This is hilarious. Roy Pearson, a ?Washington D.C. administrative law judge sued a dry cleaner because they lost his pants. And he wants $65,462,500. He says he’s entitled to that $65 million because he’s had? .mental suffering, inconvenience and discomfort..

Wow. We’ve all had a favorite pair of pants. But if mine were lost, I don’t think I’d have $65 million worth of anguish over it.

Pearson dropped off a pair of pants in 2005 to have them altered. When he came back to pick them up, he was presented with the wrong pair of pants. (Pearson is also upset because the pants weren’t done on the same day he dropped them off, and he says the “Same Day Service” sign on the wall is therefore fraudulent.)

Pearson demanded $1,150 from the drycleaners to buy a new suit, and later the owners offered him $3,000, then $4,600, then $12,000 to settle. Instead Pearson wants $65 million based upon a consumer protection law that specifies damages of $1,500 per violation per day.

Even funnier is the idea that the drycleaner should pay for Pearson to rent a car. Yes, that’s what he’s saying. You see, the drycleaner he’s suing is in his neighborhood. Now Pearson can’t go there and has to rent a car every weekend to drive to a different drycleaner. He says that’s worth $15,000.

A full-page ad in the Wall Street Journal, Chicago Tribune, and Washington Post by the U.S. Chamber Institute for Legal Reform (a pro-business group) suggests that lawsuit abuse costs the average American family $3,520.

That is the alleged increase in cost of goods ad services due to these lawsuits. This figure was determined by Tillinghast (part of consulting firm Towers Perrin) after an analysis of A.M Best insurance data. Critics say this study included all lawsuits, and not just the ones that may have been fivilous, so it’s an unfair figure

Based upon the quality (or lack thereof) of this week’s submissions, it seems this is a good time to tell everyone what the Carnival of Fraud is all about…

1. The Carnival of Fraud is part of the Blog Carnival site. The key word there is BLOG. The Carnival of Fraud is for blog posts, not other miscellaneous websites.
2. The Carnival of Fraud is about FRAUD. (Hence the word “fraud” prominently in the title.) Your ramblings about business in general aren’t going to be part of the Carnival of Fraud.
3. The Carnival of Fraud is for legitimate blogs, not cheeky little attempts at getting Google ad revenue.

The one decent submission for this week (thank you, Mary Beth) will be held over until next week’s carnival, when I hope our submissions revert back to their previous high quality.

Today another class action suit was filed against Usana Health Sciences today, with a class period of July 18, 2006 to March 14, 2007.

The twist:

?The lawsuit was filed in the United States District Court for the District of Utah. Based on recent additional allegations of wrongdoing at USANA it is possible that the Class Period may be extended to include persons who purchased USANA stock after March 14, 2007.

What’s next?

An alleged Usana employee has suggested that Usana did not have the 153,000 “active” associates that it claimed in its December 31, 2006 10-K. I hope the SEC asks for proof of this number.

I issued a report to Fraud Discovery Institute about many of the financial issues raised in the Usana Health Sciences matter. The report clarifies the issues and why they’re important from an accounting perspective, specifically regarding Generally Accepted Accounting Principles (GAAP), materiality, and disclosures.

A few of the high points of my report include:

Marilee Jones, the dean of admissions for Massachusetts Institute of Technology, has resigned after it was discovered that she falsified her credentials. She claimed on her 1979 application to MIT that she had a bachelor’s and master’s degree from Rensselaer Polytechnic Institute, when she really only attended one year of part-time schooling there.? Jones also did not have a degree she claimed to have from Albany Medical College.

Jones was originally hired with the false credentials in 1979 for a “junior” position in the admissions office. She was promoted to dean in 1997 and says she “did not have the courage to correct my r?sum?.” She co-wrote a book in 2006 called “Less Stress, More Success: A New Approach to Guiding Your Teen Through College Admissions and Beyond.” Jones also sat on several higher education boards.

The situation came to light when an anonymous tipster sparked an internal investigation. Jones says she is “deeply sorry for this and for disappointing so many in the MIT community and beyond who supported me, believed in me, and who have given me extraordinary opportunities.”

Four defendants pleaded guilty to selling millions of dollars worth of fake Rockwell Automation software. The counterfeit software was sold on eBay, and had a retail value of $19 million. Each defendant faces five years in prison and a fine of $250,000. There have now been seven felony convictions for seling counterfeit Rockwell software.

A proposed amendment to make the internal controls portion of Sarbanes-Oxley optional for smaller corporations was defeated in the U.S. Senate this week. Specifically, the change would have allowed companies with market value less than $700 million to opt out of complying with Section 404 of SarbOx.

Sarbanes-Oxely has been criticized as too expensive relative to the benefits achieved.? Supporters of the law say that corporate fraud has been reduced (although that has not necessarily been proven). The SEC and PCAOB (Public Company Accounting Oversigt Board) are currently working to make some changes to Sarbanes Oxley.

I was cruising cyber-space, seeing what others had to say about today’s earnings call for Overstock.com. I made my feelings clear about the use of the word “improvement.” Overstock’s numbers are terrible, and when compared to last year, no one in their right mind thinks that’s “improvement.”

Investigative reporter Gary Weiss suggested a potentially appropriate phrase for the use of such a word: materially misleading. Indeed, Gary also points out what pansies the analysts were on today’s call, not asking anything remotely tough.

So what’s so misleading? Patrick Byrne, CEO of Overstock, keeps using incorrect words for their performance. He even issued a press release saying “Our business is dramatically improving.”

The problem with statements such as this? Gary points out that there are people out there who might actually believe them. That’s a big problem.

I’ve suggested that Patrick and company get themselves a good dictionary so they don’t erroneously refer to putrid results as an “improvement” in the future. I know where they can get one .