The [tag]American Institute of Certified Public Accountants[/tag] ([tag]AICPA[/tag]) has been losing ground ever since the accounting scandals that started in 2001. Now, they may be headed for even more problems.
The organization decided this year to move many of its functions from New Jersey, New York, Texas, and Washington D.C. to Durham, North Carolina. About 400 jobs are being affected, and only about 50 employees have decided to make the move.
The AICPA has lost influence since the accounting scandals partly because it lost duties to [tag]PCAOB[/tag], the [tag]Public Company Accounting Oversight Board[/tag]. The PCAOB now sets the standards used to audit public companies instead of the AICPA. Currently, the AICPA has about 330,000 members, and is still the largest professional membership group for accountants. The organization says that the consolidation and move will save $10 million per year.
Chewco, one of the special purpose entities (SPE) that Enron used to enhance its financial statements, was under examination by the Arthur Andersen accountants. Specifically, they came across a letter that indicated that six million dollars from JEDI (another SPE) would fund a reserve account.
This was the proof of a secret side agreement used to get the Chewco deal closed. The six million dollars had been placed in a reserve account to secure a portion of the money provided by Barclays Bank. Enron could argue all it wanted that Barclays’s cash was really equity and not a loan. It didn’t matter anymore. Chewco had been constructed with exactly three percent independent equity. With six million dollars secured, Barclays did not have that cash at risk. Even assuming Barclays’s money was equity, Chewco was short the three percent by at least six million dollars.
There could no longer be any question. The accounting failed. Chewco was not a valid special-purpose entity. It was Enron.
And that it how it came to pass that Enron was going to have to recognize losses from these entities on its own financial statements. The entities were really not independent, so their financial results were Enron’s financial results. The vehicles that Enron executives used to move losses off Enron’s financial statements failed.
Wisconsin recently enacted a law which prohibits companies from implanting tiny computer chips under employees’ skin, also known as [tag]RFID[/tag] (Radio Frequency Identification) michrochip implant.
The small chips are used to track the movements of people, and may have been used by some employers to track employee activities. RFID tags are normally attached to products or animals, and radio waves are used to identify the chips. For example, chips like this can be used on products instead of the bar codes that are traditionally used at store checkouts.
Under the new law, any employer who requires a person to receive a [tag]microchip implant[/tag] will be fined $10,000 per day until the microchip is removed. While the chips could be useful to help positively identify employees and give them access to secure areas of companies, the risk exists that someone could cut the chips out of people and use them nefariously.
In order to prevent the kinds of fraud and abuse that went on after Hurricane Katrina, the Federal Emergency Management Agency (FEMA) is changing the way it distributes emergency aid.
The changes include the following: Continue reading
The partners at Arthur Andersen were having another argument about the management of the Enron account. As usual, Enron executives were throwing their weight around and trying to dictate who could be involved on their engagement. Specifically, they didn’t want Carl Bass to work on their account because he fought for the proper accounting treatment of items, not the creative ways that Enron used to enhance their financial statements. Continue reading
John Maloney, a former Green Bay police officer who was convicted of killing his wife, Sandy Maloney, in 1998 is seeking a pardon from the governor.
The defense strategy used by Attorney Jerry Boyle in the 1999 trial was to concede that the death of the estranged wife was a murder, but that the killer was Maloney’s girlfriend, Tracey Hellenbrand.
Hellenbrand, an ex-IRS special agent worked with law enforcement to get a videotaped confession from Maloney. The videotaping took place in a Las Vegas hotel, and included were sexual acts and hours of arguing. Maloney eventually made statements in the hotel room that indicated that he was at Sandy’s house on the night of the murder.
Maloney now says that he did not want to use Boyle’s strategy of pointing the finger at an alternate suspect. He says that instead, he (Maloney) wanted to argue that Sandy was dead from alcohol poisoning at the time the fire started, and that the fire was an accident.
Maloney was convicted of first-degree intentional homicide, arson, and mutilation of a corpse. He received a life sentence, and is eligible for parole in 2024. All appeals to the State Supreme Court have been exhausted, and a pardon is Maloney’s last chance.
Mary Ellen Wilson, a former office manager at Gentle Family Dentistry in New Berlin, was sentenced to 3 years in prison for stealing over $350,000 from the dental practice. Her [tag]prison[/tag] term will be followed by 5 years on extended supervision and 20 years of probation.
Wilson, 56, pleaded guilty to 5 counts of theft for stealing the money from her employer over a period of 5 years. Police were contacted by the clinic on April 19, 2005 with a report that a significant embezzlement had occurred, and the perpetrator had confessed that morning. The clinic operator was suspicious when the IRS contacted the dental practice to inquire about unpaid payroll taxes since 2000.
The theft scheme involved Wilson cutting checks to herself rather than making tax payments. In addition, she stole cash from the dental office. Wilson used the money for gambling, travel, clothing, and home furnishings. She said at the sentencing hearing that she was truly sorry and :
“My stealing from Gentle Family Dentistry has touched many lives. I have disgraced myself and embarrassed my family. I should have thought about all of this before I started stealing.”
CBS Corp. filed an appeal of the Federal Communications Commision’s (FCC) fine against 20 CFS stations for the airing of the flashing of Janet Jackson’s breat during the 2004 Super Bowl. Each station has been fined $27,500, and the total is therefore $550,000.
The FCC has been assessing larger fines for indecency. The largest came in March 2006, which the CBS show “Without a Trace” was fine $3.6 million. CBS says it has taken steps to ensure that something like this will not happen again.
Spivak & Bice of the Milwaukee Journal Sentinel break an interesting (but sad) story about Milwaukee’s inept District Attorney’s Office.
On July 22, Sidney Gray alleged burglarized a home and killed Frank Moore II, a neighbor who was trying to stop the burglary. Gray has seven convictions on his record.
As it turns out, Gray probably should have been in jail for stealing a car, resisting arrest and attempting to burglarizing a woman’s home on July 16. So who bungled the case? The District Attorney’s office says that they told the police to bring this woman go to the DA’s office to tell them her story. They say the police never brought her.
The police say Gray should have at least been charged with resisting arrest while the case was being investigated. A detective’s report on the burglary of the woman’s home is dated July 27, which is 5 days after Moore was murdered.
The woman says she was never told to come downtown, and that she was very willing to help out. She wants to know why Gray was released without anyone talking to her. The whole situation is crazy, including the apparent reluctance of the police to act quickly on the night of the attempted burglary. Read the whole story for the details.
The first case against a [tag]NSYE specialist firm[/tag] trader was aqutted of charges that he made improper trades of Eli Lilly stock. The case against Robert Scavone Jr. ended with a finding of [tag]not guilty[/tag] for one count of secruities fraud. He faced up to 20 years in prison.
The accusations against Scavone, a former trader for Van der Moolen Specialists USA LLC, included illegally trading for the firm’s account ahead of public orders. It was alleged that the firm made profits (and avoided losses) to the tune of $500,000 because of this. The defense was that the trades weren’t intentional crimes, rather that they were mistakes as well as misinterpreted.
11 more traders are expected to go to trial with their cases. 2 other traders have been found guilty in trials, and 2 more pleaded guilty.