Russian Federal Customs Service Suing Bank of New York Mellon over a past Money Laundering Scheme

In the 1990’s the Bank of New York Mellon was part of a court case involving a money laundering scheme where two Russian émigrés transferred $7.5 billion to the bank using an unlicensed wire transfer. As a result the bank was forced to pay a fine of $38 million.

The New York Sun reported in this article today that the case has resurfaced and the Russian Federal Customs Service is suing the bank, on the grounds that Russia deserves $22.5 billion in compensation in accordance with the RICO treble damages rule. The trial is being held in the Moscow Arbitrazh Court.

As this article in PR Newswire mentions, over 20 prominent legal scholars have supported Bank of New York motion to dismiss on these grounds:

- The U.S. Congress never intended RICO to be used by foreign courts;

- The Bank was never convicted of, much less charged with, any underlying criminal wrongdoing, which a RICO claim requires;

- The plaintiff is unable to provide any evidence of actual financial damages, as specified under RICO;

- This particular Russian court, the arbitrazh court, is a commercial court that has no jurisdiction to interpret or apply criminal statutes, let alone U.S. RICO law; and

- This is a case to recover lost tax revenue, which is a claim that cannot be brought under RICO, and any enforcement would be precluded in most countries by the well-established Revenue Rule.

For now proceedings have been adjourned until July 3rd, 2008.

Share this article with your social network, just click below to share now!

Share |

New Jersey Lottery Ring Busted

In Rockland, New Jersey, eight people were arrested and charged with enterprise corruption, money laundering, and promoting gambling for running an illegal lottery ring. It was run through storefronts in Spring Valley, New Jersey. Other locations included Ramapo, Elizabeth and East Orange, New Jersey. The ring would take bets from individuals and then pay out according to actual lottery drawings.

Source: Mid-Hudson News

Share this article with your social network, just click below to share now!

Share |

Army Officer and his Wife Plead Guilty To a Money Laundering Scheme Involving the Department of Defense

The Department of Justice reports that 43 year old John Cockerham, a U.S. army officer, has pleaded guilty to one count of conspiracy to commit bribery and one count of money laundering. Cockerham’s wife, Melissa Cockerham, pleaded guilty to one count of money laundering.

John while deployed in Kuwait was responsible for awarding contracts for services to be delivered to troops in Iraq. John received up to $9 million for awarding illegal contracts, and then directed the contractors to pay his wife and sister to hide the fact that he was accepting bribes. Melissa stored the cash in safe deposit boxes in both Kuwait and Dubai.

John and Melissa have been cooperating with the government in an effort to retrieve the money from overseas banks.

Share this article with your social network, just click below to share now!

Share |

Mortgage Fraud Charges brought against Company CFO

As reported today at CFO.com, Terrance Cole, former chief of finance for Heritage Mortgage in Kansas, pleaded guilty to his roles in mortgage fraud. His charges included conspiracy to commit wire fraud and money laundering. His major role was offering bogus loans to Kansas lenders, such as Country Wide Home Loans. His case was part of a larger case which resulted in $14 million in illegally obtained loans. He could face 5 years in prison as well as up to $250,000 for the conspiracy charge and a $500,000 fine for laundering in addition to 20 years in prison.

Share this article with your social network, just click below to share now!

Share |

Anne Hathaway’s Ex is Charged with Money Laundering

Reuters reports that Raffaello Follieri, an Italian businessman who had been a long time boyfriend of actress Anne Hathaway, was charged with conspiracy, wire fraud, and money laundering today in the U.S. District Court in Manhattan.

Investigators believe that Follieri was operating 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 complaint made stated that Follieri falsely represented himself as an official Vatican financial officer and that he had previously met with the Pope in Rome.

Follieri as well as others used the investors’ money to purchase several luxuries like expensive clothes, restaurant meals, and his $37,000 a month Manhattan apartment.

Share this article with your social network, just click below to share now!

Share |

Hollinger International Executive Convicted

In a recent story at MSNBC, they give details on the recent conviction of ex-media head Conrad Black. He was found guilty of three counts of mail fraud, and one count of obstruction of justice. The jury found him guilty of stealing $3.5 million from share holders. Overlooked during the convictions were nine other charges which had to deal with things from tax fraud to racketeering. He was once the an executive at Hollinger International, which was known for publishing community news papers including the Chicago Sun Times, the Daily Telegraph in London, and the Jerusalem Post in Israel.

Share this article with your social network, just click below to share now!

Share |

News Update

Over the past week, we’ve brought you up-to-date news on the latest current events occurring during the current credit crisis happening in America. Yesterday, we reported that Bear Stearns employees Ralph Cioffi and Matthew Tannin were going to be arrested for fraud dealing with a hedge fund account.

The Arizona Republic sheds more light on the situation this morning. In April 2007, they became aware of the current situation when an internal report was released. One of the emails that was written around that time period by Tannin states:

The subprime market looks pretty damn ugly. If we believe the (report) is ANYWHERE CLOSE to accurate I think we should close the funds now. The reason for this is that if (the report) is correct then the entire subprime market is toast.

The two were officially charged with charges of conspiracy and securities and wire fraud for lying to the authorities about the state of the hedge fund. They could both face up to twenty years in prison for these charges.

We also reported on the current mortgage crisis. The FBI has moved agents to different segments in order to deal with the current state of the mortagage business, trying to capture the rampant fraud on the market. This report at the Chicago Times reports that 67 people were charged in mortgage fraud, from builders to loan officers. The three scams targeted were: lending fraud involving false loan applications and bogus real estate appraisals; foreclosure-rescue scams in which financially strapped homeowners lose ownership of their properties to criminals; and mortgage-related bankruptcy fraud. Bonnie L. Brown was the ring leader, and obtained 183 homes through fraudulent loans worth more than $124 million. There were 28 more people in Michigan charged with mortgage fraud according to the Detroit Free Press.

Share this article with your social network, just click below to share now!

Share |

Bear Stearns Employees Arrested

In breaking news from Reuters, they divulge information that two former hedge fun managers at Bear Stearns were arrested after authorities investigated the collapse of their hedge fund. Ralph Cioffi and Matthew Tannin are expected face security fraud charges. The two funds they were managing collapsed and it is one of the causes for the current credit crisis.

According to Reuters, there was an email that is expected to be very important in the case:

The indictments are expected to cite a personal e-mail sent by one manager to the other that appeared to suggest the Bear funds were in difficulty, days before one of the managers told investors that he was comfortable with the holdings, according to the Wall Street Journal.

Share this article with your social network, just click below to share now!

Share |

Ex-lawmaker Conspiring Fraudently as he was in talks with police

In a news story released yesterday by the AP, Former State Representative Ron Saylor, Junior, pleaded guilty to more counts of fraud. Saylor, Jr, had been cooperating with authorities in a corruption probe. He’d been working with authorities since December, and the press never got word that he had been arrested. While cooperating with authorities, he was planning to land a $250,000 loan frequently by offering his church, where he was a pastor, as collateral. In March, he plead guilty to laundering $375,000 in drug money for an undercover officer. Authorities then found out about the fraudulent loan.

Pleading guilty to these two new counts of fraud, Saylor, Jr, could face up to 80 years in prison and a $2.25 million fine.

Share this article with your social network, just click below to share now!

Share |

Grocer in Kentucky Charged for Money Laundering

In a recent post at the Money Laundering blog, Abduhl Sulaiman was charged for laundering millions for five organized crime ring through the front of a grocery store. The products he made money off of were stolen baby formula, and health and beauty products. Prosecutors are seeking $4.8 million in forfeitures and money judgments. Abduhl Sulaiman is the sixth person in six years convicted of retail theft crime in convictions in Lexington. They have not released a date for sentencing, but Sulaiman faces five to nine years in prison.

Share this article with your social network, just click below to share now!

Share |

Mexico and US aim to Stop Money Laundering

The Associated Press reports that Mexico and the U.S. has recently agreed to share a data plan to stop money laundering from occurring through trade. This new trade unit will monitor any irregularities in transactions. This information will later be passed on to authorities who will investigate whether these irregularities are being used to fund criminal organizations.

Julie Myers, Assistant Secretary for Immigration and Customs Enforcement mentions that illicit trade has become a popular money laundering method. These two countries are looking to combat this method and finding new ways to prosecute drug lords. Similar programs currently in place in other Latin American countries have resulted in seizures worth US $21 million last year.

Share this article with your social network, just click below to share now!

Share |

Mortgage Frauds on the Increase, FBI sending more officers

The subprime mortgage crisis is in full swing, and the FBI has realized that. According to this article at Bloomberg, Kenneth Kaiser has ordered that 26 of the field offices in the United States switch their focus to this problem. Before the switch, 150 agents were working on over 1,300 cases.

Already dealing with the loss of 2,400 FBI agents who were sent to fight terrorism instead of white collar crime after September 11, Kaiser’s new switch will have officers no longer focusing on price fixing, mass marketing, wire fraud, mail fraud and environmental crimes. The states that are affected by this new rule are: Florida, Georgia, California, Nevada, Arizona, Texas, New York, Ohio, Michigan, Illinois, Indiana and Minnesota, he said. The targets of these investigations will be real-estate agents, homebuilders, lawyers, appraisers and borrowers.

Just one example of the many fraud mortgage cases was highlighted today at Forbes. Eight individuals, fronted as the Metropolitan Money Store, used those loosing their homes to frequently obtain loans and inflate real estate appraises to strip equity from more than 100 homes. These eight individuals were charged with conspiracy, mail fraud and money laundering.

Share this article with your social network, just click below to share now!

Share |

Fraudulent man fails to report to jail

The New York Times discloses that Samuel Israel III failed to show up on Monday, June 9, for his sentence of 20 years in prison. Israel, a former hedge fund manager and co founder of the Bayou Group, received the sentence after cheating his investors out of $450 million. He plead guilty to these accusations in 2005.

On Monday, his sport utility vehicle was found on a bridge over the Hudson River, with the message “Suicide is Painless” etched into the hood. His whereabouts are unknown, and a body has not yet been found.

Share this article with your social network, just click below to share now!

Share |

Houston Area Man Convicted to 20 Years for Fraud

David Hillburn moved to Houston, Texas in 2003 and became a securities manager for seniors, according to this article in the Houston Chronicle. Since 2003, with no license for securities trading, took $10.2 million form senior in their 40s, 50s, and 60s. After 80 of his victims testified, he was convicted to repay $3.2 million (the other $7 million was recuperated from selling off his assets) and 20 years in prison.

Share this article with your social network, just click below to share now!

Share |

Harvard Employees filing low claims

In a recent report at Prauda, they discuss the findings of US Senator Charles Grassley upon his investigation of three psychiatrists from Harvard, who worked at Massachusetts General, their reported earnings on payments they received from drug makers.

The three claimed to have received a few hundred thousand dollars from drug makers, but when asked to revised the reports, they claimed $1.6 million each in payments from drug companies. A further investigation is going to be done due to the fact that drug makers still claim they doctors were paid more money.

Senator Charles Grassley is hoping to prove to congress that the United States needs to have stricter rules on the national reporting system, specifically when it came to reports on payments that had to do with the pharmaceutical industry.

Share this article with your social network, just click below to share now!

Share |

FCC Official involved in Fraud Case

In an article in today’s New York Times, they shed light on a building case of fraud against one of the Federal Communication Commission (FCC) lieutenant officers. Daniel Gonzalez, is the lieutenant and gatekeeper to Kevin J. Martin, who is the chairman to the FCC. He’s helped to implement and plan policies to keep broadcasters nationwide.

According to the article, Gonzalez invested in a small energy company in 2005,and joined the board in 2006. Later, it turned out that the company was a fraudulent venture, and had stolen $54 million from investors. MCube Petroleum, which was based in Seattle, was operating under the façade that they were importing oil and natural gas from Indonesia and Malaysia.

Later, when it turned out to be a fraudulent agency, Gonzalez offered to resign from the board in January of 2007. He insists he had no idea as to the fraudulent actions that were going on, and that he was deceived too. The trial is set for March 2009.

Share this article with your social network, just click below to share now!

Share |

Former CEO of Student Finance Corp Pleads Guilty to Fraud

Andrew Yeo, who was the former CEO of Student Finance Corp, pleaded guilty to counts of fraud and money laundering. He will be sentenced on September 5, 2008. According to this article here at the Philadelphia Business Journal, he was found using an accountant to prepare fraudulent documents in support of loans he received. He was charged with seven counts of making a false statement, one count of wire fraud, one count of mail fraud, and one count of money laundering.

Share this article with your social network, just click below to share now!

Share |

International Drug Ring Sentenced

According to this recent blog at Money Laundering, Michael Hearns reports on a recent conviction of three Columbian nationals who were convited on guilty pleas of conspiracy to commit money laundering. Between the three Columbian nationals, there are 47 counts of money laundering. They were forced to give up $3 million of laundering funds.

From 2002 to 2006, the three laundered money promoting cocaine distribution throughout the US, Europe and Columbia. They used Mexican casas de cambinos, the Columbian Black Market Peso Exchange, and US Bank accounts to transfer the profit from the drug money to drug traffickers in Columbia.

Share this article with your social network, just click below to share now!

Share |

Supreme Court Ruling Deals Blow to Prosecutors

The Supreme Court on Monday handed down two rulings that may make it more difficult for prosecutors to prove money laundering charges when dealing with criminal cases. In U.S. v. Santos, 06-1005, the high court ruled that a money laundering case cannot be proven merely by showing funds were concealed while being transported.

In a second unrelated case, Cuellar v. U.S., 06-1456, the court said that the charge of money laundering refers to profits of an illegal operation, as opposed to gross receipts.

You can read the article here, and the AP's article here.

Share this article with your social network, just click below to share now!

Share |