28 Feb

Felons Employed by the University of Wisconsin System

A Legislative Audit Bureau report on the UW System’s employment practices shows that the system employed 40 felons currently under supervision this past fall. (An Associated Press report states 40 felons work for the UW System, but the truth is that the 40 are only the ones currently under supervision. There could be other felons working for the system, but not under supervision.) Read More

28 Feb

Enron Raided Reserves to Boost Earnings

Wesley Colwell, the former head of accounting of Enron’s wholesale energy unit testified that in July 2000, he shifted $14 million from reserve accounts to pump up earnings. He also testified that neither Kenneth Lay nor Jeffrey Skilling directly told him to manipulate earnings.

Colwell testified that Enron’s wholesale unit delayed financial reports for the fourth quarter of 2000 until they were instructed on how much profit the company wanted to report. Read More

27 Feb

Anna Nicole Smith’s Case Finally Gets to the Supreme Court

Anna Nicole Smith (real name Vickie Lynn Marshall) was a 26 year-old stripper when she met 89 year-old millionaire Howard Marshall. They met at Anna’s workplace, and adult club, and married in 1994.

Howard died in August 1995, 14 months after the wedding. All of his assets were held in a trust, with his son Pierce Marshall as the primary beneficiary. Anna Nicole claims that Howard created a separate trust for her benefit, but that Pierce destroyed the documentation. Read More

27 Feb

Denial of Service attacks are affecting e-commerce

Distributed Denial of Service (DDOS) attacks have been wreaking havoc with e-commerce sites. These attacks bombard sites with so much internet traffic, that their regular customers cannot get through to do business with them. Hackers get into computers and turn them into “bots”, which are then used to attack e-commerce sites.

Symantic reported an average of 927 DDOS attacks per day in the first six months of 2005. This was up 679% from the last six months of 2004.

23 Feb

H&R Block incorrectly calculates its own taxes!!!

The tax preparation company of H&R Block Inc. has incorrectly calculated its own state taxes. A mistake in calculating its state effective income tax rate means that the company owes $32 million in back taxes that go back to 2004.
A company representative said that the error isn’t material. But it sure hurts when the company is already experiencing a slow year, which has been impacted by a technology problem that drove away 250,000 customers.

22 Feb

KMPG partners agree to SEC penalties

Four KPMG (and former KPMG) partners have agreed to SEC fines for their failure to detect a multi-billion dollar accounting fraud at Xerox Corp. Two of the four will pay the SEC $150,000 each, the largest fines ever imposed against individual auditors by the SEC.

From 1997 through 2000, Xerox manipulated its accounting for office equipment leases, in order to meet Wall Street’s expectations. The SEC alleges that KPMG partners overseeing the audit knew or should have known about the improper accounting practices.

To date, the SEC has won $55.2 million in penalties and disgorgement from cases related to Xerox. This includes $22.5 million in fines paid by KPMG.

21 Feb

IRS Owes Taxpayers $2 Billion

Every year, taxpayers lose refunds they’re entitled to because they haven’t filed tax returns.

Currently, the IRS owes over $2 billion to 1.7 million people for the tax year of 2002. But they can’t get the refunds unless they file the returns, and the deadline to file is April 17, 2006. Taxpayers have up to 3 years to claim refunds, but after that, they forfeit any refunds.

Note 1: There are no penalties for late filing of individual tax returns if the IRS owes the taxpayer a refund.

Note 2: Refunds for 2002 won’t be sent to a taxpayer until he or she has also filed tax returns for 2003 and 2004.

20 Feb

Lawsuit over McDonald’s french fries

At least three lawsuits have been filed against McDonald’s Corp. over ingredients in its french fries. McDonald’s website previous indicated that the french fries were free of gluten and milk or wheat allergens. The site now states “contains wheat and milk ingredients” after the company disclosed that the fries include natural flavoring which includes extracts from wheat and dairy products. McDonald’s maintains, however, that the extracts are processed in a way that removes the proteins which are believed to be responsible for allergic reactions.

The lawsuits have been filed by two plaintiffs with intolerance to gluten, a protein found in wheat. The third plaintiff filing a lawsuit is a vegan who eats no animal products.

18 Feb

Merrill Lynch settles 23 class action lawsuits

Merrill Lynch & Co. Inc. will pay $164 million to settle 23 class action suits related to it cover of internet companies. It was alleged that during the dot com boom, Merrill Lynch analysts had conflicts of interests and gave favorable coverage to certain securities in order for the company to land other business. Two class action suits against Merrill Lynch related to this issue remain unsettled.

17 Feb

SEC Alleges That KPMG Auditors Ignored Red Flags

The Securities and Exchange Commission has alleged that two KPMG auditors, Kevin Hill and Rosemary Meyer, ignored fraud red flags during their audit of U.S. Foodservice Inc., a subsidiary of Ahold NV. It is further alleged that the auditors violated the rules of professional conduct during their audit.

It is alleged that Hill and Meyer found evidence of improperly recorded revenue, but the auditors did not act on this information. It is further alleged that white-out was used to cover markings on working papers that referred to audit exceptions identified related to vendor payments. Read More