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ponzi scheme

Justice Served Up August 26 2014

English: Mug shot of Charles Ponzi (March 3, 1...

English: Mug shot of Charles Ponzi (March 3, 1882 – January 18, 1949). Charles Ponzi was born in Italy and became known as a swindler for his money scheme. His aliases include Charles Ponei, Charles P. Bianchi, Carl and Carlo. Italiano: Foto segnaletica di Charles Ponzi. Charles Ponzi (Lugo, 3 marzo 1882 – Rio de Janeiro, 18 gennaio 1949) è stato un truffatore italiano. Immigrò negli Stati Uniti, dove divenne uno dei più grandi truffatori della storia americana. (Photo credit: Wikipedia)

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Staten Island Mand Sentenced To 24 Years In Prison For Fraud (SI Live) - All his last-minute pleas and professions of innocence couldn't keep Peter Liounis out of prison.  The Staten Island resident, who was convicted of swindling millions of dollars from investors, was sentenced Friday in Brooklyn federal court to 24 and a third years in prison.

Fmr Qualcomm Exec Cops To Insider Trading Charges (Reuters)A former Qualcomm Inc sales director has pleaded guilty to insider trading in Atheros Communications Inc after learning that his company planned to buy the rival chipmaker in 2011.  Robert Herman, 52, entered his plea on Thursday in the U.S. District Court in San Diego, U.S. Attorney Laura Duffy said.

Ex-Hanover CEO Sentenced To 14 Years For Ponzi Scheme (FCPA Blog) - The former chief executive officer of now defunct Hanover Corporation was sentenced this month to 14 years in prison.  Terry Kretz, 61, of Gallatin, TN was also ordered to pay $14.8 million in restitution for orchestrating an $18 million Ponzi scheme.

Disbarred NY Attorney Indicted In Real Estate Investment Scheme (FBI) - Two men were indicted by a federal grand jury today for allegedly using a real estate investment scheme to defraud 15 victims of more than $3 million, U.S. Attorney Paul J. Fishman announced.  Paul Mancuso, 46, of Glen Rock, New Jersey, is charged by indictment with one count of conspiracy to commit wire fraud and five counts of wire fraud. Pasquale Stiso, 52, of West Harrison, New York, is charged by indictment with one count of conspiracy to commit wire fraud and one count of wire fraud.

The former chief executive officer of now defunct Hanover Corporation was sentenced this month to 14 years in prison.

Terry Kretz, 61, of Gallatin, Tennessee, was also ordered to pay $14.8 million in restitution for orchestrating an $18 million Ponzi scheme.

- See more at: http://www.fcpablog.com/blog/2014/8/25/ex-hanover-corp-ceo-jailed-14-yea...

Arizona Whistleblower Gets $6 million Award (Whistleblower Today) -  A Tucson health-care network has agreed to settle Medicare fraud allegations by paying $35 million, with the whistleblower who exposed the case will receive nearly $6 million.  The Carondelet Health Network runs Tucson’s St. Mary’s and St. Joseph’s hospitals. It didn’t admit to wrongdoing but agreed to the payout to end a civil complaint from the Department of Justice and a Tucson woman named Jacqueline Bloink, the Arizona Republican said.

Feds Charge Lawyer For Coaching Witness To Lie On Stand (Pantagraph) - A high-profile defense attorney in Chicago has been indicted on federal charges for allegedly encouraging a witness to lie on the stand on behalf of the lawyer's purported drug-dealer client.  According to an indictment announced Thursday, 36-year-old Beau B. Brindley faces multiple counts of perjury, one count of obstruction of justice and one of conspiracy to obstruct justice.

Five Charged With Fraud In Wilkes-Barre, PA City Fed Credit Union Probe (PA Home) - The United States Attorneys Office for the Middle District of Pennsylvania announced that a Grand Jury in Scranton returned indictments Tuesday charging five members of the Wilkes-Barre City Employees Federal Credit Union with conspiracy and bank fraud. The indictments were sealed pending the arrests and/or voluntary surrender of the defendants today.

Iowa Couple Sentenced For Social Security Fraud (KCRG) -  An Iowa couple has been sentenced for improperly collecting nearly $50,000 in disability benefits.  U.S. Attorney Nicholas Klinefeldt’s office says 45-year-old Robert Alexander and 38-year-old Maureen Alexander were both sentenced last week.

Man Indicted For Pointing Laser At Aircraft (Dallas News) - Four days before he turns 24, Steven Alexander Chavez Jr. was scooped up by federal authorities in Lubbock and charged with one count of aiming a laser pointer at an aircraft — in this case, a Texas Department of Public Safety helicopter. He was arrested today, three days after he was indicted by a federal grand jury in Dallas.

How A Man Built A Multi-Million Dollar Business After Prison (Forbes) - Frederick Hutson is a man who sees business opportunities in everything. By his own admission, this doesn’t always work out for the best. Hutson spent over four years in prison after getting busted for an opportunity he saw in drug trafficking, a huge market, and one that was as he saw it, ripe for disruption. Police busted him at his Vegas mail store, where he’d been reducing inefficiencies by rerouting marijuana through his Florida business via FedEx, UPS and DHL.  Now he started a fantastic new business ... shout out to man in green!

Interview With 'Orange Is New Black' Piper Kerman (NY 1) - An interview with the originial author and advocate for prison reform.

he hit prison dramedy "Orange is the New Black" has 12 Emmy nominations, and has already won three technical awards this year, but the show, based on Piper Kerman's year in federal prison, is just part of the story. NY1's Stephanie Simon sat down with the real "Piper and Larry" and filed part one of a special two-part report. - See more at: http://bronx.ny1.com/content/lifestyles/arts/214404/woman-whose-year-in-...

 

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Justice Served Up July 21 2014

English: Bernard Madoff's mugshot

English: Bernard Madoff's mugshot (Photo credit: Wikipedia)

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FedEx Indicted For Shipping Drugs For OnLine Pharmacies (Bloomberg) -  FedEx Corp. was indicted for delivering prescription pain pills, sedatives, anti-anxiety drugs and other controlled substances for illegal Internet pharmacies.  The operator of the world’s largest cargo airline was charged by the U.S. with 15 counts of conspiracy to distribute controlled substances and misbranded drugs and drug trafficking that carry a potential fine of twice the gains from the conduct, alleged to be at least $820 million for it and co-conspirators. The company, while denying the allegations, said today in a regulatory filing that conviction could be “material.”

Prosecutors Push For Lengthy Sentences For Madoff-5 (Reuters)Five former employees of disgraced investment manager Bernard Madoff should be sentenced to "significant" prison sentences of up to 20 years or more, prosecutors said in a court filing on Friday.   "The five defendants here, along with others, were the people who allowed Madoff's fraud to succeed as wildly as it did," prosecutors with U.S. Attorney Preet Bharara's office in Manhattan said in the filing. "Justice requires that each receive a significant prison sentence, commensurate with their active and long-standing role in the fraud."

Stanford Losses Not Covered By SIPC (Bloomberg) -  The U.S. Securities and Exchange Commission can’t force a brokerage account insurer to pay victims of R. Allen Stanford’s $7 billion fraud because their purchases weren’t covered, an appeals court ruled.  The U.S. Court of Appeals in Washington said the 7,000 investors in certificates of deposit sold by Stanford didn’t qualify as customers of a brokerage who would be insured by the Securities Investor Protection Corp., as the SEC argued. The CDs were bought at Antigua-based Stanford International Bank LLC, which wasn’t a SIPC member, the court said.

PA Man Charged In $5 million Ponzi Scheme (Ponzi Tracker) - Federal authorities unveiled charges against a Pennsylvania man and accused him of orchestrating a $5 million Ponzi scheme..  Walter "Buddy" Lambert, 73, was charged with sixteen counts of mail fraud, five counts of wire fraud, and one count of interfering with the due administration of the Internal Revenue Service.  The criminal charges come over three years after the Federal Bureau of Investigation raided Lambert's offices, and nearly four years after almost a dozen lawsuits were filed against Lambert by victims.

How The World's Best Wine Was Kidnapped (NY Post) - As journalist Maximillian Potter describes in his new true thriller, “Shadows in the Vineyard,” the mysterious man injected the contents of one syringe into the vine’s root, sealed the drill hole with a tiny wooden plug and smoothed over the dirt. He repeated the act one vine over.

Academic Fraud, Athletes and Faculty Responsibility (Inside Higher Ed) - The National Collegiate Athletic Association rarely admits to the need to revisit an infractions case, and particularly one that strikes at the core of academic integrity issues. So when the NCAA announced an unusual and embarrassing return to the University of North Carolina at Chapel Hill to reopen an academic fraud investigation that first came to light in 2011 and resulted in narrowly constructed sanctions in 2012 that affected the eligibility of a single athlete, it marked another confidence crisis in whether the NCAA can control the powerful forces of big-time college sports.

Dallas Woman Gets Federal Prison For Bankruptcy Fraud (Dallas News) - A Dallas woman was sentenced Friday to one year and one day in federal prison for making false statements during her multiple bankruptcy filings, the U.S. attorney’s office said.  Estela Martinez, 54, had pleaded guilty in August 2013 to one count of making a false statement under penalty of perjury related to bankruptcy filings.  Martinez’s prosecution is part of U.S. Attorney Sarah R. Saldaña‘s effort to crack down on bankruptcy fraud in the Northern District of Texas, her office said. Under the office’s Bankruptcy Fraud Initiative, seven people have been charged with various felony offenses since February 2013.

Drug Sentences Can Be Cut Retroactively (Bloomberg) -  Federal drug offenders may get their sentences cut by an average of two years under changes to U.S. guidelines in a move praised by Attorney General Eric Holder, who has made fair sentencing and prison overcrowding two of his signature issues.  The U.S. Sentencing Commission voted unanimously to allow some convicts to return to court and seek shorter terms, according to a statement by the agency. The commission, which has the legal power to permit judges to act retroactively, said offenders eligible for reductions could see their sentences cut by an average of 25 months, or 18.8 percent.

Corrections Officer Gets Prison For Fraud (SF Gate) - A former Miami-Dade County corrections officer and three others have been sentenced for operating an identity theft and tax fraud ring using identities of current and former prisoners.  Ex-officer Anthony Pace Jr. was sentenced last week to more than six years in federal prison after pleading guilty to fraud conspiracy and theft charges. The other defendants got lesser prison sentences.

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Justice Served Up July 1 2014

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BNP To Pay $9 billioni in Plea Deal (Bloomberg)BNP Paribas SA (BNP) pleaded guilty to U.S. sanctions violations and agreed to pay a record $8.97 billion in a case that reached the highest echelons of French and American diplomacy.  BNP, France’s largest bank, admitted that it processed almost $9 billion in banned transactions from 2004 to 2012 involving Sudan, Iran and Cuba, the Justice Department said today. The bank will also be barred from U.S. dollar-clearing operations for one year for its oil and gas commodity finance business.

Ex-Jeffries Trader Deserves 9 Years U.S. Says (Bloomberg) -  Former Jefferies & Co. Managing Director Jesse Litvak, who was convicted earlier this year of fraud in the trading of mortgage-backed securities, should be sentenced to nine years in prison, the U.S. said.  Litvak was convicted in the only criminal case against an individual in connection with a U.S. program that used bailout funds to spur investment in mortgage-backed securities. He is scheduled to be sentenced July 23 in New Haven, Connecticut.

Former Rothstein Partner Sentenced To 30 Months (WSJ) -  A South Florida lawyer on Friday received a 30-month prison sentence, the consequences of getting mixed up with Ponzi-scheme operator Scott Rothstein.  Russell Adler, one of three name partners in the now-defunct law firm Mr. Rothstein founded, received his sentence from a federal judge after pleading guilty to making illegal contributions to political campaigns at Mr. Rothstein’s request.  “Being the A in RRA turned into an ironic curse that has ruined my name and haunts and humiliates me to this day,” Mr. Adler said in court Friday, according to the Palm Beach Daily Business Review (sub. req.).

Pennsylvania Woman Charged In Massive Ponzi Scheme (Ponzi Tracker) -  Federal authorities have indicted a Pennsylvania financial advisor on charges that she orchestrated a "massive Ponzi scheme" that may have duped hundreds of victims out of millions of dollars.  Patricia S. Miller, 67, was charged with five counts of wire fraud by the U.S. Attorney for Massachusetts.  If convicted of the charges, Miller could face up to twenty years in federal prison for each count as well as up to a $250,000 fine.  Miller served as a financial advisor with several brokerage firms, most recently with Investors Capital Corp in McMurray, Pennsylvania.  Using her position as a financial advisor, Miller solicited potential investors for "investment clubs" that offered high rates of return through purported investments in fixed-income notes and other investments.  According to the indictment, investors entrusted millions of dollars towards these "investment clubs," some of which were known as KS Investments and Buckharbor.

Mary Jo White Speaks On FCPA Self Reporting and Cooperation (FCPA Blog) - SEC chair Mary Jo White spoke Monday at Stanford University's Rock Center for Corporate Governance. Her talk was called "A few things directors should know about the SEC." She spent some time describing what should happen after your company finds a possible FCPA violation.

Whistleblowers Increasing On Wall Street (NY Post) -  In the post-Dodd-Frank world, every Wall Street bank, it seems, has a rat.  This year has marked a turning point for regulatory action against the country’s largest financial institutions, with federal and state agencies moving beyond the misdeeds of the 2008 financial crisis and devoting attention to other fraudulent schemes, including money-laundering, tax-dodging and predatory trading.

Former McKinsey Partner Takes Stand Against Another Rajaratnam (Reuters)A former McKinsey & Co partner whose testimony helped convict Raj Rajaratnam for insider trading returned to court on Thursday to testify against the Galleon Group founder's younger brother, Rengan Rajaratnam.  Anil Kumar, once a top partner at the elite consulting firm, told jurors in New York federal court that for years he leaked information to Raj Rajaratnam about his client Advanced Micro Devices Inc (AMD.N), including a 2008 deal involving an Abu Dhabi fund.

Company Hires Ex-Cons To Clean Up People's Lives (Yahoo Finance)Clutter Cleaner cleans up the messiest homes in America. The kind seen on reality shows like A&E’s "Hoarders" (in which the company appeared in over 60 episodes).  “Something tragic has happened in these people’s lives,” says owner Matt Paxton. “So we go in very delicately and help them through the process of cleaning up.”

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Justice Served Up June 11 2014

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The Wheel of Misfortune, How Judges Are Picked For Trials (Forbes) - Walt Pavlo received a blog submission from an avid reader (thank you) who faced the federal criminal system ... and lost.  Now the person has some views and we wanted to share them with all of you.

Rationalizing Bribery:  Corruption Has No Witnesses (Corporate Compliance Insights) - his article addresses the reality that there are usually no witnesses to overseas discussions involving an actual or potentially corrupt transaction.  As tweeted by Ben DiPietro, Wall Street Journal Reporter,  @BenDiPietro1 during my interview with Wall Street Journal Reporter Chris Matthews at the April 23, 2014 Dow Jones Global Compliance Symposium (DJGCS):

Indiana Man Gets 18 Years Prison For Ponzi Scheme (Ponzi Tracker) - An Indiana man received an eighteen-year prison sentence for operating a Ponzi scheme that duped victims out of at least $1.5 million.  Rudolf “Rudi” Pameijer, of Johnson County, Indiana, received the sentence from Johnson County Judge Mark Floyd, who also ordered Pameijer to pay $1.8 million in restitution to his defrauded victims.

Ex-Councilman Offered Tens Of Thousands To Undercover Agent (NY Post) -  Former City Councilman Dan Halloran offered to dole out tens of thousands of dollars in no-show city consulting work to an undercover agent in exchange for funds to boost a congressional run — and then demanded to be paid even after losing the race, the federal agent told jurors Monday.  Jurors at the White Plains federal corruption trial of Halloran, state Sen. Malcolm Smith and Queens GOP operative Vincent Tabone also heard audiotape of Halloran telling the agent that he’ll take his money in cash.

Federal Correctional Officer Heads To Prison For Cell Phone Smuggling Into Prison (Inforney) - A former guard at a federal prison has been sentenced to prison for working with an inmate to smuggle contraband, including cell phones, into Big Springs Correctional Center in Texas.

former Correctional Officer at Big Spring Correctional Center (BSCC), Matthew Castaneda, 24, and an inmate at BSCC, Ferdinand Trinidad, 45, have been sentenced for offenses related to contraband smuggling at the facility, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. - See more at: http://inforney.com/texas/item/1904-former-correctional-officer-and-inma...
former Correctional Officer at Big Spring Correctional Center (BSCC), Matthew Castaneda, 24, and an inmate at BSCC, Ferdinand Trinidad, 45, have been sentenced for offenses related to contraband smuggling at the facility, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. - See more at: http://inforney.com/texas/item/1904-former-correctional-officer-and-inma... gu

An Inmate Gives Update From Federal Prison (KymKemp) - A former marijuana farmer is not in federal prison and writing about the experience.  Brett McFarland wrote, "You have actively covered my legal story since federal agents first stormed our tranquil coastal community back in July of 2012 to arrest my brother Sean. I could not speak with you during the course of the investigation for obvious reasons, but now that the case has been adjudicated I see no reason not to be perfectly candid."  Let's hear it

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Justice Served Up June 9 2014

English: Hotel / Casino New York-New York in L...

English: Hotel / Casino New York-New York in Las Vegas. Français : L'hôtel-Casino New York-New York à Las Vegas, dans le Nevada. (Photo credit: Wikipedia)

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Gambler Linked To Ichan-Mickelson Faced $15 Million Loss (Bloomberg) - William “Billy” Walters, the Las Vegas gambler U.S. authorities are said to be investigating in connection with possible insider trading in 2011 and 2012, was at the time facing a multimillion-dollar debt to the government over a soured golf-course deal, according to court records.  In early 2011, Walters told CBS’s “60 Minutes” in a rare interview that he wagered millions of dollars on football and basketball and had never had a losing year as one of Vegas’s biggest sports bettors. Walters had a $20 million jet and seven homes, the program reported.

SEC Loses Another Insider Trading Case To Former STEC CEO (Bloomberg) -  The U.S. Securities and Exchange Commission, in a third insider-trading trial defeat in the past year, lost its lawsuit claiming STEC Inc.’s former chief executive officer made $134 million by selling stock before divulging a sales setback to investors.  Federal jurors in Santa Ana, California, returned their verdict on the first day of deliberations.  The SEC claimed Manouchehr Moshayedi, who co-founded the maker of computer-storage cards with his two brothers in 1990, sold 4.5 million STEC shares in an August 2009 secondary offering after learning that a major customer, EMC Corp. (EMC), would scale back purchases of the ZeusIOPS flash memory product.

Fmr IRS Worker Sentenced To Prison For Tax Fraud (OnLineAthens) - Federal prosecutors say a former Internal Revenue Service employee has been sentenced in a tax fraud and identity theft scheme.  Officials say 47-year-old Missy Sledge of Atlanta has been sentenced to four years and nine months in prison on charges of mail fraud and aggravated identity theft.

Testimony That State Senator Funneled Money To Lawmakers (NY Times) - A real estate developer from Rockland County came to New York City dangling tens of thousands of dollars in cash and checks and slowly began to set a trap. State Senator Malcolm A. Smith, federal prosecutors tried to demonstrate on Friday, took the bait.  In secretly recorded meetings in restaurants in the city and Rockland County and in late-night telephone conversations in 2012, Moses Stern, a developer based in Monsey, N.Y., turned over checks for $12,000 and $15,000 to Mr. Smith so he could spread campaign contributions to Senate colleagues facing difficult primaries who might reward Mr. Smith by voting to restore him as the chamber’s Democratic leader.

Ponzi Schemer's Lawyer: "Pay Me Out Of Funds Earmarked For Victims (Ponzi Tracker) - A Pennsylvania lawyer is drawing fire from prosecutors after his request that a portion of funds seized from his client, who pleaded guilty to a $10 million Ponzi scheme, be used to pay legal bills instead of being distributed to victims.  George Heitczman, a Bethlehem, Pennsylvania lawyer, served as counsel to Richard A. Freer, who pleaded guilty to 181 counts of theft on charges he operated a Ponzi scheme that duped victims out of at least $10 million.  Freer was sentenced last month to serve at least 12 years in prison.

Feds Crack Down On Penny Stock Sales In South Florida (Sun-Sentinel) -  A 3½-year-old investation into investment fraud in South Florida has resulted in 180 arrests, federal officials said this week.  Courts have ordered $1.8 billion in restitution.  In the fiscal year that ended Sept. 30, South Florida led the nation in convictions for securities and investment fraud, said FBI Supervisory Special Agent David Nanz, who is in charge of those investigations here. It continues to be a top metro area for such cases, along with New York and Los Angeles, he said.

Michigan Men Busted In Misuse of Grant Money (MLive) - Two Ada, MI area men are charged with felonies after police say they misused more than $300,000 in state grant funds, using some of the money to pay for expensive dinners and possibly a "gentleman's club" in Las Vegas.  Gardner Klaasen, 46, and David Valdiserri, 47, are charged with false pretenses involving more than $100,000. They were arraigned Friday, June 6, in Montcalm County District Court.

"Golf Addict" Arrested For Stealing Clubs (NY Post) - Police say a man suspected of taking $9,200 worth of clubs and other merchandise from the pro shop at Gold Mountain Golf Course had no criminal history, but appears to be addicted to golf.

After Prison, Free But Alone (Economist) -  THE prison gate swings shut and a man stumbles blinking into the desert sunshine. Looking up, he sees a blonde with big sunglasses and a headscarf waiting for him in a convertible. That is how screenwriters imagine the scene, but the reality of leaving prison is grimmer.  Prisoners are often released with no supervision and no help finding a job. That makes them more likely to reoffend. According to a report published on June 4th by Pew, a think-tank, the number freed with no form of parole has more than doubled over the past 20 years, though this varies a lot from state to state. In Florida 64% of prisoners leave like this; in California the figure is less than 1%

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Justice Served Up April 22 2014

FBI Badge & gun.

FBI Badge & gun. (Photo credit: Wikipedia)

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Ponzi Scheme?  TelexFree Raided By Authorities (Boston Globe) -  Federal agents from the FBI and Homeland Security have raided the Marlborough headquarters of TelexFree Inc. in the intensifying investigation of an alleged billion-dollar scheme that has the potential to rank among the largest international financial frauds.  Regulators accused the company, which sells Internet telephone services, of luring investors from immigrant communities who sometimes put in their life savings. Some distraught victims have threatened suicide.

What's Next For TelexFree Investors (Ponzi Tracker) - Last week was a busy week for TelexFree.  After filing for bankruptcy protection on Monday in a Nevada bankruptcy court, state and federal securities regulators filed civil actions accusing the company of operating a massive pyramid and Ponzi scheme that, by one estimate, may have raised $1 billion from investors worldwide.  That same day, federal agents from the FBI and the Department of Homeland Security raided the company's headquarters in Marlborough, Massachusetts, which later drew headlines after authorities discovered TelexFree's Chief Financial Officer attempting to remove $38 million in cashier's checks from the offices. (The company later claimed there was no nefarious purpose behind this effort.)

Tennessee Focuses On Healthcare Fraud (The Tennessean) -  Health care lawyer Matthew Curley is in a room on top of the Nashville skyline, his hand resting on a glossy book chronicling dozens of stories of health care fraud.  He and Anna Grizzle, both soft-spoken and cerulean blue-eyed, work on Bass Berry & Sims’ health care fraud task force. They were part of the team that published the firm’s 2013 Healthcare Fraud and Abuse Review, which is sitting near Curley on a conference room table.  For attorneys who specialize in health care fraud, business is good. That’s because the feds are turbo-charging investigation efforts.

Entrapment For Good Law Enforcement? (Police One) - The FBI used millions of dollars, liquor and cigarettes seized in other cases and more than a dozen undercover operatives in an elaborate, seven-year sting operation targeting a San Francisco Chinatown association thought to be a front for a notorious organized crime syndicate.  The agents, posing as honest businessmen and a Mafia figure, spent freely and aggressively offered their targets criminal schemes, leading to the indictment of 29 people — including state Sen. Leland Yee — on charges that included money laundering, public corruption and gun trafficking.

Bootlegging Movies Ends In Probation For Alabama Man (Nery Advertisesr) - An Alabama man faces two years in federal prison after pleading guilty to copyright infringement in November.  In a news release, prosecutors say 54-year-old Augustus Powell, of Huntsville, Ala. was stopped by police in Louisiana three times in one year and found in possession of thousands of bootlegged movies and music.  U.S. District Judge Richard T. Haik in Lafayette, La., ordered Powell to undergo three years of supervised release last week and pay $7,000 in restitution to the Motion Picture Association of America.

Knockoff Batteries Could Land Couple In Prison (Courthouse News) - A Simi Valley businessman was convicted of selling $2.6 million in cheap, knock-off batteries for emergency backup power on nuclear aircraft carriers and other Navy vessels.  A federal jury last week convicted Didier De Nier, 63, of five counts of wire fraud and one count of conspiracy to defraud the United States.

Receptionist Used Doctors Rx Pad To Get and Sell Drugs (State Journal) - A Beckley woman who stole a prescription pad from her former employer will spend 14 months in federal prison for obtaining oxycodone by fraud, U.S. Attorney Booth Goodwin said.  Tina Marie Richmond, 41, was working as a receptionist at a doctor’s office in the Beckley area when she stole the prescription pad, which had the doctor's DEA registration number on it. She then forged the doctor's signature on prescriptions, she admitted to the court in December.

Prison Reform Has Red And Blue Working Together (Los Angeles Times) - For decades the Republican Party prided itself for being tough on crime, often putting Democrats on the defensive by pushing for longer, mandatory sentences for convicts.  In 1988, that hard-line stance helped sink the presidential dreams of then-Massachusetts Gov. Michael Dukakis, who was blamed in Republican TV ads for having released convicted killer Willie Horton as part of a weekend furlough program. (Horton failed to return after a furlough and went on to commit robbery and rape.)   But now, as the U.S. Senate prepares to take up the most far-reaching changes in years to federal sentencing and parole guidelines, some conservative Republicans are flipping sides, driven by concerns about the rising cost of caring for prisoners and calls for compassion from conservative religious groups seeking to rehabilitate convicts.

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Justice Served Up February 28 2014

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Madoff's Fmr Employee Confronted With Backdated Records (Bloomberg) - The woman who ran Bernard Madoff’s investment advisory business admitted she didn’t tell federal investigators in 2009 that her duties included backdating trades and turning stocks into bonds with a few pen-strokes.  Annette Bongiorno, accused with four former colleagues of aiding Madoff’s $17 billion Ponzi scheme, acknowledged in cross-examination today that she omitted details of some of her biggest backdating projects when she was interviewed by the government after the con man’s arrest. She did so, even though she has claimed not to have known that backdating was illegal.

Study Finds SEC Staffers Sold Stock Of Companies Prior To Cases Being Disclosed (Bloomberg) - People working for the U.S. Securities and Exchange Commission who owned stock in companies under investigation were more likely to sell shares than other investors in the months before the agency announced it was taking enforcement actions, according to a new academic paper.

New York's AG Inventing New Insider Trading "Crime" (Bloomberg View) -  Today Eric Schneiderman said his office has reached agreements with 18 financial-services firms, most of which are Wall Street banks, to "stop their practice of cooperating with analyst surveys administered by certain elite, technologically sophisticated clients at the expense of others." He said this practice "can put the market at large at an unfair disadvantage." And maybe he's right about that.  But who said life is fair?

Mayor Trenton Removed After Conviction (WSJ) - A judge has removed the mayor of New Jersey's capital city from office 19 days after a jury convicted him of corruption. Trenton Mayor Tony Mack had fought to remain in office until he is sentenced to prison. That is scheduled for May, although Mr. Mack is also asking for the conviction to be thrown out.  Judge Mary Jacobson on Wednesday rejected his arguments and signed an order removing him from office.

UNC Cheating Scandal and The Whistleblower Retaliation (BusinessWeek) - Mary Willingham had been feeding information since 2011 about academic fraud to a reporter with the News & Observer in Raleigh. The coverage had put UNC on the defensive. But rather than seriously investigate the connection between sports and classroom corruption, top university administrators used vague committee reports to obfuscate the issue. Willingham’s conversations with the elderly Friday hadn’t addressed the tradecraft of whistle-blowing. Still, he’d encouraged her to act on her concerns. “At his memorial,” she says, “I realized I had to speak up.” In November 2012, she went public with what she knew.

Fraud Trial Opens For Fmr Sentinel Management Group CEO (Chicago Tribune) - Eric Bloom was still in his 20s when he took over his father’s Sentinel Management Group Inc., a well-connected Northbrook money management firm known for always paying dividends on safe, reliable investments.  But prosecutors say Bloom secretly began exposing his well-heeled customers to an increasingly risky mix of leveraged deals, leading to the company’s spectacular collapse in 2007 and the loss of more than half a billion dollars to about 70 investor groups.

Details Of $14M Whistleblower Award Revealed (WSJ) -  A record $14 million whistleblower award paid by the Securities and Exchange Commission last year was for a tip about an alleged Chicago-based scheme to defraud foreign investors seeking U.S. residency, according to people familiar with the payment.  The award is by far the biggest arising from a 2010 law designed in part to encourage tipsters to come forward with information about financial fraud. The SEC announced the payment in October without naming the whistleblower or the case, as the law gives tipsters the option to remain anonymous.

Chilean Shipping Company Pleads To Price Fixing (Maritime Exec) - Compañía Sud Americana de Vapores S.A. (CSAV), a Chilean corporation, has agreed to plead guilty and to pay an $8.9 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced.

Five Indicted For Fraud Following Joplin, MO Tornado (KSPR) - A federal grand jury indicted five Joplin-area residents, in separate cases, for fraudulently receiving (or applying for) federal disaster benefits following the tornado that struck the city of Joplin on May 22, 2011.  The tornado killed 158 people and caused more than $2.9 billion in damage

Woman Steals $1.2M From Non-Profit Over 9 Years (Penn Live) - A former employee of the Bon-Ton Stores Foundation will serve 5 years in federal prison in connection with a $1.3 million theft from the charitable group.

Federal Inmates In Morgantown Training Dogs For PTSD Veterans (BOP.gov) - In November 2013, FCI Morgantown began a Veterans-to-Veterans Service Dog Training Program. The service dog program will provide training and certification to 21 inmates who will become service dog trainers. The inmates have been carefully screened and selected for this particular training. All of them are military veterans and will be training dogs for veterans in the community who have mobility impairments and/or Post Traumatic Stress Disorder (PTSD).

 

 

 

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Justice Served Up February 26 2014

Photo of Bank of America ATM Machine by Brian ...

Photo of Bank of America ATM Machine by Brian Katt, Framingham Rest Stop, Massachusetts. (Photo credit: Wikipedia)

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Bank Of America Discloses It Is Under Two More Investigations (DealBook) - Bank of America said that it was facing two new investigations related to its activities in foreign currency exchange markets and its handling of government-backed mortgages in the United States.  The banks said in a securities filing late Tuesday that it was cooperating with both inquiries. Traders at multiple global banks are under investigation over allegations that they manipulated the price of foreign currencies.  Bank of America said that it was now among “a significant number of FX market participants,” that authorities in North America, Europe and Asia were examining.  The Charlotte-based bank also said that federal prosecutors in the Eastern District of New York were investigating whether the company complied with requirements of a Federal Housing Administration program.

Fmr Mortgage Fraud Fugitive Faces Judge Then Physically Attacks Prosecutor (Detroit Free Press) -   A convicted mortgage-fraud fugitive who had been missing for eight months assaulted a federal prosecutor in an open courtroom in downtown Detroit this afternoon, just hours after getting nabbed in Saline, MI.  Ronnie Duke, who had been on the lam since failing to report for his 13-year prison sentence last June, attacked the prosecutor during his arraignment on a bond skipping charge. According to U.S. District Court spokesman Rod Hansen, Duke had just consented to detention and was signing paperwork when he went after the female prosecutor.

NY Attorney General Schneiderman Cracking Down On Insider Trading 2.0 (Bloomberg) -   JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) were among 18 financial firms that agreed to stop participating in some surveys of analyst sentiment while New York investigates early access to the information.  The firms agreed to stop answering analyst surveys by “certain elite, technologically sophisticated clients at the expense of others,” according to New York Attorney General Eric Schneiderman. The interim agreements were part of efforts to combat trading advantages secured by investors that win early access to potentially market-moving data.

Fmr Merrill Lynch Advisor Gets 10 Years For $2.7 Million (Ponzi Tracker) - A Nevada man who operated a $2.7 million Ponzi scheme while employed as a financial advisor at Merrill Lynch learned he will spend the next 10 years in federal prison. Gary H. Lane, 60, received the sentence from U.S. District Judge Robert C. Jones after previously pleading guilty in September 2013 to twelve counts of mail fraud and seventeen counts of attempted tax evasion.  Lane's attorney has indicated he plans to appeal the sentence.

Bitcoin Exchange Mt. Gox Goes Dark Amid Rumors of Missing Currency (Reuters) Mt. Gox, once the world's biggest bitcoin exchange, abruptly stopped trading on Tuesday and its chief executive said the business was at "a turning point," sparking concerns about the future of the unregulated virtual currency.  Several other digital currency exchanges and prominent early-stage investors in bitcoin responded with forceful statements in an attempt to reassure investors of both bitcoin's viability and their own security protocols.  The website of Mt. Gox suddenly went dark on Tuesday with no explanation, and the company's Tokyo office was empty - the only activity was outside, where a handful of protesters said they had lost money investing in the virtual currency.

Ex-Madoff Employee Tells Of Life Of Intimidation Working For Bernie (Bloomberg) -  The woman who ran Bernard Madoff’s fraudulent investment advisory business broke into tears as she told a jury how the con man shouted and threw her out of his office for trying to retire in the mid-1990s.  Annette Bongiorno, on trial with four ex-colleagues accused of aiding a $17 billion Ponzi scheme, testified that Madoff “went nuts” and cursed at her after hearing her plan to quit and live full-time in her new vacation home in Boca Raton, Florida.  “He went crazy on me,” said Bongiorno, who joined Madoff’s New York-based securities company in 1968 as a 19-year-old secretary, during her second day on the witness stand. “I was completely shook.”

SAC Capital To Hire Trading Monitor (DealBook) - Better late than never.  Steven A. Cohen, the billionaire investor, is looking to hire a former prosecutor or securities regulator to monitor trading at his investment firm after the federal government’s insider trading investigation.  Mr. Cohen’s SAC Capital Advisors hedge fund, which pleaded guilty to securities fraud in November, is in the process of converting to a family office that will manage mainly $9 billion of his personal wealth. The firm announced on Tuesday, in a letter to employees, its intention to hire a chief surveillance officer to monitor trading. The firm expects to fill the newly created position in the spring.

Lying Part Of The Job At Jeffries According To Testimony In Trader's Trial (Bloomberg) -  Ex-Jefferies & Co. trader Jesse Litvak’s former customers told a jury during his fraud trial in Connecticut that lies and misrepresentations are a common part of the give-and-take of bond trading.  Litvak, 39, is on trial in New Haven federal court accused of defrauding investors of $2 million by lying on trades of mortgage-backed securities. He’s the only person charged with fraud in connection with an initiative to distribute more than $20 billion from the Troubled Asset Relief Program, which the U.S. government created during the 2008 credit crisis to help bail out banks.

HealthCare Fraud In Detroit Is Hot (Crains Detroit) - The U.S. Department of Justice could dub 2013 the year its fight against Medicare billing fraud in Southeast Michigan yielded the first real payoff.  Last year, the Detroit Medicare Fraud Strike Force, deployed here from Washington, and a locally organized Health Care Fraud Unit of prosecutors together brought charges in fraud schemes billing more than $380 million to the federal program. That's more than double the bad billing amount charged in any preceding year.

Identity Theft Triggers Surge In Tax Fraud (WSJ) - With tax season under way, federal authorities are stepping up efforts to stop what they call a growing problem of fraudulent filings seeking tax refunds based on stolen identities. The scam, which involves repeatedly filing fake tax returns electronically and receiving refunds within days, is so enticing it is attracting suspects not typically associated with white-collar crime.  On Friday, two members of an alleged crack-dealing gang in Miami were indicted on charges they also ran a tax-refund scam on the side. Suspects typically steal lists of names and Social Security numbers. Then they file large numbers of electronic returns claiming refunds, and can start getting money before investigators spot the fraud.

California "Lifers" Leaving Prison In Record Numbers (KCRA) - Nearly 1,400 lifers in California's prisons have been released over the past three years in a sharp turnaround in a state where murderers and others sentenced to life with the possibility of parole almost never got out.

 

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Justice Served Up February 24 2014

Here is what we are reading today:

Evercore's Hixon Traded Leaks To Finance Child (Bloomberg) -  Former Evercore Group LLC investment banker Frank Perkins Hixon Jr. had an unusual reason to trade on secrets he stole from clients, authorities said: he needed the money to pay child support to his ex-girlfriend.  Hixon, who was an Evercore managing director until January, was arrested yesterday and charged with insider trading. Separately, the U.S. Securities and Exchange Commission sued Hixon, 56, and his girlfriend, Destiny Robinson, 36, with whom he fathered a child, the regulator said. The trading earned almost $1 million, the SEC said.  “Text messages between Hixon Jr. and Robinson suggest he was generating the illegal proceeds in lieu of formal child support payments,” the SEC said in a statement.

Federal Judge Rejects Conflict Motion In BP Engineer, Kurt Mix, Case (New Orleans Advocate) -  The federal judge who presided over the trial of a former BP engineer found guilty last year of obstructing justice in the government’s investigation of the Deepwater Horizon disaster has denied a defense motion to disqualify him from the case, calling the effort “completely devoid of merit.”  In a strongly worded order Thursday, U.S. District Court Judge Stanwood Duval Jr. blasted a potential conflict-of-interest claim raised last month by attorneys for Kurt Mix, who said the judge was tainted by the fact that he filed a claim against BP seeking payment, including punitive damages, for oil damage to his Grand Isle fishing camp after the 2010 oil spill.   Duval called the argument “naive at best and disingenuous at its worst.”

Asylum Fraud In Chinatown Thriving (NY Times) - More Chinese immigrants apply for asylum than any other immigrant group in the country, with the Chinese population in New York leading the way: Over the past six years, about half of all applications filed by Chinese immigrants not facing deportation were submitted in New York City. (Comparable data for asylum applications from those in deportation proceedings was not available.)  In fiscal 2012, Chinese immigrants filed more than 62 percent of all asylum cases received by the federal asylum office in New York, which in recent years has received more Chinese applications than the next 10 nationalities combined.
  Though the prevalence of fraud is unknown, federal officials appear to regard the applicant pool in New York with considerable suspicion. In fiscal 2013, asylum officers around the country granted 40 percent of all Chinese asylum requests, according to government data. In New York City, asylum officers approved only 15 percent.

Ex-Madoff Employee To Take Stand In Her Own Defense (NY Post) -  A longtime secretary and top confidante to Bernie Madoff accused of helping pull off his epic $17 billion Ponzi scheme plans to break her silence by testifying before a Manhattan federal jury about how she was duped by her “hero” boss like everyone else.  Annette Bongiorno notified the government and Judge Laura Taylor Swain in legal papers Saturday that she expects to take the witness stand in her defense as early as Monday.  Bongiorno, 65, pocketed more than $14 million in fraudulent profits and oversaw an investment- advisory unit at the center of Madoff’s scheme, prosecutors say.

Feds Make Healthcare Fraud a Priority and It Is Hot In Florida (Tampa Tribune) - Four men set up four bogus medical clinics in Tampa. They pay Medicare clients who allow the clinics to bill Medicare HMO insurance providers in their names for vein procedures they never undergo. Each clinic submits a separate bill for each patient, submitting multiple claims for the same procedures on the same individuals at the same time.  The scam went on for more than three years. Collectively, the men were able to steal more than $2.5 million from federal taxpayers.  They are part of a massive industry of cheats who have become a top priority for federal investigators who say they're concerned not only with the money being taken but also with the threat posed to public health by some of the schemes.

LIRR Doc Gets 8 Years Prison for Disability Fraud (LawFuel) - Preet Bharara, the US Attorney for the Southern District of NY, announced that Peter J. Lesniewski, a Board-certified orthopedist, was sentenced in Manhattan federal court to eight years in prison for his rold in the alleged massive fraud scheme in which Long Island Railroad workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled.

Soctt Rothstein Attorney, Dougltas Bates, Pleads Guilty (Sun-Sentinel) -  Ponzi schemer Scott Rothstein told federal prosecutors in 2011 that fellow attorney Douglas Bates was in his pocket.  Now it appears Bates, 55, will be sharing in Rothstein's fate.  Bates pleaded guilty in federal court in West Palm Beach to one count of wire fraud in connection with the largest financial fraud case in South Florida history. He faces up to five years in prison and significant fines when he is sentenced on May 1.  According to prosecutors, Bates was involved in about $60 million worth of Rothstein's investment fraud.

Steve Madden Reflects On Prison After "Wolf of Wall Street"(NYPost) -  Steve Madden — the shoe designer who went to prison for securities fraud and money laundering, and who’s currently portrayed on the big screen in Martin Scorsese’s “The Wolf of Wall Street” — has opened up about his time behind bars.  “We were lying to ourselves saying we weren’t doing anything wrong . . . and a lot of people got hurt because of what we did,” Madden says in a “CBS Sunday Morning” interview this weekend.

Bridgestone Agrees To $425 Million Fine In Price-Fixing Case (WSJ) Bridgestone Corp.5108.TO +1.09% agreed to pay a $425 million fine and pleaded guilty Thursday to conspiring to fix prices of rubber car parts.  The Japanese tire and rubber maker’s plea is the latest settlement to come from the largest Justice Department price-fixing probe ever: an investigation of the auto parts industry that has led to admissions of collusion in the market for components including fuel injectors, air conditioners and windshield wipers.

Healthcare Fraud Has Links To "Wolf Of Wall Street" Firm (Reuters) A former business partner of the man who inspired the movie "The Wolf of Wall Street," about a high-profile stock fraud scheme in the '90s, has been sued for alleged Medicare fraud.  The complaint, filed on February 10, claims that Danny Porush and five other leaders of privately held Med-Care Diabetic & Medical Supplies Inc and an affiliated company participated in a "deceitful, high pressure telemarketing" scheme to sell unneeded medical equipment to patients.  Porush said in an email that he works as a manager at Med-Care and that the company never engaged in the activities alleged in the complaint.

California State Senator Busted In FBI Sting On Bribery Charges (4-NBC) -  The U.S. Attorney’s Office in Los Angeles announced a slew of federal charges, including bribery and influence peddling, against California State Sen. Ron Calderon on Friday.  A Democrat serving Montebello, Calderon took about $100,000 in cash bribes plus plane trips, golf trips and gourmet meals, according to prosecutors. The alleged scheme involved working for or against certain state legislation.

Under-reporting Driver's Hours Leads To Limo Shuttle Owner Heading to Prison (Hartford Courant) - The co-owner of the New Britain-based Wisla Express airport shuttle van service will go to federal prison for 14 months for under-reporting how long his drivers spent at work, a judge decided Friday.  Darius Szteborowski also must pay a $20,000 fine and serve three years of supervised release, a period when he may not be connected with any federally regulated transportation business.  U.S. District Judge Alvin W. Thompson handed down the maximum possible sentence under the plea deal that Szteborowski and federal prosecutors had reached last year.

Preet Bharara, the United States Attorney for the Southern District of New York, announced that PETER J. LESNIEWSKI, a Board-certified orthopedist, was sentenced today in Manhattan federal court to eight years in prison for his role in the alleged massive fraud scheme in which Long Island Railroad (“LIRR”) workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. - See more at: http://www.lawfuel.com/jail-for-lirr-fraud/#sthash.xUpb7p9z.dpuf

"Kids For Cash" Coming To A Theater Near You - In Luzerne County, PA, one of the worst crimes against children took place when a judge sentenced children to a private prison in return of a kickback.  A documentary now tracks the event and follows the lives of the children who were sentenced by Judge Mark Ciaverella.  A sad chapter in our justice system.  Movie opens Friday!

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Justice Served Up January 21 2014

Rupert Murdoch - World Economic Forum Annual M...

Rupert Murdoch - World Economic Forum Annual Meeting Davos 2007. (Photo credit: Wikipedia)

Here is what we are reading today:

News Corp Security Head Told Of Burning Papers (Bloomberg) - News Corp. (NWSA)’s U.K. head of security told a colleague he had dug a hole and “burnt stuff” as the News of the World tabloid was closed amid the phone-hacking scandal, the former co-worker told a London court.  Robert Hernandez, a security contractor at the company’s London headquarters, said Mark Hanna told him he “had dug a hole in his garden and burnt stuff” over a bottle of wine the evening before the tabloid published its last issue in July 2011. Hanna, on trial for his alleged role in the destruction of evidence, didn’t go into anymore detail about what was burned, Hernandez said.

Prosecutors Seek To Limit Testimony of Expert Witness In Martoma Trial (Bloomberg) - Testimony by one of Mathew Martoma’s expert witnesses at his insider trading trial should be barred, and another one’s curtailed, because defense lawyers failed to make adequate disclosures about what they’ll say, U.S. prosecutors told a federal judge.

Basic Flaws In The Brady System (Forbes) - In recent years, the repeated, notable failures of the Brady disclosure regime by which prosecutors are required to produce evidence favorable to the accused in criminal cases have led to a cascade of criticism and growing calls for change.  A recent opinion by Chief Judge Alex Kozinski of the Ninth Circuit Court of Appeals, dissenting from the denial of review by the entire court in United States v. Olsen, opens with the memorable words: “There is an epidemic of Brady violations abroad in the land.  Only judges can put a stop to it.”  The forceful opinion, which provoked a number of editorials in leading newspapers,  provides an illustration of some of the basic flaws of the Brady disclosure system.

Stop The Frauds, An Additional Auditor Option (FT) - How might Chinese fraudsters be stopped? SkyTides, an investment firm started by a former auditor, has a suggestion: Special Attestation Reports.  The reason is that auditors live by two words: material and reasonable. So while they need to keep an eye out for fraudulent-type behavior, it is not their central preoccupation.  Indeed, one of the things that jumps out in a post by Seeking Alpha contributor SkyTides on the subject is just how common alleged fraudulent behaviour has been since the US passed Sarbanes-Oxley, which was designed to prevent future Enron-like deceptions.

California Pastor Accused In Ponzi Scheme (Ponzi Tracker) - Authorities have arrested a California pastor on charges that he conducted a foreign currency Ponzi scheme that defrauded more than seventy Spanish-speaking victims out of nearly $4 million.  Luis Alonso Serna, 61, was charged with two counts of mail fraud, two counts of wire fraud and two counts of money laundering.  Each of the mail fraud and wire fraud charges carries a maximum twenty-year prison sentence, while each money laundering charge carries a ten-year sentence. 

Ambulance Owners Get Prison Time for Medicare Fraud (WGNS) - A couple from Murfreesboro has been sentenced by a federal court to prison for identity theft and Medicare fraud. Seventy-year old Woody Medlock, Sr. was sentenced to 75-months in a federal prison and 58-year old Kathy Medlock received a 70-month sentence.

 

 

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