Vanishing Profession

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The shortage of accounting faculty is a hot topic in academia and professional circles. Some call it a crisis.

INSIGHT – The Magazine of the Illinois CPA Society – January/February 2007
By Sheryl Nance-Nash

Over the next three years, US and Canadian universities will need to hire 942 new PhDs, but will have only 621 graduates to choose from. Which brings to light a simple truth: The number of graduating PhDs are insufficient to replace the number of professors who are due to retire over the next decade, according to research conducted by the American Accounting Association.

“This is terribly serious,” says Paul Sharman, president and CEO of the Institute o Management Accountants, (IMA) based in Montvale, New Jersey. “There are 50 percent fewer PhDs in academia than there were 10 years ago; and given the number of PhD students now, that number will likely be halved in another decade,” he contends. “The problem is growing increasingly acute.” Continue reading

Pyramid Scheme Alert update

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In late November, I announced that I had been appointed to the Board of Advisors of Pyramid Scheme Alert (PSA). PSA is an organization dedicated to educating consumers about multi-level marketing companies and pyramid schemes. While MLMs are technically legal in the United States, the vast majority of them are nothing more than product-based pyramid schemes which depend upon an endless chain of recruitment of new members.

I bring to the Board of Advisors my expertise as a fraud investigator, as well as in-depth knowledge of Mary Kay Cosmetics, a multi-level marketing company that’s been around for over 40 years. The founder of PSA, Robert FitzPatrick, is very selective in his appointments. Those who are on the board must have expertise relevant to MLMs and the mission of the organization. I’m honored to be a part of such a credentialed group.

I’ve been working to pull together information on Mary Kay for PSA. Mary Kay Inc. has been flying under the radar for years! The company has generally enjoyed a good reputation in the business community. Mary Kay Ash was well-respected because she was a shrewd businesswoman who developed this company from the ground up. Unfortunately, that has overshadowed the abusive nature of the business opportunity. People haven’t recognized that the MLM system utilized by Mary Kay is very profitable to the corporation itself, but very detrimental to the individual business owners.

PSA never really considered Mary Kay to be a company that they should look into. It just wasn’t “out there” as a recruiting scheme or product-based pyramid scheme. That’s where I come in. I’m putting together materials on the pay plan and recruiting, as well as some of the “official” and “unofficial” materials distributed by Mary Kay and its representatives.

My website Pink Truth strives to educate consumers and potential recruits about the grim reality of this pyramid scheme. I present daily posts about realities of Mary Kay, examining the real earnings of representatives, why the plan is abusive, and how millions of women a year are conned into putting money into this losing proposition.

Additionally, I’ve been working on some other things related to MLMs, and generally enjoying playing an active role in PSA. More to come…

State Farm Loses a Hurricane Katrina Case

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State Farm policyholders Norman and Genevieve Broussard of Biloxi, Mississippi have been awarded $2.5 million in punitive damages in their case against State Farm Fire and Casualty Co. The judge in the case also awarded the couple $223,292 for damage caused to their home by Hurricane Katrina.

The lawsuit was started because State Farm refused to pay for any damage to the Broussards’ home, which was completely leveled in the storm. State Farm said that the home was destroyed by an uninsured storm surge, while the Broussards claimed that is was destroyed by a tornado during the hurricane. Continue reading

Cisco Sues Apple for Use of iPhone Name

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On Tuesday, Apple unveiled its plans for the iPhone, which is to be distributed starting in June. On Wednesday, Cisco filed suit in U.S. District Court in San Francisco, seeking an injunction to prevent Apple from using the name. If successful, Apple could be forced to drop the name iPhone from its product.

Cisco says the company has owned the trademark on “iPhone” since 2000 when it acquired InfoGear Technology Corp., the original owner of the trademark. The company says its Linksys unit uses the iPhone name on a family of phones which uses voice over Internet protocol (VOIP). Continue reading

Report says the IRS collection system is flawed

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A report by Nina Olson, the Internal Revenue Service’s National Taxpayer Advocate, indicates that the system used by the IRS to collect back taxes is flawed.

She indicated in her annual report to Congress that the IRS makes it difficult for taxpayers to pay their late tax bills and is failing to promptly personally notify taxpayers of their delinquencies. The agency is also accused of not telling taxpayers about alternative payment mentods, such as installment agreements.

Sometimes taxpayers are not contacted by the IRS about their taxes owed until years later. By that time, the tax bill has increased significantly because of interest and penalties.

The IRS responded by saying that it has to have a balance between staff levels and the enforcement process. The agency also said that delinquent taxpayers do receive letters that notify them of taxes owed.

Between 2001 and 2004, the IRS labeled almost 934,000 delinquent taxpayers and “currently not collectible.” They owed a total of about $7.8 billion.

2006 Ends: Another Year, Another Fraud

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At the end of one year and the beginning of another, people seem fixated on changing for the better. Most people think up a resolution or two to get their new year started on a right foot. It seems the perfect time to make some positive changes.

Companies are no different, and the start of a year is the time when many things change. How many executives have fraud on their minds when starting a new year? Probably not many, and that’s too bad. The beginning of the year is typically a time when employees expect changes. Insurance policies are updated, new schedules may be implemented, and policies and procedures may change.

Why not focus on fraud prevention in the new year? Employees are ready for change and executives should take advantaged of that opportunity. Continue reading

Flip This House Lawsuit

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Last year I became a big fan of the A&E Channel’s show called “Flip This House”. The show followed Richard Davis, and his company Trademark Properties, as they bought, renovated, and sold houses. I loved the show and Richard’s up-and-coming employee Ginger Alexander.

I waited to see new episodes. And I waited. And waited. And waited.

And finally realized there wasn’t going to be another show. At least not with Richard and Ginger. A&E had found some bogus “replacements” for the show, and it is now terrible. Continue reading

Deferred Charge Against KPMG is Dismissed

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A deferred criminal charge against KPMG related to the sales of tax shelters has been dismissed by a federal judge. In August 2005, a deferred prosecution agreement was agreed to by the parties in the case against KPMG, which accused the audit firm of creating and selling the tax shelters to help people avoid paying U.S. income taxes.

Under the deferred prosecution agreement, KPMG paid a $456 million fine, submitted to outside monitoring, and gave up some of its tax businesses. The agreement called for the government to dismiss the deferred charges if KPMG was in compliance through December 31, 2006.

Had KPMG been indicted for those charges, it might have led to the firm’s demise. In the agreement, KPMG admitted being involved in a conspiracy to defraud the U.S. government and the Internal Revenue Service.

While the firm is off the hook, 17 former KPMG executives were criminally charged with fraud and tax evasion related to the tax shelters. One has pleaded guilty and the others are expected to be on trial in September. Jeffrey Stein, the former deputy chairman of KPMG, opposed the dismissal of the charges against KPMG.

Former Enron executive reports to prison

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Richard Causey, the former [tag]chief accounting officer[/tag] at [tag]Enron[/tag] reported to [tag]prison[/tag] yesterday to begin serving his 5 1/2 year sentence. The 47-year-old ex-executive reported to Bastsrop Federal Correctional Institution, a low- to medium-security prison outside of Austin, Texas.

Causey pleaded guilty to a charge of [tag]securities fraud[/tag] in 2005 just prior to going on trial with Kenneth Lay and Jeffrey Skilling. He would have been tried on [tag]conspiracy[/tag], [tag]fraud[/tag], and other charges related to the Enron scandal. Causey admits to making false public findings statements.

Upon completing his prison sentence, Causey will server two years of probation and pay a $25,000 fine which will be distributed to Enron victims. He has further agreed to pay $1.25 to a victims’ fund and forgo $250,000 in deferred compensation from Enron.

The Michael McGee Jackson Recall Election Will Move Forward

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Yesterday the Milwaukee Election Commission spent all day in a hearing about the recall against alderman Michale McGee (Jackson).

McGee (Jackson) claimed that were was “widespread fraud” by the recall organizers. He said he got over 100 calls about people who said they’d been decieved, but he could not name any names. Does he even have ANY credibility anymore???

The election commission determined that some signatures were not valid, but ViAnna Jordan’s petitions still had 1,785 valid signatures. That was more than enough for the recall to go forward. Continue reading