Watchdog

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.
Tax

Former IRS Officer Sentenced for Looting Grandmother’s Estate

A former Internal Revenue Service employee will go to prison after she admitted to abusing her position as trustee of her grandmother’s estate to divert funds to herself.Sandra J. Valencia, of Goodsprings, NV, was sentenced last week to 33 months in prison and three years supervised release after pleading guilty in January to six counts of mail fraud, five counts of wire fraud and four counts of tax evasion, the Associated Press reported, adding that U.S.
Tax

Judge Postpones First Enron Criminal Trial

The first Enron criminal trial has been postponed until August, when it became apparent to the judge that the trial would not fit in the available time slot, even if all parties worked on Saturdays.The Associated Press reported that U.S. District Judge Ewing Werlein sent home the 100 citizens gathered for jury selection, which was set to begin this week, in the trial of two former Enron executives and four former Merrill Lynch & Co. executives.Werlein has a vacation set to begin on July 12. After a 90-minute meeting with attorneys for both sides, he has reset jury selection for Aug.
Tax

Former Home Depot Contractor Files Whistleblower Suit

A former Home Depot subcontractor is suing the Atlanta-based home improvement giant, claiming his contract was terminated after he pointed out accounting irregularities, the Associated Press reported.Raymond Hammond filed suit May 26 in Mecklenburg County Superior Court in North Carolina claiming that in November 1999 he told Home Depot co-founders Bernie Marcus and Arthur Blank in a memo that the company had overpaid him for every installation he did for Home Depot stores in upstate New York, the AP reported.He says he received e-mails from about 70 other Home Depot window and kitchen i
Practice Management

Judges Unpredictable When it Comes to Sentencing White-Collar Criminals

Federal judges are handing down wildly different sentences to corporate criminals. While a former Dynergy Inc. tax executive got 24 years in prison after his March trial for fraud offenses in Texas, three HealthSouth executives who entered guilty pleas to similar crimes in Alabama got off without jail time last week."I don't know what messages the judge is trying to send to white-collar criminals," said U.S. Attorney Alice Martin, the lead prosecutor on the HealthSouth case.
Tax

Symbol Technologies to Pay $37M SEC Fine for Accounting Fraud

On Thursday, the Securities and Exchange Commission charged Symbol Technologies, Inc. with securities fraud and related violations of the reporting, record-keeping and internal control provisions of the federal securities laws. Eleven former Symbol executives were also charged in connection with their roles in the fraud.
A&A

Beware of Medicare Drug Discount Card Fraud

As the new Medicare drug discount card program begins this week, Medicare consumers should be aware of three common frauds including identity theft and "bait and switch" tactics, according to the Foundation for Taxpayer and Consumer Rights. "Seniors should read the fine the print of drug discount card contracts and watch for fraud and identity theft," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR).
Tax

Enron Traders Gloat over Misdeeds During California Power Crisis

Taped telephone conversations among Enron traders reveal open discussions about manipulating the California power market, taking generating units offline to raise prices and even stealing from grandmothers.A utility outside of Seattle obtained the audiotapes from the Justice Department, which is investigating Enron’s part in the electricity market crisis that brought blackouts and skyrocketing prices to California in 2000-2001. The Snohomish County Public Utility District is suing Enron, saying it was overcharged during the crisis and should receive refunds.
Tax

IRS Warns of New Scheme to Steal Identity and Financial Data

The Internal Revenue Service warned on Tuesday of a fraudulent scheme targeting non-resident aliens who have income from a United States source. The scheme uses fictitious IRS correspondence and an altered IRS form in an attempt to trick the foreign persons into disclosing their personal and financial data.
Tax

HealthSouth’s Internal Probe Uncovers Deficiencies; Former Executive Sentenced

New filings with the Securities and Exchange Commission show that HealthSouth’s internal review found more than $2.7 billion in "false or unsupported entries in the company’s accounting systems, Dow Jones Newswires reported.The forensic accounting report also uncovered an additional $632 million in "aggressive or questionable" transactions, leading some to wonder why it took so long to discover the irregularities within the health care company.
Tax

Lecture Circuit Beckons Some Ex-White-Collar Criminals

Some former white-collar criminals are finding that crime does pay, with lucrative speaking careers following prison terms.Those who have a compelling story to tell and who are willing to take responsibility for their misdeeds are highly sought after on the speaking circuit where they can make thousands of dollars per speech, the New York Times reported.Those interested in hearing from ex-cons include business schools, professional associations and corporations, the Times reported."It's a powerful message," Kellie McElhany, professor of corporate management at the Haas School of Busin

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