The CFO of Zale Corp., Mark Lenz has been placed on administrative leave indefinitely. His offense: not disclosing delayed [tag]vendor payments[/tag] done to improve 2005 cash flow. Vendor payments scheduled for the last two weeks of the company’s fiscal year were delayed until the beginning of the next fiscal year. The [tag]delayed payments[/tag] totaled $8.2 million, and while they did not affect revenue or earnings, the delayed payments did affect the reported free operating cash flow of $89 million.
Zale has had lower-than-expected sales of late, and a plan to raise sales this past Christmas failed. The company’s president, Paul Leonard, resigned in February, and the COO, Sue Gove, resigned in March.
In April, the company announced that it was being investigated by the [tag]Securities and Exchange Commission[/tag] for [tag]accounting practices[/tag] related to the timing of vendor payments. The [tag]SEC investigation[/tag] also includes accounting for extended-service agreements, leases, and payroll accruals.
Enron had banking and finance relationships with some of the largest international firms: Credit Suisse First Boston, Merrill Lynch, and Greenwich NatWest to name a few. All of the firms were interested in continuing their business relationships with Enron, as the company brought significant fees with it.
As Enron was scrambling to meet analysts’ estimates for the fourth quarter of 1999, they were looking for “creative” ways to add profits to their bottom line. Continue reading
Six current and former employees of Aggregate Industries, the largest supplier of concrete for Boston’s Big Dig were arrested today on charges of [tag]falsifying records[/tag] to cover up the poor quality of their concrete. The [tag]corruption[/tag] charges include making false statements, mail fraud and conspiracy to defraud the government.
It is alleged that the company recycled concrete that was too old and damaged with excess water. The project received at least 5,000 truckloads of this inferior concrete.
Boston’s Big Dig started in 1991, and it put Interstate 93 beneath downtown, and connected the Massachusetts Turpike to Logan Airport. The project had huge delays and overruns, with costs ballooning from a projected $2.6 billion to an actual $14.6 billion.
The indicted men included general manager Robert Prosperi, dispatch manager Marc Blais, dispatch manager John Farrar, quality control manager Gerard McNally, district operations manager Gregory Stevenson, and dispatch manager Keith Thomas.
This was a VERY interesting article about how [tag]pay-per-click[/tag] advertising works, and the possibility for abuse ([tag]click fraud[/tag]). Advertisers can click on the ads of rivals in order to “spend” their rivals’ advertising budgets and knock them off line. People with money-generating ads featured on their blogs or sites can profit if they find a way to register clicks from their sites (without getting caught and banned all together by Google).
It’s a long article, but well worth the time to read!
From the Wall Street Journal:
In testimony this morning, Jerry Arnold, a defense consultant and accounting professor at the University of Southern California, testified that [tag]Enron[/tag] wasn’t required to [tag]write down[/tag] declines in the value of its international operations that weren’t slated to be sold and that Enron hadn’t determined were permanent. He said his review found no evidence of either.
Government witnesses had previously testified that several businesses had fallen sharply in value and that Messrs. Lay and Skilling choose not to write down the book value, [tag]misleading investors[/tag] during a time of heightened concern about the company’s operations. Mr. Arnold rejected their testimony as incorrect or incomplete. He said today that he was paid $600,000 for his work.
The drug Ketek, made by the drug company Aventis (now Sanofi-Aventis SA) was approved by the U.S. Food and Drug Administration (FDA) in early 2004. But recent reports of severe liver damage to those taking the drug have come to light.
The drug was approved after completion of study 3014, which included [tag]clinical trials[/tag] of over 24,000 people. The doctor who treated the most patients in the study, Maria “Anne” Kirkman Campbell is currently in federal prison after pleading guilty to [tag]defrauding drug companies[/tag] with fabricated data. Another doctor who participated with a significant number of patients in the clinical trials has since had his license revoked.
Study 3014 was commenced by Aventis in 2001 at the request of the FDA. The FDA was concerned about liver damage and other side effects of Ketek, and would not approve the drug without further testing. The FDA has since decided that the data from the study cannot be relied upon.
Aventis discovered [tag]irregularities[/tag] with more than one doctor in the clinical trials, but did not alert the FDA to any problems with study 3014. It is the FDA’s policy that if a drug company suspects [tag]fraud[/tag] during a study, the company should inform the FDA right away.
Ketek was formally approved by the FDA on April 1, 2004 as a treatment for sinusitis, bronchitis, and pneumonia. The FDA approved its use despite the problems with study 3014, citing other smaller studies that the FDA believes provided accurate data.
Read the whole story in the Wall Street Journal.
Believe it or not, family members are notorious for stealing more from companies than regular employees. Why? Who knows! It could be greed or entitlement. It could be lax controls around family members and their job duties. It could be an unspoken rule that managers overlook the theft.
Whatever the reason, it can cost the companies lots of money. Read my article about [tag]fraud[/tag] in [tag]family business[/tag] here.
The six week G-sting trial in Las Vegas will conclude this week with closing arguments. The trial has included tape from FBI wiretaps, undercover videos, and testimony about politicians and [tag]bribes[/tag]. Former Clark County commissioners Dario Herrera and Mary Kincaid-Chauncey are on trial for federal charges of [tag]conspiracy[/tag], [tag]wire fraud[/tag] and [tag]extortion[/tag] under color of official right.
The witnesses included former commission Erin Kenny (who has pleaded guilty) and strip club owner Michael Galardi, who both testified for the prosecution. Galardi said that he gave bags of cash to politicians, in addition to sex from strippers, dancers, and other club employees.
Herrera admitted to having sex behind the bushes with one of Gilardi’s employees during a golf outing. He also said he received lap dances at one of Galardi’s clubs and had an affair with one of Galardi’s employees.
Galardi testified that he had sex with Kenny at least six times, which she denies. He also said that he paid Herrera $200,000 from 1999 through 2003 and $85,000 to Kincaid-Chauncey. Galardi’s goal was to make Jaguars, a strip club he was opening in 2002, the biggest and best in Las Vegas. He said he needed the county commission’s help to do that.
The Los Angeles Times has discontinued the column and blog of Pulitzer Prize-winning reporter Michael Hiltzik. He is being reassigned after he serves a suspension. His offense: posting things on the Internet using assumed names.
The newspaper says he did not commit any [tag]ethical violations[/tag] in his newspaper column and did not have inaccuracies in his blog. However, the Times says that he violated ethical guidelines of the paper, including:
Staff members must not misrepresent themselves and must not conceal their affiliation with The Times.
It is reported that Hiltzik used a [tag]pseudonym[/tag] to post one comment on his LA Times blog and multiple pseudonyms to post comments on other websites that dealt with his column and the newspaper. The posting under pseudonyms was first alleged by Los Angeles County Deputy District Attorney Patrick Frey, who also writes a blog.