Posted by Emanuel Sanfilippo.

On Monday the 28^th, Diane Backis, a corporate accountant in New York, admitted to stealing at least $3.1 million from Cargill Inc., an agricultural business giant. In doing so, Backis caused $25 million in losses to Cargill’s grain shipping operations at the Port of Albany according to the Associated Press. Diane Backis pleaded guilty in federal court in Albany to mail fraud and a false income tax return. According to U.S. Attorney Richard Hartunian, Backis diverted customer payments to her own accounts over a 10 year period and caused $25 million in losses to Cargill Inc.

“Backis, 50, was an accounting department manager at Cargill’s Albany grain elevators at the port whose duties included creating customer contracts, generating invoices and processing payments.” Backis admitted in court that she sent customers invoices for animal feed prices much lower than what her employer paid, in doing so, she caused the company millions of dollars in losses in inventory. She tricked consumers into sending the payments directly to her bypassing Cargill’s corporate controls. In an essence, Diane Backis basically used her ability to access inventory and money from Cargill to sell their inventory privately for personal profit.

The Associate Press states how the tax fraud charge refers to Backis’s 2015 individual income tax return on which declared $61,208 in income and omitted more than $450,000 she received that year from stealing Cargill customer payments. In accordance with Backis’s guilty plea, she has to pay $3.5 million in restitution to Cargill and she has to forfeit her house, an investment brokerage account and her pension benefits from Cargill. According to Pete Stoddart, a Cargill spokesperson, Cargill has audited its controls and trading systems and confirmed that it was an isolated incident only affecting that one location and Cargill customers were not adversely affected. Diane Backis faces up to 20 years in prison when she’s sentenced on March 28^th.

Emanuel is a sports marketing and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Jessica Page.

General Motors Co. has recently been in the news for its faulty ignition switches in over 2.6 million of the company’s Chevrolet Cobolts and other models that were recalled in 2014. The faulty ignition switches were found to “slip out of the run position and disable features including air bags.” This product defect has been connected to over 100 deaths and over 200 injuries. In September, the U.S. Justice Department brought a criminal case against GM. They agreed to pay $900 million to settle and a $35 million fine for not reporting the defect.

On Monday, Judge Robert Gerber stated that it is possible GM will also face punitive damages to compensate consumers who were harmed by the defect, even though the company sought to block plaintiffs making these claims. Judge Gerber has suggested the punitive damages could amount to billions of dollars if the legal claims are settled or successful. This is partially due to the fact that GM admitted in the original settlement that they “[mislead] regulators about the defective switch and [failed] to recall millions of vehicles.”

Another interesting factor for this case is the bankruptcy restructuring GM went through. In the restructure, they assumed responsibility for “future product-liability cases involving older vehicles.” Since this is so broad, it is likely that GM could be held responsible for claims on both compensatory and punitive damage because of its knowledge of the defect and conduct, but only to the extent that the “New GM” holds. GM has agreed to spend over $500 million to settle these cases and over the next few months, the company is expected to face even more death and injury cases that have yet to be settled.

Jessica is a finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2016.

Members of organized crime, drug dealers, and terrorists transact their “business” in cash to hide their tracks. As part of a scheme to launder money (make it look it was earned legitimately), criminals will deposit their ill-earned cash in bank accounts. In response, Congress passed the Bank Secrecy Act, requiring banks to assist the government in catching money launderers.

Under the Act, banks are required to report any cash transaction or combination of cash transactions in excess of $10,000 to the IRS.  Knowing this, criminals resort to structuring. Structuring is the deliberate parcelling of a large cash deposit into a series of smaller transactions in order to avoid detection by regulators. When bank officials suspect structuring is occurring, they are required to file a suspicious activity report, or SAR, and notify regulators of what they believe is happening.

In Ratzlaf v. United States, 510 U.S. 135 (1994), the Supreme Court found that government had to prove that defendant acted with knowledge that structuring is unlawful. As a result, Congress removed the “willfulness” requirement making it easier for the government tor prosecute structuring cases. The IRS, however, has been seizing assets of legitimate businesses and individuals without any proof or any charges filed. Small business and individuals can be a target. In one case, the IRS seized $66,000 from an Army sergeant’s college savings account, even though the sergeant was told by the bank teller to make smaller deposits in order to avoid taxes. Removing the “willfulness” requirement makes structuring a strict liability crime.

In a written statement, Richard Weber, the chief of Criminal Investigation at the IRS, said, “After a thorough review of our structuring cases over the last year . . . IRS-CI will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level.”

Posted by Hongkun Ma.

On Nov. 22nd, the ride-hailing app company Uber Technologies Inc. paid hackers $100,000 to conceal an incident that Uber revealed 57 million users’ personal information like names, phone numbers and addresses around the world. 600,000 Uber drivers’ license numbers also were released.

Whether the incident violated state law is being investigated by five state attorneys general: New York, Washington, Missouri, Connecticut and Massachusetts. Forty-eight states have laws that customers have right to know a company’s data breach and will impose fines if company violates them. For Uber, the incident has been so complicated, which lost the trust of millions of customers.

The incident reflected how a data breach can trigger responses from mass of regulators and enforcement agencies, and how a private company can have flexibility to deal with this kind of things. International regulators investigated the incident right away and data protection officers from throughout the European Union announced a task-force to look into the incident. Experts indicated that Uber had more flexibility in the way it report the incident, which can be reported as a security incident, because Uber is a private company. Uber is facing crisis of confidence and it’s difficult to win back the trust of their huge numbers of customers.

Finally, I would like to give some of my opinions. Uber is a private company, which is a third party between customers and taxi drivers. In China, Uber Company is almost monopoly. When it came into China market at the very beginning, most customers were attracted by its low price, which sometimes were even free to take a taxi. Uber gained a huge customer base from the beginning. Later, customers found Uber was not as cheap as before. It became more and more expensive, sometimes was more expensive than regular taxi. The strategy actually made the company lose some of their customers, but most customers stayed. And many customers found that Uber keeps ride details in their system for so long. Some of customers received messages that contained their personal information like history location, ride history or even private residences. From my perspective, it is possible that Uber sold customers’ personal information to third-party companies which would look for visits to key locations, such as particular market, meet-up events, café and so on.

The incident of Uber Company that they concealed the cybersecurity problem really violated law from state level, and not federal. For Uber, the challenge quickly became more complicated and needed to be handled.A company’s reputation can be easily built up and destroyed. And how to win back the trust of customers is becoming a really hard task for Uber Company.

Hongkun is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2019.

Source: https://www.wsj.com/articles/uber-likely-to-face-a-barrage-of-state-legal-action-after-breach-1512131094

Posted by Julian Toledo.

Known for its multiple smart phones and other electronic products, Apple has recently been accused around the globe of intentionally shortening the battery life of older iPhones to boost its profits. Consumer groups and government officials, primarily of the United States, South Korea, and France, have forced this technology company to undergo many lawsuits for unethical business behavior for almost two months. During late December of 2017, customers questioned whether Apple had adjusted the performance of its phones after a Reddit user shared online that his old iPhone had been functioning poorly until he replaced its battery with a new one. Consequently, other people with different iPhone versions began to post about their similar experiences. After quickly receiving huge backlash, Apple explained that it slowed down its phones with aging batteries, including the iPhone 6, iPhone 6S, and iPhone SE, after introducing an iOS update last year to prevent these products from unexpectedly shutting down. In addition, the company claimed that it has “never—and would never—do anything to intentionally shorten the life of any Apple product.” Since the uproar, Apple has made battery replacement cheaper and said it will bring a new iOS update that will notify users about their phone’s battery health. Although some individuals believe that Apple acted responsibly for stopping phone shutdowns, others are still complaining that the company could have handled this issue better.

As of January 12, Apple is facing over thirty lawsuits around the United States, with the majority of them arguing about the company’s deliberate slowdown of older iPhones without advising users. Scott Grillo, a Californian citizen and the plaintiff of a recent lawsuit, criticized Apple for “unfair business practices” and “breach of implied contract.” He told the court that after updating his device from a software upgrade, his phone began to operate inefficiently. Furthermore, lawmakers have been accusing Apple for failing to properly communicate with customers and manage the widespread problem. One government official that has challenged the company in this way is Senator John Thune of South Dakota. Thune argued in his letter to Apple CEO Tim Cook that even if the company planned to slow down older models of the iPhone to ultimately prevent shutdowns, “there should have been better transparency with respect to these practices.”

Outside the United States, more than 120 members of the South Korean organization called Citizens United for Consumer Sovereignty filed a civil suit against Apple on January 11. Led by head plaintiff Go Gye-hyun, the group is currently suing for the alleged destruction of property. For the damages, this consumer organization strives for two million win, or about $2,050, for each plaintiff. In addition, Apple’s recent controversy spread to France, where it is illegal to intentionally reduce the lifespan of goods to force buyers to purchase new ones. In fact, according to French lawyers, if executives are found engaging in this type of unethical business activity, they can be sentenced up to two years in prison and have their companies fined five percent of their sales revenue. In Paris, the public prosecutor’s office received complaints from another consumer group known as Stop Planned Obsolescence. Laetitia Vasseur, the cofounder of this organization, seeks to protect all consumers, especially because of how much more expensive Apple products are in Europe than in the United States. She stated, “At more than €1,200 per phone, these practices are unacceptable and cannot go unpunished. It is our mission to defend consumers and the environment.” This amount in euros translates to about $1,400, which demonstrates how problematic it is for individuals to replace their older, malfunctioning iPhones.

Despite its financial success, technological influence, and popularity across the world, Apple holds a big responsibility in terms of legal issues. As a multinational company, Apple is seeking to regain its trust with consumer groups and government executives. However, with these many lawsuits filed against the company within a two-month period, it is uncertain how long it could take Apple to fix its reputation. Overall, this recent controversy accurately shows how such a small business action can significantly backfire. If a company’s conduct does not truly satisfy consumer demands, it can result in legal consequences that can ultimately impact its performance and status in the market.

Julian Toledo is a business management major at the Stillman School of Business, Seton Hall University, Class of 2020.

Sources:

http://money.cnn.com/2018/01/12/technology/apple-iphone-slow-battery-lawsuit/index.html

http://variety.com/2017/digital/news/apple-slow-iphone-backlash-1202647220/

Posted by Nimra Noor.

It is mid-morning on a long winter day: your body is low on cortisol production and you are hours away from getting off from work. Instantaneously, your brain directs you to walk towards the Starbucks franchise located in your office basement. Hoping that the tall latte you have ordered would boost your energy and sugar levels as you sip it while completing your project, to your utmost surprise, the beverage is already half emptied by the time you return to your desk. This disbelief leaves you wondering if you had gulped your coffee too greedily or if the barista underfilled your cup. However, even if you are certain that latter is the reason for your latte getting finished so soon, there is nothing much you can do about it, now that a new court ruling has “legally approved” the Starbucks barista to underfill your cup.

On January 5, 2018, Judge Yvonne Gonzales Rogers of the United States District Court for the Northern District of California provided a ruling that dismissed all allegations brought by Starbucks’ customers that the Seattle-based coffee chain was “uniformly underfilling its lattes and mochas” to “save on the cost of milk.”

CRYING OVER STEAMED MILK

California residents, Siera Strumlauf and Benjamin Robles and Brittany Crittenden of New York had accused Starbucks in their proposed nationwide class action of fraud and false advertising by underfilling 12-, 16- and 20-ounce lattes by about 25 percent.

“Starbucks lattes are uniformly underfilled pursuant to a standardized recipe,” the suit alleged. “By underfilling its lattes, thereby shortchanging its customers, Starbucks has saved countless millions of dollars in the cost of goods sold and was unjustly enriched by taking payment for more product than it delivers.”

To create a latte, the standardized Starbucks recipe follows filling a pitcher with steamed milk up to an engraved “fill to” line as per the size of the beverage ordered; using a separate serving cup for espresso shots; transferring the steamed milk from the pitcher into the serving cup; and finally topping with ¼” of milk foam, leaving ¼” of free space in the cup. Accusing the company of using a lower ratio of steamed milk to milk foam in order to economize by saving money on the milk, Starbucks’ customers argued that the engraved “fill to” lines in the pitchers are too low, by several ounces relative to the volume of the beverages advertised.

The plaintiffs further debated that the foam is not part of the beverage since it “isn’t measured on a volumetric basis.”

BARISTAS APPLYING THE THERMAL EXPANSION LAW

The famed coffee icon argued that its cups hold more than the advertised number of ounces, and the “fill to” lines guide baristas how much cold milk can be used as per each order. The volume of the milk then expands when it is steamed.

LEGALLY LOVED LATTE

Reuters reported that the Oakland, California-based Judge Yvonne Gonzalez Rogers said that the plaintiffs failed to provide enough evidence to prove that Starbucks cheated its customers, whether by having smaller cups; engraving “fill to” lines on milk pitchers too low to measure the proper volume; ordering baristas to cut down on ingredients; or leaving a quarter-inch of space before the top of the cup.

Judge Rogers also dissolved the plaintiff’s argument that milk foam should not be measured towards the total volume of the beverage. “No reasonable consumer would be deceived into believing that lattes which are made up of espresso, steamed milk and milk foam contain the promised beverage volume excluding milk foam,” Rogers wrote in the ruling.

WHY IT MATTERS

It is the third time since 2016 that Starbucks has won dismissal of a lawsuit over the volume of its drinks. Two similar charges, one from California federal court and one from an Illinois federal court, claimed that the Seattle-based coffee chain cheats its customers by underfilling its drinks and then added ice to fill up the unused space. The courts decided ruled that the ice counts toward the content of the customers’ drinks, similar to the fashion Judge Rogers regarded milk foam to be part of the hot beverage.

Nimra is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.

Link to the Article:

Stempel, Jonathan. “Starbucks wins dismissal in U.S. of underfilled latte lawsuit.” Reuters, Jan. 7, 2008, https://www.reuters.com/article/us-starbucks-lawsuit/starbucks-wins-dismissal-in-u-s-of-underfilled-latte-lawsuit-idUSKBN1EW0V5. Accessed Feb. 24, 2018.

Posted by Faris Alzahrani.

On June 20th Christiano Ronaldo was accused by the government prosecutor for evading tax four times amounting to $16.5 million. Ronaldo was investigated and was expected to appear before Pozuelo de Alarcon court No. 1 on July 31. His summoning accorded with the same prosecutor who indicted Mourinho for evading tax two times. The prosecutor reported that there was enough evidence that Christiano Ronald used a shell firm to hide the cash she had acquired from the team image rights. However, Ronaldo pleaded not guilty.

It believed that Ronald had to move out of the country and join another football club because of the accusations against him. It was alleged that Mourinho committed tax deception in a period between 2011 and 2012; this is according to Madrid’s prosecutor. All of the evidence was based on the facts delivered by Spain Tax Office that indicated that Mourinho also hides money from profit rights and avoided to pay tax (Fox, 2017).

Everything was left in judges hands. It is crucial to note that these individuals are not the first to be accused of tax fraud. Last year a Barcelona striker, Lionel Messi was indicted for tax fraud on three counts that amounted to $4.6 million, this mainly from the income made from image rights. He was given a 21-month jail sentence, but he was not expected to serve in prison, since it was his first offense and his sentence was below two years.

Faris is a graduate student at the Feliciano School of Business, Montclair State University.

Reference:

News, F. (2017, June 20). Cristiano Ronaldo, Jose Mourinho caught up in Spain tax scandal. Retrieved from Fox News: http://www.foxnews.com/sports/2017/06/20/cristiano-ronaldo-jose- mourinho-caught-up-in-spain-tax-scandal

Posted by Ahmed Alzahrani.

In this article, the rapper DMX is accused of evading tax. The rapper pleaded not guilty to any of the charges against him.  He was later released in prison after spending one day in jail; this was after he paid $500,000 bond. The persecutor asserts that Earl Simmons also known as DMX evaded an estimated $1.7 million in tax in the peak of his profession between 2002 and 2005.

He purportedly avoided paying taxes, including establishing accounts on other names and paying most of his expenditure in cash. This was a violation of the law whether you are a celebrity rapper or not; paying taxes is necessary to all Americans. The prosecutor also indicated that DMX failed to file his returns in the period between 2010 and 2015; the prosecutor added that the accuser filed a fake affidavit in the US Bankruptcy Court (LIBBEY, 2017).

The bail postulated that DMX to be restrained in New York City. However, his lawyer reported that he would ask for permission for the accuser to travel for a show performance in summer. After the hearing, Mr. Simmons (aka DMX) told the journalist that his faith played a significant role in coping with a legal issue. It gave him the courage to face the situation.

Ahmed is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Reference:

LIBBEY, P. (2017, July 16). DMX Pleads Not Guilty to Tax Fraud. Retrieved from The New York Times: https://www.nytimes.com/2017/07/16/arts/music/dmx-pleads-not-guilty-to-tax-fraud.html?rref=collection%2Ftimestopic%2FTax%20Evasion&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collect.

Posted by Abdullah Almohammadi.

51-year-old Steven Croman is a landlord with more than 141 apartment buildings in Manhattan. In 2016, was arrested for the allegations of obtaining loans fraudulently and committing tax fraud. Croman pleaded guilty for giving false business records, grand larceny, and criminal tax fraud. He was sentenced to one year jail and a five million fine.

The case came from the investigation of the allegations that Mr. Croman was harassing his tenants. He was alleged that he pushed rent-regulated out of their apartments. He also withheld the state payroll taxes to earn a bonus for forcing the rent-regulated tenants.

He was taken to court on Tuesday but declined to address the court. Justice Jill made a judgment stating that he was given time in jail to think about the people he has harmed. As he left the court in handcuffs heading to prison, an elderly tenant, Carol, stated that his apartment was in bad condition since Mr. Croman had refused to clean the apartment. Another elderly tenant by the name Cynthia suggested that the public ought to be protected from such a person as Croman forever. This indicated that Mr. Croman should have life jail term. On the other hand, Mr. Croman lawyer believes that Mr. Croman will behave appropriately in jail which will make him be released after eight months instead of one year.

Abdullah is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Source:

http://www.foxbusiness.com/features/2017/10/03/nyc-landlord-sentenced-to-year-in-fraud-case.html

Posted by Kelly Shaw.

Morris Zukerman, age 72, plead guilty in June 2016 to obstructing the IRS as well as tax evasion. He was sentenced to 70 months in prison for his criminal offenses in March 2017. Morris sold a co-owned petroleum products company, which was owned by a subsidiary of his investment firm M.E. Zukerman & Co., and then proceeded to mask the income he received from the sale. By doing so, Morris was able to evade taxes on his $130 million in income in 2008.

One may wonder how Morris was able to hide such a large profit from his accountants and receive clean audits over the years. The cover story that was given stated that in 2007, Morris transferred ownership of the subsidiary to a trust account. He even went as far as creating false documents to support his story such as a promissory note. By not reporting the $130 million sale, M.E. Zukerman & Co was able to avoid paying $33 million in corporate income taxes.

To add to Morris’s list of crimes, he also claimed a $1 million charitable contribution deduction in 2009  and 2011, which he was not entitled. Morris was registered to purchase a property on Black Island that the Maine Coast Heritage trust (MCHT) was preparing to purchase and use for business purposes. After contemplating about whether he would make a charitable contribution or not, he ultimately purchased the land for himself through his new LLC for $1 million. On his personal tax return, he convinced his accountant that the purchase should be stated as a charitable contribution to MCHT which was incorrect.

A quote from the US Attorney John H. Kim, “While amassing a personal fortune through, among other things, the $130 million sale of his company, Morris Zuckerman cheated on his taxes for years, illegally scheming to evade almost every one of his tax liabilities. Through his criminal schemes, Zukerman deprived the public of over $45 million in taxes he rightfully owed.” It is evident that Morris Zukerman’s actions were motivated by pure greed with little regard for the consequences of his actions.

Kelly is an MBA student with a concentration in accounting at the Feliciano School of Business, Montclair State University.

Reference:

https://www.justice.gov/usao-sdny/pr/manhattan-energy-investor-sentenced-70-months-prison-evading-over-45-million-income-and

Posted by Mohammed Almanqari.

Uber Company is always thought of being sued now and then for one or two issues. Apparently, the company has sued an advertising company called Fetch Media. Uber has taken to court Fetch Media accusing it of click fraud. The company had improperly billed Uber for online advertisements, which were not genuine. Fetch Media took advantage of the same and benefited from application downloads that did not belong to it. Fetch Media is owned by Dentsu, one of the largest advertising company in Japan. The case was filed by Uber on 19^th September 2017 in the US District Court in San Francisco.

After placing the charges, Uber said that it expected not less than forty million dollars as compensation for the damages caused by Fetch Media. However Uber is not fond of taking to court most of the issues it faces; in fact, according to report prepared by Bloomberg, Uber has been a plaintiff twice but has been accused in more than 250 cases. Ever since the internet became a money-making platform, fraud related to online advertising has been on the rise. “One of the biggest challenges we face as digital marketers is to reduce mobile ad fraud.” This was according to the chief executive of Fetch Media, James Connelly. According to the head of media at Fetch Company, Steve Hobbs, a big percentage of downloads from Fetch`s system are noted as invalid or not genuine.

Uber became aware of this fraud during a period when it was putting efforts to shut down and avoid a scandal that was different. Uber Company then requested Fetch Media not to post any advertisements on a certain website called Breitbart news which was being run by the former chief strategist of President Donald Trump. However, ads stills appeared on that site. Fetch canceled the running of ads from any network that was related to Breitbart but this did not reduce the number of application downloads. There is a specific fee paid to Fetch by Uber when a customer downloads the company`s application. From the years 2015 to 2017, Uber had paid close to $8.4m for ads regulated by Fetch Company.

Mohammed is a graduate student at the Feliciano School of Business, Montclair State University.

Reference:

http://www.fin24.com/Tech/Companies/uber-goes-on-rare-legal-offensive-suing-ad-agency-for-fraud-20170919

Posted by Muhammad Azeem.

Playing the role of a forensic accountant can be a fundamental one as it will influence various individuals whether in a business valuation or in a fraudulence sense. This article talks about how forensic accountant can play an indispensable part in perceiving issues and working up new tradition proceeding, irrespective of facing issues during the trial.

When in doubt, forensic accountants will join money related and legal capacities in choosing the proximity of a wrongdoing. Also, they can use their skills and expertise in recognizing those factors that should be considered in a business valuation. The arranging of using a forensic accountant could in like manner ask for quick and excellent results that oblige relationship with existing clients.

Whether it is for the inspirations driving business valuation or diverse examination of data, an accountant can be a fundamental part in recognizing issues. Observation is one of the biggest issues that forensic accountants face. If you are estimating a business or attempting to choose something that requires examination of a huge amount of data, an expert accountant might be the individual you require at the end.

Muhammad is an undergraduate student in accounting at the Feliciano School of Business, Montclair State University.

Article Link: http://ezinearticles.com/?What-Are-the-Biggest-Issues-Facing-Forensic-Accountants&id=9240899

Posted by Ahmed Alhadaith.

Embezzlement is an illegal activity which several business owners have found themselves in over the years. One of the most recent cases in the United States involved one Jonathan Todd. He was an entertainment manager and through his dealings; he allegedly embezzled funds from some of his clients. Some of the clients sued him in a civil court and on January 18^th 2017; he accepted that he had embezzled funds amounting to more than 6.5 million.  He had done this by taking “Clients money for himself and Falsifying Account records to conceal the embezzlement.”

In the case, the judge sentenced him to six years in prison ruling that his actions were plainly “insidious’, ‘audacious’ and they brought about ‘grave economic and psychological harm to his victims’” (Robb, 2017). From the case, Schwartz had stolen money from multiple clients. In one instance, he had said that. His admission to the claims levied against him brought him to the seven year sentence. However, he agreed that he had made the mistake and took full liability for his actions.

In his actions, he had broken the law and hence met the full force of the law. In another article on the same site, the judge said that money managers hand responsibilities, both moral and fiduciary, to preserve the assets of their clients without using the money for their own gain. On top of this, He had evaded taxes by filing false tax returns for the year 2012 ,and the Judge noted that he would face ‘serious consequences’ as a result. His case was taken especially to serve as a lesson to other financial professionals and deter them from engaging in fraudulent activities as he had (Robb, 2017). Through these articles, the Deadline Blog sheds light into Business Forensics accounting and the application of commercial law in indictment of embezzlers and fraudsters.

Ahmed is a graduate student at the Feliciano School of Business, Montclair State University.

References:

Robb, Davi. Alanis Morissette’s Business Manager Sentenced To Six Years In Prison After Stealing $7 Million. 04 May 2017. .

Robb, David. Manager Admits He Embezzled $4.8M From Alanis Morissette. 18 January 2017. .

Posted by Alexander D. Bakogiannis.

Earlier this year the SEC reported that a medical device company named Orthofix was being charged with improperly booking revenue and making improper payment to doctors and government owned hospitals in Brazil.

They improperly recorded revenues as soon as a product was shipped before securing payments. When a company makes revenues from its operations, it must be recorded in their ledgers and then reported on the income statements every reporting period. According to GAAP, there are two criteria the company must meet before it can record revenues. First there must be a critical event that triggered the transaction process, and the amount collected from that transaction is measurable within a certain degree of reliability.  These wrongdoings cost the company over $14 M to settle charges.

One specific instance involved Orthofix recording revenue even when they gave their customers significant extensions of time to make payment. A company can recognize revenue from a transaction when the buyer of the company’s good or service agrees to a purchase, and the amount that the customer is going to pay is determined. By giving their consumers all this time to make their payments, the payments are fully determined, thus all the revenues should not have been recorded yet. These accounting failures make the company misstate data on their financial statement from 2011 to 2013. “Their accounting failures were so widespread that it caused them to make false statements to the general public regarding their financial condition”.

Orthofix violated the FCPA (Foreign Corrupt Practices Act) when their associates in Brazil used high discounts and made improper payments through third parties to solicit doctors employed by the government to use their products; fake invoices were used to facilitate this. All of this could have been avoided or contained if Orthofix had the proper internal controls in place and to ensure that proper payments were being made on their behalf to the correct individuals, and the right data was being recorded at the times times. Unfortunately, this was not the case. As a result, their sales were inflated.

Alex is an MBA with concentration in Accounting, and a Forensic Accounting Certificate, Class of 2017.

Reference:

https://www.sec.gov/news/pressrelease/2017-18.html

Posted by Basil Almubaddil.

On July 14, 2017, a renowned rapper by the name DMX pleaded not guilty to 14 charges against him concerning tax fraud. This was after he had spent a night in jail and later posted a $500,000 bond and he was released. According to the prosecutor, DMX whose real name is Earl Simmons had evaded $1.7 million in taxes during the peak seasons of his career from the year 2002 to 2005. “DMX allegedly went out of his way to evade taxes, including by avoiding personal bank accounts, setting up accounts in other`s names and paying personal expenses largely n cash.” The prosecutor clearly stated that no one  has the right to evade taxes regardless of title or fame. “Celebrity rapper or not, all Americans must pay their taxes.”

In addition, DMX was charged with failing to file tax returns from 2010 to 2015 in the United Bankruptcy Court. The bailed agreement argued that DMX is confined to the New York City area. However, his lawyer, Murray Richman, said that he was going to request permission for DMX to travel and perform his shows during the summer season that followed.

Mr. Simpson is quite a wealthy man.  This is because between 1998 and 2003, five of his albums ranked No.1 on the Billboard 200 chart. Mr. Simpson has also acted in various films like “Romeo Must Die” and “Belly” among other films. After the hearing on the charges against him, DMX told the reporters that his religious faith had been so helpful to him in dealing with legal troubles. “It`s allowed me not to be scared of the situation and face it head-on.” In addition, DMX told the reporters that his life was in God`s hands.

Basil is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Reference:

Posted by Abdullah Aljammaz.

Two brothers have formerly owned a Pennsylvania defense contractor in Pittsburgh was sentenced to  prison after their involvement in a $6 million fraud was revealed. These two brothers planned to overcharge the U.S. Defense Department for Humvee window kits.

The two brothers paid the $6 Million back to the U.S government and another $6 Million to settle a lawsuit that the American government filed against the Buckners. Not just that, the brothers paid around one million dollars in interest and income tax losses.

According to Judge Arthur Schwab, they have different sentences. The older brother Thomas Buckner received the more laborious penalty, because he was more active in everyday business and more active than the other brother John, especially in 2007 after Buckner retired from the company’s management. The brothers owned half the company where the crimes happened. At the current time, the company was sold in February to new investors who had nothing to do with Buckner’s fraud.

Thomas Buckner, 68 years old was sentenced to two years and a half prison and a fine that he has to pay of half a million ($500,000). The other brother, John Buckner, 66 years old was sentenced to two years in prison and fined $300,000.

Assistant U.S. Attorney Nelson Cohen and defense attorneys agreed that it is possible to sentence the brothers below the forty-one to fifty-one months in prison. That sentence will be given to them due to their cooperation, and charitable works and their record of civic. On the other hand, Schwab rejected arguments by Alexander Lindsay Jr. Thomas Buckner’s attorney, who wanted probation.

Based on the article above, here are some quotes from the original article:

“A non-prison sentence is a bridge far too far in considering the defendant’s conduct,” Schwab said. “You don’t want to stand in front of a judge with a pile of money in the bank and the victim not paid in full,” Cohen told the judge. “Paying back the money is just the cost of doing business.”

Abdullah is a graduate student at the Feliciano School of Business, Montclair State University.

Source:

http://www.foxbusiness.com/markets/2017/10/10/brothers-who-owned-defense-firm-sentenced-in-fraud-scheme.html

Posted by Katelyn Scott. 

Equal pay has been an ongoing issue with women in business in society today. Equal weekly earnings for full time workers did not improve from 2016- 2017 in the United States (Hegewisch). For some reason women can do the same job as men, yet their pay is not always the same. A female today could have the same qualifications as a male and still get paid less. Recently a gender equal issue was uncovered at the University of Denver. It seems that it has been a topic brought up before at the University, but the University turned a blind eye to fixing the reoccurring issue. At the University of Denver, seven law professors realized they were doing the same work as their male colleagues, but were getting paid almost $20,000 less than the male professors (Flaherty). When will women get justice in the workforce?

Furthermore, Lucy Marsh a longtime professor apart of the law school at the University started noting the pay gap. Stated by Colleen Flaherty, “Marsh told the EEOC in 2013 that she was paid less than all of her full-time, male colleagues — even those who were hired long after her” (Flaherty). This means it took 5 years to settle this case. The EEOC sued Denver for violating the Equal Pay Act and Federal non-discrimination laws. The EEOC also found evidence of pay gaps dating back to the 1970s and were even informed about these issues (Flaherty). Obviously the University did not fix the on-going issue. This lawsuit would not occur if the University fixed the pay gap when informed years ago, but unfortunately these seven professors had to face unfair compensation. Flaherty states “the university employed nine female full time professors whose average annual salary was about $140,000, compared to about $159,700 for male full professors” (Flaherty). The gap between a female and male professor with the same role is approximately $19,700. That’s not a small pay gap. It is unfortunate these woman had to fight for equal pay and were not getting the compensation or justice deserved with their time spent at University of Denver.

In addition, the University of Denver had to pay $2.6 million in a gender discrimination lawsuit involving the University’s Sturm College of Law (Rose). The University is also going to make significant changes to its law faculty compensation policies. This is great news considering the women finally get the justice they deserve. As a woman, I hope in the future gender discrimination is no longer existent. There are laws that grant gender equal compensation, but they should be taken more seriously and be closely watched in order to create a truly equal environment. Each of the women involved worked just as hard as the others there, where they were competing against men or other women. Some measures to improve the quality of jobs held by women are to tackle occupational segregation, enforce equal pay, and come up with more opportunities in the work place for women (Hegewisch). Hopefully one day gender equal compensation will one day be consistent.

Works Cited:

Flaherty, Colleen. “U. Of Denver Settles with EEOC, Agreeing to Pay $2.66 Million to Seven Female Law Professors Who Alleged Gender-Based Pay Bias.” Esports Quickly Expanding in Colleges, Inside Higher Ed, 18 May 2018,

www.insidehighered.com/news/2018/05/18/u-denver-settles-eeoc-agreeing-pay-266-million-seven-female-law-professors-who.

Hegewisch, Ariane, et al. “The Gender Wage Gap: 2017 Earnings Differences by Race and Ethnicity.” Institute for Women’s Policy Research, 7 Mar. 2018,

Rose , Johnathan. “DU Settles Unequal Pay Lawsuit, Will Pay $2.66 Million to 7 Female Professors.” Bizjournals.com, The Business Journals, 17 May 2018,

Posted by Justin Cunha.

The federal government’s rollback of many different rules has been a highly discussed topic throughout media, however one of the topics that is truly standing out currently is net neutrality. Net neutrality is a principle in which internet services have to treat all data equally and not charge consumers for any specific data. This was put in place by the Obama administration but was removed last year. The event created a lot of outrage as “more than 20 states” have challenged this decision in court (Kang). On Friday August 31, 2018, California lawmakers passed a bill that guaranteed full and equal access to the internet and is the fourth state to create a new net neutrality law.

The state put the bill in place in order to block internet services from slowing down, blocking, or charging for specific services. The bill not only reinstates net neutrality, but it is also even stricter than the one put in by the Obama Administration. The bill would prohibit promotions of free streaming for apps, something that telecommunication companies are pushing to endorse. Prohibiting the promotions would put businesses on a more even playing field, as there are many business who simply do not have the resources to put out these promotions. The change would also ensure that streaming websites all put out the same speed and quality without charging an extra price. These changes are all in an attempt to restrict the amount of power these services have over consumers and the industry. This would be California’s second major internet law in the last year, recently creating a privacy law that allowed users to ask companies such as social media platforms what data they are collecting on them. California is very influential to the rest of the world, with New York already considering a bill similar to this one. One example of the influence the state has was its auto emission laws which inspired many other states to follow in their direction, and in turn giving telecommunication companies worry that something similar will follow.

Though telecommunication companies are attempting to challenge this decision. The companies feel that having these strict rules put on them would hinder their ability to grow and develop. For example, the strict rules will hinder these companies from trying out different business models and thus hurts innovation. Such is the example with the promotion of free streaming for apps, as this was one major experimentation that these businesses wanted to try out. President of US Telecom even argues that, “The internet must be governed by a single, uniform and consistent national policy framework, not state-by-state piecemeal approaches” (Kang). This quote emphasizing that these telecommunication companies want to flow the singular federal law and that these states are simply complicating their business. The companies even went out to promise that they would not slow down or block any websites, a major concern that many consumers had. Telecommunication companies, just like California, do have a lot of influence and power that could possible stop this bill from being implanted. In 2017 they blocked a state broadband privacy bill and are looking to do the same with this bill.

Governor Brown has until the end of September to make his final decision on the matter, and sign his name on the bill. The bill is heavily consumer friendly attempting to give everyone equal access to the internet. This does restrict some freedom of these telecommunication companies, however some restrictions need to be put in place. Power can corrupt and promises can be broken, thus giving these companies too much power can be a scary prospect. So even though there are some flaws with this bill, since it is one of the strictest net neutrality bills, I do believe that California is making the right decision.

Source: https://www.nytimes.com/2018/08/31/technology/california-net-neutrality-bill.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront

Justin is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2021.

In class, we discuss trademark and trade dress.  Ever open a can of Play-Doh and smell that distinct scent?  Well, now Hasbro has trademarked that scent.

“‘The scent of Play-Doh compound has always been synonymous with childhood and fun,’” said Jonathan Berkowitz, a senior vice president of global marketing for the Play-Doh brand. “‘By officially trademarking the iconic scent, we are able to protect an invaluable point of connection between the brand and fans for years to come.’”

Posted by Samantha Staudt.

One in five Americans have reported that they have skipped medicine doses or failed to fill a prescription each year because of the cost of the medicine.  This statistic is outrageous and states have to start doing something about it because the federal government will not.  Certain states, like Nevada, have passed a new law that manufactures must disclose more information about why drug prices are rapidly increasing.  In the past few year, prices in Nevada have increased as much as 325 percent, so this law will help regulate the prices of prescription drugs.  Maryland provides another example of steps that must be taken in an order to regulate drug companies.  The attorney general sued generic drug manufacturers whose prices rose more than fifty percent in a year.  States are partly responsible for the funding of the Medicaid program, spending more than 20 million dollars a year on prescription drugs for public employees and prisoners.

Drug manufacturers have recently pushed opioids while denying and misunderstanding their addictiveness.  This may be enough to cut the political power of the pharmaceutical industry.  This statistic is not settling well with anyone and more than 100 states have filed lawsuits against pharmaceutical companies related to tobacco.  This is in an effort to recover the costs of dealing with the epidemic of addiction and overdoses.  Oklahoma’s attorney general, Nolan Clay, is making strides to fixing this rising issue by refusing to accept donations from drug companies.

Of course, pharmaceutical companies fight the big changes that would affect the company.  The industry has been at the top of the lists for lobbying expenditures and campaign contributions at the same time managing to block reform proposals.  During Nevada’s fight to lower drug prices, drug companies hired more than seventy lobbyist to descend on the bill.  When state drug pricing bills pass, the drug industry challenges them in court.  There have been several lawsuits filed, but none have succeeded yet.  In order to prevent drug companies from overpricing prescription drugs, states must enforce regulation laws immediately.

Samantha is a finance major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Elizabeth Win.

Dollar bills might as well be worth as much as computer paper now. Cryptocurrency has been on the hot seat for the past few months because of its financially growing nature and easy accessibility. Now, as we are starting to see a slow downfall of people investing in Bitcoin; the I.R.S. is starting to detect serious problems with the millennial choice of currency. One of their main concerns is that this cryptocurrency fad has created another giant, financial bubble. If this bubble were to burst, this Bitcoin “bust” could wipe out millions of spectators leading to a huge loss in tax revenue.

A main contender to this potentially huge loss is Bitcoin’s anonymity. For those unaware, Bitcoin’s underlying technology, blockchain, thrives on anonymity. When a person makes a transaction, the transaction only links through an electronic address, making blockchain more attractive to buyers. Now, the I.R.S. has many problems with this missing identification of creative transactions. The anonymity fuels the underground economy, a significant factor in the source of lost tax revenue. Most of the underground economy is conducted through cash transitions; however, what the I.R.S. fears is that cash will slowly transition to cryptocurrencies because of its convenience. An anonymous buyer of bitcoin can easily pay fewer taxes by cheating the cryptocurrency system – also known as major tax evasion. The solution? The government might have to accept the hardships of directly taxing cryptocurrencies and raise tax rates in order to offset the loss of revenue. Understand that the public would highly disagree with this solution, they generated a smarter response: a switch from taxing income when it is received to taxing income when it is spent. Although this switch would require a “major overhaul of the tax code,” many economists support this decision and believe it is future of the economy.

On the contrary, the I.R.S. understands cryptocurrencies offer major reductions in the cost of financial transactions, making it very appealing to the lower classes. There would also be less reliance on banks, which would increase the power of the Federal Reserve to control money. However, the opportunities are too great for tax evasion and illegal operations that the I.R.S. cannot continue to allow it. Although the cryptocurrency economy is growing steadily, it will need to find a way to prevent tax evasion while preserving anonymity in order for it to survive and stay attractive to buyers. For cryptocurrencies to be successful, societies will have to learn to trust the government, a very difficult task for many to grasp. With the rise of extremely advanced technology, it is inevitable that the economy will eventually transition to the cryptocurrency movement. Figuring out how to smoothly transition from worthless green pieces of paper to slick, glassy pieces of technology worth thousands of dollars each, the challenge to adjust will be difficult by eventually necessary.

Elizabeth is a marketing and information technology major in the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Johnny A. Guerrero.

This article was published by the New York Times on 26 November 2017 and was written by Stacy Cowley.  The article illuminates the tension between a high-ranking government civil service official, Ms. Leandra English, and the President of the United States, Mr. Donald Trump.  To further understand this dilemma, one has to first comprehend what is “the Consumer Financial Protection Bureau” and what do they do.  For starters, the Consumer Financial Protection Bureau, “was created six years ago to oversee a wide variety of financial products, including mortgages, credit cards, bank accounts and student loans” (Cowley).  With this in mind, one can say that the bureau was a regulator created in the aftermath of the global financial crisis that hit the New York Stock Market Exchange harshly.  The “Regulatory Agency,” also referred to as (CFPB) was created by the Obama Administration to protect consumers from the tyrants of Wall Street.  Thus, the agency is charged with overseeing financial products and services, as noted.

The tension raised because Ms. English, the deputy director of the bureau, was not willing to step down from her post because she believed that the President could not fire or replace her.  So, she “filed a lawsuit late Sunday night on 26 November 2017 to block Mr. Trump’s choice of someone else from taking control of the agency on Monday morning, 27 November 2017” (Cowley).  Ms. English was defending her cause because Congress gave the agency infrequent independency and autonomy to protect it from political interference.  Thus, the bureau’s director “is one of the few federal officials the President cannot fire at will” (Cowley).  However, the President nominates the agency’s director, who is subject to the approval and confirmation of the United States Senate.  Ms. English was not nominated by former President Obama; she was appointed director by the agency itself because the director, Mr. Richard Cordray, brusquely stepped down on Friday 24 November 2017.

To add more fire to the already burning wood, Ms. English, a seasoned agency veteran who rose progressively through the agency’s ranks, was being replace by Mick Mulvaney, Mr. Trump’s budget director.  Paradoxically, Trump wanted someone who saw the bureau as “sad, sick, a joke” (Cowley), and who openly supported legislation to eliminate it, as the agency’s new director.  Ethically this is not right.  Why appoint someone who speaks harshly about the agency to be its head?  Mulvaney, a white-collar professional, many believed would undo what the bureau had achieved since its conception, which was to protect consumers from the abusive debt collectors and politics of Wall Street Financiers.  This notion becomes eloquent with Senator Dick Durbin’s, a Democrat from Illinois, metaphor: “Wall Street hates it (the Agency) like the devil hates holy water” (Battle for Control of Consumer Agency Heads to Court, New York Times Article).

However, even though one may think that the President’s choice is ludicrous, he as the Head of the United States Government has the authority to appoint whoever he wants as the head of any Federal Government Agency.  Ms. English did not have the grounds to veto the President’s decision; after all the actual director, Mr. Cordray, was the one who resigned.  Therefore, it is the President’s duty to appoint a new head leader for the agency.  The law regarding Presidential Nominees is clear, “not grey.”  One must hope that Mr. Mulvaney does a good job protecting the American People from the Wall Street Tyrants, as he swore to do.

Johnny is in the dual B.A/M.B.A program at the College of Arts and Sciences (political science, minor in history) and the Stillman School of Business (management and finance), Seton Hall University, Classes of 2018 and 2019.

Source:

Posted by Ryan Simoneau.

The National Law Review recently posted an article on February 20, 2018 discussing the impact of the N.Y. Court of Appeals decision in Forman v. Henkin, a personal injury case. Forman, the Plaintiff, claimed she suffered spinal and brain injuries when she fell off the Defendants horse. Before the accident, the Plaintiff admitted to having an active Facebook account on which she posted pictures of her active lifestyle. After the accident, she claimed her life changed and she could no longer continue her active lifestyle and could barely type coherent messages. During discovery, the Defendant asked the court to compel the Plaintiff to provide full access to her Facebook account, regardless of whether it was public or private. At trial court level, the discovery (or electronic discovery) request was limited to photos before and after the accident and those relevant to her difficulty to type. When appealed, the appellate court limited the photographs provided in court. The court based its decision on another case, Tapp v. New York State Urban Development Corporation, in which it decided, “[t]o warrant  discovery, defendants must establish a factual predicate for their request by identifying relevant information in plaintiff’s Facebook account- that is, information that contradicts or conflicts with plaintiff’s alleged restrictions, disabilities, and losses and other claims.” The Court of Appeals, however, disagreed. They determined that public versus private did not matter in regards to social media and reinstated the trial court’s ruling.

The Court of Appeals did not grant full access to the Plaintiff’s social media to protect her privacy, yet does not see a difference between public and private Facebook posts. Typically in personal injury cases, the Defendants will ask the court for full, unrestricted access to social media which is oftentimes unwarranted and called a metaphorical fishing expedition. The Court of Appeals held that the information compelled has to be “appropriately tailored and reasonably calculated to yield relevant information.” What this means is that the request cannot be overly broad and burdensome, but relevant. This ruling mimics Federal procedure, specifically Federal Rule of Civil Procedure 26.

I am torn on the fairness of treating all Facebook posts the same regardless of whether it is private or public. In the 21^st century, social media is becoming more and more popular. People utilize Facebook and Twitter as if they are personal diaries. Sometimes a physical diary could be relevant to a case, I’m sure, but it seems like an invasion of personal privacy. On the other end, social media utilizes the internet and the internet is not private so it should all be treated the same. I believe that in social media discovery (Facebook, Twitter, Instagram), the court should use this appeal as a precedent and continue to limit requests to what is relevant but privacy settings should not matter.

Ryan is an undecided business major at the Stillman School of Business, Seton Hall University, Class of 2020.

Link: https://www.natlawreview.com/article/ny-court-appeals-no-difference-between-private-and-public-posts-discovery

Posted by Ashley Scales.

On February 22, 2018, Palantir was ordered to open their books to an investor who was seeking U.S. fraud probe.  The judge ruled, “Data analytics and security company Palantir Technologies Inc. must open its books to early investor Marc Abramowitz.”  Abramowitz wants to investigate possible fraud and misconduct at the esteemed private U.S. Company.  He sued the firm after a 2015 falling out with the company’s chief executive officer, Alexander Karp.  The lawsuit claims that Palantir prevented Abramowitz as well as many others from selling their stock in the privately owned company, while allowing sales by Karp and Chairman Peter Thiel.

Judge Joseph Slights of the Delaware Court of Chancery said that Abramowitz showed “a proper purpose of investigating potential wrongdoing and a credible basis to justify further investigation.”

Through the KT4 Partners LLC fund he manages, Abramowitz invested an initial $100,000 in Palantir in 2003.  According to Judge Slights’ 50-page opinion, Abramowitz’s investment is now estimated to be worth about $60 million.

Abramowitz and Karp had a close relationship until their falling out in 2015.  Karp “verbally abused” Abramowitz and accused him of taking intellectual property from the company.  Soon after their falling out, Abramowitz tried to sell his stock in Palantir, but he claimed that the company blocked the deal by making an offer of newly issued stock to the potential buyer.  According to Slights, Abramowitz began pursuing information from Palantir while he considered suing the company for blocking the sale of his stock.  In September 2016, in response to the potential claim against the company, Palantir sued Abramowitz for supposedly stealing trade secrets.  In a comment, Palanti said that they plan to continue to pursue their case against Abramowitz.

Abramowitz brought his case to Delaware in March 2017.  Palantir claimed that Abramowitz “should be denied information because he was likely to use it to build his lawsuit over the blocked sale”.  Judge Slights ruled, “Abramowitz could investigate Palantir’s lack of annual meetings, corporate amendments that limited KT4’s rights and the company’s sales of stock”.  However, Abramowitz would not be allowed to investigation Palantir’s value or Karp’s compensation.

Ashley is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Wasif Rahman.

Voters in Washington, who have taken on a role to guarantee paid sick leave to those working in the state recently, brought the Paid Sick Leave Act into play. The new law calls for employers to give workers an hour of paid sick leave for every 40 hours that they have worked. It also restricts when employers would be able to demand medical documentation from employees. While the new law may seem ideal for those working in the State of Washington, it poses a major problem specifically for airlines and its passengers. The problem was first pointed out by Airlines for America earlier this month.

Requiring airlines to conform to the Paid Sick Leave Act for their flight crewmembers is problematic since they are already subject to employment laws of their home state. This new law would enable those same crewmembers to also take advantage of Washington’s employment laws, including the Paid Sick Leave Act, if they are to pass through the state during their shift. Airlines for America filed a lawsuit against the State of Washington in the U.S. district court and subsequently released a statement noting, “airlines cannot operate their nationwide systems properly if flight crews are subject to the employment laws of every state in which they are based, live, or pass through”[1]. The defendant, the Department of Labor and Industries for the state of Washington, made no remarks on Airlines of America’s statement. Airlines for America suggests that Washington’s law promotes, to some degree, more crewmembers calling in sick as the airlines would have certain limitations to when they would be able to demand medical documentation to verify whether a crewmember is actually sick or not. They claim that if it gets to a point where enough crewmembers are calling in sick, it would lead to flights either being cancelled or delayed since there wouldn’t be enough flight crewmembers to serve the passengers. This would lead to severe disruptions not only at Sea-Tac International Airport in Washington but across all airports through out the country. From the airlines standpoint, it would be detrimental to their business having to tell their customers & passengers that they cannot serve their needs. Airlines also claim this new law violates the constitution.

Ultimately, this law is unfavorable to airlines as their passengers would have to face an increase in cost & time for their travels. On top of that, passengers are not purchasing these tickets for the flights to be cancelled or delayed. This isn’t only a major inconvenience for airliners but also for passengers. As of now, a few of the other airlines that have sued Washington State include JetBlue, United and Southwest.

Source:

[1] http://www.foxbusiness.com/markets/airlines-sue-over-new-washington-state-sick-leave-law

Wasif is a mathematical finance major at the Stillman School of Business, Seton Hall University, Class of 2020.

Posted by Brandon Bartkiewicz.

It has been almost two years since the Wells Fargo scandal broke into the headlines. It is not out of the ordinary to see a bank involved in shady activities; just look at the recession. However, in 2016, Wells Fargo committed a truly unforgivable crime, identity theft and fraud on a massive scale. To refresh, Wells Fargo had “… secretly opened millions of deposit and credit card accounts that may not have been authorized by customers, and that ultimately harmed those who had entrusted their financial affairs with the bank”. The goal of this was to create an illusion of more “sales” (accounts being opened). They did this by transferring money between accounts without permission of the accountholder. These activities were highly encouraged by an incentive system in place that would reward employees for opening accounts. Everyone was in on this; bank managers pressured their employees, and the executive board of Wells Fargo knew this was going on and did not stop it. By August 2017, the investigation found that as many as 3.5 million unauthorized accounts existed in Wells Fargo’s records.

The news of this wide scale fraud fueled a settlement with the U.S. Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and Los Angeles legal officials, totaling $185 million in penalties. Along with this, Wells Fargo would give “… $80 million in refunds — $64 million in cash and $16 million in account adjustments — to more than 570,000 auto loan customers who were charged for auto insurance without their knowledge.” As it should be, the bank is now in financial trouble as it tries to cover all of the direct and indirect costs relating to the scandal. However, the Janet Yellen and the Federal Reserve is not done disciplining the bank. Due to their “widespread customer abuses and compliance breakdowns,” the bank is now restricted from growing any more than its total asset size in 2017.  Along with this, the bank will remove some of the senior ranking executives in the company.  This is done to ensure that Wells Fargo will have sound business practices before it can grow again.

Personally, I believe that punishments handed down by the Federal Reserve were suitable for Wells Fargo. It provides a clear message to all banks that business malpractice is unacceptable and will be punished by harsh penalties. No bank should be able to get away with using client money and creating unauthorized accounts for personal gain. I wish the American legal system were stricter with companies so it would deviate them from doing illegal acts like this in the first place. What I did not like about this case was the fact that there are still plenty of people who have been long time officials of the company and are still employed by Wells Fargo. If you keep many of the same old pieces in place at a company, something like this is bound to happen again.

Brandon is a finance major in the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

Link: https://www.usatoday.com/story/money/2018/02/02/fed-limits-wells-fargos-growth-citing-consumer-abuses/302973002/

Donald Trump’s tax plan will make it more simple to pay the government. There are four tax rates under the plan: 25%, 20%, 10% and 0%, eliminating most deductions. The death tax will be eliminated.

According to the website, “The Trump plan eliminates the income tax for over 73 million households. 42 million households that currently file complex forms to determine they don’t owe any income taxes will now file a one page form saving them time, stress, uncertainty and an average of $110 in preparation costs. Over 31 million households get the same simplification and keep on average nearly $1,000 of their hard-earned money.”

Small business should see some relief. Under the new proposed law, all businesses will be paying the same rate. “No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.” A corporate inversion occurs when a U.S. company incorporates in another country to avoid paying high taxes here on income not earned in the U.S.

The Ninth Circuit affirmed a ruling against Gotham Garage, a maker of replica automobiles from movies and television shows. Gotham Garage sells a “Batmobile,” which looks like the original. DC Comics claims it owns a copyright in the Batmobile and the design is protected intellectual property. The Ninth Circuit ruled the Batmobile’s appearance and other distinct attributes make it a “character” that cannot be duplicated without permission from its owner. “As Batman so sagely told Robin, ‘In our well-ordered society, protection of private property is essential,’” 9th Circuit Judge Sandra Ikuta, writing for a unanimous three judge panel stated in her opinion.

Larry Zerner, an attorney for defendant, said he was disappointed in the ruling. He argues the law states that automobile designs are not subject to copyright. “My client just sells cars,” Zerner said. “The car is not a character. The car is a car.”

The replica automobiles sell for $90,000 each.

The Justice Department may soon reveal the details of a criminal settlement with GM over its failure to recall vehicles with defective ignition switches. The deal will require GM to plead to wire fraud and pay a penalty of approximately $1 billion. “GM is expected to enter a deferred prosecution agreement under which the government will eventually seek to dismiss the case if the company abides by the deal’s terms, according to the people familiar with the matter.”  Corporations, even though they are not natural persons, can be found guilty of crimes and be fined.

The claim is over the ignition switch, which can slip out of the run position and disable airbags, power steering, and brakes. The Justice Department alleged GM failed for over a decade to warn drivers of the safety issue even though GM knew about the problem. In one estimate, more that 100 people died and more than 200 were injured as a result of the switch failing.

A federal court has ruled that the House of Representatives, collectively, has standing to sue the Executive Branch over a provision in the Obama-care legislation dealing with cost-sharing subsidies. These subsidies are intended to help lower income people with their deductibles and co-pays. “Many legal observers expected the lawsuit to fail on standing: that Congress wouldn’t be able to show a way in which the Obama administration had harmed legislators, a prerequisite for a court challenge.”

House Republicans argue these subsidies are being illegally paid by the Treasury to insurers and claims the House “never appropriated” the funding. The House alleges it “has been injured, and will continue to be injured, by the unconstitutional actions of defendants . . . which, among other things, usurp the House’s legislative authority.”

Courts hear cases and controversies, and unless a plaintiff has sustained some type of injury, courts cannot take the case and will dismiss it for lack of standing. But here, the court found the House has standing to sue because they are allegedly harmed as an institution, not as individual members. The court held, “The Congress is the only body empowered by the Constitution to adopt laws directing monies to be spent from the U.S. Treasury. . . . Yet this constitutional structure would collapse, and the role of the House would be meaningless, if the Executive could circumvent the appropriations process and spend funds however it pleases. If such actions are taken . . . the House as an institution has standing to sue.”

Posted by Dana Domenick.

A four year old boy was riding in his aunt’s 1999 Jeep Cherokee when it was rear-ended in 2012. He was killed when the SUV burst into flames. The gas tank on this Jeep Cherokee model is located behind the rear axle which means when the truck is hit from behind, it will likely trigger an explosion. The location of the gas tank is a major flaw in the truck and caused over 75 deaths. Fiat Chrysler took action on this issue in 2013, by recalling over 1.56 million Jeep Cherokees manufactured from 1993-1998 (Associated Press).

Judge J. Kevin Chason in Decatur County, Georgia ordered $40 million in damages to the child’s family. Three fourths of the damages were given to the family for his death while the other portion was given for pain and suffering. Fiat Chrysler requested a new trial, claiming that the jury acted irrationally and their prejudice tainted the verdict. Their motion was denied by the judge (Associated Press).

I agree with the court’s decision. The engineers who built these Jeeps should have had enough knowledge to place the car’s parts at locations in which they were protected. Extensive road testing should have been conducted on every vehicle to play out every possible collision scenario to ensure that the quality of the vehicle met the highest efficiency and safety standards. This death, as well as the many others caused by this issue, could have been prevented had Fiat Chrysler took their road testing more seriously and therefore, the verdict was correct.

Dana is a psychology major with a legal studies in business minor at Seton Hall University, Stillman School of Business (minor), Class of 2017.

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.

Fox News’ Harris Faulkner, co-anchor of the daytime show Outnumbered, sued Hasbro toy company for $5 million. Hasbro sold a toy hamster named the “Harris Faulkner Hamster Doll” as part of their “Littlest Pet Shop” product line.

In the complaint, Faulkner alleges unfair competition under the Lanham Act and common law violation of right to publicity. She claimed she is “distressed” that her name would be associated with a toy that indicates it could be a potential “choking hazard” to children, and that portraying her as a rodent is demeaning and insulting.

She further claimed that since as a journalist she cannot be connected with a commercial product, “Hasbro’s use of her name in association with the Harris Faulkner Hamster Doll creates the false impression that Faulkner would impugn her own professional ethics by agreeing to have a commercial product named after her.”

Bank of America (“BofA”) recently settled with the U.S. Consumer Financial Protection Bureau and Office of the Comptroller of the Currency for deceptive credit-card practices.  BofA is ordered to pay $727 million in refunds to customers and $45 million in penalties.

The allegations were BofA induced customers to purchase certain add-ons, such as identity-theft protection, debt cancellation, credit monitoring and credit reporting services.  Some services were superfluous since they were already mandatory under federal law. Others were never received by the customer.

The allegations included BofA defrauded 1.4 million customers through “deceptive marketing” practices, and about 1.9 million customers were illegally charged for credit monitoring and credit reporting services that were not provided.

Richard Cordray, Director of Consumer Financial Protection Bureau, stated, “Bank of America both deceived consumers and unfairly billed consumers for services not performed.  We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”

Posted by Kesha Patel.

In 2012, four employees of tech giant Apple filed a lawsuit against their employer in San Diego. Apple allegedly failed to give their employees proper meal and rest breaks in addition to not paying them in a timely manner. In 2013, the case became a class action lawsuit that included about 21,000 employees who had worked at Apple between 2007 and 2012.

California law states that any employee that works for five hours or more must get a thirty-minute meal break; any employee that works for four hours is required to get a 10 minute rest break.

Jeffrey Hogue, an attorney representing the class action said the $2 million verdict had came but Apple could owe more. Although Apple made scheduling changes in 2012, the aura of secrecy keeps its employees from discussing the company’s working conditions.

Kesha is an accounting student at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Michael Cappelluti.

It is no surprise that our society is on the brink of a technological revolution. It is projected that “65% of elementary school students will hold jobs that do not exist yet when they enter the workforce” (Frank Diana). By 2029, Ray Kurzweil predicts we will have technology that will allow us to live forever. While these technologies may benefit us, our society will be forced to react to these changes. Ethics and law will be crucial in making these reactions a reality. A more pressing issue, though, is the introduction of autonomous vehicles on the road. The article, “Law & the Problem of Autonomous Cars” by Nicholas Stringfellow, offers a legal perspective on the implications of this new technology.

Autonomous vehicles will disrupt many aspects of law, but the article starts off by discussing statutory law. Stringfellow believes that the state and federal levels of government will have to create a body of law about self driving cars—specifically about what happens when the “autopilot system” fails and the passengers are forced to disengage the autopilot and take control. Four states currently have a statutory law for autonomous vehicles, but they differ in some ways. Some states require a person to sit in the driver’s seat in case something were to go wrong, whereas some are more lax about an “emergency driver.” A huge ethical issue will be whether the car is programmed to defend the passengers at all cost, or, from a utilitarian standpoint, make whatever decision will save the most lives in the scenario.

The article also goes on to discuss Tort law, specifically, products liability law. “Injured persons could bring manufacturing defect, design defect, failure to warn, or breach of warranty claims [to a court]” in the instance of an accident (Stringfellow). Courts will be forced to respond by “adopting a negligence standard, a strict liability standard, or by refusing to impose liability on carmakers.” Essentially, if a car is programmed to protect the most amount of lives in a situation—what happens? For example, if a car spins out of control onto the sidewalk to avoid a fatal accident pile-up on the road ahead, will the pedestrians killed by the disoriented car be able to file a law suit? These questions are unknown, at this point. This topic will be heavily discussed by futurists, ethical analysists, and lawyers in the near future—and this will pave way to the future of how we transport ourselves as human beings.

Michael is a marketing and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Brennan Smith.

A judge, a deputy constable, and a supervisor of all police, fire, and emergency operations walk into a bar…

Although a common play on the setup of a hysterical joke, the indictment of John I. Waltman, Robert P. Hoopes, and Bernard T. Rafferty is not something the members of Bucks County and Lower Southampton Township are laughing about. The three men named are the judge, supervisor, and deputy constable—respectively—referenced above, who just got indicted for money laundering.

Here’s what happened: “The trio conspired to launder about $400,000 in funds represented by investigators to be the proceeds of health care fraud, illegal drug trafficking and bank fraud, according to a federal court indictment unsealed Friday morning, a statement from the U.S. Attorney’s Office said. The men allegedly took laundering fees of $80,000,” (theintell.com). In order to launder the money, the trio went through a series of processes. One source of revenue, and by far the most prominent one, was through Raff’s Consulting LLC—a company with which Rafferty had full control—with which the three used “bogus documents” in order to turn a profit.

To understand how they did this, the facts of the case must be examined. Per the research done by theintell.com, Robert P. Hoopes would arrive to an office building in an unmarked Lower Southampton Township Police car, exchange the false documents for $100,000 cash, and bring the money back to the car (where John I. Waltman and Bernard T. Rafferty would be waiting). From there, Waltman and Rafferty would go to the Philadelphia Credit Union to deposit the money—after paying Hoopes and pocketing their own cuts—into the Raff’s Consulting LLC accounts. The operation lasted from June 2015 to November of 2016 with the trio laundering $400,000 between June and August of 2016—earning $80,000 in laundering fees (Philadelphia.cbslocal.com).

Because of their crimes, the FBI was forced to get involved and finally caught them in an undercover sting. The three will each face one count of conspiracy to commit money laundering, and three counts of money laundering. District Judge John I. Waltman has been suspended without pay, with the other two removed from their positions.

Brennan is a sports management and marketing major at the Stillman School of Business, Seton Hall University, Class of 2019.

Sources:

http://www.theintell.com/news/crime/bucks-county-district-judge-constable-lower-southampton-public-safety-director/article_f23e17b6-f07a-5e1b-8abb-6edf11a47ecc.html

(Article)

http://philadelphia.cbslocal.com/2016/12/16/authorities-judge-director-of-public-safety-deputy-constable-charged-with-conspiracy-money-laundering/

(Article)

Posted by Carlos R. Rodriguez.

The article “Ex-U.S. Tax Court Judge, Husband Indicted in Tax Case” written by The Associated Press mainly discusses the topic of how a former U.S. Tax Court Judge, Diane Kroupa and her husband, Robert Fackler have been charged with conspiracy to defraud the United States, tax evasion, making and subscribing false tax returns and obstruction of an IRS audit, U.S. Attorney Andrew Luger announced. The charges were brought in Minnesota and allege that the couple conspired to evade at least 400,000 dollars in federal taxes. In a statement, U.S. Attorney Andrew Luger stated that “Tax laws apply to everyone, and those of us appointed to federal positions must hold ourselves to an even higher standard.”

Diane Kroupa was served as a tax court judge by then-president George W. Bush in 2003 and retired in 2014. The charges brought on her and her husband allege that between 2004 and 2010, the couple understated their taxable income by about $1 million and they owe at least $400,000 in taxes. Also, federal prosecutors accuse Kroupa and Fackler of fraudulently deducting at least $500,000 of personal expenses they listed as expenses at Fackler’s consulting firm, and another $450,000 in purported business costs for which clients had reimbursed Fackler, the Star Tribune reported. Kroupa also failed to report about $44,520 that she received from the sale of land in 2010 in South Dakota instead of claiming it as an unrelated inheritance which was stated in the court documents.

In my opinion, as a Tax Court judge, Diane Kroupa should be held to a higher standard of ethics. Also, any tax cases for which she was present should be investigated because Diane’s judgment is clearly out of line if she is found guilty for these charges. Given her comprehensive understanding of tax laws, it should be obvious to her that reporting personal expenses as business expenses is a way to defraud the IRS and it was done intentionally in order to evade taxes. Going forward, a solution to an issue of this nature should be that government officials should be checked for things like tax evasion more often because if their moral judgment is incorrect, their decisions can be detrimental to the country as a whole.

Carlos is a graduate accounting student with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2017.

The regulatory process and its role in the legal system is a fundamental concept in business law. Federal, state and local governments received the authority to regulate activities from Article 1 Section 8 of the U.S. Constitution. Article 1 Section 8 also referred to as the Commerce Clause or Necessary and Proper Clause dictates the enumerated powers of Congress in professional and private settings.

The regulatory process is performed by administrative agencies. Some commonly recognized administrative agencies are the Central Intelligence Agency (CIA), the Environmental Protection Agency (EPA), and the Food and Drug Administration (FDA). The recent GlaxoSmithKline bribery scandal focused on the Securities and Exchange Commission (SEC) administrative agency. The mission of the SEC is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” (Securities Exchange Commission)

The SEC recently alleged that GlaxoSmithKline’s Chinese subsidiary had engaged in bribery activity for four years, 2010 to 2013. The SEC accused GlaxoSmithKline subsidiary of violating the Foreign Corrupt Practices Act. According to the SEC, GlaxoSmithKline’s subsidiary had been providing foreign officials and health-care professionals with gifts incongruous to the law. These gifts included shopping trips, cash, travel, entertainment, etc. for the purpose of boosting sales. Further, the SEC suspected that GlaxoSmithKline’s subsidiary deceptively recorded these payments as expenses. The bribery scandal investigation eventually captured the attention of a second agency, the U.S. Department of Justice.

GlaxoSmithKline has not admitted nor denied these bribery charges, but has agreed to pay $20 million to settle the matter. Nonetheless, this is not GlaxoSmithKline’s first bribery settlement. In 2014, the company paid $491.5 million and several managers were convicted with charges and suspended imprisonment for a similar matter. Since the 2014 bribery controversy, GlaxoSmithKline stated it “installed several reforms, including shifts to the compensation of sales representatives and the end of payments to health-care practitioners for advocating for Glaxo products to other prescribers.” (Minaya)

My opinion on the matter is that GlaxoSmithKline was rightfully accused by the SEC and DOJ, specifically for violating the Foreign Corrupt Practices Act. The Act has a firm anti-bribery provision that GlaxoSmithKline and its Chinese subsidiary had a legal and ethical responsibility to follow. The fact that GlaxoSmithKline and its subsidiary’s records were not a true representation of its payments is a clear piece of evidence suspecting its violation. In addition, having read the SEC order and learned that GlaxoSmithKline had engaged in this activity before, I believe that the company and the subsidiary did participate in bribery.

Melissa is a marketing major with dual minors in public relations and legal studies at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Joseph Locorriere. 

The fundamentals of business, something that America has practiced for decades and which was proven to be the correct way of managing a business, include running an ethical business, such as taking proper care and recognition of employees and customers as well as the surrounding environment. However, as America continues to stray farther from these values, businesses continue to find themselves in situations which is tantamount to malpractice. It is no longer as common to see businesses acting ethically as it was like years in the past, mainly due to short run profit maximization. Morgan Stanley, one of the top banks in the country has once again acted unethically towards customers. Like many instances, this business was focused on volume of sales and not ethics, also considered short-run profit maximization, due to the sole fact of making as much money as possible without concern of the public good.

Similar to the 2008 occurrence of selling faulty loans such as NINA loans (No Income, No Asset) or sub-prime mortgages that intentionally fooled the buyer into thinking they would afford their mortgage, Morgan Stanley sold Security Based Loans (SBLs) to customers, allegedly breaching their fiduciary duty. Brokers were incentivized by a $5,000 bonus for meeting loan quotas, which was intended for boosting the companies’ volume of sales. By incentivizing the employees with a bonus they disregarded customers overall satisfaction; instead they focused primarily on volume. Although Morgan Stanley boosted their profits by $24 million in new loan balances, they are being taken to a court of law for business malpractice. Morgan Stanley states that, “The securities-based loan accounts were opened only after discussing the product with each client and obtaining their affirmative consent” (Zacks.com). Although this may stand true, it still violated Morgan Stanley’s fiduciary duty to customers of informing them of their investment.

It is unfortunate to see businesses continue to perform unethically towards customers, as well as employees. Longevity, reputation and long-run profit maximization are no longer commonly displayed. Morgan Stanley in this case should have stayed with giving a bonus, but should have not forgotten about the fundamental values they hold as a broker, which is to inform clients on investments, whether it be positive or negative news. Sadly enough, this is another example of America’s current business strategy that fails to be aware of the public good.

Joseph is a finance student at the Stillman School of Business, Seton Hall University, Class of 2019.

Posted by Matthew Rachek.

One of the biggest issues that industries of all kinds deal with constantly is being able to filter out counterfeits from their marketplace. Counterfeits and other forms of knock-offs are not good for the market because they drive profits away from those that deserve the reward and often times fund criminal organizations.

The music industry has dealt with counterfeits since its existence. With the continued growth of technology and new ways for consumers to listen to their favorite artists, it has become harder and harder for the in the industry to regulate how the money is coming in. In fact often times, counterfeit CDs or knock-off streaming services do not compensate the artist at all.

In an article published in the Wall Street Journal on October 30, 2016, it explained how these music “pirates” have been flooding online retailers such as Amazon.com, “with counterfeit CDs that often cost nearly as much as the official versions and increasingly are difficult to distinguish from the real goods.”

The good news is that Amazon.com has recognized the problem an is making the right ethical decision by making sure that their stakeholders all receive the product they are expecting to receive at checkout. By doing this they are also trying to ensure that the artist and producer of the music receive proper compensation for their work so that the money does not make its way into the hands of the music pirates.

In a statement released by Amazon.com they wrote, “We are constantly innovating….to improve the ways we detect and prevent counterfeit products from reaching our marketplace. We work hard on this issue every day….” One of the ways they ensure that customers, a stakeholder, is satisfied with their product is by offering refunds for any product that is not as advertised. While this may initially hurt Amazon.com’s bottom line this is an essential moral decision because in the long-run consumers will be more likely to trust Amazon.com and buy other products off the site.

As technology continues to find new innovations it is almost certain that counterfeits and pirates will new be completely taken out of the market place, especially in the music industry. However it is very reassuring for a large company like Amazon to take nope of the issue and try to take steps to solve the issue.

Matthew is an accounting student at the Stillman School of Business, Seton Hall University, Class of 2018.

Sources:

http://www.cbsnews.com/news/amazon-struggling-to-keep-counterfeits-off-market-retailer-says/

http://www.wsj.com/articles/boost-in-online-pirated-cd-sales-deal-another-blow-to-music-industry-1477867243

Posted by Emanuel Sanfilippo.

On Monday the 28^th, Diane Backis, a corporate accountant in New York, admitted to stealing at least $3.1 million from Cargill Inc., an agricultural business giant. In doing so, Backis caused $25 million in losses to Cargill’s grain shipping operations at the Port of Albany according to the Associated Press. Diane Backis pleaded guilty in federal court in Albany to mail fraud and a false income tax return. According to U.S. Attorney Richard Hartunian, Backis diverted customer payments to her own accounts over a 10 year period and caused $25 million in losses to Cargill Inc.

“Backis, 50, was an accounting department manager at Cargill’s Albany grain elevators at the port whose duties included creating customer contracts, generating invoices and processing payments.” Backis admitted in court that she sent customers invoices for animal feed prices much lower than what her employer paid, in doing so, she caused the company millions of dollars in losses in inventory. She tricked consumers into sending the payments directly to her bypassing Cargill’s corporate controls. In an essence, Diane Backis basically used her ability to access inventory and money from Cargill to sell their inventory privately for personal profit.

The Associate Press states how the tax fraud charge refers to Backis’s 2015 individual income tax return on which declared $61,208 in income and omitted more than $450,000 she received that year from stealing Cargill customer payments. In accordance with Backis’s guilty plea, she has to pay $3.5 million in restitution to Cargill and she has to forfeit her house, an investment brokerage account and her pension benefits from Cargill. According to Pete Stoddart, a Cargill spokesperson, Cargill has audited its controls and trading systems and confirmed that it was an isolated incident only affecting that one location and Cargill customers were not adversely affected. Diane Backis faces up to 20 years in prison when she’s sentenced on March 28^th.

Emanuel is a sports marketing and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Members of organized crime, drug dealers, and terrorists transact their “business” in cash to hide their tracks. As part of a scheme to launder money (make it look it was earned legitimately), criminals will deposit their ill-earned cash in bank accounts. In response, Congress passed the Bank Secrecy Act, requiring banks to assist the government in catching money launderers.

Under the Act, banks are required to report any cash transaction or combination of cash transactions in excess of $10,000 to the IRS.  Knowing this, criminals resort to structuring. Structuring is the deliberate parcelling of a large cash deposit into a series of smaller transactions in order to avoid detection by regulators. When bank officials suspect structuring is occurring, they are required to file a suspicious activity report, or SAR, and notify regulators of what they believe is happening.

In Ratzlaf v. United States, 510 U.S. 135 (1994), the Supreme Court found that government had to prove that defendant acted with knowledge that structuring is unlawful. As a result, Congress removed the “willfulness” requirement making it easier for the government tor prosecute structuring cases. The IRS, however, has been seizing assets of legitimate businesses and individuals without any proof or any charges filed. Small business and individuals can be a target. In one case, the IRS seized $66,000 from an Army sergeant’s college savings account, even though the sergeant was told by the bank teller to make smaller deposits in order to avoid taxes. Removing the “willfulness” requirement makes structuring a strict liability crime.

In a written statement, Richard Weber, the chief of Criminal Investigation at the IRS, said, “After a thorough review of our structuring cases over the last year . . . IRS-CI will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level.”

Posted by Deena Khalil.

There are two sides of every story. According to Kelly Wallace who works for CNN, “It’s a case of she said versus they said.”

Rachael Cunnings, a young girl from New Jersey, accused her parents of throwing her out of their house when she turned eighteen. They refused to pay for her private school tuition, and so she sued them for expected future expenses, such as transportation, bills, college tuition, and living expenses.   The teen’s parents argue “that she was not kicked out of the house. Instead, they say she left on her own back in October because she didn’t want to abide by their rules.” There were many claims against each side, such as Rachael’s parents not liking her boyfriend, missing curfews, getting suspended, and apparently the teen’s parents were abusive.

The judge in the New Jersey Superior Court denied Cunnings request for high school tuition and living expenses. “The judge sounded skeptical of some of the claims in the lawsuit, saying it could lead to teens ‘thumbing their noses’ at their parents, leaving home and then asking for financial support.” There was another hearing that took place the following month about other issues in the case including her college expenses. Before the hearing, Rachael dropped the case; she was accepted by Western New England University with a $56,000 scholarship. In the end, the teen did not end up empty handed.

Deena is a finance major at Montclair State University, Class of 2017.

The Supreme Court issued an order denying an application to vacate the Fifth Circuit’s stay of a district court’s final judgment enjoining the enforcement of a Texas voting statute. The statute requires voters to produce identification before they vote. Business law students learn about injunctions (in this case, the court’s power to stop a party from acting) as a equitable remedy.

Congressman Marc Veasey, D-Fort Worth, sued Governor Perry and Texas Secretary of State John Steen in federal court, challenging the enforcement of the voter ID law, named SB 14. Veasey claimed that the law had the potential of preventing hundreds of thousands of people from voting. The strict Texas statute “requires the state’s estimated 13.6 million registered voters to show one of seven kinds of photo identification” before casting their ballot. Defendants responded SB 14 was designed to prevent voter fraud and argued voter ID laws were already approved by the Supreme Court in an Indiana case.

After a hearing, the district court agreed with Veasey that enforcement of the law “may prevent more than 600,000 registered Texas voters (about 4.5% of all registered voters) from voting in person for lack of compliant identification.” The district court determined the strict Texas statute was unconstitutional and enjoined defendants from forcing voters to produce ID. The Fifth Circuit issued a stay of the order, meaning defendants were temporarily permitted to enforce the law. The Supreme Court denied Veasey’s application to vacate the stay pending appeal. Led by Justice Ginsberg, three Justices wrote a scathing dissent (and in a rare circumstance, later corrected) expressing disagreement with the court’s decision not to vacate the stay.

Voting rights are analyzed under strict scrutiny. As of now, voters in Texas must show proper ID before they are allowed to vote in the midterm elections on November 4th.

Posted by Patrick Osadebe 

Do you think the lawyers in America get paid as much as they deserve? How much do you think a lawyer makes in a year? According to a survey conducted in 2014 by the Association of Law Placement, the highest starting salary of one of the largest firm in the US with about 700 plus employee is $160,000. This number may seem to be high based on our present economy situations but the results are accurate.

From the survey, only 27% of firms actually responded and one third actually start their employees with $160,000. According to James Leiplod who is the current NALP executive director, he stated that “it is fair to say that law firm starting salaries are flat.” In contrast to that statement, the starting salaries was much higher before the economic recession and the figure is basically a reflection of changes in large firm market.

Different firms may have different starting salaries based on size and experience but according to the survey, the median starting salary is about $125,000, which has been unchanged since 2012.

Patrick is a business administration major with a concentration in finance at Montclair State University, Class of 2016.

Posted by Abier Mustafa.

Cell phone Company, AT&T, has agreed to pay back $105 million in what is being called ”the largest cramming settlement in history.” AT&T has been adding unauthorized charges to tens of thousands of customers’ monthly bills. The charges are usually for the amount of $9.99 per month, coming from third-party services, including trivia, horoscopes, and love tips.  ”AT&T is accused of keeping at least 35% of the fees, as well as obscuring the charges on bills and preventing customers from securing full refunds.”

There have been previous lawsuits against other cell phone providers besides AT&T.  For example, the Federal Trade Commission has filed a similar lawsuit against T-Mobile in the past also due to unethical charges to customers.  “For too long, consumers have been charged on their phone bills for things they did not buy,” Wheeler, the Federal Communications Commission chairman, said- “It’s estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars.”

AT&T has released a statement saying that they have provided customers with “Premium Short Messaging Services” in the past. However, they have discontinued third-party billing.  To resolve all claims, $80 million of the settlement has been set aside for customer refunds, along with $25 million in penalties due to regulators.

So if you’re an AT&T customer and have been wrongfully charged, you may be eligible for a refund!

Abier is a finance major at Montclair State University, Class of 2016.

Posted by Gerald Wrona.

Interesting. That is one word to describe the NY Times report on the pre-trial proceedings of the Libyan Investment Authority’s (LIA) suit against Goldman Sachs (Anderson). Acting as broker-dealer to the sovereign wealth fund, Goldman established a relationship with the fund’s managers in 2007. A year later, Secretary of State Condoleezza Rice was visiting Moammar Gadhafi in Libya’s capital to devise a “trade and investment agreement . . . which will allow the improvement of the climate for investment.” (Labbott). Shortly after that promising convention between the two political heads, Goldman and the Authority finalized the agreement and the bank sold derivative products totaling $1 billion to the LIA. Then the housing market “opened its mouth” and out came the demon of the subprime mortgage crisis.

Understandably, the LIA felt exploited. They bit the bullet. Their lawyers came to the London High Court armed with notions that those managing the sovereign wealth fund were ineffectual in understanding the investments presented to them by Goldman. To add insult to insult, they further asserted that the fund administrators were altered in their judgment by Goldman representatives’ leadership role in incidents allegedly involving the recreational consumption of alcohol and visits paid to what may have been brothels, or some other manufacturer of night entertainment, though a witness statement does not specify. Considering that it would never have been in Goldman’s interest to spend more time carousing then working on the deal with the authority, it is highly unlikely that the time spent in leisure outweighed the hours dedicated to the investigation of the necessary facts of the deal.

Though it is worth noting that Goldman has already been ousted for luring investors into crummy deals and then betting against those deals to increase revenue. This is how Goldman actually made money off the subprime mortgage crisis (Cohan).

Will evidence be disclosed that suggests Goldman dealt with the LIA in a similar way? It’s impossible to know. I believe the judge will find that the heart of the matter is whether Goldman conducted due diligence in their dealing with the LIA. For that reason, Robert Miles, one of the attorney’s representing Goldman, would do well to look to the Securities Act of 1933 for support. It states: “If a Broker Dealer conducts reasonable due diligence on a security and passes the information on to the buyer before a transaction, the Broker cannot be held liable for non-disclosure of information that was not found during the investigation.”  Securities Act of 1933, SEC §§ 38-1-28 (SEC 1933).

The trial is expected to start next year.

Gerald is a Business Administration and MIT major at Montclair State University, class of 2017.

Posted by Giancarlo Barrera.

First it was Target, Home Depot, and now, JPMorgan Chase.  They are the next victim under cyber attack. Chase is the biggest bank by assets in the US. They are also the dominate bank in New York City, where the majority of banks’ cooperate headquarters are located . “JPMorgan Chase has 65.8 million open credit card accounts, and 31.8 million of those accounts with sales activity, according to its most recent quarterly report. Chase also has 30.1 million checking accounts.”  According to what the FBI has been investigating, names, addresses, phone numbers, and emails were taken, but no passwords and social security numbers

It was reported that the hackers did not receive any money from this cyberattack. “The bank’s Chairman and Chief Executive Officer Jamie Dimon said that the company will spend $250 million this year on cybersecurity, but has been losing security employees to other banks with more “expected to leave soon.”

Giancarlo is a finance major at Montclair State University, Class of 2016.

The United States Supreme Court granted certiorari in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.  Abercrombie allegedly denied a muslim woman a job at a Tulsa, Oklahoma store during an interview.  She was wearing a headscarf, which Abercrombie determined violated its “look policy.”  The “look policy” at the time was classic East Coast collegiate style.

The 10th Circuit Court of Appeals sided with Abercrombie ruling the muslim woman never indicated she needed a religious accommodation as required under federal law.  The EEOC argued Abercrombie was on notice that an accommodation was warranted because the woman was wearing the headscarf at the interview.

Under Title VII of the Civil Rights Act of 1964, a business operating with less than 15 employees (religious institutions exempted) must provide an accommodation for an employee’s religious observances, unless doing so is an undue burden for the company.  Examples of undue burdens could include, but are not limited to, costing the company more than ordinary administrative costs; workplace efficiency diminished in other areas of the business; infringing upon another employee’s job rights or benefits; impairing workplace safety; adding burdens on co-workers by forcing them to carry on the accommodated employee’s share of potentially hazardous or burdensome work; or conflicts with another law or regulation.

The High Court will decide the case next year.