging the now-defunct firm sold them a tax shelter it knew might be outlawed by the Internal Revenue Service.Assemblywoman Carol Liu and her husband, Michael Peevey, president of the California Public Utilities Commission, contend that Arthur Andersen withheld the IRS information from them, the Pasadena Star-News reported. They now face more than $2 million in penalties.

Skilling Ordered to Avoid Alcohol, Given Curfew

Facing more than three dozen counts of fraud and other crimes related to Enron’s 2001 collapse, Jeffrey Skilling has now been ordered to quit drinking, told to enter a rehab program and given a curfew by a federal judge.Skilling, 50, and his wife were involved in an April 9 melee in New York City, during which he accused other bar patrons of being FBI agents, attempted to pull the license plate off a car and lifted the shirt of a woman to see if she was wearing a wire.

KPMG Ordered to Hand Over Tax Shelter Client Names

Like other firms that steered clients toward questionable tax shelters, KPMG has been ordered by a federal judge to disclose the names of clients who participated, Reuters reported.The KPMG case is just one of many currently under way in which government investigators are going to court to get the names of clients who stashed money in the questionable shelters to avoid paying federal taxes.The problem for KPMG and others who gave tax shelter advice is that when they disclose their clients’ names, the Internal Revenue Service then aggressively pursues the clients who then sue the firms

Lesson from Quattrone Retrial: Don’t Cover Up Your Crimes

The retrial of Frank P. Quattrone suggests that prosecutors are focusing on the cover-up of the crime rather than the crime itself.Rather than mire a jury in the complexity of financial transactions and other details, prosecutors are filing charges connected with the straightforward question of whether the defendant lied to the government or hindered its investigation, the New York Times reported.

Tax Shelter Client List Could be Double What IRS Had Suspected

Settlement papers filed as part of a class-action suit show that the number of clients steered toward illegal tax shelters by Dallas law firm Jenkens & Gilchrist is more like 1,100—nearly double the number previously cited by the Internal Revenue Service, the New York Times reported.

Enron's Lea Fastow Sentenced to One Year in Prison

Signaling they have bigger fish to fry, federal prosecutors and attorneys for Lea Fastow seem to have struck a deal to end the government’s criminal case against the wife of former Enron Corp. chief financial officer Andrew Fastow. The Wall Street Journal reported she will spend no more than 12 months in prison on a charge of filing a false tax return.Update: May 6, 2004. On Thursday, Fastow, the 42 year old mother pleaded guilty to a tax charge and was sentenced to one year in prison.

Anti-Spam Law Faces its First Test


Sidley Ordered to Give Up Names of Former Tax Shelter Clients

In a matter that raises questions of attorney-client privilege, Chicago law firm Sidley Austin Brown & Wood has been ordered by a federal judge to turn over the names of 46 former tax shelter clients. The 46 clients do not want their names divulged, the Chicago Sun-Times reported.Sidley & Austin, one of the largest and oldest law firms in Chicago, acquired Brown & Wood in 2001.

Sasser Worm Spreads, What You Need to Know

A new series of worms released onto the Internet exploits a critical security vulnerability in Microsoft's Windows XP and Windows 2000 OSes and does not need users to open e-mail attachments in order to propagate, experts said Saturday.

Long-Serving, Male Execs Most Likely to Commit Company Fraud

A study conducted by KPMG has revealed some interesting information about the typical perpetrator of a fraud, why they steal and who they target. Seventy-two percent of cases involve men only. Over half of company fraud involves two to five people. Forty percent of fraud involves employees from the finance department.The analysis examines 100 of the fraud cases that KPMG has been called in to investigate over the past two years, from which a profile of a fraudster has been created.

More Workers Eligible for Overtime Pay Under Rule Change

A new rule defining who must receive overtime pay will cover workers who make up to $100,000 a year, up from the $65,000 overtime ceiling proposed previously.Also, more low-wage workers would automatically become eligible for overtime, and emergency services workers would earn overtime pay if they work more than 40 hours a week.The U.S. Department of Labor on Tuesday issued the long-awaited and far-reaching change to the 1938 Fair Labor Standards Act.

Xcel Sues IRS in Life Insurance Dispute

A Minneapolis energy company may face a $254 million bill for back taxes if it loses a legal dispute with the Internal Revenue Service.Xcel Energy Inc. believes that the IRS mistakenly disallowed interest deductions on corporate-owned life insurance, which pays benefits to the company when an employee dies but not to survivors, according to a lawsuit filed in U.S.
Community News

Lea Fastow’s Plea Deal Rejected by Judge

A judge’s decision not to accept a plea agreement with Lea Fastow may jeopardize the government’s agreement with her husband, former Enron Chief Financial Officer Andrew Fastow.U.S. District Court Judge David Hittner rejected a sentence for Lea Fastow that would have included five months in prison and five months of home confinement, which defense attorney suggested and prosecutors supported. The Fastows had made this a critical part of the deal so that one of them could remain at home with their young children.


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