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.
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.
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.
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.
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.
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. Continue reading
Steven E. Whiting, the former owner of Badger Die Casting, Inc. was sentenced today to 90 months in federal prison. He will also serve three years on supervised release and pay $921,000 in restitution. Whiting was convicted by a jury in May 2005 of ten counts of criminal conversion. He was convicted for spending employees’ health insurance premiums on personal items, leaving the employees without health insurance coverage.
The former CEO of Enron Broadband Services, Kenneth Rice, has testified that Jeffrey Skilling wanted him to mislead Enron’s board of directors. At a meeting between Rice and Skilling (former head of Enron) in May 2001, Skilling suggested that Rice should compile a presentation that was in line with analysts’ expectations. Analysts expected Enron Broadband Services to perform well long-term, but Rice says that the business unit was actually spending $100 million per quarter and producing little business.
Rice is one of 16 executives affiliated with Enron who have pleaded guilty to crimes related to Enron’s collapse. Rice pleaded guilty in July 2004 to securities fraud, and parted with $13.7 million in cash and property. That property included a Ferrari and a Colorado vacation home. He also agreed to help prosecutors with cases related to Enron. His net worth has dropped from $25 million to $10 million since pleading guilty, and he is awaiting sentencing.
The chief executive officer of RadioShack Corp., David Edmondson, lied about his academic credentials. The quote from him is that he “clearly misstated my academic record.”
Edmondson previously represented that he had a bachelor of science degree, but is now admitting that he might have something called a “ThG diploma”, which has fewer requirements than a bachelor’s degree. He apparently cannot provide proof of either degree.
Edmondson’s resume reflected a bachelor’s degree in psychology from Pacific Coast Baptist College in San Dimas, California. The school has never offered a psychology degree, however.
Last year a website called 12daily-Pro.com offered participants a 12% daily return on membership fees. The money was supposedly to be earned from viewing advertisements on the internet: 12 ads per day. After viewing the ads, members would be paid based upon how much they invested in “upgrades”.
The FBI and SEC are currently investigating this company for allegedly offering a Ponzi-like scam. Simply put, a Ponzi scheme is a fraud that promises a “return” on invested dollars, but really only pays old investors with the money of new investors. No “returns” are ever generated.
12dailyPro is an “autosurf” website, that promises people money just for viewing pages on the internet. On this particular site, a membership is free, but upgrades in increments of $6 are required in order to receive cash from the program.
The site is run by Charis Johnson, through a North Carolina company she owns called LifeClicks LLC. The main payment processor for the site, StormPay.com, has frozen all funds while the investigation is pending.