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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: pilapir who wrote (9859)	5/16/2002 4:35:35 PM
From: StockDung	Respond to of 19428

Bankrupt Kmart Draws FBI Scrutiny By DAVID ENDERS .c The Associated Press DETROIT (AP) - The Federal Bureau of Investigations is reviewing Kmart Corp. documents as part of an investigation into possible criminal violations at the bankrupt company. The investigation is one more hurdle for the discount retail giant. Kmart posted a loss of $2.42 billion for the 2001 fiscal year in a filing Wednesday with the Securities and Exchange Commission, which also is looking into Kmart's accounting. ``All I can tell you is we are looking at the situation with Kmart to see if there are any criminal violations,'' FBI Special Agent Dawn Clenney said Thursday. ``We have to have some time to review documents.'' Kmart spokesman Jack Ferry said the company was notified of the FBI investigation earlier this year. ``Kmart is cooperating fully with the FBI,'' he said, and declined to comment further. The SEC is under increased pressure to investigate criminal wrongdoing in bankruptcy cases in the wake of Enron Corp.'s collapse, said Jerry Reisman, a corporate fraud expert with the law firm Peirez and Reisman in New Jersey. Reisman said it's uncommon for the FBI to get involved in SEC investigations when the business is as large as Kmart. ``The change in times predicated by potential criminal activities at Enron have now placed a greater burden on the SEC, the Department of Justice and the FBI to investigate criminal wrongdoing at companies of any size,'' Reisman said. But he said the reasons for investigating Kmart are likely more than just post-Enron caution. ``It has been reported that Kmart executives may have taken improper loans from the company prior to their leaving the company,'' Reisman said. ``These individuals profited at a time when the shareholders posted great losses.'' Kmart paid more than $23 million in executive retention loans between October and its Jan. 22 bankruptcy filing. The Troy, Mich.-based retailer began reviewing its accounting methods following an anonymous letter, also addressed to the SEC, that claimed to be from employees. The letter was received shortly before the Chapter 11 filing. Kmart said its accounting review dealt with vendor rebates and general liability reserves. It has amended its previously reported earnings for the first three quarters of 2001 to reflect the new ways it will report vendor discounts. Kmart said Wednesday it has since received copies of additional letters sent to the SEC and others ``expressing concern'' about various matters. Kmart said it's investigating those matters, as well as the way the company was managed under former chief executive Chuck Conaway. Some analysts said that based on the information regarding vendor rebates released Wednesday, it doesn't appear that Kmart's accounting problems were that serious. ``It looks like they've come clean about everything at this point,'' said Mike Porter, a retail stock analyst with Morningstar. ``A lot of times with these things it gets worse before it gets better, but I don't think that's the case here.'' Porter said accountants for Kmart from PricewaterhouseCoopers used ``aggressive'' but not illegal methods. Arun Jain, a marketing professor at the Buffalo School of Management, said Kmart's bankruptcy was still most likely the result of mismanagement. ``They failed to recognize the competition they had. Wal-Mart was attacking them on the price front and Target was beating them on quality,'' Jain said. Kmart filed for bankruptcy following disappointing holiday sales and a stock dive. It has long struggled to keep up with Wal-Mart Stores Inc. and Target Corp. Jain said the investigation could further hurt the company's chances of making a comeback. ``It doesn't sound very good, because the FBI doesn't investigate any company casually,'' he said. ``Investor confidence could be damaged if financial improprieties are discovered at Kmart.'' Kmart shares were down 6 cents Thursday to close at $1.11 on the New York Stock Exchange. On the Net: Kmart Corp.: kmartcorp.com 05/16/02 16:20 EDT

To: pilapir who wrote (9859)	5/16/2002 6:03:10 PM
From: StockDung	Respond to of 19428

Ex-Fargo Holdings chief convicted of fraud NEW YORK (Reuters) - The former chief executive and president of Fargo Holdings, a bogus bluejean maker and financial services firm, was convicted on Thursday of his role in a scheme that cheated investors out of $2 million. Michael Nnebe, 41, of Orange, New Jersey, was convicted of conspiracy and securities fraud after a two-week trial in Manhattan federal court. He faces a possible maximum sentence of 10 years in prison when he is sentenced on Aug. 21. Two other defendants in the scheme previously pleaded guilty. Authorities said although Fargo had offices on Wall Street, it did not make blue jeans, offer financial services or engage in any other legitimate operations. Instead, the offices were allegedly used as a "boiler room" where brokers used high-pressure sales calls to lure investors into buying Fargo shares. Prosecutors charged that from 1997 to 1999, Nnebe conducted a fraudulent unregistered offering of Fargo stock in which 400,000 shares were sold at $5 per share. The defendants allegedly falsely represented to investors that proceeds from the sales were being used for business purposes, when a large portion of the money was actually spent on Nnebe's personal luxuries, including the purchase of a Rolls Royce and pool cleaning bills. Some of the money was also allegedly transferred to Nnebe's friends and relatives in Nigeria. 05/16/02 17:21 ET

To: pilapir who wrote (9859)	5/17/2002 1:22:42 PM
From: StockDung	Respond to of 19428

Firm with ties here is bent on Bermuda Don Bauder May 17, 2002 A company with juicy real estate holdings in San Diego County is one of the latest to lay plans to move its headquarters to the Bermuda tax haven. Shareholders of New York-based Leucadia National Corp. recently approved such a move, but the company won't make the shift in the near future, according to Dow Jones News Service. The moving of corporations' headquarters to Bermuda for tax purposes has become so controversial that bills are pending in Congress to rein in the practice. The main saving is a reduction in taxes on overseas income. Leucadia is financially intertwined with Carlsbad's HomeFed Corp., or what's left of the once-huge saving and loan that was seized by the Resolution Trust Corp. in mid-1992. In the mid-1990s, HomeFed's bankruptcy plan was funded largely by a $20 million note from a Leucadia subsidiary. Eventually, Leucadia got 90 percent of HomeFed stock, and in 1999 distributed it to its shareholders. Joseph S. Steinberg, Leucadia president, wound up with 12.7 percent of HomeFed's stock. Ian Cumming, Leucadia chairman, got 13.6 percent. They own 16.8 percent and 18 percent, respectively, of Leucadia. Steinberg is also chairman of HomeFed. Cumming is a board member, according to HomeFed's latest annual report to the Securities and Exchange Commission. According to that report, HomeFed and a Leucadia subsidiary joined together in 1998 for development of San Elijo Hills, a master-planned community of 3,400 homes and apartments in San Marcos. The property that has real estate experts breathing heavily is Otay Ranch. In 1998, HomeFed and Leucadia bought 4,800 acres in the area. HomeFed has contributed $11.8 million and Leucadia $10 million, according to the SEC report. HomeFed has no plans to move its headquarters offshore, says president Paul J. Borden, a former Leucadia executive. The company has huge tax loss carryforwards and no foreign business, so it's doubtful there would be any tax advantages, he says. HomeFed lost 2 cents a share in its most recent quarter and says that since all of its assets are pledged as collateral against a $26.5 million loan it received from a Leucadia subsidiary, it may not be able to obtain financing at favorable rates from any lender except Leucadia. According to Dow Jones, the massive holdings of Cumming and Steinberg iced the Leucadia vote to move to Bermuda. Leucadia won't make the move immediately because on the short-run, it would lead to a $350 million tax hit, according to Dow Jones. Leucadia is heavily in the insurance business, and hence knows Bermuda, a headquarters of many insurance firms. For example, in February, Olympus Reinsurance began business in Bermuda with $500 million in capital. Among its largest backers was Leucadia. Global Crossing, the communications firm whose chief executive raked in hundreds of millions of dollars bailing out of the stock before the company filed for bankruptcy, has been one of the most infamous companies with a Bermuda headquarters. Conglomerate Tyco, whose stock is collapsing, is also based in Bermuda. Houston's Cooper Industries voted this week to move its headquarters to Bermuda. The company said the tax-saving move would add 58 cents a share to earnings. New Jersey's Ingersoll-Rand earlier said it would save $40 million per year with its offshore move. This month, toolmaker Stanley Works voted to move to Bermuda to avoid $30 million in taxes, but the Connecticut attorney general said shareholders had been misled, and the company agreed to hold a second vote at an unscheduled time. There was a public uproar, with some people saying that the move was unpatriotic in light of the Sept. 11 atrocities. There are more than 18 companies that have created paper headquarters in Bermuda, and some others have done the same in other tax havens, such as the Cayman Islands. The companies aren't actually based there; they set up mail drops and take electronic communications, but aren't subject to local taxes.