Posted by Caroline Weeks.

On November 5, 2015 a dam in the Brazilian city of Mariana collapsed, resulting in multiple causalities and irreparable damage to the surrounding cities and ecosystems. In total, nineteen people lost their lives. The collapse also “released a torrent of sludge that washed away villages, displaced hundreds of people, and traveled more than four hundred miles through southeast Brazil’s Rio Doce basin before reaching the Atlantic Ocean.” It is said that this is “believed to be the biggest disaster of its kind anywhere.” The yearlong criminal investigation into the collapse recently ended and has resulted in homicide charges being filed against twenty one people in connection with the disaster. Some of the people charged are “current and former top executives of mining giants Vale SA and BHP Billiton Ltd., and Samarco Mineração SA.” In addition, employees of a consulting firm that performed checkups on the dam were charged with “presenting false stability reports.” This disaster is an example of companies being concerned solely with short run profit maximization and an inherent lack of corporate social responsibility.

The federal prosecutor in Brazil has stated that “the motivation of the homicides was the excessive greed of the companies.” It has been detailed that the victims were killed by the “violent passage of the tailings mud” and that they “had their bodies mutilated and…dispersed across an area of 110 kilometers.” These innocent employees died a cruel and painful death at the hands of corporate greed. Samarco focused on short run profit maximization and did not take into account the effects of their actions. The prosecutor says that there is evidence that Samarco, and its shareholders, were “aware of chronic structural problems” as early as April 2009. If this is true, the company knew about critical problems with the structure for more than 6 years and chose to continually ignore the warnings. The board not only failed to make the facility structurally sound, but responded to these structural issues by “pressuring the company to extract more iron ore.” If the company had simply taken head to these warnings they would’ve prevented the loss of innocent lives, the damage of surrounding communities, and incredibly expensive lawsuits along with a permanently tarnished reputation. These findings show the goal of the company was to maximize profits as quickly as possible. They did not take into account the repercussions of a dam collapse and innocent people paid the price for their greed.

This fatal event also details Samarco’s lack of corporate social responsibility. The company chose to focus on profits and purposely chose to ignore the issues with their facility. The company did not act ethically and they certainly did not take into account the surrounding communities. As a result of the dam collapse, families have lost their homes, and even entire communities have been washed away. Not only have these villages been destroyed, but so has the surrounding ecosystem. The river “is still tainted a rusty red form the sediment” that washed through the river basin after the dam collapsed. If the company had acted ethically, they could’ve saved lives and communities. This disaster is a prime example of executives acting carelessly in the hopes of inflating their bank accounts.

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

Posted by Ryan McNeilly.

Something we have come to know as Americans is that three things are certain in life. We will live, we will die, and we will pay taxes. Currently in the news, President’s Trump new tax plan has become the hot topic of discussion. People are disappointed to see another tax cut come about that seems to benefit the top 1% of society. Even some of the richest man in the world, like Warren Buffet and Bill Gates, are speaking up against the new plan because they feel that they do not need more money. They think they need to be giving more of it away so that people who live from paycheck to pay check can have a little bit more leeway and a better opportunity to increase their standard of living.

This article posted by Politico looks at this tax law and delves deeper to see what is occurring behind the scenes. They set the stage by opening the article with “A political battle over the fate of hundreds of regulations and other guidance for the new tax law may soon land on President Donald Trump’s desk, forcing him to choose between two of his favorite Cabinet members.” This alone is enough to capture the attention of any reader. As you continue to read you come to find out that the two Cabinet members they are talking about are Steven Mnuchin the Treasury Secretary and Mick Mulvaney the White House budget director.  The President must decide who will get to define the laws and regulations within the tax act.  This is crucial because the vision of the treasury differs from the view of the budget director.

This dispute has a greater impact than people see because now two crucial sectors of the White House will now be pitted against one another. With this occurring internally, it could hinder the President’s goal for growth. His goal is to get this plan into action, but he will not be able to unless an agreement occurs. The article states “OIRA and Treasury have been going back and forth for years over which entity should have final say over the department’s regulations.” This pressure has increased because of the decision date is slowly approaching. Politico speculates that the OMB has already made a deal with the White House. If this is true, then the OMB will get control of regulations and guidances for this tax act. None of this is confirmed so now we must wait and see how this internal debacle sorts itself out.

Ryan is a finance and information management systems major at the Stillman School of Business, Seton Hall University, Class of 2020.

Source:

Link: https://www.politico.com/story/2018/02/23/tax-law-white-house-power-struggle-364885

Posted by August Pimentel.

President Donald Trump recently had a libel case against him dismissed in the Supreme Court of New York on the basis that his tweets were spreading opinion rather than fact, and therefore could not be held accountable for libel.

The conflict began in February 2016, when Cheryl Jacobus, a Republican strategist who had previously been recruited by the Trump campaign, went on CNN attempting to expose a political action committee which allegedly was partly funding the campaign. Trump responded to the broadcast via his personal Twitter account, saying “Really dumb @CheriJacobus. Begged my people for a job. Turned her down twice and she went hostile. Major loser, zero credibility!” Jacobus sued the then presidential candidate and his then campaign manager Corey Lewandowski for defamation, pursuing damages of $4M. Jacobus stated that after the tweet, she received no more offers to speak and no employment opportunities.

Barbara Ross of the New York Daily News covered this case with an article in October 2016 on the suit, and another released in January 2017 when the case was dismissed.

“Jacobus had appeared 141 times on CNN to discuss the presidential race before the dust up,” said Ross. “But only once on another station after his tweets.”

The hearings in front of Justice Barbara Jaffe of New York revealed that the Trump campaign had indeed recruited Jacobus for a job and discussed terms of the employment, but rejected her after receiving a request for $20,000 per month in salary. Jacobus’ attorney, Jay Butterman, claimed Jacobus’ entire career was destroyed by those tweets, and the Trump campaign lied about her “begging for a job” and “[acting] hostile.” Trump’s attorney, Lawrence Rosen, claimed Butterman and his client to be engaging in “hyperbole” stating: “To a large extent, Twitter is the wild wild West. People say the darnedest things. Everyone understands that when tweets are made, you take it with a grain of salt.”

Justice Jaffe ruled in favor of President-elect Trump and Lewandowski just ten days before inauguration day. In her decision, Justice Jaffe stated that “professional misconduct, incompetence or a lack of integrity may not be reasonably inferred from being turned down from a job.” The judge also commented on the nature of tweets themselves, similar to Rosen’s argument in the case.

“His tweets about his critics, necessarily restricted to 140 characters or less, are rife with vague and simplistic insults such as ‘loser’ or ‘total loser’ or ‘totally biased loser,’ ‘dummy’ or ‘dope’ or ‘dumb,’ ‘zero/no credibility,’ ‘crazy’ or ‘wacko’ and ‘disaster,’ all deflecting serious consideration.”

Butterman and Jacobus plan to appeal the ruling, claiming it a “sad day for free speech.” Reflecting on this case, there may have been some small falsity in President Trump’s tweet in that his campaign did not turn Jacobus away twice. This was not enough, however, to make Trump guilty of libel. That tweet over a year ago, made by the then prominent presidential candidate, can be interpreted as vague. However, if it is true that Jacobus has lost speaking opportunities for which she would have gotten paid because of a crude tweet, it shows that those companies and media outlets did not take Trump’s tweets “with a grain of salt.” The president has recently boasted about the ability of his tweets to obstruct others, citing that no NFL team has signed Colin Kaepernick because they are afraid to get “a nasty tweet from Donald Trump.” Unfortunately for Jacobus’ case, this appears to be an ethical issue rather than a legal one.

August is an economics major at the Stillman School of Business, Seton Hall University, Class of 2018.

Sources:

http://www.nydailynews.com/news/national/manhattan-judge-tosses-libel-lawsuit-donald-trump-article-1.2942831

http://www.nydailynews.com/news/politics/cheryl-jacobus-trump-destroyed-career-4m-suit-article-1.2818683

Posted by Faris Alzahrani.

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

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

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

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

Reference:

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

Posted by Enerd Pani.

During the beginning of October, there was a vast change where control of the internet source code was transported from the United States, to what most likely will be the United Nations. The result is that countries not only in Europe, but all over the world can vie for control of the internet. Arguably unscrupulous countries such as Russia, China and Iran can cause issues with human rights violations and can censor areas of the internet in other countries, not only within their own home country. The second issue is that the President did not ask Congress for approval to give a piece of U.S property to overseas forces. The following action has been criticized as going against US interests, and mitigating any form of American supremacy.

Still, some people see this as a necessary step. The National Telecommunications and Information Administration believes the chance of government intrusion to be “extremely remote” (BBC). The issue arises when multiple shareholders with many different ideas on how the internet should be maintained all vie for control of singular entity. These “stakeholders include countries, businesses and groups offering technological expertise” (BBC). One might wonder how such a important function can be put within the control of so many groups with different interests. There has even been calls by Russia and China for the Domain Naming Server to be put under the control “by the United Nations’ International Telecommunication Union” (BBC). The request put forward shows the desires countries with very shady human rights have towards getting control of such a important tool for free speech.

Many groups had argued that a delay on the acquisition should have been placed. The critics of the movement “argue that once the transition takes place it is irreversible, and that it would be prudent to temporarily maintain existing U.S. government authority” (fas 18). It would seem very controversial to transfer over such a valuable asset when there may not be any chance to change a decision. Also questions arise on how the “.mil” and “.gov” domains should be handled. These domains are sole property of the U.S Government, and cannot be used in any other way.

To conclude, the “giveaway” of ICANN is one shrouded in uncertainty. No one can be sure if the new stakeholders of the internet will continue to monitor it ethically. There has been major concern about some countries abusing the power of internet control, but many companies like the NTIA assure that they are looking to “protect U.S consumers, companies, and intellectual properties” (fas 12). It can be argued that ICANN was transferred unethically, though now the deed is done. The future will tell if this move will either effect, or mitigate personal freedoms on the internet.

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

Sources:

https://www.fas.org/sgp/crs/misc/R44022.pdf

http://www.bbc.com/news/technology-37114313

Posted by Sarah Velez.

International business relations is a major component of the United States economy. Foreign countries send their ships to the United States to pick up shipments and deliver products. While this global trade relationship is highly beneficial, the challenges that arise as a result of compliance issues and differences in ethical standards have recently been brought to light. The article “Greek Shipping Companies Fined $1.5 Million for Pollution” written by Gene Johnson of the Associated Press, reports a case of a Greek vessel that “deliberately pumped oil-polluted water into the ocean, then repeatedly lied and falsified records in an effort to deceive inspectors with the U.S. Coast Guard.” These illegal actions led to a million and a half dollar fine to be paid by the companies that jointly own Gallia Graeca, the Greek vessel.

In October of 2015, Gallia Graeca arrived in Seattle to pick up a substantial shipment of soybeans. This ship, owned by both Gallia Graeca LTD and Angelakos SA, was routinely inspected by U.S. Coast Guard Petty Officer Daniel Hamilton once it arrived at the port. As reported by Petty Officer Hamilton, the oil was not properly cleaned and it was actually in areas where it should not have been as a result of the poor maintenance of the oil-water separator. A deeper investigation made by the prosecutors showed that the ship had discarded “5,000 gallons of oil-fouled bilge water” (Johnson). In addition to knowingly dumping this substantial amount of oil, the engineers on the ship also presented the U.S. Coast Guard with false records and feigned the functioning of the oil-water separator. According to the U.S. Attorney’s Office, company executives were aware of the entire operation which shows the unethical behavior throughout the company chain.

While the Coast Guard has reported cases of sea pollution, they consider that holding corporations, as well as individuals, criminally liable is “notoriously difficult to detect and prove” (Johnson). Not only were the two companies charged with forging log books and polluting, but other involved individuals were also held accountable and the engineers on board were sentenced to jail time. U.S. District Judge John Coughenour stated that this case “will resonate with other parties in this industry and cause them to pause when they think about creating a corporate culture that encourages deception.”

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

Posted by Kayla Caveny.

The United States and Europe both have emissions standards for their vehicles. The standards are in place to limit the amount of pollutants the vehicle may make. However, there is a way to bypass those standards, illegal of course. This certain device is called a “defeat device,” which is any apparatus that unduly reduces the effectiveness of emissions control systems under conditions a vehicle may reasonably be expected to experience.

On September 18, 2015 U.S and European officials accused Volkswagen and Audi of installing these defeat devices within numerous diesel cars made between 2009 and 2015. The U.S. Environmental Protection Agency the cars that were tampered with “included software that circumvents EPA emissions standards for certain air pollutants.” The vehicles that were effected only release the EPA’s emissions standards when the car is actually being tested. The vehicle actually produces nitrogen oxides at up to 40 times the “legal” standard. Because of these vehicles being tampered with over 11 million Volkswagen and Audie’s have now been subject to recall. Volkswagen did admit to not complying with governmental standards. However, the makers of Volkswagen and Audi told the owners of these cars that “this is an emissions issue, your vehicle is safe to drive.”

Volkswagen and Audi’s actions have now caused several lawsuits, especially within the state of Tennessee. Most of these lawsuits are against Volkswagen and many of the dealers within the United States. According to John Willis, a lawsuit in Chattanooga, Tennessee’s Federal Court included seven plaintiffs who sued Volkswagen’s parent company and a Tennessee based dealer for fraudulent concealment and violating Tennessee consumer protection law. They thought they were purchasing “green” vehicles that met or exceeded federal emissions standards.

The plaintiffs believe that once Volkswagen completes a government mandated recall to remove the illegal defeat devices, the cars will not perform as they were designed. In the end Volkswagen has a settlement of 10 billion for vehicle buybacks, lease terminations, and owner compensation, as well as a 2.7 billion dollars towards environmental programs to reduce polluting nitrogen oxides in the atmosphere. Volkswagen must also spend another 2 billion to promote zero-emission vehicles, which is even more than what they had originally planned to spend on the technology.

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

References:

http://www.bbc.com/news/business-34324772

http://www.edmunds.com/car-buying/faq-volkswagen-diesel-emissions-settlement.html

Posted by Ahmed Alhadaith.

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

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

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

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

References:

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

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

Posted by 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 Alexa Constantine.

The New York Times on October 11th of this year released the article describing Wells Fargo’s fraud scandal that was brought to the public eye last month. The ethics scandal came to light last month, but the fraud has been going on for years, maybe even a decade with the first report in 2005. Julie Tishkoff in 2005 wrote to the Wells Fargo human resources about how she saw employees setting up sham accounts, forging customer signatures, and the sending out of unsolicited credit cards. Her complaining went on for four years. Tishkoff was not the only employee who was complaining to the internal ethics hotline, the human resources department, and to the managers and supervisors.

In 2011, John G. Stumpf, the board chairman, received at least two letters from Wells Fargo employees describing the illegal activities they have witnessed. Mr. Stumpf became president the year Julie Tishkoff wrote to human resources. In September of this year, Mr. Stumpf testified in front of Congress, twice, stating that, “he and other senior managers only realized in 2013 that they had a big problem on their hands — two years after the bank had started firing people over this issue.” In 2013, Wells Fargo launched the internal investigation within their company for the fraud they realized that was happening. But by then, the prosecutors and regulators caught on and in May of 2015 a lawsuit was filed. The Los Angeles city attorney filed the lawsuit for the creation of unauthorized accounts against Wells Fargo. The case was settled this September of 2016.

After the lawsuit settled, Mary Eshet, spokeswoman for Wells Fargo said, “We have made fundamental changes to help ensure team members are not being pressured to sell products, customers are receiving the right solutions for their financial needs, our customer-focused culture is upheld at all times and that customer satisfaction is high.” And since September 8th, Wells Fargo will pay $185 million in fines for the opening about two million customer accounts and credit cards without authorization. Wells Fargo is taking responsibility for the scandal and is making changes to the company.

The scandal still continues after the settlement. Former employees whose are suing Wells Fargo state that many of the managers at the branch level and the people who heard their ethics complaints are still employed. The employees who complained and brought to light the fraud within the company lost their jobs shortly after they complained. Between 2011 and this year, Wells Fargo terminated the employment of 5,300 workers, “around 10 percent of those worked at the branch manager level or above, according to the bank, but only one — an area president — had a high-level management role.” The whistleblowers lost their jobs while the people who should have acknowledged the fraud kept their jobs. Mr. Stumpf acknowledged the outrage of former employees about how the bank should have heeded what they said were warning and taken action earlier by saying, “We should have done more sooner.” Mr. Stumpf’s answer does not satisfy former employees.

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

Posted by Anna Fintor.

Wells Fargo is currently involved in a legal scandal in which it is said to have opened bank accounts and credit cards without the costumer’s consent. According to Reuters, “The U.S. Consumer Financial Protection Bureau and other regulators ordered United States’ third-largest bank by assets to pay $190 million in fines and restitution to settle civil charges.” The scandal has been going on for several years and there were as many as 2 million accounts opened illegally.

Wells Fargo has been known for its “high-pressure” sales culture, which one of my personal friends who has worked in one of the branches can account for. The Bloomberg article I have read describes how anonymous users have been posting cartoonish videos on YouTube presenting the negative work atmosphere at Wells Fargo. The videos show how management pressured and threatened workers that if the unreasonable goals were not met the workers would be let go.  It is suspected that the videos were created by employees as far back as in 2010.

While reading the articles, I remembered one of the discussions from class of how in large corporations top executives can pressure the bottom level workers to commit the illegal activity. One of the YouTube videos shows that bankers received $5 McDonald’s gift cards for opening a new account, while the executives received generous bonuses. In my opinion that’s very unethical and just wrong.

In the recent weeks the CEO, Jhon Stumpf has resigned and Wells Fargo continues to be under investigation. I feel like this situation is going to hurt Wells Fargo not only financially but also create bad reputation. Due to the popularity of social media, the videos will spread to a vast number of the population, including to those who may not be keeping up with the news.

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

Sources:

https://www.bloomberg.com/gadfly/articles/2016-10-21/psst-regulators-watch-videos-for-bank-scandal-after-wells-fargo

https://www.bloomberg.com/gadfly/articles/2016-10-21/psst-regulators-watch-videos-for-bank-scandal-after-wells-fargon fines and restitution to settle civil charges

http://www.reuters.com/article/us-wells-fargo-accounts-california-idUSKCN12J2O