Part I: Provide a short synopsis of your Course Assignment #1. Provide a short description of
the following items: the facts, laws that were broken, what were the consequences and a short
analysis of whether the punishment fits the crime and your reasoning.
Part II: Provide feedback on the three responses. In your feedback to the three responses, provide your analysis of whether the punishment fits the crime and your reasoning for each response!
For my Memorandum assignment, I was assigned George Steven Burrill’s case to review. Mr. Burrill’s crime was fraudulently misappropriating more than $18 million in funds from an investor fund set up by his company, Burrill Capital Management, LLC. These funds were misappropriated as “advanced management fees” that were above and beyond the fees that the fund was required to pay. Mr. Burrill used these funds to cover his opulent lifestyle, pay his employees, and cover cash storages when other funds were not producing the return expected. Mr. Burrill was found in violation of Section 141 a and b, Section 5109, 5100 h and l, and Section 5100.5. These violations show the progression from the sent disciplinary actions taken by the CBA to his eventual license removal. Mr. Burrill’s license was revoked and he cannot practice or be employed by an investment firm, broker, or dealer. He also cannot serve as a board of director or officer for an investment company. He was ordered to pay $4,600,000 and interest of $185,000 to the SEC. Finally, he was ordered to pay $1,000,000 in a civil penalty to the SEC.
In my opinion, Mr. Burrill’s punishment is reasonable with his crime. He broke the trust of the public and his clients. Thus, he will not be able to serve as a CPA or investment broker. This shows that if trust is broken, then the consequence is severe. Also, I believe that the amount is sufficient for the crime. In a perfect world, he would be required to pay back all the money he misappropriated, but this usually never happens. So, the fact that he is now required to pay over $6 million provides a deterrent to potential fraud.
My assigned course assignment was of Chen Yi, a former corporate controller of Oplink Communication Inc. Chen Yi decided to commit fraud after coming across some private company financial information in which she subsequently bought a total of 4,740 company shares realizing a profit of $34, 678.44.
In this case Chen Yi broke section 10(b) and 14(e) of the exchange act which prohibits any manipulative or deceptive action made by a person under the rules and regulations of the commission. This law also states that it is for the protection of investors or for the public interest, as Chen Yi had insight that no other investor had making it unfair and unlawful. After being caught, Yen Chi was placed in a probation period of 3 years, CPA certificate was suspended for 90 days, had to pay a total of $73,847.25 in CBA and SEC fees, appear in person to meet when directed by the CBA, and take a 4 hour course education program and CBA course on the California Accountancy Act and regulations..
In my personal opinion, I don’t believe that the consequences placed by the CBA were fair for the severity of the case as Chen Yi violated 1/3 of the AICPA code of conduct. She showcased low level of integrity and responsibility even after serving 10 years as a CPA accountant. I think her probation period should be longer in order to make an example out of him/her and to make sure no similar incidents happen again.
My case what about the CBA disciplining Cathy Sue Fix, CPA, for several crimes which included gross negligence, misappropriation of funds, failure to notify the CBA of change of address, and failure to respond to inquiries from the CBA. The facts are that Cathy Sue Fix was negligent in her work when she did not provide timely reports to her clients, misappropriated funds when she failed to refund her clients for incomplete services, and lastly Cathy Sue Fix did not respond to any inquiries by the CBA as they received every inquiry back as “Not Deliverable To This Address”, therefore resulting in a failure of change of address to the CBA. As a result her license was disciplined and the punishment fit the crime.