White Collar Fraud

There is a saying, “It takes one to know one.” I am a convicted felon, former CPA, and former criminal CFO of Crazy Eddie. Today, I teach law enforcement agencies, professionals, and businesses how to identify fraud and train them to catch the crooks. This blog investigates white-collar crime, securities fraud, accounting irregularities, corruption, and other related topics. Accounting irregularities investigated by me are referred to appropriate government agencies as a whistleblower.

Friday, December 31, 2010

White Collar Fraud List of Blog Posts for 2010

12/16/10: A Question for Green Mountain Coffee Roasters

12/13/10: Green Mountain Coffee’s financial reporting doesn’t taste as good as its coffee

12/09/10: To Green Mountain Coffee Roasters: My Questions for Today's Earnings Call

12/08/10: Green Mountain Coffee Roasters, Slow Murky Drip

12/02/10: Green Mountain Coffee Roasters, Time to Spill the Beans?

11/23/10: California District Attorneys Sue Overstock.com for Defrauding Consumers While the SEC Finds New Disclosure Problems

11/04/10: Patrick Byrne Absent From Third Quarter Earnings Call

11/01/10: More Trouble for Overstock.com and Patrick Byrne after Dismal Third Quarter Report

10/21/10: Interesting Issues in Timing of Green Mountain Insider Stock Sales and Disclosure of SEC Inquiry

10/14/10: Does Overstock.com CEO Patrick Byrne Know When to Shut Up, Especially While the SEC Investigates his Company?

10/11/10: Crazy Eddie Documentary: How We Screwed the Government, Wall Street, Investors, Consumers, and Everyone Else

10/03/10: Will KPMG Ever Wake Up and Finally Learn Its Lesson after Being Duped into Completing Crazy Eddie’s Audits Too Early Twenty Three Years Ago?

09/24/10: Comtech Does the Right Thing by Fixing Errors in Latest Report

09/16/10: What is Accounting?

09/12/10: Five More Public Companies Who Need to Learn How to Properly Compute EBITDA under SEC Rules

08/06/10: Overstock.com CEO Patrick Dumped Stock Ahead of Bad Earnings Report and Misled Investors About Earnings

08/04/10: Another Question about Timing of NBTY Insider Stock Purchases Prior to Announcement of Carlyle Acquisition

07/26/10: Penson Worldwide and Comtech Telecommunications Need to Learn How to Properly Calculate EBITDA under SEC Rules

07/25/10: My Life as a White-Collar Criminal

07/20/10: I Have A Question

07/14/10: Goldman Sachs Settlement with SEC Ignores Company’s Duty to Provide Timely Disclosures to Shareholders about Investigation Leading up to Litigation

07/07/10: Open Letter to the Securities and Exchange Commission: Investigate Troubling Issues at Amedisys Missed by Wall Street Journal

06/27/10: Open Letter to the Securities and Exchange Commission Part 9: Overstock.com's Excuses Simply Don't Add Up

06/22/10: If You Question Medifast's Revenue Accounting, Expect a Subpoena Rather Than a Rebuttal

06/20/10: Open Letter to the Securities and Exchange Commission Is Medifast Complying with Revenue Accounting Rules?

06/17/10: Open Letter to the Securities and Exchange Commission: Can a Convicted Felon Help You Find Financial Reporting Violations?

06/15/10: Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance

06/13/10: Open Letter to the Securities and Exchange Commission: Why You Must Review Medifast's Revenue Accounting Disclosures

06/09/10: How White-Collar Criminals Exploit Your Vanity- Beware of Compliments

06/07/10: Politicians and Public Companies Who Instigate SEC Investigations in an Attempt to Silence Critics

06/02/10: Why President Barack Obama Must Take Steps to Significantly Increase Law Enforcement Resources to Combat White-Collar Crime

06/01/10: Fraud Discovery Issues Investigative Report Rebutting Congressman Anthony Weiner's Allegations Against Glenn Beck Show Advertiser Goldline

05/26/10: Patrick Byrne Pockets $3.1 Million from Dumping Overstock.com Shares While Trying to Stave Off Possible SEC Enforcement Action

05/24/10: The Brutality of Non-violent Organized White-Collar Criminal Groups

05/19/10: Barry Minkow Gives Medifast the Middle Finger

05/18/10: Can We Trust Bidz.com's Financial Reporting?

05/14/10: More Nepotism and Undisclosed Shady Related Party Transactions Found at InterOil

05/09/10: Straight Talk about Brutality of White Collar Crime from a Convicted Felon

05/05/10: Is InterOil Another Tyco or Crazy Eddie?

05/05/10: Can Investors Rely on Overstock.com's Reported Q1 2010 Numbers?

05/02/10: Bomb Found in New York City's Times Square: A Warning from a Convicted Felon

04/29/10: Are InterOil's Auditors Capable of Finding Fraud in Plain Sight?

04/28/10: The Real Reason Behind Danny DeVito’s Crazy Eddie Movie Project Meltdown from Eddie Antar’s Cousin and Criminal CFO Sam E. Antar

04/20/10: New Movie: Shia Labeouf Helps Thomas Belesis from John Thomas Financial Pump InterOil

04/20/10: Goldman Sachs Tells More Bull to Investors

04/20/10: Should the SEC Investigate Medifast Like It's Investigating Pre-Paid Legal?

04/18/10: Did a Clever SEC Bait Goldman Sachs into Compounding Its Legal Problems With the "Kiss of Death" Message?

04/15/10: Lennar: A Corporate Sleazebag?

04/08/10: Open Letter to Morgan Stanley "Research" Analyst Evan Calio: About Your Seriously Flawed Report on InterOil

04/06/10: InterOil: Deal or No Deal? Does it Matter?

04/05/10: Open Letter to the Securities and Exchange Commission (Part 8): Bring Enforcement Action Against Overstock.com for False and Misleading Disclosures

04/02/10: New False Disclosures about Overstock.com's "Tax Dodge" Found in 10-K

04/01/10: Overstock.com's New 10-K Report Reveals Management Deceptions, Major Internal Control Problems, and Zero Quality Earnings

03/31/10: Did InterOil Commit Securities Fraud?

03/30/10: Did Lennar Falsify a HUD Document?

03/29/10: Another Key Departure at Overstock.com: It Went Unreported, Too

03/29/10: The InterOil Saga: Convicted Felons Battle Current Breed of Stock Market Miscreants

03/26/10: Is InterOil Built on a Foundation of Fraud?

03/25/10: Can Shia LaBeouf Help Shed Light on a Stock Market Manipulation Scheme Involving InterOil and John Thomas Financial?

03/17/10: Overstock.com Delays Filing 10-K, Reports Even More GAAP Violations, While Patrick Byrne Hides

03/16/10: Indicted Former Democratic Assemblyman Louis Manzo Would be Wise to Stop Blabbing and Simply Shut Up

03/04/10: Open Memo to Medifast Board Chairman Bradley T. MacDonald and Chief Executive and CFO Michael S. McDevitt: Q4 2009 Earnings Call Questions

02/21/10: First Jury Trial in Federal Corruption Probe Based on Informant Solomon Dwek Convicts Beldini: Are Some Defendants Living on Hope?

02/19/10: Open Memo to Medifast Board Chairman Bradley T. MacDonald and Chief Executive and CFO Michael S. McDevitt: Grow Some Hair on Your Chest

02/16/10: The Mentality of White Collar Criminals: Providing Insight on "Connect with Mark Kelley"

02/04/10: My Reporting of a Financial Statement Manipulation Scheme at Overstock.com is Vindicated by Latest Company Announcement

02/02/10: Open Letter to the Securities and Exchange Commission (Part 7): Why Overstock.com and David Chidester Parted Ways

01/28/10: Former Overstock.com Insider David Chidester in the Hot Seat

01/27/10: Unusual Timing of Medifast Auditor Resignation

01/27/10: Open Letter to KPMG: The Ties That Bind Overstock.com, Patrick Byrne, and Deep Capture LLC

01/25/10: Open Letter to KPMG: A Warning About Overstock.com, Your New Audit Client

01/20/10: Roddy Boyd Article Will Cause SEC to Expand Investigation of Overstock.com and Probably Result in Sales Tax Investigation by New York

01/12/10: Open Memo to Medifast Chief Executive and CFO Michael S. McDevitt: Cut the BS and Address Troubling Issues Raised by Barry Minkow

01/03/10: Open Letter to the Securities and Exchange Commission Part 6: Conflicting Disclosures by Overstock.com Reveal Improper Audit Opinion Shopping

Media Commentary, Mentions, and Referrals During 2010

Thursday, December 16, 2010

A Question for Green Mountain Coffee Roasters

To CFO Francis G. Rathke:

While Green Mountain Coffee Roasters (NASDAQ: GMCR) is handling matters relating to the Securities and Exchange Commission inquiry, can you please clear up some confusion in two financial disclosures from the 10-K report below?

10-K report - page 33

Gross Profit

Fiscal 2010

Company gross profit for fiscal 2010 totaled $425.8 million, or 31.4% of net sales, as compared to $245.4 million, or 31.2% of net sales, in fiscal 2009. Gross margin increased over fiscal 2009 due to the additional manufacturing margin resulting from the acquisition of Timothy’s and Diedrich, and realized manufacturing efficiencies within SCBU. These increases in gross margin were offset by higher brewer sales returns and warranty expense. In fiscal 2010, the Company was able to recover approximately $6.0 million as reimbursement from its suppliers related to a quality issue associated with certain brewer models produced primarily in late calendar 2009. The quality issue did not represent a safety concern, and is believed to be tied to a component used in limited production primarily from late 2009. This recovery was reflected as a reduction to warranty expense and moderately offsets the higher brewer warranty expense and sales returns costs incurred during fiscal 2010. [Bold and italicized emphasis added.]

10-K report - page F-37

Product Warranties

The Company offers a one-year warranty on all Keurig® brewers it sells. Keurig provides for the estimated cost of product warranties, primarily using historical information and repair or replacement costs, at the time product revenue is recognized. During fiscal 2010, the Company experienced higher warranty returns associated with certain brewer models associated with a quality issue. The quality issue did not represent a safety concern, and is believed to be primarily tied to a component used in limited production primarily from late 2009 which came to the Company’s attention in the second quarter of fiscal 2010. The Company is continuing to replace any brewers exhibiting quality issues and has implemented hardware and software changes which it believes have corrected the issue, however, there can be no assurance that we will not experience some additional warranty expense related to this quality issue in future periods. The Company reached agreement with its suppliers and has recovered approximately $6.0 million as reimbursement related to this issue. This recovery was reflected in fiscal 2010 cost of sales as a reduction to warranty expense and substantially offsets the higher warranty expense and sales returns costs incurred in fiscal 2010. [Bold and italicized emphasis added.]

So I have a question.

How is it that the $6 million reimbursement "moderately offsets the higher brewer warranty expense and sales returns costs incurred during fiscal 2010" while that same reimbursement "substantially offsets the higher warranty expense and sales returns costs incurred in fiscal 2010"?

If you respond to my question, I will post your answer in my blog.

Respectfully,

Sam E. Antar

Disclosure

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped my cousin Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes in cold-blood for fun and profit, and simply because I could.

If it weren't for the heroic efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

There is a saying, "It takes one to know one." Today, I work very closely with the FBI, IRS, SEC, Justice Department, and other federal and state law enforcement agencies in training them to identify and catch white-collar criminals. Often, I refer cases to them. I teach about white-collar crime for professional organizations, businesses, and colleges and universities.

Recently, I exposed GAAP violations by Overstock.com which caused the company to restate its financial reports for the third time in three years. The SEC is now investigating Overstock.com and its CEO Patrick Byrne for securities law violations (Details here, here, and here).

I do not seek or want forgiveness for my vicious crimes from my victims. I plan on frying in hell with other white-collar criminals for a very long time.

I do not own any Green Mountain Coffee Roasters or Overstock.com securities long or short. My investigations of these companies are a freebie for securities regulators to get me into heaven, though I doubt I will ever get there. My past sins are unforgivable.

Monday, December 13, 2010

Green Mountain Coffee’s financial reporting doesn’t taste as good as its coffee

On Thursday, December 9, 2010 at 5:30 PM Eastern, Green Mountain Coffee Roasters (NASDAQ: GMCR) held its Q4 2010 conference call to review its "financial results for its fiscal 2010 fourth quarter and full year.” About an hour before the call, management issued “prepared remarks” which were made available to investors in an 8-K report filed with the Securities and Exchange Commission. The company also filed its annual 10-K report for fiscal year 2010, after receiving a two week extension.

No quick resolution to SEC inquiry

In its prepared remarks, management continued to express hopes for a quick resolution to the SEC inquiry:

We continue to cooperate fully, timely and voluntarily with the SEC in response to its inquiry as we would like to move the inquiry along as quickly as possible. We are fully responding to all information requests.

However, management expressed disappointment that:

Nevertheless, we do not control the timing of the process.

Just last week, I told Ilene, Phil’s Stock World editor and Seeking Alpha contributor, that Green Mountain was “concerned about the SEC inquiry and that the company is far from being out of the woods.” Now, Green Mountain concedes that it does not know when the SEC inquiry will end.

Inability to give narrow guidance with only 16 days left in quarter

Management seems unable to provide narrow guidance on earnings with only 16 days left in the current quarter ending on December 25, 2010. See below:

Non-GAAP earnings per share in the range of $0.14 to $0.18 per diluted share excluding any acquisition-related transaction expenses, amortization of identifiable intangibles related to the Company’s acquisitions, foreign exchange impact of hedging the Canadian dollar purchase price of the pending Van Houtte acquisition, and legal expenses related to the SEC inquiry or pending litigation. [Bold and italicized emphasis added.]

CNBC Senior Stocks Commentator Herb Greenberg wrote:

For the first quarter, the company guided to a range of 14 cents to 18 cents a share, which was below street estimates. And remember, it offered up that 4 cent spread even though it only two weeks left in that quarter. And the current quarter is the quarter that presumably included Christmas shipments. [Bold and italicized emphasis added.]

With 75 of 91 days in the fourth quarter completed, that management cannot estimate its earnings with greater precision is concerning. But the main point is not whether or not Green Mountain will meet its earnings estimates. It’s the apparent inadequacy of internal controls. Proper internal controls would insure that Green Mountain's future reports will be free of material misstatements. Its inability to provide narrow guidance to investors near the end of the quarter suggests those controls are not in place. The company itself admits as much.

"Material weakness" in internal controls

In its 2010 10-K report, Green Mountain disclosed that management cannot assure investors that its future financial reports can be free of material errors due to continuing “material weaknesses” in internal controls:

Management’s determination that material weaknesses exist in our internal controls over financial reporting could have a material adverse impact on the Company.

We are required to maintain internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. In Item 9A of this Annual Report, management reports that material weaknesses exist in the Company’s internal control over financial reporting principally related to the Company’s period-end financial reporting and consolidation process. Due to these material weaknesses, management has concluded that as of the end of the period covered by this Annual Report, the Company’s disclosure controls and procedures were not effective. Consequently, and pending the Company’s remediation of the matters that have caused the control deficiencies underlying the material weaknesses, our business and results of operations could be harmed, we may be unable to report properly or timely the results of our operations, and investors may lose faith in the reliability of our financial statements. Accordingly, the price of our securities may be adversely and materially impacted. [Bold and italicized emphasis added.]

Furthermore, Green Mountain disclosed that:

...the resolution of the SEC inquiry could require the filing of additional restatements of our prior financial statements, and/or our restated financial statements, or require that we take other actions not presently contemplated. [Bold and italicized emphasis added.]

Thus, Green Mountain warned investors that it may not be able to properly report the results of its operations because of material weaknesses in its internal controls. In addition, Green Mountain surmised that “investors may lose faith in the reliability of our financial statements" and that the price of its securities "may be adversely and materially impacted.” In addition, it noted that its restated financial reports from 2007 to 2010 could be restated again.

Could Green Mountain have made more transparent disclosures about the possible outcome of the SEC inquiry?

On Monday, September 20, 2010, the SEC notified Green Mountain Coffee Roasters that it was conducting an informal inquiry and requested it to voluntarily submit information concerning “revenue recognition practices and the Company’s relationship with one of its fulfillment vendors.”

Eight days later, on September 28, 2010, Green Mountain surprised investors by disclosing news of the SEC inquiry in an 8-K filing. In that same 8-K report, Green Mountain disclosed that it discovered an "immaterial accounting error" affecting financial reports issued from 2007 to 2010. The company claimed that the margin error was “immaterial” and said it would correct that error by making a cumulative adjustment to earnings “in the quarter ended September 25, 2010.”

After the stock market closed on Friday on November 19, 2010, Green Mountain disclosed three new overstatements totaling $3.2 million pre-tax income and one new understatement of $0.7 million in pre-tax income, making a total overstatement of $10.1 million in pre-tax income. This time, the company announced that it would restate its financial reports issued from 2007 to 2010 to correct its errors.

Green Mountain reassured investors that “none” of the financial statement errors involved any wrongdoing by the company, its management, or its employees:

The internal investigation is nearly complete, and the Company continues to cooperate fully with the SEC. None of the financial statement errors implicate misconduct with respect to the Company or its management or employees. In addition, none of the financial statement errors are related to the Company’s relationship with M.Block & Sons, the fulfillment vendor through which the Company makes a majority of the at-home orders for the Keurig business unit’s single-cup business sold to retailers. [Bold and italicized emphasis added.]

Green Mountain provided standard disclaimer language found at the bottom of the 8-K report:

Note Regarding Forward-Looking Statements

Except for historical information, the matters discussed in this current report on Form 8-K are “forward-looking statements” within the meaning of the applicable securities laws and regulations. Forward-looking statements, including statements regarding the Company’s intent to restate its prior financial statements, the estimated adjustments of the restated financials, the internal investigation by the audit committee of the Company’s board of directors and the expected timing of filing the restated financial reports, involve risks and uncertainties which may cause actual results to differ materially from those stated here. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the risk that additional information may arise from the final conclusion of the audit committee’s internal investigation, the risk that the process of preparing and auditing the financial statements or other subsequent events would require the Company to make additional adjustments, the time and effort required to complete the restatement of the financial reports and the impact of the inquiry initiated by the SEC and any related or additional governmental investigative or enforcement proceedings, as well as other risks described more fully in the Company’s filings with the SEC. Forward-looking statements reflect management’s analysis as of the date of this current report on Form 8-K. The Company does not undertake to revise these statements to reflect subsequent developments, other than in its regular, quarterly earnings releases. [Bold and italicized emphasis added.]

However, investors apparently ignored the "forward-looking statements" disclaimer language and instead focused on the company's reassurance that there was no "misconduct." On the following Monday morning, at 8:21 AM Eastern on November 22, 2010 before the stock market opened, StreetInsider.com reported:

Janney Montgomery Scott reiterated their Buy rating and raised their fair value estimates on Green Mountain Coffee (Nasdaq: GMCR) from $40 to $50 following the restatement of financial results on Friday.

The firm said, "We believe the results of GMCR's internal investigation should sufficiently remove the key near-term overhang on the stock and expect the stock to be up meaningfully on this news." [Bold and italicized emphasis added.]

Barron’s reported that:

Cannacord Genuity Analyst Scot Van Winkle expects that the company's internal investigation will put the matter to rest, writing "we can be 99.99% confident that the SEC response will simply be inaction."

"In our view, the accounting issues are over.” [Bold and italicized emphasis added.]

The Wall Street Journal Market Beat blog reported that:

Bank of America Merrill Lynch analysts upgraded the stock to “Buy” from “underperform” Monday.

That day, Green Mountain shares climbed $5.52 to close at $35.78 per share, an 18.4% single day gain.

The mood of reassurance lasted briefly. On December 9, 2010, Green Mountain filed its 10-K report and added new and stronger language regarding the ongoing investigation by the SEC that wasn't present in its November 19th 8-K filing:

We face risks related to the ongoing SEC inquiry.

As previously disclosed, on September 20, 2010, the staff of the SEC’s Division of Enforcement informed the Company that it was conducting an inquiry into matters at the Company. The Company, at the direction of the audit committee of the Company’s board of directors, is cooperating fully with the SEC staff’s inquiry. At this point, we are unable to predict what, if any, consequences the SEC inquiry may have on us. However, the inquiry could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties and/or other amounts and could become subject to injunctions, an administrative cease and desist order, and/or other equitable remedies. The filing of our restated financial statements to correct the discovered accounting errors will not resolve the SEC inquiry. Further, the resolution of the SEC inquiry could require the filing of additional restatements of our prior financial statements, and/or our restated financial statements, or require that we take other actions not presently contemplated. We can provide no assurances as to the outcome of the SEC inquiry. [Bold and italicized emphasis added.]

On December 10, 2010, the next trading day, Green Mountain shares dropped 9.65% in value.

The language about the SEC inquiry in the December 9 10-K is more specific and more severe compared to the language in the November 19 8-K. Should Green Mountain have used the language it used in its December 9 10-K report in its earlier 8-K report? Would the stock have traded 18% higher if Green Mountain used the same disclosure? Did something change between the time Green Mountain released the 8-K report and the 10-K report? I previously warned that, "It is premature for Green Mountain to proclaim the absence of any wrongdoing while the SEC inquiry is still ongoing...."

Suspicious options trading before Green Mountain released its November 19, 2010 8-K report

On December 9, 2010, Herb Greenberg broke some disturbing news about call options trading on the afternoon before Green Mountain released its November 19, 2010 8-K report claiming it found no misconduct by the company. Appearing on CNBC's Fast Money, Greenberg asked "Who knew what when?" According to Herb:

If you look at the call activity in this company, the in-the-money call activity in this company, it was negligible, negligible, negligible in the days leading up to that November 19 announcement, when they said they... got their clean bill of health from their internal auditors. On the 19th, they pop, from 18,000 to 74,000... and much of the activity... was at the end of the day.

In addition, Greenberg noted that:

Jon Najarian of Options Monster, who helped analyze this data for me, said on Fast Money last night that it does suggest somebody may have been trading on material non-public information.

I believe the SEC will likely investigate whether any person working at or involved with Green Mountain leaked information in its 8-K filing to call option traders before it was released. The SEC might also ask whether the people responsible for Green Mountain’s financial disclosures also leaked information to call option traders.

Final comments

While I like the taste of Green Mountain’s Coffee, I don’t like the taste of its financial disclosures. Material weaknesses of internal controls create uncertainty about the reliability of future financial reports and the SEC inquiry creates uncertainty about its recently restated financial reports. Green Mountain still has not come clean about the timing of the discovery of its accounting errors. Now we have the possibility that material inside information was leaked to options traders.

To get to the bottom of Green Mountain's accounting problems and disclosure issues, the SEC might have to start issuing subpoenas and taking sworn testimony from witnesses. I wouldn't be surprised if the SEC investigates the option trades and starts a formal investigation of Green Mountain Coffee.

I can empathize with Green Mountain’s management team based on my own personal experience with the SEC in my Crazy Eddie days. It’s stressful to be investigated by SEC! Its investigators can cause many, many sleepless nights. Therefore, I recommend that Green Mountain’s management team stay away from the caffeine and stick to its own delicious brand of decaf coffee. Its lawyers, however, might need to start infusing the real caffeinated brew.

Written by:

Sam E. Antar with Ilene

Special note

On Thursday, December 16, 2010, The Committee on Continuing Legal Education of the New York State Bar Association is hosting an event called “Accounting for Lawyers.” I will be teaching a class on “Games Companies Play: How to Identify Financial Reporting Irregularities and Violations in Plain Sight.” Additional information here.

I would like to give special thanks to Overstock.com (NASDAQ: OSTK) CEO Patrick M. Byrne and other public companies written about in this blog for helping me develop my course materials. Without you, I would not be me.

Ilene's disclosure

Ilene is the editor of Phil’s Stock World, and fellow Seeking Alpha contributor. She does not own any Green Mountain Coffee Roasters securities, long or short. Her simulated Dark Horse Hedge portfolio is short Green Mountain’s common stock.

Sam's Disclosure

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped my cousin Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes in cold-blood for fun and profit, and simply because I could.

If it weren't for the heroic efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

There is a saying, "It takes one to know one." Today, I work very closely with the FBI, IRS, SEC, Justice Department, and other federal and state law enforcement agencies in training them to identify and catch white-collar criminals. Often, I refer cases to them. I teach about white-collar crime for professional organizations, businesses, and colleges and universities.

Recently, I exposed GAAP violations by Overstock.com which caused the company to restate its financial reports for the third time in three years. The SEC is now investigating Overstock.com and its CEO Patrick Byrne for securities law violations (Details here, here, and here).

I do not seek or want forgiveness for my vicious crimes from my victims. I plan on frying in hell with other white-collar criminals for a very long time.

I do not own any Green Mountain Coffee Roasters or Overstock.com securities long or short. My investigations of these companies are a freebie for securities regulators to get me into heaven, though I doubt I will ever get there. My past sins are unforgivable.

White Collar Fraud

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Friday, December 31, 2010