Posted by Catherine Caldwell.
The trendy new and convenient company, Uber Technologies Inc., is currently enduring a legal battle for its illegal classification of freelancers. Uber was founded in 2009, as an application that acts as an electronic link from individuals who have cars to individuals who needs rides. The company has received a reputation of convenience to its customers and an easy way to make profit for its drivers. However, attorney Shannon Liss-Riordan, a powerful attorney in the state of California, disagrees with the classification of Uber drivers.
Shannon Liss-Riordan is no stranger in her attack on large billion dollar industries such as Uber. She has made cases against Starbucks, Harvard University and FedEx, to name a few. Ms. Liss-Riordan thinks that Uber drivers are unlawfully “on-demand workers” with no benefits. Instead of freelancers, Uber drivers should receive employee status, which would include drivers receiving reimbursement of their transportation expenses among other employment protective benefits.
As a software intermediary in the transportation business, Uber Technologies Inc. claims that they do not need grounds for titling their drivers as employees. Uber does not have a “fleet of drivers” waiting to pick up the next customer, but is based on convenience for both the drivers and employees. Uber does not plan on settling the case and has begun their approach by assembling 400 statements from drivers saying they were content with the flexible labor opportunities. However, in retaliation, Liss-Riordan took 50 of those statements and found that those drivers stated they would like to have official employment status.
In September, the case won class action status in San Francisco and will continue in federal court. Valued at $51 billion and is willing to fight for their case all the way to the Supreme Court and are unwilling to settle.
This case will create a precedent in the industry of software application employment services, and therefore needs to be handled very tactically. The basic labor protection laws should not be ignored due to new forms of introducing a business such as Uber. However, each Uber driver participates to make profits on their own agenda. Some use the service for extra cash, where others, in the grueling unemployment climate, use Uber as full time opportunities. In my opinion, the court should require Uber to create employment contracts with Uber drivers who can prove that it is a major source of income.
Catherine is a finance and information technology major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Carter McIntosh.
On November 5th, 2015, the Department of Justice announced that Wells Fargo failed to notify bankrupt homeowners of mortgage payment increases. Wells Fargo was required to pay out $81.6 million to “homeowners after reaching a settlement with the Department of Justice’s U.S. Trustee Program over the banks ‘repeated failures’ to provide Bankrupt homeowners with legally required notices of mortgage payment increases.” The Federal Bankruptcy Rule 3002.1 requires mortgage creditors (Wells Fargo) to file and serve a notice 21 days before adjusting a Chapter 13 debtor’s monthly mortgage payment.
The failure that sparked Wells Fargo’s fine was the fact that in Chapter 13 bankruptcy cases they did not file and serve the mortgage lenders with a notice 21 days before Wells Fargo adjusted the monthly mortgage payment. In fact, when the DOJ pursued this case, “Wells Fargo acknowledged that it failed to timely file more than 100,000 payment change notices and failed to timely perform more than 18,000 escrow analyses in cases involving nearly 68,000 accounts of homeowners in bankruptcy between Dec. 1, 2011 and March 31, 2015.”
The $81.6 million settlement that Wells Fargo agreed to pay to the homeowners within the time period listed above is made to several different groups of borrowers. The first group, which consists of $53.6 million of the $81.6 million, will go to “more than 42,000 homeowners whose payments increased as to which Wells Fargo failed to timely file a PNC with the court, each homeowner will receive on average $1,254.”
The next group, which consists of $10 million, will go to “crediting homeowners’ accounts at the end of their Bankruptcy cases.” The third group, which consist of $1.5 million, will go to “refunding in cash about 3,000 homeowners where notices of decreases in monthly payments were not timely provided and the homeowners paid more than the actual amount.” The fourth group consists of $1 million and will go to “refunding in cash to about 2,400 homeowners who satisfied escrow shortages by making a lump sum payment.” The fifth group consists of $4.5 million and will go to “crediting mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow statements.”
The sixth group, which consists of $4 million, will go to “paying about 12,000 homeowners by crediting mortgage accounts where Wells Fargo failed to timely perform an escrow analysis.” The seventh group, which consists of $4 million, will go to “refunding in cash about 6,000 homeowners who did not receive timely escrow statements.” The eighth and final group, which consists of $3 million, will go to “remediation to about 8,000 homeowners which has already been completed.”
According to Director Cliff White of the U.S. Trustee Program, he is “pleased that Wells Fargo has acted responsibly by accepting accountability for its deficient bankruptcy practices, agreed to compensate affected homeowners for those deficiencies and committed to making necessary improvements in its Bankruptcy operations.”
Carter is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Carter McIntosh.
Valeant is a very large pharmaceutical company that focused on creating a “drug giant that was focused on distribution.” Valeant “was” one of the hottest stocks on Wall Street; this stock was booming; the stock soared all the way to $260 in just months. Wall Street analysts and Hedge Funds loved Valeant and everyone wanted to own it. Valeant has been in the news lately, and it is not good news but rather some very bad news. Allegations now follow Valeant and whether or not they have true success or that there true success can be attributed to “price gouging: a secret network of specialty pharmacies; and fraud.” With these allegations surfacing, Valeant stock has “plummeted 60% in the last three months.”
Valeant has been under scrutiny for a while now, dating all the way back to August 14th, 2015. In August, Valeant was being scrutinized because they raised the price of their drugs. On October 5th, 2015, a study by a Deutsche Bank analyst finds that it is not just two drugs that they raised the prices. The report concludes that Valeant has jacked up prices on 54 other meds this year alone, by an average of 66%.” In response to this issue, Valeant CEO Pearson said during an earnings call on October 19th, 2015, that “Valeant will ease up on its strategy of buying up drugs that are mispriced and hiking the prices.”
On October 20th, 2015 “A report by Citron Research, run by activist short seller Andrew Left reveals more information about Philidor and it’s network of phantom captive pharmacies.” Left accused Valeant of committing accounting fraud; furthermore, Left compared “Valeant to companies like Enron.” Two days later on October 22nd, 2015, Valeant “called Left’s reports erroneous. The company says it hasn’t used Philidor to book false sales. It says Philidor is a separate company, but that Philidor’s financial statements are included in Valeant’s financial statements.” With this allegation surfacing Valeant shares have plummeted 30% in just three days.
As more and more information surfaced about Valeant’s relationship with Philidor, on October 30th, 2015, “Valeant says it is cutting ties to Philidor, and that the pharmacy will shut down immediately. Allegations have emerged that Philidor may have changed prescriptions to push Valeant’s high-priced drugs on patients, rather than the generics.” Bill Ackman, the largest shareholder in Valeant held a “four – hour conference call to defend Valeant,” as he believes in Valeant’s business strategy and that the company would not commit accounting fraud and price gouging. Unfortunately, this course of action did not help Valiant. In fact, after the Bill Ackman conference call, Valeant shares fell another 10%.
Carter is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Charles Batikha.
Ransomware is similar to a Trojan horse. Imagine receiving an email from a non-familiar email address. The email claims to be the IRS claiming you are being sued for tax evasion and instructed to click on a link to a website. You are skeptical, but what is the worst thing that could happen if you click on the link. Malware was the virus used when ransomware was first introduced, but more recently website URL and deceptive pop-ups are being utilized. Home computers are not the only victims, business and even government systems have been breached as well.
Upon clicking on the link your browser becomes frozen, unable to use your computer a message pops onto the screen informing you of the encryption of your computer. This renders it useless and a fee is charged for the encryption key, which will cost anywhere from $200 to $5000. This is the newest “variant” called Crypto-Wall or Crypto-Wall 2.0. Interestingly enough, the scammers instruct victims to purchase bitcoins to be used for payment. Bitcoins have become much more popular among criminals because of the concealment of their identity.
Ransomware has also begun to hit smartphones, locking them as well. I personally have fallen victim to this type of ransomware. A message popped up stating that I must contact Apple to unfreeze my phone, but every time I closed the pop-up the notification would come up again not allowing me to use my internet. I called the phone number on the message, and I noticed that the phone line was a Google number, which made me a little suspicious. Immediately after someone answered the phone, they gave me a scripted explanation of how my system was locked and I need to give them my credit card number for a fee for them to unlock my phone. Fortunately enough, I did not pay the fee and hung up on the pleading receptionist.
A way I have found to refresh your phone from ransomware is to clear your website data in the setting of your phone. This has given me the use of my internet after being hit with ransomware. Updated anti-virus software on your computer is another preventative tactic. Using a pop-up blocker and not fumbling with unsolicited emails are other great tips as well.
Charles is a graduate accounting student with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University.
Posted by Charles Batikha.
Tamira Fonville was a Mesa Airlines employee and part time recruiter for a hair show, but these were both false lives that Fonville was leading. Fonville spent her time along the east coast from New York to Washington D.C. trying to lure women to expose their financial information by fraudulently posing as a hair show recruiter wanting to hire young women. Unfortunately, there was no show and Fonville was not a recruiter, nor an airline employee. By the end, she caught herself in an addiction she could not stop, between signing off bouncing checks and scamming women; she was bound to get caught.
Ricardo Falana was Fonville’s assistant. Before the banks would know what was happening, they both would wipe accounts clean. Foneville would ask the girls for their bank account information, lying, saying she wanted to deposit checks into their account. Once the checks were deposited, the account would be emptied before the banks could be any wiser. For individuals that were too smart to be scammed, Tamira would offer them a piece of the pie. These individuals were even “coached” to lie to bank employees, telling them their credit cards had been stolen. The problem was the piece of the pie that they were waiting for never came. After some time, these women came forward as victims.
Young women were not the only ones that Fonville scammed. She applied for a car loan under the impression of being an employee of Mesa Airlines with a $65,000 salary. Tamira used $30,000 to pay for her Chevy Camero, plastic surgery and her New York apartment. While she was living this lavish life, Fonville also was living off food stamps, while having her student loans, totaling up to $100,000, deferred.
Tamira was arrested in August 2014, said to have profited over $200,000 from the scams. She was sentenced 15 months for conspiracy to commit bank fraud as well as 3 cases of bank fraud. Falana, Tamira’s assistant, was sentenced to 80 months after pleading guilty to similar bank fraud charges.
Charles is a graduate accounting student with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University.
Posted by Daniel Perez.
In “Accountants Increasingly Use Data Analysis to Catch Fraud,” Jo Craven McGinty highlights the rise in the use of mathematical and forensic procedures in the today’s audit industry. Americans are burdened with an estimated $300 billion a year due to employee fraud in the workplace. In the aftermath of large-scale fraud cases, such as Enron and WorldCom, audit firms are increasingly using more reliable audit procedures in their engagements to prevent such fraud cases from occurring again. Benford’s Law is the center focus of this article as it supports how similar procedures drives audit quality in the right direction.
In investigating refunds issued by a call center, a group of forensic accountants used Benford’s Law to detect employee fraud. Instead of traditional sampling used by auditors, the group of forensic accountants used Benford’s Law because it offers mathematical evidence that fraud may or may not be occurring: “According to Benford’s Law—named for a Depression-era physicist who calculated the expected frequency of digits in lists of numbers—more numbers start with one than any other digit, followed by those that begin with two, then three and so on.” In their testing of the refund amounts, the accountants expected to see a significant amount of refunds starting with “1,” followed by “2” and so on. The occurrence of refunds beginning with “4” were much more prevalent than it should have been according to Benford’s Law, raising the flag that fraud may be occurring. Applying similar procedures to Benford’s Law in the foundation of audits may grow to be a normal practice at some point in the future.
An application of the procedure to Enron’s financial statements portrays a clear variation from the normal results from Benford’s Law. McGinty’s article states that as computer programs, such as ACL, featuring forensic accounting procedures grow rampant in the marketplace, the use of these procedures does have a positive impact on future.
Article:
http://www.wsj.com/articles/accountants-increasingly-use-data-analysis-to-catch-fraud-1417804886
Daniel is a graduate accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.
Posted by Daphine Llosa.
The current legal issue relates to conspiracy and breach. A conspiracy is an agreement by two or more parties to commit a crime to do something unlawful or harmful. A breach is an act of breaking or failing to observe a law or agreement. On Tuesday, November 17, 2015, Crystal Banuelos pleaded guilty of a conspiracy to attain personal information and commit cards theft from Michaels Companies Incorporated’s customers. Michaels is an arts and crafts, custom framing, home décor and seasonal products store. Prior to this case, there was another prosecution where Eduard Arakelyan (age of 24) and Arman Vardanyan (age of 26) were charged for being involved in a breach. This breach was discovered in 2011 where devices were installed on point-of-sale terminals so they may obtain Michaels’ customers’ personal information as well as bank account numbers. Both individuals pleaded guilty three years ago for stealing from 952 debit cards; they were sentenced for five years of prison.
Crystal Banuelos, the 28 year old California woman, had participated in a conspiracy to acquire 94,000 credit and debit card numbers. It took Banuelos around four months to admit to her charges and plead guilty in the federal court in Camden, New Jersey. CNBC mentioned that the prosecutors found that the individuals involved in the conspiracy had replaced close to 90 of the point-of-sale terminals in 80 different Michaels stores in “19 states with counterfeit devices that were equipped with wireless technology.” They used these counterfeit devices to acquire customers’ personal identification number information as well as any additional information that they may have found useful for their theft. Crystal Banuelos, along with others, had managed to create an exact imitation of these debit cards using the stolen information they gathered when they applied the counterfeit devices. They were able to obtain and collect more than $420,000 by withdrawing from automated teller machines. Two of the defendants, Angel Angulo and Crystal Banuelos, had 179 of these imitated cards in New Jersey. Some of the banks that were affected include: Bank of America Corp, JPMorgan Chase & Co, Wells Fargo & Co, etc. It has been announced that Crystal Banuelo’s sentence is scheduled to be on February 23, 2016.
Daphne is a graduate accounting with a certification in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2016.
Posted by Daphine Llosa.
A recent legal issue involves money laundering, embezzlement and fraud. Money laundering is a form of obtaining money illegally, usually by using transfers between banks and businesses. Embezzlement is theft or misappropriation of funds. Fraud is a wrongful deception for the purpose of attaining financial or personal gain. On Friday, October 23, 2015 the New Mexico Republican Secretary of State, Dianna Duran, plead guilty of fraud. The state attorney general, Democrat Hector Balderas, filed 65 charges against Ms. Duran in August 2015 which included; fraud, embezzlement, money laundering and campaign finance violations. Investigations revealed that she used about $13,000 of the donations from her campaign to clear gambling debt around the state and to cover other personal matters. In order to hide the transfers to personal accounts, Ms. Duran altered the campaign finance reports. Ms. Duran had a hearing with her defense lawyer, Erlinda Johnson, and after refusing multiple times from leaving office she resigned. According to the New York Times, in hopes that she can receive five years of probation and get spared prison time, Ms. Duran pled guilty to six out of the sixty-five charges; four misdemeanors and two felonies. She stated that for her best interests, her loved ones and for all of New Mexico’s residents; she will be seeking for professional help due to her non-ethical and corrupt actions.
It had been a little over 80 years since New Mexico had a Republican serve as secretary of state. She ranked as the second highest elected official in New Mexico, where she served as state senator prior to becoming the 24th Secretary of State. Susana Martinez, Governor of New Mexico, received the resignation letter provided by Ms. Duran, which stated; ‘Although I may be leaving office, I shall always reflect upon the last 36 years of service, honored to work with you and other, serving the citizen of New Mexico.’ As of today, deputy secretary of state, Mary Quintana is fulfilling Ms. Duran’s place until the governor chooses who will be replacing her until the upcoming election in 2016. Any further and additional details or information regarding Ms. Duran’s replacement or charges will be released in the coming weeks. The degree of punishment and the formal legal consequences applied to Ms. Duran is scheduled to be on December 14, 2015.
Daphne is a graduate student in accounting with a Certification in Forensic Accounting, at the Feliciano School of Business, Montclair State University, Class of 2016.
Posted by Luca Aufiero.
In the article, “BizEquity Launches Online Valuation Tool for Accountants,” Daniel Hood discusses how BizEquity, an online business valuation system for businesses to be able to estimate the value of their businesses, launched a new product called Accountant Office. For accountants and advisors, this new business solution of BizEquity successfully improves the valuation process. Using a keen platform for its refined algorithms and big data knowledge, accountants and advisors will be able to provide clients with real-time awareness of what their business is really worth, more efficiently and cheaply. Accountant Office costs less than one-tenth of the average business valuation fee of $8,000. It can also deliver a valuation report in minutes compared to the average time of 3-6 weeks it takes for traditional business valuation firms to deliver a valuation. BizEquity’s business solutions help companies create, manage, and optimize its business valuations. This may revolutionize the business valuation landscape pertaining to forensic accounting as technology and data cloud services are evolving among the profession.
Currently, BizEquity is one of the world’s largest providers of business valuations, valuing more than 29.4 million companies around the globe. PrimePay, one of the nation’s biggest private payroll companies and a network of more than 10,000 accountants, will be exclusively distributing Accountant Office in the U.S. The founder and CEO of BizEquity, Michael Carter, wanted to expand the views of the capabilities that accountants are perceived at by demonstrating their value in business advisory and not just tax planning. Somewhat as their motto and the first thing that stands out on their website, reads “What’s Your Business Worth?” BizEquity conveys the importance of business valuation to owners and to those accountants and advisors who will benefit from these tools in order to better inform them. With proper valuation knowledge, companies are in a more desirable position in determining the fair value of selling a business, ability to secure financing, and striving for growth.
Luca is a BS and MS in Accounting, Forensic Certificate Program, at the Feliciano School of Business, Montclair State University.
Reference:
Hood, Daniel. “BizEquity Launches Online Valuation Tool for Accountants.” Accounting Today. 20 Oct. 2015. Web. 20 Nov. 2015. http://www.accountingtoday.com/accounting-technology/news/bizequity-launches-online-valuation-tool-for-accountants-76144-1.html
Posted by Samar Baeshen.
According to an October 21, 2015 news article in The New York Times, “Criminals Should Get Same Leniency as Corporations,” there are many critics arguing that corporations trying to make a big effort to defend their misconducted executives ought to be treated like common criminals. In addition, Emmet G. Sullivan, a federal judge, thought that criminals should be treated like big companies. Due to Obama administration’s method which gives companies the opportunity to not have a criminal record, Judge Sullivan believes that individual criminals should enjoy the same chances. In fact, the Department of Justice officials concur with Judge Sullivan’s opinion, which criticizes the American criminal justice system, and encourage Congress to lower the adjudication standards. Meanwhile, the Justice Department issued a new memo recently and released new approaches to prosecute individual employees after years of accusations about Wall Street criminals.
According to Judge Sullivan, the court is frustrated that the postponed prosecution agreements are not being utilized to give the same chances to individual criminals without causing any negative effects on the criminal conviction. Moreover, there are lack of the postponed prosecution agreements, according to the Justice Department, for both corporations and individuals. However, comparing the number of cases against individuals and companies, cases against individual criminals are enormously more than companies.
In general, the target of the Judge Sullivan’s argument is to reduce the long Sentence for prisoners who did not commit violent crimes.
Samar is a graduate student in accounting at the Feliciano School of Business, Montclair State University.