Richard Campbell notes a nice white collar crime blog edited by some law professors --- http://lawprofessors.typepad.com/whitecollarcrime_blog/
This one event in World Cup history perfectly encapsulates the mass
corruption of FIFA ---
http://www.businessinsider.com/russia-2018-and-qatar-2022-world-cups-2015-10
Question
The accounting industry purportedly has more influence on the SEC than the
PCAOB.
What is the alleged net result (gossip or fact)?
One answer
Accounting industry and SEC hobble America’s audit
watchdog
SEC --- https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission
PCAOB --- https://en.wikipedia.org/wiki/Public_Company_Accounting_Oversight_Board
December 17, 2015 message from Charles Levinson
Bob,
Iwanted to share my latest Special Report, and the third and final installment in a series on financial regulatory reform. This one looks at how the accounting industry and the SEC have hobbled America’s audit watchdog, the PCAOB. It tells the story of one of the more remarkable revolving door cases in Washington. Former Senior Deloitte partner James Schnurr was demoted at Deloitte after a string of damning inspections by the PCAOB, but was then later appointed by Mary Jo White to be SEC Chief Accountant, responsible for overseeing the PCAOB.
http://www.reuters.com/investigates/special-report/usa-accounting-PCAOB/
Happy Holidays,
Charles
Jensen Comment
Most people in the world think the profession of accountancy is dull. Perhaps
it's not as thrilling as the defense industry or the Mafia or the FBI, but it
does have its source material for novels on intrigue, fraud, and underhanded
dealings.
Of course the there is a lot of material on the frauds for which accountants go
to prison ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
The there are the frauds (at worst) and inept auditing (at worst) where
accounting firms settle for billions of dollars in and are sometimes even fined
(e.g. KPMG's $456 million fine by the IRS) ---
http://faculty.trinity.edu/rjensen/Fraud001.htm
But many muckrakers and novelists prefer to write about intrigue at the
highest levels of government. Here's some pretty good source material ---
http://www.reuters.com/investigates/special-report/usa-accounting-PCAOB/
Bob
Jensen's threads on accounting and auditing professionalism ---
http://faculty.trinity.edu/rjensen/Fraud001c.htm
Top 10 Red Flag Warnings of Fraud --- http://www.accountingweb.com/aa/auditing/top-10-red-flag-warnings-of-fraud
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
This is a fraud explanation for the (stolen) books!
However, while the truck driver was taking a lunch
break, the truck was stolen. One week later the truck was found... but the four
years of financial documents were gone.
"This May Be The Greatest "Explanation" Ever For Cooking The Company's
Books," by Tyler Durden, Zero Hedge, December 29, 2015 ---
http://www.zerohedge.com/news/2015-12-29/may-be-greatest-explanation-ever-cooking-companys-books
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
The UK may force eBay and Amazon to pay for VAT fraud ---
http://www.businessinsider.com/uk-may-force-ebay-and-amazon-to-pay-for-vat-fraud-2015-12
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Even in post-Soviet Uzbekistan, an ancient
crossroads where torture and bribery allegations are endemic, Gulnara Karimova,
the president’s Harvard-educated daughter, stood out for her ruthlessness.
"The Silk Road Affair: Power, Pop and a Bunch of Billionaires," by
Stephanie Baker, Bloomberg, November 27, 2015 ---
http://www.bloomberg.com/news/articles/2015-11-29/the-silk-road-affair-power-pop-and-a-bunch-of-billionaires?cmpid=BBD113015
Jensen Comment
Hollywood salivates for material like this! It's got all the ingredients of a
blockbuster.
Diploma Mill Fraud
EDMC is the nation's second-largest for-profit college system and the parent company of four higher education systems: Argosy University, The Art Institutes, Brown Mackie College, and South University. It was acquired by Goldman Sachs in 2006, which retains 40% ownership in the company today.
"College accused of being a 'high-pressure recruitment mill' agrees to a
record $95.5 million settlement," by Abby Jackson, Business Insider,
November 16, 2015 ---
http://www.businessinsider.com/for-profit-college-edmc-settled-civil-lawsuit-for-955-million-2015-11
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"The Consumer Bureau Cover-Up: The feds knew their data showing
racial bias was false but sued anyway," The Wall Street Journal,
December 9, 2015 ---
http://www.wsj.com/articles/the-consumer-bureau-cover-up-1449707193?mod=djemMER
. . .
This illegal guessing game of name-that-race underscores how much antidiscrimination law has become a political shakedown, and how the consumer bureau is a lawless body that needs to be reined in if it can’t be eliminated.
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
After KPMG was paid $456 million in 2006 fines for selling phony tax shelters, KPMG promised it would never happen again. Yeah Right!
Four KPMG partners arrested in tax evasion investigation ---
http://www.accountancyage.com/aa/news/2436814/four-kpmg-partners-arrested-in-tax-evasion-investigation
Bob Jensen's threads on KPMG ---
http://faculty.trinity.edu/rjensen/Fraud001.htm
"Former Florida State (Finance) Professor Convicted of Embezzlement,"
Inside Higher Ed, November 23, 2015 ---
https://www.insidehighered.com/quicktakes/2015/11/23/former-florida-state-professor-convicted-embezzlement?utm_source=Inside+Higher+Ed&utm_campaign=b3c3eb755f-DNU20151123&utm_medium=email&utm_term=0_1fcbc04421-b3c3eb755f-197565045
A federal jury last week found James Doran, formerly a professor at Florida State University, guilty of embezzling $650,000 from the institution, the Associated Press reported. Doran was charged with taking money from a fund designed to let business students make real investments. He was alleged to have returned the money when an audit discovered what happened. His lawyer did not respond to a request for comment.
Prosecutors say Doran oversaw the Student Investment
Fund as a faculty adviser in the university’s College of Business.
http://www.winknews.com/2015/11/19/former-professor-convicted-of-embezzling-at-florida-state/
Jensen Comment
Typically most student investment funds are seeded with money to invest for the
university's general endowment fund. Amounts vary, but typical funding ranges
from $500K to $2 million. FSU must have had a fairly large fund since the
$650,000 Doran pilfered was only part of the fund. The purpose of the fund is to
give finance majors experience in managing portfolios.
Actually "pilfered" may be too strong a word here. Most likely Doran engaged in unauthorized borrowing to profit his personal portfolio while fully intending to return the borrowed funds plus small returns to the university. This is a bit different than buying a sailboat or a lake house with the money. But it's just as illegal nevertheless. This is a common crime among trust managers in offices of attorneys and banks where the trust manager intends to profit from the spread between returns actually earned and the returns given to the owners of the trust funds. The devious trust manager who takes financial risks with the "borrowed" funds gets into trouble when those risky investments turn into losses.
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"CPA Pleads Guilty in Accounting Fraud Scheme," by Michael Cohn,
Accounting Today, November 20, 2015 ---
http://www.accountingtoday.com/news/audit-accounting/cpa-pleads-guilty-in-accounting-fraud-scheme-76480-1.html
A partner at a New York CPA firm has pleaded guilty to participating in a multimillion-dollar accounting fraud scheme.
Marc Wieselthier, 57, a shareholder of Curcio, Wieselthier & Cohen CPAs, pleaded guilty Wednesday to participating in a scheme to obtain millions of dollars in loans by making false statements and providing false and fraudulent documents to two unidentified commercial banks in New York concerning the financial condition of an unidentified Florida-based cosmetics company that was one of Wieselthier’s clients.
Wieselthier, a licensed CPA in Plainview, N.Y., has been a partner at the firm since 2009. The cosmetics company and its CEO were clients of Wieselthier, who performed, among other things, year-end audits of financial statements for the company.
Continued in article
Bob Jensen's Fraud Updates ---
http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Forwarded by Scott Bonacker on November 25, 2015 ---
HOW THE FRAUD GOES DOWN: IRS and Treasury officials have repeatedly tried to warn taxpayers about the escalating problem of return fraud, with one deputy inspector general even disclosing that he had once been a target. One journalist, Lisa Bennett, has written about just how simple it can be to fall for the scam - which involves criminals masquerading as federal investigators - especially for people who don't want any part of breaking the law and find themselves intimidated by the IRS and the tax code.
Bennett's report: "Throughout my hourlong ordeal I was very aware that it could be a scam, and that there were many things that didn't make sense. Yet I was also deeply afraid that it could be true - that I could have made a mistake on my tax forms; that IRS forms could have been sent but never arrived; and that events could get out of control and go terribly wrong. And this combination of plausibility, fear and confusion soon drove most rational thoughts from my head." http://bit.ly/1lgDd1C
(From “Politico’s Morning Tax” newsletter http://www.politico.com/tipsheets/morning-tax/2015/11/getting-to-be-extenders-time-the-eitc-fraud-hurdle-beps-double-trouble-211457 )
Scott Bonacker CPA – McCullough and Associates LLC – Springfield, MO
"NY Times: A Majority Of Law
Schools Are Scamming Students And Taxpayers," by Paul Caron, TaxProf Blog,
October 255, 2015 ---
http://taxprof.typepad.com/taxprof_blog/2015/10/ny-times-a-majority-of-law-schools-admit-unqualified-students-charge-outrageously-high-tuition-and-s.html
American law schools are increasingly charging outrageously high tuition and sticking taxpayers with the tab for loan defaults when students fail to become lawyers.
In 2013, the median LSAT score of students admitted to Florida Coastal School of Law was in the bottom quarter of all test-takers nationwide. According to the test’s administrators, students with scores this low are unlikely to ever pass the bar exam.
Despite this bleak outlook, Florida Coastal charges nearly $45,000 a year in tuition, which, with living expenses, can lead to crushing amounts of debt for its students. Ninety-three percent of the school’s 2014 graduating class of 484 had debts and the average was almost $163,000 — a higher average than all but three law schools in the country. In short, most of Florida Coastal’s students are leaving law school with a degree they can’t use, bought with a debt they can’t repay.
If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.
Yet for-profit schools are not the only offenders. A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.
Why? The most significant explanation is also the simplest — free money.
In 2006, Congress extended the federal Direct PLUS Loan program to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses. The idea was to give more people access to higher education and thus, in theory, higher lifetime earnings. But broader access doesn’t mean much if degrees lead not to well-paying jobs but to heavy debt burdens. That is all too often the result with PLUS loans.
The consequences of this free flow of federal loans have been entirely predictable: Law schools jacked up tuition and accepted more students, even after the legal job market stalled and shrank in the wake of the recession. For years, law schools were able to obscure the poor market by refusing to publish meaningful employment information about their graduates. But in response to pressure from skeptical lawmakers and unhappy graduates, the schools began sharing the data — and it wasn’t a pretty picture. Forty-three percent of all 2013 law school graduates did not have long-term full-time legal jobs nine months after graduation, and the numbers are only getting worse. In 2012, the average law graduate’s debt was $140,000, 59 percent higher than eight years earlier.
This reality has contributed to the drastic drop in law school applications since 2011, which has in turn exacerbated the problem — to maintain enrollment numbers, law schools have had to lower their admissions standards and take even more unqualified students. These students then fail to pass the bar in alarmingly high numbers — in 2014, the average score on the common portion of the test was the lowest in more than 25 years.
How can this death spiral be stopped? For starters, the government must require accountability from the law schools that live off student loans. This year, the Obama administration extended the so-called gainful employment rule, which ties a school’s eligibility to receive federal student loans to its success in preparing graduates for jobs that will enable them to repay their debt. The rule currently applies only to for-profit law schools, all of which, given their track records, would fail to qualify for federal loans
Continued in article
Bob Jensen's threads on the laments of law schools and their
students in the USA ---
http://faculty.trinity.edu/rjensen/HigherEdControversies.htm#OverstuffedLawSchools
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
From the CFO Journal's Morning Ledger on October 8, 2015
Blackstone in $39 million SEC settlement
http://www.wsj.com/articles/blackstone-settles-with-sec-over-certain-fee-practices-1444238653?mod=djemCFO_h
Blackstone Group LP has agreed to pay about $39 million to settle charges with the Securities and Exchange Commission over some of the buyout fund manager’s fee practices. The SEC said firm failed to sufficiently disclose to its fund investors details about big one-time fees Blackstone collected from companies it sold or took public, as well as discounts the firm received on some legal fees that weren’t passed on to the fund investors.
From the CFO Journal's Morning Ledger on October 23, 2015
SEC doubles number of financial reporting and audit cases
http://blogs.wsj.com/cfo/2015/10/22/sec-doubles-number-of-financial-reporting-and-audit-cases-in-two-years/?mod=djemCFO_h
The U.S. Securities and Exchange Commission nearly doubled its enforcement actions related to financial reporting and audit fraud over the past two years, the agency’s top cop said Thursday. Emily Chasan reports the agency filed 134 cases in the financial reporting and audit area in its 2015 fiscal year, ended Sept. 30. That is up from 98 in fiscal 2014, and 68 in fiscal 2013.
SEC ANNOUNCES ENFORCEMENT RESULTS FOR FY 2015 ---
http://www.accountingeducation.com/index.cfm?page=newsdetails&id=153637
The SEC has announced that in fiscal year 2015, it continued to build a strong record of first-of-their-kind cases that spanned the spectrum of the securities industry.
In the fiscal year that ended in September, the SEC filed 807 enforcement actions covering a wide range of misconduct, and obtained orders totaling approximately $4.2 billion in disgorgement and penalties. Of the 807 enforcement actions filed in fiscal year 2015, a record 507 were independent actions for violations of the federal securities laws and 300 were either actions against issuers who were delinquent in making required filings with the SEC or administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders.
In fiscal year 2014, the SEC filed 755 enforcement actions and obtained orders totaling $4.16 billion in disgorgement and penalties. Of the 755 enforcement actions filed in fiscal year 2014, 413 were independent actions for violations of the federal securities laws and 342 were either actions against issuers who were delinquent in making required filings with the SEC or administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders.
The agency’s first-of-their-kind cases included the first action involving: a private equity adviser for misallocating broken deal expenses; an underwriter for pricing-related fraud in the primary market for municipal securities; a “Big Three” credit rating agency; violations arising from a dark pool’s disclosure of order types to its subscribers; an FCPA action against a financial institution; an admissions settlement with an auditing firm; and an SEC rule prohibiting the use of confidentiality agreements to impede whistleblower communication with the SEC.
“Vigorous and comprehensive enforcement protects investors and reassures them that our financial markets operate with integrity and transparency, and the Commission continues that enforcement approach by bringing innovative cases holding executives and companies accountable for their wrongdoing sending clear warnings to would-be violators,” said SEC Chair Mary Jo White. “The Enforcement Division’s leveraging of data, quantitative analytics and the expertise of our other divisions contributed significantly to this year’s very strong results.”
“The Division’s hard work, tremendous energy, and efficiency uncovered significant misconduct during the past fiscal year, and helped bring a significant number of high-impact, first-of-their-kind actions,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division. “I continue to be proud of the Division’s record of accomplishments, and we have already continued to pave new ground in the new fiscal year.”
Further details of the SEC enforcement actions are available in the press release.
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
The Most Corrupt and the least Corrupt
Nations of the World ---
http://www.businessinsider.com/most-corrupt-countries-in-the-world-2014-12
Question
What is probably the main reason the USA is not among the Top 35 nations in
terms of low corruption?
Answer
The interaction of the public and private sectors in fraudulent procurements of
goods and services and financing. For example, there are millions of examples of
kickbacks and bribery from the upper reaches of the Pentagon procurement down
procurements in small counties and towns and school districts throughout the USA
where hundreds and hundreds of millions of dollars change hands under the table.
Among the classic piñatas for municipality frauds are bond sales.
Exhibit A
"SEC Tightens Policing of Municipal Debt Market: Agency Seeks to Ban Some
Local Officials for Their Involvement in Alleged Fraud," by Andrew Ackerman,
The Wall Street Journal, December 19, 2014 ---
http://www.wsj.com/articles/sec-tightens-policing-of-municipal-debt-market-1419019536?mod=WSJ_LifeStyle_LatestHeadlines
WASHINGTON—U.S. securities regulators, ratcheting up their policing of the $3.7 trillion market for state and local debt, are seeking to ban local officials from the market for their involvement in alleged fraud.
The Securities and Exchange Commission this year has sought to bar three officials in suburban Chicago and Detroit from future municipal-bond transactions, citing their roles in misleading investors in prior bond sales. A federal judge has issued a preliminary agreement to one of the requests.
Attempts to bar individual municipal officials are the latest sign of the SEC’s efforts to crack down on what it views as stale or misleading investor disclosures for municipal-bond investors. The move is significant, securities attorneys said, in part because the SEC hasn’t previously sought such prohibitions.
Unlike brokers and advisers whom regulators routinely bar from their respective industries for wrongdoing, the agency doesn’t have authority to directly regulate municipal officials and instead polices much of the market using broad antifraud authority.
“It’s an indication of how zealous they are in their enforcement actions in the state and local government market,” said Paul Maco, a partner at Bracewell & Giuliani LLP, who previously served as the SEC’s municipal-bond chief.
In seeking to bar individual municipal officials, the SEC has relied on a catchall provision of the securities laws that allows them to seek “any equitable relief that may be appropriate or necessary for the benefit of investors.” SEC officials say censuring individual municipal officials is a better alternative than imposing fines on local governments, because any fines would be borne broadly by taxpayers.
“In the municipal securities area, where the SEC has very limited enforcement authority, it is critically important to pursue cases that will deter future violations without harming innocent taxpayers,” said Daniel Gallagher, a Republican SEC commissioner. “In this context, actions against culpable individuals provide maximum deterrence.”
Last month, the SEC sought to bar the former mayor and former city administrator of Allen Park, Mich., as part of a suit against the city, for failing to inform investors of the city’s deteriorating financial condition. The city had sold $31 million of bonds to finance a now-failed movie studio.
Gary Burtka, the former mayor, and Eric Waidelich, the former city administrator, agreed to settle the SEC charges and consented to being barred from future municipal-bond transactions. A federal judge has yet to sign off on the settlements. Attorneys for Mr. Burtka didn’t respond to requests for comment. An attorney for Mr. Waidelich declined to comment.
Separately, the SEC earlier this year sued Harvey, Ill., and its former comptroller, Joseph Letke, having found the city diverted about $1.7 million of bond proceeds originally to be used for the construction of a Holiday Inn hotel—for “improper, undisclosed uses.” The city agreed to settle the charges but Mr. Letke, whom the SEC alleged received about $269,000 in undisclosed payments from the bond proceeds, has refused to settle.
Continued in article
Exhibit B
"Jury Convicts Former Detroit City Treasurer, Pension Officials of Conspiring to
Defraud Pensioners Through Bribery"
U.S. Attorney's Office
December 8, 2014
http://www.fbi.gov/detroit/press-releases/2014/jury-convicts-former-detroit-city-treasurer-pension-officials-of-conspiring-to-defraud-pensioners-through-bribery
From Quartz on October 18, 2015
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
"NY Times: A Majority Of Law
Schools Are Scamming Students And Taxpayers," by Paul Caron, TaxProf Blog,
October 255, 2015 ---
http://taxprof.typepad.com/taxprof_blog/2015/10/ny-times-a-majority-of-law-schools-admit-unqualified-students-charge-outrageously-high-tuition-and-s.html
American law schools are increasingly charging outrageously high tuition and sticking taxpayers with the tab for loan defaults when students fail to become lawyers.
In 2013, the median LSAT score of students admitted to Florida Coastal School of Law was in the bottom quarter of all test-takers nationwide. According to the test’s administrators, students with scores this low are unlikely to ever pass the bar exam.
Despite this bleak outlook, Florida Coastal charges nearly $45,000 a year in tuition, which, with living expenses, can lead to crushing amounts of debt for its students. Ninety-three percent of the school’s 2014 graduating class of 484 had debts and the average was almost $163,000 — a higher average than all but three law schools in the country. In short, most of Florida Coastal’s students are leaving law school with a degree they can’t use, bought with a debt they can’t repay.
If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.
Yet for-profit schools are not the only offenders. A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.
Why? The most significant explanation is also the simplest — free money.
In 2006, Congress extended the federal Direct PLUS Loan program to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses. The idea was to give more people access to higher education and thus, in theory, higher lifetime earnings. But broader access doesn’t mean much if degrees lead not to well-paying jobs but to heavy debt burdens. That is all too often the result with PLUS loans.
The consequences of this free flow of federal loans have been entirely predictable: Law schools jacked up tuition and accepted more students, even after the legal job market stalled and shrank in the wake of the recession. For years, law schools were able to obscure the poor market by refusing to publish meaningful employment information about their graduates. But in response to pressure from skeptical lawmakers and unhappy graduates, the schools began sharing the data — and it wasn’t a pretty picture. Forty-three percent of all 2013 law school graduates did not have long-term full-time legal jobs nine months after graduation, and the numbers are only getting worse. In 2012, the average law graduate’s debt was $140,000, 59 percent higher than eight years earlier.
This reality has contributed to the drastic drop in law school applications since 2011, which has in turn exacerbated the problem — to maintain enrollment numbers, law schools have had to lower their admissions standards and take even more unqualified students. These students then fail to pass the bar in alarmingly high numbers — in 2014, the average score on the common portion of the test was the lowest in more than 25 years.
How can this death spiral be stopped? For starters, the government must require accountability from the law schools that live off student loans. This year, the Obama administration extended the so-called gainful employment rule, which ties a school’s eligibility to receive federal student loans to its success in preparing graduates for jobs that will enable them to repay their debt. The rule currently applies only to for-profit law schools, all of which, given their track records, would fail to qualify for federal loans
Continued in article
Bob Jensen's threads on the laments of law schools and their
students in the USA ---
http://faculty.trinity.edu/rjensen/HigherEdControversies.htm#OverstuffedLawSchools
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Illustration of the Use of Materiality Guidelines to Commit Accounting Fraud
Swisher Hygiene --- http://www.charlotteobserver.com/news/business/article40301211.html
As long as the changes aren’t material, I wouldn’t
need to disclose.
"Former Swisher CFO, accountant charged in fraud case," The Charlotte
Observer, October 19, 2015 ---
http://www.charlotteobserver.com/news/business/article40301211.html
. . .
Kipp, the former CFO, was fired in 2012 as part of the probe, Swisher said. According to the federal indictment, Kipp, Viard, Pierrard and other employees who haven’t been charged used a variety of tricks to juice the company’s earnings in order to hit predetermined target numbers.
For example, the company allegedly used “cookie jar” accounting, inflating reserves of other companies it acquired and then drawing those reserves down to inflate earnings. Prosecutors say the company also took expenses that should have been booked on the profit-and-loss sheet and moved them to Swisher’s balance sheet, fraudulently reducing its reported expenses.
According to prosecutors, Kipp emailed Viard on Oct. 15, 2011, and said “I need to get about $300k in expense reductions.”
Viard responded with ideas of accounting items they could adjust, prosecutors said, and wrote back that “As long as the changes aren’t material, I wouldn’t need to disclose.” They reduced an accounting charge by $500,000, prosecutors charge, inflating earnings by the same amount.
Later that same day, Kipp emailed Viard again, prosecutors said, to tell her they would be able to make their earnings target.
“Here is the sum of my handy work for the day. I think if we can make all these stick, we can make it to the forecast of $3.5 million,” prosecutors say Kipp wrote.
Read more here: http://www.charlotteobserver.com/news/business/article40301211.html#storylink=cpy
In 2015 after a critical audit Swisher fired the audit firm of BDO ---
http://www.sec.gov/Archives/edgar/data/1504747/000135448815001539/swsh_10k.htm
In 2014 BDO reported concerns that Swisher had going concern issues.