Watchdog

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
Tax

Lesser-Known Enron Executives Face First Criminal Trial

The first Enron case to go before a jury does not involve famous names or deals that led to the company’s spectacular demise."It’s not about Andy Fastow, it’s not about Jeff Skilling, it’s not about Ken Lay. But I think the public thinks that it is," defense attorney Dan Cogdell told Reuters.
Technology

Treasury Releases Report On "Phishing" Identity Theft Prevention

Assistant Secretary of the Treasury, Wayne A. Abernathy, announced this week the release of a new report on the rapidly growing cyber-crime known as “phishing”. “When President Bush signed legislation giving consumers and law enforcement important new tools to fight the spread of identity theft, he sent a message to identity thieves that their schemes would not be tolerated.
Tax

Rite Aid Former Chief Executive Sentenced to Eight Years in Jail

The son of the man who founded the Rite Aid drugstore chain will spend eight years in prison for his role in one of the biggest fraud cases to hit corporate America, Reuters reported.Glass, 50, the company’s former chief executive, was also sentenced yesterday to three years of supervised release after he completes his prison term, according to Thomas Marino, U.S. attorney for the Middle District of Pennsylvania. As part of his plea deal, Grass, the fourth of six former Rite Aid executives to be sentenced, will pay $500,000 in fines and will forfeit $3 million to the government.
Tax

New SEC Rule Establishes Ethics Standards for Mutual Funds

The Securities and Exchange Commission voted this week to adopt a new Rule 204A-1 under the Investment Advisers Act and related amendments to Advisers Act Rule 204-2, Advisers Act Form ADV, and Rule 17j-1 under the Investment Company Act. New Rule 204A-1 would require registered investment advisers to adopt and enforce codes of ethics applicable to their supervised persons. The new rule is designed to prevent fraud by reinforcing the fiduciary principles that must govern the conduct of advisory firms and their personnel.
Tax

Case Against WorldCom's Ebbers Expands With New Indictment

The government’s case against former WorldCom Inc. chief executive Bernard J. Ebbers grew on Monday when a new 31-page indictment was handed up by a Manhattan grand jury with seven new changes of false Securities and Exchange Commission filings, the Washington Post reported. The seven new changes are added to the charges Ebbers, 62, already faces, including one count each of conspiracy, securities fraud and false filing in the role he allegedly played in the nation’s largest accounting scandal.
Tax

First Rite Aid Executive Sentenced in Accounting Scandal

Former Rite Aid Corp. executive Eric Sorkin became the first of six former top company officials to be sentenced in an accounting scandal at the drug store chain.Sorkin, 55, was sentenced yesterday to spend five months in jail and five months house arrest, to be followed by two years of probation. He was also ordered to pay a $5,000 fine.
Tax

Somali Tax Preparers Accused of Seeking Unwarranted Refunds

The Internal Revenue Service and Minnesota tax officials are looking into 3,500 questionable tax returns filed on behalf of Somali immigrants.Eleven tax preparers, themselves Somalis, are suspected of taking advantage of the recent immigrants’ confusion about the U.S. tax code, language difficulties and blind trust, community leaders told the Associated Press. The state stopped payment on about $3 million in unearned refunds, claimed by tax preparers who inflated their clients’ income, created fictional dependents or made improper business deductions."I'm shocked.

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