Resume Padding

On Monday, May 7, Yahoo apologized to its employees for discrepancies about its CEO, hired in January. Apparently, Scott Thompson, does not have a computer science degree after all, even though that information was included in an SEC filing and in several public bios about him.

Questions:

1. If Thompson allowed false information about his educational background to linger in his bio, should he be treated just like any other employee who did the same? Discuss.
2. Why didn’t this issue come up in a background investigation of the CEO before he was hired? Discuss.
3. What should Thompson have done if it truly was an error? Discuss.
4. Look at the slide show regarding padded resumes (at http://www.washingtonpost.com/business/economy/yahoo-ceo-isnt-the-only-leader-who-has-fudged-resume/2012/05/10/gIQARucmFU_gallery.html?tid=ts_biz#photo=1) What one thing surprised you most in this slide show?

Sources:
McGregor, J. (2012). Yahoo’s CEO Scott Thompson’s Incorrect Resume Raises Questions for Tech Company’s Board. The Washington Post, May 8 (Retrievable at http://www.washingtonpost.com/blogs/post-leadership/post/yahoo-ceo-scott-thompsons-incorrect-resume-raises-questions-for-tech-companys-board/2011/04/01/gIQAXUB5AU_blog.html)

Staff (2012). Yahoo CEO Isn’t the Only Leader Who Has Fudged Resume – Slide Show. The Washington Post, May 10 (Retrievable online at http://www.washingtonpost.com/business/economy/yahoo-ceo-isnt-the-only-leader-who-has-fudged-resume/2012/05/10/gIQARucmFU_gallery.html?tid=ts_biz#photo=1

Bloomberg Video (2012). Will CFO Tim Morse Head Yahoo?, May 9.

Cooking the Books – TSA style?

This week, the House Committee on Oversight and Government Reform released information about the Transportation Security Administration wasting taxpayers’ money; this time they point to a Texas warehouse holding more than 5,000 pieces of security equipment, valued at upwards of $180 million.

Questions:

1. What percentage of equipment has been stored for more than one year?

2. Based on the information in the article and video, what recommendations would you make if you worked for the inspector general’s office?

3. Representative Issa thinks that the TSA has “cooked the books.” Based on your knowledge of accounting and red flags of fraud, do you agree or disagree? Provide your reasoning.

Source:

CNN videos. (2012). TSA Cooked the Books, CNN.com, May 9 (Retrievable online at www.cnn.com/video

Fox, L. (2012). TSA Puts Millions of Dollars of Equipment in Storage, U.S. News, May 9 (Retrievable online at http://www.usnews.com/news/articles/2012/05/09/tsa-puts-millions-of-dollars-of-equipment-in-storage)

Doctorow, C. (2012). TSA Waste and Corruption: The Greatest Hits, BoingBoing, May 9 (Retrievable online at http://boingboing.net/2012/05/09/tsa-waste-and-corruption-the.html)

Lunch Money Fraud

How low can you go? Otis Josey, a 54-year old Detroit man, allegedly told a pre-school girl that he worked at a radio station and was raising donations for a children’s hospital charity. In exchange for a donation, he would give the donor a gift card. Police say he literally cheated the 5-year old girl out of her $5 lunch money in exchange for a fake $20 gift card to Chuck E. Cheese.

Questions:

1. Read the article by Ray Martin. What is one of the most reported gift card scams?
2. What does Martin recommend that you should do with an unwanted gift card?
3. How do most companies recognize the revenue from gift cards? What journal entries are involved?

Sources:

NBC Video.(2012). Man accused of selling child fake Chuck E. Cheese gift card, NBC News, April 26 (Retrievable at http://video.msnbc.msn.com/nbc-news/47178295/#47178295)

Martin, R. (2011). Attention Shoppers: Avoid this Gift Card Scam. CBS News, December 15 (Retrievable online at http://www.cbsnews.com/8301-505145_162-57343690/attention-shoppers-avoid-this-gift-card-scam/)

Visit msnbc.com for breaking news, world news, and news about the economy

General Services Administration (GSA) Scandal

A hearing on an extravagant government conference in Las Vegas will enter its second day on Capitol Hill on Tuesday, April 17. During Monday’s session, a House committee heard from officials accused of wasting taxpayer money on fancy meals and over-the-top entertainment. The GSA inspector general, Brian Miller, says he believes the behavior he uncovered could possibly be criminal and he wants the Justice Department to investigate possible bribes and kickbacks.

Questions:

1. According to the video, what were some of the reasons for out-of-control spending?
2. Compare this government scandal to a similar corporate scandal. Discuss any differences or similarities.
3. What types of controls should have been in place to prevent this overspending situation?
4. What issues do identify as criminal offenses? Discuss.

Source:

MSNBC video. (2012). GSA Under Investigation for Frivolous Spending, April 16. (Retrievable online at http://www.msnbc.msn.com/id/31510813/ns/msnbc_tv-the_dylan_ratigan_show/#47066004)
Cordes, N. (2012). Bribes, kickbacks in GSA Scandal? CBS News, April 17 (Retrievable online at http://www.cbsnews.com/8301-505267_162-57415052/bribes-kickbacks-in-gsa-scandal/)

Visit msnbc.com for breaking news, world news, and news about the economy

TaxMasters Trouble

A Houston-based tax advisory firm filed for bankruptcy Sunday, a little more than one day before it was scheduled in court to defend itself against fraud accusations. Best known for a national advertising campaign that made company’s bearded, red-haired founder Patrick Cox a recognizable figure, the company spent about $14 million in national advertising in 2009.

Questions:

1. According to the article, what amounts of assets did the company have as compared to debt in the Chapter 11 filing? According to the article, what does the timing of the bankruptcy have to do with the lawsuits filed?
2. What states are suing TaxMasters? What is the company charged with?
3. Instead of speaking to highly qualified tax consultants, who do TaxMasters customers alledgedly speak with?

Source: Video: Oberg, T. (2012). TaxMasters Files Chapter 11 Bankruptcy., ABCNews.com, March 19 (Retrievable online at http://abclocal.go.com/ktrk/story?section=news/local&id=8586594)

Mosk, M. (2012). TaxMasters Files for Bankruptcy, ABCNews.com, March 19 (Retrievable online at http://abcnews.go.com/Blotter/taxmasters-files-bankruptcy/story?id=15932628)

Bathon, M. (2012) TaxMasters Files for Bankruptcy, Dogged by Fraud Suits. Bloomberg.com, March 19 (Retrievable online at http://www.bloomberg.com/news/2012-03-19/taxmasters-files-for-bankruptcy-dogged-by-fraud-suits-1-.html)

Crime of Grime OR Sign of the Times?

Tide is flying off the shelves, according to the Associated Press. Unfortunately, retailers are not seeing the profits from this familiar laundry soap. Instead, Tide has become a hot commodity among thieves at supermarkets and drugstores in at least some parts of the country. While the maker of Tide, Procter & Gamble, has been baffled about why the brand has gotten so much attention from thieves, law enforcement has discovered direct and indirect links to the exchange of the product for illegal drugs.

Questions:

1. If a retailer uses a perpetual inventory method to account for Tide, what should they also follow up with to determine any shortages in the product?

2. If shortages of Tide are found, how should they be accounted for? Give an example including journal entries.

3. How should the extra expenses of security tagging Tide be accounted for? Give an example including journal entries.

Sources:

Nuckols, B. (2012). Thieves Rolling Tide Detergent Out of Stores, Associated Press, March 15. (Retrievable online at http://abcnews.go.com/US/wireStory/thieves-rolling-tide-detergent-stores-15922603)

Youtube.com (Wane.com). (2012). Retailers speak out against odd Tide thefts, March 14.(Retrievable online at www.youtube.com)

Can you say: Tapping a Swiss Bank account with Other People’s Money?

A Houston jury Tuesday convicted Texas financier R. Allen Stanford on all but one of the charges he faced for allegedly bilking investors out of more than $7 billion in one of the largest Ponzi schemes in U.S. history.

Questions:

1. Why, if Allen Stanford faces up to 20 years in prison for the most serious charges but could he be imprisoned for much longer?

2. How did Mr. Stanford separate the investors from their money and when did the government shut down the scheme?

3. What red flags of fraud were mentioned in the article?

Source:

MSNBC.com Staff. (2012). Jury convicts Stanford in $7 billion Ponzi scheme, March 6 (Retrievable online at http://www.msnbc.msn.com/id/46642425/ns/business-us_business/)

Visit msnbc.com for breaking news, world news, and news about the economy

A Ponzi Scheme in Ohio

In September, a prominent member of the Amish community in Sugarcreek, Ohio was arrested and accused by federal prosecutors of running a Ponzi scheme that betrayed his neighbors’ trust and wiped out more than $16 million of their savings. The elderly defendant, Monroe L. Beachy, had been a respected financial figure in his community for decades. Interestingly, unlike Bernie Madoff, the investors went to court and urged that it was more important to forgive him than recover their money. In fact, Amish religious leaders petitioned the bankruptcy court to let the church take on the debt and handle the ponzi scheme, rather than the courts. The bankruptcy judge ruled that “delegating insolvency proceedings to a religious body” would be unconstitutional. More than a year after Beachy went bankrupt, he has been indicted on mail fraud charges arising from a “scheme to defraud” that the Feds say dates back to 1990. If convicted, he faces a possible jail term of up to 20 years.

Questions:

1. What is a Ponzi scheme?

2. The campaign to have the Beachy bankruptcy case dismissed was based on what legal Act or rights? Do you agree or disagree with the bankruptcy judge? Discuss.

3. Explain how, if Beachy had been insolvent since as early as 1998, that this fraud was able to last until 2010?

Sources:

Henriques, D. B. (2012). Broken Trust in God’s Country. The New York Times, Feb. 25. (Retrievable online at http://www.nytimes.com/2012/02/26/business/in-amish-country-accusations-of-a-ponzi-scheme.html?_r=1)

NYTimes Video. (2012). Ponzi Scheme in Ohio (Retrievable online at http://video.nytimes.com/video/playlist/business/1194811622255/index.html)

Audit Irregularities

According to a report released on Feb. 15 in San Francisco county, about 400 recent foreclosures were determined to involve either legal violations or suspicious documentation.  This recent report suggests how pervasive foreclosure irregularities may be across the nation.

Questions:

1.  What is the acronym for the mortgage database that was started in 1995 to track information for lenders?

2.  What types of legal violations did the report indicate?

3.  Where did the greatest number of improprieties occur?  What internal controls could have prevented this?

Source:

Morgenson, G. (2012). Audit Uncovers Extensive Flaws in Foreclosures. The New York Times, Feb. 15 (Retrievable online at http://www.nytimes.com/2012/02/16/business/california-audit-finds-broad-irregularities-in-foreclosures.html?_r=2&hp)

 

No More “Neither Admit or Deny”

The Securities and Exchange Commission, in a fundamental policy shift, said Friday, January 6, that it would no longer allow defendants to say they neither admit nor deny civil fraud or insider trading charges when, at the same time, they admit to or have been convicted of criminal violations. This has been a longstanding practice of allowing companies to settle fraud charges by paying a fine without admitting wrongdoing.

Questions
1. In what types of cases will “neither admit or deny” still be allowed?
2. According to the article, who at the SEC decides whether to use relevant facts from the criminal case in its own court documents for the civil case?
3. In November, what high-publicity case was critical of the “neither admit or deny” settlements and who was the judge that made that point?

Source:

Wyatt, E. (2012). S.E.C. Changes Policy on Firms’ Admission of Guilt, The New York Times, Jan. 6 (Retrievable online at http://www.nytimes.com/2012/01/07/business/sec-to-change-policy-on-companies-admission-of-guilt.html?_r=2&hp)

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