Posted by Anas Khalil.
A former executive at a New York investment bank who admitted defrauding investors of more than $38 million was sentenced to four years in prison by a judge who cited his gambling addiction as reason for leniency.
Caspersen is a gambler and an alcoholic who put his family members and friends in a situation of losing millions of dollars through an elaborate scheme involving a make-up of a private equity ventures, with a fake mail addresses, and a fake fictional financier. Caspersen had a gambling illness that once he hit a high of over $100 million one day and bet it all the next on whether the market would go up or down. Thus, he was left with nearly nothing at the end of the trading day.
I think Caspersen’s family members and friends who lost millions of dollars should’ve know that an alcoholic gambler should never have an access to big chunks of dollars. A person who is addicted to gambling will not take a consideration that the money he is using does not belong to his pocket and that he is responsible to turn back the money to who it belongs. However, Caspersen will just gamble with all the money he will have an access to thinking he will earn back the money he lost.
When you have big money, you should be more aware of how you invest your money and to whom you lent it. Caspersen’s family members and friends should have never lent Caspersen any money the minute they knew that he was an alcoholic and a gambler, but unfortunately it is too late to say this.
In conclusion, Caspersen imposed a prison term that fell well short of the 15 years called for by sentencing guidelines or the 7 ½ years recommended by the court’s Probation Department. Caspersen is now going to face jail time which is the lesson for every criminal that breaks the law and put other people in impasses.
Anas is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2018.
Posted by Johanna Ortiz.
An ex-executive Andrew Caspersen at New York investment bank was declared guilty to securities and wire fraud. He admitted defrauding investors of more than $38 million, and the judge gave him four years in prison because the defendant’s attorney asked him for leniency for gambling addiction.
Caspersen was a good worker. He graduated from Princeton University and Harvard Law School. Unfortunately, for his addictions, he defrauded investors’ money including his family and friends. “I lost their money” he said “I abused their friendship. I destroyed my family’s name” (news.findlaw.com).
He used to go to an organization which helped him with his alcohol and gambling addictions; however, he never finished his treatment. He always quit. His attorney used this as an excuse to let the judge know that he is not under control and he is unable to think or act as a normal person. The judge declared him with a very real gambling disorder and for that reason he gave him short-term prison sentence. He said to the judge that he learned from this and he is going to retake the treatment.
His defense attorney said his client was very ill with his addictions that he did not care about money, and he just wanted to play. At the end of the day, he lost over $100 million. He had hope that no matter how many times he lost, he would win and take the money back.
In my opinion, Caspersen acted without values, morals, and respect to investors. He knew his addictions and he was irresponsible and quit the treatments. All his irresponsibility were not investors’ fault and he had to pay for his mistakes.
Johanna is an accounting major at the Feliciano School of Business, Montclair State University.
Posted by Justin Cohen.
For years now, daily fantasy sports has been slowly growing but recently, it has been huge. Over the last two years, if you have watched a single sporting event, I cannot imagine you not seeing one of their ads. “Fanduel packs the thrill of a whole season into just one week” (Fanduel). They are everywhere.
According to Wired, DraftKings or Fanduel aired an ad on television every 90 seconds. “You only need to remind people of something that often if your target market is sports loving goldfish” (John Oliver). Daily fantasy sports combines everything guys love, sports and money. Although the multi-billion dollar industry is made up of thousands of companies, the two main sites, DraftKings and Fanduel are the main ones making significant profit. They were recently under investigation for being unfair and there were reports of people within the sites going in and changing their entries so they would be able to win every time.
Just the other day however, attorney general Schneiderman stated, “As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it.” So now, in New York and some other areas, people will not be able to play daily fantasy sports. Is this fair? Isn’t there more important things that he should be worrying about? These are questions I ask myself. Although fantasy sports used to be a game where you played with your coworkers and eventually lost to Janice in accounting, I like the path fantasy sports is headed with more interaction and more overall fun than just regular old fantasy sports.
I believe fantasy sport sites should be legal, but if it goes down that path, they need to declare themselves as a gambling site. In all interviews and ads regarding what the site is, they state it is an entertainment site, not a gambling site, which is why the general can make it illegal in New York. For the future, I can see this going two ways. In one scenario, I can see daily fantasy sports making a comeback, and becoming legal again. In the other scenario, the more likely scenario in my opinion, I can see it becoming illegal everywhere, which I am not looking forward to.
Justin is a sports management major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Emily Nichols.
On November 5, 2015, six men were convicted on felony charges of fraud and conspiracy in the sale of vending machine business opportunities. All six of these men were from New York, and they were just six of the 22 individuals convicted with this vending machine scheme. Two of the men were convicted with conspiracy and six counts of fraud and one count of false statement to federal agents. The third man was convicted on conspiracy and mail fraud. Two of the men were convicted of conspiracy and wire fraud and the final man was convicted of conspiracy and two counts of wire fraud.
They were convicted following the six week trial where some of the men will be in jail for 40 years according to their maximum sentence for conspiracy, fraud counts and false statements. These six men, were the last of the 22 convicted for the entire Vendstar scheme.
The company not only advertised nationwide on the internet and in newspapers, but they also promised to have the full package for the customer, saying that they would provide everything to operate the vending machine including the initial supply of candy for the machine. Once the machines were ordered, they dropped the machine off to the businesses wherever and however they could, not placing the machine in any certain place, and many businesses requested immediate removal of the machine. The men attempted to sell vending machines to businesses and promised them that they would make loads of money off of the machines and the customers would pay tens of thousands of dollars to invest in the machines. Between the five years of the operation of the scheme, it cost consumers a total of around $60 Million. If the customer paid an average of $10,000, then there were about 6,000 victims of this scheme once it was all said and done.
These men, I feel, were convicted correctly of their crimes and deserve to be in jail for what will most likely be the rest of their lives as the men were all above the age of 40, three of them being over the ae of 55. In the entirety, just 22 people cause a loss of $60 Million to consumers and businesses.
Emily is an accounting and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.
Posted by Alexander Sayour.
Mergers are very common for both small and large companies. New York based company Pfizer just attempted merging with Allergan because of the incentive of moving corporate headquarters to Ireland, which in return could reduce its tax bill. This would’ve been a $150 billion merger, the second largest in history, except Obama called it off due to a new crack down from the administration on corporate tax avoidance. The attempted takeover was an example of an inversion which is in simple terms a U.S. Multinational merging with a foreign company to change its legal tax residence for lower rates. Because of these new rules for cracking down on this. many expected the merger would not go through.
Pfizer has said since being denied from merging they would look at other methods to boost their share prices. An example listed being separating the company up which will be decided on by the end. Obama went on to discuss the problem with these loopholes claiming that the laws are poorly designed. Additionally he goes on to say that loopholes “Come at the expense of middle class families because that lost revenue has to be made up somewhere. It means that we’re not investing as much as we should in schools, in making college more affordable, in putting people back to work, in rebuilding our roads, our bridges, our infrastructure, creating more opportunities for our children.”
Loopholes are definitely a pivotal issue at hand for our country and during our presidential debates–something that we are finally addressing now.
Alexander is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.
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 Nikolina Stojkovic.
Insider trading just got a little easier, if you can use the right defense. Based on the case United States v. Newman, insider trading charges were dropped based on what was considered wrong jury instruction and failure to show sufficient evidence for conviction. The case was tried in a New York district court. New York has joined the cavalry in trying to take down Wall Street crimes. US Attorney General Preet Bharara took office about six years ago and arrested 100 people for insider trading, of whom 87 have been convicted1.
A little background of the case will help demonstrate what defense attorneys were able to accomplish in appeals. In January 2012, hedge fund portfolio managers Todd Newman and Anthony Chiasson were charged with securities fraud. In December 2012, they were convicted and, in May 2013, sentenced to lengthy terms: 54 months for Newman and 78 months for Chiasson1 for using information tipped to them about Dell and Nvidia via an intermediary. Newman earned $4 million and Chiasson earned $68 million as a result of the information received.2 The charges were overturned because the prosecution never linked a personal benefit received by the original tipper, not because Newman/Chiasson denied receiving the information.
According to the defense, their clients did not commit any crime because the tipper received no known benefit of relaying the information, nor did the intermediaries that passed along the information to Newman and Chiasson. Rather, their actions were part of a business transaction based on information received. It sure sounds like insider trading without the benefit requirement.
Nonetheless, the appeals court decided otherwise. Their decision spurred a flurry of review on pending and previously decided cases, where guilty verdicts were found and admissions of guilt were allowed on insider trading matters. Based on the defense attorney’s argument, insider trading cases will become more challenging for the US Attorney General’s office. In this matter, based on the charges, the defendants are not guilty. However, had the tipper received quid pro quo in exchange for the information, Newman and the like, would be guilty of insider trading. Quid pro quo seems trivial in the matter, either you acted upon the information or you didn’t.
Nikolina is a graduate student in accounting with a certificate in forensic accounting at the Feliciano School of Business, Montclair State University.
Sources:
1 http://fortune.com/2015/09/23/supreme-court-insider-trading-newman
2 http://www.bloomberg.com/news/articles/2015-10-05/insider-trading-cases-imperiled-as-top-u-s-court-spurns-appeal
Posted by Bridget Uribe.
During the month of March of 2014, the Securities and Exchange Commission (SEC) charged three executives: Chairman Steven Davis, Executive Director Stephen DiCarmine, and Chief Financial Officer Joel Sanders of Dewey & LeBoeuf, the international law firm, with facilitating a $150 million fraudulent bond offerings. The SEC alleged that the three charged turned to accounting fraud when the firm needed money during the economic recession and steep costs from a recent merger. They were afraid that their declining revenues might cause the bank lenders to cut off access to the firm’s credit lines. Thus, leading Dewey & LeBoeuf’s financial professionals came up with ways to artificially inflate income and distort financial performance.
The fraud didn’t stop there. Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on fake financial numbers. Dewey & LeBoeuf since have officially went out of business, and the Manhattan District Attorney’s Office charged criminal charges against Davis, DiCarmine, and Sanders. According to the SEC’s complaint, the roots of the fraud dated back to late 2008 when senior financial officers began to come up with fake revenues by manipulating various entries in Dewey & LeBoeuf’s internal accounting system. The firm’s profitability was inflated by approximately $36 million (15%) at the end of the 2008 financial results. “The improper accounting also reversed millions of dollars of uncollectible disbursements, mischaracterized millions of dollars of credit card debt owed by the firm as bogus disbursements owed by clients, and inaccurately accounted for significant lease obligations held by the firm”(SEC Press Release).
Fast forward to the present, a New York judge declared a mistrial Monday bringing an end to the trial for the biggest law firm failure in U.S. history! The decision comes on the 22nd day of deliberations by a 12-member jury, which acquitted the ex-law firm leaders on several dozen counts of falsifying business records. The jury couldn’t reach a verdict on grand larceny and remained deadlocked on more than 90 counts charges facing Steven Davis, Joel Sanders, and Stephen DiCarmine. The three could have faced up to 25 years in prison if convicted of grand larceny, the most serious of the roughly 50 counts each brought against them. The defendants also faced related civil charges brought by the Securities and Exchange Commission and a private lawsuit brought by former Dewey investors who say, “They were duped into buying debt in a 2010 bond offering.” Both of those proceedings had been on hold pending the outcome of the criminal trial. Some highlights of the trial are: prosecutors had likened Mr. Davis to a drug kingpin, overseeing a criminal enterprise. Also, the defense side thought prosecutors didn’t present enough evidence to prove their case, thus choosing not to call any witnesses. Instead, the lawyers relied on the cross-examination of government witnesses to try to distance their clients from the actions taking place in the accounting department. At times, such questioning also prompted praise for the defendants from those on the stand. Where does this lead us now? How the Department of Justice completely lost the case or can a retrial give a favorable outcome in the future? It’s too early to tell, but what I do know is that the long deliberations and mistrial will raise questions about whether the case was too complex.
Bridget is a graduate forensic accounting student at the Feliciano School of Business, Montclair State University, Class of 2016.
Posted by Daniel Lamas.
After the release of Chris Kyle’s 2013 memoir, Jesse Ventura was very displeased to find out that Kyle was making claims about punching him in the face in 2006. Kyle did not use Ventura’s name in the book, but only referred to the incident by saying he “knocked out a celebrity.” Only in later interviews did Kyle publicly acknowledge the mystery celebrity as Ventura.
This angered Ventura especially due to the fact that he claimed that Kyle was making the story up. Ventura who was also a Navy veteran was even more displeased to find out that Kyle’s reason for hitting him, as depicted in the book, was due to Ventura making disrespectful remarks about the military. Ventura immediately took the matter to the courts. Not too long after, Kyle was killed at a shooting range and left behind a loving family and many adoring admirers.
Ventura still went ahead with the lawsuit and ended up suing New York publishing company HarperCollins over the book, claiming defamation. He was then awarded 1.8 million dollars from Chris Kyle’s estate. The aftermath of the lawsuit angered many people and soiled Ventura’s name even more. Ventura has said many times that he has no regrets over what he did and meant no harm or disrespect towards Kyle’s family and widow. Although many people across the country are now holding a grudge against the former Minnesota governor, he still won the battle of legal games.
Daniel is a business management and merchandising major at Montclair State University, Class of 2017.
A New Jersey appellate court recently ruled in James v. Ruiz that testifying experts cannot bolster their opinions by piggybacking or “bootstrapping” the written conclusions of other experts who are not testifying in court.
The Sixth Amendment of the U.S. Constitution protects the right of the accused to confront witnesses against him, thereby excluding hearsay from a case. Hearsay is testimony from a witness who relays information to a jury from a second-hand witness. Hearsay is considered unreliable because the witness who supposedly said the statement is not present in court to be subject to cross-examination.
To illustrate how this works, imagine a case where counsel is trying to prove that Peter was in New York at the time of a robbery. Counsel asks a witness on the stand whether Patrick told him that Peter was in New York in order to place Peter in New York at that time. This is an out-of-court statement made to prove the truth of the matter asserted (that Peter was in New York), and therefore, cannot be cross-examined by opposing counsel because Patrick is not in court. As a result of scenarios like this, rules of court have been crafted to prevent juries from considering hearsay statements in both criminal and civil cases.
Under Federal Rule 703, “an expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.” New Jersey has adopted Rule 703 and takes a strict view on what constitutes personal observance. For example, while certain medical records can be admitted under the business records exception to the hearsay rule, if those records contain medical opinions regarding a complex medical condition, then under the recent decision in James, they cannot be referenced by a testifying witnesses as a consistent (or non-consistent) opinion to his opinion, unless the testifying expert relied on those opinions for his or her own “personal” findings. The witnesses relied upon must be testifying as well. Therefore, simply rubber-stamping one’s own opinion based on a non-testifying expert’s opinion, is bootstrapping and violative of Rule 703.
Together with the business records exception and Rule 703, New Jersey also has Rule 808, which has no federal analog. Under N.J.R.E. 808:
Expert opinion which is included in an admissible hearsay statement shall be excluded if the declarant has not been produced as a witness unless the trial judge finds that the circumstances involved in rendering the opinion, including the motive, duty, and interest of the declarant, whether litigation was contemplated by the declarant, the complexity of the subject matter, and the likelihood of accuracy of the opinion, tend to establish its trustworthiness.
Thus, there are times when a non-testifying expert’s opinion can be permitted, but the trial judge must evaluate the expert’s motives, duty, and interest in giving the opinion; whether they had litigation in mind at the time of the opinion; the complexity of the subject matter; and whether the opinion is accurate. If the opinion regards something that is complex and contested in the lawsuit, the opinion will not be permitted under Rule 808. If it is an uncontested opinion or something insignificant, then it will more than likely be admitted.
There is a line drawn between facts and data, which any expert can discuss, provided that they are relied upon by other experts in the field, and expert opinions. And again, non-testifying expert opinions cannot be admitted unless the testifying expert relied upon those opinions in his analysis of the case and will be testifying. According to the court, “[i]f the requirements of Rule 808 are met, and a testifying expert has reasonably relied upon the non-testifying expert’s opinions, then the testifying expert may be permitted to refer to that absent expert’s opinions in the course of explaining his or her own opinions in court.” The court continued: “However, this pathway should not be used as a ‘subterfuge to allow an expert to bolster the expert testimony by reference to other opinions of experts not testifying.’”
The bottom line is testifying experts cannot be used as a conduit to admit non-testifying expert testimony. This applies especially to bootstrapping “net opinions” in this manner. In addition to the constitutional issues raised here, doing so is simply unfair. If a plaintiff has an expert who is testifying against the defendant’s expert with an opposite opinion, then permitting the bootstrapping of a non-expert’s opinion is like having two experts against one in front of the jury for the price of one.