Shelly Zumaya And Kiwi Corporation: Case Study

A debt of $164,000.00 was incurred by Chrysalis Manufacturing Corp. to plaintiff Husky International Electronics, Inc. Daniel Lee Ritz, Jr., the director of Chrysalis and owner of 30% of common stock, transferred all of Chrysalis’ assets to other entities the respondent, Ritz controlled, diminishing the ability to pay the debt. Thus, in 2009 Husky filed suit against Ritz, at which time Ritz to file a Chapter 7 bankruptcy. To recover losses from the debt owed, Husky filed a complaint in the bankruptcy case of Ritz, arguing Ritz’ transfer of assets form one company he owned to the other, is “actual fraud” under the Bankruptcy Code’s discharge exceptions 11.U.S.C.. §523(a)(2)(A), and does not negate his liability to Husky. The District affirms Ritz was liable under state law, however the debt did not originate by “actual fraud” and could be discharged under bankruptcy.

Arthur T. originally found himself in hot water with the company’s board five years ago when he was held accountable for losing $46 million because of an investment in Fannie Mae and Freddie Mac. Arthur T. and two other trustees approved putting $46 million of the employee profit-sharing plan into the two housing agencies just months before the two companies got caught up in economic downturn. When the money was lost Arthur T. made sure the company made up for a loss by putting the $46 million back in the profit-sharing

Later in Alberta the judge issued a judgment on of the companies (NSEM Management). The court required the company to pay more than $13 million on behalf of Danny Heatley, but that money was never paid according to court documents.

The Balance Sheet for ABC Learning in 2007 showed that the company had borrowed 1.7 billion dollars with 112.6 million being financing costs. The company’s current liabilities were 1.1billion. From 2001 to 2007 the company’s assets for its child care centres that they owned had increased from 20.2 million in 2001 to 2.8 billion in 2007. The Capital of ABC Learning had gone from 10.3 million in 2001 to a massive 1.6 billion in 2007. The child care centres that ABC Learning bought in 2007 weren’t funded with issued capital but instead they were funded with debt. This affected ABC Learning’s financial performance dramatically. The company’s current ratio in 2006 was 180% which means for every $1 the business pays for current liabilities the company had $1.80 of current assets. However in 2007 the company’s current ratio was 26.9%. This means for every $1 for current liabilities they had 26.9 cents of assets. ABC Learning payed too much for it’s child care licenses and child care centres and it couldn’t repay back the money they borrowed to buy these

Today, I talked to Mike Sanders with respect to his sale which was given to his brother Paul, pursuant to § 1244. Paul paid $40,000 for the stock three years ago and gave

He posted entries from the client’s journals to its general ledger and when he completed, Stern’s accounts receivables totaled to nearly $644,000. Romberg, Stern’s accountant, recorded fake entries, including debiting receivables and crediting sales for roughly $706,000. Siess, included the $706,000 in the receivables balance without questioning Romberg’s reasons on for the entry. In court, during his testimony, Siess reported that he could not remember whether he reviewed any of the fake invoices for Stern’s sales. The Plaintiff counsel demonstrated that just by looking at one of the invoices, it revealed that they were fake. Lacking a shipping numbers, customer order numbers, and other information that would normally be on an

The fraud consisted in misappropriation of assets, falsification of financial statements, and Phar-Mor’s relationship with its suppliers. Monus initially distributed the losses into the hundreds of other Phar-Mor stores as increase in inventory by issuing fake invoices and manipulating the cost of goods sold. Phar-Mor also counted with two sets of books, one with the real losses and another one with the fraudulent information that would be shown to the auditors. These transactions failed to be detected by their auditors, Coopers & Lybrand, whom would notify Phar-Mor in advance about which stores they would visit to observe inventory. Another misappropriation of assets included the investment of $10,000,000 of Phar-Mor’s funds into Monus’s personal projects, like the World Basketball League. Other important aspect of Phar-Mor’s fraud case was the fact that supplier companies were also involved. Tamco, a Phar-Mor’s supplier, began to send incomplete shipments while Phar-Mor wrote them down for the

Ms. Read and Mr. Read owned all of the stocks of MMP Corporation. Then they got divorced. The divorce judgment determined that Ms. Read shall sell and convey all her stocks of MMP to Mr. Read, or at Mr. Read’s election to MMP or the ESOP plan of MMP. In return, Mr. Read, or at his election MMP or the MMP’s ESOP plan shall pay a total amount of $838,724 with a $200,000 down payment in cash. In addition, Mr. Read shall deliver a $638,724 promissory note guaranteed by Mr. Read, with 9% interest payable monthly and $50,000 installment principle payment per year. As a result, Mr. Read elected MMP, instead of Mr. Read, to purchase Ms. Read’s all stocks of MMP, to pay $200,000 and to issue the promissory note of $638,724 bearing 9 percent interest to Ms. Read. And MMP authorized and agreed with the election and settled a stock repurchase agreement with Ms. Read.

But then these mistakes took the form of serious consequence. A detailed 22 months investigation by FBI was carried and major evidence of the company’s illegal practices was found. The company had to bear a loss of $475 millions. The judge Carol Kenner remarked the actions of the organization as predatory in nature. The company seemed liking hunting its customers to pay back its debt at each and every cost.

III. Application of Facts- In 2008, City Rentals discovered former employee Bauer embezzled hundreds of thousands of dollars from the company. Bauer was convicted and ordered to pay restitution to City Rentals. During the commission of the criminal offenses Bauer forger several check to various people including Kesler. Kesler and Bauer were family friends that had a relationship spanning over thirty

It was a multiyear false financial reporting committed by the founder and five other former top officers. These defendants “cooked the books”. They committed these frauds for personal gains driven by their greed and wanting to maintain their top-level positions. Company’s revenues wasn’t meeting the targets, so the defendants manipulated financial data by deferring current period expenses and inflating the current period earnings. To continue on these fraud schemes, they engaged themselves in multiple improper accounting practices. The fraudulent activities includes avoiding depreciation expense on garbage trucks by inflating salvage values and extended useful lives not set as industry standards, reporting false salvage values on other assets, ignore recording necessary write off of costs of abandoned landfill development projects, failed to decrease the value of landfills when it is use to fill waste, inflated revenue so top officers can earn large amounts of compensation in bonuses, inflated reserves account so that the excess can be used to avoid reporting unrelated expenses, and failed to set up an reserves account to pay for incomes taxes. The founder and five other former top officer are charged for using accounting manipulation known as “netting” and “geography” to make the financial looks better. The netting was use to falsify financial data of $490 million of current period operating expenses and offsetting prior period accounting to unrelated one-time gains on sale or exchange of assets. The geography entries was used to move millions of dollars between line items on the income statement to make the financial look

regarding its payroll activities which they outsourced to an external provider and ended up with

J. Buffalo who owns J.Buffalo Corp. has convinced current and former employees to transfer their jobs and retirement benefit plans to a new subsidiary called Great Plain Combines which he expected to fail. J. Buffalo has violated the ethical standards “Hiding information.” When J. Buffalo was convincing employees to accept the transfer of their jobs and retirement, he did not fully disclose that he expected it to fail, therefore he was hiding information that has harmful results. In our case the employees would not have considered transferring to Great Plains knowing that the corporation will be short lived.

By not informing his employees about the substandard sales record and expectation of collapse for Great Plains, Buffalo failed to disclose information that would come to harm his employees. As an ethical breach, Buffalo’s purposeful omission of the concerns for Great Plains during the transfer of jobs and benefit plans can be considered “Hiding or Divulging Information.”

a. Is it unethical for me to disclose the knowledge that I gained from my former employer regarding the internally designed machine use by them in order to help solve the problem of my current employer? Is it considered a violation of confidentiality agreements (if there was any) of trade secrets?