Audit Notes: Weil embarrasses DOJ, Business Insider, revolving door

Bloomberg’s Jonathan Weil makes an amazing catch on the latest Ernst & Young wrist slap from the Justice Department, this time over illegal tax shelters the accounting firm helped 200 clients abuse to cheat the government out of billions of dollars.

Weil finds the Obama administration, incredibly, kissing their back ends, so to speak:

Yet there was one area where Ernst made out beyond all reason: A veritable love letter at the bottom of the statement of facts that Ernst and the U.S. Attorney’s Office for the Southern District of New York agreed to as part of their accord. It said: “The wrongdoing in this case by a small group of professionals at E&Y represented a deviation from the more than 100-year history of ethical and professional conduct by E&Y and its partners.”

To which one can only respond: What? I asked Julie Bolcer, a spokeswoman for the U.S. attorney, what the factual basis was for the statement. She declined to comment. Amy Call Well, an Ernst spokeswoman, declined to answer the same question.

Just, wow.

Weil runs down a list of 19 serious E&Y settlements, charges, and sanctions over the last two decades and embarrasses the Justice Department.

It would be nice to believe the prosecutors were on the public’s side here. Unfortunately it seems they were more concerned about protecting Ernst than they were anyone else.

Great catch by Weil.

— This Business Insider post “says too much about journalism these days,” as Steven Levy wrote on Twitter.

First, BI reported this on March 9:

Tony Hsieh of Zappos, recently purchased 100 Teslas for the tech community he’s building in downtown Las Vegas, Business Insider was told this afternoon.

Then on March 11 (emphasis mine):

We reported this story after speaking with a VegasTechFund entrepreneur who seemed certain this had happened. But Hsieh tells us this is not the case. He says he has “never purchased a Tesla” and he is “not creating a car rental service.”

Note that there was no “Hsieh declined to comment” or anything in the original post.

And now on March 13:

Hsieh has clarified the Tesla ordeal, saying: “In the downtown project side of things, we are in the process of talking about possibly buying 100 Teslas. But to make the leap from that to saying we already bought 100 Teslas is like saying a startup that is looking to fundraise has already closed a round of financing. They are two completely different things.”

Beta journalism, or something.

— In Revolving Door Watch, newly former SEC Chairman Mary Schapiro is going straight to the board of General Electric, one of the biggest companies she oversaw. She’ll make a quarter million dollars a year for a very part-time gig.

And CNBC’s Gary Kaminsky, who came to the network from Wall Street is going back to Wall Street, this time as vice chairman of Morgan Stanley’s brokerage department.

I’m surprised it’s not Goldman Sachs after this obsequious interview with Lloyd Blankfein in April:


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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,