Watchdog

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.
Tax

SEC Charges Raymond James With Fraud

The Securities and Exchange Commission's Division of Enforcement last week brought civil fraud charges against Raymond James Financial Services, Inc., a registered broker-dealer and investment adviser headquartered in St. Petersburg, Fla., based on the conduct of one of its former brokers, Dennis Herula.
Tax

PeopleSoft CEO Ousted for 'Situational Ethics'

The opening of a trial related to Oracle's takeover bid of PeopleSoft featured the revelation that CEO Craig Conway was fired last week for making misleading statements about PeopleSoft's sales.
Tax

Fraud Victims Look to Fair Funds for Payback

An effort by the Securities and Exchange Commission to repay investors who lost money because of corporate fraud is getting mixed reviews.The victim compensation funds, called “Fair Funds,” were established under the Sarbanes-Oxley Act of 2002.
Tax

Alabama Pension Fund Nets $111M From WorldCom Settlement

As the Alabama state pension fund waits to see what will happen with U.S. Airway's bankruptcy filing, the fund received a $111 million settlement from three companies over claims in the WorldCom collapse, the Associated Press reported.The Retirement Systems of Alabama achieved majority shareholder status in U.S. Airways when it bought into the company in December 2002 while the airline was previously in bankruptcy. The airline once again filed for bankruptcy protection Sept. 12."Would I do it again? Absolutely," said Alabama pension system chief David Bronner.
Tax

Firms Nationwide Struggle with Liability Insurance Costs

Accounting firms struggling with rising liability insurance premiums have two words to say: thanks Enron.Since the accounting debacle at the former energy giant drove venerable accounting firm Arthur Andersen out of business, accounting firms across the country have been grappling with soaring insurance rates, the Philadelphia Business Journal reported."Insurance companies only care about limiting the risk of claims payout and, with the trend of increased claims against accounting companies, they see a need to increase those costs," Isdaner & Co.
Tax

Fighting Fraud Calls for Assertive Auditors, Whistleblowers

Auditors already know that they must be on the lookout for fraud, but they may be uncomfortable playing the bad guy with high-powered corporate clients.Clients should understand up front that accounting and auditing firms are not only risking their reputation, but also their survival if they don't make finding fraud the central goal of their auditing services.Michael P.
Technology

Consumer Loss from Phishing Fraud to Reach $500 Million

A recent national study conducted by Ponemon Institute and sponsored by TRUSTe, an online privacy nonprofit organization and NACHA, an electronic payments association, revealed that 76 percent of consumers are experiencing an increase in spoofing and phishing incidents and that 35 percent receive fake e-mails at least once a week.
Tax

IRS Defrauded by Chicago Woman, Ex-Rabbi

A Chicago woman who helped a former rabbi try to bilk the Internal Revenue Service out of nearly $500,000 by filing income tax refunds in the names of deceased people pleaded guilty Wednesday to federal charges, the Daily Southtown in Chicago reported.Therese Daniels admitted in court that she was paid $350 a week to prepare taxes in 1999 and 2000 on behalf of former rabbi Marvin Berkowitz, who is now a fugitive.
Tax

Former Chief of Computer Associates Faces Charges

A federal grand jury on Wednesday charged the former chief executive Sanjay Kumar of Computer Associates with securities fraud and obstruction of justice. According to the Wall Stree Journal, Kumar pleaded not guitly.
Tax

FTC Mulls Rewards for Those Who Identify Spammers

The Federal Trade Commission is considering rewarding people to rat on spammers.But the FTC said in a report issued last week that the idea faces major obstacles: locating the spammer, collecting evidence that will stand up in court and offering a big enough reward to justify the risks, Information Week reported.Snitches for the Internal Revenue Service have earned more than $35 million over the last 30 years.
Tax

First Enron Case to Set the Stage for Others

What do electricity-producing barges off the coast of Nigeria have to do with the implosion of energy giant Enron nearly three years ago? Not much directly, but government prosecutors are hoping this first obscure Enron-related trial, beginning today in Houston federal court, could lay the groundwork to catch the bigger fish.The government believes that Enron's sale 1999 sale of an interest in the Nigerian barges to Merrill Lynch & Co. was fraudulent and allowed the company to record nearly $12 million in pretax profit, the Wall Street Journal reported.

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