| #530 - January 3, 2008 |
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| #530 Updated: 1/3/08 2:41 p.m. Ex-Waste Management CFO to pay $4 million in SEC case reuters.com | 1/3/08 | Karey Wutkowski WASHINGTON (Reuters) - The former chief financial officer of Waste Management Inc (WMI.N: Quote, Profile, Research) was ordered to pay $4 million after a jury found James Koenig liable for securities fraud, falsifying company books and records, and lying to auditors, the U.S. Securities and Exchange Commission said on Thursday. The SEC said in a statement that Koenig was convicted of committing 60 securities violations from 1992 to 1997 in a scheme to falsify Waste Management's financial results, with profits being overstated by $1.7 billion. U.S. Judge Wayne Andersen for the Northern District of Illinois issued the final judgment against Koenig on December 21, the SEC said. The judgment also permanently bars Koenig from acting as an officer or director of a public company. Sarah Wolff, an attorney for Koenig, said he will appeal the ruling. "Mr. Koening strongly disagrees with the jury's verdict and stands by the accounting practices used by Waste Management," Wolff said. The final judgment follows an 11-week jury trial in 2006 after Koenig decided to fight the SEC charges against him. "The entry of final judgment against James Koenig represents the culmination of years of hard- fought litigation," said Lou Mejia, chief litigation counsel of the SEC's division of enforcement. The SEC said the scheme to inflate profits was achieved through false disclosures and a variety of accounting methods used to defer current period expenses whenever possible. The fraud resulted in a restatement in February 1998, which at the time was the largest restatement in history, the agency said. The SEC previously settled with the founder and three other top officers at Waste Management in related cases in which they had to pay a total of $30.8 million. Former Soka U. finance chief pleads not guilty to embezzlement ocregister.com | 1/3/08 | Fermin Leal SANTA ANA – The former finance director of Soka University of America pleaded not guilty Wednesday to charges that he embezzled $1.7 million from the private university over the course of seven years. Kiyoshi Hatanaka, 52, of Aliso Viejo entered the plea during his arraignment in U.S. District Court in Santa Ana. Hatanaka left his job at university in January 2006 after allegations arose that he had created sham university accounts at a Los Angeles bank, moved money into the accounts, and then cashed checks from them, school officials said. He was indicted on eight counts of embezzlement and eight counts of money laundering; each count carries a maximum sentence of 10 years. Assistant U.S. Attorney Lawrence Kole has said evidence indicated Hatanaka gambled large sums of money during that period at casinos in Temecula and Las Vegas. Hatanaka, who declined to comment after the arraignment, came with Soka when it moved from Calabasas to open a 103-acre hilltop campus in Aliso Viejo. The university is affiliated with the largest Buddhist sect in Japan, but attracts students from the U.S. and around the world. A trial date has been scheduled for Feb. 12. Woman to stand trial in embezzlement case joplinglobe.com | 1/3/08 | Sheila Stogsdill PINEVILLE, Mo. — A Grove, Okla., woman who is accused of stealing more than $60,000 from her former employer was bound over for trial after a brief hearing Wednesday. Michelle Crowder, 40, is charged in McDonald County Circuit Court with one count of stealing for allegedly embezzling about $62,600 from Roper Gas Co., of Southwest City, over a two-year period. Her husband, Kenneth Crowder, is a county commissioner in Delaware County, Okla. Peter Zouraeff, owner of Roper Gas Co., was the only witness to testify during Crowder’s 15- minute preliminary hearing. Zouraeff testified that Crowder, who had been with the company since 2003, was fired in July after she admitted to stealing money from the company. He said he noticed that the accounts-receivable list was large and excessive, so he asked Crowder to send out delinquent notices. When the notices didn’t cause the list to shrink, “Michelle came to me saying she had to talk to me. That’s when she admitted to taking the money,” Zouraeff testified. Zouraeff testified that Crowder was keeping two sets of books. A probable-cause affidavit filed at the time of Crowder’s arrest states that she had inflated the accounts receivable to $78,671.26 when they really were only $16,038.27. Ray Gordon, assistant prosecuting attorney, asked Zouraeff if he knew where the money was spent. “She did not tell me what she did with the money,” Zouraeff said. “She said she didn’t know what she did with the money.” Zouraeff testified that Crowder also stole about $30,000 before 2005, but that she made full restitution on the condition that the theft not be reported to police. Michelle Crowder, who is being represented by Ross Rhoades, is free on her own recognizance. Her arraignment in the trial division has been set for Jan. 15. What Enron Didn't Teach Us inc.com | 1/3/08 | Angus Loten The crackdown on corporate crime sparked six years ago by accounting scandals at Enron and WorldCom has done little to foster ethical behavior in the workplace, where many employees are still afraid to speak out about misconduct, a new study finds. Despite tougher laws against white-collar crimes, including the Sarbanes-Oxley Act of 2002 and other strict oversight regulations, workers today are more likely to witness conflicts of interest, abusive behavior, or outright lying from company executives, according to the Ethics Resource Center, a Washington-based research group. Among 2,000 public- and private-sector employees surveyed nationwide, 56 percent said they had personally seen at least one violation of company ethics standards, policies or the law in the past year, up from 43 percent in 2003, the study found. At the same time, less than 42 percent said they reported the incident through company channels. "There is a strong sense of futility and fear among employees when it comes to reporting ethical misconduct, and that increases the danger to business," says Patricia Harned, the group's president. According to Harned, more than half of the employees who said they witnessed wrongdoing without reporting it were afraid of retaliation. Anonymity doesn't appear to help. Only about 3 percent of all misconduct reports by employees were made over a company hotline, the survey found. Instead, most employees said they preferred to such incidence face-to-face with a manager or other company executive. "Sarbanes-Oxley did a lot to codify protections for whistleblowers, but it didn't really change the general culture or behavior at companies," says Andrew Sherman, a partner at Dickstein Shapiro Morin & Oshinsky, a Washington-based law firm focused on small-business issues. According to Sherman, who teaches an executive MBA course in business ethics at Science Application International, whistleblower protections can be a lot like paternity leave, which many employees are legally entitled to take but seldom do. "The law may say one thing, but culture and behavior say something else," he says. Not surprisingly, the risk of retaliation for corporate whistleblowers is far lower at businesses that have already created a strong ethical culture in the first place, the study found. Yet, only about a quarter of all U.S. businesses have a "well-implemented ethics and compliance program in place," according to Harned. Francisco Dao, the founder of StrategyandPerformance.com, a San Francisco-based executive coaching and consulting firm, says most executives these days have little incentive to promote an ethical workplace. "The problem is their performance is measured over the short term," Dao says. "As long as they can point to a few quarters of strong growth, they've done their jobs and are ready to cash out, even if they've ruined their companies," he says. Dao adds that many employers will say they promote open communications and dialogue with their employees. "But it comes down to leadership to make that happen," he says. According to the International Business Ethics Institute, a Washington-based non-profit advocacy group, making employees feel secure enough to raise concerns is a key factor in creating an ethical workplace. To do this, businesses need to offer an open and non- retaliatory environment with strong two-way communications. That means fostering a workplace where dialogue and feedback are part of the ingrained corporate culture, through regular employee surveys, reviews, and assessments, the group says. Other strategies include developing standards and procedures for raising concerns, implementing training at all levels, and having a process in place to investigate and address reports of misconduct. Beyond that, Sherman says business leaders need to start rewarding ethical behavior among employees, rather than just productivity and performance. "What we've done with Sarbanes- Oxley and other measures is to raise the level of awareness of ethical issues," he says. "It may be that the problem hasn't gotten worse, it's just that it's now on more radar screens." ________________________ |