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TIME CRIME
With so much SEC activity regarding the back-dating of stock options, it's almost impossible to keep up with the Wall Street Journal articles.
Security Brokerage, Inc. Investor Daniel G. Calugar, who allegedly reaped a fortune through illegal mutual fund trades, agreed Tuesday to a $153-million settlement with the Securities and Exchange Commission. The 51-year-old Calugar was accused of trading mutual fund shares after the markets had closed to take advantage of pricing trends, using phony time stamps to cover his tracks. Read the January 2006 LA Times Story or the US Nevada District Court case filing.
FINANCIAL DATA (SOX) Ý The Sarbanes-Oxley Act of 2002 (Public Law No. 107-204) commonly called "SOX" was passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, and WorldCom (now MCI). One of the numerous SOX provisions is the requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting; and that appropriate controls over financial data be implemented where such controls are found to be lacking. Enron CFO Mr. Fastow, the Chief Financial Officer and other members of the Enron executive team made it a habit engaging in time-based data manipulation, i.e., to alter or change financial data to suit whatever it was they wanted the investing public, or governmental authorities to know, or not know. Mr. Fastow has pleaded guilty and is now a guest of the federal government. Rite-Aid CEO and CFO The CEO and the CFO of this publicly traded company backdated compensation grant letters to enrich themselves by millions of dollars. They then attempted to remove any evidence of their wrongdoing by dumping the computer they used to backdate the documents into the Atlantic Ocean. These gentlemen are now guests of the federal government. Next-Card Auditors Now defunct NextCard was the largest issuer of Internet MasterCard and Visa credit cards. Executives of this former high-flying public company fraudulently and illegally re-characterized loan losses, thereby reducing the amount of cash reserves required. Assisting in no small way in this billion dollar flameout, auditors from Ernst & Young perpetuated the company’s fraud by backdating their work papers and their final reports to conform to the fraudulent representations by company executives. These auditors are also currently guests of the federal government. The SEC attorney investigating this matter lamented that the real crime here was that there was no way to ascertain or recover the real, or the true data, because of the time-based data manipulation of these insiders. Sirena Corporation CEO The Securities and Exchange Commission fined publicly traded Sirena Corp. for holding the quarter open for days after the end of that quarter in order to squeeze additional revenues to meet analysts projections. Sirena eventually declared bankruptcy. Parmalat CEO, CFO and Family Members In this 18 billion dollar 2003 bankruptcy, the entire CxO level of this mutli-national conglomerate engaged in time-based data manipulation by creating an authentic appearing confirmation by Bank of America, on Bank of America Letterhead, and signed by a Bank of America Vice President, to the effect that there existed an offshore bank account holding 5 billion euro on account. In reality both the funds and the account were non-existent, and the alleged Bank of America letter used by the Company to raise billions in the public credit market was pieced together by the company executives using a scanner and Adobe Photoshop, from three totally unrelated sources. The signature of the Bank of America VP was from the information technology department. There are currently at least three lawsuits, including two class actions, pending in various courts around the world. Adelphia Communications Executives Once one of the largest cable providers in the United States, Adelphia’s top executives engaged in time based data manipulation to hide the theft of more than 400 million dollars from the company. Adelphia subsequently entered bankruptcy, its top executives were tried (and two convicted), and the company is now being acquired by one of its competitors.
Autotote Programmer A senior trusted programmer for the largest electronic wagering organization in the United States manipulated software updates to back-date data to arrange a 6 million dollar winning ticket in the Maryland Breeder’s Cup race. This gentleman is now a guest of the state.
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