Corra Daily Planet » 2006 » October

Executives Accused of White Collar Crimes Can Prove Costly To Your Business

Tue, October 31st, 2006 - 11:17 am - By Gordon Basichis

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We found this article on

Monster Director Resigns Over Probe

A board committee conducting an internal investigation had sought to interview him further following a meeting in July. Monster also has received a subpoena from the U.S. attorney’s office in the Southern District of New York over stock options.

McKelvey, who is 71, is the latest casualty in a widening scandal over the accounting of past options grants. In all, at least 135 U.S. companies have disclosed internal inquiries or government investigations and at least 39 executives and board directors at 19 companies have been fired or resigned.

McKelvey’s resignation comes weeks after he stepped down from the posts of chairman and chief executive on Oct. 9. At that time, he retained a board seat and was named as a chairman emeritus.

Other top executives who have recently resigned over options investigations include: UnitedHealth Group Inc. founder William McGuire, KLA-Tencor Corp. Chairman Kenneth Levy, CNET Networks Inc. Chief Executive Shelby Bonnie and McAfee Inc. CEO George Samenuk.

Monster issued a statement Monday disclosing that, through a lawyer, McKelvey declined to be interviewed by a special committee of the board in a meeting that had been set for Monday. He also would not assure the board that he would appear at a later date.

A lawyer for McKelvey wrote in a letter that the former executive refused to meet because he did not have sufficient time to review the facts of what had happened over the course of several years. Attorney Steven Reich also clarified answers McKelvey gave in a July meeting, arguing that McKelvey did not know backdating was illegal.

‘He did not understand that it was improper for the exercise price of stock to be different than the price on the grant dates, nor did he understand there were legal or accounting implications associated with that difference,’ Reich wrote in the letter.

The company’s ongoing internal investigation had also delayed the release of its latest quarterly earnings results and led to the suspension of Myron Olesnyckyj, who was senior vice president, general counsel and secretary for the company.

Shares of Monster Worldwide fell 32 cents to $39.97 on the Nasdaq Stock Market in morning trading.

We have all seen a lot of news print about the the alleged illegality of back dated stock options. Corra is sure some of these incidents will find themselves as cases in criminal and civil court, featuring high profile executives and their associates. The thing is what if one of these executives or, especially, one of their lesser known executives in search of another job applies at your business?

It is possible that if that executive is involved in laws suits, some of his legal troubles can spill over into your company. You as the HR Manager or a Business owner can find yourself involved in a drama you didn’t create. You may even have to hire your own attorneys to make sure sharp civil attorneys don’t figure a way to attach some of the litigation procedures to your business.

At the very least, you might be faced with an executive who is in court more than in your office. He will most certainly be distracted by the litigation, meetings with his attorneys and the pressures of either going to jail or paying heavy fines and civil awards. This is not to even address the fact that someone involved in scandal can prove embarrassing to your company.

Corra believes executive background searches should include Federal Criminal and Federal Civil searches as well as the more standard criminal and credit reports. The Federal Criminal and Civil Searches will make you aware of a candidate’s white collar crimes. For the most part you will not find your new financial person is a kidnapper or a counterfeiter, but white collar crimes are a whole different matter.

So no matter how experienced, educated or refined they are, Corra believes you should do the extra due diligence and check them out before your hire.

New California Prosecutor Ruling May Send Those In Search Of Public Records To Private Services

Fri, October 27th, 2006 - 10:24 am - By Gordon Basichis

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We found this article in the LA Times.

Criminal records to be kept from public, media

By Peter Y. Hong
Times Staff Writer

California prosecutors are no longer releasing routine information about defendants, including their criminal histories and parole or probation status.

The change comes in the aftermath of a Sept. 20 legal opinion from Atty. Gen. Bill Lockyer that furnishing such information from law enforcement computer databases violates defendants’ privacy rights.

“It is quite a major change from what we have provided in the past. The Los Angeles D.A. has had a history of favoring the public’s right to know rather than keeping information secret,” said Lael Rubin, deputy district attorney.

Taken together with a recent California Supreme Court decision restricting disclosure of police disciplinary records, the opinion significantly narrows the public’s access to bedrock information about the criminal justice system.

“The public’s interest to disclose outweighs the privacy interest of the accused. It may be time for the Legislature to take another look at what is a fair balance,” said Thomas W. Newton, general counsel of the California Newspaper Publishers Assn.

Los Angeles County Dist. Atty. Steve Cooley said he favors pursuing new legislation to restore the public’s right to such information through the news media. “There’s a real interest for the public to know criminal histories at certain times and in context,” Cooley said.

Newton said the opinion “will almost certainly be universally followed” by prosecutors throughout California, fundamentally altering their relationship with the public.

“A typical situation is you’ve got a person who is arrested and accused of a violent crime,” Newton said. “The public wants to know who is this person. Part of who that person is, is what that person has or has not done in the past. The public wants and needs to know just who they’re dealing with.”

Indeed, citing the attorney general’s opinion, the Los Angeles County district attorney’s office on Oct. 13 denied a Times request for information on prior prosecutions of a 32-year-old man arrested for allegedly beating a Chatsworth mini-mart cashier to death with a baseball bat. Through another avenue, The Times learned that the man had been convicted 12 years earlier of stabbing another store clerk 25 times.

The 14-page attorney general’s opinion states that prosecutors may not produce records on prior offenses and parole or probation status.

Additionally, the opinion advised against releasing lists of cases in which a witness has testified and names of defendants charged with a specific kind of crime over a number of years.

I suppose this means with Corra and other background checking services we may well be seeing increased inquiries from news and media agencies. While Corra doesn’t necessarily understand how the state can legally withhold what amounts to public records, we will welcome all new business.

Criminal Records are public records, as well as Civil Records. Corra would think this decision will result in a law suit that should arrive at one point or another at the Supreme Court of California. So whether they greatest weight on the issue is ultimately assigned to either a person’s right to privacy vs. the publics’ right to know, we’ll have to wait and see.

Publication Is Embarrassed By Employee Theft That Leads To Insider Trading

Thu, October 26th, 2006 - 11:34 am - By Gordon Basichis

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We found this article in the LA Times.
Business Week plant worker pleads guilty
A former worker at a Wisconsin printing plant pleaded guilty Monday to charges that he leaked the names of stocks mentioned in Business Week before the magazine was mailed.Nickolaus Shuster, who worked at Quad Graphics Inc. in Sussex, Wis., told a judge in Manhattan federal court that he tipped two people, whom he didn’t name, to the names of the stocks that were to be favorably mentioned in the Inside Wall Street column.”I would steal pre-publication copies of Business Week and call these two people and relay to them the contents of the Inside Wall Street columns,” Shuster, 25, told U.S. Magistrate Judge Debra Freeman. Shuster, who pleaded guilty to conspiracy and securities fraud, will be sentenced in January.The guilty plea is the third in what prosecutors said was a three-prong conspiracy involving two former employees at Goldman Sachs Group Inc., Eugene Plotkin and David Pajcin.In Wisconsin, Shuster stole advance copies of Business Week for Plotkin and Pajcin, prosecutors said. In New York, former Merrill Lynch & Co. mergers analyst Stanislav Shpigelman, who pleaded guilty in July, leaked secret information about a pending deal to the pair, authorities said.
In Newark, N.J., Jason Smith, a mailman sitting on a grand jury, tipped Pajcin and Plotkin to details of a confidential U.S. accounting probe of Bristol-Myers Squibb Co., prosecutors said. Smith pleaded guilty in August.”I knew what I was doing was wrong,” Shuster said.Shuster told Freeman that, during an October 2004 meeting in the Union Square section of Manhattan, his two co-conspirators asked him to travel to Wisconsin and get a job at the Business Week plant.

In January 2005, one of Shuster’s co-conspirators bought 3,500 shares of Arbitron Inc., the biggest radio-ratings supplier in the U.S., after learning of a forthcoming mention in the column, Assistant U.S. Atty. Benjamin Lawsky said in court.

Shuster agreed to forfeit $20,000 paid to him as part of the scheme. The judge said Shuster, who previously lived in New Jersey, had been cooperating with prosecutors. Charges are pending against a second printing-plant worker, Juan Renteria, along with Plotkin.

It seems that some enterprising soul decided to cash in on a position in which he was entrusted. If you think employee theft doesn’t happen all that often, Corra suggests you think again. Many companies have gone out of business thanks largely to corporate theft. Some have been relieved of valuable databases and intellectual property. This theft if not only costly, it can ruin reputations and damage employee morale.In the case listed in the article Corra is sure this proved quite embarrassing to Business Week, a great institution with respect to business publications. Here a whacked out theft plot, something so low tech, threatened to undermine its credibility.The best way to guard against employee theft is prevention. Run employment screens on your job candidates. A pre-employment background check won’t guarantee an otherwise good citizen won’t get shady ideas, but employee screening goes a long way to weeding out the bad seeds.Corra knows it is not just the criminal records you look for, but behavior patterns that can be revealed in anything from MVR Records to Credit Records. Even civil cases can tell you quite a bit about behavior if you know what you are looking for. Remember, bad credit, substance abuse and domestic issues are serious red flags to bad employee behavior, as well as the more obvious criminal background.So remember what Corra says, check them out before your hire.

Bickering Employees Can Disrupt Office Production and Morale

Wed, October 25th, 2006 - 11:26 am - By Gordon Basichis

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We saw this article on the KSBI-TV site.

Office Ghouls Don’t Strike Only On Halloween
Survey Shows Managers Have Their Hands Full Resolving Staff Personality Conflicts

MENLO PARK, Calif. — Ghosts and goblins who traditionally make their appearance on October 31 may have office counterparts whose behaviors bedevil their managers throughout the year.

Executives polled in a recent survey say that almost a fifth (18 percent) of managers’ time — or more than seven hours each week — is spent sorting out personality conflicts among staff members.

The national poll includes responses from 150 senior executives — including those from human resources, finance and marketing departments — with the nation’s 1,000 largest companies. It was conducted by an independent research firm and developed by Accountemps, the world’s first and largest specialized staffing service for temporary accounting, finance and bookkeeping professionals.

Executives were asked, “What percentage of management time is wasted resolving staff personality conflicts?” The mean response was 18 percent. Accountemps also conducted surveys asking executives the same question in 1996, 1991 and 1986. Results for this year’s survey were unchanged from the 1996 poll (18 percent) but were up from 13 percent in 1991 and 9 percent in 1986.

While some personality conflicts are serious in nature, even small disagreements can cause friction, according to Accountemps. Managers can reduce office disharmony by being aware of employees with habits that disrupt productivity and nipping problems in the bud, advised Accountemps.

Here are some common year-round workplace goblins and tips on managing them:

— The Laughing Hyena. This personality type finds everything funny — especially her own jokes. She’s not aware that her voice carries and can be heard many cubicles away. Encourage employees to try to keep their voices down during conversations and find a conference room for meetings where speakerphones are used.

— The Ghost Employee. There’s nothing quite as frustrating as a staff member you can never find. Whether out on official business or not, some people seem perpetually away from the office and turn up only rarely for meetings and group events. These ghostlike characters may not realize they have this reputation — and are certainly not prone to correcting it — unless managers regularly remind the entire staff of the importance of being accessible.

— The Witch’s Brewer. It’s hard for people to concentrate on their work when they’re overcome by the smell of someone’s microwave popcorn or reheated dinner. You don’t need to single out offenders, but mention in team meetings that it’s inconsiderate for staff to eat especially pungent foods at their desks.

— The Office Spook. This type relishes scaring coworkers — especially new ones — about the hardships of working at your business. “If you think we’ve had it tough so far, just wait ’til the spring season,” he may be heard to say. Painting the boss as a fire-breathing ogre and spreading other tales of woe are this person’s specialty. The Office Spook may be someone you have to approach individually to turn around his pessimism.

Corra knows at least a few people that can fit into the category of annoying office workers. There are the four types listed and then some. There are the ones who have their inner demons, those with excess baggage, those in search of a perfect world and who will hardly put up with your menial imperfections. There are those who believe everyone desires them, and those who believe that everyone is out to get them. And then there are the ones who can always find a way to get under your skin.

We all know these people. The first thing we wonder is what made them like that. The second thing, is how did they ever get their job? Good questions. But the first requires and analyst while the second requires a sentient Human Resource management team that can weed them out before they make trouble. And trouble they will make, as evidenced by the time managers spend just settling disputes.

The wrong employees, disgruntled ones, incompetent ones, thieves and paranoids are bad for your staff’s morale. They will lower production output and keep most of your workers in a bad mood. Most employees just hope someone will wake up and make the trouble makers disappear. Easier said than done, once they are in your working environment.

The best thing you can do is to weed them out before they get the job. That’s why it pays to run background checks. Employment Screening won’t tell you everything but it will show criminal and financial transgressions and possibly substance and domestic abuse. You will discover early if someone is guilty of sex crimes and is on the sexual offenders’ registry. By reading the behavior patterns as well as the actual records, there is much to find out about a candidate, before you give him a job.

So, as Corra says, check them out before you hire.

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