Legal issues

HealthSouth Probe Now Includes Possible Kickbacks

The Justice Department is now looking into whether HealthSouth officials offered bribes in an attempt to secure business in Saudi Arabia, which would be a violation of federal laws that prohibit such payments to secure business oversees.Specifically, federal prosecutors are investigating a deal signed in 2000 by HealthSouth to manage a 400-bed rehabilitative hospital outside of Riyadh, Saudi Arabia.

Exxon Mobil Ordered to Pay $6.75 Billion in Valdez Case

The oil spilled more than 14 years ago, but the fallout continues. A federal judge has ordered Exxon Mobil to pay $4.5 billion in punitive damages and $2.25 billion in interest in relation to the Exxon Valdez oil tanker spill that severely damaged the Alaskan environment. Exxon Mobil, the largest publicly traded oil company in the world, will most likely appeal the decision, a company lawyer told Reuters, but no official word came from the company yesterday. The punitive number was once $5 billion but was reduced to $4 billion and now stands at $4.5 billion by U.S.
Tax

Grassley Okays GAO Investigation into CPA Firm Tax Shelter Transactions

In 2002, Sen. Chuck Grassley, chairman of the Committee on Finance, tried to amend the Sarbanes-Oxley accounting standards improvement bill to prohibit public auditors from rendering an audit opinion on the financial statement effects of any tax shelter arrangements that the auditing firm sells to an audit client. The initiative was meant to target shelters that have the potential to manipulate financial statement results, such as overstating profits or understating liabilities. Other senators blocked Grassley from offering his amendment.
Tax

ChevronTexaco Seeks $118 Million Refund Check from IRS

The ChevronTexaco Corp. says Texaco Inc. overpaid its federal income taxes and is suing the Internal Revenue Service for a $118.6 million refund.Texaco, which was bought by Chevron to form ChevronTexaco in 2001, said in court papers that it should have received tax deductions for some settlement payments it made under a 1988 consent order. The order settled the U.S. Department of Energy’s claim that Texaco had charged more for crude petroleum and refined petroleum products than federal price regulations allowed from 1973 to 1981.The lawsuit, filed Friday in U.S.
A&A

Trader Testifies About Being Beaten at Mutual Fund Hearing

In a hearing before a Senate subcommittee considering legislation already passed by the House that aims to clean up the mutual fund industry, heard from one former trader who claims he was beaten with a brick after shining the light on abuses within his firm, Putnam Investments.Putnam has slipped from No. 5 to No.
Technology

Congress, Wireless Industry Working on Cell Phone Directory

Who hasn’t been in desperate need of someone’s cell phone number and cursed the lack of cell phone directory assistance? The wireless industry and Congress are debating the logistics and expect to soon have a directory available.Congress is focusing its attention on privacy issues with legislation pending that would require cell phone users to "opt in" to the directory and would prevent the industry from collecting the "unlisted" charges people pay to keep their land line numbers private.
Community News

Tyco Planning to Change Auditors, Out With PwC

Tyco International Ltd. will ask its shareholders to approve a change of auditors at its March 25 annual meeting, replacing long-time auditors PricewaterhouseCoopers with Deloitte & Touche LLP.Pending the board’s approval, PricewaterhouseCoopers’s resignation would become effective as of the filing of Tyco’s financial statement for the quarter ended Dec.
A&A

2003 a Record Year for Investor Claims Against Brokers

Investors filed more formal grievances against their brokers in 2003 than any other year, and the amount of damages they won nearly tied a 1998 record.The National Association of Securities Dealers (NASD) received 8,945 cases in 2003, which is 16 percent more than the year prior.
Tax

WorldCom May be Able to Sue KPMG, Citigroup

Already under investigation by the Internal Revenue Service (IRS) for recommending questionable tax shelters, KPMG LLP could now face a lawsuit by WorldCom over what a report called "flawed advice."U.S. Bankruptcy Judge Arthur Gonzalez ordered the report by former U.S. Attorney General Richard Thornburgh, who delivered what some are calling a roadmap whereby WorldCom could potentially sue KPMG and Citigroup.
Tax

Freddie Mac to Spend $200 Million to Address Accounting Issues

Freddie Mac officials testified before the House Financial Services subcommittee on government-sponsored enterprises and let lawmakers know that the agency expects to spend upwards of $200 million to correct accounting problems that led to a $5 billion restatement of earnings last year.Freddie Mac, the nation’s No. 2 mortgage finance company, replaced its top three executives last June in the wake of an accounting investigation.

SEC Goes After Deadbeats; Considers New Fee Structure

The Securities and Exchange Commission (SEC) has set up a new unit to collect millions of dollars in unpaid fines.A team of three lawyers has been hired to find hidden money and get court orders to enforce judgements.
Technology

IT Departments Failing to Take E-mail Archiving Seriously

Over 52 percent of organizations using Microsoft Exchange are not archiving e-mail -- and another 28 percent don't plan to archive, according to a survey by C2C Systems and Osterman Research, a market research firm that helps organizations understand the markets for messaging, directory and related products and services. The C2C/Osterman survey found that only 19 percent of companies were using an e-mail archiving system with indexing, search and retrieval features.
Tax

Fastow Strikes Plea Deal, Will Serve 10 Years for Role in Enron Scandal

He helped engineer one of the biggest frauds in history and yesterday former Enron Chief Financial Officer Andrew Fastow pleaded guilty to charges that will put him in prison for 10 years. His wife Lea, former Enron assistant treasurer, pleaded guilty to a lesser tax charge and will spend five months in prison.The plea by Fastow includes a stipulation that he will cooperate with prosecutors who are investigating, but haven’t charged, other top Enron officers, including former Chairman Kenneth Lay and former CEO Jeffrey Skilling.
Tax

IRS Office of Professional Responsibility to Disbar CPA

An administrative law judge has issued a decision and ordered that Joseph R. Banister be disbarred from practice before the Internal Revenue Service. Banister is a CPA from San Jose, CA and a former IRS criminal investigation agent.The IRS Office of Professional Responsibility, in a complaint against Banister, alleged that he was misrepresenting the law to taxpayers and that he failed to file his own federal income tax returns for tax years 1999-2002.
Practice

KPMG Makes Management Changes After Recent Tax Shelter Probe

On Monday, KPMG's Chairman and Chief Executive Eugene D. O'Kelly announced that several management changes were being made in the firm's leadership structure. This announcement comes at a time when the IRS is investigating KPMG as a promoter of potentially abusive tax shelters that cost the U.S. Treasury $1.4 billion. According to a GAO report, tax shelter activities cost the IRS between $11 billion and $15 billion each year between 1993 and 1999.

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