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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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