Bankrupt Banker

Bear Stearns toxic debt fraud?

Allegations that Bear Stearns was holding too much illiquid subprime or "toxic debt", at inflated prices with insufficient demand to sustain prices. Instead of full disclosure, Bear Stearns put its own financial interests ahead of its shareholders by issuing misleading assurances that minimized any subprime problems and misstating that the investment bank was liquid and diversified, the claim alleges. It alleges that Bear Stearns violated the Florida Investor Protection Act (FIPA) and the rules of the National Association of Securities Dealers (NASD), the New York Stock Exchange (NYSE) and Federal Securities law. The claim further alleges that there was no real market for Bear Stearns' enormous, high risk, over leveraged subprime holdings at the inflated prices at which they were carried on Bear Stearns' books. Inevitably, the claim argues, inflated values were punctured and the air swept out of Bear Stearns' balance sheet, leaving the South Florida investor holding the proverbial bag.

Bear Stearns toxic debt fraud?

Allegations that Bear Stearns was holding too much illiquid subprime or "toxic debt", at inflated prices with insufficient demand ...

Gerald William Clark,plead guilty to two charges of fraud over $5,000.

Gerald William Clark, 55, appeared in Nova Scotia Supreme Court to plead guilty to two charges of fraud over $5,000.The Bedford man entered not guilty pleas on the remaining offences, including 18 counts of cashing forged cheques and one of breach of trust for allegedly misappropriating funds while he was a treasurer for the Bedford Minor Basketball Association.The Crown will not be offering evidence on any of those charges, which stem from alleged incidents between June 14, 2001, and Oct. 7, 2003.Police began investigating allegations of fraud in December 2004 after an internal review by Basketball Nova Scotia, the Metro Basketball Association and Bedford Minor Basketball showed that close to $150,000 had been moved around or gone missing. Crown attorney Mark Heerema said he anticipates his office will reach a joint recommendation with the defence before Mr. Clark's sentencing on Dec. 4. He would not speculate on what the sentencing recommendation might be. Mr. Clark also came under fire in 1994 for some questionable behaviour during his eight months as chief-of-staff for then-premier John Savage.He quit when Mr. Savage learned of allegations that Mr. Clark secretly gave a fellow Liberal a $35,000 consulting contract for a youth project, while serving as president of the Metro United Way. In the end, the project produced only a five-page report. No charges were ever laid.In another incident, Mr. Clark repaid more than $250 in personal expenses after concerns that he had allegedly misused a government credit card.

Gerald William Clark,plead guilty to two charges of fraud over $5,000.

Gerald William Clark, 55, appeared in Nova Scotia Supreme Court to plead guilty to two charges of fraud over $5,000.The Bedford man entered ...

William E. McKanry, his son, William C. McKanry, and mortgage broker Paula Enders,, each face a maximum penalty of five years in prison

William E. McKanry, 68, of Warrenton, his son, William C. McKanry, 42, of St. Albans, and mortgage broker Paula Enders, 36, of Florissant, each face a maximum penalty of five years in prison and/or fines up to $250,000 for each count of bank fraud and 20 years in prison and/or fines up to $1 million for each count of mail and wire fraud, according to U.S. Attorney Catherine Hanaway.Between December 2005 and January 31, 2006, the McKanrys’ sold 12 real estate properties through Enders, according to the indictment. The properties are located in Florissant, St. Charles, O’Fallon, Hazelwood, Lake St. Louis, Ballwin, St. Louis City and County, and the total sale price of the properties was $2.7 million.Enders would shop on-line to obtain mortgage financing for all of the 12 properties, prosecutors said. On the loan applications for these properties Enders falsified that the source of the down payments, settlement charges and subordinate finances were to be made by the buyer of these properties, when they were actually made by the McKanrys, prosecutors said. The indictment states that at the closings, Enders received $226,000 above her commission fees as the mortgage broker to buy Foundation Mortgage Inc. On the seller’s settlement statement these monies were falsely represented to be construction rehab costs on the particular properties, prosecutors said. Money would be going to Enders at the closings as construction rehab on these properties when they actually were to be used to purchase Foundation Mortgage.Since the closing on the 12 properties at William C. McKanry’s USA Title, 11 out of 12 properties ended up in foreclosure and were resold for $1.2 million for a loss of $1.5 million, prosecutors said.USA Properties, which William C. McKanry and his father, William E. McKanry operated, provided a list of their "for sale" properties to area brokers and real estate agents. The list identified the particular property address and corresponding "retail value" and "sale price,” according to the indictment.In order to sell the properties, USA Properties was willing to sell these properties below the purported appraised value to buyers, prosecutors said.“This market of favorably priced real estate to which Enders, William C. McKanry and William E. McKanry had access provided an opportunity,” according to the U.S. Attorney’s office. “By matching USA Properties with buyers, they exploited the difference between what USA Properties was willing to take for a property ‘sale price’ and what a prospective investor, induced by special deals, was willing to pay.”

William E. McKanry, his son, William C. McKanry, and mortgage broker Paula Enders,, each face a maximum penalty of five years in prison

William E. McKanry, 68, of Warrenton, his son, William C. McKanry, 42, of St. Albans, and mortgage broker Paula Enders, 36, of Florissant, e...

Michael A. Vallone convicted of participating in a nearly decade-long scheme to market and sell sham domestic and foreign trusts

Michael A. Vallone of Orland Park, Ill., was one of the founders and the executive director of The Aegis Company, now defunct and formerly based in south suburban Palos Hills, which marketed and sold trust packages to some 650 wealthy taxpayer clients throughout the United States. Vallone and five co-defendants were convicted in May of participating in a nearly decade-long scheme to market and sell sham domestic and foreign trusts through a network of promoters, sub-promoters, managers, attorneys and accountants. Vallone and the others essentially diverted income from businesses into sham trusts for clients, hiding hundreds of millions of dollars in income for those clients and resulting in a $60 million tax loss to the United States, making the case one of the largest of its kind, according to Nathan J. Hochman, Assistant Attorney General for the Justice Department's Tax Division; Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois; Eileen Mayer, Chief of the Internal Revenue Service Criminal Investigation Division (IRS-CI); and Alvin Patton, Special Agent-in-Charge of the IRS-CI in Chicago. U.S. District Judge Charles Norgle sentenced Vallone to serve 223 months in prison, followed by three years of supervised release. The judge will rule later on the government's request for forfeiture of more than $4 million, his home and off-shore bank accounts, as well as of the costs of prosecution. Vallone also remains liable for any taxes, penalties and interest owed. In addition to tax fraud conspiracy, Vallone was found guilty of and sentenced on 24 counts of aiding and assisting the filing of false tax returns, three counts of personal income tax evasion, seven counts of mail fraud and two counts of wire fraud. "Today's sentence sends a powerful and unequivocal message to those who seek to evade and help others evade their taxes, that they will be investigated, prosecuted, convicted, and sent to prison for years," said Assistant Attorney General Hochman. "There are numerous variations on abusive trust schemes, but in general, promoters say the trusts are designed to shift income and assets into vehicles that are either not subject to U.S. taxes or will make it impossible for authorities to trace," said IRS-CI Chief Mayer. "However, the financial investigative efforts of IRS special agents continue to unmask these abusive financial transactions for what they really are -- methods of tax evasion." "IRS nationwide has ongoing criminal and civil investigations of abusive trust tax fraud schemes involving both promoters and purchasers. Establishing abusive trusts for the purpose of evading taxes is a crime and one of the worst abuses of our nation's tax system. Today's sentence sends a clear message that there are serious consequences for those who engage in these abusive tax schemes," said Special Agent-in-Charge Patton of the IRS-CI in Chicago. Vallone and his co-defendants were convicted following an 11-week trial. The defendants were indicted in 2004, following a lengthy undercover investigation by IRS agents, code-named "Operation Trust Me," and the seizure of approximately 1.5 million documents, computer files and related materials. Nationwide, the Chicago-based investigation has resulted in convictions of more than 30 defendants and charges against approximately 30 other defendants around the country, including in Florida, Illinois, New York, Ohio and West Virginia. All six defendants were found guilty of one count of tax fraud conspiracy -- specifically, conspiracy to defraud the United States by impeding the IRS in the collection of tax revenue and conspiracy to aid and assist the preparation and filing of false tax returns on behalf of Aegis clients. All six defendants were also found guilty of additional tax offenses, while two of the six were also acquitted on some counts. Sentencing for the remaining defendants will take place at various times in October and November. The other defendants are: Edward B. Bartoli of Clearwater, Fla., a former attorney, who was also one of the founders of Aegis, and its legal director; Robert W. Hopper of Gadsden, Ala., also one of the founders of Aegis and the managing director; Timothy Shawn Dunn of Chesterton, Ind., a certified financial planner, who was a promoter and manager of Aegis trusts, and the managing director of the Aegis Management Company, which he created with Vallone, Bartoli and Hopper; William S. Cover of Naperville, Ill., also a promoter and manager of Aegis trusts, and the president of Sigma Resource Management Inc., which provided management services to purchasers of Aegis trusts; and Michael T. Dowd of Glenview, Ill., also a promoter and manager of Aegis trusts who provided management services to purchasers of Aegis trusts through Aegis and Sigma Resource Management Inc. Two other defendants in this case, David E. Parker of Williamsville, N.Y., an attorney who was the legal director of the Aegis Management Company, and John C. Stambulis of Palos Heights, Ill., an attorney and a trust counsel of Aegis, both pleaded guilty and testified for the government at trial. They are also awaiting sentencing.

Michael A. Vallone convicted of participating in a nearly decade-long scheme to market and sell sham domestic and foreign trusts

Michael A. Vallone of Orland Park, Ill., was one of the founders and the executive director of The Aegis Company, now defunct and formerly b...

Warren Kyle Foote faces up to five years in prison after entering guilty pleas to reduced securities fraud charges

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtJ18YX8bAo-sFITCFwG0x8Dou-o2EI5CiZvZKqoTq_Z0SNowsxlzGX1nkYP0DFaeGO4sbe_ozCP90QT3KLptg9dmz3veU5hhz_9a23vtVPXvb48AF9WcqOVNCLt3ze5RgPywXY-WqAXGC/s1600-h/foot.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5253048594952756370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtJ18YX8bAo-sFITCFwG0x8Dou-o2EI5CiZvZKqoTq_Z0SNowsxlzGX1nkYP0DFaeGO4sbe_ozCP90QT3KLptg9dmz3veU5hhz_9a23vtVPXvb48AF9WcqOVNCLt3ze5RgPywXY-WqAXGC/s400/foot.jpg" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; CURSOR: hand" /></a> Warren Kyle Foote, faces up to five years in prison after entering guilty pleas to reduced securities fraud charges. The 28-year-old Salt Lake City man embarrassed Westminster College last year after pledging $3.4 million to help establish the private school's Institute for New Enterprise at the very time his alleged scams were unraveling. The small private school publicized the gift, which Foote's victims say he used to build trust - even though he never gave a cent to the college, which he attended briefly a decade ago. The Utah Attorney General's Office charged Foote with eight second-degree felony counts, including theft and a pattern of unlawful activity, involving six victims whom Foote is accused of cheating out of thousands of dollars. Foote pleaded guilty to five third-degree felony counts, exposing him to prison time when Judge Deno Himonas sentences him Jan. 2. Later this month, Foote is to appear in court to resolve bad-check charges brought by county prosecutors. In late 2006 and early 2007, Foote was posing as an altruistic entrepreneur who had made a fortune in "hard money" lending when he approached several potential investors with supposedly risk-free ventures, the fraud charges say. He touted his Westminster gift with one victim as proof of his success and philanthropic intentions. Susen Sawatzki is a magazine editor who interviewed Foote for an article about his electronic billboard company Red Outdoor. Afterward, Foote offered her opportunities to make easy money in some hard-money deals. Foote held himself out as a millionaire who co-owned California's Deerfield Ranch Winery and was developing a high-rise project in downtown Salt Lake City. Sawatzki declined his investment offers, but Foote did persuade her to put up a $50,000 short-term loan, which she financed thorough a home-equity loan, to help another investor close a real estate deal. She entrusted the money to Foote on his promise that he would secure the loan with an interest in the property. Later, Sawatzki tried repeatedly to get Foote to produce documentation of the transaction, but he put her off. After the loan was due, he paid her with checks that bounced, according to the charges. Foote finally produced documents, which an investigator later suspected of being faked, since the property described in mortgage documents did not match the address Foote provided, and of bearing forged signatures. Foote grew up in Clearfield, the youngest of five, and the family moved to Taylorsville when he was a teenager. He attended Westminster for a semester after high school, but never earned a college degree. Both his parents died of cancer and he remains estranged from his siblings, according to a sister. Foote went on an LDS Church mission and was invited to join a Utah chapter of Rotary International, the conservative service organization. He used his Rotary connections to build trust with two other victims, court documents allege.

Warren Kyle Foote faces up to five years in prison after entering guilty pleas to reduced securities fraud charges

Warren Kyle Foote, faces up to five years in prison after entering guilty pleas to reduced securities fraud charges. The 28-year-old Salt La...

Tom Petters was charged with mail fraud, wire fraud, money laundering and obstruction of justice

Petters Group Worldwide had $2.3 billion in revenue in 2007. The company has investments in dozens of companies; Polaroid is among its other well-known holdings. Tom Petters was arrested Friday on federal counts of fraud, money laundering and other charges, more than a week after FBI agents raided his home and offices for an alleged multimillion-dollar investment scheme.Petters, 51, was charged Thursday with mail fraud, wire fraud, money laundering and obstruction of justice, the U.S. Attorney's Office said in a statement. Petters, who was arrested without incident about 10 a.m. at his suburban Wayzata home, was due in federal court at 3 p.m. Charging documents weren't immediately on file in federal court.An FBI affidavit filed last week alleged Petters and some associates were involved in schemes since the mid-1990s that defrauded investors of as much as $100 million. One of Petters' associates was recorded as saying the scheme could've totaled $2 billion in fraudulent funds, the document said.The scheme was tied to Petters Co. Inc., a unit of Petters Group.According to the affidavit, Petters and some associates lured potential investors by creating false purchase orders, telling investors that PCI was purchasing merchandise from smaller vendors and then reselling the products to larger stores such as BJ's Wholesale Club and Sam's Club."The purchase orders and other documents in support of the transactions are entirely fabricated," the affidavit said. "Petters uses these documents to induce investors to invest money." Jon Hopeman, Petters' attorney, has said Petters denies any wrongdoing. Hopeman didn't immediately return a call Friday about Petters' arrest. On Monday, Petters resigned as Petters CEO and chief executive, saying the "events of the last few days" made it impossible for him to continue as leader.His home and offices were raided last week as part of an FBI search of nine properties and two vehicles. Authorities seized financial documents, computers, cash, credit cards, watches and pill bottles from Petters' home and offices.The FBI affidavit said the scheme helped fund Petters' other business ventures and lavish lifestyle. A second defendant was also charged with Petters on Thursday.Larry Reynolds, 67, of Las Vegas was arrested by FBI agents Friday in Los Angeles.The FBI affidavit said Reynolds was recorded as saying that he had known about the fake purchase orders for years and that he estimated the amount of fraud to be "in excess of $2 billion." The affidavit said Reynolds was with a company called Nationwide International Resources Inc., one of the smaller companies allegedly involved in the scheme. Authorities said Reynolds told investors his company was selling large amounts of merchandise to PCI - as depicted in false purchase orders.Reynolds got investors to give money to NIR, then he gave the funds to Petters, minus a commission for himself, the affidavit said.Another Petters associate, Robert White of Excelsior, was charged Tuesday. According to the charging document in U.S. District Court, White created false purchase orders in order to lure investors - and received millions for his efforts. Sun Country Airlines, a unit of a Petters subsidiary, has already seen fallout from the investigation.The carrier warned its employees on Thursday that they should be prepared for potential major layoffs or even a shutdown as early as Dec. 1. But the airline said it issued that letter to comply with legal requirements, and that it has no plans to shut down or slash its work force.Still, the airline is having cash-flow problems. Earlier this week, Sun Country told employees that half their pay would be deferred until after the first of the year. This is the slow season for the airline and it normally would have taken a short-term loan from its parent company, but the company said that's not an option now.

Tom Petters was charged with mail fraud, wire fraud, money laundering and obstruction of justice

Petters Group Worldwide had $2.3 billion in revenue in 2007. The company has investments in dozens of companies; Polaroid is among its other...

Charles Elliott Fitzgerald, 48,was ordered to pay $42.7 million in restitution at his sentencing today in federal court in Los Angeles

Charles Elliott Fitzgerald, 48,was ordered to pay $42.7 million in restitution at his sentencing today in federal court in Los Angeles. Fitzgerald was the seventh person to plead guilty in the investigation, U.S. Attorney Thomas O'Brien said in a statement. Three other defendants are awaiting trial and one has agreed to plead guilty, O'Brien said. This is not a case about deregulation or exploiting loopholes,'' U.S. District Judge Dean D. Pregerson said at today's hearing. ``This is a case of good old-fashioned lying and cheating.'' Fitzgerald fled to the Pacific island nation of Samoa in 2003, after he was sued by two of the banks he defrauded, O'Brien said in his statement. He was deported in 2006 and has been custody since then. Fitzgerald and the co-conspirators obtained inflated mortgage loans on homes in Beverly Hills, Malibu and other wealthy communities in Southern California, using falsified purchase contracts and appraisals. Lehman Brothers Bank funded more than 80inflated loans from 2000 into 2003, O'Brien said. Bernard Rosen, Fitzgerald's lawyer, said in a phone interview that he had hoped for a 10-year sentence, the statutory minimum.

Charles Elliott Fitzgerald, 48,was ordered to pay $42.7 million in restitution at his sentencing today in federal court in Los Angeles

Charles Elliott Fitzgerald, 48,was ordered to pay $42.7 million in restitution at his sentencing today in federal court in Los Angeles. Fitz...

Switzerland’s tax authorities, , are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department

Switzerland’s tax authorities, under pressure from a growing United States investigation into the Swiss bank giant UBS, are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department, two people briefed on the matter said Tuesday. The move would represent a significant shift in Switzerland’s banking secrecy laws, whose tradition dates to the Middle Ages. UBS began handing over data on hundreds of American clients with offshore private banking accounts to the Swiss taxing authority starting in August, these people said. The delivery to the Justice Department, expected to take place within several months, would place American client names in the hands of federal prosecutors seeking to build criminal cases against wealthy Americans they suspect of tax evasion. UBS, the world’s largest private bank, is under a widening federal investigation into whether it helped up to 20,000 wealthy American clients illegally evade taxes by stashing $20 billion in overseas accounts that were not declared to the Internal Revenue Service. UBS declined to comment, saying only that it is cooperating with the investigation. In July, a federal judge in Miami approved a Justice Department request seeking to force UBS to turn over certain client names. The summons is thought to be the first to a foreign bank.Swiss law makes disclosure of client data or names a crime unless the Swiss authorities think that the client has committed a serious crime, like money laundering or tax fraud. Unlike in the United States, Switzerland does not consider tax evasion to be a crime, though both countries have largely similar definitions of tax fraud.Under pressure in recent months from the Justice Department, Switzerland’s justice ministry, taxing authority and banking regulator have adopted the view that some American clients of UBS may have committed tax fraud.Justice Department officials hope to prove that the American clients committed fraud and engaged in tax evasion by concealing their ownership of offshore assets, in part by creating sham entities and then filing I.R.S. forms that falsely claimed the entities were the owners of the accounts.United States law requires American taxpayers, including trusts and partnerships, to report all financial accounts held in a foreign country if their total value exceeds $10,000 during the year. Not doing so can result in a penalty of up to 50 percent of the amount in the account at the time. In a new tactic, the Justice Department is focusing on failure by UBS’s American clients to file those reports.The investigation is being aided by a former top UBS private banker, Bradley C. Birkenfeld, who pleaded guilty in June to helping a client, Igor Olenicoff, a property developer, conceal about $200 million in offshore accounts that were undeclared to the I.R.S. Both men, who are United States citizens, are cooperating with the investigation. As part of the inquiry, the I.R.S.’s criminal division is scrutinizing 12 wealthy American clients of UBS and of LGT, a private bank in Liechtenstein, and is likely to send some of those cases to the Justice Department for prosecution, according to two people briefed on the matter. In addition, about 100 clients of LGT, and of UBS are under active investigation by the I.R.S.’s civil division, but their names have not been referred to the criminal unit for further scrutiny. The I.R.S. and the Justice Department declined to comment on Tuesday. The 100 client names and data came from a former LGT employee, Heinrich Kieber, who in 2002 stole company data on 1,400 worldwide clients and later turned it over to the I.R.S. and other countries. UBS gave the client records to the Swiss taxing authority after being urged to do so by the Swiss banking industry regulator known as the EBK. The Swiss “are taking the view that the client, not UBS, is mostly to blame,” one of the people briefed on the matter said.The data includes account names, assets, contact information, records of foreign entities incorporated for the purposes of hiding assets and client authorizations of trades. Under Swiss law, the Swiss taxing authority is required to inform UBS clients of any disclosures. American clients can appeal to the Swiss tax authority not to turn over the data to the Justice Department, a process that can take weeks or even months.

Switzerland’s tax authorities, , are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department

Switzerland’s tax authorities, under pressure from a growing United States investigation into the Swiss bank giant UBS, are expected to hand...

Sydney couple is facing more than 90 charges each over a string of ATM frauds that netted tens of thousands of dollars.

SYDNEY couple is facing more than 90 charges each over a string of ATM frauds that netted tens of thousands of dollars.The 22-year-old man and 37-year-old woman were arrested on September 22 outside a bank on Military Road, Mosman, in the city's north, police said today. Police allegedly found them with $4000 in cash, three blank ATM cards and a number of ATM withdrawal slips. A search of their nearby car allegedly uncovered another $18,000 in cash, 40 blank cards, withdrawal slips and disguises. The pair originally faced two charges each over the arrest, but further investigation revealed the couple's fraud was much bigger than first thought. Police have located a number of bank accounts opened by the couple, with one containing $112,000 that has been frozen by the New South Wales Crime Commission. Officers also seized 54 blank debit cards containing the details of legitimate banking customers. Police allege the couple accessed the accounts by fraudulently obtaining customer PINs. The pair now face an additional 91 charges each over the massive fraud. They were refused bail in Central Local Court yesterday, and will reappear in the same court on November 27.

Sydney couple is facing more than 90 charges each over a string of ATM frauds that netted tens of thousands of dollars.

SYDNEY couple is facing more than 90 charges each over a string of ATM frauds that netted tens of thousands of dollars.The 22-year-old man a...

SUPERMARKET Asda has launched a fraud inquiry after High Wycombe customers reported their card had been used illegally after visiting the store.

SUPERMARKET Asda has launched a fraud inquiry after High Wycombe customers reported their card had been used illegally after visiting the store. The retailer today promised customers at its Cressex store would get their money back after the fraud, which one customer said saw £1,400 withdrawn from ATM machines in the US and Pakistan. About half a dozen chip and pin machines were removed as part of the investigation at the Holmes Farm Way store. A statement from ASDA said: “We are aware of the situation and can confirm we have had a number of customers contact the High Wycombe store to say they've had fraudulent activity on their credit or debit cards and we are currently investigating this in conjunction with the banks and the police. “At Asda the safety and security of customer data is of utmost importance to us. Importantly, any innocent customer who is the victim of any type of card fraud is protected by the Banking Code, which means that they will not lose out financially. “As with all their financial transactions, customers always need to be extra vigilant when they use their credit or debit cards and should always report anything suspicious or strange to their bank or credit card provider.” It said: “Customers can be assured that we are taking all the necessary steps to ensure the continued safety and security of customer data. “As with all issues around card security we work very closely with all the relevant authorities to ensure that everything possible is done to mitigate fraudulent activity and to continue to develop technology to stay ahead of fraudsters.” One customer, who wished to remain anonymous, said he had had £1,400 stolen from US and Pakistan through more than 25 withdrawals. He said his mother had also had £300 stolen after shopping at the store.

SUPERMARKET Asda has launched a fraud inquiry after High Wycombe customers reported their card had been used illegally after visiting the store.

SUPERMARKET Asda has launched a fraud inquiry after High Wycombe customers reported their card had been used illegally after visiting the st...

Northwater Capital Management Inc, said that two of its publicly traded funds contain an investment that was the victim of fraud.

Northwater Capital Management Inc, which manages money for institutional and retail investors, said on Tuesday that two of its publicly trad...

Count Alfons Mensdorff-Pouilly,raids were carried out at the request of the SFO investigating allegations of bribery

Investigators from the Serious Fraud Office arranged for the agent, Count Alfons Mensdorff-Pouilly, to be raided in Austria. Austrian prosecutors said the raids were carried out at the request of the SFO investigating allegations of bribery and money laundering. The Austrian police seized a quantity of documents from the home and office of Mensdorff-Pouilly, who has been accused of receiving millions of pounds from BAE for promoting deals. He is the Viennese laird of a Scottish castle.The SFO's investigations into BAE have been controversial as the government stopped its inquiry into Saudi arms deals. Critics have alleged that the government is soft on BAE and has placed the company above the law and effectively made it immune from prosecution - an accusation denied by ministers. Attention has turned to other cases of alleged BAE bribery which the SFO has been investigating. Critics have been sceptical about the prospect of any progress in these investigations. However the SFO has promised to pursue and complete its investigations into alleged BAE corruption in countries including Tanzania, Romania, and South Africa. The SFO has been investigating corruption allegations in a BAE deal in the Czech Republic. The US Department of Justice is also understood to be investigating the Czech deal as part of its inquiries into the British company.US officials have alleged for many years that the Czech deal was corrupt. Mensdorff-Pouilly, who bought Dalnaglar castle in Perthshire, is one of three agents who allegedly handled corrupt payments in the joint Anglo-Swedish deal in which the Czech Republic agreed to lease Gripen fighter planes for £400m in 2004. Documents obtained by Swedish state television identified secret payments of more than £4m from BAE and alleged that the money was used to pay bribes. According to the documents, BAE agreed to pass the 55-year-old count up to £40m if the aircraft sale was achieved. It is alleged that in the end, a smaller sum was paid through a Panama-registered company when a smaller contract was signed.Today, Gerhard Jorosch, spokesman for the Austrian prosecutors, told the Guardian: "We searched the premises of Mr Mensdorff-Pouilly at the direct request of the SFO last Wednesday". He added that the SFO is investigating alleged bribery and money-laundering in the sale of Gripen fighter jets to Hungary and the Czech Republic. He added :"Quite a lot of documents were seized and transmitted to the SFO. The SFO and Austrian prosecutors are studying the material". It is understood that two of the count's business associates were also raided. Harald Schuster, the count's lawyer, said he denied all wrongdoing. "The Serious Fraud Office does not have anything concrete. They are fishing for something else."Last year, the count denied receiving offshore payments when the Swedish TV programme was broadcast. He said his company, MPA, had been paid since 1992 for consultancy services in eastern Europe.Mensdorff-Pouilly, the husband of a prominent Austrian politician, was interviewed last year over the corruption allegations. In a separate controversy he was named in 1995 on a tape recording which alleged that he was the conduit for secret payments from BAE to party funds in Austria in return for sales. He was acquitted for lack of evidence. According to an Austrian press report today, the raids were also carried out at the request of Swiss prosecutors who are investigating BAE over alleged money-laundering. The Swiss prosecutors would not comment. Also under scrutiny is a 2001 deal in which the Hungarian government agreed to lease 14 Gripen planes. The SFO declined to comment. BAE said: "BAE Systems continues to fully cooperate with the ongoing SFO investigation. As this is a continuing criminal investigation, it would be inappropriate for us to comment on its substance."

Count Alfons Mensdorff-Pouilly,raids were carried out at the request of the SFO investigating allegations of bribery

Investigators from the Serious Fraud Office arranged for the agent, Count Alfons Mensdorff-Pouilly, to be raided in Austria. Austrian prosec...

Syracuse-based Penn Traffic operates or is the supplier to more than 200 supermarkets in New York state, Pennsylvania, New Hampshire and Vermont

Syracuse-based Penn Traffic operates or is the supplier to more than 200 supermarkets in New York state, Pennsylvania, New Hampshire and Vermont, including 1Quality Market outlets in Western New York.The SEC alleged that Penn Traffic carried out the accounting fraud over multiple reporting periods, and failed to file certain required financial reports with the SEC or filed reports that did not fully comply with SEC regulations.According to the federal agency, Penn Traffic agreed to settle the SEC’s charges without admitting or denying the allegations. The SEC imposed no fines or monetary penalties against the company.Penn Traffic intentionally inflated its operating income and other financial statements by approximately $10 million by prematurely recognizing promotional allowances in a scheme that lasted for nearly three years, from fiscal year 2001 through at least the fourth quarter of the 2003 reporting period.Another complaint alleges a separate scheme from at least the first quarter of 2000 through the first quarter of 2003 involving Penny Curtiss, Penn Traffic’s wholly-owned bakery manufacturing subsidiary that has since closed.

Syracuse-based Penn Traffic operates or is the supplier to more than 200 supermarkets in New York state, Pennsylvania, New Hampshire and Vermont

Syracuse-based Penn Traffic operates or is the supplier to more than 200 supermarkets in New York state, Pennsylvania, New Hampshire and Ver...

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...

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