Going Concern

News

Did an Accountant with a Penchant for Sex Chats with Underage Girls Rip Off a Wealthy Heiress?

Caleb Newquist
August 27, 2010

[caption id="attachment_16785" align="alignright" width="260" caption="He's a pervert, dude"]

[/caption]

Maybe! That’s what the Manhattan’s DA office would like to know.

In a story that Dick Wolf is certain to get ahold of, an accountant – who is admitted perv – and a lawyer are being “probed” for their management of a wealthy heiress’s fortune.

You see, Irving Kamsler – the accountant – apparently got bored managing multi-millions for copper heiress Huguette Clark and got to poking around on the Internet. He ended up pleading guilty in 2008 and was sentenced to probation, “for engaging in sexual Web chats with detectives whom he believed were girls as young as 13 and sending porn to one of them,” (plot-line twist!).

Presumably Kamsler was out of hobbies and he refocused his energy on managing the money of Ms. Clark.

Kamsler, along with Clark’s attorney, Wallace Bock, have been overlooking the heiress’s fortune for years but now the Manhattan District Attorney’s office was curious why the “elderly eccentric” had spent ‘forever’ (according to one aide) at Beth Israel hospital.

This all came about after MSNBC got to wondering aloud about Huguette’s whereabouts. More or less asking, “Why on Earth is she in a dingy hospital (have you been to Beth Israel?) and not in her 42-room 5th Ave. apartment or sprawling estates in Santa Barbara or Connecticut?”

The DA’s probe into whether Kamsler and Bock were properly managing Clark’s money is ongoing but if you’re going by Kamsler’s looks alone, you can easily conclude that they’ve got every reason to be suspicious.

Empty mansions are legacy of mystery heiress Huguette Clark [MSNBC]
‘Princess’ of Beth Israel [NYP]

Big 4
Video

Apparently, Sport Coats Can Go a Long Way for Big 4 Auditors

Caleb Newquist
August 27, 2010

And finger quotes are obviously an effective way of communicating.

Someone is wasting some billable hours in a very fine manner this August.

Earlier:
A Brief Moment in the Life of a Big 4 Auditor

News

Accounting News Roundup: IRS Drops Civil Suit Against UBS; PwC’s Diamond Deal; Roni Deutch Is Disappointed in Jerry Brown | 08.27.10

Caleb Newquist
August 27, 2010

I.R.S. to Drop Suit Against UBS Over Tax Havens [DealBook]
UBS is finally dropping those 4,450 names it owes the IRS and skates past the civil charges.

3PAR Accepts Revised Dell Takeover Bid [WSJ]
“3PAR Inc. on Friday accepted an increased, $1.8 billion takeover offer from Dell Inc., a day after Hewlett-Packard Co. raised its offer in a bidding war for the data-storage company.

Dell’s revised offer matches H-P’s Thursday bid of $27 a share for 3PAR, whose software helps companies manage and store data more efficiently.

The fight over 3PAR illustrates how important it has become for tech companies to dominate the emerging technology known as cloud computing, in which data are managed and accessed over the Internet. Dell and H-P both sell storage products and see 3PAR’s assets as important additions to their portfolios as large technology companies seek to serve all the needs of corporate-technology departments.”

When Litigation Kills the Accounting Profession-Don’t Say You Weren’t Warned! [FEI Blog]
Jim Peterson of Re:Balane guest posted over at FEI Blog where he discussed his speciality – risk surrounding the Big 4.

PricewaterhouseCoopers Trying To Buy Consulting Revenue Again With Diamond Deal [Re:The Auditors]
Francine McKenna discusses PwC’s recently announced purchase of Diamond Management & Technology including whether some of Diamond’s consultants bailed early to avoid becoming a cog in the another public accounting firm, “Did some of the employees bail out before they were signed on as sterile strategists for an ineffective firm struggling under the weight of consulting ‘leadership’ with audit-shaped heads? I know for sure that there were significant groups of BearingPoint consultants that would have rather masticated glass shards than work for a public accounting firm again.”

Official Statement [Roni Deutch: The Tax Lady Blog]
Roni Deutch says Jerry Brown, California’s Attorney General-cum-Democratic nominee for Governor, is playing election year politics. Seems plausible.

Finance Execs React to Herz’s Retirement [CFO]
No one is panicking.

SEC vows more actions over crisis [FT]
The FT is finally getting to the story about the SEC bringing more actions, changing the culture with new teams, yada, yada, yada. Except not everyone is buying it, “[S]everal judges have questioned the SEC’s deals with Citigroup and Bank of America, and some plaintiffs’ lawyers believe the regulator has been too soft.

‘There’s no real difference now to what it was like before Mary Schapiro became chairman,’ said Jacob Zamansky, a lawyer for investors and longtime SEC critic.”

Boeing Postpones Dreamliner Delivery Until 2011 [WSJ]
You’ll have to come up with a different Christmas gift for the boss this year.

As to Whether Allen Stanford Knew His CDs Were Worthless

Caleb Newquist
August 27, 2010

“I think it’s obviously obvious.”

~ Forensic accountant Mark Berenblut, responding in the affirmative that R. Allen Stanford knew he was “misrepresent[ing] the liquidity and soundness of the CDs.”

Industry

The Last Thing the IRS Needed Was a Lawsuit Alleging Discrimination Against Israel

Caleb Newquist
August 27, 2010

But that’s exactly what they got! The pro-Israel nonprofit Z Street filed suit against IRS Commish Doug Shulman because Z Street and other “pro-Israel groups whose policies conflict with that of the [Obama] administration,” are getting the stinkeye from the IRS.

From Zulu Avenue’s complaint:

The case is brought because, through its corporate counsel, Z STREET was informed explicitly by an IRS Agent on July 19, 2010, that approval of Z STREET’s application for tax-exempt status has been at least delayed, and may be denied because of a special IRS policy in place regarding organizations in any way connected with Israel, and further that the applications of many such Israel-related organizations have been assigned to “a special unit in the D.C. office to determine whether the organization’s activities contradict the Administration’s public policies.” These statements by an IRS official that the IRS maintains special policies (hereinafter the “Israel Special Policy”) governing applications for tax-exempt status by organizations which deal with Israel, and which requires particularly intense scrutiny of such applications and an enhanced risk of denial if made by organizations which espouse or support positions inconsistent with the Obama administration’s Israel policies, constitute an explicit admission of the crudest form of viewpoint discrimination, and one which is both totally un-American and flatly unconstitutional under the First Amendment.

Pro-Israel group claims IRS persecution [Politico]

There Are More Than a Few Texans Who Aren’t Impressed with Ernst & Young’s Auditing Abilities

Caleb Newquist
August 27, 2010

And this has nothing to do with Lehman Brothers.

Attorneys from Houston’s Ahmad, Zavitsanos & Anaipakos are representing a group of investors in a lawsuit filed against hedge fund auditors Ernst & Young after the group lost more than $17 million following the collapse of a Plano, Texas-based hedge fund that promised low-risk investments.

The lawsuit focuses on two funds sold by Plano’s Parkcentral Global and was filed on behalf of Houston financial consultant Gus H. Comiskey and four Tucson, Ariz.-based entities, including the Thomas R. Brown Family Private Foundation. The now-defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate H. Ross Perot before closing its doors after losing a total of more than $2.6 billion.

“Our clients were told that an investment in Parkcentral was designed to preserve capital. Instead, they lost every penny in record time. E&Y was supposed to be auditing Parkcentral, but the audited financial statements never once warned Parkcentral’s investors of their impending doom,” says attorney Demetrios Anaipakos, who will try the case with Amir H. Alavi.

Did you hear that E&Y? RECORD TIME! But why the Ross Perot mention, Ahmad, Zavitsanos & Anaipakos? Got something against eccentric Texas billionaires that like explaining complex things with charts? Sadly, the BPR does not elaborate.

The lawsuit includes claims that New York-based Ernst & Young falsely represented that the company fairly audited Parkcentral Global and the auditor failed in its “watchdog” [Ed. note: These quotation marks appear to be unnecessary. Also, the “watchdog” thing, sucks as metaphor.] role to warn relying investors of the risk of fraud and noncompliance by management. The suit accuses Ernst & Young of fraud, negligent misrepresentation, securities fraud and conspiracy.

This month, Brown Investment Management, L.P., one of the plaintiffs in this suit against Ernst & Young, won a Delaware Supreme Court ruling that requires Parkcentral Global to disclose its former investors. Those investors could be added to the new Houston lawsuit.

The investments of the Brown foundation, Brown Investment Management and the two other family-related ventures totaled $16 million and were lost within 90 days despite a “worst case loss” estimate of 5 percent. Mr. Comiskey, like his fellow investors, lost 100 percent of his investment when Parkcentral Global went under.

Mr. Anaipakos and Mr. Alavi have handled disputes against hedge funds and private equity firms for more than a decade. This lawsuit is separate from a class action filed in the U.S. District Court for the Northern District of Texas against Parkcentral Global.

News

Here’s Why Facebook Should Buy ING Direct

GoingConcern
August 26, 2010

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

It was revealed this week that Facebook is valued by its private shareholders at over $33 billion, more than Ebay, Yahoo and Dell. For a private company with little more than a year of revenue this is extraordinary.

When the company goes public it will have a hard job living up to this valuation without a significant increase in revenue streams.

One option may be for it to do a transformational transaction prior to its listing. In this way it could incorporate a pumped up revenue stream into its high IPO valuation. One such deal could be for it to buy ING Direct US, the largest online bank in the country.

Under the terms of the Dutch government bail out, ING has to sell ING Direct in the US and Canada by 2012. They will have no shortage of bidders from the financial world, but could it make sense for a non-bank to actually buy the company? And if so, what about Facebook?

Half a billion people now live their online lives through Facebook. It has huge brand value and customer loyalty. For it to generate revenue streams it needs to do more than just offer up ads and sell games.

To get from being a social network site to a commercial network site it needs to drive business, and one of the biggest impediments to online retail business is payments. By owning a bank-and thus a payment platform–Facebook could make it very easy to transact online.

Clearly there would be lots of legal hurdles for such a deal to happen, not least because regulators do not like non-banks owning banks. More specifically, Facebook has had difficulties in the past respecting people’s privacy.

But by allying the huge number of people on the site with an easy to use payments and banking business, Facebook could revolutionize its business and the way that 500 million conduct personal commercial activities on the web.

It could also learn from the clever people at ING Direct about how to protect customer data. It may be a long shot, but the two companies could complement each other very well.

Big 4
Video

A Brief Moment in the Life of a Big 4 Auditor

Caleb Newquist
August 26, 2010

Well. Any auditor for that matter.

Based on personal experience it’s plausible that the script came from actual conversations.

Deloitte

Marin County Scrapping SAP System That Deloitte ‘Neophytes’ Slapped Together

Caleb Newquist
August 26, 2010

Earlier in the summer, we told you about Marin County California, who was pretty displeased with Deloitte throwing a bunch of ‘neophytes’ at their ERP implementation project or in the County’s words ‘a trial-and-error training ground.’

As a result of Deloitte’s amateur hour, the SAP system – that Deloitte claims was just fine and dandy where they left it – is now being thrown to the scrap heap by the county because fixing it will cost more than replacing the whole system. And God knows Arnie won’t be helping them out with the bill, so they have to save on costs where they can.

The system is the subject of a lawsuit Marin County filed against system integrator Deloitte Consulting earlier this year. Deloitte used the project as “a trial-and-error training ground” for inexperienced employees, and the result was a “costly computer system far worse than the legacy systems it was intended to replace,” according to the county’s complaint.

Deloitte has filed motions against Marin County’s “completely unfounded allegations,” as well as a complaint seeking unpaid fees, a spokesman said via e-mail. The system “was working properly and could perform all the tasks consistently with the standards set forth in the written contract,” according to a Deloitte court filing.

Marin County tells a different story. The SAP implementation dates to 2006, but today only 50 percent of the functionality is in place and working properly, according to a county report.

The county hasn’t decided on who they’re going with for the new system but if you’ve got a one-person shop with no experience and present your RFP using overhead transparencies, you’ll still have an edge on Deloitte.

County will rip and replace ailing SAP system [Reuters]

Career Center

Can You Get a Big 4 Job If You Didn’t Go to a “Brand Name” College?

Caleb Newquist
August 26, 2010

Today we hear from a Big 4 dreamer and their frustration with the firms’ penchant for “brand name schools,” and what, if anything, you can do about it.

Have a question about your career? An inter-office love triangle? How to interpret the partner’s passive-aggressiveness attitude? Email us your query to advice@goingconcern.com and we’ll level with you.

Back to our reader:

I can’t tell you how frustrating it is to go onto the Deloitte Job Board and see positions with schools next to them, indicating the spot is only for a graduate of Notre Dame or some other brand name school. I turned down Notre Dame to go to a small liberal arts school in Chicago and now I have no idea how to get into the recruiting cycle for the Big 4 or regional public accounting firms. There were no accounting firms at the job fairs or on-campus interviews held at my school.

I graduated cum laude last December (a semester early and with my 150 credit hours). Desperate not to move back home, I took a private accounting job, but it didn’t work out and for personal reasons I moved up to Wisconsin. Now I am studying for the CPA and searching for a job. My question: how can I get in on this recruiting season? Is there even a way?

Unfortunately, this is just the way it is for public accounting firms. Unless an influential partner has a personal connection to a small school (Alma Mater, children are students there, etc), they are typically overlooked. The factory-like recruiting machines that are public accounting firms look for the same attribute in their target schools; where can they get the most bang (candidates) for their buck. If you think about it, it makes sense:

• Recruit at Notre Dame – meet 100 qualified accounting students
• Recruit at small liberal arts school – meet 15 qualified accounting students

Of the 1-2 students a firm would hire out of the small school, those numbers can be made up at the larger universities. This saves on expenses (travel, lodging, premiums, etc). Dollars and sense.

All that said, the issue is not that you’re from a small school, it’s that you’re now graduated and part of the workforce. Being a recent gradutate is more difficult; you’re not part of the campus recruiting scope and you’re too green to fit the typical experienced hire mold.

The best thing you can do is reach out to the firms directly. Use your network to find out who the HR contact is in the city where you live or want to live and call or email them. The most crucial thing with recruiters is getting them to know your name and face.

You’re cum laude so they’ll like that and if you are legitimately interested in the firm, they will take an interest in you. It will take some footwork on your part but it can be done.

Ernst & Young Partner Might Be Hiding Emmy Results Under His Pillow, Fails to Land Groupies

Caleb Newquist
August 26, 2010

On Sunday, The Emmys will be handed out to several cast and crew of Mad Men and a few other people. In order to give these proceedings some legitimacy, Ernst & Young partner Andy Sale (and possibly a few others) counts these votes and certify the results.

The L.A. Times published a Q&A with Sale today since the big day is nearly here and we took the liberty of bringing you the highlights.

For starters, Andy understands that the MSM could really get two shits about accountants except when there are audit failures or celebrities involved:

How cool is it to walk on the red carpet?

It’s one of those things where for at least one day a year, being an accountant is something the press wants to shine a light on.

He also doesn’t appreciate the LAT’s presumption that being an accountant is boring:

Is it the one day of the year it’s fun to be an accountant?

I think it’s fun to be an accountant every day.

Cool fact: if one of the presenters is Mel Gibson-drunk and just blurts out a name that is completely wrong, Andy must sprint on stage give the presenter a roundhouse uppercut and state unequivocally who correct winner is. Fortunately, that has happened…yet:

Has anyone ever screwed up reading a winner?

Part of our role is to ensure the appropriate name is read onstage. If a name was omitted or read inappropriately, we would be duty-bound to go onstage and correct it. It’s never happened. We hope to continue that streak.

The security around these events has to be tight and Sale and the team have to keep things creative when hiding the results. That means the results could be anywhere – a vault, his underwear drawer, Jon Hamm’s pants:

Let’s talk security. After you’ve finished counting the votes, where do they go?

Where they are secured and how they are secured changes every year. It can be in a vault. It can be under a pillow. We have multiple sets of envelopes and those multiple sets of envelopes arrive at the Nokia Theatre by different means. For security reasons, I can’t divulge those specific means. They’re delivered by a means both conventional and unconventional, and that’s all I’ll say on that.

And as glamorous as this gig is, it still not getting Andy as much action as he would like:

Do you get groupies out of this?

I can’t say I’ve seen a lot in the way of groupies.

Andy Sale is counting on Emmy Awards [Los Angeles Times]

News

Layoff Watch ’10: Rothstein Kass Making Pre-Labor Day Cuts

Caleb Newquist
August 26, 2010

From the mailbag:

Thought you’d be interested in hearing that today RK had a few last minute “transitions” or as most know them “lay offs”, these happened in the FS practice in New Jersey about 6 weeks after the official “transition date” in which upper management stated that the “transitions” were over for the year and everyone was safe and could get back to work and not worry. Today we lost 1 supervisor, 1 pending manager and 1 manager all having started their careers home grown at the firm.

Performance reasons were quoted but no one seemed to have a clue it was coming and a pretty big bummer day. Rumor has it that it’s not yet over as some others were not in the office today, doesn’t help the extremely negative morale issue going on at this firm with doom and gloom expectations of raises coming post labor day.

Would love to see some more RK news hit the site from time to time if you get it, not really sure where the firm is heading, up or down and would be great to see what others think??? FS practice is getting demolished in NY and NJ appears to be getting more antsy with every move that management makes.

A voicemail and email to Rothstein Kass spokesman Robert Solomon were not immediately returned.

If you’ve got more info on cuts or other news at RK, get in touch.

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