Archive for November, 2007
Sat 10 November 07 · Filed under Fraud News Stories
Why don’t I have employees? Quite simply put, I’m not interested in doing adult daycare again. I’ve been there, done that, and I’m not doing that again. The day I had to explain to an employee why little pigtails (the kind a 3-year-old would wear) weren’t appropriate for client meetings and why it was important to wear clothes that actually matched one another… I knew my calling as an employer was over. These are things one might expect a 29-year-old to already know. I had reached my breaking point, I think.
BusinessWeek has a great article on employees who slack off and abuse paid leave. What! I’m shocked to learn that employees spend lots of time while on-the-clock doing stuff that’s not related to what they’re paid to do. Shocked, I say!
Okay, not really. The article, aptly titled “Shirking Working: The War on Hooky” details some of the modern methods used to analyze the work patterns of employees. It’s estimated that $74 billion is lost annually to absenteeism, and that employees only work for about 85% of their pay. They goof off the rest of the time.
Companies giving greater scrutiny to employee absences include Wal-Mart, Delphi, Dell, Georgia-Pacific, and Southwest Airlines. Some are calling this “absence management.” Southwest says their new software has already saved them $2 million annually in reduced administrative costs.
Here’s the cool stuff: The new software can track things like the employee who is chronically “sick” on Monday or around holidays. Nice.
Fri 9 November 07 · Filed under Scam Busting
Our government? No, never! Not even in Wisconsin, one of the states with the biggest tax burden in the country. And it’s no wonder… the state was started by Socialists and continues to be overrun by lefties.
Seriously - hidden taxes are everywhere and an article on MSN gives us some of the gory details. We all know about certain taxes like those on fuel, tobacco and alcohol. But there are many less visible taxes that many people don’t even think about. The article lists some:
- Gambling winnings taxed as ordinary income
- Premiums on employer-funded life insurance greater than $50,000 are taxed
- Certain items that are imported - included on the list are bicycles, hammocks, peanut butter, and brooms
How expensive does this get? A government study estimates that consumers pay $400 million to $1.9 billion each year because of subsidies to the sugar industry.
Taxes are applied to all sorts of things like passengers on boats on certain waterways, airline travel, children’s vaccinations, the portion of a college scholarship that pays for room and board.
Why do these taxes get assessed? It’s one way for the government to take our money, and it’s also a way for them to control behavior. In essence, taxes may encourage or discourage certain behavior and may give certain industries competitive advantages. How’s that for government deciding how we should live our lives?
Hat tip: Wenchypoo. Great blog… check it out!
Fri 9 November 07 · Filed under Fraud News Stories
I don’t know if I was living under a rock or what, but I first discovered Consumerist a couple of months ago. I know, I know… I investigate fraud for a living and you’d think that I’d be on the lookout for sites that help consumers avoid scams. I am - sort of. You see, the focus of my company is not on consumer issues, but business fraud.
But I’ve taken an interest in these consumer scams and schemes… plenty of them perpetrated by good old American companies. You know, the ones that you’d think would value our patronage and treat us right? Consumerist does a great job of publicizing situations in which customers get the shaft from big business.
And this whole thing is about to come full-circle. Next month, I will become part of a new site, sponsored by a company with a HUGE online presence. We’ll be putting together a consumer finance blog, with several writers covering different aspects.
My focus, of course, will be fraud and scams against consumers. And this is going to be fun. I’m going to be blogging about current fraud issues facing consumers, ways to protect themselves, and real life consumer rip-offs. I’m going to be collecting stories from readers who’ve been cheated or scammed and we’ll be giving the companies who perpetrate the fraud and other bad acts a nice bit of publicity.
Stay tuned for more details, as we get ready to launch the site in a few weeks!
Thu 8 November 07 · Filed under Fraud News Stories
The Washington Post reports that two Washington D.C. government employees have stolen over $16 million in phony tax refunds in a scam that has gone on for at least three years. Harriette Walters and Diane Gustus have been charged
The two employees worked in D.C.’s Office of Tax and Revenue, and were helped by about 40 friends and family members. There were additional participants in the fraud scheme who worked in government offices. Walters and Gustus would create tax refunds for property tax accounts that would be made to appear overpaid, and then checks would be made to sham companies created by conspirators. Co-workers of Walters and Gustus would approve the fake documentation so the checks could be issued.
The fraud was uncovered when a bank employee questioned a $410,000 tax refund check that was brought into the bank in July. The investigation has found that the average amount of the refund checks created in the scheme was $388,000. Many are questioning how such unusually large tax refund checks were never noticed by other employees.
Wed 7 November 07 · Filed under Scam Busting
Today Bradford Richardson sold $600,000 more of his Usana stock. He’s liquidating all of it. With only 400 shares of stock left, I think TerminatedRamp has this one right…. Bradford Richardson, Usana’s Executive VP of Asia Pacific is going to be the sacrificial lamb. Barry Minkow and Fraud Discovery Institute released Cheating in China last month, detailing how Usana corporate employees are knowingly and willingly violating Chinese laws against multi-level marketing.
About the only way Usana can get out of this one is to offer up a sacrificial lamb. Make Richardson the one who was responsible for it all. Get rid of him and vow to make things right in China. That’s really their only chance for survival.
Forunately, the SEC is not that stupid. They (and we) know that Bradford Richardson was not solely responsible for the shenanigans in China. Dave Wentz is in on it. Myron Wentz is in on it. Gil Fuller is in on it. They are all actively involved in the China mess, and not only knew about it, but approved of it as well. Getting rid of Richardson will be a nice gesture, but it won’t work.
Wed 7 November 07 · Filed under Fraud News Stories
From Zac Bissonnette at BloggingStocks:
After Whole Foods Market (NASDAQ: WFMI) CEO John Mackey bizarre antics prompted an SEC investigation and widespread media hoopla, the company’s board of directors has decided on a new policy. Top executives and directors will now be explicitly prohibited from posting on online forums about the company, its vendors, or its competitors, except on Whole Foods-sponsored sites.
Happily, the change does not prohibit them from posting about other topics. So Mr. Mackey will still be able to compliment his own hairstyle while posting anonymously.
It’s kind of bizarre that Whole Foods even had to add this to its code of ethics, and it seems unlikely that this kind of thing will ever happen again at any normal company. Of course, it happens every day over at Overstock.com (NASDAQ: OSTK), where Director of Communications Judd Bagley routinely attacks critics on Yahoo! message boards and Wikipedia.
<snip>
Overstock Board of Directors??????
Tue 6 November 07 · Filed under Scam Busting
The Usana executive in the best position to know how factually accurate the Fraud Discovery Institute allegations about Cheating in China are… keeps unloading his Usana stock. Go, Bradford Richardson! Richardson is Usana’s Executive Vice President of Asia Pacific. Sounds like someone who knows firsthand about how badly Usana breaks China’s laws, and therefore how untrue Usana’s SEC filings are in regard to the company’s activity in China.
Here’s Richardson’s stock sales, totaling over $1 million since the October 18 release of the Cheating in China report:
I could be way off base here, but isn’t it possible that this guy knows all about the cheating in China and knows that it will very soon catch up with Usana… and he’s selling while his stock is stock is still worth something? Naaaaah… I’m sure that can’t be it.
Tue 6 November 07 · Filed under Pyramid Schemes & MLM
News on Herbalife (NYSE:HLF):
5:25PM Herbalife in its 10Q discloses SEC has issued a formal investigation (HLF) 39.35 +0.65 : The co says “on September 20, 2007, the Company was orally advised by the Los Angeles Regional Office of the SEC that the SEC had issued a formal order of investigation into the timing of trading in Herbalife securities by a former mid-level employee. The Company does not believe these trades involve the Company itself. In addition, on November 1, 2007, the Company received a voluntary request for the production of documents from the staff of the Los Angeles Regional Office of the SEC regarding the extent of personal use of Herbalife products by the Company’s distributors and the Company’s related policies and procedures. The SEC has advised the Company that its inquiry should not be construed as an adverse reflection on any person, the Company or its common shares, or as an indication from the SEC or its staff that any violation of law has occurred. The Company is cooperating fully with the staff of the SEC in these matters.”
Tue 6 November 07 · Filed under Pyramid Schemes & MLM
According to the November 5, 2007, Herbalife (NYSE:HLF) response to the Fraud Discovery Institute (FDI) report, the company states: “We have confidence in our direct-selling business model, our integrity and transparency as a NYSE-listed company and the fundamentals of our business.”
Asks FDI’s Barry Minkow, “Have Herbalife forgotten the imputed credibility of being on the New York Stock Exchange lost its value when another, well-known NYSE company failed - specifically, Enron? There was not one word about the 24-page expert analysis of the Herbalife that challenges the very core and foundation of its business fundamentals and business model.
“In fact, if the company can demonstrate that no less than 90 percent of its distributors actually do not fail within 12 to 14 months after starting an Herbalife business, then FDI will recant all of the reports’ findings, take down the doomed by design Web site, stop filming the documentary and write a formal apology to Mr. Johnson and the Board - but the reason no specific answers were given in writing in defense of the company fundamentals - which is the very motive for our report, is that Herbalife knows over 82 percent of all the compensation paid to distributors goes to less than 1 percent of its 1.5 million ‘doomed to failure’ distributors.” [Read more...]
Tue 6 November 07 · Filed under Pyramid Schemes & MLM, Scam Busting
Multi-level marketing company Herbalife has denied the allegations made in Barry Minkow’s report about their fraud in China with this press release:
We have confidence in our direct-selling business model, our integrity and transparency as a NYSE-listed company and the fundamentals of our business. With regard to our business in the People’s Republic of China, the Chinese government thoroughly reviewed our company, our global operating model and our specific operating plan in China as part of the licensing process. We received our first direct-selling license in China in March 2007 and subsequently received an expanded license in July 2007, which further validated the legitimacy of our operating plan in China. We believe our China marketing plan is compliant with all applicable laws, as are our marketing plans and business practices worldwide.
Barry Minkow states in the footnotes to his letter, he is hoping to use video gathered during his investigation as a stepping stone to a weekly television show that will benefit him financially. Minkow is a convicted felon trying to create a sensational story by drafting a 90-page letter, cobbling together one-party consent undercover video and calling it “evidence.”
We stand behind the integrity of our company.
Notice they talk about their “operating plan” and their “marketing plan” being compliant with Chinese laws. What about actual operations? Are those compliant? Not according to the evidence secured by Fraud Discovery Institute.
And yes, the video is evidence.
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