Watchdog

Tax

SEC Supports Extension on Statute of Limitations on Fraud Cases

The Securities and Exchange Commission has asked a U.S. federal appeals court to allow investors to sue companies for fraud even if the alleged violation took place after the statute of limitations had expired. Investors have been allowed to file lawsuits within one year of discovering fraudulent behavior and three years after the violation occurred. The Sarbanes-Oxley Act of 2002 changed those time limits to two years and five years, respectively. However, investors who have recently alleged fraud have done so even though the three-year limit had expired.
Tax

Inmate Accused of Filing Bogus Tax Returns in $73,000 Scam

Using a copy machine and correction fluid, an inmate at Missouri Eastern Correctional Center created 66 false tax returns that cost taxpayers more than $73,000, a federal indictment says.AdvertisementAccounting Department Policy Groups Offered By PolicySoftOver 200 accounting department
Tax

Crackdown on Internet Fraud Slams Spammers

Federal and state law enforcement agencies have teamed together in recent weeks to arrest or charge dozens of people with crimes related to online scams, the New York Times reported.Since Congress passed a law last year that calls for fines and prison sentences for those convicted of sending fake e-mails, efforts have multiplied to fight spammers. Some Internet abusers send millions of junk e-mail messages; others commit identity theft; some perpetrate credit card fraud and other financial crimes.
Tax

KPMG Tax Shelters Under Scrutiny Again

A series of e-mails dating from the mid-1990s to 2003 show that even after KPMG was ordered by the Internal Revenue Service to stop pushing tax shelters considered abusive, the Big Four firm continued to promote at least a dozen new similar shelters, the New York Times reported.New documents issued Monday by the Senate subcommittee looking into the abusive shelters, show that KPMG was continuing to develop tax shelters similar to those deemed abusive, but do not indicate whether the new tax shelters were ever actually sold, the Times reported.
Tax

Sex Addiction Drives Florida CPA to 'Moral and Ethical Bankruptcy'

Small businesses, elderly investors, a church group and the Palm Beach County Police Benevolent Association were among the victims of a scheme that paid for the sex addiction of a Broward County certified public accountant, the Sun-Sentinal reported.Thomas E. Sewell was sentenced Monday in Fort Lauderdale by U.S.
Tax

Former IRS Lawyers Suspended For Tax Shelter Case

The bar associations in Oregon and Arkansas have suspended the law licenses of two former Internal Revenue Service lawyers for two years, the New York Times reported.The state organizations' actions come after a federal court ruled last year that the two defrauded the courts to help the IRS prevail in 1,300 tax shelter cases, many of them involving airline pilots, the Times reported.Oregon suspended the license of W. Kenneth McWade and Arkansas suspended the license William A. Simms. In addition, the U.S.
Tax

Tips on Spotting Bogus Mutual Fund Web Sites

High-pressure e-mails and phony Internet addresses that tout bogus mutual fund Web sites are a problem that investors must learn how to deal with in advance if they are to avoid being stung by such a scam, according to Pax World Funds. Last week, Pax World Funds issued six "phishing tips" that mutual fund investors can use to spot and avoid fake mutual fund Web sites, including those that are promoted by what may at first appear to be legitimate e-mail messages.In June, Pax World Funds cooperated with the U.S.
Tax

IRS Files $1 Million Tax Lien Against Baseball Great, Pete Rose

Last week the IRS hit Pete Rose with a $1 Million federal tax lien, contending that the wannabe baseball Hall of Famer owes the money for tax years dating back to 1997, The Smoking Gun reported. The IRS lien was filed in Florida's Broward County courthouse. According to the report, Rose owes the IRS a total of $973,693.28 for years 1997, 1999, 2000, 2001, and 2002 (the lien notes that the IRS has "made a demand for payment of this liability, but it remains unpaid"). A tax lien covering 1998 was reportedly filed against Rose in California several years back.
A&A

Investor Scam; Con Artists Snaring Victims Across the Country

The Securities and Exchange Commission (SEC) this week issued an investor alert designed to warn Americans about a new scam sweeping the country-answering machine "wrong number" stock touts. Voice mail messages are appearing on home answering machines from coast to coast saying that the stock price of certain small, thinly traded companies will soon shoot up.
Tax

Janus Finalizes $226M Settlement on Fraud Charges

The Securities and Exchange Commission (SEC) announced on Wednesday a settled enforcement action against Janus Capital Management LLC (JCM), for entering into undisclosed market timing agreements with certain investors. The Commission ordered JCM to pay disgorgement of $50 million and civil penalties of $50 million, for a total payment of $100 million. JCM also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual-fund governance reforms.Stephen M.
Tax

Large Databases Can Mean Big-Time Fraud

Storing massive amounts of credit card information in one place proved to be a costly mistake for BJ's Wholesale Club Inc. earlier this year.Thousands of credit card numbers were stolen in what may have been the biggest retail fraud of its kind. Secret Service agents say the suspects arrested in the case may be connected to an international identity theft ring."There are some pretty heavy losses out there," Greg Smith, president of the Pennsylvania State Employees Credit Union, told the Associated Press.
Tax

Enron's Kenneth Lay Asks to Forgo Jury Trial

Update 8-12-04: According to a Washington Post reporter, a judge denied a September 14th trial start date and said that he would wait until additional motions were filed late in September or October.
Tax

Report: Thousands of Unique Phishing Attacks Occurred in June

Tumbleweed Communications Corp. and the Anti-Phishing Working Group last week released the Phishing Attack Trends Report for June 2004, an analysis of phishing scam attacks submitted to http://www.antiphishing.org, the Internet's most comprehensive archive of email fraud and phishing attacks. Analysis of over 1,400 attacks reported in June shows that 92% of all attacks use forged from addresses.
Tax

Bristol-Myers to Pay $150M to Settle Accounting Fraud Charges

The SEC announced this week that it has filed an enforcement action against Bristol-Myers Squibb Company.
Technology

IRS Reissues Consumer Warning on Identity Theft Scheme

Earlier this week, the IRS renewed its warning about a fraudulent scheme targeting non-resident aliens who have income from a United States source. The IRS has seen signs the scheme is spreading in the Caribbean area.Caribbean countries in which this scheme has surfaced include Barbados, Puerto Rico, Tobago, Trinidad and the Turks & Caicos Islands. Earlier this year, the scheme appeared in South America and Europe.The scheme uses fictitious IRS correspondence and an altered IRS form in an attempt to trick the foreign persons into disclosing their personal and financial data.
A&A

Victims of ID Theft Applaud New Way to ‘Freeze’ Credit Reports

Bridget Thomas of Prairieville, Louisiana, lobbied for a way to block access to credit reports in her state after she was badly burned by identity theft that destroyed her credit status.A woman with the same name as Thomas, but a different middle initial, obtained her social security number and started spending.Lawmakers in Louisiana and a few other states, moved by stories like Thomas’, have instituted a privacy option called a security freeze.
Tax

Tough Prosecutors Changing Corporate Environment

The consequences of bad corporate behavior have never been so severe or so well-publicized.As yet another high-profile executive is led away in handcuffs on the nightly news, corporate officials are getting the point that fraud doesn’t pay.Justice Department officials and legal observers say the crackdown by the two-year-old Corporate Fraud Task Force combined with laws that hold the executives themselves liable for malfeasance have had a "significant deterrent effect," according to the Associated Press.The Justice Department says the task force has prosecuted more than 700 people a
Tax

Scandal-Ridden Parmalat Seeks Damages from Citigroup

Parmalat Finanziaria SpA has gone to court seeking damages from Citigroup Inc., which allegedly played "an integral part" in the Italian dairy giant’s collapse.The suit was filed Thursday in Bergen County Superior Court in New Jersey by Parmalat Chairman Enrico Bondi, who is trying to salvage the company from the billions in losses it sufffered in a massive fraud scandal. According to Bloomberg News, the complaint states that Citigroup structured the company’s financing so that debt was hidden and cash flow was falsely inflated.
Tax

Settlement Reached with Two Firms For Securities Violation

The U.S. Securities and Exchange Commission (SEC) and the New York Stock Exchange today announced the initiation and settlement of enforcement actions against two NYSE specialist firms. The firms will pay a total of $5.2 million in penalties and disgorgement, consisting of $1.7 million in civil money penalties and $3.5 million in disgorgement, and implement steps to improve their compliance procedures and systems. The two settling specialist firms are SIG Specialists, Inc. and Performance Specialist Group LLC.
Tax

Whistle-Blower Leads Increase Sharply During 2004

A sharp increase in whistle-blower complaints is on the rise according to the SEC, forensic accountants and corporate lawyers, USA Today reported. "There is increased whistle-blowing activity," said Harvey Kelly, a forensic accountant who heads fraud investigation at law firm Alix Partners.

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