U.S. President Barack Obama on Thursday hammered U.S. companies that avoid federal taxes by shifting their tax domiciles overseas in deals known as “inversions” and called on Congress to pass a bill to curb the practice.
"Editor’s note: This is an excerpt from White Collar Crime: Core Concepts for Consultants and Expert Witnesses, Chapter 10 by Scott M. Richter, CPA/CIA, CFE, edited by Debra K. Thompson, CPA/CFF, CFE, and Randal A. Wolverton, CPA/CFF, CFE.
The Ponzi scheme is named after Carlo “Charles” Ponzi, who in 1919, devised a simple investment vehicle. Effectively, Ponzi planned to take advantage of weakening foreign currencies by purchasing international postal coupons overseas that could be redeemed for U.S. postage stamps. He would then sell the U.S. stamps and make a profit. However, Ponzi was unable to reap any meaningful profits due to the bureaucracy and administrative burden involved in redeeming these coupons.
Instead of abandoning this unsuccessful (but legitimate) investing method, Ponzi refined his pitch to potential investors, saying he could return a 50% profit on their investment in 45 days or double their money in 90 days. Ponzi advised investors that he would achieve such returns through a “network of international agents,” who would purchase the postal reply coupons on his behalf. He withheld further details of how he would achieve such returns “due to competitive reasons.” In reality, Ponzi was merely paying off early investors with new investors’ funds while making no new purchases of postal reply coupons.
In the short eight-month duration of his scheme, Ponzi collected as much as $15 million from 40,000 investors. News reports at the time described huge crowds lined up outside Ponzi’s Boston office waiting to invest. However, after the scheme unraveled, Ponzi was $7 million in debt, with assets that included a mere $61 in postal reply coupons. In the decades since Ponzi launched this brazen scam, thousands of other fraudsters have pursued schemes with the same common denominator: Earlier investors are paid off with funds from new investors.
Today, the legal definition of a Ponzi scheme is simply “a phony investment plan in which monies paid by later investors are used to pay artificially high returns to the initial investors, with the goal of attracting more investors” (Alexander v. Compton, 229 F.3d 750, 759 n.1 (9th Cir. 2000))."
The creation of an International Anti-Corruption Court would hold leaders accountable...
.In too many nations, corruption is endemic at the highest levels of government. Then-U.N. Secretary General Kofi Annan was correct in characterizing such behavior as an “insidious plague” in his 2003 statementupon the adoption of the U.N. Convention Against Corruption.
Corruption is extraordinarily costly, consuming more than 5 percent of the global gross domestic product. Developing regions lose more than 10 times in illicit financial flows than what they receive in foreign aid. Russia’s corruption-fueled “shadow economy” makes up an estimated 44 percent of its GDP.
Corrupt governments also often provide havens for international criminals, including drug lords in Mexico and terrorists in countries such as Afghanistan and Yemen.
Nevertheless, the most serious consequence of grand corruption is that it destroys democracy and devastates the human rights that governments are constituted to protect. Countries recognized as among the world’s most corrupt — including Somalia, Afghanistan, Sudan, Iraq and Syria — repeatedly violate the human rights of their citizens. The poor and powerless are victims of corrupt regimes throughout the world.
BEIJING, China - Five employees of a company accused of selling expired beef and chicken to McDonald's, KFC and other restaurants in China were detained by police Wednesday after an official said illegal activity was an organized effort by the supplier.China's food safety agency said on its website that its investigators found unspecified illegal activity by Husi Food Co. but gave no confirmation expired meat had been found or other details.Some of the illegal conduct was an "arrangement organized by the company," the deputy director of the agency's Shanghai bureau, Gu Zhenghua, told the official Xinhua News Agency.Those in criminal detention include Husi's quality manager, the Shanghai police department said on its microblog account. The one-sentence statement gave no details of possible charges or the employees' identities.The scandal surrounding Husi, which is owned by OSI Group of Aurora, Illinois, has alarmed Chinese diners and disrupted operations for fast food chains.It erupted Sunday when a Shanghai broadcaster, Dragon TV, reported that Husi repackaged old beef and chicken and put new expiration dates on them.
Earlier today on the Senate floor, Democratic Senator Mark Begich (Alaska) shamed House Republicans for having the audacity to nickel and dime our nation's veterans after spending trillions on the wars in Iraq and Afghanistan. In typical Republican fashion...
Aaron Foss thinks he may have built a better mousetrap when it comes to ending all those scam calls that ring up your landline. The 36-year-old contract programmer split a $50,000 prize in a crowdsourcing competition staged by the FTC -- you know, th...
A Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6 billion in U.S. income taxes over 14 years through transactions with Barclays Plc and Deutsche Bank AG, a Senate committee said.
The hedge fund used contracts with the banks to establish the “fiction” that it wasn’t the owner of thousands of stocks traded each day, said Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations. The maneuver sought to transform profits from rapid trading into long-term capital gains taxed at a lower rate, he said.
“It meant enormous profit for both the banks and the hedge funds,” Levin told reporters yesterday in Washington. “Ordinary Americans had to shoulder a tax burden of billions of dollars, a burden that was shrugged off by those hedge funds.”
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The panel urged the Internal Revenue Service to collect taxes from the fund’s investors at the higher rate that Americans pay on wages and salaries. It said Congress should remove legal obstacles to audits of hedge funds and other large partnerships, whose returns the committee said are rarely questioned.