In 2017 my Website was migrated to
the clouds and reduced in size.
Hence some links below are broken.
One thing to try if a “www” link is broken is to substitute “faculty” for “www”
For example a broken link
http://faculty.trinity.edu/rjensen/Pictures.htm
can be changed to corrected link
http://faculty.trinity.edu/rjensen/Pictures.htm
However in some cases files had to be removed to reduce the size of my Website
Contact me at rjensen@trinity.edu if
you really need to file that is missing
Accounting Scandal Updates and Other
Fraud Between April 1 and June 30, 2016
Bob Jensen at
Trinity University
Bob Jensen's Enron Quiz (and answers) --- http://faculty.trinity.edu/rjensen/FraudEnronQuiz.htm
Bob Jensen's Enron Updates are at --- http://faculty.trinity.edu/rjensen/FraudEnron.htm#EnronUpdates
Other Documents
Scandal Updates --- http://faculty.trinity.edu/rjensen/fraud.htm#ScandalUpdates
Bob Jensen's Enron Quiz --- http://faculty.trinity.edu/rjensen/FraudEnronQuiz.htm
What's Right and What's Wrong With SPEs, SPVs, and VIEs --- http://faculty.trinity.edu/rjensen//theory/00overview/speOverview.htm
Bob Jensen's Summary of Suggested Reforms --- http://faculty.trinity.edu/rjensen/FraudProposedReforms.htm
Revenue Accounting Controversies --- http://faculty.trinity.edu/rjensen/ecommerce/eitf01.htm
Electronic Business Controversies --- http://faculty.trinity.edu/rjensen/ecommerce/000start.htm
Bob Jensen's Bottom Line Commentary --- http://faculty.trinity.edu/rjensen/FraudConclusion.htm
The Virginia Tech Overview: What Can We Learn From Enron? --- http://faculty.trinity.edu/rjensen/fraudVirginia.htm
Fraud References --- http://faculty.trinity.edu/rjensen/fraud.htm#References
Fraudulent Dealer
Tricks: An Interactive DHTML Illustration ---
http://faculty.trinity.edu/rjensen/FraudDealerTricks.htm
This includes a summary of ten unethical tricks of the trade by automobile
dealers.
Selected Scandals in the Largest Remaining Public Accounting Firms --- http://faculty.trinity.edu/rjensen/fraud.htm#others
Accounting Education Shares Some of the Blame --- http://faculty.trinity.edu/rjensen/FraudProposedReforms.htm#AccountingEducation
Many of the scandals are documented at http://faculty.trinity.edu/rjensen/fraud.htm
Resources to prevent and discover fraud from the Association of Fraud Examiners --- http://www.cfenet.com/resources/resources.asp
Self-study training for a career in fraud examination --- http://marketplace.cfenet.com/products/products.asp
Source for United Kingdom reporting on financial scandals and other news --- http://www.financialdirector.co.uk
Updates on the leading books on the business and accounting scandals --- http://faculty.trinity.edu/rjensen/Fraud.htm#Quotations
I love Infectious Greed by Frank Partnoy --- http://faculty.trinity.edu/rjensen/Fraud.htm#Quotations
Bob Jensen's American History of Fraud --- http://faculty.trinity.edu/rjensen/415wp/AmericanHistoryOfFraud.htm
Future of Auditing --- http://faculty.trinity.edu/rjensen/FraudConclusion.htm#FutureOfAuditing
"What’s Your Fraud IQ? Think you know enough about corruption to spot it in any of its myriad forms? Then rev up your fraud detection radar and take this (deceptively) simple test." by Joseph T. Wells, Journal of Accountancy, July 2006 --- http://www.aicpa.org/pubs/jofa/jul2006/wells.htm
What Accountants Need to Know --- http://faculty.trinity.edu/rjensen/FraudReporting.htm#AccountantsNeedToKnow
Global Corruption (in legal systems) Report 2007 --- http://www.transparency.org/content/download/19093/263155
Tax Fraud Alerts from the IRS --- http://www.irs.gov/compliance/enforcement/article/0,,id=121259,00.html
White Collar Fraud Site ---
http://www.whitecollarfraud.com/
Note the column of links on the left.
Bob Jensen's essay on the financial crisis bailout's aftermath and an alphabet soup of
appendices can be found at
http://faculty.trinity.edu/rjensen/2008Bailout.htm
History of Fraud in America --- http://faculty.trinity.edu/rjensen/415wp/AmericanHistoryOfFraud.htm
Rotten to the Core --- http://faculty.trinity.edu/rjensen/FraudRotten.htm
Fraud in General --- http://faculty.trinity.edu/rjensen/Fraud.htm
AICPA Fraud Resource Center ---
Click Here
http://www.aicpa.org/INTERESTAREAS/FORENSICANDVALUATION/RESOURCES/FRAUDPREVENTIONDETECTIONRESPONSE/Pages/fraud-prevention-detection-response.aspx
"New Report Shows Changing Fraud Environment," by Curtis C. Verschoor,
AccountingWeb, March 18, 2013 ---
http://www.accountingweb.com/article/new-report-shows-changing-fraud-environment/221374
Today’s FBI: Facts and Figures 2013-2014—which provides an in-depth
look at the FBI and its operations—is now available ---
http://www.fbi.gov/stats-services/publications/todays-fbi-facts-figures/facts-and-figures-031413.pdf/view
Center for Audit Quality Releases 'Fighting Fraud' Video in April 2013
---
http://www.accountingweb.com/article/center-audit-quality-releases-fighting-fraud-video/221506
Bob Jensen's Fraud Updates are at
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Academic Versus Political Reporting of Research: Percentage Columns
Versus Per Capita Columns ---
http://www.cs.trinity.edu/~rjensen/temp/TaxAirlineSeatCase.htm
by Bob Jensen, April 3, 2013
WRESTLING WITH REFORM: FINANCIAL SCANDALS
AND THE LEGISLATION THEY INSPIRED ---
http://www.sechistorical.org/
Thank you Jim McKinney for the heads up.
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
History of Fraud in America ---
http://faculty.trinity.edu/rjensen/FraudAmericanHistory.htm
"Anti-fraud controls cut significantly into losses, new report finds,"
by Jeff Drew, Journal of Accountancy, March 30, 2016 ---
http://www.journalofaccountancy.com/news/2016/mar/anti-fraud-controls-cut-into-losses-201614146.html?utm_source=mnl:globalcpa&utm_medium=email&utm_campaign=06Apr2016
Bob Jensen's
Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Why it's so difficult to even fine the bankers who steal millions of dollars or euros
Steal a little and they
throw you in jail,
Steal a lot and they make you king (or queen).
Lyrics of a Bob Dylan song forwarded by Amian Gadal
[DGADAL@CI.SANTA-BARBARA.CA.US]
Countrywide Financial --- http://en.wikipedia.org/wiki/Countrywide_Financial
From the CFO Journal's Morning Ledger on June 6, 2016
Good morning. Rebecca Mairone was either a villain or victim of the financial crisis. The legal battle to determine the answer shows how hard it still is to definitively say who was responsible for the housing bubble, Christina Rexrode and Aruna Viswanatha write in a profile. The 49-year-old mother of two became a face of housing-crisis misdeeds when the Justice Department pursued civil-fraud charges against her for her work at Countrywide Financial Corp. A jury in 2013 found her liable, and a federal judge ordered her to personally pay $1 million, making her one of the few financial executives to be held to account for the housing bust.
Until last month: A federal appeals court threw out the verdict against Ms. Mairone, who is now divorced and goes by her maiden name, Steele. The court ruled the government hadn’t proved her actions met the legal definition of fraud. For Ms. Steele, it was exoneration. In her first interview since the 2012 case was filed, Ms. Steele emphasized she had done nothing wrong and denied any mistakes in a controversial mortgage-approval program she helped create at Countrywide, called “Hustle.” When she heard about the appellate ruling, she said, she texted her daughter at high school, who replied, “Are you sure?’”
Meanwhile, across the pond, a French labor court Tuesday awarded Jérôme Kerviel, the Société Générale SA rogue trader convicted in 2010 of bringing the bank to the brink of collapse, a total of €450,000 ($511,000) because it found he was fired without “real or serious cause.” Société Générale “could not pretend it hadn’t long been aware of the unauthorized trades conducted by Mr. Kerviel,” judges wrote in their ruling. The bank therefore can’t argue that Mr. Kerviel was at fault when it “previously tolerated similar practices,” they added.
Peter Pan, the manager of Countrywide Financial on Main Street, thought he had
little to lose by selling a fraudulent mortgage to Wall Street. Foreclosures
would be Wall Street’s problems and not his local bank’s problems. And he got
his nice little commission on the sale of the Emma Nobody’s mortgage for
$180,000 on a house worth less than $100,000 in foreclosure. And foreclosure was
almost certain in Emma’s case, because she only makes $12,000 waitressing at the
Country Café. So what if Peter Pan fudged her income a mite in the loan
application along with the fudged home appraisal value? Let Wall Street or Fat
Fannie or Foolish Freddie worry about Emma after closing the pre-approved
mortgage sale deal. The ultimate loss, so thinks Peter Pan, will be spread over
millions of wealthy shareholders of Wall Street investment banks. Peter Pan is
more concerned with his own conventional mortgage on his precious house just two
blocks south of Main Street. This is what happens when risk is spread even
farther than Tinkerbell can fly!
Read about the extent of cheating, sleaze, and subprime
sex on Main Street in
Appendix U.
The astonishing case of Countrywide
No jail time is expected for any partners of the negligent auditing firms in the mortgage frauds. .KPMG settled for peanuts with Countrywide for $24 million of negligence and New Century for $45 million of negligence costing investors billions.
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Enron Accounting Deja Vu
A California public water district that earned a rare
federal penalty over what it described as "a little Enron accounting" lent one
of its executives $1.4 million to buy a riverfront home, and the loan remains
unpaid nine years later although the official has left the agency, according to
records and interviews.
http://www.mercurynews.com/california/ci_29996525/after-enron-accounting-california-public-water-districts-1
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Ethics conviction removes Alabama House speaker from office ---
http://www.msn.com/en-us/news/crime/ethics-conviction-removes-alabama-house-speaker-from-office/ar-AAgSCTt?ocid=spartanntp
Alabama House Speaker Mike Hubbard's conviction on ethics charges automatically removes him from office and could mean years in prison for the powerful Republican.
Friday night, a jury found the one-time GOP star guilty of 12 counts of public corruption for using the influence and prestige of his political stature to benefit his companies and clients. He faces up to 20 years in prison for each count.
The jury, which arrived at the verdict after nearly seven hours of deliberation, acquitted Hubbard on 11 other counts.
The conviction comes amid a season of scandal that has engulfed Republicans at the helm of Alabama's legislative, judicial and executive branches of government. Chief Justice Roy Moore faces possible ouster from office over accusations that he violated canons of judicial ethics during the fight over same-sex marriage. And Gov. Robert Bentley has faced calls for his impeachment after a sex-tinged scandal involving a former top aide.
"We hope this verdict tonight restores some of the confidence in the people of the state of Alabama that public officials at all levels in the state of Alabama will be held accountable for their actions, especially those that would betray the public trust," said W. Van Davis, the acting attorney general in the case.
Hubbard, 54, spoke briefly with his attorneys before being escorted from the courtroom and to the Lee County jail, a detention center not far from Mike Hubbard Boulevard named for him. He was released on $160,000 bond and driven away by a bail bondsmen as he held his face in his hand.
Continued in article
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Cher Sues Financial Firm for Fraud After $1.3 Million in Investments ---
. . .
"Defendants routinely leveraged their insider positions with the portfolio companies to placate limited partners with news of supposed 'exit strategies,' impending 'initial public offerings,' and the potential for 'enormous' profits," states the complaint. "Unbeknownst to Veritas, Defendants secured its capital and that of several other limited partners under duress at the eleventh hour ... These bizarre and improper management tactics were a harbinger of worse to come."
In reality, and unbeknownst to Cher, the investments were tanking. Of the 10 initial portfolio companies at least three have filed for bankruptcy and most of the others will never generate a return, states the complaint, yet "defendants continued to collect management fees and lull the limited partners withrosy representations in violation of the Partnership Agreements."
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Insider Trading --- https://en.wikipedia.org/wiki/Insider_trading
"How the Feds Pulled Off the Biggest Insider-Trading Investigation in U.S.
History." by Patricia Hurtado & Michael Keller, Bloomberg, June 1,
2016 ---
http://www.bloomberg.com/graphics/2016-insider-trading/?cmpid=BBD060116_BIZ&utm_medium=email&utm_source=newsletter&utm_campaign=
For more than seven years, the U.S. government has relentlessly prosecuted Wall Street traders who used inside information to rake in hundreds of millions of dollars in profits.
Federal prosecutors in New York have racked up 91 convictions and collected almost $2 billion in fines. In the latest action on May 19, the government looked beyond Wall Street, accusing a legendary Las Vegas gambler of profiting from insider tips.
Here's a by-the-numbers look at what happens when the Feds get serious about insider trading.
The suspects worked in what prosecutors described as rings — loose and sometimes overlapping groups of insiders, traders, and facilitators.
This arrangement, however, was also their undoing. Adopting tactics used against mobsters and narcoterrorists, the FBI infiltrated these rings using wiretaps and informants to work their way further up the chain.
Continued in article
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Bob Jensen's Rotten to
the Core Threads ---
http://faculty.trinity.edu/rjensen/FraudRotten.htm
They say that
patriotism is the last refuge
To which a scoundrel clings.
Steal a little and they throw you in jail,
Steal a lot and they make you king.
There's only one step down from here, baby,
It's called the land of permanent bliss.
What's a sweetheart like you doin' in a dump like this?
Lyrics of a Bob Dylan song forwarded by Amian Gadal
[DGADAL@CI.SANTA-BARBARA.CA.US]
FIFA World Cup Soccer --- https://en.wikipedia.org/wiki/FIFA_World_Cup
From the CFO Journal's Morning Ledger on June 13, 2016
KPMG leaves the pitch
Global accounting KPMG became the latest company to sever ties with soccer’s world governing body, when it informed FIFA on Friday that it was dropping its account. The auditor’s Swiss affiliate had signed off on FIFA’s financial statements for 16 consecutive years. The announcement came 10 days after the disclosure that a small group of FIFA’s top officials allegedly paid each other tens of millions of dollars in bonuses and other incentives, and followed the resignation of FIFA’s chief financial officer, Markus Kattner.
Bloomberg, June 3, 2016
http://www.bloomberg.com/news/articles/2016-06-03/fifa-top-three-bosses-netted-80-million-in-pay-and-severance?cmpid=BBD060316_BIZ&utm_medium=email&utm_source=newsletter&utm_campaign=
FIFA’s Top Three Bosses Netted $80 Million in Pay and Severance
Disgraced ex-president Sepp Blatter, former Secretary-General Jerome Valcke and former CFO Markus Kattner shared more than $80 million over the past five years in bonuses, incentives and salary increases that they signed off on themselves, according to soccer’s global governing body. All three men had already been suspended or fired by FIFA. In a separate statement, the Swiss authorities said they raided FIFA’s offices a day ago.
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
From the CPA Newsletter on June 3, 2016
Poor tech use, weak internal controls enable fraudsters
Companies are not taking advantage of the technology available to help stop fraud, KPMG says in a report. The use of proactive data analytics is involved in detecting just 3% of fraudsters globally, KPMG says. Meanwhile, 59% of fraud in North America stems at least partly from weak internal controls, the report says.
The National Law Review (5/30)
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"Review of 'The Confidence Game: Why We Fall for It … Every Time',"
by Scott McLemee, Inside Higher Ed, March 5, 2016 ---
https://www.insidehighered.com/views/2016/03/09/review-maria-konnikova-confidence-game-why-we-fall-it-every-time
Jim Martin wrote the following in his MAAW Blog on May 20,2016
http://maaw.blogspot.com/2016/05/financial-shenanigans-update.html
Financial Shenanigans update
I added the following note to my summary of Schilit, H. 2002. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports. 2nd edition. McGraw Hill.
Schilit includes seven main shenanigans that include 30 accounting tricks and techniques. See http://maaw.info/ArticleSummaries/ArtSumSchilit2002.htm
The third edition of this book was published in 2010. See Schilit, H. and J. Perler. 2010. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 3rd edition. McGraw-Hill Education.
Part three includes four chapters on cash flow shenanigans:Chapter 10: Shifting financing cash flows to the operating section.
Chapter 11: Shifting normal operating cash flows to the investing section.
Chapter 12: Inflating operating cash flows using acquisitions or disposals.
Chapter 13: Boosting operating cash flows using unsustainable activities.
Part four includes two chapters on key metrics shenanigans:
Chapter 14: Showcasing misleading metrics that overstate performance.
Chapter 15: Distorting balance sheet metrics to avoid showing deterioration
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
From the CFO Journal's Morning Ledger on May 19, 2016
Health-care executives go on trial
Two criminal trials of former health-care executives set to begin in a Boston courthouse in the coming weeks illustrate what the federal government says is a new push to hold more individuals accountable for alleged corporate wrongdoing. A former division president at drugmaker Allergan PLC’s Warner Chilcott unit will stand trial on a charge of conspiring to pay kickbacks to doctors to prod them to prescribe the company’s medicines, including osteoporosis drug Atelvia. And two former senior officers of Johnson & Johnson medical-device unit Acclarent are charged with marketing a sinus-opening device for a use not authorized by the Food and Drug Administration. All three executives deny wrongdoing.
The Inspector General for the IRS said Thursday that the tax collection agency continues to be at risk of paying out billions of dollars in fraudulent Earned Income Tax Credit payments each year, and that there's nothing the IRS can do about it. The Treasury Inspector General for Tax Administration released a report that said almost 25 percent of EITC payments issued last year should not have been issued. That amounts to $15.6 billion in payments under a program that's meant to boost low and moderate-income people and families.
Without Expanded Error Correction Authority, Billions of Dollars in
Identified Potentially Erroneous Earned Income Credit Claims Will Continue to Go
Un addressed Each Year
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
April 27, 2016
https://www.treasury.gov/tigta/auditreports/2016reports/201640036fr.pdf
Deloitte Auditors Fail to Detect $350 Million Ponzi Fraud
"Aequitas investors file suit against Tonkon Torp, Deloitte," by Jeff
Manning, The Oregonian, April 4, 2016 ---
http://www.oregonlive.com/business/index.ssf/2016/04/aequitas_investors_file_suit_a.html
Investors burned in the flameout of Aequitas Capital Management have filed suit against Portland law firm Tonkon Torp and accounting giant Deloitte & Touche, claiming the firms enabled the massive Ponzi scheme allegedly masterminded by the Lake Oswego financial company.
"Investors trusted Aequitas and their trust was abused," said Keith Ketterling, of the Stoll Berne Lokting & Shlachter firm in Portland. "The law makes the lawyers and accountants responsible to the same extent as Aequitas, because these professionals are the gatekeepers, and their services lend credibility to the investments."
Tonkon Torp, one of the most respected corporate law firms in town, for several years represented Aequitas and helped prepare prepare financial documents for investors that were materially false, investors allege.
"The Aequitas securities could not have been sold without the legal services that Tonkon provided," investors claim in the new complaint.
Deloitte prepared the 2014 and 2015 audited financial statements for Aequitas, which painted a reassuring portrait of Aequitas' financial strength. Deloitte offered a so-called "unqualified" opinion in its 2014 audit that Aequitas' financials fairly and accurately represented the company's financial condition. The U.S. Securities and Exchange Commission now claims that Aequitas by 2014 was little more than a large Ponzi scheme, reliant on new investor money to cover its expenses.
The new complaint, filed Monday in U.S. District Court in Portland, is likely the first of many investor lawsuits. The commission's March 10 lawsuit accused Aequitas and three top executives of concealing the catastrophic condition of the company even as it continued to raise more than $350 million from investors.
Continued in article
Bob Jensen's threads on Ponzi frauds ---
http://faculty.trinity.edu/rjensen/FraudRottenPart2.htm#Ponzi
The
11.5 million documents released this week implicate several world leaders and
their families ---
Wikileaks ---
http://time.com/4280302/what-to-know-panama-papers-leak/?xid=newsletter-brief
Wells Fargo just agreed to
pay $1.2 billion to settle 'shoddy' mortgage practices (phony property
appraisals, loans with zero chance of repayment passed upstream to Fannie and
Freddie, etc.) ---
http://www.businessinsider.com/wells-fargo-mortgage-settlement-2016-4
Caspersen Fraud --- https://en.wikipedia.org/wiki/Andrew_Caspersen
From the CFO Journal's Morning Ledger on April 4, 2016
In alleged scheme, Caspersen targeted a Princeton classmate
When Andrew W.W. Caspersen was looking to raise millions of dollars last year in what prosecutors now describe as an elaborate fraud, the Wall Street executive allegedly targeted an old college classmate with whom he had family ties.
From the CFO Journal's Morning Ledger on March 30, 2016
Hedge-fund manager’s charity was victim of alleged Caspersen fraud
Hedge-fund manager Louis Bacon’s charitable foundation said it was the victim in a scheme allegedly orchestrated by former private-equity executive Andrew W.W. Caspersen to defraud investors out of $95 million. Mr. Bacon is the founder of hedge-fund firm Moore Capital Management.
Bob Jensen's
Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
From the CPA Newsletter on March 20, 2016
Quiz: Can you find the warning signs for travel and entertainment expense fraud? ---
http://www.journalofaccountancy.com/issues/2016/mar/fraud-iq-quiz.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=31Mar2016
Bob Jensen's
Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Retired U.S. Tax Court Judge
Indicted For Tax Evasion While She Sat On The Court ---
http://taxprof.typepad.com/taxprof_blog/2016/04/former-tax-court-judge-and-husband-indicted-for-tax-evasion.html
Bob Jensen's
Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"Anti-fraud controls cut
significantly into losses, new report finds," by Jeff Drew,
Journal of
Accountancy, March 30, 2016 ---
http://www.journalofaccountancy.com/news/2016/mar/anti-fraud-controls-cut-into-losses-201614146.html?utm_source=mnl:globalcpa&utm_medium=email&utm_campaign=06Apr2016
Cabela's --- https://en.wikipedia.org/wiki/Cabela%27s
From the CFO Journal's Morning Ledger on April 22, 2016
Cabela’s, CFO settle SEC accounting charges
Outdoor recreation retailer Cabela’s Inc. agreed to pay a $1 million civil penalty to settle Securities and Exchange Commission allegations that it and its longtime finance chief Ralph Castner misled investors, CFO Journal’s Maxwell Murphy reports. Neither the company nor Mr. Castner admitted wrongdoing. The SEC alleged the company in 2012 failed to eliminate an intercompany promotions fee with Cabela’s wholly owned bank subsidiary. The error effectively increased the company’s gross margins.
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"Climate Crowd Ignores a Scientific Fraud: A defective
radiation-risk standard holds back our most important low-carbon energy source,"
by Holman W. Jenkins, Jr., The Wall Street Journal, April 15, 2016 ---
http://www.wsj.com/articles/climate-crowd-ignores-a-scientific-fraud-1460758426?mod=djemMER
Green activists, some masquerading as attorneys general of New York and California, want to prosecute Exxon XOM -0.54 % as a climate heretic. Its sin? Saying impeccably true things about climate science: The range of uncertainty is high. Climate models are not the climate, and show themselves to be unreliable guides to future warming. There is a cost-benefit test that policy must pass, and it doesn’t.
The AG case is a spinoff of “investigative” journalism by the Los Angeles Times and Inside Climate News, which we now learn was directly underwritten by climate activists at the Rockefeller Brothers Fund and Rockefeller Family Fund.
“It’s about helping the larger public understand the urgencies of finding climate solutions. It’s not really about Exxon,” explained a Rockefeller official about a January meeting to coordinate the legal and journalistic attack.
The journalists involved in this travesty, we’re sorry to say, are of the dumber sort—confused about what science is. But their clottedness comes at a poignant moment.
Honest greens have always said nuclear power is indispensable for achieving big carbon reduction. James Hansen, the former NASA scientist who has been chaining himself to fences since the first Bush administration, was in Illinois last week lobbying against closure of a nuclear plant. Ditto activist Michael Shellenberger. We might also include Bill McKibben, the Bernie Sanders of the climate movement and shouter of Exxon accusations, who told journalist William Tucker four years ago, “If I came out in favor of nuclear, it would split this movement in half.”
Nuclear (unlike solar) is one low-carbon energy technology that has zero chance without strong government support, yet is left out of renewables mandates. It’s the one non-carbon energy source that has actually been shrinking, losing ground to coal and natural gas.
What keeps nuclear costs high? Why do so many opponents misread the Fukushima meltdown, where 18,000 deaths were due to the earthquake and tsunami, none to radiation exposure, and none are expected from radiation exposure? Why has the U.S. experience of spiraling nuclear construction costs not been matched in South Korea, where normal learning has reduced the cost of construction?
The answer increasingly appears to be a real scientific fraud. In a series of peer-reviewed articles, toxicologist Edward Calabrese of the University of Massachusetts Amherst shows how a cabal of radiation geneticists in the 1940s doctored their results, and even a Nobel Prize acceptance speech, to exaggerate the health risk from low-level radiation exposure. At the time, Hermann Muller, their leader, was militating against above-ground atomic-bomb testing. “I think he got his beliefs and his science confused, and he couldn’t admit that the science was unresolved,” Mr. Calabrese told a UMass publication.
Data developed to show high-dose effect on fruit flies, Muller claimed, showed a proportional low-dose effect. Thus was born LNT—the “linear no-threshold” model of radiation risk that has become the world’s go-to standard for nuclear safety, source of repeated (and unfulfilled) forecasts of thousands of cancer deaths from Chernobyl or Fukushima. LNT is why nuclear plants shoulder huge costs not to protect against accidents, but to protect against trivial emissions. Coal-plants, which don’t have to meet U.S. Nuclear Regulatory Commission rules, actually put out thorium and uranium far in excess of what nuclear plants are allowed to emit.
We detailed some of the health evidence in a December piece about efforts to wake up the NRC. The New York Times wrote a similar piece last September looking at Japan’s foolish evacuation of thousands of Fukushima residents against a nonexistent radiation threat.
Dr. Carol Marcus, of the UCLA medical school, and two other nuclear-medicine specialists last year petitioned the NRC to re-evaluate its standards. Now the Environmental Protection Agency and several green groups have filed defenses of LNT, which since the 1950s has been adopted not only as Washington’s unscientific model of radiation risk, but as the EPA’s unscientific model of chemical risk. It shouldn’t be overlooked that, for these green groups and the EPA, nuclear is also anathema because it competes with solar and wind.
OK, science seldom fares well in high-stakes political controversies, but it’s bizarre to watch green campaigners attack anybody who questions their thinly based climate predictions, then attack anybody who questions the thinly based science that keeps down our best carbon-free energy choice.
An environmental reporter with an ounce of independence would actually be doing his or her green friends a favor. Pushing the greenies to confront their nuclear contradictions is probably the best possible way right now of making progress on the climate conundrum.