Eideard

Michael Woodford demonstrates oversight by Japan’s regulators
Daylife/Reuters Pictures used by permission

Four months after one of Japan’s biggest corporate scandals, police and prosecutors on have arrested seven men, including the former president of Olympus Corp and ex-bankers, over their role in a $1.7 billion accounting fraud at the medical equipment and camera maker.

Tokyo prosecutors arrested ex-President Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada on suspicion of violating the Financial Instruments and Exchange Law, officials said.

Also arrested were former bankers Akio Nakagawa and Nobumasa Yokoo and two others suspected of helping hide huge investment losses through complex M&A deals…

The scandal was exposed in October by then-CEO Michael Woodford, who was sacked by the Olympus board after querying dubious M&A deals later found to have been used to conceal the losses. Woodford campaigned to win his job back, but gave up that bid last month, blaming cozy ties between management and big Japanese shareholders and citing the strain on his family.

“After going to hell and back, this is a day to remember,” Woodford said in an email on Thursday. The Briton, who was a rare foreign CEO in Japan, plans to write a book about his experiences uncovering the scandal.

The arrests come as investors focus on who will run the once-proud company when its management steps down at an April 20 shareholders meeting, and whether Olympus will seek a capital tie-up to fix its balance sheet.

Olympus is banking on that April meeting marking a turning point in the scandal, with at least six of its 11-member board, including current President Shuichi Takayama, set to resign…

An Olympus spokesman said the company would cooperate fully with the investigative authorities. It is also under investigation by law enforcement agencies in Japan, Britain and the United States. Yup. They all did such a thorough job before Woodford blew the whistle.

Olympus in December filed five years’ worth of corrected financial statements plus overdue first-half results, revealing a $1.1 billion dent in its balance sheet, triggering talk it would need to merge or forge a business tie-up to raise capital.

On Monday, it forecast a $410 million full-year loss due largely to its ailing camera operations, but its core endoscope business appeared unscathed by the scandal…

Looking forward to Woodford’s book. To be followed by interviews from self-titled investigative journalists who will ask the coppers in the UK, US and Japan why they didn’t notice the fraud. No one will ask the journalists – considered expert in financial matters – why they didn’t notice the fraud.

Everyone has lunch together and celebrates quarterly statements as achieving something more than the paper they’re printed on. Some financial markets have to offer at least a semblance of reality. Japan isn’t one of them.

Daylife/Getty Images used by permission

Italian prosecutors have asked a court to sentence former Prime Minister Silvio Berlusconi to five years in prison if he is found guilty of corruption charges.

Berlusconi is charged with bribing a British lawyer, David Mills, to secure favorable testimony in legal cases. Prosecutors requested prison time as they summed up their case against him…and the three-judge court is expected to issue a verdict by late February.

The former premier’s lawyers have argued that the statute of limitations in the case has expired, and Mills’ conviction in the case was overturned in 2010. And even if convicted, the 75-year-old Berlusconi may never serve time due to appeals and his age — under Italian law, judges can suspend sentences for convicts over 70.

The 75-year-old Berlusconi dominated Italian politics for a decade and a half before resigning amid a financial crisis in November. He has survived a series of political, corruption and sex scandals over the years, involving allegations of embezzlement, tax fraud and bribery.

In addition to the Mills case, he also faces trial on charges that he hired an underage prostitute and later tried to pull strings to get her out of jail when she was arrested for theft.

Jail time for Berlusconi? Overdue.

One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.

A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.

Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.

Chris Koster, the Missouri attorney general, will prosecute the case. “The grand jury indictment alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery,” Mr. Koster said in a statement…According to the indictment, Ms. Brown acted “knowingly in concert with DocX and its employees” to mislead and defraud the Boone County recorder of deeds. The documents central to the indictments were deeds of release, which eliminate a previous claim on an asset. Such releases are typically issued when a mortgage has been paid off…

Since evidence of pervasive foreclosure improprieties emerged, state officials have mostly brought civil suits against the institutions and law firms that filed the fraudulent documents…The Missouri grand jury found that the person whose name appeared on 68 documents executed on behalf of a lender — someone named Linda Green — was not the person who had signed the papers. The documents were submitted to the Boone County recorder of deeds as though they were genuine, Mr. Koster said.

A recent civil lawsuit against Lender Processing by the attorney general of Nevada found that former workers at one of its divisions had described their work as “surrogate signers.” One worker who was quoted in the complaint said she had been paid $11 an hour and told that her job was “to sign somebody else’s signature on documents.” The person said she had signed roughly 2,000 documents a day for months, according to the lawsuit.

Now look around at what passes for insurgent political candidates in this land of ours. These hypocrites not only waste TV time with prattle about crap policies proven useless over decades of American history – from trickle-down economics to laissez-faire resolution of the Great Recession – they endorse continuing practices like this without the oversight which caught these crooks in the act of stealing.

I’ll start trusting the decision management of chain banks — after they’re forced to match the standards of my local bank for a couple of decades.

Italian police have arrested 39 doctors who were selling holy water as a cure for cancer and other diseases…

Those arrested were charged with conspiracy, fraud, personal injury and wrongful practice for selling the holy water, Italy’s ANSA news agency reported.

Customers were told online the miracle cure, called “White Light Water,” came from the holy shrines of Lourdes, Fatima and Medjugorje and cost as much as $263 per vial. Doctors selling the fake holy water often told customers to abandon traditional medical treatment and rely instead on the “frequencies” given off by the blessed water, police said.

Police searched four doctors’ offices in Ancona, Bari, Milan and Venice, where the concoction was bottled and redistributed, plus 4,000 flasks of ready-to-ship water.

Face it. People who believe that water can be changed into something holy that will cure your ills – are ready and willing targets for fraudsters.

Never mind that last question. I already know the answer to that one. Including the part about not paying taxes on the sale.

Whistleblowers earned more than $532 million in 2011 through lawsuits alleging fraud against the U.S. government, a record for such payouts…Private parties suing on the behalf of the government collected $140 million more than they did the previous year, even as the Justice Department’s total civil fraud sanctions remained consistent…

The DOJ recovered some $3.02 billion last year through cases under the False Claims Act – the third-largest recovery ever, just shy of the $3.09 billion it won through cases in 2010.

Golly gee. Anyone think enforcement has changed a little bit since the Bush/Cheney cabal left town.

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Mom — and the unpaid-for bodywork Mom is wanted in Germany for

The mother of a German national suspected of one of the worst arson sprees in Los Angeles history appeared before a U.S. magistrate judge Tuesday in the German government’s effort to extradite her on fraud charges…

His mother, 53-year-old Dorothee Burkhart, was arrested by Los Angeles police during a traffic stop on December 28, a day before the first of 52 fires, mostly in parked cars, that investigators suspect were part of a series of arsons.

The son, who was arrested Monday, was charged with one count of arson of an inhabited dwelling. He is likely to face additional charges as the investigation moves forward, said Los Angeles Mayor Antonio Villaraigosa…

It did not appear that she knew her son had been arrested a day earlier on the arson charge…

A federal extradition complaint said she is wanted in Germany on 19 counts of fraud, including an allegation that she defrauded the doctor who performed breast augmentation surgery on her in 2004. The other fraud charges center on rent and security deposits for apartments in Frankfurt, Germany, the complaint said.

Dorothee Burkhart left Germany last October for California, where she lived with her son in a Hollywood apartment, according to the extradition complaint.

Investigators seized press clippings of arson attacks in Germany from the apartment, according to a law enforcement official who spoke on the condition of anonymity…

Los Angeles Police Chief Charlie Beck said officials believe — and hope — the fires were set by one person. But they will proceed as though others may be involved until they know for sure, Beck said…

Los Angeles County Reserve Sheriff’s Deputy Shervin Lalezary, who draws a salary of $1 a year, was hailed as a hero for arresting Burkhart. Lalezary, an Iranian-born lawyer who moonlights as a deputy, pulled over a van in Hollywood driven by a man who resembled the person seen on the surveillance video. With the help of backup officers, he then arrested the driver, Burkhart.

This will probably put a crimp in mom’s new career in California. Apparently, she’s been advertising her services for “sensual tantra massage” and offering “full body hot oil body to body sliding massage”.

If they get hard up for Euros they could always convert to condos

Greek authorities…jailed the abbot of a 1,000-year-old Greek Orthodox monastery pending trial for what officials said was a key role in a land deal with the state that became a major political scandal.

Investigators have said the deal, which was revealed several years ago, was weighted in favor of Vatopedi Monastery in northern Greece and cost taxpayers the equivalent of about $131 million. Two ministers in a previous, conservative government lost their jobs over the deal, which was ultimately canceled, although legal issues have delayed full restitution.

The scandal nonetheless contributed significantly to the conservatives’ 2009 general election defeat.

Abbot Efraim, 55, was led to the Korydallos prison in Athens after spending the night in the capital’s police headquarters. He had traveled 370 miles from the Orthodox monastic sanctuary of Mount Athos, from which women and female animals have been banned since 1046…

Female animals, eh? We know what that’s about.

No trial date has been set, and the abbot’s lawyers are expected to apply for his release. Under Greek law, suspects can be jailed for up to 18 months pending trial.

Greek politicians embroiled in the scandal will not stand trial, as Parliament ruled this year that the statute of limitations had expired.

Vatopedi Monastery has a treasure trove of medieval artifacts and books. It has attracted large numbers of male guests, including Prince Charles of Britain, who is a frequent visitor to Mount Athos.

But, no women guests, no female pets. I guess.

Internet bandits devised an international scheme to hijack more than 4 million computers in more than 100 countries, manipulating traffic on Netflix, the U.S. Internal Revenue Service and other popular websites to generate at least $14 million in fraudulent advertising revenue.

Six of the seven people named in the indictment unsealed Wednesday are Estonians who are in custody in that country, and prosecutors said extradition was being sought. One Russian remains at large.

About 500,000 computers in the United States were infected with malware, including those used by individuals, educational institutions, nonprofits and government agencies like NASA, U.S. Attorney Preet Bharara told a news conference.

Bharara called the case the first of its kind because the suspects set up their own “rogue” servers to secretly reroute Internet traffic to sites where they had a cut of the advertising revenue. “On a massive scale, the defendants gave new meaning to the term ‘false advertising,’” Bharara said.

The problem was first discovered at NASA, where 130 computers were infected. Investigators followed a digital trail to Eastern Europe, where the defendants operated “companies that masqueraded as legitimate participants in the Internet advertising industry,” according to the indictment…

The indictment estimated the defendants “reaped least $14 million in ill-gotten gains” over a five-year period.

It’s easy enough to say “Don’t click unless you are certain of the source” but, the average user – or even a skilled user, presuming that’s who was fooled at NASA – is only going to spend a minimum amount of time before deciding whether or not an innocent-appearing email in their inbox is legit.

Better solutions require better protective software – or a better operating system. Unix-based operating systems like OS X can be relied upon to provide security beyond the capabilities of most hackers, most cyber-crooks. Additional steps and stages can be placed between a user’s computer and the world living out there on the Internet. The problem resolves back to beancounters who say they can’t or won’t spend that extra little bit. Pennywise and pound-foolish loses again.

A Dutch psychologist has admitted making up data and faking research over many years in studies which were then published in peer-reviewed scientific journals.

Diederik Stapel, a psychologist working at Tilburg University in the Netherlands, said he had “failed as a scientist” and was ashamed of what he had done, but had been driven to falsifying research by constant pressure to perform. The respected journal Science, which published some of Diederik Stapel’s work earlier this year, issued an “expression of concern” editorial in which it said it now had serious concerns about the validity of Stapel’s findings.

NSS. Part of the point of peer review is questioning in material and scientific analysis – not just accepting results as rote. Certainly in many other vocations that is the case.

Stapel was suspended from his position at Tilburg University in the Netherlands in September when an investigation was launched by the university into his work.

“The official report … indicates that the extent of the fraud by Stapel is substantial,” Science’s editor-in-chief Bruce Alberts wrote in the journal’s online edition Science Express…

The process of peer review, in which other scientists are asked to critique and analyze a paper before it is accepted for publication in a journal, is designed to minimize the risk that false data will get through, but it is not infallible.

As I said above, regardless of how a paper is vetted beforehand, a critical part of the process is investigation after the fact. Cripes, there are discussions in archaeology, paleontology, astronomy which have been in progress for decades.

The British drug company GlaxoSmithKline said Thursday that it had agreed to pay $3 billion to settle United States government civil and criminal investigations into its sales practices for numerous drugs.

The settlement would be the largest yet in a wave of federal cases against pharmaceutical companies accused of illegal marketing, surpassing the previous record of $2.3 billion paid by Pfizer in 2009. In recent years, drug companies have been prime targets of federal fraud investigations, which have recovered tens of billions of dollars for Medicaid and Medicare.

The cases against GlaxoSmithKline include illegal marketing of Avandia, a diabetes drug that was severely restricted last year after it was linked to heart risks. Federal prosecutors said the company had paid doctors and manipulated medical research to promote the drug…I keep forgetting about the “high standards” of our medical professionals.

The agreement to settle its biggest federal cases should be completed next year, the company added in the statement. It said $3 billion would settle not only the Avandia case, but also a Justice Department investigation of its Medicaid pricing practices and a nationwide investigation led by the United States attorneys in Colorado and Massachusetts into the sales and marketing of nine of its drugs from 1997 to 2004…

Critics of the settlements made with drug companies argued for stiffer penalties, including prison sentences for corporate officials…How about prison sentences for Congress-thugs who enabled a lot of the fraud?

Patrick Burns, spokesman for Taxpayers Against Fraud, an advocacy group for whistle-blowers, said, “Who at Glaxo is going to jail as a part of this settlement? Who in management is being excluded from doing future business with the U.S. government..?”

Mr. Burns said the health care sector accounted for more than 80 percent of the $4 billion in overpayments recovered by the government in 2010 as a result of whistle-blower lawsuits and resulting fraud investigations by federal and state agencies.

But, don’t worry. The Republicans in Congress just ran a bill through the House to remove jury trials from whistleblower lawsuits. They feel safer relying on judges.

Perish the thought we should have a system of laws and sanctions which involves ordinary Americans who might not understand about treating really important corporations with the proper respect.