Watchdog

A&A

More Automated Check Payments = More Scams

In what has been termed “the e-commerce equivalent of mugging,” scammers are targeting checking accounts as an easy access point for fraud.The huge number of automatic checking account withdrawals and deposits is opening the door to the increase in fraud.
Tax

President Bush Signs Identity Theft Bill into Law

On Thursday, President Bush signed into law, the Identity Theft Penalty Enhancement Act, creating stiffer criminal penalties for identity theft. The goal of this bill is to prevent identity theft by increasing the punishments associated with the crime and establishing a new crime of aggravated identity theft, which is the use of a stolen identity to commit certain criminal acts. Though solid numbers are hard to come by, identity fraud has been called one of the fastest-growing crimes in the U.S, touching millions of people at a cost of billions of dollars a year.
Tax

MCI Files Suit to Collect Close to $300M in Funds Loaned to Ebbers

In the heydays leading up to the collapse of WorldCom and other corporate entities, loaning money to top executives was a common practice. MCI Inc., formerly known as WorldCom, filed suit last week to recoup more than $300 million ousted chief executive Bernard J. Ebbers still owes the company.Ebbers borrowed $408 million from WorldCom after company stock he had pledged as collateral for personal loans lost value, the Wall Street Journal reported. When the stock no longer provided adequate collateral, Ebbers was going to have to sell stock to cover the loans.
Practice

SEC Charges Lay, Enron's Former Chairman and CEO, with Fraud & Insider Trading

The Securities and Exchange Commission today initiated civil charges against Kenneth L. Lay, former Chairman and Chief Executive Officer of Enron Corp., for his role in a wide-ranging scheme to defraud by falsifying Enron's publicly reported financial results and making false and misleading public representations about Enron's business performance and financial condition. The Commission also alleges Lay profited from the scheme to defraud by selling large amounts of Enron stock at prices that did not reflect its true value.
Community News

Lay Faces Charges He Conspired to Manipulate Enron Finances

Former Enron Chairman Kenneth Lay, who became a symbol of corporate greed but an elusive target for investigators, was indicted Wednesday by a federal grand jury for his part in allegedly manipulating financial statements to defraud investors.The Wall Street Journal, citing people familiar with the matter, reported that the criminal indictment is expected to be unsealed Thursday morning. The indictment is likely to include many charges, possibly lying to the public about Enron's financial condition, or hiding losses and creating reported earnings on financial statements.
Tax

Whistleblower Rules May Provide New Niche for Accountants

As public companies begin actively encouraging whistleblower complaints, accountants and consultants are offering products and services to gather the sensitive information and deal with it quickly.The new whistleblower provisions, required by the Sarbanes-Oxley Act, are providing another opportunity for accounting firms to help companies cope in the post-Enron environment.Under the corporate reform law, audit committees must allow employees to report accounting or auditing irregularities without fear of being identified.
Technology

Tips for Effective Internal Investigations

by Stuart R. Buttrick, Baker & DanielsEmployers are forced to defend themselves against large numbers of EEOC charges and lawsuits, many of which could be avoided by prompt and effective internal investigations. A primary goal of any human resource or EEO officer should be to have an effective mechanism for allowing work-related complaints to be resolved internally.
Tax

Five Rules to Detect and Avoid Phishing Scams

One of the more sinister and increasingly prevalent methods of identity theft is the practice of "spoofing" or "phishing," involving the sending of e-mails that mirror the appearance of a popular Web site or company in an attempt to commit identity theft.
Tax

Banc One Unit Agrees to Pay $50M to Settle SEC Fraud Charges

The Securities and Exchange Commission (SEC) announced on Tuesday a settled enforcement action against Banc One Investment Advisors Corporation (BOIA), a registered investment adviser based in Columbus, Ohio, and Mark A. Beeson, age 46, of Westerville, Ohio, former President and CEO of One Group Mutual Funds (One Group) and Senior Managing Director of BOIA.
Tax

SEC Settles Insider Trading Matter against Former FleetBoston Employee

The Commission announced that a Massachusetts federal court has entered a final judgment against Guillermo Garcia Simon, a former FleetBoston Financial Group employee residing in Buenes Aires, Argentina, in connection with his trading in the securities of FleetBoston in advance of the announcement of its acquisition by Bank of America Corporation. Under the terms of the final judgment, entered by consent, Simon was ordered to pay approximately $525,000 in disgorgement, interest, and a penalty.
Community News

Top Mistakes Companies Make in Computer Crime Prevention

Re-published with permission from White-Collar Crime Fighter, www.wccfighter.com. I've been working with large companies on information security and internal computer crime for more than five years and have been in law enforcement for more than 15 years as a detective investigator as well as a detective commander.To this day I am amazed that top managers of Fortune 1,000 companies are still in the same boat when it comes to computer crime: No one thinks their employees would ever abuse their company's computers to steal
Tax

Industry Leaders Form Group to Combat Online Fraud

A “superhero slate” of cross-industry leaders in retail, telecommunications, financial services, banking and technology have joined forces to eliminate the threat of phishing to e-mail and e-commerce. The Trusted Electronic Communication Forum (TECF) said in a statement that the group formed as a “collaborative endeavor with the mission to help mitigate the risks posed by phishing, spoofing and other tactics of online identity fraud.” The group will also focus on finding an immediate cross-geographic and industry-wide standard to protect consumers and businesses.
Tax

In-Kind Donations to Charities—the Problem of Overvaluation and Other Issues

With respect to gifts of both tangible and intangible property, we have seen overvaluation by some taxpayers to inflate the charitable contribution deduction at public expense. Valuation issues can be especially difficult. The Administration’s FY 2005 Budget includes several proposals to address the problem of overvaluation of donated property. But there can be other problems as well.Intellectual PropertyA key issue in intellectual property donations, as in all other property donations, is whether the property has been appropriately valued.
Tax

Donor Advised Funds

A donor advised fund is a separately identified account maintained and operated by a section 501(c)(3) organization. These accounts have become very popular in recent years. Each account is funded with contributions made by a donor or a group of donors. For the payment to qualify as a completed gift, the charity must have legal control over the donated funds. While the donor, or individuals selected by the donor, may advise on the distribution of funds from the account and the investment of assets in the account, the charity must be free to accept or reject the donor’s recommendations.
Tax

Misuse of Tax-Exempt Entities by Donors and Investors

We are facing a number of other current issues where donors or others are using or attempting to use tax-exempt organizations for private purposes, including sheltering assets for deferred personal use or claiming accelerated or inflated deductions. I will briefly discuss certain classes of cases in which we have found abusive behavior.
Tax

Embattled HealthSouth Names New Chief Operating Officer

HealthSouth Corp. announced this week the appointment of Mike Snow, age 49, to the position of Chief Operating Officer (COO), effective June 30, 2004. Snow, who most recently served as the President of the Gulf Coast Division of HCA, will be responsible for the day-to-day operations of the company on an ongoing basis. Snow has an extensive background in the healthcare industry.
Tax

Indictment Against Lay Could be Imminent

In a development first reported by the Houston Chronicle, it appears prosecutors may be close to an indictment against former Enron Corp. chairman Kenneth Lay, for allegedly urging employees and investors to buy Enron stock even as he knew the company was on the verge of collapse.The Washington Post reported the development stating that an indictment against Lay, 62, would cap a two-and-a-half year investigation into the collapse of the Houston-based energy giant, once the nation’s seventh-largest company in terms of revenue.
Tax

Ex-CEO of Long Island Tech Company Declared Fugitive

The indicted former chief executive of Symbol Technologies Inc. was declared a fugitive Wednesday after apparently returning to his native Croatia and refusing to return to the U.S.Tomo Razmilovic’s lawyer told federal prosecutors that his client would not face arraignment, the Associated Press reported. He had been living in England since leaving the company two years ago, and prosecutors believe he left for Croatia.The former president of the Long Island-based maker of bar-code scanners and wireless networks faces securities fraud and other charges.
Community News

Ex-WorldCom CFO Pleads Guilty to Conspiracy; Sentencing Delayed

The former chief financial officer of WorldCom, Scott Sullivan, has pleaded guilty to one count of conspiracy to commit securities fraud.Sullivan entered his plea Monday in Hinds County, Miss., before Circuit Judge Bobby DeLaughter. Sentencing was delayed, the Associated Press reported. Sullivan faces up to five years in prison and a fine of $5,000, the state attorney general's office said.

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