Bankrupt Banker

Securities and Exchange Commission filed an action to halt what regulators said was an ongoing fraud in the sale of stock by Aerokinetic Energy Corp

Securities and Exchange Commission filed an emergency action to halt what regulators said was an ongoing fraud in the sale of stock by Aerokinetic Energy Corp. and its president, Randolph Bridwell.Acting on the SEC’s request, Judge James Whittemore of the U.S. District Court for the Middle District of Florida in Tampa issued a temporary restraining order and an asset freeze over Aerokinetic’s bank account. According to the SEC’s complaint, Aerokinetic and Bridwell raised at least $535,000 from 24 investors nationwide and are currently seeking to raise another $575,000 through a fraudulent offering of unregistered securities. The SEC said Bridwell misappropriated investors’ funds to pay personal expenses and it cannot account for $230,00 in investor funds.Aerokinetic, based in Sarasota, claims to be in the business of researching, developing and marketing alternative power technologies and other innovative products, the SEC complaint says. The company and Bridwell claimed to have developed a power generation station that is capable of creating electrical energy at a fraction of the cost of conventional or nuclear means and to have developed an electric car that has attracted the interest of prominent individuals such as Lee Iacocca, Brad Pitt, Arnold Schwarzenegger and Al Gore, the complaint says.The defendants also told investors and potential investors that they project millions of dollars in sales within the first years of operation and billions of dollars thereafter, according to the complaint.The SEC said the claims are patently false and that Aerokinetic has no patients, license agreements, contracts, suppliers, customers, sales, revenue or market share.The temporary restraining order will be in effect until Aug. 4. The court has scheduled a hearing for a preliminary injunction on Aug. 1.

Securities and Exchange Commission filed an action to halt what regulators said was an ongoing fraud in the sale of stock by Aerokinetic Energy Corp

Securities and Exchange Commission filed an emergency action to halt what regulators said was an ongoing fraud in the sale of stock by Aerok...

Hernan E. Arbizu former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges

former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges in connection with the alleged embezzlement of nearly $5.4 million from clients.According to an indictment unsealed Monday, Hernan E. Arbizu, a former vice president and senior private banker, was charged with embezzlement by a bank officer, bank fraud, identity theft and 12 counts of wire fraud. Arbizu, 41 years old, was arrested in Buenos Aires on Monday. He remains in custody in Argentina pending extradition.Arbizu, who was originally charged in a criminal complaint in May, faces up to 30 years in prison on each count of wire fraud, bank fraud and embezzlement.At one point, Arbizu was the relationship manager responsible for maintaining and developing private banking relationships in Latin America, according to court papers.Prosecutors allege that Arbizu caused about $5.38 million in unauthorized wire transfers from accounts held at UBS AG (UBS) and J.P. Morgan between March 2007 and April 2008, including nearly $2.8 million in four transactions on April 15, 2008, according to the indictment. The government also alleges Arbizu used the names and account numbers of J.P. Morgan and UBS customers without their authorization to initiate the transfers, according to court papers.The criminal investigation is being handled by the U.S. Attorney's office in Manhattan and the Federal Bureau of Investigation.In June, J.P. Morgan sued Arbizu, who at one point managed more than $200 million in client assets, in U.S. District Court in Manhattan, alleging he stole confidential and proprietary information about the bank and its clients. The bank also filed a claim against him with the Financial Industry Regulatory Authority.In its suit, J.P. Morgan claimed it discovered in May that Arbizu engaged in unauthorized wire transfers between a JPMorgan client's account and accounts at other firms. J.P. Morgan also alleged Arbizu copied, downloaded and collected proprietary and confidential information and materials belonging to JPMorgan and its clients, including names, addresses, Social Security numbers and client financial information. The bank said he fled to Argentina and was subsequently terminated, according to the lawsuit."We appreciate the cooperation and the prompt joint action of the Argentine and American authorities," J.P. Morgan said in a statement Tuesday. The bank declined further comment due to pending litigation against Arbizu in the U.S.

Hernan E. Arbizu former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges

former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges in connection with the alleged embezzl...

£220 million attempt to hack into Sumitomo Matsui Banking Corporation's systems, and a £70 million attempted fraud within HSBC's securities services

KPMG said the record sum was fuelled in part by two big cases, namely an alleged £220 million attempt to hack into Sumitomo Matsui Banking Corporation's systems, and a £70 million attempted fraud within HSBC's securities services division. But it added that even without these two cases, there was still more than £60 million of fraud against financial institutions coming to court, compared with just £37 million during the whole of 2007.There were nine cases of mortgage fraud worth more than £20 million during the first half of the year, compared with only 10 cases worth £3.7 million throughout 2007.Overall, there were 128 different fraud cases against all sectors totalling more than £631 million going through the courts during the first six months of the year, a substantial increase on the 91 cases worth £421 million during the previous six-month period.Hitesh Patel, partner at KPMG Forensic, said: "The cases in this period's fraud barometer largely predate the credit crunch in terms of when the frauds were committed - the fear is that we will not see the real and full fraud impact of the crunch for another six or 12 months or even more, as businesses start to take a closer look at their operations in this difficult economic climate."The signs are that we could end up seeing some substantial losses being suffered."Two-thirds of fraud by value and more than half by number were carried out by organised gangs, with the financial services sector the main target, followed by investors, and the previous number one target of Government offices.

£220 million attempt to hack into Sumitomo Matsui Banking Corporation's systems, and a £70 million attempted fraud within HSBC's securities services

KPMG said the record sum was fuelled in part by two big cases, namely an alleged £220 million attempt to hack into Sumitomo Matsui Banking C...

Linda Edwards and Ladonna Mullins were convicted of wire fraud, making false statements, false use of a Social Security number

Linda Edwards, 55, of Centennial, and Ladonna Mullins, 73, of Denver, were convicted of wire fraud, making false statements, false use of a Social Security number, making false statements to a financial institution, and criminal forfeiture. They were convicted after a 14-day jury trial in federal court in Denver. Mullins worked as a real estate agent doing business through “LaDonna’s Realty and Management” in Denver, according to the indictment. Edwards worked as a real estate agent doing business through “Affable Realty” in Aurora.From 1999 through 2004, Edwards and Mullins assisted would-be homebuyers who couldn’t legitimately qualify for mortgages insured by the Federal Housing Administration, according to the indictment.Edwards, Mullins and others working with them obtained false Social Security numbers to conceal a buyer’s bad credit history; created false W-2s or other income documents that inflated or created income; and created false verifications of rent or employment, alternate credit letters or “gift letters” stating that the buyer had enough funds for the down payment, according to the indictment.They are scheduled to be sentenced by U.S. District Court Judge Marcia Krieger on Dec. 15. Edwards faces up to 20 years for wire fraud, and five years on each of the charges of false statements and false use of a Social Security number, plus fines of $250,000 for each crime, and forfeiture of all property involved in the scheme.Mullins faces up to five years for wire fraud, plus a $250,000 fine and forfeiture.

Linda Edwards and Ladonna Mullins were convicted of wire fraud, making false statements, false use of a Social Security number

Linda Edwards, 55, of Centennial, and Ladonna Mullins, 73, of Denver, were convicted of wire fraud, making false statements, false use of a ...

Big Four auditing firm KPMG, LLP has been ordered by a New Jersey Superior Court judge to stand trial in a massive accounting fraud lawsuit.

Eagan O'Malley & Avenatti today announced that Big Four auditing firm KPMG, LLP has been ordered by a New Jersey Superior Court judge to stand trial in a massive accounting fraud lawsuit. Cast Art Industries, LLP v. KPMG, LLP, Superior Court of New Jersey Law Division - Middlesex County (Docket No. MID L-3295-03). Cast Art sued KPMG in 2003 for professional malpractice and negligence for allegedly failing to detect a pervasive financial fraud at Papel Giftware, Inc. prior to Cast Art acquiring Papel in December 2000 for nearly $50 million. In a just released written opinion, The Honorable Judge Heidi Willis Currier found sufficient evidence for a jury trial to proceed against KPMG, Papel's auditor. In one e-mail uncovered during the lawsuit, a member of Papel's management described how the company had "raped and pillaged to an extreme" in order to meet its forecasts. A KPMG partner later acknowledged, in a memorandum he sent to others at KPMG, that Papel's management could not be trusted. Despite this, KPMG repeatedly represented to Cast Art and others that Papel's financial statements were accurate and no fraud had occurred. "Wall Street, Main Street, investors, and the public at large depend on auditing firms to be truthful and accurate when reporting on the financial condition of company," stated Michael Avenatti, a lawyer for Cast Art. "In this case, like in too many others, KPMG cut every possible corner and fell woefully short." Earlier this year, a court-appointed investigation blasted KPMG for sanctioning dubious accounting practices at New Century Financial Corp., thereby assisting in the collapse of the subprime lender and contributing to the subprime market meltdown. Cast Art claims that for three years prior to its acquisition of Papel, KPMG repeatedly affirmed that Papel's financial statements were accurate when in reality the company's management had engaged in a number of fraudulent schemes designed to inflate the value of the company to potential buyers. Cast Art alleges that Papel's management booked tens of thousands of fraudulent transactions on the company's books and records by, among other things, purposely shipping product to phony customers and double and triple shipping the same product to the same customer. Cast Art plans to seek close to $50 million at trial. Cast Art is represented in the lawsuit by Michael J. Avenatti of the California law firm Eagan O'Malley & Avenatti, LLP and Alan Wasserman of the New Jersey law firm Wilentz, Goldman & Spitzer, P.A. Opening statements are expected to begin in the trial on September 15, 2008

Big Four auditing firm KPMG, LLP has been ordered by a New Jersey Superior Court judge to stand trial in a massive accounting fraud lawsuit.

Eagan O'Malley & Avenatti today announced that Big Four auditing firm KPMG, LLP has been ordered by a New Jersey Superior Court judg...

FBI is investigating possible fraud at IndyMac

The FBI is investigating possible fraud at IndyMac, the California lender which was seized by regulators last Friday after America's biggest high street bank failure for two decades. Law enforcement sources told the Associated Press that the inquiry revolved around home loans made by IndyMac to risky borrowers and was focused on the bank itself, rather than on individuals who ran it.The FBI declined to comment on IndyMac specifically, although a spokesman said the scope of the bureau's examination of the sub-prime mortgage industry had broadened from 19 inquiries to 21 since April. A spokesman said: "We receive information from a variety of sources on a daily basis, and we have an obligation to review each allegation on its merits." Banking regulators took over IndyMac after a run on deposits, as customers withdrew $1.3bn in 10 days. At its peak, IndyMac had assets of $32bn. Under a federal insurance scheme, the first $100,000 of savings for each depositor is guaranteed. But anxious customers continued queueing outside branches to withdraw savings this week. Pasadena-based IndyMac is the fifth US bank to close this year, and is the biggest failure since the Chicago bank Continental Illinois collapsed in 1984. An estimated 10,000 customers could lose unprotected deposits of some $1bn. A New York senator, Charles Schumer, who wrote a public letter in June raising concerns about lax lending at IndyMac, has been blamed by the Office of Thrift Supervision for inciting panic among customers. Schumer argues that the OTS is responsible for allowing the bank to become vulnerable in the first place. IndyMac's demise has prompted jitters about other regional banks. Seattle-based Washington Mutual and Ohio's National City Corporation were obliged to issue statements denying liquidity crises this week after their shares plunged.

FBI is investigating possible fraud at IndyMac

The FBI is investigating possible fraud at IndyMac, the California lender which was seized by regulators last Friday after America's big...

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients in European and off-shore banks to avoid paying taxes to the IRS.The news has many in Washington up in arms, and a senate committee has called a hearing for Thursday. They want to meet with UBS representatives, who allegedly "set up sham entities for the US clients in tax havens, such as Panama or the British Virgin Islands, and pose as the owners of the entities." One UBS banker has pled guilty to smuggling cash and diamonds to Europe so U.S. clients could avoid paying taxes.Phil Gramm has worked for UBS since leaving the U.S. Senate immediately after using his position as a Senator to remove six-decade-old consumer banking protections in place since the Great Depression. The 1999 Gramm law, called the Gramm-Leach-Bliley Act, is the main cause of the subprime mortgage meltdown that has crippled the U.S. economy. Gramm deregulated the banking industry, quit the Senate to leave for UBS, then lobbyied George W. Bush on behalf of UBS to remove remaining state laws that protect consumers from predatory lending. Scandals are nothing new to the Gramm family. Around the same time Gramm was lining his pockets by laying the groundwork to destroy our economy, his wife Wendy used her power as a government official to delay investigations into Enron wrongdoing. Wendy Gramm then quit to take a position on the Enron board of directors. Wendy Gramm later was sued for her part in insider trading and paid a $13 million fine with her own money.Phil Gramm is also the same person who last week said that America was not in a recession, that the problem is that "America is a nation of whiners". John McCain tried to distance himself from Gramm after a firestorm erupted over that comment, even going so far as to claim Gramm would take a smaller role in his campaign.If the mainstream press connect the dots and put UBS and Phil Gramm together it could and should mark the end of any major influence Gramm has on the McCain campaign. Some people from UBS, and some U.S. tax dodgers will likely go to prison as well.A scandal like this would historically be a crippling blow to a presidential campaign, but don't expect much negative coverage tying McCain to Gramm and UBS. The war profiteering defense contractors who own the media today refuse to eat their own

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American clients

UBS, is under hot water after it was revealed today that they allegedly helped hide up to $20 billion belonging to their richest American cl...

Harriette Walters is in federal custody on money laundering, bank fraud and other charges

Harriette Walters was generous with her friends.She showered the people she met with cash they used to buy fancy vacations, designer goods, fur coats, cars and homes. Those friends included a bank teller, hair salon owner, luxury goods saleswoman and an IRS tax official. But federal prosecutors say the gifts were more than generosity.The midlevel official in the District of Columbia's tax office used them to recruit the network she would need to steal roughly $50 million from D.C.'s coffers, prosecutors said in federal court filings in Washington and Maryland. Walters is in federal custody on money laundering, bank fraud and other charges. Her attorney, Steven Tabackman, would not comment on the investigation. Seven of the 13 friends and relatives charged in the case so far have pleaded guilty, and their pleas provide a window into what prosecutors say is broad scheme that eluded detection for about two decades.She wrote fake property tax refund checks to shell firms controlled by relatives and friends or in the names of real, unsuspecting companies, according to prosecutors. Court documents list dozens of checks, some for more than $500,000, drafted as early as 1991.Checks were picked up at the tax office, deposited into bank accounts, then distributed to partners in her scheme, prosecutors say. Walters personally approved vouchers for the checks to avoid detection, prosecutors say.The amounts were initially small _ just a few thousand dollars in the late '80s. To boost the amounts and evade detection, Walters recruited people who had business bank accounts, filings show. Walters worked for more than 25 years in the tax office, eventually as a manager in the property tax refund division. Her longevity and a reputation for diligence made her a trusted worker. The city even consulted her when it developed the computerized tax system she is accused of manipulating. "She was known for being professional, very direct, efficient," said Sherryl Hobbs Newman, the former tax office chief, in testimony to the D.C. Council last November. "She was not one of those people you would be questioning their performance."Walters, whose annual salary was $81,000, also gave gifts and loans to co-workers, earning her the nickname "Mother Harriette," according to testimony at the council hearing. FBI search warrants from her Washington home list more than 40 Louis Vuitton handbags among a hoard of clothes, jewelry, shoes and a Faberge egg. She spent $1.4 million at Neiman Marcus, a chain of high-end department stores, court documents say.Friends and co-workers assumed her money came from an inheritance from her father, a banker in the U.S. Virgin Islands, said Samuel Pope, who owned a D.C. beauty salon frequented by Walters in the '80s. Pope said Walters was a kind, generous woman and they became close friends. "She seems to care about what happens with most people and with their problems," he told The Associated Press in an interview two weeks ago. "She seemed to always be in their corner to help out." Last year, Pope was having financial difficulties and Walters called him to report he had a $75,000 tax refund on his Washington home, he said. Pope said he thought the money was legitimate."Why turn down that kind of money?" he asked.However, Pope pleaded guilty Wednesday to conspiracy to commit money laundering and mail fraud. According to prosecutors, Walters let Pope in on the scheme about 20 years ago, and that he took in more than $1.5 mllion by allowing his business bank account to be used for check deposits. He also sought out two property tax refunds from Walters, authorities said. Walters' family appeared to be key to the scheme. A niece is accused of delivering checks and distributing the money. Her brother used his plumbing business for deposits while her nephew, used the account of his cleaning business, court documents state.Most of her accused conspirators didn't ask questions, chose not to believe they were participating in fraud or didn't understand the scale, even as they pocketed hundreds of thousands or millions of dollars from Walters, according to court filings and defense attorneys.Alethia Grooms, a real estate agent from Prince George's County who also did graphic design, would draft fake documents such as check stubs to help cover up the alleged fraud, according to her lawyer, Kevin McCants. She also helped deposit about $600,000 in checks, though McCants said she didn't know how big the scheme was. She made about $200,000, but gambled most of it away with Walters at casinos.Grooms plans to plead guilty to conspiracy to commit fraud, McCants said. Some people held key positions.Walter Jones was a bank worker when Walters came in as a customer in the mid-1990s. The two became friends, and Walters began to use Jones for most of her banking. She offered him gifts of $100, which Jones refused _ but he took the money when the offers went up to $1,000.Jones, who eventually became an assistant manager at a Baltimore Bank of America branch, helped deposit nearly $18 million in checks, and in return, received $366,000, according to his May plea to conspiracy to commit money laundering. The ring included an IRS tax official, Robert Steven, who deposited $9.2 million into the account of a catering business he owned with his wife, documents say. They used the $1.7 million they kept to buy Jaguar cars, a townhouse, and Bahamas trips. His wife faces federal charges and Steven pleaded guilty to federal counts. As for Walters' family, her niece Jayrece Turnbull is still facing charges, and her brother, Richard Walters and nephew, Ricardo Walters, have pleaded guilty to federal charges. Ultimately, the penalty proved greater than what people gained. Many face long prison terms and must repay the full amount of checks they handled, even if they didn't keep all the money.

Harriette Walters is in federal custody on money laundering, bank fraud and other charges

Harriette Walters was generous with her friends.She showered the people she met with cash they used to buy fancy vacations, designer goods, ...

Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans

Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans made to risky borrowers, The Associated Press has learned.CBS News' Stephanie Lambidakis confirmed that the FBI is investigating the failed bank and that the probe began before its collapse.The investigation is focused on the company - which was taken over last Friday by the FDIC - and not individuals who ran it, according to a law enforcement official who was not authorized to speak publicly about the investigation. IndyMac Bank's assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said. "The FBI currently has 21 investigations related to the sub-prime market industry," FBI spokesman Richard Kolko told CBS News. "We receive information from a variety of sources on a daily basis, and we have an obligation to review each allegation on its merits. Given the volatility of today's subprime market, we have seen an increase in sub-prime related complaints."The Office of Thrift Supervision said it transferred IndyMac's operations to the Federal Deposit Insurance Corporation because it did not think the lender could meet its depositors' demands. FDIC spokesman David Barr could not immediately be reached for comment Wednesday. over the last year, and faced with a cratering housing market, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.Countrywide Financial Corp., the nation's largest mortgage lender, is also under scrutiny. Additionally, two former Bears Stearns managers were indicted last month on conspiracy and securities and wire fraud charges alleging they lied to investors in a hedge fund that tanked last year as the subprime market collapsed. Those charges marked the first criminal charges to arise on Wall Street from the subprime mortgage debacle.

Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans

Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans made to risky borrowers,...

Jagmeet Channa pleaded guilty to one count of conspiracy to defraud and another of money laundering after he admitted using colleagues' passwords

Jagmeet Channa, 25, showed no remorse as Judge Geoffrey Rivlin, sitting at the Southwark Crown Court, bemoaned his limited sentencing powers in dealing with the "audacious and outrageous" crime. Channa had previously pleaded guilty to one count of conspiracy to defraud and another of money laundering after he admitted using colleagues' passwords to steal money from a trading account which he then wired to associates in Manchester and Morocco. Today, Judge Rivlin told him: “This was no silly prank. This was a carefully planned and very serious attempt to transfer a fortune in money away and it almost succeeded." Channa worked at the Canary Wharf headquarters of Britain's largest bank for less than a year. In April, the court heard, he sent €60 million from an HSBC trading account to a Societe Generale branch in Casablanca; minutes later, he wired another €30 million to a Barclays branch in Manchester. However, Channa forgot that the account he had raided had to show a zero balance at the end of each day. The massive debit was discovered over the weekend by HSBC employees in Malaysia, who alerted colleagues in London. Both Barclays and Societe Generale were quickly contacted and the money was returned. HSBC estimated it lost about £54,000 in interest while the money was in other accounts. Initially, the employees whose passwords had been used by Channa were arrested and blamed for the crime. But further inquiries exonerated them and led to Channa, who was sacked by the bank. The court heard that Channa had taken the money at the direction of one or more co-conspirators, in exchange for the promise of a handsome cut. His defence lawyer, Peter Corrigan, said: “Because he had the sort of job he did, offers were made to him and he succumbed to temptation." However, Channa's refusal to cooperate with police meant that no other party involved in the crime has yet been identified. Judge Rivlin said: "Others were inolved, perhaps several others, and in the absence of any explanation from you I must assume this was a planned and sophisticated criminal enterprise. "You say you had no idea who these people were or what was going to happen to the money. I regret I cannot accept this statement." The judge told Channa that while his guilty pleas would attract some credit, “the evidence against you is quite overwhelming”. His confession, age, remorse and the fact he had not made a penny from his dishonesty were among the few other things in his favour. Judge Rivlin compared the maximum 10-year sentence available to the 14 years that could be passed for handling and burglary. But he said he must nevertheless "do all that I can to deter those employed by financial institutions from committing such offences". He added: “Where anyone acting in flagrant breach of trust and attempts to steal many millions of pounds, the sentence will inevitably be a very long one." Detective Sergeant Martin Peters said: “This crime is believed to be one of the largest frauds of its kind and it is thanks to the prompt response of the police and the banks that the money was recovered. “The City of London Police takes a robust stance against members of staff that abuse their position and steal from their employer.” The attempted fraud occurred at a sensitive time for the banking sector. It took place just months after Societe Generale, the French bank, alleged that trader Jerome Kerviel lost €4.9 billion (£3.8 billion), while Credit Suisse later revealed that some of its traders had caused pricing errors leading to a $2.85 billion (£1.4 billion) writedown.

Jagmeet Channa pleaded guilty to one count of conspiracy to defraud and another of money laundering after he admitted using colleagues' passwords

Jagmeet Channa, 25, showed no remorse as Judge Geoffrey Rivlin, sitting at the Southwark Crown Court, bemoaned his limited sentencing powers...

number of corporate bankruptcies in Japan rose 11.6 percent in the first half of 2008 with the number of cases related to higher material prices

Bankruptcies for the first six months totalled 6,022, while combined liabilities climbed 17.4 percent to 3.019 trillion yen (28 billion dollars) compared with the same period last year, Teikoku Data Bank said.number of corporate bankruptcies in Japan rose 11.6 percent in the first half of 2008 with the number of cases related to higher material prices hitting a record high, researchers said on Tuesday.June saw 1,065 bankruptcies leaving liabilities of at least 10 million yen each, up 7.1 percent from 994 cases in May, the research firm said in its monthly report.However, combined liabilities in June was down 1.9 percent from the previous month to 471.92 billion yen, but was still 40.3 percent up on the same period last year, it said. Bankruptcies in construction stayed at a high level due to declining orders for public works and rising material prices, the report said.The number of business failures related to the recent surge in raw materials costs reached a record high of 54 cases in June, when oil prices hit a record high of 140 dollars, up 40 percent since early 2008, it added.Corporate failures are expected to continue to increase and the pace accelerate, which will severely impact small and mid-sized firms, the research firm said.Japan has since 2002 been in its longest post-war economic expansion, but that "is about to end," Teikoku Data Bank said."In addition to the construction industry, small retailers are expected to face a period of tough conditions... as recent consumer surveys show household spending expected to decline," it added."Demand from overseas is falling, meaning more manufacturers are expected to go out of business."Top Japanese executives are at their most pessimistic in almost five years as soaring costs, a slowing global economy and a stronger yen pile pressure on profits that are expected to drop this year, the central bank said last week

number of corporate bankruptcies in Japan rose 11.6 percent in the first half of 2008 with the number of cases related to higher material prices

Bankruptcies for the first six months totalled 6,022, while combined liabilities climbed 17.4 percent to 3.019 trillion yen (28 billion doll...

If you're sitting there doing a crossword and you put the paper on the key, boof-boof-boof-boof, it can go right off ... You can just keep trading

Making money makes reputations at investment banks, but the numberless ways in which high-profile traders can lose eye-popping sums is making the case for much sharper focus on the unglamorous role of the risk control units. Despite a regular crop of scandals and errors, from unauthorised positions to "fat-fingered" trades, there is insufficient investment in systems to monitor traders and prevent unacceptable losses, said Giles Nelson, co-founder of trading technology provider Progress Apama. "If you look at surveillance of trading behaviour, it's somewhat seen as a Cinderella," said Nelson. "The real focus is on the exciting stuff, on making money, making deals ... That's where the investment in technology is." Yet the same traders can also lose a bank billions of dollars by circumventing the rules. Trading limits can be broken or errors hidden as unloved risk managers, often equipped with inadequate technology, struggle to impose controls on risk-loving traders. Unauthorised and undetected trading by a junior trader at Societe Generale earlier this year cost the French bank as much as 4.9 billion euros ($7.69 billion). A common mistake is to misprice products or deals, either deliberately, or due to a lack of liquidity or market data, or by the inadvertent typing of an extra zero. Just last week Canada's Toronto-Dominion Bank took a $90 million hit when a trader mispriced financial derivatives, while in June, Wall Street bank Morgan Stanley suspended a London-based credit trader who had overvalued positions by $120 million. In May, Lehman Brothers suspended two London equities traders after identifying a similar problem. THE ALPHA TRADER The problem, said Nelson, is partly because banks are wary of imposing too many controls on traders and so stifling innovation or prompting them to walk to more lax competitors. It is also very difficult to challenge the processes of a division that is a major revenue earner, said Brian Sentance, chief executive of Xenomorph, supplier of data management technologies. Existing safeguards struggle to keep up with the evolution of financial products and transactions and the proliferation of trading venues, and are often run on a series of independent spreadsheets or databases, which inevitably makes a bank vulnerable to errors or malfeasance. Sentance said some of his clients were already updating their risk systems. But banks still need to give risk managers greater power and invest more heavily in data and risk management technologies and procedures, Nelson said. "(Banks realise that) if we don't, then not only are we going to suffer reputationally and the regulators will come down harder on us, but we will lose significant amounts of money eventually," Nelson said. But some circumstances might always prove difficult to guard against. "If you're sitting there doing a crossword and you put the paper on the key, boof-boof-boof-boof, it can go right off ... You can just keep trading and trading and trading," said one London-based trader

If you're sitting there doing a crossword and you put the paper on the key, boof-boof-boof-boof, it can go right off ... You can just keep trading

Making money makes reputations at investment banks, but the numberless ways in which high-profile traders can lose eye-popping sums is makin...

Another Bank failure as Mortgage lender IndyMac Bancorp Inc said on Tuesday depositors had been withdrawing cash at an "elevated" pace

Mortgage lender IndyMac Bancorp Inc said on Tuesday depositors had been withdrawing cash at an "elevated" pace since a key U.S. senator questioned its ability to survive the housing crisis. IndyMac shares sank 38 percent to 44 cents. A collapse of the largest independent, publicly traded U.S. mortgage lender could prove a headache for U.S. regulators since more than $17 billion of its deposits carry federal insurance. Paul Miller, a Friedman, Billings, Ramsey & Co analyst, said shareholders may be wiped out, citing IndyMac's decision to stop most mortgage lending and inability to raise capital. Miller cut his price target for the stock to zero from $1.00. "It's hard to gauge how this situation will resolve itself," said Christopher Wolfe, managing director at Fitch Ratings. "We see a high likelihood of some kind of regulatory intervention occurring, which could result in asset dispositions, or the thrift going into receivership." When asked if the White House was involved in interagency discussions or considering any action, a spokesman responded: "This is an issue for the Fed." Prospect Mortgage, a Northbrook, Illinois-based affiliate of private equity fund Sterling Partners, said late on Tuesday it agreed to buy more than 60 IndyMac retail mortgage branches, which employ 750 people, for an undisclosed price. In a regulatory filing, IndyMac said it still faces "elevated levels of deposit withdrawals." It pointed to comments in late June from Sen. Charles Schumer, who chairs Congress's Joint Economic Committee, raising questions about a possible collapse. Schumer reiterated his concerns on Tuesday. IndyMac said it was working with regulators on a new business plan after losing $896 million in the nine months to March 31. "We are aware of the situation and are working closely with the institution," said a spokesman for the Office of Thrift Supervision, IndyMac's main federal regulator. Big mortgage rivals New Century Financial Corp and American Home Mortgage Investment Corp filed for bankruptcy protection last year. Countrywide Financial Corp, the top U.S. mortgage lender, avoided possible collapse when it was acquired last week by Bank of America Corp. "In short, IndyMac was a junior version of Countrywide," Schumer said in a statement on Tuesday. "IndyMac fueled its growth through unsound lending practices," the New York Democrat continued. "Regulators should consider ways to implement stricter oversight over the lending system so that there isn't another IndyMac." IndyMac reported $17.3 billion of its deposits were insured by the Federal Deposit Insurance Corp. The FDIC has $52.8 billion in its insurance fund to cover bank failures. FDIC Chairman Sheila Bair told the Senate Banking Committee last month that the housing downturn could cause "institutions of greater size than we have seen in the recent past to fail." SEEKING SECURITY IndyMac set plans on Monday to eliminate 3,800 jobs, or 53 percent of its work force, and stop offering most home loans. It also projected a larger loss in the second quarter than the $184.2 million loss it posted for January to March. Regulators concluded the company is not "well-capitalized," and IndyMac has about $1.7 billion of operating liquidity, a regulatory filing showed. A bank is considered well capitalized when it has an equity capital ratio over 6 percent. IndyMac had a ratio of 5.76 percent on March 31. It needs to keep its capital ratio between 4 percent and 6 percent, according to Douglas Landy, a banking partner with law firm Allen & Overy, "in order to remain adequately capitalized and avoid being subject to greater regulatory sanction." U.S. banking law gives regulators increasing power over institutions as their capital levels dwindle over time. IndyMac once specialized in "Alt-A" loans that often don't require borrowers to document income or assets. IndyMac's $77 billion of mortgage loans in 2007 gave it a 3.2 percent market share, ranking ninth nationally, according to newsletter Inside Mortgage Finance. But as rates rose and home prices fell, many borrowers found themselves unable to refinance, and defaults surged. IndyMac shares have skidded 99 percent in the past year, cutting its market value to $44 million from $3.3 billion. HANGING IN Fitch on Tuesday cut its issuer default ratings for IndyMac Bancorp to "CC," a low junk grade, from "B-minus," and for IndyMac Bank to "CCC" from "B." The rating agency also assigned IndyMac's roughly $720 million of uninsured deposits an "average" recovery rating, suggesting uninsured depositors might get 31 percent to 50 percent of their money back. Patricia Lannom, a retiree, said she decided to keep her $100,000 IndyMac certificate of deposit after employees at a branch in Torrance, California, said the funds were FDIC-insured. "I think somebody will buy them if they go under," she said. "What else can I do but hang in there?" FBR's Miller said the stock price might succumb to falling home prices, rising credit losses, rating agency downgrades, and IndyMac's decision to curb lending. "We do not believe that there is any value left for common shareholders," he wrote. IndyMac faces several shareholder lawsuits that accuse it of misleading investors about its financial condition. The company said it plans to keep offering reverse mortgages to older borrowers through its Financial Freedom unit, and operate 33 branches in Southern California. (Additional reporting by Dena Aubin and Martha Graybow in New York, and Rachelle Younglai in Washington, D.C.; Editing by Braden Reddall abd Andre Grenon)

Another Bank failure as Mortgage lender IndyMac Bancorp Inc said on Tuesday depositors had been withdrawing cash at an "elevated" pace

Mortgage lender IndyMac Bancorp Inc said on Tuesday depositors had been withdrawing cash at an "elevated" pace since a key U.S. se...

Fitch indicated it may move to cut its credit rating on Merrill’s long-term debt

Merrill Lynch (MER) has garnered the nod as an outlier among investment banks in terms of credit worthiness. But it’s a dubious distinction, at best. Ratings agency Fitch indicated it may move to cut its credit rating on Merrill’s long-term debt - a prospect it basically erased for the other three major investment banks. Citing the scope of the long-term credit that comes due next year, Fitch placed Merrill’s long-term issuer default ratings on rating watch with a negative bias, a move that often presages an upcoming cut in the credit rating itself. Fitch expressed pessimism about the prospects for Merrill’s fixed-income, currency and commodity operations, which it said could off-set strength in areas like Merrill’s retail brokerage operations. The rating agency also said that it anticipated further write-downs from Merrill’s exposure to its residential mortgage and monoline insurance exposure, which diminish expectations for a sustainable return to core profitability. Merrill shares traded down nearly 3%, though - to be fair - even the investment banks that weren’t put on rating watch suffered declines in Wednesday’s trading.

Fitch indicated it may move to cut its credit rating on Merrill’s long-term debt

Merrill Lynch (MER) has garnered the nod as an outlier among investment banks in terms of credit worthiness. But it’s a dubious distinction,...

Bank failures are extremely rare, savers might want to bear in mind that the Government will only underwrite the first £35,000 of your savings in any

Halifax said house prices had fallen by more than 6 per cent during the last year, having fallen 2 per cent in the last month. The average property now costs around £180,000. Mortgage rates have already hit their highest level for eight years, according to the Bank of England. The average rate on a two-year fixed rate mortgage has risen from 6.26 per cent to 6.63 per cent. The pain is set to continue as lenders tighten their lending criteria. For example, Alliance & Leicester still allows homeowners to opt for a term of 40 years on their mortgages but affordability will be calculated as if you were paying it back over 25 years. Ray Boulger of mortgage brokers John Charcol, said: "Today's Monetary Policy Committee (M per cent ) decision to keep the bank rate unchanged at 5 per cent was widely expected. With increasingly bad economic news almost daily from most sectors of the UK economy a rate cut is badly needed to help restore some confidence but the expectation of further increases the inflation is a major constraint on the MPC. "However, the dire economic news probably means that the MPC is no longer seriously considering increasing bank rate and so the main question is how long will we have to wait for the next cut. The MPC will be watching the price of oil and other commodities very closely." Jonathan Cornell, of mortgage brokers Hamptons Mortgages, said the Bank of England had been under tremendous pressure from two sides. "On one side inflation at 3.3 per cent is significantly above the bank's 2 per cent target and the Governor had to write an explanation letter to the Chancellor on June 16," he said."On the other side, a chronic lack of mortgage funding has led to house prices falling month on month. The majority of the inflationary pressure is linked to the rising price of oil, the price of other energy and food." Richard Cotton, senior partner at estate agents Cluttons, said: "The bank's decision to maintain rates suggests that it is continuing its laissez-faire attitude of the last two months, and failing to take positive action to deal with the current downturn in the property market and the wider economy. "The property industry needs to hear a positive message from the bank, that it understands the difficulties in the industry and is doing something about it. "Maintaining rates at 5 per cent will not give consumers any confidence in the bank's ability to manage this crisis, which will result in a worsening of current conditions in the property market and wider economy." But savers should be able to benefit with rates at a seven-year high as high street banks which are struggling to raise funds on the money markets try to attract large inflows of cash. As a rule, the highest paying accounts are run online as banks without high street branches have fewer overheads. Those customers who can afford to lock up their money for the minimum of a year will also receive preferential rates. Savers should be aware however that while bank failures are extremely rare, savers might want to bear in mind that the Government will only underwrite the first £35,000 of your savings in any one bank. This limit often applies to all the different brands operated by one bank.

Bank failures are extremely rare, savers might want to bear in mind that the Government will only underwrite the first £35,000 of your savings in any

Halifax said house prices had fallen by more than 6 per cent during the last year, having fallen 2 per cent in the last month. The average p...

Baninter US$2.5 billion fraud, which led to the world’s biggest bank collapse per capita

after five years the Supreme Court put an end to the proceedings that led to bank fraud convictions in the Baninter case, when it upheld the...

IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history

New chief executive of IndyMac Bancorp, brought in by the government to manage the failed bank, said new lending standards should prevent the kind of problems that have brought down credit markets.John Bovenzi, the chief operating officer of the Federal Deposit Insurance Corp., reassured consumers that bank failures have been rare in the past, and that if more banks do fail, the government has enough in reserve "I think the important point to make is that, historically, only a very small percentage of the banks on our problem banks list ever failed," he said on CNN late Sunday. "While there are 90 banks on the list, there would be no expectation that 90 of those banks would fail."Bovenzi took the helm of what will be IndyMac Federal Bank when the government stepped in late Friday afternoon to save the struggling institution.The Office of Thrift Supervision transferred control of IndyMac to the FDIC because it did not think the lender could meet its depositors' demands. IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history, regulators said after taking control of the bank.As of March 31, IndyMac had $19.06 billion in total deposits.Bovenzi reminded consumers that all accounts worth $100,000 and less are automatically insured by the FDIC, which has $53 billion in insurance funds. And he noted that there are ways to structure accounts so that more than $100,000 is covered."If there are other bank failures in the coming weeks, I think the same message, if your accounts are under $100,000, you have absolutely nothing to worry about," he said. "You can still find ways to protect more if you like."Beyond $53 billion, he said the FDIC would have go to other banks to raise more money, adding that in that case, consumers could expect some of that to be passed on in fees."Well, obviously it's a difficult time and there were certainly institutions that made loans that shouldn't have been made," he said. "There are standards being put out, hopefully, at institutions with better underwriting going forward so that this problem doesn't repeat itself."

IndyMac is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history

New chief executive of IndyMac Bancorp, brought in by the government to manage the failed bank, said new lending standards should prevent th...

U.S. regulators seized California savings and loan company IndyMac Bank and its $32 billion in assets.

Investors are scanning the banking industry for signs of more trouble after the biggest U.S. bank failure in more than two decades. Last wee...

Rachel Lottering believed to be on the run in Pretoria, allegedly duped people into believing that she had inherited R600-million.

Rachel Lottering, 37, believed to be on the run in Pretoria, allegedly duped people into believing that she had inherited R600-million.Bellville specialised commercial crime court on Monday authorised a warrant for the arrest of a woman alleged to have obtained loans by fraudulent means.She was to have gone on trial on Monday before Magistrate Amrith Chabilall on four counts of fraud, but was absent when the case was called.Facing the same charges were her husband, Jacob, of George in the Southern Cape, and a friend of the couple, Johannes Jantjies.The wife's absence caused the withdrawal of her privately funded attorney, William van der Schyff, who told the court she had not met her financial commitments towards him, nor had he been able to consult her.Her bail was initially fixed at R5 000, but was later reduced to R2 000.According to her husband, she was "somewhere in Pretoria", Van der Schyff said.He added: "Last Saturday, she informed me that she had no money to come down to Cape Town."On the first charge, prosecutor Jacques Smith alleges she fraudulently induced George businessman Werner Kruger to advance her R257 409 whilst her non-existent inheritance was being finalised.Her inheritance was to be invested in his business, Smith alleges.The second charge alleges that she duped Rodney Kemp, of Belhar on the Cape Flats, to resign his job and spend R43 000 on premises and office furniture for a company that he was to launch on her behalf.He did this on her false pretence that she was to invest R15-million of her inheritance in the business, and that he, his wife Merle, and Lottering and her husband would be the directors.The third charge alleges that she similarly induced Southern Cape businessman Andries George to lend her R33 000 while she waited for the finalisation of a R700-million inheritance - not R600-million as with the others. On the fourth charge, she is alleged to have similarly induced Belhar businessman to lend her R15 000 while she waited for her inheritance.The charge sheet did not specify what part her husband or Jantjies had in the alleged scam. The matter case was postponed to July 28, when the arrest warrant is to be executed should she again fail to appear in court.

Rachel Lottering believed to be on the run in Pretoria, allegedly duped people into believing that she had inherited R600-million.

Rachel Lottering, 37, believed to be on the run in Pretoria, allegedly duped people into believing that she had inherited R600-million.Bellv...

attorney Richard "Dickie" Scruggs was sentenced to five years in prison for conspiring to bribe a judge in front of whom he had a pending case

attorney Richard "Dickie" Scruggs, a high profile plaintiff personal injury attorney from Mississippi, was sentenced to five years in prison for conspiring to bribe a judge in front of whom he had a pending case.Mr. Scruggs and his firm made its reputation in suits against tobacco and asbestos companies and represented Hurricane Katrina victims in actions against insurers that had denied policy holders' claims. In an attorney fee dispute case arising out of the Katrina cases, Mr. Scruggs and his firm found themselves defendants. According to the indictment against Mr. Scruggs, he conspired to bribe the trial court judge in the fee dispute case to enter an order sending the claim to binding arbitration. Scruggs felt he would pay less by having an arbitration panel, rather than a jury, determine what he owed the attorney who sued him over the division of the Katrina case legal fees.All attempts to subvert the legal process are reprehensible, and must be punished. Not surprisingly, Mr. Scruggs case has been reported by the "tort reform" folks with great rejoicing. Mr. Dan Pero, the dean of reasoned, objective, in-depth analysis, has written a blog piece about it, filed in his "trial lawyer" category, reserved for examples of conduct of which he does not approve (very broadly defined) by trial attorneys. (Exclusively defined as those attorneys representing plaintiffs in personal injury actions. Apparently the American Justice Partnership cannot envision any possible misconduct by attorneys representing insurance companies or corporations.) By the way, the "Tort Reform" and "Trial Lawyer" categories of Mr. Pero's blog are intended to show why the country needs more rules to curb the greed of injury victims and those who represent them. Interestingly, there is no category entitled "Corporate Greed". I mention this because about the same time as Mr. Scruggs was sentenced, the most recent in a series of federal indictments were handed down in the continuing FBI probe of mortgage fraud across the nation (Mortgage Probe Results in Six Indictments). Corruption and lax business practice in the pursuit of profits in the mortgage and banking industries have helped pave the nation's path to recession. Yet, there is not one reference to such greed and such criminal activity in the American Justice Partnership's American Courthouse blog. Search if you like. I have. Perhaps I should consult the Michigan Supreme Court's Library of Dictionaries for the proper definition of "justice". What Mr. Pero and the AJP fail to recognize is that, in reviewing the Scruggs case, the "tort reformers" and the various Chambers of Commerce have more in common with Dickie Scruggs than they would care to admit. Mr. Scruggs, the defendant in the fee dispute, wanted the judge to order the case into arbitration, figuring he would do better there than in front of a jury. I assume he felt that if his actions were reviewed by a jury of average citizens, that the facts might yield a result not in his best financial interest. So, he tried to engage in a little private "tort reform" of his own, by bribing the judge to take the case away from the jury.

attorney Richard "Dickie" Scruggs was sentenced to five years in prison for conspiring to bribe a judge in front of whom he had a pending case

attorney Richard "Dickie" Scruggs, a high profile plaintiff personal injury attorney from Mississippi, was sentenced to five years...

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