ChoicePoint settles data security case


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 lawsuit over eBay fakes


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.

Milwaukee Fraud: Founder of Arabian Fest sentenced to prison


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.

Shareholder questions spending of public company


Carl Icahn, a major shareholder in Time Warner Inc. has been speaking out against the company’s expenses. He says that the overhead and the perks are outrageous. Corporate overhead includes airplanes used by senior management for business and personal travel. Icahn also points out that Time Warner’s corporate headquarters, at $1.7 billion, is the most expensive office building ever built in New York.

Time Warner executives say that their overhead spending is not out of line when compared to other companies of a similar size.

Publishing Changes After “A Million Little Pieces” is Outed as a Faud


The publisher of “A Million Little Pieces” by James Frey has apologized to its readers. Nan A. Talese/Doubleday published the hardcover version, while Anchor Books published the paperback edition. Both publishers are apologizing to readers for the controversy.

The book, a purported nonfiction work, includes many exaggerated truths and outright lies. The publishers have now decided to include author and publisher notes to all future editions shipped to stores. The notes will also be published online.

As you might imagine, this controversy has helped to increase sales of the book.

Enron trial to begin Monday


It has taken four years, but Ken Lay and Jeffrey Skilling of Enron fame are finally going in front of a jury. The question remains whether or not the two heads of the company were a part of inflating earnings while the company was billions of dollars in debt.

First ‘Survivor’ winner found guilty of tax evasion


Richard Hatch, the winner of the first season of ‘Survivor’ was convicted of evading taxes on his winnings, as well as money earned as a radio show host and earnings from a rental property. He faces prison time of up to 13 years and a fine of up to $600,000.

Hatch’s defense was based upon his contention that he was a bad bookkeeper, and that he thought the producers of ‘Survivor’ were supposed to pay the taxes on his winnings.

He was acquitted on seven charges of bank fraud, mail fraud, and wire fraud. Hatch was taken into custody because the judge felt he was a flight risk. Sentencing is scheduled for late April.

Wisconsin Fraud: State official accused of corruption


Georgia Thompson, a purchasing division supervisor in the Wisconsin Department of Administration has been charged in federal court with 2 felonies. The charges include misapplication of funds and participating in a scheme to defraud the State.

The charges stem from the awarding of a $750,000 contract to provide travel services to the State. Thompson was on the team that reviewed bids from travel agencies, and the team awarded the contract to Adelman Travel.

Thompson was the coordinator of a process that limited the number of travel agencies doing business with the State. She allegedly manipulated the contract process to create job security for herself and create a political advantage for her supervisors.

In 2004, bids were solicited for 6 travel contracts. The largest one included 40% of the State’s travel business. Thompson and her team evaluated bids and utilized a scoring system. After written bids were examined, Thompson is accused of manipulating the next step of the process by inflating her scores for Adelman Travel and convincing other committee members to do the same.

Other team members agreed that the contract should go to Omega World Travel because of a higher score than Adelman. Thompson convinced the team to allow Adelman and Omega to present their “best and final” numbers, even though Omega won. A final round of bids was solicited from the two firms, and Adelman was awarded the contract.

The maximum possible penalty if convicted, is 20 years in prison.

Milwaukee Fraud: Museum Considers Hiring Forensic Auditors


The audit committee of the Milwaukee County Board is considering hiring an outside forensic accounting firm to perform a forensic audit on the finances of the Milwaukee Public Museum. This project would cost between $50,000 and $100,000. The project is being proposed by Supervisor James White.

The board of MPM was told by county auditors that investigators found no evidence of fraud or misappropriation of funds. The museum board once considered a forensic audit, but instead allowed county auditors to examine the books. Continue reading

Ameriquest Mortgage offers settlement to consumers


Ameriquest Mortgage Co. has offered $325 million to settle accusations of predatory lending in 49 states. Consumers in Wisconsin will receive over $2.7 million of the total. The company was accused of using high-pressure tactics and deception to sell mortgages to homeowners interested in refinancing.

Ameriquest is the nation’s largest sub-prime lender, offering loans to consumers with poor credit. Those mortgages are usually at higher interest rates.

Ameriquest has denied all allegations, but is agreeing to new standards that are meant to prevent the alleged unfair and deceptive practices. The new standards include not paying incentives to employees who secure mortgages with prepayment penalties or other fees.

The settlement must still be approved by the state courts.