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AccountingWEB

Bramwell’s Lunch Beat: Former House Speaker Tried to Hide Money From the IRS

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May 29th 2015
Staff Writer and Editor AccountingWEB
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Frank Longobardi elected as new CohnReznick CEO
New York-based accounting, tax, and advisory firm CohnReznick LLP has selected Frank Longobardi as its next CEO, the firm announced on Thursday. Longobardi will begin his new role on Oct. 1 when current co-CEOs Ken Baggett and Tom Marino step down pursuant to the terms of the partnership agreement, according to a press release. Both Baggett and Marino will remain members of the CohnReznick Executive Board. Longobardi is currently the firm’s regional managing partner for New England and is a member of the Executive Board. He joined the firm in 2007 when his own firm, Haggett Longobardi, combined with J.H. Cohn. J.H. Cohn and the Reznick Group combined in 2012 to form CohnReznick.

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Former House Speaker Dennis Hastert indicted in payment scheme
Former House Speaker Dennis Hastert was indicted on Thursday for allegedly structuring cash bank withdrawals of funds he used to “conceal his prior misconduct” against an unnamed individual and for lying to the FBI about the arrangement, wrote Josh Gerstein, Hillary Flynn, and John Bresnahan of Politico. A federal grand jury in Chicago charged Hastert with withdrawing $1.7 million in cash from several banks over four years – with many of those withdrawals in amounts designed to avoid triggering federal reporting rules. Prosecutors charge that Hastert struck a deal with someone referred to as “Individual A” in 2010, agreeing to pay “$3.5 million in order to compensate for and conceal [Hastert’s] prior misconduct against Individual A.” Structuring is a crime involving efforts to avoid the Bank Secrecy Act’s reporting requirements. When taxpayers withdraw or deposit cash in amounts of $10,000 or more, they must file a Currency Transaction Report with the IRS. Those trying to skirt the reporting rules often withdraw or deposit sums under $10,000.

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FBI to investigate IRS data breach
The FBI has opened an investigation into the theft of tax return information from the IRS, an escalation of the government’s response to the identity-theft scheme, wrote Devlin Barrett of the Wall Street Journal. An FBI spokesman said on Thursday that agents are working to determine the “nature and scope’’ of the theft and urged people who think their identities may have been stolen to contact authorities. On Tuesday, the IRS said thieves used the agency’s online services to obtain prior-year tax return information for about 100,000 US households, starting in February through mid-May. Authorities said the theft didn't appear to be the result of computer hacking, but rather a large-scale impersonation in which the thieves gathered enough personal information about individuals to call up their tax information online.

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House GOP renews push for Lerner prosecution
Scott Wong of The Hill wrote that all 24 Republicans on the House Ways and Means Committee sent a letter to newly confirmed Attorney General Loretta Lynch on Thursday, asking her to respond to the panel’s 2014 request to charge former IRS official Lois Lerner for possible crimes, including using her position to have the IRS target conservative groups, impeding investigations by giving misleading information, and disclosing confidential taxpayer information. Lerner has denied any wrongdoing. US Attorney for the District of Columbia Ronald Machen recently informed House Speaker John Boehner (R-OH) that his office would not prosecute Lerner for obstructing Congress due to her refusal to testify at a congressional hearing.

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Grassley airs concerns about fake SEC filings
Sen. Chuck Grassley (R-IA) is pressing the US Securities and Exchange Commission (SEC) on whether its online database of financial documents allows bad actors to artificially swing the market, wrote Peter Schroeder of The Hill. In a letter to the SEC, Grassley, chairman of the Senate Judiciary Committee, pointed to a few cases where fake filings led to dramatic stock swings, asking if the “relative ease” with which documents can be posted, regardless of accuracy, could encourage market manipulation. On May 14, a financial firm calling itself PTG Capital posted a filing on the SEC’s online database of financial filings indicating it was preparing to buy out Avon Products. The document led to a wild swing in Avon’s stock, jumping more than 10 percent on the apparent news. But while the buyout statement is still posted online by the SEC, it appears that there never was a buyout offer, or perhaps even a PTG Capital. The filing is currently being investigated by the SEC and the FBI.

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IASB proposes changes to conceptual framework
The International Accounting Standards Board (IASB) on Thursday proposed changes to its conceptual framework, which provides a foundational underpinning for financial reporting under IFRS, wrote Ken Tysiac of the Journal of Accountancy. In an exposure draft, Conceptual Framework for Financial Reporting, the IASB proposes changes that would include, among other things, a new chapter on measurement, describing appropriate measurement bases (historical cost and current value, including fair value), and the factors to consider when selecting a measurement basis. It also includes refining the definitions of the basic building blocks of financial statements, including assets, liabilities, equity, income, and expenses. The IASB plans to issue a final conceptual framework next year.

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