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Showing posts from September, 2011

As InterOil tumbles, actor Shia LaBeouf and John Thomas Financial CEO Thomas Belesis have egg on their faces

Updated 10/03/11

Today, shares of InterOil Corporation (NYSE: IOC) tumbled down $9.27 per share to close at $45.82 per share, a drop of 16.83% in market value. The stock lost over $300 million in market value in a single day!

Back on March 24, 2010, InterOil shares closed at $67.95 per share. At that time, actor Shia Labeouf and John Thomas Financial CEO Thomas Belesis were busy hyping InterOil shares to investors. Shia LaBeouf trained at John Thomas Financial to study for his role in the motion picture "Wall Street 2: Money Never Sleeps." LaBeouf claimed that he turned an initial investment of $20,000 into $489,000 by trading various securities while training for his role in the movie.

A day later, on March 25, 2010, Kaja Whitehouse from the New York Post reported:

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that ha…

Were Groupon’s and Overstock’s Management and Auditors Stupid or Did They Condone Improper Accounting Practices?

Back on August 24, 2011, accounting professors J. Edward Ketz and Anthony H. Catanach Jr., reported in their blog that Groupon (planned ticker symbol: GRPN) violated Generally Accepted Accounting Principles (GAAP) in reporting its revenues and recommended that it restate its financial reports to correct its error. They sent a complaint to the Securities and Exchange Commission Whistleblower Office. Last week, Groupon restated its financial reports to comply with revenue accounting rules as called for by Ketz and Catanach. The company revised its reported 2009 revenues from $30.5 million to $14.5 million and its 2010 revenues from $713.4 million to $312.9 million – no small potatoes!

Why did Groupon’s CFO and its auditors at Ernst and Young (the third largest accounting firm in the world) miss revenue accounting violations? Ketz and Catanach did not have access to company management or its books and records. They found GAAP violations from merely reading financial reports filed with th…

Why White-Collar Criminals Should Thank President Obama and Congressional Republicans

Last night, in his address before Congress, President Barack Obama said, "We're also planning to cut away the red tape that prevents too many rapidly growing start-up companies from raising capital and going public." Perhaps, President Obama does not understand that it is already easy for private companies to cut "red tape" and go public through what is known as a reverse-merger. Fraudulent companies have routinely used reverse-mergers to avoid regulatory scrutiny and defraud investors. If Obama wants to cut more "red tape" it will be even easier for white-collar criminals to defraud investors.

Meanwhile, congressional Republicans have already succeeded in cutting funding for the Securities and Exchange Commission despite increased responsibilities under the Dodd-Frank Act. According to the New York Times, an S.E.C. memo warned: “We may be forced to decline to prosecute certain persons who violate the law; settle cases on terms we might otherwise not…