In May of 2011 The SEC filed suit alleging massive fraud against Brooke Corporation’s senior management. The SEC suit alleges that during the fiscal year of 2007 and the first and second quarters of 2008 senior management at Brooke Capital misrepresented the health of their business and its subsidiaries. Brooke Corporation’s business growth strategy relied heavily on its finance subsidiary and franchise fees. The average franchise fee was $165,000 which would have been financed through Brooke Credit Corporation; in the first quarter of 2007 a third of Brooke Corp’s operating revenue was from interest and franchise fees (Phillips, 2007). The same store sales for the first quarter of 2007 were down 3% from the previous year and in the fourth quarter of that year the recession officially started.
However, since the Sabine-Oxley Act came into play in the early 2000’s investors and shareholders have been protected by these types of schemes and avocations. According to an article on Overcoming Administrative, Procedural and Evidentiary Hurdle’s in Ponzi Scheme Litigation by Weiss & Daghbandan , the unfortunate reality the come with a Ponzi scheme is bankruptcy and unsecured creditors clamoring for their money back and demanding the fortitude (Weiss & Daghbandan, Pg. 641 2012) of the person the wrong them. Reference (Melvin, S. P. (2011). The legal environment of business: A managerial approach: Theory to practice.
Accounting – Fraud case Satyam Systems, a global IT company based in India, has just been added to a notorious list of companies involved in fraudulent financial activities, one that includes such names as Enron, WorldCom etc. The Satyam Computer Services scandal was publicly announced on 7 January 2009, when Chairman Ramalinga Raju confessed that Satyam's accounts had been falsified. The preliminary investigations by Registrar of Companies and confession by Mr. Raju revealed the balance sheet of Satyam for the year 2008 contained `cash and bank balances’ of Rs 5040 crore (US $ 1.12 billion) as against the Rs 5361 crore (US$ 1.12 billion) reflected in the books, an accrued interest of Rs 376 crore (US$ 83.85 million) which was described by Raju as `non existent’ , an understated liability of Rs. 1,230 crore (US$ 274.29 million) on account of funds was arranged by himself and an overstated debtors' position of Rs. 490 crore (US$ 109.27 million) as against Rs.
This paper will focus on consequential effects of ethical and unethical financial reporting, and the cascading affects on all supporting investors of Riverside Bottling Company. Background Riverside Bottling Company has secured a substantial insurance loan, which requires the general ledger to maintain at least a $200,000 monthly balance to avoid penalty charges as specified in the loan agreement (Weygandt, 2008, p. 382). For the month ending June 30 the balance of cash resulted in a $120,000 deficit. As the assistant controller, I report the discrepancy to the financial vice president, Gena Schmitt. Gena instructs that the cash receipts ledger to remain open for an additional day, as a $150,000 payment will post to the bank on July One from Oconto Distributors, and recorded as part of June’s receivables, which fulfills the requirements of the loan agreement, but misrepresents true closing receivables (Weygandt, 2008, p. 382).
Hebri sent a memo (dated July 24, 2002) to the agents directing them to obtain their own private security business licenses from the VDCJS and individual liability insurance so they could be classified as independent contractors. Issue: The issue is whether the bodyguards were considered to be employees or independent contractors for the purpose of the Fair Labor Standards Act. Decision: Judgment for Schultz. Reasoning: The five plaintiff-agents were employees under the FLSA. Because defendant CIS was one of their joint employers along with the Prince, CIS is jointly and severally liable for the payment of any overtime required by the FLSA during the agents’ employment.
Section 404 of the Sarbanes-Oxley Act directs the SEC to adopt rules requiring annual reports of companies with publicly traded securities, other than registered investment companies, to disclose management’s assessment of the effectiveness of the company’s ICFR and an auditor’s independent attestation to the effectiveness of those internal controls. These rules were adopted by the Commission on May 27, 2003. The act gave large filers that are traded publicly till the end of the fiscal year in 2004 to become compliant. Internal controls are in place to require reporting of financial reports to be analyzed and audited. Companies are also hiring internal personnel to ensure accuracy and high ethical standards are being followed.
Jason accepted bids from three other accounting firms and ultimately selected a firm that was priced lower with the understanding that they would be awarded consult work for the corporation at a later time. The Stakeholders The stakeholders of Linex are the owners of the corporation, the employees, creditors, and any individual or firm that is a potential investor for Linex. Other stakeholders in this case are the accounting firms that represent Linex who
In answering this question, assume that each factor is independent of the others. a. LVD is a publicly traded company. b. Dr. Jones is the major shareholder of LVD and its CEO. c. Dr. Jones has unusual influence over the board of directors. d. Your firm has audited LVD for the last four years.
(n.d.). Retrieved from False Claims Act attorney, Tycko & Zavareei LLP, False Claims Fraud | Tycko & Zavareei LLP: http://www.fraudfighters.net/false-claims-act-fraud/ Insurance-Fraud-Handbook.pdf (application/pdf Object). (n.d.). Retrieved from http://www.acfe.com/uploadedFiles/ACFE_Website/Content/documents/Insurance-Fraud-Handbook.pdf Ohio Attorney General Mike DeWine - Health Care Fraud FAQs. (n.d.).
The primary shareholders of ASIMCO were Trust Company West, Morgan Stanley—Dean Witter Reynolds and senior management. The senior management team consisted of the following people: Jack Perkowski (Chairman and CEO)—a former investment chief at Paine Webber (New York City) and graduate of both Yale University (cum laude) and the Harvard Business School (Baker Scholar). Tim Clissold (President)—a physics graduate from Cambridge University who turned accountant with Arthur Anderson in the 1980s. Clissold had worked in England, Australia, China and Hong Kong for Anderson before entering London’s School of Oriental and Asian Studies where he became fluent in both spoken and written Mandarin. Michael Cronin (Chief Investment and Financial Officer)—also worked as an accountant for Arthur Anderson throughout the 1980s in Australia, the UK and Hong Kong.