Lehman Probe Stalls; Chance of No Charges

Via Wall Street Journal (H/T Truth on the Market).

The U.S. government's investigation into the collapse of Lehman Brothers Holdings Inc. has hit daunting hurdles that could result in no civil or criminal charges ever being filed against the company's former executives, people familiar with the situation said.

In recent months, Securities and Exchange Commission officials have grown increasingly doubtful they can prove that Lehman violated U.S. laws by using an accounting maneuver to move as much as $50 billion in assets off its balance sheet, which made it appear that the securities firm had reduced its debt levels.

SEC officials also aren't confident they could win any lawsuit accusing former Lehman employees, including former Lehman Chief Executive Richard Fuld Jr., of failing to adequately mark down the value of the large real-estate portfolio acquired in Lehman's takeover of apartment developer Archstone-Smith Trust or to disclose the resulting losses to investors, according to people familiar with the matter.

...

A spokeswoman for the Justice Department declined to comment on Lehman. In a statement, she said the agency "will continue to root out financial fraud wherever it exists. When we find credible evidence of criminal conduct—by Wall Street financiers, lawyers, accountants or others—we will aggressively pursue justice. However, we can and will only bring charges when the facts and the law convince us that we can prove a crime beyond a reasonable doubt."

Click Here to Read: Lehman Probe Stalls; Chance of No Charges 

Courts Repudiate Attempts to Find Loopholes in Supreme Court Foreign Cubed Decision

Via HLS Forum.

Citing the Supreme Court’s decision in Morrison v. National Australia Bank, on February 22 a federal district judge in New York threw out most of a securities class action jury verdict that plaintiffs’ lawyers had estimated was worth $9.3 billion. The jury’s verdict, rendered against the French media conglomerate Vivendi, S.A. thirteen months ago—before National Australia was argued and decided, and thus under now-overturned law—upheld claims that were predominantly “foreign-cubed” (asserted by foreign investors against a foreign issuer for losses on a foreign exchange) and “foreign-squared” (asserted by American investors against a foreign issuer for losses on a foreign exchange). In categorically dismissing all the claims of those investors, the decision in In re Vivendi Universal, S.A. Securities Litigation, No. 02 Civ. 5571 (RJH) (S.D.N.Y. Feb. 23, 2011), according to Vivendi and its counsel, eliminated at least 80%, and perhaps up to 90%, of the liability that the verdict could have produced.

...

The so-called “listed” securities theory. The most ambitious plaintiffs’ theory relied upon the statement in Morrison v. National Australia Bank that Section 10(b) of the Securities Exchange Act of 1934 applies “only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.” (Emphasis added.) Plaintiffs’ lawyers took this to mean that whenever the home-country security of a foreign issuer was “listed” on a U.S. exchange (as must often be done, for example, in order to issue and list American Depositary Receipts), trades in that security anywhere in the world would be subject to Section 10(b). Thus, if a foreign company sponsored even a small issue of ADRs, or if it dual-listed its home-country shares on an American exchange, global foreign-cubed and foreign-squared class actions would be fair game.

Click Here to Read: Courts Repudiate Attempts to Find Loopholes in Supreme Court Foreign Cubed Decision 

Honesty for Banks Is Still Such a Lonely Word

Good Read via Jonathan Weil @ Bloomberg (H/T Going Concern). 

Interesting Excerpts: 

Last August an electronics manufacturer named Molex Inc. (MOLX) did something remarkable, at least by today’s standards for disclosing bad news. It filed a special report with the Securities and Exchange Commission known as an 8-K, saying it had overstated its shareholder equity by $101 million and that investors shouldn’t rely on its financial statements for the previous three years.

What made this event so unusual is it was the only negative restatement disclosed in this manner last year by a company in the Standard & Poor’s 500 Index. That’s according to Audit Analytics, a Sutton, Massachusetts, research firm that tracks such data. Molex, based in Lisle, Illinois, included its corrected results in its fiscal 2010 annual report the same day.

...

“It’s one or the other,” says Don Whalen, research director at Audit Analytics. “Either companies’ internal controls have improved dramatically, so they’re not making mistakes. Or it’s too good to be true, and the information is not getting out.”

...

The figures for banks, in particular, look unnaturally low. Forty-four banks restated last year, one fewer than in 2009. Even more curious, there were 133 banks that issued corrections from 2008 through 2010. That was down from 169 banks during the previous three-year period, before the financial crisis took off in earnest, which makes no sense.

...

About 53 percent of all restatements by U.S. companies in 2010 were handled this way, on the grounds that the errors supposedly weren’t big enough to warrant more prominent disclosures. Sometimes called “stealth restatements,” the corrections instead got tucked elsewhere, such as footnotes in press releases or companies’ quarterly and annual reports.

Click Here to Read: Honesty for Banks Is Still Such a Lonely Word

Hedge Funds and “Stock Manipulation”

Via AllAboutAlpha.

The researchers also found that this “manipulation” is more likely to occur in stocks owned by hedge funds with less diversified portfolios.  After all, it’s those funds that stand to gain the most by artificially inflating prices, since the stock in question has a larger impact on the fund’s overall performance.

They also find that stocks owned by hedge funds having a stellar year are more likely to be “manipulated” than stocks owned by poorly performing hedge funds.  The logic is a bit more muddled here though.  The authors suggest the incentives to manipulate are higher when funds are “competing for the highest positions on the list.”  Yet they also argue that manipulation is beneficial for hedge funds “…because is allows them to avoid a highly negative return…”.

New and smaller funds are fingered in the report since they have a higher “performance-flow” relationship.  (See this post for more on the propensity for new and small funds to avoid tiny losses and apparently to turn them into tiny gains).

Click Here to Read: Hedge Funds and “Stock Manipulation”

Rajat Gupta: Bigger Than Madoff?

Via NetNet.

One of the reasons we rarely see such charges against people with the stature and wealth of Gupta is that insider trading makes so little logical sense for such people. There’s really no reason Gupta should leak confidential information to a hedge fund manager. He doesn’t need money, access, prestige or any favors at all.

If he did tip off his hedge fund manager friend, it was something darker than greed or ambition. It was something close to sociopathic narcissism—perhaps a belief that he was somehow above the law, immune to the rules that govern the rest of us. The sort of thing we see in Madoff.

Of course, there’s another explanation: that Gupta didn’t do what the SEC claims he did. That those phone calls to accused insider trader Raj Rajaratnam, made within seconds of the conclusion of board meetings, were just social calls.

Click Here to Read: Rajat Gupta: Bigger Than Madoff?

The Big Financial Lie – How Growing Income Inequality, Too Big To Fail Banks, and Stock Market Delusion Swindled the American Public and Dissolved the Middle Class

Via Foreclosure Blues.

What then of reform?  The banking system needs a complete overhaul.  Investment banking and commercial banking need to be split right down the middle.  There should be a zero guarantee on any investment bank activity and absolutely no access to the Federal Reserve.  You want to gamble you do it with your own capital.  It is simply amazing that we haven’t had this accomplished even after having our own rendition of the Great Depression.  Instead, to solve the problem of too big to fail the too big to fail got even bigger.  To solve our debt problems we went into deeper debt.  So not only are the banks central to the crisis not brought to justice but they are rewarded to become even bigger with taxpayer backing.  It is amazing that people aren’t on the streets because of this.

This isn’t a chapter from Alice in Wonderland or 1984 but the serious financial reality of today.  The stock market rally is based on fumes just like we are to believe that the $5.4 trillion in deposits at FDIC insured banks is somehow “backed” by a deposit insurance fund with no money.  It is entirely based on faith.  Since moral hazard is now built into the system you can rest assured another crisis is only around the corner.  Why are we to expect anything different?  The amount of toxic loans still out there is enough to sink the entire banking system.  Instead, we are to pretend that all is well because the banks now have access to the hard work and system we know as the American economy.

Click Here to Read: The Big Financial Lie – How Growing Income Inequality, Too Big To Fail Banks, and Stock Market Delusion Swindled the American Public and Dissolved the Middle Class

The Madoff Tapes - Must Read!

It has been a while since I've found an article so compelling. This is a definite must read. Being able to get into the thought processes of criminals is perhaps the most riveting aspect of this industry. It's remarkable. 

Nadine

By Steve Fishman @ New York.

(Many) Interesting Excerpts: 

And so, sitting alone with his therapist, in the prison khakis he irons himself, he seeks reassurance. “Everybody on the outside kept claiming I was a sociopath,” Madoff told her one day. “I asked her, ‘Am I a sociopath?’ ” He waited expectantly, his eyelids squeezing open and shut, that famous tic. “She said, ‘You’re absolutely not a sociopath. You have morals. You have remorse.’ ” Madoff paused as he related this. His voice settled. He said to me, “I am a good person.” 

...

“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry?” he continued. “And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.”

...

The pain that Madoff visited upon those closest to him has certain echoes in his own background, part of what drove him to succeed. “I had a father who was very successful in business,” he told me, a sporting-goods-manufacturing business. “He invented the punching-bag stand,” Madoff said. “The Joe Palooka punching-bag stand.” But the business failed when Madoff was in college. “You watch that happen,” said Madoff, “you see a father whom you idolize all of a sudden lose everything, and you’re frightened about something like that happening.”

...

He’d come up with a new trading strategy based on index options. But the new strategy needed volatility to work, and in the early nineties, the recession had settled in. “The market went to sleep,” said Madoff. He had too much of other people’s money and not enough to invest in. 

...

“The chairman of Banco Santander came down to see me, the chairman of Credit Suisse came down, chairman of UBS came down; I had all of these major banks. You know, Safra coming down and entertaining me and trying [to invest with Madoff]. It is a head trip. [Those people] sitting there, telling you, ‘You can do this.’ It feeds your ego. All of a sudden, these banks which wouldn’t give you the time of day, they’re willing to give you a billion dollars,” he explained. “It wasn’t like I needed the money. It was just that I thought it was a temporary thing, and all of a sudden, everybody is throwing billions of dollars at you. Saying, ‘Listen, if you can do this stuff for us, we’ll be your clients forever.’ ” 

...

But it was business that kept the boys on the edge of their seats. They sat raptly at the dinner table listening to their father’s adventures taking on the powers of Wall Street. And wherever they went, they heard of his mastery—strangers lavished on them tales of their father’s genius. Their father was a Wall Street player, a wizard, a man who’d made a lot of people a lot of money. At the time, these were reasons to follow in his footsteps. In fact, neither of the boys seemed to ever experience a rebellious impulse—“Mark wouldn’t wear pink,” said a friend from high school—and neither considered any employer besides BLMIS. In that high-school-yearbook entry, Andrew wrote, “Mark—future partner MADF,” and continued, “u’ll all see—I’m the 1.” 

...

However happy Madoff was to have his family in the office with him, he made no bones about whose business it was. He once shouted at his brother, “Until your name is the name on the door, don’t tell me what to do.” The business revolved around Madoff, his thoughts, his needs, his idiosyncrasies, including his compulsion for order. “I definitely have obsessive-compulsive tendencies,” he said; everyone remembered him on his knees, straightening the venetian blinds. 

...

And Madoff insists that rather than the pursuer, he was usually the pursued. People begged him to take their money. Madoff says that he waved red flags, issued caveats that should have been obvious to even an unsophisticated investor. “They were all told by me, ‘Don’t invest any more money than you could afford to lose. This is the stock market. There’s always stuff that can happen. Brokerage firms can fail. I could go crazy and do something stupid. If you want a [safe thing], put your money in government bonds. So everybody understood this. 

...

And now there are limits to his sympathy. He sees himself not as some evil mastermind but as part of a system of corruption, maybe its linchpin, but he believes that people have lost their perspective on what actually occurred. “Look, none of my clients, even if they lost every penny they put in there, can plead poverty,” he said. “Look, it doesn’t mean I’m excusing what I did, doesn’t mean I don’t feel sorry for them. I’m embarrassed … It was the people that came in very late in the game that got hurt. All of my friends, most of my individual clients, are not net losers,” he said. “Now if you listen to [them], they’re living out of Dumpsters and they don’t have any money, and I’m sure it’s a traumatic experience to some, but I made a lot of money for people. Does it justify it? No.

“When you deal with people’s money, as I did for all my life,” he continues, “you realize how strange they are; it’s all like, ‘What have you done for me lately?’ If you made money for me, I was smart because I gave you the money and I went there, and if you lose money, then it’s all your fault. So you become somewhat callous about people lying.”

...

“I was always able to rationalize it … Look, I tried to give moneys back to my individual clients when I realized it was impossible to get myself out. I tried to return funds to my friends, moneys to the smaller clients. They wouldn’t take it back … Everybody said, ‘No, you can’t do that. You can’t send me my money back. I’ve been a friend of yours, or a client, for years’ … I couldn’t tell them I would have been doing them a favor. I couldn’t. I mean, could I have insisted? Yes.

“I did block it out of my mind,” he said. “I had no choice.”

...

He faced $7 billion in redemptions, which he didn’t have. He’d been feverishly trying to raise money and in fact had commitments for $700 million, which could have kept the scheme afloat for several more weeks. “What was the point? It wasn’t going to solve my problem. And I was so exhausted and deep down with worry, and so on. I just said to hell with it. I decided I wasn’t going to take [the money]. There was no point in me hurting additional people,” he told me. The authorities found checks for $173 million in his desk—uncashed. 

...

Mark developed an addiction to news about his father’s case and the family’s troubles, and that made it almost impossible for him to move forward. Andrew could only do so much before losing his temper. “Shut off your fucking computer,” he told his brother. But Mark couldn’t. And so, says a close friend, “he saw the world’s perception of him through the eyes of these hateful people.” 

...

But the world is not as Madoff imagines it from behind prison bars. To a friend, Andrew mocked his father’s thoughts: “Yes, I stole every penny that you had, and you’ve got to dive into a Dumpster to get a meal, but, you know, that’s the past, get over it.”

Click Here to Read: The Madoff Tapes

Rule By Banks Instead of Rule By Law

Via LivingLies (H/T Foreclosure Blues). 

The astonishing part is that the banking industry continues to maintain that it really didn’t do anything wrong, all it did was make some technical errors. That so grossly understates the degree of its recklessness and malfeasance as to be beyond Belief.

It’s no surprise that the so-called Foreclosure Task Force which spent a mere eight weeks reviewing servicer activities and didn’t find much. The timeframe of its exam assured that it would not verify servicer records and accounts against borrower experience and records. It is almost certain that they also did not look at how servicer software credited payments and charges, when there is widespread evidence of violations of agreements with borrowers and RESPA.

Click Here to Read: Rule By Banks Instead of Rule By Law

Wall St. Often Slow to Disclose Brokers’ Sins

Via DealBook.

The case casts a light on a persistent problem: the failure of financial firms to properly report infractions to Finra’s central database, a critical tool that large and small investors rely on to vet stockbrokers and other financial professionals.

“It’s really no different than if you’re talking to a doctor,” said Charles Rotblut, a longtime investor and a vice president of the American Association of Individual Investors. “You have to trust who you’re working with.”

For its part, Morgan Stanley Smith Barney says it followed the correct procedures regarding Mr. Erzinger, disclosing the matter once the related court documents became available. The reporting requirement, said Jim Wiggins, a spokesman for the firm, was met in “an accurate and timely manner.”

...

Finra in 2010 fined Citigroup $150,000 for filing “inaccurate” disclosures about 120 brokers who were fired or resigned after being accused of theft or fraud. In its disciplinary action, the regulator said Citigroup had “hindered the investing public’s ability to access pertinent background information.” Finra fined JPMorgan Chase $150,000 for similar violations in 2009.

Alex Samuelson, a spokesman for Citi, said the bank had “a robust internal reporting system and follows all Finra rules on client complaints and brokers’ records.” A JPMorgan spokesman declined to comment.

Click Here to Read: Wall St. Often Slow to Disclose Brokers’ Sins 

For the S.E.C., Problems of Time and Money

Via Peter Henning @ White Collar Watch. 

In 2003, the S.E.C.’s enforcement program was under attack from Wall Street, which complained that overregulation and too much enforcement hampered the effectiveness of American markets in competition with financial centers in London and Asia. The S.E.C., like other agencies involved in the investigation and prosecution of white-collar crimes, received fewer resources to work with as the federal government ramped up its spending on antiterrorism programs.

It is not surprising that a case involving options backdating in that time period would be de-emphasized, at least before the practice gained the national attention in March 2006 when The Wall Street Journal began publishing a series of articles titled “The Perfect Payday” that outlined the huge gains that some executives reaped from backdating. As accounting cases went, it did not look anything like the types of frauds that occurred at companies like Enron and WorldCom, which were the S.E.C.’s primary focus at that time.

Click Here to Read: For the S.E.C., Problems of Time and Money

Another Reminder That Crime Pays

Via Naked Capitalism. 

The second reason is timid prosecutors. A commonly invoked excuse for the failure to file criminal cases is that they are hard to win. But the standard set by the investigators seems to be that they will win all or most of the cases, which is bizarre. As long as a prosecution does not look foolish or overreaching, filing cases where there are good grounds for doing so does have deterrence value. High profile cases are costly to the targets: they consume management time and generate bad PR. Stanley Sporkin, the SEC’s head of enforcement in the 1970s was feared all over Wall Street precisely because he was not afraid to go after questionable behavior, even if he might not prevail in court.

And you aren’t going to be any good at litigating financial cases if you are afraid to try them. That in turn leads to a vicious circle: you won’t attract high caliber law school grads if you aren’t seen as being a good training ground (by contrast, the County of New York Robert Morgenthau was always able to attract talent because it was recognized in the law profession as a top flight operation; Sonia Sotomayor, Eliot Spitzer, and Andrew Cuomo were all assistant DAs under Morgenthau).

An obvious example is the SEC’s recent failed prosecution against former Bear Stearn hedge funds executives. Conventional wisdom is that the outcome proves that the loss confirms that it is hard to win complex criminal cases. But Enron was vastly more complex, yet it resulted in a raft of settlements (with jail time and big fines) and convictions. The fact is the SEC did a bad job. It made rookie mistakes, like relying overmuch on e-mails that looked damaging and failing to do adequate discovery on the surrounding circumstances.

Click Here to Read: Another Reminder That Crime Pays

Behavioral Motivations: When CEO’s Cook the Books & Why do firms issue financial misstatements?

Via Kellogg. H/T SimoleonSense. Great read. 

When the dot-com bubble of the late 1990s sent stock prices soaring, something else soared, too: CEOs’ perceptions of their net wealth. That theory alone may explain a large part of the psychology and behavior of why some corporate managers allowed their accounting books to get cooked.

On March 10, 2000, the dot-com bubble burst abruptly and as a result many firms had to issue accounting restatements well into the next decade. Let’s face it, a lot of people lost a lot of money, and not just the CEOs who watched large portions of their own stock holdings in their own companies vaporize. Let’s also not forget the chasm of broken trust that opened between the business community and the public.

So what happened? Did the CEOs transmogrify into greed-poisoned crooks? That answer may satisfy our human desire for a villain, but that is not exactly how things played out, says Anup Srivastava, an assistant professor of accounting information and management at the Kellogg School of Management.

Click Here to Read: Behavioral Motivations: When CEO’s Cook the Books & Why do firms issue financial misstatements?

Why Isn't Wall Street in Jail?

Very good (yet sad) article via Rolling Stones (Many thanks to Miguel @ SimoleonSense for finding this).

To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."

...

That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.

Click Here to Read: Why Isn't Wall Street in Jail? 

If At First You Don't Succeed...

I couldn't resist.

 

The Matrixx of Materiality and Statistical Significance in Securities Fraud Cases

Via NERA Economic Consulting (H/T HLS Forum).

Click Here to Read: The Matrixx of Materiality and Statistical Significance in Securities Fraud Cases

The Disinformation Campaign Bank of America Considered

BoA never ceases to amaze me... definitely take a look at the presentation founded by Wikileaks. Slides 13 & 14 blow my mind. 

Commentary via Empty Wheel:

In other words, in addition to proposing to conduct cyber attacks on Wikileaks’ European-based infrastructure (complete with a picture of WL’s bomb shelter-housed servers), the proposal appears to recommend that these companies be paid to troll social media, like Twitter, to not only “identify risky behavior of employees” but also, presumably, “push the radical and reckless nature of wikileaks activities.” You know–the kind of trolling we often see targeted at Glenn (and in recent days targeted against David House, who was also listed in this presentation).

In addition, the presentation proposes to create a concern over the security of the infrastructure. Interestingly, when additional newspapers in Europe got copies of the State cables (including Aftenposten), some people speculated that the files had come from a hack of Wikileaks servers. (Note how the slide above notes the disgruntled WL volunteers.)

That doesn’t mean we’re seeing this campaign in process. After all, Glenn has a ton of enemies on Twitter. And if the intent behind leaking additional copies of the cables was to suggest WL’s infrastructure had been hacked, that perception has largely dissipated as more and more newspapers get copies.

One final note: according to Tech Herald, the law firm pitching these firms, Hunton and Williams, was itself recommended to BoA by DOJ. As the presentation makes clear, these are significant government contractors. (Remember, we’re getting these documents because Anonymous hacked HBGary Federal, which was offering what it had collected to DOJ.) To what extent is what we’re seeing just an extension of what our own government is trying to combat Wikileaks?

Click Here to Read: The Disinformation Campaign Bank of America Considered

FDIC Makes A Case Against Auditors For Bank Failures

By Francine McKenna.

On the other hand, the auditors have one of the most powerful affirmative defenses known to third-party advisors – the doctrine of in pari delicto and the theory of imputation. We recently saw this defense used effectively to shoot down two cases against auditors under New York law – Teachers Retirement System of Louisiana v. PwC (a vintage AIG case) and Kirschner v. KPMG et al (a Refco bankruptcy case).

In the Refco case, the Bankruptcy Trustee brought claims against more than one third-party advisor. All were eventually dismissed.

The FDIC, as a receiver in bankruptcy, will stand in the shoes of the failed bank corporation. The in pari delicto doctrine is based on common law agency principles. The acts of fraudster bank executives are imputed to the bank corporation since they acted as agents of the corporation. They were authorized to act on its behalf unless it can be proven that they abandoned the corporation and their fraud was solely for their own interest.  That’s called an adverse interest exception. The doctrine of in pari delicto says that, “in a case of equal or mutual fault the position of the defending party is the stronger one."

Click Here to Read: FDIC Makes A Case Against Auditors For Bank Failures

Documentary: Do No Harm

H/T Foreclosureblues.

Introduction (Via Rebecca Schanberg):

Do No Harm tells the story of two reluctant whistleblowers in a small Georgia town who endure relentless attacks as they struggle to draw national attention to hospital corruption and the plight of the uninsured.

At the center of this story is Phoebe Putney, a non-profit hospital in Albany, Georgia whose influence is felt by most residents - everyone knows someone who works at Phoebe, owes Phoebe money, or who has been to the hospital for treatment. In 2003, Dr. John Bagnato and accountant Charles Rehberg stumble upon evidence that the hospital is overcharging uninsured and indigent patients and is using aggressive collections tactics to recover costs. Their subsequent investigation uncovers millions of dollars in offshore bank accounts and lucrative for-profit businesses under the control of the non-profit hospital - not only at Phoebe, but also at non-profit hospitals around the country. And shockingly – this is all entirely legal.

When these discoveries become public, Bagnato and Rehberg become the targets of threats and intimidation, and are eventually prosecuted by local authorities for blowing the whistle on the hospital's practices.  With their reputations and livelihoods on the line, Bagnato and Rehberg must confront what they’re willing to sacrifice to bring about justice.

On Insider Trading . . . and Shredding and Smashing and Purging

I found this hilarious... via WSJ Law.

According to the criminal complaint, filed Tuesday in Manhattan federal court, Longueuil allegedly ripped up his computer drives with pliers after reading a Wall Street Journal report on the probe late last year.

Longueuil’s version of that night’s events was recorded later, during a December meeting with a former colleague, who by then was cooperating with the government and recording conversations, according to the U.S. complaint.

“F—in’ pulled the external drives apart,” Mr. Longueuil told Mr. Freeman during their meeting, according to the criminal complaint. “Put ‘em into four separate little baggies, and then at 2 a.m. … 2 a.m. on a Friday night, I put this stuff inside my black North Face …  jacket, … and leave the apartment and I go on like a twenty block walk around the city … and try to find a, a garbage truck … and threw the s—t in the back of like random garbage trucks, different garbage trucks … four different garbage trucks.”

Click Here to Read: On Insider Trading . . . and Shredding and Smashing and Purging

I.R.S. Offers a Tougher Amnesty Deal for Offshore Accounts

Very, very interesting! Via The New York Times (H/T Going Concern). 

Offshore tax evaders received a new incentive on Tuesday to come forward and declare their hidden bank accounts to the Internal Revenue Service, with stiffer penalties than a previous offer but no risk of prosecution.

Under the initiative, Americans with hidden offshore accounts have until Aug. 31 to come forward voluntarily and report the accounts to the I.R.S. in exchange for penalties that, while below what they would ordinarily pay, are still higher than those offered in an earlier amnesty program.

The additional carrot in the new program is a continued promise by the I.R.S. not to prosecute those who come forward for tax evasion.

“The risk to individuals hiding assets offshore is clearly increasing,” Douglas H. Shulman, the I.R.S. commissioner, said during a conference call.

Click Here to Read: I.R.S. Offers a Tougher Amnesty Deal for Offshore Accounts