Bob Jensen's Main Fraud
Document ---
http://www.trinity.edu/rjensen/fraud.htm
Bob Jensen's Enron Quiz (and answers) ---
http://www.trinity.edu/rjensen/FraudEnronQuiz.htm
Bob Jensen's Enron Updates are at ---
http://www.trinity.edu/rjensen/FraudEnron.htm#EnronUpdates
Other Documents
Many of the scandals
are documented at
http://www.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://www.trinity.edu/rjensen/Fraud.htm#Quotations
I love Infectious
Greed by Frank Partnoy ---
http://www.trinity.edu/rjensen/Fraud.htm#Quotations
Bob
Jensen's American History of Fraud ---
http://www.trinity.edu/rjensen/415wp/AmericanHistoryOfFraud.htm
Future of Auditing ---
http://www.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://www.trinity.edu/rjensen/FraudReporting.htm#AccountantsNeedToKnow
Bob Jensen's threads on fraud are at
http://www.trinity.edu/rjensen/Fraud.htm
How to proceed if you're taken by a fraudulent eBay seller
While eBay officials say the vast majority of
transactions take place without a hitch, company spokesmen
acknowledge that the growth in online buying has been
accompanied by a growth in online disputes, from simple
disagreements over a sweater's color to more serious
allegations. And, says eBay spokeswoman Catherine England, fraud
also occurs against sellers, when buyers don't pay up as agreed.
Cracking down on such problems has been a hot topic at the
annual "eBay Live!" gatherings of buyers, sellers and company
executives. This year's, in Las Vegas in June, was no exception:
EBay president and chief executive Meg Whitman in her keynote
speech ticked off a number of improvements in eBay's online
dispute-resolution process.
Kathleen Day, "Self-Defense For EBay Buyers Avoiding Unpleasant
Surprises On World's Biggest Auction Site,"
The Washington
Post, July 2, 2006 ---
Click Here
Question
What can you do to prevent being taken on eBay?
(Word of Caution: Never open an email message that pretends to be from
Pay-Pal)
Two brothers have published a book of "true tales of
treachery, lies and fraud" from eBay. "Dawn of the eBay Deadbeats" contains
stories written by eBay buyers and sellers. From stories of disappointing
purchases to out-and-out fraud, the book is a manual of what can go wrong when
buying and selling on auction sites. Brothers Stephen and Edward Klink co-wrote
the book, illustrated by Clay Butler. The idea for the book sprung from a
website Stephen Klink had created. A New Jersey police office, he founded
eBayersThatSuck.com - a site that aims to help people avoid auction scams -
after he himself was ripped off online.
Ina Steiner, "Dawn of the eBay Deadbeats: New Book Uncovers Online Auction
Treachery," AuctionBytes.com, December 28, 2005 ---
http://www.auctionbytes.com/cab/abn/y05/m12/i28/s01
Bob Jensen's threads on how to prevent eBay fraud ---
http://www.trinity.edu/rjensen/FraudReporting.htm#eBay
Beware of the So-Called Investor Education Programs
(especially beware of infomercials)
"I don't see frankly much out there
that really does the job, and that's partially because investors
are their own worst enemy," says former SEC Chairman Arthur
Levitt. "They refuse to invest skeptically, and are too easily
seduced by all the purveyors of financial products that prey
upon their worst instincts."
"Investor Education 101: How to Avoid Scams:
Outreach Programs Target Most-Vulnerable Americans, But Success
Is Hard to Assess," By Lynn Cowan, The Wall Street Journal,
May 9, 2006; Page D3 ---
http://online.wsj.com/article/SB114713241888747241.html?mod=todays_us_personal_journal
An onslaught of investor education
is being unleashed, thanks to an ever-growing stockpile of
money set aside for this purpose by regulators.
Senior-citizen investors being
preyed upon? The nonprofit Investor Protection Trust is
financing a Florida state program that teaches retirees to
identify and report suspected scams.
Military families feeling pressured
into buying unnecessary financial products? The National
Association of Securities Dealers' Investor Education
Foundation has launched a specialized Web site:
saveandinvest.org.
Auto workers receiving lump-sum
retirement buyouts in coming months? There is a new
Securities and Exchange Commission publication that warns
that they could be prime targets for fraud.
There seems to be no end to the
list of publications, public-service announcements and
seminars being funded in the wake of a landmark settlement
in 2003 between regulators and Wall Street over stock
analysts' conflicts of interest. The settlement provided $80
million in investor-education funds, and regulators add to
that amount every year with more penalties for new
securities-industry transgressions.
Unfortunately, there's also a
seemingly infinite trove of outright hucksters and smooth
marketing materials bombarding investors every day, say
regulators and observers. And no one knows how effective
investor-education programs are in combating them.
"I don't see frankly much out there
that really does the job, and that's partially because
investors are their own worst enemy," says former SEC
Chairman Arthur Levitt. "They refuse to invest skeptically,
and are too easily seduced by all the purveyors of financial
products that prey upon their worst instincts."
There's also little information
available about what kinds of programs really work to
educate and protect investors. Regulators and
investor-education specialists say they are working hard to
expand their materials beyond brochures with basic
information to encompass interactive games for students,
television programs and in-person seminars.
But regulators add that they are
also fighting against strong forces in their battle to
educate and protect investors from scam artists, their own
emotions and a legacy of conflicts of interest in the
brokerage industry.
Scam artists are the most easily
identified investor-protection issue: Often organized in
pyramid, or "Ponzi," structures, the schemes promise
outsized returns and can exist for years before collapsing.
Investor-protection programs can easily focus on warning
about this kind of threat because it has some obvious
hallmarks.
Regulators' second villain is
trickier: investors' own inertia and greed. Getting most
people in the U.S. to learn the basics of a careful
investing strategy is akin to asking them to read a legal
footnote, but there is no shortage of people willing to sign
up for the chance to earn 130% on ersatz securities.
Possibly the most innovative
investor-education program in existence today targets
investors who are drawn to these get-rich-quick scams. The
SEC runs several Web sites that pose as can't-fail
investment schemes. One,
growthventure.com, outlines the
business dealings of a fake construction-supply company,
Growth Venture, which invites viewers to invest and receive
returns of 350% a year. Anyone falling for the bait is
linked to an SEC page that gently chides them and describes
how to avoid scams.
But such educational tools aren't
as easy to construct for one of the thorniest issues facing
investor-education programs: teaching people about
protecting themselves in daily interactions with the
legitimate brokerage industry.
Although larger Ponzi scams, such
as the Financial Advisory Consultants bust in California in
2004, are headlined for bilking investors out of as much as
$300 million, industry wide brokerage scandals involving
well-known firms have surpassed $1 billion apiece. From
Prudential Securities' abusive sales of limited partnerships
in the early 1990s to the conflicts of interest in analyst
research in the late 1990s, major Wall Street firms appear
to be struggling with improper systematic conduct every
decade.
Yet investor educators often
express concern about finding the right balance between
warning investors and condemning a highly regulated industry
that provides legitimate advice and services.
Continued in article
Jensen Comment
Also be careful what mutual fund or brokerage firm you deal
with. My advice is to avoid high-commission brokerage firms. My
advice is to also compare the mutual fund expense rates with
benchmark rates of Vangaard and Fidelity.
Bob Jensen's threads on scams are at
http://www.trinity.edu/rjensen/FraudReporting.htm
Check the fraud rates of firms of better known firms. For
example do a search on "Merrill" at
http://www.trinity.edu/rjensen/FraudRotten.htm
"IRS issues warning about identity theft," Free
Republic, August 24, 2006 ---
http://www.freerepublic.com/focus/f-news/1689286/posts
The IRS warned taxpayers Wednesday
not to be duped by scammers posing as private debt
collectors the agency has hired to chase unpaid tax debts.
The Internal Revenue Service
designed the debt collection program to minimize that risk
"because we know what it's like out there with regard to
identity theft nowadays," said Brady Bennett, IRS director
of collection.
But some critics of the program see
so many pitfalls that they're urging debtors to insist on
negotiating payment directly with the IRS.
The National Treasury Employees
Union, which represents IRS employees and opposes the
program, has even drafted a sample letter that taxpayers can
send to opt out of the private collection program and demand
that the IRS handle their case.
The IRS plans to assign 12,500
accounts with unpaid tax debts to three private agencies
beginning Sept. 7. About 40,000 accounts will be turned over
by the end of the year. The IRS chose taxpayers who owe less
than $25,000 and don't dispute the debt.
Anyone contacted by a private
collection agency has the right, among others, to insist
that only the IRS deal with their account. Bennett said he
hoped few taxpayers with debts sent to private collectors
would opt out.
"The purpose of this program is to
provide value to the American taxpayer. Those who don't pay
have an impact on everybody else who does," he said.
Bob Jensen's threads on identity theft are at
http://www.trinity.edu/rjensen/FraudReporting.htm#IdentityTheft
Bob Jensen's threads on tax scams are at
http://www.trinity.edu/rjensen/FraudReporting.htm#TaxScams
Colleges warn about networking sites
Incoming college students are hearing
the usual warnings this summer about the dangers of everything
from alcohol to credit card debt. But many are also getting
lectured on a new topic - the risks of Internet postings,
particularly on popular social networking sites such as Facebook.
From large public schools such as Western Kentucky to smaller
private ones like Birmingham-Southern and Smith, colleges around
the country have revamped their orientation talks to students
and parents to include online behavior. Others, Susquehanna
University and Washington University in St. Louis among them,
have new role-playing skits on the topic that students will
watch and then break into smaller groups to discuss. Facebook,
geared toward college students and boasting 7.5 million
registered users, is a particular focus. But students are also
hearing stories about those who came to regret postings to other
online venues, from party photos on sites such as Webshots.com
to comments about professors in blogs.
"Colleges warn about networking sites," PhysOrg, August
2, 2006 ---
http://physorg.com/news73762121.html
Bob Jensen's threads on fraud reporting are at
http://www.trinity.edu/rjensen/FraudReporting.htm
An Australian fisheries manager accused Japan of illegally
taking $2 billion worth of southern bluefin tuna, damaging the
commercial stock.
"Japan allegedly stole huge amount of tuna," PhysOrg,
August 12, 2006 ---
http://physorg.com/news74568848.html
Richard McLoughlin, managing
director of the Australian Fisheries Management Authority,
told the Sydney Morning Herald, Japanese fishers and
suppliers from other countries caught up to three times the
Japanese quota each year for the past 20 years.
"Essentially the Japanese have
stolen $2 billion worth of fish from the international
community, and have been sitting in meetings for 15 years
saying they are as pure as the driven snow," he said. "And
it's outrageous."
The revelations have sparked
concerns that other fisheries in the Pacific and Indian
oceans were pilfered. Calls have been renewed for southern
bluefin to be protected under international wildlife law.
Southern bluefin tuna is one of the
world's most expensive fish.
Question
What is "pump-and-dump" brokerage fraud?
"Brokers Are Indicted in Fraud Case," The Wall Street
Journal, August 3, 2006, Page D2 ---
Click Here
Eight brokers,
including the nephew of the chief executive of microcap
Stratus Services Group Inc., have been indicted in an
alleged "pump-and-dump" scheme to artificially inflate the
New Jersey temporary-staffing company's stock, Manhattan
District Attorney Robert M. Morgenthau said.
At a press
conference, Mr. Morgenthau said Christopher Janish of
Parsippany, N.J.; Joseph Barile of Long Branch, N.J.; Arthur
Caruso of Secaucus, N.J.; Marat Beksultanov of Brooklyn; and
four other individuals defrauded hundreds of clients out of
at least $13 million by inducing them to buy shares in
lightly traded Stratus. Prosecutors declined to name the
other individuals because they haven't yet been arraigned.
Four companies,
including brokerage firm Essex & York Inc. and investment
fund
Pinnacle Investment Partners
L.P., also have been charged in the matter.
Continued in article
Bob Jensen's threads on brokerage fraud are at
http://www.trinity.edu/rjensen/FraudRotten.htm#InvestmentBanking
Question
Could there possibly be fraud in U.S. Government accounting?
The State Department agency in charge of $1.4 billion in
reconstruction money in Iraq used an accounting shell game to hide ballooning
cost overruns on its projects there and knowingly withheld information on
schedule delays from Congress, a federal audit released late Friday has found.
The agency hid construction overruns by listing them as overhead or
administrative costs, according to the audit, written by the Special Inspector
General for Iraq Reconstruction, an independent office that reports to Congress,
the Pentagon and the State Department. Called the United States Agency for
International Development, or A.I.D., the agency administers foreign aid
projects around the world. It has been working in Iraq on reconstruction since
shortly after the 2003 invasion. The report by the inspector general’s office
does not give a full accounting of all projects financed by the agency’s $1.4
billion budget, but cites several examples.
"Audit Finds U.S. Hid Cost of Iraq Projects," by James Glanz, The New York
Times, July 29, 2006 ---
Click Here
Military Spending Fraud on an Unfathomable Scale
Of course, people have been decrying
Pentagon waste and inefficiency for decades. But things have got
significantly worse over the past five years, because Congress
and the Bush Administration have thrown so much money at the
Defense Department so fast. Studies of corporate behavior show
that when companies are flush with cash they are more likely to
make acquisitions that reduce their over-all value. The defense
industry today, in fact, is much like Silicon Valley in the late
nineties—when you give lots of money to an industry with no
audits and no supervision, people lose discipline. They spend on
bad ideas, gild every surface, and cheat. Is it really a
surprise that billions of dollars meant for private contractors
in Iraq seems to have been stolen?
James Surowiecki, "Unsafe at Any Price," The New Yorker,
August 8, 2006 ---
http://www.newyorker.com/talk/content/articles/060807ta_talk_surowiecki
Judge Approves $36M Settlement Balance in PNC Accounting
Scandal: $193 Million Out of $1.15 Billion
The separate suit against Ernst & Young is still pending
A federal judge in Pittsburgh has
approved the last part of a settlement involving more than
73,000 shareholders who lost money in a PNC Financial Services
Group Inc. accounting scandal. The shareholders are ready to
receive about $2,600 each, for a total of $36.6 million, based
on the $193 million settlement and interest. That amounts to 68
cents per share, the Pittsburgh Tribune-Review reported. It's
not clear when settlement money will be distributed, and the
final amount will be reduced by attorneys' fees. The last
remaining portion of the class-action lawsuit was approved by
U.S. District Judge David S. Cercone, July 13.
"Judge Approves $36M Settlement Balance in PNC Scandal,"
AccountingWeb, July 19, 2006 ---
http://www.accountingweb.com/cgi-bin/item.cgi?id=102357
Earnings were restated, as required
by the Federal Reserve, and the results were $155 million
less than originally reported. The lawsuit contends that
stockholders who bought the bloated shares between July 19,
2001, and July 18, 2002, lost an estimated $1.15 billion.
PNC paid $25 million to the U.S.
Department of Justice to settle conspiracy to commit
securities fraud charges in June 2003. The government
ordered PNC to place $90 million into the $193 million
restitution fund. Most of the rest of the escrow fund came
from insurance companies and from AIG, which paid in $44
million.
A separate shareholder lawsuit is
pending against Ernst & Young, which reviewed the
questionable loan sales.
Continued in article
Bob Jensen's threads on Ernst & Young are at
http://www.trinity.edu/rjensen/Fraud001.htm#Ernst
"Nigerians foiled in black banknote scam in Vietnam," --- Thannnie
News, June 26, 2006 ---
http://www.thanhniennews.com/overseas/?catid=12&newsid=17070
Vietnamese police have foiled three Nigerians
in their scams duping thousands of dollars out of Vietnamese women who
lent them money to ostensibly buy chemicals to restore ‘blackened US
banknotes’.
A source
said they had been deported from Vietnam.
The police
refused to reveal their names or say whether the three cases were
related, but they happened with different women earlier this year by
different Nigerians with the same trick.
In April,
one Nigerian befriended a café owner in southern Vung Tau resort city
and promised to give her a share in a restaurant he was about to open if
she lent him US$20,000 to buy chemicals to restore blackened banknotes
worth an astronomical US$1 billion.
He claimed
he had purposefully blackened the notes to dodge customs screenings and
taxation.
He then did
an experiment. After rubbing and cleansing in a ‘special solution’, he
managed to turn two blackened papers the size of US$100 banknotes into
real cash.
He
generously gifted her the two notes.
The
gullible woman later lent him $7,000 before being handed a stack of
supposed banknotes wrapped in thick paper. He said the money had been
treated with chemicals but had to wait for eight hours in cold
temperatures before taking effect.
She then
put the stack in her fridge and, after eight hours, opened it only to
discover they were just plain paper.
Meanwhile,
the ‘billionaire’ had fled.
A similar
case occurred the following month with a woman in Ho Chi Minh City, who
got to know a man claiming to be Brazilian through Internet chat.
The
‘Brazilian’, who is in fact Nigerian, flew to Vietnam and told her he
had inherited $6.5 million which he wanted to invest in Vietnam.
He added
the $500,000 he had initially transported to Vietnam had turned black
and he needed $40,000 to buy chemicals.
Another
woman also in Ho Chi Minh City was similarly defrauded of $30,000.
A policeman
told Thanh Nien the tricksters secretly slid real banknotes
underneath the black papers during ‘chemical treatment’ and secretly
slipped the black papers out. The ‘chemical solution’ is just plain
water, he added.
Bob Jensen's threads on Nigerian frauds are at
http://www.trinity.edu/rjensen/FraudReporting.htm#NigerianFraud
Question
What is the act of "spinning" in an initial public offering?
Clark McLeod, who had been the
chairman and chief executive of McLeodUSA, agreed to turn over
$4.4 million in profits he was accused of receiving from the
so-called act of spinning, the New York attorney general, Eliot
Spitzer, was scheduled to announce Monday. Spinning is when
senior executives get preferential shares of stock in initial
public offerings from the same brokerage firm that they used as
an investment banker.
"Ex-Chief of McLeod in $4.4 Million Settlement," The New York
Times, July 31, 2006 ---
http://www.nytimes.com/2006/07/31/business/31spin.html
July 5, 2006 message from Dennis Beresford
[dberesfo@TERRY.UGA.EDU]
Today's Wall Street Journal reports that Mercury
Interactive is the first company to actually restate its financial
statements and describe in detail how it had improperly accounting for stock
options. A revised 10-K for 2004 is now available at the company's web site
http://www.mercury.com/us/website/pdf-viewer/?url=/us/pdf/company/10ka-final-2004.pdf
make for fascinating reading.
Denny Beresford
Note the University of Phoenix issue over possible backdating of options
"CNET to Restate Results Over Stock-Option Grants," by John Hechinger,
The Wall Street Journal, July 11, 2006; Page A3 ---
http://online.wsj.com/article/SB115253695093802258.html?mod=todays_us_page_one
CNET Networks Inc. said it expects restatements
that will lower its reported earnings for at least three years, bringing to
nearly a dozen the number of companies that have acknowledged errant
stock-options accounting.
The San Francisco Web site operator and more than
50 other companies are under scrutiny by federal authorities because they
granted stock options to executives at unusually low prices, often before
sharp jumps in the companies' share prices.
. . .
Also, Apollo Group Inc., the big for-profit
education company that operates the University of Phoenix, disclosed it will
be unable to file its 10-Q quarterly SEC filing on time because of its
directors' review of stock-option practices. At the same time, Apollo
revealed that the SEC notified the Phoenix-based company that it was
conducting an informal investigation of its stock-option granting practices.
Apollo, which said it was cooperating with the SEC, already disclosed that
it had received a subpoena from the U.S. attorney for the Southern District
of New York related to the matter. Apollo shares rose 20 cents, or 0.4%, to
$50.12 on Nasdaq.
Terri Bishop, an Apollo spokeswoman, said the
company believes "there has been no backdating and that we have complied
with all applicable laws."
In addition, Take-Two Interactive Software Inc.,
the New York maker of gaming software, said it has received a notice from
the SEC of an "informal non-public investigation" into stock-option grants
"from January 1997 to the present." The company already had said a special
committee of independent directors was investigating such matters. Take-Two
said it is cooperating with the SEC and declined further comment. The
company's shares fell 76 cents, or 7.5%, to $9.34, also on Nasdaq.
From The Wall Street Journal Accounting Weekly Review on June 30, 2006
TITLE: Timely Question: How to Undo Unfair Options?
REPORTER: Kara Scannell
DATE: Jun 27, 2006
PAGE: C1 LINK:
http://online.wsj.com/article/SB115137241897491448.html
TOPICS: Accounting, Auditing, Financial Accounting, Internal Controls, Stock
Options
SUMMARY: "Boards of directors at companies with executives who may have
benefited from backdated stock-option grants face thorny questions about whether
they should void the options or try to get back money from options already
cashed in.
QUESTIONS:
1.) Summarize the issue with backdating stock options granted to executives.
2.) Why are some executives not being terminated upon discovery of of the
stock option backdating practices? Are some executives being terminated?
3.) What internal control procedures should be in place regarding issuance of
stock options to executives?
4.) How does the problem with backdating indicate that internal control
breakdowns occurred at companies in which stock option backdating has been
discovered?
5.) Do you think that there are companies with problems of options backdating
in which there was no breakdown of internal control? Support your answer.
6.) How was the problem of backdating stock options uncovered? Did this
discovery occur through an annual audit of financial statements, through an
internal audit procedure, or through some other means? Explain.
7.) Explain how it is possible that an annual financial statement audit did
not detect these problems with stock options backdating in at least some cases
now being uncovered.
Reviewed By: Judy Beckman, University of Rhode Island
--- RELATED ARTICLES ---
TITLE: Why '90s Audits Failed to Flag Suspect Options
REPORTER: George Anders
PAGE: B1
ISSUE: Jun 22, 2006
LINK:
http://online.wsj.com/article/SB115093901436887061.html
Bob Jensen's threads on accounting for stock options are at
http://www.trinity.edu/rjensen/theory/sfas123/jensen01.htm
"FASB Appears In a New Light On Stock Options:
Some Companies That Opposed Expensing Rule Are Caught Up In U.S. Probe on
'Backdating'," by David Reilly, The Wall Street Journal, August 14, 2006;
Page C1 ---
http://online.wsj.com/article/SB115552025107534780.html?mod=todays_us_money_and_investing
When the nation's accounting-rule
makers proposed in 2004 that companies treat employee stock
options as an expense that cuts into profit, corporate
executives all but stormed the Financial Accounting
Standards Board's headquarters in Norwalk, Conn.
In letters and public statements,
business leaders declared that such an accounting rule would
damage their bottom lines, compromise their ability to
attract talented employees and make them less competitive
against foreign rivals that didn't face similar
requirements. Their protests failed to sway FASB; the new
rule went into effect this year.
Now, some of the same companies
that opposed it are among those caught up in a widening
probe by federal authorities of companies that allegedly
"backdated" employee stock options, a practice in which
executives retroactively pick an options-grant date at which
the company's share price was at a low, meaning they
potentially can lock in a greater profit. This could violate
securities laws and lead to misstated financial results and
tax problems. This turn of events casts the companies'
arguments against expensing stock options in a different
light and offers what some accounting-industry observers say
is a vindication for FASB.
It isn't clear that a rule
requiring the expensing of options would have prevented the
abuses now believed to have taken place from the early 1990s
until recent years. But expensing "would have served as a
deterrent," because the related cost would have affected
profit rather than being shown in a footnote, says Rebecca
Todd McEnally, director of the capital-markets policy group
at the CFA Institute, a financial-markets organization.
"Auditors would have had to pay considerably more attention
to [options grants] than they apparently did."
Some of the companies opposing an
expensing rule argued in 2004 that options didn't actually
"cost" companies anything and that investors had all the
information they needed regarding this type of compensation.
One executive at that time even insisted to FASB there was
no way for her company to issue options in a way that would
provide potentially greater gains for executives; the
company, KLA-Tencor Corp., has since acknowledged that
probably did happen.
Other companies complained to FASB
that its proposal would give investors a distorted view of a
company's finances. Patrick Erlandson, chief financial
officer at UnitedHealth Group Inc., wrote in a June 2004
letter that "expensing stock options does not provide
financial statement readers with the most appropriate
reflection of the economic impact of stock-options grants on
an entity's financial statements."
UnitedHealth this spring disclosed
that its options-grant practices are the subject of an
"informal" SEC inquiry and that the Internal Revenue Service
has requested documents regarding the options. Federal
prosecutors also are probing the Minnetonka, Minn., company,
which has warned it may have to restate prior year's
results. A company spokesman declined to comment on the
letter.
Those favoring expensing of stock
options "seem to do so for the wrong reasons," the
then-top-three executives at Macrovision Corp., including
Chairman John Ryan, wrote FASB in 2004. "They tend to focus
on corporate greed," the letter said, referring to scandals
such as the implosion of Enron. "Stock options in themselves
do not make people corrupt," the letter added.
In June, Macrovision, based in
Santa Clara, Calif., disclosed that the Securities and
Exchange Commission had requested information about the
company's options practices since 1997; later that month the
company said it was subpoenaed by federal prosecutors.
"It's irrelevant what the thought
process was three years ago," says James Budge,
Macrovision's current chief financial officer, who wasn't in
that position in 2004 and didn't sign the company's letter
to FASB. "There is a rule there today and we live by it."
But he adds that he doesn't think the expensing rule solves
any of the problems related to backdating.
Stock options give employees the
right to buy stock at a preset, or exercise, price at a
future date -- typically the same as the company's closing
price on the date the option is granted. Backdating the
grant date to coincide with a recent low point in a
company's share price essentially builds in an instant paper
gain on the options.
FASB tried to put options expensing
in place in the mid-1990s but got pushed back by companies
and Congress. Then came Enron, and FASB tried again, and
succeeded. Since the beginning of this year, all public
companies have had to record a cost for issuing options on
their income statements.
Some executives argued in 2004 that
expensing could lead to abuses. The difficulty in assessing
values needed to expense options would result in an
"opportunity for creativity for those who might push the
envelope," Nathan Sarkisian, chief financial officer at
Altera Corp., wrote in a June 25, 2004, letter.
In May, Altera said the SEC and
federal prosecutors were looking into its options-granting
practices. The San Jose, Calif., company has since said
there were problems with options granted between 1996 and
2000 and that it expects to restate nine years of financial
results. A spokeswoman declined to comment.
In another letter to FASB, the KLA
executive questioned the motives of those pushing an
options-expensing rule. Maureen Lamb, then a vice president,
finance, wrote that while there were flaws in the accounting
rules for stock-based compensation, "the politically charged
belief that the blame lies with executives unwilling to give
up their ill-begotten compensation is backward and
unproductive."
Ms. Lamb, who is no longer with the
company, added that "KLA-Tencor does not currently have the
ability to issue any equity-based compensation other than
at-the-money stock options." At the time, only options with
exercise prices below the current trading price --
"in-the-money" options -- had to be expensed. So-called
at-the-money options have an exercise price equal to the
grant day's trading price; they didn't have to be expensed
back then, but under the new rule they do.
This June, a committee of KLA's
board reached a preliminary conclusion that the price dates
for certain grants likely differed from recorded grant
dates. In other words, the options likely weren't
"at-the-money" and should have been expensed. Federal
regulators and prosecutors have requested information from
the company.
KLA officials didn't return calls
seeking comment. Ms. Lamb, now chief financial officer of
Photon Dynamics Inc., a San Jose technology company, also
didn't return calls seeking comment.
"In Internal Probes Of Stock Options, Conflicts
Abound: Directors' Ties Can Complicate Job of Assuring the Public
Investigation Is Thorough Sorting It Out at UnitedHealth," by James Bandler
and Charles Forelle, The Wall Street Journal, August 11, 2006; Page A1
---
Click Here
The board of UnitedHealth Group
Inc. met on May 1 to deal with questions about unusually
well-timed stock-option grants to top executives such as
Chief Executive William McGuire. The gathering heard a
briefing from a lawyer who was running UnitedHealth's
internal probe of how the options were dated.
One director whose recollections
would be important to the investigation was Thomas H. Kean,
a former New Jersey governor who had served on the
compensation committee that approved options grants.
The same day as the board meeting,
some UnitedHealth directors and executives were supporting a
campaign by Mr. Kean's son for a U.S. Senate seat from New
Jersey. Some of them attended a fund-raiser for Tom Kean Jr.
that day, in UnitedHealth's home state of Minnesota. It
isn't clear whether Dr. McGuire and his wife attended, but
each donated $2,000 to the cause. So did Richard T. Burke,
who sits on a special board committee that is overseeing the
options investigation. All told, UnitedHealth-affiliated
donors have contributed $25,000 to the campaign.
The donations were just one
instance of overlapping relationships and potential
conflicts of interest that exist at some companies
conducting investigations of their own stock-option
practices. The various relationships don't necessarily mean
board members can't be fully objective. But governance
experts warn that, at the least, the ties are likely to
hinder public confidence in the thoroughness of some of the
inquiries.
These internal probes are important
in the unfolding scandal over the dating of stock-option
grants. Options are meant to pay off for an executive only
if the stock price rises from its level when they are
granted. If it is found that a company played around with
grant dates so that options showed a paper profit from the
start, the company may face a range of knotty problems, from
allegations of false disclosure to the need to restate past
financial results. In recent weeks former executives of two
companies, Brocade Communications Systems Inc. and Comverse
Technology Inc., have faced criminal charges.
With options under scrutiny at more
than 80 companies so far, regulators and prosecutors haven't
the resources to conduct full-blown forensic probes of every
company. They often rely on companies' own internal
inquiries to do the initial digging that helps authorities
decide whom to pursue most vigorously. In addition, the
companies themselves rely on these internal probes, either
to show the public they've been diligent or to defend
against shareholder suits.
In these probes, "if the government
catches wind of issues affecting independence, they will
naturally be more skeptical and less trusting of the process
and the results," said W. Scott Sorrels, an Atlanta attorney
who has conducted investigations for corporate boards in the
past. Mr. Sorrels, not speaking of any particular firm,
said: "We advise companies to avoid any appearance of
impropriety so you don't have the situation blow up in your
face six months down the road after the investigation is
done."
At UnitedHealth, a spokeswoman said
neither the company, directors nor executives would comment
on potential conflicts of interest. Efforts to reach
directors separately drew no response or were referred to
the company. UnitedHealth has hired former Securities and
Exchange Commission enforcement chief William McLucas to
conduct the board probe.
When the donations to the Kean
Senate campaign were described to former SEC Chairman Harvey
Pitt, he said they struck him as "ill-advised and strange"
and something that could be seen as an attempt to influence
a witness because of the senior Mr. Kean's role on the
compensation committee. A spokeswoman for the Kean campaign
said the fund raising came at a "UnitedHealth breakfast"
hosted by Minnesota Republican Sen. Norm Coleman, and there
was absolutely no effort to curry favor with the elder Mr.
Kean. The former New Jersey governor didn't return calls
seeking comment.
UnitedHealth shows a variety of
ties among directors or between directors and executives.
One director is a trustee of a nonprofit to which Dr.
McGuire and his wife gave $4 million from their family
foundation, while another is a former head of that charity's
board. Another director appears to manage money for the
foundation, according to its tax filings. And Mr. Burke, who
is on the special committee investigating options grants,
was himself a member of the board committee that made
options grants for a time in the early 1990s.
At Linear Technology Corp., some
directors got options on the same beneficial dates as
executives. Typically, directors' and executives' option
grants occur on different cycles. Robert Swanson, Linear's
chairman, said directors and executives receive options at
pre-set cycles that sometimes coincide. A Louisiana pension
fund that is suing Linear over its options-dating practices
claims that directors can't fairly judge whether there was
any impropriety because they got options on the same dates.
The suit, filed in state court in
Santa Clara County, Calif., by Louisiana Municipal Police
Employees' Retirement System, alleges that Linear sustained
substantial harm because of the executive and directors'
actions. Linear is a semiconductor company in Milpitas,
Calif.
Mr. Swanson said two independent
directors are overseeing the internal investigation. While
acknowledging that the two probably received some of the
option grants in question, he said the directors could
fairly evaluate what happened. He said the facts would show
there was no impropriety, adding that the board was "aware
of everything we did. Nobody is having amnesia."
Mr. Swanson said that to assist the
board, Linear is using one of its regular outside law firms,
the prominent Silicon Valley firm of Wilson Sonsini Goodrich
& Rosati. Some legal experts say a truly independent
corporate probe would use a law firm with which the company
has had no prior ties. Mr. Swanson said it would be "kind of
an admission something's wrong if you have to go outside." A
Wilson Sonsini spokeswoman said the firm isn't conducting an
independent review but is representing Linear in its
dealings with prosecutors, regulators and litigants.
Continued in article
Scamming Apple Corporation Investors: Probe of Accounting for
Options Digs Deeper
"Apple Options Probe Widens," Wired News, August 4,
2006 ---
http://www.wired.com/news/technology/0,71533-0.html?tw=wn_index_2
Apple Computer says it expects to
restate some of its financial results as a probe into its
granting of stock options widens, threatening years of
profits.
The notice of further evidence of
"irregularities" comes as Apple has been riding its wildly
popular iPod digital music player to the most profitable
period in its 30-year history. Fueled largely by steadily
rising iPod sales, Apple has reported $3.1 billion in profit
during the past four years.
Without providing specifics, the
computer and software maker said late Thursday it had
uncovered enough evidence of mishandled stock options to
raise doubts about the accuracy of its financial statements
dating back to Sept. 29, 2002.
The developments threaten to rattle
investors, based on how Wall Street has punished other
companies that have recently disclosed potential accounting
problems caused by stock option improprieties.
Apple shares fell $1.70, or 2.4
percent, to $67.89 in early trading Friday on the Nasdaq
Stock Market, where they have traded in a 52-week range of
$42.02 to $86.40. The Cupertino, California-based company's
market value has increased by about $55 billion since
September 2002.
Apple first raised a red flag about
the way it accounted for stock options in late June when it
announced an internal investigation into a series of
"irregularities."
Some of the nettlesome stock
options were given to Apple CEO Steve Jobs, but he
voluntarily canceled those in 2003 before cashing them in.
After digging deeper, Apple
uncovered enough new problems to prompt the company to hire
an outside lawyer to take over the investigation and notify
the Securities and Exchange Commission about its findings.
Apple hopes to complete its
accounting review as quickly as possible, said company
spokesman Steve Dowling. In the meantime, Apple may miss a
deadline for filing its latest quarterly report with the
SEC. The company said it has hired an outside lawyer to lead
the investigation.
More than 60 other companies across
the country are grappling with similar stock option
headaches, but Apple is by far the most prominent of the lot
to acknowledge trouble so far. While Apple hasn't explained
exactly how it mishandled stock options, most of the
problems at other companies so far have revolved around
"backdating."
Under this practice, insiders try
to make the rewards more lucrative by retroactively pinning
the option's exercise price to a low point in the stock's
value. Usually, a stock option's exercise price coincides
with the market value at the time of a grant to give the
recipient an incentive to drive the price higher.
If companies backdate options
without accounting for the move, it can cause profits to be
overstated and taxes to be underpaid.
The financial manipulation also
exposes companies to possible fraud charges.
Continued in article
Bob Jensen's threads on accounting for employee stock
options are at
http://www.trinity.edu/rjensen/theory/sfas123/jensen01.htm
Three Executives at Comverse Charged in Stock Options Case
Describing a brazen scheme to
manipulate the granting of options, federal prosecutors in
Brooklyn charged three former executives of Comverse Technology
with mail, securities and wire fraud yesterday. The three
executives, prosecutors said, used fictitious employees to
create a secret slush fund of options to be distributed to
favored employees. Two of the executives, David Kreinberg, the
former chief financial officer, and William F. Sorin, the former
general counsel, were arraigned yesterday in Federal District
Court in Brooklyn, where they were released on $1 million bail
each, secured by their homes.
Julie Creswell, "3 at Comverse Charged in Stock Options Case,"
The New York Times, August 10, 2006 ---
http://www.nytimes.com/2006/08/10/business/10options.html
Question
What do companies and executives who back dated options fear the most?
The Internal Revenue Service is
examining as many as 40 companies ensnared in various stock
options investigations to determine whether they owe millions of
dollars in unpaid taxes. In the last few weeks, the agency has
directed its corporate auditors to start reviewing the tax
returns of dozens of executives and companies, which may have
improperly reported stock option grants. These preliminary
investigations are expected to take months, but if there is
early evidence of widespread tax trouble, I.R.S. officials said
they were prepared to step up their effort. “Where there are
indications of mischief, we want to now look at those cases and
see if they complied with tax laws,” said Bruce Ungar, the
agency’s deputy commissioner for large and midsize businesses.
“It is possible that they are compliant, but the early
indication is that there is a good likelihood there is some
noncompliance.
Eric Dash, "I.R.S. Reviewing Companies in Options Inquiries,"
The New York Times, July 28, 2006 ---
Click Here
Jensen Comment
The first 40 companies are only a drop in this scandalous
bucket. Over 2,000 companies are suspected of this unethical
compensation ploy.
Bob Jensen's threads on scandalous executive compensation are
at
http://www.trinity.edu/rjensen/FraudConclusion.htm#OutrageousCompensation
"PCAOB Issues Alert to Auditors on
Backdating," SmartPros, July 31, 2006 ---
http://accounting.smartpros.com/x54136.xml
The oversight
board's first-ever "audit practice alert," released on
Friday, warns auditors to "be alert to the risk that the
issuer may not have properly accounted for stock options,
and as a result, may have materially misstated its financial
statements."
The nine-page practice alert,
Matters Relating to Timing and Accounting for Options Grants
(PDF), was prompted by recent
reports and disclosures about issuer practices related to
the granting of stock options, including the "backdating" of
such grants.
In
a statement Friday, the board said these reports and
disclosures indicate that some issuers' actual practices in
granting options might not have been consistent with the
manner in which these transactions were initially recorded
and disclosed. Some issuers have announced restatements of
previously issued financial statements as a result of these
practices. In addition, some of these practices could result
in legal and other contingencies that may require
recognition of additional expense or disclosure in financial
statements.
The alert advises auditors that these
practices may have implications for audits of financial
statements or of internal control over financial reporting
and discusses factors that may be relevant in assessing the
risks related to these matters. The alert reminds auditors
to "be mindful" of applicable financial accounting
standards, including
SFAS No. 123 (Accounting
for Stock-Based Compensation).
PCAOB audit practice alerts are issued
by the board's staff to "highlight new, emerging, or
otherwise noteworthy circumstances that may affect how
auditors conduct audits under the existing requirements of
PCAOB standards and relevant laws." They will be posted on
the board's Web site,
www.pcaobus.org, as well as
transmitted to registered public accounting firms via email
when possible.
Bob Jensen's threads on options accounting are at
http://www.trinity.edu/rjensen/theory/sfas123/jensen01.htm
Question
How excessive is executive compensation and what can be done about it?
From Jim Mahar's Blog on August
22, 2006 ---
http://financeprofessorblog.blogspot.com/
Are
CEOs overpaid?
Yeah, I know I said I would go a
while before posting, but Rich forwarded this to me and
I think many of you will be interested. It is from
MSNBC/Newsweek:
A few look-ins:
*"Ogling executive pay is the
spectator sport of business. The catcalls from the
stands have gotten louder as new studies throw out
eye-popping statistics about how rich CEOs are
getting, while the rest of us worry about keeping
our jobs out of China. One such: the U.S.-based
Institute for Policy Studies notes that CEOs made
142 times more than the average worker in 1994—and
431 times more in 2004."
*"Democratic Congressman Barney Frank is proposing a
Protection Against Executive Compensation Abuse Act,
which would limit tax deductions for companies that
pay executives more than 25 times the lowest paid
worker. But even as the drumbeat for reform grows
louder, some new research is questioning just how
out of proportion these megapackages really are—and
whether more regulation is the best way to scale
them down.First,
there's the issue of metrics....[the article then
shows that using medians reduced the average CEO to
average worker pay mulltple to 187].
*Xavier
Gabaix of MIT and Augustin Landier of NYU
say that since 1980 the pay of
CEOs has risen in lock step with the market
capitalization of their companies: both are up 500
percent.
*"Good governance still plays some part in
determining pay—the researchers say that CEOs can
garner 10 to 20 percent more by going to a firm with
a weak board. And cultural mores play some role,
too; many of the Japanese firms studied were as big
as American firms, but executives were paid less and
changed jobs less often."
*"...nearly all firms are moving toward heavier
reliance on bonuses. The average dollar amount of
bonuses has doubled in the last three years, as they
make up a growing proportion of pay...."
Interesting article and an
easy read so it is perfect for the final "lazy, hazy,
crazy days of summer."
Bob Jensen's threads on
Outrageous Executive and Director Compensation Schemes are at
http://www.trinity.edu/rjensen/FraudConclusion.htm#OutrageousCompensation
Question
What is "click fraud?"
Answer:
- The act of purposely clicking ad listings without
intending to buy from the advertiser.
www.tractionsearch.com/se-dictionary.php
- In online advertising, click fraud involves sending
fraudulent clicks to Cost Per Click (CPC) advertisers. The
clicks can be artificially generated via automated
technology methods (such as hitbots) or via manual clicking
for the purpose of debiting CPC advertiser accounts or
increasing CPC network partner/affiliate commission
revenues. ...
http://en.wikipedia.org/wiki/Click_fraud
Yahoo settles "click fraud" lawsuit
Yahoo Inc. will consider refunding
money to thousands of advertisers dating back to January 2004
and pay $4.95 million in attorney fees to settle a class-action
lawsuit alleging the Internet powerhouse has been profiting from
bogus sales referrals generated through a sham known as ''click
fraud.'' The agreement, given preliminary approval Wednesday by
U.S. District Judge Christina Snyder in Los Angeles, doesn't
limit Yahoo's liability -- one of several contrasts to a
settlement reached in March by online search engine leader
Google Inc. to resolve a class-action lawsuit over the same
issue . . . Although Yahoo doesn't know how much money it will
end up refunding, company officials seem confident it will be a
relatively small amount. Yahoo's ad revenue totaled $9.1 billion
from January 2004 through March of this year. "We want to keep
our advertisers happy,'' said Yahoo lawyer Reggie Davis.
''Whatever credits are owed will be 100 percent forthcoming.''
"Update: Click Fraud Class-Action Suits at Yahoo and
Google," MIT's Technology Review, July 3, 2006 ---
http://www.technologyreview.com/read_article.aspx?id=17118
Google awaits "click fraud" settlement
Google's financial commitment in its
case, overseen by an Arkansas state court, is capped at $90
million. That's a sliver of the $13.3 billion in ad revenue that
the Mountain View, Calif.-based company has collected since
2001. As much as $30 million of the Google settlement could be
paid to the attorneys who filed the case . . . In its
settlement, Google is offering to give back less than 1 percent
of the money spent on undetected click fraud and plans to make
the payments in the form of credits that can used to buy more
ads on its networks.
"Update: Click Fraud Class-Action Suits at Yahoo and Google,"
MIT's Technology Review, July 3, 2006 ---
http://www.technologyreview.com/read_article.aspx?id=17118
"Review Done, Fannie Mae Says," The New York
Times, August 10, 2006 ---
http://www.nytimes.com/2006/08/10/business/10fannie.html
Fannie Mae, the nation’s largest
buyer and seller of mortgages, said Wednesday that it
believed that a wide-ranging review had now uncovered all
its accounting errors, clearing the way for the company to
complete the restatement of its 2004 earnings by the end of
the year.
It also said that the
multibillion-dollar correction could be less than previously
estimated.
Fannie Mae, which finances one of
every five home loans in the United States, said it would
miss a regulatory deadline Wednesday for filing its
financial report for the second quarter of 2006. It has not
filed an earnings statement since late in 2004.
Federal regulators accused Fannie
Mae then of serious accounting problems and earnings
manipulation to meet Wall Street targets; the Securities and
Exchange Commission ordered the company to restate earnings
back to 2001. The Justice Department has been pursuing a
criminal inquiry, which the company confirmed “remains
open.”
The anticipated correction of
earnings has been estimated around $10.8 billion. But Fannie
Mae indicated on Wednesday that the final amount could be
lower because some losses would be less than thought.
The 2004 losses related to
accounting for mortgage commitments will be “significantly
smaller” than its previous estimate of $2.4 billion, Fannie
Mae said, though it did not specify by how much.
After the restatement of 2004
earnings is complete and made public by year’s end, Fannie
Mae expects those for more recent periods to come
“cascading” in months to follow, the chief executive, Daniel
H. Mudd, said.
The company said the latest
accounting errors disclosed involved its so-called master
servicing arrangements with the trusts it created to issue
securities backed by the billions of dollars of home
mortgages annually that it buys from lenders and bundles
together for resale to investors worldwide.
In May, Fannie Mae disclosed
further accounting problems uncovered in the business of
issuing securities and in the guaranty fees it charged banks
and other lenders.
Continued in article
Jensen Comment
I have much more confidence in the forthcoming accounting
restatements with Denny Beresford as head of Fannie's Audit
Committee.
"U. of Phoenix Loses in U.S. Court," by Doug Lederman, Inside
Higher Ed, September 6, 2006 ---
http://www.insidehighered.com/news/2006/09/06/phoenix
The University of Phoenix must
defend itself against charges that it violated federal law
by paying its recruiters based on how many students they
enrolled, the U.S. Court of Appeals for the Ninth Circuit
ruled Tuesday. The federal appeals panel’s
unanimous decision, which
overturned a lower court’s ruling in Phoenix’s favor, had
been eagerly awaited because of the for-profit university’s
high profile as one of the country’s largest and because of
the mammoth size of the malfeasance alleged — billions of
dollars could be at stake.
But the case is also important
because it is the latest in a string of decisions in which
federal courts have gradually expanded the grounds under
which colleges can be sued under the federal False Claims
Act, much to the consternation of some college and
university lawyers and legal experts. In siding with the
former admissions officials who sued Phoenix on the
government’s behalf, the Ninth Circuit panel leaned heavily
on one of those earlier decisions,
involving Oakland City University.
At issue in the Phoenix case is a
provision in the Higher Education Act that prohibits
colleges from offering bonuses or other incentive pay to
admissions officers or recruiters based on specific
enrollment goals, to discourage them from giving officials
extra incentive to bring in any potential student,
regardless of academic ability. Two former enrollment
counselors at Phoenix, Mary Hendow and Julie Albertson,
charge that the for-profit university paid cash bonuses and
other gifts to them and to other recruiters based strictly
on how many students they enrolled — charges Phoenix has
denied.
In 2003, Hendow and Albertson filed
what is known as a qui tam lawsuit, which is filed
under the federal False Claims Act by an individual who
believes he or she has identified fraud committed against
the federal government, and who sues hoping to be joined by
the U.S. Justice Department. (The plaintiff then shares in
any financial penalties, which can include trebled damages.)
The women charged that the allegedly fraudulent behavior had
put more than $1.5 billion in federal funds at risk, which
set the value of a potential verdict in the case at several
times that. The federal government declined to join the
lawsuit as a third party, but the Justice Department did
file a friend of the court brief in 2005 encouraging the
court to rule against Phoenix.
A federal district court dismissed
the women’s lawsuit in May 2004, concluding that they had
not put forward a valid theory for how Phoenix had defrauded
the government under the False Claims Act.
But in its decision Tuesday, a
three judge panel of Ninth Circuit appeals court concluded
differently. Reinforcing and even expanding on
last October’s decision by the
U.S. Court of Appeals for the Seventh Circuit in United
States of America ex. rel. Jeffrey E. Main v. Oakland City
University, the Ninth Circuit judges declared that the
two former admissions officers (known in False Claims Act
parlance as the “relators") had indeed offered two
legitimate theories (known as “false certification” and
“promissory fraud") for how the university had defrauded the
government.
Without ruling on whether the women
had actually proven their claims — impossible without a
trial on the facts of the case — the court concluded that
they had met the four requirements of filing a legitimate
claim under the federal fraud law: (1) alleging that a
defendant had made false statement or engaged in fraudulent
conduct; (2) that the action had been taken deliberately;
(3) that the act or statement played a direct role in money
flowing out of government coffers; and (4) that the
government did indeed pay out or forfeit money as a result.
At its core, the Ninth Circuit ruled that the university had
— by participating in a several-step process to accept
federal financial aid — committed to abiding by a wide range
of rules and requirements, including the prohibition on
incentive compensation.
On multiple fronts, the court
rejected arguments made by lawyers for Phoenix. To the
suggestion — which other college officials have echoed in
fighting False Claims Act cases —
that “the incentive compensation ban is nothing more than
one of hundreds of boilerplate requirements with which it
promises compliance,” as the appeals panel phrased it, the
court wrote: “This may be true, but fraud is fraud, no
matter how ’small.’
“The university is worried that our
holding today opens it up to greater liability for innocent
regulatory violations, but that is not the case — as we held
above, innocent or unintentional violations do not lead to
False Claims Act liability,” Judge Cynthia Holcomb Hall
wrote for the court. “But that is no reason to innoculate
[sic] institutions of higher education from liability when
they knowingly violate a regulatory condition, with the
intent to deceive, as is alleged here.”
With that statement, the court
seemed to clearly reject the arguments made by college
officials that the federal courts’ decisions in this line of
cases are making colleges significantly more vulnerable to
False Claims Act challenges — even if they have violated
federal law by simple mistake.
And Phoenix’s assertion that the
ban on incentive compensation is a condition on
participating in the federal student aid programs, but not a
condition on receiving payment from the government, “is a
distinction without a difference,” the court said. “In the
context of Title IV and the Higher Education Act, if we held
that conditions of participation were not conditions of
payment, there would be no conditions of payment at all —
and thus, an educational institution could flout the law at
will.”
The Ninth Circuit’s decision not to
dismiss the lawsuit against Phoenix would send the case back
to the lower federal court for a trial on the merits. But
several other possibilities seem likelier at this point. The
university could ask the entire U.S. Court of Appeals for
the Ninth Circuit to review the decision of the three judge
panel.
Or Phoenix’s lawyers could appeal
the Ninth Circuit’s decision to the U.S. Supreme Court, on
the hope that the nation’s highest court decides to hear the
case because it concludes that federal appeals courts have
split on the issues in the case. But the Supreme Court
declined in April to consider the Oakland City case, letting
the Seventh Circuit’s decision stand, which would appear to
make it unlikely to hear the Phoenix case.
Timothy J. Hatch, a Los Angeles
lawyer who represented Phoenix in this case, said that he
and the university “obviously disagree” with the court’s
conclusions but had not yet decided how to respond to the
ruling. Terri Bishop, chief communications officer for the
Apollo Group, which owns the University of Phoenix, added in
a statement that the decision “greatly expands the scope of
False Claims Act liability beyond what Congress had intended
or even what other courts have recognized.” The company is
“carefully reviewing the opinion in order to determine our
next steps,” she said.
The two California lawyers who
represented the relators in the case, Nancy G. Krop and J.
Daniel Bartley, were practically giddy on the telephone late
Tuesday afternoon, and said they were eager to get the case
before a jury. “The evidence is all sitting there waiting
for a courtroom, and once we get a courtroom,” Krop said,
Phoenix “is in big trouble.”
Bob Jensen's threads on higher education controversies are
at
http://www.trinity.edu/rjensen/HigherEdControversies.htm
"Students Getting Sticker Shock from Textbook Prices,"
AccountingWeb, August 4, 2006 ---
http://www.accountingweb.com/cgi-bin/item.cgi?id=102424
Students entering college in 2006
can expect to pay more than $500 for textbooks for their
first semester courses, a huge outlay of cash for many who
have already taken out student loans to pay for tuition and
fees. University of Connecticut freshman Ben March returned
to UConn’s Co-op bookstore for an accounting textbook last
February, after having already spent $400 on other
textbooks. The book cost $101. “I was trying not to buy it,
but I ended up needing it," March said, according to
boston.com. “The prices are depressing, but you really don’t
have a choice.”
Full-time students in a four-year
public college paid $898 for books in 2003-2004, equal to 26
percent of the cost of tuition and fees, according to a
Government Accountability Office report issued in 2005.
Congress is looking at the problem, and Virginia and
California have passed legislation, but these measures have
had little impact on student costs so far.
Faculty members are now being asked
by state legislatures to consider pricing in their selection
of textbooks and study materials. Is it necessary, for
example, for an introductory accounting course to use the
latest edition of a text that comes from the publisher
bundled with a CD-ROM and study aids, which jack up the
price?
New editions, which now come out
every three or four years, cost students up to 45 percent
more, the Washington Post says. The most popular accounting
textbooks have been through many editions, and changes from
the previous editions may be limited to the use of color and
graphics. Accounting, by Warren, Reeves and Fess, published
by South-Western Press, is now in its 22nd edition.
Publishing companies market their
wares directly to professors at regional and national
meetings of groups like the American Accounting Association,
where professors sign up to receive complimentary copies of
new textbooks. Large sales teams from companies like
McGraw-Hill, publisher of Principles of Financial
Accounting, 18th edition, and Prentice-Hall, publisher of
Introduction to Financial Accounting, 9th edition, attend
the national meetings.
A survey conducted by the
California Student Public Interest Research Group reported
that faculty members in all disciplines at Stanford
University said that the replacement of old editions by new
ones was “rarely” or “never” justified. But many continued
to order them for their classes anyway, according to the
American Intelligence Wire. Eighty-seven percent of faculty
surveyed in the entire California system favored publishing
new information in the form of paperbound supplements.
A Textbook Task Force at Western
Connecticut State University (WCSU), recommended not buying
new editions or bundled products, but faculty peers did not
endorse these proposals. The faculty senate, while
acknowledging that textbook pricing was a persistent
problem, did not agree with the Task Force’s opposition to
bundling or to new editions, saying that educators in the
professions use evidence-based materials and needed to
consider the requirements of professional licensing.
The senate found that providing
“faculty and students with more comprehensive, current
pricing information in a timely, easily-accessible fashion
is not only critical, but the most practical first step to
take.” The WCSU task force recommendations and responses are
published on the university’s Web site.
In fields like accounting, where
older editions might work in introductory courses,
professors have individual goals for more advanced courses,
and texts should include current law, research or cases,
instructors say. The text should be considered an
investment, a reference that the student will want to keep.
Additional resources may also prove a good investment for
many students.
Publishers determine wholesale
prices for textbooks, and college bookstores determine the
final price for the book. The average mark-up college
bookstores add to new books is 33 percent, and the mark-up
for used books is 50 percent, Bruce Hildebrand, executive
director at the Association for American Publisher says,
according to MSNBC.
Peg Godwin, manager of the
University of Idaho’s Bookstore, told the university
newspaper, the Argonaut, that it is hard to break even. “If
we buy 100 books, we have to sell 80 books just to pay for
those books and then we have to sell another four or five
books to pay for the freight on them. And then we have to
pay all our salaries, and salaries run around 12 to 13
percent, so we have to sell those last three books.”
Most college bookstores have
textbook buyback programs, but with new editions coming out
so frequently, there are not many books stores can accept
for resale. University of Texas Co-op President, George H.
Mitchell, says that UT students buy an average of 40 percent
used books, much higher that the national average of 25
percent, the Financial Times reports. The process is
successful in Texas, says Jennifer Libertowsky, spokeswoman
with the National Association of College Stores, because
instructors provide lists of books that will be used in
classes well in advance of the buying period.
Students are finding that
purchasing online provides substantial savings on both new
and used books, the Washington Post says. Popular sites, in
addition to Amazon.com, include www.campusbookswap.com,
which allows students to buy and sell used books directly,
and www.textbookx.com.
And like other products, some
textbooks are cheaper in Canada. In some cases savings can
equal 90 percent of the U.S. retail price, the Post says,
although AccountingWeb found prices for accounting textbooks
were only slightly lower than U.S. prices. Shipping time is
estimated to be three to six weeks. Buyers can go to
www.amazon.ca.
But shop early or pay full price.
As of August 1st, Amazon had only one new copy of Principles
of Financial Accounting by Wild, Larson and Chiapetta,
(Chapters 1-17) now in its 18th edition and selling for
$113. McGraw-Hill does not list their price for the book.
There were only four new copies of Introduction to Financial
Accounting by Horngren, Sundem, Elliott and Philbrick
available on Amazon for $106.70. The book lists on the
Prentice-Hall Web site at $149.50 and costs $165 with
Peachtree software.
And the most successful textbook in
history, according to Amazon, Warren, Reeves and Fess’s
Accounting, published by South-Western Publishing in a
number of different formats, is also nearly sold out. Amazon
says they have more copies of all of these books on order.
Bob Jensen's threads on oligopoly publisher frauds are at
http://www.trinity.edu/rjensen/FraudReporting.htm#ScholarlyJournals
Question
What are two of the shocking developments in spyware and spam?
July 14, 2006 message from Richard Campbell
[campbell@RIO.EDU]
This is from a newsletter from
sunbelt software - developers of Counterspy, a spyware
detection software.
CSN: What do you see as the latest
trends in spam?
AM: I see four main trends. The
first is that most spam now comes from zombie machines so
even if you are able to track the spam back to the machine
that sent it, there is nothing you can do about it as the
person that owns the machine most likely doesn't even know
that his machine is being used as a zombie and even if he
did, he wouldn't know what to do about it. This zombie
phenomenon also leads to individualized spam as the zombie
code can access the address book and send legitimate looking
email to the zombie machine owner's friends.
The second trend I see is the
increase in the amount of image spam. That is spam that
contains an image instead of text. The spammer's message is
contained in the image as a graphic image instead of text so
that there is no practical way to try and detect spam by
looking at the contents of the email. It's easy for the
human eye to look at the picture and read the text that it
contains but it is very difficult for a computer to do the
same thing. Since it is so easy to change a bit or two in
the image, it is not easy to come up with a hashing
algorithm (a way to create a "signature" that can be used to
determine if another image is the same as the original one).
There is a lot of work being done to try to come up with
ways of comparing images to see how "similar" they are but
nobody has come up with a workable solution so far.
Currently, I'd guess the amount of image spam is around 5% -
10% of the total amount of spam. I expect to see this
increase to 20% - 30% in the next year or two.
The third trend is the scariest and
that is phishing. I monitor the spam reported by our users
so I get to see a pretty good cross section and it scares me
to see how good the phishing sites are. They are so good
that you have to be pretty savvy to detect some of them. I
feel sorry for all the non-computer types out there that
will fall victim to these. I have seen a dramatic rise in
the amount of phish email in the past 6 months and expect to
see that increase continue because there is so much money to
be made with very little effort or risk.
The fourth trend and is "returned
email" I have noticed a marked increase but I haven't had
time to investigate. I suspect that the bulk of it is spam/malware,
especially those that have attachments. It is particularly
nasty because an attachment on a returned email doesn't seem
out of the norm. In fact, you kind of expect to see your
original email attached. Some of the undelivered email that
I've looked at with attachments doesn't have the original
email there. Instead it contains spam or a link to a malware
site. You have to be real careful and make sure that the
"bounce" (rejected email) is actually something that you
sent. Many times it is the result of a rootkit having taken
over your machine, turning it into a zombie. If you see
email bounced that you never sent, it is very likely that
you machine is infected.
CSN: What about image spam, what is
it, and why so dangerous or such a pain to get ride of?
AM: The primary use for image spam
is to advertise penny stocks. Most of this type of spam is
part of a 'pump-n-dump' scheme where the spammer buys a lot
of a particular stock and then starts promoting it via spam
that describes what a great buy the stock is or giving the
impression that the company is on the verge of some major
expansion or discovery in order to get gullible investors to
buy the stock. Once the price goes up, and it can go up as
much as 500%, the spammer sells his shares and makes a huge
profit. Since there was no real reason for the stock to
increase, it usually falls back to its original level or
lower. Most of the time, the company whose stock is being
hyped is not involved in the spamming so they end up being a
victim of the spammer as well as there is very little that
they can do to keep their stock from being manipulated.
Image spam is only useful in
situations where the user doesn't have to communicate with
the spammer. With normal spam, there is a phone number to
call or a button to click to order pills or whatever the
spammer is hawking but with image spam, there is no
information that links the email to the spammer as the
typical stock add mentions the company but not the spammer.
This is what makes it so different from the run of the mill
spam.
I'm sure that it won't be too long
before some creative spammer comes up with another type of
situation where one way communication can be used to somehow
flow money to them.
Richard J. Campbell
mailto:campbell@rio.edu
Bob Jensen's threads on spyware and spam are at
http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection
Leading Anti-Virus, Anti-Spyware, and Anti-Spam
Alternatives
I trust Consumer Reports rankings more than virtually all other ranking
sources mainly because Consumer Reports accepts no advertising or has
other links to the vendors of products rated in Consumer Reports' labs
The Consumer Reports
home page is at
http://www.consumerreports.org/cro/index.htm
"Finding Free Antivirus Software, Walter S. Mossberg, The Wall
Street Journal, August 3, 2006; Page B4 ---
http://online.wsj.com/article/mossberg_mailbox.html
Q: My computer is a virus-infected mess. I
sometimes have to close over 20 pop-ups just to access the PC. Taking your
advice, I tried to download the "free" AVG Anti-Virus, but there is nothing
free about it. They ask for your credit-card info. What am I missing?
A: The company that makes AVG,
Grisoft, offers both paid and free versions of the product. The free version
must be downloaded from a separate Web site,
free.grisoft.com.
Most of the first few results in a Google search for "AVG" or "AVG
anti-virus" point to this free version. Also, the free version is
prominently featured at
Download.com, the big
site for downloading software that is owned by CNET.
Q: Is there a significant difference between the
Palm Treo 700p and the 700w phones -- or is it just preference of software?
Do they have the same ease of use?
A. The 700p uses the Palm
operating system and the 700w uses the Windows Mobile operating system. The
hardware is essentially the same, except for one big difference -- the
700p's screen has a significantly higher resolution than the 700w's. There
are also some different buttons on the keyboard.
But asking if two devices differ in
"just preference of software" is like asking if living in a similar home in
North Dakota or Florida differs "just" in terms of your preference in
weather. The software is every bit as important as the hardware, and makes a
huge difference in how the two Treos work.
I have reviewed both devices, and I
find that the Windows Mobile software on the 700w is considerably inferior
to the Palm operating system software on the 700p. Too many common actions
in the Windows version take more steps than the same actions on the Palm OS
version, and often require navigating menus. You are likely to use the
stylus more often in the Windows version as well.
And, even though the software on the
Windows version was made by Microsoft, it is actually worse at handling
Microsoft Office and Adobe PDF email attachments than the built-in software
for that purpose on the Palm OS version.
For my review of the 700p, see:
ptech.wsj.com/archive/solution-20060607.html. For my review of the 700w,
see:
ptech.wsj.com/archive/ptech-20060105.html.
Q: Last week, you advised readers never to trust
any email from a financial institution because online criminals have gotten
so good at faking such emails. Does that include emails from institutions
where you have accounts, such as receipts for transactions at brokerages?
A: Yes and no. If you get an
unexpected email from a bank, or brokerage, or payment service like PayPal,
where you do have an account, I'd still advise ignoring it and never
clicking on any link it contains. This is even true if the email suggests
some problem with your account or advises that you need to log onto a web
site to "verify" your account information. Such emails are very often just
attempts to steal your passwords and account numbers. To double-check on
such an email, phone the bank or brokerage, or manually call up its Web
site.
However, if you have just bought or
sold a stock, or performed an online banking action, and you get an email
confirming the transaction, it could well be legitimate -- provided it
contains enough detail of a type criminals might find hard to replicate, and
it arrives very quickly after the transaction was completed. I still
wouldn't click on any links in such an email, however. Remember, most
financial institutions don't have to ask you to supply account information
they already have.
It's really too bad that people have
to look on such emails with such suspicion. Email could be a great tool for
communications between banks and their customers. But, despite some strides,
the technology and financial industries have so far failed to find a way to
make email truly trustworthy and secure. And law-enforcement agencies have
failed to stop the thefts of money and identities. So far, the crooks are
winning in this arena. So you have to be extra careful.
Also check on SUPERAntiSpyware Free Edition 3.2.1028 ---
http://www.superantispyware.com/
Is a visited Web site authentic and safe?
CallingID 1.5.0.70
http://www.callingid.com/Default.aspx
August 7, 2006 reply from Edward Gardner
[gardner@CASESABATINI.COM]
I want to add nod32, which is a low-overhead
antivirus product which has won numerous awards for detecting 100% of
viruses thrown at it. I have it at home and I'm real impressed.
www.nod32.com
Ed Gardner, CPA
Bob Jensen's threads on computer and networking security are at
http://www.trinity.edu/rjensen/ecommerce/000start.htm
"International crime rings, not hackers, true Internet
villains," PhysOrg, August 6, 2006 ---
http://physorg.com/news74065139.html
Organized crime is winning the
Internet security war, specialists warned at the world's
foremost gathering of computer hackers in Las Vegas on
Saturday.
User rating Not rated yet Would you
recommend this story? Not at all - 1 2 3 4 5 - Highly
The online peril is no longer
brilliant young social outcasts penetrating networks for
notoriety; it is international crime rings swiping billions
of dollars with keystrokes and malicious computer codes,
cyber cops agreed.
Ironically, potential champions in
the battle for Internet privacy were sought among the
thousands of hackers that made pilgrimages to the US
gambling mecca nicknamed "Sin City" for the three-day DefCon
14 conference.
Online evil doers were crime rings
working out of countries such as Russia, Romania and Brazil,
and their nefarious technical skills were keeping ahead of
computer security experts, veterans of the cyber-crime
battle said.
"We are getting our butts kicked,
there is no doubt about it," said Dan Hubbard, vice
president of security research at Websense. "There is a lot
more of a bond and a sharing of tools in their society than
in ours."
Continued in article
Bob Jensen's threads on computing and networking security are
at
http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection
Appearance Versus Reality of Trustee/School Kickbacks
One of the most common reality is that trustees who run
portfolio investment firms become trustees to steer a portion of
the school's endowment to their companies. The connections can
be direct or extremely circuitous.
All to often members of the boards of trustees of colleges
and school boards of K-12 schools serve for business reasons
(typically to steer business their way) rather than for purposes
of ethically guiding the institutions. Sometimes these kickbacks
are highly illegal. Sometimes they are not illegal but they are
unethical and are frowned upon if details are exposed to the
public. For example, institutions commonly, albeit secretly,
promote insurance, legal, personal finance, computer, or travel
business of a trustee. These arrangements sometimes entail
questionable and unmentioned kickbacks such as a kickback to the
school for every trip booked with a trustee's travel agency or
every insurance policy written with an employee, student, or
alumnus. One of the more subtle examples is where a school or
alumni association promotes a credit card without revealing that
the school gets a kickback every time the user makes a payment
to the credit card company. Often these kickback arrangements
are established without a trustee being involved, but all too
often a trustee has guided the school into such arrangements.
Stanford University paid more than
$2 million in legal fees to a firm headed by a Stanford trustee,
The San Francisco Chronicle reported. While Stanford defended
the arrangement and it is not illegal, it is the type of
apparent conflict of interest that for-profit companies
increasingly try to avoid, the newspaper reported.
Inside Higher Ed, July 3, 2006 ---
http://www.insidehighered.com/news/2006/07/03/qt
Bob Jensen's threads on controversies in higher education are at
http://www.trinity.edu/rjensen/HigherEdControversies.htm
"Simply Disclosing Funds Behind Studies May Not Erase Bias," by
Shirley S. Wang, The Wall Street Journal, August 4, 2006; Page
A11---
http://online.wsj.com/article/science_journal.html
Think you can't be
bought for the price of a pen? Neither do most people. But
we can be notoriously poor at judging ourselves, and our
honesty, psychologists say.
For example,
biomedical researchers reprimanded for failing to disclose
financial ties to companies whose drugs or medical devices
they study seem baffled over what they did wrong.
In the past few
weeks, several top journals have published corrections
noting that authors of papers failed to reveal they had
served as paid consultants or speakers for companies whose
products they studied, often receiving thousands of dollars.
Such conflicts of interest are emerging as a major concern
in research.
Studies show that
even small gifts create feelings of obligation, and that
those feelings can influence subsequent decisions, so why do
many researchers feel they're immune to conflicts of
interest?
Just as we fool
ourselves into thinking we're more ethical, kind and
generous than we are, so scientists can be blind to the very
real possibility that their work is inappropriately
influenced by financial ties. These psychological processes
usually operate so subtly that people aren't aware that such
ties can bias their judgment.
Receiving gifts and
money creates the desire, often unconscious, to give
something back, says Max Bazerman of Harvard Business
School. Even small gifts can have an influence. Charities
that send out free address labels, for example, get more in
donations than those that don't. Customers who are given a
50-cent key chain at a pharmacy spend substantially more in
the store.
Conflicts can be hard
to recognize, because "cognitive bias" comes into play. "The
mind has an enormous ability to see the world as we want,"
says Dr. Bazerman.
We are more likely to
scrutinize information when it's inconsistent with how we
want to see things, something psychologists call motivated
skepticism. If a study about an anticipated new drug is
sponsored by the manufacturer, "we don't kick into a higher
gear of criticism," says psychologist David Dunning of
Cornell University. "We just accept the findings" if they
are positive, without digging too hard for possible flaws in
methodology or statistics.
Studies of
psychiatric drugs by researchers with a financial conflict
of interest -- receiving speaking fees, owning stock, or
being employed by the manufacturer -- are nearly five times
as likely to find benefits in taking the drugs as studies by
researchers who don't receive money from the industry,
according to a review of 162 studies published last year in
the American Journal of Psychiatry. Studies that the
industry funded, but in which the researchers had no other
financial ties, didn't have significantly different results
than nonindustry-funded studies.
Studies can be
designed in ways that boost the likelihood that results will
come out a certain way, says Lisa Bero of the University of
California, San Francisco. A new treatment can be compared
with a placebo, instead of with a treatment already in use,
making finding a significant statistical difference between
the two more likely. Dosage and timing of medications, which
make a big difference in their effectiveness and side
effects, can also be manipulated, she says.
While studies in
reputable journals are reviewed by experts in the field
prior to publication, data require interpretation, which
opens the door to subjectivity. If the numbers don't show an
overall benefit of a drug, for instance, scientists with
financial ties to the company might dig deeper to find one,
perhaps to one small group, say, white women over 50 years
of age.
Because it's rare for
studies to show that one variable clearly causes an outcome,
there's always room for doubt. Conflicted individuals, says
Prof. Bazerman, "continue to have doubts long after
objective observers are convinced by the evidence," as when
some tobacco executives refused to admit that smoking is
related to risk of cancer.
But simply disclosing
financial ties, as many journals require of authors, may not
help. In fact, it may make things worse. For one thing,
readers don't know how much, if at all, a conflict has
skewed the reported results.
In a 2005 experiment
done by Harvard's Daylian Cain and colleagues, volunteers
were given advice about how much money was in a jar of
coins. In some cases, the advisers were unconflicted, and
the volunteers used the advice to make good guesses about
the coins (which they saw only fleetingly and from a
distance). In other cases, the advisers had a monetary
incentive to overestimate the value of the coins. The
volunteers knew this, and adjusted the advice downward. But
they didn't adjust enough, and overestimated the value.
Disclosure poses
another problem: It may unconsciously tempt researchers to
exaggerate their findings or put an even more pro-company
spin on their data to counteract the expected reader
skepticism. "If disclosure encourages you to cover your
ears, it makes me shout louder," Dr. Cain says.
Bob Jensen's threads on "Appearance Versus the Reality of
Research Independence and Freedom"---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#ResearchIndependence
Federal Trade Commission (Then and Now)
---
http://www.ftc.gov/index.html
EthicsPoint whistleblowing options for
employees, customers, and vendors ---
http://www.ethicspoint.com/en/default.asp
Thomas Neches & Company Links to Useful
Websites ---
http://www.thomasneches.com/links.htm
How to Fight Global Crime and Corruption
Transparency International (News, Tools, etc.) ---
http://www.transparency.org/
Bob Jensen's updates on fraud are at
http://www.trinity.edu/rjensen/FraudUpdates.htm
Read the Fine Print in Your Life Insurance Policy and Its
Amendments
Many life insurers, including
Allstate Corp., AXA Equitable Life Insurance Co., Fidelity
Investments, Lincoln Financial Group, MetLife Inc., New York
Life Insurance Co. and Prudential Financial Inc., use customers'
overseas-travel plans as a factor in making underwriting
decisions, and some may deny a policy or increase premiums to
customers going to countries deemed dangerous. Some companies
even deny coverage based on previous travel to a dangerous
region. The countries that trigger denials are often on the
State Department's travel warning list, which includes popular
destinations such as Israel, Indonesia and Kenya.
Rachel Emma Silverman, "Life Insurers Face Backlash Over Policy
on Foreign Travel: New Laws Curb Practice Of Denying Coverage
to People Who Visit Certain Countries," The Wall Street
Journal, May 4, 2006; Page D1 ---
http://online.wsj.com/article/SB114670871469043437.html?mod=todays_us_nonsub_pj
How to find people, places, and databases (for reporting
frauds) ---
http://www.melissadata.com/Lookups/
Internet Fraud ---
http://www.fraud.org/internet/intset.htm
Consumer Ripoffs ---
http://www.ripoffreport.com/
HowToComplain.com ---
http://www.howtocomplain.com/
Purportedly (no guarantees) these are ways to to straight to
humans in place of threading through computer voices on
telephones
GetHuman ---
http://gethuman.com/us/
Lemon Law America (Federal and State) ---
http://www.lemonlawamerica.com/
(Choose Where You Live)
Complaints.com ---
http://www.complaints.com/
Consumer Reports (not free) ---
http://www.consumerwebwatch.org/
Consumer World (a great resource site) ---
http://www.consumerworld.org/
Consumer Review ---
http://www.consumerreview.com/channels/consumerreview/data/main/index.html
FirstGov for Consumers ---
http://www.consumer.gov/
Federal Trade Commission ---
http://www.ftc.gov/
TOP TEN RETAIL RIPOFFS EXPOSED ---
http://www.trampolinesales.com/ripoffs.htm
DMA Consumer Assistance ---
http://www.dmaconsumers.org/
Clever Idea: New ShopSmart from Consumer Reports
"Getting Sales Advice From Your Cellphone: New Service
Offers Ratings By 'Consumer Reports'; Categories Are Limited,"
by Walter S. Mossberg, The Wall Street Journal, December
14, 2005; Page D14 ---
http://online.wsj.com/article/SB113452481752621918.html?mod=todays_us_personal_journal
At one time or another, all of us
have been handed a Christmas or birthday gift list that
includes seemingly simple items such as "coffee maker,"
"luggage," or the most dreaded item of all, "TV." But
choosing the right one is no easy task. Once you're actually
in the store, surrounded by options, it's easy to buy the
worst brand of coffee maker, or the luggage that is infamous
for wearing out too soon, or the overly expensive television
set.
Wouldn't it be easier if you had
some independent help, right there in the store, to make the
best choice and resist the often bad information provided by
salespeople?
Consumer Reports certainly thinks
so. This week, it introduced a cellphone application,
ShopSmart, that allows you to carry the magazine's famous
product comparisons and ratings with you while shopping,
right on your mobile phone. Available for Verizon Wireless
and Sprint Nextel customers just in time for the holiday
shopping season, this new service costs $3.99 a month.
Cingular will start carrying ShopSmart next month.
The idea is that, while you're in a
store, dazed by a row of similar-looking products like
digital cameras, you can just whip out your cellphone,
launch ShopSmart, and see which camera Consumer Reports
recommends, or how it rates the particular camera you're
holding.
We love and trust Consumer Reports,
which runs a very successful and useful paid Web site in
addition to its legendary print magazine. But we were
dubious. How well would a cellphone handle such an
application? Would it be easy for last-minute shoppers to
rapidly receive, read and use the data provided by
ShopSmart? So, we tested this new application using a
Verizon LG VX8100 cellphone -- a newer phone that runs on
Verizon's ultrafast EV-DO network, which downloads data at
about the speed of a low-end home DSL connection.
(Consumer Reports has a
content-sharing relationship with The Wall Street Journal
Online.)
Overall, we were impressed by
ShopSmart's straightforward and easy-to-use approach. Each
screen was simple to read at a glance, and browsing from one
screen to the next took just a couple of seconds. We
especially liked the program's ability to add certain
products to a "Favorites" list, for accessing later, and a
feature that lets you email the ShopSmart data to yourself,
or anyone else, for later perusal.
There are a couple of downsides.
For now, ShopSmart covers only three categories of products
-- electronics, appliances, and home and garden. It omits
important categories Consumer Reports covers in print and
online, including cars, personal finance, food and travel.
So it won't help you to buy that luggage, even though the
magazine reviewed it. And people who already subscribe to
the magazine and/or the Web site don't get it free. Like
everyone else, they have to pay the $3.99 monthly fee.
Also, while performance was very
good on our test phone running on the fast EV-DO network,
the product-information downloads would be much, much slower
at the typical network speeds most people use.
The program is updated weekly. It
uses Yahoo Shopping to provide up-to-date price ranges for
each product, listing prices from online stores as well as
retail chains, so you can find where each product is sold
for the lowest cost.
After downloading ShopSmart through
your phone carrier's built-in online store -- our phone used
Verizon's Get It Now -- it can be opened by pressing just a
few keys. This might be particularly useful for shoppers who
use this program only once in a while, so they don't easily
forget how to get started.
To make the best use of the phone's
small display, ShopSmart is simply organized into different
sections using five tabs labeled Ratings, Search, Favorites,
Articles and About. The products themselves are divided into
three main categories: Appliances, Electronics, and Home and
Garden. Product types are listed alphabetically within each
category, 10 per screen. Under the Search tab, we found that
the Appliances category included 20 different types,
starting with air conditioners and ending with washing
machines, including coffee makers and gas ranges along the
way.
Continued in article
Help for victims of investment fraud ---
http://www.helpforinvestors.org/
Think you're a victim of investment
fraud? Want to check out your financial adviser? Need to report
identity theft? A new streamlined Web site from the Alliance for
Investor Education,
www.helpforinvestors.org,
provides direct links to the right government agencies,
regulators, and trade groups.
Lauren Young, "A Tool for Investors in Distress: The new Web
site from the Alliance for Investor Education offers lots of
help, including for those who may have been duped," Business
Week, June 15, 2005 ---
http://www.businessweek.com/bwdaily/dnflash/jun2005/nf20050615_4371_db035.htm?chan=tc
"Internet Con Artists Turn to 'Vishing'," PhysOrg,
July 13, 2006 ---
http://physorg.com/news71990250.html
Internet con artists are turning to
an old tool - the phone - to keep tricking Web users who
have learned not to click on links in unsolicited e-mails.
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A batch of e-mails recently making
the rounds were crafted to appear as if they came from
PayPal, eBay Inc.'s online payment service. Like traditional
phony "phishing" e-mails, these said there was some problem
with the recipients' accounts.
Phishing e-mails generally instruct
recipients to click a link in the e-mail to confirm their
personal information; the link actually connects to a bogus
site where the data are stolen.
But with Internet users wiser about
phishing, the new fake PayPal e-mail included no such link.
Instead it told users to call a number, where an automated
answering service asked for account information.
Security experts tracking this scam
and other instances of "vishing" - short for "voice phishing"
- say the frauds are particularly nefarious because they
mimic the legitimate ways people interact with financial
institutions.
In fact, some vishing attacks don't
begin with an e-mail. Some come as calls out of the blue in
which the caller already knows the recipient's credit card
number - increasing the perception of legitimacy - and asks
just for the valuable three-digit security code on the back
of the card.
"It is becoming more difficult to
distinguish phishing attempts from actual attempts to
contact customers," said Ron O'Brien, a security analyst
with Sophos PLC.
Vishing appears to be flourishing
with the help of Voice over Internet Protocol, or VoIP, the
technology that enables cheap and anonymous Internet
calling, as well as the ease with which caller ID boxes can
be tricked into displaying erroneous information.
The upshot: "If you get a telephone
call where someone is asking you to provide or confirm any
of your personal information, immediately hang up and call
your financial institution with the number on the back of
the card," said Paul Henry, a vice president with Secure
Computing Corp. "If it was a real issue, they can address
the issue."
Continued in article
"IRS Warns Phishing Scams Increasing," AccountingWeb,
July 12, 2006 ---
http://www.accountingweb.com/cgi-bin/item.cgi?id=102335
The Internal Revenue Service (IRS)
is reminding taxpayers to be on the lookout for bogus
e-mails claiming to be from the tax agency, on the heels of
a recent increase in scam e-mails.
In recent weeks the IRS has
experienced an increase in complaints about e-mails designed
to trick the recipients into disclosing personal and
financial information that could be used to steal the
recipient’s identity and financial assets. Since November,
99 different scams have been identified. Twenty of those
were identified in June, the highest number since the height
of the filing season when 40 were identified in March.
“The IRS does not send out
unsolicited e-mails asking for personal information,” IRS
Commissioner Mark W. Everson, said in a prepared statement.
“Don’t be taken in by these criminals.”
The current scams claim to come
from theirs, tell recipients that they are due a federal tax
refund, and direct them to a web site that appears to be a
genuine IRS site. The bogus sites contain forms or
interactive web pages similar to the IRS forms or Web pages
but which have been modified to request detailed personal
and financial information from the e-mail recipients. In
addition, e-mail addresses ending with “.edu” – involving
users in the education community – currently seem to be
heavily targeted.
Many of the current schemes
originate outside the United States. To date, investigations
by the Treasury Inspector General for Tax Administration
have identified sites hosting more than two dozen
IRS-related phishing scams. These scam Web sites have been
located in many different countries, including Argentina,
Aruba, Australia, Austria, Canada, Chile, China, England,
Germany, Indonesia, Italy, Japan, Korea, Malaysia, Mexico,
Poland, Singapore and Slovakia, as well as the United
States.
Tricking consumers into disclosing
their personal and financial information, such as secret
access data or credit card or bank account numbers, is
fraudulent activity which can result in identity theft. Such
schemes perpetrated through the Internet are called
“phishing” for information.
The information fraudulently
obtained is them used to steal the taxpayer’s identity and
financial assets. Typically, identity thieves use someone’s
personal data to empty the victim’s financial accounts, run
up charges on the victim’s existing credit cards, apply for
new loans, credit cards, services or benefits in the
victim’s name and even file fraudulent tax returns.
When the IRS learns of new schemes
involving use of the IRS name or logo, it issues consumer
alerts warning taxpayers about the schemes.
The IRS also has established an
electronic mailbox for taxpayers to send information about
suspicious e-mails they receive which claim to come from the
IRS. Taxpayers should send the information to phishing@irs.gov.
Instructions on how to properly submit possibly fraudulent
e-mails to the IRS may be found on the IRS web site at
www.irs.gov. This mailbox is only for suspicious e-mails,
not general taxpayer inquiries.
More than 7,000 bogus e-mails have
been forwarded to the IRS, with nearly 1,300 forwarded in
June alone. Due to the volume or e-mails the mailbox
receives, the IRS cannot acknowledge receipt or reply to
taxpayers who submit possibly bogus e-mails.
Bob Jensen's threads on "Phishing , Pharming, Vishing,
Slurping, and Spoofing" are at
http://www.trinity.edu/rjensen/ecommerce/000start.htm#Phishing
Kim
Zetter. "ID Theft: What You Need to Know," Wired News, June 29,
2005 ---
http://www.wired.com/news/privacy/0,1848,68032,00.html?tw=wn_tophead_8
What
should I do if my wallet or purse is
lost or stolen?
Immediately
contact all three credit reporting
agencies -- Equifax, Experian and
TransUnion -- and have them place a
fraud alert on your account. This means
that companies issuing new credit
accounts in your name will have to call
you to obtain permission first. The
alert will last for 90 days only. You
can extend the alert to seven years, but
only if you've been a victim of identity
theft and can provide a police report.
Equifax:
1.800.525.6285
Experian:
1.888.397.3742
TransUnion:
1.800.680.7289
In addition to
contacting the credit reporting
agencies, you should file a police
report if your property was stolen.
Close any accounts that you think may
have been compromised by the loss or
theft. The FTC provides
more information
and a chart to
tick off steps you should take.
What
can I do to prevent myself from becoming
a victim?
There isn't
really anything you can do to prevent
identity theft. As long as Social
Security numbers are used for purposes
other than Social Security, you are at
risk of having your identity stolen any
time someone has access to documents
that carry your number and other
personal data. There are, however,
things you can do to lower your risk of
becoming a victim.
- Review
monthly financial statements
carefully for fraudulent activity.
- Request a
free copy of your credit report from
a credit-reporting agency once a
year to examine it for fraudulent
activity. A new law requiring credit
reporting agencies to provide a free
annual report goes into effect
nationwide in September. Until then,
it's in effect only in western and
Midwestern states. The credit report
will show who requested access to
your credit record. Look for
requests from companies you haven't
done business with and tell
credit-reporting agencies if you see
credit accounts that you didn't open
or debts you didn't incur. Check to
see that your name and address are
correct.
- Don't give
your Social Security number to any
business that doesn't really need
it.
- Cross
shred sensitive documents. Thieves
have been known to piece together
strips of paper that are shredded
only once. Cross-shredders
double-shred documents.
- Shred
pre-approved credit-card offers
before tossing them in the garbage.
- Don't
store sensitive personal
information, such as bank account
numbers and passwords, on home
computers or handheld devices.
- Install a
firewall and anti-virus software on
your computer and keep the virus
definitions up to date to prevent
viruses and Trojan horses from
infecting your computer and feeding
personal information back to
hackers.
- Don't fall
for phishing scams. Phishing occurs
when someone sends you an e-mail
purporting to be from your bank or
other company you do business with
and requesting you to update your
account information.
- Use
specially designed software programs
to clean data from your computer
before you sell or discard it.
Simply deleting files will not
remove data from the memory.
- Don't
carry any documents in your wallet
that have your Social Security
number on them, including your
medical card or military ID, on days
when you don't need the card.
- Opt-out
when your bank or other financial
institution requests permission to
share information about you with
other businesses.
- Close all
credit-card accounts except the one
or two that you really need.
- If you are
an identity theft victim and live in
one of ten states, including
California, Colorado, Louisiana,
Maine, Texas, Vermont or Washington,
consider placing a "freeze" on your
credit report so that no one can
access it without your permission.
More than 20 additional states are
considering passing similar
legislation. Creditors need to look
at your report before granting you
credit. By freezing your report, it
will prevent unauthorized people
from seeing your personal data and
it will prevent creditors from
opening a new credit account in your
name for an impostor. Some states
only let victims of identity theft
freeze their records. Other states
allow anyone to freeze their record.
The State Public Interest Research
Groups maintains
a list of
states with freeze laws.
Bob Jensen's
helpers on identity theft ---
http://www.trinity.edu/rjensen/FraudReporting.htm#IdentityTheft
Bob Jensen's
threads on computing and network security ---
http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection
What to know and do when you suspect
fraud ---
http://www.aicpa.org/pubs/jofa/jun2005/wells.htm
Association of Certified Fraud Examiners ---
http://www.acfe.com/home.asp
PricewaterhouseCoopers - Global Economic Crime Survey 2003
---
http://www.acfe.com/documents/2003_PwC_CrimeReport.pdf
FraudNet the Government Accountability Office (GAO) ---
http://www.gao.gov/fraudnet/fraudnet.htm
The Institute of Internal Auditors ---
http://www.theiia.org/
Information Systems Audit and Control Association ---
http://www.isaca.org/
AICPA's Business Valuation and Forensic & Litigation Services
Center (not free to the public) ---
http://bvfls.aicpa.org/
Fraud Position Statement of the Institute of Internal
Auditors of the UK and Ireland ---
http://www.blindtiger.co.uk/IIA/uploads/48dc2e62-f2a7bd939a--7c26/2003FraudPositionStatement.pdf
I snipped this link to
http://snipurl.com/IIAFraudStatementUK
The
Fraud Detectives Consultant Network ---
http://www.frauddetectives.com/
This is a helpful site, although I might add that accountants,
attorneys, and others can list themselves free at this site with
no filtering with regard to skills and experience.
February 18, 2005 message from Joanne Tweed
[ibridges@san.rr.com]
America's seniors are being cheated
of their life's savings by securities Broker/Dealers.
SENIORS AGAINST SECURITIES FRAUD
http://seniorsagainstsecuritiesfraud.com offers
supportive educational links and solutions. Please consider
linking.
Most Sincerely,
Joanne Tweed
Occupational Fraud Report
In 2003, occupational fraud is
estimated at $660 billion.
2004 Report
to the Nation on Occupational Fraud and Abuse, The
Association of Certified Fraud Examiners ---
http://www.cfenet.com/resources/rttn.asp
|
Occupational fraud and abuse is a widespread
problem that affects every entity, regardless of
size, location or industry. The ACFE has made it
a goal to better educate the public and
anti-fraud professionals about this threat.
The 2004 Report to the Nation is based on
a survey that began in late 2003 and ran through
the early months of 2004. Certified Fraud
Examiners throughout the US were asked to
provide detailed information on one fraud case
he or she had personally investigated that met
the following criteria:
-
The case involved occupational fraud;
-
The fraud occurred within the last two
years;
-
The investigation of the fraud was complete;
and
-
The CFE was reasonably sure that the
perpetrator had been identified.
|
The end result is a comprehensive report that sheds
light on occupational fraud and abuse while offering
stark lessons and valuable insights about its prevention
and detection.
Download the 2004 Report to the Nation
* (564 kb)
Order a printed copy of the 2004 Report to the Nation
Download the 2002 Report to the Nation
* (857 kb)
Download the 1996 Report to the Nation
* (235 kb)
The Museum of Hoaxes
http://www.museumofhoaxes.com/
Academic fraud and plagiarism threads are at
http://www.trinity.edu/rjensen/plagiarism.htm
How Technology Can Reduce Fraud
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
Bob Jensen's Other Documents On Fraud
Important Links for Reporting
Frauds and Important Things to Know
in Avoiding Fraud (including ID theft)
Purportedly (no guarantees) these are ways to to straight to
humans in place of threading through computer voices on
telephones
GetHuman ---
http://gethuman.com/us/
FTC helpers if suspect someone else has
become you ---
http://www.ftc.gov/bcp/conline/pubs/credit/idtsummary.pdf
FTC helpers in getting your credit report
and FICO score ---
http://www.ftc.gov/bcp/conline/edcams/credit/index.html
FTC consumer warnings ---
http://www.ftc.gov/ftc/consumer.htm
U.S. Consumer Product Safety Commission
---
http://www.cpsc.gov/
Lemon Law America (Federal and State) ---
http://www.lemonlawamerica.com/
TOP TEN RETAIL RIPOFFS EXPOSED ---
http://www.trampolinesales.com/ripoffs.htm
Fraudulent (Supposed) Publishers (especially targeting
poets) ---
http://www.foetry.com/
A government Website on
Cybercrime ---
http://www.usdoj.gov/criminal/cybercrime/
Bob Jensen's threads on computing and networking security are at
http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection
Consumer Reports Web Watch ---
http://www.consumerwebwatch.org/for-consumers.cfm
Question
What should you do if you think you're a possible victim of ID
theft?
Answer
There are a number of things to do, especially the following:
Fill out an identity theft report with your local, state or
federal law enforcement agency. It's unclear if the mere loss or
theft of personal information constitutes identity theft, but
filing a report may offer additional protections. The FTC makes
an affidavit available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf
"Tips for Preventing or Catching Identity Theft: Contacting
one of three credit reporting agencies is the key to monitoring
possible fraud," MIT's Technology Review, May 24, 2006
---
http://www.technologyreview.com/read_article.aspx?id=16923
Consumer advocates have some advice
for the 26.5 million veterans whose personal information was
stolen from the home of a Veterans Affairs employee: Don't
panic.
Identity theft may be a growing
problem that affected 9.3 million Americans last year,
according to Javelin Strategy and Research. But consumer
advocates say a few precautions can lessen the chances of
becoming a victim, even for people whose personal
information has been stolen.
The first thing to do if you think
your Social Security number, birth date or other sensitive
data has fallen into the wrong hands is to place an initial
fraud alert on your credit reports. There are three major
credit reporting agencies, but a call to one -- for
instance, Equifax at 800-525-6285 -- will ensure the other
two are notified.
A fraud alert entitles you to a
free copy of your credit report from each of the three
companies. Order one from each and scrutinize them carefully
for accounts you didn't open or debts you don't recognize.
Also, make sure that information such as your Social
Security number and employer are correct on each report.
If you discover accounts or
transactions you didn't authorize, call and speak with
someone in the fraud department of each company involved.
Keep a log of each person contacted, along with the date,
time and topics discussed on each call.
An initial fraud alert also
requires businesses to take additional steps to confirm your
identity before issuing loans or opening accounts in your
name. Be prepared for loan and credit card applications to
take slightly longer to be processed.
It's important to understand that
an initial fraud alert, as the name implies, is only a
temporary fix. That's because it remains in effect for only
90 days. To prevent becoming a victim after the three months
are up, you'll need to take additional steps.
Next, fill out an identity theft
report with your local, state or federal law enforcement
agency. It's unclear if the mere loss or theft of personal
information constitutes identity theft, but filing a report
may offer additional protections. The FTC makes an affidavit
available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf
Ask each of the three credit
reporting companies to place a freeze or extended alert on
your account. Seventeen states have enacted laws that
require the reporting companies to block access to your
files in most instances. Check with the Consumers Union Web
site or attorney general in your state to see if this is
available where you live.
Even if your state doesn't offer
this protection, ask Equifax, TransUnion and Experian to
give you an extended alert anyway. This option will entitle
you to two free credit reports per year, and it will also
require the credit reporting companies to remove you from
lists marketers use to send prescreened credit offers for
five years.
To qualify for an extended alert,
the reporting companies will require you to prove you've
been the victim of identity theft, even though it is not
always clear how the law defines a victim in this case. Be
sure to include the FTC affidavit or other law enforcement
report you filed. It is legal documentation that your
personal identification has been stolen.
Finally, recognize that
safeguarding your privacy is a never-ending task, even for
people who have no reason to believe their personal
information has been stolen. A little education and
prevention, say consumer advocates, can go a long way.
''You need an ongoing vigilance,''
says Paul Stephens, a policy analyst with the Privacy Rights
Clearinghouse in San Diego. ''We want people to be
proactive, to be vigilant, but we also don't want to have
people panicking.''
On the Net:
http://www.ftc.gov/bcp/conline/pubs/credit/idtheft.htm
http://privacyrights.org
http://www.consumersunion.org/creditmatters/creditmatterslearnmore/002583.html
Also see
Identity (ID) Theft Prevention and Reporting
One link is to a listing of where you can file Internet
complaints ---
http://www.consumerwebwatch.org/consumer-center.cfm
Organizations and government agencies featured in this
section are listed alphabetically.
Better Business Bureau Online
The Better Business Bureau Online, the electronic arm of the
Better Business Bureau, offers consumers the opportunity to
file a complaint against e-commerce sites as well as offline
businesses. The Better Business Bureau was founded in 1912
and seeks to create a more fair marketplace through consumer
education and voluntary self-regulation on the part of
companies.
http://www.bbbonline.org/consumer/complaint.asp
Consumer Sentinel
Consumer Sentinel is a complaint database designed to
provide law enforcement agencies with information on
Internet cons, telemarketing scams and other consumer
fraud-related complaints. The database, which is maintained
by the Federal Trade Commission, is available to 40 federal
law enforcement organizations, more than 200 state and local
fraud-fighting agencies, and every state attorney general in
the United States. You may register a complaint
here.
http://www.consumer.gov/sentinel/index.html
econsumer.gov
This international site, launched by a coalition of 13
nations, registers cross-border e-commerce complaints and
offers tips for safe shopping online. It utilizes the
Consumer Sentinel's network of Internet fraud complaint data
and shares it in several languages with consumer protection
law enforcers in countries that belong to the International
Marketing Supervision Network.
http://www.econsumer.gov
Internet Fraud Complaint Center
The Internet Fraud Complaint Center enables consumers to log
online fraud complaints. The center is the result of a
partnership between the FBI and the National White Collar
Crime Center (NW3C), a nationwide support network for
enforcement agencies involved in the prevention,
investigation, and prosecution of economic and high-tech
crime. NW3C is funded through a grant from the Bureau of
Justice Assistance, Office of Justice Programs, and the U.S.
Department of Justice.
http://www1.ifccfbi.gov/index.asp
National Fraud Information Center
The National Fraud Information Center (NFIC) was established
in 1992 by the National Consumers League and continues to be
funded by the organization. NFIC offers an online form for
consumers who are interested in registering an Internet
fraud complaint.
http://www.fraud.org/
State Attorneys General
Contact your state attorney general if you feel you have
been a victim of consumer fraud on the Web. Consult
individual state sites for telephone or electronic contact
information for filing complaints. U.S. Securities and
Exchange Commission The U.S. Securities and Exchange
Commission offers tips on avoiding Internet fraud when
investing, and a mechanism to register Internet fraud or
spam complaints for investigation.
http://www.naag.org/ag/full_ag_table.php
U.S. Securities and Exchange
Commission
The U.S. Securities and Exchange Commission offers tips on
avoiding Internet fraud when investing, and a mechanism to
register Internet fraud or spam complaints for
investigation.
http://www.sec.gov/complaint.shtml
Corporate Fraud Reporting
Association of Certified Fraud Examiners ---
http://www.acfe.com/home.asp
In particular note the Code of Business Ethics and Conduct ---
http://www.acfe.com/documents/code_of_business_ethics.pdf
Fraud Resources Center ---
http://www.acfe.com/fraud/fraud.asp
Fraud Prevention Check-Up ---
http://www.acfe.com/fraud/check.asp
Fraud Prevention CD-ROM ---
http://www.acfe.com/fraud/cd.asp
How to Prevent Small Business Fraud ---
http://www.acfe.com/documents/smallbusinessfraudexcerpt.pdf
Other Downloads ---
http://www.acfe.com/fraud/downloads.asp
Also note the explosion of salaries of Certified Fraud Examiners
---
http://www.acfe.com/documents/2005comp-guide.pdf
PricewaterhouseCoopers - Global Economic Crime Survey 2003
---
http://www.acfe.com/documents/2003_PwC_CrimeReport.pdf
FraudNetrom the Government Accountability Office (GAO) ---
http://www.gao.gov/fraudnet/fraudnet.htm
The Institute of Internal Auditors ---
http://www.theiia.org/
AICPA's Business Valuation and Forensic & Litigation Services
Center (not free to the public) ---
http://bvfls.aicpa.org/
Fraud Position Statement of the Institute of Internal
Auditors of the UK and Ireland ---
http://www.blindtiger.co.uk/IIA/uploads/48dc2e62-f2a7bd939a--7c26/2003FraudPositionStatement.pdf
I snipped this link to
http://snipurl.com/IIAFraudStatementUK
The
Fraud Detectives Consultant Network ---
http://www.frauddetectives.com/
This is a helpful site, although I might add that accountants,
attorneys, and others can list themselves free at this site with
no filtering with regard to skills and experience.
February 18, 2005 message from Joanne Tweed
[ibridges@san.rr.com]
America's seniors are being cheated
of their life's savings by securities Broker/Dealers.
SENIORS AGAINST SECURITIES FRAUD
http://seniorsagainstsecuritiesfraud.com offers
supportive educational links and solutions. Please consider
linking.
Most Sincerely,
Joanne Tweed
Association of Certified Fraud Examiners ---
http://www.acfe.com/home.asp
In particular note the Code of Business Ethics and Conduct ---
http://www.acfe.com/documents/code_of_business_ethics.pdf
Fraud Resources Center ---
http://www.acfe.com/fraud/fraud.asp
Fraud Prevention Check-Up ---
http://www.acfe.com/fraud/check.asp
Fraud Prevention CD-ROM ---
http://www.acfe.com/fraud/cd.asp
How to Prevent Small Business Fraud ---
http://www.acfe.com/documents/smallbusinessfraudexcerpt.pdf
Other Downloads ---
http://www.acfe.com/fraud/downloads.asp
Also note the explosion of salaries of Certified Fraud Examiners
---
http://www.acfe.com/documents/2005comp-guide.pdf
PricewaterhouseCoopers - Global Economic Crime Survey 2003
---
http://www.acfe.com/documents/2003_PwC_CrimeReport.pdf
The Institute of Internal Auditors ---
http://www.theiia.org/
AICPA's Business Valuation and Forensic & Litigation Services
Center (not free to the public) ---
http://bvfls.aicpa.org/
Fraud Position Statement of the Institute of Internal
Auditors of the UK and Ireland ---
http://www.blindtiger.co.uk/IIA/uploads/48dc2e62-f2a7bd939a--7c26/2003FraudPositionStatement.pdf
I snipped this link to
http://snipurl.com/IIAFraudStatementUK
From the Government Accountability Office (GAO)
---
http://www.gao.gov/fraudnet/fraudnet.htm
FraudNET
The purpose of the Government
Accountability Office's
FraudNET is to facilitate the reporting of allegations
of fraud, waste, abuse, or mismanagement of federal funds.
If you want to report such
allegations, you may do so by filling out a
FraudNET Form or by using one of these other methods:
- Send allegations via e-mail to
fraudnet@gao.gov
- Send a fax to FraudNet at
202-512-3086
- Write to:
GAO FraudNET
441 G Street NW
Washington, D.C. 20548
A
FraudNET Form requires a web browser that supports
forms, HTML 3.0 tables and 128 bit encryption.
In all cases, please provide as
much detail as possible concerning the who, when, where,
what, how and how much. You do not need to provide your
name. The information you submit will be entered over a
secure connection. All information submitted is safeguarded
against unauthorized disclosure.
Free Corporate Fraud Hotline Initiated February
2003: 888-622-0117
-
2,000 calls logged within eight months.
-
Callers can be anonymous
-
Several new cases opened based on caller
information
-
Several existing cases were enhanced
-
Public cooperation is essential
The
Fraud Detectives Consultant Network ---
http://www.frauddetectives.com/
Welcome to the
Forensic Group LLC, host of the FraudDETECTIVES
Consultant Network, the premier Web source for locating
leading Forensic CPAs, Certified Fraud Examiners, Certified
Turnaround Professionals, Crisis Managers, Litigation
Specialists, and Bankruptcy Professionals.
Fraud Tips
Free Fraud Advice from the
experts.
Fraud
Tales
Forensic accounting true Tales:
"Back to Basics"
"The Case of the Shrinking Margins".
What Is
Fraud?
Do you realize how much fraud
costs organizations annually? Read
What Every CEO Should Know about fraud.
KnowFRAUD?
Take
A Short Quiz just for fun
to test your knowledge of fraud.
Comment from Bob Jensen
This is a helpful
site, although I might add that accountants, attorneys, and
others can list themselves free at this site with no filtering
with regard to skills and experience.
Title Washing: How Car Titles Get Laundered
Unsuspectingly you may be purchasing a car that was flooded
during a hurricane
Thousands of vehicles that sat in
the murky waters left by hurricanes Katrina and Rita are
starting to show up on the used-car market. Most states require
that flooded cars be labeled as such on the title. But scam
artists have found loopholes in the system. They re-register
cars in states with looser title laws -- sometimes two or three
states -- until the warning that the car was flooded is gone.
This fraudulent practice is known as "title washing."
Jeff Brady, "Holes in Monitoring System Let Lemons Get Resold,"
NPR, January 31, 2006 ---
http://www.npr.org/templates/story/story.php?storyId=5173717
Bob Jensen's fraud updates are at
http://www.trinity.edu/rjensen/FraudUpdates.htm
"Identity Theft, Net Scams Rose in '04-FTC ," Reuters, The
Washington Post, February 1, 2005 ---
http://www.washingtonpost.com/wp-dyn/articles/A54010-2005Feb1.html?nav=headlines
Americans lost at least $548
million to identity theft and consumer fraud last year as
the Internet provided new victims for age-old scams,
according to government statistics released Tuesday.
The U.S. Federal Trade Commission
said it received 635,000 consumer complaints in 2004 as
criminals sold nonexistent products through online auction
sites like eBay Inc. or went shopping with stolen credit
cards
Identity theft -- the practice of
running up bills or committing crimes in someone else's name
-- topped the list with 247,000 complaints, up 15 percent
from the previous year.
Fraud and identity theft cost
consumers at least $437 million in 2003.
Internet-related fraud accounted
for more than half of the remaining complaints as scammers
found victims through Web sites or unsolicited e-mail, the
FTC said.
Auction fraud was the most common
Internet scam, the FTC said in its annual fraud report,
followed by complaints about online shopping and Internet
access service.
The number of incidents was up
across nearly every category from 2003, but it was unclear
whether that represented an actual increase in fraud or
simply a greater awareness of the FTC's Consumer Sentinel
fraud program.
Consumers likely lost significantly
more than the amount reported, as fewer than half were able
to pin a dollar figure on their losses.
The median monetary loss reported
was $259, though 41 consumers reported losses of $1 million
or more.
The FTC did not specify how many
identity-theft incidents took place online. A recent report
by the Better Business Bureau found that most cases of
identity theft occurred through the theft of a checkbook or
other offline methods.
Question
What should you do if you think you're a possible victim of ID
theft?
Answer
There are a number of things to do, especially the following:
Fill out an identity theft report with your local, state or
federal law enforcement agency. It's unclear if the mere loss or
theft of personal information constitutes identity theft, but
filing a report may offer additional protections. The FTC makes
an affidavit available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf
"Tips for Preventing or Catching Identity Theft: Contacting
one of three credit reporting agencies is the key to monitoring
possible fraud," MIT's Technology Review, May 24, 2006
---
http://www.technologyreview.com/read_article.aspx?id=16923
Consumer advocates have some advice
for the 26.5 million veterans whose personal information was
stolen from the home of a Veterans Affairs employee: Don't
panic.
Identity theft may be a growing
problem that affected 9.3 million Americans last year,
according to Javelin Strategy and Research. But consumer
advocates say a few precautions can lessen the chances of
becoming a victim, even for people whose personal
information has been stolen.
The first thing to do if you think
your Social Security number, birth date or other sensitive
data has fallen into the wrong hands is to place an initial
fraud alert on your credit reports. There are three major
credit reporting agencies, but a call to one -- for
instance, Equifax at 800-525-6285 -- will ensure the other
two are notified.
A fraud alert entitles you to a
free copy of your credit report from each of the three
companies. Order one from each and scrutinize them carefully
for accounts you didn't open or debts you don't recognize.
Also, make sure that information such as your Social
Security number and employer are correct on each report.
If you discover accounts or
transactions you didn't authorize, call and speak with
someone in the fraud department of each company involved.
Keep a log of each person contacted, along with the date,
time and topics discussed on each call.
An initial fraud alert also
requires businesses to take additional steps to confirm your
identity before issuing loans or opening accounts in your
name. Be prepared for loan and credit card applications to
take slightly longer to be processed.
It's important to understand that
an initial fraud alert, as the name implies, is only a
temporary fix. That's because it remains in effect for only
90 days. To prevent becoming a victim after the three months
are up, you'll need to take additional steps.
Next, fill out an identity theft
report with your local, state or federal law enforcement
agency. It's unclear if the mere loss or theft of personal
information constitutes identity theft, but filing a report
may offer additional protections. The FTC makes an affidavit
available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf
Ask each of the three credit
reporting companies to place a freeze or extended alert on
your account. Seventeen states have enacted laws that
require the reporting companies to block access to your
files in most instances. Check with the Consumers Union Web
site or attorney general in your state to see if this is
available where you live.
Even if your state doesn't offer
this protection, ask Equifax, TransUnion and Experian to
give you an extended alert anyway. This option will entitle
you to two free credit reports per year, and it will also
require the credit reporting companies to remove you from
lists marketers use to send prescreened credit offers for
five years.
To qualify for an extended alert,
the reporting companies will require you to prove you've
been the victim of identity theft, even though it is not
always clear how the law defines a victim in this case. Be
sure to include the FTC affidavit or other law enforcement
report you filed. It is legal documentation that your
personal identification has been stolen.
Finally, recognize that
safeguarding your privacy is a never-ending task, even for
people who have no reason to believe their personal
information has been stolen. A little education and
prevention, say consumer advocates, can go a long way.
''You need an ongoing vigilance,''
says Paul Stephens, a policy analyst with the Privacy Rights
Clearinghouse in San Diego. ''We want people to be
proactive, to be vigilant, but we also don't want to have
people panicking.''
On the Net:
http://www.ftc.gov/bcp/conline/pubs/credit/idtheft.htm
http://privacyrights.org
http://www.consumersunion.org/creditmatters/creditmatterslearnmore/002583.html
I am really glad to see the Digital Duo return to PBS
television. Back in the 1990s I loved this show as a helper to
those of us struggling to learn new computing and networking
technologies. The most important attribute of this show is the
willingness of the Duo to criticize the products or services
that they are evaluating. The Duo is consumer-oriented. Unlike
its counterpart Computer Chronicles, the Digital Duo are
probably not especially popular among vendors who supply the
products and services.
The main site for the Digital Duo
http://www.pcworld.com/digitalduo/index/0,00.asp
The Digital Duo is the independent,
irreverent video review of all things digital. Hosted by Stephen
Manes and Angela Gunn.
More about PC World's Digital Duo
The weekly shows are probably listed in your television guide
for your local PBS channel. I suggest
you record each show and then save the recordings that you think
will be helpful to your students or your family in the future.
One of the features that I watched this weekend featured free
access to credit reports. The Duo pointed out how the majority
of the sites that now offer free credit reports should be
avoided. They recommended using
https://www.annualcreditreport.com/cra/index.jsp
I think this is good advice, but I have some other
recommendations below.