Archive for May, 2006
Wed 31 May 06 · Filed under Fraud News Stories
James Lewis Jr., the operator of one of the largest Ponzi schemes in U.S. history was sentenced to 30 years in prison last week. That was the maximum sentence that could be imposed. He was also ordered to pay $156 million in restitution.
The sentence comes after a guilty plea to one count of money laundering and one count of mail fraud. 12 charges were dropped in exchange for the guilty pleas on these two counts.
The Ponzi scheme lasted for almost 20 years, and took in $311 million. Lewis represented to investors that he was earnings returns of 18% to 40% by investing in leased medical equipment, financing medical insurance, making commercial loans, and buying and selling troubled businesses.
In reality, Lewis was using money from new investors to pay of old investors, the classic Ponzi scheme. Some investors received money back from the scam, leaving a loss of $156 million for the later investors.
Tags: Ponzi scheme, prison, restitution, guilty plea, money laundering, mail fraud
Tue 30 May 06 · Filed under Uncategorized
According to an article on the Motley Fool site earlier this year, credit card debt is a huge problem. They say that Americans owe over half a trillion dollars in credit card debt. An analysis by the U.S. Public Interest Research Group and Consumer Federation of America shows that the average household has $10,000 to $12,000 in revolving debt and has 9 credit cards.
While using credit cards to excess is a problem, not having any credit cards at all can also be a problem. Credit cards are necessary to help build a credit history. The key is to pay all charges in full every month.
On the Neat Living Blog, Ariane talks about clutter and her experience with credit cards in the late 80s. She also discusses some interesting things related to needs and wants in our society, how we’re always in a hurry, and how we end up collecting stuff upon stuff upon stuff.
Tue 30 May 06 · Filed under Fraud News Stories
The American Institute of Certified Public Accountants (AICPA) lost the social security numbers of all of its members earlier this year. I was notified of this via a letter dated May 8.
The organization offered its members one free year of credit monitoring, with the program available on May 23. Today I signed up for the credit monitoring and was surprised to find out the following details about it:
Enjoy peace of mind knowing all 3 of your national credit files are monitored every day and that you will be informed of key changes when they occur. Actively monitoring your credit can be your first line of defense against identity fraud and inaccuracies that may affect your credit.
What this means is that the credit monitoring service will notify me of any changes to my credit report from today forward.
So what happens to changes that may have occurred after the AICPA compromised my information and prior to this service being available to me? I clicked the button that offered to let me see my credit report. I need to know where I stand today, don’t I? I need to find out if my credit has been used up until today, don’t I?
I was kindly informed that there would be a charge to view my credit report. What???? What good is the credit monitoring service offered by the AICPA if we’re not allowed to see our credit reports as part of it?
Tags: American Institute of Certified Public Accountants, AICPA, social security numbers, credit monitoring, credit report
Tue 30 May 06 · Filed under Fraud News Stories
Yes, you read that correctly. A man in Milwaukee was stabbed last night in the chest after he and the suspect had an argument over a passage in the Bible. Wow.
Tags: Bible
Tue 30 May 06 · Filed under Fraud Detection & Prevention
Following the collapse of Enron Corp., Kenneth Lay and Jeffrey Skilling were still wealthy. (It seems they cashed in their stock options at just the right time.)
According to an August 2001 balance sheet, Lay owned many non-Enron stocks totaling $17 million, several vacation properties, 13 vehicles, a $10 million condominium in the River Oaks neighborhood, $2 million in furnishings for the condominium, and other real estate investments totaling $8.5 million.
Skilling’s current wealth is estimated at $57 million in assets, while Lay is estimated to have somewhat less. Since Skilling was convicted of insider trading related to a $15 million Enron stock sale, the government may try to seize that amount. Skilling also faces a claim on his assets by his defense team, and a potential liability related to shareholder civil suits.
Lay has spent an estimated $20 million on his defense, while Skilling is estimated to have spent $40 million. Some of these costs were covered by Enron’s liability insurance.
Tags: Enron, Kenneth Lay, Jeffrey Skilling, balance sheet, liability, civil suits
Sun 28 May 06 · Filed under Fraud News Stories
Cingular Wireless LLC has filed suit against insurance companies and brokers, alleging that the insurers paid over $1 billion in kickbacks to the brokers if sent business their way. The lawsuit names brokers Marsh & McLennan and Aon Corp, and insurers American International Group Inc. (AIG), Aetna Inc., Cigna Corp., The Hartford Financial Services Group Inc., and The St. Paul Travelers Companies Inc.
Marsh has offered $850 million and AIG has offered $1.6 billion to settle similar claims brought by New York Attorney General Eliot Spitzer in October 2004. Cingular declined to participate in that settlement in order to pursue its own case.
Cingular claims that the kickbacks to Marsh increased the company’s earnings by $800 million just in 2003. As a result, it is alleged that customers purchasing insurance paid more than they should have for their coverage.
Cingular is also alleging that bid-rigging occurred. When Cingular asked its broker to shop around for better insurance prices, the broker would obtain inflated quotes from two companies and claim that Cingular was already getting a good deal on insurance rates. This would induce Cingular to stick with its current insurance company, who was allegedly working behind the scenes with the broker to keep the business.
Tags: kickbacks, bid-rigging
Sun 28 May 06 · Filed under Fraud News Stories
Kim Kellbach, 48, has been charged with 3 felonies in Ozaukee County for stealing from her employer of 15 years. The charges include theft in a business setting, modifying computer data to commit fraud, and forgery, and carry penalties of up to 19 years in prison and $45,000 in fines.
The criminal complaint states that Kellbach issued herself seven extra paychecks of $909.54 each and 19 unauthorized bonus checks totaling $11,781. She also diverted insurance company payments of $21,750 to herself, and gave herself multiple reimbursements totaling $7,600 for her own insurance premiums.
Kellbach’s employer, Jeffrey Taxman, owns Newport Professionals Inc. The embezzlement was discovered by him last summer when questions arose about computerized accounting records. Taxman accessed the computer records, and when Kellbach learned that he had looked at the records, she started acting suspiciously. Taxman and his wife immediately began comparing the computer records to bank records, and quickly discovered the theft.
Tags: stealing, theft, fraud, forgery, prison, criminal complaint, unauthorized, embezzlement
Fri 26 May 06 · Filed under Auditing & Regulations
Mary Ellen Wilson, age 56, pleaded guilty today to five counts of felony theft from her employer, Gentle Family Dentistry. She was charged with stealing $293,000, but the actual losses could be more than double that figure. Under a plea agreement, Wilson could be sentenced to five years in prison, five years of extended supervision, 25 years of probation, and restitution. The judge, however, made it clear that he is not obligated to follow these terms, and could sentence her to up to 35 years in prison.
Wilson’s fraud spanned from 1998 to April 2005, and suspicion began while she was on leave and the IRS contacted the office about unpaid payroll taxes. Wilson wrote unauthorized checks to herself, while she left the payroll taxes unpaid. The owners of the clinic trusted her and never looked at any bank statements. Some of those bank statements were destroyed, some were kept in her desk, and others were kept at her home.
On April 19, 2005, the clinic owner met with Wilson to discuss the situation with the IRS. They did not immediately suspect a theft, rather they assumed that the IRS must have made an error. Wilson confessed that day, and the owner took her to the police station in his car so they could report her theft immediately.
Tags: felony, plea agreement, prison, extended supervision, probation, restitution, sentence, fraud, payroll taxes
Fri 26 May 06 · Filed under Uncategorized
Wal-Mart is an easy target for those who want to bash “Corporate America”, big box retailers, or big business in general. While no one seems to complain when they’re at Wal-Mart’s checkout line and receiving low prices, that doesn’t stop some from complaining that the company isn’t giving their employees enough pay or benefits.
It’s easy to cite the “huge” profits of Wal-Mart, but no one stops to consider the details. Here are a few, thanks to Yahoo Finance. For the trailing twelve months the company had: Read the rest of this entry »
Thu 25 May 06 · Filed under Fraud News Stories
Former employees of Enron were thankful and encouraged upon hearing that Kenneth Lay and Jeffrey Skilling were found guilty of felony charges of conspiracy and fraud. While nothing will give back all that they lost, the idea that “justice prevails” has encouraged the former employees.
Both defendants proclaimed their innocence and vowed to appeal the jury’s verdict. After surrendering his passport and paying a $5 million bod, Lay said:
I firmly believe I’m innocent of the charges against me as I have said from day one.
Tags: Enron, Kenneth Lay, Jeffrey Skilling, conspiracy, fraud
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