[Grovenet] Finally, it's safe to be an accounting fraud again.

David Morelli jo.david at verizon.net
Wed Jun 1 23:14:23 PDT 2005


On Wednesday, June 1, 2005, at 09:19  PM, Robert VanNatta wrote:

> I have no disagreement with your assertion that AA and the big 
> accounting firms generally had some business practices with which I 
> disagree.  the same accounting firm providing consulting services  
> (how to find loopholes), and auditing services (approving the use of 
> loopholes) created an inherent conflict of interest.
>
> Where I think you lose focus is this.
>
> AA wasn't on trial for being a jerk or having accounting practices 
> that were bad.  They were convicted of obstructing justice for running 
> a paper shreader on documents that there was no legal requirement to 
> keep---or even make in the first place.
>

Interesting discussion.  Fortunately there is a precedent for 
"accessory after the fact" trials that can be useful in trying those 
professionals who assist in the hiding of evidence of a crime.  So, no, 
AA may not have had a legal requirement to make or keep the records of 
legal transactions.  But, I suspect that a professional who is working 
in their professional capacity, finds that their client has committed a 
crime, that the evidence of the crime is in their their possession, and 
they destroy the evidence, ... I suspect that they have just become an 
accomplice.

I understand that a lawyer is privileged in their dealings with an 
accused client.  If the lawyer is aware of the crime as it is being 
planned and executed, doesn't that make them an accomplice and pierce 
the privileged status?

Does the same apply to accountants?

Try this, if a developer had a geo-technical report that indicated that 
building one more house on a California hillside would cause it to 
collapse, and Ron had gotten a copy of the report before the house was 
built when he brokered the lot sale.  He should have shown it to the 
buyer.  Once the rains cause the hillside to slide into the valley, and 
Ron realizes that the developer is going to be sued, does he have an 
obligation to the developer to shred the papers?  Or would the 
shredding really be to protect his broker's license?

I should be more than a bit surprised to find that AA did not assist or 
review the accuracy of legally mandated reports and stockholder reports.

David



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