Watchdog

Tax

'Tax Buster' Internet Tax Scam Halted

The Justice Department announced on Tuesday that a federal court in Atlanta has halted a tax scheme that promises customers they can avoid income tax by “renouncing” their Social Security numbers and claiming to be “sovereign citizens.” The preliminary injunction order entered against Jonathan D. Luman, of Stockbridge, Georgia, blocks sales of his “Tax Buster” program.
Tax

Federal Court Shuts Down Multi-State 'Warehouse Banking' Tax Scheme

The Justice Department announced on Thursday that a federal court has permanently shut down a tax evasion scheme operated by Anthony L. Hargis, of Fountain Valley, California. Hargis and his business, Anthony L. Hargis & Co., or ALH, helped customers attempt to hide assets and income from the IRS. In permanently enjoining the scheme, sometimes referred to as a “warehouse bank,” Judge David O. Carter of the U.S.
Tax

Trucker, Tax Preparer Sued for $350M Fraudulent Tax Schemes

Charles B. Eden, a St. Louis truck driver and tax return preparer who allegedly lists improper deductions on his customers’ income tax returns was sued by the Justice Department this week. The civil injunction suit, filed in the U.S. District Court in St. Louis, alleges that Eden prepared returns that fraudulently claimed deductions for non-existent or grossly inflated charitable donations and business expenses. The suit was filed December 2, but not announced until today, after Eden was served with a copy of the complaint.
Tax

Judge Bars MCI from Paying Additional Professional Fees

A District Court judge has ordered MCI to stop paying the numerous professional firms that guided it through its complicated, $104 billion bankruptcy.Judge Jed Rakoff, of the Southern District of New York, told the telecommunications giant and the firms in question to explain why a budgeting process he set up was not followed, according to the New York Law Journal. Several firms, he said, submitted excessive requests or had not received the proper approval.
Technology

Grant Thornton Manual Provides Financial Institutions with Intrusion Testing Guidance

Customers and the banking regulators expect and require financial institutions to have effective written policies to help assure that their Web sites are secure, protected from hackers and resistant to computer viruses.
Tax

Consumers Now Have Access to Free Credit Reports, Enhanced Fraud Alerts

Starting December 1, 2004 consumers will begin to have more tools at their disposal to fight identity theft, protect against credit card fraud, and check-up on the health of their total credit picture under a new federal law. The Fair and Accurate Credit Transactions Act of 2004 (FACT Act) was signed into law in December 2003 giving residents of the western part of the United States the right to a free copy of their credit report each year.
Tax

Louisiana Men Sued in '100 %Tax Freedom' Scam

The Justice Department announced this week that it has sued two Louisiana men in federal court, seeking to halt an alleged tax scam involving the preparation of fraudulent tax returns for customers. The lawsuit alleges that Richard A. Fuselier, Richard J.
Tax

OSHA Orders Whistleblower Reinstated

Whistleblower David Windhauser, a controller for the Trane Corporation, must be reinstated and paid more than $105,000 in back wages, ruled the Department of Labor's Occupational Safety and Health Administration (OSHA). OSHA referred to the whistelblowing provisions of the Sarbanes-Oxley Act of 2002 when making its ruling that Windhauser's termination after he raised questions about the company's accounting practices to his supervisors, Business & Legal Reports (BLR.com) reported.Windhauser complained to OSHA's New York regional office after he was terminated. Patricia K.
Tax

Former KPMG Consultant Pleads in Conspiracy Case

In a case of aiding and abetting a corporate fraud, former KPMG consultant Larry Alan Rodda pleaded guilty to federal fraud charges Tuesday, admitting he signed phony contracts with Peregrine Systems intended to boost Peregrine's earnings, the San Diego Union-Tribute reported. The contracts, worth $25 million, were part of an elaborate accounting fraud that was uncovered in 2002. Eleven people were indicted last month and Rodda, 54, is the sixth person to plead guilty on federal charges, the Union-Tribune reported.His attorney, Craig C.
Tax

Boiler Room Operations Charged with Fraud, Investor Warning

The Securities and Exchange Commission ("SEC") this week filed civil fraud charges in federal court in the Southern District of Florida against six boiler room operations in connection with their operation of a series of recovery room advance-fee schemes directed primarily at previously victimized investors from a number of countries. A "recovery room advance fee" scheme is a fraud wherein the perpetrators prey on investors who have lost money on particular stocks they purchased in the past.
Tax

SEC Files Fraud Charges Against Hollinger, Inc. & CEO, Conrad Black

The Securities and Exchange Commission announced on Monday that it has filed an enforcement action against Hollinger International's former Chairman and CEO Conrad M. Black, former Deputy Chairman and COO F. David Radler, and Hollinger, Inc., a Canadian public holding company controlled by Black. The Commission's complaint alleges that from approximately 1999 through 2003, Black, Radler and Hollinger Inc. engaged in a fraudulent and deceptive scheme to divert cash and assets from Hollinger International, Inc., a U. S.
Tax

GAO: Governments Could Do More to Reduce Identity Theft

While the use of Social Security numbers (SSN) can be very beneficial to the public sector, SSNs are also a key piece of information used for committing identity crimes. The widespread use of SSNs by both the public and private sectors and their display in public records have raised concern over how SSNs might be misused and how they should be protected.
Tax

Senators Press for SEC Enforcement of Whistle-blower Law

Two senators are ratcheting up pressure on the Securities and Exchange Commission to enforce a tough whistle-blower law. With a government finding that a publicly traded company retaliated against a whistle-blower, Iowa Republican Charles Grassley and Vermont Democrat Patrick Leahy asked for “aggressive enforcement” in a letter last week to SEC Chairman William H. Donaldson, the Associated Press reported. Donaldson was also asked for details of the agency's enforcement plans.
Tax

IRS and Puerto Rico Announce Partnership to Fight Abusive Transactions

The Internal Revenue Service and Puerto Rico Department of the Treasury, the Hacienda, this week announced a new partnership to fight abusive tax avoidance transactions.The partnership is the latest development in an effort unveiled in September 2003 to enable federal, state and commonwealth tax agencies to join together in ensuring all taxpayers fulfill their obligations under the tax code. Puerto Rico joins 48 states, the District of Columbia, New York City and the Virgin Islands on the list of tax agencies that have signed partnership agreements with the IRS.
Tax

U.S. Court Freezes $500M In Probe of Doctors' Tax Shelter

Eileen J. O'Connor, Assistant Attorney General for the Tax Division of the Department of Justice, and Carol C.
Tax

Spyware Infiltration Rises in Corporate Networks

Corporations are experiencing a steady infiltration of spyware into enterprise networks, but only a small number have deployed an enterprise-class solution to combat the threat, according to a new survey conducted by Equation Research. The survey, which canvassed more than 275 IT managers and executives nationwide, found that even as IT organizations spend more time fighting spyware, very few corporations are deploying corporate solutions against the growing threat.
Tax

McDonough Predicts Some Won't Meet Reporting Deadline

Companies need to be prepared for how they will tell investors about internal control weaknesses uncovered by ongoing reviews mandated by Sarbanes-Oxley, said William McDonough, chairman of the Public Company Accounting Oversight Board (PCAOB).Investors.com reported on a speech McDonough gave last week to the Securities Industry Association. The PCAOB was created by the Sarbanes-Oxley Act of 2002, passed to reform corporate governance in the wake of numerous accounting scandals.
Tax

Justice Dept. Seeks Injunction Against Promoter of Fraudulent Tax Scheme

The Justice Department recently announced that it has sued a Cincinnati-area man in federal court, seeking to halt an allegedly fraudulent tax scheme. The lawsuit alleges that Richard W. Standring, of Batavia, Ohio, gives seminars at which he falsely claims that he can help customers “decode” IRS records to help them establish that they need not file federal income tax returns or pay federal income taxes.
Tax

Defendants Convicted in First Enron Trial

The government has secured all-important convictions against the first group of Enron defendants, signaling that juries have had enough of corporate malfeasance, the New York Times reported.Convicted Wednesday in a Houston federal court were four former Merrill Lynch executives and a former Enron official, who were found guilty of conspiring to help Enron report false profits.
Tax

Fraud Detection is not Just by the Numbers

By Francis C. Brulenski, CPA, and Ricardo J. Zayas, CPA, CFE, CVA. Reprinted with permission from the Pennsylvania CPA Journal, a publication of the Pennsylvania Institute of Certified Public Accountants." Audit professionals should, by now, be knowledgeable of Statement on Auditing Standards (SAS) No. 99, Consideration of Fraud in a Financial Statement Audit. Professional standards mainly focus on fraud detection procedures, but beyond this, the standards available for the auditor to consider once fraud has been detected are limited.

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