Joseph Harvey, the former CFO of Bielinskis Brothers Builders Inc. of Pewaukee was sentenced to two years of federal probation, including six months of home confinement. This sentence follows his guilty plea to charges of aiding and abetting a wire fraud.

Harvey is one of ten people indicted in a fraud scheme led by Robert Brownell, Bielinski’s former CEO. The loss to Bielinski is estimated at $10 million or more.
Harvey’s actions included forging a signature on a document for a loan of $1.43 million, and reimbursing himself with company funds for a campaign contribution.

Read Tracy’s article in the Wisconsin Law Journal, about the lessons to be learned from the Bielinski fraud.

According to the Houston Chronicle, the Free Enterprise Fund filed suit in Federal court this week against the Public Company Accounting Oversight Board (PCAOB). The lawsuit seeks to revoke the authority of the board, based upon the argument that it violates the Constitution’s mandate of separation of power between the three branches of government.

Sarbanes-Oxley established PCAOB, and the filers of the suit wish to remove power from the Board. The legal team for the Free Enterprise Fund includes Kenneth Starr (of Monica Lewinsky infamy).

According to the Wall Street Journal, General Motors is going to cut its $2 per share annual dividend in half, and cut executive salaries. The dividend cut will reduce the cash paid by about $565 million.

Cuts are also being planned for the health benefits for salaried retirees. GM will be capping its contributions to their healthcare at the 2006 amount paid. This should save GM about $900 million per year.

GM’s worldwide auto business had a loss of $11.4 billion in 2005.

In fiscal 2005, the U.S. government spent $2.47 trillion. More than half of that, or $1.3 trillion, went for Social Security, Medicare, Medicaid, farm-price supports, and government-employee pensions.

American International Group Inc. (AIG) is close to settling their case with the SEC and the New York State Insurance Department for $1.5 billion. This settlement includes penalties as well as disgorgement of ill-gotten gains.

In May, the SEC accused two former executives of AIG of accounting fraud to enhance the company’s performance figures. This was believed to mislead both investors and regulators. The executives involved include AIG’s former chief executive officer, Maurice “Hank” Greenberg, and former chief financial officer, Howard I. Smith.

Greenberg resigned from AIG in March, after leading the company for 38 years. Both he and Smith have denied any wrongdoing.

A $1.5 billion settlement would be the largest ever by the SEC, exceeding both the $750 million settlement with WorldCom Inc. and the $850 million settlement with Marsh & McLennan Companies.

Former Vice Chairman of Wal-Mart, Thomas Coughlin, has pleaded guilty to federal wire fraud and tax evasion charges. Coughlin was accused of taking fraudulent reimbursements and misusing gift cards. In addition to his seven-figure compensation, he had Wal-Mart pay for personal expenses like hunting trips, alligator boots, and contact lenses.

ChoicePoint Inc., a commercial data broker, has agreed to pay $15 million to settle charges of violating consumer privacy rights. $10 million will be paid as a penalty to the government, with $5 million going to 800 individuals who had their identities stolen as a result of ChoicePoint’s actions.

In addition, ChoicePoint must change it customer screening procedures, implement new information handling procedures, and have independent security audits every other year for the next 20 years.

The situation began when the company did not verify the identity of a client, who pulled credit histories on 163,000 people. The client turned out to be a Nigerian national who was involved in a fraud ring, and who provided fake company names, phone numbers, and addresses to ChoicePoint when applying for an account.

Press release from the FTC

Tiffany & Company is going to court against eBay, alleging that the online auction service allows sellers to list counterfeit Tiffany jewelry. The suit also alleges that eBay makes millions of dollars in fees from the auction of counterfeits.

Tiffany bought several hundred items on eBay, all listed as “Tiffany”. 75% of those items were found to be fakes.

EBay’s defense is that the company merely brings together sellers and buyers, and that the company is not responsible for the authenticity of items. The case is considered very serious, as a loss for eBay would open the door for ever other brand that believes fakes are being sold on the auction site.

One research analyst has suggested that Tiffany is pursuing this case in order to stop “secondary” sales of its products. If eBay is no longer an option, buyers will be more likely to buy directly from Tiffany.

The founder of Milwaukee’s Arabian Fest has been sentenced to 3 years in prison for stealing $75,000 of federal block grant money. He must also pay $75,000 in restitution and a fine of $1,000.

Mhammad Abu-Shawish got a sentence on the high end because the judge believed he lied while testifying in his trial this past summer. The judge also believes that Abu-Sawish helped 22 immigrants from Jordan enter the U.S. illegally between 2000 and 2002.

The illegal immigrants allegedly were brought here with invitation letters written by Abu-Sawish, indicating they would be working at Arabian Fest, and that the festival would purchase round trip tickets for them. It is believed that the people did not really work for Arabian Fest, and instead had purchased these invitation letters for $11,000 to $14,000. Of the 22 immigrants involved, it is alleged that 11 returned to Jordan, 7 stayed in the U.S., and 4 are unaccounted for.

The defendant was convicted of receiving federal block grant money after submitting a proposal that was identical to a proposal submitted by an agency. Abu-Shawish received the $75,000 block grant, but did not use it for community purposes.

Abu-Shawish will likely be deported after serving his sentence, as he illegally obtained permanent residency in the U.S. with 2 sham marriages. He is currently serving 8 months in prison for a previous federal conviction on his involvement in a mortgage fraud scam.