How is this practiced? According to SEC (Aug. 30 - Sept. 5 issue of Bloomberg Businessweek, p.76), a certain company ships hundreds of thousands of merchandise to distributors and repurchase them after they had booked the sales, disguising the repurchase as "assorted product." Effect: Huge business deductions as "capital investment." The truth: They only repurchased their own products.
This is what Bloomberg calls as "Grand Theft." That's why in 2005, Senator Hillary Clinto called for a federal investigation. A $7.5 million in penalties was "awarded" to one sneaky toy company in that same year. The said company paid a penalty without admitting wrongdoing. Plus, in 2007, this company's CEO was also "awarded" another $7.26 million for falsifying records in a stock option. Thank God this CEO has been fired by the company's governing board.
Another meaning of the term, "Parking," is when a businessman (or company) sends his profits to offshore banks and use these banks as tax havens, thus the businessman (or company) won't be paying taxes. Recently, it was reported that Mitt Romney used offshore banks in the Cayman Islands and other offshore banks to "park: or hide his money from Uncle Sam. This practice is a loophole found by investment "experts" and many investors use it.
Moral of the story: NO PARKING!
Posted March 10, 2013
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