Watchdog

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.
Tax

IHI's Outside Accountant Pleads Guilty, Will Testify Against Ex-CEO

In a case the Securities and Exchange Commission called one of the biggest pyramid schemes in history, federal prosecutors secured a guilty plea from another participant, who has agreed to testify against Stan Van Etten, former chief executive officer of International Heritage Inc., the News-Observer in North Carolina reported.David Walter Brown, 50, of Raleigh, IHI's outside accountant, pleaded guilty in federal court in Raleigh to a conspiracy charge, agreeing also to testify against Van Etten.
Tax

Atlanta Businessman Convicted for Tax Fraud Conspiracy

An Atlanta businessman has pleaded guilty to conspiring to defraud the IRS, a felony, announced Daniel G. Bogden, United States Attorney for the District of Nevada, Eileen J. O’Connor, Assistant Attorney General for the Department of Justice Tax Division, and Nancy Jardini, Chief of Internal Revenue Service Criminal Investigation. Robert F. Holliday, entered his guilty plea late late week afternoon before United States District Judge David W. Hagen.
Tax

IRS Highlights Examples of Abusive Return Preparer Investigations

The following examples of Abusive Return Preparer Fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.Tax Preparer Sentenced for Tax Fraud and Worker’s Compensation FraudOn September 20, 2004, in Greenbelt, MD, John A. Williams was sentenced to 40 months in prison, followed by three years of supervised release and ordered to pay $144,443 in restitution after a jury convicted him for worker’s compensation fraud and aiding and assisting in the preparation of false tax returns.
Tax

‘Renaissance, The Tax People’ Promoters Indicted for $84M Tax Fraud

Michael Craig Cooper, founder of Renaissance, The Tax People, Inc. was arrested late Tuesday crossing the border from Mexico to the U.S. near Laredo, Texas. On August 13 of this year, a federal grand jury returned a 148-count indictment charging Mr. Cooper, together with Jesse Ayala Cota, Todd Eugene Strand, Daniel Joel Gleason, and Renaissance, The Tax People Inc. ("Renaissance") with conspiracy to defraud the United States by impeding the IRS and to commit mail and wire fraud, willfully assisting in the preparation of fraudulent federal income tax returns; mail fraud and wire fraud.
Community News

HealthSouth's Scrushy Begins New Career: Religious Talk Show Host

While preparing for a criminal trial due to begin in January, ousted HealthSouth CEO Richard Scrushy has apparently added a new member to his legal team: Jesus, USA Today reported.Scrushy, 52, who stands accused of orchestrating a $2.7 billion fraud at the medical services company he founded in 1984, has been hosting a half-hour religious talk show every weekday morning since March with his wife Leslie.The show, called Viewpoint, is supported by the Guiding Light Church, an African-American oriented ministry Scrushy joined last year after attending church for years in his upscale suburb
Tax

IRS Warns: Check Carefully Before Applying for Offers in Compromise

The Internal Revenue Service this week issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.Such promoters make money by inappropriately advising indebted taxpayers to file an application for an offer in compromise with the IRS, promising unrealistic results, even when the taxpayers do not meet the requirements of the program.
Tax

Court Halts Nationwide Tax Promotion

The Justice Department recently announced that a federal court has ordered a Palmdale, California man to stop promoting two nationwide tax scams. The preliminary injunction entered by Judge Florence-Marie Cooper of the U.S. District Court for the Central District of California orders Joseph O.
Tax

IRS Highlights Examples of Corporate Fraud Investigations

The following examples of fraud investigations are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.151 Month Sentence ReceivedOn July 20, 2004 in Akron, OH, Gary Harris was sentenced to 151 months imprisonment, to be followed by 3 years supervised release, and a $95,000 fine.
Tax

SEC Charges Qwest with Multi-Faceted Accounting & Financial Reporting Fraud

Qwest Agrees to Anti-Fraud Injunction, $250 Million Penalty, and Will Permanently Maintain Chief Compliance Officer Reporting to the Outside Directors of the Board. On Thursday, The Securities and Exchange Commission charged Qwest Communications International Inc., one of the largest
Tax

WorldCom Whistleblower to be Inducted Into Hall of Fame for CPAs

Cynthia Cooper, the former vice president of internal audit at WorldCom who exposed the largest corporate fraud in U.S. history, will lead the list of three new inductees into the 2004 American Institute of Certified Public Accountants. (AICPA) Business & Industry Hall of Fame, an annual event sponsored by Ajilon Finance, a leading accounting and financial staffing services company. Cynthia Cooper’s name became synonymous with integrity when she exposed the fraud at WorldCom – to date the largest corporate fraud in history. At the time, Ms.
Tax

IRS Tightens Position on Abusive Tax Shelter Settlement Terms

The Appeals Division of the Internal Revenue Service has reassessed and tightened its settlement guidelines under which it will accept offers to settle cases with taxpayers that participated in certain abusive transactions, officials said Wednesday. Last month, the IRS Appeals Division and the Large and Mid-Size Business Division began sending letters to taxpayers involved in three abusive transactions, advising them that the settlement terms available to resolve these transactions have changed.
Tax

Virginia Tax Preparer Used Sham Trusts to Claim Improper Deductions

The Justice Department announced earlier this week that a federal court has permanently barred Ronald M. Green of Norfolk, Virginia, from preparing federal income tax returns for others. Judge Henry C. Morgan, Jr., of the U.S. District Court for the Eastern District of Virginia in Norfolk, also prohibited Green from representing customers before the IRS and from attempting to enforce contracts that purport to restrict his customers from discussing Green’s tax preparation services.
Tax

Judge Allows Class Action Against Tyco, Strikes Down Another Suit

A federal judge has allowed a shareholder class action lawsuit against Tyco International Ltd. to proceed, but he rejected a related shareholder lawsuit.According to the Wall Street Journal, U.S.
Tax

Ahold Settles With SEC, Avoids Fine

Dutch retailer Royal Ahold NV has ended a 20-month investigation into accounting fraud by reaching a settlement with the Securities and Exchange Commission that avoids a fine.The SEC said it decided not to fine Ahold because of its “exceptional” cooperation with the probe, Bloomberg reported.“Cooperation pays,” said Thomas Newkirk, an SEC enforcement official.
Tax

Adelphia's Complex Bankruptcy: Claims Total $3 Trillion

It is what some are calling the most complicated bankruptcy case in history.
Tax

SEC Files Charges Against Former Employees of Peregrine for Orchestrating Massive Accounting Fraud

The Securities and Exchange Commission (SEC) this week filed civil fraud and related charges against six former senior officers of San Diego-based Peregrine Systems, Inc. who orchestrated and attempted to cover up a massive accounting fraud at the company. According to the Commission's complaint filed in the United States District Court in San Diego, the Peregrine defendants fraudulently inflated the product revenue Peregrine reported in its filings with the Commission and elsewhere.
Tax

Justice Department Sues to Shut Down Alleged WA State Area Tax Scams

The Justice Department announced earlier this week that it has filed a civil suit seeking to stop Raymond Leo Bell, American Beauty Rose, and The Best Way, Inc., all of Yelm, Washington, from promoting fraudulent tax schemes that use sham trusts and other sham entities.According to the government’s complaint, Bell helps his customers set up sham trusts and corporations that customers use illegally to eliminate or reduce their federal tax liabilities and to evade IRS collection efforts.

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