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Wed July 13, 2016
July 10, 2016
Each Fall I begin a Who's the Worst list of fradusters.This is preparation for the Accounting Ethics 5308 class taught in the spring. One particular case has already caught my eye so let's get underway.
Friday April 30 2010
It's a tough call, all the fat cats at Bear, Lehman, Goldman, paying themselves as their very firms fell apart, John Thain redecorating the office for $1 M, demanding $10 M in bonus for saving Merrill an hour before Lehman evaporated, Blankfein denying Goldman bet against their clients, a true rogue's gallery but
my nomination goes to Richard Fuld at Lehman. Now he is back on the witness stand and apparently engaging in perjury about just how much he did make. Come prosecutors, make my day, march re election glory for putting this guy where he belongs, off the yacht and into jail.
Business
Valeant Pharma stock has fallen 73% this year.
CEO Mike Pearson is leaving, not a mutual decision. Activist investor Bill Ackman is joining the Board. There will be more on the firm in this space I am sure....
Valeant's Elizabeth Holmes banned from running a lab for two years. She intentionally omitted information about lab tests to shareholders.
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Fiat Chrysler admits to falsifying sales figures for 71versus thecorrect 40 months.
FCA at first denied accusations in a lawsuite brought byMaserati dealers.
FCA claimed a 300% increase in sales. In fact, the 'sales' were cars in demonstrator status. This is doubly disappointing in that theCEO of FCA,
Sergio Marchionne,is a Chartered Professional Accountant in his home country of Canada.
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PwC faces rare Crisis Era Suit
Lee Farkas was chairman of Taylor Bean, a mortgage company.He is now serving 30 years for fraud. The bankruptcy trustee for Taylor Bean is suing PwC for $5.5 Bin damages. PwC defense is that it was lied to by the company. At issue here is the gray area of just how responsible an external auditor is for uncovering fraud.
And as Zero Hedge Says, You can't make this up, Coorzine sues PwC for the failure of IMF Global
If Corzine had not been a former Dem Governor and Senator he would surely have been jailed for the first securities firm to stiff its customers, Corzine claimed he had no idea where their money went in the collapse, strange for a former Goldman Sachs partner....
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The fallout from the VW emissions scandal continues.
Here are five reasons why Americans are not buying. And to think, someone in the last two years invested in a brand new VW dealership in the Dominion area.
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Rumblings of account impropriety have been in the open since 2013, when an LA Times investigation first revealed that sales pressures led Wells employees to cut legal and ethical corners. “Wells Fargo is the nation’s leader in selling add-on services to its customers,” the paper wrote at the time, in an article that would go on to get the attention of the Los Angeles city attorney and lead to the city’s 2015 suit against the bank. ”I’m not aware of any overbearing sales culture,” then-CFO (and current COO) Timothy Sloan told the Times.
All the while, Wells CEO John Stumpf has been frank about his desire to get Wells credit cards in the hands of his customers. “I am not going to be satisfied until every creditworthy customer who calls us their bank carries our credit card,” he said in 2014.
In ACCT 5308 we study ethical behavior and corporate governance. And we learn that proper ethical behavior is a result of the 'tone at the top.' What is implied in the tone of the remarks above by the CFO and current CEO?
Worse, half of all the bank accounts in the USA are now in the custody of four or five large banks, WFC is one of them. It is unusual that finally a company actually admitted complicity in such an act.
“Our entire culture is centered on doing what is right for our customers,” Stumpf said in a company-wide memo Thursday. “However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs.”
This news came out Sept 9, 2016. As I write the Dow is down 269 points, WFC dropped 70 cents along with the overall market.
This is just another example of Too Big To Fail. The government pockets a hefty fee, the guys at the top keep their jobs and bonuses, and 3,500 employees get pink slips for doing what the guys at the top wanted.
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Small Potatoes Dept - Sequin store owner sentenced to one year on jail for SNAP fraud.
Nasir Ali, 67, pleaded guilty to charging up to double for amounts purchased under the Food Stamp Program. So at age 67 he gets a year in the pen and restiution of $274K.
If one is going to become a criminal , this is not the way to do it!
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__Indian fraudsters are posing as US IRS agents and demanding payments.
This is the result of outsourcing US tax information abroad. Never give information about your taxes to a stranger on the phone.
Politics
She had raised some $800,000 but only dispensed one $1,000 scholarship. Apparently she deposited money from the charity to her personal bank account.g Funds were also used to pay for events hosted by Brown including lavish receptions and luxury boxes at concerts. \
In 2013 Crown responded to a question by saying Don't confuse me with the facts.
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This scheme also involved an education non profit.
He routed a federal grant through his consultants to pay back an illegal loan. The 59 year Old Democrat had been in Congress since 1995 and served on the powerful House ?Appropriations Committee.
Gee how is that for irony!
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Hillary Clinton violates the Federal Records Act, among other statutes.
FBI's Comey confirms foreign hackers probably have all 60,000 e mails including the 30,000 not released. President Obama campaigns for her the same day the Attorney General is supposedly deciding on prosecution. Hmm, do we have a double standard here?
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Democrats planned a craiglist ad supposedly placed by Trump seeking cooperative women
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Debbie Wasserman Schulz resigns as Democrat Chair amid wikileaks e mails.
Thousands of hacked e mails were released showing Schulz complicit in trying to de-rail the Sanders campaign, just as Sanders had suggested. Interestingly Hillary gets to keep the nomination, no matter how she achieved it. And this suggests the Russians are indeed in possession of Hillary's unreleased e mails. How might Putin use those during a Hillary presidency?
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Malaysian Prime Minister involved in $3.5 B money laundering scam. Here is the Jeff Foxworthy you can't make this stuff up moment.
Apparently some of the money went to finance the movie The Wolf of Wall Street.
http://www.wsj.com/articles/behind-the-1mdb-scandal-banks-that-missed-clues-and-bowed-to-pressure-1473109548
http://www.wsj.com/graphics/1mdb-money-flow/
http://graphics.wsj.com/1mdb-decoded/
Sports
The Russians have been accused of widespread doping of athletes at its 2014 Sochi Games.
Seems the FSB, successor to the KGB, figured out a way to open the sealed urine sample containers without breaking the seals. Recall that V. Putin got his start at the KGB.
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Irish Intl Olympic Chief Patrick Hickey arreseted in Rio for scalping tickets
Hickey and at least six others were involved in selling more than 1,000 tickets sold for higher fees after being allocated to the Olympic Council of Ireland. Gee, Patrick talk about tawdry behavior, first the Russian doping scandal, then scalping tickets and then the green water in the diving pool, one wonders how the Brazilian authorities managed to catch them but catch them they did
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And the Bum Steer Award of the Olympics surely goes to the guys and gals in charge of the diving pool.
As anyone who has worked at a pool would know, they ran out of chlorine and algae quickly took over, well duh....Millions of people in Rio and no one could find some chlorine to fix this????
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Ryan Lochte - I over exaggerated but did not lie about the robbery.
Well, as Richard Nixon demonstrated, covering up the story can be much much worse than the story it self. You may recall that Mr. Lochte claimed his group had been held up by armed robbers posing as police. It turns out he had vandalized a convenience store and the guards demanded he pay for the damage. Granted the guards did not call police but once we practice to deceive, it gets harder and harder to remember what we said.
Ryan Lochte losing sponsors. Yep, actions have consequences.
Seattle Seahawks sanctioned for practice violation.
And it happened in 2014 as well. Read the link to learn that the coach had the team engage in a prohibited training outside the regular season. The result was fines and a loss of a draft pick. How could a coach who had previously done the same thing, be so foolish! Apparently he thought he would not be caught. This sort of small thing is evidence of a lack of tone at the top, and unchecked, usually leads to other, larger problems.
Sunday July 10, 2016
One cause of firm failure is the inability to detect change and adapt to it.
Here is a 1991 Radio Shack advertisement. Nearly every thing listed here can now be done by a mobile phone, tablet, or laptop. Failing to see what was happening doomed RSH.