You may have read that dedicated criminal Barry Minkow has once again been sentenced to […]
Accounting News Roundup: More Execs Say Benefits Sarbanes-Oxley Outweigh Costs; New Jersey Millionaire Tax Fails; Has the SEC Learned Anything? | 06.22.10
As Congress Mulls SOX Exemption, Survey Suggests Acceptance [Compliance Week]
Just when Sarbanes-Oxley compliance was about to get torpedoed by the financial reform bill, a new study comes out that shows companies are starting to see benefits from the legislation, “In its 2010 Sarbanes-Oxley compliance survey, Protiviti says 70 percent of executives in at least their fourth year of working to comply with Sarbanes-Oxley say they believe the benefits outweigh the costs. That’s a big swing from the first year the firm asked the same question and heard only 39 percen benefits greater than the costs.”
Showdown Over Strippers [WSJ]
Some people in the Show Me State are not interested in living up to that name, “Last month, the Republican-controlled legislature passed one of the nation’s toughest state laws aimed at strip clubs and other adult-entertainment venues. It would ban nude dancing and the serving of alcohol in adult cabarets, force strip clubs to close at midnight and forbid seminude dancers to touch patrons.”
The legislation is currently awaiting sign/veto from MO Governor Jay Nixon.
Opponents argue that the state’s very economic recovery is at stake, “Club owners and dancers say that the venues rarely attract crime, and that the new rules would be so strict that hundreds of jobs and millions of dollars in state revenue could be lost at a time when Missouri’s economy is struggling to recover from the recession.”
JP Morgan Names Doug Braunstein CFO in Shake-Up [AP]
“JPMorgan Chase said Tuesday it is shuffling the positions of three executives, including naming a new chief financial officer. The shake up is part of a program JPMorgan Chase has put in place to have executives work across multiple divisions to broaden their experience. Doug Braunstein is taking over as CFO. He was previously head of the bank’s investment banking division in the Americas. Braunstein, 49, replaces Michael Cavanagh, who had served as CFO since 2004. Cavanagh was named head of the bank’s treasury and securities services business.”
Tropical Storm May Pose Threat to BP Spill Cleanup [Bloomberg]
The first storm of the Atlantic hurricane season may enter the Gulf of Mexico as soon as next week, possibly disrupting BP Plc’s efforts to clean up the worst oil spill in U.S. history.
Thunderstorms in the Caribbean may strengthen into a tropical storm this week before heading into the Gulf between Mexico and Cuba, said Jim Rouiller, a senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania.
“The first named tropical storm of the 2010 season appears more likely to form over the northwestern Caribbean late this week and will go on to represent a formidable threat to the Gulf, along with heightening concerns about the oil slick,” Rouiller said in an e-mail yesterday.
Forecasters are predicting this year’s Atlantic hurricane season, which runs from June 1 to Nov. 30, may be among the most active on record and hamper the U.K. oil company’s efforts to plug the leaking well. AccuWeather Inc. forecast at least three storms will move through the region affected by the spill.
New Jersey Democrats fail to extend millionaires tax [Reuters]
Garden State millionaires rejoice!
SEC Crazy Talk [Portfolio/Gary Weiss]
Sam Antar recently turned over 37,000 documents to the Securities and Exchange Commission but not because the SEC was getting nostalgic for the Crazy Eddie days.
The SEC wanted documents, emails etc. from both Antar and Fraud Discovery Institute founder Barry Minkow on companies that have been covered by both men. The information relates mostly from information obtained from short-sellers. However, Gary Weiss writes that the SEC also asked for emails that the two exchanged with two reporters and from Antar’s ex-wife.
Gary thinks that this poking around by the Commission is all too familiar, “Well, I think what we may be seeing is a repeat of the [David] Einhorn fiasco, and then some,” referring to the SEC’s investigation into Einhorn’s criticism and short-selling of companies.
Einhorn was eventually vindicated and the companies – most notably Allied Capital – outed for their shady practices. Why the SEC is digging around the very people trying to help them isn’t quite clear but then again the SEC doesn’t have the greatest track record.
Barry Minkow Isn’t Buying Anthony Weiner’s Report That Says Goldline International Is More or Less a Fraud
Last time we saw Congressman Anthony Weiner, he was attempting to discuss the IRS’ role in the enforcement of healthcare with spin-hater Bill O’Reilly. While that particular encounter was quite fun (especially Weiner’s huffing and O’Reilly’s eye-rolling) the video of the Congressman’s recent appearance on Fox Business News is quite good.
But what we’d really like to see him have a conversation with Barry Minkow about how that Barry thinks the Congressman’s report on Goldline International is unmitigated bullshit:
Friend of GC, Tracy Coenen participated in the Minkow’s investigation and she presents the findings over at Fraud Files Blog. Here’s a sample:
• Allegation: Weiner criticizes Goldline because of complaints on the website Ripoff Report lodged by consumers who say Goldline representatives improperly hold themselves out as investment advisors.
• What Weiner didn’t tell you: Ripoff Report says (in response to the consumer complaints) that you can feel completely confident doing business with Goldline. Weiner gave us only half of the story in his report.
Allegation: Goldline grossly overcharges for its products
What Weiner didn’t tell you: Our sampling of coins listed in the Weiner report showed that Goldline’s prices were very comparable to those of six competitors. He also forgot to mention that companies are free to set whatever prices they like for their products.
Allegation: Goldline says they’ll buy back your gold and silver, but doesn’t “guarantee” that
What Weiner didn’t tell you: It is against the law for Goldline to offer a buyback guarantee. If they offered such a guarantee, they would be in violation of securities laws because their salespeople are not licensed broker dealers.
Regardless of how you feel about Glenn Beck, gold coins, or Anthony Weiner’s Fox News-esque ability for interrupting, it kinda sorta sounds like the Congressman’s investigators don’t know a non-fraud when they see one. Besides, we’ll take the word of a convicted-felon-turned-fraud-buster over any report that comes out of Congress. Especially in an election year.
A message left with Congressman Weiner’s spokesperson was not immediately returned.
Goldline International: An In-Depth Look at Congressman Weiner’s Allegations, And How He Got It Wrong [FDI]
Barry Minkow debunks the Glenn Beck and Goldline International fraud connection [Fraud Files Blog]
Weiner Takes on Goldline and Fox Business — At The Same Time [Weiner.house.gov]
Accounting News Roundup: Strange Letter Disrupts Ernst & Young’s Iraq Plans; Allen Stanford Is the Worst; Debunking a Tax Preparer Regs Conspiracy Theorist; Medifast Gets the Bird | 05.20.10
Mysterious letter rattles E&Y’s Iraq ambitions [Accountancy Age]
Ernst & Young has been trying to get its audit on in Iraq shortly after Saddam Hussein’s party ended in 2004. The firm has been providing services there, however not yet been approved to perform auditing services. E&Y has been claiming that it was making headway, “on the verge of obtaining an accounting license” but now a letter from somewhere within the dense Iraqi bureaucracy seems to have delayed those plans.
It came as a shock when the firm learned of a letter sent to the Iraqi Supreme Court, the Central Bank of Iraq, the Commission of Integrity gistrar and the Iraqi Banks Union, among other senior institutions, from the Iraq Union of Accountants and Auditors, which claimed the firm had been banned.
“It has been decided to forbid the accreditation of any financial statements audited by Ernst & Young (E&Y) company and forbid its operations in accountancy and auditing for governmental and private sectors in Iraq,” the letter stated.
The letter, in Arabic and signed by the Union Secretary Dr Rafed Obaid Al Nawwas, said the union reserved the right to go to “legal authorities to stop non-Iraqis from conducting audit and accountancy in Iraq”.
So in case you missed it, E&Y did not actually receive this purported letter but heard of it second-hand and then responded that the Iraq Union of Accountants and Auditors has no authority on the matter, since it’s just an “association of Iraqi accountants.” So it sounds like the AICPA of Iraq basically tried to tell the Iraqi version of the SEC, PCAOB, et al. that E&Y was not fit to be in country (if you’ve got another idea, by all means).
Iraq’s chief accounting regulator claims to not knowing about the letter and that E&Y is “just about to obtain its license” so this may be a nuisance more than anything else.
How Stanford is worse than Madoff [Fortune]
Mostly because CDs are the basic financial instrument that is usually held by little old ladies and other common folk. Not Kevin Bacon.
Unenrolled Tax Preparer: Preparer Regulation is a CPA Plot to Put Me Out of Business [Tax Lawyer’s Blog]
Naturally, there are some unlicensed tax preparers that are taking the IRS’ proposed regulations a little personally. Peter Pappas at TLB tells us about one unlicensed preparer who did some bellyaching to the Service. This sage of taxes challenges anyone to question his expertise:
1. “I prepare my returns accurately and would challenge anyone to find errors.“
2. “I have seen numerous returns prepared by CPAs and other similar preparers that were incorrect. [the man strives for perfection]”
3. “I am willing to take some courses or some certification, but to become an enrolled agent or CPA would cause an undo burden on my business. [i.e. require me to work more than 8 hours a day]”
And that’s just a sampling. Mr Pappas kindly debunks all of these (and more):
1. “A self-serving declaration by an unenrolled tax preparer that the returns he prepares are 100% accurate is about as valuable as an NBA player announcing that nobody can guard him.”
2. “This is utterly irrelevant and, if anything, an argument for more regulation, not less…[This] is dumber than texting while driving.”
3. “Becoming an enrolled [preparer] would force Mr. Jamieson to make expenditures of time and money he does not wish to make, therefore, because he is not prepared to make those sacrifices he believes that people who have made them should get no benefit from it whatsoever.”
Barry Minkow Gives Medifast the Middle Finger [White Collar Fraud]
At this point we’re assuming it’s only the figurative bird, by way of a report that states that Medifast’s business model is effectively a multi-level marketing scheme.
Barry Minkow Would Like to Remind Everyone, Especially PwC, That InterOil Has Never Found Any Oil or Gas
Barry Minkow has a message for InterOil auditors at PwC and it appears as though he would really, really like for P. Dubs to remember its fiduciary responsibility. So much so that he even made a video to help drive the point home so let’s hope this lands where it is supposed to and PwC considers Barry’s friendly suggestions.
“InterOil and its CEO have shown a troubling pattern of behavior that goes back to the company’s founding in 1997,” Minkow said. “We’ve seen inflated assets, a missing report from world-class Netherland Sewell, no major partners willing to put up cash for its proposed LNG plant, a recent bad-faith bankruptcy filed by CEO Phil Mulacek for a company he controls, and unreported $5.7 million commission, insiders dumping tons of stock last month, hyped press releases, and the list goes on. In fact, the only thing we haven’t seen from InterOil is any commercial oil or gas.”
Despite Past Investigations and Borderline Childish Behavior, McGladrey & Pullen Takes Medifast Audit
McGladrey & Pullen/RSM McGladrey has been named the new audit/tax firm of Medifast, the company announced in a filing last Friday. The Company dropped Bagell, Josephs, Levine and Company LLP of New Jersey who was purchased by Friedman LLP, citing/blaming Sarbanes-Oxley for reducing the number of accounting firms that have the “extensive resources and experience with public companies on a national and regional basis to better serve Medifast.”
For those of you not familiar, Medifast is “an amazing weight loss program” whose products “are formulated with a