NEW YORK - 9/6/2015 - United States Attorney for the Southern District of New York Preet Bharara recently announced that Robert Stewart, the father of former investment bank managing director Sean Stewart, pled guilty to participating in a conspiracy to trade on inside information about several mergers and acquisitions announced between 2011 and 2014.
Robert Stewart was arrested on May 14, 2015, and Sean Stewart surrendered to federal authorities that same day
Charges against Sean Stewart remain pending before U.S. District Judge Laura Taylor Swain. A third member of the charged conspiracy, cooperating witness Richard Cunniffe, pled guilty before Judge Swain on May 12, 2015, and awaits sentencing. Steward is scheduled to be sentenced by Judge Swain on November 12.
“Instead of teaching his son lessons of right and wrong, Robert Stewart worked with him to break the law by trading on nonpublic information and sharing in the benefits with him. Robert Stewart’s criminal actions – to which he has pled guilty today – perpetuate the unfortunate perception that the markets are rigged in favor of those with connections,” Bharara said.
According to the agreement pursuant to which Robert Stewart entered his plea of guilty today, the underlying criminal complaint filed May 13, 2015, the Superseding Indictment filed July 15, 2015, and statements made during court proceedings:
In early 2011, Sean Stewart, who at the time held the position of Vice President in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father with nonpublic information about upcoming mergers and acquisitions.
The first of these deals involved the acquisition of Kendle International Inc. (“Kendle”) by INC Research, LLC, which was announced publicly on May 4, 2011
Sean Stewart worked on the deal, representing Kendle. Robert Steward made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011 When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, Robert Stewart reported that he used the proceeds of those trades to pay expenses related to Sean Stewart’s June 2011 wedding.
The second deal about which Sean Stewart tipped Robert Steward was the acquisition of Kinetic Concepts Inc. (“KCI”) by Apax Partners, announced on July 13, 2011. Although Robert Steward purchased some stock in KCI based on Sean Stewart’s tip, he sold that stock before the acquisition was announced, around the same time that Sean Stewart learned the Financial Industry Regulatory Authority was conducting an inquiry into Robert Steward’s Kendle trading.
Also around this time, in the spring of 2011, Robert Steward expressed a concern to co-conspirator and cooperating witness Richard Cunniffe that Robert Steward was “too close to the source” to be trading in KCI stock in his own account, and asked Cunniffe to make purchases of KCI call options for Robert Steward in Cunniffe’s brokerage account. Cunniffe agreed to do so, and also mirrored for his own benefit the KCI trades that Robert Steward was directing.
When the KCI/Apax Partners deal was announced, Robert Steward and Cunniffe reaped profits totaling approximately $107,790. At around this time, Robert Steward told Cunniffe that the source of the KCI tip and the earlier Kendle tip had been Robert’s son Later, around the spring of 2012, Robert Steward clarified for Cunniffe that the son in question was Sean Stewart, who worked on the “sell side” on Wall Street.
In October 2011, Sean Stewart left Investment Bank A. A few months later, he joined an investment banking advisory firm headquartered in Manhattan (“Investment Bank B”) as a managing director.
During Sean Stewart’s tenure with Investment Bank B, based on tips concerning nonpublic acquisition-related information supplied by Sean Stewart, Robert Steward had Cunniffe conduct options trading in advance of the public announcements of three more deals: (1) the acquisition of Gen-Probe Inc. by Hologic Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. (“Lincare”) by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. (“CareFusion”) by Becton, Dickinson & Co. (“Becton”), announced on October 5, 2014. Investment Bank B represented Hologic Inc. in connection with its acquisition of Gen-Probe Inc.; Linde AG in connection with its acquisition of Lincare; and CareFusion in connection with its acquisition by Becton. The profits that Robert Steward and Cunniffe reaped from illegal insider trading in advance of the announcements of these three deals totaled approximately $1.1 million. In the midst of the scheme, in December 2012, Robert Steward transferred at least $15,000 to Sean Stewart.
To try to avoid detection for their crimes, Robert Steward and Cunniffe refrained from speaking explicitly about their trading over the phone or e-mail, sometimes using “golf”-related code For example, shortly after the announcement of Lincare’s proposed acquisition by Linde AG, a German company, Robert Steward wrote to Cunniffe that he had seen a news story about the “high cost of golf reservations since a foreign company purchased all-even more expensive than imagined.” Other steps Robert Steward and Cunniffe took to avoid detection included trying to discuss their trading at face-to-face meetings and adopting a profit-splitting mechanism that had Cunniffe paying Robert Steward his portion of the illegal proceeds in small increments, over time, typically in cash.
In March and April of 2015, Cunniffe recorded meetings he had with Robert Steward During one such meeting, Robert Steward accepted a payment of $2,500 cash from Cunniffe, which was the balance of the proceeds owed to Robert Steward for profitable trading executed in Cunniffe’s account in advance of the CareFusion acquisition announcement. Also during this meeting, Robert Stewart admitted that Sean Stewart once chastised him for failing to make use of a tip, saying, “I can’t believe I handed you this on a silver platter and you didn’t invest in it.”
Source: Financial Fraud Enforcement Task Force
MARK TWAIN: FATHER OF AMERICAN LITERATURE -- FACT FACTS
ABOVE: Samuel Clemens, aka Mark Twain, was cemented as a premier writer of late 19th century America with his works "The Adventures of Tom Sawyer" and "Adventures of Huckleberry Finn." Find out more about his life and writing in this video.
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
New York Man Pleads Guilty to Insider Trading
Subjects
banker,
fraud,
Insider trading,
investment,
investors
Lawyer Sentenced for Securities, Wire Fraud
(NEW YORK) - 10/4/2013 - Everette L. Scott, Jr., a New Jersey attorney, was sentenced on Sept. 24 in New York federal court to 30 months in prison for engaging in securities and wire fraud in connection with two separate schemes, U.S. Attorney for the Southern District of New York Preet Bharara recently announced.
In the larger of the two schemes, Scott and co-defendant Tyrone L. Gilliams, Jr., solicited and misappropriated $5 million in investments in a bogus U.S. Treasury Strips investment program. In the other scheme, the defendants solicited and misappropriated a $450,000 investment in a Utah coal mine. In addition to buying luxury cars, jewelry, and other items, Gilliams spent hundreds of thousands of dollars of investor money organizing and promoting a multi-day festival in Philadelphia that headlined Sean “Diddy” Combs. Scott and Gilliams were found guilty following a jury trial in February 2013, and Scott was sentenced by U.S. District Judge Deborah A. Batts.
“With his sentence today, Everette Scott meets the just punishment that befalls an attorney who uses a law license as a vehicle for fraud – time in federal prison,” Bharara said. “This office will continue to make sure the perpetrators of fraud are brought to justice and pay the price for their crimes.”
According to the Indictment and the evidence presented at trial:
In 2009 and 2010, Gilliams was the owner of TL Gilliams, LLC, which purported to engage in transactions in commodities like oil and gold. Scott was an attorney at a small law firm in New Jersey and acted as TL Gilliams’s general counsel.
In the summer of 2010, Gilliams solicited $5 million dollars from two investors for purposes of trading in U.S. Treasury Strips, which are a derivative of U.S. Treasury Bonds. Gilliams and Scott arranged for the investors to make their investments by wiring them into an attorney trust account maintained by Scott’s law firm. Upon receiving the money, Scott – at Gilliams’s direction – misappropriated more than $700,000 to satisfy expenses stemming from an unrelated and failed venture to buy a coal mine in Utah. Scott also claimed $50,000 of the investment money for himself as purported fees. At Gilliams’s direction, Scott transferred most of the remainder to bank and brokerage accounts that Gilliams controlled.
At most, Gilliams purchased $250,000 worth of Treasury Strips with the more than $4 million in investment money transferred by Scott. Over a span of less than six months, Gilliams spent more than $1.6 million on an unrelated gold investment; more than $200,000 to purchase a commercial warehouse in Denver; at least $100,000 to buy or lease luxury cars; at least $50,000 for construction work on his home; at least $100,000 on luxury hotel and travel expenses; and more than $500,000 promoting two events – “Joy to the World,” involving an album release party with Jamie Foxx at the Vault nightclub in Philadelphia, and culminating in a red carpet, black tie gala at the Philadelphia Ritz-Carlton, headlined for a $120,000 fee by Sean “Diddy” Combs, and the “Gatta Be Jokin’ Comedy Jam,” a December 2010 comedy performance in Nassau, Bahamas.
Gilliams did not engage in any trading of Treasury Strips and, as a result, did not derive any profits. Nonetheless, during the period when he was spending investor money, Gilliams provided investors with false reports of trades and profits, and made occasional, nominal payments that he falsely claimed represented profits from Treasury Strips trading. Other than these purported profit payments, which totaled approximately $100,000, neither investor received any of his combined $5 million investment back.
In a separate scheme, Gilliams and Scott arranged in late 2009 for an investor to transfer $450,000 to SCOTT’s attorney trust account, to be held in escrow until used in connection with a venture to purchase the assets of a bankrupt Utah coal mine. Once the money was in Scott’s account, he secretly misappropriated approximately $112,000 by claiming it as purported fees, and transferred the rest to Gilliams or other individuals and entities at Gilliams’s direction. Until August 2010, Gilliams and Scott falsely assured the victim that his $450,000 remained safely in escrow, long after Scott’s escrow account had been emptied. Although the victim repeatedly demanded the return of his funds, Gilliams and Scott pacified him by producing forged bank documents and a false attorney attestation letter written by Scott purporting to show that Gilliams was in possession of the millions of dollars necessary to purchase and operate the Utah coal mine. In August 2010, after an attorney for the victim threatened Scott with professional discipline for his failure to return the escrowed funds, Gilliams and Scott paid the victim $450,000 using funds they raised for investment in Treasury Strips.
In addition to the prison term, Batts sentenced Scott, 52, of Sewell, New Jersey, to three years of probation. He was also ordered to make restitution in the amount of $1,005,000, and pay a $300 special assessment fee.
Gilliams is scheduled to be sentenced by Judge Batts on Oct. 31, 2013, at 10:30 a.m.
Source: Financial Fraud Enforcement Task Force
“With his sentence today, Everette Scott meets the just punishment that befalls an attorney who uses a law license as a vehicle for fraud – time in federal prison,” Bharara said. “This office will continue to make sure the perpetrators of fraud are brought to justice and pay the price for their crimes.”
According to the Indictment and the evidence presented at trial:
In 2009 and 2010, Gilliams was the owner of TL Gilliams, LLC, which purported to engage in transactions in commodities like oil and gold. Scott was an attorney at a small law firm in New Jersey and acted as TL Gilliams’s general counsel.
In the summer of 2010, Gilliams solicited $5 million dollars from two investors for purposes of trading in U.S. Treasury Strips, which are a derivative of U.S. Treasury Bonds. Gilliams and Scott arranged for the investors to make their investments by wiring them into an attorney trust account maintained by Scott’s law firm. Upon receiving the money, Scott – at Gilliams’s direction – misappropriated more than $700,000 to satisfy expenses stemming from an unrelated and failed venture to buy a coal mine in Utah. Scott also claimed $50,000 of the investment money for himself as purported fees. At Gilliams’s direction, Scott transferred most of the remainder to bank and brokerage accounts that Gilliams controlled.
At most, Gilliams purchased $250,000 worth of Treasury Strips with the more than $4 million in investment money transferred by Scott. Over a span of less than six months, Gilliams spent more than $1.6 million on an unrelated gold investment; more than $200,000 to purchase a commercial warehouse in Denver; at least $100,000 to buy or lease luxury cars; at least $50,000 for construction work on his home; at least $100,000 on luxury hotel and travel expenses; and more than $500,000 promoting two events – “Joy to the World,” involving an album release party with Jamie Foxx at the Vault nightclub in Philadelphia, and culminating in a red carpet, black tie gala at the Philadelphia Ritz-Carlton, headlined for a $120,000 fee by Sean “Diddy” Combs, and the “Gatta Be Jokin’ Comedy Jam,” a December 2010 comedy performance in Nassau, Bahamas.
Gilliams did not engage in any trading of Treasury Strips and, as a result, did not derive any profits. Nonetheless, during the period when he was spending investor money, Gilliams provided investors with false reports of trades and profits, and made occasional, nominal payments that he falsely claimed represented profits from Treasury Strips trading. Other than these purported profit payments, which totaled approximately $100,000, neither investor received any of his combined $5 million investment back.
In a separate scheme, Gilliams and Scott arranged in late 2009 for an investor to transfer $450,000 to SCOTT’s attorney trust account, to be held in escrow until used in connection with a venture to purchase the assets of a bankrupt Utah coal mine. Once the money was in Scott’s account, he secretly misappropriated approximately $112,000 by claiming it as purported fees, and transferred the rest to Gilliams or other individuals and entities at Gilliams’s direction. Until August 2010, Gilliams and Scott falsely assured the victim that his $450,000 remained safely in escrow, long after Scott’s escrow account had been emptied. Although the victim repeatedly demanded the return of his funds, Gilliams and Scott pacified him by producing forged bank documents and a false attorney attestation letter written by Scott purporting to show that Gilliams was in possession of the millions of dollars necessary to purchase and operate the Utah coal mine. In August 2010, after an attorney for the victim threatened Scott with professional discipline for his failure to return the escrowed funds, Gilliams and Scott paid the victim $450,000 using funds they raised for investment in Treasury Strips.
In addition to the prison term, Batts sentenced Scott, 52, of Sewell, New Jersey, to three years of probation. He was also ordered to make restitution in the amount of $1,005,000, and pay a $300 special assessment fee.
Gilliams is scheduled to be sentenced by Judge Batts on Oct. 31, 2013, at 10:30 a.m.
Source: Financial Fraud Enforcement Task Force
Subjects
fraud,
investment,
wire fraud
Investment Fund Chief Pleads Guilty in Scheme
NEW YORK - July 19, 2013 - Abdul Walji and Reniero Francisco, the chief executive officer and president, respectively, of Arista LLC (Arista), a California investment fund, pleaded guilty on July 2 in New York federal court to defrauding and misappropriating nearly $10 million from more than 35 investors by misrepresenting the nature and performance of the fund, and issuing fraudulent account statements to investors to cover up massive losses, announced Preet Bharara, the U.S. Attorney for the Southern District of New York.
Walji also pleaded guilty to perpetrating a multi-million dollar fraudulent scheme with pension plan funds that he managed through three California-based trusts: Allied Benefits Inc., Allied Benefits Trust, and Stone Lamm Trust (collectively, the Trusts). Both defendants were charged in December 2012, and pleaded guilty today before U.S. District Judge Denise Cote.
“Abdul Walji and Reniero Francisco told one lie after another in order to squeeze millions of dollars out of their investors, even as they misappropriated nearly $10 million, including at least $2.7 million solely for their own personal benefit,” Bharara said. “Walji even went a step further and orchestrated a second scheme that ultimately cost his victims another approximately $9.5 million. With today’s guilty pleas, they will begin to be held responsible for their actions and repay those wronged by their unlawful conduct.”
According to the three-count superseding information to which Walji pleaded guilty, the indictment to which Francisco pleaded guilty, the defendants’ plea agreements and other documents in the public record:
The Arista Fraudulent Scheme :
Arista began operations as an investment firm in February 2010, with its principal place of business in Newport Coast, Calif. In April 2011, Arista became a registered commodity pool operator with the U.S. Commodity Futures Trading Commission, and a National Futures Association member.
In early 2010, Walji and Francisco began to solicit individuals to invest in Arista. From 2010 through 2011, the defendants carried out their fraudulent scheme through three methods. First, Walji and Francisco misrepresented to several Arista investors the nature of the company’s investments and the returns that investors would receive from investing in Arista. For example, Walji and Francisco falsely told investors that their money would be invested in safe, risk-free securities, when in fact much of the money was invested in options and futures. Second, Walji and Francisco sent fraudulent account performance statements to Arista investors that misrepresented the value of their investments. In an effort to secure additional contributions, the defendants also concealed Arista’s trading losses, and told investors that they were profiting from their investments when they were actually losing money. Finally, Walji and Francisco misappropriated at least $2.7 million from Arista’s investors through fees to which they were not entitled, and which Walji and Francisco diverted for their own personal benefit. Based on their false representations, Walji and Francisco collected nearly $10 million from over 35 investors, and they ultimately misappropriated a large portion of the money.
From early 2008 through June 2013, Walji also perpetrated a separate fraudulent scheme using pension plan funds that he administered. Similar to the scheme set forth above, Walji executed his fraudulent scheme through three principal methods. First, Walji made oral misrepresentations to existing and potential clients of the Trusts concerning: (i) the nature of the Trusts’ pension plan investments; (ii) the investment value and past performance of the pension plans; and (iii) the source of funds distributed to plan participants who had reached retirement and/or who had requested distributions. Second, Walji distributed fraudulent statements to clients concerning the value of their accounts and the prior performance of their pension plans in order to forestall redemption requests, induce new clients to contribute to the plans, and induce existing clients to make additional contributions. As selected clients reached retirement age or requested disbursements, Walji sent those clients money that he represented to be proceeds of their individual pensions, when in fact he knew that the purported disbursements were often funds contributed by other clients. Third, Walji misappropriated approximately $300,000 of client funds for his personal use. In total, this scheme caused losses to approximately 35 additional victims in an aggregate amount of approximately $9.5 million.
Walji, 60, of San Juan Capistrano, Calif., pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of commodities fraud, and one count of securities fraud. The securities fraud charge carries a maximum sentence of 20 years in prison; the commodities fraud charge carries a maximum sentencing of 10 years in prison; and the conspiracy charge carries a maximum sentence of five years in prison. Francisco, 57, of Newport Coast, Calif., pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud and one count of securities fraud.
In connection with their guilty pleas, Walji consented to forfeit $13.6 million and Francisco consented to forfeit $4.1 million. The defendants also agreed to forfeit the proceeds of several bank and trading accounts.
This case is being handled by the U.S. Attorney’s Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys David I. Miller and Christopher D. Frey are in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.
Source: Financial Fraud Enforcement Task Force
Walji also pleaded guilty to perpetrating a multi-million dollar fraudulent scheme with pension plan funds that he managed through three California-based trusts: Allied Benefits Inc., Allied Benefits Trust, and Stone Lamm Trust (collectively, the Trusts). Both defendants were charged in December 2012, and pleaded guilty today before U.S. District Judge Denise Cote.
“Abdul Walji and Reniero Francisco told one lie after another in order to squeeze millions of dollars out of their investors, even as they misappropriated nearly $10 million, including at least $2.7 million solely for their own personal benefit,” Bharara said. “Walji even went a step further and orchestrated a second scheme that ultimately cost his victims another approximately $9.5 million. With today’s guilty pleas, they will begin to be held responsible for their actions and repay those wronged by their unlawful conduct.”
According to the three-count superseding information to which Walji pleaded guilty, the indictment to which Francisco pleaded guilty, the defendants’ plea agreements and other documents in the public record:
The Arista Fraudulent Scheme :
Arista began operations as an investment firm in February 2010, with its principal place of business in Newport Coast, Calif. In April 2011, Arista became a registered commodity pool operator with the U.S. Commodity Futures Trading Commission, and a National Futures Association member.
In early 2010, Walji and Francisco began to solicit individuals to invest in Arista. From 2010 through 2011, the defendants carried out their fraudulent scheme through three methods. First, Walji and Francisco misrepresented to several Arista investors the nature of the company’s investments and the returns that investors would receive from investing in Arista. For example, Walji and Francisco falsely told investors that their money would be invested in safe, risk-free securities, when in fact much of the money was invested in options and futures. Second, Walji and Francisco sent fraudulent account performance statements to Arista investors that misrepresented the value of their investments. In an effort to secure additional contributions, the defendants also concealed Arista’s trading losses, and told investors that they were profiting from their investments when they were actually losing money. Finally, Walji and Francisco misappropriated at least $2.7 million from Arista’s investors through fees to which they were not entitled, and which Walji and Francisco diverted for their own personal benefit. Based on their false representations, Walji and Francisco collected nearly $10 million from over 35 investors, and they ultimately misappropriated a large portion of the money.
From early 2008 through June 2013, Walji also perpetrated a separate fraudulent scheme using pension plan funds that he administered. Similar to the scheme set forth above, Walji executed his fraudulent scheme through three principal methods. First, Walji made oral misrepresentations to existing and potential clients of the Trusts concerning: (i) the nature of the Trusts’ pension plan investments; (ii) the investment value and past performance of the pension plans; and (iii) the source of funds distributed to plan participants who had reached retirement and/or who had requested distributions. Second, Walji distributed fraudulent statements to clients concerning the value of their accounts and the prior performance of their pension plans in order to forestall redemption requests, induce new clients to contribute to the plans, and induce existing clients to make additional contributions. As selected clients reached retirement age or requested disbursements, Walji sent those clients money that he represented to be proceeds of their individual pensions, when in fact he knew that the purported disbursements were often funds contributed by other clients. Third, Walji misappropriated approximately $300,000 of client funds for his personal use. In total, this scheme caused losses to approximately 35 additional victims in an aggregate amount of approximately $9.5 million.
Walji, 60, of San Juan Capistrano, Calif., pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of commodities fraud, and one count of securities fraud. The securities fraud charge carries a maximum sentence of 20 years in prison; the commodities fraud charge carries a maximum sentencing of 10 years in prison; and the conspiracy charge carries a maximum sentence of five years in prison. Francisco, 57, of Newport Coast, Calif., pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud and one count of securities fraud.
In connection with their guilty pleas, Walji consented to forfeit $13.6 million and Francisco consented to forfeit $4.1 million. The defendants also agreed to forfeit the proceeds of several bank and trading accounts.
This case is being handled by the U.S. Attorney’s Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys David I. Miller and Christopher D. Frey are in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.
Source: Financial Fraud Enforcement Task Force
Subjects
fraud,
investment,
stocks
Securities Broker Sentenced to 84 Months
(DOJ) - 5/22/2013 - A former stock broker was sentenced to prison on May 16 for his role in an extensive pump-and-dump stock manipulation scheme.
The announcement was made by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division , U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma, Special Agent in Charge James E. Finch of the FBI’s Oklahoma City Division and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison. In addition to his prison term, Lankford was ordered to forfeit $250,000. Proceeds from forfeited assets will be used to bring partial restitution to victims.
On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.
“Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” Raman said. “As this case shows, stockbrokers and other professionals will be punished if they break the law. Lankford now faces substantial time in prison for his manipulation scheme.”
According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges. Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.
Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.
Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants. Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012. James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme. Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme. Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison. The fifth defendant, Dean Sheptycki, remains a fugitive.
The case is being prosecuted by trial attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma. The case is being investigated by IRS-CI and the FBI.
Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison. In addition to his prison term, Lankford was ordered to forfeit $250,000. Proceeds from forfeited assets will be used to bring partial restitution to victims.
On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.
“Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” Raman said. “As this case shows, stockbrokers and other professionals will be punished if they break the law. Lankford now faces substantial time in prison for his manipulation scheme.”
According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges. Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.
Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.
Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants. Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012. James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme. Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme. Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison. The fifth defendant, Dean Sheptycki, remains a fugitive.
The case is being prosecuted by trial attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma. The case is being investigated by IRS-CI and the FBI.
Subjects
investment,
money,
securities,
stocks
Zillow, Inc. Faces Class Action Suit Over Stock
SEATTLE - (BUSINESS WIRE) - 11/30/2012 - Securities law firm Hagens Berman Sobol Shapiro, LLP (“Hagens Berman”), recently announced the filing of a class-action securities lawsuit against Zillow, Inc. (NASDAQ:Z) (“Zillow”) on behalf of a proposed class of investors who purchased Zillow stock during the period from Feb. 15, 2012, to Nov. 6, 2012 (the “Class Period”), inclusive.
Shareholders who purchased or otherwise acquired Zillow common stock during the Class Period are encouraged to contact Hagens Berman attorney Karl Barth at 206-623-7292 or to contact the Hagens Berman legal team through e-mail at Zillow@hbsslaw.com to discuss their legal rights. Investors can also contact Mr. Barth by visiting www.hb-securities.com/cases/Zillow.
Investors who wish to serve as lead plaintiff in the case must move the court no later than Jan. 28, 2013. Any member of the proposed class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Class members need not seek to become a lead plaintiff in order to share in any possible recovery.
Hagens Berman’s lawsuit, filed Nov. 29, 2012, in the United States District Court for the Western District of Washington, alleges that Zillow and certain of its officers violated the Securities Exchange Act of 1934.
On Nov. 5, 2012, Zillow announced its third quarter, 2012, financial results and reduced guidance for the fourth quarter and the full 2012 year. On the news, Zillow’s stock price fell nearly 18 percent, closing at $28.15 per share.
The complaint alleges that the defendants issued false and misleading statements to investors during the Class Period, causing the company’s stock to trade at an artificially high level. It claims the company misled investors regarding issues the company was having in signing up new real estate agents as subscribers, among other issues.
The complaint further alleges that company insiders sold 3.1 million shares of Zillow stock for nearly $115 million while the stock traded at an artificially high price.
The plaintiff in the case seeks to recover damages on behalf of the class and is represented by Hagens Berman Sobol Shapiro, LLP. Hagens Berman is a nationwide investor-protection law firm, with many years of experience prosecuting investor class actions and actions involving financial fraud.
For more information about Hagens Berman Sobol Shapiro, LLP, or to review a copy of the complaint filed in this action, visit www.hb-securities.com/cases/Zillow.
Shareholders who purchased or otherwise acquired Zillow common stock during the Class Period are encouraged to contact Hagens Berman attorney Karl Barth at 206-623-7292 or to contact the Hagens Berman legal team through e-mail at Zillow@hbsslaw.com to discuss their legal rights. Investors can also contact Mr. Barth by visiting www.hb-securities.com/cases/Zillow.
Investors who wish to serve as lead plaintiff in the case must move the court no later than Jan. 28, 2013. Any member of the proposed class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Class members need not seek to become a lead plaintiff in order to share in any possible recovery.
Hagens Berman’s lawsuit, filed Nov. 29, 2012, in the United States District Court for the Western District of Washington, alleges that Zillow and certain of its officers violated the Securities Exchange Act of 1934.
On Nov. 5, 2012, Zillow announced its third quarter, 2012, financial results and reduced guidance for the fourth quarter and the full 2012 year. On the news, Zillow’s stock price fell nearly 18 percent, closing at $28.15 per share.
The complaint alleges that the defendants issued false and misleading statements to investors during the Class Period, causing the company’s stock to trade at an artificially high level. It claims the company misled investors regarding issues the company was having in signing up new real estate agents as subscribers, among other issues.
The complaint further alleges that company insiders sold 3.1 million shares of Zillow stock for nearly $115 million while the stock traded at an artificially high price.
The plaintiff in the case seeks to recover damages on behalf of the class and is represented by Hagens Berman Sobol Shapiro, LLP. Hagens Berman is a nationwide investor-protection law firm, with many years of experience prosecuting investor class actions and actions involving financial fraud.
For more information about Hagens Berman Sobol Shapiro, LLP, or to review a copy of the complaint filed in this action, visit www.hb-securities.com/cases/Zillow.
Subjects
investment,
investors,
lawsuit
Officials Target Civil Business Opportunity Cases
(USDOJ) - 11/15/2012 - The Justice Department announced on Nov. 15 the filing of several criminal
and civil business opportunity fraud cases, initiated as part of a joint
sweep with the Federal Trade Commission and several states. Business opportunity fraud schemes take advantage of people
looking for work by luring them in with false promises of big profits
and leaving them worse off than they started. The cases include criminal charges against 14 individuals and civil cases against three businesses. The criminal and civil cases announced today are part of a series of investigations named “Operation Lost Opportunity.”
The Justice Department’s cases are part of the efforts of the
President’s Financial Fraud Enforcement Task Force and are being handled
by the Civil Division’s Consumer Protection Branch, in coordination
with the U.S. Attorney’s Offices for the Central District of California,
the Southern District of California, the Southern District of Florida,
the District of Oregon, the Western District of North Carolina, the
Western District of Pennsylvania and the Southern District of Texas.
Seven different business opportunity schemes are the targets of the Justice Department’s actions.
According to the charging documents, the criminal schemes
involved placement of advertisements online and in newspapers that
touted the profits that could be earned by purchasing a business
opportunity to own and operate vending machines or display racks.
The United States alleges that the schemes operated as follows:
Salespeople explained that consumers who purchased the opportunity would earn substantial income from the equipment.
According to the sales pitch, the vending machines or display
racks would be placed in store locations in the purchaser’s hometown and
would offer candy, refreshments or jewelry, depending on which
opportunity was being offered.
According to the sales pitch, the purchaser would then receive
profits based upon sales from the vending machines or display racks.
“In an attempt to lure wary consumers, fraudsters have crafted business
opportunity schemes that promise what appear to be more realistic
returns backed up by false success stories,” said Tony West, Acting
Associate Attorney General.
“But we are more determined than ever to bring to justice those
who are defrauding Americans out of their time, money, and faith in our
economic system – this law enforcement sweep represents a coordinated
effort to combat business opportunity fraud on multiple fronts.”
Enticed by the promise of a “turnkey” business, hundreds of consumers
lost millions of dollars purchasing the fraudulent business
opportunities targeted in this sweep.
The four businesses involved in the criminal component of the sweep include the following:
·
Mark Five Inc., a Houston company that promoted a jewelry business opportunity.
O n November 12, 2012 and November 14,
2012, the Department of Justice filed criminal informations charging
Billie Joyce Sanders and Michael Cupina in connection with their conduct
at Mark Five.
Each defendant was charged with conspiracy, which carries a maximum prison term of five years.
According to the charging documents, Mark Five salespeople
referred potential business opportunity buyers to Sanders and Cupina,
who falsely claimed to own and operate successful jewelry display racks.
One other individual was previously charged in connection with Mark Five.
In February 2012, a grand jury in Houston indicted Mark Five
principal Robert King on charges of conspiracy to commit mail and wire
fraud, and substantive mail and wire fraud.
King’s trial is scheduled for February 2013.
·
The Lauren Jewelry Collection, an Atascocita, Texas, company that promoted a jewelry business opportunity.
On November 13, 2012, the Department of Justice filed a
criminal information in the Southern District of Texas charging Regina
Rush in connection with the Lauren Jewelry Collection.
Rush was charged with one count of conspiracy, which carries a maximum prison term of five years.
According to the charging document, Rush served as the
proprietor of the firm and made false representations about the success
of distributors and the authenticity of references.
The charges state that Rush encouraged potential purchasers to
call references who made false statements about their experiences with
the Lauren Jewelry Collection.
·
American Vending Systems (AVS), a Colorado company that promoted energy candy business opportunities.
On November 14, 2012, the Department of Justice filed a
criminal information in the Western District of Pennsylvania charging
Pearl Pastilock in connection with her conduct at AVS.
Pastilock was charged with one count of conspiracy, which carries a maximum prison term of five years.
According to the charging document, AVS salespeople referred
potential buyers to Pastilock, who falsely claimed to own and operate
successful energy candy vending machines.
Five other individuals were previously charged for their conduct at AVS and related firms.
Richard Black, Gary Luckner, Lou Gubitosa, Trey Friedmann and
Mel Hendricks were all charged and pleaded guilty to conspiracy charges
for this conduct.
·
Multivend LLC, dba Vendstar, a New York company that promoted candy vending machine business opportunities.
On Oct. 10, 2012, a grand jury in the Southern District of
Florida indicted 10 individuals for misrepresenting a number of facts in
connection with the sale of Vendstar business opportunities.
More information about these charges can be found at:
The charging documents referred to above contain only accusations against the defendants and are not evidence of guilt.
The defendants should be presumed innocent unless and until proven guilty.
The civil cases the Justice Department filed allege that three
businesses violated the Federal Trade Commission’s Business Opportunity
Rule.
The businesses include:
·
The Zaken Corp., also doing business as The Zaken Corporation, QuickSell and QuikSell, (Zaken).
Zaken is alleged to be a Thousand Oaks, Calif., corporation that offers a work-at-home business opportunity.
According to the complaint against Zaken and its corporate
officer Tiran Zaken, the defendants offer consumers a business plan to
locate and contact businesses with excess inventory to sell.
The complaint alleges that Zaken represents that once purchasers
of the opportunity identify businesses interested in selling excess
inventory, Zaken will find a buyer for the inventory and give the
purchaser a “finder’s fee” equal to half of the total sales price.
Among other allegations, the complaint filed by the Justice
Department alleges that Zaken makes unsubstantiated claims, including
that purchasers “can make thousands of dollars monthly for working just 2
to 4 hours a week from home.”
This case was filed in the U.S. District Court for the Central District of California.
·
Christopher Andrew Sterling, doing business as Sterling Visa, Rebate Data Processors and Credit Card Workers.
Sterling is alleged to have run several work-at-home schemes from Southern California. According to the complaint, Sterling represents that purchasers
of his opportunity will make a substantial income by “processing”
applications for product rebates or credit card applications. Among other allegations, the government’s civil complaint
alleges that Sterling failed to make required disclosures under the
FTC’s Business Opportunity Rule and made unsubstantiated earnings
claims.
This case was filed in the U.S. District Court for the Southern District of California.
·
Smart Tools LLC, a Tualatin, Ore., company.
The complaint against Smart Tools and its corporate officer,
Kirstin Hegg, alleges that the defendants have marketed a work-at-home
business opportunity that teaches purchasers to locate people who are
eligible for a partial refund of their FHA mortgage loan insurance
premium.
According to the complaint, the defendants tell potential
buyers that they can charge a fee for information on how to obtain the
refund.
The defendants allegedly sent postcards to potential buyers
stating that purchasers can earn up to $38,943 per year without stating
what, if any, substantiation supports the earnings claim.
Such a claim violates the FTC’s Business Opportunity Rule.
This case was filed in the U.S. District Court for the District of Oregon.
Subjects
business,
fraud,
investment,
profit
CDR Founder Pleads Guilty to Bid-Rigging, Fraud
WASHINGTON - 12/30/2011 - A Beverly Hills, Calif.,-based financial products and services firm, and its founder and owner pleaded guilty today in the Southern District of New York for their participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.
Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, and David Rubin, CDR founder and owner, pleaded guilty before U.S. District Judge Victor Marrero in the Southern District of New York. Rubin and CDR, along with Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a vice president of CDR, were indicted on Oct. 29, 2009. The trial for Wolmark and Zarefsky is scheduled to begin on Jan. 3, 2012, in the Southern District of New York.
Rubin and CDR each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Rubin and CDR also pleaded guilty to one count of wire fraud in connection with those schemes.
“Mr. Rubin and his company engaged in fraudulent and anticompetitive conduct that harmed municipalities and other public entities,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s Antitrust Division. “Today’s guilty pleas are an important development in our continued efforts to hold accountable those who violate the antitrust laws and subvert the competitive process in our financial markets.”
According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
During his plea hearing, Rubin admitted that, from 1998 until 2006, he and other co-conspirators supplied information to providers to help them win bids, solicited intentionally losing bids, and signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury Regulations. Additionally, Rubin admitted that he and other co-conspirators solicited fees from providers, which were in fact payments to CDR for rigging or manipulating bids for certain investment agreements so that a particular provider would win that agreement at an artificially determined price.
“Mr. Rubin and his firm were trusted with public money and confidence to assist municipalities with issuing bonds,” said FBI Assistant Director in Charge Janice K. Fedarcyk. “Contrary to his agreement and the law, Mr. Rubin shirked his responsibilities while defrauding taxpayers. Thankfully, this bid-rigging scheme, where Mr. Rubin decided the winners and losers, is over.”
The bid–rigging conspiracy with which Rubin is charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine. The fraud conspiracy with which Rubin is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The wire fraud charge with which Rubin is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
CDR faces a maximum criminal fine on the bid-rigging charge of $100 million. The fraud conspiracy and wire fraud offenses with which CDR is charged each carry a maximum criminal fine of $500,000. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Rubin is the tenth individual to plead guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI.
In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012. Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.
Source: Financial Fraud Enforcement Task Force
Rubin/Chambers, Dunhill Insurance Services, also known as CDR Financial Products, and David Rubin, CDR founder and owner, pleaded guilty before U.S. District Judge Victor Marrero in the Southern District of New York. Rubin and CDR, along with Zevi Wolmark, also known as Stewart Wolmark, the former chief financial officer and managing director of CDR, and Evan Andrew Zarefsky, a vice president of CDR, were indicted on Oct. 29, 2009. The trial for Wolmark and Zarefsky is scheduled to begin on Jan. 3, 2012, in the Southern District of New York.
Rubin and CDR each pleaded guilty to participating in separate bid-rigging and fraud conspiracies with various financial institutions and insurance companies and their representatives. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Rubin and CDR also pleaded guilty to one count of wire fraud in connection with those schemes.
“Mr. Rubin and his company engaged in fraudulent and anticompetitive conduct that harmed municipalities and other public entities,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s Antitrust Division. “Today’s guilty pleas are an important development in our continued efforts to hold accountable those who violate the antitrust laws and subvert the competitive process in our financial markets.”
According to court documents, CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process for contracts for the investment of municipal bond proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
During his plea hearing, Rubin admitted that, from 1998 until 2006, he and other co-conspirators supplied information to providers to help them win bids, solicited intentionally losing bids, and signed certifications that contained false statements regarding whether the bidding process for certain investment agreements complied with relevant Treasury Regulations. Additionally, Rubin admitted that he and other co-conspirators solicited fees from providers, which were in fact payments to CDR for rigging or manipulating bids for certain investment agreements so that a particular provider would win that agreement at an artificially determined price.
“Mr. Rubin and his firm were trusted with public money and confidence to assist municipalities with issuing bonds,” said FBI Assistant Director in Charge Janice K. Fedarcyk. “Contrary to his agreement and the law, Mr. Rubin shirked his responsibilities while defrauding taxpayers. Thankfully, this bid-rigging scheme, where Mr. Rubin decided the winners and losers, is over.”
The bid–rigging conspiracy with which Rubin is charged carries a maximum penalty of 10 years in prison and a $1 million criminal fine. The fraud conspiracy with which Rubin is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The wire fraud charge with which Rubin is charged carries a maximum penalty of 20 years in prison and a $250,000 criminal fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
CDR faces a maximum criminal fine on the bid-rigging charge of $100 million. The fraud conspiracy and wire fraud offenses with which CDR is charged each carry a maximum criminal fine of $500,000. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Rubin is the tenth individual to plead guilty in an ongoing federal investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS-CI.
In addition, Dominick Carollo and Peter S. Grimm, formerly of GE Funding Capital Market Services, and Steven E. Goldberg, formerly of GE Funding Capital Market Services and FSA, were indicted on July 27, 2010, and are scheduled to begin trial in April 2012. Three former UBS employees, Peter Ghavami, Gary Heinz and Michael Welty, were indicted on Dec. 9, 2010.
Source: Financial Fraud Enforcement Task Force
Subjects
bonds,
financial,
investment
Estate Planning CEO, Employee Face Charges
Indictment Alleges Defrauding of Terminally-ill and Elderly
PROVIDENCE, R.I. - 11/26/2011 - A Rhode Island attorney and an employee of his Cranston, R.I., estate planning company were charged in a 66-count federal grand jury indictment returned November 17 alleging that they conspired to steal and to use the identities of terminally-ill patients and elderly individuals to obtain more than $25 million in illicit profits from insurance companies and bond issuers.
Attorney Joseph A. Caramadre, 49, president, CEO and majority owner of Estate Planning Resources, and Raymour Radhakrishnan, 27, an employee of Estate Planning Resources, are charged with conspiracy and multiple counts of mail fraud; wire fraud; identity theft; aggravated identity theft; and money laundering. Caramadre is also charged with one count of witness tampering.
The two-year investigation and indictment were announced by Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Robert Bethel, Inspector in Charge of the Postal Inspection Service (USPIS), Boston Division; and William P. Offord, Special Agent in Charge of the Boston Office of the Internal Revenue Service – Criminal Investigation (IRS-CI).
The indictment alleges that Caramadre and Radhakrishnan made misrepresentations to terminally-ill and elderly patients and their family members in order to obtain their personal identity information. It is alleged they used the information, including names; dates of birth; and social security numbers, to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase “death-put” bonds in the victims’ names without their knowledge and consent. It is alleged that the defendants either forged the signatures of terminally-ill people on account documents or obtained the signatures by means of misrepresentations. When the terminally- ill person died, it is alleged that Caramadre and others reaped substantial profits by exercising death benefits associated with the investments. The scheme allegedly generated more than $25 million in illicit profits.
It is alleged that Caramadre launched the scheme in 1995. Radhakrishnan is alleged to have begun participating in the scheme when he was hired by Caramadre in 2007.
According to the indictment, one means by which the defendants undertook their alleged scheme was to regularly place advertisements in the Rhode Island Catholic newspaper, offering a $2,000 charitable gift to people suffering from a terminal illness. It is alleged that Radhakrishnan met with individuals and their family members who responded to the advertisement and gave them money on Caramadre’s behalf, while, at the same time, making an assessment as to the life expectancy of the person. It is alleged that if Radhakrishnan believed the person was likely to die in the near future, he would tell them Caramadre had more money available for them. Radhakrishnan and Caramadre then allegedly either forged the terminally-ill person’s signatures or obtained their signatures on account opening documents by making misrepresentations and omissions about the nature of the documents.
The indictment alleges that some terminally-ill people were misled when they were told their signatures were needed for receipts documenting Caramadre’s charitable gift.
Others were allegedly misled when they were told that an account would be opened to benefit the terminally-ill person’s surviving family members, or that an account would be opened to benefit other families suffering from terminal illness. The indictment alleges that Caramadre and Radhakrishnan concealed from the terminally-ill people, their families and care givers that Caramadre and his investors stood to make a substantial profit from their deaths.
In addition, the indictment alleges that Caramadre and Radhakrishnan made numerous misrepresentations to insurance companies, brokerage houses and other corporate entities. It is alleged that they falsely claimed that the terminally-ill people were clients of Caramadre’s law practice and that the terminally-ill people were not paid or given money to become annuitants. It is also alleged that the defendants misrepresented the financial assets and investment experience of the terminally-ill people; misrepresented the relationship between the terminally-ill people and Caramadre or his clients; that the proceeds of the accounts would go to the terminally-ill; falsely claimed that Caramadre paid for the terminally-ill people’s burial expenses at the request of the Catholic Church; and concealed Caramadre’s ownership interest in many of the investments.
According to the indictment, Caramadre attracted capital from wealthy and prominent individuals and corporations as investors by telling them that he discovered a “loophole” which permitted the use of terminally-ill persons on variable annuities and as co-owners on joint brokerage accounts to be used to purchase death-put bonds. Caramadre allegedly entered into profit-sharing agreements with some of these outside investors, through which Caramadre allegedly received a significant percentage of all profits earned.
The indictment seeks the forfeiture by Caramadre of property derived from the scheme.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams of the District of Rhode Island.
Source: Financial Fraud Enforcement Task Force
PROVIDENCE, R.I. - 11/26/2011 - A Rhode Island attorney and an employee of his Cranston, R.I., estate planning company were charged in a 66-count federal grand jury indictment returned November 17 alleging that they conspired to steal and to use the identities of terminally-ill patients and elderly individuals to obtain more than $25 million in illicit profits from insurance companies and bond issuers.
Attorney Joseph A. Caramadre, 49, president, CEO and majority owner of Estate Planning Resources, and Raymour Radhakrishnan, 27, an employee of Estate Planning Resources, are charged with conspiracy and multiple counts of mail fraud; wire fraud; identity theft; aggravated identity theft; and money laundering. Caramadre is also charged with one count of witness tampering.
The two-year investigation and indictment were announced by Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; Robert Bethel, Inspector in Charge of the Postal Inspection Service (USPIS), Boston Division; and William P. Offord, Special Agent in Charge of the Boston Office of the Internal Revenue Service – Criminal Investigation (IRS-CI).
The indictment alleges that Caramadre and Radhakrishnan made misrepresentations to terminally-ill and elderly patients and their family members in order to obtain their personal identity information. It is alleged they used the information, including names; dates of birth; and social security numbers, to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase “death-put” bonds in the victims’ names without their knowledge and consent. It is alleged that the defendants either forged the signatures of terminally-ill people on account documents or obtained the signatures by means of misrepresentations. When the terminally- ill person died, it is alleged that Caramadre and others reaped substantial profits by exercising death benefits associated with the investments. The scheme allegedly generated more than $25 million in illicit profits.
It is alleged that Caramadre launched the scheme in 1995. Radhakrishnan is alleged to have begun participating in the scheme when he was hired by Caramadre in 2007.
According to the indictment, one means by which the defendants undertook their alleged scheme was to regularly place advertisements in the Rhode Island Catholic newspaper, offering a $2,000 charitable gift to people suffering from a terminal illness. It is alleged that Radhakrishnan met with individuals and their family members who responded to the advertisement and gave them money on Caramadre’s behalf, while, at the same time, making an assessment as to the life expectancy of the person. It is alleged that if Radhakrishnan believed the person was likely to die in the near future, he would tell them Caramadre had more money available for them. Radhakrishnan and Caramadre then allegedly either forged the terminally-ill person’s signatures or obtained their signatures on account opening documents by making misrepresentations and omissions about the nature of the documents.
The indictment alleges that some terminally-ill people were misled when they were told their signatures were needed for receipts documenting Caramadre’s charitable gift.
Others were allegedly misled when they were told that an account would be opened to benefit the terminally-ill person’s surviving family members, or that an account would be opened to benefit other families suffering from terminal illness. The indictment alleges that Caramadre and Radhakrishnan concealed from the terminally-ill people, their families and care givers that Caramadre and his investors stood to make a substantial profit from their deaths.
In addition, the indictment alleges that Caramadre and Radhakrishnan made numerous misrepresentations to insurance companies, brokerage houses and other corporate entities. It is alleged that they falsely claimed that the terminally-ill people were clients of Caramadre’s law practice and that the terminally-ill people were not paid or given money to become annuitants. It is also alleged that the defendants misrepresented the financial assets and investment experience of the terminally-ill people; misrepresented the relationship between the terminally-ill people and Caramadre or his clients; that the proceeds of the accounts would go to the terminally-ill; falsely claimed that Caramadre paid for the terminally-ill people’s burial expenses at the request of the Catholic Church; and concealed Caramadre’s ownership interest in many of the investments.
According to the indictment, Caramadre attracted capital from wealthy and prominent individuals and corporations as investors by telling them that he discovered a “loophole” which permitted the use of terminally-ill persons on variable annuities and as co-owners on joint brokerage accounts to be used to purchase death-put bonds. Caramadre allegedly entered into profit-sharing agreements with some of these outside investors, through which Caramadre allegedly received a significant percentage of all profits earned.
The indictment seeks the forfeiture by Caramadre of property derived from the scheme.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams of the District of Rhode Island.
Source: Financial Fraud Enforcement Task Force
Subjects
aging,
insurance,
investment
Investment Advisor Admits Guilt in $10M Scheme
NEW HAVEN, Conn. - 7/27/2011 - Gregory P. Loles, 51, of Easton, Conn., pleaded guilty today before U.S. District Judge Mark R. Kravitz in New Haven, Conn., to mail fraud, wire fraud, securities fraud and money laundering offenses stemming from a scheme to defraud investors, including a Connecticut church, of millions of dollars, U.S. Attorney David B. Fein for the District of Connecticut has announced.
According to court documents and statements made in court, Loles owned Apeiron Capital Management Inc., which was an investment adviser and broker dealer registered with the U.S. Securities and Exchange Commission (SEC) from 1995 through 1998, at which point the registrations were cancelled. However, Loloes continued to operate Apeiron as an unregistered investment adviser and falsely represented Apeiron to be a registered investment management firm. Loles also was the majority owner and managing member of Farnbacher Loles Motor Sports, Farnbacher Loles Racing, Farnbacher Loles Street Performance and various other Farnbacher Loles businesses, which were based in Danbury, Conn. Farnbacher Loles was engaged in the business of professional race team operations and servicing high-performance automobiles.
In pleading guilty, Loles admitted that he falsely represented to numerous victim-investors, including friends and fellow parishioners of a church in Orange, Conn., that he would act as their investment adviser and invest their funds through Apeiron in various securities including in what he described as “Arbitrage Bonds,” which Loles represented would provide investors with a safe and steady return.
Loles also was selected to serve on the board of the church’s endowment fund and was entrusted to manage the Church’s investment funds, including the endowment fund and the Building Fund, by investing in, among other things, Arbitrage Bonds. However, the Arbitrage Bonds did not exist.
Loles caused numerous victim-investors to invest more than $10 million with him and Apeiron. Loles failed to invest the money as represented, and instead diverted investors’ funds for his own personal use and benefit, including to pay personal expenses such as credit card bills, and to distribute a large amount of the funds to Farnbacher Loles.
Some of the individual investors provided Loles with funds that had previously been invested in IRAs, 401(k)s, or were proceeds of life insurance payments.
As part of the scheme to defraud, Loles provided investors with fraudulent account statements and also made periodic “lulling” payments to certain investors using a portion of other victim-investors’ funds.
Loles also defrauded clients of Farnbacher Loles.
The government estimates that victims have lost at least $8.7 million as a result of this scheme.
Today, Loles pleaded guilty to one count of mail fraud, one count of wire fraud, one count of securities fraud and one count of money laundering. Judge Kravitz has scheduled sentencing for Oct. 14, 2011, at which time Loles faces a maximum prison term of 20 years, on each count, as well as an order of restitution.
Loles has been detained since his arrest by the FBI on Dec. 15, 2009.
The case is being investigated by the FBI, with the assistance of the SEC. The case is being prosecuted by Assistant U.S. Attorney Michael S. McGarry and law student intern Ewelina Chrzan.
Source: U.S. Department of Justice release.
According to court documents and statements made in court, Loles owned Apeiron Capital Management Inc., which was an investment adviser and broker dealer registered with the U.S. Securities and Exchange Commission (SEC) from 1995 through 1998, at which point the registrations were cancelled. However, Loloes continued to operate Apeiron as an unregistered investment adviser and falsely represented Apeiron to be a registered investment management firm. Loles also was the majority owner and managing member of Farnbacher Loles Motor Sports, Farnbacher Loles Racing, Farnbacher Loles Street Performance and various other Farnbacher Loles businesses, which were based in Danbury, Conn. Farnbacher Loles was engaged in the business of professional race team operations and servicing high-performance automobiles.
In pleading guilty, Loles admitted that he falsely represented to numerous victim-investors, including friends and fellow parishioners of a church in Orange, Conn., that he would act as their investment adviser and invest their funds through Apeiron in various securities including in what he described as “Arbitrage Bonds,” which Loles represented would provide investors with a safe and steady return.
Loles also was selected to serve on the board of the church’s endowment fund and was entrusted to manage the Church’s investment funds, including the endowment fund and the Building Fund, by investing in, among other things, Arbitrage Bonds. However, the Arbitrage Bonds did not exist.
Loles caused numerous victim-investors to invest more than $10 million with him and Apeiron. Loles failed to invest the money as represented, and instead diverted investors’ funds for his own personal use and benefit, including to pay personal expenses such as credit card bills, and to distribute a large amount of the funds to Farnbacher Loles.
Some of the individual investors provided Loles with funds that had previously been invested in IRAs, 401(k)s, or were proceeds of life insurance payments.
As part of the scheme to defraud, Loles provided investors with fraudulent account statements and also made periodic “lulling” payments to certain investors using a portion of other victim-investors’ funds.
Loles also defrauded clients of Farnbacher Loles.
The government estimates that victims have lost at least $8.7 million as a result of this scheme.
Today, Loles pleaded guilty to one count of mail fraud, one count of wire fraud, one count of securities fraud and one count of money laundering. Judge Kravitz has scheduled sentencing for Oct. 14, 2011, at which time Loles faces a maximum prison term of 20 years, on each count, as well as an order of restitution.
Loles has been detained since his arrest by the FBI on Dec. 15, 2009.
The case is being investigated by the FBI, with the assistance of the SEC. The case is being prosecuted by Assistant U.S. Attorney Michael S. McGarry and law student intern Ewelina Chrzan.
Source: U.S. Department of Justice release.
Subjects
fraud,
investment
JPMorgan Chase Admits to Anticompetitive Action
WASHINGTON – 7/8/2011 - JPMorgan Chase and Co. 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 $228 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced on July 7.
As part of its agreement with the department, JPMorgan admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees, the department stated. According to the non-prosecution agreement, from 2001 through 2006, certain former JPMorgan 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.
“By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled,” said Assistant Attorney General Christine Varney in charge of the Department of Justice’s Antitrust Division. “Today’s agreements ensure that JPMorgan will pay restitution to the municipalities harmed by its anticompetitive conduct, disgorge its profits from the illegal activity and pay penalties for the criminal conduct. We are committed to rooting out anticompetitive activity in the financial markets and our investigation into the municipal bond derivatives industry, which has led to criminal charges against 18 former executives, remains active and ongoing.”
Under the terms of the agreement, JPMorgan 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. One of these charged executives, James Hertz, is a former JPMorgan employee. Nine of the 18 executives charged have pleaded guilty, including Hertz.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Fed) and 25 state attorneys general also entered into agreements with JPMorgan 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 JPMorgan employees, as well as other remedial measures.
As a result of JPMorgan’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, Fed and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute JPMorgan for the manipulation and bid rigging of municipal investment and related contracts, provided that JPMorgan satisfies its ongoing obligations under the agreement.
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 anticompetitive conduct in the municipal bond derivatives market.
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, Fed and state attorneys general for their cooperation and assistance in this matter.
Souce: U.S. Department of Justice release.
As part of its agreement with the department, JPMorgan admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees, the department stated. According to the non-prosecution agreement, from 2001 through 2006, certain former JPMorgan 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.
“By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled,” said Assistant Attorney General Christine Varney in charge of the Department of Justice’s Antitrust Division. “Today’s agreements ensure that JPMorgan will pay restitution to the municipalities harmed by its anticompetitive conduct, disgorge its profits from the illegal activity and pay penalties for the criminal conduct. We are committed to rooting out anticompetitive activity in the financial markets and our investigation into the municipal bond derivatives industry, which has led to criminal charges against 18 former executives, remains active and ongoing.”
Under the terms of the agreement, JPMorgan 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. One of these charged executives, James Hertz, is a former JPMorgan employee. Nine of the 18 executives charged have pleaded guilty, including Hertz.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Fed) and 25 state attorneys general also entered into agreements with JPMorgan 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 JPMorgan employees, as well as other remedial measures.
As a result of JPMorgan’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, Fed and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute JPMorgan for the manipulation and bid rigging of municipal investment and related contracts, provided that JPMorgan satisfies its ongoing obligations under the agreement.
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 anticompetitive conduct in the municipal bond derivatives market.
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, Fed and state attorneys general for their cooperation and assistance in this matter.
Souce: U.S. Department of Justice release.
Subjects
competition,
investment,
trust
UBS AG Agrees to Pay $160 Million In Restitution
WASHINGTON – 5/5/2011 - UBS AG has entered into an agreement with the Department of Justice to resolve anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced on May 4.
As part of its agreement with the department, UBS admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees.
According to the non-prosecution agreement, from 2001 through 2006, certain former UBS employees at its municipal reinvestment and derivatives desk and related desks, entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other non-profit entities.
“UBS and its former executives engaged in illegal conduct that corrupted the competitive process and harmed municipalities, and ultimately taxpayers, nationwide,” said Assistant Attorney General Christine Varney. “Today’s agreements with UBS ensure that restitution is paid to the victims of the anticompetitive conduct, that UBS pays penalties and disgorges its ill-gotten gains. The Antitrust Division will continue to use every tool at our disposal to root out illegal activity in financial markets that disrupts the competitive process.”
Under the terms of the agreement, UBS 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. Four of these charged executives are former UBS employees: Mark Zaino, Peter Ghavami, Gary Heinz and Michael Welty. Nine of the 18 executives charged have pleaded guilty, including Mark Zaino.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) and 25 state attorneys general also entered into agreements with UBS requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of full restitution to the victims harmed by the manipulation and bid rigging by UBS employees.
As a result of UBS’s admission of conduct; its cooperation with the Department of Justice and the SEC, the IRS and the state attorneys general; its monetary and non-monetary commitments to the SEC, IRS and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute UBS for the manipulation and bid rigging of municipal investment contracts, provided that UBS satisfies its ongoing obligations under the agreement.
In December 2010, Bank of America agreed to pay a total of $137.3 million in restitution to federal and state agencies for its participation in anticompetitive conduct in the municipal bond derivatives market.
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 Office of the Comptroller of the Currency (OCC) and the Federal Reserve Bank of New York.
The Antitrust Division, SEC, IRS, FBI, state attorneys general, OCC and Federal Reserve Bank are members of the Financial Fraud Enforcement Task Force. For more information about the task force, visit www.stopfraud.gov.
As part of its agreement with the department, UBS admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees.
According to the non-prosecution agreement, from 2001 through 2006, certain former UBS employees at its municipal reinvestment and derivatives desk and related desks, entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other non-profit entities.
“UBS and its former executives engaged in illegal conduct that corrupted the competitive process and harmed municipalities, and ultimately taxpayers, nationwide,” said Assistant Attorney General Christine Varney. “Today’s agreements with UBS ensure that restitution is paid to the victims of the anticompetitive conduct, that UBS pays penalties and disgorges its ill-gotten gains. The Antitrust Division will continue to use every tool at our disposal to root out illegal activity in financial markets that disrupts the competitive process.”
Under the terms of the agreement, UBS 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. Four of these charged executives are former UBS employees: Mark Zaino, Peter Ghavami, Gary Heinz and Michael Welty. Nine of the 18 executives charged have pleaded guilty, including Mark Zaino.
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) and 25 state attorneys general also entered into agreements with UBS requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of full restitution to the victims harmed by the manipulation and bid rigging by UBS employees.
As a result of UBS’s admission of conduct; its cooperation with the Department of Justice and the SEC, the IRS and the state attorneys general; its monetary and non-monetary commitments to the SEC, IRS and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute UBS for the manipulation and bid rigging of municipal investment contracts, provided that UBS satisfies its ongoing obligations under the agreement.
In December 2010, Bank of America agreed to pay a total of $137.3 million in restitution to federal and state agencies for its participation in anticompetitive conduct in the municipal bond derivatives market.
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 Office of the Comptroller of the Currency (OCC) and the Federal Reserve Bank of New York.
The Antitrust Division, SEC, IRS, FBI, state attorneys general, OCC and Federal Reserve Bank are members of the Financial Fraud Enforcement Task Force. For more information about the task force, visit www.stopfraud.gov.
Subjects
anticompetitive,
bonds,
investment
2010 Called 'Wonderful Year' for Energy Investors
NORWALK, Conn.- (BUSINESS WIRE) - 1/13/2011 - Despite a poor start, 2010 finished as a “wonderful year” for energy investors, with more than 65 percent of oil and gas stocks delivering positive returns last year, according to the IHS Herold 2010 Energy Peer Group Stock Market Performance Report, which was just released by information and insight provider IHS.
Driven by economic growth, crude prices, which hit bottom in late May 2010 at around $65 per barrel, rose steadily and consistently through the second half of the year, and took oil company shares with them.
The median gain for the 503 stocks covered in the report was 21 percent, which, while it did not match the record-setting 59 percent gain posted in the 2009 IHS report, did outperform the market indices of nearly all Organization for Economic Cooperation and Development (OECD) countries. Total capitalization jumped by more than $300 billion, further reducing the severe losses the sector incurred in 2008 the report said, but did not extinguish them.
“Sometime in the first quarter of 2009, equity markets began to move upward in response to the economic growth that was becoming apparent in OECD countries,” said Robert Gillon, senior vice president and co-director of energy equity research at IHS. “It seemed as though every statistic that confirmed expansion was under way was reflected in a rise in the price of crude, which boded well for oil stocks. That pattern continued throughout the year, with oil prices and oil shares at a recovery high at the closing bell of 2010. In particular, North American oil stocks delivered the most returns to their investors.”
After finishing second-to-last as a peer group in 2009, U.S. Royalty Trusts earned redemption by taking top honors in 2010 as the best performing peer group reviewed, posting a gain of more than 44 percent. MV Oil Trust led the group by posting a return of 111 percent.
Companies in the E&P Limited Income Partnerships group followed closely with gains of nearly 43 percent. According to the IHS report, these survey-leading returns were in response to monetary stimuli by numerous central banks, where open-market interest rates fell to the lowest levels seen in decades, which forced yield-conscious investors to take on more risk in order to maintain their desired level of income.
“The vast amount of liquidity being injected into the economic system, particularly in the U.S. has resulted in a strong correlation between equity prices and oil prices,” Gillon noted. “By contrast, for many years prior to 2009, there was a reverse relationship, with higher crude prices perceived to cause a reduction in disposable income, lower consumer spending, and declining domestic product and stock prices. To our mind, this is the normal state of affairs, but to predict we will be back to normal in short order would be unwise.”
Mid-sized U.S. E&Ps, led by McMoRan Exploration Company, generated a segment return of nearly 42 percent, outperforming every other group of oil and gas producers globally. McMoRan delivered a total return in 2010 of nearly 114 percent.
As a group, Master Limited Partnerships — mostly pipeline and storage companies — enjoyed a hearty gain of nearly 35 percent, while the peer group of Integrated Oil Stocks with U.S. Downstream returned 22 percent, which was marginally above the survey average. Canadian Integrated Oil Stocks and Integrated Oil Stocks without U.S. Downstream Operations gained less than half that amount, at 10 percent and nine percent, respectively. Returns from the latter group, the report said, were dragged down by the generally poor performance of European markets. On the other hand, shares in the Refining and Marketing category offered a healthy median gain of 38 percent and did well globally as demand for distillates rose with increasing economic activity.
EnCore Oil plc of the U.K., whose shares rocketed by 773 percent following the discovery of the Catcher field in the U.K. sector of the North Sea, was the runaway leader of the Smaller E&P Companies Outside North America, but among companies starting at more than $0.50 per share, Xcite Energy Ltd. of the U.K. stole top survey honors for best total return of 552 percent due to its North Sea heavy oil project. Notably, Xcite Energy was also the top performer in last year’s survey.
Pacific Rubiales Energy enjoyed splendid results with its heavy oil development program in Colombia, and the sizzling gain of 131 percent placed the company at the top of the list of Largest Oil and Gas Producers for a second year in a row. CNOOC Ltd. maintained the title of largest capitalization amongst the Largest Oil and Gas Producers by a very wide margin. The Chinese producer, which had a steaming 56 percent total return, is the first in this sector to have its market valued exceed $100 billion.
Amongst the Largest Integrated and Diversified Oils, top-ranked Ecopetrol’s 84 percent gain reflected rapidly growing oil production, and it also got an updraft from the soaring Bogota market. Sunoco Inc. and Valero Energy, last year’s bottom two performers in the Largest Integrated and Diversified Oils group, moved into the top 10 due to a dramatic turnaround in refining margins. BHP Billiton is the only member of the 2009 crop to repeat in the top 10 this year.
In a stunning turnaround, nine of last year’s top 10 finishers fell to the bottom half of the table in 2010, with Petroleo Brasileiro and Rosneft Oil, numbers one and two in the previous ranking, being hit particularly hard.
Thanks in part to the Greek financial crisis, European markets were among the worst-performing financial exchanges and companies there had a tough 12 months, the report noted. Eni, Spa and Husky Energy repeated in the group’s bottom 10. BP p.l.c., as anticipated following the Deepwater Horizon incident, suffered through a horrendous year and now ranks eighth by capitalization, down from second in 2005.
While oil stocks carried the sector in 2010, continued weakness in the North American natural gas market did not prevent the large producers from generating solid shareholder returns, with the median performance of the group nearly matching that of the entire survey. However, a high concentration of North American natural gas in the production mix detracted from returns, since U.S. natural gas spot prices, which began the year at what now seems like the lofty price of $6/MMBtu, ended the year at a nine-year low for the date, which was about 30 percent below where they began. This led to the denouement of Southwestern Energy, which had been a stellar performer in the previous three years, the report said.
“Natural gas inventories were well above average and U.S. domestic production showed no signs of topping out,” Gillon added. “Fortunately for everyone but the Europeans, it has been ferociously cold in Europe, so gas is being shipped to the higher priced markets. The world is well supplied with gas, and the modest upward slope to the current futures curve is testimony to the glut in supply.”
Stocks in the Alternative Energy group held the basement position as worst in class, posting losses of more than 24 percent after gaining 26 percent in 2009. Said Gillon, “We’re not sure what to say about alternative energy, except perhaps a requiem. In the five years we have shown this segment in the survey, it has been the worst performing group twice, second worst twice, and soared to fourth from the bottom on one happy occasion. They suffer when natural gas prices go down, when government subsidies are cut, when the wind doesn’t blow, when it blows too much, and when the sun doesn’t shine. There may be other problems as well, which we will probably find out about in 2011.”
See: IHS Herold
Driven by economic growth, crude prices, which hit bottom in late May 2010 at around $65 per barrel, rose steadily and consistently through the second half of the year, and took oil company shares with them.
The median gain for the 503 stocks covered in the report was 21 percent, which, while it did not match the record-setting 59 percent gain posted in the 2009 IHS report, did outperform the market indices of nearly all Organization for Economic Cooperation and Development (OECD) countries. Total capitalization jumped by more than $300 billion, further reducing the severe losses the sector incurred in 2008 the report said, but did not extinguish them.
“Sometime in the first quarter of 2009, equity markets began to move upward in response to the economic growth that was becoming apparent in OECD countries,” said Robert Gillon, senior vice president and co-director of energy equity research at IHS. “It seemed as though every statistic that confirmed expansion was under way was reflected in a rise in the price of crude, which boded well for oil stocks. That pattern continued throughout the year, with oil prices and oil shares at a recovery high at the closing bell of 2010. In particular, North American oil stocks delivered the most returns to their investors.”
After finishing second-to-last as a peer group in 2009, U.S. Royalty Trusts earned redemption by taking top honors in 2010 as the best performing peer group reviewed, posting a gain of more than 44 percent. MV Oil Trust led the group by posting a return of 111 percent.
Companies in the E&P Limited Income Partnerships group followed closely with gains of nearly 43 percent. According to the IHS report, these survey-leading returns were in response to monetary stimuli by numerous central banks, where open-market interest rates fell to the lowest levels seen in decades, which forced yield-conscious investors to take on more risk in order to maintain their desired level of income.
“The vast amount of liquidity being injected into the economic system, particularly in the U.S. has resulted in a strong correlation between equity prices and oil prices,” Gillon noted. “By contrast, for many years prior to 2009, there was a reverse relationship, with higher crude prices perceived to cause a reduction in disposable income, lower consumer spending, and declining domestic product and stock prices. To our mind, this is the normal state of affairs, but to predict we will be back to normal in short order would be unwise.”
Mid-sized U.S. E&Ps, led by McMoRan Exploration Company, generated a segment return of nearly 42 percent, outperforming every other group of oil and gas producers globally. McMoRan delivered a total return in 2010 of nearly 114 percent.
As a group, Master Limited Partnerships — mostly pipeline and storage companies — enjoyed a hearty gain of nearly 35 percent, while the peer group of Integrated Oil Stocks with U.S. Downstream returned 22 percent, which was marginally above the survey average. Canadian Integrated Oil Stocks and Integrated Oil Stocks without U.S. Downstream Operations gained less than half that amount, at 10 percent and nine percent, respectively. Returns from the latter group, the report said, were dragged down by the generally poor performance of European markets. On the other hand, shares in the Refining and Marketing category offered a healthy median gain of 38 percent and did well globally as demand for distillates rose with increasing economic activity.
EnCore Oil plc of the U.K., whose shares rocketed by 773 percent following the discovery of the Catcher field in the U.K. sector of the North Sea, was the runaway leader of the Smaller E&P Companies Outside North America, but among companies starting at more than $0.50 per share, Xcite Energy Ltd. of the U.K. stole top survey honors for best total return of 552 percent due to its North Sea heavy oil project. Notably, Xcite Energy was also the top performer in last year’s survey.
Pacific Rubiales Energy enjoyed splendid results with its heavy oil development program in Colombia, and the sizzling gain of 131 percent placed the company at the top of the list of Largest Oil and Gas Producers for a second year in a row. CNOOC Ltd. maintained the title of largest capitalization amongst the Largest Oil and Gas Producers by a very wide margin. The Chinese producer, which had a steaming 56 percent total return, is the first in this sector to have its market valued exceed $100 billion.
Amongst the Largest Integrated and Diversified Oils, top-ranked Ecopetrol’s 84 percent gain reflected rapidly growing oil production, and it also got an updraft from the soaring Bogota market. Sunoco Inc. and Valero Energy, last year’s bottom two performers in the Largest Integrated and Diversified Oils group, moved into the top 10 due to a dramatic turnaround in refining margins. BHP Billiton is the only member of the 2009 crop to repeat in the top 10 this year.
In a stunning turnaround, nine of last year’s top 10 finishers fell to the bottom half of the table in 2010, with Petroleo Brasileiro and Rosneft Oil, numbers one and two in the previous ranking, being hit particularly hard.
Thanks in part to the Greek financial crisis, European markets were among the worst-performing financial exchanges and companies there had a tough 12 months, the report noted. Eni, Spa and Husky Energy repeated in the group’s bottom 10. BP p.l.c., as anticipated following the Deepwater Horizon incident, suffered through a horrendous year and now ranks eighth by capitalization, down from second in 2005.
While oil stocks carried the sector in 2010, continued weakness in the North American natural gas market did not prevent the large producers from generating solid shareholder returns, with the median performance of the group nearly matching that of the entire survey. However, a high concentration of North American natural gas in the production mix detracted from returns, since U.S. natural gas spot prices, which began the year at what now seems like the lofty price of $6/MMBtu, ended the year at a nine-year low for the date, which was about 30 percent below where they began. This led to the denouement of Southwestern Energy, which had been a stellar performer in the previous three years, the report said.
“Natural gas inventories were well above average and U.S. domestic production showed no signs of topping out,” Gillon added. “Fortunately for everyone but the Europeans, it has been ferociously cold in Europe, so gas is being shipped to the higher priced markets. The world is well supplied with gas, and the modest upward slope to the current futures curve is testimony to the glut in supply.”
Stocks in the Alternative Energy group held the basement position as worst in class, posting losses of more than 24 percent after gaining 26 percent in 2009. Said Gillon, “We’re not sure what to say about alternative energy, except perhaps a requiem. In the five years we have shown this segment in the survey, it has been the worst performing group twice, second worst twice, and soared to fourth from the bottom on one happy occasion. They suffer when natural gas prices go down, when government subsidies are cut, when the wind doesn’t blow, when it blows too much, and when the sun doesn’t shine. There may be other problems as well, which we will probably find out about in 2011.”
See: IHS Herold
Subjects
energy,
investment,
oil,
stocks
Investment Advisor Pleads Guilty in Scheme
NEW YORK – 1/10/2011 - A registered investment advisor pleaded guilty on Jan. 7 to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme, announced U.S. Attorney for the Southern District of New York Preet Bharara.
Alexei P. Koval, aka “Aleksey Koval,” admitted that he obtained inside information from his co-conspirator, Igor Poteroba, a former investment banker in the Healthcare Group of UBS Securities LLC, and then traded on that information.
The information related to six mergers and acquisitions that certain UBS clients were contemplating. Koval pleaded guilty in Manhattan federal court before U.S. District Judge Paul A. Crotty.
“Alexei Koval flagrantly violated the securities laws to make a quick profit, and now he will pay for his crimes,” Bharara said. “Insider trading undermines faith in the market and cheats honest investors. It will not be tolerated. Together with our law enforcement partners, we will continue to prosecute and punish those who use their access to inside information to break the law.”
According to documents previously filed in Manhattan federal court, from May 2006 through at least 2009 Koval was a registered investment adviser. During approximately the same time period, Poteroba served as an executive director at UBS. In that capacity, Poteroba obtained material, non-public information regarding certain mergers and acquisitions involving the following six publicly traded healthcare companies: Guilford Pharmaceuticals Inc., Molecular Devices Corporations, PharmaNet Development Group Inc., Via Cell Inc., Millennium Pharmaceuticals Inc. and Indevus Pharmaceuticals Inc.
In violation of his duties of trust and confidence, Poteroba then disclosed the UBS inside information to Koval, who in turn disclosed the UBS inside information to another co-conspirator (CC-1).
As part of the scheme, Koval typically received tips from Poteroba by telephone in advance of a public announcement about certain mergers and acquisitions. Shortly after receiving a tip from Poteroba, Koval and CC-1 purchased securities in one of the healthcare companies on the basis of the UBS inside information.
Following the public announcement of the acquisition, Koval and CC-1 quickly sold the securities they had purchased. Koval and CC-1 executed dozens of securities transactions based on UBS inside information provided by Poteroba. Koval then paid a portion of the profits to Poteroba.
Koval pleaded guilty to three counts of securities fraud and one count of conspiracy to commit securities fraud. The securities fraud counts each carry a maximum sentence of 20 years in prison and a maximum fine of $5 million.
The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Koval agreed as part of his plea agreement to forfeit at least $1,414,290, representing the amount of proceeds obtained as a result of the securities fraud offenses.
Koval, 36, of Chicago, and Pasadena, Calif., will surrender to federal authorities on Jan. 14, 2011, and is scheduled to be sentenced by Judge Crotty on April 12, 2011, at 2:30 p.m.
Poteroba, 37, of Darien, Conn., pleaded guilty to similar charges before Judge Crotty on Dec. 21, 2010. He is scheduled to be sentenced on March 16, 2011.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The case is being handled by the U.S. Attorney Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Marissa Molé is in charge of the prosecution.
Note: Original release date was Jan. 7, 2011. Source: Financial Fraud Enforcement Task Force
Alexei P. Koval, aka “Aleksey Koval,” admitted that he obtained inside information from his co-conspirator, Igor Poteroba, a former investment banker in the Healthcare Group of UBS Securities LLC, and then traded on that information.
The information related to six mergers and acquisitions that certain UBS clients were contemplating. Koval pleaded guilty in Manhattan federal court before U.S. District Judge Paul A. Crotty.
“Alexei Koval flagrantly violated the securities laws to make a quick profit, and now he will pay for his crimes,” Bharara said. “Insider trading undermines faith in the market and cheats honest investors. It will not be tolerated. Together with our law enforcement partners, we will continue to prosecute and punish those who use their access to inside information to break the law.”
According to documents previously filed in Manhattan federal court, from May 2006 through at least 2009 Koval was a registered investment adviser. During approximately the same time period, Poteroba served as an executive director at UBS. In that capacity, Poteroba obtained material, non-public information regarding certain mergers and acquisitions involving the following six publicly traded healthcare companies: Guilford Pharmaceuticals Inc., Molecular Devices Corporations, PharmaNet Development Group Inc., Via Cell Inc., Millennium Pharmaceuticals Inc. and Indevus Pharmaceuticals Inc.
In violation of his duties of trust and confidence, Poteroba then disclosed the UBS inside information to Koval, who in turn disclosed the UBS inside information to another co-conspirator (CC-1).
As part of the scheme, Koval typically received tips from Poteroba by telephone in advance of a public announcement about certain mergers and acquisitions. Shortly after receiving a tip from Poteroba, Koval and CC-1 purchased securities in one of the healthcare companies on the basis of the UBS inside information.
Following the public announcement of the acquisition, Koval and CC-1 quickly sold the securities they had purchased. Koval and CC-1 executed dozens of securities transactions based on UBS inside information provided by Poteroba. Koval then paid a portion of the profits to Poteroba.
Koval pleaded guilty to three counts of securities fraud and one count of conspiracy to commit securities fraud. The securities fraud counts each carry a maximum sentence of 20 years in prison and a maximum fine of $5 million.
The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Koval agreed as part of his plea agreement to forfeit at least $1,414,290, representing the amount of proceeds obtained as a result of the securities fraud offenses.
Koval, 36, of Chicago, and Pasadena, Calif., will surrender to federal authorities on Jan. 14, 2011, and is scheduled to be sentenced by Judge Crotty on April 12, 2011, at 2:30 p.m.
Poteroba, 37, of Darien, Conn., pleaded guilty to similar charges before Judge Crotty on Dec. 21, 2010. He is scheduled to be sentenced on March 16, 2011.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The case is being handled by the U.S. Attorney Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Marissa Molé is in charge of the prosecution.
Note: Original release date was Jan. 7, 2011. Source: Financial Fraud Enforcement Task Force
Subjects
conspiracy,
fraud,
Insider trading,
investment,
securities
