Happy Holidays from AMLAC

We're taking some much needed time off from our coverage of the ever-growing world of fraud to celebrate the season with our loved ones. We want to sincerely thank you for your readership, your comments and your participation.

This year we were stunned by the economic turn throughout the world and we saw it as our duty to keep you informed and proactive in the situation as it relates to your career.

We'll be back in January with more coverage on hedge funds, mortgage fraud and money laundering.

We wish you Happy Holidays!

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Bankers Take Aggressive Approach to Fight Money Laundering

Florida bankers have banded together to fight against money laundering and terrorists acts.

Marketwatch: The word is out in the banking industry - the Florida International Bankers Association (FIBA), Inc. offers top-notch, cost-effective training and certification in the prevention of money laundering and terrorist financing. In fact, FIBA has just finished training its first wave of Latin American bankers who came to the U.S. to get certified.

It sounds like a great name, though a bit like the Justice League; however, who is going to pay for this new endeavor? The weakened federal and state economies have little resources to begin new initiatives--especially with those that may endanger national security by attempting to foil money plots. Hmm...

Well good luck, Florida! Get back to us when you get the bad guys.

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Monica and Walter M. Noel Lose over $7B Thanks to Partner, Bernie

Madoff may have been wildly reckless with billions of dollars--but he didn't do it alone. For instance, just how he got hundreds of the wealthiest persons in the world to invest in his schemes came from the help of some very skilled (wealthy) inviduals like Walter M. Noel.

Walter and his wife, Monica head up the Fairfield Greenwich Group which lost over $7B dollars thanks to their good buddy, Bernie.

Affected in this loss are their four grown daughters and four sons-in-law that work at the company plus a children's clothing manufacturer based in Greenwich.The Noel's were featured in a 2002 issue of Vanity Fair and had homes in the most exclusive areas around the world.

Camelot, for the Noels has ended.

For more information, please visit this NYT article

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Former CEO of China World Trade Guilty of Fraud

Finally! Spammer brought to justice over phony stock market scams. The stock market bust is trickling down into our spam inboxes.

This is some great news for your Friday:

How Wai John Hui pleaded guilty in a Detroit federal court for his connection in an international fraud scheme that involved sending bulk commercial spam that manipulated the stock market.

According to court records, Hui conspired with others in 2005 to send tens of millions of unsolicited bulk commercial spam e-mail promoting thinly traded stocks for Chinese companies.
The individuals allegedly sent the spam e-mail to drive up the prices of stocks so they could earn profits.

Hui, a resident of both Hong Kong and Canada, was charged as a result of a 3-year investigation by the FBI, IRS and the United States Postal Inspection Service.

For more information on this case, please click here.

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Madoff Watch '08: European Banks Tally Losses Linked to Madoff

The French Societe Generale totally knew about the problem of Madoff back in 2003--nearly five years ago? What gives?!

So why didn't Société Générale let the rest of the wealth management organizations know of Madoff's obvious incompetence? I know that the world of wealth management/hedge fund management is highly secretive; however, with a problem of this magnitude--shouldn't they have let someone in on the secret? Perhaps Société Générale thought that the others saw Madoff's incompetence, too and were keeping it to themselves.

What do you think? Should there be a statute of reporting amongst hedge fund/wealth management companies?

The red flags at Mr. Madoff’s firm were so obvious, said one banker with direct knowledge of the case, that Société Générale “didn’t hesitate. It was very strange.” While the bank kept the discovery to itself, as is common in the secretive world of wealth management, the information saved Société Générale more than embarrassment: its total exposure to Mr. Madoff’s apparent Ponzi scheme is less than 10 million euros, or $13.8 million

We've referenced an article from The New York Times.

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Texan Health Officials Get Kickbacks

More kickbacks for health officials have landed Texan health officials in some serious hot water. What is important about this case, as with all fraud cases, is that it affects the individuals who trusted in others to do their job and to do it well. People don't want to be seen as dollar signs, it grows contempt in the consumer which is just bad business.This case, with phony advocacy groups and false marketing materials is predatorial and wrong and these individuals deserve to be prosecuted by the full extent of the law.

J&J’s Janssen Pharmaceutica funneled kickbacks to Texas health officials, distributed false marketing materials and deployed phony advocacy groups to get its Risperdal antipsychotic prescribed to low-income Texans, the state alleges in a new filing in an ongoing fraud lawsuit filed in 2006, according to The Dallas Morning News.

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NYT: Fraud Inquiry Centers on Investment Firm’s Sanctum

From NYTimes.com
And the 17th floor is now an occupied zone, as investigators and forensic auditors try to piece together what Mr. Madoff did with the billions entrusted to him by individuals, banks and hedge funds around the world.

Bernie Madoff has taken nearly $50 billion dollars and, well, no one has a clear sense of where it all went. From influential Hollywood celebrities to large sports companies, the money is long gone. What happened with the Madoff Organization is that people found out they were unable to get their money--which with most hedge funds they're able to do so--unless there is a gate in place.

What do you think of this debacle?

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NYT: Prominent Trader Accused of Defrauding Clients

From NYTimes.com

Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of running a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history.


Investors in the Madoff scheme include Steven Spielberg, eek. The 70 year old Madoff seems to have walked away with nearly $50 billion dollars--but where did it all go? We can tell that this is going to be some epic news. Gordon Gekko has nothing on this guy.


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Patricia Blagojevich: First Lady Fraudster

From NYTimes.com

...Ms. Blagojevich appears to be an influential and demanding partner to her husband’s schemes to trade the Senate seat vacated by President-elect Barack Obama for money-making or politically aggrandizing opportunities.

From her foul-mouthed antics to her seemily cool and a cucumber demeanor, Mrs. Blago has more information on her infamous husband's dealings than his closest advisors. Patricia comes from Illinois political royalty and some would say this was a marriage for politicial power over love. Regardless, this lady has the goods that the feds want. Let's see what she can tell us about hubby.

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Kansas City: NovaStar agrees to settle securities-fraud class action for $7.25M

From Kansas City Business Journal:

NovaStar Financial Inc. has agreed to pay $7.25 million to settle a class-action securities-fraud lawsuit that originated in April 2004.

Novastar's insurance has agreed to pay the settlement; however, is it really the insurance company's responsibility to do so? Even though they don't have an admission of wrong doing, that doesn't mean that wrong doing didn't take place. I think a bigger investigation is in order for the company--and the people who work and do business with Novastar deserve answers.

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Feds Nab $100M Hedge Fund Fraudster

We have a new admission to the "Worst" category of money fraudsters. Marc S. Dreier has now been arrested in a $100M fraud schemes. Basically, Dreier forged the return on investments by clients and took home the profits. Sorry to say that $100M is nearly chump change to recent losses in the financial sector--its still bad, Dreier.

From NYTimes.com

...when the lawyer, Marc S. Dreier, stepped off a flight from Canada on Sunday night, federal authorities in New York arrested him in a $100 million fraud scheme, portraying his recent undertakings as more high-stakes grifting than high-end lawyering.

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Kansas City: Jury Convicts Columbia Businessman for Multi-million Dollar Investment Fraud, Money Laundering Conspiracy

They just keep pouring in from all over the country--phoney businessmen taking money from the well to do and losing it with ease.

Today's report comes from Missouri where crooked Daryl Miles Brown convinced people to invest in high-yield, short term investments. He made the investments sound very enticing--claming that they weren't available to the general public. There are a bunch of losers in this scenerio; however, its difficult to feel that sorry for people who blindly put their money into schemes that seemed too good to be true. Pyramid anyone?

From Infozine.com
Daryl Miles Brown, 31, who was chairman of The Vertical Group, located in Columbia, and principal of Cerberus, Inc., located in Fulton, Mo., was found guilty of the charges contained in an Aug. 11, 2006, superseding indictment.

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S.E.C. Charges a Venture Capitalist With Fraud

Is there a classified ad out there that I'm not reading?

"Newbie investor seeks large amounts of funds from people who should know better. "

Today's example comes from Silicon Valley where a former capitalist used money from investors to buy a multi-million dollar stake in a hockey team. Really. I can't make this stuff up.

From NYTimes.com

Federal authorities accused William Del Biaggio III, 41, a former Silicon Valley venture capitalist and part owner of the Nashville Predators hockey team, of defrauding investors and using the money to buy his $25 million stake in the professional sports team.

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Australia: OneVue Launces Anti-Money Laundering Product

From MoneyManagement.com

OneVue has launched an anti-money laundering product to help financial businesses protect themselves and reduce costs.
Connie McKeage, the chief executive of OneVue, said financial planners must meet their obligations under anti-money laundering legislation (AML) simply and effectively.

We believe [the] AML Explorer [product] represents a breakthrough in helping financial service businesses of all sizes to comply with AML legislation,” McKeage said.
The AML Explorer product presents compliance obligations in an easy to read format that enables users to identify problems quickly. It can also process phonetically-matching names against government supplied lists of politically exposed people and sanctioned organisations, at a speed of one million names per second. It can be integrated into most financial administration systems.
AML Explorer can be installed as an application or via the web. OneVue also offers a consultancy service to help clients set up and integrate the product.
Australian Unity Investments and OneVue’s subsidiary, DirectPortfolio, have already adopted the product.
OneVue is developing the product to submit applications electronically to the Australian Transaction Reports and Analysis Centre.

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Retailers Balance Security, Customer Service

Store owners have lost $42.3B in stolen merchandise since the beginning of the year

From: NJBiz.com

Retailers are getting into the holiday season this week, following the early-morning openings and price slashes of Black Friday, the day after Thanksgiving.
Traditionally, store owners would be focused on ringing up enough sales to turn a profit before the end of the year. But fears that a weak economy point to an anemic holiday season are driving retailers in New Jersey and elsewhere to pay a lot of attention to the theft of goods, called shrinkage, that can hammer a company’s bottom line.

“Loss-prevention continues to be a big concern for all sorts of retailers,” said John Holub, president of the New Jersey Retail Merchants Association in Trenton. “Based on my talks with New Jersey retailers, there is some anecdotal evidence that the weak economy is helping to drive an increase in shoplifting as we head into the all-important holiday season.”
Theft will cost North American retailers about $42.3 billion in 2008, down from $43.5 billion last year, according to an annual study released last month by Checkpoint Systems Inc. The Thorofare-based company, which sells retail antitheft systems, credits the drop in shrinkage to improved security measures.

Most of the shrinkage cost is borne by U.S. retailers, according to the Checkpoint survey.
The true cost, though, “is not just borne by retailers, but by consumers and society at large,” said Rob van der Merwe, chief executive officer of Checkpoint. “Shrink is a serious threat to retailers’ bottom lines, and amounts to a hidden ‘tax’ on consumers who are already dealing with the strain of their tightening household budgets during the economic downturn.”

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FBI arrests Birmingham, Alabama, mayor

From CNN.com:

The FBI on Monday arrested the mayor of Birmingham, Alabama, on federal charges including conspiracy, bribery, fraud, money laundering and filing false income tax returns.

Larry Langford, 62, is named in an indictment that alleges criminal activity while he was a county commissioner, said U.S. Attorney Alice Martin.

As president of the Jefferson County Commission and head of its department of finance and general services from November 2002 until about November 2006, Langford put his personal affairs ahead of those of the county, Martin said.

"Our investigation has revealed, and the indictment alleges, that Langford sold his public office to his friends and political supporters," Martin said.

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Mobster Busted for Money Laundering

Scranton, PA

StandardSpeaker.com

Reputed mob boss William “Big Billy” D’Elia was sentenced to nine years in prison Monday, as more information was revealed about his cooperation in the prosecution of Dunmore business magnate Louis DeNaples.The 62-year-old Hughestown man, whom investigators believe is the head of the Bufalino crime family, was sentenced for his role in hiding $600,000 in drug proceeds and for arranging a hit on a co-defendant who was cooperating with investigators.He receives credit for two years already spent in prison, and may not even serve the full remaining seven years if he continues to cooperate in the perjury case against DeNaples in Dauphin County.Assistant U.S. Attorney Gordon Zubrod said he will recommend the judge reduce D’Elia’s sentence if Dauphin County officials decide D’Elia provided “substantial help” in their investigation.
In July, D’Elia testified in front of a Dauphin County grand jury regarding DeNaples, who is accused of lying to state gambling regulators when he sought a license for his Mount Airy Casino Resort in 2006.What came to light Monday was that sometime before going to prison, D’Elia had written several letters and given them to friends to mail in case something happened to him. One of those letters, which was never mailed, was dated October 2006 and addressed to the Pennsylvania Gaming Control Board.Defense attorney James Swetz recently turned that letter and others over to the U.S. Attorney’s Office. The prosecutor said he forwarded that and other handwritten letters from D’Elia to Dauphin County authorities involved in the DeNaples investigation.

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Chicago dentist gets 3 years for laundering money

From MLive.com:

CHICAGO (AP) — A downtown dentist who pleaded guilty to laundering thousands of dollars for an interstate prostitution ring operating in Illinois, Michigan, Hawaii and elsewhere was sentenced Thursday to three years and a month in federal prison.
Dr. Gary Kimmel, 59, admitted using prostitution money to buy cars including a Corvette, a Land Rover and a Mercedes Benz in his own name that members of the ring used to visit customers.
But Kimmel told U.S. District Judge Blanche M. Manning he is broke.

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Colorado authorities crack down on National 1031 Exchange fraud

From BCBR.com

National 1031 Exchange Service at 1402 28th St. owned by Debra Sue Edwards allegedly "failed to return substantial amounts of money" to at least two customers, Boulder Police said in a press release.
Edwards said the situation was a "business matter."
"We're closing down the business, and any losses will be covered by our insurance," she said.
National 1031 Exchange serves customers who have sold commercial real estate and wish to have the profits from the sale held, tax free, until they locate new property to purchase. The process is allowed by the Internal Revenue Service.
Under the company's contract, Edwards is supposed to return the money when a new property has been located, minus a small handling fee, police said.
But police said they received two complaints saying Edwards allegedly did not return substantial amounts of her customer's money. In one case, a business owner alleged that he had recently sold a property and given National 1031 Exchange more than $1.2 million to hold for him while he searched for a new property.
"When he found a place to purchase, the company wired him some of the money, but he says Edwards failed to return more than $400,000," police said. "After several requests, the victim was told he would have to file a demand letter with the company's insurance provider to collect the additional money."

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Reuters: Fraud detected more often at bankrupt companies

From Reuters:

Bankrupt companies are three times more likely to have been cited for fraud by U.S. regulators, according to a study released on Monday.
The study from Deloitte Financial Advisory Services LLP also showed that fraud incidents were much more likely to land a company in bankruptcy court.
"Many of the companies that commit financial statement fraud are dealing with adverse performance issues and committing fraud to cover those up," said Toby Bishop, director of the Deloitte Forensic Center. "A significant proportion of them -- 20 percent -- will end up filing for Chapter 11 (bankruptcy protection)."
Fraud-linked bankruptcies like Enron, WorldCom and Adelphia have kept U.S. courts busy for years, and the study revealed that companies that are cited for financial-statement fraud were twice as likely to file for bankruptcy as those that were not cited.

Does this surprise you?

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Federal Government Charges 6 In $40 Million Class-Action Settlement Fraud

From CNNMoney:

Six people have been charged with participating in a scheme to steal more than $40 million in settlement funds from class-action lawsuits.
According to the indictment unsealed in Philadelphia by Acting U.S. Attorney Laurie Magid, the accused submitted numerous false and fraudulent claims in three class-action lawsuits - all of which were eventually settled - between 2001 and 2007.
The class-action defendants were Nasdaq OMX Group Inc. (NDAQ), Bank of America Corp. (BAC) and the former Cendant Corp. agreed to pay a combined $4.5 billion in their settlements.
In each case, accounting firms were used to administer the massive settlements. But the accused used a number of devices, from setting up fake corporations to creating phony brokerage-account statements and other financial documents in an effort to snatch some of the settlement funds, Magid said.
"Class-action lawsuits play a vital role in vindicating the rights of thousands of people with legitimate legal claims," Magid said. The defendants " exploited the system and created their own virtual world, full of false names, fake accounts, and bogus corporations. The only thing real in their world was the intent to deceive."

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Key figure in $5 million eBay fraud gets 27 years

From MSN Money:

A man, who prosecutors described as a leader in a scheme that swindled thousands of eBay bidders and other Internet users out of $5 million, was sentenced Wednesday to 27 years in federal prison.
Adrian Florin Fechet, 39, a Romanian national, received one of the longest sentences in memory for a white-collar offense, prosecutors said.
U.S. District Judge John W. Darrah imposed the lengthy sentence after finding that Fechet was a leader in the scheme and had not taken responsibility for his crime.
Fechet had also engaged in identity theft, Darrah said.

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Vilar Conviced of Fraud

Courtesy of Reuters.com:

Alberto Vilar, a once high-flying New York money manager and arts philanthropist accused of stealing from clients, was found guilty of fraud and money laundering by a U.S. jury on Wednesday.
Vilar was convicted of defrauding clients to pay debts, a scheme that prosecutors say began after a sharp decline in technology stocks hurt performance at his Amerindo Investment Advisers money management firm. He was found guilty by a U.S. District Court jury in Manhattan of all 12 counts he faced.

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Oppenheimer & Co. accused of Fraud

Massachusetts' top securities regulator on Tuesday accused Oppenheimer & Co. Inc. of fraud over the investment bank's sales of auction-rate securities to customers who couldn't access their money after the market for the risky investments froze.

Secretary of State William Galvin's administrative complaint also alleges Oppenheimer executives and managers sold nearly $3 million in their own personal auction-rate securities holdings two weeks before the market collapsed last February, without warning clients of growing risks amid the downturn in the broader credit markets.

Read more at Newsweek.

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Minnesota Billionaire's Fall from Grace

Tom Petters had it all. Rising from a salary of $30,000 per year in 1990 to a estimated worth of $1B in less than twenty years; he was an astounding rising star who would have a fall even more fascinating.

From PostBulletin.com
Over two decades, Petters used his charisma and salesmanship to turn a small liquidation company into a diversified, billion-dollar business with stakes in companies including Polaroid and Sun Country Airlines. He wrote big checks to politicians and pledged millions to universities that named programs and buildings after him.
"I thought that everything he touched turned to gold," said George Wozniak, a Minneapolis travel agency owner who once considered a business deal with Petters. "That's what it looked like."

Read about his fall here.

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Seattle Man Faces $1M Fine

From Seattlepi.com:

A Port Orchard man was convicted Thursday in U.S. District Court on 27 counts including securities fraud, wire fraud, mail fraud and money laundering.
Charles Nolon Bush, 69, operated various investment entities and accepted more than $35 million in investor funds. He promised high yield investments, but used investor money to fund a lavish lifestyle and pay previous investors in the form of a Ponzi scheme.
Bush fled to Poland, where he was arrested in August 2007. He made his initial appearance in U.S. District Court in February.
To lend legitimacy to the investment scheme, federal prosecutors showed he conducted business from a mansion on a private golf course and from a Safeco Field luxury suite.
Wire Fraud, Mail Fraud, Securities Fraud and Money Laundering are punishable by up to 20 years in prison and a $1,000,000 fine.
Bush's sentencing is scheduled for Feb. 6, 2009 in Seattle.

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$33M Mortgage Fraud Bust

A Virginia business man who sought to capitalize on the housing boom is now facing charges after it was discovered that he was liable for fraud of nearly $33M.

According to the Washington Post,

Vijay K. Taneja, 47, admitted that he defrauded banks of at least $33 million through schemes in which he created bogus mortgage loans and obtained funds for the same loans from multiple banks. Prosecutors said the case is the largest in Virginia in at least 20 years.

Taneja is a popular Indian-American businessman who has funded many Indian films and musical acts. Regardless of his patronage for the arts, Taneja faces more than seven years in prison.

Taneja was released as he awaits his January sentancing. He'll be electronically monitored to ensure that he doesn't flee.

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US Scammers Walk Away with $500,000 in Foreign Money

A father and son duo based in Washington state have been found guilty of money laundering and fraud. Both men, outlined in this article from The Spokesman Review took money for false industrial products from businessmen around the world to the tune of $500,000 or more. The son is now in Federal custody while the father will remain out of jail until sentencing.

For more information visit the article here.

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Family of 3 in NY are Convicted of Investment Scam

Newsday.com reports that 55-year-old Ronald Persaud, his 50-year-old wife Esther promised, and their 24 year old son Shawn have been convicted with multiple counts of conspiracy, wire fraud, and money laundering conspiracy. The couple promised to secure millions of dollars in overseas financing for investors to develop ski resorts, theme parks, and large-scale projects in return for a fee. But, after the couple received commissions, they never came through with the money. Their sentencing is set for March 9th.

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UK Taxpayers Money Used for Showgirls

From: Telegraph.co.uk

Taypayers' money spent on showgirls, campaign group claims

British taxpayers' money is being wasted by the European Union on a myriad of "bizarre" schemes, a campaign group has claimed.

Grants include £850,000 for Intertango, a Finnish dance project to further "the internationalisation of Finnish tango" and £1 million to help young Italian women learn a trade as television showgirls in Naples.

A think-tank called Open Europe, which campaigns for more transparency within the EU, included these examples in a list it compiled of the 'Top 100' examples of waste and fraud.

In one case £10 million (12 million Euros) was siphoned away into a secret bank account by authorities in the Belgian city of Charleroi, which spent it on a series of parties and outings including a hunting trip to Belarus.

In another Italian dentist Giovanni Lupo invented a solar panel business to acquire cash from the EU, which he spent on 55 luxury cars include a yellow Ferrari Testarossa. The dentist was part of a larger fraud scheme that drained the EU of more than £60 million (80 million Euros).

British taxpayers contribute almost 10 per cent of the EU's estimated £123 billion budget.

The European Court of Auditors has refused to sign off the EU's books for the last 13 years because of suspected fraud and financial irregularities.

Read more here.

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SFGate: Former ally says he paid off ex-sheriff monthly

A millionaire businessman who allegedly helped launder campaign donations for former Orange County Sheriff Michael Carona testified Thursday that he paid the sheriff a monthly stipend to keep him from taking bribes from others.

Don Haidl, who struck a plea deal with prosecutors in Carona's federal corruption case, said he paid Carona and his campaign manager, George Jaramillo, $1,000 a month each to control their greed. He said he was worried that obligations over small freebies would derail the trio's larger plan to get Carona elected to state office, where he could funnel lucrative side deals and contracts to Haidl.

"They seemed to be obsessed with money and business deals and they didn't seem to understand how the business world works ... and I was very concerned," Haidl said, saying he made the payments from 1998 to 2002. "I didn't want them to be politically obligated to people over a dinner."

The government alleges that over several years the three-term sheriff, his mistress, his wife and a close group of friends accepted hundreds of thousands of dollars in bribes and kickbacks in exchange for the power of Carona's office.

Prosecutors allege the scheme began as early as 1998, when Carona - an underdog candidate - laundered tens of thousands of dollars in campaign donations with Haidl's help.

Carona, 53, has pleaded not guilty to charges of conspiracy, mail fraud and witness tampering. His mistress, Debra Hoffman, has pleaded not guilty to charges of conspiracy, mail fraud and bankruptcy fraud. Carona's wife, Deborah, will be tried separately on a single count of conspiracy.

Read more on the SFGate’s article.

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Press one for Sen. Barack Obama, two for Sen. John McCain

The Star Tribune of Minneapolis and St. Paul, Minnesota reports that they've received word about a telephone scheme to collect votes via a telephone.

Freeman said his office has heard from one person who received the call. His office would like to hear any voicemails, text messages or see any caller ID numbers left on telephones related to this scheme. The prosecutors believe many calls were made, here and elsewhere, that may have come from one central call center so they hope to hear from anyone in any jurisdiction.

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Man Sentenced to Nine Years in Prison for Money Laundering Plot

The Examiner reports that a Pakistani national living in both Maryland and Washington has been sentenced to serve 110 months in prison for a money laundering plot and concealing terrorist financing.

The man sentenced, Saifullah Anjum Ranjha, is forty-five years old and plead guilty to charges back in August. The U.S. District Judge Marvin Garbis has ordered Ranjha to forfeit $2,208,000.

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Voter Fraud 2008

Not many would argue against the fact that the 2008 presidential election has been highly contested. The latest controversy that has come out of the campaign is the possibility of Voter Fraud. Some are crying foul over ACORN, while others have been reporting faulty machines that flip flop votes. With the 2000 election still at the forefront of thoughts, many are waiting with bated breath to see if voter fraud will potentially play a role in determining our next President. Fox news recently posted an article titled "Opposing Views: Could Voter Fraud Steal the 2008 Election?" The two views that they highlighted were:

1. We Should Be Worried
2. Voter Discrimination is the Real Fraud

What are your thoughts? Do you think voter fraud will play a role in this election? If so, then what role do you think it will play?

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Ruling in AIG and Berkshire Hathaway Case

The Wall Street Journal reported that the Judge presiding over the fraud case of former insurance executives at AIG, and Berkshire Hathaway has ruled that the conspiracy caused massive losses for investors. Also determined was that over 250 shareholders were harmed by their actions. A sentencing date has yet to be determined, however, the defendants could end up with 16 to 20 years in prison for their actions.

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Trial begins for Lance Paulson

The trial for the former founder and chief executive of National Century Financial Enterprises, Lance Paulson, begins today in Columbus, Ohio. He is charged with committing $1.9 billion of corporate fraud. Forbes has more here.

He is accused of: fabricated data, moved money between accounts to hide shortfalls and misled the investors who funded his business model.

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FSA Fines SHL Over Money Laundering Controls Failures

Looks like the recent news of the FSA fining Sindicatum Holdings Limited is all over the websphere. I came across this post on Bridging & Commercial in which they discuss how the Financial Services Authority gave the company a £49,000 fine, and gave an additional fine of £17,500 to Michael Wheelhouse, as the company’s money laundering reporting officer.

This fine was put in place because the FSA found inadequate anti-money laundering systems and controls that the company currently has in use for verifying and recording clients’ identities. This marks the first time that the FSA has fined a money laundering reporting officer. Head of retail enforcement at the FSA, William Amos, mentions:

"This fine is a warning to firms and individuals about the importance of complying with our rules in this area and we will not hesitate to clamp down on failures, where necessary."

Will this sudden penalty at SHL convince other companies to tighten up on AML protocols and controls?

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Group in Virginia is Charged with Laundering Money

UPI reports today that nine people in southeastern Virginia have been charged with operating a million dollar drug and money laundering operation.

Eight members were from the Newport News area and the other member was from Costa Mesa, California. William Foreman, Quentin Haley, and Bryan Robbs were all charged with laundering the proceeds of drug dealing, Shavonda York of Hampton, Perry Lee Bowen Jr. of Chesapeake and Richard Wiggins Jr. were charged with money laundering and Margarette Bullock Powell, was charged with wire fraud.

Eight houses, ten vehicles, $70,000 in cash, and $3.75 million has been seized and forfeited because of the indictment.

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Gardner Addresses Anti-Money Laundering Response to the World Bank

Rapaport News reports in this article that Cecilia Gardner, President, the CEO and general counsel of the Jewelers Vigilance Committee will present to the World Bank on October 30 the U.S. jewelry industry’s response to government regulations that require the industry to develop and execute anti-money laundering programs.

Gardner will be addressing the World Bank for the second time and will speak in front of officials from approximately 16 third-world and developing nations and members of the International Monetary Fund.

Gardner, who is a Certified Anti-Money Laundering Specialist mentions:

“The U.S. government has asked the jewelry industry to be alert for red flags that may indicate possible money-laundering activities. I appreciate the opportunity to share the progress the U.S. jewelry industry has made in its response to anti-money laundering government regulations.”

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Wachovia VP Pleads Guilty to Money Laundering

BizJournals reports that Javier Ortiz, a Wachovia Bank assistant vice president, has leaded guilty to conspiracy to commit money laundering in connection with a 2006 Medicare fraud scheme.

In 2005 Ortiz was introduced to Angel Castillo, who has already been sentenced to serve 19 years in prison for his role in the $48 million Medicare and money-laundering scheme. Ortiz used his position to open up business checking accounts for Castillo’s medical companies. Castillo would submit fraudulent claims to the Medicare program, and then they would deposit the Medicare payments across the various companies’ accounts.

Castillo would pay Ortiz lump sums of cash in exchange for removing computer holds on the checks and opening the accounts. Ortiz faces up to 12 years in prison.

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Sentencing of Follieri

As we reported earlier here, Raffaello Follieri pleaded guilty to 14 separate criminal counts. In latest news, the former fund manager and boyfriend to Anne Hathaway, has been sentenced to a 4.5 year prison sentence. In a brief statment Follieri:

"I have dishonored my family name and embarrassed the church I love. I will never be able to wash away that stain.''

This is brings a conclusion to the case that has been in the news frequently as a result of the high profile members involved.

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Florida man sentenced for conspiring to commit fraud

Graham Kligerman, a resident of Clearwater, Florida, received a jail sentence of 10 years for conspiracy to commit bank, mail and wire fraud. In January of 2004, he began involvement in mortgage forclosure rescue fraud.

In the scheme, more than 50 homeowners facing foreclosure sold their homes to straw purchasers with the expectation that they would lease the homes back to the original homeowners, a release from the Department of Justice said.

These straw purchasers received loans under the pretense that they would purchase the homes from the original homeowners. Instead, they borrowed more money than the first mortgage and delivered the homes’ equity to others involved in the conspiracy, the release said.

Read more here.

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Trouble at Gatwick Airport

A group of seven passengers were recently arrested at Gatwick Airport in London. The seven, three men and four women, were arrested in relation to reports of fraud involving holidays booked to Jamaica paid for using compromised credit cards. (Source: The Press Association)

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Former judge sits on the other side of the bench

A former Pennsylvania state court judge is sitting on the other side of the bench this month, facing charges of six counts of money laundering and three counts of mail fraud. In 2007, Michael Joyce was forced to retire from his position after a grand jury indictment for falsely claiming back and neck pain to receive insurance money. He collected $440,000 from a two car accident, then used the money to purchase a new motorcycle, hot tub, and make down payments on a new house and an airplane. Read more here at the IFB Web News. Joyce faces up to twenty years for each mail fraud charge, 10 years for each money laundering charge and a maximum fine of $250,000.

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Fraud cases lacking FBI agents

Recently at the New York Times, they took a look at how the FBI is struggling to put agents on fraud investigations. Since 9/11, they cut the criminal investigation crime force when they needed agents for security. Although the agency saw the mortgage industry falling into a crisis as early as 2004, the sitting president never gave them money to properly investigate the crimes. Other grim numbers include the fact that from 2001, white collar investigation staff has fallen 36%. Prosecutions for financial fraud have decreased 48%. Insurance fraud prosecution has fallen 75%, and securities fraud prosecutions has fallen 17%.

So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars.

The article also states that the recent bailout doesn't have enough controls on it to prevent fraud. Therefore the justice department will have to rely on state and local authorities to pick up on certain types of fraud.

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EU Member States Fail to Implement Anti-Money Laundering Laws

The EU member states of Belgium, Ireland, Spain, and Sweden have all been sent to the European Court of Justice by the commission over lack of implementation of anti-money laundering directives. As stated in this news article:

"The 2005 legislation tightens the EU anti-money laundering regime currently applicable to the financial sector as well as lawyers, notaries, accountants, real estate agents and casinos. The scope of the directive is broadened also to encompass trust and company service providers as well as all providers of goods, when payments are made in cash in excess of 15,000 euros."

The EU commission decreed that member states should have been in compliance by December of 2007.

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ABA on Anti-Money Laundering Agency

The American Bankers Association is calling for an independent federal "gatekeeper" organization to help monitor, prevent, and detect money laundering, and various other illegal financial activity. In keeping with news regarding the presidential election on everyone's mind, ABA President, Edward Yingling, remarked, as reported here, that:

"Improving the effectiveness of our efforts against financial crime needs to be a key part of the next president's regulatory reform agenda"

The ABA would like the government to start cracking down more on individuals participating in illegal activity rather than focusing in on banks and similar organizations who have to wade through a myriad of laws that can sometimes be confusing. They are requesting for a streamlined organization to help reduce costs, since as a KPMG report conducted last year informed, compliance with anti-money laundering schemes was 71% higher for the industry from 2004 to 2007.

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Enron Update

Former Co-CEO for Enron Broadband Services, Joseph Hirko, pleaded guilty to wire fraud according to this news report. His plea agreement terms mean he could be up for a prison sentence of up to 16 months, and fine of $250,000. Hirko's sentencing is set for March 3, 2009. Also included in the terms is an agreement to help with further investigation into former coworkers, and a forfeiture of $8.7 million in restitution to the SEC Enron Fair Fund for victims of the Enron scandal.

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Ironic Fraud Case

Authorities in Phoenix booked three men for three counts of forgery and one count of fraud. The men had been trying to return laptops to Wal-Mart saying that they had been given empty boxes with no merchandise included. Store employees were suspicious, and called the police. As it turned out, the men had indeed been sold empty boxes, however, they were not completely innocent. Authorities found that the three men had a total of 19 forged credit cards which had been encoded with valid stolen numbers, as reported here.

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Prosecutor’s Request for Removal of Judge with Ties to Tom DeLay is Rejected

A recent news report on chron.com discusses how the Third Court of Appeals has denied a prosecutor’s request to remove Judge Waldrop from the case, someone who once had political ties to Tom DeLay in a previous criminal case involving two of DeLay’s associates.

Tom DeLay, a former GOP leader of the U.S. House, and his former associates John Colyandro and Jim Ellis are accused of illegally moving $190,000 in corporate donations through a political committee formed by DeLay to seven Texas House candidates in 2002. Tom DeLay’s attorney believes that the ruling for this case will eventually lead to dismissed charges since lawmakers didn’t add checks to the definition of "funds" in the money laundering law until 2005. Many say that the money laundering statute in 2002 applies to cash and not checks. What are your thoughts?

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Elementary School Teacher Accused of Money Laundering

I came across this news report on Click2Houston which details how the 40-year-old 1st grade teacher, Elena Ducoing, has been accused of trafficking drugs and money laundering in Montgomery County.

Ducoing is suspected of laundering millions of dollars through the transport of drugs. Investigators have already seized several computers, 10 lbs marijuana, and 3grams of cocaine. Her husband Roberto Munoz has strong ties one of Mexico’s most notorious drug cartels, the Los Zetas/Gulf Cartel. He was already arrested last month.

Read the full article here.

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Philippine Loan Broker Charged in Defrauding the Export-Import Bank of the United States

MarketWatch reports that Bettina Balderrama, a loan broker from the Philippines, has been charged with brokering nearly $15 million worth of fraudulent loan transactions between companies located in the Philippines and U.S. lending banks, in which the Ex-Im Bank acted as guarantor or insurer.

According to reports, Balderrama instructed Cristina Song, a U.S. exporter, to prepare false shipping documents and submit them to lenders in order for companies in the Philippines to be approved for loans needed to purchase U.S. goods. The indictment alleges that Cristina misappropriate the funds by sending large portions of the amounts to bank accounts that were controlled by Balderrama.

The charges that Balderrama faces are: one count of conspiracy to defraud the United States and to commit offenses against the United States; three counts of submitting false statements to the Ex-Im Bank; one count of conspiracy to commit money laundering; three counts of money laundering; and one count of obstructing a proceeding before a department and agency of the United States.

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Update on the Tom Petters Case

The StarTribune reports that US District Judge Ann Montgomery appointed a receiver, Minneapolis attorney Doug Kelley, to oversee Petters Group Worldwide and related companies. One of the companies related to Petters Group Worldwide, Sun Country Airlines, filed for bankruptcy late Monday following the fraud charges brought against the parent company’s founder. The government believes that the alleged fraud scheme has defrauded investors in as much as $3 billion since 1995.

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Founder of Petters Group Worldwide is Under Investigation for Money Laundering and Fraud

Forbes reports that Tom Petters, the founder of Petters Group Worldwide, was arrested on Friday for charges related to money laundering, fraud, and other charges. Federal agents searched the company’s headquarters last week with a warrant alleging that Petters was involved in a scheme to defraud investors of as much as $100 million.

Along with 51 yr old Petters, sixty-seven yr old Larry Reynolds was also charged with him. Jon Hopeman, Tom Petter’s attorney, hopes that his name will soon be cleared of all charges.

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Man filed for bankruptcy may not have to pay fraud payments

Ronald Hummel filed for bankruptcy asking to be freed from $1.7 million of debt. As reported by KWCH, this amount includes the $760,000 he was ordered to pay from civil suits that were from insurance fraud cases. Hummel was convicted for collecting insurance premiums and pocketing the money in five Kansas counties including Cowley, Ellsworth, Edwards and Reno.

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Katrina fraudster charged

According to the Clarion Ledger, Robert Manley, who pleaded guilty for to making false statements to FEMA and the Small Business Association, was sentenced to 16 months in prison. He received $46,352 in Hurricane Katrina disaster funds. According to the prosecution, the majority of the money was spent on drugs, gambling and a car.

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Former CIA #3 Convicted of Fraud

Kyle "Dusty" Foggo, the one time executive director of the CIA, on Monday, became the highest ranking official in the CIA to be convicted 0f criminal charges. The LA Times reports that he plead guilty to one charge of fraud, which eliminated 20 other charges he was facing. Foggo directed business amounting to $100 million to longtime friend Brent Wilkes while he worked in Germany as a procurement officer. He could face up to 20 years in custody and $250,000 in fines. His friend, Brent Wilkes, is currently serving a 12 year sentence for bribing Senator Randy "Duke" Cunningham. Cunningham is also serving an 8 year prison sentence after pleading guilty to to taking $2.4 million in bribes for defense contracts.

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Alberto W. Vilar's trial begins

Yesterday, the trial for Alberto W. Viler began. From 1986 to 2005, he was involved in a number of illegal activities at Amerindo Investment Advisers. Full details of the trial's first day can be read here at the New York Times. Charges against Mr. Viler and his partner, Gary Tanaka, include conspiracy and securities fraud, investment adviser fraud, mail fraud, wire fraud and money laundering.

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Minnesota trio charged fro medicare fraud

Mohamed Essa of Eden Prairie, Minnesota, his wife and a third member are responsible for Medicare fraud totaling $1.5 million. They cheated Medica, the Medicaid public health program in Minnesota, by submitting claims for translations services that never took place.

As reported by the Star Tribune, the wife, Indadeeq Omar, was sentenced to six years in prison in July, convicted under the following charges: one count of health care fraud conspiracy, 12 counts of health care fraud, one count of money laundering conspiracy, 19 counts of concealment money laundering and seven counts of promotion money laundering. Mohamed Essa failed to return to the United States in 2007 to face the charges he is facing. A date is not set for the sentencing.

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SEC Finds Lauer Liable for Fraud

The SEC, as reported in the Wall Street Journal, has determined Michael Lauer, from Lancer Management Group and Lancer Management Group II, is liable for fraud. Lauer, a hedge fund manager, and acquired $1.1 billion from investors then lost around $500 million. SEC stopped the fraud in 2003 by freezing assets, and is not seeking $50 million as a penalty for his "allegedly fraudulent activity". Lauer has chosent to represent himself in the criminal case and has chosen not to comment.

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Fraud on Wall Street

Earlier this decade, the U.S. experienced a huge jolt when Enron collapsed and in the wake there was a five year investigation by the FBI relating to fraud. Now, the U.S. is experiencing another financial crisis with the collapse of several investment banks and as the Washington Post reports here, another round of investigations by the FBI is to commence. As has been reported by CNN, Federal Officials will be investigating potential criminal wrongdoing at the five firms of Fannie Mae, Freddi Mac, Lehman Brothers, Countrywide Financial and AIG. With these new additions, the total number of firms under investigation for corporate fraud is now 26, while the number of individuals under investigation, is closer to 1,400. It will be interesting to see how many more firms are put under investigation as the crisis continues.

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Money Laundering Case Against Tom Delay to be Reconsidered

DA Ronnie Earle, from Travis County in Texas, has requested for the appeals court to have another look at the money laundering case against Jim Ellis and John Colyandro, who were associates of Tom DeLay former U.S. House Majority Leader. For the original case the judicial panel had “volunteered that the state’s money laundering statute in 2002 did not cover checks,” as reported in this article. One of the justices on the panel, Diane Henson, felt that the case had not been handled correctly and asked that the panel review the constitutional challenge that was presented before the court. The panel turned this suggestion down, and as a result, Earle reacted by writing a strongly worded complaint that included some of Henson’s comments. A lawyer for Ellis, J.D. Pauerstein, responded by saying:

“It is way out of line. That sounds like it was written by a politician instead of a lawyer.”

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Swiss Committed to Combating Money Laundering

Taiwan's first family is in a bit of hot water over alleged money laundering. The family has reportedly opened accounts across the globe and have allegedly used these accounts for questionable activity. According to Taiwan News, the Swiss accounts that have been opened by the family will receive the utmost inspection, within legal boundaries, to combat any alleged laundering by the first family. But according to Swiss law, there must be proven criminal activity for the Swiss to have access to these accounts opened by the first family. Unfortunately, the criminal activity may only be proven if authorities are given access to these accounts. If there is probable cause to be criminal activity in these accounts, do you think the Swiss should step in further?

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Smith Convicted of Money Laundering for Illegal Alcohol Operation

The Franklin News Post reports that Jody Alton Smith and Margaret Smith have been found guilty on charges related to money laundering, conspiracy, and distribution of illegal whiskey in Western Virginia.

A jury will later decide if they will have to forfeit thousands of dollars in property and money. Agents from ABC and ATF raided the illegal still in Halifax and destroyed four 1,000-gallon blackpot stills, along with thousands of empty jugs, hundreds of pounds of sugar and two copper condenser coils. Four other people connected with this scheme have also pleaded guilty to money laundering and conspiracy.

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Brazil Drops Money Laundering Charges Against Berezovsky

The Associated Press reports that Brazil’s top court has stopped a money laundering case against Russian billionaire Boris Berezovsky because the judge overseeing the proceedings didn't allow his lawyers to question witnesses after the prosecution.

The Brazilian authorities have accused Boris Berezovsky of being the mastermind behind a huge money laundering scheme with the soccer club Corinthians. The president and vice president of the Brazilian soccer club have been suspended for three years for allegedly letting the team be part of the money laundering front. Berezovsky remains in exile in Britain for the time being.

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Former Georgia Lawmaker is Serves Federal Time for Money Laundering

The Associated Press reports a former Georgia lawmaker has been sentenced to serve 63 months in jail for defrauding his church and for money laundering.

The former state Rep. Ron Sailor Jr’s lawyers initially asked the district judge for 30 months of probation, but the judge sentenced him to federal prison time instead. Agents arrested him on Dec. 19^th and took $300,000 in cash which he planned to launder. Sailor was arrested for taking out a fraudulent $250,000 loan and using his church as collateral.

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Former NY Giants Star Ingram Faces Serious Jail Time for Money Laundering

Mark Ingram, a star in the 1991 superbowl winning team, faces nearly 10 years in prison when he is sentenced on Tuesday for charges related to bank fraud and money laundering according to this article in AM New York.

Mark Ingram pleaded guilty back in 2005 for money laundering charges associated with narcotics deals, bank fraud, and cashing counterfeit checks. For the past three years he has sought to revoke the plea and have hired and fired many court-appointed attorneys during this process.

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Follieri Pleads Guilty

We’ve been keeping a watchful eye on the Follieri money laundering case over the past couple of weeks. Australia.TO reports that Follieri has pleaded guilty in a Manhattan federal court to one count of conspiracy to commit wire fraud, eight counts of wire fraud, and five counts of money laundering. Each wire fraud count and money laundering count carries a maximum of 20 years in prison, as a result he faces up to 265 years in prison for all of his counts.

In addition, Follieri agreed to forfeit 12 watches and 9 pieces of jewelry as well as a payment of $2,4440,000.

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Defrauding Fannie Mae

Leib Pitner, former Brooklyn Mortgage executive has pleaded guilty for defrauding Fannie Mae of $44 million with a colleague. In federal Court on Thursday, he entered his guilty plea specifically for the charge of conspiracy to commit wire fraud. He had collected money from payoffs of 257 loans. Maximum penalty he could face is 20 years in prison, but as this article states, it is unlikely to be over 10. Pitner’s sentencing is scheduled for Dec. 19, while his partners case is still pending.

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Enron Payout

As this article reports, the victims of the Enron Scandal will finally be getting their restitution. Enron shareholders, and investors alike, which totals approximately 1.5 million individuals, will be splitting the sum of $7.2 billion dollars. This amount is to be divided up and is not inclusive of the legal fees to be paid for the handling of this case. These monies have been sitting and accruing interest since 2002. It has finally been decided that the attorney’s fees to be paid out will come out to a final total of around $688 million. The total fees are said to be the largest payout for a securities fraud case.

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Update on Anne Hathaway’s Ex Plea Deal

We posted two months ago that Raffaello Follieri, Anne Hathaway’s ex, was being charged with conspiracy, wire fraud, and money laundering because of a scheme in which he led potential investors to believe that he had close connections to the Vatican, which enabled him to purchase the Catholic Church’s unwanted real estate properties in the US at bargain prices. The Wall Street Journal reports in this article that Follieri is nearing an agreement to plead guilty to the money laundering charges in which he could possibly serve up to five years in prison.

In addition to crimincal charges, Follieri is being sued by Burkle’s Yucaipa investment operation for charges of misappropriating more than $1.3 million from their real-estate ventures to fund his private jets and lavish lifestyle.

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Security breaches up in 2008

In 2007, there were 207 publically disclosed security breaches. As of August 22, 2008, there have been 449 publically disclosed security breaches according to the Resource Center in San Diego, a nonprofit organization for victims of identity theft. The Wall Street Journal discusses this issue here.

Cyber criminals have adopted more sophisticated ways to break into data systems. Business are doing little to combat this, as the majority are spending little money protect the mass amount of data they are now housing on their clients. There are 44 states that required business to disclose security breaches, and when they go public with the information, they’re rarely punished for the lack of security around their data.

Bruce Schneier, chief security technology officer at BT Group belivies that there are two ways to solve these problems: is if the government creates an incentive, either by allowing individuals to hold businesses liable for data breaches or by introducing regulations that impose criminal or stiff civil penalties on businesses that experience a breach.

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Bad Weather. . . Bad News

Officials are preemptively preparing for disaster fraud expected after the wake of Hurricane Gustav. As reported in this article, U.S. Attorney Dunn Lampton, stated that his office, as well as the Hurricane Katrina Fraud Task Force, is already getting ready for the onslaught of fraud cases expected. The Hurricane Katrina Task force was created in 2005, has already seen 898 defendants charged across 43 judicial districts, 25,000 complaints, with 17,000 cases being sent to law enforcement agencies for pending investigation. Another fact of note, is that the “largest fraud case in terms of loss,” for South Mississippi, was after Hurricane Katrina in Pearl River County in the amount of $716,677.

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China’s Central Bank Cracks Down On Money Laundering

China Daily reports that the Central Bank of China has helped police uncover 89 money-laundering cases last year involving $4.2 billion. Most of these cases according to the Central Bank of China were related to underground private banks.

Last year the People’s Bank of China imposed over 26.5 million yuan on 350 financial institutions that didn’t comply with strict anti-money laundering regulations. The PBOC has signed and approved all international treaties passed by the United Nations. What are some examples of other countries that have began to crackdown on money laundering?

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A case of changing laws

In a recent story reported by the Houston Chronicle, U.S. Representative Tom DeLay and two others were absolved of their money laundering charges. The law that absolved them was passed eight months after their original indictment. The law was also authored by a representative who received some of the money.

In 2002, John Colyandro, James Ellis and DeLay, were all involved with a check for $190,000 that was sent to Republican National State Elections Committee in Washington. A large amount of the check, $100,000, was money given to a government official by a corporation, which is illegal. A few months later, Representative Larry Taylor received a check for $20,000 for the national committee. He then went on to author the bill relating to insurance fraud, which included a paragraph dealing with money laundering.

However, Taylor claims the bill had nothing to do with the three who were released from their money laundering charges:

"We were working on insurance fraud, and we had prosecutors from all over the state wanting us to help them. They said we also have another issue we have trouble prosecuting. In this electronic age, the drug smugglers are not just using cash. They said they weren't able to prosecute money laundering under the old statute."

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Bank of China Managers Have Been Convicted

In related news to this post from us, former Bank of China managers and their wives have been convicted on charges of racketeering and laundering $485 million they defrauded from the lender, as stated by the U.S. Department of Justice. This article reports that Xu Chaofan, and Xu Guojun, along with their respective wives, Kuang Wan Fang and Yu Ying Yi, were convicted by a federal jury in Las Vegas on Aug. 29. Yu Zhendong, another bank manager accused of fraud has sentencing scheduled for Nov. 24. In the meantime, amidst all of this press, shares for Bank of China have decreased by 12% this year in Hong Kong Trading.

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Islamic Bank Purchases Software to Combat Money Laundering

Arabianbusiness.com reports that Dubai Islamic Bank has signed an agreement to buy software to crack down on money laundering. The bank has bought the systems from Norkom Technologies, and will implement the solutions across operations in the UAE and Pakistan according to bank chiefs.

The Software will allow the bank to monitor and analyze the transactions and customer interactions across its entire database to investigate criminal activity. Waheed Rathore, head of Group Compliance at Dubai Islamic Bank mentions:

"This initiative demonstrates DIB's commitment to improve its defences against money laundering and terrorist financing. It also reflects DIB's belief that sustainable growth can only be achieved by maintaining high standards of regulatory compliance."

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Developments in the Taiwan Money Laundering Scandal

Recently we informed you in this blog post that the Ex-President of Taiwan, Chen Shui-bian, quit the Democratic Progressive Party amid allegations of money laundering. In the latest developments concerning the case, as reported here, another ex-Taiwan official, Yeh Sheng-mao, has been indicted for “allegedly hiding information” in the case related to Chen. Yeh, if found guilty, could face up to 30 months in Jail.

In related news Chen has been banned from leaving the island. His son and daughter-in-law had already left for the United States prior to the scandal being exposed.

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Bank of China Under Heavy Money Laundering Allegations in US Court

TradingMarkets.com reports that a lawsuit filed in the US tying the Bank of China to funding terrorist organizations are “are purely nonsense and without foundation," bank spokesman Wang Zhaowen mentions.

A lawsuit filed in the Los Angeles Supreme Court alleges that the bank transferred millions of dollars to Hamas and Palestinian Islamic Jihad in Syria and Iran. Wang Zhaowen also says, "Bank of China has always strictly been in compliance with the United Nations rules against money-laundering and terrorist financing. The bank has consistently adhered to the regulatory requirements in China and other jurisdictions.”

The Bank of China ultimately believes that the US Court will issue a fair ruling based on facts.

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Merrill Lynch in Taipei to explain role in possible money laundering

We'd like to update you on a blog post we brought to you Friday. As reported by Reuters, Merrill Lynch has sent executives to Taipei to clarify their role in possible money laundering. A Chinese paper cited that two Asian-based executives went on behalf of the company. Chen Shui-bain, who was the president from 2000 to 2008, has family members under investigation for holding bank accounts that are believed to be a part of the a money laundering operation. Chen’s son Chen Chic-chung and daughter-in-law Huang Jui Ching are the two under investigation.

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Mortgage Fraud up by 42%

In a report from Mortgage Asset Research Institute (MARI), as announced in this article, mentioned that “incidents of mortgage fraud in the U.S. increased by 42 percent in the first quarter of 2008” year over year. The two states with the highest incidents remained Florida, and California. The most common type of case filed include: General Application Misrepresentation, Income Misrepresentation, and Employment Misrepresentation. The statement released by MARI, regarding their recent report stated:

"The mortgage industry is currently in a volatile state, as many constituents try to protect themselves from criminals who continue to use these turbulent times as an opportunity to commit new fraud and inflict additional financial damage for our nation's lenders."

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Man Gets 7 Years for Defrauding Banks in Oklahoma City

The Associated Press reports that a former Edmond resident, Michael Lloyd Lee, will now serve 80 months in prision for defrauding banks and an Oklahoma City Oil Company for $5.8 million.

Investigators alleged that Lee forged the signature of Raven Resouces, his former employer, on 203 checks drawn on the company’s account. Lee broke a federal money laundering law in November 2006 when he used funds derived criminally to purchase a 2003 Mercedes Benz totaling over $40,000.

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Louisiana state senator charged with conspiracy to commit money laundering

Derrick Shepherd, a Louisiana state senator, had his law license suspended by the Louisiana Supreme Court and was charged with conspiracy to commit money laundering. According to this article released by the AP, over the years he’s maintained his law practice, he has: failed to safeguard clients money, mislead clients health care provider about the status of the case, failed to properly supervise a non-lawyer assistant. His trial will begin in October for the conspiracy to money laundering charges in which he is charged with helping an unlicensed bond broker launder money to conceal her illegal operation of an insurance business.

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JVC Releases List of Countries that have Laws Against Money Laundering

This article from Rapaport News, announced that the Jewelers Vigilance Committee (JVC), has created a list of countries that have established processes to prevent money laundering in this industry. The list is posted on the JVC website. Here is the procedure that the U.S. follows to determine if retailers present a low risk to suppliers:

For purposes of evaluating risk, if a retailer’s supplier:

- is situated in a country that has AML laws, and

- that country’s AML laws cover precious metals and stones, and

- the supplier represents that it is compliant with the country’s laws, and

- there are no “red flags” associated with transactions with the supplier, then

- the retailer may assign a low-risk level to transactions with that supplier.

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Dhaka’s Money Laundering Practices to be Checked

The Daily Star reports that a team from the Asia/Pacific Group on Money Laundering (APG) will evaluate Dhaka’s safeguard against money laundering, fraud, and terror finances from now until August 31^st.

This is the government’s effort to bring back money siphoned off overseas. The experts will assess current laws relating to freezing assets of terror financing and confiscating proceeds from crimes. The experts hope to enable the country to cooperate effectively at the international level by discussing findings with officials from key government departments and private sector, including banks, other financial institutions, real estate, legal and accountancy professions.

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Some Defendants Charged in $17 Million Mortgage Fraud Case Plead Guilty

Of the 15 arrested last month following a 10 month investigation into a mortgage fraud scheme, six of them, residents of South Florida, have pleaded guilty. As this article relates, the case, which involved more than $17 million, had been under investigation for some time in connection with two separate title companies in Miami-Dade County. The defendants who have plead guilty face charges ranging from $10,000 to $20,000 combined with up to five years in prison. The remaining nine arrested still have charges pending

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The Ex-President of Taiwan Quits His Political Party

Amid allegations for money laundering, the ex-president of Taiwan, Chen Shui-bian, quit the Democratic Progressive Party (DPP) as announced in this article. Currently, he is involved in another allegation for embezzlement of 14.8 million Taiwan dollars, and in the same trial, his wife has been accused of corruption and document forgery. For the latest accusations, however, Chen has already said that his wife, Wu Shu-chen, had wired $20 million without his prior knowledge. In a statement addressing his leaving of the DPP Chen said,

"I have to say sorry to DPP members and supporters with a heavy heart. I let everybody down and caused irreparable damage to the party. This was not my intention but I made mistakes"

For some of his mentioned past mistakes, he had been able to avoid the investigation, as a result of presidential immunity. The investigation into these matters was launched by prosecutors on the same day that Chen left office after serving his last term.

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US Trustee Program Requests Authorization to Investigate SemGroup

The Office of the United States Trustee program, a section of the Justice Department, has requested authorization to look into SemGroup’s bankruptcy filing on the basis that fraudulent trading could have caused the collapse of the company. As reported in this article from Reuters, SemGroup, had filed bankruptcy on July 22^nd claiming a $3.2 billion loss on energy futures and derivatives trades. In an official document Roberta DeAngelis, from the US Trustees office stated:

"The dearth of information available regarding the trading strategy and its impact upon the value of the debtor's businesses has caused significant unrest and concern among the debtor's customers, suppliers, lenders and investors"

The official word from SemGroup is that they are willing to cooperate completely with the investigation. This, however, is not the only investigation that is underway for the company. Federal Investigators are already checking into the matter of whether or not proper disclosure was made to investors regarding liquidity issues of the subsidiary group SemGroup Energy Partners LP.

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