As expected, James Davis, Stanford Financial’s Chief Number-Maker-Upper has entered his not guilty plea but his counsel has stated that his client will plead guilty to all the charges against him as early as next week. The initial plea has been made in order to finalize the plea agreement with Davis prior to his pleading guilty
This is all occurring while Stan the Man’s attorneys are in New Orleans appealing a Houston judge’s ruling that he has to pump iron in prison throughout his trial. Stan’s attorneys continue to maintain that their client is NOT a flight risk, which is kinda like saying that Bernie Madoff is NOT in jail.
Ex-Stanford CFO to plead guilty within 2 weeks: lawyer [Reuters]
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When Booking Bogus Revenue, Ideally Your CFO Is the Type to Not Give a Rat’s Ass
James Li and David Chow used to run a shop called Syntax-Brillian Company as the CEO and Chief Procurement Officer respectively. They sold high-def, LCD TVs under the Olevia brand in China. Problem was, they didn’t really sell TVs under the Olevia brand in China. According to the SEC:
[F]rom at least June 2006 through April 2008, Li and Chow engaged in a complex scheme to overstate Syntax’s financial results by publicly reporting significant sales of LCD televisions in China, when in fact the vast majority of these sales never occurred. Li and Chow initially concealed the scheme through the use of fake shipping and sales documents.
Of course, they couldn’t do it alone. They needed a CFO. A CFO who would backdate things when asked and ignore obvious signs of bogus revenue. That man was Wayne Pratt who, from the sounds of it, wasn’t too concerned about ANYTHING:
The SEC alleges that Wayne Pratt, Syntax’s Chief Financial Officer, ignored red flags of improper revenue recognition and participated in preparing backdated documentation that was provided to Syntax’s auditors to support fictitious fiscal 2006 year-end sales. Pratt also ignored indications of impaired assets, agency sales, and potential collectability issues.
So, budding criminals, get on the look out for a guy/gal who is accustomed to shrugging their shoulders and responding “Meh. Whatever.” to your demands. Should work out well for you.
Litigation Release [SEC]
Complaint [SEC]
(UPDATE) Ex-Hospital CFO Pleads Guilty to Tax Evasion, Health Care Fraud
In dubious CFO news, Vincent Rubio, the former financial chief at Tustin Hospital and Medical Center, agreed to plead guilty yesterday for paying kickbacks to “marketers” who recruited homeless people from the Skid Row area of Los Angeles.
Rubio pleaded guilty to health care fraud and tax evasion; he was the fifth person to charged in the investigation that is still ongoing. He faces fifteen years in prison After the homeless people were treated, the hospital billed Medicare and Medi-Cal for unnecessary treatments.
The AP piece doesn’t have much to it so we’re got to wondering all sorts of things like: A) Who discovered this fraud? Was it — gasp — the auditors? B) what were these unnecessary treatments? We’re these displaced individuals getting checked for hernias or less intrusive procedures? C) how much was Medicare and Medi-Cal charged? Are we talking Madoff-esque numbers? D) When the homeless were finished up at the hospital did they strap them to a rickshaw and send them back out in the streets or did they try to help them for real?
We called the hospital to find out more and we were connected to a spokesperson, who told us that she could not comment on the matter. She informed us that our message would be relayed to the hospital’s President, James Young. At the time of posting, we had not heard back from him. We’ll update this post with any comment or further information.
Ex-hospital CFO pleads guilty in homeless scam [AP via SF Chronicle]
UPDATE Friday, February 12th: We received the press release from Pacific Health, the owner of the Hospital:
February 11, 2010
Press Release
Pacific Health Corporation learned of the allegation that a third party made improper payments to Vince Rubio on November 30, 2006. Upon receipt of the allegation, Pacific Health Corporation contacted its outside counsel to investigate the allegation.
Within one day of the allegation being received, Pacific Health Corporation took employment action in the matter, placing Mr. Rubio on leave. Within one week, Pacific Health Corporation terminated the employment of Mr. Rubio.
After the completion of the its internal review and taking the employment action, Pacific Health reported the matter to law enforcement officials. That took place in early 2007.
A Couple of Suggestions for NPR’s New CFO
NPR has a new CFO and if you’re not a public radio junkie, you might not give a shit less. For those of you that can’t function without hearing the soothing voices brought to you courtesy of your very own tax dollars, then this is big news.
Deborah Cowan is joining NPR from Radio One where she was SVP of finance. She also did stints at IBM and Coopers & Lybrand (look it up, young people).
Not sure if Ms Cowan will be able to weigh in on editorial matters but we humbly suggest more of the following:
Oh and if you could encourage your boss to reverse a particular asinine policy, that’d be great. Good luck in the new gig.