Wehmhoff “did not set out to commit tax fraud for Tom Petters, but slowly became aware of it, then did nothing to halt it, and eventually was right in the middle of it, preparing and filing returns he knew to be false,” the government attorneys wrote. Prosecutors also called attention to Wehmhoff’s otherwise “unblemished” professional history and “striking” remorse. [MSPBJ]
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Angelo Mozilo Wishes He Had John Elway’s Problems
Neither man is having a very good week but Moz got especially bad news today that might cause him to cut back on luxury items including 86ing the private jets with tanning beds and the two-tone shirt collection:
The Securities and Exchange Commission today announced that former Countrywide Financial CEO Angelo Mozilo will pay a record $22.5 million penalty to settle SEC charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis emerged. The settlement also permanently bars Mozilo from ever again serving as an officer or director of a publicly traded company.
Mozilo’s financial penalty is the largest ever paid by a public company’s senior executive in an SEC settlement. Mozilo also agreed to $45 million in disgorgement of ill-gotten gains to settle the SEC’s disclosure violation and insider trading charges against him, for a total financial settlement of $67.5 million that will be returned to harmed investors.
Was Koss Fraud Made Possible by Incestuous Management?
Maybe! If you figure an incestuous management team is a clueless management team, the argument can certainly be made. How else could Sue Sachdeva hold garage sales at her desk without anyone noticing? This went on for five years:
How is it that nobody noticed $5 million missing each year when the company’s net income is about $5 million? I mean, the business of “stereo headsets” isn’t really a complex business model. There’s revenue, cost of sales, and expenses. How do you somehow manage to hide $5 million when expenses are only $10 million … and cost of sales is $25 million?
The answer becomes clear when you look at the company’s management team. Michael Koss is the company’s CEO. He’s also the company’s vice chairman, president, COO, and CFO. The company’s VP of sales is, that’s right, John Koss. Together they own 65 percent of the company’s stock. Another Koss, John Jr., owns 8 percent of the company’s stock. Who knows how many other Kosses there are scattered about the place. No checks and balances there. No hands on the wheel, either.
Sooo, the question becomes: Should Grant Thornton have noticed this sleepy management oversight? Did Michael Koss just give them the “I involved in every aspect of the business so there’s nothing to worry about” story and GT just bought it? Discuss.
The Problem with Incestuous Management [The Corner Office/Steve Tobak]
Madoff CFO to Be Charged
Frank DiPascali, Bernie Madoff’s CFO Number-Maker-Upper is going to be charged in connection with some money gone missing. DiPascali has agreed to skip the grand jury and get down to business, according to Bloomberg, indicating that he might flip. DiPascali seems to be taking a cue from another pseudo-bean counter who’s only plausible defense is stupidity.
U.S. to File Charges Against DiPascali, Ex-Madoff CFO [Bloomberg]