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Accounting News Roundup: Impressive (Alleged) Fraud; Community Banks Mad at FASB; Sweet Director Gigs | 12.18.15

Ed. note: I'll be MIA most of the day as I'm going to see what all this Star Wars fuss is about. Hopefully some of you are doing the same. Discuss these links and drop your questions and other stories (but no spoilers!) I've missed into Open Items. Have a great weekend.

Drug C.E.O. Martin Shkreli Arrested on Fraud Charges [NYT]
Pharma CEO and all-around dirtbag Martin Shkreli was ceremoniously arrested for fraud yesterday. I say ceremoniously because his perp walk was amazing and now everyone wants that hoodie. Shkreli and Evan Greebel, outside counsel for Retrophil, one of the companies at the center of the fraud, were charged running a "quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds."  If you read some of the emails that are included in the indictment, they are definitely awkward moments which might lead you to conclude that Shkreli was just bad at investing and a liar and all that bad investing and lying caught up to him. But Matt Levine writes that it's far more amazing than that; this was quite the feat of fraud:

If you believe the allegations in today's indictment, he lost (or stole) all of his investors' money, then lied to them to string them along, Ponzied it up by raising new money to keep them happy, and then finally found an investment that allowed him to pay off his earlier investors, with profits all around. He wasn't caught because his scheme, like most such schemes, eventually crashed under its own weight. His scheme worked! He was caught, as far as I can tell, for being so abrasive about everything. How could shareholders not complain; how could prosecutors not go after him? Still, it is quite an accomplishment. If he is a securities fraudster, he should be an inspiration to securities fraudsters everywhere.

But, yeah, jacking up drug prices, being a creep, all the stuff that everyone hates Shkreli for just makes all this (alleged!) run-of-the-mill Ponzi scheme all that more delicious. Not that

Community Bank Group Upset at FASB Remarks [AT]
There are certain downsides to any job that you just have to accept. If you're the Chairman of the FASB, one of those downsides is that banking organizations will relentlessly criticize you in public for anything you said if they feel like it. Russell Golden got a taste of that after a speech he made mentioned that "community banks" were "major part of the problem" during the financial crisis. The Independent Community Bankers of America did not appreciate that:

In a letter sent Tuesday to Golden, the ICBA Executive Committee criticized him for denying the excessive cost and complexity inherent in FASB’s Current Expected Credit Loss model.

“To say that community banks were a ‘major part of the problem’ is a direct slander on hardworking Americans who devote their professional and, in many cases, personal energies to providing for their communities in both good times and bad,” wrote ICBA chairman Jack Hartings, president and CEO of The Peoples Bank Co. in Coldwater, Ohio. “FASB’s continued inability to comprehend the community bank business model has resulted in flawed accounting that will harm all aspects of bank lending in this country, costing thousands of jobs and financing options that keep small communities thriving.”

There's no counter to a blustery statement like that, however, a FASB spokesperson attempted to explain that Golden's statement "was not intended to suggest in any way that community banks were the cause of the financial crisis."   

U.S. House backs permanent tax breaks in massive bill [Reuters]
The bill permanently extends the Child Tax Credit and Earned Income Tax Credit as well as R&D credit, among others.

In other news: