Archive for July, 2006
Mon 31 July 06 · Filed under Fraud News Stories
A recent theft of data involving over 112,000 customers at Sentry Insurance is currently being investigated by the U.S. Secret Service. The thief was a “lead programmer” with a computer consulting company hired by Sentry. In carrying out his job duties, he had access to the information on customers. He has been arrested, and faces felony charges in federal court.
The company is aware that the personal information of 72 customers with workers compensation claims has been sold on the internet. The additional 112,198 claimants involved in the theft do not appear to have had their information sold. The information being sold includes names and Social Security numbers.
Tags: theft of data, Secret Service
Sat 29 July 06 · Filed under Fraud Detection & Prevention
Today the U.S. Court of Appeals for the Second Circuit upheld the conviction and prison sentence of former WorldCom CEO Bernard Ebbers. The 64-year-old defendance was convicted in 2005 of nine counts of conspiracy, securities fraud, and false SEC filings. He received a 25-year prison sentence, which all but assures that he will die in prison.
WorldCom’s demise was an $11 billion accounting fraud that included improper capitalization of operating costs, among other things. It sent WorldCom, a company with stock previously valued at $180 billion, into bankruptcy. Ebbers’s defense was that the CFO, Scott Sullivan, and his subordinates committed the fraud without his knowledge.
Ebbers’s attorney argued that the sentence was excessive and that Ebbers did not receive a fair trial because potential defense witnesses weren’t offered immunity from prosecution in exchange for their testimony. The witnesses said they would use the fifth amendment to avoid testifying.
Ebbers has been free while the appeal was pending, and is expected to be ordered to prison soon.
Fri 28 July 06 · Filed under Uncategorized
After deliberately lying during testimony in a Milwaukee County courtroom, Milwaukee Alderman Michael McGee (aka Jackson) will not be charged with perjury.
The perjury occured on April 12, May 12, and May 16, 2006 during Domestic Abuse Injunction Hearings before the Family Court Commissioner and Judge Clare Fiorenza. The hearing involved McGee/Jackson and his pregnant former mistress Kimley Rucker.
Judge Fiorenza indicated in her ruling that she did not believe McGee/Jackson’s testimony (calling it “incredible”) that the relationship ended in August 2005, and that it was clear that the relationship extended beyond that.
The Milwaukee District Attorney’s Office follows this logic in deciding that no perjury occured:
There is no crime in Wisconsin for .giving incredible testimony,. or for .intentionally misleading under oath.. Wisconsin does proscribe perjury, which is defined in Wis. Stat. Sec. 946.31 as having all of the following legal components:
PERJURY DEFINED:
- An oral statement must be made under oath or affirmation.
- The statement must be false when made.
- The declarant did not believe the statement to be true when made.
- The statement was made in a proceeding before a court.
- The statement must be material to the proceeding.
Prosecution of perjury requires proof of each and every one of these elements: what is required is an unambiguous statement or assertion that was demonstrably and unambiguously false.and which is material to the purpose of the hearing.
Ethically, before bringing a perjury charge, prosecutors must have sufficient competent evidence to convince 12 jurors beyond a reasonable doubt. Three areas of testimony have raised the most suspicion:
- Mr. McGee.s denial of a .romantic relationship. with Ms. Rucker.
- His denial that MCGEE4ME@yahoo.com was .his. e-mail account.
- His denial of authorship of several e-mails to Ms. Rucker.
The District Attorney’s Office goes on to explain that “romantic” is ambiguous, so they don’t know if McGee/Jackson’s denial of it is a lie. The fact that the email account belongs to McGee/Jackson’s campaign means that they don’t know if he really lied.
But the best part is McGee/Jackson’s denial that he wrote certain emails to Rucker. The District Attorney’s Office says:
Of course it is utterly implausible that someone else wrote and sent those e-mails: however, there is no direct evidence that Mr. McGee wrote and/or sent them.
So they believe he wrote them, yet they say there’s no evidence?
And the final reason for not charging McGee/Jackson is that the untrue testimony he gave was not “material”. They say these lies didn’t relate to whether or not domestic abuse occured, so they weren’t material.
Yet again, McGee/Jackson gets away with criminal behavior in a courtroom.
Tags: perjury
Thu 27 July 06 · Filed under Entertainment
Sharman Networks Ltd., the company behind the music-swapping service called Kazaa, has agreed to pay $115 million ot the entertainment industry to settly piracy lawsuits. The company has also agreed to help discourage piracy of music online.
Kazaa software was downloaded more than 389 million times, and the company used a “Fast Track” file sharing network to connect millions of personal computers. Sharman Networks is now negotiating distribution licenses with entertainment companies, which would allow the company to legally distribute music and movies through its service.
Wed 26 July 06 · Filed under Uncategorized
In the ongoing saga of the life of Alderman Michael McGee (aka Jackson), there is a new development. McGee/Jackson had a restraining order against him, which prohibited contact with his ex-mistress Kimley Rucker.
Rucker was pregnant, allegedly by McGee/Jackson. She got a restraining order against him due to domestic volence, and in court the day of the restraining order, McGee/Jackson told her that if she drove by his house, he’d kill her.
Russel Jones, the attorney representing Rucker, was interviewed this morning on WISN-AM Early Spin. According to Russel Jones:
Rucker was contacted by McGee/Jackson via a third party (in violation of the current restraining order) and Rucker was told that if she dropped the restraining order, McGee/Jackson would not contest paternity of her child.
Rucker did ask for an amendment to the restraining order, but did not drop it all together as McGee/Jackson preferred. Since she didn’t drop it all together, McGee/Jackson is now contesting the paternity of the baby (which was born in early July).
Rucker apparently asked for the amendment to the restraining order so that they could have contact about the baby.
Wed 26 July 06 · Filed under Fraud Detection & Prevention
Today the Securities and Exchange Commission (SEC) voted to require public companies to report the details of pay and perks for executives. The new rule will take effect in 2007, and is aimed at making total executive compensation clearer.
The details companies will be required to provide about the executive compensation include:
- Salary
- Bonus
- Dollar value of stock options
- Changes in the value of pension benefits
- Above-market earnings on deferred compensation
- All perks exceeding $10,000 per year
- Golden parachutes and other benefits paid to executives who are fired or released pursuant to a merger
These disclosures will be required for a company’s top five executives, including the CEO and CFO. The disclosures must be made in “plain English” so that investors can understand the items.
Tags: Securities and Exchange Commission, SEC, executive compensation
Tue 25 July 06 · Filed under Fraud News Stories
Today Milwaukee County Assistant District Attorney Karen Loebel issued a letter stating that charges would not be filed against Milwaukee Alderman Michael McGee (aka Michael Jackson) for threatening to kill his ex-mistress while in court for a hearing on a restraining order.
During the May 17 hearing, McGee/Jackson turned to Kimley Rucker and said:
If you drive past my house, I will kill your ass.
The District Attorney’s Office was supposedly considering charges of disorderly conduct and violation of a domestic abuse injunction.
Part of the reason McGee/Jackson is not being prosecuted is because of the First Amendment. Loebel cites “free speech” in this case, and says that he can’t be prosecuted for disorderly conduct for this “protected speech“. She makes a distinction between a “threat” and a “true threat”.
Apparently, in Loebel’s mind, McGee/Jackson’s statement that he’d kill his ex-mistress was not a “true threat”. For there to be a “true threat”, the speaker of the threat has to believe that the listener will believe he intends to follow through.
Loebel says McGee/Jackson’s statement was an instruction for Rucker to stay away from him, but not a serious threat of bodily injury. She further says that Rucker’s July 20 request to amend the restraining order to prohibit only domestic abuse contact (meaning that they COULD have non-violent contact) shows that she didn’t take the threat seriously.
Has Loebel never seen an abused woman who genuinely fears a man but still allows him back into her life?
It is amazing how this so-called leader gets away with criminal activity time after time. When will he be held accountable for his crimes and his frauds?
Tags: Michael McGee, restraining order, disorderly conduct, domestic abuse, First Amendment, free speech, protected speech, bodily injury
Mon 24 July 06 · Filed under Fraud News Stories
On Sunday, the Milwaukee Journal Sentinel had an article on property taxes with the subtitle: “By one measure, Milwaukee is among ‘tax havens’ in area.” That subtitle and the information in the information in the article are completely misleading and Milwaukee is NOT a property tax haven. Here’s why.
The original theory to be tested was whether or not high property tax rates in Milwaukee have prompted people to move to the suburbs. The rates themselves are high. $22.93 per thousand of assessed value in Milwaukee County, compared to $15.59 per thousand in Waukesha County.
The Public Policy Form studied the rates and said the following: By one key measure, the city of Milwaukee ranks as a “property tax haven.” The folks doing the study found that the average property tax bill in the region was over $4,000 in 2006, while the average tax bill was under $3,500 in the city of Milwaukee. The city of Waukesha had a average property tax bill of $4,079.
Why is this misleading? The average home sales prices were $299,023 for Waukesha County and $176,837 for Milwaukee County. As you can see, even though Milwaukee might have lower property tax bills in raw dollars, when compared to the value of the property, Milwaukee’s taxes are sky-high.
If you compare the average tax bill to the average property sales value, the numbers look like this:
$3,500 / $176,837 = .0198
So the average property taxes equal 1.98% of the home’s value in Milwaukee.
$4,079 / $299,023 = .0136
So the average property taxes equal 1.36% of the home’s value in Waukesha.
That calculation puts Milwaukee’s property taxes at a rate that is 45.5% higher than Waukesha.
Tags: property taxes, tax haven
Sat 22 July 06 · Filed under Fraud News Stories
A slowing housing market is bringing attention to the issue of inflated property appraisals. While home values were climbing and interest rates were low, this wasn’t a problem. Even if an appraisal was too high, the market value of the home would quickly catch up. But now that the market is slowing down, some homeowners are finding out that their market values are below their old appraisals.
Inaccurate appraisals become a problem when it is time to sell or refinance a house. Homeowners are finding that they have less equity in their homes than they thought. This is especially critical for those who bought homes with no downpayment or those who used all of their equity for improvements or debt consolidation. As homeowners borrowed against inflated and unrealistic values, they now have fewer options when looking to sell or refinance. Some are finding that their home value is less than the amount they have borrowed against it.
It is believed that loan officers put subtle pressure on appraisers to declare a home’s value at or above the buyer’s offer. Without such an appraisal, a deal will almost certainly fall through. Since appraisers depend upon loan officers for their business referrals, it is in their best interest to help close as many deals as possible.
Tags: property appraisals, market value, refinance
Fri 21 July 06 · Filed under Fraud Detection & Prevention, Writing & Blogging
Last week, my column The Fraud Files for the Wisconsin Law Journal was entitled How to Catch Employees Stealing. And it was about just that - what employers can do to help catch employees in the act of stealing from them.
Now, of course, you don’t want employees stealing from you at all. So it’s not really about catching them, as much as it is about letting them know that they will be monitored so that if they do decide to steal, we will know.
The basic tips I offer:
- Data analysis - use software that will scan your databases and check for unusual data and numbers
- Security measures - use standard security measures like video cameras when and where appropriate
- Monitor systems - monitor emails as well as company computer usage
- Notify employees - let employees know that they will be monitored
Read the article here.
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