Saturday Open: Retail creeps and the Aggies head to Jackson

I’m really not that old fashioned but you know something is wrong when Halloween items hit store shelves in late August and we skip over Thanksgiving to extend the “Christmas Season”.

Black Friday opens with a whimper along Coast ~ Patrick Ochs

The MSHSAA’s State Class 4A football championship game is set as the Forrest County AHS Aggies will represent the Southern part of Mississippi against Lafayette County next Saturday.

Aggies punch their ticket to Jackson ~ Stan Caldwell

A bit more on this unique school.

Miss Glenda is a sweetheart.

FInally some hometown news:

Bay councilman hot over new fire truck ~ Cassandra Favre

I always thought the purpose of the State Contract was to make purchasing easier. Hmmm.

Holiday Season Special: Easy as Exhibits A, B & C

The following has very profound implications:

Exhibit A ~ The official word on a few of former Jefferson Parish President Aaron Broussard’s many other criminal acts:

  • Broussard’s receipt of a major ownership interest in a company holding Canadian resort property for little or no capital contribution, which was instead supplied by various Parish vendors

Beginning in or around 2002, a company named Nova Scotia Enterprises, LLC (“NSE”), was formed. See Exhibit A at 1-5 (Articles of Organization and Initial Report of NSE). NSE was a holding company for several pieces of vacation rental property located in the Canadian province of Nova Scotia. See Ex. A at 11 (Operating Agreement of NSE at Section 2.3, noting purpose of company is to acquire and own real property). At various times from 2002 through 2010, there were up to twelve partners in NSE – many of which were Jefferson Parish contractors or prospective contractors. See id. at 32-34 (attachments to NSE Operating Agreement). Broussard was also a partner in NSE. See id. at 34. However, unlike almost every other partner in NSE, Broussard was given a large, 42% interest in NSE for a small capital contribution to the company. See id, at 34 (reflecting Broussard’s ownership interest) & 56 (NSE spreadsheet reflecting contributions made by NSE partners and noting that Broussard’s contribution as approximately $782.60). By contrast, nearly $50,000 was contributed by several other NSE partners for the upkeep and maintenance of properties. See id. at 56. Significantly, many of the NSE investors who supplied the vast majority of the funds obtained a much smaller ownership interest than Broussard in NSE. See id, at 32-34 (reflecting 3% or 6% interest obtained by other partners in NSE). Most importantly and not coincidentally, during Broussard’s tenure, many of the NSE partners, through their various corporations, received contracts with, and work in, Jefferson Parish, worth millions of dollars, at the same time they were funding NSE and Broussard’s corporate interest in it. Finally, Broussard sought, at the conclusion of his tenure as Parish President, to sell his ownership share in NSE – which was purchased for very little – for nearly $200,000, an extraordinary return on the minimal investment supplied by Broussard. See id. at 57-60 (correspondence and promissory note regarding Broussard sale). Thus, in sum, the Government will present evidence reflecting that various Jefferson Parish vendors (who sought and received work when Broussard was Parish President) supplied investments (a thing of value) for a company owned, in large part, and managed by, Broussard. See Exhibit A at 1-60.

Exhibit B ~ Real Estate Abstracts obtained by Slabbed New Media in 2011 and 2012 on the property in question Continue reading “Holiday Season Special: Easy as Exhibits A, B & C”

Today’s Auditing Moment: Rental Real Estate Transactions and Money Laundering. (Part 1)

CPAs that perform audits of financial statements under the Codified Generally Accepted Auditing Standards are typically well versed in the standards and practices detailed therein but to the extent continuing education on the topic of auditing often focuses on notable audit failures such as those involving ENRON and Mississippi’s own WorldCom along with a host of others dating back to the 1920s the study of what went wrong is both natural and needed.  Out of the ENRON and WorldCom disasters came a host of new auditing standards. I particularly thought the AICPA did a good job with AU Sections 314, 316 and 317 which deal with understanding the entity in question, and the risks associated with the entity including fraud and illegal acts.

Today, the realities of the post Katrina Mississippi coast is the growth of the rental real estate in terms of sheer number of units, often built solely as a result of post Katrina taxpayer subsidies.  The number of units constructed has resulted in a market overcapacity and that in turn impacts the monthly price of the rentals.  With insurance sky high the top and bottom line squeeze on the owners of the units can lead to pressure to do some very unsavory things. Let’s begin with the National Association of Realtors Anti Money Laundering page:

The crime of money laundering continues to be a growing area of concern in the United States. Therefore, law enforcement agencies and the financial sector devote considerable time and resources to combatting these illegal financial activities. However, many non-financial businesses and professions are also vulnerable to potential money laundering schemes.

Real estate professionals are a category of the non-financial business sector that may encounter persons engaging in money laundering activities. The purpose of this fact sheet and suggested voluntary guidelines is to increase real estate professionals’ awareness, knowledge, and understanding of the potential money laundering risks surrounding real estate and enable them to identify practical measures to mitigate the risks.

It is at this point that I’ll observe that while most people understand the concept of money laundering in a general sense they do not understand the specific elements so here it the skinny:

The actual process of money laundering is a three step process that is initiated by introducing the illegal proceeds into the financial system, e.g., breaking up large amounts into small deposits or by purchasing financial instruments, such as money orders, which is referred to as placement. This is typically followed by distancing the illegal proceeds from the source of the funds through layers of financial transactions, referred to as layering, and finally by returning the illegally derived proceeds to the criminal from what appears to be a legitimate source, known as integration.

So there we have it folks, money laundering is a three step process defined by 1. Placement 2. Layering and 3. Integration but this is different from the legal definition of the crime of money laundering. Here in the US, I find the FBI primer page on the topic to be very useful because in the US the crime of money laundering is just a 2 step process: Continue reading “Today’s Auditing Moment: Rental Real Estate Transactions and Money Laundering. (Part 1)”

The headline could have easily read…..

5 Sun Herald attorneys from Jones Walker working with Aaron Broussard and pals to shut Slabbed down.

Naw folks, the Sun Herald only cares about the First Amendment and public records when it is their own ox being gored.

Five attorneys working for Mississippi to keep records from public ~ Anita Lee

Speaking of the Goatherders, I have a dynamite update coming as the gang has made some stunning admissions in Canadian court filings.