10/29/2012 08:42 am ET Updated Oct 29, 2012

Expense Report Abuses: Strip Clubs, Haircuts And Other Egregious Abuses


Lawyers may have a reputation for expensing every last thing, but they’ve got nothing on these politicians and executives.

James Kwon: $4,537 at Treasures Strip Club

Law firms have a reputation for excessive use of expense-accounts— racking up big bills for everything from first-class travel to photocopies — and passing the costs on to clients. Those clients are now crying foul, The Wall Street Journal reported this week. But eye-popping expense reports are nothing new. This month, Port of Oakland officials suspended its maritime director, James Kwon, alleging that he four years ago filed a $4,537 expense report for a drinks and dinner reception with clients at an establishment called D. Houston Inc. Turns out, that’s the corporate name of Treasures, a Houston-based strip club. “The nature of the venue is not evident from the receipt,” the Port of Oakland said in a statement. The port is taking measures to “ensure expenditures like this don’t occur in the future,” board president Gilda Gonzales said. (Kwon hasn’t publicly commented on the matter, and his lawyer did not respond to requests for comment.)

Michael Mclntyre: $4,109 on fake restaurant bills

Morgan Stanley fired broker Michael McIntyre in 2009, alleging that he submitted false expenses totaling $4,109. But this was no ordinary bogus expense report, according to a subsequent hearing ( pdf ) by the Financial Industry Regulatory Authority. According to the report, McIntyre fabricated 10 restaurant receipts in 2008, totaling $3,301 — and another 17 bogus receipts in 2009, totaling $3,448. He was only reimbursed $808 following an internal inquiry by the bank. McIntyre told investigators he created fake receipts and submitted false expense reports, but he denied misappropriating funds from Morgan Stanley. He argued that once he qualified for an expense allowance award, he was entitled to the full amount as part of his compensation package, not as a reimbursement for allowable business expenses, according to the report of the hearing. A spokesman for Morgan Stanley says, “The Finra hearing decision speaks for itself.”

John Edwards: $800 on two haircuts

Most men probably spend $20 on a haircut. In 2008, Democratic presidential hopeful John Edwards submitted receipts totaling $400 per trim. Was Edwards too groomed to be true? “Mr. Edwards most likely wanted the best haircut he could get in the area he was in, so he sought out the best -- and you pay the price for that,” says Michael Dueñas, CEO and founder of hairstyling service . (Edwards’s attorney did not respond to requests for comment.) Throughout his subsequent ordeals, the former North Carolina senator did not have a hair out of place.

Sarah Palin: $150,000 on clothing, hair and makeup

Some critics called it Sarah Palin’s “John Edwards moment.” The Republican National Committee spent $150,000 on a makeover for the then vice-presidential candidate and former governor of Alaska. That included $50,000 spent at Saks Fifth Avenue, $75,000 shelled out at Neiman Marcus, plus other items from high-end department stores like Barney’s New York and Bloomingdale’s. The six-figure political wardrobe was at odds with Palin’s reputation for being a down-to-earth, moose-hunting soccer mom, says Steven Smith, author of the memoir “ It Shouldn’t Happen to a Hairdresser .” Given her arrival on the world stage, Palin was under immense scrutiny, Smith says. Or put bluntly, “She needed her hair done,” he says. (Palin’s representatives did not respond to request for comment; Palin subsequently said the clothes were ordered for her and her family for the Republican National Convention and were returned. She disputed the $150,000 figure and said she did not request them.)

Pilar O’Leary: $2,066 in hotel and extraneous expenses

The one-time high-flying director of the Smithsonian Latino Center in Washington, D.C., Pilar O’Leary resigned in 2008 after the Smithsonian concluded, in a 30-page report , that she violated general ethical rules and specific prohibitions on conduct “that constitutes or appears to constitute a conflict of interest.” It listed thousands of dollars of expenses with “repeated misuse of her Smithsonian-issued travel card.” O’Leary allegedly charged for upgraded rooms at four- and five-star hotels with ocean views while traveling on business, couriers for personal items, expensed spa and salon visits, and solicited free tickets for the Latin Grammy Awards. According to the Smithsonian, O’Leary returned $2,066.55. (The Smithsonian and O’Leary did not respond to requests for comment, but in 2008 O’Leary told the Washington Post: “All of my travel was authorized by my supervisor’s office.”) The Inspector General referred the case to the U.S. Attorney’s office, which declined to take the matter further.

Gordon Brown: $10,000 for house-cleaning services

Britain’s former Prime Minister Gordon Brown paid roughly $10,000 over two years from parliamentary allowances to employ a housekeeper. According to details released by No. 10 Downing Street, the official residence of the Prime Minister, the cleaner was paid about $570 a month to spend seven hours a week at Brown’s London flat. In 2006, Brown named his house in Fife, Scotland, (in an area where he is elected to government) as his primary residence, allowing him to register the flat as a second home and legitimately claim public money for its upkeep. At the time, a No. 10 spokesman said the payments went to a professional cleaner who maintained the flat, adding that there was nothing unusual or wrong about the arrangement.

Larry B. Seabrook: $177 for a bagel and diet soda

Of course, it wasn’t just a $177 bagel and diet soda. In July, former New York City Councilman Larry B. Seabrook, a Bronx Democrat, was found guilty of siphoning around $1.5 million to his family, friends and then-mistress. He was convicted on 9 of 12 counts in his corruption trial. Among the allegations in court: Prosecutors claimed he doctored a $7 receipt for a bagel sandwich to make it look like a bill for $177. Known in the media as “Cash and Carry Larry,” Seabrook said after his conviction: “I continue to have faith in God, I continue to have faith in the system, and now I’ll prepare myself for what’s next.” That would be his sentencing, scheduled to take place on Jan. 8, plus a city election to replace him on Nov. 6. “We respect the jury’s verdict, but we disagree with it,” defense attorney Edward Wilford said after the trail; he did not respond to request for comment.

Carlos Divar: $35,000 for weekend getaways

The chief justice of Spain’s Supreme Court, Carlos Divar, resigned in June amid allegations by José Manuel Gómez Benítez, another judge and member of Spain’s General Council of the Judiciary, that he used about $35,000 to pay for dozens of weekend trips over four years, some of which were to the sunny resorts of Marbella and Puerto Buenos on Spain’s south coast. At the time, Divar said the trips were for business rather than pleasure, and said there was “neither judicial, nor moral, nor political” wrongdoing. But the kerfuffle came at a bad time for a country in the grip of an economic crisis and followed hot on the heels of King Juan Carlos of Spain’s elephant-hunting trip to Botswana in southern Africa in April, during a period when the government was telling Spaniards to tighten their belts.



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