Thursday, December 20, 2018

Tri-level logosmography for data and financial auditing.

Logismography as a concept has been derived from a storied historical past.
In one of my graduate-level management accounting classes, the lore was of a system more advanced and informative than double-entry bookkeeping. This mythical entity was a system that used a method of triple entry accounting, called Logismography. At one point several years ago, I even checked Wikipedia; there was no entry for this idea. There is still no entry for this idea.
No results for articles containing the term, either.

Okay, well what about the most authoritative authority on the attribution of authors? That's right... I'm talking about our good friend, Google.
Top-level skim yields nothing significant. What about peeking into the mountain of student-funded research[3] available to students and professors whist they are ensconced in the Ivory towers? Why yes; I'm referring to greedy database hoarders like EBSCO host and JSTOR that continue to squelch access to the actual research part of student and taxpayer-funded research.
But we digress. Back to this
For what this system might be used, the authors could only speculate. Today, after about a decade of "in the field professional experience", I have some ideas.

Logismography was thought to have been developed in Renaissance times, and later generations of accountants dismissed it as being "unviable", preferring the double entry version developed by Pacioli. Given that the physical limitations of his time didn't include the computational or cryptographical boundaries that we enjoy today, would a Logismography-like system be a natural and obvious choice for present day?

(Footnote): Patent possibly pending.

  • [1] Ancient Double-Entry Bookkeeping. Scholars' Book Co. 1974: p 33.
  • [2] Filios, Vassilios P. "Four Schools of European Accounting Thought." The Accounting Historians Journal (1981): pp 61-78.
  • [3]
  • [4]
  • Monday, September 17, 2018

    Salesforce (NYSE:CRM) smells like Enron

    Salesforce (NYSE:CRM) smells like Enron

    The most egregious accounting fraud, insider trading, and ENRON-like practices are perpetuating at Salesforce, where they're cooking the books

    It's open season for looting on Wall Street. The regulators, it seems, have put on their blinders. For a holder of a hard-earned Baccalaureate degree in Accountancy and a staunch promoter and maintainer professional accounting ethics, it's sickening. The warning sirens are screaming but nobody is listening. Although I could never do the wardrobe of an auditor CPA, I can still share my findings....

    One of the worst offenders is headquartered in downtown San Francisco, in a lofty tower stuffed full of headset-wearing marketing people and "engineers"  tucked in with a splattering of corporate motivational posters.

    The corporation for which these lipsticked pigs work does not produce anything tangible; it does not have any saleable inventory. This corporation didn't invent anything noteworthy; nor does it hold any significant patents. It doesn't contribute anything of appreciable value to its customers.  

    If, on December 30, 2016, you'd looked at the income statement of this corporation, you'd wonder how on Earth did it get to a 46.9 Billion dollar market cap? (Yes, that is billion with a "B"; 46 billion +900 million).

    You'd be baffled, and perhaps dig a bit into the balance sheet and quarterlies. In them, you would discover what are factually negative GAAP Earnings-Per-Share (EPS) for all seven out of seven of the last seven years since it IPO'd (2009 - 2016). In fact, you'd see a company that has largely been inventing its own "earnings" and selling those fake numbers to shareholders.  The numbers which do not adhere to any accounting standards, they say, are an indication of their "growth".  Growing what, exactly?  You'd see a company with vague business model and poor-to-mediocre digital products haphazardly glued together with wads and wads of cold and limp spaghetti.  You might try a few random searches to see what the big deal is... how has this company managed to stay in business? What are they selling, exactly?

    What you'd discover instead of answers is droves and droves of pigs: pigs that are singing and tap-dancing incessantly about the cold spaghetti. There are literally thousands of troll accounts on social media sites, all of them incessantly praising this company. You might wonder what the hell was going on.  How does a company that can't explain what it does in one clear sentence have so many fanboys?  And why are there so many tactics being used to promote Salesforce so similar to what we saw with the Russian troll farm accounts used to steal our elections?

    Then maybe you'd decide to take a listen to a conference call hosted by the chief pig himself -- Marc Benioff.  Just one listen and it becomes clear that this is company is nothing more than spew of mouthful after mouthful of slobbering and regurgitated pie-in-the-sky lies. Benioff & Co. assault the listener with an irrational barrage of buzzwords about digital apps, the "cloud" growth, customer-facing solutions and blah, blah blah.  The detachment from reality is quite alarming.

    For any real software engineer, it's too much to swallow.  Real hackers know that you CANNOT scale customized spaghetti. Adding more spaghetti on top of others' forgotten and moldy spaghetti doesn't make the spaghetti any more efficient.  Benioff's delusions about growth have zero substance, like marshmallow fluff whipped up with green olive baloney puked on top of that cold spaghetti.

    Are you getting sick yet?  If not, you should be.  This is not right.   

    These days, society is so well-acquainted with delusional men that it lets them get away with way more than it should. Sometimes society even likes to encourage them by lapping up their vomit.

    Fast forward to today.  A mere 21 months later, and that Salesforce vomit is now being "valued" by shareholders at an astounding 115.58 billion dollar market cap.  It has increased in value by 69.5 Billion dollars in only 21 months.

    Let me spell that out for you. The ACCOUNTING FRAUD at SALESFORCE has stolen over 115 billion, 580 million from investors who believed the fake numbers Benioff and Co have been selling as "real" GAAP numbers!

    For some other perspective, consider the breakdown of what the best analysts on Wall Street make out in difference between "small" cap and "large" cap stock.  The journey between a small and large cap ($10B of value) is long and arduous, and here is key:  It takes a long time.  It takes a long time of solid earnings that produce positive EPS, not on the back of "bridge loans" for billions and other shady deals derived from other co-conspirators who profit from borrowed money inflated like a blimp.

    What this means is that when the fraud and corrupt accounting practices are exposed, all of the Salesforce "insiders" will have effectively stolen over 100 billion dollars.   It's being reported that Benioff is going to buy Time Magazine with his booty. 

    This ALSO means Marc Benioff's attempt to acquire TIME Magazine for $190M is being done with Unlawful Proceeds from Stock Sale!


    It's easier to fake the short-term than it is the long term.

    • Egregious balance sheet manipulation  --  Even Tesla, which everybody knows is maybe probably prematurely overvalued, doesn't try to defraud people with fake Goodwill or "Intangible" assets. 

      For a peek as to how the insiders "really" feel about their growth, take a look at insider dumping (NOTE: this does not include 3 of the most egregious dumps in the last 4 weeks)

      Insider dumping


    Factual GAAP accounting numbers are being suppressed, and instead the salesmen direct investors to the fraudulent and manipulated non-GAAP earnings they repeat ad nauseum.

    Since most of what Salesforce can claim as its revenue comes from unenforcable "contracts" (prepay forward contracts are fully refundable by law!) and which it has not yet delivered (and for which no real engineers will work), it has been emulating tactics used by ENRON insiders to mislead investors about growth.  Like ENRON, Salesforce has a fishy credit rating with one of its most intimate bed mates, including Merril Lynch, the company that fronted $3 billion of the $6.5 billion acquisition cost for Mulesoft.   
    • Borrowing practices parallel those used by ENRON 
    Enron entered into circular transactions that were characterized as prepay forward contracts in order to disguise borrowings as cash from operations. Lay was aware of the importance and magnitude of prepay transactions to create operating cash flow and thereby maintain Enron's investment grade credit rating. Lay was aware that the credit rating agencies were not told the magnitude of Enron's prepay obligations and that this information was not disclosed in Enron's public filings.1   

    In Conclusion...

    You shouldn't need a CPA's wardrobe to catch this kind of crime.  It's wrong on every level: it diverts dollars from investment in truly worthy companies, for one.  It enables sleazebags like Benioff to cash out hundreds of millions of dollars, for two.  It makes places like San Francisco even worse than it already is.

    PLEASE write to the SEC and tell them time to start jailing criminals like Marc Benioff and Keith Block; this kind of fraud will ruin America; criminals and enablers doing this stuff on purpose need to be locked up and throw away the key.


    Thursday, July 30, 2015

    Fennica escorted out of Portland

    Today was a day for the books, at least in terms of environmental activism.  The Fennica, an icebreaker employed by Shell Oil, received a police and coast guard escort as it exited the Port of Portland early Thursday evening.

    A police and coast-guard escort

    Protesters from Greenpeace who'd dangled suspended from mountaineering equipment under the St. John's Bridge ~40 hours or so prior to this escort were ready to attempt to slow down this boat's as it was in a hurry. 

    Three of the 13 dangling protesters were forcibly removed from the bridge, so this boat could go underneath, and make its way back to the Arctic, where it will stand by in case one of the cap stacks blows a gasket.
    Fennica got an escort because it was in a hurry, and under a deadline.  Yup.  Break out the big guns in law enforcement to ensure that corporate interests get where they're needing to go, when they need to get there.





    Tuesday, March 17, 2015

    KwikPay and RenWeb -- Nelnet's malware exploits the student loan industry

    Was your student loan debt acquired illegally?  How malicious is KwikPay?  The $133 Billion Dollar Questions...

    If your student loan balance is going nowhere, and if you use or have been enticed by your loan "servicer" to use a little piece of software called KwikPay -- you may wish to read ahead.  Especially if your intentions are to minimize the actual dollar amount of interest (or interest + principle) paid. 


    Background: doing a little research on something only tangentially related to student loans, I happened across a couple intriguing posts on reddit... have a read  here, here and here.  Immediately my intuitive hackles went up:  something is not right.  And thus the "little" research led to more research, and some pretty interesting discoveries. 

    First and foremost: be informed that any company that uses KwikPay or Renweb is, in some way, affiliated with Nelnet.  This is not good thing.   

    Nelnet, AKA "National Education Loan Network, Inc." is a behemoth publicly-traded, for-profit company that operates under a vast number of names and pseudonyms.  Nelnet operates at least 47 subsidiaries (probably more today; but as of 2008 there were at least 47 -- see Footnote 1) and handles upward of $133.6 BILLION DOLLARS in student loans debts.

    This might be an admirable or impressive feat but for the reality that most of the "business" associated with these student loans was obtained illegally.

    Keep in mind that the $133.6 BILLION DOLLARS number does not include side deals where Nelnet has aggressively marketed its KwikPay malware and injected it into supposedly "competing" loan service companies such as Edfinancial, Charter One Bank, First Mark Credit Services, etc.   How on Earth one company has been "entrusted" with so much student loan debt-handling is beyond comprehension.   

    The fundamental problem with KwikPay is exactly like this redditor mentioned -- that the portions of your payment getting applied to interest and principle are seemingly random, especially for borrowers with multiple kinds of "loans" bundled (aka "consolidated") under this one servicer.  

    This malware is programmed to apply interest vs. principle in a way that forces borrowers to maximize interest payments paid to the banks; this, of course, increases both the amount and the lifespan of the loan and makes paying it down that much harder.  The formula for even "simple" interest:  I = prt is easily manipulated when you let them play with the other variables in whatever manner they wish.

    Getting this straightened out is not only something they make difficult, but something that they actively discourage you from doing (or know how to do).


    Some recent data about Nelnet from a recent earnings report:

    "Nelnet Reports Fourth Quarter 2014 Results -

    - Servicing $133.6 billion student loans for 5.9 million borrowers under government contract
    - 30 percent increase in payment processing revenue driven by RenWeb acquisition
    - Purchased $6.1 billion of loans during 2014"

    Historical Facts: 

    Nelnet was sued a few years ago under the False Claims Act. The details of this
    case were obtained through WikiLeaks, and links to the source documents have been included for convenience:

    The TL;DR version of a 285 page suit:

    As part of some incentive for "quick and dirty" regulation compliance, Nelnet was able to inject its malware into numerous Colleges, Universities, and alumni associations; students and graduates from over one hundred colleges and Universities (see list starting on page 14 or Footnote 2) ... were steered toward using Nelnet's exit counseling software -- software that was specifically designed to induce students into a transaction with Nelnet and JP Morgan / Citigroup for any FFELP consolidation loans.  Highlights from the case:
    • Nelnet made fraudulent and misleading statements on its website that consolidating the FFELP loans with Nelnet entitled them to a 6 month forebearance.
      • By conducing them to consolidate FFELP-eligible loans before their grace period runs out, and by offering them forbearance for which they are not entitled, Nelnet yields loans with higher interest payments and loan balances that extend for longer than they otherwise would. JP Morgan and Citigroup delight in this.
      • Nelnet failed to reveal that by consolidating, borrowers would lose certain rights the government grants on Perkins loans (lower interest rates, ability to discharge) 
    • JPMorgan and Citigroup were named as aiders and abettors to Nelnet for "knowingly assist[ing] in the improper acts, plans, schemes and transactions"
      •  There was a single plan for Nelnet, JP Morgan and Citigroup to obtain payment of US money by presenting as many FFELP claims as possible.  JP Morgan and Citigroup took advantage of this plan to obtain the maximum amount of US money, with overt wrongful acts
    • Nelnet agents were required to make 100+ telephone calls per day soliciting people to complete loan consolidations; they were specifically instructed to present misleading statements regarding eligibility and savings over the life of the loan.
      • However, the facts have shown that "individuals who consolidate their student loans with Nelnet end up paying more interest over the life of their loans and make payments for longer periods of time"

    Very sadly and quite unfortunately... Nelnet, JP Morgan and Citibank's attorneys + lobbyists were (and still are) very powerful.  They weaseled the judicial system to get this lawsuit thrown out (albeit from one man, not from anybody else who wishes to pursue it).   The bad guys got a small victory -- it was “settled” for a measly $55 million (, none of which went to distressed students who were taken by this scam.

    The original whistleblower – Rudy Vigil – had worked for Nelnet in the heyday of scamming students out of college – he ended up financially destitute and is reported to have filed bankruptcy. 

    Now, About RenWeb...

    So with that little whistleblower blip taken care of, and the asset of a formula that has been "proven" to work with little or no takedown by the government, Nelnet now sets its sights on target: RenWeb.

    RenWeb is a recent acquisition.  It at first appears to be an innocent and simple tool that can allow parents to track their childrens' school involvement; however, it is much more than that.  Pieces of RenWeb allow students to apply for tuition and financial assistance... and it gathers both performance and income-sensitive data, data that is surely very valuable for targeting likely defaulters.  Given Nelnet's historical actions, it's highly likely that this is an attempt to duplicate former success by getting the malware injection even sooner into the process -- by going after students' parents and a number of private or religious-based institutions.

    To Do:  

    The CFPB is soliciting borrowers’ complaints. The agency invites borrowers to submit complaints online or call a toll-free number: (855) 411-2372.

    Senator Elizabeth Warren is just about the only political person who can be counted on to stand up for the rights of student borrowers.  But if you know of any more, please mention them...

    Expect to see a lot of lawsuits on the horizon for Nelnet and its cronies.    

    KeyWords:  EdFinancial, Nelnet, Kwikpay, Student Loans, 5280 Solutions, Firstmark, Renweb

     Footnote 1:  Some of Nelnet Subsidaries (direct + indirect) are known as Education Solutions, Inc (Lincoln, NE); First National Life Insurance Company of the USA (Lincoln, NE); Lincoln Square Funding, LLC; Nelnet Student Asset Funding Extendible CP;  M &P Building LLC (Lincoln, NE); Peterson's Nelnet LLC (Lawrenceville, NJ); CUnet, LLC (Wyckhoff, NJ); Loanstar Assets Partners, LP (Delaware); Loanstar Assets GP (Delaware + Nebraska); Chela Education Funding, Inc. (NE); College Bound Loans, Inc. (Warwick, RI); National Honor Roll, L.L.C. (Lynbrook, NY); Student Marketing Group, Inc. (Lynbrook, NY);  FACTS Management (Lincoln, NE); infiNET Integrated Solutions (NE);  Shockley Financial Corp (Aurora, CO); SLAAA Acquisition Corp (Lincoln, NE);  Student Loan Acquisition Authority of Arizona, LLC (Delaware + Nebraska); National Education Loan of New England, Inc. (Warwick, RI); MELMAC, LLC (organized in Delaware - based in Portland, ME); MELMAC, Inc. (organzied in Nevada - Portland, ME); NHELP, Inc. (various states and cities); InTutition, Inc. (organized in Florida, based in Lincoln, NE); ClassCredit, Inc. (organized in Florida, based in Lincoln, NE), FirstMark Services, LLC (Woodbury, MN); 5280 Solutions (direct subsidiary Littleton, CO);  National Higher Loan Education Program, Inc (Lincoln, NE);  

    Footnote 2:  Schools targeted by Nelnet between 1998 - 2008:  Boise State University; Bowie State University; Central Michigan University; Cleary University; Clemson University; Cleveland State University; College of Charleston; Colorado State University; CC of Baltimore County; ECU; Eastern University; Washington University; Embry-Riddle; Emporia State U; Florida Coastal School of Law; Florida International University; Fort Hays State; Georgia College & State University; Georgia State U; Georgia Tech; Grand Canyon U; Hawaii Pacific U; Idaho State U; Indiana University; Iona College; James Madison University; The U of Kansas; Kansas State U; Langston University; Le Moyne College; Life University; Louisiana State University; Manhattan College; Medical University of OH; Miami University; Midland Lutheran College; North Carolina State; Northeastern State U; Northern Illinois U; Northern Kentucky U; Northern Michigan U; Northwestern State U; Norwich University; Ohio University; Oklahoma Christian University; Old Dominion University; Prescott College; Queens University of Charlotte; San Jose State U (SJSU); South Dakota State U (SDSU); Tarleton; Texas A&M; Texas Tech; Troy University; University of California Santa Cruz (UCSC); Union College; The University of Akron; U of Alaska - Fairbanks; U of Arizona; University of Central OK; U of Colorado; U of Dayton; U of Detroit-Mercury; University of Illinois; University of Kentucky; U of Louisiana; U of Missouri;  U of Maryland; The University of Memphis; University of Nevada; University of New England; University of New Mexico; University of North Florida; University of South Alabama; The University of South Dakota; University of South Florida; University of Toledo; University of Wisconsin; University of Nebraska at Kearney; University of New Orleans; Washburn; Wilkes University;   

    Footnote 3:   This author believes that you should never trust website software that uses ".aspx" in its URL bar.

    Footnote 4:  Malware is computer software that injects itself into a system and adds significant transactional burden and "load" to systems.  It does not go away on its own and must be forcefully removed.  

    Saturday, January 17, 2015

    Why I'm a boat rocker.

    "You're rocking the boat.  They don't like that."  

    A comment I heard just this week... one woman chatting with another woman about how she did it... how was she able to overcome the overwhelming gender bias in this industry and join a team with an employer who actually cares?

    How did she do it?  By not rocking the boat.

    I've had this ... I guess we could call it a "conversation" with myself at various points in my life.  Usually it's when I'm getting washed ashore and clinging to dear land, gasping for air:  Oh, geeze. I rocked the boat too hard, again!  And everybody, like, freaked out.  They threw me overboard!  How dare they!?  

    Why did they do that?  Because I rocked the boat.

    Yes, rather than risk their boat getting toppled by little me, they decided that the smartest thing to do is just throw the boat rocker overboard.  Gee thanks.  But the interesting thing is that never has any team member from any boat I've been thrown from stopped with pause to think or ask logical questions about things like physics or wind, materials science, currents or compass...

    Because all they can see is that their boat is getting rocked.   

    If only they could see... logical questions have logical answers.  It's not the boat rocker who ultimately destroys the boat and ruins everything; it's the boat rocker who exposes the vulnerabilities of the boat and can help everybody be more prepared.  Before it's too late.  But the key is that ... you've gotta let the boat rocker stay on the boat.  Having somebody who's not afraid to push the limits of our boat is a good thing. 

    The dearth of women and women in leadership roles in technology is obvious to anybody who has worked in technology.  Once in a while somebody will create a little movement ... some noise or a "non profit" or a summit or something.  But these blips are hardly ever noticed on the larger radar.  They fade and disappear.  People forget.  Men keep getting promoted over women, and they almost never have to fight quite as hard for the raises or pay they deserve.  Venture capitalists keep gladly seed-funding extras from The Social Network.   Firms from A...Z (pardon the pun) keep gladly throwing millions at startups which have been documented to willfully discriminate and retaliate against women.

    My two cents for the conversation is pretty simple:  there are only two different kinds of humans in the world:  Those who actively exploit women, and those who actively speak out against the exploitation of women.   Keeping your mouth shut for fear of rocking the boat -- this is a form of apathy all its own.  

    The exploiters have general strategies:  when she's smart, competent, hard working, and nice, underpay her.  She's easy to take advantage of.  Besides, when we really drill down and look at things, she just doesn't  deserve the same basis as the guys on her team.   Or better yet -- why allow her to be part of the company at all?  Why not make sure she's thoroughly plundered of her wages by a middleman "temp agency" or headhunter?  The more fear and job insecurity you can instill in her, the harder she'll try. 

    The other strategy the exploiters take is this:  when she's  smart, competent, hard working, and strong enough to stand up for herself, the exploitation takes the form of failure to hire, hiring with a longer "probation" period, bullying, biased performance reviews, or the ultimate insult of getting fired.

    I've tried both the "nice" and the "strong" approach, and the unfortunate reality is that neither one really works.   The number of people who actively exploit women is still too big, and the quantitative number of women who aren't afraid to rock the boats is still too small.

    But I'm not about to stop rocking boats.

    Because it's not the boat rocker who ultimately destroys a boat.  It's the boat rocker who exposes boats that simply do not possess enough integrity to handle the seas.  And those are boats I don't wanna be on anyway.