Filed under: Investigations

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SEC: Accounting problems stem from technology

A lack of investment in crucial technology systems is to blame for material weaknesses identified last year in the U.S. Securities and Exchange Commission’s financial statements, top SEC officials said in testimony prepared for delivery to lawmakers on Thursday.

The weaknesses, identified in a November 2010 report by the Government Accountability Office, were uncovered in the SEC’s information systems and financial reporting and accounting process during an audit of the agency’s fiscal 2010 and 2009 financial statements. Get the full story »

American Apparel CEO held teen as sex slave: Suit

Dov Charney. (Reuters)

American Apparel founder and chief executive Dov Charney is being sued for $250 million by a woman who said he treated her as a sex slave when she was a teenage sales employee at the clothing chain.

Irene Morales of Brooklyn, New York, has accused Charney, 42, of sexual harassment, creating a hostile workplace, gender discrimination and retaliation.

American Apparel and directors at the company have also been named as defendants in the lawsuit, filed in a New York state court on Friday. Morales accused them of failing to protect her, and said they knew or should have known that Charney was a “sexual predator.” Get the full story »

Suburban Chicago man pleads guilty to $18M fraud

A suburban Chicago businessman has pleaded guilty to stealing $18 million of public money set aside for minority businesses.

Illinois Attorney General Lisa Madigan said Tuesday that 58-year-old Ronald Blum of New Lenox pleaded guilty to two counts of minority business fraud. Blum owns the Markham-based Castle Construction Corp. Get the full story »

SEC investigating Kraft for corruption in India

The U.S. Securities and Exchange Commission is investigating Northfield-based Kraft Foods Inc. for possible corruption at an Indian facility of its Cadbury unit, the company said in a regulatory filing.

Kraft, the marker of Maxwell House coffee, Oscar Meyer lunch meats and Velveeta cheese, received a subpoena from the SEC on February 1, the filing said. Get the full story »

Republicans question SEC on Madoff conflicts

Two Republican lawmakers are probing a decision by the U.S. Securities and Exchange Commission to let the agency’s top lawyer handle matters concerning Bernard Madoff, even though his deceased mother had invested with the swindler.

House Oversight Committee Chairman Darrell Issa and the Senate Judiciary Committee’s top Republican, Charles Grassley, said on Thursday they had sent an inquiry to SEC Chairman Mary Schapiro asking questions about why SEC General Counsel David Becker was allowed to advise the commission on Madoff matters. Get the full story »

Illinois AG sues law firm for duping consumers

A Chicago-based debt-settlement company used lawyers as a “front” to illegally collect massive fees from financially struggling consumers who were seeking help, Attorney General Lisa Madigan alleged Wednesday.

Madigan filed a lawsuit Wednesday against the national firm Legal Helpers Debt Resolution, based at 233 S. Wacker Drive in Chicago.

The company, also known as the law firm Macey, Aleman, Hyslip & Searns, charged upfront fees for debt-consolidation services, which became illegal in Illinois last year, the suit alleges. Get the full story »

3 theater chains fined over child labor violations

Three movie theater companies will pay more than $275,000 in civil fines after being accused of  violating federal labor laws by allowing dozens of teenagers in nine states, including Illinois, to perform dangerous jobs and work hours longer than allowed by law, the Department of Labor said Tuesday.

The U.S. Department of Labor’s Wage and Hour division said about 160 minors at 27 theaters operated by Milwaukee-based Marcus Theatres Corp.;  Regal Cinemas Inc. of Knoxville, Tenn.; and Wehrenberg Inc. of St. Louis violated the Fair Labor Standards Act. Get the full story »

Ex-Goldman director accused of insider trading

Former Goldman Sachs board member Rajat Gupta is being accused by regulators of passing along inside information about the bank to a prominent hedge fund manager.

Monroe Capital raises $250M

Chicago-based Monroe Capital LLC said it has raised a $250 million debt and equity fund that it’ll use to invest in middle-market businesses as well as woman-and-minority-owned firms in poor communities. Get the full story »

Illinois Blue Cross settles allegations that it denied sick kids coverage

Illinois’ largest health insurance company will pay $25 million to settle allegations that it denied coverage to sick children in need of nursing care by “fraudulently” shifting their claims to Illinois’ Medicaid program, state and federal prosecutors said this morning.

The settlement, reached by Illinois Attorney General Lisa Madigan and U.S. Attorney Patrick Fitzgerald, follows several years of complaints from patients and their families. The patients reached out to Madigan’s office after their claims were denied by Blue Cross and Blue Shield of Illinois.

The cost of the medical care, which included so-called private-duty nurses for sick children and other ill patients, should have been covered by Illinois Blue Cross, but instead was shifted to Medicaid at a cost of nearly $12 million, prosecutors said. The claims were denied based on “internal, undisclosed guidelines that were more restrictive than the language provided to patients in plan policy materials,” Madigan’s office said. Get the full story »

Regulators probe Apple subscription plan

Regulators have begun an inquiry into Apple Inc.’s plans to take a cut of the revenue generated by the sale of online subscriptions through its App Store, according to a person familiar with the plans. Get the full story »

NHTSA steps up probe into diesel VW stalling

The government is expanding its safety investigation into possible engine problems in 100,000 Volkswagen diesel cars.

The National Highway Traffic Safety Administration says it has received 160 complaints and field reports about engines stalling or losing power. The reports involve 2009 and 2010  Jettas and 2010 Golfs and Audi A3s with TDI clean diesel engines. Get the full story »

U.S. to announce more insider trading charges

U.S. prosecutors said they plan to announce insider-trading charges against three hedge fund managers and a hedge fund analyst. Get the full story »

U.S. set to release results of Toyota probe

The government on Tuesday plans to release the findings of its investigation into reports of sudden acceleration in Toyota vehicles.

The Transportation Department and NASA have been studying the safety issues that led Toyota to recall more than 11 million vehicles since the fall of 2009. Get the full story »

WTO set to issue findings on Boeing subsidies

The World Trade Organization will issue a confidential final ruling Jan. 31 concerning European claims that Boeing benefited from unfair aircraft subsidies, sources familar with the case said on Friday.

The report, which will not be made public for several weeks, is the latest round of legal Ping-Pong between the European Union and United States over mutual claims their aircraft industries have been unfairly shielded from competition. Get the full story »