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PwC Is Raking It In on Old Fraud

Posted on by Adrienne Gonzalez

As the multibillion-dollar scheme led by Tom Petters approaches its sixth anniversary, the meter is still running for the lawyers and accountants sorting through the corporate empire created by the former Wayzata businessman, and the array of creditors and investors who did business with him.

More than $83 million has been paid to the lawyers and accountants working on the Petters bankruptcy after a federal bankruptcy judge last week approved $3.5 million for another stretch of legal work.

So far, trustee Doug Kelley and a team of lawyers and accountants have recovered nearly $400 million in various legal proceedings, including funds from the sale of Sun Country Airlines and Polaroid, both of which were owned by Petters.

The recovery ratio to date is $5 recovered for every $1 spent on professional fees. By comparison, in the bankruptcy of convicted New York Ponzi schemer Bernard Madoff, the recovery ratio is approximately 10 to 1 ­— legal fees totaling $927 million on recoveries reaching $9.8 billion. [Minneapolis Star Tribune]

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A Lifetime Prison Sentence Won’t Prevent You from Qualifying for the Homebuyer Tax Credit

Oh the glorious first-time homebuyer tax credit. Championed by Congressional Leaders, popular with Americans and ripe with fraud.

No legislation is perfect though, amiright? You’ve got to take the good with the bad. The latest of the bad comes courtesy of everyone’s favorite bureaucratic nagging mother-in-law, the Treasury Inspector General for Tax Administration. The TIGTA has come out with a new report that shows that the FTHBTC program hasn’t really gotten any better at weeding out the unscrupulous activity.

TIGTA estimates that 14,132 individuals received erroneous credits totaling at least $26.7 million. These erroneous credits included:

• 2,555 taxpayers receiving credits totaling $17.6 million for homes purchased prior to the dates allowed by law.

• 1,295 prisoners receiving credits totaling $9.1 million who were incarcerated at the time they reported that they purchased their home. These prisoners did not file joint returns, so their claims could not have been the result of purchases made with or by their spouses. Further, TIGTA found that 241 prisoners were serving life sentences at the time they claimed that they bought new primary residences.

•10,282 taxpayers receiving credits for homes that were also used by other taxpayers to claim the credit. (In one case, TIGTA found that 67 taxpayers were using the same home to claim the credit.) TIGTA auditors have not fully quantified the total of these erroneous credits, but all indications are that the total will be in the tens of millions of dollars.

But wait! There’s good news! Inspector General J. Russell George was happy to report that there has been improvements, “The good news is that the IRS has made significant strides resolving problems associated with this program. For example, no minors received the Credit, according to our report.”

Progress! They’ve managed to keep the under-eighteen crowd under control. But do we prefer this to prisoners doing life getting our tax dollars? Seems like a toss-up.

Errors, Fraud Still Occur in First-Time Homebuyer Credit Program [TIGTA]

Happy (Belated) First Anniversary Satyam Fraud!

One.jpgTechnically it was last week but dang, it’s been a helluva year for Satyam and PwC.
Two auditors in jail, the PwC Chairman resigned, Jim Quigely couldn’t wait to tell everyone that Deloitte was the new auditor and P. Dubs would really, really be stoked if everyone just forgot the whole thing ever happened.
Despite the non-existent coverage in the U.S., our contributor Francine McKenna has covered this story from the beginning so we got her thoughts:

What do we know about the scandal one year later – its causes and how to prevent similar frauds in the future? Not much. The experts we should look to for answers, Satyam’s auditors Price Waterhouse India, are accused of being complicit and are still in jail. Who’s guarding the guardians? We’ll have to wait for the shareholders’ lawsuits and the SEC here in the US to hear what really happened, who all benefitted, and who is ultimately responsible.

Judging by the pace of things, we’re guessing the lawsuits won’t be resolved in our lifetime. While we are around however, we’ll keep you updated on what does happen whether it’s reasonable requests from PwC to jailhouse brawls (please God).

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