August 10, 2020

Accounting News Roundup: Unsatisfied Whistleblowers and RIP Eddie Antar | 09.12.16

Unsatisfied whistleblowers

Whistleblowers go through a lot to expose wrongdoing. Their lives are turned upside down for years — loss of jobs, income, etc. — and sometimes it's all for nothing; the company is never held accountable and everyone moves on.

This was not the case for the Monsanto whistleblower who was awarded $22 million. Yes, the process was long and "[caused] friction with co-workers" but, according to an interview with Gretchen Morgenson, that's not what he was going for.

“The company got fined and some money changed hands, but that’s not the answer,” the whistle-blower said in a telephone interview. “Management not being held accountable, that still bothers me. I went into this to get that fixed, and that didn’t get fixed.” 

And here I thought altruism in accounting was lost! It is difficult to understand what would compel a person to risk their livelihood and professional well-being to "fix" something that isn't really fixable. I don't know about you all, but $22 million would fix quite a bit for me.

In any case, as we noted earlier, the whistleblower's attorney, Stuart Meissner, also believes auditors are not being held accountable:

The S.E.C. […] declined to act against Deloitte, Monsanto’s auditor. This puzzles Mr. Meissner, the whistle-blower’s lawyer, knowing what he does about the facts of the matter.

“Bringing cases against auditors would put a stop to a good deal of accounting fraud,” Mr. Meissner told me. In accounting cases like this one, “there should also be an action against the outside audit or an explanation of why there isn’t one,” he added.

I'm pretty sure the impunity of Big 4 auditors is a feature, not a bug. At least it feels that way.

RIP Eddie Antar

Eddie Antar, the founder of the Crazy Eddie chain of electronics stores has died. For anyone too young to remember, Crazy Eddie was one of the most well-known frauds of the 1980s, best known for its TV commercials and the pitchman yelling about INSAANE prices. Here's a brief rundown of the rise and fall of the company from Mr. Antar's New York Times obituary:

In 1984, Mr. Antar took the business public at $8 a share. Within two years, its stock price would hit $79 per share. At its peak, Crazy Eddie reported annual sales of more than $350 million.

But that success was illusory. In 1987, dissident stockholders staged a takeover of the company. Within two weeks of the acquisition, they said they had discovered that $45 million in merchandise was missing. At the same time, federal prosecutors were building a case against Mr. Antar, charging that he had defrauded shareholders through stock manipulation.

The last Crazy Eddie store closed in 1989 after the company declared bankruptcy. Eddie's cousin, Sam Antar, the CFO of the company, pleaded guilty and testified against Eddie who ended up serving 7 years in prison after pleading guilty to racketeering. Eddie attempted a comeback in 2001 but it ultimately faltered. Eddit Antar was 68.

Has Donald Trump released his tax returns?

Nope! But his running mate, Mike Pence, released 10 years worth of his on Friday and no one cares.

Elsewhere: Making tax shelters great again!

Previously, on Going Concern…

A couple of new Open Items from over the weekend: Someone wants an explanation of National Tax Services and someone else did a first round interview with Deloitte.

In other news:

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