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Bramwell's Lunch Beat: Accounting Fraud, Dewey Trial, Jindal’s Tax Plan

Oct 7th 2015
lunch beat

SEC charges ex-OCZ Technology executives with accounting fraud
The US Securities and Exchange Commission (SEC) on Tuesday charged two former top executives at OCZ Technology Group Inc. for accounting failures at the now-bankrupt seller of computer memory storage and power supply devices. The SEC alleges that former OCZ CEO Ryan Petersen engaged in a scheme to materially inflate the company's revenues and gross margins from 2010 to 2012. The agency separately charged OCZ's former CFO Arthur Knapp for certain accounting, disclosure, and internal accounting controls failures. Knapp agreed to settle the SEC's charges by paying a penalty of $130,000 without admitting or denying the allegations against him. The SEC's litigation continues against Petersen. Antonia Chion, associate director of the SEC Division of Enforcement, said when high-level executives participate in accounting fraud and failures, “they will be held accountable.”

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Jury deadlocked in trial of former Dewey & LeBoeuf executives
After 14 days of deliberation, a New York jury said it can't agree on whether three former Dewey & LeBoeuf LLP executives committed financial fraud in the years leading up to the law firm's 2012 collapse, wrote Sara Randazzo of the Wall Street Journal. “We the jury can't come to a unanimous decision on the majority of the counts on the verdict sheet,” jurors wrote in a note to Judge Robert Stolz in Manhattan state criminal court late Tuesday afternoon. Each of the three defendants faces around 50 counts, including grand larceny, conspiracy, securities fraud, and dozens of instances of falsifying business records. They deny wrongdoing. The deadlock is a setback for prosecutors, who have conducted a yearslong investigation into Dewey's accounting practices. Judge Stolz told the jurors to keep deliberating Tuesday and that he would have fuller instructions on Wednesday morning.

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Bobby Jindal wants all to pay some income tax
Seeking to breathe life into his presidential campaign, Louisiana Gov. Bobby Jindal is taking a sharply different approach to tax policy than his Republican rivals, wrote Patrick O'Connor of the Wall Street Journal. The presidential contender plans to unveil a tax plan on Wednesday in Iowa whose goal is to make all citizens pay at least some federal income tax. Jindal's plan seeks to compress the current seven tax brackets to three, with those in the lowest rung paying a 2 percent rate. It would also eliminate most deductions, including those that allow millions of Americans to pay nothing in federal income taxes. Jindal's proposal would eliminate the standard deduction and the $4,000 personal exemption, and it would include a nonrefundable tax credit that could replace some of these deductions for households with children under the age of 18, or people older than 65 who make less than $5,000. He didn't offer specifics on how this might work.

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Ben Carson: 6-month tax hiatus for overseas profit
GOP presidential hopeful Dr. Ben Carson said on Wednesday he would declare a six-month tax hiatus for corporations to bring the more than $2 trillion in profits held overseas back to the United States, wrote Matthew J. Belvedere of CNBC. “However, I would stipulate that 10 percent of it had to be used in enterprise zones [impoverished areas] that we'd set up in some of our major cities or to create jobs for people who are unemployed and on welfare,” the retired neurosurgeon told CNBC's Squawk Box. But once the six-month tax holiday ends, US corporate taxes need to be re-established at a level lower than the average around the world, he said. “I want us to become a tax haven for people because it also becomes an opportunity haven for people,” Carson added. On personal income taxes, Carson said he's calling for a 10 percent flat tax. “I use 10 percent because it's easy to do the numbers,” he said.

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Quick Links

  • Tips for tax-savvy homeowners (Wall Street Journal)
  • The ‘Cadillac tax' shows why Obamacare was never built to last (Tax Analysts)
  • North Carolina tax changes – sort of good, kind of bad (Tax Analysts)
  • How tax reform could shape the GOP field (CNBC)
  • Why Marco Rubio is insisting that his massive tax cuts will pay for themselves, explained (Vox)
  • New estimates of how many households pay no federal income tax (TaxVox)
  • The case of the carrot in need of a stick: A tax credit for paid family leave (TaxVox)
  • California Supreme Court hears arguments in Multistate Tax Compact case (Tax Foundation)
  • The key component of Estonia's competitive tax system (Tax Foundation)
  • New study shows that tuition deduction does not increase college attendance (Tax Foundation)
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