Watchdog

Technology

Charitable Donations, Give Wisely: Tips to Avoid Fraudulent Scams

The Association of Fundraising Professionals (AFP) is encouraging the general public to contribute to tsunami relief efforts, but urged donors to use caution when giving to avoid potential scams.
Tax

Ex-WorldCom Directors Agree to Pay from Own Pockets

In an unprecedented legal move that could send shock waves through board rooms around the country, 10 ex-directors of the former WorldCom Inc.
Tax

Six Convicted in Far Reaching International Tax Fraud Case

Eileen J. O’Connor, Assistant Attorney General, United States Justice Department, Tax Division, John McKay, United States Attorney for the Western District of Washington, and Mark W. Everson, Internal Revenue Service Commissioner, announced last week that after seven weeks of trial, six persons associated with Anderson’s Ark and Associates (AAA), were convicted in connection with one of the most far ranging fraudulent tax schemes ever prosecuted. The jury was unable to reach a verdict on four other defendants.
Tax

PCAOB Slashes 2005 Budget, Reports Recruitment Shortfall

The Public Company Accounting Oversight Board last week approved a revised budget for calendar year 2005 reducing the Board’s 2005 accounting support fee from $152.5 million to $136.1 million.
Tax

New Study Sheds Light on Corporate Tax Shelters

A study by researchers from Duke University and Pace University found that use of corporate tax shelters not only allows organizations to avoid billions of dollars in annual tax payments, it may also help companies artificially enhance their attractiveness to investors by reducing levels of debt.
Tax

IRS Warns Business Against Abuses Involving ESOPs and S Corporations

The Internal Revenue Service has issued letters to approximately 1,700 businesses and retirement plan sponsors alerting them to new income and excise taxes applicable to S corporation employee stock ownership plans (ESOPs) and warning of the consequences of participating in abusive schemes involving ESOPs and S corporations. The letters are being mailed to S corporation ESOPs reporting 10 or fewer participants.
Tax

Professional Fees in Enron Bankruptcy Top $780M

Advisers that led Enron through its complex bankruptcy case have asked a judge to approve more than $780 million in fees. That figure includes $164 million requested by New York law firm Weil Gotshal & Manges. If the request is approved, it will be more than any law firm has been awarded in a bankruptcy case, according to data compiled by Bloomberg. The largest bankruptcy in the U.S.
Tax

Survey Shows Consumers are Unaware of Increase in Fake Insurance

At this time of year, there is no room in the budget for purchases that do not deliver value.
Tax

Knight Securities Settles, Pays $79M in Disgorgement and Penalties

The Securities and Exchange Commission on Friday announced the settlement of civil fraud charges against Knight Securities, L.P. The Commission issued an Order that found that Knight defrauded its institutional customers by extracting excessive profits out of its customers' orders while failing to meet the firm's duty to provide "best execution" to the institutions that placed those orders.
Tax

Franklin Advisors Announces $20M Settlement

On Monday, The Securities and Exchange Commission (SEC) filed settled charges against Franklin Advisers, Inc. (FA) and Franklin Templeton Distributors, Inc. (FTDI) (collectively, Franklin), the investment adviser and principal underwriter and distributor affiliated with the Franklin Templeton mutual funds, alleging that Franklin, without proper disclosure, used fund assets to compensate brokerage firms for recommending the Franklin Templeton mutual funds over others to their clients.
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.

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