Watchdog

Tax

PA Woman Claims to be Princess, Gets $1.2 Million Refund from IRS

Claiming to be Hawaiian royalty, a Pennsylvania woman has become a thorn in the side of the Internal Revenue Service, which has repeatedly sent her refunds and personal information belonging to the rightful heir. In the latest blunder, the IRS sent Abigail Roberts a $2.1 million tax refund that should have gone to Abigail Kinoiki Kekaulike Kawananakoa.Roberts, 61, a cafeteria worker, filed a tax return using Kawananakoa’s Social Security number and received the $2.1 million tax refund of money either Kawananakoa or her estate had paid the IRS in anticipation of taxes due.
Tax

Long-Serving, Male Execs Most Likely to Commit Company Fraud

A study conducted by KPMG has revealed some interesting information about the typical perpetrator of a fraud, why they steal and who they target. Seventy-two percent of cases involve men only. Over half of company fraud involves two to five people. Forty percent of fraud involves employees from the finance department.The analysis examines 100 of the fraud cases that KPMG has been called in to investigate over the past two years, from which a profile of a fraudster has been created.
Tax

Computer Associates Chief Steps Down

As a federal criminal investigation into securities fraud and obstruction shifts in his direction, Sanjay Kumar, resigned yesterday as Computer Associates’ chairman and chief executive, the New York Times reported. The fourth-largest independent software company, CA is based in Islandia, NY. With his resignation, Kumar becomes the latest in a string of chief executives to be caught in the crossfire as accounting scandals have rocked U.S. companies.
Tax

Scrushy Must Repay $25 Million Loan to HealthSouth

Upholding a lower court ruling, the Delaware Supreme Court ruled on Thursday that HealthSouth’s founder and former chief executive Richard Scrushy must pay back a $25 million loan to the company.In July 2002, Scrushy repaid the loan using HealthSouth shares, which tanked just after the repayment when he warned of lower-than-expected profits and said he planned to reorganize the company, Reuters reported.The stock decline was the reason the company sued him after he was accused of being behind a $2.7 billion fraud, which he denies even though he faces 85 federal counts of fraud and cons
Tax

Tax Business Accused of Bilking 100,000 Customers

The Justice Department wants a federal judge to shut down a business that is accused of costing the government and 100,000 customers at least $500 million.The New York Times reported that the business, the National Audit Defense Network, has cheated the government out of $324 million or more in taxes in the last three years, according to a civil suit filed in Las Vegas Thursday.The company markets itself as a network of more than 1,000 former Internal Revenue Service agents and others who can win audits and stop collection of past due taxes.
Tax

Computer Associates Officials Plead Guilty

Another corporate official has pled guilty to charges related to accounting fraud. David Rivard, 36, former vice president of finance at Computer Associates, pleaded guilty yesterday morning in Federal District Court in Brooklyn.Rivard admitted to obstructing the government’s investigation of accounting irregularities at the company and conspiring to commit securities fraud, the New York Times reported. David Kaplan, a former senior vice president, and Ira H.
A&A

SEC Rethinking Late Trade Crackdown

The Securities and Exchange Commission may offer alternatives to its plan to stop late trading in mutual funds.While Chairman William Donaldson defended the 4 p.m. "hard close" proposal before the Senate Banking Committee Thursday, he acknowledged the concerns. The SEC has received almost 1,100 formal comments, mostly in opposition, the Chicago Tribune reported.Many investors and retirement plan administrators oppose the plan, which would require all mutual fund trades to be placed with the fund firm — not just brokers — by 4 p.m. Eastern time to receive that day’s price.
Community News

Eight Indicted on Tax Avoidance Scheme for Wealthy Clients

Eight people were indicted Thursday on federal charges of helping hundreds of rich Americans avoid $68 million in taxes through the use of domestic and offshore trusts.The 51-count indictment outlines a scheme to sell foreign and domestic trusts through The Aegis Co., based in the Chicago suburb of Palos Hills, the Chicago Tribune reported. About 650 wealthy Americans were involved in the scheme, which involved moving money out of businesses, into a business trust, to an asset management trust, and then to trusts in exotic locales or fake charitable trusts.
A&A

Analyst Identifies New Ways to Reduce Risk of ID Theft

Billions of dollars -- that's what identity theft costs U.S. businesses and consumers each year. New research clearly demonstrates that online banking, bill payment and statement viewing is one of the best ways businesses and their customers can protect themselves against identity theft. Yet, consumers still believe incorrectly that online financial transactions increase their risk of fraud.
Tax

Trial of Third Tyco Official Set for this Month

While the trial of former Tyco executives Dennis Kozlowski and Mark Swartz ended in mistrial last week, another high-profile Tyco trial is set to begin this month, with possible ramifications for Kozlowski and Swartz.Prosecutors in other white-collar cases such as Enron and WorldCom, have focused on making deals with lower-ranking executives to shore up their cases against the top officials.
Tax

IRS Warns of 'Corporation Sole' Tax Scam

The Internal Revenue Service this week issued a consumer alert advising taxpayers to be wary of promoters offering a tax evasion scheme that misuses "Corporation Sole" laws. Promoters of the scheme misrepresent state and federal laws intended only for bona-fide churches, religious institutions and church leaders. "This scheme shamelessly tries to take advantage of special tax benefits available to legitimate religious groups and church leaders," said IRS Commissioner Mark W. Everson. "Unscrupulous tax promoters always look for ways to game the system and prey on unsuspecting victims.
Tax

Judge Denies Mistrial Request in Kozlowski Trial

With the atmosphere in the jury room described as “poisonous” and one juror under media fire for an alleged gesture made in court last week, calls for a mistrial in the trial of Dennis Kozlowski and Mark Swartz were denied yesterday by New York Supreme Court Justice Michael Obus.Kozlowski and Swarz face up to 30 years in prison if convicted on charges they looted Tyco International Ltd. of $600 million.
Tax

Dynegy’s Olis Sentenced to 24 Years in Prison For Accounting Fraud

Jamie Olis, a Korean-American who overcame a difficult childhood and economic struggles to become vice president of finance at Dynegy Inc., was sentenced to 24 years in prison for his part on a $300 million fraud at the company.Dynegy, a Houston-based natural gas and power company, had attempted to acquire Enron, but called off the purchase just before Enron’s collapse in 2001.Under new federal sentencing guidelines, Olis must serve about 85 percent of his term and federal prisoners are not eligible for parole. He is the father of a newborn daughter. U.S.
Tax

Skilling Pays Lawyers $23 Million Before Assets Frozen

High-profile lawyers don’t come cheap, especially when you are former Enron CEO Jeffrey Skilling, who faces criminal and civil cases that could drag on for years.Court documents show that Skilling paid his Houston attorneys $23 million toward his defense before his assets worth $55 million were frozen by the government, the Associated Press reported. Among the assets frozen were Skilling’s homes. "It sounds like a lot at first. But based on the number of cases Mr.
Tax

Resume Fraud Gets Sophisticated; What You Need to Know

The combination of a sluggish job market and poorly protected databases is opening the door to a new, more sophisticated wave of resume fraud, with some candidates stooping to breaking the law to boost their chances with prospective employers.Adding to the dishonest atmosphere is the uprising of websites that exist solely to provide job-seekers with false credentials, including college degrees and previous work experience."Candidates are allegedly breaking the law to get a particular job or promotion, and that is pretty much going to the full extent of the limit," Scott Pustizzi, vice pr
Tax

Bank of America to Pay $375 Million, Exit Mutual Fund Clearing Business

The Securities and Exchange Commission announced a settlement agreement in principle with Bank of America of securities fraud charges arising from arrangements to permit timing in certain Nations Funds mutual funds and for facilitating market timing and late trading by certain customers. The agreement in principle is subject to the approval by the Commission. Bank of America has agreed to pay a total of $375 million, consisting of $250 million in disgorgement and $125 million in penalties.
Tax

WorldCom Restatement Hovers Around $11 Billion

The nation’s second-largest telecommunications company is about to close its darkest chapter after rebuilding its books from scratch and restating its financial reports to the tune of about $11 billion.
Community News

EnterpriseEmail Fraud Threatens Security of Sensitive Corporate Information

At DEMO 2004, Pavni Diwanji, CEO and co-founder of MailFrontier, warned corporate executives and IT directors of a growing threat to enterprise messaging: corporate email fraud. While phisher scams -- a largely consumer-facing problem where fraudsters spoof well-known brands in an attempt to steal personal information -- garner most of the media attention, the untold story is that IT departments are being spoofed as well, compromising the security of entire corporate networks.
Tax

Enron Class-Action Trial Bumped to 2006

Get used to the word Enron, it is here to stay for some time to come. As criminal cases wind their way through the courts, the trial for the class-action lawsuit filed by former employees and shareholders has been postponed again—this time to 2006.U.S. District Judge Melinda Harmon set an Oct. 16, 2006 trial date this week, which is the third time a trial date has been set. Harmon was overly optimistic back in 2002 when she set a 2003 trial date to deal with the thousands of claims filed in 2001. The 2003 date was later postponed to 2005 and now to 2006.
Tax

CPA Claims Ties to Italian Royalty as Part of $45M Fraud

Saying he was tied to Italian royalty and claiming to be a certified public accountant, Richard Glenn Dunham, 56, of Corona del Mar, pleaded guilty to charges of mail fraud and helping to prepare false tax returns for the now-defunct DFJ Italia.Prosecutors say that Durham convinced people such as former Los Angeles Rams football players Eric Dickerson and Duval Love, and people from Hollywood to invest in DJF by claiming links to Italian royalty and the European economic community, the Associated Press reported. Investors lost upwards of $45 million, the U.S.

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