Fraud

  • 01 Sep 2010
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  • ANR

Accounting News Roundup: More Tax Cuts for Small Business?; Scenes from a SaaS Meltdown; SEC Files Charges Against Sachdeva | 09.01.10

By Caleb Newquist

No Charges for Moody’s in Ratings Violation [NYT]
“The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative securities in 2007.

The decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.

The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.”

Tax Cuts Weighed to Spur Economy [WSJ]
“The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.

The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.

On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.

Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.”

Lessons from ClearBooks failure [AccMan]
What happens when a SaaS provider has a blow-up? Well, it depends.

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  • 30 Aug 2010
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  • Fraud

Which SpongeTech Founder Celebrated Suing Reporters and Critics with a Zurich Hooker?

By Caleb Newquist

Token hooker image

Back in May, we briefly mentioned the alleged fraud at SpongeTech, a company that specialized in sponges that “can be pre-loaded with detergents and waxes, which are absorbed in the core of the product then gradually released during use.” How this is different from using regular sponge isn’t quite clear (dry sponge + soap + water = sponge ready for use). Maybe it’s the “gradual release”?

But that’s neither here nor there. As you may recall, the allegations brought against founders Michael Metter and Steven Moscowitz include making up five customers that accounted for 99% of SpongeTech’s revenues.

But what’s extra-important today is that investigative journalist Roddy Boyd has some interesting details over at his blog, The Financial Investigator that indicate that either Metter or Moscowitz (not exactly clear which) was looking for a little release themselves:

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As to Whether Allen Stanford Knew His CDs Were Worthless

By Caleb Newquist

“I think it’s obviously obvious.”

~ Forensic accountant Mark Berenblut, responding in the affirmative that R. Allen Stanford knew he was “misrepresent[ing] the liquidity and soundness of the CDs.”


  • 26 Aug 2010
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  • ANR

Accounting News Roundup: Deloitte Poised to Be the Biggest of the Big 4; A Guide to Avoiding Layoffs; Forensic Accountant Testifies That Stanford Skimmed Funds | 08.26.10

By Caleb Newquist

~ Sorry about the downtime yesterday. Our best people are on it like ConEd.

Deloitte to be world’s biggest accountant as partners sweep up £590m [Telegraph]
“According to Mr Connolly, when Deloitte publishes its global results in October the firm is set to reveal it has overtaken PriceWaterhouseCoopers to become the biggest of the “Big Four” accountancy houses globally.

However, Mr Connolly, who is set to retire in 2011, predicted the current financial year could prove even more successful despite describing future growth in the wider economy as ‘low and slow.’ ‘We have already done very well in the first quarter of this year, so I expect we shall return to double-digit growth. The M&A market has started to get much busier and our tax business is growing well again. Changes in regulation also mean good business for us.’ ”

Investors Gain New Clout [WSJ]
“In a decision years in the making, the SEC voted 3-2 in favor of the “proxy access” rule, which requires companies to include the names of all board nominees, even those not backed by the company, directly on the standard corporate ballots distributed before shareholder annual meetings. To win the right to nominate, an investor or group of investors must own at least 3% of a company’s stock and have held the shares for a minimum of three years.

Currently, shareholders who want to oust board members must foot the bill for mailing separate ballots, as well as wage a separate campaign to woo shareholder support. Both are too costly and time-consuming for most. Now, the targeted companies will essentially be footing the bill for the dissidents, including them in the official proxy materials. The new rule will be in place in time for the 2011 annual meeting season next spring.”

Celgene names new chief financial officer [Reuters]
Jacqualyn Fouse will replace David Gryska effective Sept. 27

Herz Resigns As FASB Chair [The Summa]
Professor David Albrecht’s take on Roberto Herz’s decision to step down.

3Par Accepts Dell’s Increased Takeover Offer [Bloomberg]
“Dell Inc. said 3Par Inc. has accepted its increased offer of $24.30 per share in cash, or about $1.6 billion, net of 3Par’s cash.”

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New Jersey Nets Fans May Have Gotten Ripped Off

By Caleb Newquist

“She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

~ California Attorney General Jerry Brown isn’t impressed with Roni Deutch’s advertising. And the Nets likely have one less way to try and draw crowds.


  • 05 Aug 2010
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  • News

Apparently the ‘Wildly Inaccurate’ Accounting at Scott Rothstein’s Law Firm Didn’t Impress Some Miami CPAs

By Caleb Newquist

That's Weintraub on the left there with Rothstein rockin' the 'fro. Source: SFBJ

Unless you were born blind and deaf, you may have noticed that South Florida has its share of shady characters. We all know that Berns Madoff frequented the area. Plus there’s the obsessively dapper Lew Freeman, who was Miami’s go-to forensic accountant until he thought he’d just keep his client’s money.

Another model citizen/criminal in FLA is Scott Rothstein. His Ponzi Scheme managed to bring in just over $1 billion and he got 50 years for his trouble. But now the fallout from Rothstein’s little stunt is now raining hell on Miami accounting firm Berenfeld Spritzer Schechter & Sheer.

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The Restatement That Never Ends: KPMG Hasn’t Received Necessary Docs for Satyam

By Caleb Newquist

Back in June we told you about Satyam requesting just a wee bit more time to nail down their restatement of their financial statements. It wasn’t because KPMG and Deloitte weren’t working their asses off, it was more of commitment to get things right. Putting good numbers out there, repairing broken trust, so on and so forth.

Well! The three month extension ends next month but as you might expect, there’s a bit of a problem. More specifically, KPMG is now saying that they haven’t received the documentation necessary to finish the job. Unless everyone is okay with some wild-ass guesses, in which case they can proceed.

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  • 28 Jul 2010
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  • Fraud

Sue Sachdeva Pleads Guilty, Shopaholism Still a Possible Motive

By Caleb Newquist

Regretful

Well gang, the Sue Sachdeva circus has come to an unspectacular end. S-squared pleaded guilty yesterday to the $30-odd million embezzlement at headphone factory Koss. No trial, no media circus (the type we envisioned anyway) and no spectacular cross-examination that could have resulted in a great Law & Order Brewtown spinoff.

Nope. Just a guilty plea, some regret from Suz and the distinct possibility that something might not be right upstairs. Although the MJS reports, “when asked whether she had any mental health issues. [Her attorney, Michael] Hart answered for her, saying there were no issues of mental health that prevented her from understanding the government’s case or the plea agreement,” her statement alludes to some “issues” that led to the thieving:

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  • 26 Jul 2010
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  • ANR

Accounting News Roundup: Geithner Is Ready to Let Tax Cuts Die; Hayward on His Way Out?; PwC Wants Glitnir Lawsuit Tossed | 07.26.10

By Caleb Newquist

No new recession, let tax cuts die: Geithner [Reuters]
“The economy is not likely to slip back into recession but letting tax cuts for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans — those making $250,000 or more a year — will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.”

BP Said to Prepare Dudley as CEO as Board Looks for Recovery [Bloomberg]
“BP Plc plans to name Robert Dudley to succeed Tony Hayward as chief executive officer as the board looks to recover the company’s position in the U.S., two people with knowledge of the matter said.

Dudley, the director of BP’s oil spill response unit, is ready to be announced as the company’s first American chief and to take the helm Oct. 1, one of the people said, asking not to be identified because a final decision hasn’t yet been made. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.”

Madoff Investors Brace for Lawsuits [WSJ]
“Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called “net winners” from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff’s firm than the amount of principal they invested.

‘The people who made money, who got more, have made money at the expense of the people who didn’t,’ said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.

Mr. Picard must file any so-called clawback lawsuits by December, the two-year anniversary of Mr. Madoff’s arrest and the filing of regulatory proceedings against him. ‘We’re not going to wait until the last minute,’ Mr. Picard said.”

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  • 23 Jul 2010
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  • Fraud

Convicted Forensic Accountant Lew Freeman Will Be Damned if You Think You’re Getting His Suits

By Caleb Newquist

No suit for you!

Miami’s go-to forensic accountant-turned Ponzi Schemer Lewis Freeman was sentenced to eight years in prison earlier today. While that’s clearly an embarrassment for him and his family (he reportedly told his kids, “I know you’re smart enough not to follow … the horrible example I set for you.”) the man does have a shred of dignity left.

He still has plenty of friends who think that his charity work should have been enough to keep him out of the slammer altogether. Sam Antar – who did the exact opposite metamorphosis – isn’t impressed by this:

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