Watchdog

Tax

Settling WorldCom Lawsuit Will Cost J.P. Morgan $2 Billion

J.P. Morgan Chase will pay $2 billion to settle a class-action investor lawsuit that alleges the bank failed to investigate WorldCom's financial health when it sold bonds just before the company imploded amid scandal.J.P. Morgan Chase is the last of 14 bond underwriters to settle the case, led by New York Comptroller Alan Hevesi, who oversees the New York State Common Retirement Fund.
Tax

Ebbers Found Guilty in Massive WorldCom Fraud Case

In a closing chapter in what has become the nation's largest accounting fraud, former WorldCom chief executive Bernard Ebbers was found guilty today on all counts, the Wall Street Journal reported.The verdicts were a major victory for Justice Department prosecutors who spent nearly three years investigating the $11 billion fraud that pushed the company into bankruptcy and decimated a stock that was once worth $100 billion. The company, now known as MCI, emerged from bankruptcy in 2004 and is courting acquisition offers from Verizon Communications Inc.
AccountingWEB Life

Federal Court Bars Three From Promoting 'Sham Trust' Tax Scam

The Justice Department announced last week that a federal court in Florida has permanently barred Fred J. Anderson and Deborah A. Martin, of Lehigh Acres, Florida; and Richard A. Walters, of Arlington, Texas, from promoting sham trust tax schemes or any other tax fraud scheme.The court also barred Martin, a tax return preparer, from preparing returns for customers that assert unrealistic positions. The court in January barred Tax Strategies, Inc., a company the three defendants ran, from promoting sham trust or other tax fraud schemes.
Tax

SEC Charges Two Former Buddies of ImClones' CEO With Insider Trading

The Securities and Exchange Commission today charged Zvi Fuks and Sabina Ben-Yehuda, two friends of the former CEO of ImClone Systems Inc., Samuel Waksal, with insider trading in ImClone securities in December 2001. The Commission charged that Ben-Yehuda and Fuks sold ImClone stock after receiving an illegal tip from Waksal just before the FDA denied approval of ImClone's cancer treatment drug.Fuks is the Chairman of the Department of Radiation Oncology at Memorial Sloan Kettering Hospital in New York, and in December 2001 was a member of the ImClone Scientific Advisory Board.
Tax

Consumer Information Stolen From Another Data Broker

Names, addresses, driver's license records and Social Security numbers of about 30,000 consumers may have landed in the hands of criminals.LexisNexis, a major compiler of public consumer information, said the theft occurred at its subsidiary, Seisint, the New York Times reported. The announcement comes on the heels of other security breaches. Data broker ChoicePoint said records of about 145,000 consumers were accidentally sold to criminals.
Technology

Tips to Guard Against Identity Theft Vulnerability

The average victim of identity theft spends about $4,800 and 30 hours to rectify effects of the crime, according to a recent Federal Trade Commission (FTC) study. Identity theft is the fastest growing crime in the U.S., and has spurred new legislation requiring businesses and even consumers to destroy certain documents before throwing them away.
Tax

Abusive Tax Scheme Halted in Nationwide Sweep

Washington DC - The Justice Department this week sued Nicholas P. Magalhaes, of Altamonte Springs, Florida, formerly of Smithtown, New York, to bar his alleged promotion of an abusive tax shelter for employers. The government’s complaint, which was filed in the U.S. District Court for the Eastern District of New York, contends that Magalhaes and his businesses -- Asset Accumulation, Inc., Pinnacle Wealth Group, L.L.C., Strategic Ventures, Inc., and Pinnacle Wealth Concepts, Ltd. -- sell what they purport to be voluntary employees’ beneficiary association (VEBA) plans to employers.
Tax

Washington State Trust Promoters Indicted for Tax Conspiracy

Eileen J. O’Connor, Assistant Attorney General for the Tax Division, United States Department of Justice and John L. McKay, United States Attorney for the Western District of Washington, announced this week that a federal grand jury in Seattle, Washington returned an indictment against David C. Stephenson and Michael J. Shanahan. The indictment charges the defendants with conspiring to defraud the United States by impeding and impairing the Internal Revenue Service in the ascertainment and collection of income taxes. The indictment also charges Mr.
Tax

Citigroup Reaches $75M Settlement on Global Crossing Suit

Citigroup on Wednesday announced it has settled class action litigation brought on behalf of purchasers of Global Crossing securities which was pending in the United States District Court for the Southern District of New York as In re Global Crossing Ltd. Securities Litigation, No. 02 Civ. 910 (GEL).
Tax

Free Credit Report Offers... Are They Really Free? - Consumer Alert

Free credit report offers seem to flood the Internet these days. Most companies claiming to give you a free credit report are really looking to sell you something in the long run, such as a credit monitoring service or identity-fraud protection. Once you purchase the service, you will be given a copy of your credit report, usually from just one of the major credit bureaus. Since there are three major credit reporting agencies (Experian, Transunion, and Equifax), you will not see the complete picture if you do not receive a report from each one.
Tax

Merrill Lynch Loses $1 Million Court Case

Merrill Lynch, Pierce, Fenner & Smith, Inc. has been ordered by an arbitration panel of the National Association of Securities Dealers, Inc.
Tax

IRS Announces the 2005 Dirty Dozen Tax Scams

The Internal Revenue Service (IRS) on Monday unveiled its annual listing of notorious tax scams, the "Dirty Dozen," reminding taxpayers to be wary of schemes that promise to eliminate taxes or otherwise sound too good to be true.The "Dirty Dozen" for 2005 includes several new scams that either manipulate laws governing charitable groups, abuse credit counseling services or rely on refuted arguments to claim tax exemptions.
Tax

Enron Trial Set to Begin in January 2006

Claiming they need more time to prepare, defense attorneys have convinced a federal judge to postpone the start of the main Enron trial until January 2006. The case against Enron founder Kenneth Lay, former CEO Jeffrey Skilling and chief accounting officer Richard Causey is now scheduled to begin on Jan. 17, 2006 with Judge Sim Lake presiding. The three defendants had sought a Dec.
Tax

More than a Thousand Whistleblower Cases Discarded in 2004

Washington, DC — The U.S. Special Counsel has dismissed more than 1,000 whistleblower cases in the past year, according to a letter from the Bush-appointed Special Counsel released last week by Public Employees for Environmental Responsibility (PEER). The Special Counsel appears to have taken action in very few, if any, of these cases and has yet to represent a single whistleblower in an employment case.In a letter dated February 14, 2005 and addressed to U.S.
Community News

Defense of WorldCom's Ebbers Begins with Whistleblower

Lawyers for former WorldCom Inc. Chief Executive Bernard Ebbers launched their defense Wednesday afternoon with testimony from the whistleblower credited with alerting WorldCom's board to the massive accounting fraud.Cynthia Cooper, the former head of internal auditing at WorldCom, testified that auditors at Arthur Andersen gave a "green light" rating to the company's accounting for 2000 and 2001, the Associated Press reported.
Tax

Andersen Appeal to go Before Justices in April

According to The Houston Chronicle, the United States Supreme Court announced this week it will hear arguments April 27 on whether to overturn the conviction of the Arthur Andersen accounting firm for obstruction of justice in the shredding of Enron documents. The focus of the appeal will be on how the law was presented to the jury. A decision could come as early as June.Last month the Supreme Court agreed to hear the appeal of the company's June 2002 obstruction of justice conviction.
Tax

ChoicePoint Says Security Breach Widespread

A spinoff of credit reporting agency Equifax acknowleged Monday that criminals may have gained access to consumer information on residents in all 50 states, the District of Columbia and three U.S. territories.ChoicePoint Inc.
Practice

Most Companies Get an 'F' in Fraud Prevention

Enron had a code of conduct. Enron had a hotline. And in the end, Enron had fraud. Today, companies operate with a false sense of security because they either don't have a fraud prevention program or the program they have is a legal, yet ineffective "fig leaf." "One key to fraud prevention is to create an atmosphere where employees feel confident in reporting wrongdoing without being victimized, even if executives appear to be involved," explains Toby Bishop, president & CEO of the Association of Certified Fraud Examiners (ACFE), the largest anti-fraud association in the world.
Tax

SEC Files Emergency Action to Halt Ongoing Fraud by Northshore Asset Management

The Securities and Exchange Commission announced this week that it filed an emergency enforcement action to halt a fraud by Northshore Asset Management LLC (Northshore) and its three principals, concerning their misappropriation of assets of two hedge funds, Ardent Research Partners, L.P. (Ardent Domestic) and Ardent Research Partners, Ltd. (Ardent Offshore).
Technology

New Technology Gives E-Mailers Chance to Rethink Messages

Who hasn't hit send on an e-mail message and instantly wanted to get it back? Whether it contains inappropriate content or private company information, a new product aims to give users a second chance.Forbes reported that a new product from a company called InBoxer (formerly known as Audiotrieve) is on display at the Demo Conference in New York this week. The product, known as OutBoxer, scans outgoing e-mail messages looking for inappropriate content, unauthorized disclosure of information and tries to encourage senders to improve their messages before they actually send them.

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