The Daily Caveat is written by Michael Thomas, a recovering corporate investigator in the Washington, DC-area. [More]
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12/21/2008
Major Accounting Firms Eyed by Fraud Victims in Madoff Mess
Former AOL Execs Charged By SEC on Billion Dollar Fraud
5/18/2008
Software Company Founder Convicted on Fraud Charges
CTFC Sues Sentinel Management Group
Herbalife CEO Forced to Admit Resume Padding
Falsified Accounts Lead to $200 Million Loss for Australian Broker
Opes Prime, once a leading brokerage firm down under, has collapsed in the wake of fraud allegations, with serious repercussions in the Australian market. The Australian Securities and Investments Commission is investigating.
Reportedly Lirim Emini, head of the firm, directed his staff to cover up the losses of six large investors, hiding $200 million in losses. The disintegration of the firm has left behind a $1billion in debts to creditors and 1200 or so clients at loose ends.
Even worse news for Emini whose apparent connections to the mob are coming back to haunt him. A couple of key clients have turned out to be connected to organized crime figures and one imagines they may not deal charitably with their losses.
Also, a civil suit from investors is pending, naturally.
-- MDT
3/25/2008
Biovale Accounting Fraud Gets SEC Action
1/16/2008
Homestore CEO sees Conviction Overturned
Refco Final Report Released
Jail Day for Sanjay Kumar of CA
How KPMG Dodged Prosecution on the Enron Fraud
Enron Broadband Executive Sentenced
Bush Administration, SEC at Odds Over Enron Shareholder Suit
Former Enron Exec Sentenced to Jailtime
Biovail Faces Expanded SEC Investigation
Enron Shareholders Pursue Banks for Restitution
SEC Wrapping Up GM Investigation
Peregrine Systems Trial Exposes Depth of Corruption
Insider Trading Charges a Back Door For Prosecutors
Shell Pays $340 Million to Settle EU Class Action Suit
Two Former Endocare Executives Face Indictment
FBI After Beazer Homes for Potential Fraud
Stockman Securities Fraud Charges Become Official
Peregrine Systems CEO Pleads Guilty
Nortel Execs Face Fraud Charges
UK Business Community Headed For Its Own Enron Style Meltdowns?
Veritas Pays $30 Million to Settle Charges
Major Accounting Firms Eyed by Fraud Victims in Madoff Mess
PricewaterhouseCoopers and BDO Seidman are just two of the big names whose customers are mulling or have already filed suit.
-- MDT
5/19/2008
-- MDT
Labels: accounting fraud, BDO Seidman, Bernie Madoff, PWC
Former AOL Execs Charged By SEC on Billion Dollar Fraud
Four former AOLers have already settled with the SEC. Four more still have a date with a New York courthouse. And just think, some called this case dead only a year or so back... (See this article for more on that score and an interesting link to yesterday's PurchasePro store.
At issue are allegations that the eight executives participated in a scheme to fluff up AOL company value in the 2000 to 2002 period. AOL got caught at the time, essentially, paying themselves for their own advertising. This allowed AOL to pump up its online advertising revenue by about $1 billion.
Thus far David Colburn, former head of the AOL’s business affairs unit; Eric Keller, a former senior manager; James MacGuidwin, former controller; and Jay Rappaport, a former senior manager have all reached a settlement on the charges against them, without an admission of guilt.
Still on the chopping block are John Michael Kelly, former CEO; Steven Rindner, former senior executive; Joseph Ripp, former CFO of the company’s AOL division; and Mark Wovsaniker, former head of accounting policy.
AOL / Time Warner itself paid a $300 million settlement to the SEC back in '04-05 on a related case.
You can get details on the four and four cases, right here - straight from the SEC.
-- MDT
At issue are allegations that the eight executives participated in a scheme to fluff up AOL company value in the 2000 to 2002 period. AOL got caught at the time, essentially, paying themselves for their own advertising. This allowed AOL to pump up its online advertising revenue by about $1 billion.
Thus far David Colburn, former head of the AOL’s business affairs unit; Eric Keller, a former senior manager; James MacGuidwin, former controller; and Jay Rappaport, a former senior manager have all reached a settlement on the charges against them, without an admission of guilt.
Still on the chopping block are John Michael Kelly, former CEO; Steven Rindner, former senior executive; Joseph Ripp, former CFO of the company’s AOL division; and Mark Wovsaniker, former head of accounting policy.
AOL / Time Warner itself paid a $300 million settlement to the SEC back in '04-05 on a related case.
You can get details on the four and four cases, right here - straight from the SEC.
-- MDT
Labels: accounting fraud, AOL, Freelance Security, revenue inflation
1 Comments.
An entry from the NY Times in 2002 reads that:
"A person involved in the internal investigation said that in April 2001 Mr. Ripp noticed that Mr. Keller had tried to backdate a deal with the online advertising company PurchasePro so that it would add to first-quarter results."
Keller was then put on leave and the matter investigated. I don't understand how the man who brought the issue to the Justice Department is being charged.
Post a Comment
"A person involved in the internal investigation said that in April 2001 Mr. Ripp noticed that Mr. Keller had tried to backdate a deal with the online advertising company PurchasePro so that it would add to first-quarter results."
Keller was then put on leave and the matter investigated. I don't understand how the man who brought the issue to the Justice Department is being charged.
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Software Company Founder Convicted on Fraud Charges
Charles 'Junior' Johnson was founder and CEO of Las Vegas-based software company, PurchasePro. Back in 2001, in the midst of the dot com bust, he conspired to inflate company revenues in a scheme that put Purchase Pro squarely in the cites of Federal regulators.
Seven years later, Johnson makes seven PurchasePro execs to have been convicted in relation to the attempted Fraud. Johnson made his particular situation worse by attempting to alter documents to obscure the fraud. Convicted on all counts, Johnson will now face sentencing.
-- MDT
5/06/2008
Seven years later, Johnson makes seven PurchasePro execs to have been convicted in relation to the attempted Fraud. Johnson made his particular situation worse by attempting to alter documents to obscure the fraud. Convicted on all counts, Johnson will now face sentencing.
-- MDT
Labels: accounting fraud, Charles Johnson, guilty, PurchasePro
CTFC Sues Sentinel Management Group
Fraud charges, bankruptcy and $100 million outstanding.
Not a good week to be a former Sentinel exec.
-- MDT
5/02/2008
Not a good week to be a former Sentinel exec.
-- MDT
Labels: accounting fraud, CTFC, Sentinel Management Group
Herbalife CEO Forced to Admit Resume Padding
And the ever colorful fraud investigator, Barry Minkow is there to take credit.
Minkow is a bit of a controversial fellow in his own right, with his own crooked past. He's now the grand poobah behind the Fraud Discovery Institute.
You might remember Minkow from his dust-up with USANA a while back.
-- MDT
4/01/2008
Minkow is a bit of a controversial fellow in his own right, with his own crooked past. He's now the grand poobah behind the Fraud Discovery Institute.
You might remember Minkow from his dust-up with USANA a while back.
-- MDT
Labels: accounting fraud, Barry Minkow, Fraud, Herbalife
Falsified Accounts Lead to $200 Million Loss for Australian Broker
Opes Prime, once a leading brokerage firm down under, has collapsed in the wake of fraud allegations, with serious repercussions in the Australian market. The Australian Securities and Investments Commission is investigating.Reportedly Lirim Emini, head of the firm, directed his staff to cover up the losses of six large investors, hiding $200 million in losses. The disintegration of the firm has left behind a $1billion in debts to creditors and 1200 or so clients at loose ends.
Even worse news for Emini whose apparent connections to the mob are coming back to haunt him. A couple of key clients have turned out to be connected to organized crime figures and one imagines they may not deal charitably with their losses.
Also, a civil suit from investors is pending, naturally.
-- MDT
Labels: accounting fraud, ASIC, Lirim Emini, Opes Prime
Biovale Accounting Fraud Gets SEC Action
See our favorite muckracker, Gary Weiss for details. Also...a note to the folks at Reputrace - you might want to use a proxy server so that when your clients log in to review the articles from around the web you've collected for them, that it isn't, like, totally obvious who the client is and what reputational issues are of concern to them.
-- MDT
-- MDT
Labels: accounting fraud, Biovail, Gary Weiss, Gradient Analytics, SEC
1 Comments.
Michael,
Never let the watchers know that you are watching them - it discourages them.
Post a Comment
Never let the watchers know that you are watching them - it discourages them.
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Homestore CEO sees Conviction Overturned
Some good news for Stuart Wolff, who had been looking at 15 years in prison for his role in the $70 million Homestore fraud. Not that this happened because the dude wasn't guilty. Rather, the sentencing judge had undisclosed ties to the case that should would have otherwise disqualified him. Check out details, including a link to the U.S. v. Wolff ruling via the San Francisco Gate.
-- MDT
8/21/2007
-- MDT
Labels: accounting fraud, Homestore, revenue inflation, Stuart Wolff
Refco Final Report Released
Race to the Bottom has details and links.
-- MDT
8/15/2007
-- MDT
Labels: accounting fraud, boom, Race to the Bottom, Refco
Jail Day for Sanjay Kumar of CA
Kumar, CA's former CEO, is set to begin serving a 12 year sentence for his part in the company's multi-billion dollar accounting fraud. Kumar previously plead guilty to federal securities fraud, obstruction of justice and conspiracy charges in exchange for a plea agreement. Former VP of sales, Stephen Richards is already serving his sentence and several other guilty pleas have been entered in relation to the case.
Further details on Kumar's sentence at Newsday.
-- MDT
7/11/2007
Further details on Kumar's sentence at Newsday.
-- MDT
Labels: accounting fraud, CA, Sanjay Kumar, Stephen Richard
How KPMG Dodged Prosecution on the Enron Fraud
Take it back to June 2005. KPMG executives meet with federal prosecutors in an attempt to avoide the fate that befell former big five accounting firm Arthur Anderson. With the outcome uncertain and the future of the firm in the balance it is hard to understate the importance of the negotiations. Due to notes from those meetings recently made public, we now have a ringside seat to how things went down. The notes, taken by KPMG attorney, Joseph Barloon of Skadden Arps reveal the strategies that aided KPMG in striking a deal with prosecutors.
Get further details at The Ledger.
-- MDT
6/20/2007
Get further details at The Ledger.
-- MDT
Labels: accounting fraud, Enron, KPMG, tax shelters
Enron Broadband Executive Sentenced
Former CEO of Enron Broadband Services, Kenneth Rice was sentenced yesterday to two years and change for his role in the energy trader's widespread fraud. Rice plead guilty three years ago and awaited sentencing while a steady stream of his former company colleagues faced prosecution - many with the help of his testimony. Further details on the Rice sentencing can be found here, via CFO.com.
-- MDT
6/13/2007
-- MDT
Labels: accounting fraud, Enron, insider trading, Kenneth Rice, securities
Bush Administration, SEC at Odds Over Enron Shareholder Suit
The Bush administration has opted not to second the SEC's supportive position regarding a pending class action lawsuit that has former shareholders of defunct energy trader, Enron, pursing several investment banks for damages arising from their role in obscuring Enron's house of cards.
The SEC had asked for a brief of support to be filed by the Justice Department's Solicitor General Paul Clement. As of Monday's deadline, no such amicus brief had been filed by the DOJ and no support, at this point is expected. Not entirely surprising given the cozy relationship between Enron and the current administration.
In fact President Bush (who The Daily Caveat usually avoids discussing) chimed in with his own comments on the case, which gave a hint which way the winds were blowing at DOJ. The President decried the notion of unnecessary lawsuits, which we can assume to include those brought by Bill Lerach.
The SEC had voted at a 2 to 3 margin to support the suit, with Bush appointee, SEC Commissioner Christopher Cox siding with two democrats in support of the case. The U.S. treasury has taken the opposite stance, arguing that the case could set a precedent that would harm U.S. Competitiveness.
For more on the conflict between the Justice Department and the SEC, check out this article from the China Standard.
-- MDT
6/06/2007
The SEC had asked for a brief of support to be filed by the Justice Department's Solicitor General Paul Clement. As of Monday's deadline, no such amicus brief had been filed by the DOJ and no support, at this point is expected. Not entirely surprising given the cozy relationship between Enron and the current administration.
In fact President Bush (who The Daily Caveat usually avoids discussing) chimed in with his own comments on the case, which gave a hint which way the winds were blowing at DOJ. The President decried the notion of unnecessary lawsuits, which we can assume to include those brought by Bill Lerach.
The SEC had voted at a 2 to 3 margin to support the suit, with Bush appointee, SEC Commissioner Christopher Cox siding with two democrats in support of the case. The U.S. treasury has taken the opposite stance, arguing that the case could set a precedent that would harm U.S. Competitiveness.
For more on the conflict between the Justice Department and the SEC, check out this article from the China Standard.
-- MDT
Labels: accounting fraud, Bush administration, class action, Enron, investment banks, Paul Clement, Stoneridge
Former Enron Exec Sentenced to Jailtime
Kevin P. Hannon, a former officer in Enron's broadband division and one of the government's instrumental witnesses in the conviction of Jeffery Skilling, has been sentenced to two years in prison.
Hannon plead guilty in 2004 to one count of conspiracy in connection with the rampant fraud at the former energy trading firm. Skilling himself, a key player in the fraud, was sentenced to his own two-year prison term earlier this month.
More on Hannon, here, via Forbes.com.
-- MDT
5/15/2007
Hannon plead guilty in 2004 to one count of conspiracy in connection with the rampant fraud at the former energy trading firm. Skilling himself, a key player in the fraud, was sentenced to his own two-year prison term earlier this month.
More on Hannon, here, via Forbes.com.
-- MDT
Labels: accounting fraud, Enron, Jeff Skilling, Kevin Hannon
Biovail Faces Expanded SEC Investigation
The SEC is coming for Canada's largest drug maker. At issue, according to the U.S. securities regulator, are Biovails string of accounting irregularities and misleading financial disclosures. Biovail acknowledged previously receiving a Wells Notice from the SEC regarding their 2003 finances. The SEC's probe now apparently extends from 2001 to 2004. Biovail founder, Eugene Melnyk, is also facing investigations into his personal conduct relating to Biovail. Additional details on the Biovail investigation can be found right here.
-- MDT
5/11/2007
-- MDT
Labels: accounting fraud, Biovail, Eugene Melnyk, SEC
Enron Shareholders Pursue Banks for Restitution
But will they get it? This Lerach-led lawsuit was stalled back in March, but the group is currently seeking the support of the SEC to get the case back on course after being rejected by an appeals court. Several banks made no-fault settlements back in 2003. This current suit concerns several additional banks - Merrill Lynch & Co., Credit Suisse First Boston and Barclays.
See The Houston Chronicle for further details.
-- MDT
See The Houston Chronicle for further details.
-- MDT
Labels: accounting fraud, Bill Lerach, Enron, securities
SEC Wrapping Up GM Investigation
After more than 2 years the SEC has called an end to their investigation of accounting issues at General Motors/Delphi. Whether or not the regulatory agency will file civil charges remains to be seen, but we should know something by the end of the summer. The New York Attorney General's Office also has a dog in this fight, having been looking into GM's supplier relationships since 2006.
For further details on where things stand on GM check out the full article from the Detroit News. Also note the quote-love for friend of The Daily Caveat, Peter Henning.
-- MDT
5/07/2007
For further details on where things stand on GM check out the full article from the Detroit News. Also note the quote-love for friend of The Daily Caveat, Peter Henning.
-- MDT
Labels: accounting fraud, Delphi, GM, New York AG, SEC
Peregrine Systems Trial Exposes Depth of Corruption
We're four weeks into the trial of several Peregrine Systems executives in a case that has been called San Diego's Enron. Another separate trial is still to come, arising from the rampant internal fraud that first came to light at Peregrine in 2002.
Back in March Peregrine CEO, Stephen Parker Gardner plead guilty to charges of conspiracy, securities fraud and obstruction of justice. Eight other company execs preceded him in January '07. There was also the Peregrine related extradition of the unfortunately named Jeremy Crook back in September '06.
In more recent news Peregrine's former General Counsel was just indicted last month and will face charges similar to his former bed-fellows: securities and wire fraud, bank fraud and conspiracy to commit fraud.
And the beat goes on...
For up-to-date details on the Peregrine trial, click here.
-- MDT
4/24/2007
Back in March Peregrine CEO, Stephen Parker Gardner plead guilty to charges of conspiracy, securities fraud and obstruction of justice. Eight other company execs preceded him in January '07. There was also the Peregrine related extradition of the unfortunately named Jeremy Crook back in September '06.
In more recent news Peregrine's former General Counsel was just indicted last month and will face charges similar to his former bed-fellows: securities and wire fraud, bank fraud and conspiracy to commit fraud.
And the beat goes on...
For up-to-date details on the Peregrine trial, click here.
-- MDT
Labels: accounting fraud, corporate scandal, Peregrine Systems
Insider Trading Charges a Back Door For Prosecutors
Interesting article from the NJ Star Ledger (which features quote-love for friend of The Daily Caveat Peter Henning) on changing strategies for corporate crime prosecutors. Using the Joe Nacchio trial as a case in point, Henning describes in the article how prosecutors can use insider trading charges against executives as a back door to exploring accounting fraud without having to dive into the treacherous, confusing minutia that comes from attacking corporate accounting head on.
-- MDT
4/12/2007
-- MDT
Labels: accounting fraud, insider trading, Joe Nacchio, Peter Henning, prosecution
Shell Pays $340 Million to Settle EU Class Action Suit
Royal Dutch Shell will make a massive, multi-million dollar settlement payment to over 50 European institutions in relation to Shell's downgrading of their oil reserves in 2004. According to the terms of the settlement Shell has already faced more millions in fines relating to their mis-reporting and several execs, including former company chairman Sir Philip Watts, lost their jobs over the fiasco.
The Shell settlement represents the largest class action settlement in Europe's history. It has been reported that Shell plans to offer a similar settlement to affected investors in the United States, but that may refer to the distribution of the millions in fines the company has already paid to the SEC on the reserves restatement matter.
-- MDT
4/11/2007
The Shell settlement represents the largest class action settlement in Europe's history. It has been reported that Shell plans to offer a similar settlement to affected investors in the United States, but that may refer to the distribution of the millions in fines the company has already paid to the SEC on the reserves restatement matter.
-- MDT
Labels: accounting fraud, class action, Royal Dutch Shell, settlement
Two Former Endocare Executives Face Indictment
A 27 count indictment has been filed against two former executives of medical product manufacturer, Endocare. The comany's former CEO, Paul Mikus and former CFO, John Cracchiolo were charged with wire and securities fraud, filing false statements with the SEC and lying to the company's accountants. The two allegedly participated in a scheme in 2001 and 2002 to artificually inflate Endocare's revenue, ultimately costing investors an estimated $200 million.
Further details on the Endocare indictment can be found here.
-- MDT
3/29/2007
Further details on the Endocare indictment can be found here.
-- MDT
Labels: accounting fraud, Endocare, John Cracchiolo, Paul Mikus, SEC
FBI After Beazer Homes for Potential Fraud
Atlanta-based Beazer Homes USA is facing scrutiny from the FBI over allegedly fraudulent practices in the company's mortgage lending business. Beazer, a public company, operates as a home builder in 21 states.
More here on the FBI's investigation of Beazer.
-- MMDT
3/27/2007
More here on the FBI's investigation of Beazer.
-- MMDT
Labels: accounting fraud, Beazer Homes USA, FBI
Stockman Securities Fraud Charges Become Official
David Stockman, who served in the Reagan administration from 1981 to 1985, has been accused of perpetrating securities fraud. Stockman along with other executives of automotive manufacturer Collins & Aikman is accused of to mislead investors while inflating earnings. The fraud charges had been teased since at least late last year.
Stockman formerly served as chairman and chief executive Collins & Aikman and is also the co-founder of a private-equity firm - one of the largest shareholders in the auto-parts company.
Collins & Aikman itself has already reached settlements, with both the SEC and the U. S, Attorney for the Southern District of New York. The deal, announced earlier this week, allows Collins and Aikman to avoid prosecution and substantial fines.
Check out more on the Stockman indictment via the Chicago Tribune.
-- MDT
3/14/2007
Stockman formerly served as chairman and chief executive Collins & Aikman and is also the co-founder of a private-equity firm - one of the largest shareholders in the auto-parts company.
Collins & Aikman itself has already reached settlements, with both the SEC and the U. S, Attorney for the Southern District of New York. The deal, announced earlier this week, allows Collins and Aikman to avoid prosecution and substantial fines.
Check out more on the Stockman indictment via the Chicago Tribune.
-- MDT
Labels: accounting fraud, Collins and Aikman, David Stockman, SEC, securities
Peregrine Systems CEO Pleads Guilty
Stephen Parker Gardner, former CEO of Peregrine Systems has plead guilty to conspiracy, securities fraud and obstruction of justice. The charges arose in relation to a 2004 indictment charging Gardner and several other Peregrine execs with accounting fraud, specifically backdating contracts and improperly recognizing revenue. Further details on the Gardner plea via the LA Times.
-- MDT
3/13/2007
-- MDT
Labels: accounting fraud, guilty, Peregrine Systems, Stephen Park Gardner
Nortel Execs Face Fraud Charges
Both U.S. and Canadian regulators have filed charges against a group of former Nortel executives over illegal activities that included lying to investors and reporting false numbers to the SEC. Canada's Ontario Securities Commission and the U.S. SEC are alleging that former Nortel execs conspired to "fix" earnings between 2000 and 2004.
Amongst the group facing charges are former chief executive Frank Dunn, former finance chief Douglas Beatty, and former controller Michael Gollogly. Former controller MaryAnne Pahapill also faces charges from the SEC. Further details on the Nortel charges here, via the FT.
-- MDT
3/01/2007
Amongst the group facing charges are former chief executive Frank Dunn, former finance chief Douglas Beatty, and former controller Michael Gollogly. Former controller MaryAnne Pahapill also faces charges from the SEC. Further details on the Nortel charges here, via the FT.
-- MDT
Labels: accounting fraud, Douglas Beatty, Frank Dunn, homeland security, MaryAnne Pahapill, Michael Gollogly, Nortel, Ontario Securities Commission, securities
UK Business Community Headed For Its Own Enron Style Meltdowns?
So says Peter Wyman, head of professional affairs at Pricewaterhouse Coopers, UK. In a recent interview, Wyman called existing company audit procedures inadequate and states that executives could indeed be using loopholes in the existing law to thwart regulation:
-- MDT
2/23/2007
“At the level of an Enron or a WorldCom, I am pretty confident that the auditors would stumble across it in two or three years, but one would have no real confidence that they would come across it in year one unless they were incredibly lucky or the management made a mistake. The audit is simply not designed to deal with that.”Read the rest of the Wyman interview via The Business. For more, check out his column from the CPA Journal.
-- MDT
Labels: accounting fraud, Enron, PWC, regulation
Veritas Pays $30 Million to Settle Charges
Suspect account is what fount Veritas in the crosshairs. To appease the SEC, the company will pay a $30 million fine, which follows a four an a half year investigation by the securities regulator. The San Francisco Gate has further details.
- MDT
- MDT
Labels: accounting fraud, SEC, Veritas
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