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ProActive Computer Services Appoints VP of International Finance Update on Fingerprint Technology Business Acquisition
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13 February 2004, 08:00am ET
HOUSTON, Feb. 13 /PRNewswire-FirstCall/ -- Beral Inc., a New York-based financial holding company with international interests, has become an active shareholder of Proactive Computer Services, Inc. (PAVP: Pink Sheets). Mr. Andrew G. Racz, Director of Research of Beral Inc., now holds the position of VP of International Finance with PAVP. He is an invaluable asset to PAVP and will enhance its market visibility and exposure by leveraging his solid reputation and extensive network in the international business community, especially in Europe. Beral's first task is to restructure the company as a merchant bank in order to capitalize on the current needs of the market. Mr. Racz will assist PAVP in identifying potential international partners or investors for mergers and acquisitions. Currently, he is in negotiations with a number of foreign financial institutions and investors who have shown an interest in PAVP. Details will be released once a letter of intent is signed with any of these parties.
CEO Andrea Cortellazzi is excited about the signing of such a notable international advisor. He stated: "Andrew has a wealth of expertise and has achieved great success in restructuring and financing small and growing companies such as ours. I am very confident that he will increase the value of PAVP by securing international assets and investors."
Mentioned Last Change
PAVP 0.005 0.0002dollars or (3.84%)
PAVP is in negotiations to acquire a fingerprint technology identification business. This was first reported in the March 23rd, 2003 news release. The process was delayed due to Carey W. Cooley's departure at the end of 2003. Andrea and his advisors have identified three acquisition targets and intend to make their decision by the end of the month. The biometric technology employed by these companies is state-of-the-art and in high demand due to the heightened emphasis on national security following the attacks of 9/11. The projections for each of these companies are at least $15M in revenues and profitable by 2005 when they expect their products to be ready for commercialization. Andrea stated: "This field is a fast-growing and exciting one that can make a positive contribution to the revenue and earnings of PAVP in both the short and long-term. The acquired company will operate as a separate entity or subsidiary of PAVP's CortDev Inc. business."
For more information, please call 514-830-3348.
Forward-Looking Statements
Please be advised that statements made herein, other than historical data, constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, potential volatility in the company's stock price, increased competition, customer acceptance of new products and services offered by the company, and uncertainty of future revenue and profitability and fluctuations in its quarterly operating results. More information about potential factors that could affect the company's business and financial results may be obtained by contacting the company at by phone at 514-830-3348, or on the Internet at www.pacsi.com . Please also be advised that the company's stock is not currently registered with the Securities and Exchange Commission.
Contact:
ProActive Computer Services Inc.
Andrea Cortellazzi, 514-830-3348
Aalabbate@sympatico.ca
SOURCE ProActive Computer Services Inc.
-0- 02/13/2004
/CONTACT: Andrea Cortellazzi of ProActive Computer Services Inc.,
+1-514-830-3348,
Aalabbate@sympatico.ca
/
/Web site:
http://www.pacsi.com
/
(PAVP)
CO: ProActive Computer Services Inc.; Beral Inc.
ST: Texas
IN: CPR FIN HEA BIO MTC
SU: PER TNM RCN
MP
-- NYF020 --
5727 02/13/2004 08:00 EST
http://www.prnewswire.com
ProActive Computer Services Inc. (Pink Sheets:PAVP) has finalized the acquisition of CortDev Inc., a Canadian airport redevelopment/enhancement firm. CortDev's current project is the redevelopment of the St. Hubert airport in Montreal.
Phase I of the project is well underway and CortDev has reached several major milestones. These include the securing of approximately $4.5 million of financing from major financial institutions as well as private investors from both Canada and the U.S. The schematic of the planned modernization program and feasibility study has cleared with the relevant regulatory bodies, including Transport Canada. It has also been met with tremendous approval and piqued the interest of prospective tenants (e.g. conference organizers and hospitality companies). CContract negotiations with the interested parties are in progress and will be announced upon completion. CortDev has set a start date of mid-June that will involve a groundbreaking ceremony.
Mentioned Last Change
PAVP 0.005 0.0002dollars or (3.84%)
ProActive Computer Services will soon change its name to better reflect its current business operations and strategic plan going forward and plans to be fully reporting within six to nine months. CortDev will add considerable value to PAVP and the company is committed to making other acquisitions that are good strategic fits and well-positioned for growth.
According to CEO Andrea Cortellazzi, "ProActive is now on the right track for growth ... this is just the first step on the path to profitability." Due to the increasing workload in managing the company, PAVP has initiated a search for a CFO. The company expects to announce the nomination by the end of the month.
For more information, please call 514-830-3348.
Forward-Looking Statements
Please be advised that statements made herein, other than historical data, constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, potential volatility in the company's stock price, increased competition, customer acceptance of new products and services offered by the company, and uncertainty of future revenue and profitability and fluctuations in its quarterly operating results. More information about potential factors that could affect the company's business and financial results may be obtained by contacting the company at by phone at 514-830-3348, or on the Internet at www.pacsi.com. Please also be advised that the company's stock is not currently registered with the Securities and Exchange Commission.
CONTACT:
ProActive Computer Services Inc.
Andrea Cortellazzi
514-830-3348
Cortellazzi@sympatico.ca
FreeStar Files $54 Million Fraud Claim Against vFinance and AffiliatesSeeks Damages for Fraud, Market Manipulation and Illegal Short SellingNEW YORK, May 6 /PRNewswire-FirstCall/ --FreeStar Technology Corporation(BULLETIN BOARD: FSRC) , a global technology company committed to setting the next generation standard for secure Internet commerce, announced it has filed an answer and substantial counter claim in the vFinance et al vs. FreeStar Technology Corporation et al action.The filing, which took place today in United States District Court, Southern District Of New York, states, in part, that FreeStar retained "vFinance Investments, Inc. ("vFinance"), a national publicly-traded broker-dealer ... with self-proclaimed 'expertise and superior service required to address the special needs of small and medium sized public companies' ... as the exclusive financial advisor for Freestar." The filing further states, "vFinance recommended and assisted Claimants to negotiate, draft and execute convertible debt financing through 'floorless' convertible notes with lenders controlled by vFinance, vFinance's own Chief Executive Officer, employees and affiliates. These notes and related transactions are referred to in the financial community as 'toxic convertibles' or 'death spiral convertibles' ... vFinance and Plaintiffs charged Freestar gigantic fees and otherwise ensured profits of multiples of their original investment by setting out to destroy vFinance's customer, Freestar." In addition, the filing states, "The dispute here arises because Freestar survived the 'death spiral' and vFinance's and Plaintiffs' expectation of gigantic gains was foiled ... Freestar and Paul Egan, in turn, file these Counterclaims to recover from vFinance and Plaintiffs damages suffered as a result of their 'death spiral' strategy, violations of the federal securities laws, breach of contracts, including over-conversion of the pledged securities, market manipulation, breach of fiduciary duty and fraud."Paul Egan, President and Chief Executive Officer of FreeStar, stated, "We want to be absolutely clear we believe that the actions of David Stefansky, Richard Rosenblum, Marc Siegel and their affiliated corporate entities were unconscionable and violated virtually every actual and implied legal and moral obligation of a financial advisor. We believe the litigation process will reveal that they perpetrated a massive fraud on our emerging company and its shareholders, while supposedly acting in a fiduciary capacity. Although there are always substantial risks in litigation, we are confident that we will prevail in the action. Mr. Egan went on to note, "This is not some frivolous action which will quietly be settled and forgotten. We are deadly serious in pursing our claims and in holding those so-called 'financial professionals' responsible for their conduct."Litigation BackgroundThis litigation has been initiated by vFinance Investments, Inc., Boat Basin Investors, LLC, Papell Holdings, Ltd., Marc Siegel, David Stefansky, Richard Rosenblum against FreeStar Technology Corporation, First American Stock Transfer, Inc., Paul Egan, Ciaran Egan, Phillip Young, and Margaux Investment Management Group, S.A.The Chapter 7 Petition for involuntary bankruptcy filed against FreeStar in January by vFinance, Inc., David Stefansky, Richard Rosenblum, Marc Siegel, Papell Holdings LLC and Boat Basin Investors Ltd. in the United States Bankruptcy Court for the Southern District of New York was dismissed pursuant to a ruling by Honorable Judge Allan L. Gropper. As contended in FreeStar's Motion to Dismiss of February 4, 2003, the Petitioners held no claims against FreeStar that were not the subject of a bona fide dispute.FreeStar is of the opinion that the Chapter 7 Petition was filed in bad faith in order to depress FreeStar's share price and thus allow the Petitioners to cover a substantial naked short position in FSRC stock. In connection with the bankruptcy filing Petitioners paid $40,000 in FreeStar's attorneys' fees.The 88 page answer and counter-claim filed by FreeStar can be viewed in its entirety by visiting FreeStar's corporate website at www.freestartech.com.Conference CallPaul Egan, the president of FreeStar, will conduct a conference call and webcast on Wednesday, May 7 at 9am Eastern. Investors may access the call by dialing 877.209.9922 in the United States or from an international location by calling 651.224.7472. Participants should identify the call as the "FreeStar Conference Call." A replay of the call will be available following the call in the United States at 800.475.6701 or internationally at 320.365.3844, access code 684317.About FreeStar Technology CorporationFreeStar Technology is a global technology force focused on exploiting a first-to-market advantage for enabling ATM and debit card transactions on the Internet and high-margin credit card processing. FreeStar Technology's Enhanced Transactional Secure Software ("ETSS") is a proprietary software package that empowers consumers to consummate e-commerce transactions on the Internet with a high level of security using credit, debit, ATM (with PIN) or smart cards. It sends an authorization number to the e-commerce merchant, rather than the consumer's credit card information, to provide a high level of security. The company maintains its corporate headquarters in Santo Domingo, Dominican Republic, and offices in Dublin, Ireland, and Helsinki, Finland. For more information, please visit the Company's web sites at www.freestartech.com, www.rahaxi.com and www.epaylatina.com.On April 24, 2003 the company announced that its Board of Directors accepted in principle a $74,480,000 non-binding letter of intent received from a privately held company, FreeStar Acquisition Corporation, to acquire all of FreeStar Technology Corporation's outstanding capital stock. Based on the number of FSRC shares currently issued and outstanding, the proposed letter of interest is valued at approximately $.49 per share (after payment of existing indebtedness, but excluding conversion of outstanding preferred stock and exercise of in-the-money stock options), would represent a 158% premium over the closing price of FreeStar's common stock on April 23, 2003. That offer is subject to various conditions including buyer's obtaining of financing and satisfactory due diligence.Forward Looking StatementsCertain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. This litigation, like all litigation, is subject to inherent uncertainties, and unfavorable rulings could occur that would have an adverse impact on the FreeStar and its claims. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical and other complications which may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above.Contact
Trilogy Capital Partners, Inc.,
461 5th Avenue, 11th Floor
New York, NY 10017
800.330.1860aj@trilogy-capital.com CONTACT: Trilogy Capital Partners, Inc., +1-800-330-1860, aj@trilogy-capital.com , for FreeStar Technology CorporationWeb site: http://www.freestartech.com/http://www.rahaxi.com/http://www.epaylatina.com/" target="_new">http://www.freestartech.com/http://www.freestartech.com/http://www.rahaxi.com/http://www.epaylatina....
Copyright 2003 PRNewswire
Issued: 05/06/2003 01:43 PM GMT
FreeStar Files $54 Million Fraud Claim Against vFinance and AffiliatesSeeks Damages for Fraud, Market Manipulation and Illegal Short SellingNEW YORK, May 6 /PRNewswire-FirstCall/ --FreeStar Technology Corporation(BULLETIN BOARD: FSRC) , a global technology company committed to setting the next generation standard for secure Internet commerce, announced it has filed an answer and substantial counter claim in the vFinance et al vs. FreeStar Technology Corporation et al action.The filing, which took place today in United States District Court, Southern District Of New York, states, in part, that FreeStar retained "vFinance Investments, Inc. ("vFinance"), a national publicly-traded broker-dealer ... with self-proclaimed 'expertise and superior service required to address the special needs of small and medium sized public companies' ... as the exclusive financial advisor for Freestar." The filing further states, "vFinance recommended and assisted Claimants to negotiate, draft and execute convertible debt financing through 'floorless' convertible notes with lenders controlled by vFinance, vFinance's own Chief Executive Officer, employees and affiliates. These notes and related transactions are referred to in the financial community as 'toxic convertibles' or 'death spiral convertibles' ... vFinance and Plaintiffs charged Freestar gigantic fees and otherwise ensured profits of multiples of their original investment by setting out to destroy vFinance's customer, Freestar." In addition, the filing states, "The dispute here arises because Freestar survived the 'death spiral' and vFinance's and Plaintiffs' expectation of gigantic gains was foiled ... Freestar and Paul Egan, in turn, file these Counterclaims to recover from vFinance and Plaintiffs damages suffered as a result of their 'death spiral' strategy, violations of the federal securities laws, breach of contracts, including over-conversion of the pledged securities, market manipulation, breach of fiduciary duty and fraud."Paul Egan, President and Chief Executive Officer of FreeStar, stated, "We want to be absolutely clear we believe that the actions of David Stefansky, Richard Rosenblum, Marc Siegel and their affiliated corporate entities were unconscionable and violated virtually every actual and implied legal and moral obligation of a financial advisor. We believe the litigation process will reveal that they perpetrated a massive fraud on our emerging company and its shareholders, while supposedly acting in a fiduciary capacity. Although there are always substantial risks in litigation, we are confident that we will prevail in the action. Mr. Egan went on to note, "This is not some frivolous action which will quietly be settled and forgotten. We are deadly serious in pursing our claims and in holding those so-called 'financial professionals' responsible for their conduct."Litigation BackgroundThis litigation has been initiated by vFinance Investments, Inc., Boat Basin Investors, LLC, Papell Holdings, Ltd., Marc Siegel, David Stefansky, Richard Rosenblum against FreeStar Technology Corporation, First American Stock Transfer, Inc., Paul Egan, Ciaran Egan, Phillip Young, and Margaux Investment Management Group, S.A.The Chapter 7 Petition for involuntary bankruptcy filed against FreeStar in January by vFinance, Inc., David Stefansky, Richard Rosenblum, Marc Siegel, Papell Holdings LLC and Boat Basin Investors Ltd. in the United States Bankruptcy Court for the Southern District of New York was dismissed pursuant to a ruling by Honorable Judge Allan L. Gropper. As contended in FreeStar's Motion to Dismiss of February 4, 2003, the Petitioners held no claims against FreeStar that were not the subject of a bona fide dispute.FreeStar is of the opinion that the Chapter 7 Petition was filed in bad faith in order to depress FreeStar's share price and thus allow the Petitioners to cover a substantial naked short position in FSRC stock. In connection with the bankruptcy filing Petitioners paid $40,000 in FreeStar's attorneys' fees.The 88 page answer and counter-claim filed by FreeStar can be viewed in its entirety by visiting FreeStar's corporate website at www.freestartech.com.Conference CallPaul Egan, the president of FreeStar, will conduct a conference call and webcast on Wednesday, May 7 at 9am Eastern. Investors may access the call by dialing 877.209.9922 in the United States or from an international location by calling 651.224.7472. Participants should identify the call as the "FreeStar Conference Call." A replay of the call will be available following the call in the United States at 800.475.6701 or internationally at 320.365.3844, access code 684317.About FreeStar Technology CorporationFreeStar Technology is a global technology force focused on exploiting a first-to-market advantage for enabling ATM and debit card transactions on the Internet and high-margin credit card processing. FreeStar Technology's Enhanced Transactional Secure Software ("ETSS") is a proprietary software package that empowers consumers to consummate e-commerce transactions on the Internet with a high level of security using credit, debit, ATM (with PIN) or smart cards. It sends an authorization number to the e-commerce merchant, rather than the consumer's credit card information, to provide a high level of security. The company maintains its corporate headquarters in Santo Domingo, Dominican Republic, and offices in Dublin, Ireland, and Helsinki, Finland. For more information, please visit the Company's web sites at www.freestartech.com, www.rahaxi.com and www.epaylatina.com.On April 24, 2003 the company announced that its Board of Directors accepted in principle a $74,480,000 non-binding letter of intent received from a privately held company, FreeStar Acquisition Corporation, to acquire all of FreeStar Technology Corporation's outstanding capital stock. Based on the number of FSRC shares currently issued and outstanding, the proposed letter of interest is valued at approximately $.49 per share (after payment of existing indebtedness, but excluding conversion of outstanding preferred stock and exercise of in-the-money stock options), would represent a 158% premium over the closing price of FreeStar's common stock on April 23, 2003. That offer is subject to various conditions including buyer's obtaining of financing and satisfactory due diligence.Forward Looking StatementsCertain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. This litigation, like all litigation, is subject to inherent uncertainties, and unfavorable rulings could occur that would have an adverse impact on the FreeStar and its claims. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical and other complications which may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above.Contact
Trilogy Capital Partners, Inc.,
461 5th Avenue, 11th Floor
New York, NY 10017
800.330.1860aj@trilogy-capital.com CONTACT: Trilogy Capital Partners, Inc., +1-800-330-1860, aj@trilogy-capital.com , for FreeStar Technology CorporationWeb site: http://www.freestartech.com/http://www.rahaxi.com/http://www.epaylatina.com/" target="_new">http://www.freestartech.com/http://www.freestartech.com/http://www.rahaxi.com/http://www.epaylatina....
Copyright 2003 PRNewswire
Issued: 05/06/2003 01:43 PM GMT
Investor Communications International, Inc. ("ICI") announced that on March 14, 2003 Steven D. Jones and Carol S. Remond ("Steve&Carol") created another article that appeared in a Dow Jones news wire in the same erroneous vein as a previous inaccurate news wire by Steve&Carol of October 11, 2002 pertaining to ICI and GeneMax Corp. (OTC Bulletin Board: GMXX) that provide the reader with inaccurate and false facts and erroneous conclusions.
Although Steve&Carol seemed to stop writing defamatory and incorrect articles about ICI and GeneMax Corp. for a period of time after ICI made public that December 9, 2002 and October 11, 2002 news wires by Steve&Carol contained numerous unfactual statements, Steve&Carol have begun writing inaccurate reports that mislead the public. For those who may have forgotten, GeneMax Corp. and Investor Communications International, Inc. formed the subject of the news wire story dated October 11, 2002 by Steve&Carol. There were at least sixteen inaccurate facts or statements made in the October 11, 2002 news wire story by Steve&Carol. There were only 990 words in the entire October 11, 2002 Steve&Carol news wire. Corrections were brought to the attention of the lead author Steven D. Jones and counsel to Dow Jones with request for retraction. Retractions were not subsequently made.
Further information obtained by Steve&Carol pertaining to a lawsuit filed in the Superior Court of the State of Washington against a GeneMax shareholder, Garth Braun (the "Lawsuit"), has led to numerous erroneous statements by Steve&Carol. In fact, ICI would like to make clear that all conclusions made by Steve&Carol in their latest March 14, 2003 Dow Jones news wire pertaining to information they have received relating to the Lawsuit are false and untrue, proving once and for all that a little knowledge is a dangerous thing. Like the October 11, 2002 news wire by Steve&Carol that contained at least sixteen inaccurate facts or statements, it would be too onerous to address and disclose the breadth and effect of the numerous inaccuracies in the March 14, 2003 Dow Jones news wire, or correct the inaccurate and untrue conclusions made therein. As a result ICI provides clarification as follows:
-- All statements and conclusions made by Steve&Carol in the
March 14, 2003 Dow Jones news wire regarding the float of GeneMax
being larger than it was in October of last year or at any other
time stated in the article are false and untrue.
-- All statements and conclusions made by Steve&Carol in the
March 14, 2003 Dow Jones news wire regarding share options granted
to ICI in the capital of GeneMax Corp. and any sale thereto are
false and untrue.
-- Information provided to Dow Jones reporter last fall by Grant Atkins
of GeneMax Corp. is accurate and correct. That information has been
misquoted, misstated, taken out of context, or generally distorted
by Steve Jones for purposes other than providing true and accurate
reporting.
-- Brent Pierce is neither a director nor officer of ICI. Steve Jones
has been advised of such facts in writing, but chooses to distort
and misguide the public by making false statements to the contrary.
Grant Atkins of GeneMax Corp. stated, "When it comes to yellow journalism, Steven D. Jones and Carol S. Remond are likely to be involved. Companies are guided by SEC regulations and ever-increasing public governance. It is amazing that the media is guided by no governing body other than ethical constraints of journalistic professionalism. When authors lose that, they mislead the public. In the case of Remond and Jones, freedom of the press includes the freedom to mislead."
SAFE HARBOR STATEMENT
THIS NEWS RELEASE MAY INCLUDE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE UNITED STATES SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, WITH RESPECT TO ACHIEVING CORPORATE OBJECTIVES, DEVELOPING ADDITIONAL PROJECT INTERESTS, THE COMPANY'S ANALYSIS OF OPPORTUNITIES IN THE ACQUISITION AND DEVELOPMENT OF VARIOUS PROJECT INTERESTS AND CERTAIN OTHER MATTERS. THESE STATEMENTS ARE MADE UNDER THE "SAFE HARBOR" PROVISIONS OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND INVOLVE RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN."
SOURCE Investor Communications International, Inc.
CONTACT: Marcus Johnson of Investor Communications International, Inc.,
800-209-2260
(GMXX)
http://www.prnewswire.com
Wall Street's rogue mutual fund traders now have more to fear than the wrath of New York Attorney General Eliot Spitzer.
Last week, federal prosecutors in New York shocked securities experts by filing criminal charges against three brokerage executives who were involved in helping hedge funds market-time shares of mutual funds.
The charges against the former top executives of Mutuals.com, a Dallas brokerage, are the first to allege that mutual fund market-timing -- a theoretically legitimate arbitrage strategy -- can be a crime in certain circumstances. The case has defense lawyers fearing that prosecutors now may be gunning for other brokers who engaged in the practice.
In charging Richard Sapio, Eric McDonald and Michele Leftwich with securities fraud, prosecutors allege the "defendants engaged in a number of deceptive and fraudulent practices designed to conceal the identity" of the firm's hedge fund customers and their trading activity.
Prosecutors contend the Mutuals.com execs resorted to the deception after a number of mutual funds told them to stop market-timing because it was hurting long-term investors. Specifically, they allege the defendants conspired to evade detection by setting up multiple accounts and incorporating two affiliated brokerages to make their trades.
Sources familiar with the investigation said one of the clients that Mutuals.com did market-timing for was Veras Investment Partners.
Until now, state prosecutors in Spitzer's office and regulators at the Securities and Exchange Commission have spared brokers criminal prosecution. In the scandal's highest-profile broker case, regulators filed civil fraud charges against a group of Prudential Securities brokers alleged to have used deception to conceal their clients' abusive trading activity. The criminal charges against the Mutuals.com executives mirror those, but come with criminal penalties
Before last week's development, the only brokers, traders or mutual fund officials facing criminal charges were ones who allegedly had some connection to late-trading -- a practice in which favored investors are allowed to buy mutual fund shares that were priced prior to the emergence of market-moving news.
Now, even plain-vanilla market-timers could face criminal prosecution. Federal prosecutors in Massachusetts, sources said, are getting closer to filing criminal charges against the several former Prudential brokers who allegedly used deception to conceal their market-timing activity.
A source familiar with the investigation said Spitzer's office also hasn't ruled out filing criminal charges over market-timing, especially in cases involving egregious conduct. (Prudential is jointly owned by Wachovia (WB:NYSE - news - research) and Prudential Financial (PRU:NYSE - news - research) .)
Defense lawyers, however, say prosecutors make a big leap trying to turn market-timing into a crime.
"With each case, the regulators seem to be walking farther out on the limb," said James Walden, a partner with O'Melveny & Meyers in New York and a former federal prosecutor. "The prosecutors will have an extremely difficult time convincing a jury that market-timing is provable securities fraud without allegations of late-trading."
What prosecutors contend is deception, Walden says, arguably can be characterized as an attempt by savvy brokers and traders to "exploit gray areas of the system."
Indeed, if prosecutors intend to turn the gray areas surrounding market-timing into a crime, there could be plenty of criminal cases to pursue.
That's because using techniques such as multiple accounts was a standard operating strategy for market-timers trying to evade detection by the so-called "timing cops" -- employees mutual fund companies relied on to stop abusive trading.
"I didn't even think of that as illegal. That's how common it was," says James Nesfield, a mutual fund consultant who helped find market-timing opportunities for Canary Capital Partners, another hedge fund at the center of the inquiry.
One thing that often gets overshadowed in the mutual fund scandal is that many fund companies did try to deter market-timers. The problem is that many timing cops weren't particularly good at their jobs, and the mutual fund companies didn't consider deterring market-timing a high priority.
The lax enforcement meant it didn't take much subterfuge for market-timers to evade detection. It's one reason most market-timers didn't negotiate the kind of special trading arrangements that regulators have highlighted in settlements with several mutual fund companies, including Alliance Capital (AC:NYSE - news - research) and FleetBoston Financial's (FBF:NYSE - news - research) Columbia Funds.
"Most of it wasn't negotiated," says Nesfield. "It was a lot easier to change account names than call up a mutual fund company."
In fact, market-timers contend that most of the things they did to avoid detection, while possibly shady and unethical, were perfectly legal.
In a possible preview of their defense to the criminal charges, the defendants in the Mutuals.com case call the SEC an example of "strained" regulatory enforcement.
In court papers seeking the dismissal of the SEC action, lawyers for the brokerage executives accuse regulators of targeting them because market-timing is now seen as "extremely unpopular and politically incorrect in the current environment." The defendants contend the "SEC attempts to contort a series of legal acts into a fraudulent scheme."
By Matthew Goldstein
TheStreet.com Senior Writer
Rice will eventually testify, no doubt about it.
Like I said before Rice will Testify
Panel Presses for Rice's Public Testimony
By SCOTT LINDLAW, Associated Press Writer
CRAWFORD, Texas - White House allies and Republicans investigating the Sept. 11 attacks pressed Sunday to hear open testimony from national security adviser Condoleezza Rice (news - web sites), with one commissioner calling her refusal a "political blunder of the first order."
Rice said in a TV interview that she wants to testify publicly, but is constitutionally barred from doing so, a senior administration official said Sunday afternoon, before the program aired. Rice also said in the "60 Minutes" interview that she wants to meet with family members of the Sept. 11 victims, to hear their concerns, the official said.
President Bush (news - web sites), spending a long weekend on his Texas ranch, gave no ground, and several aides said he will not change his mind on letting Rice testify. But Bush sent her and other top administration officials out for television interviews to rebut fresh attacks on the way his administration has handled the threat of terrorism.
Sharpening his criticism, former counterterrorism chief Richard Clarke said President Clinton (news - web sites) was more aggressive than Bush in trying to confront al-Qaida, Osama bin Laden (news - web sites)'s organization.
"He did something, and President Bush did nothing prior to September 11," Clarke told NBC's "Meet the Press."
"I think they deserve a failing grade for what they did before" Sept. 11, Clarke said of the Bush's administration. "They never got around to doing anything."
Clarke said a sweeping declassification of documents would prove that the Bush administration neglected the threat of terrorism in the nine months leading up to the attacks.
He said he sought declassification of all six hours of his testimony before a congressional committee two years ago. Some Republicans have said that testimony about Sept. 11 contradicts Clarke's current criticism.
Clarke said he also wanted Rice's previous interview before the independent Sept. 11 commission declassified, along with e-mails between him and Rice, and other documents, including a memo he sent on Jan. 25, 2001 offering a road map to the new Bush administration on how to confront al-Qaida, and the directive that a National Security Council adopted on Sept. 4, 2001.
The material will prove that Bush was "lackadaisical" about terrorism before the attacks, Clarke said, because "they're basically the same thing. And they wasted months when we could have had some action."
Asked about Clarke's request for the declassification, Secretary of State Colin Powell (news - web sites) on CBS' "Face the Nation," said, "My bias will be to provide this information in an unclassified manner not only to the commission, but to the American people."
White House spokesman Jim Morrell said decisions on declassification "will be made in discussion with the 9/11 commission." One senior administration official said the White House and intelligence community would never agree to release the Sept. 4 national security directive, because it contains sensitive information on sources and methods.
Members of the Sept. 11 commissioner made clear they will not relent in their pursuit of public testimony from Rice, but said they were not inclined to subpoena her.
The White House has declined to let her appear at the commission's televised hearings, citing the constitutional principle of separation of powers; the panel was created by Congress.
"Condi Rice would be a superb witness. She is anxious to testify. The president would dearly love to have her testify," Defense Secretary Donald H. Rumsfeld told reporters. "But the lawyers have concluded that to do so would alter the balance if we got into the practice of doing that."
Rice was interviewed by the panel behind closed doors on Feb. 7. The administration has offered a second private session with Rice, but the commission has not accepted.
Rice was "very, very forthcoming in her first meeting with us," said former New Jersey Gov. Thomas Kean, a Republican named by Bush to lead the commission.
"But we do feel unanimously as a commission that she should testify in public. We feel it's important to get her case out there. We recognize there are arguments having to do with separation of powers. We think in a tragedy of this magnitude that those kind of legal arguments are probably overridden," Kean told "Fox News Sunday."
Commissioner John Lehman, another Republican, said Rice "has nothing to hide, and yet this is creating the impression for honest Americans all over the country and people all over the world that the White House has something to hide, that Condi Rice has something to hide."
"And if they do, we sure haven't found it. There are no smoking guns. That's what makes this so absurd. It's a political blunder of the first order," Lehman told ABC's "This Week."
A White House ally, Richard Perle, said, "I think she would be wise to testify."
Perle, who resigned last month as an adviser to the Pentagon (news - web sites), said he recognized the constitutional concerns at issue. "Sometimes you have to set those aside because the circumstances require it," he told CNN's "Late Edition."
Richard Ben-Veniste, a Democratic commissioner, noted in an interview with The Associated Press that several White House staff in recent years have appeared before legislative bodies, including former national security adviser Sandy Berger when he was in office. Rice's several media appearances also undermine the White House's position, he said.
"I fail to see the logic on the one hand relying on the confidentiality of such communications with the president and yet appearing everywhere except the one entity that has been created for the express purpose of investigating and holding public hearings on 9/11," he said.
Rice was to appear on the CBS program "60 Minutes" on Sunday night.
Clarke accused the Bush administration of waging a "campaign to destroy me professionally and personally," and called on the White House to "raise the level of discourse."
Reacting to charges that his new book represented "profiteering" from the terrorist attacks, Clarke said he planned to donate a "substantial" but unspecified portion of its sales to the attacks' survivors and to the widows and children of military personnel who have died in Afghanistan (news - web sites) and Iraq (news - web sites).
Clarke also fired back at the administration by reading Bush's response to his resignation letter.
Noting it was in the president's handwriting, Clarke said the letter read that he would "be missed. You served our nation with distinction and honor," and had "left a positive mark on our government."
___
Associated Press writer Hope Yen in Washington contributed to this report.
http://story.news.yahoo.com/news?tmpl=story&cid=519&e=1&u=/ap/20040328/ap_on_re_us/sept_....
Like I said before Rice will Testify
Panel Presses for Rice's Public Testimony
By SCOTT LINDLAW, Associated Press Writer
CRAWFORD, Texas - White House allies and Republicans investigating the Sept. 11 attacks pressed Sunday to hear open testimony from national security adviser Condoleezza Rice (news - web sites), with one commissioner calling her refusal a "political blunder of the first order."
Rice said in a TV interview that she wants to testify publicly, but is constitutionally barred from doing so, a senior administration official said Sunday afternoon, before the program aired. Rice also said in the "60 Minutes" interview that she wants to meet with family members of the Sept. 11 victims, to hear their concerns, the official said.
President Bush (news - web sites), spending a long weekend on his Texas ranch, gave no ground, and several aides said he will not change his mind on letting Rice testify. But Bush sent her and other top administration officials out for television interviews to rebut fresh attacks on the way his administration has handled the threat of terrorism.
Sharpening his criticism, former counterterrorism chief Richard Clarke said President Clinton (news - web sites) was more aggressive than Bush in trying to confront al-Qaida, Osama bin Laden (news - web sites)'s organization.
"He did something, and President Bush did nothing prior to September 11," Clarke told NBC's "Meet the Press."
"I think they deserve a failing grade for what they did before" Sept. 11, Clarke said of the Bush's administration. "They never got around to doing anything."
Clarke said a sweeping declassification of documents would prove that the Bush administration neglected the threat of terrorism in the nine months leading up to the attacks.
He said he sought declassification of all six hours of his testimony before a congressional committee two years ago. Some Republicans have said that testimony about Sept. 11 contradicts Clarke's current criticism.
Clarke said he also wanted Rice's previous interview before the independent Sept. 11 commission declassified, along with e-mails between him and Rice, and other documents, including a memo he sent on Jan. 25, 2001 offering a road map to the new Bush administration on how to confront al-Qaida, and the directive that a National Security Council adopted on Sept. 4, 2001.
The material will prove that Bush was "lackadaisical" about terrorism before the attacks, Clarke said, because "they're basically the same thing. And they wasted months when we could have had some action."
Asked about Clarke's request for the declassification, Secretary of State Colin Powell (news - web sites) on CBS' "Face the Nation," said, "My bias will be to provide this information in an unclassified manner not only to the commission, but to the American people."
White House spokesman Jim Morrell said decisions on declassification "will be made in discussion with the 9/11 commission." One senior administration official said the White House and intelligence community would never agree to release the Sept. 4 national security directive, because it contains sensitive information on sources and methods.
Members of the Sept. 11 commissioner made clear they will not relent in their pursuit of public testimony from Rice, but said they were not inclined to subpoena her.
The White House has declined to let her appear at the commission's televised hearings, citing the constitutional principle of separation of powers; the panel was created by Congress.
"Condi Rice would be a superb witness. She is anxious to testify. The president would dearly love to have her testify," Defense Secretary Donald H. Rumsfeld told reporters. "But the lawyers have concluded that to do so would alter the balance if we got into the practice of doing that."
Rice was interviewed by the panel behind closed doors on Feb. 7. The administration has offered a second private session with Rice, but the commission has not accepted.
Rice was "very, very forthcoming in her first meeting with us," said former New Jersey Gov. Thomas Kean, a Republican named by Bush to lead the commission.
"But we do feel unanimously as a commission that she should testify in public. We feel it's important to get her case out there. We recognize there are arguments having to do with separation of powers. We think in a tragedy of this magnitude that those kind of legal arguments are probably overridden," Kean told "Fox News Sunday."
Commissioner John Lehman, another Republican, said Rice "has nothing to hide, and yet this is creating the impression for honest Americans all over the country and people all over the world that the White House has something to hide, that Condi Rice has something to hide."
"And if they do, we sure haven't found it. There are no smoking guns. That's what makes this so absurd. It's a political blunder of the first order," Lehman told ABC's "This Week."
A White House ally, Richard Perle, said, "I think she would be wise to testify."
Perle, who resigned last month as an adviser to the Pentagon (news - web sites), said he recognized the constitutional concerns at issue. "Sometimes you have to set those aside because the circumstances require it," he told CNN's "Late Edition."
Richard Ben-Veniste, a Democratic commissioner, noted in an interview with The Associated Press that several White House staff in recent years have appeared before legislative bodies, including former national security adviser Sandy Berger when he was in office. Rice's several media appearances also undermine the White House's position, he said.
"I fail to see the logic on the one hand relying on the confidentiality of such communications with the president and yet appearing everywhere except the one entity that has been created for the express purpose of investigating and holding public hearings on 9/11," he said.
Rice was to appear on the CBS program "60 Minutes" on Sunday night.
Clarke accused the Bush administration of waging a "campaign to destroy me professionally and personally," and called on the White House to "raise the level of discourse."
Reacting to charges that his new book represented "profiteering" from the terrorist attacks, Clarke said he planned to donate a "substantial" but unspecified portion of its sales to the attacks' survivors and to the widows and children of military personnel who have died in Afghanistan (news - web sites) and Iraq (news - web sites).
Clarke also fired back at the administration by reading Bush's response to his resignation letter.
Noting it was in the president's handwriting, Clarke said the letter read that he would "be missed. You served our nation with distinction and honor," and had "left a positive mark on our government."
___
Associated Press writer Hope Yen in Washington contributed to this report.
http://story.news.yahoo.com/news?tmpl=story&cid=519&e=1&u=/ap/20040328/ap_on_re_us/sept_....
Like I said before Rice will Testify
Panel Presses for Rice's Public Testimony
By SCOTT LINDLAW, Associated Press Writer
CRAWFORD, Texas - White House allies and Republicans investigating the Sept. 11 attacks pressed Sunday to hear open testimony from national security adviser Condoleezza Rice (news - web sites), with one commissioner calling her refusal a "political blunder of the first order."
Rice said in a TV interview that she wants to testify publicly, but is constitutionally barred from doing so, a senior administration official said Sunday afternoon, before the program aired. Rice also said in the "60 Minutes" interview that she wants to meet with family members of the Sept. 11 victims, to hear their concerns, the official said.
President Bush (news - web sites), spending a long weekend on his Texas ranch, gave no ground, and several aides said he will not change his mind on letting Rice testify. But Bush sent her and other top administration officials out for television interviews to rebut fresh attacks on the way his administration has handled the threat of terrorism.
Sharpening his criticism, former counterterrorism chief Richard Clarke said President Clinton (news - web sites) was more aggressive than Bush in trying to confront al-Qaida, Osama bin Laden (news - web sites)'s organization.
"He did something, and President Bush did nothing prior to September 11," Clarke told NBC's "Meet the Press."
"I think they deserve a failing grade for what they did before" Sept. 11, Clarke said of the Bush's administration. "They never got around to doing anything."
Clarke said a sweeping declassification of documents would prove that the Bush administration neglected the threat of terrorism in the nine months leading up to the attacks.
He said he sought declassification of all six hours of his testimony before a congressional committee two years ago. Some Republicans have said that testimony about Sept. 11 contradicts Clarke's current criticism.
Clarke said he also wanted Rice's previous interview before the independent Sept. 11 commission declassified, along with e-mails between him and Rice, and other documents, including a memo he sent on Jan. 25, 2001 offering a road map to the new Bush administration on how to confront al-Qaida, and the directive that a National Security Council adopted on Sept. 4, 2001.
The material will prove that Bush was "lackadaisical" about terrorism before the attacks, Clarke said, because "they're basically the same thing. And they wasted months when we could have had some action."
Asked about Clarke's request for the declassification, Secretary of State Colin Powell (news - web sites) on CBS' "Face the Nation," said, "My bias will be to provide this information in an unclassified manner not only to the commission, but to the American people."
White House spokesman Jim Morrell said decisions on declassification "will be made in discussion with the 9/11 commission." One senior administration official said the White House and intelligence community would never agree to release the Sept. 4 national security directive, because it contains sensitive information on sources and methods.
Members of the Sept. 11 commissioner made clear they will not relent in their pursuit of public testimony from Rice, but said they were not inclined to subpoena her.
The White House has declined to let her appear at the commission's televised hearings, citing the constitutional principle of separation of powers; the panel was created by Congress.
"Condi Rice would be a superb witness. She is anxious to testify. The president would dearly love to have her testify," Defense Secretary Donald H. Rumsfeld told reporters. "But the lawyers have concluded that to do so would alter the balance if we got into the practice of doing that."
Rice was interviewed by the panel behind closed doors on Feb. 7. The administration has offered a second private session with Rice, but the commission has not accepted.
Rice was "very, very forthcoming in her first meeting with us," said former New Jersey Gov. Thomas Kean, a Republican named by Bush to lead the commission.
"But we do feel unanimously as a commission that she should testify in public. We feel it's important to get her case out there. We recognize there are arguments having to do with separation of powers. We think in a tragedy of this magnitude that those kind of legal arguments are probably overridden," Kean told "Fox News Sunday."
Commissioner John Lehman, another Republican, said Rice "has nothing to hide, and yet this is creating the impression for honest Americans all over the country and people all over the world that the White House has something to hide, that Condi Rice has something to hide."
"And if they do, we sure haven't found it. There are no smoking guns. That's what makes this so absurd. It's a political blunder of the first order," Lehman told ABC's "This Week."
A White House ally, Richard Perle, said, "I think she would be wise to testify."
Perle, who resigned last month as an adviser to the Pentagon (news - web sites), said he recognized the constitutional concerns at issue. "Sometimes you have to set those aside because the circumstances require it," he told CNN's "Late Edition."
Richard Ben-Veniste, a Democratic commissioner, noted in an interview with The Associated Press that several White House staff in recent years have appeared before legislative bodies, including former national security adviser Sandy Berger when he was in office. Rice's several media appearances also undermine the White House's position, he said.
"I fail to see the logic on the one hand relying on the confidentiality of such communications with the president and yet appearing everywhere except the one entity that has been created for the express purpose of investigating and holding public hearings on 9/11," he said.
Rice was to appear on the CBS program "60 Minutes" on Sunday night.
Clarke accused the Bush administration of waging a "campaign to destroy me professionally and personally," and called on the White House to "raise the level of discourse."
Reacting to charges that his new book represented "profiteering" from the terrorist attacks, Clarke said he planned to donate a "substantial" but unspecified portion of its sales to the attacks' survivors and to the widows and children of military personnel who have died in Afghanistan (news - web sites) and Iraq (news - web sites).
Clarke also fired back at the administration by reading Bush's response to his resignation letter.
Noting it was in the president's handwriting, Clarke said the letter read that he would "be missed. You served our nation with distinction and honor," and had "left a positive mark on our government."
___
Associated Press writer Hope Yen in Washington contributed to this report.
http://story.news.yahoo.com/news?tmpl=story&cid=519&e=1&u=/ap/20040328/ap_on_re_us/sept_...
Taking Stock Of An Electronic Exchange
Everyone knows the leading destination for stock trading in the U.S. is the southwest corner of Wall & Broad -- the New York Stock Exchange. Replacing it with computers in Chicago, New York, and Altamonte Springs, Fla., is the stated goal of Archipelago Holdings, a company only 211 people strong. Ridiculous?
Archipelago hopes you won't think so. This operator of an electronic trading system called Archipelago Exchange, or ArcaEx, is getting ready to ask public investors to take a stake in its improbable dream.
On Mar. 2 the Chicago firm filed papers to prepare for an initial public offering to be led by Goldman Sachs. Will this be a sweet deal? It's impossible to say just yet, since the amount of money Archipelago expects to raise and how much of the equity it will give up in return is yet to be disclosed. In addition, Archipelago execs, including co-founder and CEO Gerald Putnam, are keeping quiet ahead of the deal. Fortunately, you can find plenty of hints about Archipelago's outlook and valuation in its securities filing.
HERE IS WHAT'S striking: For a company founded barely seven years ago, Archipelago has gathered a lot of momentum. In two years' time its share of trading in NASDAQ stocks has swelled to more than 24% from less than 6%. Traders are attracted to its ability to match four out of five buy or sell orders swiftly and anonymously within ArcaEx. It does so electronically, without the intervention of humans on an exchange floor, as at the NYSE, or of a securities dealer (NASDAQ). When it can't match orders, it routes them to rival exchanges.
Its share of trading in NYSE-listed issues last year barely topped 1%, but as big trading firms increasingly take their orders elsewhere, opportunity beckons. With added growth from such new securities as exchange-traded funds, Archipelago's array of Sun Microsystems servers in 2003 handled 12.4% of all U.S. securities trading volume. With that, and a consequent 28% leap in revenue, to $459 million, Archipelago netted $1.9 million. How does that compare? Very nicely next to its nearest public-company rival, Instinet Group. Last year, Instinet's revenue grew just 3%, and the company lost $73.8 million.
About twice as big by revenue and controlled by giant Reuters Group. Instinet is busily cutting staff and other costs. However, it can be counted on to keep downward pressure on the transaction fees that make up nearly all of Archipelago's revenues. "I have never seen such price competition in all my days," says John Bogle, the Vanguard Group founder who serves on Instinet's board. Margin pressure doesn't stop there. NASDAQ has cut some fees, and the NYSE's new regime is moving toward more automated trading. That could sap some of Archipelago's appeal to traders suspicious of the matching of trades by humans on the Big Board's floor.
As it happens, Instinet owns 4% of Archipelago and may sell some of its stake in the IPO alongside shares sold by the company. Fellow stockholders, who also may sell some shares, are a familiar bunch: Goldman, the private-equity firm General Atlantic Partners, Credit Suisse First Boston. Fidelity Investments, Merrill Lynch, Charles Schwab and more.
What are their shares worth? When Archipelago last November issued employee stock options, the exercise price it set indicated a total equity value of $535 million. The same month, General Atlantic paid $125 million for a 23.4% stake, also suggesting a value near $535 million. Yet these figures are for illiquid private stock. A third way to figure Archipelago's public-market value is to check the multiples of sales and book value investors pay for Instinet. At those, 2.1 times book and 1.9 times the past 12 months' sales, Archipelago's value ranges from $640 million to $870 million. A key difference: Archipelago in 2003 made a small profit; Instinet is still fighting to get in the black.
Once Archipelago goes public, here's another way to check its progress: Unlike most issues trading on ArcaEx, its own shares are set to trade exclusively there. If it keeps building on the momentum it's now enjoying, Archipelago may never change hands at Wall & Broad.
Let that nation that has not sinned cast the first nuclear weapon!
The ultimate penalty for the hidden third party is rejection by all sides and the economic, political and philosophical demise of its actions. You have barely scratched the surface but you have found some of the tid bits...Psi Ops has been evolved to a very highly technical science with extremely dangerous and devastating results in the international community. 911 Commission is not even willing to ask the right questions...what did the Isreali Mossad have to do with 911? Should be the first question. To bring peace one needs to eliminate the third party, regardless of their religious grounds.
Remember The Debt We Owe Mesopotamia
El Hassan bin Talal
Good news doesn’t sell papers. Nor, it appears, does the idea of respect for human dignity. Recent flurried debates over how events in Iraq will unfold have dwelt almost exclusively on technical issues – political and economic security. The salient omission in all discussions is the less media-friendly topic of how the exercise of power must engage with human values. While uncertainty grips virtually all parts of this fragile globe, thousands of Iraqi families whose ancestors represented the first flowering of human civilization have lived for decades in deteriorating conditions under an arbitrary death sentence.
There are options for the Security Council; there are options for the allies; and there are options for Saddam. Not to recognize and exercise these alternatives for the common good is to invite a polarity of extremes the world over.
The land of Iraq is rightly regarded as the cradle of civilization. It gave humanity some of its greatest achievements in science, law, literature and the arts. Archaeologists are keenly aware of the debt we owe Mesopotamia — the Book of Job, the ‘virtuous sufferer’, was first formulated in Sumerian cuneiform. I do not believe in seeking a conversation between my civilization and your civilization; we are “one world and ten thousand cultures”.
Iraq has the human potential to be a catalyst for civil society and economic reconstruction based on equity and justice in the Arab and Muslim world. As we face the prospect of war, surely we must, in the name of humanity, accept that the post-war world will be no better if it fails to win the peace. Civilization should be restored to Iraq, and civic dignity should be given back to her talented people.
This cannot be done by creating chaos and further traumatizing young people who will in the future take up the reins of power. The unrelenting pressure of living under threat is causing ordinary people’s minds and will to atrophy. The project of rebuilding in Iraq after any strike will have to be a reconstruction, not just of infrastructure, but also of hearts and minds. After years of suffering followed by war in our Middle East region, there has to be a reconstruction of attitudes.
The issue that must be at the forefront of policy is what can be done now to ensure that Iraq does not fracture into a ‘militarized democracy’. Surely the focus of politics for people is sovereignty for the citizens of Iraq in their richness and their diversity. Iraq’s plurality – Christian, Kurd, Turkman, Sunni, Shi’a – has not been taken into full consideration. A ‘Marshall plan’ should include a Muslim and international benevolent fund to empower the poor to build a culture of peace through a culture of participation.
We have been told that waging war on Iraq will bring stability to the Middle East and contribute to a more peaceful world order. Whether Saddam steps down, or is bombed, or inspections continue indefinitely, we cannot overlook the fact that the world will continue to face the problem of what to do about massive feelings of exclusion, of the ghettoization of the Other, and of the privatized war that is terrorism. As long as politicians see their agenda in exclusively material terms, there can be no real dialogue about our shared values and no peace for anybody upon this planet. But if we are really talking about human security, what about a regional code of conduct for WMD worldwide?
Current technical debates in the Security Council focus on security in the material sense. The rights and responsibilities of its indigenous population in freedom and human dignity will only incite more violence and counter-violence. Yet, the weapon of mass destruction about which we should be most concerned is the absence of a civilizational discourse of post-war reconstruction and development of our shared humanitarian values world wide.
As a Muslim, I believe in the haq el hurriya and haq el karama, the right to freedom and the right to human dignity. Politicians have turned from the public good to narrower considerations. Yet, in the words of my friend Rabbi Magonet citing the hallel: “To get out of this narrowness, I called on God. God answered me with a broader vision. Give thanks to the eternal who is good, for God’s love is la-olam: for the whole world.” Finally, in the words of His Holiness the Pope: “God does not interfere in the affairs of man; God is a judge and an arbiter”. I think the time has come in our interconnected world to teach not only truth, but virtue and common purpose in saving our shared humanity.
HRH Prince El Hassan bin Talal is the Moderator of the World Conference on Religion and Peace; President of the Club of Rome and President of the Arab Thought Forum
Milberg Weiss Announces The Filing Of A Class Action Suit Against Universal Health Services, Inc. and Certain Senior Executives on Behalf of Investors
NEW YORK--(BUSINESS WIRE)--March 22, 2004--The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on March 22, 2004, on behalf of purchasers of the securities of Universal Health Services, Inc. ("Universal Health" or the "Company") (NYSE:UHS) between July 21, 2003 and February 27, 2004, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' Web site at: http://www.milberg.com/universalhealth/
The action, numbered 04 cv 1233 is pending in the United States District Court for the Eastern District of Pennsylvania against defendants Universal Health and certain of its senior executive officers. According to the complaint, defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period.
The complaint alleges that defendants materially misled the investing public, thereby inflating the price of UHS stock, by publicly issuing false and misleading statements and omitting to disclose material facts necessary to make defendants' statements as set forth herein, not false and misleading. These statements and omissions were materially false and misleading in that they failed to disclose material adverse information and misrepresented the truth about the Company, its financial performance, earnings momentum, and future business prospects, including: (a) UHS was unable to compete effectively in key markets; (b) UHS hospitals were losing better-paying patients to their competitors and the proportion of uninsured patients, who constitute a greater credit risk, was increasing; (c) due to poor case management, certain UHS hospitals were unable to effectively manage their caseloads and, as a consequence, had experienced an increase in the number of patients who remained hospitalized at UHS facilities beyond the period reimbursable by Medicaid and Medicare and that, therefore, the hospitals were not receiving full payments for the services provided; (d) defendants failed to properly write-off uncollectible receivables, and materially overstated UHS's financial results by maintaining known uncollectible accounts as assets during the Class Period; (e) the Company's allowance for doubtful accounts was insufficient and, as a result, the Company's reported operating income was artificially inflated; and (f) the Company's reported operating income was not a true measure of the Company's operating performance because defendants failed to properly deduct from operating income the appropriate allowance for doubtful accounts.
On March 1, 2004, before the markets opened, defendants shocked investors by withdrawing their guidance for 2004 and announcing that earnings per diluted share for the three-month period ending March 31, 2004 could be as much as 25% lower than the $0.84 per diluted share recorded in the same period in the prior year. Defendants attributed the decline in substantial part to UHS's inability to compete effectively in two key markets in Nevada and Texas, erosion of UHS's market share, poor case management resulting in an increase in the length of patient stays beyond the period reimbursable by Medicaid or Medicare, and a pronounced increase in bad debt from uninsured patients. The Company which had already increased its provision for doubtful accounts in the fourth quarter of 2003 to $74.3 million, or 7.8% of revenues, as compared to $58 million, or 6.9% of revenues, during the prior year's fourth quarter, said that bad debt in 2004 was likely to exceed the Company's previously reported expectation of 9.5% of revenues. On this news, the price of UHS shares fell $9.05, or 17%, to $44.88.
If you bought the securities of Universal Health Services, Inc. between July 21, 2003 and February 27, 2004 and sustained damages, you may, no later than May 21, 2004, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes & Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.
Milberg Weiss Bershad Hynes & Lerach LLP (http://www.milberg.com) is a 190-lawyer firm with offices in New York City, San Diego, San Francisco, Los Angeles, Boca Raton, Philadelphia and Seattle, and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others, and has been responsible for more than $20 billion in aggregate recoveries. Please contact the Milberg Weiss Web site for more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:
Steven G. Schulman
Peter E. Seidman
Andrei V. Rado
One Pennsylvania Plaza, 49th fl.
New York, NY, 10119-0165
Phone number: (800) 320-5081
E-mail: universalhealth@milberg.com
Web site: http://www.milberg.com
Weiss & Yourman Law Office Announces Class Action Lawsuit against Canadian Superior Energy, Inc.
NEW YORK--(BUSINESS WIRE)--March 26, 2004--A class action lawsuit against Canadian Superior Energy, Inc. ("Canadian Superior") (AMEX:SNG) and its officers was commenced in the United States District Court for the Southern District of New York, on behalf of purchasers of Canadian Superior securities. If you purchased Canadian Superior securities between November 17, 2003 and March 11, 2004, please read this notice.
The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements which artificially inflated the stock.
This action seeks to recover damages on behalf of defrauded investors who purchased Canadian Superior securities. Plaintiff is represented by Weiss & Yourman, a law firm possessing significant experience and expertise in prosecuting class actions on behalf of defrauded shareholders in federal and state courts throughout the United States. Weiss & Yourman has been appointed by numerous courts to serve as lead counsel in class action lawsuits and in that capacity has recovered hundreds of millions of dollars on behalf of investors.
If you purchased Canadian Superior securities between November 17, 2003 and March 11, 2004, you may move the Court no later than May 14, 2004, to serve as a lead plaintiff of the class. In order to serve as a lead plaintiff, you must meet certain legal requirements. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Weiss & Yourman or other counsel of your choice to serve as your counsel in this action.
If you wish to receive an investor package or if you wish to discuss this action, have any questions concerning this notice or your rights or interests with respect to this matter, or if you have any information you wish to provide to us, please contact:
James E. Tullman, Mark D. Smilow or David C. Katz, (888) 593-4771 or (212) 682-3025, via Internet electronic mail at info@wynyc.com or by writing Weiss & Yourman, The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176.
Calpers Opposes PwC as Freddie Mac Auditor
Pension fund challenges Freddie's use of PricewaterhouseCoopers for non-audit services.
Stephen Taub, CFO.com
March 24, 2004
The California Public Employees' Retirement System (Calpers) is opposing Freddie Mac's reappointment of auditor PricewaterhouseCoopers and the reelection of members of the mortgage finance company's audit committee, according to the Washington Post.
The pension fund giant, which owns 5.1 million Freddie shares, is taking the action because the company has used PwC for non-audit services, Calpers spokesman Brad W. Pacheco told the paper.
As a matter of policy, Calpers withholds votes from audit committee members at companies that allow auditors to perform non-audit work, elaborated Pacheco. "We believe that auditors should not be compensated or perform work for anything else besides their role in conducting the audit," he told the paper. "It creates too many conflicts of interest, and our experience shows that it leads to problems."
Calpers is withholding its vote from the reelection to the audit committee of presiding director Shaun F. O'Malley, who was chairman of PricewaterhouseCoopers when the firm was known as Price Waterhouse LLP, noted the Post.
The pension fund is also withholding its votes from director Michelle Engler, wife of former Michigan governor John Engler, who was appointed to the board by President Bush. Engler's husband "has a business relationship with the company that…could impair her objectivity," added the paper, quoting from a recent Calpers report. Engler's husband is an executive at Electronic Data Systems Corp., which last year received $24.1 million from Freddie Mac; the pension fund stated that EDS's services are "negotiated at arm's length," reported the Post.
"We are comfortable that the services that PwC has performed and will perform for us do not and will not compromise their independence," Freddie spokesman Michael Cosgrove said in a statement. All of the mortgage giant's non-management board nominees are independent under New York Stock Exchange listing standards, he added.
Last year Freddie Mac paid PricewaterhouseCoopers audit fees of $41.2 million and audit-related fees of $1.4 million, according to the paper. The non-audit fees, however, came to a mere $71,851 for tax services and $321,631 for other advice.
IRS cases: penalties stiff for tax fraud
Tax evasion is a risky crime. It is a felony punishable by five years imprisonment and a $250,000 fine. Taxpayers hearing claims from preparers offering larger refunds than other preparers are encouraged to check it out with a trusted tax professional or the Internal Revenue Service (IRS) before getting involved.
Those convicted of tax evasion may face prison time, home confinement, electronic monitoring or a combination.
The following case summaries are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted:
Roosevelt Kyle of San Diego, Calif., was sentenced Dec. 8, 2003, to 12 months in custody. A jury convicted Kyle for failing to file his personal income tax returns for the years 1995 through 1998. Evidence at trial showed Kyle earned more than $300,000 and prepared more than 3,000 tax returns but failed to file his own personal income tax returns. According to evidence presented in court, Kyle promoted tax-avoidance seminars, at which he advised clients they could permanently stop paying income taxes.
Kyle also promoted the book "Vultures in Eagles Clothing," which claims the income-tax laws are not applicable to U.S. citizens. This book was written by Lynne Meredith, who is under criminal indictment in the Central District of California for various tax crimes.
Leonard Hunter of Detroit, Mich., an accountant and tax preparer who owned and operated Len Hunter Tax Service, pleaded guilty, Dec. 1, 2003, to conspiring to defraud the IRS by filing false tax returns. Hunter's employee, Paul Yeskey, pleaded guilty, Nov. 24, 2003, to conspiring to defraud the IRS by filing false tax returns. During 1995 through mid-1998, Hunter and Yeskey focused on taxpayers that were unemployed, self-employed or minimally employed, who had dependents and had not filed a tax return for several years. Working with these taxpayers, Hunter and Yeskey would prepare false and fictitious tax returns, which showed a tax refund was due.
Hunter would file the returns, listing his accounting service as the return address. When the refund checks were received, Hunter would assist the taxpayers in cashing these checks, sometimes receiving half of the value of the false refund check as payment for his services. The indictment indicated more than 79 returns were identified as part of the scheme, causing more than $130,000 in fraudulent refunds.
Frank Lesters Bowden of Greenville, N.C., was sentenced Sept. 15, 2003, to 84 months in prison, three years of supervised release and a $500 special assessment for conspiracy and federal tax violations. His codefendant, Vickie Jones Peele, was sentenced May 28, 2003, and received a sentence of 18 months in prison, three years of supervised release and a $500 special assessment.
Bowden and Peele were each convicted of conspiracy to defraud the U.S. Treasury/IRS and four counts of making false, fictitious and fraudulent claims to the IRS for tax refunds. Evidence presented in court showed that Bowden and Peele prepared and filed IRS 1041 forms, which are used to report trust income, using the names of several taxpayers. The evidence further showed that none of the taxpayers for whom the forms were prepared and filed operated any trust accounts and that all of the figures on the 1041 forms were fabricated. Bowden offered his services for $100 in cash as a preparation and processing fee, and sometimes charged an additional 10 percent of the refund for check cashing.
Nancy L. Wallace of Cincinnati, Ohio, was sentenced April 15, 2003, to three years and four months in prison, followed by three years of supervised release and ordered to pay restitution to the IRS and her clients in the amount of $935,867. Wallace pleaded guilty Dec. 2, 2002, to one count of conspiracy and one count of aiding and assisting in preparing and presenting a false income tax return. Wallace admitted she helped her clients to evade more than $300,000 and her actions cost the IRS almost $950,000 in lost taxes.
The defendant also admitted she misappropriated and diverted her clients' funds for her personal use and failed to repay all of the funds. Wallace agreed, as part of the plea, to fully cooperate with IRS in determining her own tax liability and to prepare accurate income tax returns for herself and any related entity for the years 1992 to 2001 and file within a reasonable time.
How to report problems
Those who suspect tax fraud or know of an abusive return preparer should report the activity to the nearest IRS office. This information can be communicated by phone or in writing to the local IRS office. Contact the IRS by phone at 800-829-0433.
SEC gets tough on companies hindering investigations
By Kathleen Day / The Washington Post
WASHINGTON--The Securities and Exchange Commission is sending a pointed message to corporate America: Cooperate during federal investigations ... or else.
Starting with a warning in the fall of 2001 and bolstered more recently by a series of civil cases and millions of dollars in penalties, the SEC has signaled a tougher policy. The agency is not only enforcing the nation's securities laws, but also vigorously reacting to how well companies and individuals help or hinder federal probes, according to lawyers who follow its enforcement actions.
``If the legal and corporate community hasn't gotten the message, they are deaf,'' said David Gourevitch, a securities fraud lawyer, former SEC enforcement attorney and former New York state securities prosecutor. ``There's tremendous pressure on corporations and individuals to cooperate in investigations. The SEC is out there pounding that message whenever they can.''
The strategy is part of a series of new tactics the agency has implemented. With business scandals producing daily headlines about corporate misconduct that has cost the investing public billions of dollars, the SEC has sometimes appeared to be playing catch-up to the more aggressive efforts of others, especially New York Attorney General Eliot Spitzer. But now it is moving on many fronts, including nailing companies that try to derail investigations, according to lawyers in and outside the agency.
The Justice Department's criminal obstruction-of-justice case against Arthur Andersen LLP two years ago--which put the accounting firm out of business--and its more recent case against Martha Stewart have been well publicized. In both cases the Justice Department lawyers won on allegations of a coverup during a federal probe of alleged securities law violations, not on charges involving the alleged violations themselves.
The SEC's change in policy has made fewer headlines than those Justice Department cases, but it has been heard loud and clear in the corporate legal community. ``There's no doubt the SEC staff have substantially increased the penalties for those companies that they believe haven't cooperated,'' said William R. Baker III, former associate director of enforcement at the SEC and now a partner at Latham & Watkins LLP.
The most recent example was the announcement this week by Lucent Technologies Inc., which said it agreed in principle, without admitting or denying guilt, to pay a $25 million penalty to the SEC as an addition to a previous settlement of investigation into the company's accounting practices. The SEC's staff didn't impose a fine in connection with the alleged violations, accepting instead a promise from the company to stop the practices in question. Rather, the entire $25 million penalty was imposed because of what the SEC staff ``considered Lucent's lack of cooperation during the investigation and certain actions taken by the company subsequent to the agreement in principle,'' according to a Lucent press release.
Last week the SEC fined Bank of America Corp. $10 million for withholding and destroying documents requested in connection with an ongoing investigation into whether the company's brokerage unit engaged in illegal trading based on inside information about its upcoming analysts' reports.
A number of companies in the past two years, including Xerox Corp. and American International Group Inc., also have been hit, as part of broader settlements of alleged securities violations, with large penalties that the SEC made clear could have been avoided if the firms had been helpful.
Several investment banks, including Deutsche Bank, Goldman Sachs, Morgan Stanley and a unit of Citigroup Inc., were fined $8.25 million for failing to properly maintain documents such as e-mails that the SEC requires them to keep so federal regulators can properly oversee the companies.
``Any effort to impede an SEC investigation may itself become the subject of an enforcement proceeding,'' Stephen Cutler, head of the SEC's enforcement division, said in an interview.
In addition to penalizing companies that refuse to cooperate, the SEC has implemented a strategy called ``sweeps'' to try to detect problems before they become pervasive in an industry. For example, according to sources familiar with the probes, the SEC launched a review of oil companies' financial statements in recent months, following revelations by Royal Dutch/Shell Group that the multinational oil company overstated its oil and gas reserves. Similarly, the SEC has launched a review of the grocery industry following accounting errors at Royal Ahold NV, the owner of Giant Food.
The SEC won't confirm or deny such investigations, but sources say that the willingness of companies to be forthcoming is essential for such large-scale reviews to be efficient and effective in rooting out fraud.
The emphasis on cooperation was formally unveiled in the fall of 2001, when the SEC, under then-Chairman Harvey Pitt, issued a report saying the agency, when deciding what charges to bring and penalties to impose, would weigh factors such as how responsive a company was during a probe. The issue was so important, SEC sources say, that Pitt wrote much of the report himself, rather than directing agency attorneys to draft it.
The Seaboard decision--which got its name from the company involved in the decision--has become a hallmark of agency policy that securities lawyers describe as a carrot-and-stick approach. It emphasizes that companies can reduce charges against them, and possibly even avoid being charged with securities fraud altogether, if they help SEC staff identify individuals who are at fault.
Some attorneys say the agency needs to make sure that the rights of those under investigation are not compromised by the approach.
``In the carrot-and-stick approach, the question for lawyers is: Is there any room for advocacy on behalf of the client or will the SEC characterize that as obstruction?'' Baker said.
Cutler, in response to such questions, says that the SEC welcomes ``zealous advocacy'' because ``it helps us frame better cases and it makes sure we get to a more just result.'' He said that obstruction--behavior that interferes with justice because it interferes with getting at the truth--is clearly different.
Energy industry gets away with murky accounting practices
By Rachel Beck / AP Business Writer
NEW YORK -- Energy companies announcing big reductions in their oil and gas reserves have left many investors wondering what happened -- did the oil suddenly disappear or was it never there in the first place?
Don’t expect an easy answer to that.
The recent cuts by big names like Royal Dutch/Shell Group and others have provided a glimpse into the energy industry’s murky accounting practices, which are the result of imprecise government regulation that gives great discretion to oil company executives and allows results to be based largely on guesswork.
So-called proved oil and gas reserves are the estimated quantities that a company expects to commercially extract; unproved reserves are less certain to be extracted. Although some experts say that tallying reserves is more of an art than a science, they are considered an important asset for energy companies and are closely watched by investors as a key measure of future profit potential.
Shell announced in January it was reclassifying 20 percent, or 3.9 billion barrels, of its proved reserves to the unproved categories. And on Thursday, it said it reduce its estimated proved reserves by an additional 250 million barrels.
Other companies have done the same in recent months, including El Paso Corp. of Houston, which knocked down its proved reserves by 41 percent.
Companies often acknowledge the difficulties involved in determining reserves. Oil and gas can be buried deep below the earth’s surface, so there isn’t any easy way to gauge precisely what is down there and how much will actually be retrieved.
Also, changes in prices can require revisions in reserves. It might not be profitable to drill for hard-to-get oil when prices are at $15 a barrel, but that thinking changes when prices reach $30.
“There is some big science and some strong math behind what we do,” said Gary Swindell, a Dallas-based petroleum engineering consultant. “But at the end of the day, there is rarely enough information to feed our equations fully, and there is almost always some piece of conflicting information.”
That uncertainty can be exaggerated because of loose regulations, which give companies lots of leeway in determining their reserve levels and allow for divergent practices in the energy industry.
Using rules dating back to the late 1970s, the Securities and Exchange Commission requires companies to disclose their proved oil and gas estimates at the end of each year. They also need to say whether those proved reserves are developed, meaning they can be extracted by using equipment already in place, or undeveloped, which means more work and equipment is needed.
Proved figures are based on what companies believe they can recover with “reasonable certainty” from their energy reservoirs. The trouble is that companies can have different standards for what reasonable is.
Companies also can choose between two methods to account for their reserves. One, called the successful efforts method, is considered more conservative because companies more quickly have to write off their failures. Under the full-cost method, companies have a longer disclosure period.
Consider the case of Shell to see some of these inconsistencies at work.
Chevron Texaco and Exxon Mobil are Shell’s partners in Australia’s giant Gorgon gas project. While Shell had booked the reserves from that project as proved, the others did not. As it turns out, those proved reserves ended up accounting for a good portion of what Shell reclassified recently.
Shell’s revision doesn’t mean the oil doesn’t exist. But by moving its reserves from proved to unproved, the energy giant has acknowledged that it took an unrealistic view of how quickly the fields could be developed.
Now the SEC is now conducting a formal investigation into Shell’s accounting for its reserves.
Maybe the recent wave of reserve revisions will prompt calls for some standardization in the industry, or possibly even lead to tighter regulations in booking reserves.
An immediate change could come in requiring companies to hire independent engineers to review reserve estimates. They could work much like the auditors who test the accuracy and methodology of corporate financial statements.
That could at least begin to bring greater clarity to the industry’s accounting.
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck@ap.org
U.S. states demand KPMG give up $146 mln from MCI
Reuters, 03.17.04, 10:27 PM ET
By Justin Hyde and Joan Gralla
WASHINGTON/NEW YORK, March 17 (Reuters) - A coalition of 14 states asked a U.S. judge on Wednesday to force KPMG to surrender $146 million in fees it received or applied for from bankrupt phone company MCI and to bar the accounting firm from continuing to audit the company's books, according to a court filing.
The states, in a brief written by Massachusetts, charged that KPMG created a tax strategy that helped MCI, whose legal name is WorldCom Inc. <WCOEQ.PK> <MCWEQ.PK>, evade taxes by claiming $24 billion in improper deductions.
Separately, several states have recently started filing claims with the same bankruptcy court judge, seeking hundreds of millions of dollars in back taxes, penalties and interest from MCI, according to a source familiar with the matter.
A January report by an examiner appointed by the bankruptcy court estimated that the states were owed $250 million to $300 million.
MCI filed the largest bankruptcy in U.S. history in 2002, buckling under the weight of $41 billion in debt and an accounting scandal that ballooned to $11 billion.
Although Arthur Andersen was the company's auditor at the time of the accounting scandal, KPMG [KPMG.UL] acted as an adviser on tax and royalty strategies. KPMG is MCI's current auditor.
In the brief, the states argue MCI is still using the improper tax strategy. They contend that if they're successful in collecting back taxes and penalties from MCI, the telecom company could pursue KPMG for repayment, creating a conflict of interest for KPMG.
"KPMG would have to evaluate the soundness of its own tax minimizing strategies and would have its own financial interest at stake," said the brief, written by James O'Connor and Jeffrey Ogilvie, counsel for the Massachusetts Department of Revenue.
KPMG spokesman George Ledwith said the company's work for MCI followed all rules and regulations, adding, "We firmly stand behind it." He also said the company was confident it was still a "disinterested" auditor of MCI's books, as required by law, and called the state's allegations "groundless."
MCI, in a statement, said KPMG's tax strategies were appropriate, and it had "no plans to pursue claims against them."
Earlier this month, MCI restated its earnings from 2000 and 2001 by $74.4 billion. It plans to emerge from bankruptcy in April and shed the WorldCom name, but must still file results from 2003.
Behind wave of corporate fraud: change in how auditors work
By JONATHAN WEIL
The Associated Press
3/25/04 8:58 AM
The Wall Street Journal
The recent wave of corporate fraud is raising a harsh question about the auditors who review and bless companies' financial results: How could they have missed all the wrongdoing? One little-discussed answer: a big change in the way audits are performed.
Consider what happened when James Lamphron and his team of Ernst & Young LLP accountants sat down early last year to plan their audit of HealthSouth Corp.'s 2002 financial statements. When they asked executives of the Birmingham, Ala., hospital chain if they were aware of any significant instances of fraud, the executives replied no. In their planning papers, the auditors wrote that HealthSouth's system for generating financial data was reliable, the company's executives were ethical, and that HealthSouth's management had "designed an environment for success."
As a result, the auditors performed far fewer tests of the numbers on the company's books than they would have at an audit client where they perceived the risk of accounting fraud to be higher. That's standard practice under the "risk-based audit" approach now used widely throughout the accounting profession. Among the items the Ernst & Young auditors didn't examine at all: additions of less than $5,000 to individual assets on the company's ledger.
Those numbers are where HealthSouth executives hid a big part of a giant fraud. This blind spot in the firm's auditing procedures is a key reason why former HealthSouth executives, 15 of whom have pleaded guilty to fraud charges, were able to overstate profits by $3 billion without anyone from Ernst & Young noticing until March 2003, when federal agents began making arrests.
A look at the risk-based approach also helps explain why investors continue to be socked by accounting scandals, from WorldCom Inc. and Tyco International Ltd. to Parmalat SpA, the Italian dairy company that admitted faking $4.8 billion in cash. Just because an accounting firm says it has audited a company's numbers doesn't mean it actually has checked them.
In a September 2003 speech, Daniel Goelzer, a member of the auditing profession's new regulator, the Public Company Accounting Oversight Board, called the risk-based approach one of the key factors "that seem to have contributed to the erosion of trust in auditing." Faced with difficulty in raising audit fees, Mr. Goelzer said, the major accounting firms during the 1990s began to stress cost controls. And they began to place greater emphasis on planning the scope of their work based on auditors' judgments about which clients are risky and which areas of a company's financial reports are most prone to error or fraud.
Auditors still plow through "high risk" items, such as derivative financial instruments or "related party" business dealings between a company and its executives. But ostensibly "low risk" items -- such as cash on the balance sheet or accounts that fluctuate little from year to year -- often get no more than a cursory review, for years at a stretch. Instead, auditors rely more heavily on what management tells them and the auditors' assessments of a company's "internal controls."
A 2001 brochure by KPMG LLP, which claims to have pioneered the risk-based audit during the early 1990s, explained the difference between the old and new ways. Under a traditional "bottom up" audit, "the auditor gains assurance by examining all of the component parts of the financial statements, ensuring that the transactions recorded are complete and accurate." By comparison, under the "top down" risk-based audit methodology, auditors focus "less on the details of individual transactions" and use their knowledge of a company's business and organization "to identify risks that could affect the financial statements and to target audit effort in those areas."
So, for instance, if controls over a company's sales and customer IOUs are perceived to be strong, the auditor might mail out only a limited number of confirmation requests to companies that do business with the audit client at the end of the year. Instead, the auditor would rely more on the numbers spit out by the company's computers.
For inventory, the lower the perceived risk of errors or fraud, the less frequently junior-level accountants might be dispatched on surprise visits to a client's warehouses to oversee the company's procedures for counting unsold goods. If cash and securities on the balance sheet are deemed low risk, the auditor might mail out only a relative handful of confirmation requests to a company's banks or brokerage firms.
In theory, the risk-based approach should work fine, if an auditor is good at identifying the areas where misstatements are most likely to occur. Proponents advocate the shift as a cost-efficient improvement. They also say it forces auditors to pay needed attention to areas that are more subjective or complex.
"The problem is that there's not a lot of evidence that auditors are very good at assessing risk," says Charles Cullinan, an accounting professor at Bryant College in Smithfield, R.I., and co-author of a 2002 study that criticized the re-engineered audit process as ineffective at detecting fraud. "If you assess risk as low, and it really isn't low, you really could be missing the critical issues in the audit."
Auditors can't check all of a company's numbers, since that would make audits too expensive, particularly in an age of sprawling multinationals. The tools at auditors' disposal can't ensure the reliability of a company's numbers with absolute certainty. And in many ways, they haven't changed much over the modern industry's 160-year history.
Auditors scan the accounting records for inconsistencies. They ask people questions. That can mean independently contacting a client's customers to make sure they haven't struck undocumented side deals -- such as agreeing to buy more products today in exchange for a salesperson's oral promises of future discounts. They search for unrecorded liabilities by tracing cash disbursements to make sure the obligations are recorded properly. They examine invoices and the terms of sales contracts to check if a company is recording revenue prematurely.
Auditors are supposed to avoid becoming predictable. Otherwise, a client's management might figure out how to sneak things by them. It's also important to sample-test tiny accounting entries, even as low as a couple of hundred dollars. An old accounting trick is to fudge lots of tiny entries that appear insignificant individually but materially distort a company's financial statements when taken together.
Facing a crush of shareholder lawsuits over the accounting scandals of the past four years, the Big Four accounting firms say they are pouring tens of millions of dollars into improving their auditing techniques. KPMG's investigative division has doubled to 280 its force of forensic specialists, some hailing from the Federal Bureau of Investigation. PricewaterhouseCoopers LLP auditors attend seminars run by former Central Intelligence Agency operatives on how to spot deceitful managers by scrutinizing body language and verbal cues. Role-playing exercises teach how to stand up to a company's management.
But the firms aren't backing away from the concept of the risk-based audit itself. "It would really be negligent" not to take a risk-based approach, says Greg Weaver, head of Deloitte & Touche LLP's U.S. audit practice. Auditors need to "understand the areas that are likely to be more subject to error," he says. "Some might believe that if you cover those high-risk areas, you could do less work in other areas." But, he adds, "I don't think that's been a problem at Deloitte."
Mr. Lamphron, the Ernst & Young partner, and his firm blame HealthSouth's former executives for deceiving them. Mr. Lamphron declined to comment for this article. Testifying before a congressional subcommittee in November, he said he had looked through his audit papers and "tried to find that one string that, had we yanked it, would have unraveled this fraud. I know we planned and conducted a solid audit. We asked the right questions. We sought out the right documentation. Had we asked for additional documentation here or asked another question there, I think that it would have generated another false document and another lie."
The pioneers of the auditing industry had a more can-do spirit. In Britain during the 1840s, William Deloitte, whose firm continues today as Deloitte & Touche, made a name for himself by helping to unravel frauds at the Great Eastern Steamship Co. and Great Northern Railway. A growing breed of professionals such as William Cooper, whose name lives on in PricewaterhouseCoopers, began advertising their services as an essential means for rooting out fraud.
"The auditor who is able to detect fraud is -- other things being equal -- a better man than the auditor who cannot," wrote influential British accountant Lawrence Dicksee in his 1892 book, "Auditing," one of the earliest on the subject.
But in the U.S., the notion of the auditor as detective never quite took off. The Securities and Exchange Commission in the 1930s made audits mandatory for public companies. The auditing profession faced its first real public test in 1937, when an accounting scandal broke open at McKesson & Robbins: More than 20 percent of the assets reported by the drug company were fictitious inventory and customer IOUs. The auditors had been fooled by forged documents.
The case triggered some reforms. Auditing standards began requiring that auditors perform more substantive tests, such as contacting third parties to confirm customer IOUs and physically inspecting clients' warehouses to check inventories. However, the American Institute of Certified Public Accountants, the group that set auditing standards, repeatedly emphasized the limitations on auditors' ability to detect fraud, fearing liability exposure for its members.
By the 1970s, a new force emerged to erode audit quality: price competition. For decades, the AICPA had barred auditors from publicly advertising their services, making uninvited solicitations to rival firms' clients or participating in competitive-bidding contests. The institute was forced to lift those bans, however, when the federal government deemed them anticompetitive and threatened to bring antitrust lawsuits.
Bidding wars ensued. The pressures to hold down hours on a job "inadvertently discouraged auditors to look for" fraud, says Toby Bishop, president of the Association of Certified Fraud Examiners, a professional association.
Increasingly, audits became a commodity product. Flat-fee pricing became common. The big accounting firms spent much of the 1980s and 1990s building more-lucrative consulting operations. Many audit clients soon were paying their independent accounting firms far more money for consulting than auditing. The audit had become a mere foot in the door for the consultants. Economic pressures also brought a wave of mergers, winnowing down the number of accounting firms just as the number of publicly traded companies was exploding and corporate financial statements were becoming more complex.
Even before the recent rash of accounting scandals, the shift away from extensive line-by-line number crunching was drawing criticism. In an October 1999 speech, Lynn Turner, then the SEC's chief accountant, noted that more than 80 percent of the agency's accounting-fraud cases from 1987 to 1997 involved top executives. While the risk-based approach was focusing on information systems and the employees who fed them, auditors really needed to expand their scrutiny to include top executives, who with a few keystrokes could override their companies' systems.
Looking back, the risk-based approach's flaws are on display at a variety of accounting scandals, from WorldCom to Tyco to HealthSouth.
When WorldCom was a small, start-up telecommunications company, its outside auditor, Arthur Andersen LLP, did things the old-fashioned way. It tested the thousands of details of individual transactions, and it reviewed and confirmed the items in WorldCom's general ledger, where the company's accounting entries were first logged.
But as WorldCom grew, Andersen shifted toward what it called a risk-based "business audit process." By 1998, it was incurring more costs to audit WorldCom than it was billing, making up the difference with fees for consulting and other work, according to an investigative report last year by WorldCom's audit committee. In its 2000 audit proposal to WorldCom, Andersen said it considered itself "a committed member of (WorldCom's) team" and saw the company as a "flagship client and a crown jewel" of the firm.
Under the revised audit approach, Andersen used sophisticated software to analyze WorldCom's financial statements. The auditors gathered for brainstorming sessions, imagining ways WorldCom might cook its books. After identifying areas of high risk, the auditors checked the adequacy of internal controls in those areas by reviewing the company's procedures, discussing them with some employees and performing sample tests to see if the procedures were followed.
When questions arose, the auditors relied on the answers supplied by management, even though their software had rated WorldCom a "maximum risk" client, according to a January report by WorldCom's bankruptcy examiner, former U.S. Attorney General Richard Thornburgh.
One question that Andersen auditors routinely asked WorldCom management was whether they had made any "top side" adjustments -- meaning unusual accounting entries in a company's general ledger that are recorded after the books for a given quarter had closed. Each year, from 1999 through 2002, WorldCom management told the auditors they hadn't. According to Mr. Thornburgh's report, the auditors conducted no testing to corroborate if that was true.
They did check to see if there were any major swings in the items on the company's consolidated balance sheet. There weren't any, and from this, the auditors concluded that follow-up procedures weren't necessary. Indeed, WorldCom executives had manipulated its numbers so there wouldn't be any unusual variances.
Had the auditors dug into specific journal entries -- the debits and credits that are the initial entries of transactions or events into a company's accounting systems -- they would have seen hundreds of huge entries of suspiciously round numbers that had no supporting documentation.
The sole documentation for one $239 million journal entry, recorded after the close of the 1999 fourth quarter, was a sticky note bearing the number "$239,000,000," according to the WorldCom audit committee's report. Sometimes the "top side" adjustments boosted earnings by reversing liabilities. Other times they reclassified ordinary expenses as assets, which delayed recognition of costs. Other unsupported journal entries included one for precisely $334 million in July 2000, three weeks after the second quarter's books were closed. Another was for exactly $560 million in July 2001.
Andersen signed its last audit report for WorldCom in March 2002, saying the numbers were clean. Three months later, WorldCom announced that top executives, including its former chief financial officer, had improperly classified billions of dollars of ordinary expenses as assets. The final tally of fraudulent profits hit $10.6 billion. WorldCom filed for Chapter 11 reorganization in June 2002, marking the largest bankruptcy in U.S. history. Now out of business, Andersen is appealing its June 2002 felony conviction for obstruction of justice in connection with its botched audits of Enron Corp.
"No matter what kind of audit you do, it is virtually impossible for an auditor to detect purposeful fraud by management," says Patrick Dorton, an Andersen spokesman. "And that's exactly what happened at WorldCom."
PricewaterhouseCoopers also fell prone to faulty risk assessments. In July, the SEC forced Tyco, the industrial conglomerate, to restate its profits, which it inflated by $1.15 billion, pretax, from 1998 to 2001. The next month, the SEC barred the lead partner on the firm's Tyco audits from auditing publicly registered companies. His alleged offense: fraudulently representing to investors that his firm had conducted a proper audit. The SEC in its complaint said that the auditor, Richard Scalzo, who settled without admitting or denying the allegations, saw warning signs about top Tyco executives' integrity but never expanded his team's audit procedures.
Mr. Scalzo declined to comment. A PricewaterhouseCoopers spokesman declined to comment on the SEC's findings in the Tyco matter.
Like Tyco and WorldCom, HealthSouth grew mainly by buying other companies, using its own shares as currency. So it needed to keep its stock price up. To do that, the company admitted last year, it faked its profits.
In their audit-planning papers, Ernst & Young auditors noted HealthSouth executives' "excessive interest" in maintaining or increasing its stock price and earnings. Twice since the 1990s, the Justice Department had filed Medicare-fraud suits against HealthSouth.
But none of that shook the Ernst & Young audit team's confidence in management's integrity, members of the team later testified. And at little more than $1 million annually, Ernst & Young's audits were fairly low cost. The firm charged slightly less to audit HealthSouth's financial statements than it did for one of its other services for HealthSouth: performing janitorial inspections of the company's 1,800 health-care facilities. The inspections, performed by junior-level accountants armed with 50-point checklists, included checking to see that the toilets and ceilings were free of stains, the magazine racks were neat and orderly, and the trash receptacles all had liners.
Most of HealthSouth's fraud occurred in an account called "contractual adjustments." This is an allowance on the income statement that estimates the difference between the gross amount charged to a patient and the amount that various insurers, including Medicare, will pay for a specific treatment. The company manipulated the account to make net revenue and bottom-line earnings look higher. But for every dollar of illicit revenue, HealthSouth executives had to make a corresponding entry on the balance sheet, where the company listed its assets and liabilities.
An Ernst & Young spokesman, Charlie Perkins, says the firm "performed appropriate procedures" on the contractual-adjustment account.
At an April 2003 court hearing, Ernst & Young auditor William Curtis Miller testified that his team mainly had performed "analytical type procedures" on the contractual adjustments. These consisted of mathematical calculations to see if the account had fluctuated sharply overall, which it hadn't. As for the balance-sheet entries, prosecutors say HealthSouth executives knew the auditors didn't look at increases of less than $5,000, a point Ernst & Young acknowledges. So the executives broke up the entries into tiny pieces, sprinkling them across lots of assets.
The company's ledger showed thousands of unusual journal entries that reclassified everyday expenses -- such as gasoline and auto-service bills -- as assets. Had the auditors seen those items, one congresswoman noted at a November hearing, they would have spotted that something was wrong. Mr. Lamphron conceded her point.
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Cassell Bryan-Low contributed to this article.
Shaped by Scandal
Key dates in the history of auditing:
-- 1840s: William Welch Deloitte achieves fame in U.K. for unraveling accounting frauds in the railway industry, becoming a prototype for the fraud-combatting auditor.
-- 1934: The new U.S. Securities and Exchange Commission makes independent audits mandatory for public companies.
-- 1937: After scandal at drug maker McKesson & Robbins, some auditing rules are strengthened, but U.S. auditors downplay ability to detect fraud.
-- 1970s: Bidding wars break out among auditors after ban on solicitation of clients is struck down.
-- 1980-90s: Stressing cost controls, firms promote "risk-based" audits.
-- 2002: After wave of frauds, Congress creates new authority to set auditing standards among other reforms.
FASB Braces for Fight
March 22, 2004 (TheDeal.com) — The body that sets standards for the accounting industry is primed to do battle with Capitol Hill.
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The Financial Accounting Standards Board within weeks will release proposed rules requiring companies to expense stock options in their financial statements, and assorted lawmakers are mobilizing to thwart them.
The fight, which has flared in the wake of the accounting scandals that racked Corporate America in recent years, is, in fact, an old one. FASB and legislators have skirmished since the 1970s, when members of Congress, mostly from oil-producing states, pressured the accounting board and the Securities and Exchange Commission to ease standards for financial reporting in the oil industry.
Indeed, many observers accuse lawmakers of serving the interests of corporate constituents on accounting rules at the expense of investors.
"A few members of Congress appear to be running interference for various businesses," says J. Edward Ketz, an accounting professor at Pennsylvania State University's Smeal College of Business. "These are members from districts with a lot of high-tech firms; California comes to mind or those politicians who have received a lot of campaign contributions from high-tech firms."
Part of the problem is that FASB, an ostensibly private organization, is funded by and reports to the SEC, which itself answers to Congress. And if Congress is unhappy with an FASB standard, it can pass a law directing the SEC to ignore it.
"By and large FASB would be better off if Congress just stayed out of the rulemaking process," says Dennis Beresford, a former FASB chairman and now an accounting professor at the University of Georgia.
Lawmakers also tried to bring FASB to heel 10 years ago. Moving to block FASB from issuing a standard requiring companies to recognize the cost of employee stock options on their balance sheets, Sen. Joe Lieberman, D-Conn., sponsored a bill that threatened to strip FASB of its mandate. He also introduced a resolution that attacked the proposal as dangerous to American entrepreneurs. Although the bill was rejected, the resolution passed 88-9 and effectively killed the rule.
FASB also came under congressional pressure in the late 1990s regarding new rules for derivatives and accounting for mergers and acquisitions.
The latter issue, which ultimately eliminated pooling-of-interest accounting, spawned legislation strikingly similar to that aimed at halting FASB's stock option standard.
Pressure from lawmakers forced FASB to compromise. Pooling was ultimately eliminated over objections from legislators that the move would have dire economic consequences.
While expressing his respect for FASB, Rep. Richard Baker, chairman of the House subcommittee on capital markets, says that no one is above congressional review. "I do not subscribe to the school that FASB can do no wrong," he says.
This time, however, the board may have better luck. The bookkeeping fiascos at Enron Corp. and WorldCom Inc., as well as the role of stock options in skyrocketing executive compensation, are driving reform. Even without guidance from FASB, nearly 500 U.S. companies have already begun, or are planning, to expense stock options, according to a recent Bear, Stearns & Co. report.
During a House Financial Services subcommittee hearing on stock option legislation in June, FASB chairman Robert Herz said interference from lawmakers "would send a clear and unmistakable signal that Congress is willing to intervene in the independent, objective and open accounting standard-setting process based on factors other than the pursuit of sound and fair financial reporting."
To drive his message home, Herz also pointed out that congressional efforts to block FASB would be "inconsistent with the language and intent" of the Sarbanes-Oxley Act of 2002, which includes measures to ensure the group's independence.
More important are the shifting political tides. Rep. Paul Kanjorski, D-Pa., says it is a mistake for lawmakers to undermine FASB's independence. He also linked Congress' actions a decade ago in halting expensing rules to the "financial storm" that swept Wall Street in recent years.
"Deciding what should be accounted for and how it should be accounted is the job of the Financial Accounting Standards Board, not the Congress," says Kanjorski, ranking Democrat on the House Capital Markets Subcommittee.
Still, FASB has an uphill battle as opponents to the proposed standard marshal their forces. The American Electronics Association, the nation's largest high-tech trade group, plans to fly business leaders from around the country on March 31 to lobby Congress to adopt proposed legislation that would override the FASB rule.
"What we're trying to do is stop FASB," says John Palfoutas, a domestic policy and congressional affairs lobbyist for AeA who is organizing the "Fly-In."
Of these measures, the Stock Option Reform Act, introduced last year by Reps. Baker, R-La., and Anna Eshoo, D-Calif., most directly threatens FASB's plan. The legislation directs the SEC only to require better disclosure of stock options. It also would test the rule for three years, and during this period the SEC would not recognize FASB's stock option accounting standard.
Sens. Mike Enzi, R-Wyo., and Harry M. Reid, D-Nev., are offering a companion bill that would require companies to expense options for their top five executives. Options for lower-ranked employees would not be booked.
In late January Rep. Cliff Stearns, R-Fla., who chairs the House subcommittee that is investigating the Freddie Mac accounting scandal, said he will introduce a bill that would change Generally Accepted Accounting Principles to require companies to adopt fair-value methods of accounting for financial assets.
"I believe legislation is needed to encourage FASB to more quickly reform the system, as well as provide principles to guide FASB in promulgating those accounting standards," Stearns says.
But accounting experts argue that any move by Congress to draft alternative accounting legislation would undermine the rulemaking process and sap investor confidence.
"Congress should keep out of the accounting principles debate because most members of Congress are not schooled in accounting as an information science or as a behavior catalyst or as an economic measurement," said Mark E. Haskins, a professor of business administration at the Darden School of Graduate Business Administration in Virginia.
-- Donna Block in Washington
A beefed-up NASD short-selling rule designed to make
the market more efficient may very well have the opposite affect - at least
temporarily.
That's because technological changes haven't been made that would allow NASD
and non-NASD members to exchange the necessary information that puts them in
compliance with the new short sale rules.
The result: Non-NASD members looking to do short sales could be spending a
lot of time on the phone with NASD market makers confirming that they have, as
required under the new rule, taken steps to locate shares before entering in a
short sale transaction.
This has the potential of affecting a large base of traders. Non-NASD
members include the New York Stock exchange, the American Stock Exchange,
regional exchanges, specialists firms and most foreign brokers.
NASD strengthened its existing affirmative determination rule late last
year, expanding the rule to cover non-NASD members. The new NASD rule is
schedule to take effect on April 1.
But as it stands, BRASS, an electronic trade execution system widely used by
market markers and trading firms in the U.S., has yet to make necessary
changes to its software to address NASD's affirmative determination rule.
BRASS is owned by SunGard (SDS).
SunGard has been telling clients that it will take two to three months for
its order management system to be able to handle a new step required by NASD
in short sale trades by non-members.
Tom King, president of SunGard Trading Systems, said Friday that his company
provided its clients with an alternative to process those orders. King said
the alternative may not be "as streamlined as they would prefer" but that it
will allow clients to process short sale orders from non-NASD members while
SunGard works on implementing technical changes to its trading system. King
wasn't able to comment on how long it would take his company to implement
technical changes needed to deal with NASD's new short sale rule. King said
only a very small amount of orders would be affected.
BRASS is the predominant Nasdaq market making trading system and also
support trade execution and order management on NYSE, AMEX and Nasdaq.
A short seller typically borrows stock from a broker to sell it into the
market, betting that the share price will fall so that he can buy the stock
back at a lower price and pocket the difference.
Under the rule, brokers and dealers engaged in a short sale transaction must
make sure that shares can be delivered by settlement date, three days later.
The new NASD affirmative determination rule doesn't cover non- members,
instead it effectively makes it the responsibility of NASD members to make
sure that their trading counterparts have taken steps to locate the shares
necessary to timely settle a transaction before completing a short sale.
Andrew #####, director of business development and international trading at
Canaccord Capital Corp. in Vancouver said that the difficulties of executing
short sales would significantly reduce short selling from Canada.
"Because of the lack of a system solution to pass the locate information to
market makers, we'll have to pass the information on a manual basis. This will
result in placing an order over the phone," Jaffy said.
NASD last month delayed implementation of its broader affirmative
determination rule, which was originally scheduled to take effect on Feb. 20,
to provide its members with additional time to make technological changes to
their systems to comply with the new requirement.
Some members "needed time to reprogram their systems in order to create this
interim step before accepting orders," Steve Luparello, executive vice
president of Market Regulation at NASD told Dow Jones Newswires on Feb. 18. A
spokeswoman for the NASD said Friday that no members had "indicated to us that
they won't be ready."
SunGard is not a NASD member.
Market makers engaged in bone fide market making activities will continue to
be exempt under NASD new affirmative determination rule.
(Carol S. Remond is one of four "In The Money" columnists who take a
sophisticated look at the value of companies and their securities and explore
unique trading strategies.)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com
(END) Dow Jones Newswires
03-26-04 1622ET
The Mossad is very adept at creating conflicts between the US and the Arab Muslim nations. Dig deep and you will find the trail of tears.
That may be why there is resistence for her testimony but she will eventually need to testify and they will rip her to shreds...
Yahoo buys European comparison site for $574 mln
CBS MarketWatch
LONDON - Internet portal Yahoo on Friday said it was buying Kelkoo, Europe's leading price comparison-shopping site, for around 475 million euros ($574 million) in cash.
Kelkoo earns commissions from merchants for click-throughs, or customer referrals. Its product search engine compares prices from 2,500 merchants in categories that include books, music, travel and consumer electronics.
The deal could also bring Yahoo into a potential conflict with rival Microsoft . Microsoft's MSN Internet portal has had a pan-European referral agreement with Kelkoo for about a year.
The "vast majority" of Kelkoo's revenue and traffic stem from visits from its own sites in 10 European countries, but MSN is its largest outside referral partner, said Pierre Chappaz, chief executive officer and founder of Kelkoo, in an interview.
He said he's not expecting any change to the MSN relationship.
A spokesman for MSN in London said the Microsoft portal division also isn't anticipating any change to the relationship, which is based on sharing revenue from referrals. "Our partnership with Kelkoo is still in place and there's no change at all," he said.
Yahoo shares were up 19 cents, or 0.4 percent, to $47.13.
Sales last year surged to 42 million euros, up 170 percent on the year. Earnings totaled 11 million euro. Kelkoo has been profitable since the fourth quarter of 2002, Yahoo said.
Yahoo expects to complete the deal in the second quarter of 2004.
The acquisition is a way for Yahoo "to reach more people (and offers) more ways to make our services more useful," said John Marcom, Yahoo's senior vice president international operations. For now, Yahoo has no plans for a re-branding, he also said.
"We'll look for the appropriate ways to link it with Yahoo, if it makes sense," he said. "Kelkoo markets itself extremely well and they are very good at it."
Consumer electronics, led by digital cameras and DVDs, are its largest category, Chappaz said. The U.K. is its biggest market, with with over 13 million unique users per month, the Kelkoo website says.
For its part, venture capital backed Kelkoo decided to link with Yahoo instead seeking an initial public offering to back an expansion. An IPO was one of its options, Chappaz noted.
"The product search markets were really becoming a world-wide market," he said. "We are pragmatic people; we couldn't become the worldwide leader alone... This is why we have been looking at partnering with Yahoo."
Yahoo said it isn't anticipating any job cuts; Kelkoo currently employs around 250 people in Europe. Yahoo shares ended up 5.5 percent Thursday at $46.94.
VC backers in Kelkoo since its creation in 1999, include Banexi Venture Partners, Sgam (Societe Generale) and Innovacom from France, Netjuice and BBVA from Spain, and Kistefos from Norway.
InfoSpace to buy Switchboard for $170 million in cash
CBS MarketWatch
SAN FRANCISCO -- In a bid to capture a piece of the surge in yellow-page advertising on the Web, InfoSpace said Friday that has agreed to acquire Switchboard Inc. for $170 million in cash.
Shares of Switchboard soared 27 percent to $7.76 while InfoSpace jumped 14 percent to $36 in a week jam-packed Internet mergers.
As part of the deal, InfoSpace is paying Switchboard shareholders $7.75 per share, representing a 29 percent premium above Switchboard's market value before the deal was announced.
By taking control of the Switchboard.com site, InfoSpace said it would lay claim to 23 percent of online yellow-pages searches. Those searches come mostly from InfoSpace.com and Switchboard.com branded sites.
But they also come from InfoSpace's other sites, such as Dogpile and Metacrawler, or distribution partners like ABCNews.com.
The acquisition is expected to close July 1, and is estimated to add $10 million to $12 million in sales and $4 million to $5 million in cash flow in the second half of the year.
"It's complementary," said Brian McManus, InfoSpace executive vice president of strategy, in an interview.
InfoSpace and Switchboard both focus on building up their online distribution. Both generate an online audience from either their own branded sites or from other Web sites partners.
Both companies then rely on other companies to aggregate advertisers.
InfoSpace's distribution platform, made up of a network of sites, displays advertisements from Yahoo-owned Overture, Google and FindWhat.com. It also provides yellow page advertisements from Verizon , the nationwide phone operator with a huge local sales force out on the street getting tiny merchants to place their advertisements in those big fat yellow pages books.
Another similarity between InfoSpace and Switchboard is that both companies have technology to offer private-label solutions. For instance, Switchboard powers Time Warner's AOL's yellow pages.
While InfoSpace gets bigger with Switchboard, the winner of this race remains to be unknown.
Verizon dominates the yellow page business in the print world because it has both a nationwide footprint and a sales force. Verizon is also aggressively positioning its Superpages.com as the nationwide site for local information.
At the moment, an estimated $450 million in local advertisements were placed on the Web in 2003, according to The Kelsey Group. That number is expected to grow 25 percent annually and make up 30 percent of the total $15 billion in yellow page advertising.
Meanwhile, Yahoo and Google have turned on the heat by launching their own local initiatives. Yahoo unveiled Smartview - a site that incorporates maps and listings dynamically while Google is beginning to list several local listings at the top of its search-results pages for any search that specifies a location. For instance, someone typing in "Plumbers in Sag Harbor" will see a link at the top of the results search page for local plumbers in that town.
The question becomes: Will local merchants prefer to put their dollars onto destination sites that are branded as the next-generation yellow pages? Or will local advertisers like having their ads displayed on a network of sites?
McManus said both options make sense for advertisers.
Accordingly, InfoSpace will focus on building up its brands as destination sites but will also continue to work on distribution through its partners.
Written agreement with Planters Bank and Trust Company
http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040324/default.htm
Written agreement with Virginia Heartland Bank
http://www.federalreserve.gov/boarddocs/press/enforcement/2004/200403242/default.htm
Written agreement with Midwest Banc Holdings, Inc.
http://www.federalreserve.gov/boarddocs/press/enforcement/2004/200403243/default.htm
For a schedule of upcoming postings to the Board's web site,
go to http://www.federalreserve.gov/calendar.htm
For a list of items posted to the Board's web site over the past two
weeks,
go to http://www.federalreserve.gov/whatsnew.htm
Federal Grand Jury Indicts Delusional Anti-Tax Crusader
AccountingWEB.com - March 26, 2004 - Irwin Schiff, an anti-tax author who has urged thousands of Americans to pay no taxes, was indicted by a federal grand jury Wednesday on tax evasion and conspiracy to defraud the United States.
According to the New York Times, the indictment handed up in Las Vegas also charges Schiff with preparing at least 4,950 returns that fraudulently listed zero income, failing to report $3.7 million in sales at his bookstore from 1997 through 2002 and using offshore accounts and an illegal "Christian Patriot Association" bank in Oregon to hide income and assets. If convicted, Schiff, who is 76, also faces $3.25 million in fines and up to 43 years in prison.
Schiff, a convicted tax evader, is the author of "The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes." He lectures extensively, encouraging taxpayers to report zero income.
Two of Schiff’s associates were also charged. His former girlfriend, Cindy Neun, was charged with conspiracy, failure to file her tax returns, Social Security disability fraud and theft of government property. Lawrence Cohen, an employee of Schiff's bookstore, Freedom Books, was charged with conspiracy, preparing fraudulent tax returns and tax evasion.
"I have no income," Schiff told the New York Times. "I have filed my tax returns and reported zero income because I have no income in the constitutional sense. The government has fraudulently gotten an indictment and the claim that I owe taxes is false. The indictment is a fraud and I will file a motion to dismiss."
Schiff’s psychiatrist has determined that Schiff suffers from paranoid delusions and believes that only he can interpret tax laws. "No jury can convict me," Schiff said. "I say I am America's leading expert on the income tax. Everyone knows I believe no law requires me to pay taxes, so there is no willful intent to commit a crime. And if I am wrong, then I am delusional, in which case I am not willful. So they can't legally convict me of tax evasion or any other crime that requires willful intent."
The IRS warned taxpayers not to fall for schemes to cheat the IRS. "You may wind up in federal prison, said Eileen J. O’Connor, the assistant attorney general in charge of the Justice Department's tax division. "In the end, you will still owe taxes, and you may also owe interest and penalties."
SEC to Take Hard Look at Off-Balance-Sheet Disclosures
AccountingWEB.com - March 24, 2004 - Off-balance-sheet transactions, once abused by Enron to hide debt and overstate profits, will be closely scrutinized as regulators look for ways to improve financial disclosures.
That warning came from Donald T. Nicolaisen, chief accountant of the Securities and Exchange Commission, according to the Wall Street Journal. Nicolaisen said at a Financial Accounting Standards Advisory Council meeting Tuesday that the agency will study the details about off-balance-sheet activity that companies provided in their latest filings. The SEC will provide Congress with a report on the issue later this year, he said.
In the past, companies have not been required to report how their current or future financial conditions might be affected by off-balance-sheet arrangements, which often involve entities formed to diversify risk and issue securities, leasing arrangements and other contractual obligations, the Journal reported.
Companies are beginning to report on their connection to an unconsolidated entity, including nature, size and amount of risk in SEC filings, but studies have shown that not all companies are embracing the requirements.
Nicolaisen also told the advisory council that the SEC will continue helping companies disclose more useful, understandable financial information. For example, the SEC issued guidance late last year intended to improve disclosures in the "management discussion and analysis" section, or MD&A, in companies' stockholder reports.
The advisory council, which acts as a "sounding board" to the Financial Accounting Standards Board, also heard a report from FASB Chairman Robert Herz. In the next few days, FASB is expected to reveal its plan to require companies to recognize employee stock-option compensation as an expense on income statements. The board then plans to hold public roundtable discussions in late June before it enacts a final rule, Herz said.
In recent weeks, executives of technology firms and other options-dependent companies have stepped up their lobbying campaign to persuade lawmakers to intervene.
Two men are suing two Detroit police officers who arrested them last year, saying they were falsely accused of being terrorists based on ethnic profiling.
The lawsuit says the men were accused of videotaping the Ambassador Bridge, the busiest U.S.-Canada border crossing, though the men claim they never filmed there. A video camera was seized during their arrest last April.
Mohamed Elmathil and Hazaa Shahit, both of Dearborn, were never charged with any crime. Police said the arrests were justified because the officers thought they had witnessed suspicious activity.
Police found fireworks in Elmathil's car, and initially thought they were sticks of dynamite. The lawsuit says the men were questioned for hours about whether they were members of al-Qaida.
"My clients were subject to ethnic profiling," their attorney, Michael Cafferty, told the Detroit Free Press for a Friday story. "They haven't even gotten the video camera back. The whole thing is ridiculous."
Elmathil is a U.S. citizen originally from Yemen and Shahit was born in the Detroit area, Cafferty said.
The lawsuit against Officers Aric Tosqui and Michael Parish was filed Monday in Wayne County Circuit Court. It seeks an undetermined sum of money and alleges ethnic intimidation, defamation of character, false imprisonment and civil rights violations.
Tosqui declined to comment Thursday, and Parish could not be reached for comment. The police department did not return a message seeking further comment Friday morning.
The Ambassador Bridge has about 10 million vehicle crossings every year and handles a quarter of all trade traffic between the United States and Canada.
http://www.newsday.com/news/nationworld/nation/sns-ap-bridge-arrests,0,3184182.story?coll=ny-nationa...
Talkback: Your reaction to Clarke's allegations
What is your reaction to Clarke's allegations that Bush ignored his pre-9/11 efforts to focus on al-Qaida?
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1. The USA I love IT that is Why REPUGNATS MUST GO!!!!!!!
Submitted by: CaliSteve
12:04 AM EST, Mar 26, 2004
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2. I can't stand Condi Rice, get her outta there ASAP ... Otherwise, AMERICA, LOVE IT OR LEAVE IT
Submitted by: LI Dude
11:30 PM EST, Mar 25, 2004
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3. Clarke speaks the truth .... finally someone admits the government screwed up in plain spoken words .... Bush, Rummy, Wolfowitz, Rice ... all shameless pretenders ... see how they duck and run for cover .... long on arrogance ...short on common sense ...
Submitted by: tahlula
11:09 PM EST, Mar 25, 2004
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4. Clark is a two-faced liar and his own words in 2002 prove it. Neither Clinton or Bush could have prevented 9/11. How about blaming Islamic militants, our enemies rather than our government for a change. Wake up!!!
Submitted by: Pizza
10:49 PM EST, Mar 25, 2004
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5. As usual the Democrats are trying to rewrite history. "Clinton was tough on terror, Bush was weak" Yea right!
Submitted by: Jeffrey Boshart
10:49 PM EST, Mar 25, 2004
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6. Clarke's greatest contribution maybe that of leading the revolt of the professionals. Career White Staff can blow the whistle on this administration and it's obvious failures.
Submitted by: Al Lowe
10:34 PM EST, Mar 25, 2004
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7. Clarke is a fraud, The media is also very bias. This guy lied to sell a book and the media is giving him a pass. What ever happened to fairness in the press not one of the major outlets have covered any of this guys conflicts in his stories !!!!
Submitted by: Mark L
10:33 PM EST, Mar 25, 2004
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8. I believe Clarke. He did the right thing by telling the country what a doofus we have squatting in our White House. The very fact that Bush is afraid to talk to the whole panel is extremely telling.
Submitted by: Sylvia Cunningham
10:10 PM EST, Mar 25, 2004
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9. The Republicans for 8 years and 70 million tax payer dollars,had the FBI investagating Clinton.Maybe it is time for America to vote them out!
Submitted by: Independent
10:09 PM EST, Mar 25, 2004
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10. One has only to read these comments to get some idea of the extent of failure of the American education system, and the brain damage done by our "recreational" drug culture! Love is dying and Hate now controls our destiny.
Submitted by: Billie E.
9:57 PM EST, Mar 25, 2004
http://www.newsday.com/news/nationworld/ny-clarktalkback0323,0,2161817.graffitiboard?coll=ny-top-spa...
More interesting news: Videos of Hooters Waitresses Investigated
WEST COVINA, Calif. - Nearly 200 women who applied for jobs at a Hooters restaurant were secretly videotaped in a trailer while they undressed to put on a Hooters uniform, police said.
Authorities raided the trailer last month and seized a computer that held 180 digital videos of the women, ages 17-25, Lt. Mark Dettor said.
"None of us suspected we would find that many videos, and we are dealing with victims who are shocked and feel betrayed," he said.
Hooters is a national chain known for its scantily clad waitresses, who wear low-cut tank tops and shorts. The restaurant in West Covina, about 18 miles outside of Los Angeles, was scheduled to open in April.
No charges have been filed, Sandi Gibbons, a spokeswoman for the Los Angeles County district attorney, said Friday.
Justin Johl, a lawyer for Hooters, said the company was outraged and was conducting its own investigation.
Police also searched the home of Juan Aponte, 32, a former manager for a Hooters in Pasadena. He has not been arrested or charged, and his lawyer, Brian Michaels, declined to comment on the investigation.
http://news.yahoo.com/news?tmpl=story&u=/ap/20040326/ap_on_re_us/hooters_videos
She'll testify soon.
In the confrontation between the stream and the rock, the stream always wins - not through strength but by perseverance. (H. Jackson Brown)
We the people are the stream, the administration is the cocky rock!
Wonder if there was anything in the war budget to buy up counter propaganda...wonder who is really buying up all those books?
Time to Bring in the Super Anti Terrorist Rage Machines
Their Here, Their There, Their Everywhere, So Beware!
Its a big distraction to getting on with real productive business but there are ways to go all electronic and opt out of the system...Atlas Shrugging by these firms hasn't worked.
The Times are Changing?
Thursday March 25, 12:30 pm ET
The Liberal Government of Canada Reintroduces Bill C-10 -- formerly bill C-38 -- to Decriminalize Non-Medical Marijuana
NEW YORK, March 25, 2004 (PRIMEZONE) -- The following information is being issued by Amigula Incorporated:
Amigula Incorporated (Other OTC:AMJL.PK - News), the World's First Publicly traded Medical Marijuana Company, today announced that the company recognizes that parliamentary Bill C-10 has been reintroduced into Canadian parliament effectively decriminalizing marijuana in Canada.
The federal government formally reintroduced some key pieces of legislation that were left unattended to after the Liberal government prorogued Parliament in November 2003.
Minister of Justice and Attorney-General Irwin Cotler formally reintroduced the controversial legislation to decriminalize possession of small amounts of marijuana.
The bill C-10 -- formerly C-38, which is virtually unchanged -- proposes that marijuana possession under 15 grams will result in a fine only. In sensational news, Western Australia decriminalized marijuana last week. This could affect the Canadian parliament's vote in a few weeks.
Western Australia -- Marijuana is now decriminalized in Australia
Western Australian Premier Geoff Gallop has defended the State's new cannabis laws, which came into effect yesterday. People caught with a small amount of cannabis, or with no more than two plants, will either be fined or will have to complete a counseling session, rather than incur a criminal record.
Amigula Incorporated has seen the writing on the wall, as the NDP government may become the important swing vote in Canadian Parliament when an election is called in the fall 2004. The NDP government is on the right track -- they have clearly stated that they would legalize marijuana and properly (sin) tax it as a commodity, states Peter Hilton Mijovick company treasurer.
During the previous session of Parliament, in October/November 2003, Bill C-38 was examined by the Special Committee on the Non-Medical Use of Drugs and was amended. Throughout the committee process, the NDP government pushed for a number of changes. The NDP got some movement from the government on certain aspects of the Bill. Parliament suspended in November and returned to session as of February 2004. The Bill (now called C-10) has been reintroduced for debate at the same stage it was at when the House was suspended in November.
The September 30, 2002 Speech from the Throne indicated that the federal government would consider the possibility of the decriminalization of marijuana possession.
What has been introduced under the Bill is a fine regime for simple possession (under 15 grams). A $150 fine for adults and $100 for youth would be issued for possession, but no criminal charges could be laid. For possession of 15-30 grams, police would have the discretion either to issue a ticket of $300 for an adult and $200 for a youth, or to proceed by a summary conviction criminal charge with a penalty of up to 6 months in prison, up to a $1000 fine, or both (plus, of course, a criminal record if the police proceed by way of criminal charge).
Although the federal NDP was able to get improvements on two significant parts of the Bill (sealing of records and personal cultivation), the NDP government remains concerned that Bill C-10 does not even go so far as to decriminalize marijuana, let alone set up a much more sensible regulatory regime.
The NDP government supports the following
Amnesty Provisions
Past charges or convictions for simple possession of marijuana would be erased; a pardon does not go far enough. It would be required to go back as far as records are kept.
Records for contraventions/receiving of fines
Records for people who received a fine for simple possession and/or cultivation for personal use of marijuana would be sealed and not shared with Interpol or other foreign jurisdictions.
Non-commercial transfer of marijuana
Currently, even simply giving marijuana for no money (``passing a joint'') is considered trafficking. Bill C-38 should be amended so that non-commercial transfers of up to 30 grams of marijuana not be considered trafficking.
Reasonable grounds required for searches
Changes need to be made to the provisions required by police to obtain a search warrant to enter a person's home. Under the current Controlled Drug and Substances Act, suspicion that any amount of an illicit drug is in a home is enough for a warrant to be issued. The Bill should include new provisions that are more consistent with decriminalization. The Bill should be amended to require police to demonstrate reasonable grounds to believe that the amount of marijuana in the home exceeds 30 grams, or that trafficking -- which would not include simple non-commercial transfer -- of marijuana is occurring in order to obtain a search warrant.
Fines
The proposed fine for possession of up to 30 grams of marijuana should be eliminated. Alternatively, the NDP proposed that fines for possession of up to 30 grams of marijuana be changed to $25 for both adults and youth.
If a fine system is adopted, possession of any amount up to 30 grams should be ticket-able only. The discretion that the current Bill gives to the police to criminally charge a person possessing between 15 and 30 grams of marijuana should disappear.
A special provision to the Bill should be added to guarantee no imprisonment on defaulting on the payment of fines.
Personal cultivation
Non-punitive provisions for personal cultivation should be included in the Bill, allowing for the personal cultivation of up to 5 plants.
Warren Eugene, the company founder & Chief Executive Officer, states, ``We hope to qualify for NASDAQ or Amex -- that's when the business really takes off.
When we file with the SEC -- we will focus on the revenue model for medical and recreational marijuana.`` Mr. Eugene also goes on to say, ''It would make good economic and political sense for Canada to regulate and tax marijuana as they do tobacco and alcohol. There is a huge, untapped taxable base available to support many initiatives including the paying down of deficits, the funding of social initiatives such as the ailing school system and the distraught medical system, social insurance, homelessness, the arts, sports -- all contribute to the overall good of people around the world. In just this stand alone model, over $900 million per year in tax revenue may be realized.`` The company is an original-agricultural-pharmaceutical-brand.
Mr. Eugene, is planning to attract large name Hollywood celebrities to endorse his company's marijuana products; he feels the timing -- becoming a reporting issuer -- is very beneficial to the project.
Mr. Eugene is recognized as a pioneer in industry as a founder of both Internet Gaming and E-cash (Electronic Cash), producing timely entrepreneurship while recognizing opportunities created through technological advances. He has been featured in esteemed publications like Time Magazine, USA Today, and The Wall Street Journal as well as prominent network and distribution channels like CNBC, CBS, MSN, CNN, Reuters, Bloomberg, PBS, AM New York and hundreds of international news services.
About Amigula Inc.
Amigula Inc. (http://www.Amigula.com) has recently completed the purchase of 51% of Medical Cannabis Inc. and has announced their plans to file as a reporting issuer. The company plans to list on a major exchange beginning with an application for a listing on the American Stock Exchange (AMEX) or NASDAQ as well as several European exchanges. The company views the current prohibition of marijuana as similar to that of alcohol, beer and tobacco. Canada's marijuana crop alone is estimated at $4 billion to $7 billion. If a single company controlled it, it would be larger than Canada's oil and gas business and agricultural industries. On October 7, 2003 the Ontario Superior Court ruled that business and individuals be allowed to grow and supply medical marijuana, effectively relieving the Canadian government of its often criticized and fairly unsuccessful attempts. Health Canada ``permitted persons'' (exemptees) can now pay Amigula to grow marijuana for them. The ruling makes it easier for sick people to get marijuana by allowing them easier access -- more choice and fair prices. The company has a mandate to develop and improve the medical marijuana business worldwide and is on the acquisition and consolidation trail of other legal licensed marijuana operations with notable international brands.
Statements in this press release that are not historical facts are forward-looking statements within the meaning of the Securities Act of 1933, as amended. Those statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements reflect management's current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward- looking statements due to a number of important factors, and will be dependent upon a variety of factors, including, but not limited to, our ability to obtain additional financing and access funds from our existing financing arrangements that will allow us to continue our current and future operations. The Company undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in the Company's expectations with regard to these forward-looking statements or the occurrence of unanticipated events.
Contact:
Amigula Incorporated
Warren Eugene
President & Director
(416) 838-3600
www.amigula.com
First Publicly Traded Marijuana Company -- Addresses the Short Interest in Their Stock and the Harm to Shareholders
Thursday March 25, 1:55 pm ET
NEW YORK, March 25, 2004 (PRIMEZONE) -- Amigula Incorporated (Other OTC:AMJL.PK - News) -- the World's First Publicly traded Marijuana Company -- today announced that the company will address the short interest in their stock. Based upon review of stock transfer records and the activity in the market, the company believes naked short sellers are involved in the stock. Amigula today announces contemplating a forward split of the stock to combat the short sellers that are adversely affecting the market. This would force delivery of all certificates. The company's shares are not DTC eligible. The short sellers were expected to cease their activities in February 2004, instead it was delayed until April 1, 2004.
Warren Eugene, President, states, ``These people are nasty and an unnecessary evil in the marketplace. It is about time they are removed from the process.''
About Amigula Inc.
Amigula Inc. (http://www.Amigula.com) has recently completed the purchase of 51% of Medical Cannabis Inc. and has announced their plans to file as a reporting issuer. The company plans to list on a major exchange beginning with an application for a listing on the American Stock Exchange (AMEX) or Nasdaq as well as several European exchanges. The company views the current prohibition of marijuana as similar to that of alcohol, beer and tobacco. Canada's marijuana crop alone is estimated at $4 billion to $7 billion. If a single company controlled it, it would be larger than Canada's oil and gas business and agricultural industries. On October 7, 2003 the Ontario Superior Court ruled that business and individuals be allowed to grow and supply medical marijuana, effectively relieving the Canadian government of its often criticized and fairly unsuccessful attempts. Health Canada ``permitted persons'' (exemptees) can now pay Amigula to grow marijuana for them. The ruling makes it easier for sick people to get marijuana by allowing them easier access -- more choice and fair prices. The company has a mandate to develop and improve the medical marijuana business worldwide and is on the acquisition and consolidation trail of other legal licensed marijuana operations with notable international brands.
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Statements in this press release that are not historical facts are forward-looking statements within the meaning of the Securities Act of 1933, as amended. Those statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements reflect management's current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward-looking statements due to a number of important factors, and will be dependent upon a variety of factors, including, but not limited to, our ability to obtain additional financing and access funds from our existing financing arrangements that will allow us to continue our current and future operations. The Company undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in the Company's expectations with regard to these forward-looking statements or the occurrence of unanticipated events.
Contact:
Amigula Incorporated
Warren B. Eugene
(416) 838-3600
www.amigula.com
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