NASA Employee Charged With Illegal Shipping

   WASHINGTON — 1/10/2011 — An Ohio man was charged with illegally shipping infrared military technology to South Korea, the Department of Justice announced on Jan. 10
   A criminal information was filed charging Kue Sang Chun, 66, of Avon Lake, Ohio, with one count of exporting defense articles on the U.S. Munitions List without first obtaining an export license or written authorization from the U.S. Department of State, and one count of knowingly making and subscribing a false U.S. individual income tax return.
   Chun is a longtime employee at the NASA Glenn Research Center, though he is not accused of taking technology or related materials from the research center.
   According to count one of the information, between March 2000 and November 2005, Kue Sang Chun knowingly exported and caused the export from the United States to the Republic of Korea (South Korea) of Infra Red Focal Plane Array detectors and Infra Red camera engines which were designated as defense articles on the U.S. Munitions List. The information charges that Chun did so without first obtaining an export license or written authorization for such export from the U.S. Department of State.
   Count two charges Chun with knowingly making and subscribing a false U.S. individual income tax return for the year 2005, which failed to report approximately $83,399.08 of taxable income he earned during said tax year.
   “This defendant is charged with violating important regulations designed to protect national security,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “He did it for money and, according to the charges, he intentionally failed to pay taxes on the money he made from his crimes.”
   “The FBI and the Department of Justice are committed to the protection of U.S. defense technology, particularly that which is governed by the International Trafficking in Arms Regulations. As such, the FBI will continue to pursue all investigative leads in this matter, and is committed to the continued investigation of any and all persons or entities who may be involved in such criminal activities and those activities with national security implications,” said Steven Anthony, Special Agent in Charge of the FBI Cleveland Field Office.
   This case is being prosecuted by Assistant U.S. Attorneys Robert W. Kern and Justin E. Herdman of the U.S. Attorney’s Office for the Northern District of Ohio, following an investigation by the Cleveland offices of the FBI and the Internal Revenue Service, Criminal Investigations.
  An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
  Source: U.S. Federal Bureau of Investigation

Investment Advisor Pleads Guilty in Scheme

   NEW YORK – 1/10/2011 - A registered investment advisor pleaded guilty on Jan. 7 to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme, announced U.S. Attorney for the Southern District of New York Preet Bharara.
   Alexei P. Koval, aka “Aleksey Koval,” admitted that he obtained inside information from his co-conspirator, Igor Poteroba, a former investment banker in the Healthcare Group of UBS Securities LLC, and then traded on that information.
   The information related to six mergers and acquisitions that certain UBS clients were contemplating. Koval pleaded guilty in Manhattan federal court before U.S. District Judge Paul A. Crotty.
   “Alexei Koval flagrantly violated the securities laws to make a quick profit, and now he will pay for his crimes,” Bharara said. “Insider trading undermines faith in the market and cheats honest investors. It will not be tolerated. Together with our law enforcement partners, we will continue to prosecute and punish those who use their access to inside information to break the law.”
   According to documents previously filed in Manhattan federal court, from May 2006 through at least 2009 Koval was a registered investment adviser. During approximately the same time period, Poteroba served as an executive director at UBS. In that capacity, Poteroba obtained material, non-public information regarding certain mergers and acquisitions involving the following six publicly traded healthcare companies: Guilford Pharmaceuticals Inc., Molecular Devices Corporations, PharmaNet Development Group Inc., Via Cell Inc., Millennium Pharmaceuticals Inc. and Indevus Pharmaceuticals Inc.
   In violation of his duties of trust and confidence, Poteroba then disclosed the UBS inside information to Koval, who in turn disclosed the UBS inside information to another co-conspirator (CC-1).
   As part of the scheme, Koval typically received tips from Poteroba by telephone in advance of a public announcement about certain mergers and acquisitions. Shortly after receiving a tip from Poteroba, Koval and CC-1 purchased securities in one of the healthcare companies on the basis of the UBS inside information.
   Following the public announcement of the acquisition, Koval and CC-1 quickly sold the securities they had purchased. Koval and CC-1 executed dozens of securities transactions based on UBS inside information provided by Poteroba. Koval then paid a portion of the profits to Poteroba.
   Koval pleaded guilty to three counts of securities fraud and one count of conspiracy to commit securities fraud. The securities fraud counts each carry a maximum sentence of 20 years in prison and a maximum fine of $5 million.
   The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Koval agreed as part of his plea agreement to forfeit at least $1,414,290, representing the amount of proceeds obtained as a result of the securities fraud offenses.
   Koval, 36, of Chicago, and Pasadena, Calif., will surrender to federal authorities on Jan. 14, 2011, and is scheduled to be sentenced by Judge Crotty on April 12, 2011, at 2:30 p.m.
   Poteroba, 37, of Darien, Conn., pleaded guilty to similar charges before Judge Crotty on Dec. 21, 2010. He is scheduled to be sentenced on March 16, 2011.
  This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The case is being handled by the U.S. Attorney Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Marissa Molé is in charge of the prosecution.
  Note: Original release date was Jan. 7, 2011. Source: Financial Fraud Enforcement Task Force

Illinois Public Schools Look to Tax Plan for Help

    By Andrew Thomason (Illinois Statehouse News) - 1/9/2011 - School districts in Illinois could soon have in hand the nearly $1.1 billion owed to them by the state.

    Senate President John Cullerton, D-Chicago, laid out a plan on Jan. 6 to borrow billions of dollars to pay off the state’s mountain of unpaid bills, then raise the income tax by 75 percent to pay off its new debt.

   Cullerton said Gov. Pat Quinn and Illinois Speaker of the House Michael Madigan have signed on for the borrow-and-tax idea.

   If the Democrats’ proposal gets approved in the final days of the current General Assembly, Manteno Community Unit School District soon could see the $1 million it has been waiting on from the state.

  “I know these are tough decisions that they (legislators) are working on," said Manteno Superintendent Dawn Russert. "I’ve told my local legislator that I’m willing to pay more in an income tax so that the children of our state have a bright future.”

   Paying schools and others the money promised by the state accounts for just a piece of the increase, but the Democrats plan is much more bloated than that, said Jeff Mays, president of Illinois Business Roundtable.

   “The first question in a lot of people’s minds is how can they allow themselves to get in that kind of hole in the first place? How can we allow ourselves to be floating our vendors or our schools when we’re expanding programs?” Mays said.

  Some have accused the legislature of holding schools and social service hostage in exchange for a tax increase.

  Carthage Elementary School District Superintendent Vicki Hardy said she didn’t necessarily agree with that, but said she is tired of the state playing chicken with her district’s funding, only to avoid a disaster at the last second.

  “We go back to our staff and say there are going to be this many cuts across the board because the state tells us that is what is going to happen," Hardy said. "And then two months after the school year starts, well more money has come in, they found money here, which is great, don’t me wrong. But then, year after year, it makes (the administration) look like we’re liars.”

  Having the state withhold payments makes it hard to craft budgets, according to Christopher Norman, director of finances at Alton Community School District. The state owes the Alton district more than $3 million.

  “The frustrating part is that if this continues, we will be getting to a point where you start dismantling programs that are doing the things you want to do,” Norman said.

  It also creates an environment of uncertainty for employees of the schools.

  “I look at the human side when you give risk notices to staff members, and maybe for some of our teachers, they’re the only ones working," Russert said. That puts a lot of stress in their lives as well, as “am I going to be able to make my mortgage payments? Am I going to be able to put food on the table for my kids next year?’”.

  In addition settling the state's past-due account, the Democrats plan would create an education fund paid for by increasing the cost of a pack of cigarettes by a dollar, according to Cullerton.

  He said that there would be no strings attached to the $377 million fund.

  Cullerton said the tax hike would originate in the Illinois House, which failed to pass a tax increase in 2009 for lack of support.

  The House is back in Springfield Sunday to tie up the loose ends of the current session before a new General Assembly session begins on Jan. 12.
   Story courtesy of Illinois Statehouse News

Survey: U.S. Base Salary Increases on the Rise

   PHILADELPHIA - (BUSINESS WIRE) - 1/3/2011 - U.S. employees can expect median base salary increases of 2.8 percent in 2011, according to a new Hay Group survey released on Jan. 3. This compares to median actual base salary increases of 2.4 percent in 2010. Planned increases in 2011 are also at 2.8 percent for management/professional and support positions. Executives and skilled trade jobs come in slightly lower at 2.7 percent.   
   “Relatively speaking, a forecasted median 2011 base salary increase of 2.8 percent is good news for employees who, over the past two years, saw the lowest salary increases in decades,” Hay Group’s North American Reward Practice Leader Tom McMullen said. “Hay Group’s survey also points to a positive trend in organizational staffing. We found that the number of organizations increasing their staffing levels is double that of organizations that are decreasing their staffing levels.”
    Hay Group’s research also indicates that many of the cuts organizations have made to labor costs due to the recession have already happened. The percentage of organizations using or considering significant labor cost reduction items is considerably lower than data reported 18 to 24 months ago.
    The percentage of organizations using or considering the following labor cost reduction actions:

• Pay freezes: 18 percent
• Reduced retirement benefits: 17 percent
• Other reduced benefits: 15 percent
• Decreasing staffing levels: 10 percent
• Job sharing: 9 percent
• Furloughs: 7 percent
• Reduced working hours: 5 percent
• Salary cuts: 4 percent

    One exception to this trend is the continued emphasis on increasing employee co-pays and scaling back on employer paid coverage. Nearly 50 percent of organizations report either actual recent increases in employee co-pays (or reduced employer paid coverage), or that they are considering doing this in the near future.
    “Despite the optimism in our latest data, the contraction in the U.S. economy will not be reversed overnight, and neither will the return to the 3.5 percent to 4.5 percent base salary increases employees were used to receiving for much of the last decade,” McMullen said. “Along with modest base salary increases, we will likely see a continued emphasis on variable pay programs, both incentives and bonuses, as organizations emerge from the recession. Organizations are willing to pay for results, but only if they get those results.”
    An area of concern revealed in the data is the lack of differentiation in base salary increases between top performers and average performers. Top performers are reported to receive a median 3.1 percent increase versus the 2.8 percent increase reported for the typical employee.
    “Organizations have a difficult time differentiating pay increases when the pot of money gets smaller,” said McMullen. “Couple this with the ineffectiveness of many line managers in assessing employee performance and undifferentiated pay is the outcome. Managers have an opportunity to utilize their suite of ‘total’ reward programs – all of the financial and non-financial rewards that the organization provides – to reinforce the link back to individual and team performance.”
    Hay Group’s forecast results are based on the latest data available from Hay Group’s U.S. database, provided by 468 U.S. organizations in November 2010. Typical respondents to the survey include compensation professionals in the Human Resources departments of small to large size U.S. organizations across a wide range of industries. Hay Group’s core compensation database represents compensation practices for almost 3,000 companies and over 6 million employees.