Duke University Hospital pockets $69.7 million peddling discounted drugs

April 4, 2013

Wondering why your private insurance rates and taxes are so high? It’s not all Obamacare. Duke University Hospital may be using your insurance plan and tax dollars to subsidize its budget. Supposedly a “non-profit” corporation, Duke Hospital has mastered the art of buying drugs low and selling them high, thanks in part to what U.S. [...]

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What lurks in Deloitte’s Longtop Financial audit work papers?

April 3, 2013

Deloitte’s China unit (DTTC) is hiding something. Why is an open question. The firm’s continuing refusal to comply with a May 2011 SEC subpoena for audit work papers will inevitably fuel speculation. A bizarre May 2, 2011 resignation letter from DTTC to Longtop Financial Technologies Ltd touched off the SEC’s investigation. The letter reads, in part, [...]

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Guilty: IRS examiner admits exposing whistleblower

March 13, 2013

Today’s object lesson in whistleblower risk and regulatory capture comes to us courtesy of the IRS. As reported in Accounting Today: Dennis Lerner, 60, a former international examiner in the IRS’s New York office, pleaded guilty Monday in a Manhattan federal court before U.S. District Judge John F. Keenan. He was arrested last September and [...]

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FCPA! DOJ & SEC Resource Guide just published

November 14, 2012

FCPA! It doesn’t mean what you think it means. Which is why the DOJ and SEC have just co-authored a book explaining what they mean when they say “FCPA.” The Foreign Corrupt Practices Act (“FCPA”) is a favorite SEC and DOJ enforcement tool. Some folks have no clue what it means. Others don’t care. Many [...]

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6th Circuit joins 2nd & 7th: In FERA § 4(f)(1), “claims” means “cases”

November 3, 2012

Words mean things, don’t they? The next sentence is a real mouthful, so take a deep breath before proceeding. Yesterday, in United States ex. rel. Sanders v. Allison Engine Co., Nos. 10-3818/10-3821, the 6th Circuit Court of Appeals held that the word “claims” — in the phrase “all claims under the False Claims Act,” in § [...]

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UVA-BYU MetaFraud: SEC droid we’re looking for?

September 26, 2012

Researchers at University of Virginia and BYU have developed what may be the Holy Grail of securities-fraud surveillance: a software algorithm they’ve named MetaFraud. In a forthcoming article in MIS Quarterly, co-authors Ahmed Abbasi, Conan Albrecht, Anthony Vance, and James Hansen, describe the algorithm, which they say identifies financial statement fraud with 80-percent accuracy. According to a [...]

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PCAOB’s Chinese “Potemkin audit” plan: Blame state secrecy & Western colonialism?

September 24, 2012

$12.8 billion.  That’s the market capitalization created by reverse mergers through which 159 Chinese companies entered U.S. securities markets between January 1, 2007 and March 31, 2010. Speaking at Cal State Irvine last Friday, PCAOB Member Lewis H. Ferguson disclosed that of these companies, 67 have had their auditors resign, while 126 have been “delisted” [...]

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False Claims Act tax twister: Are relator’s attorney fees deductible?

September 24, 2012

Yes and no. Internal Revenue Code § 62(a)(20) is the authority on the federal income tax treatment of fees paid by whistleblowers to their attorneys, in federal FCA and federal-law based whistleblower retaliation cases.  IRC § 62(a)(20) says that such attorney fees, if paid after October 22, 2004 with respect to any judgment or settlement occurring [...]

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Legal perspective on IASB-FASB revenue recognition draft: It’s complicated!

September 18, 2012

Got revenue? Better learn to account for it. It’s not going to get any easier, thanks to a new standard coming soon, from your local FASB and IASB. For SEC whistleblowers and attorneys engaged in many business-related practice areas, revenue accounting can be a big issue. It is the most common source of financial reporting [...]

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Huge: IRS awards $104 million to whistleblower Birkenfeld

September 11, 2012

Kudos to Bradley Birkenfeld and the IRS Whistleblower Office!  Six years into its “new” Whistleblower Program, the IRS has finally paid its first award [see update below], a whopping $104 million to banking whistleblower Bradley Birkenfeld. Talk about sending a message. In its determination letter, the IRS provided [see update below] considerably more information about [...]

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