From the NYTimes: As investors from Palm Beach to New York to London counted their losses on Friday in what Mr. Madoff himself described as a $50 billion fraud, federal authorities took control of what remained of his firm and began to pore over its books. But some investors said they had questioned Mr. Madoff’s supposed investment prowess years ago, pointing to his unnaturally steady returns, his vague investment strategy and the obscure accounting firm that audited his books. Despite these and other red flags, hedge fund companies kept promoting Mr. Madoff’s funds to other funds and individuals. More recently, banks like Nomura, the Japanese firm, began soliciting investors for Mr. Madoff internationally. The Securities and Exchange Commission, which investigated Mr. Madoff in 1992 but cleared him of wrongdoing, appears to have been completely surprised by the charges of fraud. Now thousands, possibly tens of thousands, of investors confront losses that range from serious to devastating. Some families said on Friday that they believed they had lost all their savings. A charity in Massachusetts said it had lost essentially its entire endowment and would have to close. According to an affidavit sworn out by federal agents, Mr. Madoff himself said the fraud had totaled approximately $50 billion, a figure that would dwarf any previous financial fraud.
Saturday, December 13, 2008
Monday, October 27, 2008
Lawyer gets 6 months
In the NYTimes: The lawyer, David Bershad, 68, was a key player in the scheme that paid people to act as plaintiffs in cases that brought roughly $239 million in legal fees to Milberg Weiss, now known as Milberg.
Senator Stevens found guilty on corruption charges
Stevens, 84, was convicted of all seven felony charges he faced of lying about free home renovations and other gifts he received from a wealthy oil contractor. Jurors began deliberating last week.
Wednesday, October 22, 2008
A.I.G. to suspend millions in executive payouts
In the NYTimes: The beleaguered insurer AIG has agreed to suspend payments to executives from a $600 million bonus fund as well as $19 million in payments to its former chief executive, New York’s attorney general announced on Wednesday.
Monday, October 20, 2008
Charges Expected Against Employees of Concrete Testing Company
In the NYTimes: Manhattan prosecutors are expected to seek state racketeering and fraud charges later this month against about a dozen officers and employees of a company hired to test the strength of the concrete at some of the biggest construction projects in the New York area, according to investigators and others briefed on the case. The charges are expected to accuse the company’s president and several senior officials of failing to do some tests and falsifying others over a period of about five years, the investigators and the others said. They spoke on the condition of anonymity because no charges had yet been filed.
Saturday, October 18, 2008
Taking a closer look at Lehman's Brothers
From the NYTimes: One area of focus for New Jersey prosecutors is whether Mr. Fuld or other Lehman executives made misleading statements about the bank’s condition to investors who took part in a $6 billion infusion of capital announced by Lehman on June 9, one person close to the matter said. The new capital came as Lehman disclosed a $2.8 billion third-quarter loss that sent its shares plunging.
Friday, October 17, 2008
Mutual funds scandal in France
Christine Lagarde, French finance minister, on Friday ordered an inquiry into Groupe Caisse d’Epargne, France’s third-largest mutual savings bank, after it announced a €600m loss due to a trading scandal. The accusation? Traders had exceeded authorised limits on size and ignored instructions to trade cautiously when using the bank’s own account, Caisse d’Epargne said. More here.
Fall of the fat cats
At one time, he says, he was earning more than $1 million a week. Now, he has been ordered to pay back $110 million to his victims, and he said he is working on that. More on the story here.
Wednesday, October 8, 2008
CEO's collected millions through salaries, stock options and bonuses
Many CEOs who led their banks and brokerages into the subprime abyss collected millions through salaries, stock options and bonuses. Equilar, an executive-compensation research firm in Redwood Shores, Calif., helped columnist Michael Brush take a look at what some of the key players earned over the past three years as the nation's banks went bust. Here are some of the facts.
AIG Executives blow $440,000 of our money
This article: On September 22, a week after the FED extended an $85 billion emergency loan to save the insurance firm. AIG CEO's spent $440,000 in a corporate retreat at the St. Regis Monarch Beach resort in Dana Point, Calif., about midway between Los Angeles and San Diego. According to the receipt from the St. Regis, the eight-day company retreat was a lavish one -$139,000 was spent on hotel rooms, while even more money -$147,301- was spent on banquets. Another $23,380 was spent on undisclosed spa treatments and another $6,939 was spent on golf. A full $9,980 was spent on room service and food and cocktails at the hotel lounge.
Tuesday, September 23, 2008
Corruption in the local government
Three separate federal probes in Broward County involving alleged payoffs of more than $40,000 have led to the arrests Wednesday of two leading political figures and a former Miramar city official.
Broward County Commissioner Josephus Eggelletion Jr., School Board member Beverly Gallagher and former Miramar Commissioner Fitzroy Salesman were arrested Wednesday on a variety of charges including bribery, fraud and money laundering. FBI agents are interviewing other witnesses and could bring additional charges against other people.
Officials would not say how the investigations started, but it is apparent from the criminal complaints that Salesman, while under investigation, led undercover agents to Eggelletion. All three appeared during an afternoon hearing before federal Magistrate Judge Lurana Snow and were granted personal surety bonds. They were in the process of being released. Gov. Charlie Crist issued an executive order Wednesday afternoon suspending Eggelletion and Gallagher.
So far, no resignation letter from either official had been received by Crist. Crist will solicit applications and interview candidates and make interim appointments sometime in the next several weeks.
Criminal complaints outlined the probe of each public official as follows:
*Gallagher accepted $12,500 from FBI agents posing as builders who were trying to land a contract with the Broward County School Board. The money allegedly paid to Gallagher was in exchange for her vote in support of a school construction project. Gallagher took some money to set up a meeting with Michael Garretson, the Broward school district's deputy superintendent for construction and facilities management, so the fake builders could prequalify for district construction contracts. Garretson is not named in the complaint.
According to the complaint, Gallagher influenced a district committee to recommend a large construction company for an approximately $71 million renovation project at Hollywood Hills High School. The company would then agree to hire the federal agents for subcontract work. The company is not mentioned by name in the complaint, but the School Board eventually awarded the contract to James B. Pirtle Construction. Between Jan. 1, 2002 and August 11, 2009, the school district's facilities department had issued 27 contracts to Pirtle, public records show. The Hollywood Hills renovations have since been scrapped, part of dozens of school construction projects the district eliminated due to budget constraints.
*Salesman, while serving as Miramar commissioner, accepted $5,840 from FBI agents posing as contractors attempting to land business with the city of Miramar. He then agreed to cooperate with the FBI in their separate investigation of Eggelletion. According to a criminal complaint, an FBI undercover agent and a cooperating witness met with Salesman in April 2006 to get construction work. At the recorded meeting, Salesman accepted an envelope containing $1,000 from the undercover agent and then made a phone call to an individual identified by Salesman as a high ranking Miramar city official.
The complaint said Salesman asked the city official if he had any no-bid $50,000 jobs available and made an appointment with the official for that month, adding he would bring the person he thought was a contractor. Salesman told the contractor that the city official ``owes me'' because he had gotten him his job and raises in the past, the complaint said. That city official arranged for the contractor to meet another official regarding the design and construction of a gazebo project that had been destroyed by Hurricane Wilma.
After further negotiations, Miramar wrote a check one year later for $34,366 as payment for the construction of the gazebo. During that time, Salesman was suspended after a 2005 DUI arrest. He was reinstated in April 2007. In a separate deal orchestrated by Salesman, Miramar issued another check for renovating a gym floor for $28,475 in October 2007. For that deal, Salesman got $3,000, the complaint said.
*Eggelletion was involved with two South Florida businessmen and an attorney in the Bahamas to launder $23,000 collected as part of a Ponzi scheme. The others arrested were Ron Owens and Joel Williams, both businessmen. The third defendant is Bahamian attorney Sidney Cambridge. To establish their relationship with Eggelletion, FBI agents donated $5,000 to the commissioner's private golf foundation. The allegations against Eggelletion are not related to his public office.
This is how the money laundering scheme unfolded, according to the criminal complaint:
In July 2006, the undercover agents told Eggelletion they were interested in opening an offshore bank account on behalf of a client. Eggelletion said he had contacts with bankers in the Bahamas. Late that year, an undercover agent and cooperating witness told Eggelletion they wanted to hide their client's proceeds from a ``nonexistent European, high-yield investment fraud scheme that was sending out `made up' statements to clients.''
Federal authorities say Eggelletion got $23,000 in kickbacks in a money laundering operation, where he helped set up a bank account in the Bahamas to wire $900,000 derived from a purported Ponzi scheme.
Eggelletion introduced the agents to Williams and Owens to assist with opening a bank account in the Bahamas.
Broward County Commissioner Josephus Eggelletion Jr., School Board member Beverly Gallagher and former Miramar Commissioner Fitzroy Salesman were arrested Wednesday on a variety of charges including bribery, fraud and money laundering. FBI agents are interviewing other witnesses and could bring additional charges against other people.
Officials would not say how the investigations started, but it is apparent from the criminal complaints that Salesman, while under investigation, led undercover agents to Eggelletion. All three appeared during an afternoon hearing before federal Magistrate Judge Lurana Snow and were granted personal surety bonds. They were in the process of being released. Gov. Charlie Crist issued an executive order Wednesday afternoon suspending Eggelletion and Gallagher.
So far, no resignation letter from either official had been received by Crist. Crist will solicit applications and interview candidates and make interim appointments sometime in the next several weeks.
Criminal complaints outlined the probe of each public official as follows:
*Gallagher accepted $12,500 from FBI agents posing as builders who were trying to land a contract with the Broward County School Board. The money allegedly paid to Gallagher was in exchange for her vote in support of a school construction project. Gallagher took some money to set up a meeting with Michael Garretson, the Broward school district's deputy superintendent for construction and facilities management, so the fake builders could prequalify for district construction contracts. Garretson is not named in the complaint.
According to the complaint, Gallagher influenced a district committee to recommend a large construction company for an approximately $71 million renovation project at Hollywood Hills High School. The company would then agree to hire the federal agents for subcontract work. The company is not mentioned by name in the complaint, but the School Board eventually awarded the contract to James B. Pirtle Construction. Between Jan. 1, 2002 and August 11, 2009, the school district's facilities department had issued 27 contracts to Pirtle, public records show. The Hollywood Hills renovations have since been scrapped, part of dozens of school construction projects the district eliminated due to budget constraints.
*Salesman, while serving as Miramar commissioner, accepted $5,840 from FBI agents posing as contractors attempting to land business with the city of Miramar. He then agreed to cooperate with the FBI in their separate investigation of Eggelletion. According to a criminal complaint, an FBI undercover agent and a cooperating witness met with Salesman in April 2006 to get construction work. At the recorded meeting, Salesman accepted an envelope containing $1,000 from the undercover agent and then made a phone call to an individual identified by Salesman as a high ranking Miramar city official.
The complaint said Salesman asked the city official if he had any no-bid $50,000 jobs available and made an appointment with the official for that month, adding he would bring the person he thought was a contractor. Salesman told the contractor that the city official ``owes me'' because he had gotten him his job and raises in the past, the complaint said. That city official arranged for the contractor to meet another official regarding the design and construction of a gazebo project that had been destroyed by Hurricane Wilma.
After further negotiations, Miramar wrote a check one year later for $34,366 as payment for the construction of the gazebo. During that time, Salesman was suspended after a 2005 DUI arrest. He was reinstated in April 2007. In a separate deal orchestrated by Salesman, Miramar issued another check for renovating a gym floor for $28,475 in October 2007. For that deal, Salesman got $3,000, the complaint said.
*Eggelletion was involved with two South Florida businessmen and an attorney in the Bahamas to launder $23,000 collected as part of a Ponzi scheme. The others arrested were Ron Owens and Joel Williams, both businessmen. The third defendant is Bahamian attorney Sidney Cambridge. To establish their relationship with Eggelletion, FBI agents donated $5,000 to the commissioner's private golf foundation. The allegations against Eggelletion are not related to his public office.
This is how the money laundering scheme unfolded, according to the criminal complaint:
In July 2006, the undercover agents told Eggelletion they were interested in opening an offshore bank account on behalf of a client. Eggelletion said he had contacts with bankers in the Bahamas. Late that year, an undercover agent and cooperating witness told Eggelletion they wanted to hide their client's proceeds from a ``nonexistent European, high-yield investment fraud scheme that was sending out `made up' statements to clients.''
Federal authorities say Eggelletion got $23,000 in kickbacks in a money laundering operation, where he helped set up a bank account in the Bahamas to wire $900,000 derived from a purported Ponzi scheme.
Eggelletion introduced the agents to Williams and Owens to assist with opening a bank account in the Bahamas.
Monday, September 22, 2008
PHI 2604 Chapter 3 Homework
Homework
1. Define:
a) Freedom
b) Equality
c) Rights
2. “Justice” is usually defined as fairness. Is there a more detailed explanation based on today’s affairs?
3. What is the best way to cut the fiscal pie? Explain.
4. How would utilitarians do it? Cite Mill’s example of “talented workers.”
5. What would “worker participation” and “greater equality of income” mean for Mill?
6. What is the libertarian approach to justice? Define Nozick’s “entitlement theory.”
7. Explain Nozick’s other two principles.
8. Clarify Rawls’ idea of justice. Cite his two main principles.
9. Within Rawl’s theory, define:
a) Nature of choice
b) Veil of Ignorance
c) Choosing principles
1. Define:
a) Freedom
b) Equality
c) Rights
2. “Justice” is usually defined as fairness. Is there a more detailed explanation based on today’s affairs?
3. What is the best way to cut the fiscal pie? Explain.
4. How would utilitarians do it? Cite Mill’s example of “talented workers.”
5. What would “worker participation” and “greater equality of income” mean for Mill?
6. What is the libertarian approach to justice? Define Nozick’s “entitlement theory.”
7. Explain Nozick’s other two principles.
8. Clarify Rawls’ idea of justice. Cite his two main principles.
9. Within Rawl’s theory, define:
a) Nature of choice
b) Veil of Ignorance
c) Choosing principles
Thursday, September 11, 2008
Oil brokers sex scandal may affect drilling debate
"On the eve of Congress starting this big debate you've got a horror story of mismanagement and misconduct in programs that are going to be a key part of the discussion," Sen. Ron Wyden, D-Ore., said in an interview, adding that it can't help but influence the debate. The two-year, $5.3 million investigation by Interior's inspector general found workers at the Minerals Management Service's Royalty Collection Office in Denver partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business.
The investigations exposed "a culture of ethical failure" and an agency rife with conflicts of interest, Inspector General Earl E. Devaney said.
Between 2002 and 2006, 19 oil marketers — nearly a third of the Denver office staff — received gifts and gratuities from oil and gas companies, including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp., the investigators found.
"Employees frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and natural gas company representatives" who referred to some of the government workers as the "MMS Chicks."
The director of the royalty program had a consulting job on the side for a company that paid him $30,000 for marketing its services to various oil and gas companies, the report said.
MMS Director Randall Luthi said in an interview the agency was taking the report "extremely seriously" and would weigh taking appropriate action in coming months.
Interior Secretary Dirk Kempthorne in a statement released Thursday vowed to take swift action, saying that he was "outraged by the immoral behavior, illegal activities and appalling misconduct of several former and long-serving career employees." Taken from here.
The investigations exposed "a culture of ethical failure" and an agency rife with conflicts of interest, Inspector General Earl E. Devaney said.
Between 2002 and 2006, 19 oil marketers — nearly a third of the Denver office staff — received gifts and gratuities from oil and gas companies, including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp., the investigators found.
"Employees frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and natural gas company representatives" who referred to some of the government workers as the "MMS Chicks."
The director of the royalty program had a consulting job on the side for a company that paid him $30,000 for marketing its services to various oil and gas companies, the report said.
MMS Director Randall Luthi said in an interview the agency was taking the report "extremely seriously" and would weigh taking appropriate action in coming months.
Interior Secretary Dirk Kempthorne in a statement released Thursday vowed to take swift action, saying that he was "outraged by the immoral behavior, illegal activities and appalling misconduct of several former and long-serving career employees." Taken from here.
Monday, September 8, 2008
PHI 2604 Homework: Chapter 1
Sorry about how late I've posted this. For some reason I forgot my password and only got it yesterday.
PHI 2604 Homework: Chapter 1
Have the answers to these questions ready for our next meeting on Wednesday.
1- Discuss the different meanings of “Ethics”?
2- Establish the distinction between “moral” and “non-moral” standards.
3- What’s the difference between morality and etiquette. Think of one example.
4- Point to the differences between “morality” and “law.” Think of one example.
5- Where do moral standards come from?
6- Is religion necessary for morality? Explain why or why not.
7- Define “ethical relativism.” Go over some of the counterarguments explore in the text. Do you have any other possible objections to this position?
8- (On page 13) Is it true that “business” has its own kind of ethics as Albert Carr argues for?
9- How reliable is our conscience when it comes to acting morally? Comment on Huck example (page 15).
10- Regarding individual responsibility within a corporation, what was David Frew’s discovery? (page 18)
11- What is a defensible moral judgment?
12- Discuss the requirements for moral judgments?
PHI 2604 Homework: Chapter 1
Have the answers to these questions ready for our next meeting on Wednesday.
1- Discuss the different meanings of “Ethics”?
2- Establish the distinction between “moral” and “non-moral” standards.
3- What’s the difference between morality and etiquette. Think of one example.
4- Point to the differences between “morality” and “law.” Think of one example.
5- Where do moral standards come from?
6- Is religion necessary for morality? Explain why or why not.
7- Define “ethical relativism.” Go over some of the counterarguments explore in the text. Do you have any other possible objections to this position?
8- (On page 13) Is it true that “business” has its own kind of ethics as Albert Carr argues for?
9- How reliable is our conscience when it comes to acting morally? Comment on Huck example (page 15).
10- Regarding individual responsibility within a corporation, what was David Frew’s discovery? (page 18)
11- What is a defensible moral judgment?
12- Discuss the requirements for moral judgments?
Thursday, August 28, 2008
TEXTBOOK FOR PHI 2604 Wednesday 5:40-8:10pm
Moral Issues in Business (Tenth Edition) by William H. Shaw and Vincent Barry (ISBN# 0-495-00717-X). We just ordered it today. So my guess is that the book will be available by next Tuesday.
Monday, May 12, 2008
Friday, March 28, 2008
PHI 2604 Topics for Quiz #2 (7-9)
Wednesday, January 30, 2008
Link for the textbook
This is going to help: Moral Issues in Business Link. To the left of the page, you have the chapters (1 & 2) then, check each of the tutorial exams. Play with it and have fun. I may use some of these questions for the quiz. Don't forget to bring your scantron sheets (green rectangular) to the exam).
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