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Bramwell's Lunch Beat: Valeant Dogged, AICPA Chairman, Swiss Tax Cheats

Oct 22nd 2015
Lunch Beat
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Valeant plummets on allegation of Enron-like accounting
Valeant Pharmaceuticals International Inc. shares took a beating, falling more than 30 percent, after a stock-commentary site run by a short seller accused the company of an Enron-like strategy of recording fake sales by using phony customers, wrote Crayton Harrison of Bloomberg. In a report published on Wednesday, Citron Research said Valeant is using a specialty pharmacy called Philidor RX Services to store inventory and record those transactions as sales. “Is this Enron part deux?” the report said. “These similarities are too close to ignore.” The report also said Valeant uses “phantom accounts” to fool auditors and investors. A spokeswoman for Valeant declined to comment. Citron has been a dogged critic of Valeant's business model, denouncing its reliance on acquiring drugmakers and then jacking up the prices of their products, which have been on the market for years.

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Tim Christen elected chairman of AICPA Board of Directors
Tim Christen, chairman and CEO of Baker Tilly Virchow Krause LLP, was elected as the new chairman of the board of directors of the American Institute of CPAs (AICPA) on Oct. 21. Christen, 56, was elected to the one-year volunteer post by the AICPA governing Council, which concluded its annual fall meeting on Wednesday. Kimberly Ellison-Taylor, CPA, CGMA, executive director of Oracle USA, was voted in as vice chair. Christen, who says his strengths are in strategy and communications, said the profession should embrace change – and do it fast – to ensure a bright future, attract the best talent, and be in the strongest position to serve the public interest. “Will we be the ones to take charge of our destiny and lead our profession to greater relevance and opportunity?” asked Christen, CPA, CGMA. “Or will we be mere passengers, sitting in the back seat of a bumpy ride to an unknown destination? I vote for the driver's seat.”

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Inside Swiss banks' tax-cheating machinery
Laura Saunders of the Wall Street Journal wrote that dozens of Swiss banks have been spilling their secrets this year as to how they encouraged US clients to hide money abroad, part of a US Justice Department program that lets them avoid prosecution. It is part of a broader US crackdown on undeclared offshore accounts that has ensnared big Swiss banks, such as UBS Group AG, but has received scant attention because it mostly involves little-known firms and relatively small fines. Some Swiss banks loaded funds onto untraceable debit cards. At another, clients who wanted to transfer cash used code phrases such as “Can you download some tunes for us?” One bank allowed a client to convert Swiss francs into gold, which was then stored in a relative's safe-deposit box. The more than 40 firms that have admitted to the misconduct have paid a total of approximately $360 million to resolve the cases and avoid criminal charges.

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Carl Icahn drops $150 million to force Congress on tax plan
Billionaire Carl Icahn is putting his money where his mouth is when it comes to corporate taxes, which he wants lowered to encourage US companies to return $2.2 trillion held overseas, wrote Kaja Whitehouse of USA Today. The billionaire investor has formed a Super PAC to convince Congress to enact, by the end of the year, legislation to encourage companies to repatriate their overseas earnings. Icahn even funded the PAC with a whopping $150 million. In a letter to members of Congress, Icahn demanded that Congress enact a proposal by December, saying that dilly-dallying will force the issue to the sidelines until after the presidential election. And by then, it will be too late, he said. “The inability of Congress to enact desperately needed legislation because of certain members not willing to compromise is reprehensible, and the members responsible must and will be held accountable,” Icahn wrote.

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Quick Links

  • Candidates need to talk about tax reform (CNBC)
  • 2 experts make the case against Obamacare's controversial ‘Cadillac tax' (Vox)
  • EU's top court rules that bitcoin exchange is tax-free (Bloomberg)
  • After blow to Europe tax havens, some promise more staying power (Bloomberg)
  • The world's most taxed workers get a break (Bloomberg View)
  • The ‘tampon tax' outrage is overblown (Daily Beast)
  • Back to the Future: Taxes now & then (Forbes)
  • There will be no fines in the Starbucks and Fiat European Union tax cases (Forbes)
  • $486 million in growth later, Kansas' historic tax cut should set example for neighbors (Forbes)
  • Conservatives should support Obamacare repeal reconcilliation bill (Forbes)
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