Justice Served Up Daily

ponzi scheme

Justice Served Up April 22 2014

FBI Badge & gun.

FBI Badge & gun. (Photo credit: Wikipedia)

Here is what we are reading today:

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

Here is what we are reading today:

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)

Here's what we are reading today:

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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Justice Served Up January 10 2014

Here is what we are reading today:

NY Attorney General Schneiderman Looking Into BlackRock Pact (Bloomberg) -  New York Attorney General Eric Schneiderman said the probe that led to his settlement with BlackRock Inc. (BLK) over analyst surveys is looking at brokerage firms and individuals who provided nonpublic information that could have been used to trade.  BlackRock, the world’s biggest money manager, agreed to end its program as part of the accord. It was developed by Scientific Active Equities, an investment group within Barclays Global Investors, which BlackRock acquired in 2009.

Ex-SAC Trader Martoma Was Expelled From Harvard Law School (DealBook) -  A federal jury will decide whether Mathew Martoma, the former hedge fund manager, cheated when he worked at SAC Capital Advisors, but there’s no denying he cheated when he falsified his grades at Harvard Law School some 15 years ago.  In 1999, Mr. Martoma was expelled from Harvard for creating a false transcript when he applied for a clerkship with a federal judge, court papers unsealed on Thursday showed. Mr. Martoma used a computer program to change several grades from B’s to A’s, including one in criminal law, and then sent the forged transcript to 23 judges as part of the application process.

JP Morgan Lost Madoff In A Blizzard of Paper (NY Times) -  Did JPMorgan Chase deliberately cover up Bernard L. Madoff’s fraud? The documents released this week by federal prosecutors do not show it did, and I suspect it did not. JPMorgan was penalized for failing to report “suspicious activity” in Mr. Madoff’s account at the bank — the account that took in money from the Ponzi investors and paid out withdrawals.

Petters Gets Jailhouse Lawyer In Bid To Reduce 50-Year Sentence (PonziTracker) - A former Minnesota businessman currently serving a fifty-year prison term for masterminding the third-largest Ponzi scheme in history has filed yet another motion seeking a reduction in his sentence - this time enlisting the assistance of a "jailhouse lawyer" currently serving time for drug-related charges.  The latest motion filed by Thomas Petters, who was convicted of a $3.65 billion Ponzi scheme back in December 2009, seeks to renew his recently-denied attempt to have his sentence reduced and to recuse the presiding judge.  However, the fate of Petters' latest effort may be in jeopardy - the very lawyer that represented Petters in his previous attempt has observed that the subsequent order was not appealable.

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Justice Served Up December 11 2013

English: Bernard Madoff's mugshot

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

Here is what we are reading today:

Marking 5 Year Anniversary Of Madoff Scandal (Forbes) - It was the first week of December, 2008, and Bernard Madoff’s world was in turmoil. Financial juggernaut Lehman Brothers had just filed for bankruptcy protection in what would be the largest corporate bankruptcy in history, and financial markets were in a tailspin. Investors were making withdrawal requests from his investment firm, Bernard L. Madoff Investment Securities (BLMIS), at an increasing pace.

Madoff Employee Trial Told How Ponzi Schemer Cried In Last Days Before Crime Made Public (Bloomberg)Bernard Madoff planned every detail of his firm’s demise in the days before he was arrested five years ago to avoid being marched past his 200 employees in handcuffs, the con man’s former finance chief told a jury.  Madoff, in papers spread across his desk, wrote a series of names and dates in a schedule of events leading up to the exact day his $17 billion Ponzi scheme would finally come to light, Frank DiPascali, the former executive, testified yesterday in Manhattan federal court in the trial of five ex-colleagues.

SAC Trial Continues For Steinberg (Bloomberg) -  U.S. prosecutors are seeking to show a jury the former SAC Capital Advisors LP analyst testifying against Michael Steinberg at his insider-trading trial also provided incriminating evidence about the hedge fund.  Assistant U.S. Attorney Antonia Apps asked permission to question former SAC analyst Jon Horvath about the information he provided the government after he decided to plead guilty and cooperate in September 2012, a month before his own insider-trading trial was set to start.

Bogus Talent Agent Heading To Prison (Valley News) - A Moreno Valley man who posed as a booking agent for rapper Lil' Wayne, and defrauded multiple victims seeking to secure the artist for shows in the U.S. and Canada, faces more than 20 years in federal prison when he is sentenced inthree months.  Nicholaus Saint James, 30, is slated to be sentenced March 7 by U.S. District Judge Justin Quackenbush in Riverside.  James was convicted Thursday on six counts of wire fraud for taking nearly $160,000 from people who paid for performances featuring Wayne, shows that never happened.

Federal Inmates Make Toys For Kids At Christmas (Kentucky.com) - With 16 days until Christmas and Santa Claus still at the North Pole, more than a dozen organizations received some unlikely help in preparation for the holiday season. Inmates at the Federal Medical Center on Leestown Road spent much of the year knitting, carving, crocheting and sewing Christmas gifts for the needy.


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Justice Served Up November 4 2013

Here is what we are reading today:

SAC To Plead Guilty Today (Bloomberg) - SAC Capital Advisors LP will plead guilty to securities fraud, CNBC reported, resolving an indictment filed earlier this year in Manhattan federal court that was the culmination of a U.S. insider trading crackdown spanning the past six years.  SAC Capital will be fined $1.8 billion as part of the plea deal, which prosecutors and the hedge fund will probably sign today, the network said citing people familiar with the agreement whom it didn’t name.

JPMorgan Asia Hiring In Questions (DealBook) - Can this bank get in anymore trouble?  Looks like the answer is YES.  A federal investigation into the hiring practices of JPMorgan Chase has expanded beyond the borders of China, where the bank faces questions about whether it hired the children of powerful Chinese officials to win lucrative business there.  The bank disclosed in a securities filing on Friday that authorities were now looking into “its business relationships with certain related clients in the Asia Pacific region and its engagement of consultants in the Asia Pacific region.” JPMorgan did not specify where the inquiries were directed.

JPMorgan Facing Dozens of Charges (NY Post) -   JPMorgan’s breathtaking list of legal woes now stretches from hiring practices in Hong Kong to energy market manipulation in California to bank fraud in Milan.  In its latest corporate confession, the nation’s biggest bank disclosed that it’s facing more than a dozen civil and criminal investigations into its virtually every aspect of its business.

Tracking MediCare Fraudsters In South Florida (Miami Herald) - Authorities are finding fugitives from justice are making their way to Cuba once they are indicted.  Cuba seems to be the No. 1 destination for South Florida’s Medicare fraud fugitives. Together, they stole hundreds of millions of dollars by filing billions in false claims for everything from medical equipment to HIV-therapy infusion drugs.

Former BDO Chief Executive Acquitted On Tax Fraud Charges (BusinessWeek) - Former lawyer Paul Daugerdas was convicted in a retrial for what U.S. prosecutors called the biggest criminal tax fraud in history, while former BDO Seidman Chief Executive Officer Denis Field was acquitted.

Wife of Ponzi Schemer Liable After Husband's Suicide (Ponzi Tracker) - A California woman whose husband committed suicide after being investigated for a massive Ponzi scheme can be held liable for the $114.5 million in damages owed to victims, a California appeals court ruled.  Kathleen Otto is the widow of deceased Fresno businessman John Otto, who committed suicide in May 2009 after authorities began investigating investor complaints about his equipment leasing business.  After an ensuing trial against several of Otto's companies and ex-employees resulted in a $114.5 million verdict, Kathleen Otto was found to have benefited from her husband's fraud and thus liable for his debts as a surviving spouse.

Civil Servant Gets 10 Years For Navy Contractor Fraud (Providence Journal) - Ralph M. Mariano, called the mastermind of a kickback scheme in which nearly $18 million in Navy contract money was stolen and led to more than 100 people losing their jobs, was sentenced Friday to 10 years in federal prison, one month short of the maximum.  When Mariano, through his lawyer, made statements about deserving some leniency, Chief U.S. District Judge Mary M. Lisi said before sentencing: “That rings hollow, when I consider the devastation you left in your wake.”


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Justice Served Up October 15 2013

English: Bernard Madoff's mugshot

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

Here is what we are reading today:

The Madoff-Five Fight For Freedom (Bloomberg) -  Five former employees of Bernard L. Madoff on trial over allegations they aided in his $17 billion fraud probably scrapped plea talks involving harsh prison terms to gamble for total exoneration from a jury, ex-prosecutors said.  The U.S. had little reason to offer the group leniency in exchange for testimony against others, since Madoff and his top aides had already pleaded guilty, said Philip Hilder, a former federal prosecutor in Houston who represents defendants accused of white-collar crimes.

Implications For Banks As Madoff Litigation Grinds On (DealBook) -  It has been nearly five years since the Ponzi scheme perpetrated by Bernard L. Madoff came to light, and litigation surrounding the case grinds on.  The trustee seeking to recover funds for defrauded investors, Irving H. Picard, asked the Supreme Court to overturn a lower court decision barring him from pursuing banks for their role in helping perpetuate the fraud.

Kentucky Man Headd To Prison For Hacking (WKYT) - A northern Kentucky man is headed to federal prison for four months for hacking into people's accounts on the social networking site SodaHead.com and changing posts that put forth conservative views.  Attorneys for 38-year-old Michael Pullen of Dry Ridge say the changes were merely a prank. Lawyer Dennis C. Alerding told The Kentucky Enquirer the case is "an enormous waste of taxpayer money."

Fmr Pittsburgh Police Chief Prepared To Plead Guilty To Federal Charges (Trib Live) -  Nate Harper, a former motorcycle officer and narcotics detective who in 2006 climbed the ranks to become Pittsburgh's first black police chief in more than a decade, is poised to become a convicted felon on Friday.  Harper, 60, of Stanton Heights intends to plead guilty in federal court to conspiring to divert public money for personal use and failing to file income tax returns for four years. A judge could send him to prison for as long as five years on the conspiracy charge and one year each for the tax filing charges.

After Fraud, Regulators Go After Bank (NY Times) - You can't run a Ponzi Scheme without a bank.  n such a scheme, money that is supposed to be invested is really used to line the pockets of the Ponzi promoter or to pay previous investors. A lot of money has to flow through bank accounts, and it flows in ways that differ from what the promoter tells investors is happening. Banks are in a unique position to notice what is going on before the money is all gone.

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Justice Served Up September 19 2013

Here is what we are reading today:

UBS Japan To Pay $100 million Fine For Its Role In Libor Scandal (Bloomberg) -  A Japanese unit of UBS AG (UBSN), Switzerland’s biggest bank, was ordered to pay a $100 million fine as part of a global resolution of allegations that it manipulated benchmark interest rates.  UBS Securities Japan pleaded guilty in December in federal court in Hartford, Connecticut, to one count of wire fraud and agreed to pay the fine, according to court filings. U.S. District Judge Robert N. Chatigny accepted the plea agreement today, the U.S. Justice Department said in a statement.

JP Morgan Set To Pay $900 Million In Fines For London Whale Trade (DealBook) -  JPMorgan Chase is expected to pay more than $900 million in fines to government authorities in Washington and London and make a rare admission of wrongdoing on Thursday, a pact that will settle a range of investigations over a multibillion trading blunder the bank suffered last year, according to people briefed on the matter.  The settlements with the government authorities — the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Conduct Authority in London — will mark a pivotal moment for the nation’s largest bank as it works to move past the $6 billion trading loss.

Could There Be More People Charged In Madoff Ponzi Scheme? (DealBook) - With federal prosecutors in Manhattan facing a December deadline to bring additional charges connected to Bernard L. Madoff’s multibillion-dollar Ponzi scheme, they are weighing criminal charges against several people connected to the case, said people briefed on the investigation. Among those still under scrutiny are Shana Madoff Swanson, a senior executive at the firm, and Paul J. Konigsberg, a longtime accountant in Mr. Madoff’s inner circle.

U.S. Prosecutors Want To Continue Long Sentences For White Collar Crimes (Chicago Tribune) - The U.S. Justice Department opposes a wholesale revamping of white-collar criminal sentences that defense lawyers and some judges have urged, a top federal prosecutor said on Wednesday.  But Melinda Haag, the U.S. attorney in San Francisco, said the department was open to limited changes in white-collar sentencing that could reduce sentences in some fraud cases.

Florida Attorney Gets 11 Years For ID Theft (Biz Journal) - Mark Jackson pleaded guilty to the conspiracy charges in August 2008, but fled and was a fugitive until March 2012 when he was arrested in North Carolina.  Jackson and a co-conspirator were accused of stealing mail containing personal information and personal and business checks from April 2000 to July 2004.  This week he got an 11 year prison term to think about things.

Not Enough Jobs For Inmates (Huffington Post) - The federal prison population has grown so large that the federal Bureau of Prisons can no longer reasonably expect to meet its goal of employing a quarter of prisoners, according to an internal Justice Department review.


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