On August 3, 1999, the company would have to restate first-quarter results downward, partly because of changes in the value of landfills and other assets in connection with its acquisition last year of Wheelabrator Technologies Inc. The reported earnings were consistent with the June 21, 1993 projection. Outside Pressure on Rooney From Shareholders 251. Fourth Quarter Accounting Manipulations 253. The failure to provide the Action Steps to the audit committee or the Board was consistent with what had been done in the past. Defendants were aided in their fraud by Arthur Andersen, which repeatedly issued unqualified audit reports on the Company's materially false and misleading annual financial statements. Rooney, Waste Management's president, was in charge of building the profitability of the Company's core solid waste operations and at all times exercised overall control over the Company's largest subsidiary.
Top management otherwise did not provide support for the salvage value of the Company's trucks, equipment, and containers. The Securities and Exchange Commission filed a civil complaint yesterday against six former officers of Waste Management Inc. The newly formed company retained the Waste Management name and relocated to Houston, Texas. The ServiceMaster netting further illustrates top management's steadfast refusal to correct known misstatements unless and until it could be done surreptitiously and without reducing net income or Income from Operations. They made the changes without any research.
Waste Management vehicles and equipment are featured prominently in several scenes in. Waste Management also was required to recognize corporate federal and state income tax liabilities each year and to record an expense in the period for those taxes. Next to vehicles, containers, and equipment, land primarily landfills represented the second largest asset of the Company. Founded in 1971, the company is headquartered in the in ,. In addition, another auditor would have seen that there were a lot of outdated fixed assets that Waste Management, Inc. The targeted earnings were set through the annual budget process. Over the two weeks immediately preceding the April 21, 1997 release of the Company's results for the first quarter of 1997, Rooney sold all of his remaining holdings, 459,748 shares of the Company's stock.
In the press release, Buntrock boasted about the Company's purported continued growth in North America and internationally and its continued success in managing costs. In addition to the ill-gotten bonuses, Buntrock, Rooney, and Koenig sold Waste Management stock while the fraud was being perpetuated. Waste Management then relocated its headquarters from to. Arthur Andersen's Audit Closing Meetings with Buntrock, Rooney, Koenig, Hau, and Getz 136. He agreed to implement the Action Steps, yet had responsibility for the Company's failure to do so. To gain back that credibility, we have to deliver on the results that we say we're going to.
Buntrock, age 71, is a resident of Hinsdale, Illinois. During the quarters, top management monitored the actual results of operations versus what was budgeted. In restating it financial statements, the Company revised every accounting practice identified in the Action Steps practices that defendants had agreed, but had failed, to change four years earlier. Buntrock and Rooney knew of the sweep. Koenig and Hau, with Tobecksen's assistance, recorded geography entries in the first quarter that manipulated the reported trends and margins.
By reason of the foregoing, Rooney knew or recklessly disregarded facts indicating that the Company's increasing use of top-level adjustments and the lack of disclosure were part of a fraudulent earnings management scheme to reduce expenses, artificially inflate earnings, and achieve preset earnings targets while, at the same time, boosting the reported margins and concealing the operating realities of the Company. He persuaded the others to use aggressive accounting practices and he was the spokesperson who announced fake numbers for the Company. More accounting changes were made in the fourth quarter. Because maintaining the appearance of profitable operations did not leave room for compliance with generally accepted accounting principles, Rooney ensured that required write-offs were not recorded and, in some instances, overruled accounting decisions that would have a negative impact on operations. During all relevant times, Getz participated in the preparation of the disclosures in the Company's periodic reports on Forms 10-K and 10-Q, and press releases of earnings and other financial information. Through these steps a company can effectively and responsibly manage waste output and their positive effect they have on the environment. .
By engaging in the conduct described above, defendants Buntrock, Rooney, Koenig, Hau, Getz, and Tobecksen aided and abetted the Company's violations of section 13 a of the Exchange Act and Exchange Act rules 12b-20, 13a-1, and 13a-13. The other two just abetted in the scheme because of their roles within the company. Things that should be done to keep the issue from arising again would be to always check on the accouting and financial statements monthly to reassure that they are being done correctly and honestly. Private messages do not impact your company rating. Hau, the former chief accounting officer; Herbert A. Defendants went to extraordinary lengths to conceal their fraud.
In my case, my city has an ordinance requiring it's citizens to have trash service. Waste Management owned and operated more than 100 landfills. Arthur Andersen's Audit Closing Meetings With Buntrock, Rooney, Koenig, Hau, and Getz 210. Interesting, since the person on the phone told me to just leave the containers outside by my garage and they'd come pick them up. As demonstrated by the following chart, the top-level adjustments had by 1996 grown to become a major component of the Company's reported profits: Fraudulent Accounting Practices and Related Misleading Disclosures 46.
Although shareholders lost billions of dollars, the defendants profited handsomely from their fraud. By reason of the forgoing, Buntrock knew or recklessly disregarded facts indicating that the impact of the 1993, 1995 and 1996 changes in depreciation estimates was material to the Company's current and future period earnings. Fourth Quarter Accounting Manipulations 169. It has grown to be the largest garbage disposal company in the U. The Company's practice was to carry virtually all of its land on the balance sheet at cost. The most important thing for such kinds of companies is to meet the estimated numbers on paper, whichever technique is to be used.
Moreover, another fraudulent activity that occurred with the accounting books was how the officers were refraining from recording expenses for any decreases in the value of the landfills. Thus, by manipulating the reported results to achieve budgeted earnings, the defendants also collected substantial bonuses. The misstatements materially understated expenses thereby overstating reported earnings. Students use a framework to analyze accounting irregularities and their effects on the financial statements. The benefits were based on the participant's average compensation, including salary and bonus, for the three consecutive years in which the participant's total compensation was highest. A dramatic change would be harder to explain away and might lead readers of the report to question the Company's operations.