Latest "Accounting Ethics" Posts

AIG Accounting Fraud: No Admissions, Big Fines, Bad Ethics

The former Chief Executive Officer of AIG, Maurice Greenberg and his co-defendant, Howard Smith, AIG’s former chief financial officer, reached a settlement with the State of New York in a case of accounting fraud.

The case, which took more than 10 years to adjudicate ended with the two executives agreeing to fork over $9.9 million in performance bonuses. It sounds impressive until we understand that the state had sought more than $50 million and the executives refused to admit to fraud.

The executives were accused of participating in deals aimed at fooling investors into investing in the AIG company, one of the world’s leading insurance leaders.  Accounting fraud comes in many forms.  At the settlement, the State of New York stated:

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Posted by Chuck Gallagher in Accounting Ethics and tagged , , ,

Was Massive Accounting Fraud Uncovered at Homex? Seems So!

At first glance, this case of massive accounting fraud and unethical business practices might seem to be someone else’s problem; some other country’s problem. However, we not only live in inter-connected times, we also invest globally.  And fraud can happen in any company just ask Homex!

Desarrolladora Homex S.A.B. de C.V. or Homex, for short is a homebuilder based in Mexico. They build homes in Brazil as well as Mexico. Homex stock is traded internationally which is why the SEC cares if the stock is being fairly-traded. Homex is in thousands of stock portfolios in international funds.

The company has just been charged with massive accounting fraud amounting to $3.3 billion. They reported fake revenues on more than 100,000 residences most of which were never built. The fraud occurred over a three-year period.

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Posted by Chuck Gallagher in Accounting Ethics and tagged , ,

Accounting Ethics: Weatherford International False Reports Lead to Unethical Behavior

As the recent national elections were heating up and the debates were rocking the news cycle, a major tax fraud scandal almost escaped notice. At Weatherford International the tax fraud constitutes one of the larger fines in recent memory: $140 million for accounting fraud.

Weatherford InternationalThe company is Swiss-based Weatherford International, a major gas and oil conglomerate. They have offices throughout the world and thousands of employees. To understand this scandal, it is necessary to introduce the acronym “ETR,” or the effective tax rate. The ETR is the tax rate a corporation pays on its taxable income. If the company fraudulently (and purposely) plays with the tax accounting, they can inflate (or deflate) earnings.

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Posted by Chuck Gallagher in Accounting Ethics and tagged ,

Accounting Ethics: Unethical Accounting Practices at Lime Energy

“Our range of energy solutions are based upon our expertise in understanding the unique needs of different types of businesses.” — Lime Energy Website

lime-energyApparently, understanding the unique needs of different kinds of businesses does not extend to accounting practices at Lime Energy. The SEC has fined the company $1 million and four of its executives are further charged with accounting fraud.

This is another example of unethical behavior supplanting ethics because the executives felt that they had the opportunity and the means to carry out a scheme to manipulate the stock price. The executives felt they were the brightest “guys” in the room and that no one at the SEC would be any the wiser.

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Posted by Chuck Gallagher in Accounting Ethics and tagged , ,

Bookkeeper Fraud: Tennessee First Presbyterian Church is a Victim

There is no point in dwelling on the “sickness” of bookkeeper Connie Parker. Between 2007 and July 2016, she stole at least $600,000 from a Tennessee First Presbyterian Church. She allegedly used the church’s credit card to charge everything from lavish vacations to household furniture.  This is accounting fraud or better stated bookkeeper fraud and likely one that is never expected.

Bookkeeper FraudAfter the many years of stealing, the axe finally came down on Parker. This resulted in two immediate outcomes: a hearing was held in front of a judge and the judge issued an injunction restraining Parker from selling or disposing of any property or assets. The church is scrambling to recover as much money as possible.  This is just part of the aftermath of bookkeeper fraud.

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Posted by Chuck Gallagher in Accounting Ethics, fraud, Fraud Pure and Simple and tagged , , , ,

Accounting Ethics Violation: Roger Stadtmueller faces prison

There is no doubt that a person who is a CPA is by many accounts well trained.  Part of that training is a foundational principle – accounting ethics.  It is expected that those who are charged with the Accounting Ethicspublic trust – as Certified Public Accountant are – should be held to the highest ethical standards.  After all that is what accounting ethics is all about.

Roger Stadtmueller, 53, and now former CPA from Spokane, WA has pleaded guilty to three counts of making and subscribing false corporate income tax returns.  His guilty pleas set in stone his violation of accounting ethics.

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Posted by Chuck Gallagher in Accounting Ethics and tagged , , ,

When Accounting Ethics Fail – Scott London’s Fall as a CPA

Would you voluntarily do something that would end your career and change your life forever?  Most people, when I ask that question in my seminars, say resoundingly – NO!  Yet, everyday people make choices that have that very consequence.  Former CPA and my friend Scott London is no different.  When accounting ethics fail the outcome is most likely life altering.  My career When Accounting Ethics Failas a CPA was shattered by my choices and so was Scotts.  Every choice has a consequence!

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Posted by Chuck Gallagher in Accounting Ethics and tagged , , , ,

Accounting Ethics? Cooked Books Earns former CPA Prison Time

Marc Wieselthier, a certified public accountant and partner at a New York accounting firm (the “Firm”), pled guilty to participating in a scheme to obtain millions of dollars in loans by making false statements and providing false and fraudulent Accounting Ethicsdocuments to two commercial banks based in New York (the “Banks”) concerning the financial condition of a Florida-based cosmetics company (the “Company”) that was one of his clients.  Here’s an example of accounting ethics at its worst!

Manhattan U.S. Attorney Preet Bharara said: “Marc Wieselthier has admitted to lying about the financial condition of a company to induce banks to lend the company millions of dollars.  Relying on false information, the banks made loans that ended up defaulting with nearly $5 million still owed.  Wieselthier now joins his co-conspirators in awaiting sentencing for his crime.”

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Posted by Chuck Gallagher in Accounting Ethics and tagged , ,