Posted by Aliyah Ponton.

A former executive, Andrew Caspersen, at a New York investment bank admitted swindling investors of more than $38 Million. As a result, he was sentenced to four years in prison. During court he told the U.S. District Judge, Jed Rakoff, “I chose gambling over everything.” The Judge cited his gambling as a reason for leniency. Andrew Caspersen is 40 years old and is a graduate of Princeton University and Harvard Law School. He also defrauded his job, PJT Partners Inc., of over $8 Million.

Caspersen is the son of the late Finn M.W. Caspersen, who was a philanthropist and former chief executive of Beneficial Corp. “I destroyed my family’s name,” said Caspersen. In the court room it was packed with family and friends as well as members of organization he has joined. Many of his friends and families argued for leniency to the judge. Rakoff imposed Caspersen’s prison term by giving him way less then the 15 years that was entitled for by the sentencing guidelines and also less than the 7 ½ years recommended by the Probation Department.

Caspersen stole from his friends, family, and from investors. He took advantage of his Wall Street pedigree and even stole from charities. “Using his Wall Street pedigree, Andrew Caspersen deceived and defrauded investors – including his own family and friends and a charity – out of tens of millions of dollars,” said the U.S. Attorney Preet Bharara. When faced by the judge Caspersen said that he was dedicated to continuing treatment for his gambling addiction but Assistant U.S. Attorney Christine Magdu said Caspersen failed to follow through with his gambling addiction treatment. She also added that Caspersen quit therapy after only seven sessions. In the end, after going to court and fighting for leniency, Caspersen was sentenced to 4 years in prison.

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

Source:

http://news.findlaw.com/apnews/feb61e4e2ac8475b9110b70ba45e9928

http://abcnews.go.com/US/wireStory/executive-ny-bank-years-prison-38m-fraud-43313982

Posted by Nick Farkas.

A McDonald’s’ franchise in California has repeatedly gotten into legal trouble throughout the past few years because they were not paying and recording the overtime of their employees correctly. The Smith family owns the franchise and have around 800 employees working for them. They initially settled the claims for $700,000 but did not learn from their mistakes.

McDonald’s is not entirely liable because it is a specific franchise involved; however, they are going to pay the $1.75 million in damages and $2 million in legal fees to protect the brand. McDonald’s has also agreed to train the Smith family on the use of corporate software designed to ensure compliance with California’s distinctively strict employment laws.

This is not the end of McDonald’s’ lawsuits and it is certainly not the beginning. Earlier this month, a union-backed group filed sexual harassment complaints on behalf of workers. McDonald’s has to decide which cases are worth fighting, and which cases they should automatically plead guilty. These decisions are based on risk and image.

Nick is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by James Awad.

Florida’s death penalty law has been slightly changed after their Supreme Court ruled that there needs to be unanimous support from the jury to sentence someone to death.  This means that in Florida you now need ten or more jury member’s consent to use the death penalty.   The issue had been raised by Timothy Hurst “a death row inmate whose appeal led lawmakers early this year to rewrite the state’s death penalty law”.  He believed that the death penalty was a violation of his Eighth Amendment right.   In light of the court’s decision the justices of Florida “also ordered that Mr. Hurst have a new sentencing hearing for his conviction for a 1998 murder in Escambia County, in the Florida Panhandle.”

There are about thirty states that still have capital punishment and most of them require that there be unanimous support by the jury.  This highlights the movement toward eliminating the death penalty altogether in the United States.  Many people do not agree with it and about twenty states have banned it such as New Jersey and New York.  There are a large group of people who say that it violates your Eighth Amendment right which pertains to cruel and unusual punishment.

In Florida “The Florida Department of Corrections said Friday that the state was housing 385 prisoners who had been sentenced to death”.   It seems that now that the law has changed, many of these men and women will receive retrials and most likely get their death penalties taken away.  Most of these people, like Mr. Hurst, have been appealing and prolonging the process for years.  In the case of Mr. Hurst, he had avoided the death penalty for more than fifteen years through appeals.

James is an accounting major at the Feliciano School of Business, Montclair State University. 

Posted by Anas Khalil.

A former executive at a New York investment bank who admitted defrauding investors of more than $38 million was sentenced to four years in prison by a judge who cited his gambling addiction as reason for leniency.

Caspersen is a gambler and an alcoholic who put his family members and friends in a situation of losing millions of dollars through an elaborate scheme involving a make-up of a private equity ventures, with a fake mail addresses, and a fake fictional financier. Caspersen had a gambling illness that once he hit a high of over $100 million one day and bet it all the next on whether the market would go up or down. Thus, he was left with nearly nothing at the end of the trading day.

I think Caspersen’s family members and friends who lost millions of dollars should’ve know that an alcoholic gambler should never have an access to big chunks of dollars. A person who is addicted to gambling will not take a consideration that the money he is using does not belong to his pocket and that he is responsible to turn back the money to who it belongs. However, Caspersen will just gamble with all the money he will have an access to thinking he will earn back the money he lost.

When you have big money, you should be more aware of how you invest your money and to whom you lent it. Caspersen’s family members and friends should have never lent Caspersen any money the minute they knew that he was an alcoholic and a gambler, but unfortunately it is too late to say this.

In conclusion, Caspersen imposed a prison term that fell well short of the 15 years called for by sentencing guidelines or the 7 ½ years recommended by the court’s Probation Department. Caspersen is now going to face jail time which is the lesson for every criminal that breaks the law and put other people in impasses.

Anas is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2018.

Posted by Navjoat Aulakh.

PepsiCo’s famous ‘healthy’ beverage line, Naked Juice, is being stripped down and exposed for it’s misleading marketing tactics.  The line of beverages features images of various fruits and vegetables, and claims to be ‘all natural’.  The CSPI (Center for Science in the Public Interest) has argued that “a single 15.2-ounce container (the smallest option) contains 61 grams of sugar, about 50% more sugar than a 12-ounce can of Pepsi”.  The American Heart Association’s suggested sugar intake is 37.5 grams a day, PepsiCo’s Naked Juice almost doubles this suggested amount.

Although the lawsuit is less than two months old, it is expected to make impact in due time.  CSPI is asking that the company be more transparent in the ingredients of the drink, and to compensate monetary damages to customers.  Although the compensation of damages is not likely, PepsiCo will most likely have to change it’s marketing tactics.  The CSPI has a strong history of exposing the misleading marketing of products, and has even caused changes in rival companies such as Coca-Cola.

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

Posted by Kieran Tonero.

Throughout the last four years many scammers have taken advantage of homeowners and business owners who lost properties during Superstorm Sandy.  State officials have reported that scams that relate to Superstorm Sandy total $20 million.  Many residents in Ocean County have been affected by Sandy-related fraud.   The Ocean County Prosecutor’s Office has prosecuted more than 50 cases.  Many of the cases involved contractors who took advantage of people that were looking to rebuild their houses and businesses.  Some schemes that have been investigated so far include contractors that have not registered with the Division of Community Affairs and contractors that have taken money and failed to finish or even start jobs.

One of the most prominent cases in Ocean County involved a couple who owned two repair businesses.  The couple was charged with “…taking more than $1 million from storm victims and using the money to gamble or buy luxury items instead of making the repairs” (Spoto).  The couple was charged with theft by failure to make required disposition of property, money laundering, misconduct by a corporate official, tampering with public records, filing a fraudulent tax return, failure to file a tax return and failure to pay tax. The state attorney General Christopher Porrino said that “…20 owners paid the couple and their companies more than $1 million to repair, elevate, or rebuild their homes but work was either never started or abandoned in mid-stream” (Spoto).  It is truly remarkable that many of these contractors took advantage of people after one of the worst storms in the history of the tri state area.

At last, another case that got attention for Hurricane Sandy fraud involved an Ocean County motel owner who falsely claimed he provided refuge to Hurricane Sandy victims in the aftermath of the storm.  Sandipkumar Patel admitted that he took $81,567 from the Federal Emergency Management Agency.  The money from FEMA was meant to provide transitional housing for storm victims.  According to the article Patel billed the federal government for housing 11 people in the wake of the storm.  The state investigation found that eight of those people never stayed there while the three others were there for a shorter time than Patel claimed.  Patel also used names of family members who were found to be not displaced by the storm.  Patel will serve three years in prison while pleading guilty to second-degree theft by deception.  Patel has also paid full restitution.

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

Posted by Leandro Iglesias.

The article “There Should be No Special Deal for Tax-Evading Cameco,” written by Murray Dobin describes Cameco, a Canadian based uranium mining colossus, that is currently facing charges in Federal Court by the Canada Revenue Agency for avoiding $2.2 billion in Canadian income taxes. As the article states, this case has been delayed for years and the fact that it has finally made it before a judge is good news. However, as we discussed in class, a lot of these forensic cases end up with companies settling and individuals are usually not held responsible. Because of that, it is important that Cameco’s case does not follow the same path, and that Cameco is held responsible for all its wrongdoings and not allowed to settle for any less. Cameco has been so arrogant in its tax avoidance, that it does not even bother to justify their tax planning and just states that they are following relevant laws and regulations. In order to bring attention to off-shore tax havens and to stop companies from abusing such tactics, Canada needs to make an example of Cameco.

As the article states, Cameco’s tax avoidance started in 1999, where they drafter Cameco drafted a 17-year uranium supply agreement at a fixed price of $10 a pound. In 1999, $10 a pound was the reasonable market value. However, as you can imagine, over the 17-year period it is obvious that price would change. As Dobin notes, “That world price went to almost $140 a pound in 2007 and is now around $35.” In order to understand the problem with the above scenario, we need to mention that the Canada corporate income tax is 27%, compared to the 10% tax rate in Switzerland. By the transfer pricing agreement, Cameco was paying Canadian income tax on revenue up to that $10 threshold, but any revenue above that was being paid in Switzerland, at a much lower 10% tax rate. As stated above, prices increased substantially from the 1999 market value, and so Cameco was benefiting of this transfer pricing agreement. The reason why this is a big deal is because the uranium was in Canada, and most of the uranium was also sold in Canada. Cameco would purposely sell its uranium at a lower $10 price to its subsidiary in Switzerland, and then recognize any revenue above $10 in Switzerland instead of in Canada, in order to avoid paying a higher Canadian income tax rate. However, as noted, an insignificant amount of revenues was actually coming from Europe.

This case sheds light on the intriguing topic of transfer pricing. Although Cameco is not a known company in the US, this case relates to the current news on Apple. Apple is facing a US$15 billion tax bill from the European Commission for its abuse of transfer pricing in Ireland. Many companies use transfer pricing to avoid paying higher taxes, which is not illegal. However, Cameco’s revenue is not generated in Switzerland, and they have no full-time employees or even an office location in Europe. Dobin states, “Virtually all the substantive work was performed in Canada. All of the uranium is mined in Canada, all of Cameco’s sales are negotiated and completed in Canada, and literally all of its profits are generated in Canada. The company’s scheme is pure scam which is why fair-tax activists in Saskatchewan call the company Scameco.”

There are ways in which transfer pricing can legally be used to decrease their tax burden, however companies are not allowed to create operations in foreign countries with the sole purpose of tax avoidance. As the article states, there is no operating business reason for Cameco to be in Europe; they neither mine uranium there or make sales abroad. The sole purpose of Cameco in Europe is tax evasion, and as a result they should be found guilty of tax evasion.

Finally, I found this article intriguing because it relates to topics we discussed in our “Legal Issues” class, and also in our Forensic Accounting class. Transfer pricing is just one of the ways in which corporations are boosting their profits, and loop-holes will always exist, hence why tax law and accounting law is always changing. Because of this reason, I believe the demand for forensic accountants is increasingly growing. Furthermore, when cases like Cameco are brought up, they usually all end up the same way, with corporations settling with the Government. I think it is important for corporations and individuals to be held responsible for their wrongdoings, and until that happens, corporations will keep on believing they can get away with it. Forensic accountants should play a bigger role in discovering and investigating cases like the one described in this article.

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

Posted by Heidy Sanchez.

Chipotle Mexican Grill, is an fast casual restaurant which is known for specializing tacos and burritos. Their priority is to serve fresh organic food by hand nationwide, yet things took a drastic change after they announced their temporary closure. The E-coli controversy began in August 2015, when more than 200 people were sickened with norovirus after eating at one of its restaurants, according to the article Every Day’s a Safety Drill as Chipotle Woos Customers Back written by Stephanie Strom. This incident lead to another 64 people, who were affected with salmonella poisoning. Yet it was not until November, when the Chipotle company announced it had closed a string of stores across the Pacific Northwest because of E. coli contamination. Chipotle Mexican Grill took drastic measures to ensure the safety of their food to their customers in order to keep their reputation intact as well as their profits.

Strom states that more than 2,000 Chipotle’s Mexican restaurants were forced to use a digital kitchen timer, which gave employees a regular reminder every 30 minutes to wash their hands in order to prevent any similar problems in the future. The company established a new position of “food safety leader” to ensure that workers followed the orders and suggestion of Dr. Marsden, a food safety expert that Chipotle hired. Dr. Marsden long history of dealing with food-safety crises allowed him to create an innovative idea that would permit managers to check workers every morning for illnesses, to regularly check the temperature of food, to removing any possible contamination of the vegetables used in the restaurant. These procedures included drizzling chopped tomatoes, onions, jalapeno and avocados in citrus juices after they were immersed in hot water to kill germs on their peels, and rinsing and draining the lettuce and later submerge it in a vinegar solution. Dr. Marsden suggested marinating the chicken in the evenings to reduce risk of contamination. Chipotle’s efforts have been slowly paying off. “Robert Gravani, who teaches food safety at Cornell University, said what he had heard about what Chipotle was doing under Dr. Marsden’s direction seemed good (Strom).”

Chipotle’s controversial E-Coli caused their reputation and sales to decline and they have managed to work through this issue by creating innovative ideas. According to Strom  “Some sales have returned, but more slowly than investors expected, and shares have fallen 45 percent in the last year.” This ultimately lead to the company’s bad reputation amongst customers, not to mention the decline in stock prices. Overall, Chipotle has  managed to enhance food safety among its suppliers in order regain public’s confidence as well as their profits. Although, it is currently safe to eat Chipotle now, I would have stopped eating it  during the E-Coli controversy. Chipotle has currently recovered and their efforts to bring back their clients and increase sales are now paying off.

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

Source:

Posted by Ricardo Collado.

One of the most awkward questions you can be asked in a job interview is “What are you salary requirements?” or “How much are you making in your current job?”. Massachusetts has become the first state to bar employers from asking about applicants’ salaries before offering them a job. The new law will require hiring managers to state a compensation figure upfront, based on what an applicant’s worth is to the company, rather than on what he or she made in a previous position.

Massachusetts governor Charlie Baker signed a law, which goes into effect on July 1, 2018. The pay disparity between men and women is still pronounced nationwide, even the size of the gap is in dispute. This bill is being pushed  as a model for others states, as the issue of men historically outearning women who do the same job has leapt onto the national political scene. A new research from career site Glassdoor, which analyzed pay by job title at individual companies, said women earned 94.6 cents for every dollar earned by men in the same positons. Also the law will require equal pay not just for workers whose jobs are alike, but also for those whose work is of “comparable character” or who work in “comparable operations.” Workers with more seniority will still be permitted to earn higher pay, but the law effectively broadens the definition of what is equal work.

“I think very few businesses consciously discriminate, but they need to become aware of it,” said State Senator Pat Jehlen, a Democrat and one of the bill’s cosponsors. “These are things that don’t just affect one job; it keeps women’s wages down over their entire lifetime.” For example if  you are in a job interview and a hiring manager asks you how much you make or how much you are looking for, Sethi, HR consultant, says you should say something like, “You know what, I’m happy to discuss money down the road, but right now I’m just trying to see if there’s a good fit for both of us. I’m sure you’re trying to do the same thing.”

Massachusetts joins at least 12 other states that already require companies to let employees compare notes about how much are paid. Massachusetts has created a new wave, not only to close wage gaps but to lower poverty rates and create a stronger economy for our country as a whole.                                                                       

Ricardo is an accounting major at Feliciano School of Business, Montclair State University, Class 2018.

Sources:

New York Times, http://nyti.ms/2aKzR5c

Business Insider, http://www.businessinsider.com/massachusetts-equal-pay-law-2016-8

Quartz, http://qz.com/749476/massachusetts-salary-history-job-interviews/

Posted by Karolina Staron.

A lawsuit was brought against Dannon Company, Inc for falsely advertising their yogurt brand. Dannon Company for years has claimed their popular product to be the healthiest on the market, ultimately pricing higher than competitors. Stating that daily consumption of the yogurt will reduce occurrences of colds and strengthen individual’s immune system. Consumers profoundly believed in the advertising, willing to pay a higher price.

One individual, however, challenged those claims. Trish Wiener suffered with digestive problems, the consumption of the yogurt that guaranteed digestive system improvements was intended to aid with the discomfort. Inspire of this, with time the yogurt failed to relieve the daily burden and Wiener began to question the accuracy of the advertisement.  “In its ads for the yogurts Dannon claims the products use exclusive strains of what are known as probiotic bacteria, [which] are live microorganisms, usually bacteria, similar to the beneficial ones found in the human digestive system. In the right amounts, they ‘confer a health benefit on the host.’” While, in fact no clinical testing has been accomplished to support the existence of probiotics in the dairy product.

Dannon Company, Inc. although denying any allegations against false advertising, has agreed to settle the Federal Trade Commission law suit. The settlement required acceptance to omit disclosing “scientific proof” benefit of their products. “Claiming that any yogurt, dairy drink, or probiotic food or drink reduces the likelihood of getting a cold or the flu, unless the claim is approved by the Food and Drug Administration.” The Company’s intention behind settling was forgo incurring additional expenses.

In the modern times, busy work schedule and daily tasks often take away time from properly planning meals and force people to rely on quickly obtainable foods. With a busy lifestyle people neglect the need to educate themselves on the quality of products they purchase. If the media states a specific food is beneficial to ingest, the statement is relied upon by the public without further questioning. This is only one case that has been brought to the public’s attention that addresses the topic of food quality and false advertisement. Many of the goods consumed on a daily bases possesses even lower value, yet are an accepted norm.  The lesson taken from this case is to inform ourselves on the supposed benefits of the purchased products, because in truth unless we grow and produce foods ourselves, we won’t know the true ingredients embedded in every product.

Karolina is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.

Sources:

http://abcnews.go.com/Business/dannon-settles-lawsuit/story?id=9950269

https://www.ftc.gov/news-events/press-releases/2010/12/dannon-agrees-drop-exaggerated-health-claims-activia-yogurt

Posted by Nick Contey. 

In the past, Canada’s reputation against fraud has been nothing shy of embarrassing. Their inefficient methodologies created a hole in the financial fraud sector, giving little chance for victims to stand up against the suspects and letting convictions slip away. A perfect example has been the criticism towards the Integrated Market Enforcement Team of the Royal Canadian Mounted Police (RCMP) for not effectively doing their job. Since 2003, there have only been 5 convictions of white-collar criminals despite their annual budget of roughly $40 million. Regardless of Canada’s past performances, the future seems to be a bit more optimistic due to new regulatory and enforcement programs. The new era of their fraud administration aims to focus on developing the three previously inefficient areas, which are enforcement, regulation, and prosecution. It seems that Canada will not stop until they have completely revamped their fraud methodologies, having improvements coming from both federal and provincial bodies.

Since 2012, there have been numerous changes on both the federal and provincial side that give authorities high expectations when it comes to fighting fraud in the future. One federal change came from the RCMP, expanding the mandate of its Commercial Crime Program which allows them to tackle more types of fraud files such as investment fraud, securities fraud, and several more. One provincial change came from the Ontario Securities Commission (OSC) in 2013 where they created a new department called the Joint Serious Offences Team (JSOT). This innovative program creates more collaboration between federal and provincial bodies, giving authorizes a stronger chance of winning their fight against future fraud. The JSOT is a partnership team consisting of the OSC, the RCMP Financial Program, and Ontario Provincial Police Anti-Rackets branch. According the 2015 Annual Report by Ontario Securities Commission, the JSOT executed 69 search warrants, had seven matters under investigation, and commenced 31 cases. “Canada is notably the only G7 economy without a national securities regulator,” (Richdale and Teal, 2016). The lack of a national regulatory establishments has been due to certain Constitutional literature. However, the Supreme Court has been debating on allowing a combined tactic between federal and provincial bodies as long as there are no contradictions to the provincial nature of securities regulations under Constitution. Although it is not officially implemented the Cooperative Capital Markets Regulatory System is the first step in encouraging more collaborative methods against fraud. This system currently consist of British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Yukon, and the federal government.

Ontario has been the leader in the fight against fraud establishing three other changes that have already shown a positive impact, the OSC’s Whistleblower Program, the OSC’s no-contest program, and the increase in litigation funding. Effective July 24, 2016 the program gives whistleblowers the opportunity to receive 15 percent of the total monetary sanctions ordered (a maximum of $1.5 million). Whistleblowers also have the possibility to increase their reward to $5 million if the monetary sanctions exceed $10 million and their participation in the case were a direct result of $1 million or more in monetary sanctions. The no-contest program began in 2014, where its focus is to settle cases without creating an extensive litigation process. “The OSC has already approved a number of ‘no-contest’ settlements, including a large $156.1 million settlement with CI Investments Inc. in February, as well as a $13.5 million settlement with TD Waterhouse and related Entities,” (Brigeeta and Teal, 2016). The process of increasing litigation funding aims to give victims the ability to recover their losses as a result of the committed fraud. This shift showed its true impact in 2012 when the Supreme Court allowed litigation funding for the Livent Inc. v Deloitte & Touche case.  “This funding arrangement ultimately allowed Livent’s receiver to pursue a costly 68-day trial against Deloitte. The trial judge awarded Livent damages in the amount of more than $84 million, (Richdale and Teal, 2016).” While Canada still isn’t considered a heavy hitter in the fraud investigation field, the effects of their recent changes show that their involvement will only get stronger.

Nick is a graduate accounting major with a concentration in Forensic Accounting at the Feliciano School of Business, Montclair State University, Class of 2017.

Source:

Richdale, B., & Teal, C. (2016, November/December). Canada fighting fraud with new laws, enforcement. Fraud Magazine, 31(6). http://www.fraud-magazine.com/article.aspx?id=4294994746

Posted by Ryan Borgo.

In 1977, the United States implemented the Foreign Corrupt Practices Act.  This act states that it is a crime to pay another country’s public official for favors.  Since this time many companies have been accused of disobeying this law and as a result were forced to pay a substantial fine or even faced jail time.  The company Embraer, a Brazilian aircraft manufacturer, are currently under scrutiny for violating this act.  The article related to this story by Forbes states “Brazilian aircraft manufacturer Embraer has agreed to pay $205m in fines to authorities in the U.S. and Brazil to settle a bribery investigation involving aircraft sales to Saudi Arabia, Mozambique, the Dominican Republic and India.”  This settlement was announced on October 24^th, 2016.  These bribery payments had been reoccurring throughout the company for many years.  For example, in the article it states “Embraer had paid bribes to a number of government officials and other intermediaries in the four countries and falsified its records in connection with the sale of 16 aircraft in four deals between 2008 and 2011.”  Even though Embraer is a Brazilian company, if you are listed in the U.S (which Embraer was), you will still be subject to obey American corruption laws.

As a result of participating in these bribery transactions, Embraer earned a profit of $84 million dollars.  These bribery deals included a plethora of illegal business transactions.  For example, Embraer paid a government official $3.52 million dollars in the Dominican Republic in order to seal the deal on a contract to sell the Dominican Air Force military aircraft for $92 million dollars.  By offering these officials a bribe it gives Embraer an unfair advantage over its competitors that are looking to do business in the Dominican Republic.  It is also important to note that even if these officials did not accept the bribe, Embraer would still be charged as they still intended to offer the bribe.  These individuals who accepted the bribe were charged due their involvement in these illegal business transactions, as they accepted these bribes when they could have denied them and reported Embraer to the authorities.  In addition, in the following year Embraer “paid an agent $5.76m to secure the sale of three planes to the Indian Air Force for $208m.” As you can clearly see, Embraer has a long history of initiating bribery transactions amongst various countries.

The details of the settlement were highlighted in the article.  “The settlement announced today involves payment of a criminal penalty of $107.3m. In addition, Embraer is paying the SEC $78.2m and Brazilian authorities a further $20m. The investigation was carried out by the US authorities under the U.S. Foreign Corrupt Practices Act.”  Furthermore, the Brazilian Authorities have charged 11 individuals in the Dominican Republic for accepting these bribes offered by Embraer.  The business decisions taken by Embraer over the past years were insufferable and are considered unlawful in accordance with the Foreign Corrupt Practices Act.

It is not fair to other companies within the industry that complied with the law, as they may have lost many business deals as a result of the bribes committed by Embraer.  For instance, Embraer is considered the world’s third largest company in the sector.  However, much of this success may be as a direct result of the bribe transactions that they participated in the past.  Therefore, in my opinion, the other companies in this industry should be compensated as a result of Embraer’s actions.  Due to this settlement, authorities should closely monitor the future business transactions conducted by Embraer to ensure that they are legally sufficient.

Ryan is accounting graduate student with a concentration in forensic accounting at the Feliciano School of Business, Montclair State University. 

Posted by Francesca Mecionis.

The owners of America’s Test Kitchen filed a 39-page lawsuit against Christopher Kimball, and some of his other associates, on November 3. According to the suit, Kimball and his accomplices “conspired to literally and conceptually rip off” the Boston TV show. The reason for his actions were said to be for his personal benefit in order to help launch his new brand, Milk Street. There are accusations of “stolen customer lists and trade secrets, sneaky tactics to secure a radio deal, and new office space.” Kimball had a fiduciary responsibility to the show. However, the owners believed he had stolen their entire business model, “right down to how recipes are written,” and also had worked on his own project while still being employed by America’s Test Kitchen.

Kimball, in response to the suit, claims it is “absurd” and “was meant to generate publicity and to shore up the America’s Test Kitchen brand.” Yet, there is proof of his actions in writing. There was a forensic search of his emails, which showed “Kimball’s scrambling to set up his new business before he left the old one, securing copies of his work contacts and packing up his belongings.” In another email, Kimball wrote to his assistant, “Want to get ahead of the partners!” in regards to using the America’s Test Kitchen name to find a new office space for his business.

The lawsuit was issued in the Superior Court of Suffolk County of Massachusetts. The owners are hunting for “unspecified monetary damages, repayment of some of the compensation that America’s Test Kitchen paid Kimball and the people who left with him, and asks the court to prevent him and his new company “from exploiting information, assets and opportunities stolen from America’s Test Kitchen.” Lawyers are arguing that Kimball’s motivation to steal secrets from the show stemmed from when the board and investors pushed him out. In 2013, America’s Test Kitchen’s rating decreased dramatically, and the show responded by hiring a new set of employees. By 2015, a new CE whom outranked Kimball had taken over, and eventually he stopped showing up to work, telling his coworkers “he had been fired.” “Kimball, in an interview Wednesday, cautioned not to read too much into the allegations, saying most were false or twisted interpretations.” His legal team is preparing to go against these accusations, within this month. Hopefully, the truth will be revealed and both parties receive what they deserve.

Francesca is an accounting major at the Feliciano School of Business, Montclair State University.

Posted by Paul Della Vecchia.

The recent Bloomberg article “Wal-Mart Balks at Paying $600-Million-Plus in Bribery Case” written by Tom Schoenberg and Matt Robinson, depicts a long standing bribery case Wal-Mart participated in. The article is dated October 6^th, 2016. Wal-Mart is said to have been paying foreign officials in Mexico, India, and China. They did this to take a fast track into getting into those countries. A fast track is speeding up the process to start a business in a country, and it allows them to get their business permits. Wal-Mart reported sales of $482 billion, and $14 billion in profits. In this case alone, “Wal-Mart has already spent $791 million on legal fees and an internal investigation into the alleged payments and to revamp its compliance systems around the world, it said” (Schoenberg and Robinson). These legal fees are starting to add up as the investigation goes longer, but Wal-Mart is not looking to settle. To settle the case, it would be $600 million.

Bribing foreign officials is illegal under the 1977’s Foreign Corrupt Practices Act. Wal-Mart tried to outsmart the system by “Calculating a fine based only on the amount of the alleged bribes, as the department has done in some cases, would yield a lower penalty, they said” (Schoenberg and Robinson). Companies are in the business of making money, and Wal-Mart looked at the pros and cons of this bribery. They believed that they would be able to actually make a profit off breaking the law, and to do that they ran calculations to see whether the fine would outweigh the benefit. Clearly it did not, because they were able to bribe their way to the top, and open more foreign companies. The case is so long standing, because the evidence the officials have is outdated. To work around this, the investigators are trying to look to more recent allocations of bribery from Wal-Mart in Brazil. As each day goes by, evidence becomes more outdated and less reliable. In 2011, “Wal-Mart disclosed possible violations in Mexico to the justice Department and SEC” (Schoenberg and Robinson). There wasn’t much done at the time, and now we fast forward to 2016 and that 5 year old evidence is not looking as clear. So the investigators are beginning to look elsewhere to try and solve this problem. The article also makes reference to attempts to find bribes in China, but to no avail.

Wal-Mart is looking to fight this case, because they are unsure what the criminal charges against them would be. If they decide to settle, the settlement “would rank among the highest levied under 1977’s Foreign Corrupt Practices Act” (Schoenberg and Robinson). The article relates the Wal-Mart case to the similar VimpelCom Ltd. and Siemens AG case. Both cases deal with bribing foreign officers to win business, and both settlements were higher than Wal-Mart. Judging the case off precedent and the increasing costs of legal fees, settlement should be a viable option for Wal-Mart. A company making $14 billion in profits should be able to sponge any damages done by their illegal acts. Wal-Mart does not want to settle, because they are unaware how it would affect their company. The timing is just not right at the moment to be spending the settlement costs, the article alludes to. “Wal-Mart said Thursday that net income for the year through January 2018 will be “relatively flat” as the company invests in its website and mobile app” (Schoenberg and Robinson). So if they have the option to clear their name and spend a little extra money or settle and have their brand slightly tarnished, they are going to fight for now. This way they are able to compete with Amazon in their work on their mobile app and website for online shopping.

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

Posted by Michael Del Piano.

When people hear the word CPA, they think of an accountant that is normally behind a desk working on some taxes. However, this was not the case for Ronald L. Durkin. Durkin was not your ordinary accountant. Instead, he was an FBI agent that was working undercover to establish a business relationship between a crime ring and Durkin’s fake accounting firm. Durkin came into the face of danger early on in his investigation. When he was undercover eating dinner with some of the criminals, he accidentally pulled out his personal credit card to pay the bill. Luckily for him, he was able to get out of it by yelling at the waiter and accusing him of incorrectly charging them. This would not be the last time that Durkin would find himself in danger. On another occasion, Durkin was on SWAT duty and engaged in a fire-fight. After a great carrier, Durkin left the FBI to work in the private sector. Durkin worked for Arthur Andersen and then later was the partner in charge of fraud and misconduct for investigation for KPMG.

Another individual that did not follow the traditional path of traditional accountant was Letha Sparks. Sparks is well-known for her work of investigating a $100 million fraud involving life insurance policies. A&O Resource Managements Ltd.’s owners did not pay the premiums on the life insurance policies. Instead, they used the money to buy fancy cars and multimillion dollar homes.

Generally, people do not see accountants as crime fighters. However, forensic accounting has been widely used to catch white collar criminals. Accounting is one of the five “FBI Special Agent Entry Programs” that qualify an individual for possible employment. In fact, the FBI employs around 700 CPAs as special agents. They even have 600 forensic accountants employed. Another interesting fact is that not all of these forensic accountants that work for the FBI are CPA’s.

CPA’s and accountants greatly help the FBI catch criminals. I personally believe that it is important to let other people know the different kinds of roles that accountants can play. You do not always have to follow the traditional path of accountants and sit behind a desk doing taxes. There are other options available and the world needs forensic accountants to help catch criminals.

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

The Justice Department charged fourteen people, including nine current or former FIFA figures and five sports marketing professionals, for allegedly “‘foster[ing] a culture of corruption and greed that created an uneven playing field for the biggest sport in the world,’” FBI Director James Comey said. The government alleged racketeering and corruption involving more than $150 million in bribes and kickbacks spanning two decades.

“The investigation grew out of allegations of payoffs to officials who decided where to hold the next two World Cups, the biggest international event in sports, that landed the games in Russia for 2018 and Qatar in 2022, according to three senior U.S. law enforcement officials. The U.S. was runner-up to Qatar’s win.”

FIFA appears to be relieved with the indictments. In a statement posted on its website, it said it “welcomes actions that can help contribute to rooting out any wrongdoing in football.”  FIFA further said, “We are pleased to see that the investigation is being energetically pursued for the good of football and believe that it will help reinforce measures that FIFA has already taken.”

The Clinton Foundation is under scrutiny for accepting money from FIFA and Qatar.  “In 2014, the Qatar 2022 Supreme Committee, set up by the Qatar government to ensure a successful FIFA world cup, awarded the Clinton Foundation between $250,000 and $500,000; the State of Qatar donated between $1 million and $5 million.”  According to the Clinton Foundation website, the money was for “research and development for sustainable infrastructure at the 2022 FIFA World Cup to improve food security in Qatar, the Middle East, and other arid and water-stressed regions throughout the world.”

Cell phone video capability is commonplace now, and police in New Jersey are getting used to it. Experts claim that under the First Amendment recording police in plain view is protected. A police officer may not seize a cell phone, delete anything on it, or even demand that the person turn it over to him without a warrant. As long as the person is not truly interfering with a police investigation, they can record as much as they want.

Robert W. Fox, president of the New Jersey State Fraternal Order of Police, stated police should face the fact that cell phone cameras are a reality.  “‘We tell our officers out there . . . that, anything they do, consider themselves being filmed,’” Fox said. “‘No matter where you are anymore, there is some sort of video on the incident – whether it comes from a building camera or an individual cellphone or things like that.’” Arguably, the videos not only protect citizens but also the police from being falsely accused. For most police, video recording should not matter, because they are doing things by the book anyway.

It should be noted that cell phone videos may not capture everything that is taking place during a police encounter. Therefore, rushing to judgment against police would be unfair.

Posted by Jen Suarez.

On April 6th, 2015, Phi Kappa Psi at University of Virginia announced that it is taking legal action against Rolling Stone Magazine for falsely accusing them of gang rape. Columbia Journalism School Review stated the magazine “acted recklessly and defamed the chapter’s members” by publishing this “shock narrative” and as a result the fraternity house has been vandalized. A police investigation was started but was suspended due to lack of evidence after two weeks.

The woman who wrote the article, only identified as “Jackie,” claimed to be the victim of this gang rape. Rolling Stone magazine vowed to analyze their practices and remove the article, which has been viewed by millions, but publisher Jann S. Wenner refused to fire anyone for this obvious case of bad journalism. The fraternity stated, “The reporter in question not only failed to apologize to members of Phi Kappa Psi, but doesn’t even acknowledge the three witnesses she quoted in the article but never interviewed.” This controversy has damaged the school’s reputation, sparked protests, and hurt efforts to fight sexual violence. Rolling Stone Managing Editor, Will Dana, and author, Sabrina Rubin Erdely, have both apologized but the school and fraternity are still waiting for a sincere apology from corporate and for those responsible for this serious fault to be reprimanded.

Libel is the defamation by written or printed words, pictures, spoken words, or gestures. It is also defined as malicious and damaging misrepresentation. We have all seen ignorant comments on the Internet from people all over the world. They say inaccurate and hurtful things because they can hide behind a keyboard and these vicious comments can be very damaging to the reputation of the individual and company. They cry out “Freedom of Speech!” but they aren’t exercising their rights; they are intentionally trying to bring the target into ridicule, hatred, scorn or contempt of others. Defamation is considered a civil wrong and is cause for a lawsuit for damages. In many cases, the target must be able to prove that the statements published were a lie. In this case, however, there is overwhelming lack of evidence and inaccurate information.

Jen is a business administration major with a concentration in management at Montclair State University, Class of 2017.

A New Jersey appellate court recently ruled in James v. Ruiz that testifying experts cannot bolster their opinions by piggybacking or “bootstrapping” the written conclusions of other experts who are not testifying in court.

The Sixth Amendment of the U.S. Constitution protects the right of the accused to confront witnesses against him, thereby excluding hearsay from a case. Hearsay is testimony from a witness who relays information to a jury from a second-hand witness. Hearsay is considered unreliable because the witness who supposedly said the statement is not present in court to be subject to cross-examination.

To illustrate how this works, imagine a case where counsel is trying to prove that Peter was in New York at the time of a robbery. Counsel asks a witness on the stand whether Patrick told him that Peter was in New York in order to place Peter in New York at that time. This is an out-of-court statement made to prove the truth of the matter asserted (that Peter was in New York), and therefore, cannot be cross-examined by opposing counsel because Patrick is not in court. As a result of scenarios like this, rules of court have been crafted to prevent juries from considering hearsay statements in both criminal and civil cases.

Under Federal Rule 703, “an expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.” New Jersey has adopted Rule 703 and takes a strict view on what constitutes personal observance. For example, while certain medical records can be admitted under the business records exception to the hearsay rule, if those records contain medical opinions regarding a complex medical condition, then under the recent decision in James, they cannot be referenced by a testifying witnesses as a consistent (or non-consistent) opinion to his opinion, unless the testifying expert relied on those opinions for his or her own “personal” findings. The witnesses relied upon must be testifying as well. Therefore, simply rubber-stamping one’s own opinion based on a non-testifying expert’s opinion, is bootstrapping and violative of Rule 703.

Together with the business records exception and Rule 703, New Jersey also has Rule 808, which has no federal analog. Under N.J.R.E. 808:

Expert opinion which is included in an admissible hearsay statement shall be excluded if the declarant has not been produced as a witness unless the trial judge finds that the circumstances involved in rendering the opinion, including the motive, duty, and interest of the declarant, whether litigation was contemplated by the declarant, the complexity of the subject matter, and the likelihood of accuracy of the opinion, tend to establish its trustworthiness.

Thus, there are times when a non-testifying expert’s opinion can be permitted, but the trial judge must evaluate the expert’s motives, duty, and interest in giving the opinion; whether they had litigation in mind at the time of the opinion; the complexity of the subject matter; and whether the opinion is accurate. If the opinion regards something that is complex and contested in the lawsuit, the opinion will not be permitted under Rule 808. If it is an uncontested opinion or something insignificant, then it will more than likely be admitted.

There is a line drawn between facts and data, which any expert can discuss, provided that they are relied upon by other experts in the field, and expert opinions. And again, non-testifying expert opinions cannot be admitted unless the testifying expert relied upon those opinions in his analysis of the case and will be testifying. According to the court, “[i]f the requirements of Rule 808 are met, and a testifying expert has reasonably relied upon the non-testifying expert’s opinions, then the testifying expert may be permitted to refer to that absent expert’s opinions in the course of explaining his or her own opinions in court.”  The court continued: “However, this pathway should not be used as a ‘subterfuge to allow an expert to bolster the expert testimony by reference to other opinions of experts not testifying.’”

The bottom line is testifying experts cannot be used as a conduit to admit non-testifying expert testimony. This applies especially to bootstrapping “net opinions” in this manner. In addition to the constitutional issues raised here, doing so is simply unfair. If a plaintiff has an expert who is testifying against the defendant’s expert with an opposite opinion, then permitting the bootstrapping of a non-expert’s opinion is like having two experts against one in front of the jury for the price of one.

Posted by Robert Santos.

Usually when people go on vacation, they come home with a souvenir of some sort such as a hat or refrigerator magnet. Lauren Guerra will be going home with a little more than a silly souvenir–in fact she will be going home with 3.5 million dollars. This will be a trip to remember for Guerra but not in the way one would want. Although Guerra will be going home a very rich woman, the damage that has been done is something that all the money in the world couldn’t fix.

On October 27, 2013, Lauren Guerra was one of the many passengers on the Star Line Tours of Hollywood bus giving a tour to passengers of Hollywood. These buses are popular and very well known for they give tours of the famous locations in California, and are known for the unique design of not having a roof but a open deck level for tourists to have a better view of sites and take better pictures. Unfortunately this would be Guerra’s biggest regret, for while aboard one of these buses, a tree branch flew into her face leaving her permanently disfigured. She immediately sued the company after hearing of another death on the same type of bus under the same company. In July 2014, and has been in a back and forth battle since then.

The court battle was vigorous and both sides seemed to have fair arguments. Mark Cunningham who is the attorney for the Starline Bus Company argued that Guerra was at fault because she was standing while the bus was in motion and also was drinking prior to being on the bus. Brian Kabateck, who is Guerra’s attorney, responded by admitting his client did indeed have a drink or two before entering the bus. But there was no way anyone could of avoided this injury, sober or not. Guerra’s attorney argued Star Line could have done more to prevent the situation such as having a worker on the second level of the bus, and also having individuals scout to see what type of environment the bus routes consisted of before actually allowing the buses on them. After a day-long discussion among jurors, the court finally awarded Guerra a settlement of 3.5 million dollars.

Something says that whether you weigh the negatives or the positives, Guerra will never forget this vacation.

Robert is a philosophy major at Seton Hall University, Class of 2016.

Posted by Robert Santos.

It seems that multiple companies are beginning to merge in an attempt for one company to make a larger profit and the other company to remain alive. Some companies tend to merge in order to both strengthen their profits and publicity. In this specific case, these companies merged in order to create a better and more powerful drug that could be beneficial and a game changer for individuals who suffer from multiple sclerosis. Or so it seemed. Unfortunately for these French companies, there well planned venture did not go as planned.

In 2011, a giant French pharmaceutical company known as Sanofi acquired Genzyme, a small biotech company based in Cambridge, Massachusetts. Sanofi paid 20 billion dollars for the company, and although that seems a bit much for a small-time company, Genzyme was making strides to create a powerful and promising treatment to multiple sclerosis called Lemtrada. It seemed like a good deal that would not only benefit the two companies but the world as well.

Unfortunately things did not turn out for the best with this venture between the two companies. It turned out that Sanofi was developing their own treatment to multiple sclerosis. The drug is called Aubagio and would have been a competitor against Lemtrada. Sanofli was faced with a dilemma: they could have followed F.D.A regulations and worked to seek approval for Lemtrada, or finish working on Aubagio. The only catch would be that by focusing on Lemtrada, Sonafli would have to give additional payments to the Genzyme rights holders in the estimate of 3.8 billion dollars. Of course Sonafli choose the latter option and focused on their drug without the right holders of Genzyme knowing, and now a lawsuit has been issued.

A lawsuit was filed against Sonafli by Genzyme rights holders under the claim that Sonafli failed to fulfil its obligations under their deal. Because of this, the individuals who invested in Genzyme have not received the money owed to them in a sum of 708 million dollars. The lawsuit claims Sonafli may have taken it upon themselves to slow the approval of Lemtrada through the F.D.A in order to avoid having to pay the right holders of Genzyme, while the approval of Sonafli’s drug Aubagio was an easier process and did not have as much difficulty of being approved as Lemtrada did. It has already been noted by F.D.A officials that the time process for Lemtrada to be approved took longer than it should have, therefore, it already seems that Sofali is in the wrong.

Unfortunately, this is a case where the wellbeing of individuals is outweighed by the possibility of profit. If what Genzyme is claiming is true, we would have been witness to another company thinking about their pockets before the health of many. Considering the impact these drugs could have had on the lives of the somewhat 2.3 million people in the world who suffer from multiple sclerosis, it is a sad thing to see money interrupting the process of progress. Hopefully, we see some agreement and it happens as fast as possible so these companies can go back to focusing on what’s important, and that’s saving a life.

Robert is a philosophy major at Seton Hall University, Class of 2016.

Posted by Deane Franco.

In a recent article posted in the Wall Street Journal, I read about General Motors being charged with punitive damages due to a defective part causing multiple deaths. General motors had been in the process of recalling millions of vehicles, when a defective ignition switch caused 100 or so deaths.

The punitive damages will be limited to the extent of a lawsuit based on claims and knowledge that GM had of a new company auto maker’s 2009 restructuring. GM attempted to prevent plaintiffs for bringing punitive damages based on personal injury or wrongful death. Unfortunately for GM, Robert Hilliard who is representing all those injured by GM feels that punitive damages “are the only way to properly compensate victims who have been harmed by defect.” This is because punitive damages are meant to be a large enough punishment to the corporation to send a notable message with the intent of assuring the corporation understands its wrong doing.

Although GM tried to fight the punitive damages, the plaintiffs won outright. What this means for GM is that punitive damages could reach millions or even billions of dollars awarded to those affected, depending on the ruling, previous defective GM part cases may also be included.

GM has already paid $935 million in damages and has also agreed to $625 million in compensation for the victims. But we will see if the court will stop there. Moreover, GM is being considered for additional charges because they had acknowledged that they mislead regulators about the defective car parts and still put them into production. The hairy part, however, comes in when GM addresses their bankruptcy filing, because technically, “Old GM” filed for bankruptcy and would be responsible for all these defective parts liabilities and, “New GM,” the product of the bankruptcy reorganization, is a new company separate from the actions of the old.

This article relates to the discussion post this week in class where we discussed the hot coffee spill in Liebeck vs. McDonalds. In that situation, punitive damages were used not necessarily as a fair compensation to the victim, but to ensure McDonald’s knew of its intentional wrong doing and would be more likely to halt such procedures.

The pricing of the punitive damages was said to be very important for Mr. Hillard because he knows that those damages tend to run very high and would lead to fair compensation for the victim’s losses. This is a little different from the Liebeck case, because in that case, there appeared to be dual responsibility as to   both the temperature and the spilling of coffee; in this GM case, all responsibility falls on the manufacturer for selling a defective car which caused death to numerous victims. It does not matter that GM has rebranded itself after going through bankruptcy filings.  At this point in time, there may be products on the market that have not been recalled, which caused injury and or death to numerous victims. For these reasons, the punitive damages should be high to balance out the victim’s loss and GM’s punishment.

Deane is a member of the The Gerald P. Buccino ’63 Center for Leadership Development at the Stillman School of Business, Seton Hall University, and a finance and information technology management major, Class of 2018.

Posted by Abigail Anaemeje. 

Yet, another automobile scandal! In September, the Environmental Protection Agency found that Volkswagen sold 482,000 cars in the U.S. that contained a “defeat device.” This type of software was used in diesel engines, “that could detect when they were being tested, changing the performance accordingly to improve results.” The result of this led to the “engines emitting nitrogen oxide pollutants 40 times above what is allowed in the US.” In addition, in November of this year, Volkswagen also found irregularities of carbon dioxide emissions levels in about 800,000 cars in Europe. In response to the emission-cheating scandal, Volkswagen has acknowledge their failure. As a result, they will have to pay a fine to the EPA of $37,500 for every vehicle that goes against the allowed standards.

This issue has not only effected the U.S. and Europe, but also France, South Korea, the UK, Italy, Canada, and Germany. In total, 500,000 cars in the U.S., 2.4 million in Germany, and 1.2 million cars in the U.K. have been recalled as a result of the emissions scandal. So far, no employees have been directly fired over the incident. However, the management board member and the head of sales and marketing, Christina Klingler is leaving the company on an unrelated issue.

Abigail is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Abigail Anaemeje.

In September of this year, a settlement was finally reached involving GM and their issue involving small- car ignition switches. In the last year, the company has had to recall over 2.6 million of their older cars to replace defective switches that, “shuts off the engine and disables power-assisted steering, power brakes and the air bags.” Such problems have been found in models such as the Saturn Ion and Chevrolet Cobalt. This deadly case drew even more attention when it was the cause of at least 124 deaths and 275 injuries. GM, the Detroit automaker, admits that, “some of its employees knew about the problem for more than a decade, but no cars were recalled until early last year.” After hiring a federal prosecutor, Anton Valukas, he discovered that there has been no wrongdoing made by the top executives. However, in light of the incident, 15 employees of GM have been fired for falling to act in correcting the issue.

Overall, GM Motors will have to pay a wire fraud charge of $900 million in a late prosecution agreement. As for the families who have lost their loved ones, each will receive at least $1 million. In addition, $625 million has been set aside to compensate people who will agree with the settlement. Ironically, this case occurred a year after Toyota was caught hiding information about its defects that caused similar outcomes. Since it was much severe, Toyota agreed to pay a penalty of $1.2 billion; making it the largest penalty enforced on an automobile company.

Abigail is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Yasmine Miller.

Around the time of July, 2015 Whole Foods was being sued for misleading sugar claims. Shoppers of Whole Foods were angry when discovering that the evaporated cane juice is actually sugar. The company has built their popular reputation on only selling foods that are supposed to be healthier than the foods that you would get in local grocery store. Whole Foods has been fighting against their allegations in the misleading and false advertisements on their cookies.

According to the article “The plaintiffs allege that Whole Foods called sugar “evaporated cane juice” on the label of its Gluten Free All Natural Nutmeal Raisin Cookies in an attempt to make consumers believe that the cookies do not contain as much sugar as they in fact contain.” Further, still today Whole Foods denies the claims in the Missouri lawsuit. “In their filing in support of this motion, they argue that no reasonable customer could have been led, by the label on its cookies, to believe that the product didn’t contain sugar.”

Whole Foods mislead their customers by conceiving them that their healthy snack (cookies) weren’t as healthy as everyone thought. The company mislead and falsely advertised their cookies and violated laws that are in place to protect clients from being misled about products and or services. From my understanding, businesses are not allowed to make statements that lead to incorrect impressions.

Whole Foods violated the Code of Conduct in Business for their deception and dishonesty towards their customers. A code of conduct (also known as the code ethics) provides employees with guidance for handling difficult ethnical situations related to the business. Whole Foods definitely violated this conduct.

Yasmine is a psychology major at Seton Hall University, Class of 2017.

Posted by Leonardo Terzulli.

Two new cases that have just arose, DraftKings and FanDuel, two one-day fantasy sports websites that guarantee immediate cash payouts, have been banned in the state of New York. New York’s Attorney General Eric Schneiderman, sent a cease-and-desist letter earlier this past week accusing FanDuel and DraftKings to be considered illegal gambling. This whole debate started over news that had been circulating that an employee who worked for DraftKings won $350,000 in a contest on the website. There were allegations that the employee had inside information that was used to help him win the contest. DraftKings response to the allegation was “the information was only available after player lineups had been locked in.” Both companies claim that employees are banned from participating in competition on the website, and failed to check-up on internal controls.

Both DraftKings and FanDuel have chose to file lawsuits feeling that the Attorney General wasn’t fair in his cease-and-desist order. “The two companies made separate filings that asked the New York Supreme Court to throw out Schneiderman’s order. In its lawsuit, DraftKings argued that Schneiderman’s cease-and-desist order is unconstitutional, saying the Attorney General acted as ‘judge, jury and executioner.’”

While there are already a few states that have prohibited daily sports, I feel that this case is really going to be contingent on the employee who violated the rules and lack of check-up on the internal control in the companies.

Leonardo is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Leonardo Terzulli.

McDonald’s has recently been involved in a case of a customer, Lynn Gipson, having hot water spill on her at a McDonald’s drive-through. The incident happened in 2012 when a cup’s lid popped off, “spilling the scalding water and causing second-degree burns on Ms. Gipson’s thigh and stomach,” a quote from the court documents. This incident is similar to the 1994 incident when Stella Liebeck sued McDonald’s in the case Liebeck v. McDonald’s Restaurants in which a top to a coffee lid came off in between Liebeck’s legs causing severe burn injuries with resulted in skin grafting. The turnout for this case was Liebeck was awarded $2.86 million. Gipson is alleging that McDonald’s drive-through employees delivered tea and other hot liquid substances in a negligent matter.

Unlike the case the in 1994, McDonald’s is most likely opting to not take the case to court and settle. The turnout for the 1994 case ended in the jury calling for McDonald’s to pay punitive damages. Knowing that they have faced a few court cases already this year, and that they will probably lose this case again, they feel the best choice for them is to just settle with Gipson’s terms. Although the case is still not fully resolved, it is safe to say that McDonald’s is going to lose. Similar to the 1994 case, this is a case that might seem a little obscure but, Lynn Gipson exerted all of her options, taking into account all actions by both parties, and taking the educated step to ensure she was given justice.

 Leonardo is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Ryan Neligan.

Human beings have a natural tendency to expand upon whatever the present is. In America, pilgrims settled in the state of Massachusetts and eventually expanded all the way to California. This trend of expanding continues today, as now people look forward to what is beyond Earth: Outer Space. This week Congress has passed a bill called the Space Act of 2015, which will help the small business of asteroid mining become an official operation.

The resources that are in outer space could be quite valuable to our world for the future. There are so many things untouched out there and in such great supply. In the past, “the prospect of large scale extraction of minerals from other planets or cosmic bodies has been both technologically and legally questionable, with starry-eyed entrepreneurs hard at work on the first part, but without much guidance on the second” (Good Magazine). Our civilization has not had the knowledge or technology in order to make obtaining a vast amount of resources from outer space an appropriate business. That has changed in current day though, as technology has made leaps forward in progress of this venture, and now to is officially about to become legitimate. With the passing of the Act, the business of space mining could boom into a full blown industry in the market, for “this lays the legal groundwork for private businesses to own extra-planetary resources, as well as sell their goods back on Earth” (Good Magazine). Huge potential is seen for space mining. Businesses are waiting for the new act to become official so they can jump into the extraterrestrial world of space mining and make as profit off of it.

The Space Act of 2015 is not yet complete to be used, but it is laying the foundation to open up endless possibilities that reach far beyond he extant of this world. Humans continue to expand the horizons that are in front of them, and this act would put them in the galaxies.

Ryan Neligan is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Ryan Neligan.

Earlier in the month, the state of New York banned the use of Fanduel and Draftkings, both websites in which people use to bet on daily fantasy sports. These websites are run daily in which people place down money and compete against each other in order to see who the best judge of sports is, and the winner acquires a large sum of money from those people who took place in the game. Games like this take place all over the world through these websites and have instantly gained a great amount of popularity.

The attention it is getting from the population has caused some heads to turn, such as the state government of New York. It has seen these websites as illegal gambling taking place within the state, and New York’s attorney general is set on shutting down this business. FanDuel and DraftKings are not going down without a fight though, as “the two biggest daily fantasy sports sites are taking on Eric Schneiderman in court, accusing him in lawsuits of bullying and abusing his powers in ordering that they stop operations in New York and are seeking a judge’s order to let them keep operating” (BloombergBusiness). To lose the participation of New York would be a huge blow for these two businesses, because New York accounts for “more than $1 billion each and have drawn investors across the sports, media and venture-capital industries. The state accounts for 5 percent of FanDuel’s customers and more than 7 percent for DraftKings, according to the companies’ filings” (BloombergBusienss).

Fanduel and DraftKings are taking action and are filing suit against this banning, for they do not see their business as an illegal online gambling site. They see it as a game of skill and knowledge in sports. Fanduel stated in its complaint about the case that “Such a shutdown would deprive hundreds of thousands of subscribing New Yorkers of the opportunity to pit their skills against the skills of others in selecting a ‘fantasy’ team of athletes from different sports teams and competing in contests offering prizes to the players whose fantasy teams perform best” (BloombergBusiness).

The case can be made for both sides of the argument. These websites are definitely a test of skill in the area of sports just like when people play regular Fantasy games, but it can also be seen as a website used for gambling and requiring money online, which is illegal in the state of New York. If these website continuing operating, the attorney general will take action and put chargers against these companies. The people of New York will be watching this case closely to see what the final outcome is, but for now daily fantasy sports has been banned from the state.

Ryan Neligan is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Robert Santos.

Usually when people go on vacation, they come home with a souvenir of some sort such as a hat or refrigerator magnet. Lauren Guerra will be going home with a little more than a silly souvenir–in fact she will be going home with 3.5 million dollars. This will be a trip to remember for Guerra but not in the way one would want. Although Guerra will be going home a very rich woman, the damage that has been done is something that all the money in the world couldn’t fix.

On October 27, 2013, Lauren Guerra was one of the many passengers on the Star Line Tours of Hollywood bus giving a tour to passengers of Hollywood. These buses are popular and very well known for they give tours of the famous locations in California, and are known for the unique design of not having a roof but a open deck level for tourists to have a better view of sites and take better pictures. Unfortunately this would be Guerra’s biggest regret, for while aboard one of these buses, a tree branch flew into her face leaving her permanently disfigured. She immediately sued the company after hearing of another death on the same type of bus under the same company. In July 2014, and has been in a back and forth battle since then.

The court battle was vigorous and both sides seemed to have fair arguments. Mark Cunningham who is the attorney for the Starline Bus Company argued that Guerra was at fault because she was standing while the bus was in motion and also was drinking prior to being on the bus. Brian Kabateck, who is Guerra’s attorney, responded by admitting his client did indeed have a drink or two before entering the bus. But there was no way anyone could of avoided this injury, sober or not. Guerra’s attorney argued Star Line could have done more to prevent the situation such as having a worker on the second level of the bus, and also having individuals scout to see what type of environment the bus routes consisted of before actually allowing the buses on them. After a day-long discussion among jurors, the court finally awarded Guerra a settlement of 3.5 million dollars.

Something says that whether you weigh the negatives or the positives, Guerra will never forget this vacation.

Robert is a philosophy major at Seton Hall University, Class of 2016.

Posted by Robert Santos.

It seems that multiple companies are beginning to merge in an attempt for one company to make a larger profit and the other company to remain alive. Some companies tend to merge in order to both strengthen their profits and publicity. In this specific case, these companies merged in order to create a better and more powerful drug that could be beneficial and a game changer for individuals who suffer from multiple sclerosis. Or so it seemed. Unfortunately for these French companies, there well planned venture did not go as planned.

In 2011, a giant French pharmaceutical company known as Sanofi acquired Genzyme, a small biotech company based in Cambridge, Massachusetts. Sanofi paid 20 billion dollars for the company, and although that seems a bit much for a small-time company, Genzyme was making strides to create a powerful and promising treatment to multiple sclerosis called Lemtrada. It seemed like a good deal that would not only benefit the two companies but the world as well.

Unfortunately things did not turn out for the best with this venture between the two companies. It turned out that Sanofi was developing their own treatment to multiple sclerosis. The drug is called Aubagio and would have been a competitor against Lemtrada. Sanofli was faced with a dilemma: they could have followed F.D.A regulations and worked to seek approval for Lemtrada, or finish working on Aubagio. The only catch would be that by focusing on Lemtrada, Sonafli would have to give additional payments to the Genzyme rights holders in the estimate of 3.8 billion dollars. Of course Sonafli choose the latter option and focused on their drug without the right holders of Genzyme knowing, and now a lawsuit has been issued.

A lawsuit was filed against Sonafli by Genzyme rights holders under the claim that Sonafli failed to fulfil its obligations under their deal. Because of this, the individuals who invested in Genzyme have not received the money owed to them in a sum of 708 million dollars. The lawsuit claims Sonafli may have taken it upon themselves to slow the approval of Lemtrada through the F.D.A in order to avoid having to pay the right holders of Genzyme, while the approval of Sonafli’s drug Aubagio was an easier process and did not have as much difficulty of being approved as Lemtrada did. It has already been noted by F.D.A officials that the time process for Lemtrada to be approved took longer than it should have, therefore, it already seems that Sofali is in the wrong.

Unfortunately, this is a case where the wellbeing of individuals is outweighed by the possibility of profit. If what Genzyme is claiming is true, we would have been witness to another company thinking about their pockets before the health of many. Considering the impact these drugs could have had on the lives of the somewhat 2.3 million people in the world who suffer from multiple sclerosis, it is a sad thing to see money interrupting the process of progress. Hopefully, we see some agreement and it happens as fast as possible so these companies can go back to focusing on what’s important, and that’s saving a life.

Robert is a philosophy major at Seton Hall University, Class of 2016.

Posted by Deane Franco.

In a recent article posted in the Wall Street Journal, I read about General Motors being charged with punitive damages due to a defective part causing multiple deaths. General motors had been in the process of recalling millions of vehicles, when a defective ignition switch caused 100 or so deaths.

The punitive damages will be limited to the extent of a lawsuit based on claims and knowledge that GM had of a new company auto maker’s 2009 restructuring. GM attempted to prevent plaintiffs for bringing punitive damages based on personal injury or wrongful death. Unfortunately for GM, Robert Hilliard who is representing all those injured by GM feels that punitive damages “are the only way to properly compensate victims who have been harmed by defect.” This is because punitive damages are meant to be a large enough punishment to the corporation to send a notable message with the intent of assuring the corporation understands its wrong doing.

Although GM tried to fight the punitive damages, the plaintiffs won outright. What this means for GM is that punitive damages could reach millions or even billions of dollars awarded to those affected, depending on the ruling, previous defective GM part cases may also be included.

GM has already paid $935 million in damages and has also agreed to $625 million in compensation for the victims. But we will see if the court will stop there. Moreover, GM is being considered for additional charges because they had acknowledged that they mislead regulators about the defective car parts and still put them into production. The hairy part, however, comes in when GM addresses their bankruptcy filing, because technically, “Old GM” filed for bankruptcy and would be responsible for all these defective parts liabilities and, “New GM,” the product of the bankruptcy reorganization, is a new company separate from the actions of the old.

This article relates to the discussion post this week in class where we discussed the hot coffee spill in Liebeck vs. McDonalds. In that situation, punitive damages were used not necessarily as a fair compensation to the victim, but to ensure McDonald’s knew of its intentional wrong doing and would be more likely to halt such procedures.

The pricing of the punitive damages was said to be very important for Mr. Hillard because he knows that those damages tend to run very high and would lead to fair compensation for the victim’s losses. This is a little different from the Liebeck case, because in that case, there appeared to be dual responsibility as to   both the temperature and the spilling of coffee; in this GM case, all responsibility falls on the manufacturer for selling a defective car which caused death to numerous victims. It does not matter that GM has rebranded itself after going through bankruptcy filings.  At this point in time, there may be products on the market that have not been recalled, which caused injury and or death to numerous victims. For these reasons, the punitive damages should be high to balance out the victim’s loss and GM’s punishment.

Deane is a member of the The Gerald P. Buccino ’63 Center for Leadership Development at the Stillman School of Business, Seton Hall University, and a finance and information technology management major, Class of 2018.

Posted by Abigail Anaemeje. 

Yet, another automobile scandal! In September, the Environmental Protection Agency found that Volkswagen sold 482,000 cars in the U.S. that contained a “defeat device.” This type of software was used in diesel engines, “that could detect when they were being tested, changing the performance accordingly to improve results.” The result of this led to the “engines emitting nitrogen oxide pollutants 40 times above what is allowed in the US.” In addition, in November of this year, Volkswagen also found irregularities of carbon dioxide emissions levels in about 800,000 cars in Europe. In response to the emission-cheating scandal, Volkswagen has acknowledge their failure. As a result, they will have to pay a fine to the EPA of $37,500 for every vehicle that goes against the allowed standards.

This issue has not only effected the U.S. and Europe, but also France, South Korea, the UK, Italy, Canada, and Germany. In total, 500,000 cars in the U.S., 2.4 million in Germany, and 1.2 million cars in the U.K. have been recalled as a result of the emissions scandal. So far, no employees have been directly fired over the incident. However, the management board member and the head of sales and marketing, Christina Klingler is leaving the company on an unrelated issue.

Abigail is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Abigail Anaemeje.

In September of this year, a settlement was finally reached involving GM and their issue involving small- car ignition switches. In the last year, the company has had to recall over 2.6 million of their older cars to replace defective switches that, “shuts off the engine and disables power-assisted steering, power brakes and the air bags.” Such problems have been found in models such as the Saturn Ion and Chevrolet Cobalt. This deadly case drew even more attention when it was the cause of at least 124 deaths and 275 injuries. GM, the Detroit automaker, admits that, “some of its employees knew about the problem for more than a decade, but no cars were recalled until early last year.” After hiring a federal prosecutor, Anton Valukas, he discovered that there has been no wrongdoing made by the top executives. However, in light of the incident, 15 employees of GM have been fired for falling to act in correcting the issue.

Overall, GM Motors will have to pay a wire fraud charge of $900 million in a late prosecution agreement. As for the families who have lost their loved ones, each will receive at least $1 million. In addition, $625 million has been set aside to compensate people who will agree with the settlement. Ironically, this case occurred a year after Toyota was caught hiding information about its defects that caused similar outcomes. Since it was much severe, Toyota agreed to pay a penalty of $1.2 billion; making it the largest penalty enforced on an automobile company.

Abigail is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Yasmine Miller.

Around the time of July, 2015 Whole Foods was being sued for misleading sugar claims. Shoppers of Whole Foods were angry when discovering that the evaporated cane juice is actually sugar. The company has built their popular reputation on only selling foods that are supposed to be healthier than the foods that you would get in local grocery store. Whole Foods has been fighting against their allegations in the misleading and false advertisements on their cookies.

According to the article “The plaintiffs allege that Whole Foods called sugar “evaporated cane juice” on the label of its Gluten Free All Natural Nutmeal Raisin Cookies in an attempt to make consumers believe that the cookies do not contain as much sugar as they in fact contain.” Further, still today Whole Foods denies the claims in the Missouri lawsuit. “In their filing in support of this motion, they argue that no reasonable customer could have been led, by the label on its cookies, to believe that the product didn’t contain sugar.”

Whole Foods mislead their customers by conceiving them that their healthy snack (cookies) weren’t as healthy as everyone thought. The company mislead and falsely advertised their cookies and violated laws that are in place to protect clients from being misled about products and or services. From my understanding, businesses are not allowed to make statements that lead to incorrect impressions.

Whole Foods violated the Code of Conduct in Business for their deception and dishonesty towards their customers. A code of conduct (also known as the code ethics) provides employees with guidance for handling difficult ethnical situations related to the business. Whole Foods definitely violated this conduct.

Yasmine is a psychology major at Seton Hall University, Class of 2017.

Posted by Leonardo Terzulli.

Two new cases that have just arose, DraftKings and FanDuel, two one-day fantasy sports websites that guarantee immediate cash payouts, have been banned in the state of New York. New York’s Attorney General Eric Schneiderman, sent a cease-and-desist letter earlier this past week accusing FanDuel and DraftKings to be considered illegal gambling. This whole debate started over news that had been circulating that an employee who worked for DraftKings won $350,000 in a contest on the website. There were allegations that the employee had inside information that was used to help him win the contest. DraftKings response to the allegation was “the information was only available after player lineups had been locked in.” Both companies claim that employees are banned from participating in competition on the website, and failed to check-up on internal controls.

Both DraftKings and FanDuel have chose to file lawsuits feeling that the Attorney General wasn’t fair in his cease-and-desist order. “The two companies made separate filings that asked the New York Supreme Court to throw out Schneiderman’s order. In its lawsuit, DraftKings argued that Schneiderman’s cease-and-desist order is unconstitutional, saying the Attorney General acted as ‘judge, jury and executioner.’”

While there are already a few states that have prohibited daily sports, I feel that this case is really going to be contingent on the employee who violated the rules and lack of check-up on the internal control in the companies.

Leonardo is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Leonardo Terzulli.

McDonald’s has recently been involved in a case of a customer, Lynn Gipson, having hot water spill on her at a McDonald’s drive-through. The incident happened in 2012 when a cup’s lid popped off, “spilling the scalding water and causing second-degree burns on Ms. Gipson’s thigh and stomach,” a quote from the court documents. This incident is similar to the 1994 incident when Stella Liebeck sued McDonald’s in the case Liebeck v. McDonald’s Restaurants in which a top to a coffee lid came off in between Liebeck’s legs causing severe burn injuries with resulted in skin grafting. The turnout for this case was Liebeck was awarded $2.86 million. Gipson is alleging that McDonald’s drive-through employees delivered tea and other hot liquid substances in a negligent matter.

Unlike the case the in 1994, McDonald’s is most likely opting to not take the case to court and settle. The turnout for the 1994 case ended in the jury calling for McDonald’s to pay punitive damages. Knowing that they have faced a few court cases already this year, and that they will probably lose this case again, they feel the best choice for them is to just settle with Gipson’s terms. Although the case is still not fully resolved, it is safe to say that McDonald’s is going to lose. Similar to the 1994 case, this is a case that might seem a little obscure but, Lynn Gipson exerted all of her options, taking into account all actions by both parties, and taking the educated step to ensure she was given justice.

 Leonardo is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Ryan Neligan.

Human beings have a natural tendency to expand upon whatever the present is. In America, pilgrims settled in the state of Massachusetts and eventually expanded all the way to California. This trend of expanding continues today, as now people look forward to what is beyond Earth: Outer Space. This week Congress has passed a bill called the Space Act of 2015, which will help the small business of asteroid mining become an official operation.

The resources that are in outer space could be quite valuable to our world for the future. There are so many things untouched out there and in such great supply. In the past, “the prospect of large scale extraction of minerals from other planets or cosmic bodies has been both technologically and legally questionable, with starry-eyed entrepreneurs hard at work on the first part, but without much guidance on the second” (Good Magazine). Our civilization has not had the knowledge or technology in order to make obtaining a vast amount of resources from outer space an appropriate business. That has changed in current day though, as technology has made leaps forward in progress of this venture, and now to is officially about to become legitimate. With the passing of the Act, the business of space mining could boom into a full blown industry in the market, for “this lays the legal groundwork for private businesses to own extra-planetary resources, as well as sell their goods back on Earth” (Good Magazine). Huge potential is seen for space mining. Businesses are waiting for the new act to become official so they can jump into the extraterrestrial world of space mining and make as profit off of it.

The Space Act of 2015 is not yet complete to be used, but it is laying the foundation to open up endless possibilities that reach far beyond he extant of this world. Humans continue to expand the horizons that are in front of them, and this act would put them in the galaxies.

Ryan Neligan is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Ryan Neligan.

Earlier in the month, the state of New York banned the use of Fanduel and Draftkings, both websites in which people use to bet on daily fantasy sports. These websites are run daily in which people place down money and compete against each other in order to see who the best judge of sports is, and the winner acquires a large sum of money from those people who took place in the game. Games like this take place all over the world through these websites and have instantly gained a great amount of popularity.

The attention it is getting from the population has caused some heads to turn, such as the state government of New York. It has seen these websites as illegal gambling taking place within the state, and New York’s attorney general is set on shutting down this business. FanDuel and DraftKings are not going down without a fight though, as “the two biggest daily fantasy sports sites are taking on Eric Schneiderman in court, accusing him in lawsuits of bullying and abusing his powers in ordering that they stop operations in New York and are seeking a judge’s order to let them keep operating” (BloombergBusiness). To lose the participation of New York would be a huge blow for these two businesses, because New York accounts for “more than $1 billion each and have drawn investors across the sports, media and venture-capital industries. The state accounts for 5 percent of FanDuel’s customers and more than 7 percent for DraftKings, according to the companies’ filings” (BloombergBusienss).

Fanduel and DraftKings are taking action and are filing suit against this banning, for they do not see their business as an illegal online gambling site. They see it as a game of skill and knowledge in sports. Fanduel stated in its complaint about the case that “Such a shutdown would deprive hundreds of thousands of subscribing New Yorkers of the opportunity to pit their skills against the skills of others in selecting a ‘fantasy’ team of athletes from different sports teams and competing in contests offering prizes to the players whose fantasy teams perform best” (BloombergBusiness).

The case can be made for both sides of the argument. These websites are definitely a test of skill in the area of sports just like when people play regular Fantasy games, but it can also be seen as a website used for gambling and requiring money online, which is illegal in the state of New York. If these website continuing operating, the attorney general will take action and put chargers against these companies. The people of New York will be watching this case closely to see what the final outcome is, but for now daily fantasy sports has been banned from the state.

Ryan Neligan is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.