Thursday, August 28, 2008

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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Wednesday, August 27, 2008

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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Tuesday, August 26, 2008

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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Monday, August 25, 2008

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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Friday, August 22, 2008

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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Thursday, August 21, 2008

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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Wednesday, August 20, 2008

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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Tuesday, August 19, 2008

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 31st.

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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Monday, August 18, 2008

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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Friday, August 15, 2008

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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Thursday, August 14, 2008

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 22nd 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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Wednesday, August 13, 2008

Couple sentenced in mail fraud case

A couple who took $1.57 million from investors was charged Tuesday in Clifton Park, New York. The husband, Steven O’Brien, received 41 months in prison and the wife, Jeanne, received five years of probation and 24 months of house confinement as sentences. A report in Albany’s Times Union reports the story here. They were charged with one count each of mail fraud. Prosecutors believe they will never be able to reimburse the 20 victims fully, but they must pay $200 a month of 10% of their income due to the fact that they have no assets for authorities to seize.



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Tuesday, August 12, 2008

Huron Consulting and Acuity Team Up to Enhance Services to Financial Institutions

Centerdaily.com reports that Huron Consulting has announced a joint venture with Acuity to offer clients consulting services regarding anti money laundering compliance such as monitoring systems, regulatory compliance, and corporate governance for financial institutions that must abide by AML laws and the Bank Secrecy Act.

Gary E. Holdren, chairman and chief executive officer, Huron Consulting Group mentions:

"Huron's joint venture with Acuity will allow both companies to extend advisory, forensic, and consulting services to financial institutions and others impacted by anti-money laundering statutes, the Bank Secrecy Act and the Patriot Act. The Huron-Acuity team provides clients with the full range of expertise needed to navigate these complex waters."

After September 11, 2001 many laws governing the Bank Secrecy Act and anti-money laundering were expanded, and so many companies and financial institutions were put at risk for civil and criminal liability. This joint venture will enhance the capabilities of both companies to deliver consulting services to clients in the financial sector.



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Monday, August 11, 2008

Money Laundering Pact is Signed in Asia

India News reports that in an effort to combat money laundering and terror financing, The Bangladesh Bank and Bank Negara Malaysia have signed an agreement to share information on money laundering. Bangladesh has mentioned that it also wants similar agreements with several other countries including India. Research from The World Bank suggests that cross border flow of illegal proceeds ranges between $1 trillion and $1.6 trillion, and that half of this originates from developing and transitional economies. Since Malaysia is believed to be one of the major destinations of money smuggled, it is putting forth an effort to prevent money laundering from occurring.



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Friday, August 8, 2008

Money Launderer gets 12 years in prison

Yesterday, Randolph Speer, former CFO of now bankrupt National Century Financial Enterprises, was sentenced to 12 years in prison for his role in the fraud at the company. This story was reported at CFO.com. He was the CFO from 1999-2002. The co-founder and former vice chairman, Donald Ayers, was sentenced to 15 years in prison. These two as well as three other executives were responsible for laundering $2.9 billion from investors in this healthcare financing company. All were placed in jail in April after a plot to flee the country to Aruba was foiled by prosecutors.



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Thursday, August 7, 2008

Zurich bankers on trial for helping Brazilian tax officials

In Switzerland, the trial for the five Zurich bankers who helped Brazilian tax officials launder $45 million continues. The trial was suspended in June and resumed yesterday according to this article at Business Week. The bankers who were aiding the Brazilian officials are accused of keeping numerous bank accounts for the officials in addition to monitoring large amounts of money that was deposited into the accounts creating a large number of banking transactions. The Brazilians involved were high ranking tax officials in the their government.

The identities of those who aided the tax officials remain secret due to strict Swiss laws. Prosecutors would like to fine the bankers up to $38,000 each for their participation in the money laundering scheme as well as 18 to 30 months of jail time. They would also like for the Swiss government to confiscate the money kept in those bank accounts. There is no date set for the verdict.



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Wednesday, August 6, 2008

One of the Largest Hacking and Identity Theft Case Prosecuted

Believed to be the largest hacking and identity theft case prosecuted by the Department of Justice, 11 people have been charged with: conspiracy, computer intrusion, fraud, and identity theft. This report from the Associated Press states that Attorney General Michael Mukasey, in a prepared statement said:

"They used sophisticated computer hacking techniques, breaching security systems and installing programs that gathered enormous quantities of personal financial data, which they then allegedly sold to others or used themselves. And in total, they caused widespread loses by banks, retailers, and consumers."

Retailers affected include, TJX Cos, BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW. TJX reported that 45.7 million cards numbers could have been possible stolen, while later, some of the banks have said that the number may have been closer to 100 million. Regardless, this resulted in many retailers facing negative publicity.

The report also mentions that countries of the 11 indicted include the U.S., Estonia, Ukraine, China, and Belarus. One of the persons of interest is only known by an online alias, and it has yet to be revealed where they are from.



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Tuesday, August 5, 2008

$1 Trillion Laundered Every Year in India

The Economic Times reports that an audit reported conducted by KPMG shows that over $1 trillion is being laundered every year in India through illegal means which include narcotics trafficking, illegal trade in endangered wildlife, smuggling, corruption, tax evasion, and trade in illegal gems.

A major change for banking, finance, and insurance in the future would be preventing money laundering from occurring. The KPMG reports suggests that India will have to focus primarily on improving its current AML policies and procedures, and its AML controls to reduce illegal money transfers. India has already succumbed to the pressure coming from the United States by joining the Financial Action Task Force, but is this enough?



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Monday, August 4, 2008

Longtop Financial Technologies Develops Anti-Money Laundering System for a Joint Stock Bank in China

This article in Quamnet reports that Longtop Financial Technologies will be providing one of China’s Joint Stock banks with a customized software solution for the bank’s anti-money laundering system.

Longtop Financial Technologies will create a centralized anti-money laundering system to automate screening and reporting of transactions. This system is necessary in order to comply with Chinese banking regulatory.

Weizhou Lian, Chief Executive Officer of Longtop mentions:

“Longtop is an established leader for anti-money laundering solutions in China’s financial IT solutions market with a broad customer base and leading market share. This project further strengthens our market leadership in this mission-critical area of protecting financial institutions and society at large from criminal activities.”



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Friday, August 1, 2008

Securities Fraud Class Action Suits on the Rise

After hitting a 10 year low in 2006 the number of securities fraud class action suits has been continually rising. Industry experts believe that this is a result of the subprime-mortgage losses, in addition to the unpredictability ruling the stock market currently. The International Herald Tribune reported that according to a study conducted by Stanford Law School Securities Class Action Clearinghouse and cornerstone research, half of the suits filed were related to subprime and other credit losses. Cornerstone VP, John Gould, commented that “The numbers are high” adding that “They are approaching the number we saw in 2000 to 2002.” During those years, the explanation for the record setting numbers was as a result of the collapse of Enron. At that time there were 267 stock fraud suits filed just for 2002.



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