November 21, 2018

Bad Decisions

Reminder: Insider Trading Turned Out Badly for Ex-KPMG Partner Scott London

UPDATE: See update below regarding sentencing timing. It's been quite awhile since we've been on the Scott London beat, but something interesting was brought to our attention late last week that's worth sharing. In a court filing from last month, London's attorney Harland Braun laid out the arguments against a Presentence Report by the United States […]

Ex-NMFA Controller Admits That He Was ‘Probably Negligent’ to Submit a Fake Audit Report But It’s Okay Because a Real Audit Will Confirm That Everything Is A-okay

The New Mexico Finance Authority ("NMFA") has a bit of a mess on its hands. You see, a week or so back, the State Auditor discovered that the audit report – that was submitted six months late – was fake. Bogus. A sham. The NMFA management and board investigated and determined that the authority’s former […]

Bafflingly, a Manager at a Top 10 Firm Agreed to Work the Weekend After Her Last Day

A blind item from the front: It has come to my attention that a manager in the [redacted] office of [redacted] is leaving the firm. Her last day is officially this Friday. The two partners have asked her to come in the Saturday and Sunday after her official last day, and she has agreed. I […]

Here Is Exhibit A for the Argument Against Temporary Grant Thornton Tattoos

Look, you guys. I know the stress of busy season can be a lot to deal with but I beg you, don't let it cloud your judgment. Think about your loved ones. Think about the American people. Think about the children.  Whatever helps you recenter your perspective, keep that thing in mind so that you don't […]

Can Convicted Felons Become CPAs?

As many of you are already aware, any sort of criminal record can negatively impact your career options if you’re considering public accounting. For one Going Concern reader, his sketchy past could mean the difference between becoming a CPA and spending his life as a payroll clerk.

Here’s the question:

Suppose I am an educated, convicted felon (possession of marijuana w/ intent to distribute when I was 19, currently 22) who is taking the CPA exam in the fall after graduation from college. I expect to pass (I’ve studied long and hard) and I have a few questions for you. Do you think accounting firms would be open to hiring a convicted felon, despite qualifications and a non-fiduciary felony? Also, would a state board (NH specifically) certify me as a CPA, provided I was able to get a job and fulfill the experience requirements? Do you have any precedents or similar situations you could inform me of?

Well, let’s start with the New Hampshire application for licensure, which contains the following simple question:

Have you ever been convicted of a felony that has not been annulled or committed any dishonest act?

If yes, please attach a separate sheet, which contains a complete description of the circumstances.

What this says to me is that you should start working on what you’re going to put on that separate sheet. You won’t get points for oversharing but you may get credit for honesty and clarity.

As you pointed out, it’s worth noting a few things. First, you were 19. We all do stupid things when we are 19. Granted, your stupid things got you a felony when it gets most 19 year olds regretful tattoos or embarrassing stories but still, you were a kid. That said, you’re still a kid to some employers/authority figures, so don’t get your hopes up expecting people to automatically assume you’ve reformed yourself in 3 years.

Second, it’s not like you robbed a gas station, stole credit card numbers or ripped off your Boy Scout troop – the fact that you were once in possession of a large quantity of marijuana isn’t much of a reflection on your character as it pertains to your ability to stick to the professional code. But (and this is the part that sucks), marijuana is still illegal and therefore the Board of Accountancy will consider that fact independent of what you were actually charged for. To some, the fact that you committed any crime at all means you are not of the ethical fortitude required to be a CPA. Let’s ignore the fact that many of the people who feel this way break the law all the time; talking on their cell phones behind the wheel, speeding, and driving while mildly intoxicated after happy hour.

The general rule here is that you should be fine as long as your conviction isn’t a fiduciary one but it’s up to the state to decide. Whatever you do, don’t try to hide it, as the important thing here is proving you are trustworthy. And you may want to talk to a lawyer about having your conviction expunged or knocked down to a misdemeanor. It probably doesn’t change much for you as far as jobs go (hope you aren’t planning on going Big 4, they won’t touch you with a conviction like that) but hey, you’ll be able to carry a gun (you know, for those dangerous engagements).

Good luck!

Some People Aren’t Too Concerned About the Walgreen CFO’s Second DUI

Yesterday we shared with you the unfortunate tale of Walgreen CFO Wade Miquelon picking up his second DUI in just over a year. While Mr. Miquelon is obviously responsible for his own actions, this whole mess could have been avoided if WAG would just splurge a tad and get him 24/7 car service. Sure you might catch some shit from Footnoted but isn’t that better than people getting hurt?

Anyhoo, most of the coverage on this story is in and around Chicago but naturally, analysts that cover the company were asked about the whole ordeal and frankly, since jumping behind the wheel after a few highballs doesn’t seem to have any effect on Wade’s professional capacity, it’s really NBD:

Dereck Leckow with Barrington Research […] sees no reason for investors to be concerned.

“Certainly, it’s rather embarrassing, but he’s not been found guilty of anything at this point,” said Leckow.

“At this point in time, it’s not something to be concerned about,” he concluded. Leckow has an “Outperform” rating on Walgreen shares and a $46 price target.

The risk for investors, if anything serious were to result from the latest charge, is that Miquelon is regarded as key to restructuring that’s been going on at Walgreen.

“Wade has been very valuable for the company’s cost-reduction efforts,” observes Scott Mushkin of Jefferies & Co. “If there were any problem that would take him away from his responsibilities at Walgreen, that would be a negative,” said Mushkin.

As we noted yesterday, WAG isn’t commenting on this “personal matter” but some people are wondering aloud about Wade’s decision-making ability:

Companies have to disclose “events that occurred during the past 10 years and that are material to an evaluation of the ability or integrity” of an officer. This includes whether the person “was convicted in a criminal proceeding … (excluding traffic violations and other minor offenses),” according to the Securities and Exchange Commission.

So the question becomes when does such an issue stops being a “personal matter” and starts becoming a “material” one. And what does it say about a person who makes such repeated mistakes, risking himself and others in the process? Can shareholders trust him with running the finances of their company?

The answer is, it depends.

“Some companies might have disclosed the second arrest right away; some might have said something somewhere,” said Edward Best, a partner at law firm Mayer Brown. “Other companies could reasonably have concluded, ‘Hey, the guy still showed up Monday morning.’ He’s still able to fly to New York to meet with rating agencies, investors and bankers. It’s not a material issue.”

One thing is for certain – Miquelon is losing his license for three years effective November 10th, so Walgreen has a couple of weeks to arrange for that car service.

Walgreen: Street Unperturbed By CFO DUI Arrest [Barron’s]
Walgreen CFO Arrested on Drunk Driving Charges … Again [Daily Finance]
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

Walgreens Is ‘Aware’ of CFO Being Charged with Second DUI in Just Over a Year

At this rate, Wade Miquelon is going to be at Billy Joel territory in no time:

Walgreen Co. Chief Financial Officer Wade Miquelon was arrested on suspicion of drunken driving last month, his second such arrest in a little more than a year, according to Kenilworth and Glencoe police.


Miquelon stonewalled officers when they requested a breathalyzer test which goes over well approximately 100% of the time. As for the past incident:

In Sept. 2009, he was stopped at 12:51 a.m. at Green Bay Road and Glencoe Drive and charged with speeding, improper lane usage, DUI and having alcohol in his system. In May, he accepted a one-year supervision for the latter offense, according to a Cook County District Court clerk.

“We’re aware of it,” said Walgreen’s spokesman Michael Polzin. “It’s a personal matter, and we don’t comment on personal matters.”

Are they also be aware that it’s relatively inexpensive to hire a full-time driver for a senior executive when you have profits of $2 billion? Just so, you know, no one gets killed.

Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

Area Accountant Desires Government Job More Than Porn Star Wife

Last summer, you may remember hearing about an accountant in Florida who was fired from his job as Town Manager of Fort Myers Beach because his wife was a porn star.

At the time we wondered how an injustice of this magnitude could occur in this great land of ours. If an accountant can’t marry a porn star and be a public servant, is this really the country we want to live in?


Despite that setback for FREEDOM, Scott Janke – the accountant and husband of porn star in question – is trying to become the City Manager of Flager Beach, FL and he has supporters stating that he’s the best man for the job, so on and so forth.

However, Janke’s supporters aren’t concerned that the porn star wife (which they say wasn’t an issue to being with) and Hustler pinup – Anabela Mota Janke, aka Jazella Moore (most definitely NSFW) – will not be a problem this go round because Janke and Jazella are separated.

“I think that he’d be a really good city manager,” Flagler Beach Commissioner Jane Mealy said. She said Janke’s wife’s profession wouldn’t factor into her decision.

“As far as I’m concerned, it has no impact,” Mealy said.

Mealy predicted that “by next week, people will have forgotten” about any controversy surrounding Janke.

Maybe that’s because Janke said Tuesday that he and his wife are separated.

Now you could debate the pros and cons of dating a porn star until Jenna Jameson comes home but in this particular case, Janke really sounds like he wants to be a City Manager/Planner. Janke must have figured that he didn’t have to settle for a woman with D-level acting skills and a D-cup rack when he could have a whole city on its knees.

He’s an accountant; she’s a porn star. And their life’s no bed of roses. [FloriDUH]

Toys R Us Accountant Will Probably Not Have Much Success Asking Hookers to Return Stolen Money

Back in fall we mentioned a run-of-the-mill whore-supporting accountant that pleaded guilty to ripping off Toys R Us to the tune £3.7 million. Paul Hopes is described as a ‘Walter Mitty character’ by the Telegraph who can now fantasize about what Oz character he is, now that he’s spending 7 years in prison.

Hopes got more bad news recently as he learned that he has to repay £3.36 million of the £3.68 million from Geoffrey.

If he fails to repay the money, he see his sentence more than doubled with an extra 10 years in prison.

The court heard that Hopes, an “accounts payable manager” at the retailer, diverted regular instalments of £300,000 to an account of a fictitious toy manufacturer which he controlled.

He named the fund Dunbar Associates after a prostitute with whom he had become besotted and to whom he eventually handed a total of more than £1.5 million pounds.

He spent at least £2.4 million of the money he stole on five female escorts in all.

That’s a bitch about the additional 10 years if doesn’t repay. But we’re sure that he placed the remaining £900k into a safe, no-load mutual fund so he’ll be able to at start paying at least part of it back ASAP. The sensible accountant in him had to have made one decision with stolen money.

As for the rest of it, we don’t know how successful Johns are at getting refunds in circumstances such as these but if those girls were 100% satisfaction guaranteed, he’ll have to explore other options.

Toys R Us accountant ordered to pay back £3.4m after escort girl fraud [Telegraph]

California Accountant Had Some Ambitious Career Goals

Many of you probably consider yourself to be ambitious. You have aspirations of riches and success in the field of accounting that the likes of Arthur Andersen dared not dream of. You’re a game changer. The profession won’t be the same after you’re done with it.

But Yasith Chhun of Long Beach, CA could not be satisfied with simple pleasures like titles such as Partner or CFO and fabulous wealth simply would not be enough. His life goals were far more lofty than a simple title, salary or home with a three-car garage on a golf course. This was about a revolution!

A California accountant was sentenced to life in prison Tuesday in Los Angeles for orchestrating a failed attempt to overthrow the Cambodian government in 2000.

Yasith Chhun, of Long Beach, was found guilty in 2008 of three counts of conspiracy and one count of engaging in a military expedition against a nation with which the United States is at peace.

Chhun is a U.S. citizen of Cambodian descent who helped lead a handful of rebel fighters in an attack of government buildings in the country’s capital of Phnom Penh. Three of the fighters were killed, and several police and military officers were injured.

Prosecutors said Chhun planned the coup over two years, traveled to the region to assemble a rebel force and held fundraisers for the operation.

So unless you’re willing to engage in guerrilla tactics in order to topple an entire nation that’s friendly with the U.S., we don’t ever want to hear about your career path.

Calif. man in attempted Cambodian coup gets prison [AP]

Today in Accountants Making Bad Decisions: Tweeting That You’re Going to Blow Up an Airport

When an airport is closed due to inclement weather, most people just shrug and realize that there’s nothing they can do about it. Oh sure, there might be a few lunatics who will yell at the ticket agent because they’ve somehow concluded that they have the ability to ring up the Almighty and put in a rush order of clearing skies but most people have the self control to internalize this.


In the case of Paul Chambers, an accountant in the UK, it wasn’t so much a ticket agent but his Twitter followers who heard his frustration. Chamber was understandably concerned that he wasn’t going to get laid due to Robin Hood Airport being closed this past January after a snowstorm. Chambers claimed that he Tweeted the following…

“C—! Robin Hood Airport is closed. You’ve got a week and a bit to get your sh– together, otherwise I’m blowing the airport sky high!”

…out of frustration because he was scheduled to fly to Belfast to meet Crazy Colours, whom he had met on Twitter. Prior to the C U Next Tuesday message, he had Tweeted to Crazy Colours, “I was thinking that if it does I’ve decided that I’m going to resort to terrorism,” presumably referring to another snowstorm that could potentially delay is upcoming travels.

Anyhoo, the Tweet was discovered by a Robin Hood Airport employee who was compelled to report the threat to authorities. Naturally this led to seven hours of questioning, the loss of his job, and a ban from the airport for life (later rescinded).

The judge ruled that the Tweet was ”of a menacing nature in the context of the times in which we live.” Chambers was fined approximately $1,500 and naturally, took to the Twittersphere with his thoughts on the matter:

Accountant used Twitter to threaten to blow up airport [Telegraph]
Briton Convicted for ‘Menacing’ Tweet Against Robin Hood Airport [The Lede/NYT]

Former Deloitte Intern Not So Good at Gambling on Corporate Card, Lying About It

In blatant-misuse-of-the-corporate-credit-card news, a former Deloitte “trainee/student” (let’s assume an intern, shall we?) has admitted to racking up over £8,800 in gambling debt on his Deloitte issued credit card.


Umar Qureshi, using his Deloitte laptop no less, managed to lose the money in just a couple of months, October and November of 2008. At that point, Qureshi, rather than admit to being a horrendous gambler, lied about the charges, telling Deloitte that they were fraudulent. Depending on when this particular lie took place, he only managed to keep a straight face, at the most, for two months, as Deloitte terminated his contract in January of ’09.

Which is understandable. Gambling can be nerve-racking on its own but losing your ass on the Corporate Card has got to be a real pant-crapper. This makes for the second Big 4 degenerate loser to make headlines this year in the UK. Back in February, a ex-KPMGer really was rolling, slamming over £25,000 on his expense report.

Accountancy Age reports that the Institute of Chartered Accountants in England and Wales (“ICAEW”), “ordered that the defendant cease to be a provisional member and be ineligible for re-registration for six months, and that he be severely reprimanded.” As we mentioned in the KPMG case, we’re not sure what a “reprimand” entails but a weeklong diversity training with Barry Salzberg could be a possibility.

Luckily, for Qureshi a relative was kind enough to pay the debt owed to Deloitte, who must have really wanted the money back. It’s just principle.

Former Deloitte student admits £8k bill from online gambling [Accountancy Age]

Ohio Man Fighting the IRS May Not Be Done Bulldozing

Great news everyone! There’s a chance that more bulldozer fun will be had in Ohio, courtesy of Terry “Dozer” Hoskins.

Having demolished his house in less than two hours and knowing that it was only a matter of time before the bank came after his business property, he’s giving serious thought to renting another dozer and finishing this thing once and for all. Small town bank and IRS be damned.


Hey, we’re all for it. If you can a dozer for $500 why not introduce a little more chaos in your life? And don’t worry, the man is a professional and is always mindful of safety, “‘You have to know what you’re doing before doing something like this’ to avoid being hurt, Hoskins said of destroying his house. ‘I’ve run heavy equipment for years.'”

Believe it or not, Dozer’s wife wasn’t thrilled with the whole razing of the house, “Also not happy about the destruction of their house was his wife, Hoskins said. They are now living in one of the buildings on the commercial property.” He must have concluded that since he had already declared bankruptcy and destroyed one piece of property, floating the idea of flattening the business property couldn’t piss off the Mrs. too much more.

Question Hoskins decision-making skills if you like but it’s good to see a man taking pride in his work, “I don’t regret one bit of it.”

Home razer might take business next [Cincinnati Enquirer via TaxProf]

Today in IRS Resistance: Ohio Man Bulldozes His Own House

What’s the saying about trends? We can’t remember it but after the suicide attack on the IRS last week, we now bring you a less violent but equally ineffective middle finger to the IRS.

Terry Hoskins, of Moscow, Ohio had IRS liens slapped on his carpeting store and other properties. Apparently he used his personal residence as collateral on the business and these other properties, leading his bank to foreclose on his home. Hoskins wasn’t okay with that:


Whether Terry the Bulldozer was looking to get a Facebook following out of this, isn’t entirely clear. But we will give the guy credit; even if he did this to himself by putting up his personal residence for some bad business deals, he’s got pretty creative for the sake of making a point.

“I made a bad business decision. Fuck you IRS! Up yours, RiverHills Bank! You think I’m not serious? I will rent heavy machinery to prove my point. I will make my loved ones temporarily homeless. I will go on a local NBC affiliate to talk about it. How do you like me now?”

Unfortunately, the timing couldn’t be worse. If that attention whore Joe Stack hadn’t gone on his little flight, Terry could be enjoying Joe the Plumber-esque fame right now. Next time, Terry.

(UPDATE) Ernst & Young Partner Sentenced to Prison for Role in Tax Shelter Scheme

prison.jpgIn accountants going to jail news, E&Y partner Robert Coplan was sentenced to three years in prison for his role in creating tax shelters for wealthy clients from 1998 to 2006.
In addition to the jumpsuit (denim?), Mr. Coplan was ordered to pay a $75,000 fine and peform 120 hours of community service, half of which must be counseling of tax professionals about his time as a scofflaw.


Judge Sidney Stein said that while Mr. Coplan was an otherwise all right guy, the sentence was for ‘general deterrence’ and that he understood that ‘there was pressure coming from higher-ups at Ernst & Young’.
Judge Stein is scheduled to hand out more prison time to former E&Y partner Martin Nissenbaum today, while former partners Richard Shapiro and Brian Vaughn tomorrow.
Presumably all the men have access to a toilet without too much hassle.
UPDATE, Friday 8 am: Martin Nissenbaum was sentenced to two-and-a-half years. Not sure why he got 6 months less than Coplan but we’re sure he’s thrilled with the outcome.
E&Y partner gets prison over tax shelter scheme [Reuters]

What Are You Prepared to Do to Make Your Dream Wedding Happen?

love-money.jpgOkay ladies, we’re aware that some of you have the wedding fever. You want the string quartet, doves flying out of the house of worship, driving away in a Bentley while you leave your new hubby’s ex on her knees sobbing her stupid little head off. We get it.
What we don’t get is the lengths that a few of you are willing to go to make this super magical day happen.
Enter Joanne Kent, a 26 year old accountant who embezzled £470,000 from her employer. £50,000 went to bankroll her wedding, including £37,134 for the cliff-top hotel. That didn’t include the cost of the flowers, cars, and fireworks on the beach (all crucial).
And she would have gotten away with it had she not produced an American invoice that was in pounds rather than dollars. The poor girl was sentenced to two years for her little stunt and will likely have to pay the loot back. What’s not clear is if the guests will be demanding their gifts back.
Accountant stole £470,000 for wedding and luxury life [Telegraph]
More Theft for Necessities:
Accountant Steals from Toys ‘R’ Us, Buys Hookers Bentleys

And Here We Thought All Accountant Bloggers Were Doing It for the Forces of Good

Thumbnail image for integrity.jpgThe gamut of accounting bloggers that we’re acquainted with are good people despite their individual proclivities. Things like paranoid fantasies that involve every level of government bureaucracy (we’re looking straight at you, JDA) and perverse obsessions with stilettos that even freak us out (ahem, Francine) don’t make anyone a bad person, just well, weird.
That being said, it was only a matter of time before an accountant/blogger actually turned out to be criminal*.


Russ Fox at Taxable Talk:

About a year ago I discover a tax blog called Apirl15.com. I doubt we’ll be seeing any more of this blog; according to an affidavit from an IRS Special Agent, the proprietor of the blog has admitted to embezzling $8.5 million.
William Murray, a CPA from Sacramento, allegedly told his clients to pay their taxes through a “trust account” system. This “service” would help the clients and make things easier for them. Mr. Murray also allegedly had clients send money that he would allegedly “loan” to other clients.

William “No, not Bill” Murray used the client money for the run-of-the-mill stuff: cars, houses, entertainment (i.e. hookers, llelo), plus it’s alleged that he’s a degenerate gambler. A model citizen really.
Despite this blow to the accounting blogosphere image, you can sleep well knowing that if we ever ask for your money it will be used for the purposes of providing you with the finest accounting rag news publication possible. There are reputations at stake.
April 15th No More [Taxable Talk via Tax Update Blog]
*You were a criminal before you started blogging, Sam.

Section 409A: Worst Tax Enactment of the Decade

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for thumbs down col.gifEditor’s note: Welcome to GC’s first edition of “Taxes: Because We’re the Little People” by Joe Kristan. Joe Kristan is a tax shareholder for Roth & Company, a Des Moines, Iowa CPA firm, where he works with closely-held businesses and their owners. Prior to helping start Roth & Company, he worked for two of what are now the Final Four CPA firms. He writes the Tax Update Blog and is available for seminars, first communions, Bar Mitzvahs, etc.
Sure, those Northwest pilots who missed Minnesota were off the mark. So was Arthur when he signed off on the Enron audit. But as badly as they missed the target, they look like Annie Oakley compared to Congress in its response to Enron.
Congress takes aim at the national firms whose audits failed to spot the looting at places like Enron. The result? SarBox, the greatest gravy train for the Final Four firms since the invention of the senior accountant.


The Congressional response on the tax side took a different approach. Rather than reward the guilty, they chose to beat the innocent. Hence Section 409A.
The Enron scandal featured elaborate deferred compensation plans to provide executives a gilded liferaft when the ship sinks. Congress responds with a code section affecting schoolteachers. They showed Ken Lay what for by designing a tax on folks on money they may never see because of somebody else’s foot fault.
Sec. 409A clobbers its victims two ways:
• It taxes employees on their deferred comp balances when the plan is out of compliance, even if the employee doesn’t get the money, ever.
• It hits them again with a 20% excise tax.
Worse, the code section imposing these penalties is so complicated that it took 3 years to complete the regulations that run to 200 pages, and are so complicated and intrusive that accidental noncompliance must be rampant.
This all makes Sec. 409A my choice as the worst tax enactment of the decade. But tastes differ. Let us know your nominee for the worst tax provision enacted from 2000 through 2009 in the comments and if we get some good submissions, we’ll put it to a vote.

Here’s a Good Example of How Not to Sue a Big 4 Firm

Thumbnail image for morans.jpgWere you at all concerned that you would never hear another story about a lawsuit related to the AOL/Time Warner merger from 2001? A merger described by BusinessWeek as possibly being the “worst of the worst.”
AOL’s revenue recognition practices for booking online ad revenue led to restatements of their financial results from 2000 to 2002. This led to hundreds of shareholder lawsuits, most of which were consolidated into a class action suit. All of the suits have been settled or dismissed.
E&Y, who audited the AOL portion of this little gem, has now had the final lawsuit against the them dismissed. Back in 2003, AOL shareholder Dominic Amarosa decided that he was going to file suit on his own rather join the class action. Problem was, he didn’t file suit on time and failed to connect his losses to statements that were made by E&Y. Those both sound kind of important.
On top of that, Judge Colleen McMahon didn’t really care for the plaintiff or his attorney Christopher Gray, calling Amarosa a ‘vexatious litigant pursuing clearly frivolous claims’ and Gray’s tactics, ‘shenanigans.’ Judge McMahon also indicated that she was considering sanctions against Gray for said shenanigans.
So if you’re looking for a blueprint on how to completely screw the pooch on a lawsuit against a Big 4 firm, this is probably a good place to start.
Lawsuit over Time Warner-AOL merger dismissed [Reuters]

Accountant Steals from Toys ‘R’ Us, Buys Hookers Bentleys

Thumbnail image for Thumbnail image for prostie.jpgBefore we get started, we just want to kindly request that you keep any thoughts or comments you have about Geoffrey masks to yourselves, okay? Thanks.
Anyhoo, an accountant in the UK has pleaded guilty to 18 counts of theft of £3.7 million from Toys ‘R’ Us that he spent on hookers and other necessities including said hookers’ mortgages and their transportation needs.

[Paul] Hopes encountered most of the call girls while touring the country on business, drinking in the bars of luxury hotels. He spent about £500,000 of the money on “food, drink and entertainment”, according to one source. He also gave thousands of pounds to call girls and bought one a Bentley.
“He developed an infatuation with at least a couple of the girls,” said one investigator. “Sometimes thousands of pounds in cash were passed over in envelopes and they could do what they wanted with it.”
He paid off the mortgage of at least one escort — although he failed to do the same for the loan on his own home. According to the economic crime unit of Thames Valley police, there is no suggestion that Hopes’s wife or his two children benefited from the fraud in any way.

Yes, the man was married with children. And yes, the man was willing to make sure that a lady of the evening had a roof over her head before his own family. So, mild-mannered, grey-haired, double-chinned number crunchers that are leading double lives. Consider this your warning. Everyone will be looking at you differently.
Quiet Paul from accounts in £3m secret life of fast cars and call girls [Times Online]

Lesson of the Day: When Requesting a Bogus Tax Refund, Avoid an Excessive Amount

It makes sense that financial crimes increase during a recession. People get desperate and they start taking crazy-ass chances. Crazy-ass chances like, let’s request a tax refund for a couple hundred million dollars.
Justice.gov:

Papers filed in the cases say the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. One defendant – Dick Jenkins, of Heber City, Utah – allegedly holds himself out as a CPA and requested a $210 million fraudulent refund for one customer. The Internal Revenue Service (IRS) catches the vast majority of the bogus tax returns and blocks the claimed refunds…Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in the seven lawsuits filed this week) have requested a total of $3.3 trillion in fraudulent refunds.

According to the AP, “Officials say the tax preparers often falsely tell customers the government maintains secrets accounts of money for its citizens that can be accessed by filing false returns.”
So your tax preparer tells you that by filing a fake tax return you’ll be able access a secret pile of money. Is this remotely believable? Believable to the point of saying, “Excuse me, Internal Revenue Service, you owe me $210 million”?
Some discretion, people.
DOJ Charges Seven With Seeking $562m of Bogus Tax Refunds [TaxProf Blog]
Feds file suits over $562 million bogus tax claims [AP]

Today in Bad Decisions: Borrowing Money from Your Ex-Mother-in-Law

mother-in-law.jpgDo you have a mother-in-law? How well do you get along with her? Not good, huh? Whatever differences you may have, surely it’s not this bad:

When a former son-in-law in Illinois failed to settle an asserted loan by his ex-mother-in-law to her satisfaction, she gave up on collecting but issued a 1099-C reporting the amount as debt forgiveness income.
Ex-Son-in-Law took it badly, and fought back. He sued Ex-Mom, claiming that because she wasn’t required to issue a 1099-C, it was fraudulent for her to do so.

Borrowing money from your mother-in-law, let alone your ex-mother-in-law is not what we would consider a good life decision. Jesus, especially if you’re a deadbeat. We understand that times are tough but hey, next time around he’ll know.
So this guy is in a tough spot. Solution? Sue her for fraud, of course! The judge in the case said someone issuing an unnecessary 1099 did not constitute fraud so the son’s only remedy now is to argue that the contents of said 1099 were fraudulent. Good luck with that, man. You’re finished.
A Victory For Bitter Ex-Mother-In-Laws Everywhere [Tax Update Blog]