Online Gambling Settlement

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Poker Stars, the world’s largest poker company and its rival, Full Tilt, agreed to settle federal money laundering and fraud charges by paying hundreds of millions of dollars to reimburse online gamblers.

Questions:
1. Who were the founders of these companies and what charges do they face?
2. Through what means did the companies deceive banks into processing gambling transactions?
3. How did the two sites become the dominant sites for Web gambling in the U.S.? Did the companies plead guilty to any charges? What type of scheme was alleged?

Sources:
New York Times Business Day Live video, August 1, 2012.
NBC News. (2012). 2 poker sites agree to forfeit $731 million after prosecutors allege ‘global Ponzi scheme’ August 1 (Retrievable online at http://www.msnbc.msn.com/id/48433962/ns/us_news-crime_and_courts/)

Labor Department Violations

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On Tuesday, the Labor Department announced that it had levied a $34,000 fine on C. J.’s Seafood for safety violations. This is the company that supplies crawfish to WalMart. In addition, the agency also ordered C. J.’s to pay $214,000 for wage and hour violations.

Questions:
1. Where is the company based?
2. Specifically, how did the company violate wage and hour regulations? How did the company violate safety regulations?
3. On average, how much in back wages does the company owe to each worker?
4. Can C.J.’s deduct these payments as operating expenses for tax purposes?

Source:
Greenhouse, S. (2012). C.J’s Seafood Fined for Labor Abuses. The New York Times, July 24 (Retrievable online at http://www.nytimes.com/2012/07/25/business/cjs-seafood-fined-for-labor-abuses.html?src=recg#h[])

Super Hero Strength

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The Associated Press reports that three of the five hospitals treating victims from the mass shooting will waive or limit medical costs. Children’s Hospital Colorado will use donations and a charity fund to cover the expenses of uninsured victims, and waive co-pays for the insured.

Questions:
1. According to the article, about how much has been donated so far for the recovery of the victims?
2. What is a co-pay? How would a medical corporation make the entry involving a co-pay?
3. Will the donations be tax deductible for donors? Discuss.

Source: CNN Video, 2012. Aurora Survivors Face Big Medical Bills, July 25. (Retrievable online at http://www.cnn.com/video/#/video/bestoftv/2012/07/26/ac-lavandera-aurora-victim-medical-bills.cnn)
Ohlheiser, A. (2012). Aurora victims have medical bills wavied. The Slatest, July 26 (Retrievable online at http://slatest.slate.com/posts/2012/07/23/james_holmes_hearing_aurora_batman_shooting_supsect_due_in_court.html)

Reported to be the largest antitrust settlement in history

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Visa, MasterCard and major banks agreed Friday, July 13, to pay at least $6 billion to settle a lawsuit brought by retailers. A banking industry trade group said the settlement would allow stores to charge customers more to pay with a credit card.

Questions:
1. According to the article, what is the average credit card percentage paid by merchants on the price of the purchase?
2. Who were the defendants in the lawsuit?
3. When did the suit start through the court system?

Source: Associated Press, staff. (2012). VISA, MasterCard and banks reach $6 Billion Settlement over card fees. The Washington Post, July 13 (Retrievable online at http://www.washingtonpost.com/national/visa-mastercard-banks-reach-73-billion-settlement-with-merchants-over-credit-card-fees/2012/07/13/gJQADGkdiW_story.html)

The Weather Channel Buys Weather Underground

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, International Accounting, Managerial Accounting, Video Updates.

This week, Weather Underground, a unique website with a cult following was acquired by The Weather Channel for an undisclosed sum of money. As a strong competitor to The Weather Channel, the website has a devoted readership, with approximately 10 million unique visitors per month. Fans of Weather Underground have expressed outrage and disappointment in the acquisition calling it a “sell-out” to larger commercial corporate interests.

Questions:
1. What do you think is the business strategy associated with the acquisition? How do you think that The Weather Channel should go about trying to melt its current fans/interests with its acquired interests? What plans has The Weather Channel already announced regarding the acquisition?
2. What type of media offers future expansion opportunities to The Weather Channel?
3. Who is the new CEO of the Weather Channel? Who is the consortium that owns The Weather Channel?
4. Research the beginnings of the Weather Underground. Who are their typical followers?

Sources:
Stelter, B. (2012). Weather Channel Acquiring Weather Underground. The New York Times, July 2 (Retrievable online at http://mediadecoder.blogs.nytimes.com/2012/07/02/weather-channel-acquiring-weather-underground/)

NYT Video (2012). Business Day Live, The New York Times, July 3 (Retrievable online at http://video.nytimes.com/video/2012/07/03/business/100000001643644/business-day-live-july-3-2012.html)

Jail is not for Big Pharma

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In the largest health care fraud settlement in U.S. history, A federal judge on approved an agreement to fine British drugmaker GlaxoSmithKline for criminal and civil violations involving 10 drugs.

Questions:
1. Do you think fines can deter unlawful behavior at Big Pharma? In your opinion, why didn’t anyone go to jail for these violations?
2. What drugs did the company promote for unapproved uses? What were the uses and what were the risks?
3. What was the fine approved by the agreement? How are fines accounted for in the financial accounting records under GAAP or IFRS? How are fines accounted for in income tax records according to IRS regulations?

Sources:
Associated Press Staff. (2012). GlaxoSmithKline pleads guilty to health fraud, Associated Press, July 5 (Retrievable online at http://www.foxnews.com/us/2012/07/05/glaxosmithkline-pleads-guilty-to-health-fraud/)

NYT Video (2012). Business Day Live, The New York Times, July 3 (Retrievable online at http://video.nytimes.com/video/2012/07/03/business/100000001643644/business-day-live-july-3-2012.html)

The Barclays Scandal (AKA LIBOR LIAR)

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Questions about the close links between banking regulators and the financial institutions they oversee will come into focus on Monday, when a top official at Britain’s central bank appears before a parliamentary committee here looking into the manipulation of global interest rates.

Questions:
1. Explain the Libor rate.
2. As a result of this scandal, what types of transactions are affected?
3. What was Tucker’s role in the scandal? What was Diamond’s role?
4. Develop an analogy that would help you explain the scandal to one of your friends.

Sources:
Scott, M. (2012). Banking Official Faces Panel in Barclays Scandal, The New York Times, July, 8 (Retrievable online at http://dealbook.nytimes.com/2012/07/08/banking-official-faces-panel-in-barclays-scandal/)

NYT Video (2012). Business Day Live, The New York Times, July 3 (Retrievable online at http://video.nytimes.com/video/2012/07/03/business/100000001643644/business-day-live-july-3-2012.html)

Medical Tourism

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Video Updates.

Tourism is sometimes more than just for pleasure. In fact, thousands of U.S. citizens are crossing the border to Mexico or as the video shows, they are going to even more exotic places in search of more affordable medical care.

Questions:

1. What types of procedures are people going to Mexicali to receive?
2. According to the video, what percent can you save by having a heart bypass in India rather than in the U.S?
3. Perform a cost/benefit analysis on a procedure that either you or one of your family members has had or is considering. Discuss whether this would be a realistic option for that person.

Sources:

Medina, J. (2012). Mexicali Tour, From Tummy Tuck to Root Canal, The New York Times, June 27 (Retrievable online at http://www.nytimes.com/2012/06/28/health/mexicali-lures-american-tourists-with-medical-care.html?pagewanted=all)

CNN video. (2012). Medical Tourism on the Grow in Asia, June 30 (Retrievable online at www.cnn.com/videos).

Japanese Whistleblower Wins in the End

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

Masaharu Hamada, a good salesman with experience in the U.S., was demoted by Olympus Corp. as reprisal for relaying supplier complaints to management regarding corrupt business practices. But he fought back and Japan’s Supreme Court ruled in favor of the whistleblower for the first time. This case highlights the harsh treatment that outspoken employees have endured in a nation that zealously values loyalty and conformity.

Questions:
1. How long was Hamada’s battle against the company? What type of protection would a whistleblower have in the U.S.?
2. What were some of the punishments for whistleblowers in the past in corporate Japan?
3. Explain the basic facts of why Olympus has been in the news recently regarding an accounting fraud and cover-up.

Source:

Associated Press Staff. (2012). Japan whistleblower wins in Supreme Court in nation first as judge dismisses Olympus appeal. The Washington Post, June 30 (Retrievable online at http://www.washingtonpost.com/world/asia_pacific/japan-whistleblower-wins-in-supreme-court-dismisses-olympus-appeal-in-a-nation-first/2012/06/30/gJQAC41vCW_story.html)

Saving Money in the Court System Leads to Problems

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According to Lisa Borden, an attorney in Birmingham, Alabama, many towns are so economically strapped, that the pressure is growing on courts to bring in more money rather than mete out justice. In this article, examples highlight aggressive tactics used by for-profit probation companies that promise revenue to the towns, while failing to offer constitutional alternatives to fines, jail time, and appropriate counsel.

Questions:

1. The problem with for-profit probation companies has been highlighted in a recent research report by the nonpartisan Conference of State Court Administrators. The name of the report is: “Courts are not Revenue Centers.” What is a revenue center?
2. A 2010 study by the Brennan Center for Justice at New York University School of Law found that the court fee structure in 15 states imposed new and often onerous ‘user fees’ on individuals with criminal convictions. What are some of these fees?
3. Prepare a cost/benefit analysis regarding for-profit companies and use it to support a one-paragraph opinion essay on why or why not you think this practice of outsourcing should continue for private probation companies.

Source:

Bronner, E. (2012). Probation Fees Rise, Firms Profit and the Poor Go to Jail. The New York Times, July 2 (Retrievable online at http://www.nytimes.com/2012/07/03/us/probation-fees-multiply-as-companies-profit.html?_r=2&hp)