Posted by Chenglu Xia.

In his article, “Bitcoin Will Be Taxed as an Asset: Israel Tax Authority,” Samburaj Das states that Israel government will have a new regulation on cryptocurrency. The official tax authority is making a change, transferring bitcoin’s role from the cryptocurrency to an asset. However, Israel’s official authority is not the only one that regards bitcoin as an asset. The IRS also did the same thing; it admits the importance of bitcoins, but the precondition is that bitcoins should play a role of asset rather than cryptocurrency and should be taxed proportionately. I believe this change can make bitcoins market legal, which will also benefit the worldwide economy. If any transaction of bitcoins will be taxed, it will lead to stronger and more sustainable economic growth without some illegal transactions.

Nowadays, bitcoin is the most popular cryptocurrency around the world. It has two main characteristics. Primarily, it’s a kind of digital currency rather than fiat currency, such as USD. Moreover, it’s decentralized which use a process called mining. This process use advanced technology with some complex mathematic formulas to produce specific codes. At the beginning, most investors prefer to use this kind cryptocurrency to avoid taxation.  Meanwhile, they can exchange bitcoins with fiat currency, also goods and services; and, it is difficult to track those transactions, which encourages the black market to use this cryptocurrency to carry on illegal transactions.

However, I’m considering about bitcoins’ credibility. There is no guaranteed operating organization. Bitcoin is just a virtual currency and there is no regulation when it first appeared on the Internet. I am wondering why there is an increasing number of people using this currency. In China, I heard that most people just buy bitcoins for investment. It is the similar situation with the investment in stocks, which means that most people do not regard bitcoins as a currency. They only invest in it because of high profits, although it comes with high risk. Personally, I believe that there are some organizations which use bitcoins to do illegal transactions, making high profit. Thus, bitcoin becomes a tool used for illegal purposes, which attracts the attention of national legislature. Thus, it’s profound, meaningful and effective to make the decision of taxing transactions of bitcoins.

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

Sources:

https://www.ccn.com/bitcoin-will-see-taxation-asset-not-currency-israel-authority/

https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp

Posted by Basil Almubaddil.

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

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

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

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

Reference:

Posted by Xiangni Meng.

There have been at least 16 deaths caused by a ruptured Takata air bag inflator worldwide. The first U.S. death report of a Takata inflator is a 17-year-old high school senior, who died in Texas in a moderate speed crash. The most recent death in the United States was confirmed by U.S. safety regulators. A 50-year-old California woman died in a Honda Civic that was first recalled in 2008 because of a defective airbag.

The problem is that “[t]he defective air bag inflators deploy with too much force sending metal fragments flying.” This accident spurned the search and recall for noncompliant vehicles. This deficiency covers more than 60 million air bags in vehicles from BMW, Ford, Honda, Tesla, Toyota, and 12 other corporations. That is one of every five cars on the road in the U.S. The biggest recall could affect more than 100 million vehicles around the world.

Actually, about 11.4 million inflators in the United States have been fixed, while more than 20 million were left unrepaired. Takata spokesman Jared Levy said the “tragedy underscores the importance of replacing those airbag inflators that have been recalled by automakers.” However, owners can be difficult to find. Even Honda has mailed letters, placed Facebook ads, made telephone calls, and in some instances visited owners, but some owners just refuse to get it repaired. “Safety advocates have called for laws banning the sale of any vehicle until recall repairs are made, or a national requirement that recalls be done before license plates can be renewed.” Spokesman Bryan Thomas said, The U.S. National Highway Traffic Safety Administration (NHTSA) doesn’t have legal authority to order those recalling steps.

A Senate investigation and personal injury litigation have turned up company documents suggesting that Takata executives ignored their own employees and hid the potential danger from Honda, their biggest customer, as well as from U.S. regulators. It is said Takata is seeking a financial investor to help pay for huge liabilities from the world’s biggest auto recall. Also, Takata could face $200 million fine over faulty airbags.

Xiangni is a marketing major at the Stillman School of Business, Seton Hall University, Class of 2017.

Sources:

http://www.nytimes.com/aponline/2016/10/29/business/ap-us-air-bag-danger.html?src=busln

http://fortune.com/2016/10/21/takata-air-bag-deaths/

http://www.bloomberg.com/news/features/2016-06-02/sixty-million-car-bombs-inside-takata-s-air-bag-crisis

Posted by Shellian A. Murray.

The basis for this blog will be an Enron story” The Smartest Guys in the Room (2005)” which was retrieved from the documentary listings on Netflix. A 2929 Entertainment, a Wagner/Cuban Company, Magnolia Pictures, HDNet Films. The documentary takes a behind the scenes look at the reliable energy company whose downfall will forever change the scope of business prospects around the globe. The “Jesus saves” notion was embedded with everyone asking the same sets of questions, which include, whether or not one main person was to be blamed, or it is a shared effort, and what mechanisms were put in places to make sure such events will never occur again. The fall of Enron was considered to be the largest bankruptcy in the United States of America history.

Enron, a company that took approximately 16 years to build and with a net worth of over a 100 million in assets took 24 days to go bankrupt.  What everyone thought was a significant investment and a company that was poised to take over the energy section with major gas prices, turns out to be the biggest Ponzi scheme. But in an instructive tale of corporate greed, negligent and diffusion of responsibility, there was no evidence of directors’ fiduciary duty, integrity, and stewardship displayed from those who were the leading players in the Enron scandal.

Jeffery Skilling, the former president and CEO and Kenneth Lay chairman/CEO were both Harvard graduates, the leaders of Enron, and were known as “the smartest guys in the room.”  Skilling and Lay were the captains of the ship; one that they thought was too powerful to go down. The employees that were involved were consumed by pride, greed, arrogance, and intolerance that they fail to realize they were just sinking themselves into a hole: a hole that will be unable to climb back out. The chaos caused by Enron traders in the 2000 California energy crisis left many disgruntled. California was seen as the money pit for Enron. The game was to create blackouts that would then drive-up gas prices significantly.  Many called on the federal government to fix a deregulatory system that Enron officials took for self-interest, but were told that the state was on its own and had to correct the problem by themselves.

On the other hand, Enron’s CFO, Andrew Fastow was still able to continue leaving massive debts off the balance sheets and booking future earnings, producing an illusion of market-to-market profit.  The Security Exchange Commission (SEC) did not have a problem with this accounting method and failed to enforce against companies like Enron. But reported profits were actually losses, even though amounts were not collected or collected, but were supposedly prepayments from clients, where such momentum was created to keep the stock price up.  But after winning the award for the best innovative company six years in a row, many persons started to question, how Enron made its money. A reporter by the name of Bethany Mclean wrote an article, “Enron stock overpriced?”  realizing that the cash flows were not coming together.

Jeffery Skilling the CEO had resigned suddenly, which lead the SEC to launch an investigation.  Enron declared bankruptcy on December 4, 2001, giving employees thirty (30mins) to leave the building. But before such bankruptcy declaration, on October 23, 2001, Author Andersen, the prestigious accounting firm had destroyed thousands of documents which were related to Enron finances.

Opinions and Reactions

The operation of Enron defrauded employees and investors out of millions of dollars, which at the same time the “big guys” who were involved in the game were quietly bailing themselves out, putting millions in personal and offshore accounts including the banks, such as, Chase and Citi Bank. Ken Lay had a high level political figure as a good friend, one that could help Enron to maintain its operation’s practices. Consequently, and if one were to believe it or not, politics is the driving factor for all regulatory and policies within any countries operations.

ArthurAndersen, the prestigious accounting firm, was paid a million dollar per week, denied their awareness of such practices of Enron. Auditors that supposedly gave reasonable assurance that the financials were, in fact, true and fair and free of material misstatements. As a result, many persons questioned the integrity and independence of the accounting and auditing profession. Such questions left a bitter taste in my mouth, within a career that has my interest and aspiration. A profession I held a role as an external auditor, internationally, and now as an accountant, I am in an “aww” moment, as to how people’s greed could allow them to continue embezzling cash or equivalents by any means necessary, no matter what harm may have caused by such actions. The disappointment I have with these people that are involved, by allowing their integrity to be compromised because of the greed of money is very heart rendering, wherein the end, mostly the poor suffer from such harsh deals.

Shellian is a master of science in accounting student at the Feliciano School of Business, Montclair State University, Class of 2018.

Posted by Kristina Volta.

In light of the recent events of Samsung’s Galaxy Note 7 phones setting on fire, many people have been looking to Apple as an alternative. However, the new news of Apple’s IPhone 7 catching flame has many consumers nervous. The most recent case was when an Australian surf coach, Matt Jones, left his phone under a pair of pants in his car while he taught a lesson. When he returned to his car he found that his car was full of smoke and where his phone was had been burnt up and the pants that had been on top of the phone were on fire. This is concerning for Apple whose stock has dropped .41%. This is going to be a knock to Apple’s popularity, especially after seeing the negative kickback that Samsung has been facing for a similar problem.

Apple has been investigating this report, challenging that he was not at the car when the fire started. Many people are beginning to believe that there is a possibility that Apple’s IPhone 7 has a similar Lithium-ion battery, which can become “unstable” when it’s put in certain situations. There is a chance the phone became too hot wrapped up in the pants in the car and that could have been the reason the phone caught fire.

Even though these claims haven’t been solidified yet, this could still cause a major setback for Apple and their products. Although there haven’t been many claims about Apple phones catching fire, the fear consumers now have could be significantly detrimental to their sales of the IPhone 7. Not to mention, if the case does come out to show that it was the IPhone’s battery that caught fire, Apple will be held liable for it.

When companies put out products their consumers and shareholders are putting faith in the company that they are purchasing a safe good unless otherwise mentioned. Lithium-ion batteries have been known to have issues for other products like “Tesla cars, Boeing jetliners, Hewlett Packard laptops and Hoverboards” as well as other IPhones. There was a case in March of an IPhone 6 bursting into flames on a flight to Hawaii. This is concerning for not only Apple, but also any other company who is or plans to use Lithium-ion batteries. This is a risk these companies are taking considering the clear unpredictability of the safety of these batteries.

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

Sources:

http://fortune.com/2016/10/21/apple-iphone-7-explodes/

http://www.breitbart.com/california/2016/10/21/2nd-fire-apple-iphone-7-threatens-mass-recall/

In 2017, Bank of America came to the agreement to pay $66.6 million to end its lawsuit accusing it of high rate of interest and fees from customers, who have checking accounts that were overdrawn for several days. The amount of interest and fees Bank of America charges was decided unlawful. The case was a lawsuit between the company and the federal government. The lawsuit began in 2016 and the final settlement of this lawsuit was disclosed in San Diego’s federal court on November 3, 2017.

According to the final settlement, Bank of America has been overcharging interest and fees for over five years (since February 2014) and the bank has made a huge amount of profit by overcharging customers. The settlement was predicated on the fact Bank of America needed to “stop charging for extended overdrafts,” which at the time the customers, who have overdrawn their account, will not have to pay the extensive amount of interest to Bank of America. The decision made by the court will save customers about $1.2 billion. After the court decision was made, Bank of America had its attorney sent out an email to customers indicating that “Bank of America account-holders will no longer have to endure these charges.”

This is a great example of how business law made by the federal government could protect customers. Bank of America used to charge a $35 fee for overdrawing their accounts, and if customers want to continue using their account, they will have no choice but pay this high extensive fee. The lawsuit perfectly shows that federal government protects the people’s right as customers and helps them to be fairly treated by large corporations.

Zhanli Peng is a finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Reference:

Aubin, D. (2017, November 02). Bank of America settles overdraft lawsuit for $66.6 million. Retrieved February 01, 2018, from https://www.reuters.com/article/us-bank-of-america-overdrafts/bank-of-america-settles-overdraft-lawsuit-for-66-6-million-idUSKBN1D22ER

Posted by Mohammed Almanqari.

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

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

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

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

Reference:

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

Posted by Shahrani Bhatti.

On January 30th of 2018, U.S. regulators made it known that they feel Congress should expand regulation of the bitcoin as well as a growing number of other cryptocurrencies. Their reasoning being that the currency is not subject to investor-protection laws. The chairmen of the SEC and the CFTC told senators that the exceedingly popular cryptocurrency has surmounted state regulation. This is only one of a growing number of concerns, as U.S. banks are taking a step forward and stopping credit card purchases of bitcoin in addition to bitcoin prices dropping dramatically as governments in China, India and South Korea have placed restrictions on cryptocurrency trading.

The chairmen continued, saying that in order to regulate cryptocurrencies and protect investors, Congress would need to become involved as the SEC and the CFTC hold no power in regards to the market of products like bitcoin. At a testimony earlier this year, Christopher Giancarlo of the CFTC said that if they were given jurisdiction in this situation that it would be a, “dramatic expansion of the CFTC’s regulatory mission.”

Both market regulators have also halted illicit operations that have attempted to capitalize investors’ growing desire for returns similar to that of bitcoin’s skyrocketing $17,900 in only December of last year. The SEC has also stopped initial coin offerings, a fundraising method that has accumulated billions from investors in exchange for the issuance of new digital currencies like the bitcoin, as the demand for them continues to grow. Chief of the SEC, Mr. Clayton said that unlike the bitcoin, however, that these other issuances leave the issuer vulnerable to federal anti-fraud and investor-protection laws. Because of unregulated exchanges, Chief Clayton says, market prices can intensely rise.

While the bitcoin is still mainly unregulated, its derivatives are continually inspected. The CTFC has examined how these tokens should be allotted for trading. Mr. Giancarlo has come up with a new process for other duplicate tokens of the bitcoin, which consist of intensified information sharing agreements between exchanges and the CFTC, and agreements by exchanges to coordinate launches with CFTC’s staff.

I believe cryptocurrency regulation is a necessity at this time. Investors need to be protected from fraud. If the U.S. begins to regulate these currencies, then other countries may also follow suit. The cryptocurrencies may also grow and lead to an increased number of jobs which can only benefit the U.S. economy. If this benefits the U.S. economy, a larger standard of living will persist and the U.S. will become a more powerful country — as a high standard of living among people, high GDP and a good economy are the defining features of powerful countries. Cryptocurrency may give the current U.S. national currency a run for its money, but in the long run, the benefits will outweigh the costs as cryptocurrencies are easier to manage and track as the exchanges are basically exclusively carried out online.

Shahrani Bhatti is an economics major at the Stillman School of Business, Seton Hall University, Class of 2020.

In 2017, Bank of America came to the agreement to pay $66.6 million to end its lawsuit accusing it of high rate of interest and fees from customers, who have checking accounts that were overdrawn for several days. The amount of interest and fees Bank of America charges was decided unlawful. The case was a lawsuit between the company and the federal government. The lawsuit began in 2016 and the final settlement of this lawsuit was disclosed in San Diego’s federal court on November 3, 2017.

According to the final settlement, Bank of America has been overcharging interest and fees for over five years (since February 2014) and the bank has made a huge amount of profit by overcharging customers. The settlement was predicated on the fact Bank of America needed to “stop charging for extended overdrafts,” which at the time the customers, who have overdrawn their account, will not have to pay the extensive amount of interest to Bank of America. The decision made by the court will save customers about $1.2 billion. After the court decision was made, Bank of America had its attorney sent out an email to customers indicating that “Bank of America account-holders will no longer have to endure these charges.”

This is a great example of how business law made by the federal government could protect customers. Bank of America used to charge a $35 fee for overdrawing their accounts, and if customers want to continue using their account, they will have no choice but pay this high extensive fee. The lawsuit perfectly shows that federal government protects the people’s right as customers and helps them to be fairly treated by large corporations.

Zhanli Peng is a finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Reference:

Aubin, D. (2017, November 02). Bank of America settles overdraft lawsuit for $66.6 million. Retrieved February 01, 2018, from https://www.reuters.com/article/us-bank-of-america-overdrafts/bank-of-america-settles-overdraft-lawsuit-for-66-6-million-idUSKBN1D22ER

Posted by Lindsey Pena.

In business, ethics are strong guiding principles that aid managers, employees, and investors to correctly conduct business transactions. When ethical matters are disregarded, the end result is fraud, embezzlement, among many other illegal actions. One of these illegal actions is called a Ponzi scheme. Perhaps the most famous Ponzi scheme was devised by Bernie Madoff, a well-respected financier, who conned investors out of an estimated $65 billion. Madoff was caught in December of 2008 and charged with 11 counts of fraud, perjury, theft, and money laundering. He ultimately faced 150 years in prison as a result of his decades long Ponzi scheme.

Because of the magnitude of this Ponzi scheme, eight years later, the consequences are still being addressed. Recently, the estate of Stanley Chais, one of Bernie Madoff’s friends, agreed to pay the victims of Madoff’s Ponzi scheme $277 million to settle claims that insisted Chais profited from the scheme. Irving Picard, a trustee liquidating Madoff’s firm, has recovered more than $11.2 billion for the investors who were conned. They achieved this my suing the banks and offshore accounts that hid the money in addition to investors who profited from the fraud. In the 2009 lawsuit against Chais and his wife, Picard claimed that they “reaped about $1 billion in profit from fake securities transactions at Madoff’s firm.” Chais also reaped rewards through fees that he would earn when he gave his customer’s money to Madoff’s firm. In addition to this, Chais was also sued by the SEC in 2009 because he “steered assets from three investment funds to Madoff, “despite having clear indications Madoff was engaged in fraud.”

Chais, along with five of Madoff’s employees, were not the only ones who received consequences. Thousands of innocent investors trusted Bernie’s reputable, veteran background hoping to make profit from their investments. While reading this article, I could not help but to think about the Kantian ethics which states that a person should evaluate their actions by the consequences if everyone in society acted the same way. Bernie Madoff made the exception for himself when he decided to execute the treacherous plan and the consequences of his actions will cost him the rest of his life.

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

Posted by Kosta Arvanitis.

In an article written by Sophia Pearson and Elizabeth Amon, they update us on the on-going recovery of funds for Bernie Madoff’s Ponzi Scheme victims. Being the biggest one to date, it has been a grueling process in recovering the billions of dollars lost tied to the scheme. In this specific case, FutureSelect Portfolio Management sued EY in 2010 over faulty audits tied to a Madoff-linked feeder fund, Tremont Group Holdings Inc., and ultimately won a portion of its $112 million loss back. This is just the one of many victims of the scheme; and since Madoff’s incarceration, only 34% of the billions of dollars of losses have been recovered by his thousands of victims. The Washington state court for FutureSelect’s case found that the accounting giant was negligent by signing off on audits of billions in assets that didn’t exist.

It is rare that a negligence case arise against a Big Four accounting firm. This case was brought because under a Washington state securities law, it is more protective of investors than other federal and state statutes (Amon Pearson 4). The main accusation of FutureSelect’s was that EY relied on audit reports done by Madoff’s notorious accounting firm, Friehling & Horowitz. They claim that EY failed to question the firm’s professional reputation; and in doing so, took an enormous risk and lost $112 million in its investment fund. The audit reports were of Rye Funds, managed by Tremont Group Holdings Inc., who was also sued by the company. It appeared as though EY failed to perform adequate procedures in testing the existence of Rye’s assets on their financial statements, which FutureSelect claimed in court documents.

Here are the facts. EY audited Rye Funds, who were managed by Tremont Group. Tremont was the second largest feeder into Madoff’s multibillion dollar fraud. EY also audited Tremont through 2008, and supposedly did not suspect a thing even though Madoff’s assurances showed that Rye outsourced investment decisions, and even record keeping (which should have waved red flags). EY’s spokesperson Amy Call Well, stated that EY technically did not audit a Madoff entity, that they were among many auditors who also chose to use Madoff as their investment adviser. They mistakenly trusted the work done by Madoff’s accountant, saying also that they couldn’t have seen the Ponzi scheme coming. Another important factor is that in 2013, FutureSelect opted to pursue its own case when Tremont and Madoff’s brokerage agreed to a $1 billion settlement that would free up money to repay other victims of the scheme. FutureSelect tried to see if they could be more successful in conducting their own case. The question on all of this is whether EY did everything they could in their power, through adequate audit procedures, to uncover any potential fraud. In which case, there were billions in assets that did not exist that EY failed to detect, which showed EY’s negligent misrepresentation. In the end, FutureSelect’s awards netted $10.15 million, of which EY was found half liable, and FutureSelect half liable of the total $20.3 million in damages.

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