WASHINGTON - 12/10/2011 - Wachovia Bank N.A., which is now known as Wells Fargo Bank N.A., has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $148 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced today.
As part of its agreement with the department, Wachovia admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees. According to the non-prosecution agreement, from 1998 through 2004, certain former Wachovia employees at its municipal derivatives desk entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment and related contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.
“The illegal conduct at Wachovia Bank corrupted the bidding practices for investment contracts and deprived municipalities of the competitive process to which they were entitled,” said Sharis A. Pozen, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division. “Today’s resolution achieves restitution for the victims harmed by Wachovia’s anticompetitive conduct and ensures that Wachovia disgorges its ill-gotten gains and pays penalties for its illegal conduct. We are committed to ensuring competition in the financial markets and our investigation into anticompetitive conduct in the municipal bond derivatives industry continues.”
Under the terms of the agreement, Wachovia agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry. To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation. Nine of the 18 executives charged have pleaded guilty.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and 26 state attorneys general also entered into agreements with Wachovia requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of restitution to the victims harmed by the manipulation and bid rigging by Wachovia employees, as well as other remedial measures.
As a result of Wachovia’s admission of conduct; its cooperation with the Department of Justice and other enforcement and regulatory agencies; its monetary and non-monetary commitments to the SEC, IRS, OCC and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute Wachovia for the manipulation and bid rigging of municipal investment and related contracts, provided that Wachovia satisfies its ongoing obligations under the agreement.
Earlier this year, JPMorgan Chase & Co. and UBS AG also entered into agreements with the Department of Justice and other federal and state agencies to resolve anticompetitive conduct in the municipal bond derivatives market. In July 2011, JPMorgan agreed to pay a total of $228 million in restitution, penalties and disgorgement to federal and state agencies for its role in the conduct. In May 2011, UBS AG agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies for its participation in the anticompetitive conduct.
The department’s ongoing investigation into the municipal bonds industry is being conducted by the Antitrust Division, the FBI and the IRS-Criminal Investigation. The department is coordinating its investigation with the SEC, the OCC and the Federal Reserve Bank of New York. The department thanks the SEC, IRS, OCC and state attorneys general for their cooperation and assistance in this matter.
The Antitrust Division, SEC, IRS, FBI, state attorneys general and OCC are members of the Financial Fraud Enforcement Task Force. For more information, visit www.stopfraud.gov.
Showing posts with label SEC. Show all posts
Showing posts with label SEC. Show all posts
Broker Indicted in Alleged 'Pump and Dump' Case
WASHINGTON - 2/2/2011 - An indictment unsealed on Feb. 1 in Detroit charges stock broker Gregg M. Berger, of New York, for his role in a wide-ranging fraud scheme to illegally "pump-and-dump" thinly traded Chinese and Israeli stocks, announced Assistant Attorney General Lanny A. Breuer and U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade.
The single count superseding indictment returned in the Eastern District of Michigan alleges that Berger, 47, conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley, and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007.
The indictment alleges that during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for his co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and Bradley have all been previously convicted and sentenced for their roles in the case.
"Pump-and-dump schemes undermine the integrity of our stock markets," Breuer said. "When stock brokers exploit their trusted positions to enrich themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we will pursue them vigorously."
The charges arose after a multi-year investigation led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, which revealed a sophisticated and extensive pump-and dump operation in which the defendants sent spam e-mails to manipulate thinly traded stocks. After the e-mail recipients bought the stock being promoted, thereby driving up the share price, Berger and his co-conspirators profited by selling their existing shares at the newly inflated prices.
According to the indictment, Berger's role was to act as the stock broker for the conspiracy. Berger allegedly established brokerage accounts for trading the stocks that were illegally promoted, arranged for shares of the stocks to be transferred into the brokerage accounts, executed stock trades at the direction of co-conspirator Tribble rather than the direction of the named account holders and transferred funds from the trading of the stocks to bank accounts controlled by the conspirators.
Berger also allegedly routinely provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, all without authorization from the named account holders.
The stocks artificially inflated and then sold by Berger and his co-conspirators included China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions, and m-Wise.
The indictment charges Berger with one count of conspiracy to commit securities fraud and wire fraud. It also seeks forfeiture of criminal proceeds. If convicted, Berger faces a maximum penalty of 25 years in prison, and a $250,000 fine. Berger is scheduled to be arraigned on Feb. 8 in U.S. District Court in Detroit.
"Investor fraud schemes like this one prey on small investors and are motivated by greed," McQuade said. "Financial fraud is an important priority so that we can protect victims and the integrity of our financial systems."
An indictment is merely an allegation, and a defendant is presumed innocent unless proven guilty in a court of law.
In a related action, the U.S. Securities and Exchange Commission (SEC) also filed civil fraud charges on Feb. 1 against Berger as well as seven other individuals and three companies involved in the scheme. The SEC seeks permanent injunctions, disgorgement and civil penalties, and a penny stock bar against Berger for violations of the antifraud and registration provisions of the securities laws.
The case is being prosecuted by Assistant U.S. Attorney Terrence Berg for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Criminal Division's Computer Crime and Intellectual Property Section.
Source: U.S. Department of Justice press release
The single count superseding indictment returned in the Eastern District of Michigan alleges that Berger, 47, conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley, and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007.
The indictment alleges that during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for his co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and Bradley have all been previously convicted and sentenced for their roles in the case.
"Pump-and-dump schemes undermine the integrity of our stock markets," Breuer said. "When stock brokers exploit their trusted positions to enrich themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we will pursue them vigorously."
The charges arose after a multi-year investigation led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, which revealed a sophisticated and extensive pump-and dump operation in which the defendants sent spam e-mails to manipulate thinly traded stocks. After the e-mail recipients bought the stock being promoted, thereby driving up the share price, Berger and his co-conspirators profited by selling their existing shares at the newly inflated prices.
According to the indictment, Berger's role was to act as the stock broker for the conspiracy. Berger allegedly established brokerage accounts for trading the stocks that were illegally promoted, arranged for shares of the stocks to be transferred into the brokerage accounts, executed stock trades at the direction of co-conspirator Tribble rather than the direction of the named account holders and transferred funds from the trading of the stocks to bank accounts controlled by the conspirators.
Berger also allegedly routinely provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, all without authorization from the named account holders.
The stocks artificially inflated and then sold by Berger and his co-conspirators included China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions, and m-Wise.
The indictment charges Berger with one count of conspiracy to commit securities fraud and wire fraud. It also seeks forfeiture of criminal proceeds. If convicted, Berger faces a maximum penalty of 25 years in prison, and a $250,000 fine. Berger is scheduled to be arraigned on Feb. 8 in U.S. District Court in Detroit.
"Investor fraud schemes like this one prey on small investors and are motivated by greed," McQuade said. "Financial fraud is an important priority so that we can protect victims and the integrity of our financial systems."
An indictment is merely an allegation, and a defendant is presumed innocent unless proven guilty in a court of law.
In a related action, the U.S. Securities and Exchange Commission (SEC) also filed civil fraud charges on Feb. 1 against Berger as well as seven other individuals and three companies involved in the scheme. The SEC seeks permanent injunctions, disgorgement and civil penalties, and a penny stock bar against Berger for violations of the antifraud and registration provisions of the securities laws.
The case is being prosecuted by Assistant U.S. Attorney Terrence Berg for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Criminal Division's Computer Crime and Intellectual Property Section.
Source: U.S. Department of Justice press release
Trader Charged with Threatening to Kill Officials
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By Steve Rensberry
----------------------------------- (RPC) - 1/18/2011 - Asset manager and commodities trader Vincent P. McCrudden of Dix Hills, NY, was charged on Jan. 14 with threatening to kill 47 U.S. officials, each of whom held various responsibilities in the regulation of the financial industry.
Agents apprehended McCrudden at Newark Liberty Airport in Singapore. He is being represented by defense attorney Bruce Barket and is being held without bail.
McCrudden, who had been living in Singapore, is a 20-year veteran of Wall Street and CEO of Alnbri Management, LLC, of Long Beach, New York.
Threats were alleged to have been made via e-mail against numerous active and former officials with the U.S. Securities and Exchange Commission, the National Futures Association, The U.S. Commodities Futures Trading Commission and the Financial Industry Regulatory Authority.
According to a summary of the case released by the U.S. Department of Justice, McCrudden, 49, faces two counts of transmitting death threats, each of which carries a maximum prison sentence of five years.
In one instance McCrudden is alleged to have stated in an e-mail sent to an NFA employee that "it wasn't ever a question of 'if' I was going to kill you, it was just a question of when. And now, that question has been answered. You are going to die a painful death."
McCrudden also posted threats on a website under his control, urging people to "buy a gun and take back the country," the DOJ announcement said.
"On another page on his website, the defendant included and 'Execution List' with the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC. That list included the chairperson of the SEC, the chairman of the CFTC, a former acting chairman and commissioner of the CFTC, the chairman and CEO of FINRA, the former chief of enforcement at FINRA, and other employees of the NFA and CFTC."
Furthermore, McCrudden upped the ante by offering a reward of $100,000 to anyone who could supply personal information about such officials and proof of their punishment.
The complain alleges that McCrudden began his threats not long after the CFTC filed a civil enforcement suit in early December, 2010, the latest in a string of disciplinary actions by regulatory agencies over many years.
Business Insider has reported on a number of McCrudden's alleged threats here, in particular those made against Dan Driscoll of the National Futures Association.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Lanny A. Breuer, Assistant Attorney General of the Criminal Division, United States Department of Justice; and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
Lynch stressed the importance of the government's case.
"In this day and age, there is no such thing as an idle threat. Those who threaten injury or worse to the lives of others will be promptly investigated and vigorously prosecuted," Lynch said.
The website of Alnbri Management, LLC says that McCrudden has two children and is a former soccer player with the University of Rhode Island and at one time played professionally for the Tampa Bay Rowdies and the Minnesota Strikers, in addition to being an amateur boxer and having raised money for slain and disabled officers with the New York Police Department.
But the site also contains this statement:
"Mr. McCrudden has spent the past 13 years and counting combating a colluded Government attempt to discredit and harass Mr. McCrudden through repeated bogus procedures. Mr. McCrudden has sought relief by suing multiple agencies and officials for $1 Billion. But this has not stopped certain higher ranking officials because they know that Judges are Government employees too. In order to stop the libel, slander and harrassment at the hands of these entities, and with no available forum in the US justice system, Mr. McCrudden has started a process to enact payback for years of Government abuse." See: Alnbri Management.
According to the site, McCrudden claims to be a two-time survivor of the World Trade Center bombings and to have lost 23 friends in the tragedy.
"Wake up my fellow citizens and middle class and go look into the mirror, because you my friends are the face of the new Al Qaeda! Civil disobedience can be a start for justice. Its us (middle class) against them (Government officials and the Bourgeosie). Start acting now before its too late!" the site says.
