Watchdog

Tax

Computer Virus Turns 20 Amid New IT Security Scares

This month marks the twentieth anniversary of the first personal computer virus attack. What better way to celebrate than with the release of additional studies confirming that businesses’ high technology endeavors operate in a minefield of new viruses, worms and other security threats?The Federal Bureau of Investigation (FBI) found that 87 percent of businesses it surveyed suffered attacks that affected their computer security last year.
Tax

IRS, Prosecutors Crack Down on Tax Evasion, Tax Fraud

Questionable Refund Program. “We will announce plans in the very near future to institute notification procedures as well as significant processing improvements to minimize the number of taxpayers whose refunds are frozen unnecessarily,” Everson said. Senators of both parties had requested the review following congressional testimony by the National Taxpayer Advocate, Nina Olson, New York Times reports.The IRS said that members of Congress and the National Taxpayer Advocate had raised legitimate issues regarding the length of delay and lack of notification for refund claims.
Tax

Data Storage Systems at Risk: Symantec, EMC Acknowledge, Correct Product Flaws

In a sign that virtually all bastions of business data security are vulnerable to attack, the vendors of two data storage systems -- a product type often implemented to provide an added layer of defense against hackers, have each just admitted to security flaws in separate high-profile products and have issued correctional patches.EMC Corporation of Hopkinton, Massachusetts, has issued separate patches for it Legato NetWorker system versions 7.2.1, 7.14 and 7.3, while Symantec Corp.
Tax

Mark Your Calendar: Lessons from SAS 99 Webinar

Almost as long as there has been business, there has been fraud. Today’s regulatory environment, especially in relation to Section 404, makes it even more critical that public companies of all sizes recognize and manage risk more effectively. On Thursday, January 19, 2006, at 2:00 p.m. Eastern, Dr.
Tax

Combating Corporate Fraud

The number of companies around the world that reported incidents of fraud increased 22 percent in the last two years, according to the 2005 biennial survey by PricewaterhouseCoopers (PwC), which interviewed more than 3,000 corporate officers in 34 countries. In England, a recent Ernst & Young survey of the Times Top 1000 indicated the average cost of each fraud exceeded $200,000. But fraud is not the only problem. There's also misconduct, unethical behavior, lying, falsification of records, sexual harassment, and drug and alcohol abuse.
Tax

Inmate Tax Refund Scams On the Rise

Inmates are filing false tax returns and scamming the Internal Revenue Service (IRS). It’s a nationwide problem to the tune of $68 million from 18,000 prisoners, for the 2004 tax year alone. The Arizona Star reports that convicts are responsible for more than one-seventh of all false refunds nationally.The prisoners found to be filing false refunds avoid prosecution from state and federal officials since they are already behind bars, according to the Arizona Star.
Tax

Retail Return Policies Tighten Up

Retailers are changing their return policies to target customers who abuse more liberal return policies and combat return fraud that costs them $16 billion annually. Penalty restocking fees are being implemented, particularly on electronics, home appliances, tools, lawn and garden items, and automotive items. Retailers are identifying specific items or categories where they suffer the most fraud, according to Joseph LaRocca, vice president of loss prevention for the National Retail Federation, speaking to the Baltimore Sun.
Tax

2005, the Year of the Restatement and the Year KPMG Survived

With a background of former executives seen entering courthouses, called to account for corporate scandals of previous years, and indictments announced against individuals and KPMG partners, corporate accounting issues surfaced in a less dramatic way in 2005, through restatements of financials, at giants like American International Group (AIG) and mortgage companies, Fannie Mae and Freddie Mac.
Tax

Don't Let Holiday Time Be Scam Time

Santa and his elves are not the only busy people at this time of year. Robbers, thieves, carjackers and shoplifters all seem to thrive during the holiday season.
Technology

Beware of E-mail Bearing Tax Refunds

The Internal Revenue Service (IRS) issued a consumer alert last week warning taxpayers of a “phishing” scam that attempts to trick e-mail recipients into disclosing personal and financial data. The scam uses e-mail messages, purportedly from the IRS, informing consumer of tax refunds and directing them to follow a link to a web site that requests personal information, such as Social Security Numbers and credit card information.
Tax

Corporate Fraud Still Widespread, Difficult to Detect

The number of companies around the world that reported incidents of fraud increased 22 percent in the last two years, according to a new Big Four survey.While layers of new controls have been implemented to improve corporate governance, fraud is still widespread, difficult to prevent, and detected many times by chance, according to the biennial survey by PricewaterhouseCoopers (PWC), which interviewed more than 3,000 corporate officers in 34 countries.Fraud was detected by 45 percent of the companies polled, which is up from 37 percent in 2003, Reuters reported.
Tax

Greenberg Won’t Face Criminal Charges

The former CEO of American International Group (AIG) will not face criminal charges initiated by New York Attorney General Eliot Spitzer. Spitzer may continue to pursue civil charges against Greenberg with an amended civil complaint containing new information. The civil suit is primarily based on AIG’s misuse of finite reinsurance polices that concealed reserve issues from AIG’s balance sheet, according to TheStreet.com. “The office decided months ago to pursue the case as a civil matter,” Spitzer spokesman Darren Dopp told USA Today.
Tax

Andersen Prosecution Abandoned: Enron’s Final Chapter?

When the Justice Department walked away from its prosecution of Arthur Andersen last week, was it finally closing the book on the Enron saga? The decision not to re-try the case comes only six months after the U.S. Supreme Court overturned Andersen’s 2002 conviction for obstruction of justice charges related to the Enron corporate fraud investigation and eventual collapse.
Tax

Companies Combating ID Thefts while Consumers Check Credit Reports

Lost or stolen credit cards still account for a large percentage of identity thefts as do scams such as credit-card skimmers used at restaurants and ATMs, says Chris Thoms, chief risk officer at MasterCard International, according to MarketWatch.com. These thefts can result from the consumer’s behavior. But well-publicized breaches of giant data systems like ChoicePoint, Bank of America and CardSystems Solutions could potentially affect 56.3 million people, MarketWatch reports.
Community News

Greed Is Going to Jail: Ex-Tyco Execs Sentenced

Former Tyco International CEO L. Dennis Kozlowski, whose lavish lifestyle has come to symbolize corporate greed, was sentenced Monday to 8 to 25 years in prison. He has also been ordered to pay $167 million in restitution and fines. Former Tyco CFO Mark H. Swartz, was also sentenced to 8 to 25 years but only owes $72 million in fines and restitution. Both men were taken immediately into custody.
Tax

Ebbers Out on Bail Pending Appeal; Ohio Settles for $94 Million

Bernard J. Ebbers did not go straight to jail despite being convicted on nine felony counts and sentenced to 25 year in prison. On Wednesday, U.S. District Judge Barbara S. Jones granted a defense request, delaying his entry into prison by at least six months.In her four-page order, Judge Jones found that Ebbers was unlikely to flee before his appeal and that the issue raised by his defense team was substantial and could lead to a reversal of the conviction or a new trial. Oral arguments in the appeal case could be heard by the U.S.
Tax

WorldCom Convictions Handed Down

Bernard Ebbers received 25 years for his part in the largest bankruptcy in U.S. history. He was sentenced in July after a jury of his peers ruled in April that he had engaged in fraud and conspiracy in connection with WorldCom’s $11 billion accounting scandal. It was the largest in U.S. history. WorldCom has since come out of bankruptcy as MCI. Verizon is expected to acquire the company later this year.Other men who helped convict Ebbers have had their sentences passed down recently. Scott Sullivan was WorldCom’s chief financial officer and the big fish after Ebbers.
Tax

Banker Pleads Guilty in Tax Shelter Case

Federal prosecutors investigating abusive tax shelters struck a plea agreement with a banker on Thursday in the first criminal charges brought in the case, according to the Washington Post. Domenick DeGiorgio, the former managing director of HVB Group, pleaded guilty to four counts of conspiracy, wire fraud and tax evasion relating to his participation in selling a tax shelter known as BLIPS or Bond Lined Issue Premium Structure, created and marketed by KPMG. DeGiorgio said he knew the tax structure lacked economic justification.
Tax

Civil Complaint Against MBIA May Be Close

Federal and state authorities are reviewing a draft civil complaint against bond insurer MBIA Inc., the Wall Street Journal reported Thursday.The newspaper, citing people familiar with the matter, said authorities may file civil fraud charges connected with MBIA's accounting for reinsurance, with a settlement possible in coming weeks.Attorneys in New York Attorney General Eliot Spitzer's office and the Securities and Exchange Commission are reviewing the complaint, the Journal reported.Separately, the U.S.
Tax

SEC Settles With College Savings Plan

The Securities and Exchange Commission (SEC) has settled a cease-and-desist lawsuit against the Utah Educational Savings Plan Trust (UESP). The UESP administers Utah’s educational savings plan. The settlement resolves the first ever charges against a Section 529 savings plan. The charges stem from an investigation of the plan’s former director, Dale C. Hatch. Flaws were found in the savings plan’s operations and internal accounting controls. Investigators found that the savings plan failed to fully allocate investor gains and losses to investor accounts.

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