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Cooked Books Al Dente at American Italian Pasta Co
The American Italian Pasta Co. announced that an internal investigation of the company’s accounting would require a $60.7 million charge this quarter, and it was delaying filing its current 10-Q because the investigation is ongoing and the financials cannot be issued. According to a press release (here), AIPC said that the largest amount was an…
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Christmas Show Fraud Nets 87-Month Prison Term
The U.S. Attorney’s Office for the Southern District of Florida announced that David Ellisor received an 87-month prison term for defrauding a number of South Florida schools into paying $10 per child for a show called "Christmas Around the World" that was completely fictitious. According to the press release (here): [T]he evidence presented at trial…
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Hedge Fund Fraud in Tony Palm Beach
The New York Times has a long article in the Sunday business section (here) detailing the alleged fraud involving KL Group, which operated out of southern California and West Palm Beach. The firm touted its outsized, and apparently overblown, returns on its investments, asserting it had a 70% return in 2003 and a 40% return…
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Attorneys in Trouble Over Taxes
Two attorneys in Texas have run afoul of the IRS and DOJ for filing false tax returns. Odessa attorney Stephen Ashley entered a guilty plea to one count of filing a false estate tax return in connection with the settlement of his father’s estate (press release here): Ashley was the executor of his father’s estate…
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Southern Happenings
In Mississippi the Clarion-Ledger reports that State Supreme Court Judge Diaz was found not guilty on all counts. (see here) Other defendants in this case had somewhat mixed verdicts – with some counts being not guilty and others ending in a hung jury. None of the defendants prosecuted by the government in this case were…
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White Collar Sentences in China Tougher than in US
The New York Times reports here that a leading banker in China, convicted of embezzlement, has been given a sentence of death. The sentence was suspended. So for those, like me, who thought Bernard Ebbers, Jamie Olis, and the Rigas’ sentences were too high – I guess they certainly weren’t according to the standards used…
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Former Bayer Execs Charged with Antitrust Violation
Two former executives of Bayer have been indicted for price-fixing. The Department of Justice press release reports here that: "The former Bayer executives were charged with carrying out the conspiracy with their co-conspirators by: Participating in meetings among major rubber chemical producers to discuss the prices of rubber chemicals to be sold in the United…
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Is There a Bright Line Between Civil and Criminal Fraud?
Bruce Carton on the Securities Litigation Watch blog (here) and Prof. Larry Ribstein on the Ideoblog (here) raise questions about when a securities fraud case, perhaps more specifically a case involving accounting issues, moves from being a civil to a criminal case, and whether the direction of a case is anything more than the "corporate…
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Tax Protester Convicted
Tax protester Larken Rose was convicted in Philadelphia of five counts of failure to file a tax return. Rose is a leading advocate of the Section 861 position, which claims that income earned inside the United States is not subject to taxation. Section 861 (here) is entitled "Income From Sources Within the United States," and…
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Collins & Aikman Discloses SEC and DOJ Investigations
Collins & Aikman Corp., the large auto-supplier that filed for bankruptcy protection earlier this year, disclosed that it has received a grand jury subpoena and has been providing documents to the SEC. The company’s press release (here) states: Collins & Aikman Corporation (CKCRQ) announced today that it has received a grand jury subpoena from the…
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