Watchdog

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.
Tax

Helping Whistleblowers Help Organizations Fight Fraud

By White-Collar Crime Fighter - The Sarbanes-Oxley Act of 2002 requires audit committees of public companies to establish procedures to confidentially address all employee complaints regarding questionable accounting practices.While that requirement doesn't specifically guarantee protection to whistleblowers who want to report other internal frauds, the spirit of the new law does strongly encourage companies to set up systems and procedures for encouraging employees to come forward when they observe or suspect internal fraud.Key: With the new emphasis on corporate ethics i
Tax

IRS Hits AmeriDebt with $15 Million Claim

The Internal Revenue Service has filed a claim for $15 million against credit counseling firm AmeriDebt as part of a recent crackdown on allegedly not-for-profit debt management firms. The claim stems from the IRS's expectation that the firm will lose its tax-exempt status.
Tax

Charles Schwab Settles Mutual Fund Probe for $350K

On Tuesday, the Securities and Exchange Commission (SEC) announced that it has instituted settled enforcement proceedings against San Francisco-based broker-dealer Charles Schwab & Co., Inc. The Commission charged that Schwab allowed investment adviser customers to change mutual fund orders after the 4:00 p.m. Eastern time market close, creating the risk that such customers could unfairly capitalize on late-breaking news at the expense of other mutual fund investors.
Tax

Former Executive Joins Most Wanted List

Getting your picture on the wall in the post office is not usually a time for celebration. For Tomo Razmilovic, the disgraced former president and CEO of Symbol Technologies Inc., the Holtsville, NY bar code scanner company, it simply means he is in no hurry to return to his former home in the United States. "I still believe in the American judicial system," the 62-year-old Mr.
Community News

Identity Theft Perpetrator Pleads Guilty

A 35-year-old former help desk associate at Teledata Communications Inc. (TCI) has pleaded guilty in federal court to charges in what may be the largest identity theft case in U.S. history. New Yorker Philip Cummings appeared in federal court Tuesday to plea to wire fraud, fraud, and conspiracy charges in the case which reportedly bilked more than 30,000 victims out of more than $2.7 million.Cummings was employed at TCI during 1999 and 2000. TCI is a company that provides computer access to credit reports for banks and other financial institutions. During his employment with TCI, Mr.
Tax

Pimco Settles Fraud Charges for $50 Million

The Securities and Exchange Commission this week announced that PA Fund Management LLC (PAFM), PEA Capital LLC (PEA), and PA Distributors LLC (PAD) (collectively, the PIMCO Entities) agreed to a settlement of charges that they defrauded investors in the PIMCO Funds: Multi-Manager Series in connection with an undisclosed market timing arrangement. Under the settlement, the PIMCO Entities have been ordered to pay $50 million, consisting of $10 million in disgorgement and a civil penalty of $40 million.
Tax

Judge Allows Tax Shelter Suit Against Law Firm to Proceed

A federal judge has allowed an aggrieved tax shelter client to pursue a fraud lawsuit against Deutsche Bank AG and the law firm of Sidley Austin Brown & Wood.While the courts have thrown out similar suits against Sidley Austin and others, U.S. District Court Judge Shira A. Scheindlin has ruled that a Virginia telecommunications executive can pursue his lawsuit, although not in New York, the Wall Street Journal reported. Scheindlin said the allegations of malpractice, breach of contract and breach of fiduciary duty could be refiled in Virginia.
Tax

Former CEO Gets 9 Years in Prison, $3.5M Fine

A federal judge has ordered a former chief executive to pay $3.5 million and serve more than nine years in prison for his part in a scheme that plunged his company into bankruptcy in 2001. The former executive of National Environmental Services Co. (Nesco), Eddy Lynn Patterson, was convicted in December on 22 counts of conspiracy, fraud, tax evasion and making false statements on loan documents, the Associated Press reported. His September 1 sentencing called for a federal prison term of nine year and two months.
A&A

Former Invesco Executives Settle Market Timing Abuses

The Securities and Exchange Commission (SEC) announced this week settled enforcement actions against Timothy J. Miller, the former chief investment officer and a portfolio manager for Invesco Funds Group, Inc. (IFG); Thomas A. Kolbe, the former national sales manager of IFG; and Michael D. Legoski, a former assistant vice president in IFG's sales department. The Commission issued orders alleging that Miller, Kolbe and Legoski violated federal securities laws by facilitating widespread market timing trading in certain Invesco funds in contravention of those funds' public disclosures.

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