A federal grand jury indicted Bruce Karatz, the former CEO of real estate company KB Home, on Thursday for manipulating stock options to earn more than $230 million in three years. The indictment estimated that the backdating made Karatz’s stock options $1.63 to $4.56 more valuable per share. Karatz has already paid a fine of $20 million to KB Home and the federal government for backdating stock options between 1999 and 2006. If convicted of all twenty counts of fraud and making false statements, Karatz will face 415 years in prison. (LA Times)
Darrell Dochow, an official at the Office of Thrift Supervision, retired quietly last Friday while under investigation for fraud. The U.S. Inspector General claims that Dochow allowed IndyMac to deceive its investors by reporting an $18 million deposit in a March 2008 financial disclosure document though the funds were not transferred until May. IndyMac filed for bankruptcy protection four months later. To investigators, writes ABC News, Dochow’s retirement shows “how cozy government regulators have become with the banks and savings and loans they are supposed to be checking on.” (ABC News)
The FEC will instiute a new fundraising rule designed to reduce the impact of lobbyists on elected leaders. Effective March 19, the rule requires PACs to disclose the names of lobbyists who collect contributions of more than $16,000 (sub. req.) from multiple sources. Currently, lobbyists can curry favor with lawmakers by collecting bundles of political contributions from personal and professional contacts. Disgruntled lobbyists tell Roll Call that they plan to dodge the restriction by hosting fundraisers registered under the names of multiple co-hosts, who could each raise $15,000. (Roll Call)
Looks like the Halliburton scandal just won’t die. Federal prosecutors in Houston charged two British men of helping Kellogg, Brown & Root, at the time a Hallibuton subsidiary, bribe the Nigerian government to win more than $6 billion in construction contracts, a clear violation of the Foreign Corrupt Practices Act. KBR has already admitted to bribing the Nigerian government from 1995 to 2004 and agreed to pay $400 million in fines. (Associated Press)
Fueled by the fallout from Bernard Madoff’s $50 billion scam, the SEC will consider streamlining its whistle-blower policy. Tips to the SEC are currently processed through several SEC divisions in Washington and throughout the country. Though a new process has not yet been established, SEC chairman Mary Schapiro told Reuters that the agency will institute a system to fill regulation gaps which “cause breakdowns that prevent us from ensuring swift and vigorous enforcement.” (Reuters)
New Jersey Governor Jon Corzine announced he will donate to charity all political contributions received from Bernard Madoff. Madoff gave $2,000 to Corzine’s 2000 U.S. Senate campaign and $1,000 to his 2006 gubernatorial campaign. Corzine saidthat he did not know about Madoff’s contributions until recently. (Associated Press)
