Bankrupt Banker

FBI is combing through documents and e-mails related to the collapse of AIG, Fannie Mae, Freddie Mac and Lehman Brothers looking for wrongdoing

FBI is combing through documents and e-mails related to the collapse of AIG, Fannie Mae, Freddie Mac and Lehman Brothers looking for wrongdoing that may have contributed to the credit crisis. Some 500 prosecutions are under way against mortgage brokers and appraisers at the sharp end of the subprime scandal. The top US regulator, the Securities and Exchange Commission (SEC), has ordered more than two dozen hedge funds to hand over trading information as it seeks evidence that short-sellers spread rumours to undermine the companies they had targeted. Two former Bear Stearns bankers, Matthew Tannin and Ralph Cioffi, have been charged with fraud after allegedly misleading investors by painting a rosy picture of their hedge-fund investments. The pair deny the allegations. As with previous scandals, legal experts believe the government is fishing for minnows to use to catch much bigger fish. “Every financial debacle we have had needed a face to it,” said James Cox, law professor at Duke University. “We haven’t put a face on this scandal yet.” But he believes one will be found. “The American psyche needs a culprit. It’s also a good political diversion from the more complicated issues like sorting out regulation.” The big problem with this scandal is that it is so large and complex, and affects so many companies, that it is hard to pin the blame on any one group, let alone an individual. The legal inquiry makes up one of the “three Rs” now being pursued on both sides of the Atlantic by law makers and reformers: retribution, regulation and remuneration. Christopher Cox, the chairman of the SEC, said on Friday that the voluntary supervision programme for Wall Street’s largest investment banks was “fundamentally flawed” and closed it down. Oversight will largely shift to the Federal Reserve, but there are more fundamental moves afoot. Last week the world’s banking watchdogs began devising a new system of regulation for the financial industry at the meeting of the International Conference of Banking Supervisors in Brussels. Underlying their agenda was the creation of a new global super-regulator that could ultimately bring every financial institution around the world under the same set of rules, including hedge funds. “We must have global standards,” said Eugene Ludwig, who spent five years as America’s banking regulator under President Clinton. “You can’t operate these large corporations safely without having similar standards across the globe. You can have one place that has lax standards; everyone then moves there and blows the place up. “Similar businesses of a similar size should be regulated the same way. You can’t put a label on something – call it the hedge-fund industry or the private-equity industry – and say well, you are not regulated because you have put another label on yourself. If you called yourself a merchant bank, you would be regulated heavily. “If you go back to the root of the problem in the American housing market, unregulated mortgage brokers created bad paper - paper that wouldn’t have been so easily created in the regulated industry. The regulated industry, in order to compete, stretched itself out to do similar things. “Those two sides together found a mechanism to pour money into short-term profitable business - and almost brought the house down.” A raft of principles was agreed last week that would force banks to hold larger cushions of cash to see them though troubled times. There were also plans to introduce more regular stress tests for banks, and rules for bonuses and incentives. An overhaul of the American regulatory system will have to wait until after November’s election. But now that there are only two Wall Street investment banks – down from five at the start of the year - any changes adopted in Europe are bound to have a much larger effect on American thinking. In Britain there is confusion over how the Financial Services Authority (FSA), the Treasury and the Bank of England are likely to respond to the crisis. There will be moves to clamp down on executive pay, as threatened by Alistair Darling, along with an “urgent review” by Lord (Adair) Turner, the new chairman of the FSA. Some action has already been taken by Britain’s regulators. In the past few weeks nearly every financial institution in the country has had a questionnaire from the FSA asking basic questions. Is the company’s board sufficiently qualified? Is it made up of people who have sufficient time on their hands to devote to the task? Does the management team have enough experience? Regulators everywhere are concerned about creating too many rules. Nobody wants to cripple the financial sector, only to ensure it operates safely.

FBI is combing through documents and e-mails related to the collapse of AIG, Fannie Mae, Freddie Mac and Lehman Brothers looking for wrongdoing

FBI is combing through documents and e-mails related to the collapse of AIG, Fannie Mae, Freddie Mac and Lehman Brothers looking for wrongdo...

Tom Petters, thrust into the spotlight earlier this week when his business and home were swarmed by federal agents

Twin Cities businessman Tom Petters, thrust into the spotlight earlier this week when his business and home were swarmed by federal agents, is the central figure in what authorities suspect is a multi-billion dollar fraud scheme that lured investors with empty promises, according to documents unsealed Friday in federal court. In a sworn statement used to obtain nine search warrants, authorities said Petters used the capital raised through his equity company, Petters Co. Inc. (PCI), "for his other business ventures and to support his extravagant lifestyle." Petters is chief executive of Petters Group Worldwide, with holdings that include Sun Country Airlines, Petters Warehouse Direct and Polaroid.Petters' attorney, Jon Hopeman, said Friday evening, "Mr. Petters maintains his innocence and intends to fight this if he is charged."Petters declined to comment Friday, but Thursday night he had told a gathering of friends and business associates that the federal investigation was an "unnecessary situation.''The government, however, claims that Petters and a circle of associates played loose and free with investors' money by creating the impression of a successful retail business that bought and sold phantom goods for more than 10 years.One of Petters' associates in the alleged scheme was secretly recorded estimating the fraud could be "in excess of $2 billion," the government affidavit said.The government's allegations are contained in an affidavit prepared by an FBI agent seeking court permission for a series of search warrants. It was unsealed Friday afternoon in St. Paul. Search warrants do not contain charges but rather information to back up the government's request to search and obtain documents that might support their cases.The affidavit reveals that an unidentified "cooperating witness" wore a recording device in meetings with Petters and others this month. According to the government, the witness has agreed to plead guilty to a conspiracy charge and faces up to five years in prison, but hopes to get that reduced in exchange for cooperating.During one of those meetings, Petters indicated that he didn't want to continue having an employee prepare false documents for investors, but added that they must because "he didn't know what choice they have."The government said that the balance sheet for PCI on June 30 showed total current liabilities of $3.5 billion against net accounts receivable of $1.9 billion, a figure that the government witness advised is "substantially less" than actual accounts receivable.On one of the recordings, Petters "talks about fleeing the country and creating fabricated defenses if the fraud scheme is discovered," the government says. Petters also is warned by accountant Jim Wehmhoff that federal tax auditors will be examining Petters' taxes, including his expenses and deductions. Petters responded "by admitting that he cheats on all those items," the affidavit says.According to the government, the scheme to lure investors into investments backed by allegedly phony consumer transactions included Deanna Coleman, PCI's vice president of operations; Robert White, 67, an Excelsior resident and a former PCI officer who is now a consultant; Michael Catain, 52, a Shorewood resident who ran one of the shell companies -- Enchanted Family Buying Co. -- used to facilitate the transactions in question, and Larry Reynolds, 65, of Nationwide International Resources (NIR), a firm with an office in Los Angeles.Coleman, White, Catain, and Reynolds could not be reached for comment Friday night.Phony purchases, sales alleged Petters allegedly solicited investors to PCI by promising that their investment was secured by property, principally retail goods, that were purchased at wholesale from vendors such as NIR and Enchanted and sold to retailers such as Wal-Mart and Sam's Club for a profit.But the purchase orders and the sales orders were phony, the government says.At one point in the investigation, federal agents approached Wal-Mart, the parent of Sam's Club, with PCI purchase orders and was told the orders were "fictitious" and did not have valid purchase order numbers for Wal-Mart Stores or Sam's Club.The wire transfers between PCI's preferred vendors were considerable, according to government calculations. One California bank reported to authorities that $11.6 billion was transferred in and out of an account controlled by NIR between 2003 and 2006.Enchanted, which has an office in an Excelsior car wash, received $35 million in transfers in less than a month this summer and transferred out slightly more than $35 million, mostly to PCI, the government says. Frank Vennes is described in the FBI document as a broker with investors in PCI and other Petters' companies. Petters was recorded saying that Vennes had told him that he was operating "a little paper manufacturing plant," apparently referring to the alleged fraud. Vennes also is quoted as warning Petters and others that if investors send auditors to visit warehouses where the merchandise is located, "the scheme would implode."The FBI noted that Vennes had a money laundering conviction in 1987 and pleaded no contest to a cocaine and weapons charge. He is listed as a board member of Northwestern College in St. Paul, and Minnesota Teen Challenge, a nonprofit drug and alcohol program. He has been listed as CEO of Excelsior-based Metro Gem, but it's unclear if that business still operates.Catain was involved in a large number of businesses. At one point he worked out of Petters' headquarters building at 4400 Baker Road.The two men also were linked when Petters was an investor in Liquid 8 Records, a Minnetonka business that Catain founded. And they apparently were involved in one other limited liability company.Catain, who moved to the Twin Cities from his hometown of Los Angeles in 1996, told the Star Tribune in a 2003 interview that he was transferred here by a liquidation company.He said he got the idea to call his record company Liquid 8 because he was a liquidator and had Liquid 8 as a vanity license plate."When people start record labels, they don't realize you have to have cash flow," Catain said in the interview.In the affidavit unsealed Friday, the FBI agent described Catain's Excelsior business Enchanted as a "sham entity."Among the allegations spelled out in the affidavit is the description of a "joint scheme" by Catain, Petters and White to "use false purchase orders to obtain $20 million from a large commercial lending company."One of the alleged victims of false purchases of electronics goods is the Fidelis Foundation, a Plymouth-based foundation that was acting as an investment agent for Minnesota Teen Challenge."We're speechless," said Rich Scherber, executive director of Minnesota Teen Challenge.Scherber said his organization received money from Vennes, a board member. "We were given money by Mr. Vennes that was put into the Fidelis fund for us," he said. Scherber referred additional questions to Joe Smith at Fidelis. He did not respond to a message left on his voice mail.

Tom Petters, thrust into the spotlight earlier this week when his business and home were swarmed by federal agents

Twin Cities businessman Tom Petters, thrust into the spotlight earlier this week when his business and home were swarmed by federal agents, ...

Kyle Dustin Foggo, a former top CIA official, pleaded guilty Monday of defrauding the U.S. government

Kyle Dustin Foggo, a former top CIA official, pleaded guilty Monday of defrauding the U.S. government for using his influence to steer contracts to his long-time friend. Foggo, 53, the third-highest position in the CIA between 2004 and 2006, entered his plea in a Virginia federal courtroom, related to his dealings with defense contractor and good friend Brent Wilkes. He was accused of helping steer agency contracts to companies run by Wilkes. Foggo resigned in 2006 as executive director of the CIA and was charged in 2007 with fraud and other offenses in the bribery case of convicted U.S. Congressman Randy "Duke" Cunningham. Prosecutors said Foggo and Cunningham helped steer an estimated100 million U.S. dollars in contracts to Wilkes' firms. Cunningham is serving eight years in prison after pleading guilty to taking bribes from defense contractors and evading taxes. Foggo was then indicted in May 2007 on charges involving Wilkes, who is serving 12 years in prison for bribing Cunningham. Foggo faces a maximum of 20 years in federal prison when he is sentenced in January, but prosecutors promise to pursue no more than 37 months in prison.

Kyle Dustin Foggo, a former top CIA official, pleaded guilty Monday of defrauding the U.S. government

Kyle Dustin Foggo, a former top CIA official, pleaded guilty Monday of defrauding the U.S. government for using his influence to steer contr...

Romance sites are among the biggest growth areas for advance-fee fraud crime groups

Romance sites are among the biggest growth areas for advance-fee fraud crime groups, as scammers move beyond spamming millions of email inboxes to find fraud targets. =Detective Hay said people who responded to emails were added to a sucker list that could be accessed by other criminals. "Once they've got the name of a victim and feel they've exploited them for all they can, they will sell the name to other fraudsters." A recent victim of fraud was a 73 year-old pensioner from central Queensland, who lost thousands of dollars in two separate scams. The woman, who did not wish to be named, uses computers daily, but fell victim to an inheritance scam and a fake win of a car in England, where she paid money for the "taxes and the transport" of the vehicle to get it to Australia. She was reluctant to believe she was being scammed and only stopped sending money after the police had spoken to her. "You don't really know if they are or they aren't," "They ask for so much money, you just don't have the money to even pursue it, so you don't really know." Detective Hay has suggested that internet service providers can play a role in protecting internet users against advance fee fraud, using internet protocol blocking. "We'd like to see better IP blocking," Detective Hay said. "For example, if the industry came together and shared their mischief IPs and rogue IPs, they could block them." Or they could decide they were going to block postings from certain countries or locations. "There's ground that can be made that will protect their clients." Communications Minister Stephen Conroy has discussed using ISP-level filtering to block some sites, but Detective Hay said there had been no discussions on blocking fraud sites. "We've had no discussions, even though the issue of IP filtering has been discussed for some time in a variety of forms." Queensland Police say money is increasingly being sent to several countries besides Nigeria, including Britain, the US and Germany. "An examination of 37 case studies showed that for every $1 sent to Nigeria, $1.04 is sent to other countries due to advance fee frauds. "Investigations showed money was sent to 42 different countries, proving the Nigerian fraud scams work through a global network." The Queensland Police Fraud and Corporate Crime Group will host a National Advance Fee Fraud Symposium in Brisbane next month. It will be attended by representatives of the Nigerian Economic Financial Crimes Commission, the US Department of Justice and the US Federal Bureau of Investigations, and the National Police Service of Holland. Detective Hay said Queensland Police had been leading the charge against advance fee fraud but there was strong collaboration with all other states and territories. "One thing I think Australian law enforcement is very good at is recognising the waste of time and resources reinventing the wheel," he said. "We might be leading the cause in respect of this, but then you'll have NSW leading the way in another area, and you'll have Victoria leading the way in another. We're very efficient and good at sharing information and strategies."

Romance sites are among the biggest growth areas for advance-fee fraud crime groups

Romance sites are among the biggest growth areas for advance-fee fraud crime groups, as scammers move beyond spamming millions of email inbo...

John Ford is a member of a politically prominent family in Memphis and was once one of the most powerful lawmakers sentenced on two counts

John Ford of Memphis is already serving a 5 1/2-year federal sentence for a separate conviction of taking bribes from undercover FBI agents....

Michael Fresnel, co-founder of OctaFuel New Zealand that on-demand hydrogen technology is a fraud

Hydrogen On Demand Fuel Saving Devices A Fraud: Octafuel New Zealand. OctaFuel New Zealand - a Hamilton based business that has spent considerable resources on the development of on-demand hydrogen generators - believes the technology is a fraud, and advises New Zealanders to avoid spending money online buying on-board hydrogen generators and instruction manuals on how to build them. Says Michael Fresnel, Co-Founder, OctaFuel New Zealand: "There are a number of international studies supporting the on-demand hydrogen generator technology - and because of these studies OctaFuel felt that the technology was genuine, despite the critics. It came as a shock to discover that the technology did not save fuel." Michael Fresnel, co-founder of OctaFuel New Zealand, made the fraud admission in a statement today, two days before a Hamilton motoring writer, Eric Otoka, was planning to disclose results of his trial of the OctaFuel hydrogen fuel system designed to reduce petrol consumption.Otoka was going to go public in his Loose Nut column in Waikato Times motoring section on Thursday, and say his trial found the generators did not work.But Mr Fresnel said today his company now "believes the technology is a fraud, and advises New Zealanders to avoid spending money online buying on-board hydrogen generators and instruction manuals on how to build them". He said OctaFuel had been persuaded the technology was genuine because of a number of international studies supporting it"It came as a shock to discover that the technology did not save fuel," he said. "No one likes getting the wool pulled over their eyes."The experience had been humbling, but going public was the right thing to do, "despite the embarrassment factor", he said.OctaFuel spent three months work and about $100,000 on the development of an on-demand hydrogen unit, contracting a mechanical engineer with more than 25 years' experience and a reputable electronics company to undertake the research, development and manufacture of the technology.The OctaFuel equipment was professionally installed by mechanics and the unit was trialled in two customers' vehicles and by OctaFuel, Mr Fresnel said. In addition to its own research and development, OctaFuel accepted participation in a Waikato Times trial over a five-week period, during which OctaFuel continued its own trials."OctaFuel's team of advisors were not sure the product had been tested thoroughly enough in-house, but the feedback seemed positive, with reports of between 20 per cent and 25 per cent fuel savings, so the decision was made to proceed with a public trial," he said.But later installations in a number of customers' vehicles and the Waikato Times trials "showed that on-demand hydrogen technology is a fraud". Mr Fresnel said the company would continue exploring hydrogen as a primary fuel for motor vehicles, including reforming of methane from rubbish dumps to hydrogen gas, which can be used to fuel cars.

Michael Fresnel, co-founder of OctaFuel New Zealand that on-demand hydrogen technology is a fraud

Hydrogen On Demand Fuel Saving Devices A Fraud: Octafuel New Zealand. OctaFuel New Zealand - a Hamilton based business that has spent consid...

Alberto W. Vilar described in court as a lying fraudster who finagled money out of clients.

Alberto W. Vilar, the opera lover and disgraced patron of the arts, took center stage in a federal courtroom on Monday, when his trial for securities fraud opened with a prosecutor describing him as a lying fraudster who finagled money out of clients. Lawyers for Alberto W. Vilar said he made millions of dollars for his clients and that he returned "every penny" to them. Defense lawyers gave a contrasting view, portraying him as a top-rated investment adviser who made millions for big pension funds and individuals and returned “every penny” to his clients.An assistant United States attorney, Benjamin A. Naftalis, repeatedly used the words lie and steal to describe Mr. Vilar’s dealings with clients, and said that Mr. Vilar and his business partner had even had an employee use scissors and Scotch tape to attach a client’s signature to an order transferring $250,000 from her account. Mr. Vilar, 67, and the partner, Gary A. Tanaka, 65, are charged with conspiracy and securities fraud, investment adviser fraud, mail fraud, wire fraud and money laundering while handling funds of clients of their firm, Amerindo Investment Advisors, from 1986 to 2005.They were arrested in May 2005. Mr. Vilar had already made headlines for failing to provide millions of dollars in promised donations to the Metropolitan Opera, the Los Angeles Opera, the Washington National Opera and other organizations. Nevertheless, he ranks as one of the culture world’s major donors for the millions he did give. With his trial finally under way in Federal District Court in Manhattan, Mr. Vilar, wearing a brown suit, sat expressionless during the session, occasionally making notes.Mr. Vilar and Mr. Tanaka “repeatedly lied to their clients about how they would invest their money,” Mr. Naftalis said. One scheme involved instruments called Guaranteed Fixed Rate Deposit Accounts, which he offered to clients.“He told them to their face their money would be safe and guaranteed,” Mr. Naftalis said, calling that an “absolute sham.” The money instead was put in risky technology stocks that ultimately lost most of their value, he said. Mr. Vilar never made that clear, Mr. Naftalis added. The prosecutor also outlined the indictment’s charge that Mr. Vilar diverted $5 million in 2002 from one of his first clients, Lily Cates, for personal and business expenses, including fulfillment of a $500,000 pledge to his alma mater, Washington and Jefferson College. About $3 million went to pay back another investor, he said. Mr. Vilar told none of this to Ms. Cates, Mr. Naftalis said, adding, “That’s crime. That’s fraud.” The $5 million was supposed to be for a new small-business investment fund. Mr. Vilar proposed the deal to Ms. Cates at his luxury apartment on United Nations Plaza knowing he did not have government approval for the fund, Mr. Naftalis said. “He looked her right in the eye, and he lied to her,” the prosecutor added. Ms. Cates, the mother of the actress Phoebe Cates, was a close friend of Mr. Vilar’s. In 2003, the prosecutor said, the defendants stole $250,000 from her by diverting the money from one of her accounts to a personal account of Mr. Vilar’s. “This time they did it with a pair of scissors and a roll of Scotch tape,” Mr. Naftalis said. Mr. Tanaka’s assistant in London did the cutting and pasting, he charged.

Alberto W. Vilar described in court as a lying fraudster who finagled money out of clients.

Alberto W. Vilar, the opera lover and disgraced patron of the arts, took center stage in a federal courtroom on Monday, when his trial for s...

UK have been raking in a fortune recently by sneakily increasing the interest rates on agreed overdrafts on customers’ bank accounts.

According to a recent report banks in the UK have been raking in a fortune recently by sneakily increasing the interest rates on agreed over...

Rumours about ICICI Bank’s exposure to some troubled global firms has led to intense short-selling of the bank’s stock in the market

Capital market watchdog Securities and Exchange Board of India, or Sebi, is keeping a close watch on the sharp fall in the share price of India’s largest private sector lender ICICI Bank Ltd. Rumours about ICICI Bank’s exposure to some troubled global firms has led to intense short-selling of the bank’s stock in the market by institutional investors. Short-selling is a technique used by investors who try to make profit from the falling price of a stock. Big fall: ICICI Bank Towers, in Mumbai. Bank shares have fallen 60% this year, eroding market cap by Rs82,222 crore. Prashanth Vishwanathan / BloombergThe stock dropped 12% to close below Rs500 on Monday’s trade at the Bombay Stock Exchange on rumours of ICICI Bank’s exposure to distressed US lenders Wachovia Corp. andWashington Mutual Inc., which could lead to rise in the bank’s mark-to-market, or MTM, provisioning. The stock has lost 22% in past one week. A senior Sebi official, who did not wish to be identified, said ICICI Bank is investigating the matter and is expected to submit a report. “If rumours are found to be spread by a competitor or any other entity with a malicious intent, they can be punished by Sebi under the current rules,” he said. Sebi, however, has no plan to ban short-selling in financial stocks, in line with market regulators in the UK and US, the executive said. ICICI Bank’s shares have lost about 60% this year, eroding its market capitalization by Rs82,222 crore. The bank’s shares had reached a record Rs1,465 in mid-January. The private sector lender is largely owned by foreign institutional investors. Foreign funds which hold more than 1% stake in ICICI Bank include Allamanda Investments Pte Ltd, Merrill Lynch Capital Markets Espana, Government of Singapore, CLSA Mauritius Ltd, Growth Funds of America Inc., Dodge and Cox International Stock Fund and FID Funds Mauritius. The bank in a statement said “ICICI Bank UK Plc. has no exposure to US subprime. About 98% of the ICICI Bank UK Plc.’s non-India investment book of $3.5billion is rated investment grade and above by Standard and Poor’s, Moody’s and Fitch. Above 89% is rated A- and above by Standard and Poor’s, Moody’s and Fitch.’’

Rumours about ICICI Bank’s exposure to some troubled global firms has led to intense short-selling of the bank’s stock in the market

Capital market watchdog Securities and Exchange Board of India, or Sebi, is keeping a close watch on the sharp fall in the share price of In...

$20 million taken bank accounts in Qatar as well as in the United Arab Emirates were raided by a group of people who specialised in robbing banks

banks in Qatar have taken tough measures to foil any attempt by fraudsters to access from their customer's accounts, a Qatari banker stated. This step was taken after rumours that some bank accounts in Qatar as well as in the United Arab Emirates were raided by a group of people who specialised in robbing banks through decoding Automated Teller Machines (ATM) cards. A bank source told Al Sharq that several accounts in the Qatari banks have suffered from the same, adding that Qatar Central Bank was coordinating with local banks to develop preventive measures against any suspicious operations. Abdul Rahman Al Meer, Head of Retail Banking at Doha Bank, said, "Banks in Qatar are now taking strict measures to foil such attempts. At Doha Bank, we have created an operation centre to oversee transactions done through ATM cards." "The centre is located at the Salwa Road branch. The task is to contact the holder of the ATM card immediately when any suspicious transaction occurs," Al Meer said. He added that the centre will be working round-the-clock in order to ensure that all ATM card transactions taking place are genuine. Al Meer, however, put the blame on customers for not informing the banks immediately when such cases occur. "Victims of burglary attempts should inform their banks without any delay." "Doha Bank has an investigation committee that looks into any theft case with regard to customer accounts. The committee returns the stolen amount immediately to the customer who is a victim," he said. There is an organised group of people that target banks in GCC countries. Members of these groups are based in various countries including Russia, Ukraine, Canada and Philippine. These gangs work hard to develop systems that hack into bank accounts and decode the ATM cards. According to crime statistics released by the FBI, there were 1,542 robberies, burglaries and larcenies at banks, S&Ls and credit unions between July 1 and September 30, 2007. Thieves escaped with money in 92 percent of cases. Of nearly $20 million taken, some or all of the money was recovered in 20 percent of the incidents, totaling to $2.2m. Four hundred incidents involved firearms, 750 incidents occurred in metro areas and 565 incidents were prevalent in small towns. 225 incidents took place in the suburbs and 38 in rural areas.

$20 million taken bank accounts in Qatar as well as in the United Arab Emirates were raided by a group of people who specialised in robbing banks

banks in Qatar have taken tough measures to foil any attempt by fraudsters to access from their customer's accounts, a Qatari banker sta...

fake £1 coins has doubled in five years to 30 million – about one in 50 – because of counterfeiting by organised crime gangs.

"It is a criminal offence to make or use counterfeited coins. Anyone who suspects they have a counterfeited coin should not attempt to spend it."Under the 1981 Forgery and Counterfeiting Act, forging coins carries a prison sentence of up to 10 years.fake £1 coins has doubled in five years to 30 million – about one in 50 – because of counterfeiting by organised crime gangs.Random sampling tests by the Royal Mint revealed that approximately 2 per cent of £1 coins are bogus, up from 1 per cent in 2003 and the highest level of forgeries in the denomination's 25-year existence. Only careful examination reveals the true origins of the coins, which are spent freely (and illegally) in shops, pubs and restaurants.Police have caught several forgers in recent years, but a former Royal Mint executive, Robert Matthews, believes the architects of the fraud are at large. "There is organised crime involved," said Mr Matthews, who retired as the Queen's Assay Master (tester of coinage and bullion) four years ago. "The police have done well to catch these mints but they have only caught the people operating the machinery. Who is behind this is another matter."Italy and eastern Europe are believed to be two sources of blank coins, or dies, which are "headed and tailed" by lower-level counterfeiters in the UK, Mr Matthews said.The counterfeiters mimic the nickel-brass compound used by the Royal Mint, but sometimes add lead so that levels of electro-conductivity are accepted by vending machines. The coins are thought to cost around 20p each to make and sold on for about 70p, netting the counterfeiters up to £2m a year. In a rare police success, an engineer, Marcus Glindon, was jailed for five years in December 2007 after detectives discovered coin-making machinery in his workshop at an industrial estate in Enfield, north London.Despite making up to £300,000, Glindon showed little sign of wealth, and his accomplices, whom he named as "Tom" and "John", were not caught.Glindon, 37, claimed that he was "relieved" he had been caught. At the time of his conviction at Wood Green Crown Court in December 2007, Dan Roberts, of the Metropolitan Police's major crimes unit, said detectives had uncovered a "nationwide criminal network" and put a substantial dent into the illegal production of the coins.The Royal Mint and police are under pressure to act following the example of South Africa's five-rand coin. In 2004, South Africans started refusing to accept it because of the number of counterfeits. Eventually the coin had to be redesigned and recirculated.The Royal Mint appears sanguine about the level of counterfeiting. It said: "We track the counterfeit rate through regular surveys. The survey consists of taking a random sample of coins from across the country and subjecting them to individual analytical inspection.

fake £1 coins has doubled in five years to 30 million – about one in 50 – because of counterfeiting by organised crime gangs.

"It is a criminal offence to make or use counterfeited coins. Anyone who suspects they have a counterfeited coin should not attempt to ...

Tax demand for John Noonan after a company with which he was thought to be connected was linked to Martin Hyland

Tax demand for John Noonan after a company with which he was thought to be connected was linked to Martin Hyland, a drug dealer shot dead in Dublin almost two years ago. Noonan is disputing the tax bill, one of the largest ever served by the bureau, as excessive and unfair. “I don’t wish to discuss the case as it is ongoing and is under appeal,” he said last week. “I have been issued with a tax demand but I don’t want to say anything more until everything has been agreed and signed off. I'll have no problem answering any questions when the case is over.” Noonan is one of several former republicans targeted by the CAB, which was established in 1996 to seize the proceeds of crime and terrorism. He was the adjutant officer of the Provisional IRA’s Dublin brigade for most of the 1980s. He was convicted of firearms offences in the 1970s and jailed for five years. He stood for Sinn Fein in the European elections in 1984 and was a prominent anti-drugs activist throughout the 1980s and 1990s. The bureau began investigating his wealth in 2006 when it linked him to Hyland, who was murdered by members of his own gang as he slept in a house in Finglas. Noonan had been monitored meeting Hyland by undercover gardai some weeks previously. Bureau officials raided his home in February 2007 after the publication of an interview he gave to Hot Press, a music magazine, to promote his autobiography, What Do I Do Now? In the interview, Noonan said rumours of a CAB investigation into his finances were unfounded and claimed to run a licensed security company. The bureau later raided his home in Fettercairn, Tallaght, and a number of other premises in Dublin. He is said to have presented himself to CAB on the day of the raids and offered to reach a settlement without a legal confrontation. He admitted to owning assets in Wexford and Dublin, and apartments and a villa in Torrevieja on the Costa Blanca, Spain. His property portfolio was estimated to be worth about €1.5m, although the value has fallen because of the recession. Noonan denied any financial links to Hyland, but admitted to meeting him several times to get information for a crime thriller he planned to publish. In meetings with the bureau, Noonan is thought to have given details of the IRA’s money-laundering operations in Dublin in the 1980s, according to a former IRA member familiar with his activities. He said: “No one knows for sure where he got his money from, but it didn’t come from the IRA.” Noonan claims his wealth comes from working in the security industry and by providing security to film production companies.

Tax demand for John Noonan after a company with which he was thought to be connected was linked to Martin Hyland

Tax demand for John Noonan after a company with which he was thought to be connected was linked to Martin Hyland, a drug dealer shot dead in...

Clive Everton Saunders used this money to fund the building of a million pound mansion in Staffordshire, purchases of many high value vehicles

Craig Johnson was the seventh member of a criminal gang to be jailed in connection with a £68 million VAT fraud, following an investigation by HM Revenue & Customs (HMRC). In June 2006, six men were sentenced to a total of 51 years for defrauding HMRC by means of a complicated fraud involving the non-payment of VAT on mobile telephones. Some sentences are running concurrently meaning a combined total of 39 years in jail for the six men. Known as 'missing trader' or carousel fraud, the scam exploits the EU VAT system in which VAT is not charged on the sale of goods between VAT registered companies in different EU member states. The subsequent sale of goods in the UK created a VAT liability due from companies that 'disappeared'. These companies are known as 'missing traders'. Craig Johnson's role was to launder the proceeds of the 'missing trader' fraud. He received in excess of £6 million of laundered funds in the form of racehorses, business assets, high value vehicles and property. The funds had come from accounts in Hong Kong, into which the proceeds of the missing traders' transactions - usually the stolen VAT - had been transferred. Chris Harrison, Deputy Director of Operations, Criminal Investigation, for HMRC said: "Tackling 'missing trader' fraud is one of HMRC's top priorities. It is theft of essential public revenue by organised criminal gangs, and is a Europe-wide problem. We are committed to pursuing those involved no matter how complex the crime and no matter where in the world the money trails take us. We will also actively pursue confiscation proceedings in order to strip the guilty of their assets, illegally derived from the proceeds of these frauds. The sentences being handed down demonstrate the gravity with which the courts view this crime." He added: "We would particularly like to acknowledge the excellent support we have received from Staffordshire Police and West Midlands Police in bringing this case successfully to conclusion." The fraud began with a company called Crownlink Networks Limited, which was registered for VAT by the company director Charles Hackney, who ran the company with his son in law Michael West. In the course of two months in 2001, £27 million pounds worth of mobile telephones were bought and sold by their company. Hackney and West were sentenced to five and four years in prison respectively. Another missing trader called Gyraland UK Limited was run by Phillip Hague of Stoke on Trent, Staffordshire. In January and February 2002, his Bristol-based company sold £7 million worth of mobile telephones. Hague was sentenced to five years in prison. Clive Everton Saunders of Uttoxeter, Staffordshire, had previously been involved in violent crime and ran a security company which provided doormen to pubs and clubs in the North Staffordshire area. At the time of the trial Saunders was serving five years in prison for violent affray in which a man was shot outside a busy restaurant in Stoke-on-Trent. Saunders used his security business to recruit willing 'front men' for missing traders including Hackney and West along with his right hand man, ex soldier Craig Jones, who effectively controlled the companies ensuring that the money passed through the bank accounts. For this he received high value vehicles and property abroad. After forensic evidence led to Jones being charged with being involved in the fraud, he approached the authorities and gave evidence in court against his co-accused. Taking this into account HHJ Orme sentenced Jones to five years in prison. Enquiries abroad established a web of accounts into which proceeds of the fraud were paid. Saunders' bookkeeper David Routledge funnelled hundreds of thousands of pounds through his bank accounts to Saunders' accounts in Hong Kong, Switzerland and Spain. Saunders used this money to fund the building of a million pound mansion in Staffordshire, purchases of many high value vehicles including Ferraris and Bentleys and a helicopter that he kept on a helipad in the grounds of his property. He also owned a Spanish villa, a boat moored on the Costa Blanca and several Rolex watches. David Routledge pleaded guilty to his involvement part way through the trial and was sentenced to seven years in prison for Cheating the Revenue and five years for money laundering to be served concurrently. Saunders was found guilty on two counts of cheating the public revenue and was sentenced to eleven and nine years imprisonment also to be served concurrently. Assets to the value of £6 million have been seized under the Criminal Justice Act 1988 - including 4.5 million in a related investigation (Operation Emersed). Confiscation Orders are being secured to reclaim this money for the public purse. These assets comprise of a helicopter, a yacht, two properties including Meaford Hall, Stoke, performance vehicles - a Ducati, Aston Martin, Ferrari and two Bentleys, Rolex watches and diamonds. Matthew Wagstaff, Head of the Commercial Division of Revenue & Customs Prosecution Office (RCPO) said: "Missing Trader prosecutions are the most challenging area of RCPO's casework. This case was particularly challenging to prosecute because of the large number of trading companies and defendants - their complex web of associations and activities were difficult to unravel and present to the jury. RCPO are pleased to have secured such a high number of convictions in the face of these difficulties and will build on these successes in future prosecutions.

Clive Everton Saunders used this money to fund the building of a million pound mansion in Staffordshire, purchases of many high value vehicles

Craig Johnson was the seventh member of a criminal gang to be jailed in connection with a £68 million VAT fraud, following an investigation ...

Garret Griffith Gililland III described in the indictment as "an unlicensed mortgage broker," fled before he could be arrested

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9ujZ04asnqBONZRdQsc_pjGuFFwphkInF6BpHYQIKAFXG6QBCdlZz9RmRPU2GzDfsiZUcrawLev6POxorgiB2fMs34cOEKQ-oXVAGZAzyMI82InuJtycl6-kvLPGdyO5c-7Tl0H4kgN-6/s1600-h/gililland.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5250083841797287682" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9ujZ04asnqBONZRdQsc_pjGuFFwphkInF6BpHYQIKAFXG6QBCdlZz9RmRPU2GzDfsiZUcrawLev6POxorgiB2fMs34cOEKQ-oXVAGZAzyMI82InuJtycl6-kvLPGdyO5c-7Tl0H4kgN-6/s400/gililland.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;" /></a> Garret Griffith Gililland III was indicted by a federal grand jury in Sacramento Aug. 14 on three counts of making false statements on loan applications and one count of engaging in a monetary transaction with cash derived from unlawful activity. But the 27-year-old Gililland, described in the indictment as "an unlicensed mortgage broker," fled before he could be arrested, authorities said.He is described by authorities as approximately 6-feet, 2-inches tall, 220 pounds, dark blond hair, green eyes, and an athletic build with a number of tattoos.Federal agents said they believe he has ties to Loomis Wealth Solutions, a Roseville-based company with offices in Illinois and the state of Washington, which holds itself out as a financial planner that has "figured out a way to help you accumulate cash." The organization offers to help those who buy membership in one of its plans locate and buy properties that will yield rental income. "Our members receive an average of $340 (a month) in rental income for properties they have acquired in 2008," its Web site boasts. The Web site scam.com, however, features postings by people who claim they have lost money dealing with Loomis.Internal Revenue Service and FBI agents raided Loomis' Roseville office Aug. 26 and carted away 204 boxes of records, plus an array of computers and related equipment.At the same time, agents raided the Granite Bay home of the company's head, Lawrence Leland "Lee" Loomis, and seized business and personal records. That same evening, an FBI agent and an IRS agent approached the 51-year-old Loomis at the Sacramento International Airport and seized his laptop computer, canceled checks and various types of paperwork. The next morning, an IRS agent seized more than $461,000 from two Loomis-related bank accounts.Later that day, the California Department of Corporations issued desist and refrain orders against Loomis, Wealth Solutions and two affiliated entities.The order aimed at Loomis and Wealth Solutions says they have been offering and selling securities in the form of plan memberships that anticipate members purchasing property, "and then allowing Loomis and Loomis Wealth Solutions Inc. to control the property. The member is promised a monthly return plus half the sale price when the property is sold."Loomis and his company "were engaged in unlicensed broker-dealer activity," the securities had not been qualified under state law, and Loomis had been acting as an investment adviser without required authorization, the order states."Loomis Wealth Solutions will shortly be making a motion for the return of the funds and property that were seized," Malcom Segal, the company's attorney told The Bee in an interview."The government has declined to restore the money to the accounts and has refused to return the computer records and documents that would allow the company to function," he said."Hopefully, the government will eventually determine that this was an appropriate business methodology and terminate its investigation," Segal said.Loomis attorney Patrick Hanly was even more explicit. "The government won't even tell us what it is Mr. Loomis is supposed to have done wrong," Hanly said. "We're confident that, once all the facts come out, he will be shown not to have done anything wrong."Federal officials in Sacramento said the case is larger in scope than the Charles Head case.In March, Charles Head, 33, of La Habra was indicted as the alleged ringleader in a massive mortgage fraud case that investigators said preyed on people close to foreclosure and stripped homeowners in two dozen states of millions of dollars in equity. Indictments also were issued against 18 other people, according to court records.

Garret Griffith Gililland III described in the indictment as "an unlicensed mortgage broker," fled before he could be arrested

Garret Griffith Gililland III was indicted by a federal grand jury in Sacramento Aug. 14 on three counts of making false statements on loan ...

American International Group Inc. shareholders lost as much as $1.4 billion because of a fraud that led to the convictions of five insurance executive

American International Group Inc. shareholders lost as much as $1.4 billion because of a fraud that led to the convictions of five insurance executives, U.S. prosecutors told a judge. U.S. District Judge Christopher Droney may sentence four former General Reinsurance Corp. executives, including ex-Chief Executive Officer Ronald Ferguson, and a former AIG manager to life in prison if he agrees with the estimate. Droney began a sentencing hearing today for the ex-executives, who were convicted in February of fraud and conspiracy charges. Defense attorneys say AIG investors lost no money in the fraud. A federal jury in Hartford, Connecticut, found in February that the former executives used a sham transaction in 2000 to help AIG add $500 million in loss reserves, a key indicator of an insurer's health. AIG shares fell between 6 and 15 percent in early 2005 when media and company disclosures began revealing the inflated loss reserves, prosecutors said today. This 6 to 15 percent stock drop represented the deflation of the stock that was previously inflated by the lies'' about the loss reserves, Assistant U.S. Attorney Raymond Patricco argued. ``The defendants have not offered any plausible alternative explanation for why AIG's stock price dropped.'' The loss amount will help determine the sentences. Any loss larger than $400 million exposes the defendants to a possible life term under advisory sentencing guidelines. Prosecutors say the fraud led to investor losses of between $543 million and $1.4 billion. Droney didn't rule today on the size of the loss, or set specific sentencing dates for the five defendants.

American International Group Inc. shareholders lost as much as $1.4 billion because of a fraud that led to the convictions of five insurance executive

American International Group Inc. shareholders lost as much as $1.4 billion because of a fraud that led to the convictions of five insurance...

Former Qantas flight attendant and callgirl Lisa Robertsonmade breached obligations as a bankrupt by disposing of and concealing property

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijmJcr6g9DzEeu5YIVduCRquH-NuSs5TaYjy74ezMCZqvSwsIyxuVJHjardO9rZP1X2MQAJtpWleLrl0kdbfgLtAr0f-srWMHwNyuD4JNO5HN2DstuVXtyC6fdXXZi6GRjg9esTmM8JTbM/s1600-h/lisarobertso.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5250081355200430754" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijmJcr6g9DzEeu5YIVduCRquH-NuSs5TaYjy74ezMCZqvSwsIyxuVJHjardO9rZP1X2MQAJtpWleLrl0kdbfgLtAr0f-srWMHwNyuD4JNO5HN2DstuVXtyC6fdXXZi6GRjg9esTmM8JTbM/s400/lisarobertso.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;" /></a> former Qantas flight attendant and callgirl Lisa Robertsonmade international headlines last year when she was sacked by the airline for having sex with film star Ralph Fiennes in the toilet on a flight from Darwin to India. It was later revealed she also moonlighted as a high-class prostitute, earning up to $2000 a night at a Sydney brothel. Ms Robertson, who is also a former NSW police officer, declared bankruptcy in 2004, while living in north Queensland. Early yesterday, officers from the Federal Government's Insolvency and Trustee Service Australia raided her St Kilda unit. Accompanied by detectives from the St Kilda criminal investigation unit, the investigators seized more than $8000 in cash, a laptop computer and other items. ITSA fraud investigations chief Jeff Hanley said the raid followed a probe into allegations that Ms Robertson had breached her obligations as a bankrupt by disposing of and concealing property from her bankruptcy trustee. She allegedly had tried to travel overseas last year without the consent of the trustee. Her bankruptcy last year was extended until 2012, after her trustee formally objected to her release. The investigation is believed to centre on "tell-all" media deals struck by Ms Robertson following her tryst with Fiennes, including an appearance on 60 Minutes.

Former Qantas flight attendant and callgirl Lisa Robertsonmade breached obligations as a bankrupt by disposing of and concealing property

former Qantas flight attendant and callgirl Lisa Robertsonmade international headlines last year when she was sacked by the airline for havi...

Frank Ignacio Urbano, Luz Belem Corral, Kevin Allen DeRosier and Marwan Abdellatif are each charged with multiple felony counts of forgery

Four ex-managers of an Orange County auto dealership allegedly inflated used car values using "phantom upgrades" to defraud custom...

Alberto W. Vilar a high-flying investor who rode the technology-stock bubble arrested on charges of defrauding clients of his firm

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJMssFitoXUe8Ys_X3tI5z-UsNagKCZalBrAxOoDu_WKWBOkbaG1vNbKUNq8S5ies3mMiUZQpV4GqHjq8w3dxyAzovjWZCYP41KJJZhHyb-r8wH-RMgHrkP5TFhfHgBKZgb3QRc6J3o0Dl/s1600-h/aa06give.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5249295054460357442" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJMssFitoXUe8Ys_X3tI5z-UsNagKCZalBrAxOoDu_WKWBOkbaG1vNbKUNq8S5ies3mMiUZQpV4GqHjq8w3dxyAzovjWZCYP41KJJZhHyb-r8wH-RMgHrkP5TFhfHgBKZgb3QRc6J3o0Dl/s320/aa06give.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;" /></a> Alberto W. Vilar a high-flying investor who rode the technology-stock bubble and spread his largess throughout the cultural world, Mr. Vilar tumbled off the stage on May 26, 2005, when he was arrested on charges of defrauding clients of his firm, Amerindo Investment Advisors. With his trial opening on Monday — the same day his beloved Metropolitan Opera starts its season — Mr. Vilar sounds defiant about his legal troubles and still boastful about his past financial success. He is angry at prosecutors and the news coverage and disillusioned about those he once counted as friends.“I’ve been fighting some charges I think are preposterous, and thank God they’re going to trial soon,” Mr. Vilar, 67, said, speaking slowly and quietly. The strict conditions of his $10 million bail have been eased. “But I don’t lead a very normal life,” he said, “with the brutality of the criminal justice system on my back.”Mr. Vilar had already suffered a fall from grace before his arrest, when arts institutions disclosed that he had failed to keep up with his pledges. The Metropolitan Opera — to which he promised $20 million but, by his own admission, gave half of that — took his name off its grand tier; the Royal Opera at Covent Garden in London removed “Vilar” from its Floral Hall; the Salzburg Festival took his picture out of its programs.Now the United States government will lay out the full extent of its allegations. Jury selection starts on Monday, with opening arguments on Thursday before Judge Richard J. Sullivan in United States District Court in Manhattan. The trial is expected to last seven weeks. Mr. Vilar’s business partner, Gary A. Tanaka, will also go on trial. “He looks forward to this long-awaited day in court and his opportunity to vindicate himself and his name,” said Mr. Tanaka’s lawyer, Glenn C. Colton.The 12-count indictment alleges conspiracy to commit securities fraud, investment adviser fraud, mail fraud, wire fraud and money laundering. The combined prison terms would amount to more than 150 years. In interviews several days before the trial, Mr. Vilar said a dispute with a client was trumped up into a criminal matter. He denounced prosecutors for saying early during the highly publicized case that $5 million in allegedly stolen money was the “tip of the iceberg.” “You know what’s missing?” he said. “Zero. The government is saying, ‘None of your clients lost a penny, and you’ve got to go to jail for the rest of your life.’ ”Mr. Vilar blamed his high-profile philanthropy for the prosecution. “If I had been another guy who said, ‘Gee, put another Picasso on the wall,’ they probably wouldn’t have bothered me,” he said. The United States attorney’s office declined to comment, but government documents allege $17 million has gone missing.Mr. Vilar also finds it painful, he said, that the board members and cultural officials who benefited from his patronage have abandoned him. “The notion of presumed innocence doesn’t exist,” he added. “I’m disappointed to say that 99-point-X percent of people I knew haven’t had the decency to pick up the telephone and say anything, like, ‘My prayers are with you.’ ” Even members of his small family have turned their backs on him, Mr. Vilar said. He said he spends most of his time alone in his 25th-floor apartment overlooking the East River and the United Nations, surrounded by the trappings of a cultural life. Legal documents and binders covering glass tables and the floor are the anomaly in his 5,500-square-foot living room, with its gold brocade drapes, marble floor, paintings and sculptures, and well-tuned Steinway baby grand piano. A larger-than-life-size bronze statue of the child Mozart has pride of place. A reproduction of the Met chandelier hangs from the ceiling. A framed newspaper photograph showing Mr. Vilar in his old seat at the Met, A-101, sits on a side table. Recordings of the tenors Rolando Villazón and Fritz Wunderlich lie nestled in a CD player tray. His life is a far cry from what it was in the mid-1990s, when he rode the market boom, especially in technology stocks. His funds soared in value, and the profits rolled in. Mr. Vilar’s investment firm was managing $9 billion, and his wealth at one point was valued at a near $1 billion. “We were the first investors in probably 15 household tech companies that made it,” he said.As his fortune grew, Mr. Vilar embarked on a giving spree, pledging some $200 million in all to arts and other institutions. He was not shy about announcing his largess, often demanding naming rights for the projects he financed, even suggesting that he be recognized onstage at the Met. Some acquaintances cited a craving for attention and legitimacy; Mr. Vilar said he was trying to set an example for potential donors. 1 2

Alberto W. Vilar a high-flying investor who rode the technology-stock bubble arrested on charges of defrauding clients of his firm

Alberto W. Vilar a high-flying investor who rode the technology-stock bubble and spread his largess throughout the cultural world, Mr. Vilar...

WaMu's $310 billion in assets, its diverse loan portfolio, its large base of depositors and conservative risk management

WaMu, America's largest savings and loan, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since 2007.Of the 22 homes sold in that period, at least six have become problems for WaMu: Four were foreclosed, one received a notice of default and another was listed for sale at a $260,000 loss. Total value of WaMu's mortgages on the troubled properties: $2.7 million.The Seattle-based thrift's lending practices resembled those of many other institutions that have run into trouble. They all offered complex adjustable-rate and subprime mortgages, approving many with limited scrutiny. WaMu's $310 billion in assets, its diverse loan portfolio, its large base of depositors and conservative risk management were supposed to protect the thrift from collapse. Now it appears to be the next domino in the row.WaMu said it is investigating the Soni deals as part of a fraud scheme and maintained that those loans are not a symptom of larger problems."We have extensive controls in place to protect the integrity of our portfolio and loan processes," spokeswoman Sara Gaugl said. "We are continually enhancing our efforts to identify and prevent any potential illegal activity."But lending analysts said the Soni case raises questions about standards at WaMu, which could face a federal takeover if it can't find a new source of credit. The distressed properties would then belong to the taxpayers."This is a quality-control problem," said Paul Leonard of the Center for Responsible Lending's California office. "It certainly is curious WaMu's fraud-detection system didn't pick this up. It looks very bad and it is bad. The question is how widespread it is."Leonard and others said the Sonis' deals probably escaped notice because WaMu, like many other lenders: Allowed financing of property flips that occur less than 90 days after purchase. The Federal Housing Administration banned financing 90-day flips in 2006. It also required a second appraisal for homes sold at a 100 percent gain less than 180 days after purchase. Relied heavily on imperfect fraud-detection software. Computers are good at flagging things like unrealistic income statements but can be deceived by determined insiders. Did not check criminal backgrounds. The Sonis had been convicted in 2003 of numerous felonies for a real-estate-fraud scheme. WaMu checks criminal backgrounds of loan originators, such as outside mortgage brokers, but not borrowers. Last month, District Attorney investigators raided the family's homes and business offices."Unfortunately, we are back looking at these characters again," said Doug Brannan, the deputy Orange County District attorney who prosecuted the Sonis in 2003. WaMu declined to answer questions about the Soni case."This is an active investigation and we are fully cooperating with local law enforcement regarding this matter," Gaugl said.The Soni family's transactions with WaMu indicate it continued making risky loans long after its underwriting standards were supposedly tightened in mid-2007, said James Barth, a senior finance fellow at the Milken Institute in Santa Monica."Lending institutions had an obligation to do due diligence to make sure the borrower can repay the loan, especially in 2007 and 2008 when they knew there was a mortgage meltdown taking place," Barth said.Santa Ana home prices peaked in 2006 and have slid more than 40 percent since.While those prices were plummeting, members of the Sonis family never sold for a loss. A Register analysis of 22 Santa Ana properties flipped by the family in the past two years shows a total gain on sale of $3.7 million.Average gain: 48 percent. Average time between purchase and sale: 92 days.Todd Lackner, a San Diego mortgage-fraud investigator who has examined the transaction records, said the common thread of WaMu funding makes the Sonis' transactions even more disturbing. "Any idiot can see these sale prices are excessive," he said.The FBI says mortgage-fraud reports increased 31 percent nationally in fiscal 2007. "During declining markets, mortgage-fraud perpetrators may take advantage of industry personnel attempting to generate loans to maintain current standards of living," the FBI's annual fraud report said.In the past two years, Soni family members took out a total 14 mortgages with various other lenders, but WaMu was their preferred one, with triple that number of loans. In August 2003, an Orange County Superior Court jury found Vijay and Supriti Soni guilty of forgery, falsifying real-estate documents, identity theft and grand theft. Vijay Soni was sentenced to a year in jail. He also surrendered his real-estate license. Supriti Soni was sentenced to three years in prison. Brannan said their scheme "took advantage of their clients' trust when they exploited the unsuspecting customers' information for their own financial gain. They left these families with large financial liabilities, goods and property purchased in their name without their knowledge, many hidden costs, and a huge amount of grief to clean up their credit."Last month, investigators from the Orange County District Attorney's office and state Franchise Tax Board served search warrants on nine locations, including the homes of the Sonis, her mother, Sushama Lohia, and the family of her sister Suniti Shah plus four family companies. They carted out 154 cardboard boxes and 40 computers filled with evidence.Family members declined to comment for this story, citing the advice of attorneys."I'm confident that the facts will reveal that Mr. Soni has not engaged in any wrongdoing," said Vincent LaBarbera, Vijay Soni's attorney.In the past two years, the Soni family essentially created their own market in Santa Ana by flipping enough homes in a small area, said Lackner, the appraisal-fraud specialist. In at least three cases, homes flipped from one family member to another — sales later used by appraisers to give credibility to high asking prices for other properties.One example: Lohia bought the bank-owned house at 827 S. Flower for $249,500 on Jan. 4. She sold it 20 days later for $575,000 to her daughter, Suniti Shah, who financed the purchase with a $488,750 WaMu mortgage."Selling to each other, that's something an appraiser should definitely discover," said Mike Sanders, a Laguna Beach real-estate appraiser. "If the appraiser finds all the same people's names on transactions, then that's something suspicious."In an interview with the India Journal in Southern California, Vijay Soni provided another clue to his success at selling homes in a falling market: He said his company made the down payments for the buyers.Soni said his "liquidation company" bought foreclosed properties in Santa Ana, Riverside and Corona and sold them by offering "10 percent down free money to any qualified buyer. With this big burden out of the way, they only have to worry about coming up with their monthly mortgage."That would be the equivalent of 100 percent financing, experts said. If loan documents do not fully disclose who made the down payment, it would misrepresent the purchaser's stake in the property and potentially is a form of criminal fraud or theft, said Ann Fulmer, vice president for Interthinx, an Agoura Hills fraud detection company used by lenders."Unfortunately, the bank doesn't know it's 100 percent financing," she added.Documents show that all of the family's sales through Washington Mutual indicated that the buyer paid a down payment of 10 to 20 percent.But Elijio Servin Rojas said he never made a down payment on the home he bought in November for $640,000 from Sushama Lohia. Records show he paid at least $64,200 before closing.Servin Rojas said he was renting when Lohia persuaded him to buy last year. He said he has fallen behind on payments on WaMu's $575,800 mortgage. He received a notice of default in July.The Sonis were positioned to escape detection if in fact no money changed hands — because Lohia, a licensed real-estate broker, also served as escrow agent.

WaMu's $310 billion in assets, its diverse loan portfolio, its large base of depositors and conservative risk management

WaMu, America's largest savings and loan, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of...

Detective Sergeant Richard de Cadenet misused more than £73,000 on a credit card issued to him by the Metropolitan police

Detective Sergeant Richard de Cadenet, 39, who worked on high-profile investigations including the 7/7 bomb attacks on London, misused more than £73,000 on a credit card issued to him by the Metropolitan police, Southwark crown court heard.He was issued with the card for legitimate police expenses but used it for his own personal spending, including a holiday in Thailand worth £6,452 and a holiday in Mexico worth more than £9,000, as well as thousands of pounds worth of clothes, electrical goods and supermarket purchases. The court heard he made cash withdrawals of up to £18,000 and used the card to pay for a box at a Premiership football ground in which his estranged father had been entertained, along with others.De Cadenet was arrested after an Independent Police Complaints Commission (IPCC) investigation and pleaded guilty in July to one count of misfeasance in public office.David Levy, prosecuting, said Metropolitan police policy had been for officers to use the credit cards to pay for legitimate expenses such as hotel bills and travelling while working outside the Metropolitan police district.He said officers were supposed to submit a monthly reconciliation of expenditure to the Metropolitan Police Authority but De Cadenet, who joined the force from the RAF in 1996, had failed to do this. Neil Saunders, defending, said De Cadenet had been in marital difficulties and developed a drinking problem. He had racked up substantial debts on his own personal credit card. Saunders said De Cadenet had been trying to "buy the affections" of those who were closest to him in the misuse of the card. "He was buying what he thought was attention and affection. He was a man who was simply unable to cope."The IPCC said de Cadenet's actions were a serious misuse of public money. Deborah Glass, the London commissioner for the IPCC, said: "The taxpayers of London will rightly be concerned. I hope today's sentence reassures them that abuse of the system will not be tolerated."

Detective Sergeant Richard de Cadenet misused more than £73,000 on a credit card issued to him by the Metropolitan police

Detective Sergeant Richard de Cadenet, 39, who worked on high-profile investigations including the 7/7 bomb attacks on London, misused more ...

Gary J. Gross took in more than $700,000 in commissions and fees, while causing investors to lose more than $2.7 million between 2004 and 2006

Gary J. Gross, who worked in the Boca Raton office of broker-dealer Axiom Capital Management, recommended unsuitable securities and engaged ...

Raymond Zwego,led a real estate investment company that purchased more than 50 area homes, obtaining more than $19 million in mortgages

Raymond Zwego, 60, led a real estate investment company that purchased more than 50 area homes, obtaining more than $19 million in mortgages...

Frank L. Amodeo today pleaded guilty to defrauding the federal government out of at least $172 million in payroll taxes.

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUndKJwOJyKjC6kpUweYGoAWCUd_b3UEOpJFdpkp90teUqMVXVvBeKXpNrk0JMz8gPg8O-k49NLM2EMALOuVG503kZhIF8TEk41-imYIhr76p7sU1EenFQmi6EQncVbMgUD6gbdGg5TXo/s1600-h/fraud.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5249283787176874562" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUndKJwOJyKjC6kpUweYGoAWCUd_b3UEOpJFdpkp90teUqMVXVvBeKXpNrk0JMz8gPg8O-k49NLM2EMALOuVG503kZhIF8TEk41-imYIhr76p7sU1EenFQmi6EQncVbMgUD6gbdGg5TXo/s400/fraud.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;" /></a> Frank L. Amodeo today pleaded guilty to defrauding the federal government out of at least $172 million in payroll taxes.He remains free on $500,000 bond, awaiting sentencing.It's not clear when Amodeo will be sentenced, but he faces a maximum of 25 years in prison and fines that could top $360 million.Amodeo is the formerly high-flying entrepreneur who created Mirabilis Ventures Inc., a conglomerate that bought up distressed companies, including those that provided payroll services.According to his plea deal, those subsidiaries collected payroll taxes but never passed them on to the Internal Revenue Service.The federal government sets the amount of fraud at $182 million. Amodeo says he only kept $172 million. The rest, he contends, was legitimately earned fees.Amodeo signed the plea deal yesterday, but U.S. Magistrate Gregory J. Kelly postponed until today a plea hearing.That took place this morning in Orlando federal court.Amodeo appeared, in a blue suit and his electronic monitor. He said he was clear-headed and understood everything that was going on.That's important because he suffers from bipolar disorder, a mental illness. Yesterday one of his psychiatrists testified that although Amodeo is mentally competent to enter the plea, he's still seriously mentally ill and believes that he will, at some point, come to dominate the world economy.Defense attorney Harrison "Butch" Slaughter Jr. said that at times, during his 2 ½ years of working with Amodeo, the defendant has believed he could forecast the future and could telepathically communicate to people.

Frank L. Amodeo today pleaded guilty to defrauding the federal government out of at least $172 million in payroll taxes.

Frank L. Amodeo today pleaded guilty to defrauding the federal government out of at least $172 million in payroll taxes.He remains free on $...

Oman Ghana Trust Fund now has money nearing THREE TRILLION DOLLARS! That would be enough to rescue AIG and Lehman Brothers

Americans have a saying that there is a sucker born everyday. The statement speaks to the gullibility of some people to fall for schemes that are patently fraudulent, and should be avoided the same way one would avoid the plague. There is an ongoing attempt to scam the government and people of Ghana unless sensible people rise up to say no to con-men peddling falsehoods and lies. The damage will be done not only in terms of huge monetary loss, but our national prestige and international credibility will forever be tarnished, if Ghana were to fall for a scam currently being sold by remnants of John Ackah Blay Miezah’s hustlers.Of late, a group calling itself Friends of Oman Ghana Trust Fund (FOGTF) has embarked on a media blitz aimed at gaining the support of the government and people of Ghana to what is essentially a scam akin to what the villain in our folkore, Kwaku Ananse would endeavour to visit on his family.One cannot begin to understand this fraudulent scheme without reference to the name and fraudulent practices of the ‘master con-man’ Blay-Miezah. Indeed, FOGTF claims to be continuing the efforts ‘made’ by Blay-Miezah to gain access to some so-called money. The mere mention of Blay-Miezah should have rang bells, and alerted officials and the public to the scam, but so far, like Blay-Miezah, the perpetrators are doing their job in a fashion that sounds credible to the gullible. According to Blay-Miezah, Ghana’s first president Dr. Kwame Nkrumah named him the sole beneficiary of millions of dollars that Nkrumah had stashed in banks in Switzerland under a scheme described by Blay-Miezah as the Oman Ghana Trust Fund (OGTF). After Nkrumah’s death in 1972, Blay-Miezah managed to sell his OGTF story to investors in the city of Philadelphia, Pennsylvania, USA. Blay-Miezah had lived in the city, and had spent time in a state prison for writing bad cheques, and failing to settle a huge bill at the Bellevue Stratford Hotel in Philadelphia.After the con game was brought to the attention of authorities, Time magazine (April 21, 1986 edition), did a story on investors who had contributed at least $18 million (and possibly $100 million) to the scheme, and quotes Robert Ellis extensively on the modalities of the criminal enterprise. Robert Ellis had posted bond for Blay-Miezah in a previous criminal case in Philadelphia, and in return Blay-Miezah appointed Ellis, his American ‘agent’. The main role for Ellis was to solicit American investors whose money would then be used to facilitate retrieval of alleged millions of dollars bequeathed to Blay-Miezah under the OGTF by the late president Nkrumah of Ghana. Blay-Miezah insisted that he needed cash in hand (which he personally didn’t have!), in order to cut deals with some local Chiefs and government officials, all of whom had some stake in OGTF, and whose palms must be greased in order to enable him to secure the funds. The story being peddled in Ghana today by FOGTF, is rather similar to the tale woven by Blay-Miezah to successfully ensnare gullible investors in the 1970’s.As Time magazine pointed out, those who fell prey to Blay-Miezah were not some wacky illiterate individuals, but highly intelligent and educated professionals. There is a general belief among westerners that Africa’s leaders especially in the immediate post-independence era were corrupt. Therefore no matter how zany Blay-Miezah’s story sounded, people found it hard to discount. A corrupt African ruler had stolen millions from his country’s treasury and stashed the money in Swiss banks. The story had/has a familiar ring to it. And con-men adopted the story to rake in millions from the gullible and the greedy.By the mid-1980’s when the gullible investors had not received a penny on their contributions, and local law enforcement authorities in Philadelphia had been alerted to Blay-Miezah’s con-game, Blay-Miezah was happily ensconced in a posh mansion in London where he was safely protected under diplomatic immunity. When Blay Miezah arrived in Ghana during General Acheampong’s military regime (about 1975), he conned the government into believing his story. Mr. Ebenezer M. Debrah who had served as Ghana’s ambassador to the United States, and was quite aware of Blay-Miezah’s machinations, was the secretary to the military government of the National Redemption Council. Reports at the time indicated that Mr. Debrah provided a dossier on the criminal activities of Blay-Miezah and strongly warned the government to stay clear of the man. However, Blay-Miezah’s story had made such an imprint on the Ghanaian psyche, and the man laundered money so much so that, Debrah was seen as an impediment to Ghana receiving a windfall. Mr. Debrah was sacked as Secretary to the government. Blay Miezah’s public relations machine was quite effective, and it included stalwarts in the Nkrumah regime such as the impressive Krobo Edusei and Kwasi Amoako-Attah a former Minister of Finance.With his main antagonist out of the way, Blay-Miezah successfully sold his story to the government and then claimed that he could only retrieve the money if a diplomatic passport was issued to him. In reality, his acquisition of the diplomatic passport provided immunity and cover from outside prosecution. Consequently, when a criminal case pertaining to the fraud was brought against him in the United States of America in the 1980’s, Blay-Miezah could not be extradited to Philadelphia to face charges relating to financial extortion and other crimes. Blay-Miezah’s diplomatic passport would be renewed by the PNDC military government which ruled Ghana from 1981-1992. Thus, the late Ed Bradley had to go to London to interview Blay-Miezah for the American CBS TV station’s 60 Minutes investigative report. I will never forget Ed Bradley’s interview of Blay-Miezah. The day after the interview, our American classmates who had seen the program looked at me and the other African students in awe. The Americans wondered how the African could come up with such a well-crafted story to outwit these highly educated, professional white Americans? The master stroke however, was Blay-Miezah’s insistence that the interview with 60 Minutes could not commence unless Bradley provided the best gin for Blay-Miezah to invoke the spirit of his ancestors, by purifying his Stool, the symbol of his traditional authority, and the embodiment of the souls of his ancestors! Bradley looked on rather bemused as Blay-Miezah gargled a mouthful of the liqour and then released powerful sprays 3-times onto the ancestral Stool! As one elderly Jewish woman who had invested his lifetime savings in the OGTF, and who appeared on the program wondered: How could Blay-Miezah not be rich, and be the beneficiary of such huge largesse when he accommodated the investors in posh most exclusive hotels in London, Geneva, and Paris. Of course, Blay-Miezah could afford exquisite entertainment for his investors because he was using their money!! Blay-Miezah himself did not have a dime to his name by himself. No wonder, Ed Bradley said that of all the con men he had been involved with, Blay-Miezah was "clearly head and shoulders above the rest . . . the best con man I’ve ever seen in my life." The preceding provides more than a cautionary tale to the government and people of Ghana as a latter-day Blay-Miezah seeks to resurrect a discredited scam that has spawned copy-cat scams all over the world. When Blay-Miezah concocted his scheme and defrauded the gullible and greedy investors of their hard-earned money, the scheme was largely anonymous. Today, thanks to the Internet and massive participation by Nigerian fraudsters, the scheme is called 419, so-called after the section of Nigeria’s legal code dealing with financial scam. What the FOGTF is claiming is quite similar to a 419. It is a sad commentary on the state of affairs of the body politic when government officials and the media cannot see through the ruse being currently peddled by the so-called FOGTF. Like Blay-Miezah before him, Gregg Frazier who is currently presented as the ‘sole trustee’ of the Oman Ghana Trust Fund, is reportedly demanding a Ghana diplomatic passport to facilitate retrieval of the money. Like Blay-Miezah before him, Frazier passes himself off as having been anointed sole trustee of OGTF after the death of Blay-Miezah; and Frazier similarly claims to be the only living soul with knowledge of a ‘special security code and password’ needed to redeem the money. Just as Blay Miezah had his American ‘agent’ to do his bidding in the U.S.A.; Frazier has his Ghanaian local front man in the person of one Kobla Asamani who is sometimes addressed as “His Awardship Kobla Asamani” to smoothen his way among the Ghana labyrinth! And like Blay-Miezah, Frazier seeks government assistance in the scheme. Kobla Asamani who signs press releases of the Friends of Oman Ghana Trust Fund, warns that Frazier is advancing in age, and the government of Ghana should therefore act with alacrity to help Frazier secure the funds else Frazier takes knowledge of the security code and password to the grave! Blay-Miezah’s minions used to give similar ominous warnings! These two men and their so-called Friends of Oman Ghana Trust Fund have embarked on a media show to press their fraudulent case. They have managed to get Ghana’s Finance Minister Baah Wiredu to signal interest and support for the scheme, according to reports in the Ghana news media currently saturated with news about FOGTF and OGTF. Frazier and his group have managed to meet with the Finance Minister in the latter’s office. We must stop this nonsense before it is too late!! Blay-Miezah similarly used the media to get his way. He was feted by some of Ghana’s most accomplished businessmen and industrialists, some of whom were too eager to carry his luggage publicly; and offered him sumptuous accommodations. The FOGTF is adopting similar tactics to wine and dine some journalists to do FOGTF’s bidding. I am sure there may be some gullible people in positions of power and influence who may fall prey to the machinations of FOGTF. After all, Gregg Frazier who is an American, understands that there is a sucker born everyday.According to Gregg Frazier and FOGTF, Oman Ghana Trust Fund now has money nearing THREE TRILLION DOLLARS! That would be enough to rescue AIG and Lehman Brothers in the ongoing banking crisis in the U.S.A.!! There is no Oman Ghana Trust Fund. And there is no money anywhere in spite of promises being made by Frazier. Blay Miezah made similar promises, including one that if he did not bring the money he could be shot. This promise came after he was arrested and jailed by the PNDC government of ex-president Rawlings. Blay-Miezah conned people including Gregg Frazier (who claims to have given millions to Blay-Miezah). Sadly, FOGTF is now too late to a game where the most gullible continue to be conned. If Frazier believes otherwise, I am sure he would wish to buy my parcel of virgin forest in the Louisiana swamps in the USA! As an American he would understand the nature of my offer!!! Rather than holding meetings to aid and abet this forgery, I urge the government of Ghana to treat the claims being made by the so-called FOGTF with utmost contempt. The group must be warned in no uncertain terms that continuing this calumny, and using Ghana’s name in such fraudulent and despicable manner could invite serious legal problems for the group and its members.

Oman Ghana Trust Fund now has money nearing THREE TRILLION DOLLARS! That would be enough to rescue AIG and Lehman Brothers

Americans have a saying that there is a sucker born everyday. The statement speaks to the gullibility of some people to fall for schemes tha...

Dennis Raymond Sheffield, who pleaded guilty in June to 6 counts of bank fraud

Dennis Raymond Sheffield, who pleaded guilty in June to 6 counts of bank fraud, also will have to pay back $953,557 he obtained from Robertson Banking Co. in 2001 and 2002. "That's going to be difficult in light of his financial situation currently and other obligations," said defense lawyer Tommy Spina, who unsuccessfully argued for leniency. For the last three years, Sheffield has worked as a salesman for Knight Sign Industries in Tuscaloosa, earning $45,000 a year. Prior to that, Sheffield owned Tall Timber Inc. and had a longstanding relationship with Robertson Banking Co. That is how he was able to get loans in 2001 and 2002 for what turned out to be bogus deals. Sheffield, 47, falsely told the bank that he had a valuable timber sale contract and timber deeds signed by officials of the U.S. Department of Agriculture's Forest Service allowing him to cut and remove trees in the Talladega National Forest in Bibb County. The next year, he falsely told the bank that he had a timber contract with United Land Corp. of Birmingham to remove trees in various parts of Tuscaloosa County. In both cases, according to his written plea document, he went to great lengths to fool the bank, submitting phony maps, contracts, deeds and other documents. He also toured forest land with bank officials. When Robertson Banking officials began asking why the timber was not being cut, Sheffield blamed bad weather conditions and labor shortages.

Dennis Raymond Sheffield, who pleaded guilty in June to 6 counts of bank fraud

Dennis Raymond Sheffield, who pleaded guilty in June to 6 counts of bank fraud, also will have to pay back $953,557 he obtained from Roberts...

credit default swaps market as “ripe for fraud and manipulation”, saying that it was a forum for the shorting of corporate debt without the oversight

$58,000bn credit default swaps market as “ripe for fraud and manipulation”, saying that it was a forum for the shorting of corporate debt wi...

Enric Duran, 32, wrote in the magazine called La Crise (The Crisis) that he had created fake pay slips which he used to take out 68 personal loans

Enric Duran, 32, wrote in the magazine called La Crise (The Crisis) that he had created fake pay slips which he used to take out 68 personal loans from 39 banks beginning in 2006, the online edition of daily newspaper El Mundo said. “I stole 492,000 euros from those who steal the most from us to denounce and build an alternative society,” El Mundo quoted him as writing in the magazine, which offers advice on how to face up to Spain’s economic slowdown. “With a printer, a photocopier, scissors and glue, you can work wonders,” he added, calling his operation “a new form of civil disobedience”.Duran has fled the country to avoid prosecution, El Mundo reported, citing sources close to the the modern day Robin Hood.He had given banks various reasons for seeking loans, from purchasing a car to renovating an apartment or buying audiovisual equipment for a non-existent firm.Duran said he spent 360,000 euros directly on the production of the 200,000 copies of the sole edition of La Crise magazine with the remaining 132,000 euros going towards several other expenses such as taxes and commission.

Enric Duran, 32, wrote in the magazine called La Crise (The Crisis) that he had created fake pay slips which he used to take out 68 personal loans

Enric Duran, 32, wrote in the magazine called La Crise (The Crisis) that he had created fake pay slips which he used to take out 68 personal...

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him about the legality of keeping $200 million in unreported offshore accounts; charged him millions in excessive fees; and after leading him astray, reported him as a "tax evader" to the Internal Revenue Service.In December, Olenicoff, a Forbes 400 member, pleaded guilty to a single federal tax felony and paid $52 million in back taxes, interest and civil fraud penalties. In his plea deal, he acknowledged that he had lied on his tax returns for 1998 through 2004 when he answered "no" to a question asking if he had ownership or authority over a financial account in a foreign country.In June, former UBS (nyse: UBS - news - people ) private banker Bradley Birkenfeld pleaded guilty to conspiring to helping the billionaire hide $200 million and evade $7 million in tax; he is cooperating with U.S. prosecutors and has made statements suggesting widespread wrongdoing at UBS.In a statement, Olenicoff described the suit, which accuses Birkenfeld, eight other former or current UBS bankers, and numerous additional defendants of fraud, as "the start of UBS and its partners in crime being called to account for what they did and answering to the victims of their shocking misconduct.” He is seeking $500 million in damages for actual losses and a "tarnished family and business name." A spokesman for UBS said Wednesday that the bank has reviewed the suit and "intends to vigorously defend itself in this litigation.'' UBS has admitted to compliance problems but has denied any wholesale fraud by the institution. It is now negotiating with the U.S. Department of Justice over a summons requiring it to turn over the names of the American owners of 19,000 "undeclared" UBS Swiss accounts. Swiss authorities insist such wholesale disclosure would violate the country's strict bank secrecy laws, which permit the turnover of information in cases of tax fraud, but not tax evasion. William J. King, the Orange County attorney who brought the suit for Olenicoff, said it shows UBS “carried out an enormous fraud that ensnared thousands of innocent investors.” But Edward M. Robbins Jr., the billionaire's criminal attorney, insisted Olenicoff still accepts responsibility for his own misconduct. “He is not trying to weasel out of his guilty plea by blaming it on UBS,” Robbins saidOlenicoff says in his suit that he began moving both offshore and onshore funds to UBS in 2001 after being courted with promises of legal tax savings. Instead, he alleges, UBS provided "erroneous legal and tax advice" and concealed from him that he "owed taxes on his investments" to the IRS and "would face criminal investigation for the management structure of his account,” which included various trusts and companies set up in Liechtenstein and Denmark. According to the suit, when Birkenfeld was approached by the U.S. Department of Justice in 2004, he disclosed information about Olenicoff and other U.S. clients. In 2005, the suit adds, UBS, knowing Birkenfeld had already turned over information about the billionaire, also "reported Olenicoff to the IRS as a tax evader.”"Everybody was trying to avoid blame and they were making Mr. Olenicoff the sacrificial lamb,” King says. Adding insult to injury, the suit alleges Olenicoff's funds have been mishandled and tens of millions has gone missing. Birkenfeld left UBS and in 2005 persuaded Olenicoff to move his money to Neue Bank, also a defendant in the case. Last year, as part of his deal with prosecutors, Olenicoff agreed to bring all his funds back to the U.S. But shortly before the transfer was to take place, the suit alleges, $40 million was removed from his accounts.

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him

California real estate developer Igor M. Olenicoff filed suit Tuesday against UBS, claiming the Swiss banking giant deceived him about the l...

Luis Alvarez Renta was hospitalized at the Center for Diagnostics, Advanced Medicine and Telemedicine (CEDIMAT) at Plaza de la Salud

Sentenced to 10 years in jail for involvement in the Baninter banking fraud, financier Luis Alvarez Renta was hospitalized at the Center for...

Banks may accelerate efforts to move trading in the $62 trillion credit-default swaps market through a central clearinghouse

Banks may accelerate efforts to move trading in the $62 trillion credit-default swaps market through a central clearinghouse or to an exchange after the bankruptcy of Lehman Brothers Holdings Inc. and the credit downgrade of American International Group Inc. Lehman, the first major market-maker to go bankrupt in the decade-long history of the privately negotiated, unregulated business, may leave behind billions of dollars in potential losses for trading partners, according to Barclays Plc of London. No one knows exactly how much because there's no central exchange or system for recording trades. ``The fact that I can't tell you the notional value of derivatives contracts Lehman has written the day after a bankruptcy is a scary thing,'' Brian Yelvington, a strategist at New York-based bond research firm CreditSights Inc., said yesterday. A clearinghouse capitalized by owners could have reduced the risks because it becomes the so-called counterparty, for a fee, to each side of the trade. Now, banks are sifting through trading positions to ``net'' trades that offset each other and reduce potential losses. Untangling that web may last into 2009, said John Jay, a senior analyst at Boston-based Aite Group, a financial services consulting firm. ``Just figuring out what they have could take a week, but the thornier issue is to figure out valuations,'' said Jay. ``It's a Gordian knot because you have different ratings, different counterparties, different end-dates and you have to somehow attach a value to these contracts. It's an operational nightmare and a legal nightmare of interpreting what each contract says.'' The Markit CDX North America Investment Grade Index, which rises as confidence in companies deteriorates, climbed as high as 195 basis points yesterday, from 152 basis points at the close of trading on Sept. 12, according to broker Phoenix Partners Group. The index reached a record 200 during an emergency trading session on Sunday, Sept. 14 as investors tried to prepare for the collapse of New York-based Lehman. A basis point is 0.01 percentage point. Prices continued to rise in Europe and Asia today after credit ratings on AIG, the biggest U.S. insurer by assets, were cut by Standard & Poor's and Moody's Investors Service. Contracts on the Markit iTraxx Crossover Index of 50 companies in Europe with mostly high-risk, high-yield credit ratings climbed 33.5 basis points to 627.5, according to JPMorgan Chase & Co. prices at 7:19 a.m. in London. The Markit iTraxx Australia Series 9 Index increased 35 basis points to 220 basis points, matching the all-time high of March 17 when Bear Stearns Cos. was bailed out by the Federal Reserve, according to ABN Amro Holding NV. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. Each contract is a separate agreement between two so-called counterparties and trades in over-the-counter transactions, leaving parties exposed to the risk that their partner will default. Barclays analysts estimated in February that if a financial institution that had $2 trillion in credit-default swap trades outstanding were to fail, it might trigger between $36 billion and $47 billion in losses for those that traded with the firm. That doesn't include the market-value losses investors face as the cost to protect companies against a default widens. ``There should be some central agency which prevents risk in the future of a large counterparty failing and causing losses,'' said Puneet Sharma, the head of investment-grade credit strategy at Barclays Capital, the U.K.'s third-biggest bank. ``This was not necessary.'' Wall Street created credit-default swaps more than a decade ago to help banks hedge against loan losses. Dealers later came up with contracts and indexes that allowed investors to speculate on a borrower's creditworthiness without owning any bonds. The market grew 100-fold in the past seven years leaving dealers, who until a few years ago recorded trades on scraps of paper, struggling to keep up. New York Fed President Timothy Geithner assembled dealers in September 2005 to develop a plan to reduce the backlog of paperwork and unconfirmed trades. In July the 17 dealers agreed to form a clearinghouse, create a system to better manage the collateral that protects trading partners from losses and tear up offsetting contracts to reduce the number of positions that banks have to oversee. The clearinghouse may fall behind schedule, delaying completion until next year, said a person familiar with the process who asked not to be identified last week because the discussions weren't made public. The development was postponed after the Fed pushed Chicago-based Clearing Corp. to obtain a banking license, which would place it under the central bank's watch, the person said. A spokesman for the Federal Reserve Bank of New York, Andrew Williams, declined to comment. Clearing Corp. spokesman Andy Merrill declined to comment, pointing to a statement last week that the company ``and its clearing participants have been moving aggressively to prepare the CDS platform for launch as soon as the appropriate regulatory approvals are achieved.'' ``The industry's progress in building a strong foundation for our business will enable it to successfully address current issues,'' said Eraj Shirvani, chairman of the International Swaps and Derivatives Association and head of European credit at Credit Suisse Group in London, said yesterday in a statement. Clearing Corp. said it will guarantee trades between dealers, at least at first, and only contracts on benchmark indexes rather than on individual companies.

Banks may accelerate efforts to move trading in the $62 trillion credit-default swaps market through a central clearinghouse

Banks may accelerate efforts to move trading in the $62 trillion credit-default swaps market through a central clearinghouse or to an exchan...

Counterfeit bank and credit cards used to steal funds from customer accounts.

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeRDYdbHhOYm6DlOrfktb4l2Kn_wJ8sirV90N_EP5O5OTliCsbS-UePZHwqymCehzb33S0fke6Py2wpfVEA1AjCeqzRkGy3ysPmn-TOSiJ3saJdTcrgx18SzqiAyv2Y-IJO5Bz_UvppOQ/s1600-h/business.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5246541119395678322" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeRDYdbHhOYm6DlOrfktb4l2Kn_wJ8sirV90N_EP5O5OTliCsbS-UePZHwqymCehzb33S0fke6Py2wpfVEA1AjCeqzRkGy3ysPmn-TOSiJ3saJdTcrgx18SzqiAyv2Y-IJO5Bz_UvppOQ/s400/business.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;" /></a> banks in the UAE have slashed the daily cash withdrawal limit of ATM users by almost half after hackers, who police said were from Russia and Ukraine, used counterfeit bank and credit cards to steal funds from customer accounts. Some banks even blocked international use of ATM cards as a preventive measure while HSBC Bank temporarily reduced the daily withdrawal limit to Dh6,000 for premier card members and Dh4,000 for others as part of measures to contain the damage. As thousands of customers thronged ATM machines to change their card PINs (personal identification number) over the past three days, most banks in the UAE said they would continue the state of alert against the fraud, but refused to disclose the size of the money stolen or how many accounts were skimmed.An initial investigation by banks indicated that cash machines were rigged with devices that stole customers’ PINs as they made withdrawals. Jonathan Campbell James, regional head of security and fraud risk, HSBC Middle East, said his bank did not implement a general blocking of overseas transactions as its customers expected to have access to their accounts wherever they travel.“But when we detect a series of fraudulent transactions coming from a particular geography, we may temporarily restrict access,” he said Major-General Khamis Matar Al Mazeina, Deputy Commander-in-Chief of Dubai Police, said the hackers are from Russiaand Ukraine. Banking sources, however, said the hackers were part of an international network, with most of the fraudulent transactions originating from more than 20 countries outside the UAE.Al Mazeina said the police were trying to find out the methods used by the gang to steal from bank accounts. “We want to find out whether the breach occurred when customers used their cards to buy on-line or when they used their cards within the UAE and certain other countries.”He said police still did not have any clue about the number of people and banks hit by the fraud or the total amount stolen by the gang.“We are in touch with credit card companies, banks and fraud victims although we have not received any complaint so far.” He said the police would meet concerned authorities to probe into the matter and find measures to protect credit card users.Banks said only ATM debit cards have been counterfeited. “The attack is more sophisticated than that are routinely experienced, and has come from multiple countries,” Campbell James said. Most banks continued to encourage customers to change their PIN numbers. “Because a large number of customers have already done so, a significant number of attempts by fraudsters to steal from customers’ accounts have been frustrated,” the bank official said. “HSBC and several banks in the UAE have identified fraud that appears to result from the compromise of ATM information from another bank. This information has been used to produce counterfeit cards that have been used internationally.”The bank official said if a customer’s card had been copied and used to steal money, the bank would contact the customer, advise them what had been done, organise a refund and issue a new card free of charge. “Our special accelerated procedure for refunding UAE customers affected by this particular fraudulent attack is working well. A substantial number of customers have already received their refunds and the process of issuing free replacements for cards which have been compromised is on track.”

Counterfeit bank and credit cards used to steal funds from customer accounts.

banks in the UAE have slashed the daily cash withdrawal limit of ATM users by almost half after hackers, who police said were from Russia an...

The Lehman collapse has changed the game of how regulators now deal with financial institutions, and potential bailouts are no longer an option.

Bankruptcy of Lehman Brothers has far more serious implications for the world’s financial system, with possible consequences to the Gulf, than did the demise of Bear Stearns. The Lehman collapse has changed the game of how regulators now deal with financial institutions, and potential bailouts are no longer an option. The accelerated momentum of securitisation of mortgage loans in 2005 caused the subprime crisis, not the low interest rates when the Fed reduced Fed funds to 1 per cent. The sale of securities from credit pools had never reached such a level before. When US investment banks discovered the appetite of foreign institutions, commercial banks sped up their loans to uninformed borrowers to meet the soaring investor demand. Banks transferred to their trading books what cost too much on their credit books (8 per cent of their assets in equity) even though the so-called “securities” were for the most part illiquid private placements. This trend to structure credit in the cheapest way possible by avoiding capital requirements was blatant regulatory arbitrage on a massive scale. But this was caused by the central banks themselves who insisted on a higher and costly capitalisation on banks, who in turn tried to minimise such costs by moving assets off-balance sheet. Second, the investor demand for this structured paper was not triggered by the “excess liquidity” created in the low interest rates since 2001, but it instead represented the most massive transfer of wealth ever recorded in history. Two billion individuals moved in a matter of only a few years from a state-controlled economy to semi-capitalist private systems, and the productivity gains across both western economies and emerging market economies unleashed a virtual flood of financial wealth and savings, with the world capital stock nearly trebling from US$60 trillion (Dh220.4trn) to $160trn. One only has to observe these phenomena in the Gulf over the past few years to see the effect on new wealth creation for many classes of citizens. These same citizens must now be wondering what happens next and the news is not looking good, given the inter-linkages of counter obligations among financial institutions. It will take months to unwind Lehman’s complex deals and obligations with other banks, and given the company’s high-profile presence in the Gulf, it would be a brave soul to state that Gulf institutions will not be affected this time around. Tighter credit and higher margins will be the order of the day as banks seek quality clients, and investors, in turn, seek quality financial institutions whose numbers seem to diminish by the day. Until the collapse of Lehman, the assumption had been that any financial institution operating at the centre of the international financial system, be it a commercial or investment bank, is simply too big and too interconnected to be allowed to fail or to be wound down quickly for fear of a systemic breakdown. This assumption has now been shaken.This raises the issue of fiduciary risk. Two thirds of the capital flows today go through fiduciaries, those who act as managers, custodians, broker-dealers, administrators or trustees, while credit banks, the dominating power of finance until the 1980s, have become marginalised. The whole texture of finance shifted from a classic loan industry to one of securities trading, warehousing, arbitrage and valuation. Institutions don’t lend cash anymore: they lend securities and exchange credit swaps and interest rates.The shift was so sudden and reached so deeply in a structural sense that it heightened the fragility of the whole system. No wonder regulatory tools based on a credit model have proven to be so ineffective. As long as the industry was dominated by credit and an obligation to generate and protect the “results”, one could reinforce the walls and limits of a regulated system. But when the industry is overtaken by institutions acting as fiduciaries rather than creditors, the obligation is only of the “means” (ie “best practice”) not of the ends, or the result of their imprudence, so how do you effectively regulate that? What is worrying is that more and more Gulf institutions have been following the fiduciary route with traditional credit-related commercial banking taking a secondary role.A move to enlarge the supervisory role of a central bank is likely to create an unprecedented concentration of powers with no corresponding real and effective means to intervene and contain market excesses save for “bailing out” creditors who make the asset bubbles possible. What’s more, by guaranteeing impaired assets, central banks are exposed to capital losses, however over-collateralised the central bank is in its term lending through its new liquidity facilities. As the current crisis itself has shown, when all the financial institutions – rather than just one or two in trouble – face funding risks at the same time, there is not much value in the collateral you are holding unless you can hold it for a long, long time. This is what made Barclays decide to pull out of the Lehman rescue effort. The Lehman collapse raises the question whether central banks could go under in the wake of their market intervention during a financial crisis. The Fed’s total equity stands at $40 billion versus the $29bn needed to guarantee Bear Stearns alone, and this is without Freddie Mac and Fannie Mae support. A central bank can never go “broke” per se, of course, since a government will always replenish its capital base if the losses due occur. But that would also entail, in effect, printing money at a time when inflation is an issue. Concerning Lehman, the Fed has declined to pump in money to bail it out and some, including Alan Greenspan, are now calling for a new model of financial supervision that does not automatically bail out failed banks. Some have put forward drastic solutions given the potential capital adequacy problems of central banks to support a total collapse in the financial system. One suggestion is that we need to limit the size of financial institutions. We should limit their size instead of facing the unavoidable option of having to save them. In short, once an institution grows too big, it should be split as AT&T once was in the late 1970s, and IT companies in this century. The argument was one of the social and economic needs to break a cartel, whereas today it is the size itself that becomes so unmanageable relative to the means of containing a systemic risk. In both cases, the goal is to improve market efficiency. Should we move back to restore the strict division between commercial and investment banking and put an end to such a massive regulatory leakage? The answer may lie in the transition of the industry itself. The “old” Fed had regulatory responsibilities over a traditional commercial banking industry that is mostly a relic from textbooks, while the “new” Fed must consider the financial industry in whole. It is possible that the new regulatory fabric that arises will produce clear lines of responsibilities, dividing the new credit and fiduciary roles within the finance industry, as both sides are not subjected to the same performance obligations. Given the explosion of commercial and investment banking in the Gulf, this issue will also be an important one for GCC regulators. The trend in the region was for larger banks and mergers to face the big boys from outside. This will cause the same dilemma for Gulf regulators in case one major financial institution faces trouble, but given the state of fragility of banking confidence due to recent fraud and scandals the likely option in the Gulf is to discreetly bail out. In the final analysis, let us hope that in trying to fix this current mess, the regulators do not lay the seeds of a future financial meltdown.

The Lehman collapse has changed the game of how regulators now deal with financial institutions, and potential bailouts are no longer an option.

Bankruptcy of Lehman Brothers has far more serious implications for the world’s financial system, with possible consequences to the Gulf, th...

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