Ernst and Young Under the Gun
This post was written by Josh
In the game of "Life," (the Milton Bradley version, mind you) each piece of paper money bears the image of a fanciful character. One of the most memorable is that of "G.I. Luvmoney" (Art Linkletter). It seems that the spirit of old G.I. Luvmoney may have been hovering over not only failed investment bank Lehman Brothers but also its bookkeeper, Ernst and Young. A whistleblower is claiming in a blistering letter that Ernst and Young engaged in unethical accounting practices. Lehman's response to the whistleblower? Lay him off, of course, and conveniently blame it on broader downsizing.
The whistleblower, Matthew Lee, a senior VP in Lehman's finance division, made six major allegations of accounting fraud in a memo he sent to Lehman's senior managers in May 2008. Lehman asked E & Y to investigate, and Lee highlighted Lehman's questionable "Repo 105" transactions which were used to hide as much as $50 billion off Lehman's balance sheet in order to temporarily reduce its debt levels.
According to a 2,200 page report by a court-appointed examiner, sufficient evidence exists to bring malpractice claims against E & Y for failing to disclose or investigate Repo 105. E & Y may face both civil claims as well as criminal penalties.
The worst part of all this is that not one but two major corporations could have acted upon red flags raised by Michael Lee, but failed to do so. Now, one is defunct and the other faces serious penalties. E & Y already paid a $8.5 million fine to the S.E.C. in December 2009 for allowing another client to avoid restating its earnings in 2002 when accounting rules changed. It appears they may not have learned their lesson.
The River Styx Co-Pay
This post was written by Josh
In Greek mythology, the River Styx served as the boundary between Earth and the Underworld. In order to cross the river, a dead person had to pay the ferryman, Charon, a fee. The ancients would place a coin in the mouth of the deceased in order to pay this fee, as it was believed that those unable to pay would never be able to cross into the underworld (and who really wants the semi-dead walking among us, anyway?).
According to a report in the New York Post, however, the dead seem to possess special powers that enable them to bill Medicaid for services, regardless of whether they are able to pay their way across the River Styx. A state audit conducted by the New York State Office of the Medicaid Inspector General (OMIG) has found that health-care providers allegedly billed Medicaid for services provided to 287 patients who were actually dead.
One glaring example of the fraud involved Bellevue Hospital in Manhattan, which accepted a dead Medicaid patient to harvest the cadaver's organs, but then billed Medicaid for treatment. According to the Post, other outrageous behavior included the following:
- A dead patient's Medicaid card was used at three dentists in a week;
- Providers billed Medicaid for "scheduled patients" before actually treating them;
- A family accepted delivery of a new bed paid for by Medicaid after the patient died;
- A doctor requested delivery of his patient's prescription to his office after she died.
Some of the providers claim the erroneous billing was the result of honest clerical errors, while others claim that they actually billed for the services while the patients were still alive. One pharmacy in Long Island billed Medicaid $28,000 for prescriptions written for 17 dead customers ("honest" clerical error?). In regard to clerical mistakes that result in Medicaid being charged for dead people's treatment, Medicaid Inspector General Michael Sheehan observes
We don’t know how often it happens, but we think that it is a sign of general billing problems. What we tell people is, ‘If your billing system is so weak it bills for dead people, you are bound to have other billing problems, too.’
Those benefiting from billing Medicaid for dead folks run the gamut from big pharmacy chains to doctors to family members of the departed. Most people probably wouldn't want to be remembered as a fraudulent Medicaid charge, making this type of fraud totally disrespectful to the dead (and, of course, the living taxpayers who foot the bill, too).
Sold Out by USDA?
This post was written by Josh
Hopefully you're not about to tuck into a plate of veal cutlet or sausage right now. The latest whistleblower to be undermined by the very agency he worked for--the USDA--is veterinarian Dr. Dean Wyatt. For the past 18 years, Dr. Wyatt has had the enviable position of monitoring slaughtering operations for the USDA's Food Safety and Inspection Service (FSIS). Dr. Wyatt recently monitored operations at Seaboard Farms, a hog-slaughtering plant, and Bushway Packing, a veal calf-slaughtering plant.
Dr. Wyatt observed repeated handling violations at the plants, and, as it was his job to do so, reported these violations to his employer, USDA. Instead, USDA allegedly sided with the plants and ultimately retaliated against Dr. Wyatt by giving him a rock/hard place ultimatum: transfer or be fired.
Dr. Wyatt's information led to an undercover investigation by the Humane Society of the United States at the Bushway plant, which uncovered widespread inhumane treatment. As a result, USDA closed down the Bushway plant for violations of the Humane Methods of Slaughter Act and began a criminal investigation.
Taxpayers, animals, and consumers would have been much better served, however, if the USDA had actually listened to its own employee in the first place. As Dr. Wyatt testified before the House Oversight Committee's Domestic Policy Subcommittee on March 5, 2010,
Food integrity and humane handling whistleblowers should not have to rely on an undercover video investigation in order for USDA supervisors to take their disclosures seriously. It seems almost unbelievable to me, but I have been ignored by my own people and have suffered physically, emotionally, and financially in the process. More importantly, animal welfare and food safety have suffered as well.
In a recent editorial, Humane Society CEO Wayne Pacelle makes the important observation that the FSIS has become part of the law enforcement problem because it has grown too close to the slaughter industry. Pacelle notes that the meat industry receives large federal subsidies, and it basically calls the shots at USDA. Dr. Wyatt's painful experience reveals just how corrupted the situation has become.
The Government Accountability Office has released a report sharply criticizing USDA, and one would hope that changes are in the works. In the meantime, we are lucky to have whistleblowers like Dr. Wyatt who endure intense hardships in order to stop serious misconduct.
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