SC "Ponzi" Businessman Pleads Guilty

South Carolina businessman, Gene Sullivan admitted Monday in federal court that he spent as much as $1.2 million on himself. This comes after at least 15 years and more than $2.5 million of phony investments stolen from at least 35 people, reports HeraldOnline.com.

Sullivan, 63, a Rock Hill insurance agent and broker for New York Life for more than 30 years, pleaded guilty in Columbia to one count of mail fraud.

He could receive up to 20 years in prison during a sentencing hearing scheduled for April 7 before U.S. District Court Judge Matthew J. Perry Jr., who accepted the plea Monday.

Learn more: Broker admits to Ponzi scheme, pleads guilty to mail fraud

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Rajaratnam and Chiesi Plead Not Guilty In Hedge Fund Fraud Case

Accused fraudster, Raj Rajaratnam and executive at New Castle Funds LLC. Danielle Chiesi appeared in Manhattan federal court to plead not guilty to insider trading, conspiracy and securities fraud, reports HedgeCo.net.

Bloomberg reports that the two appeared in Manhattan federal court today to plead not guilty in an insider trading case that allegedly generated more than $20 million in illegal profits. They were arrested in October and indicted on Dec. 15. Prosecutors cite multiple schemes dating to 2003 and say the two used secret tips to trade in stocks including Polycom Inc., Akamai Technologies Inc., Google Inc. and International Business Machines Corp.

Learn more: Raj Rajaratnam, Chiesi Deny Insider Trading Charges

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26 Arrested in Three States in Medicare Fraud Schemes

The New York Times reports that Federal agents arrested 26 suspects in three states on Tuesday, including a doctor and nurses, in a crackdown on Medicare fraud totaling $61 million.

The raids came a week after a report that Miami-Dade County got more than half a billion dollars from Medicare in home health care payments intended for the sickest patients in 2008, more than the rest of the country combined, even though only 2 percent of those patients nationwide live there.

Learn more: 26 Arrested in Three States in Medicare Fraud Schemes

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Rajaratnam, Chiesi Indicted in New York for Conspiracy, Fraud

Bloomberg.com reports that Raj Rajaratnam, the billionaire Galleon Group LLC founder, and Danielle Chiesi, an executive at New Castle Funds LLC, were indicted by a federal grand jury for using inside information to profit from stock trades.

The indictment includes 11 counts of securities fraud and conspiracy against Rajaratnam and 10 counts against Chiesi stemming from trades that allegedly generated more than $20 million in illegal profits. It cites multiple schemes dating to 2003 and says the two used secret tips to trade in stocks including Polycom Inc., Hilton Hotels Corp, Akamai Technologies Inc., Google Inc. and International Business Machines Corp.


Learn more: Rajaratnam, Chiesi Indicted in New York for Conspiracy, Fraud

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Louisiana agent accused of stealing $2.9 million in auto policy scheme

IFAwebnews.com reports that Louisiana agent, Jolie R. Bonvillian, 40, of Violet has been arrested and accused of 424 counts of forgery, 339 counts of bank fraud, 85 counts of insurance fraud and three counts of theft. State police say an investigation began when troopers from its insurance fraud/auto theft unit received a complaint from Progressive Insurance Co., concerning an “unusually large” number of commercial auto polices generated by Bonvillian.

An investigation revealed that Bonvillian generated 85 fraudulent policies using fake names, international drivers license information and vehicle information. The Progressive auto policies were created to facilitate 339 bogus premium finance agreements, authorities said.

Learn more: Louisiana agent accused of stealing $2.9 million in auto policy scheme

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Brookstreet and the CEO charged with fraud

According to Reuters, Stanley Brooks, former President and Chief Executive of Brookstreet group have been charged with fraud. They promoted risky mortgage securities to customers after they were warned that the securities were dangerous, illiquid and inappropriate for retail investors.

A statement from Robert Khuzami, director of the SEC's Division of Enforcement, said:
"These were complex mortgage derivative securities with byzantine pricing, valuation and trading characteristics. Selling them to retirees and conservative investors was profoundly and egregiously wrong."

Read more here.

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Alleged Ponzi Scheme Uncovered in Florida

The Associated Press reports that attorneys sorting through the books of disbarred Florida lawyer Scott Rothstein have uncovered handsome salaries for the disgraced attorney and his partners.

In 2008, Rothstein collected $35 million. Stuart Rosenfeldt, a 50 percent partner, received more than $6 million, and name partner Russell Adler was paid $888,000.

The law firm is now in bankruptcy, and Rothstein faces charges including racketeering and money laundering in what authorities allege was a massive ponzi scheme. Creditors have filed nearly $1.2 billion in claims.

Bankruptcy attorneys say the firm's books are a mess, and it's impossible so far to paint a complete picture.

Rothstein has pleaded not guilty.



Florida Lawyer Charged With Fraud Collected $35M in 2008

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Tom Petters Found Guilty of $3.65B Ponzi Scheme

Yesterday a Minnesota jury found businessman Tom Petters guilty for his $3.65B ponzi scheme. The Wall Street Journal reports that, Petters guilty sentence contains 20 counts of wire fraud, mail fraud, money laundering and conspiracy, potentially consigning him to life in prison without parole.

Petters case has been overshadowed by fellow ponzi-schemer, Bernie L. Madoff.

Petters Found Guilty of Fraud

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Baltimore Mayor Convicted of Fraud

Baltimore mayor, Sheila Dixon, was convicted yesterday on a single charge she took gift cards intended for the city’s poor. Although she was acquitted of felony theft charges, her misdemeanor conviction could force her from office, reports the Associated Press. Jurors deliberated more than six days after hearing accusations that the Democrat improperly used or kept $630 worth of gift cards. She was accused of soliciting most of the cards from a developer and buying electronics at Best Buy, clothes at Old Navy, and knickknacks at Target.

Baltimore mayor convicted on fraud charge

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New federal task force to fight fraud

The Obama Administration has created a new task force that will work to combat fraud. It will replace the task force that Bush for the same reason.

U.S. Attorney General Eric Holder stated, "This task force's mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from occurring. By punishing criminals for their actions, we will send a strong message to anyone looking to profit from the misfortunes of others."

Read the full article here.

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Agility indicted in fraud case

The Denver Post reports that a federal grand jury has indicted a Kuwait- based company for an alleged series of schemes that U.S. officials say amounted to a "massive overcharging" of the U.S. government for food the company provided to soldiers stationed overseas.

According to civil court records, the alleged acts have cost taxpayers more than $1 billion.

The criminal indictment, which was unsealed Monday, accuses the company of conspiracy, major fraud, false statements, submitting false claims and wire fraud.

The publicly traded multinational company does business under the name Agility but was charged under its old name, Public Warehousing Co., or PWC. According to its website, it has 37,000 employees in 120 countries. The company's commercial division, Agility Global Integrated Logistics, has its American offices in Irvine, Calif.

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Former US Congressman Faces 13 Years in Jail

According to this post on IBN Live a former US Congressman William Jefferson has been sentenced to 13 years in jail after being found guilty in August of collecting bribes for personal interests after police found $90,000 stored in his freezer.

Jefferson lost his seat in 2008 elections after voters were completely turned off by all the indictments of bribery and money laundering. In exchange for the bribes Jefferson allegedly led business operations in Africa that included telecommunication deals with countries such as Ghana and Nigeria.

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U.K. Fraud Office Investigates London Hedge Fund Group

The Wall Street Journal reports that London-based hedge fund group, Dynamic Decisions Capital Management Ltd. is being investigated by the U.K. Serious Fraud Office in connection with suspicions about the firm's investment activities in connection with its Cayman Islands-registered fund called Dynamic Decisions Growth Premium Master Fund Ltd.

For more information about the investigation, please click here.

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How will the CARD Act impact AML regulations?

Recently, the prepaid industry has been under heavy scrutiny and with the addition of the Credit Card Accountability, Responsibility and Disclosure Act going into effect on February 22, 2010 even more provisions will apply to gift certificates, store gift cards and general-use prepaid cards. This article from Bankrate.com highlights how expiration and inactivity fees, for example, will be very limited. Customers can not incur inactivity fees on gift cards unless they go unused for a period of over 12 months.

There are however, certain fees that the CARD Act does not protect from like upfront issuance and sales fees. One aspect of fees that the CARD Act is particularly aiming to eliminate is expiration fees. The ACT demands that cards not expire for 5 years after its issuance; many gift cards at this time expire after 1 or 2 years.

What sort of changes do you foresee for AML regulations in the prepaid industry with these new provisions going into effect early next year?

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105 Charged in Wide-Spread Florida Mortgage Fraud

RealEstateChannel.com reports that The Justice Dept. has charged 105 mortgage company representatives, brokers and other individuals in fraudulent schemes that have netted them $400 million in loans on 700 properties in Florida. In the four Florida markets targeted by federal and local law enforcement agencies over a nine-month period, 32 defendants are from Fort Myers, 30 from Tampa, 24 from Jacksonville and 19 from Orlando. Alex Finkelstein reports that this investigation was launched in late January 2009

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