Archive for Saturday, July 31, 2004

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July 31, 2004

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H&R Block wins ruling

H&R Block Inc. said Friday that a federal judge in New York had tossed out a class action lawsuit claiming the company hid the fact it was facing at least 20 lawsuits about its tax refund anticipation loans.

Critics say the loans charge illegally high interest rates or include "kickbacks" from banks that make the loans to tax clients who expect a refund but want the money immediately. The Kansas City, Mo.-based company has denied those claims.

Plaintiffs in the class action lawsuit said the company did not disclose the fact it was being sued regarding the tax refund anticipation loans in a timely manner. After the lawsuits were disclosed, H&R Block's share price tumbled by 26 percent in one week.

Investigation

Former Enron executive pleads guilty to fraud

The man who once led Enron Corp.'s high-speed Internet unit pleaded guilty Friday to securities fraud and agreed to help federal prosecutors on other cases related to the energy giant's collapse.

Kenneth Rice, 45, faces up to 10 years in prison and a fine of up to $1 million. Sentencing was set for Jan. 31. The plea agreement with prosecutors also requires him to forfeit $13.7 million in cash and property.

Rice was charged in 2003 with selling 1.2 million shares of Enron stock for more than $76 million while he knew Enron Broadband Services was failing. The more than 40 counts against him included fraud, conspiracy and other charges for participating in a scheme to tout Enron's broadband network.

Aviation

Delta CEO asks pilots for $1 billion in cost cuts

Delta Air Lines chief executive Gerald Grinstein told pilots Friday the survival of the company depends on a minimum $1 billion in concessions from them, insisting their proposal for up to $705 million in cuts was not enough.

"While I respect the negotiating process and believe details are best resolved privately at the table, the sheer life-altering magnitude of the need ... deserves acknowledgment, hard truths and assurances from me personally," Grinstein wrote in an open letter to pilots.

The letter follows last week's proposal by Delta pilots to cut their pay by 23 percent and agree to other rules and scheduling changes that would save the airline between $655 million and $705 million a year. The union offer was roughly twice as much as its previous one.

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