20 Apr

Conspiracy of Fools: Audit Adjustments

Enron had a history of trying to elicit favorable opinions on accounting issues from Arthur Andersen. The executives were aggressive in their reporting of income and expenses, always seeming to find a way to report things in the way that had the best effect on earnings.

As a part of Enron’s merger with Portland General, the company was acquiring a supply contract worth millions. Enron had a history of reporting income as soon as a contract was signed (which is a very aggressive and maybe incorrect accounting treatment), so naturally the executives wanted to book this contract as income immediately. Read More

19 Apr

Legitimate business or patent trolls?

Burst.com is a California company co-founded 18 years ago by Richard Lang.

Exactly what is the core business of the company? It holds 10 U.S. patents and asks big companies to license its technology. If they don’t, Burst sues them.

In March 2005, the company won a $60 million settlement from Microsoft. Its current target is Apple. Lang claims that Apple is infringing on Burst’s patents related to superfast transmission of data.

Hi-tech companies often refer to companies like Burst as patent trolls. The companies hold patents and make money on them by suing corporations who make products and services. They claim that they are all but forced to make large settlements with the patent trolls, because the legal risk of not doing so is too high.

Lang counters that he patented a method for transmitting data which was years ahead of its time. He says that Microsoft played hardball, and Lang had to sue.

The whole story is found at BusinessWeek.

17 Apr

Former Illinois governor George Ryan convicted of fraud and racketeering

A jury trial ended in conviction for former Illinois governor George Ryan. He was found guilty of all charges, including [tag]fraud[/tag], obstructing the Internal Revenue Service and lying to the FBI. The charges against Ryan were related to accusations of funneling large state contracts to friends and political insiders. In return for those contracts, Ryan received gifts and money.

Ryan’s co-defendant, Larry Warner was also convicted of [tag]racketeering[/tag] [tag]conspiracy[/tag] in addition to mail fraud, attempted [tag]extortion[/tag] and [tag]money laundering[/tag]. He benefited to the tune of $3 million in business deals.

The investigation into this [tag]corruption[/tag] matter went on for eight years. Ryan says he will appeal.

16 Apr

Illegal immigrant studying at Princeton University

Dan-el Padilla Peralta is an [tag]illegal immigrant[/tag] and a student at Princeton University. He turned himself in two weeks ago. He has won a scholarship to Oxford University in the United Kingdom, but if he leaves the United States he won’t be allowed to return.

Princeton knew that Dan-el was in the country illegally, but admitted him to the school and gave him a full scholarship anyway. The school essentially overlooked his illegal status. They did not require him to return to his home country and apply for a [tag]student visa[/tag], which is the legal way to admit such a student.

The issue of illegal immigrants in colleges and universities is hot. The Federation for American Immigration Reform has pointed out that each illegal immigrant admitted to college potentially takes away a seat from a [tag]legal resident[/tag].

Dan-el is also concerned about his future after graduating from college. If he does not accept the scholarship to attend Oxford, and instead stays in the U.S., he may have difficulty finding a teaching position without legal residency.

The entire story can be read in the Wall Street Journal.

15 Apr

Frank Jude Jr’s reaction to not guilty verdict

According to the Milwaukee Journal Sentinel, Frank Jude Jr. is “devastated and disgusted” at the news that three former Milwaukee police officers were acquitted of charges of beating him in October 2004.

Jude is currently at the Oshkosh Correctional Institution as a result of a parole violation following a physical altercation with his mother. His attorney Jonathan Safran said:

“He said it’s ironic that he’s incarcerated for what literally was revocation of parole with the incident with his mother who didn’t want to press charges and the cops involved in his tremendous beating were acquitted and out on the streets.”

14 Apr

Former Milwaukee Police Officers Not Guilty

I just listened to the reading of the verdicts in the trial of the three former Milwaukee police officers charged with beating Frank Jude Jr in October 2004. On 4 of the 5 counts the defendants were charged with, the verdict was “not guilty”. The jury was hung on the last count. Daniel Masarek and Andrew Spengler have won their victories. The State has said that they will re-try Jon Bartlett on the one count on which the jury was deadlocked. We await the response from the community.

11 Apr

Pen thief?

Maruicio Aguirre-Orcutt is currently serving a 57 month sentence in federal prison for fraudulently obtaining a $4,200 pen. Over three years, Aguirre-Orcutt collected dozens of limited-edition fountain pens by telling people that the pens would be given to celebrities or political leaders.

Pen collecting is a hobby in which collectors gather to show of their special pens, often engraved or bejeweled, and sometimes worth tens of thousands of dollars. Pen designers love to have their pens shown with celebrities, as this creates a stir and can boost sales.

In 2003, Aguirre-Orcutt told a Seattle pen merchant, World Lux Inc., that he was throwing a gala event for the “Legal Institute of the Arts”. The event and the organization were phony, but he convinced the merchant to send him a $2,750 Krone “John Hancock” pen which had embedded in it a splinter from the real John Hancock’s desk.

In 2004, the publisher of trade magazine Pen World, Glen Bowen, sent Aguirre-Orcutt at $4,200 David Oscarson “Harvest”. This is an 18 carat gold fountain pen, and Aguirre-Orcutt promised that President Bush would use it to sign a Monther’s Day proclamation. But when Bowen received a picture of Mr. Bush using the pen, he could tell that someone had only superimposed the pen onto the photo.

 

The Secret Service eventually searched his Apartment, and found 30 pens stolen from pen merchants and designers. Aguirre-Orcutt is now behind bars for this, one of many frauds he has perpetrated in his life.

11 Apr

Jeffrey Skilling declares his innocence

The former president of [tag]Enron Corp[/tag], [tag]Jeffrey Skilling[/tag], has taken the witness stand in his own defense Monday. He said, “I am absolutely innocent.” His testimony included a narrative on the company’s growth and quality of employees, and he declared that he never told any subordinates to lie or manipulate the financial statements.

Skilling is facing 28 counts of [tag]conspiracy[/tag], [tag]fraud[/tag], and [tag]insider trading[/tag]. Also on trial with him is former chairman of Enron, [tag]Kenneth Lay[/tag], who faces 6 criminal counts.

11 Apr

Third Party Confirmations Eyed

Compliance Week
By Tammy Whitehouse

In light of regulatory action against fraudulent third-party audit confirmations, some law firms are advising their clients to proceed more carefully when asked to provide such confirmations.

“We’re cautioning our clients regarding providing third-party confirmations, as are most major law firms,” said Frederick Lipman, partner with Blank Rome and president of the Association of Audit Committee Members. Lipman said the firm advises its clients to run all responses to audit confirmation requests through the accounting department, rather than sales or marketing functions, so the company can have confidence in the accuracy of the information it provides. Read More