August 15, 2019

General Electric is denying a report from a whistleblower who accuses the company of accounting fraud in a case "far more serious" than Enron.

Harry Markopolos, the expert who uncovered Bernie Madoff's Ponzi scheme, accuses GE of fraud in a lengthy report published Thursday, as reported by The Wall Street Journal. In it, he claims the company's "cash situation is far worse than disclosed" and that it "ended the year" in 2018 "with minus $20 billion in working capital."

The report goes on to claim GE has been "running a decades long accounting fraud by only providing top line revenue and bottom line profits for its business units and getting away with leaving out cost of goods sold, SG&A, R&D, and corporate overhead allocations," CNBC reports. GE changed the reporting format of its financial statements every few years, the report also claims, either due to incompetence or in a deliberate attempt to conceal $38 billion in accounting fraud; that would be 40 percent of the company's market capitalization.

General Electric has denied the report, with CEO H. Lawrence Culp Jr. calling it "market manipulation — pure and simple" on Thursday. Culp went on to say the report "contains false statements of fact," and he accused Markopolos of being interested "solely in generating downward volatility in GE stock so that he and his undisclosed hedge fund partner can personally profit." Per the Journal, Markopolos is "working with an undisclosed hedge fund, which is betting GE's share price will decline." GE shares fell 11 percent on Thursday following the report's release, per CNBC.

Markopolos in the report says his allegations are based on seven months worth of analysis but that "we believe the $38 billion in fraud we've come across is merely the tip of the iceberg." Brendan Morrow

5:51 p.m.

The Senate adjourned on Thursday until September 8 without reaching a deal on the next coronavirus relief bill, CNBC reports.

The next stimulus package is now likely weeks away, leaving millions of unemployed Americans without jobless benefits that were provided from the early days of the pandemic until the end of July when the CARES Act expired without a replacement bill lined up.

Democrats have argued the $600 weekly boost should continue, while Republicans say it should be reduced. Both sides have accused the other of refusing to compromise. House Speaker Nancy Pelosi (D-Calif.) has said Democrats are willing to cut their proposed $3 trillion bill by $1 trillion if Republicans are willing to add $1 trillion to their $1 trillion bill. Democrats are seeking additional aid for absentee voting and remote learning.

Senate Majority Leader Mitch McConnell (R-Ky.) said if lawmakers manage to make a deal while on recess, senators will return to work to vote. Read more at CNBC. The Week Staff

5:38 p.m.

The Trump campaign launched a lawsuit against two Iowa counties on Wednesday, suing the counties for making it easy to vote by mail, reports The Associated Press.

The Democratic-leaning counties had distributed absentee ballot request forms that had pre-filled boxes with voters' names, dates of birth, and voting pin numbers. The idea was that voters could just sign and return the forms to get mail-in ballots ahead of November's election.

But the Trump campaign says tens of thousands of ballot applications should be invalidated because the process wrongly includes personal information, violating Iowa Secretary of State Paul Pate's instruction that the request forms should be mailed blank to "ensure uniformity." Pate, a Republican, isn't suing the counties, but said his office is investigating.

Linn County Auditor Joel Miller, a Democrat, said the applications were pre-filled to avoid common mistakes. "I'm just trying to protect people in my community from the pandemic," he said, arguing the move was within his authority.

As Obama campaign manager and former White House Deputy Chief of Staff Jim Messina put it, the attempt to "disenfranchise voters" isn't likely to earn the president many brownie points in a state where he's already walking a thin line.

Notably, the Trump campaign is not suing a Republican-leaning county in Iowa that did the exact same thing. Read more at The Associated Press. Summer Meza

4:49 p.m.

The creators of Fortnite are headed to war against Apple.

Epic Games, the company that developed Fortnite, on Thursday said it had filed a lawsuit against Apple shortly after the online game was removed from the App Store, Variety reports.

The App Store removal was prompted by Epic Games introducing a new direct payment system in Fortnite in an attempt to avoid the 30 percent fee Apple collects on in-app purchases, allowing players to buy the game's "V-Bucks" for a discounted price if they did so through this "Epic direct payment" rather than through the App Store. That didn't go over well with Apple, which within hours removed the game from the App Store and blasted Epic Games for introducing the feature "with the express intent of violating" its guidelines, per The Verge. The payment system was also introduced on Android.

Epic Games clearly anticipated Apple's move, as it announced a lawsuit almost immediately afterward. The complaint describes the App Store removal as "yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100 percent monopoly over the iOS In-App Payment Processing Market." It also accuses Apple of becoming "what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation," with Epic Games saying it's bringing the lawsuit in an effort to "end Apple's unfair and anti-competitive actions."

And that's not all: Epic Games soon premiered a short film within Fortnite itself parodying Apple's famous "1984" commercial, calling on players to help "#FreeFortnite." Brendan Morrow

Brendan Morrow

4:32 p.m.

It's not just business as usual at the United States Postal Service.

While President Trump is publicly saying he plans to block funding for the USPS so that Democrats can't achieve their goal of expanding mail-in voting across all states ahead of the November election, the Postal Service is also facing some internal changes.

Vice News' Motherboard reported Thursday that USPS is quietly removing mail sorting machines — the very machines that are responsible for sorting ballots. There's no official explanation for the changes, and it's unclear why the machines would be removed rather than simply not used when not needed. The removals and planned removals are reportedly affecting several processing facilities across the U.S.

"It'll force the mail to be worked by human hands in sorting. Guarantees to STOP productivity," a Post Office source told The Washington Post's Jacqueline Alemany. "On top of cutting the overtime needed to run the machines, can you imagine the [overtime] needed to do this [the] old hard way?"

Postal workers say equipment is often moved around or replaced, but not usually at such a rate, and not in such a way that would affect workers' ability to quickly process large quantities of mail. Local union officials have no idea what's going on. "I'm not sure you're going to find an answer for why," one union president told Vice, "because we haven't figured that out either."

A USPS spokesperson said the move is routine. "Package volume is up, but mail volume continues to decline," said the spokesperson. "Adapting our processing infrastructure to the current volumes will ensure more efficient, cost effective operations." Since there is an expected influx of mail as Americans begin sending in ballots, postal workers urged voters not to wait until the last moment to avoid overwhelming the dwindling number of sorting machines. Read more at Vice News. Summer Meza

3:27 p.m.

Presumptive Democratic presidential nominee Joe Biden is slamming recent comments from President Trump he says prove his opponent doesn't "want an election."

Biden spoke Thursday after Trump in a Fox Business interview said he is against the funding for the United States Postal Service that Democrats are pushing for in a stimulus bill, with the president suggesting this is specifically because he wants to prevent universal mail-in voting during the COVID-19 pandemic.

"Pure Trump," Biden said of these comments. "He doesn't want an election."

The Biden campaign in a statement on Thursday also accused the president of "sabotaging a basic service that hundreds of millions of people rely upon, cutting a critical lifeline for rural economies and for delivery of medicines, because he wants to deprive Americans of their fundamental right to vote safely."

In the Fox Business interview, Trump, who has asserted without evidence that increased mail-in voting during the coronavirus crisis would result in widespread voter fraud, had said that without the $25 billion for the USPS that Democrats want and that he is blocking, "you can't have universal mail-in voting, because they're not equipped to have it." Brendan Morrow

2:01 p.m.

Yet another tropical storm has formed in the Atlantic amid 2020's unusually busy hurricane season.

The National Hurricane Center on Thursday gave the name Josephine to a tropical storm that has formed in the Atlantic with winds of 45 miles per hour, CNN reports. This makes Josephine the 10th named storm of the Atlantic hurricane season and the earliest storm with a J name ever, coming earlier than Jose, a tropical storm that formed on Aug. 22, 2005.

The good news, though, is that Josephine, which is over 1,000 miles east of the Leeward Islands, is expected to weaken and "it does not appear" it "will pose a threat to the mainland United States," according to The Weather Channel. Still, Josephine's formation was notable given that as USA Today reports, during an average hurricane season, it takes until Oct. 19 for the 10th named storm to form.

But the National Oceanic and Atmospheric Administration recently forecast that 2020's Atlantic hurricane season could be one of the busiest ever recorded, with as many as 25 named storms when there are an average of only 12 in an entire season. Of those 25 storms, the NOAA projected that between seven and 11 of them will become hurricanes. Brendan Morrow

1:54 p.m.

The Trump campaign is bringing back some of President Trump's old tricks.

Trump has repeatedly pushed a racist conspiracy theory claiming former President Barack Obama wasn't born in the U.S., and now it appears his staffers are taking a similar approach against new vice presidential candidate Sen. Kamala Harris (D-Calif.).

Jenna Ellis, a Trump campaign legal advisor, hopped on Twitter on Thursday and retweeted an op-ed that attempts to make a dubious argument against Harris' eligibility for the vice presidency. The op-ed, which has been thoroughly denounced as "nonsense," argues that even though Harris was born in Oakland, the fact that her parents are immigrants from Jamaica and India may raise questions about her citizenship qualifications as VP.

As Forbes notes, the op-ed was written by a law professor who previously ran for California attorney general and lost — to Harris.

ABC News reports Ellis defended her retweet of the op-ed. Harris eligibility is "an open question," Ellis claimed, "and one I think Harris should answer so the American people know for sure she is eligible." If the "just asking questions" defense sounds familiar, it's probably because team Trump has used it time and time again. Summer Meza

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