According to a study released last Tuesday, U.S. multinational companies are saving $100 billion a year by shifting their profits overseas to lower their tax bills.
Questions:
1. Is this tax fraud? Why or why not?
2. Explain the mechanism they are using.
3. Which countries are companies shifting profits to and why (be specific)?
4. How much in tax revenues are being lost by the U.S. each year and how could the Congress act to prevent this?
Source:
Merle, R. (2016). U.S. companies are saving $100 billion a year by shifting profits overseas, report says. The Washington Post, May 10 (Retrievable online at https://www.washingtonpost.com/news/business/wp/2016/05/10/u-s-companies-are-saving-100-billion-a-year-by-shifting-profits-overseas-report-says/)
Some Chinese state-owned entities, backed by the key government agency that oversees major state industrial companies, have adopted a controversial defense when they face U.S. lawsuits – we enjoy sovereign immunity.
Questions:
1. The article says that this policy is an indication of something much deeper. What is that?
2. The article mentioned Chinese audit firms. What did they do?
3. Discuss the facts of the drywall case and your opinion about what should happen.
4. What is the legal argument by the Chinese Foreign Ministry?
Source:
Miller, M. and M. Martina. (2016). Chinese state entities argue they have ‘sovereign immunity’ in U.S. courts. Reuters.com, May 11 (Retrievable online at http://www.reuters.com/article/us-china-usa-companies-lawsuits-idUSKCN0Y2131)
Tara Zoumer thought she had found her dream job when she was hired at WeWork, a $16 billion start-up that rents office space to young entrepreneurs. As a salaried employee, she was soon asked to expand her duties to include many things that an hourly custodian should do. When she tried to get other employees to join her in a class-action suit against her employer to fight for overtime pay. That was when she found out that the company had implemented arbitration for HR disputes, making her lawsuit null and void.
Questions:
1. When Tara did not sign the new company policy, what happened?
2. What other companies were mentioned in the article that made their employees sign an arbitration clause?
3. What was the most interesting part of this article to you?
4. Would you sign an arbitration clause? Why or why not?
Source:
Silver-Greenberg, J. and M. Corkery. (2016). Start-Ups Embrace Arbitration to Settle Workplace Disputes. The New York Times, May 14 (Retrievable online at http://www.nytimes.com/2016/05/15/business/dealbook/start-ups-embrace-arbitration-to-settle-workplace-disputes.html)
A $5 million suit was filed in Federal court alleging that Starbuck’s is deceiving customers by filling drinks with too much ice.
Questions:
1. Based on the allegation, do you think that Starbuck’s should report the lawsuit as a contingency in their upcoming annual report? Why or why not?
2. Besides claiming that too much ice is in drinks, what other issues does the plaintiff allege?
3. After reading Bort’s article, what are some of the other reasons that Starbuck’s has been sued? What is your favorite?
4. What percentage of the suits listed in the Bort article do you estimate are frivolous?
Sources:
Bort, R. (2016). THE (MANY) REASONS PEOPLE HAVE SUED STARBUCKS. Newsweek, May 6 (Retrievable online at http://www.newsweek.com/starbucks-lawsuits-list-456294)
Bowerman, M. (2016). Starbucks: Lawsuit over ice in chilled coffee, tea is ‘frivolous.’ USA Today, May 4 (Retrievable online at http://www.usatoday.com/story/money/nation-now/2016/05/04/woman-sues-starbucks-5-million-ice-chilled-coffee-tea/83920832/)
The government set up an elaborate sting operation to expose a network of recruiters for visa mills. The only problem was that some students claim that they thought the “honey trap” was a legitimate organization and were duped by the U.S. government.
Questions:
1. Briefly explain the sting scheme.
2. After reading the article, do you see how some of these students could have legitimately been deceived by the University of North New Jersey? Explain.
3. If this was fraud on the students’ parts, what should be proven about these student co-conspirators?
4. What financial hardship resulted from this sting?
5. Where were most of the students from? Discuss the cultural relationship to red flags of fraud in the scheme.
Source:
Robbins, L. (2016). Students at Fake University Say They Were Collateral Damage in Sting Operation. The New York Times, May 5 (Retrievable online at http://www.nytimes.com/2016/05/06/nyregion/students-at-fake-university-say-they-were-collateral-damage-in-sting-operation.html)
The executive director of an arts charity, D. Alexandra Dyer, was attacked with drain cleaner last year. On Friday, she was fired by the board of the charity, along with the financial officer who helped her unearth what the authorities have called a $750,000 embezzlement scheme.
Questions:
1. What led up to the “Drano” attack?
2. If as the article states “the firings were retaliatory, and that the board wanted to avoid scrutiny of the negligence that had allowed the thefts to occur,” do you think that Ms. Dyer has a good case for whistleblower status, even though this is “nonprofit charity?”
3. What are the pending charges against the staff accountant?
4. What red flags of fraud did the board ignore, going back as far as 2011?
Source:
Newman, A. (2016). Charity Fires Leader Who Questioned Finances and Suffered Lye Attack. The New York Times, May 6 (Retrievable online at http://www.nytimes.com/2016/05/07/nyregion/charity-fires-leader-who-questioned-finances-and-suffered-lye-attack.html).
In an apparent rejection of the basic principles of the U.S. economy, a Harvard University poll shows that most young people do not support capitalism.
Questions:
1. What percentage supported socialism?
2. Why are the results of the survey difficult to interpret?
3. What did the survey say about health insurance?
4. What did you find most interesting about the results?
Source:
Ehrenfreund, M. (2016). A majority of millennials now reject capitalism, poll shows. The Washington Post, April 26 (Retrievable online at https://www.washingtonpost.com/news/wonk/wp/2016/04/26/a-majority-of-millennials-now-reject-capitalism-poll-shows/)
In the 1930s through the 1960s, most African-Americans could not get mortgages. This was because the U.S. government deemed neighborhoods where they lived ineligible for federal mortgage insurance, which was the Depression-era innovation that made mortgages widely affordable. As a result, hucksters moved in and peddled homeownership through contracts for deed, where the home seller gives the buyer a high-interest loan and a pledge to turn over the deed after 20 to 40 years of monthly installment payments. These contracts built no equity and usually resulted in default and eviction.
If you thought similar types of schemes were over in the mortgage industry, read Stevenson and Goldstein’s April 17th article.
Questions:
1. Explain why contract for deeds are making a comeback.
2. What Dallas company was mentioned in the article as being the largest player in this contract scheme?
3. Unlike mortgage foreclosure, what do the contracts typically lack?
4. In the example in the article, what percentage interest was being charged? How does that compare to the current mortgage interest rate? Based on this, how much additional interest will be charged per $1,000 over 20 years?
Sources:
The Editorial Board. (2016). The Racist Roots of a Way to Sell Homes. The New York Times, April 29 (Retrievable online at http://www.nytimes.com/2016/04/29/opinion/the-racist-roots-of-a-way-to-sell-homes.html).
Stevenson, A. and M. Goldstein (2016). Wall Street Veterans Bet on Low-Income Home Buyers. The New York Times, April 17 (Retrievable online at http://www.nytimes.com/2016/04/18/business/dealbook/wall-street-veterans-bet-on-low-income-homebuyers.html).
Swift — the Society for Worldwide Interbank Financial Telecommunication — is billed as a supersecure system that banks use to authorize payments from one account to another. However, last week, Swift announced that hackers had captured $81 million from Bangladesh’s central bank in February and that other similar heists have been attempted.
Questions:
1. According to Chris Larsen, the founder of a financial technology company, what is wrong with Swift?
2. What were some of the internal control problems at the Bangladesh central bank?
3. Why was the timing of the malware attack perfect?
4. What was the most interesting thing that you learned from the article?
Source:
Corkery, M. (2016). Hackers’ $81 Million Sneak Attack on World Banking. The New York Times, April 30 (Retrievable online at http://www.nytimes.com/2016/05/01/business/dealbook/hackers-81-million-sneak-attack-on-world-banking.html)
To improve the reputation of the University of California, Davis, and its Chancellor, Linda P.B. Katehi, after the November 2011 pepper spraying of students, the university contracted with consultants for at least $175,000 to scrub negative online Internet postings about the incident.
Questions:
1. Explain what percentage the strategic communications budget increased by from 2009 to 2015. Based on your reading of the article, what were some of the reasons?
2. What type of consultants do you think they contracted with?
3. What other controversies are associated with the Chancellor?
4. Do you think that the school acted ethically and/or legally in the incident and scrub-up?
5. What was the most interesting item that you read about in this article?
Source:
Stanton, S. and D. Lambert. (2016). UC Davis spent $175,000 to scrub online pepper spray references. McClatchy, DC, April 13 (Retrievable online at http://www.mcclatchydc.com/news/nation-world/national/article71700862.html).
