Posted by Kevin Pereira.
Volkswagen has recently admitted to the fact that many of the diesel automobiles they were being sold were cheating the air emission standards. This was made possible by an intelligent computer module that sensed when the automobile was being tested. It would then activate the equipment necessary to pass the emission test. However, after the test was complete, the automobile would disable this equipment, which would enhance the driving experience as well as gasoline mileage. The problem here is this deception has allowed automobiles to pollute the air with deadly chemicals, which result in respiratory diseases and global warming. This is an example of short-term profit maximization versus long-term profit maximization.
Stemming from this lawsuit that Volkswagen is facing, lawyers are having a difficult time figuring out where the case will take place and which lawyer will receive the most compensation. Being that Volkswagen practically sells vehicles all over the country, the courts have jurisdiction in all the states in which Volkswagen sells and advertises. In addition to this large suit, Volkswagen is facing “350 lawsuits” (Meier) by consumers who have recently purchased these rigged vehicles. Many of these consumers are demanding that Volkswagen compensate them for the full price of the vehicle as well as the depreciation value. With so much money at stake in this lawsuit, the concentration has moved from the concern of the plaintiff to the notion of which lawyer can make the biggest portion of money.
Meier states, “legal scholars . . . are concerned that lawyers, who get paid when a case is resolved, may be open to settlement terms that might favor them more than some clients” (Meier). In other words, lawyers will be urged to have a bias going into the case simply so they can be awarded a larger portion of money. As a result, the plaintiffs who purchased the rigged vehicles will not receive the outcome and compensation they ultimately deserve.
Kevin is a marketing major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Kevin Pereira.
This past Thursday, the F.B.I. arrested Benjamin Wey at his home located in Manhattan. He was charged for “securities fraud, wire fraud, conspiracy and money laundering in an eight-count indictment unsealed in a federal court in Manhattan.” In addition, Mr. Wey had already been arrested for sexual harassment a couple months prior to this incident. Mr. Wey was making Chinese companies public in the United States using a process known as a reverse merger. To explain, a reverse merger is a way for private companies to go public by buying the “shell” of a public American company.
Mr. Wey fulfilled this fraud by involving his family members and close friends. He portrayed the Chinese companies he was taking public to be mature and prosperous so that inventors were fooled into thinking that they were successful corporations in the NASDAQ stock market. Therefore, many clueless investors were investing into these masked corporations, which were being upheld by his family members. In addition, Mr. Wey’s banker, Seref Dogan Erbek, was helping falsify the “sales, volume, demand and price of the shares of the companies they took public.” The SEC in a civil complaint charged Mr. Erbek, Mr. Wey’s wife, his sister, and two lawyers as being part of the fraudulent matter.
Mr. Wey was inflating the prices of the shares by trading them between his family and friends. By doing this, the sudden increase in price attracted many eager investors. Once Mr. Wey had an audience, he would sell the inflated shares and generate millions of dollars. The money he was making would be sent to bank accounts offshore in Japan and Switzerland. Mr. Wey’s family members would then transfer the money back into the United States, stating it was a gift.
Kevin is a marketing major at Seton Hall University, Stillman School of Business, Class of 2018.