Professor Elam

Kristi Alfaro Defaults

Wed Nov 18 2020

Kristi Alfaro, wife of a convicted San Antonio oil man, has defaulted on an agreed to repayment deal.

No honor among theives as they say,.

Alfaro Still Scheming

Friday Nov 13 2020

 

Just this week we described the 121 month sentence  to Brian Alfaro. If at first you don't succeed, try again!

 

Alfaro and his wife, while he waits the month before reporting to jail, attmepted to launch ARCA Wildlife.

The State of Texas issued a cease and desist order

as the wording of this scheme sounds just like the oil scheme, working interests, overages, etc.

I never run out of new material for the ethics class.

$13 M Bank Fraud Scheme at Bank of San Antonio

Thursday Nov 12, 2020

Ron Schroeder and others have been arrested in a $13 M factoring fraud scheme.

Schroeder was a bank President. He manufactured invoices and the bank loaned money against them.  He and his conspirators used teh money for their own purposes.

Here is the weak bank response. Does this inspire your confidence that they won't be bilked again?

“This is a ‘one-off,’ isolated event, and we have a $10 million insurance policy to indemnify our bank from this loss,” stated J. Bruce Bugg Jr., chairman of the board of The Bank of San Antonio.

 

Another Month, Another Ponzi Scheme

Nov 11 2020

Brian Alfaro had failed investors before. Now he is headed to jail for 121 months for defrauding more recent investors.

Like Bates in  Four Winds, Alfaro spent the money  on himself buying a Lambo and Spurs tickets behind the team bench.

Some lost their llfe savings. It amazes me that individuals do not hire CPAs or at least expolicemen to investigate. Putting your life savings with one person in uncertain oil deals is foolish to say the least.

 

I never run out of new material for ethics class.

Google Sued by DOJ

Tuesday Oct 20 2020

 

Google is being sued by DOJ over search dominance, joined by 11 State Republican AGs

Probably right and this is in keeping with lawsuits against successful companies at past market highs.

 

BRK Fined $4.1 M for Turkish Violations

Tuesday Oct 20 2020

We have noted an apparent increase in fees and fines for wrong doing, now even

Berkshire Hathaway is being fined.

SEC Eases Regulations on Auditor Independence

Monday Oct 19 2020

Page B 5 of today's WSJ

 

The U.S. Securities and Exchange Commission adopted changes that relax some conflict-of-interest rules for companies and audit firms, making it easier for them to avoid violating auditor independence in certain situations.

But honestly I am not sure what this means.

the article says it gives auditors more discretion in assessing conflicts of interest. 

Two SEC commissioners disagreed arguing it would inject moe opportunity for uncertainty and error.

Positive mood results in a  loosening of accounting restrictions near market tops. That appears to be the case here.

Four Scandals One Auditor / Ponzi Retrospective

Weekend October 17 2020

I don't know if this links as it is through our University Library and I had to log in but

https://search-proquest-com.tamusa.idm.oclc.org/news/docview/2451495587/fulltext/B06F603601D4050PQ/3?accountid=130967

There is a front page article in the Weekend WSJ about Luckin, Wirecard and two mid east firms all of which are failed audits and all of which

belong to EY. Actually this is right on time, consider

Enron happened right after the dot.com peak in March 2000. The resulting fall out took down Arthur Andersen and gave us SARBOX.

Nine years later we had Bernie Madoff and the sub prime crisis. Goldman had to issue a $1 B preferred stock to Warren Buffet to stay in business.  Goldman is back to reporting big profits.  This followed a market peak in Fall 2007.  That brought us Dodd Frank.

Now another ten years later, the stock market is recording another record run. And right on time we have another auditor scandal this time courtesy of EY and various mis steps by KPMG the last few years.

The article mentions that many ex EY personnel sit on the Board so firms EY audits. And that EY seeks new tech firms. Gee sounds like an echo of Enron which claimed it had new ways of doing business as well.

_____________________

And in  the weekend journal there is a Carlo Ponzi Retrospective, the  100th Anniversary

https://search-proquest-com.tamusa.idm.oclc.org/news/docview/2451495641/F073537C4809400FPQ/1?accountid=130967

 

Liz Warren Blasts Disney over Restoring Top Pay and Stock Buybacks

Thursday Oct 15 2020

I don't usually agree with Elizabeth Warren but in this case she is right.  She wrote a five page letter to Bob Iger at Disney.

Disney has laid off 28,0000 employees at its theme parks. Now it is restoring top exec pay.  In the past few years it spent $47 B buying back its own stock to increase the share price.  And of course that has weakened the financial position of the company.

As social mood grows more negative expect more such protests.

Wells Fargo Fires Dozens for Abuse of COVID Program

Thursday Oct 15 2020

Wells Fargo says it's fired workers who bilked a federal coronavirus relief program. A source tells CBS News 100 to 125 workers were shown the door.

 

Brian Dakss

Thu, October 15, 2020, 4:53 AM CDT

 

 

Wells Fargo says it's fired workers who bilked a federal coronavirus relief program. A source tells CBS News 100 to 125 workers were shown the door.

David Galloreese, head of the bank's Human Resources department, said in an internal memo provided to CBS News that the workers "defrauded" the Small Business Administration's Economic Injury Disaster Loan program.

It was designed to aid companies hurt by the coronavirus shutdown.

The program offered grants of up to $10,000 for businesses impacted by the coronavirus. But Well Fargo says it discovered that some of its employees got loans from the program and put the funds into their personal accounts.

We have detailed numerous problems at WFC over the last few years. Most involved ethical failures at the top of the organization. We study ethics and corporate governance in ACCT 5308 and  4311. Apparently the tone at the top has been such that  100 employees thought they could get away with this stunt.

Worse what does this say about internal control at the Small Business Administration?  I am guessing they just rubber stampled teh applications without asking any questions. No accountability at WFC or SBA.

 

--

The Galloreese memo read in part, "Unfortunately, we have identified employees who we believe – outside of their work responsibilities – defrauded the U.S. Small Business Administration (SBA) by making false representations in applying for coronavirus relief funds for themselves through the Economic Injury Disaster Loan program, which is administered directly through the SBA.