Suchergebnisse

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  Case 25: Bernard Madoff (2008)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …understanding, as was the case with the U.S. subprime mortgage crisis. It was the result of one of the simplest and one of the oldest embezzling schemes: a… …stunning fraud that appears to be of epic proportions”, and the Economist called it “the con of the century”. Needless to say, the unprecedented scope of… …older ones. The scheme lasted six months before it was uncovered. Today, the conception of such a scheme seems almost incomprehensible. Besides its… …returns. The SEC admitted that it had missed “repeated opportunities” to discover the fraud. It had received “credible and specific allegations regarding… …red flags was so long and unsettling that it should have raised serious concerns with regulators and potential investors (see Gregoriou/Lhabitant 2008… …Madoff’s purported track record was so good and so consistent that it should have been suspect. Based on mathematical probabilities, the average returns… …niece Shana served as the in-house legal council (it might be noteworthy that she was married to a lawyer who had served at the SEC and had repeatedly… …supervised inquiries about Bernard Madoff’s securities operations). In general, this heavy family influence should have been questioned, as it was an… …162 tions and required advisors to count each final investor as a client, Madoff still did not register. It was only after an SEC investigation that… …largest hedge fund is a fraud”. This time, the SEC followed up on his tips and investigated BMIS. But it found no evidence of a Ponzi scheme, just a few…

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  Case 26: Juergen Schneider (Germany, 1994)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …behaviour as a serious and important businessman. It also appeared that they were seduced into taking the risk by the promise of big profits. The scam ran… …verified something as basic as the size of the property it was lending on. Accounting Fraud in European Companies 166 Schneider also appeared… …explic- itly whether there were any supplementary contracts. Deutsche Bank claimed that it was the victim of systematic fraud. Hilmar Kopper, at the… …the affair proved to be very embarrassing for the bank. The report from the auditors, Wollert-Ellmendorff, supported Deutsche Bank’s argument that it… …had been crimi- nally deceived. But it also made clear that there had been complacency in the deal- ings with the property tycoon. There were several… …ensure that it was technically possible to construct a particular building and that the building costs were in relation to what was required. – All… …asked for a “transitional loan” in a letter received on April 7, 1994. It was in the spring of this year that Schneider began to face a string of… …it is possible that one individual can collect such a volume of debt in such a short time”. Schnei- der was arrested in Miami, Florida, in January… …1995. When he was returned to Germany in February 1996, the mass-circulation newspapers made it the big story of the day. “Hello, Mr. Schneider, Your… …just before it became impossible to stave off his creditors. The German media portrayed Juergen Schneider as a sophisticated con artist. But…

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  Case 27: Flowtex (Germany, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …precedent,” said judge Michael Meyer. He expressed his incredulity that the scam could have lasted for nearly ten years without being noticed. “It is amazing… …debts that needed to be covered.” Flowtex, based in Ettlingen near Karlsruhe in southern Germany, marketed horizon- tal drilling equipment. It… …each machine was fitted with the correct plates and documentation. It did not appear to strike KPMG as strange that machines they had chosen at… …bond to its customers as being “an attractive investment opportunity”. It would have been the first bond issue from a privately owned German… …their losses, which they refused to quantify. Why due diligence failed to expose the apparent Flowtex scam is still unclear. It is noteworthy that… …Flowtex case, said the complex structure of the Schmider-Kleiser group had “certainly played a role” in the deception. However, it emerged that KPMG… …pretend business. In 2002, the well-known auditing firm paid creditors of the bankrupt drilling equipment maker EUR 50 million. KPMG said that it made the… …against the state of Baden-Wuerttemberg after claiming that it failed to act in time against Schmider and Kleiser. The plaintiffs claimed that the tax… …records are examined before it issues securities. It is a textbook example of what can go wrong when banks and auditors place too much reliance on the…

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  Case 28: EM.TV (Germany, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …. When the company went public in 1997, it still had a tiny EUR 15 million in annual sales. It was one of the first companies to join the “Neuer Markt”… …and Americans wouldn’t have taken the company seriously. And Haffa was one of the most promi- nent examples of entrepreneurs in Germany who struck it… …. But in its chosen niche, cartoons and other children’s programming, it was already much bigger than its competitors. EM.TV controlled about one-third… …world of entertainment. Haffa showed that his prized German programs could make it everywhere else on the Continent. For example, the hit cartoon… …early 2000, shortly after a capital increase, EM.TV started an acquisition spree. For example, in February 2000, it acquired the Jim Henson Company… …forecast.” Haffa added that he would have never expected that it would be possible to be charged in a criminal court. In pleading for their acquittal… …was not executed till autumn. Kirch told the court that he had verbally agreed to the deal in mid-June 2000, and that he considered it to be “a fully… …jail sentence, but they did obtain a crimi- nal fine of EUR 1.2 million for Thomas Haffa and EUR 240,000 for Florian Haffa. It was important for the…

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  Case 29: Infomatec (Germany, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …million”. However, the con- tract with Mobilcom was far from “at least” EUR 28 million, and it turned out later that the contract was worth less than EUR 5… …. The stock had plummeted after the company admitted it was disseminating a materially incorrect ad-hoc-bulletin about a supposed large-scale order… …to drive up the company’s stock price and then selling their own shares at peak prices. In addition to the deceptive press releases, it was further…

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  Case 30: Lernout & Hauspie Speech Products (Belgium, 2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …of sophistication of the fraud and the amount of imagination that went into it”. Speaking at a news conference in Brussels, he said the fraud… …wowed investors with techno-mirages of humans chatting with computers, it made money with low-tech offerings. Its speech programs in their infancy were… …Europe), although it had never been profitable and had just a few million dollars in annual revenue. As with many high-tech firms, the hope lay in a… …L&H’s hey- day, it hired a former Belgian prime minister as its chairman, and Bill Gates visited, lauding the innovative and ground-breaking speech… …commissioned a special midyear audit by L&H’s regular auditor, KPMG. On November 9, 2000, L&H announced that it would revise financial statements for 2… …with another venture it helped start, Brussels Translation Group N.V. (“BTG”), this time to develop software for auto- matic translation from one… …late 1998, L&H launched a new and elaborate scheme to create additional cus- tomers and, thus, to bolster its reported revenue. It helped create 30… …and intelligence services, developers of strategically impor- tant technologies, and investors. It was supposed to be a win-win-situation. The… …technologies and a helping hand in getting orders from other government agencies. The BND, in turn, got first class technology which it couldn’t develop…

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  Case 31: Bankgesellschaft Berlin (Germany, 2001)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 186 Case 31: Bankgesellschaft Berlin (Germany, 2001) It is a spectacular tale of incompetence… …bank insolvency), this time it did not involve any elite private bank, but the most powerful banking house in the German capital. The crisis ex- posed… …. While Berlin’s city-state government owned the majority of BGB’s shares, the new institution was also publicly listed. That made it an unusual hybrid in… …the German banking system. Moreover, the way BGB was structured and managed left it vulnerable to weak controls and conflicts of interest. Its complex… …mix of businesses made it difficult for the supervisory board of the parent institution to maintain control and insist on clear risk reporting from… …Aubis and agreed on the credit line without the usual collat- erals and checks. However, Aubis failed as it saw itself unable to rent out the refur-… …were not just businessmen, but old CDU colleagues who had sat alongside him in parliament for many years. Then it came to light that Landowsky had… …, BGB quickly became one of the leading players in the Euro- pean real estate investment fund market. However, it was buying market share by assuming… …admitted it could not complete its 2000 accounts because of the ongoing investiga- tion and deep uncertainties about the potential risk in the… …property-linked portfolio. When BGB belatedly reported its official figures for 2000 in July 2001, it had to reveal a startling EUR 1.65 billion loss. It also…

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  Case 32: Comroad (Germany, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …. g., navigation assis- tance and mobile Internet, emergency and breakdown services. At its peak in 2000, Comroad was valued at EUR 1.2 billion. It had… …defend itself from accusations of accounting manipulations, prominent among which was that it had “phantom partners” in Asia. Culmination of these… …it would hire a new “special auditor” to fully investigate its accounts. Comroad con- cluded this press release by stating that it was “endeavouring… …mode, just one day later, on April 24, 2002, KPMG said it would re-audit all of its 35 Neuer Markt-traded clients. Soon thereafter, the case of Comroad… …difficulty sentencing Mr. Schnabel; it specifically based its judgment on false information provided in annual financial statements and in ad- hoc disclosures… …. Still, the courts rejected most of the civil claims against Mr. Schnabel. KPMG said that it was victim of the fraud – and indeed, some observers… …German bank, was involved when the company issued new shares in 2000 after having made up sales. Concord said it carried out due diligence on the Comroad… …IPO and felt “cunningly deceived”. Hauck & Aufhaeuser said it relied on information from Con- cord, the lead IPO manager, and didn’t undertake further… …checks. A spokesman for HVB said the bank relied on positive reports from accountants and lawyers it had hired to check Comroad. Catherine the Great… …September 2002, the Frankfurt-based Neuer Markt was to be closed as it had be- come a discredited brand. “It was tarred with too many high-profile failures…

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  Case 33: Vivendi Universal (France, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …conglomerates, including the Universal film studios and the Uni- versal music group in the United States. It had securities traded on the Paris Stock Exchange as… …his ouster by Vivendi’s board, Messier had issued several press releases that falsely stated that Vivendi did not face an immediate cash shortage. It… …, announced that Vivendi would have run out of money within days because banks had refused to extend it more credit while Messier remained in charge. In… …Companies 195 it had used them as collateral for a loan. However, it had tried to book the loan as revenue until the French stock market regulator… …difficult to decipher; for example, many experts noted that it was hard to distinguish what debt belonged to the environment business and what belonged to… …November 2002, the beleaguered company disclosed that it was also facing a criminal investi- gation by the U.S. attorney’s office in New York, along with a… …big awards in such cases.” Accounting Fraud in European Companies 196 In December 2003, the SEC announced that it filed and simultaneously… …adjustments were made so that the company could meet the ambitious earnings targets that it had communicated to the market. – Vivendi failed to disclose… …arrested in Paris, facing accusations of share-price manipulation, in- sider trading, and embezzlement. First, it was alleged that Messier and his top team… …before the company’s financial situation began to unravel. Finally, it was alleged that generous payments made by Messier to large shareholders and…

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  Case 34: Royal Ahold (The Netherlands, 2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …the most prominent and re- spected corporations in the Netherlands. For several years, it had been named the most desirable employer and the company… …and the French firm Carrefour S.A. had larger annual food retail sales than Ahold. In 2002, the com- pany’s reported sales were EUR 62.7 billion; it… …share quickly by purchasing existing grocery chains in foreign countries. In 2000, the company completed its most ambitious acquisition when it… …was forced to buy out Velox’s interest and absorb its liabilities. Ahold had failed to disclose that it had committed itself to purchase the residual… …ownership interest in the joint venture if Velox de- faulted on its outstanding debts. Now Ahold had to announce that it was taking over USD 492 million in… …subsidiary. In early 2003, Ahold surprised investors when it announced that U.S. Foodservice had overstated earnings by at least USD 500 million in 2001 and… …by USD 880 million over three years, and that it would have to take pre-tax charges of nearly USD 1 billion on group level. The size of the new… …figures shocked Ahold’s new management as much as it did analysts and investors. The company immediately authorized an investigation by law firm White &… …investigations, it was ultimately found that there were two principal sources of material misrepresentations in Ahold’s consolidated financial statements: (1)… …at USF centred around the way it accounted for “promotional allowances”. USF typically purchased products from a variety of suppliers at full price…

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