Sep
13
Madoff whistleblower claims GE is a bigger fraud than Enron


OF OIL. $54.31.>>>BEFORE THE BREAK WE TOLD TU GUY THAT HAD WARNED US, ONE OF THEM, ABOUT BERNIE MADOFF HAS A NEW WARNING, AND THE WARNING IS ABOUT GENERAL ELECTRIC. WHATEVER YOU THINK, KRISTINA PARTSINEVELOS JOINS US NOW, PEOPLE ARE CLEARLY LISTENING. THIS STOCK IS GETTING HAMMERED TODAY.>>CLEARLY. YOU ARE SEEING IT DOWN ALMOST 12%. THAT’S BECAUSE THE ACCOUNTING EXPERT CAME OUT SAYING THAT GE IS FACING THE LARGEST ACCOUNTING SCANDAL EVER, THAT HE’S EVER SEEN. HE’S BEEN RESEARCHING THIS WITH HIS TEAM FOR THE PAST SEVEN MONTHS. HE PUBLISHED A DOCUMENT, RESEARCH PAPER, ON GEFRAUD.COM. IT’S ABOUT 175 PAGES, MAKING ALLEGATIONS THAT GE HAS A MASSIVE ACCOUNTING FRAUD TOTALLING $30 BILLION AND THAT IT’S POTENTIALLY EVEN BIGGER THAN ENRON. THAT’S WHAT YOU ARE SEEING ON THE SCREEN RIGHT THERE. BEFORE WE GET TO THE ALLEGATION, I WANT TO GET TO THE COMMENT I GOT FROM GE THIS MORNING. THEIR SPOKESPERSON SAID THE CLAIMS MADE ARE MERITLESS. THE COMPANY HAS NEVER MET, SPOKEN TO OR HAD CONTACT WITH MR. MARKUPOLIS AND WE ARE EXTREMELY DISAPPOINTED THAT AN INDIVIDUAL WITH NO DIRECT KNOWLEDGE OF GE WOULD CHOOSE TO MAKE SUCH SERIOUS AND UNSUBSTANTIATED CLAIMS. SOME OF THE CLAIMS IN THE DOCUMENT ARE, THESE ARE THE ALLEGATIONS FROM THE WHISTLEBLOWER, THAT GE HAS BEEN HIDING ROUGHLY $29 BILLION IN LONG-TERM CARE LOSSES, THAT PERTAINS TO THEIR LONG TERM CARE INSURANCE UNIT, THINK NURSING HOMES AND ALL THAT, THEN THEY NEED AN ADDITIONAL $18.5 BILLION IN RESERVES. THEY HAVE ISSUES WITH THE BAKER HUGHES ACCOUNTING. THEY ALSO WENT ON TO SAY IN THIS DOCUMENT THAT GE CHANGES ITS ACCOUNTING REPORTING EVERY TWO TO FOUR YEARS, MAKING IT MUCH HARDER TO PREVENT COMPARISON, AND THEY ARGUE THAT THE COMPANY COULD POTENTIALLY GO BANKRUPT FROM ALL OF THESE CHANGES IN ACCOUNTING PRACTICES. THERE IS A BIG BUT, THOUGH, AND THAT IS MARKOPOLIS WAS LOOKING INTO GE FOR AN UNIDENTIFIED HEDGE FUND SO HE’S BEING PAID BY A HEDGE FUND. I ASKED GE SPECIFICALLY ABOUT THIS HEDGE FUND AND THEY, THE SPOKESPERSON SAID THAT SUCH FUNDS ARE USUALLY FINANCIALLY MOTIVATED. WE KNOW THIS, TO ATTEMPT TO GENERATE SHORT SELLING. THAT’S HOW THEY CAN TURN A PROFIT AND WHAT IS HAPPENING TODAY? THE STOCK IS DROPPING, MEANING SHORT SELLERS ARE BENEFITING. TAKE A LOOK AT THE STOCK AGAIN. WE ARE SEEING IT DOWN OVER ALMOST NOW EVEN DOWN MORE, DOWN OVER 12%. THE COMPANY, THOUGH, IS ARGUING THAT THEY ARE WELL SUPPORTED, THEY HAVE RESERVES, THEY DO ADEQUATE TESTING TO MAKE SURE THEY HAVE ENOUGH MONEY BUT WE KNOW THE COMPANY CURRENTLY IS BEING INVESTIGATED BY THE DEPARTMENT OF JUSTICE AND THE S.E.C. FOR ACCOUNTING PRACTICES RELATED TO THEIR POWER BUSINESS. CONNELL: THAT’S A BIG MOVE IN THE STOCK.>>HUGE MOVE IN THE STOCK. HUGE MOVE. CONNELL: BEFORE WE MOVE ON, ON THAT LAST POINT, ON THE MOTIVATION HERE, YOU WANT TO SAY SOMETHING?>>I THINK, I DON’T EVER WANT TO BASH SHORT SELLERS. SOMETIMES THEY SHINE A LIGHT ON THINGS THAT ARE BAD AND NEED TO BE REVEALED BUT IN THIS CASE, IT IS A DIFFICULTY IN OUR SYSTEM THAT YOU DON’T NEED THE FUNDAMENTALS TO BE TRUE. YOU DON’T NEED THE STORY TO BE RIGHT. MERELY SAYING IT CREATES THE RESULT FOR THE SHORT SELLERS. THE FACT HE’S WORKING FOR AN UNIDENTIFIED HEDGE FUND, IF SOMEONE DID THIS ON THE LONG SIDE THEY WOULD BE GOING TO JAIL. IT WOULD BE CALLED INSIDE TRADING. ON THE SHORT SIDE YOU ARE