Archive for January, 2008
Tue 22 January 08 · Filed under Writing & Blogging
The day has gotten away from me, so it’s time for one of those cop-out posts where I tell you what I’m writing about elsewhere. I hope to get back here later today or sometime tomorrow with some original content. I’m actually looking forward to addressing a question posed to me last week by Dennis Howlett, about audit effectiveness and options to audits. As you can imagine, I’ve got some strong opinions (really?) and I love to hear his and Francine’s take on those opinions.
But for now… today on WalletPop, I wrote about…
To hire or not to hire - Deciding if and when to hire employees for your small business
Does advertising really work on consumers? - Lots of money is spent on not-so-memorable television advertising. Is it worth it?
Stocks and Investing: The sky is falling!…or is it really? - My take on all the cries of “recession” and “inflation,” and what those with stock market investments should not do right now.
Symphony DVD Micro Music System for iPod, $107 - A little dock for your iPod to turn it into a home system. Not the greatest quality, but seems worth the price.
Tax Tips: What’s the story on Capital Gains? - A little primer on short and long term capital gains and how to make them work for you at tax time.
Millionaires beware: More IRS audits for you - More audits are on the horizon, especially if you make more than a million dollars a year.
You can own a yacht! Yes, you! - “Fractional ownership” gives people the chance to own a piece of a yacht, a jet, a mansion, and more.
And a couple from yesterday…
Layoff in your future? Plan now. - Some tips for preparing ahead of time for a layoff that you hope never happens.
You have to work for your money! - A company pays a guy for almost five years. He was never their employee. And he kept the money.
Get $25 or more from the Currency Conversion Fee settlement - If you travel over sees, you may be entitled to part of a class action settlement with the credit card companies.
Mon 21 January 08 · Filed under Fraud News Stories
Last week I posted on WalletPop about a proposed “congestion fee” that airlines would have to pay at airports. Right now they pay a landing fee based upon the weight of the plane. With the congestion fee, they would instead pay a fee based upon the day of week, time of day, and congestion at the airport during landing. Simply put: During peak travel days and times, airlines will pay more for each plane they land.
Several comments have been left on the post, with readers generally arguing about why airlines charge so much to fly, why they’re not profitable, and what the lowly consumer can do about it.
One reader left this excellent comment that I think does a marvelous job of summarizing the problem with the U.S. airline industry:
Two issues were noted in previous posts:
(1) Airlines treating us like cattle because it maximizes their profits. (2) Airline costs are high because of labor costs.
Let’s address these problems - unions exist because labor organized to fight management abuses - many of them salary related. (And we all know cases of rotten management somewhere!) Businesses (in theory) exist to return profits to stockholders. Simplify the equation to a single boss and a single worker - a boss offers a salary for a given unit of work, and a worker offers work for a given unit of salary. If the worker asks for too much, the boss hires a different worker. If the boss offers too little, then the worker tries to find work elsewhere. Looking at the problem from the point of a single boss and worker, it’s simple….
But we are not looking at a simple equation. Workers are expecting pay scales based on airlines past successes. Airlines have costs imposed on them due to past regulations and contracts which no longer are sustainable. Government has not defined the markets in a way that natural forces check and balance both airline management and labor. Nor has it managed resources well (landing slots, transport to airports, etc.). Couple this with an American culture that rewards false economies (such as buying things at the lowest price without regard to quality), and we’ve seen air travel go to blazes.
How should we address this in a way to save real money, and yet use markets to our advantage? For me, it’s choosing not to use airlines for shorter trips. It also includes choosing my airports carefully (and I can do so in the NYC region), which may include driving out of my way to avoid airports with excessive congestion. If we start acting rationally, both airlines and their labor will start doing the same. And we may see realistic, sustainable, reasonably inexpensive fares with quality service return…..
I couldn’t have said it better. The airlines have a cost structure that they can’t support and real customer service is practically non-existent. How long can the airlines tread water?
I think a large-scale overhaul of the industry is necessary, but it will inflict great pain on the consumers while it happens. It may even require the airlines to “start over”… essentially completely overhauling their process and their sales force. While they do that, I expect that flights will be in short supply and prices will be very high.
Sun 20 January 08 · Filed under Entertainment
I wanted the perfect ending to this fairy tale of a season for the Green Bay Packers. Brett Favre deserved to be in one more Super Bowl. No one expected much of the team this year, but they took it all the way to the NFC championship game. And they just couldn’t finish. I feel like Brett has been cheated out of a beautiful ending to his career.
Thu 17 January 08 · Filed under Fraud News Stories
To hear Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne tell it, everyone is gunning for them. The company is fantastic. Patrick is fantastic. Everything is above board and everyone is forthcoming with everything.
However, another issue has come up. It’s now clear that there were shenanigans with the resignation of President Jason Lindsey and the statements made and documents filed in the days around the resignation.
Sam Antar has discovered proof that Jason Lindsey’s resignation from Overstock.com was backdated.
Here’ the 8-K that Overstock.com filed on January 2, 2008 with the SEC (click on it to see it full-size): [Read more...]
Wed 16 January 08 · Filed under Pyramid Schemes & MLM
Last week, Usana Health Sciences (NASDAQ: USNA) announced that the SEC dropped its informal investigation into the company. Immediately, there was a nice short squeeze. But since then, the stock has been on a downward trend.
My opinion on this? I think that Cheating in China is still a big issue. I’m not sure that the SEC is interested in this issue right now, but someone is. And frankly, Usana hasn’t answered questions about why their management employees in China are breaking the law and showing potential distributors how to break the law.
I think this issue is still a big problem, and that’s why the stock is languishing this week. So how does this get resolved? I think Bradford Richardson, Usana’s Executive VP of Asia Pacific is going to take the fall for the company. It looks like he’s sold off all his shares of Usana and with money in pocket, will leave quietly. Expect a big announcement before the next conference call, that way Gil and Dave can spend part of the conference call raving about how high their ethics are.
And my guess is that Richardson is going to be hired by Shaklee. But don’t ask me why I think that.
Chart below (click on it to see it full size).
Mon 14 January 08 · Filed under Pyramid Schemes & MLM
Last week the Securities and Exchange Commission (SEC) informed Usana Health Sciences (NASDAQ: USNA) that it was closing its informal investigation into the company and taking no further action at this time. The pro-MLM camp has trumpeted this as a complete victory for Usana, proclaiming that the SEC basically said their business structure was completely legal and all was rosy at the company.
What does the letter from the SEC to Usana really mean? It means that the SEC is closing their investigation for now. Nothing more, and nothing less.
It is certainly not a vindication for Usana. While the company and its executives can celebrate the fact that the investigation is currently closed, that doesn’t mean they’re operating by the book or they’ll get a pass into infinity.
What this really means is that the SEC did not have enough to warrant moving their investigation of Usana from the informal phase to the formal phase. But I still believe that Usana is committing a serious fraud against its shareholders and distributors. Could they be committing fraud even though the SEC closed their informal investigation? Of course! [Read more...]
Mon 14 January 08 · Filed under Auditing & Regulations
Last week I wrote about Catapult Communications (NASDAQ: CATT) switching from Deloitte & Touche to a much smaller local firm, in a post called Big Four = Big Fees. In that post I referenced the CFO.com article from which I got my information. The article focused on the difference in fees between the firms: $985,000 for Deloitte and $561,000 for the small firm. That big savings was portrayed as the reason Catapult switched.
And in rides Francine McKenna of re: The Auditors. She raises a good point. Why did Catapult go to great pains to detail the reason for the switch from Deloitte to a virtual no-name firm? Was Catapult trying to embarrass Deloitte?
Well I think Francine may have found the answer, one which she suggests CFO.com might have found if they hadn’t just accepted Catapult’s story at face value. You see, in the company’s annual report for the year ended September 30, 2007, it was noted that a material weakness from the prior year was remediated.
What was this weakness, you ask? Well, you can see what the weakness was if you read the fix that was noted in that annual report:
The Company’s Chief Financial Officer performs a detailed quarterly review to confirm that the Company’s accounting for its cash, cash equivalents and short-term investments is in accordance with the requirements of generally accepted accounting principles in the United States.
Uh…. if the “fix” is that the CFO now reviews cash and short-term investments to see if they’re reported in accordance with GAAP, then the weakness was that he wasn’t doing it before! And…. not doing it was deemed a material weakness by Deloitte.
That’s pretty bad. And who knows.. maybe Catapult is upset that Deloitte forced them to fix the problem and make the disclosure.
Francine also notes that Catapult switched auditors in January of 2006, too, dumping PriceWaterhouseCoopers and hiring Deloitte.
Francine and I agree on this: It is not uncommon for companies to go opinion shopping.
Could that be what we’re witnessing here?
UPDATE: More on Dennis Howlett’s take is found here.
Mon 14 January 08 · Filed under Pyramid Schemes & MLM
Multi-level marketing will go down in history as one of the great frauds of our times. It deceptively wraps its harmful scam with the real needs and desires of people today - additional income, stay home with the family, independence, entrepreneurship, high income without high investment or training, and a group that will help you succeed. MLM is an Enron story, glossy and exciting to those who invest. But in the end, it causes massive harm, employs sophisticated deception, and it is corrupting our government.
MLM is an American-based “sales ” scam, and has spread to more than 70 other countries, just as Nigeria has spread its famous “bank account” scam worldwide.
Yet, 2007 marked a turning point.
- Amway/Quixtar, the largest and oldest of all MLMs, was put on trial for fraud in EnglandAmway’s top insiders blew the whistle and sued the Amway/Quixtar scheme for fraud
- The well respected fraud investigative firm, Fraud Discovery Institute, founded by Barry Minkow, has turned its professional skills of investigation on MLM. Devastating reports have been released on Usana and Herbalife, tracking their recruitment behavior all the way to China with undercover video tapes.
- Deception by the MLM, Usana, against both consumers and shareholders has been uncovered and numerous lawsuits have been filed against the scheme.
- More websites to expose MLM are appearing now in Europe and in Mexico and in USA.
- When fraud is protected by government and flaunts its ill-gotten wealth in the marketplace, real courage is required to stand up to it and declare the truth.
Congratulations to all who had the courage in 2007 to recognize MLM for what it is and to tell the truth about it.
Sun 13 January 08 · Filed under Entertainment
The only thing better than the Dallas Cowboys losing????
Terrell Owens losing!!!!!
Sun 13 January 08 · Filed under Fraud Detection & Prevention
See! Usana Health Sciences (NASDAQ: USNA) CFO Gill Fuller was right when he said that everyone was lying about their credentials (including him!).
The CEO of CellCyte (Public, OTC:CCYG) was recently busted for embellishing his resume, and the stockholders have paid dearly. Gary Reys, the co-founder and CEO of CellCyte Genetics was busted by The Seattle Times, who challenged the accuracy of statements in his biography on the company website.
The original biography on the website says, in part: [Read more...]
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