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Fastow Heads to Prison
Former Enron CFO Andrew Fastow has finally headed off to a prison in the federal correctional system after a delay of almost two months to allow him to give a deposition in the securities fraud class action against the company’s banks. Fastow is currently being held in the Federal Detention Center (website here) in Oakdale,…
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Beware the Former IT Director
The U.S. Attorney’s Office for the Southern District of Florida announced (here) the indictment of Joseph H. Shook for violating the computer crime statute, 18 U.S.C. Sec. 1030, for allegedly hacking into the computer system of his former employer. Shook had been the Director of Information Technology for Muvico, which operates movie theaters, primarily in…
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Cooperate or You’re Gone
The current environment in the options back-dating investigations is certainly taking a toll on the management at companies, and the pressure to cooperate is intense. In another example of the attitude of companies toward employees who do not willingly provide information in internal investigations, ScanSource, Inc. announced that an executive vice president for administration and…
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Controller Pleads Guilty to Embezzling $2.5 Million
Richard E. Davis entered a guilty plea to embezzling approximately $2.5 million over eight years from his employer, Packaging Corporation of America (PCA), where he was the controller and chief accountant at a plant in Richmond, Virginia. The bulk of the embezzlement occurred by inflating invoices payable to a janitorial company owned by his wife,…
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Playing Both Sides in High Profile Cases
The U.S. Attorney’s Office for the Southern District of New York announced the arrest of Michael Lair for allegedly defrauding lawyers in two civil cases by telling them that he had information for sale about their opponents. After taking the money, he then contacted counsel for the other side and offered to provide information that…
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Martha Stewart Settles the Final Case
The final piece of litigation related to Martha Stewart’s ill-fated sale of a little over 3,000 shares of ImClone Systems stock in December 2001 is about to be settled. The government believed her broker had been tipped by Dr. Samuel Waksal, then CEO of ImClone who is serving a seven-year sentence for insider trading and…
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Marketing Executive Convicted of Accounting Fraud
Former U.S. Foodservice chief marketing office Mark Kaiser was convicted in New York of securities fraud, conspiracy, and filing false documents with the SEC in connection with an accounting fraud at the company, a subsidiary of Royal Ahold N.V. Kaiser and a number of senior executives at the company were charged in connection with inflating…
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UnitedHealth Gets Ready to Take Its Options-Timing Hit
UnitedHealth Group Inc. has been at the center of the options-timing scandal, and the effect of the problems has forced the company to disavow its financial statements all the way back to 1994. UnitedHealth became a publicly-traded company in 1984, so that means about half of its financial statements are no long reliable. The company’s…
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Former NextCard Executives Settle SEC Fraud Case
Five former senior executives of defunct credit card issuer NextCard, Inc. settled an SEC civil securities action related to accounting fraud that hid problems at the company. The defendants are: John Hashman, CEO; Yinzi Cai, president and COO; Bruce Rigione, CFO; Douglas Wachtel, controller; and, Jeremy Lent, chairman and chief strategy officer. According to the…
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Former Homestore Executive Receives 30-Month Sentence
Peter Tafeen, formerly vice president of business development at Homestore.Com Inc., received a thirty-month prison term for his role in inflating the company’s revenue from advertising through "round trip" agreements that did not generate any money for the company. Tafeen also settled an SEC securities fraud complaint by agreeing to pay $2.6 million and accepting…
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