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Tom Petters Is Not a Bentley Guy

Posted on by Caleb Newquist

Thumbnail image for petters_plane.jpgSwashbuckling cocker spaniel Tom Petters has managed to keep his focus the last few days, testifying in his trial for his alleged $3.5 billion Ponzi scheme.
His cross-examination by Assistant U.S. Attorney Joe Dixon included several interesting exchanges including Petters admitting that he was the ‘heart and soul’ of PCI despite his claim of being duped for fifteen years by his office manager/confidante/lover, Deanna Coleman and Robert White, his former CFO. Dixon also accused of Petters of getting drunk on the super-happy-fun times he was having as a captain of industry:

Dixon moved to a line of questioning meant to show Petters used investors’ money to support his other businesses and lifestyle.
Dixon asked about Petters’ ownership of a Bentley, his use of corporate aircraft and homes on Lake Minnetonka and in Florida.
“You wanted the life of a corporate tycoon,” Dixon said.
“No, others wanted me to have that life,” Petters said, his voice rising. “I did not want the life of a corporate tycoon. Absolutely, I didn’t want that.”
Petters said his friend Dean Vlahos, a founder of the Champps and Redstone American Grill restaurant chains, bought him a Bentley as a gift.
“I didn’t want a Bentley,” he said. “I’m not a Bentley guy.”

See? Tom Petters was thrust into this swashbuckling lifestyle by others. The man can’t finish a book if his life depended on it, he can’t possibly be this titan of capitalism. He would’ve been perfectly happy driving a late 70s Oldsmobile Cutlass around on fumes with the headliner completely torn out. In fact, he would’ve preferred that.
Prosecutor jabs, Petters takes to ropes [Minneapolis Star-Tribune]
More GC Coverage of Tom Petters:
Even as the Doors Were Being Busted Down, Tom Petters Was Sure Everything Would Be Fine
Tom Petters Was Pretty Sure He Was Going to End Up in a Dumpster Somewhere
Ernst & Young and McGladrey & Pullen Both Have a Petters Problem

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Fraud Examiners Can’t See the Silver Lining

fraud.jpgThe Association of Certified Fraud Examiners (“ACFE”) is bellyaching about the Garret-Adler amendment.
This is the measure that was passed by the House Financial Services Committee that would exempt small issuers (market cap less than $75 mil) from complying with section 404 of Sarbanes Oxley.
ACFE President, James Ratley:

“At a time when the economic downturn has heightened the risk of fraud for organizations large and small, it simply does not make sense to weaken accounting rules that are in place to protect investors,” he said in a statement. “The bottom line is that internal controls are one of the best fraud prevention tools for any organization to have in place. Providing exemptions for some public companies from the SOX 404 requirements only leads to an increased risk of fraud.”

Ratley very well may be right but let’s not forget who we’re talking about. Nobody — especially accountants — is going to stop the train wreck that is the U.S. Congress. Accordingly, the ACFE should embrace this as a golden opportunity to boost their membership and shout from the rooftops about the benefits of having a CFE certification.
Nobody seems to understand that it isn’t auditors’ job to detect fraud and most companies only seem interested in detective controls, so what’s the point?
Get on this ACFE. It’s fraud awareness week after all. We shouldn’t have to explain this to you.
ACFE Warns Not to Change SOX Rules [Web CPA]

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Satyam: Does Anyone Mind if We Take Another Three Months to Finish Our Restatements?

With just a couple weeks until the June 30 deadline for the company to issue its restated financial statements, Satyam is requesting just a little more time to get this mulligan nailed down. Three months to be precise.

Yes, they’re completely aware that it’s been nearly 18 months since the shit hit the fan. And yes, this is the third time they’ve asked India’s Company Law Board (“CLB”) for an extension on the filing but at this point they figure expectations are so low, no one will get too worked up over it.


Except for an “analyst with a leading brokerage house.” who is quoted in the Business Times, “There is no clarity on what is happening within the company. They should have at least provided the current sales figure or the bench strength. How is the shareholder supposed to rate their stock?”

Since more than a few people might be caught up in “sales figures” and whatnot, Satyam went to the trouble to let everyone know that they’re working hard, ordering in, etc. etc. so you can rest your pretty little heads:

A Satyam official said, “The records have been under the custody of investigating agencies and we recently got a court clearance. Also, our auditors (KMPG and Deloitte) told us they need some more time for the restatement. It’s only a matter of a quarter.”

See? It’s just a matter of a quarter. Plus, you can’t really blame them – KPMG and Deloitte are the ones saying they need more time. Satyam has likely been bugging them for months about wrapping up but KPMG and Deloitte are probably complaining, saying things like, “we can’t find any documentation to supports these numbers” and “this doesn’t add up.”

So, TFB if some whiny analysts don’t like it. We’ll just find out just how big of nightmare these financial statements will be in due course.