Spinelli Corporation Newsletter
Spinelli Report
Volume No. 4
Issue No. 3
March 2005
Computer Forensics
Computer Forensic Analysis of Floppy Disk Leads Police Straight to BTK Killer
A lilac-colored floppy disk included in the BTK (standing for "Bind, Torture, Kill") killer's final mailing to a local Wichita, KS, television station helped crack the 31-year old case. Using computer forensic techniques, police found such digital footprints on the disk as an Internet protocol address and remnants of deleted files that enabled them to trace it back to a computer at Christ Lutheran Church, where Dennis L. Rader, 59, the man believed to be the BTK killer, is president of the church council. Pastor Michael G. Clark said that in January Mr. Rader had used the disk in the computer so that he could print copies of the agenda for a council meeting. Mr. Rader was arrested on Feb. 25 and charged with 10 counts of first-degree murder in a series of strangulations that terrorized the city since 1974. He is being held on $10 million bail.
"Computer Disk and DNA Led to BTK Suspect,"  Associated Press via Las Vegas SUN, March 3, 2005
"Computer Disk Led to Arrest in Killings, Pastor Says,"  The New York Times, March 2, 2005
Copyright/Patent Infringement
Zig-Zag Customers, Distributor Rolled by Counterfeit Cigarette Paper Scheme
Wajdi Abdulaziz Beydoun, 39, pleaded guilty in Federal court to conspiracy and trafficking in counterfeit goods for a five-year scheme to sell counterfeit Zig-Zag cigarette papers that cost the real distributor $1.8 million, according to prosecutors. Mr. Beydoun paid a Tucson, AZ, company $16,000 to print counterfeit Zig-Zag covers that were smuggled into Mexico, where prison laborers repackaged leaves of rolling papers. While authentic Zig-Zag packs contain 100 leaves, the fakes held only 32. The packs were sold for $1.25 each in Louisiana and Dearborn, MI. Mr. Beydoun faces up to 15 years in prison and a $2.25 million fine.
"Mich. Man Admits to Cigarette Paper Scheme,"  Associated Press via Las Vegas SUN, February 11, 2005
Corporate Espionage
B-School Applicants Hack MBA Applications Processing Firm to Find Out Whether They Got In; Many Promptly Get Thrown Out
Weeks before official offers were mailed out to business school applicants, a computer hacker anonymously posted instructions on BusinessWeek's online technology forum on how to hack into the files of ApplyYourself - a company that processes the MBA applications of several top business schools, including Harvard, Carnegie Mellon, Dartmouth, Duke, MIT and Stanford - to find out whether they were accepted. More than 200 applicants, many of whom have been identified, let their curiosity trump their sense of ethics and broke into the files. Consequently, Harvard has decided to reject 119 applicants and MIT, 32. Carnegie Mellon announced that it will reject two applicants if there is proof they were among the hackers. Taking a slightly less hard line approach, Stanford is urging the hackers to turn themselves in before making individual admissions decisions, while Duke and Dartmouth have not yet announced their plans.
"Rejecting The Hacker Class,"  BusinessWeek, March 21, 2005
"Get Into Biz School? Hacker Offers Crystal Ball,"  Reuters via Yahoo! News, March 6, 2005
Environmental Investigation
DuPont Settles WV Class Action Suit For $107 Million Without Any Evidence That Drinking Water Contaminated With PFOA Is Dangerous
Wood County Circuit Judge George W. Hill approved settlement of a class action lawsuit alleging a chemical used in making the nonstick substance Teflon contaminated water supplies near DuPont Co.'s Washington Works plant in West Virginia. In what the judge termed a "very unprecedented action by a huge corporate defendant," DuPont agreed to pay at least $107.6 million without any evidence that perfluorooctanoic acid, known as PFOA or C8, caused any disease. The lawsuit was filed in August 2001 on behalf of residents living near the plant, located on the Ohio River about 7 miles southwest of Parkersburg, WV, who said their drinking supply was contaminated by PFOA. DuPont has denied any wrongdoing but said in September it decided to enter into the agreement because of the time and expense of litigation. Under the agreement, DuPont, based in Wilmington, DE., is to provide six area drinking water utilities with new treatment equipment to reduce PFOA in water supplies at an estimated cost of $10 million. The company also is to fund a $5 million independent study to determine if PFOA makes people sick and pay $22.6 million in legal fees and expenses for residents who sued. DuPont ultimately could be forced to spend another $235 million on a program to monitor the health of residents who were exposed to the chemical, according to the agreement.
"Judge OKs 'Unprecedented' Settlement of DuPont Class Action,"  Associated Press via Law.com, March 1, 2005
Fraud/Embezzlement
NY Lawyers Accused of Stealing Money from Client Escrow Accounts, Petty Cash
Bay Ridge, Brooklyn-based lawyer Valerie Simuro, 56, is accused of randomly transferring more than $2.6 million from the escrow accounts of at least eight clients into her business account, from which she would withdraw cash to finance gambling sprees to Las Vegas, Atlantic City and Foxwoods Casino in CT. The Brooklyn DA's office has charged Ms. Simuro with numerous counts of grand larceny; she faces disbarment and a jail term of up to seven years. In an unrelated matter, Jay R. Kolmar, 46, formerly a real estate partner at Kelley Drye & Warren has resigned from the New York State Bar rather than face disbarment for stealing at least $110,000 in $250 increments from the firm's petty cash account over a 10-year period, supposedly for reimbursement of gratuities paid to title companies during real estate closings. Mr. Kolmar admitted his misconduct in an affidavit of resignation submitted in November to the Disciplinary Committee of the Appellate Division, 1st Department, which has granted the committee's request for an order accepting his resignation from the Bar. Mr. Kolmar stated that he repaid all the money he had improperly taken to the firm.
"Game Over For Lawyer’s $2M 'Theft',"  New York Post, March 9, 2005
"Ex-Kelley Drye Partner Quits Bar Over Pilfered Petty Cash,"  New York Law Journal via Law.com, March 9, 2005
Internal Controls
Audits of 500 Companies Show Lax Internal Controls; Business Groups Say Most Reported Problems Are Piddling
More than 500 public companies of all sizes have reported deficiencies with their internal accounting controls under section 404 of Sarbanes-Oxley Act of 2002. Under the rule, management must review a broad range of internal controls issues. Then, an external auditor performs an independent assessment and discloses whether it agrees with management's conclusions. Supporters of the Federal corporate-accountability law point to the volume of disclosures as proof that the new rule is needed to ensure accurate and reliable financial reporting, while business groups protest that huge auditing bills have been racked up to find internal controls deficiencies that have largely been insignificant. By one estimate, companies will spend an average of $3 million each on section 404 compliance, though annual costs are expected to drop after the first year or two. Among the firms announcing plans to deregister their securities to avoid Sarbanes-Oxley costs are manufacturing firm Paul Mueller Co., Etch-A-Sketch maker Ohio Art Co., and ShoLodge Inc., which owns and operates Shoney's Inns.
"Accounting Rule Exposes Problems But Draws Complaints About Costs,"  The Wall Street Journal, March 2, 2005
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