Tag: Porn

Porn-Extortion Plot Didn’t Turn Out Too Well for Ex-Deloitte Partner

This story goes back before GC’s time so we’ll give you some background: Steven Klig was a hotshot tax partner at Deloitte until he was arrested for extorting an ex-lover back in January 2009.

Since most tax partners we know have to beat off the ladies with a stick in each hand, this seems unbelievable but apparently, Klig didn’t have the typical IRC wonky charm and was a little miffed that a lover wasn’t interested in him any more.


His frustration reached critical levels which resulted in emails to the lover, who he tracked down on the web and claimed that he had a DVD of them getting down. Lucky for us, the Post just so happened to get its hands on a copy of the email back in January ’09:

“Just to give you a head’s up. I’ve been doing a little editing on our video. Mostly some blurring of myself so that I won’t be recognized,” he wrote in one e-mail, according to the criminal complaint. You, on the other hand, can be seen very clearly having the time of your life being f—ed by me.”

Despite the good times, the woman went to the FBI after Klig emailed her husband trying to get a hold of her email address. An agent posing as the woman responded to Klig:

[A]sking what he wanted and pleading, “I want to keep my family out of this.”

He allegedly responded, “I don’t need money. What I really want is something new to look at.”

Klig then allegedly detailed his preferences for the “first installment” as: “(1) fully clothed; (2) without your shirt; (3) without your shirt and pants (in just a bra and panties); (4) without the bra and (5) fully nude.”

And the best part? He sent some of these emails while he was on vacation. At Disney World. With his wife and kids. Can’t you see it? You’re walking around Epcot, surrounded by shrieking children, grown adults dressed as princesses, talking animals, and overgrown dwarves; what a perfect opportunity to extort some porn out of an uncooperative ex-lover!

According to the Post, Klig pleaded guilty to lesser charge in order to avoid serious time although the judge indicated he could face up to a year in prison where he may or may not have the time of his life.

Tax lawyer pleads guilty in porno-extort scheme [NYP]

(UPDATE) Let’s Take a Closer Look at This SEC Accountant’s Porn Activity

Since we’ve been out of the number crunching biz on a day to day basis, our reaction to the 16,000 attempts by an SEC accountant to access porn was simply, “Holy shit, that’s a lot.”


Thankfully, we still have plenty of friends that still burn up the 10-key calcs and we got a drop from one of them a little while ago:

I did [a] calc on that accountant that viewed porn sites up to 16,000 in one month. He was averaging 725x per day (including weekends). That is impressive. I don’t think I can hit 725 times in a year (and I don’t even have a girlfriend), let alone one month.

The best part of this whole ordeal is that it’s now becoming a political football and hyperbole that even makes us scoff.

UPDATE: Our stupid friend is obviously rusty on the calc (they’re no longer in public accounting) and we’ve been re-informed by said friend that 725x is based on 22 workdays (i.e. not including weekends).

Even more importantly, how many accountants out there double-checked this pre-update calc and then failed to get all self-righteous about it?

Furthermore, and perhaps most importantly, the bar has been raised in the wasting time department. Granted this accountant was wasting everyone’s tax dollars while those of you in public accounting are wasting your clients’ dollars but these porn surfing numbers are no doubt a challenge worth accepting. Go forth.

Accounting News Roundup: Ernst & Young Settles with HealthSouth Bondholders; SEC Accountant Tried to Access Porn 16,000 Times in a Month; The Best Accounting Rules Won’t Fix Everything | 04.23.10

UBS to Pay $217 Million to Settle HealthSouth Case [Bloomberg BusinessWeek]
After the better part of a decade, Ernst & Young has finally settled with the bondholders of inpatient service provider HealthSouth. Bloomberg is reporting that the firm agreed to pay the Company’s bondholders $33.5 million after settling with shareholders last year for $109 million. HealthSouths’ investment bank, UBS settled with shareholders and bondholders for $117 million and $100 million respectively.

The $2.7 billion fraud resulted in guilty pleas from 15 executives, including five former CFOs but an acquittal of CEO Richard Scrushy. Scrushy managed to wind up in prison on bribery charges instead and is currently serving 6 years and 10 months. As is typical in these matters, both UBS and E&Y ponied up yet denied any wrongdoing.


GOP ramps up attacks on SEC over porn surfing [AP]
The official SEC porn report has been leaked and some interesting things that are new include:

• One guy had so much porn on his computer that he had to bring in CDs and DVDs to help expand the collection. He thought it wise to keep these at the office.

• “An accountant” was blocked from accessing sites 16,000 times yet still amassed a “collection of ‘very graphic’ material on his hard drive by using Google images to bypass the SEC’s internal filter.” He refused to ” testify in his defense” and was suspended for fourteen days.

• Seventeen employees were “at a senior level” with the highest salary reported over $222k.

Darrell Issa (R-CA) is not amused by this porn bonanza, saying, “[it is] disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse,” according to the AP. Based on this response, it wouldn’t be surprising to find Issa ensnarled in a porn scandal of his own before this year’s election.

Best accounting rules are not enough [FT]
A reader responded to the epic article published by the Financial Times, raising the notion that “one set of high quality accounting standards” will not solve the world’s problems.

Those who prepare and use accounts very often have a different perspective on accounting questions from accountants as such, whether or not they have had an accounting qualification in the past…

[T]he report on Lehman explicitly did not address the question of accounting arbitrage. This was because Lehman used an accounting rule to disguise from the markets the weaknesses in the balance sheet in a way which, as the examiner reported, was invalid even if the rule itself was completely valid in all jurisdictions.

This points to the fact that the best accounting rules possible are not enough – the financial reporting chain has other links: corporate governance, auditing and regulation.

Apparently the Porn Problem Has Spread from the SEC to the IRS

This is the last thing the IRS needs. Well, maybe next-to-last.


“An IRS employee is charged with having child pornography on a laptop computer that police said he left in a garbage bag in a wooded area in Sterling Heights. Alan E. Erickson, 45, of Sterling Heights is charged with one count of using a computer to commit a crime and five counts of possession of child sexually abusive material, officials said.”

Dumping a laptop in the woods? And child porn to boot? Jesus. You thought the death threats against IRS agents were bad before…

IRS employee charged in porn case [Detroit Free Press]

Image source: Sterling Heights Police via DFP

Can the SEC’s New Chief Accountant of Enforcement Division Stay Focused?

Howard Scheck is newest member of the SEC Dream Team, joining the Commission after leaving the Forensic & Dispute Consulting Practice of Deloitte Financial Advisory Services. Mr Scheck will serve as the Chief Accountant in the Enforcement Division, working for Robert Khuzhami.

Khuzhami is thrilled to have Howie on board, saying in the Commission’s press release, “Financial statement and accounting fraud are high enforcement priorities for the SEC, and Howard is highly qualified to lead our accounting staff in its relentless pursuit of these wrongful practices that are so harmful to investors.”


Sounds like Scheck is the man for the job, having been an forensic expert at Deloitte and working in the Enforcement Division for ten years as well but the question that really needs to be asked is, can he exert some self-control while on the job and avoid ladyboyx.com?

Not only has the SEC proven time and again that they aren’t the brightest group but that viewing porn on the job to cope with the stress is a-okay.

While other protectors of the markets are perusing the web for the best tranny-porn that can be seen for free, will Scheck be able to focus on slapping accountants on the wrist? Khuzhami seems like the no-nonsense sort but the herd mentality at the Commission may be too much to bear.

Howard A. Scheck Named Chief Accountant in SEC Enforcement Division [SEC.gov]

Accounting News Roundup: The SEC’s Porn Problems Somehow Get Worse; The Daily News Offers Free Tax Help While the Sun-Times Has More Obvious Tax Advice | 03.24.10

• SEC Employees Were Masturbating to Kiddie Porn While Your Economy Tanked [Gawker]
So this whole SEC/Porn fiasco has taken an unsuspecting and disturbing turn for the worse. Gawker has obtained documents that show that there have been sixteen investigations of SEC employees surfing the web for the likes of ladyboyjuice.com, kinkycomments.com, sexyavatars.net, cafebuckskin.blogspot.com and the list goes on and on and on and on.

Even more awkward is that it was discovered that one of the Commission’s porn connoisseurs computers contained videos that “potentially contained child pornography” and was referred to the FBI. Protecting our markets, people. Protecting our markets.


• Readers turn to Daily News Tax Hotline for free help filing tax returns [NYDN]
Can’t afford a CPA? NBD. Just call up the Daily News. Their annual tax assistance hotline runs today and tomorrow from 10 am to 4 pm. The DN partners with the NY State Society of CPAs so you can rest easy that it won’t be Rush & Malloy.

• Don’t pay taxes with credit card [Chicago Sun-Times]
Not such a good idea.

CPAs Spanked by SEC for Porn Site Audit

Let it be known that if you are peddling porn and engaged in online pimping, you do not want the SEC on your back.

WebCPA reports that Stephen Corso of Las Vegas and Brian Rabinovitz of Oak Park, CA got the SEC smack down in a Nevada federal court for filing materially false and misleading financial statements from 1999 – 2002 (that’s quite a backlog) and that audit staff – under the boys’ supervision – omitted important info and violated the sanctity of auditor independence during audits of Exotics.com


While the enforcement doesn’t go into specifics, we’re happy to. Exotics.com bills itself as the world’s premiere source for – wait for it – beautiful female adult entertainers. Not to be outdone, Exotics also boasts a veritable cornucopia of escort options including “BDSM & fetish providers, exotic dancers, strippers, sensual and erotic massage specialists, TSTV and other adult entertainment.” It’s that “other that really scares me. Self-billed as the Quicker Pecker Upper (kid you not), the site headline right around the time the SEC brought the heat was “Better than Wives, Girlfriends, and Porn” – and apparently above performing audits according to GAAS?

So, who wants to wildly speculate as to how audit staff violated auditor independence?

Here’s the 2005 release from our friends at the SEC:

[T]he accountants fraudulently participated in audits of Exotics-Nevada’s year-end financial statements and in a review of its quarterly financial statements and failed to conduct those engagements in accordance with GAAS, as required. The Commission also alleges in its complaint that, among other things, the accountants prepared or created many of Exotics-Nevada’s books and records and then audited the financial statements they created. According to the complaint, they also caused their firms to issue false audit reports which, together with the underlying financial statements, were incorporated in Exotics-Nevada’s public filings with the Commission.

Now listen, little auditors, you don’t shit where you live and you don’t audit your own statements. Audit sampling? I could see how it would be hard to resist in this particular instance.

CPAs Disciplined for Porn Site Accounting Fraud [Web CPA]
SEC Complaint

Accounting News Roundup: SEC Official Explains His Porn Habits; Private Companies May Embrace IFRS Quicker; New Bill Would Ax Tax Tardy Fed Employees | 03.04.10

• Porn Nightmare Never Ends for SEC Official [FINS]
Whatever your porn preferences, you’re probably not sharing them with complete strangers. If you are, the cloud of awkward around you has got to be so thick that you may as well have leprosy. However, if you have the unfortunate luck of getting caught viewing this art form at work, then you might be forced to discuss your preferences, how often you’re engaging in the activity, among other things:

[T]he really juicy stuff begins when he’s asked about accessing Web sites like tgirlhotspot.com and ladyboyx.com (warning, very NSFW): “Our records show that on Wednesday, August 13, 2008, beginning at 1:57 p.m., you made approximately 85 attempts…to access a Web site called tgirlhotspot.com. Do you have any recollection of attempting to access this site?”

The employee answers: “I do not personally have recollection of it, but it would not surprise me.” To which the inspector — and the reader — responds: “Okay. That’s fair.”

Seriously, who can remember every instance that they’ve visited ladyboyx.com? Does the guy have a photographic memory? Maybe on certain images but date, time, and spreadsheet you had open that you could quickly jump to in case someone came to close? That’s asking a little much.

• Should the U.S. Forget about Private-Company GAAP? [CFO Blog]
Now that the Blue Ribbon Panel for private company GAAP has been announced, it makes some people wonder if the non-SEC types will just ignore this whole song and dance the Commission is doing get with the IFRS program ASAP. Ahh, the advantages of being a private company…

Even though both the BRP and the SEC will release their musings on their respective topics in 2011, private companies already have options, “[T]he U.S. private sector has already set some IFRS wheels in motion. In 2008, AICPA recognized the IASB as an official standard-setter, which means U.S. auditors are allowed to issue opinions on private-company financial results filed using IFRS.”

It’s doubtful that IFRS reporting will spread like H1N1 among private companies but while the SEC twiddles the private sector seems to recognize where all this is ultimately going.

• Jason Chaffetz: Ax Hill staff tax cheats [Politico]
Since all the members of the House are up for reelection this year, everyone needs something solid to campaign on and apparently Jason Chaffetz (R-UT) has found his stump.

Chaffetz is introducing legislation that would extend an IRS policy — termination employees that haven’t paid their federal taxes — to all federal departments and agencies.

In 2008 alone, 447 House employees and 231 Senate workers didn’t pay their taxes, according to figures from the IRS, Office of Personnel Management and Department of Defense.

“We have over 600 staffers on Capitol Hill not paying their taxes. That’s just not acceptable,” Chaffetz said in an interview with POLITICO. “It’s disingenuous to take federal taxpayer dollars and not pay your full share of taxes. It’s wrong.”

Between to the two bodies in Congress, over $8 million are owed in taxes. We don’t have to remind anyone how little money this is grand scope of the federal government. But hey! Rep. Chaffetz has an election to win and by God, this could be the ticket. Some other notable delinquent federal employees include the Postal Service at $257 million; Dept. of Veteran Affairs at $131 million; Army and Navy owe $81 million and $61 million respectively.

But pointing out those people wouldn’t make for very good press.