In the Courts
May 07, 2004
Important rulings of interest to you and your practice.
Tougher Penalties, More Prosecutions
May 07, 2004
Although the McCain-Feingold Campaign Reform Act took effect almost 18 months ago, little attention has been paid to changes it made in the enforcement of federal campaign finance law, including big penalties for violations and sentencing guidelines that mandate incarceration for most criminal convictions. Notably, the Act ' Campaign P.L. 107-155, officially called the Bipartisan Campaign Reform Act of 2002 (BCRA) ' has increased the risk of criminal prosecution as well as the penalties.
Can You? Should You? Must You?
April 01, 2004
As general counsel of a small public company, you discover that, for 2 years, a department head approved sending false invoices to customers, resulting in profits of at least $2 million. Although it stopped a year ago and is well concealed, the practice was intentional, and a half-dozen current employees were involved. You fear that the false invoices constitute at least mail and wire fraud. Moreover, if the victims find out, they might sue. What do you do?
In The Courts
April 01, 2004
The latest on what's happening in the courts.
Prosecuting Energy Trading Fraud under the CEA
April 01, 2004
In the aftermath of Enron's collapse, attention turned to the accounting and other practices of energy companies. Numerous investigations and suits have been brought against traders and energy companies involved with supplying power to California and elsewhere during the 2000-2001 energy crisis. The government has focused on such practices as "round-trip trades," in which energy companies entered into pre-arranged transactions, lacking market risk, to inflate reported trading volumes. Federal prosecutors in California and Texas have charged individuals with causing inaccurate or fictitious trades to be reported to trade journals.
Internal Controls: Cure-all or Snake Oil?
April 01, 2004
Internal controls" have been touted for years as the cure-all for corporate ills. Why, then, are we bombarded with daily revelations of abuses crippling corporations around the globe?
Inferring Dishonesty: The Fifth Amendment and Fidelity Coverage
April 01, 2004
Dishonest employees always have posed a problem for businesses. The average business may lose 6% of its annual revenues to employee fraud, and cumulatively the impact of employee theft on the economy is estimated to be $600 billion annually. <i>See</i> Association of Certified Fraud Examiners ("ACFE"), 2002 Report to the Nation on Occupational Fraud & Abuse, at ii, 4 (2002), available at <i>www.cfenet.com/publications/rttn.asp.</i> Although the average loss through employee embezzlement is $25,000, where computerized financial records or transactions are involved, the average loss increases nearly twentyfold. <i>See</i> National White Collar Crime Center, <i>WCC Issue: Embezzlement/Employee Theft,</i> at 2 (2002), available at <i>http://nw3c.org/downloads/Computer_Crime_Weapon.pdf.</i>
Risky Business
March 01, 2004
Third-party facilitators have played a critical role in allowing corporate misconduct to happen," according to Deputy Attorney General James B. Comey, Jr., head of the Justice Department's Corporate Fraud Task Force. Stephen Cutler, Director of Enforcement for the SEC, has warned that financial institutions violate the federal securities laws by "contributing to fraudulent accounting and manipulated financial results" of public companies. In a recent report, the Enron bankruptcy examiner described a financial institution as an "enabler" of violations by Enron's officers. In the Sarbanes-Oxley era, the government is not only rounding up the direct violators, but has also brought aiding-and-abetting charges against companies that entered into certain business transactions with other companies accused of securities violations, even though the alleged abettors themselves filed honest reports with the SEC.
