The Securities and Exchange Commission obtained emergency asset freezes against two brothers, Jonathan Adam and Tanner Adam, and their respective entities, GCZ Global LLC and Triten Financial Group LLC, to halt an alleged $61.5 million cryptocurrency Ponzi scheme.
The SEC alleges that from January 2023 to June 2024, the Adam brothers solicited and lured more than 80 investors across the country by promising 13.5% monthly investment returns. The duo told investors that Jonathan Adam had created an automated software “bot” that could identify arbitrage trading opportunities on a crypto trading platform and enter into “smart contracts;” then investor funds would be used in a lending pool that would fund “flash loans” to complete these trades, according to the complaint. The brothers allegedly told investors that their funds were safe.
In reality, the described lending pool did not exist, and the brothers instead used millions of dollars to pay supposed returns to existing investors and to support their lavish lifestyles, the SEC alleges. Jonathan Adam, for instance, used at least $480,000 of investor funds to purchase cars, trucks and recreational vehicles, and Tanner Adam used investor funds to build a $30 million condominium in Miami where he resides, according to the complaint.
“As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes,” Justin Jeffries, associate director of enforcement in the SEC’s Atlanta Regional Office, said in a statement. “The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors.”
Jonathan Adam did not immediately respond to request for comment. Tanner Adam could not be reached for comment.
The complaint, filed on Aug. 26 in the U.S. District Court for the Northern District of Georgia, charges Jonathan Adam, Tanner Adam, GCZ Global LLC and Triten Financial Group LLC with violating antifraud provisions of the federal securities laws. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgement interest and civil penalties against the defendants.
The Financial Accounting Standards Board issued a proposed accounting standards update Tuesday to establish authoritative guidance on the accounting for government grants received by business entities.
U.S. GAAP currently doesn’t provide specific authoritative guidance about the recognition, measurement, and presentation of a grant received by a business entity from a government. Instead, many businesses currently apply the International Financial Reporting Standards Foundation’s International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy, at least in part, to account for government grants.
In 2022 FASB issued an Invitation to Comment, Accounting for Government Grants by Business Entities—Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into GAAP. In response, most of FASB’s stakeholders supported leveraging the guidance in IAS 20 to develop accounting guidance for government grants in GAAP, believing it would reduce diversity in practice because entities would apply the guidance instead of analogizing to it or other guidance, thus narrowing the variability in accounting for government grants.
The proposed ASU would leverage the guidance in IAS 20 with targeted improvements to establish guidance on how to recognize, measure, and present a government grant including (1) a grant related to an asset and (2) a grant related to income. It also would require, consistent with current disclosure requirements, disclosure about the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant, among others.
FASB is asking for comments on the proposed ASU by March 31, 2025.
“It will not be a cut and paste of IAS 20,” said FASB technical director Jackson Day during a session at Financial Executives International’s Current Financial Reporting Insights conference last week. “First of all, the scope is going to be a little bit different, probably a little bit more narrow. Second of all, the threshold of recognizing a government grant will be based on ‘probable,’ and ‘probable’ as we think of it in U.S. GAAP terms. We’re also going to do some work to make clarifications, etc. There is a little bit different thinking around the government grants for assets. There will be a deferred income approach or a cost accumulation approach that you can pick. And finally, there will be different disclosures because the disclosures will be based on what the board had previously issued, but it does leverage IAS 20. A few other things it does as far as reducing diversity. Most people analogized IAS 20. That was our anecdotal findings. But what does that mean? How exactly do they do that? This will set forth the specifics. It will also eliminate from the population those that were analogizing to ASC 450 or 958, because there were a few of those too. So it will go a long way in reducing diversity. It will also head down a model that will be generally internationally converged, which we still think about. We still collaborate with the staff [of the International Accounting Standards Board]. We don’t have any joint projects, but we still do our best when it makes sense to align on projects.”
Mauled Again (http://mauledagain.blogspot.com/): Not long ago, about a dozen states would seize property for failure to pay property taxes and, instead of simply taking their share of unpaid taxes, interest, and penalties and returning the excess to the property owner, they would pocket the entire proceeds of the sales. Did high court intervention stem this practice? Not so much.
Current Federal Tax Developments (https://www.currentfederaltaxdevelopments.com/): In Surk LLC v. Commissioner, the Tax Court was presented with the question of basis computations related to an interest in a partnership. The taxpayer mistakenly deducted losses that exceeded the limitation in IRC Sec. 704(d), raising the question: Should the taxpayer reduce its basis in subsequent years by the amount of those disallowed losses or compute the basis by treating those losses as if they were never deducted?
Parametric (https://www.parametricportfolio.com/blog): If your clients are using more traditional commingled products for their passive exposures, they may not know how much tax money they’re leaving on the table. A look at possible advantages of a separately managed account.
Turbotax (https://blog.turbotax.intuit.com): Whether they’re talking diversification, gainful hobby or income stream, what to remind them about the tax benefits of investing in real estate.
The National Association of Tax Professionals (https://blog.natptax.com/): Q&A from a recent webinar on day cares’ unique income and expense categories.
Boyum & Barenscheer (https://www.myboyum.com/blog/): For larger manufacturers, compliance under IRC 263A is essential. And for all manufacturers, effective inventory management goes beyond balancing stock levels. Key factors affecting inventory accounting for large and small manufacturing businesses.
Withum (https://www.withum.com/resources/): A look at the recent IRS Memorandum 2024-36010 that denied the application of IRC Sec. 245A to dividends received by a controlled foreign corporation.
PwC made a $1.5 million investment to Bryant University, in Smithfield, Rhode Island, to fund the launch of the PwC AI in Accounting Fellowship.
The experiential learning program allows undergraduate students to explore AI’s impact in accounting by way of engaging in research with faculty, corporate-sponsored projects and professional development that blends traditional accounting principles with AI-driven tools and platforms.
The first cohort of PwC AI in Accounting Fellows will be awarded to members of the Bryant Honors Program planning to study accounting. The fellowship funds can be applied to various educational resources, including conference fees, specialized data sheets, software and travel.
“Aligned with our Vision 2030 strategic plan and our commitment to experiential learning and academic excellence, the fellowship also builds upon PwC’s longstanding relationship with Bryant University,” Bryant University president Ross Gittell said in a statement. “This strong partnership supports institutional objectives and includes the annual PwC Accounting Careers Leadership Institute for rising high school seniors, the PwC Endowed Scholarship Fund, the PwC Book Fund, and the PwC Center for Diversity and Inclusion.”
Bob Calabro, a PwC US partner and 1988 Bryant University alumnus and trustee, helped lead the development of the program.
“We are excited to introduce students to the many opportunities available to them in the accounting field and to prepare them to make the most of those opportunities, This program further illustrates the strong relationship between PwC and Bryant University, where so many of our partners and staff began their career journey in accounting” Calabro said in a statement.
“Bryant’s Accounting faculty are excited to work with our PwC AI in Accounting Fellows to help them develop impactful research projects and create important experiential learning opportunities,” professor Daniel Ames, chair of Bryant’s accounting department, said in a statement. “This program provides an invaluable opportunity for students to apply AI concepts to real-world accounting, shaping their educational journey in significant ways.”