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 Muhammad Azeem.

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

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

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

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

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

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 Alexander D. Bakogiannis.

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

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

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

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

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

Reference:

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

Posted by Kelly Shaw.

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

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

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

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

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

Reference:

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

Posted by Abigail Murphy.

A way to raise money, fund a project, or venture from a large number of people for a small startup in the earliest stage money sounds simple. Not so much. Every so often, there are crowdfunding campaigns gaining popularity via Facebook newsfeed, twitter feed, and emails. These campaigns come with issues of the right amount of regulation and increasing issue of inequality of funding portals.

After years of back and forth, in October 2015 the U.S. Securities and Exchange Commission (SEC) implemented Title III of the Jumpstart Our Business Startups (JOBS) Act. JOBS allowed startup companies to safely use the internet to offer securities to investors. Prior to 2012, the internet could not be used to match investors and startup ventures due to the “general solicitation rule.” In a short 6 years, the SEC has developed their stance that the internet as a matchmaker for investors and startups is solicitation to a lacking concern for the inequality of funding portals.

A funding portal is the basic platform for the fundraising to take place and act as an intermediary. Both the funding portal pursuant and the broker-dealer must be registered through the SEC, however rising inequality have expressed that regulation is not enough. Concerns are expressed due to argument of crowds vs. expert’s wisdom, including liability. Wisdom for a crowd verses one single investor is never going to be definitive, while a single expert’s wisdom could be too specific. In addition, some are urging the SEC to reevaluate the liability of both parties in a crowdfund due to the easy loophole of fraud. If experts are considered the investors of crowdfunding, do their duties violate under the 1940 Advisers Act? Is crowdfunding an indirect security? This act set grounds for investors to follow and a guideline for compensations, economic activity, and other indirect securities. If the experts end up being categorized as investors, then they too are responsible for any fraudulent financial activity.

Personally, I believe that the overturning of the 2012 JOBS solicitation rule and the 2015 implementation of Title III of JOBS is all still very new. There are no past comparisons of any type of money exchange and investment to base crowdfunding off of. As this topic gains popularity and a crowd does flock to crowdfunding, there will be a need for heavier regulations on the liabilities and registration to create an ethical and financially stable funding portal. I was surprised to read about such an open ended definition when it comes down to the investor vs expert responsibilities in relation to the Advisers Act in 1940. Crowdfunding is an innovative way and already has several fundraising success stories. Over the next few years it will be interesting to see the investor return reports. As long as the finances stay in line, and both the crowdfund pursuant and the investors stay happy I see no issue in allowing the internet to play a role in matchmaking.

Abigail is an economics major at the Stillman School of Business, Class of 2018.

Source:

http://scholarship.law.unc.edu/cgi/viewcontent.cgi?article=4958&context=nclr

Posted by Ahmed Alzahrani.

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

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

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

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

Reference:

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

Posted by 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