Wednesday, 30 July 2014

Ebola virus a threat

"The risk to UK travellers and people working in [affected countries] of contracting Ebola is very low but we have alerted UK medical practitioners about the situation in West Africa and requested they remain vigilant for unexplained illness in those who have visited the affected area. "It is important to stress that no cases of imported Ebola have ever been reported in the UK and the risk of a traveller going to West Africa and contracting Ebola remains very low since Ebola is transmitted by direct contact with the blood or bodily fluids of an infected person." BBC global health correspondent Tulip Mazumdar said the West African outbreak had been going on for four months. In that time local people had been looking after the sick and carrying out burials, which could actually help to spread the virus, she added. Ebola kills up to 90% of those infected, but patients have a better chance of survival if they receive early treatment. The outbreak - the world's deadliest to date - was first reported in Guinea in February. It then spread to Liberia and Sierra Leone. Ebola virus disease (EVD) Symptoms include high fever, bleeding and central nervous system damage Fatality rate can reach 90% Incubation period is two to 21 days There is no vaccine or cure Supportive care such as rehydrating patients who have diarrhoea and vomiting can help recovery Fruit bats are considered to be virus' natural host

Massive increase in Brits abroad drug arrests

DRUG arrests of Britons in Spain have soared, with an incredible 68% increase on the previous year. In total, 708 Brits have been arrested overseas on drug charges already this year – a shocking 173 of which were in Spain, according to the UK’s Foreign Office. A worrying trend is the reported rise in the use of a party drug named ‘Cannibal’ – due to its tendency to dramatically increase aggressiveness. It is apparently being distributed widely in parts of Spain, including the Balearics. A British man was arrested in Magaluf, after biting beachgoers while high on the drug. The rapid rise in drug-related arrests is due to a serious crackdown on dealers launched by police this year. The second-largest number of drug arrests involving Britons last year was in America, with 102 cases.

Forest fire in Casares

FOREST fire raged today near Casares. The fire was very near the site of Manilva’s Roman baths, inland from Sabinillas. Three helicopters and an aircraft were sent by Infoca in response, and emergency services rushed to the scene. A second fire station was reported to have sent emergency response teams as support.

EU Must Investigate CIA European Prisons Case

EU member states should carry out a thorough investigation into CIA-run prisons in Europe, where the inmates were subjected to torture, Russian diplomat Konstantin Dolgov said Monday. "Human rights activists are reasonably demanding the government of Poland to finally conduct an effective investigation into secret CIA prisons on its territory. Similar steps should be taken by other EU member states on which territories CIA torture camps operated," the Russian Foreign Ministry’s Special Representative for Human Rights wrote on his Twitter page. Last week, the European Court of Human Rights (ECHR) ruled that Poland violated an international treaty to protect human rights by hosting secret CIA prisons on its territory. The case was filed by two men who charge they were taken to a secret CIA black site in a Polish forest and subjected to torture before being transferred to Guantanamo Bay. An investigation into the detainees' treatment was opened in Poland in 2008 but is still not concluded – a situation that has been condemned by the UN's anti-torture body. Poland is one of a number of European countries accused of hosting secret CIA prisons. Meanwhile, Romania, Bulgaria, and Lithuania also have had allegations made against them for being part of the CIA black site network.

Tuesday, 29 July 2014

Lionel Messi to be prosecuted for alleged tax evasion

A Spanish court will push ahead with prosecuting the Barcelona forward Lionel Messi for alleged tax evasion despite a recommendation from the public prosecutor the charges be dismissed. The prosecutor argued in June that Messi’s father Jorge was responsible for the family’s finances and not the four-times World Player of the Year. However, the court in Barcelona has decided that Lionel Messi could have known about and approved the creation of a web of shell companies that were allegedly used to evade taxes due on income from image rights. The judge in the case ruled that the case against both Messis should continue. Argentina’s Messi and his father were accused last year of defrauding the Spanish state of more than €4m (£3.1m) by filing false returns for the years 2006 to 2009. They have denied wrongdoing.   One of the world’s highest-paid athletes, Messi earns just over $40m (£23.5m) a season in salary and bonuses, according to Forbes magazine, as well as about $23m from sponsors. The magazine has him as the fourth top-earning athlete behind the boxer Floyd Mayweather, Real Madrid footballer Cristiano Ronaldo and basketball player LeBron James.

Friday, 4 July 2014

London fraudster Fizzy jailed for '£30m' lottery scam

A fraudster, named "Fizzy" because of his love for champagne, has been jailed for conning people out of their life savings with a bogus lottery scam. Frank Onyeachonam, 38, of Canning Town, east London, ran the UK-end of a global scam that was orchestrated from his native Nigeria. The Old Bailey heard how he extracted up to £600,000 from pensioners to fund a luxurious lifestyle. He was jailed for eight years for charges of conspiracy to defraud. The court heard how he deliberately targeted pensioners because they were potentially vulnerable.

Tuesday, 28 August 2012

Amber Gold affair is one of the biggest financial scandals to hit Poland since the fall of communism in 1989.

It was pretty much all the money Bozena Oracz had after a working life as an accountant: the equivalent of $15,000. She placed it in a fund investing in gold, with the hope of paying for her daughter's studies and getting treatment for a bad knee.

Those dreams were dashed when she discovered she had fallen victim to an elaborate fraud scheme that has left thousands of Poles, many of them elderly, facing financial ruin.

The so-called Amber Gold affair is one of the biggest financial scandals to hit Poland since the fall of communism in 1989. The extent of wrongdoing is still murky, but it seems to have some elements of a pyramid scheme, meaning the financial institutionused funds from new clients to pay off older clients rather than investing them.

Consumed with anger and desperation, 58-year-old Oracz traveled last week from a small town near Warsaw to a law firm in the capital to consider whether, after losing 50,000 zlotys, she should risk another 3,000 zlotys ($920; €730) on the fee to join a class-action lawsuit seeking to recover some of the losses.

"This was a lot of money to me — it was my savings," Oracz said, fighting back tears. Now retired and living on a small pension, she sees no way of building another nest egg. "My pension barely covers my needs," she said.

The affair has raised questions about the effectiveness of Poland's justice system and government because authorities failed to act against the scheme despite red flags from regulators and the criminal record of its young owner. Scrutiny has also focused on the prime minister due to business dealings his son had with those running the scheme. The scandal has even touched democracy icon Lech Walesa, who fears it could tarnish his good name.

Prosecutors say investors lost about 163 million zlotys ($50 million; €40 million), a number that has been mounting as more and more victims come forward. Any law suits could take care years to go through the courts, with no guarantee of their outcome.

"People are desperate," said Pawel Borowski, a lawyer preparing the class-action suit that Oracz is considering joining. "In most cases the clients lost life savings or sold family properties to make investments."

The financial institution, Amber Gold, promised guaranteed returns of 10 to 14 percent a year for what it claimed were investments in gold. Many of its clients were older Poles who grew up under communism and lacked the savvy to question how a financial firm could guarantee such a high return on a commodity whose value fluctuates on the international market. The promised returns compared well to the 3 to 5 percent interest offered by banks on savings accounts — earnings essentially wiped out by the country's 4 percent inflation rate.

"These were people with a low level of financial education," said Piotr Bujak, the chief economist for Poland at Nordea Markets. "They think it's still like in the old times, where everything was guaranteed by the state. They underestimated the risk."

Amber Gold launched in 2009, opening branches in city centers alongside respected banks, with white leather sofas and other sleek touches that conveyed sophistication and respectability. It bombarded Poles with convincing advertisements. Some early investors got out with their expected gains, adding to the fund's credibility.

The company, based in Gdansk, capitalized on gold's allure while playing on people's anxieties in unpredictable financial times. "We are dealing with a loss of confidence in the entire financial system and an urgent need for safe investments," one ad said. "The environment for gold is perfect."

Amber Gold drew in 50,000 investors over its three years of operation, though the company's founder, Marcin Plichta, said there were only about 7,000 at the time of liquidation.

Soon after Amber Gold began operations, the Polish Financial Supervision Authority put it on a "black list" of institutions that operate like banks without authorization. There are 17 other such black-listed institutions in operation, but the regulators lack the authority to shut them down. This has sparked a debate in the government and news media about whether courts should be more aggressive in intervening.

According to prosecutors, the company did use some of its money to invest in at least one legitimate business: It was the main investor in budget airline OLT Express. It was this investment that brought Amber Gold down — when the airline filed for bankruptcy, Amber Gold entered liquidation and its scheme of investments unraveled. Its bank accounts were blocked and it was unable to return the money of thousands of its customers.

Plichta was charged this month with six counts of criminal misconduct.

Prime Minister Donald Tusk's center-right government went into damage-control mode when it emerged that the leader's son, Michal Tusk, had done PR work for the airline. Tusk said he had warned his son against doing business with Plichta but that ultimately he son makes his own decisions.

Leszek Miller, the head of the opposition Democratic Left Alliance, asked how Tusk could warn his son against involvement in the airline but not warn the thousands of Poles who invested in the fund. Miller has called for a parliamentary inquiry into the scandal.

Public discontent is also centering on the justice system because Plichta, 28, has past convictions for fraud, and many Poles are asking why authorities — aware of his criminal record — didn't stop him sooner. Born Marcin Stefanski, he took his wife's last name to distance himself from his past crimes.

The country's top prosecutor, Andrzej Seremet, admitted Monday that prosecutors were negligent in failing to heed multiple warnings since 2009 about Amber Gold from the financial supervisory body. He announced personnel changes in the office he blamed for mistakes.

The affair also has an unlikely connection to the Solidarity leader and former president, Lech Walesa, because an Oscar-winning director, Andrzej Wajda, was relying on money from Amber Gold to produce a film about Walesa's struggle in the 1980s.

Walesa came out publicly to make clear he is not involved in any way, saying he doesn't want his name "dirtied."

Many of the unlucky investors are not only furious but wracked by shame and guilt.

Engineer Andrzej Malinowski, 61, put three months of salary — 25,000 zlotys ($7,660; €6,100) — into Amber Gold. He made the investment without consulting with his wife, sensing that there was some risk and that she would not have agreed.

Now he is so shaken and embarrassed that he doesn't want to talk about it, leaving his wife, Danuta Malinowska, to help unravel the mess.

"He saw that gold was going higher and higher so he believed that maybe it would be a good deal," Malinowska said. "Now he has so much guilt that I am trying to help — contacting the lawyer, filling in the forms, writing to the prosecutors. But the justice system is very ineffective. I don't believe we will be getting any of this money back."

Monday, 20 August 2012

Former fugitive tycoon Asil Nadir has been found guilty of three counts of theft by an Old Bailey jury, which is still considering a further nine counts.

Asil NadirAsil Nadir faced 13 counts of theft over the collapse of his Polly Peck business empire (Picture: AP)

The 71-year-old, from Mayfair, is accused of looting his Polly Peck business empire of £34million between 1987 and 1990.

Nadir, who was cleared of one count of theft by the jury of three women and seven men, fled Britain in 1993 but returned in 2010.

Mr Justice Holroyde has told the jury at the Old Bailey that he will accept verdicts of nine to one on the remaining nine charges.

The jury has been considering its verdicts for seven days after a seven-month trial in which two jurors were discharged for health reasons.

Nadir, who originally fled to his native northern Cyprus, denied all 13 charges and claimed he was unfairly treated by the Serious Fraud Office.

He looked shocked as the verdicts were announced, while his wife Nur, 28, looked on from the side of the dock.

Polly Peck, a conglomerate dealing in fruit, leisure, textiles and electronics, was one of the success stories of the 1980s but collapsed in 1990 with debts of around £550m.

Thursday, 16 August 2012

A most-wanted list of 20 alleged tax-dodgers accused of fleeing the UK while owing the Treasury millions has been issued in an appeal for help to track them down.


Names and pictures of the fugitives have been published by Her Majesty's Revenue and Customs (HMRC) for the first time. They include Hussain Chohan, 44, believed to be in Dubai, who was convicted at Birmingham crown court for his role in a £200m fraud, part of which involved importing 2.25 tonnes of tobacco worth £750,000 in duty. Chohan was given 11 years for smuggling and fraud offences and for failing to appear in court. He is also subject to a £33m confiscation order.

Wayne Joseph Hardy, 49, believed to be in South Africa, was convicted at Ipswich crown court for costing the taxpayer an estimated £1.9m by manufacturing tobacco products and not paying duty. He was given a three-year sentence in October 2011.

Nasser Ahmed, 40, was sentenced to six years at Bristol crown court in 2005 for his part in VAT fraud worth £156m, but fled before verdicts were given and is thought to be in Pakistan or Dubai. He was convicted and sentenced in his absence.

Gordon Arthur, 60, believed to be in the US, is suspected of illegally importing cigarettes and alcohol and failing to pay about £15m in duty. He fled in 2000 and a warrant was issued for his arrest at Maidstone crown court in 2002.

Zafar Baidar Chisthi, 33, now believed to be in Pakistan, is wanted over another VAT fraud worth £150m. He fled while on bail and was jailed for 11 years in his absence at Kingston crown court for conspiracy to defraud the public purse.

The three are among 20 people whose pictures and details will be posted at 9am on Thursday on HMRC's Flickr page.

Treasury minister David Gauke said: "These criminals have collectively cost the taxpayer over £765m and HMRC will pursue them relentlessly. We hope that publishing their pictures in this way will enable members of the public to contribute to the effort to catch them."

The top 20 most-wanted tax fugitives

• Hussain Asad Chohan, 44, believed to be in Dubai. He was convicted at Birmingham crown court in his absence and sentenced to 11 years for his part in fraud worth about £200m, which included importing 2.25 tonnes of tobacco worth £750,000 in duty. Chohan has also been served with a £33m confiscation order.

• Nasser Ahmed, 40, believed to be in Pakistan or Dubai, was convicted at Bristol crown court in 2005 for his role in VAT fraud worth £156m. He fled before verdicts were given, and was convicted and sentenced to six years in prison in his absence.

• Zafar Baidar Chisthi, 33, thought to be in Pakistan, was found guilty at Kingston crown court for his part in VAT fraud worth about £150m. He was sentenced to 11 years for conspiracy to defraud the public purse and one year for perverting the course of justice.

• Darsim Abdullah, 42, believed to be in Iraq, was convicted at Guildford crown court for being part of a money laundering gang that processed £1m-£4m per month. Eleven other members of the gang were convicted or pleaded guilty, but he ran away before sentencing.

• Leigang Liang, 38, believed to be in the UK, was convicted at Lewes crown court for illegally importing tobacco from China. He was sentenced in his absence to seven years. The estimated cost to the taxpayer of the scam was £2.6m.

• Olutayo Owolabi, 40, believed to be in the UK, was convicted in January 2010 for 27 charges linked to tax credits and money-laundering and sentenced in his absence to nine months in jail. The estimated cost to the taxpayer was £1m.

• Wayne Joseph Hardy, 49, now believed to be in South Africa, was convicted at Ipswich crown court for manufacturing tobacco products and not paying duty. He was given three-year sentence in October 2011. The estimated cost to the taxpayer was £1.9m.

• Adam Umerji, aka Shafiq Patel, 34, thought to be in Dubai, was jailed at Liverpool crown court for 12 years for VAT fraud and money-laundering. The cost to the taxpayer was £64m.

• Gordon Arthur, 60, believed to be in the US, suspected of illegally importing cigarettes and alcohol and failing to pay £15m in duty. He fled in 2000 and a warrant was issued for his arrest at Maidstone crown court in 2002.

• Emma Elizabeth Tazey, 38, also believed to be in the US, is wanted in connection with the same allegations.

• John Nugent, 53, thought to be in the US, was accused of putting in fraudulent claims for duty and VAT worth more than £22m. A warrant for his arrest was issued at Manchester crown court.

• Malcolm McGregor McGowan, 60, believed to be in Spain, was found guilty at Sheffield crown court in December 2011 of illegally importing cigarettes worth £16m into the UK, and was sentenced to four years.

• Timur Mehmet, 39, believed to be in Cyprus, is wanted over a £25m VAT fraud. He was found guilty in absence and sentenced to eight years at Northampton crown court.

• Vladimir Jeriomin, 34, thought to be in Russia or Lithuania, was part of a gang that made false claims for tax repayments. The estimated cost to the taxpayer was £4.8m. A warrant was issued for his arrest at Liverpool crown court.

• Cesare Selvini, 52, thought to be in Switzerland, is wanted for smuggling platinum bars worth about £600,000. A warrant was issued for his arrest at Dover magistrates court in 2005.

• Dimitri Gaskov, 27, thought to be in Estonia, allegedly smuggled 3mcigarettes into the UK using desktop computers. He fled before trial and an arrest warrant was issued at Ipswich crown court.

• Mohamed Sami Kaak, 45, thought to be in Tunisia, is wanted for smuggling millions of cigarettes into the UK between March 2005 and September 2006 and evading £822,000 in duty. He was convicted in his absence at Isleworth crown court and jailed for four years.

• Rory Martin McGann, 43, believed to be in Northern Ireland or the Republic of Ireland, is wanted for alleged VAT fraud worth more than £902,000. He was arrested in November 2008 but later fled.

• Yehuda Cohen, 35, thought to be in Israel, is wanted over VAT fraud worth about £800,000. He was arrested at Heathrow airport in March 2011 but later fled while on bail.

• Sahil Jain, 30, believed to be in the UK, was arrested over alleged VAT fraud worth £328,000 but failed to appear at the Old Bailey and a warrant was issued for his arrest on 8 June.

Thursday, 12 July 2012

'Bomb detector' maker Jim McCormick faces fraud charges

businessman who sold a bomb-detecting device to 20 countries, including Iraq, has been charged with fraud, Avon and Somerset Police said. Jim McCormick, 55, has been on bail for two-and-a-half years while police examined the sale of the device. A BBC Newsnight investigation in 2010 showed the ADE-651 did not work and led to the British government banning its export to Iraq and Afghanistan. Mr McCormick will appear at City of London Magistrates' Court on Thursday. Avon and Somerset Police said that Mr McCormick would face six charges including producing and supplying the devices, knowing that they were designed or adapted for use in fraud. The device had been sold to a range of Middle-Eastern countries and as far afield as Bangkok. The Iraqi government spent $85m (£52m) on the hand-held detectors which were used at most checkpoints in Baghdad.

Tuesday, 10 July 2012

Britain's Serious Fraud Office (SFO) has reopened its investigation into collapsed hedge fund Weavering Capital,

Britain's Serious Fraud Office (SFO) has reopened its investigation into collapsed hedge fund Weavering Capital, just weeks after damages of $450 million were awarded against the fund's manager in a civil case in the High Court.


The decision marks a U-turn by the fraud agency after it ended a 2-1/2 year probe into Weavering last September, saying there was no reasonable prospect of conviction.


Investors were left with hundreds of millions of dollars of losses when the Weavering Macro fund collapsed during the credit crisis. The fund was found to have more than $600 million in interest rate swaps where the counterparty was a firm related to Weavering.


In May this year damages of $450 million were awarded against Weavering Macro's manager Magnus Peterson, after a High Court case brought by the liquidators of Weavering's British operation.


Judge Sonia Proudman ruled that the interest rate swaps on which the case centred were a "sham" used to manipulate net asset value figures to give investors the impression the Macro fund was successful.


"The (SFO's) director, following a review of the High Court Civil Judgment by Mrs Justice Proudman on the 31 May 2012, has reopened a criminal investigation into Weavering Capital UK," the SFO said in a short statement on its website.


The move is another major decision by SFO Director David Green, who took over from Richard Alderman in April and who told Reuters last month the SFO has to "prove itself".


Last week the SFO said it would investigate the manipulation of interbank lending rates and last month it dropped its probe of property tycoon Vincent Tchenguiz.


The decision last September to end the investigation into Weavering, which raised questions over London's ability to uncover and punish white-collar crime, came just days after a Cayman Islands court awarded damages of $111 million against two of the fund's directors.


During its investigation the SFO made two arrests in May 2009, including Peterson.


"The decision of the SFO to re-open the investigation is welcomed by Weavering's investors. They and the professional advisers involved in the case will provide every assistance to the SFO," said Jones Day partner Barnaby Stueck, who represented the liquidators in the civil case.

Organised investment fraud cost Aussies $113m

The Australian Crime Commission has estimated that 2600 Australians have lost more than $113 million due to investment fraud, in the last five years. The findings come in a new report, published yesterday, titled Serious and Organised Investment Fraud in Australia (PDF). The report was put together by Taskforce Galilee, a consortium of 19 government departments, including the Crime Commission, the Attorney-General's Department, the Australian Tax Office, the Department of Human Services and the Australian Communications and Media Authority. In addition to offers for shares in companies, the fraudsters offer green energy investments, new technology shares, lotteries and sweepstakes and foreign currency trading, among others. The report found that most of the operations targeting Australians were based overseas. Many were based in Asia, but were not run in Asia. Those who cold-called victims were generally Australia, English, Scottish, Kiwi or South African. The report stated that the fraudsters commonly used Voice-over-IP, email, phone, mobile phone or SMS to contact victims, and developed fake websites with log-ins that would displace fake balances, to keep the victim investing money in the scam. The victims tended to be male, aged over 35 years, but generally over 50. Small business owners, self-funded retirees and those who are socially isolated were common. The report said that Australian victims were found to be well-educated and computer literate. Home Affairs Minister Jason Clare said in a statement that people could be strung along for months before catching on.

Businessmen Thomas Scragg and Paul Phillips jailed for £34m fraud

Two men who carried out a £34m tax and VAT fraud by laundering cash through the construction industry have been jailed. Thomas Scragg, 56, of Solihull, West Midlands, and Paul Phillips, 60, of Derbyshire, set up numerous companies over five years as part of the fraud. Carl and Anthony Johnson, 49 and 41, from Wolverhampton have also been found guilty of money laundering. The men spent thousands on hotels, homes and expensive cars, police said. Reporting restrictions around the case have now been lifted following the conviction at Birmingham Crown Court on Monday of the Johnson brothers. 'Flaunted wealth' Scragg, from Hockley Heath, was jailed for a total of 17 years following three separate fraud convictions against HM Revenue & Customs (HMRC), one of the longest sentences in UK criminal history for fraud, West Midlands Police said. Phillips, of Glebe House, in Ashbourne, was found guilty of conspiracy to cheat HMRC and money laundering and sentenced to nine years in prison in November 2010, police said. The Johnson brothers laundered £2.4m and "flaunted their wealth for the local Wolverhampton community to see which is what ultimately led to their downfall", police said. They installed state-of-the art security equipment in their homes. Carl Johnson had bulletproof glass put in his home in Bushbury Road and Anthony rebuilt his house on Sandy Lane, installing a cinema room, stables and dog kennels. They also bought a Lamborghini Murcielago, Bentley Continental, Porsche Cayenne and Ferrari Spider, police said. Their assets, including properties worth more than £2m, are now the subject of confiscation proceedings. Continue reading the main story “ Start Quote This was fraud and money laundering on a massive scale” Det Ch Insp Shaun Edwards To carry out the fraud, Scragg and Phillips set up several payroll companies which dealt with construction work. They collected PAYE payments but did not pass them to HMRC. Instead, the cash was passed to a second layer of fraudulent "payroll companies', HMRC said. "These companies were used to channel the money, and provide distance from the fraud, by transferring it to a third layer of fraudulent companies, all dormant, set up purely to launder the funds for cash," the spokesman added. "The workforce would be paid 'cash in hand' without any deductions being made and VAT for work carried out went unaccounted." Det Ch Insp Shaun Edwards said the joint investigation took more than five years. "This was an incredibly long and complex investigation using the combined specialist skills of officers from West Midlands Police, HMRC investigators, the Regional Organised Crime Unit (ROCU), Regional Asset Recovery Team (RART) and CPS lawyers, who have worked extremely hard throughout the inquiry. "This was fraud and money laundering on a massive scale. It deprived the public purse of millions of pounds and Scragg's audacity is shown by the fact he continued the fraud in various guises even after he knew he was being investigated." He said the Johnson brothers were heard to joke "crime does pay" but added that they were likely have plenty of time behind bars to reconsider that opinion.

Futures Brokerage PFG Best Freezes Accounts Following Discovery Of Accounting Irregularity

Update 3: Russ Wasendorf Sr., the founder and CEO of PFGBest, reportedly attempted to commit suicide this morning outside the corporate headquarters in rural Cedar Falls, company officials confirmed Monday afternoon. Update 2: PFGBest had $400MM in customer segregated funds at the end of April. Is JPMorgan about to "discover" another $400 million in Q2 "profits"? Update: PFGBest Plans 'Several Hundred' Layoffs, Spokeswoman Tells Dow Jones - Dow Jones. Sounds like a good idea in the facec of liquidation Just out from futures broker PFG Best to clients, where the owner's suicide attempt apparently has led to a whole new MF Global spin off. Monday, July 9, 2012   Due to a recent emergency involving Russell R. Wasendorf, Sr., a suicide attempt, some accounting irregularities are being investigated regarding company accounts.  PFGBEST is wholly owned by Mr. Wasendorf.  Therefore, the NFA and other officials have put all funds on hold, and PFGBEST is in liquidation-only status with our clearing FCM.  What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds.  We will update you as any new procedures are stipulated and with any further information as it becomes available. ... And just as the public trust was storming back into the capital markets. From Reuters: Small U.S. futures brokerage PFGBest told customers on Monday that its funds had been put "on hold" as it investigates accounting irregularities following an apparent suicide attempt by the firm's owner.   The Cedar Falls, Iowa-based broker, which had about $400 million in customer segregated funds at the end of April, said it was in "liquidation-only" status with its futures commission merchant (FCM), meaning that "no customers are able to trade except to liquidate accounts," according to the notice.   It said the National Futures Association (NFA) and other officials had put all its funds on hold.   PFGBest officials were not immediately available to comment. One PFGBest broker verified the letter. A second source familiar with the company said owner Russell R. Wasendorf, Sr., had attempted to commit suicide at the firm's Iowa compound. From WCF Courier: Prominent Cedar Falls businessman hospitalized after suicide attempt   Russ Wasendorf Sr., the founder and CEO of PFGBest, reportedly attempted to commit suicide this morning outside the corporate headquarters in rural Cedar Falls, company officials confirmed Monday afternoon.   Wasendorf was taken to Sartori Memorial Hospital this morning, then later was airlifted to University of Iowa Hospitals and Clinics, where he was in critical condition.   Emergency crews were called to the headquarters shortly after 8 a.m. after employees found a man in a car near the headquarters building, located near the Beaver Hills Country Club.   The National Futures Association, the self-regulating organization of the United States futures industry, has placed PFGBest on a “liquidation only” status due to Wasendorf’s condition. The company is wholly owned by Wasendorf.   The company stated that all funds have been put on hold, meaning customers will only be able to sell off their interests, until future notice.   According to company officials, accounting irregularities are being investigated.   Wasendorf, the founder of PFGBest, an international brokerage firm, moved the corporate offices of the company from Chicago to rural Cedar Falls in 2009. He had started the company in Chicago in 1990.   Wasendorf is a Cedar Falls native who started his business in his hometown. Meet Russell R. Wasendorf, Sr. PFGBEST's Leadership Russell R. Wasendorf, Sr. Chairman and Chief Executive Officer of PFGBEST PFGBEST, the brand that evolved from Peregrine Financial Group, Inc., was incorporated in 1990 and has grown to become one of the largest U.S. non-clearing futures brokerage firms. PFGBEST has a presence in the world’s major financial centers, plus a network of more than 700 branches, introducing brokers, foreign introducing brokers and Commodity Trading Advisors (CTAs) serving customers in 80 countries. The company is an industry leader in technology innovations to benefit online traders and investors. It has multiple proprietary online trading platforms that have been spun off of the original BESTDirect Online Trading system, which was one of the very first to deliver customer orders directly into the Globex trading engine of the Chicago Mercantile Exchange, in 1998. Throughout the 1980s, and 1990s, Russell R. Wasendorf, Sr. invested in technological capabilities to create the BESTDirect Online Trading platform, well before other brokerage firms were engaged in this science. Today, the BESTDirect Online Trading platform continues to be known for its efficiency and reliability, making futures and forex markets more transparent and more easily accessible for all participants. PFGBEST has grown to be a liquidity provider that is completely unbiased and diversified to accommodate trading strategies across a variety of asset classes, including futures, forex, options, securities and precious metals. PFGBEST has a leading position in online futures, forex and options; retail brokerage; forex services for individual and institutional clients; managed accounts; demand-inspired new technologies and investor education. Russell also founded SFO – Stocks, Futures and Options, the Official Advocate for Personal Investors – in 2001. The magazine became one of the most widely-distributed monthly publication specializing in these investments, and today it is completely digital. He is a noted writer and educator, having written or co-written six books about futures and trading. These include: Commodity Trading: The Essential Primer; All About Futures From The Inside Out; All About Commodities From The Inside Out; All About Options From The Inside Out; All About Managed Futures From The Inside Out; and The Complete Guide To Single Stock Futures. In 2007, Russell founded W&A Publishing, a firm that has brought numerous authors to market and developed a reputation as “the trader’s tutor”. In 2009, he purchased the assets of another well-regarded investment publisher, Trader’s Press, and moved the business to Cedar Falls, Iowa. The two were merged under the Wasendorf & Associates, Inc. brand in 2010. Russell is widely recognized as an expert and industry voice in many venues, advocating on behalf of efficiencies for individual investors. He serves on the FCM Advisory Committee of the National Futures Association (NFA). He is one of the original partners in a real estate development company, Avrig 35, headquartered in Bucharest, Romania. Avrig 35 has built some of the most significant commercial buildings in East Europe during the past decade. He sits on the Board of the Peregrine Fund along with notables including Patricia Disney, Julie Wrigley, Lee Bass, Henry Paulson, Jr. and Paxton Offield. The Peregrine Fund is a non-political, science-based organization in Boise, Idaho, which works worldwide to conserve wild populations of birds of prey. He also sits on the President Committee of both the University of Iowa and the University of Northern Iowa. Russell began his career as director of public affairs for the American Soybean Association and is a photographer and cinematographer. After that, he worked with Commodities Magazine from 1976 to 1980 and was Director of the Commodities Educational Institute, an affiliated entity. In 1980, he started Wasendorf & Associates, and he founded the Center for Futures Education. Wasendorf & Associates created an Introducing Brokerage arm – Wasendorf & Son Company – in 1986. Peregrine Financial Group, Inc. was born in 1990 to better serve trading customers. Russell’s philanthropic endeavors are channeled through Peregrine Charities, a private family foundation that he founded in 2004, with a charitable focus on research and cures for rare childhood diseases and help for the families facing these illnesses. He received two honors in 2010: the Patriotic Employer Award, for support of the U.S. National Guard and Reserve and employees who are serving or have served in the military; and, the Treating Capital Award from the Cedar Valley Alliance and the Cedar Falls Chamber of commerce for providing regional opportunities in technology employment and commitment to green practices and sustainability efforts. * * * And while Senior obviously had some problems, as confirmed by his Finra record, his son appears to have had some close encounters with the regulators as well.

Sunday, 8 July 2012

The Libor fixing scandal is set to explode across the continent in the coming weeks as it emerged that German regulators have launched an intensive probe into Deutsche Bank

The Libor fixing scandal is set to explode across the continent in the coming weeks as it emerged that German regulators have launched an intensive probe into Deutsche Bank – one of the City's biggest employers – over the affair. BaFin, the country's financial watchdog, is said to have moved its existing investigation into the bank to the status of a "special investigation process" – indicating potential serious breaches. The results are expected by the middle of this month, Reuters reported, citing multiple sources. While the UK's Financial Services Authority never names which London-based institutions it is investigating, news of the advanced BaFin probe could indicate a coordinated investigation. Deutsche is a big player in the City, to the extent that its new boss, Anshu Jain, was drawn from the London investment banking side of the business. While it is not known what the outcome of the Deutsche investigation will be, Barclays will be relieved when other banks begin to be named, shamed and fined. Its decision to go first with a settlement backfired with the political and media storm of the past week and a half. While it was known that Deutsche was among the many banks being investigated over rate fixing, so far it has only admitted it had received subpoenas and requests for information like all the banks submitting their rates to the Libor authorities. Meanwhile, on the continent, the authorities which calculate the European version of Libor, known as Euribor, will be holding a conference call tomorrow in response to allegations about possible fraudulent manipulation of the rate by banks. Euribor-EBF is made up of the national banking associations of all the euro area countries. Across the world, the scandal has led to outrage and calls for more transparency in the way Libor is arranged. This is despite the fact that, at the moment, banks are barely using the rate. The huge influx of lending from central banks, from the Bank of England and the Federal Reserve to the Bank of China, have flooded the markets with cash, making interbank lending fairly irrelevant. Tony Crescenzi, at the giant investment group Pimco, told Bloomberg: "No one is bigger than the market. The enormity of the liquidity operations of the central banks has got so great that any attempt to manipulate an interest rate has got to be futile." But Mr Crescenzi joined the chorus of leading figures calling for Libor reform and transparency.

Friday, 6 July 2012

Serious Fraud Office launches Libor investigation

The Serious Fraud Office (SFO) has confirmed that it has formally launched a criminal investigation into the rigging of inter-bank lending rates. Earlier this week, it said it was considering whether prosecutions would be possible. An SFO spokesperson confirmed that a dedicated case team had now started work. Its involvement follows an investigation by US and UK regulators into the manipulation of Libor. That resulted in a record fine for Barclays, who last week agreed to pay £290m in penalties after its traders tried to rig inter-bank lending rates, sometimes working with staff at other financial institutions. Regulators are continuing to look into possible rate manipulation at other banks, while the US Department of Justice is carrying out its own criminal investigations. The SFO would not say whom it is investigating. Its short statement said only: "The SFO Director David Green QC has today decided formally to accept the Libor matter for investigation." Continue reading the main story Serious Fraud Office Independent government agency established in 1988 Deals with complex, high value fraud cases Average length of case is 4-6 years Carries out investigations in England, Wales and Northern Ireland. In Scotland, this is done by the Crown Office's Serious and Organised Crime Division The Libor affair, described by the prime minister as a scandal, has led to the resignation of three of Barclays' most senior executives in a matter of days, including chief executive Bob Diamond. He appeared before MPs on the Treasury Select Committee this week, when he called the behaviour of those responsible for Libor rigging at the bank "reprehensible". Regulators in the UK and the US found that Barclays staff had tried to affect rates over a number of years, first for profit and then to reduce concerns about how much it was being affected by the financial crisis. The SFO is responsible for investigating allegations of serious and complex frauds. It considers whether to prosecute using a number of criteria, including whether it is a matter of public concern, and whether the value of any fraud is more than £1m.

Sunday, 1 July 2012

Woman who jumped 35 floors to death at Las Vegas hotel had been sought for fraud

 woman wanted on fraud and theft charges jumped 35 floors to her death at a Las Vegas hotel just as two criminal investigators entered her room to arrest her, according to law enforcement documents. A search warrant released Friday shows investigators from the Secretary of State Office’s Securities Division forced their way into Elizabeth DeMaria’s room at the MGM Grand on Tuesday and saw her throw a laptop computer off the balcony before jumping herself. 13 Comments Weigh InCorrections? Personal Post Gallery Olympic track trials, Democrats protest House contempt vote, health-care ruling and more in the day in photos: News and feature images from around the world. DeMaria, 46, was charged in 2010 with 11 counts of fraud and 11 counts of theft. She was accused of conning nine victims out of $200,000 by telling them they were investing in a media company called The Vegas Channel. Authorities say she allegedly bought luxury items for herself instead. After tracking her to the resort, the investigators knocked and announced their intent to serve a bench warrant for her failure to show at a court-mandated May 10 status check when she was out of jail on bail. A female voice could be heard in the room, but requests to open the door were ignored. After she jumped, police were called to the scene, and a white stone ring and a brooch were found in the room. The remains of the computer were recovered, and will be examined for evidence of fraudulent materials and activity. Documents found on the bed referred to Secretary of State Ross Miller and Clark County Sheriff Doug Gillespie, the Las Vegas Review-Journal reported ( ). Also found was a U.S. passport under the name Lisa Victoria, the name she used to check into the MGM Grand. “The passport could be used for international travel, thereby implicating consciousness of guilt,” investigators said in their search warrant. “The passport is evidence of a violation of federal law and contraband.” Investigators said DeMaria had been renting the room since the day she failed to appear in court. While staying at the MGM Grand, she posted “disparaging blogs about witnesses related to her criminal prosecution,” according to the warrant. While DeMaria insisted investor funds were only used to develop the media company, authorities say her bank records show the money was deposited into an account under the name Luxury Lifestyles Las Vegas. She withdrew about $125,000 in cash from the account, according to records.

Dykstra agrees to plead guilty to bankruptcy fraud

Former New York Mets outfielder Lenny Dykstra has agreed to plead guilty to three counts stemming from a bankruptcy fraud case in Los Angeles, federal prosecutors said Thursday. Dykstra will plead guilty to one count each of bankruptcy fraud, concealment of assets and money laundering, said Thom Mrozek, a spokesman for the U.S. attorney's office. Dykstra faces up to 20 years in federal prison. It's not immediately known when his next court date will be. Dykstra, who bought a mansion once owned by hockey star Wayne Gretzky, filed for bankruptcy three years ago, claiming he owed more than $31 million and had only $50,000 in assets. Prosecutors said that after filing for bankruptcy, Dykstra hid, sold or destroyed more than $400,000 worth of items without permission of a bankruptcy trustee. Court documents said Dykstra gave false and misleading testimony under oath about what he did with some of the items he took from his home. Dykstra said he put an oven, sconces and chandeliers into a storage unit, but prosecutors said he ended up selling the items for $8,500. He also hid baseball gloves, balls, bats and other memorabilia from the bankruptcy court and creditors and sold them last year for about $15,000, court documents show. Dykstra is currently serving a three-year prison sentence after pleading no contest to grand theft auto and providing a false financial statement. He also was sentenced this year to nine months in jail after pleading no contest to charges he exposed himself to women he met on Craigslist. A phone message left for Dykstra's deputy federal public defender, Christopher Dybwad, was not immediately returned.

Wednesday, 27 June 2012

Fraud Ring In Hacking Attack On 60 Banks

Sixty million euro has been stolen from bank accounts in a massive cyber bank raid after fraudsters raided dozens of financial institutions around the world. According to a joint report by software security firm McAfee and Guardian Analytics, more than 60 firms have suffered from what it has called an "insider level of understanding". "The fraudsters' objective in these attacks is to siphon large amounts from high balance accounts, hence the name chosen for this research - Operation High Roller," the report said. "If all of the attempted fraud campaigns were as successful as the Netherlands example we describe in this report, the total attempted fraud could be as high as 2bn (£1.6bn)." The automated malicious software programme was discovered to use servers to process thousands of attempted thefts from both commercial firms and private individuals. The stolen money was then sent to so-called mule accounts in caches of a few hundreds and 100,000 euro (£80,000) at a time. Credit unions, large multinational banks and regional banks have all been attacked. Sky News defence and security editor Sam Kiley said: "It does include British financial institutions and has jumped over to North America and South America. "What they have done differently from routine attacks is that they have got into the bank servers and constructed software that is automated. "It can get around some of the mechanisms that alert the banking system to abnormal activity." The details of the global fraud come just a day after the MI5 boss warned of the new cyber security threat to UK business. McAfee researchers have been able to track the global fraud, which still continues, across countries and continents. "They have identified 60 different servers, many of them in Russia, and they have identified one alone that has been used to steal 60m euro," Kiley said. "There are dozens of servers still grinding away at this fraud – in effect stealing money."

Tuesday, 26 June 2012

Asil Nadir arrives at the Old Bailey with his wife Nur to face 66 charges of theft and fraud.

Asil Nadir
 Photograph: Nicholas Razzell

Polly Peck tycoon Asil Nadir fled Britain because he was a broken man with no hope of a fair trial over allegations that he stole nearly £150m from the collapsed firm, the Old Bailey heard .

Nineteen years after he left for Northern Cyprus, the 71-year-old broke his silence as he took the stand in his fraud trial.

Nadir told the jury he left Britain on 4 May 1993 after his mental health collapsed, he was accused of trying to bribe a judge, and believed his post had been tampered with. Denying all charges, he said: "By the time I left the UK, I was a totally broken man. My health was in tatters, my hope on a fair trial was in tatters. I had zero hope of receiving a fair trial."

Asked by his lawyer, Philip Hackett QC, how his health had been affected, he added: "I was not well. Half way through the proceedings in early 1992 I was getting very unwell and the judge, Justice Tucker, made a ruling that I should see a psychiatrist and should have treatment. All through my life up to that point I had been in excellent health."

The court was also told about the "frightening situation" Nadir found himself in after he was accused of trying to bribe his original trial judge.

His lawyer read a transcript from a pre-trial hearing in November 1992 when the conspiracy allegations, which were later dropped, were first put to Nadir, his lawyer Anthony Scrivener QC, and Justice Tucker – who were both implicated.

Denying any involvement in a conspiracy, Nadir said: "It was a frightening situation. I still remember the concerns and the fear the lordship [Justice Tucker] had in his face. I had laid all my hopes on getting an independent trial but was very worried I would not. The judge's expression is not one that one wants to see."

He added: "Anthony Scrivener QC turned to me and said he was extremely worried about it. He tried to get me to give him permission to get him [Scrivener] off the case [but] I didn't give him permission."

The businessman's evidence was heard on the first day of the defence's case in a trial that started in January. It is the first time Nadir has taken the stand since he voluntarily returned from exile in his native Northern Cyprus in 2010.

The court heard that he believed private letters had been tampered with after his post appeared to have been opened, leading to a private detective being hired to investigate. He said: "I did have concerns that my mail was being intercepted. I was not getting mail in the normal way people get mail. Every now and then I would have a pile of opened envelopes with a plastic band wrapped around them."

Nadir explained to the court that he had started his life in business as a six-year-old selling newspapers in his home town. He arrived in the UK in 1980 and bought the then small textile firm Polly Peck, which had a turnover of £2m. He turned it into a conglomerate worth £2bn.

Explaining to the court why he had moved money to a Cyprus-based subsidiary, he claimed this was because he could get a higher rate of interest from the Mediterranean island's banks.

He added that many Cypriots, from both the Greek and Turkish sectors of the island, wanted to invest in the company.

"I have seen dozens of Greek Cypriots on the register of PPI [Polly Peck] because they saw how successful it was from their neighbours. It was very attractive for them to invest in those shares."

But by 1991 Nadir was declared personally bankrupt, he was sued by Polly Peck administrators, and could no longer afford his own lawyers in civil actions, the court heard.

On Tuesday, he claimed the company, which went bust in 1990, was not insolvent. "I think it had a tremendous future and this attitude was shared by the top brokers and investors in this country and worldwide. Finance was available from Turkey. The amount discussed was £70m to obtain a standstill [agreement].

"The finance was from three top Turkish banks on the instigation of the president of Turkey. It was a committed financial arrangement."

The Serious Fraud Office, which is prosecuting the case, claims Nadir abused his power as chairman and chief executive of Polly Peck. The case against him alleges that he "helped himself to tens of millions of pounds" of Polly Peck's money in transfers of more than £146m. The jury previously heard Nadir used the money to secretly buy shares to support the firm's share price and buy expensive properties for himself and relatives.

Staying in his Mayfair home in central London under strict bail conditions, he is set to give more evidence on Wednesday. The trial continues.

Friday, 22 June 2012

Pensions consultancy reports huge increase in pension scheme fraud

The annual report, from consultants Baker Tilly, recorded a 55% increase in pension schemes reporting fraudulent activity. Of the survey respondents 19% said they had experienced cases of fraud, compared to 12% of respondents in 2011. “Awareness of the issue may be rising against a backdrop of more pension frauds hitting the headlines, including high-profile investigations involving illegal cash transfers, false schemes, money laundering and bribery allegations,” it said. The accuracy of member data was considered the most vulnerable area for fraud by the survey’s respondents. Most of the reported incidences of pension scheme fraud came from larger schemes with more than 10,000 members, Baker Tilly said. These schemes accounted for 70% of reported fraud cases despite making up only 31% of respondents. However, the report acknowledged that larger schemes were more likely to identify problems due to “stricter governance frameworks”. Pensions law expert Simon Tyler of Pinsent Masons, the law firm behind, said that it was a "sad fact of life" that fraud levels tended to increase during times of economic stress. However, he noted that the report had highlighted an increase in more serious types of fraud. "Most pension schemes will have come across a spouse 'forgetting' to report a pensioner's death,

Three senior businessmen who cooked up an elaborate scheme to siphon almost £9 million from Sainsbury’s in a corrupt potato deal, were jailed today.

Sainsbury's potato buyer admits corruption
John Maylam, right, entered into a corrupt deal with David Baxter, left, operations director at Greenvale, which supplies half of Sainsbury's potatoes Photo: TONY PALMER 
John Maylam, 44, a senior buyer for the supermarket chain, accepted almost £5 million in bribes from a supplier, which he “frivolously” spent on lavish holidays to Monaco and the South of France, a top of the range Aston Martin and in luxury hotels such as Claridge's.

He colluded with John Baxter, a director at Greenvale who massively overcharged Sainsbury's for its crop.

Maylam admitted corruption and acquiring criminal property and was jailed for four years. Baxter, 50, admitted the same charges and was jailed for 30 months.

With the proceeds, the two men lived “like millionaires”, running up a £350,000 bill at Claridge's, where they received brown envelopes stuffed with up to £2,000 in cash and hiring a Sunseeker motor yacht during a trip to Jersey.

For Maylam’s 40th birthday, he was treated to a five–star £350,000 holiday to Monaco for the grand prix, as well as stays in luxury hotels in Cannes and St Tropez.

Friday, 25 May 2012

EU cookie implementation deadline is today

A year after its implementation in May 2011, the European Commission's Privacy and Electronic Communications Directive will finally start to be enforced as of tonight, meaning visitors to websites are required to be informed of, and given choice over, the site's intentions to store their data in cookies. Though there has been fierce opposition to the directive, some companies, such as the BBC, Channel 4 and the Guardian, have now begun implementing measures that range from multiple user choices in the level of information shared with the site, to a single message informing the user that, by continuing to browse, they have automatically agreed to have their information stored. Further reading EU cookie law is a 'restraint to trade online', says online retailer Most UK organisations not compliant with EU cookie law New EU cookie law set to come into force But the majority of companies, it is widely reported, will miss tonight's deadline. While the Information Commissioner's Office (ICO) still disagrees that a "one size fits all" policy of standardisation is not the way forward when enforcing cookie legislation, some believe such a framework is the only way forward. Society for engineering and technology professionals, the Institution of Engineering & Technology said, "The implementation of this directive is likely to prove very variable until the introduction of a set of standards on the best way to provide a balance between easy browsing and personal privacy. "We had hoped that more progress would have been made on achieving this in the 12 month implementation delay that the Information Commissioner, Christopher Graham, gave British organisations."

Google plans to warn more than half a million users of a computer infection that may knock their computers off the Internet this summer.

Unknown to most of them, their problem began when international hackers ran an online advertising scam to take control of infected computers around the world. In a highly unusual response, the FBI set up a safety net months ago using government computers to prevent Internet disruptions for those infected users. But that system will be shut down July 9 -- killing connections for those people.

The FBI has run an impressive campaign for months, encouraging people to visit a website that will inform them whether they're infected and explain how to fix the problem. After July 9, infected users won't be able to connect to the Internet.

On Tuesday, May 22, Google announced it would throw its weight into the awareness campaign, rolling out alerts to users via a special message that will appear at the top of the Google search results page for users with affected computers, CNET reported. 

“We believe directly messaging affected users on a trusted site and in their preferred language will produce the best possible results,” wrote Google security engineer Damian Menscher in a post on the company’s security blog.

“If more devices are cleaned and steps are taken to better secure the machines against further abuse, the notification effort will be well worth it,” he wrote.

The challenge, and the reason for the awareness campaigns: Most victims don't even know their computers have been infected, although the malicious software probably has slowed their web surfing and disabled their antivirus software, making their machines more vulnerable to other problems.

Last November, when the FBI and other authorities were preparing to take down a hacker ring that had been running an Internet ad scam on a massive network of infected computers, the agency realized this may become an issue.

"We started to realize that we might have a little bit of a problem on our hands because ... if we just pulled the plug on their criminal infrastructure and threw everybody in jail, the victims of this were going to be without Internet service," said Tom Grasso, an FBI supervisory special agent. "The average user would open up Internet Explorer and get `page not found' and think the Internet is broken."

On the night of the arrests, the agency brought in Paul Vixie, chairman and founder of Internet Systems Consortium, to install two Internet servers to take the place of the truckload of impounded rogue servers that infected computers were using. Federal officials planned to keep their servers online until March, giving everyone opportunity to clean their computers.

But it wasn't enough time.

A federal judge in New York extended the deadline until July.

Now, said Grasso, "the full court press is on to get people to address this problem." And it's up to computer users to check their PCs.

'We started to realize that we might have a little bit of a problem on our hands...'

- Tom Grasso, an FBI supervisory special agent

This is what happened:

Hackers infected a network of probably more than 570,000 computers worldwide. They took advantage of vulnerabilities in the Microsoft Windows operating system to install malicious software on the victim computers. This turned off antivirus updates and changed the way the computers reconcile website addresses behind the scenes on the Internet's domain name system.

The DNS system is a network of servers that translates a web address -- such as -- into the numerical addresses that computers use. Victim computers were reprogrammed to use rogue DNS servers owned by the attackers. This allowed the attackers to redirect computers to fraudulent versions of any website.

The hackers earned profits from advertisements that appeared on websites that victims were tricked into visiting. The scam netted the hackers at least $14 million, according to the FBI. It also made thousands of computers reliant on the rogue servers for their Internet browsing.

When the FBI and others arrested six Estonians last November, the agency replaced the rogue servers with Vixie's clean ones. Installing and running the two substitute servers for eight months is costing the federal government about $87,000.

The number of victims is hard to pinpoint, but the FBI believes that on the day of the arrests, at least 568,000 unique Internet addresses were using the rogue servers. Five months later, FBI estimates that the number is down to at least 360,000. The U.S. has the most, about 85,000, federal authorities said. Other countries with more than 20,000 each include Italy, India, England and Germany. Smaller numbers are online in Spain, France, Canada, China and Mexico.

Vixie said most of the victims are probably individual home users, rather than corporations that have technology staffs who routinely check the computers.

FBI officials said they organized an unusual system to avoid any appearance of government intrusion into the Internet or private computers. And while this is the first time the FBI used it, it won't be the last.

"This is the future of what we will be doing," said Eric Strom, a unit chief in the FBI's Cyber Division. "Until there is a change in legal system, both inside and outside the United States, to get up to speed with the cyber problem, we will have to go down these paths, trail-blazing if you will, on these types of investigations."

Now, he said, every time the agency gets near the end of a cyber case, "we get to the point where we say, how are we going to do this, how are we going to clean the system" without creating a bigger mess than before

Under European Union law, Greece cannot leave the euro.

That is the theory. But in practice, any protection the law offers investors could be difficult to enforce, according to lawyers trying to protect their corporate clients against the upheaval sure to follow if Greece defaults on its debts and adopts a new currency. So their advice is blunt: Remove cash and other liquid assets from Greece and prepare to take a short-term hit on any other investments. “My personal view is that it is irrational for anyone, whether a corporation or an individual, to be leaving money in Greek financial institutions, so long as there is a credible prospect of a euro zone exit,” said Ian Clark, a partner in London for White & Case, a global law firm that has a team of 10 attorneys focusing on the issue. Several multinational corporations have already taken the same view. Vodafone, the mobile phone operator, and GlaxoSmithKline, the pharmaceuticals firm, say they are “sweeping” money out of Greece and into British banks each evening. This applies not just to Greece but to most other euro nations, although Glaxo says it still keeps money in Germany. Corporate attorneys say looking to E.U. law provides only approximate guidance on whether Greece could stop using the euro while remaining in the Union. Although the E.U. prides itself on basing decisions on strict interpretation of the legal texts in its governing treaty and other legislation, the rules on euro membership have proved flexible. For example, while all 27 E.U. nations are supposedly obliged to join the single currency, once they meet certain economic criteria, Britain and Denmark were able to negotiate the option of retaining their own currencies. Sweden is one of the nations technically obliged to join the euro, but since a national referendum opposed the idea in 2003, no one has pressed the country to do so. Similarly, while leaving the euro might, legally, mean quitting the union itself, most experts see this as a technicality that can be circumvented as well. “The treaty doesn’t cover the question of what would happen if a country were to leave the euro and return to its previous currency,” said Stephen Weatherill, Jacques Delors Professor of European Law at Oxford University. “In the absence of any provision, there is plenty of space for European governments to concoct a solution, adopt it and for it to be legally enforceable,” he added. “In general, you can do anything you like, so long as you do not breach pre-existing international obligations.” The mechanics of leaving the euro would surely lead Greece to impose so-called capital controls to stem the flight of money from a currency destined to be devalued. Again, such controls look impossible under E.U. law. But Mr. Weatherill thinks that a loophole allowing for the protection of public security could be invoked. Mr. Clark, of White & Case, a global law firm, points to a clause in Article 65 of the treaty that says that the pledge on free movement should not prevent countries from taking measures “which are justified on grounds of public policy or public security.” Mr. Clark and his team serve clients that include financial institutions like BNP Paribas and hedge funds. In February, Andrew Witty, the chief executive of GlaxoSmithKline, said: “We don’t leave any cash in most European countries” except Germany. Tens of millions of pounds flow into accounts in Britain every day, he said. But, apart from trying to ensure that debts are paid promptly and therefore in euros, legal options for companies are limited. Contracts covered by Greek law, particularly for services delivered in Greece, provide little protection against the currency’s being redenominated and devalued — a development regarded as unlikely until recently. “Greece would, through its laws, be able to amend contracts governed by Greek law or to be performed within the territory of Greece,” Mr. Clark said. “It is the governing law and the place of performance of the contract that is most important.” International contracts, which might be covered by English, German or Swiss law, would be more likely to be honored in the designated currency, though in some cases the wording of the legal document may be vague. And even if the law is on their side, companies would find that to extract payment from a Greek company, they would need a judge in Greece to enforce a ruling from a foreign court. “Enforcement of foreign judgments is harder or easier from country to country within the E.U.,” Mr. Clark said. “Greece has always had a reputation of being a difficult place in which to enforce judgments, from a practical perspective.” That means that international trading partners are likely to share in any losses that accompany a Greek exit from the euro. “International businesses that have long-term interests in Greece are going to have to be pragmatic and probably, in the short term, give some dispensation to their Greek counterparties, rather than trying to enforce the terms of contracts that cannot be performed,” Mr. Clark said.

Former Lloyds worker Jessica Harper in £2.5m fraud charge

A former head of security at Lloyds Bank has been charged in connection with an alleged £2.5m fraud. Jessica Harper, 50, of Croydon, south London, is accused of submitting false invoices to claim payments, between September 2008 and December 2011. At the time she was working as head of fraud and security for digital banking and allegedly made false claims totalling £2,463,750. Ms Harper will appear at Westminster Magistrates' Court on 31 May. She has been charged with one count of fraud by abuse of position. The bank, which is now 39.7% state-owned after being bailed out by the government during the financial crisis, refused to comment on the charging of Ms Harper. A Metropolitan Police spokesman said she was arrested on 21 December 2011 by officers from its fraud squad. Andrew Penhale, from the Crown Prosecution Service's Central Fraud Group, said: "The charge relates to an allegation that between 1 September 2008 and 21 December 2011, Jessica Harper dishonestly and with the intention of making a gain for herself, abused her position as an employee of Lloyds Banking Group, in which she was expected to safeguard the financial interests of Lloyds Banking Group, by submitting false invoices to claim payments totalling £2,463,750.88, to which she was not entitled. "This decision to prosecute was taken in accordance with the Code for Crown Prosecutors. "We have determined that there is a realistic prospect of conviction and a prosecution is in the public interest."

Monday, 30 April 2012

Miami Massage Clinic Owner Accused Of Insurance Fraud

The owner of a Miami massage clinic has been charged with insurance fraud. Thirty year old Judith Gonzalez is accused of billing insurance companies nearly $250,000 in fraudulent claims and coaching patients on how to commit personal injury protection fraud. Also charged in the probe were a physician’s assistant and 14 patients. Gonzalez, who is the owner of the Flamingo Health Corporation, has operated several other clinics. The state Division of Insurance Fraud and the Miami-Dade Public Department’s Public Corruption Investigation Bureau conducted an undercover investigation which revealed the scheme.

Donor who fled over fraud charges is set to return to Britain

Nick Clegg defended his party's decision to hold on to the £2.4m donated by the millionaire fraudster Michael Brown, who is back in Europe and facing extradition to the UK. Mr Brown was flown from the Dominican Republic to Madrid at the weekend and is now awaiting return to the UK under a European Arrest Warrant. The fraudster achieved national fame when he gave £2.4m to the Liberal Democrats to see them through the 2005 general election. No other Liberal Democrat backer has been able to come near to matching his munificence, and yesterday Mr Clegg dismissed a suggestion that the Liberal Democrats are morally obliged to give the money back. He told BBC's Sunday Politics programme: "This was something that happened before I was even an MP, let alone leader of the Liberal Democrats. What I have been told is that the Electoral Commission, in 2009, looked at this exhaustively and they categorically concluded that the money was received in good faith and all the controls and checks that should have been made were reasonably made by the Liberal Democrats at that time." He added that he was "very pleased" that Brown is returning to face justice. At his trial in 2008, Brown was convicted of posing as an investor to persuade people to part with money which he used to fund an extravagant lifestyle, including a Mayfair flat, a £2.5m private jet, and a personalised Range Rover. Among his victims was the Manchester United boss, Martin Edwards, who gave him around £7m after being assured that the money would be invested and bring substantial returns. After his conviction at Southwark Crown Court, Brown fled to the Caribbean, and was sentenced in his absence to seven years in prison. In January, he was arrested by local police in the town of Punta Cana, in the Dominican Republic, on a separate fraud charge. A City of London Police spokesman said: "Michael Brown was deported from the Dominican Republic and landed in Madrid on Saturday morning, accompanied by officers from the Dominican Republic. "City of London Police will be taking the appropriate steps to bring him back to the UK, via a European Arrest Warrant." Detective Superintendent Bob Wishart said: "The City of London Police is pleased that after four years evading British justice, Mr Brown is a step closer to returning to the UK to start his prison sentence."

Australia’s parliamentary speaker, Peter Slipper, stepped aside after allegations of sexual harassment and expenses fraud

Australia’s parliamentary speaker, Peter Slipper, stepped aside after allegations of sexual harassment and expenses fraud, weakening Prime Minister Julia Gillard’s grip on power and ability to pass legislation. Deputy Speaker Anna Burke, a lawmaker from Gillard’s Labor party, will replace Slipper as he contests the claims, he said in a statement yesterday. He denied allegations in a Federal Court lawsuit that he made “unwelcome sexual advances” toward a male adviser and misused taxpayer-funded travel vouchers. Enlarge image Julia Gillard, Australia's prime minister. Photographer: Mark Graham/Bloomberg Enlarge image Peter Slipper, speaker of the Australian House of Representatives, stepped down amid allegations of sexual harassment and fraud. AP Photo/The Office of Peter Slipper MP Gillard’s minority government has been relying on Slipper to boost its numbers in the lower house since he defected from the opposition coalition to become speaker in November. His decision to step aside to fight the claims means Labor, already battling near record-low poll ratings, faces losing its one-seat majority when parliament reconvenes next month and debates the annual budget on May 8. “It makes it more difficult for Gillard to manage the parliament with the speaker tainted, and it makes her government look as if it’s almost unmanageable,” said John Wanna, a professor of public administration at the Australian National University in Canberra. “It keeps clouds hanging over the Gillard government but it’s not necessarily terminal.” Police Probe In the April 20 lawsuit, James Ashby, who started working for Slipper in December, alleges he made “unwelcome sexual comments” and “unwelcome suggestions of a sexual nature” between January and March 2012. He also accuses Slipper of handing signed, blank travel vouchers to the driver of a vehicle in which they travelled. Australian police said they will probe the allegations of expenses fraud. “The allegations include both a claim of criminal behavior and a claim under civil law,” Slipper said in his statement. “It is appropriate for me to stand aside as speaker while this criminal allegation is resolved.” Slipper, who in his role enforces rules and procedures, said he will return to the position when the criminal allegations are proven to be false. Gillard’s ‘Integrity’ Tony Abbott, leader of the Liberal-National opposition, said the matter raised fresh questions about the “integrity” of the government and the prime minister. Gillard backed Slipper in the speaker’s role in a “desperate bid to shore up her own numbers and seems to indicate this is a prime minister who will do anything, anything at all to assist her position in the parliament,” Abbott said in an interview with the Seven Network today. Gillard, in Singapore for talks with government officials, said in a statement yesterday that Slipper’s decision to step aside was “appropriate.” The opposition leader sought to link the Slipper affair to another that’s overshadowing the government -- allegations against Labor lawmaker Craig Thomson. He denies claims he used a union credit card to pay for prostitutes before entering parliament in 2007. Abbott is demanding that Gillard pressures Thomson to cooperate with police inquiries and to ensure a report by Australia’s workplace tribunal, which is probing the affair, is released immediately. Minority Government Support for Labor sat near a record low in an opinion survey published last week before an election required by the end of 2013. Labor’s support of 29 percent trails Abbott’s coalition by 19 percentage points, according to a Newspoll published in the Australian newspaper April 17. Gillard formed a government in 2010 after the nation’s closest election in seven decades ended Labor’s majority. She has had to rely on the support of independent and Greens lawmakers to secure the 75 votes needed to pass legislation in the 150-member House of Representatives. The Greens party and two of those independent lawmakers, Tony Windsor and Rob Oakeshott, today reiterated their support for the government, the Associated Press reported. In November 2011, Gillard gained a two-seat majority after then-speaker Harry Jenkins, a Labor lawmaker, quit and was replaced by Slipper. That majority was cut to one in January when independent lawmaker Andrew Wilkie withdrew his allegiance to Gillard, saying she broke a promise to tighten gambling laws.

Swiss arrest former SNC-Lavalin executive for alleged corruption

In a major strike against alleged corruption involving Canadian construction giant SNC-Lavalin in North Africa, Swiss authorities have arrested former top executive Riadh Ben Aïssa, who parted ways with the company last February. The allegations concern “corruption, fraud and money laundering related to business dealings conducted in North Africa,” Jacqueline Buhlmann of Switzerland’s federal prosecution agency, the Office of the Attorney General, confirmed to the Toronto Star. Word of the arrest of Ben Aïssa, who had close ties to the regime of former Libyan dictator Moammar Gadhafi and especially his son Saadi, comes after the RCMP, accompanied by a Swiss investigator, raided the head office of the company in Montreal on April 13. The search took place at the request of Swiss authorities. A spokesperson for SNC-Lavalin said Sunday that the company is aware of Ben Aïssa’s arrest but has no specific details of his status. “If crimes have been committed by Mr. Ben Aïssa or any other former employee, the company believes that they should be held accountable,” Leslie Quinton said in a statement. Buhlmann indicated that the arrest is the result of a criminal investigation that began as far back as May 2011. Ben Aïssa is currently in prison. He has reportedly been held since mid-April. SNC-Lavalin’s business dealings in Libya have become a major ethical and financial crisis for the company, which has seen its stock price plummet in recent months. The company’s chief executive officer was forced out last March on the same day a damning internal review was released, which focused on $56 million in missing payments. It was revealed that Pierre Duhaime had breached the company’s code of ethics in approving the payments without authorization after the chief financial officer had rejected them. The review was prompted by improper payments allegedly made by Ben Aïssa to commercial agents. The company refused to provide details on the projects, but said it “believed” the payments weren’t related to Libya. The review also did not specify how the payments were made, through which banks, or where. Switzerland is the world’s largest offshore financial centre. Duhaime was forced out following the departures in February of Ben Aïssa, the executive vice-president of construction, and Stéphane Roy, the company controller. Ben Aïssa was “believed to have direct and significant knowledge about most of the investigated transactions,” but did not co-operate with the internal investigation on the advice of his lawyer, the review stated. Clouding the alleged improper business dealings is the connection Ben Aïssa and Roy have with Ontario consultant Cynthia Vanier, who sits in a Mexican prison. Roy travelled to Mexico City last fall to meet with Vanier, who was at the same moment arrested by Mexican police in connection with an alleged attempt to spirit Saadi out of Libya during that country’s revolution, and smuggle him to Mexico. Vanier, who denies any connection to a Mexico-related plot, had been previously hired by the SNC executives to complete a “fact-finding” mission in Libya to determine, among other things, how the company could securely re-establish its business interests there. She produced a report widely seen as very pro-regime, which was praised by Roy. SNC at first denied any involvement with Vanier. It now pleads ignorance, saying that any work mandates Vanier performed for the company “may have been outside the permitted scope of authority of those who assigned them.” Roy is also the subject of a probe by the RCMP commercial crimes section, according to a CBC report. Ben Aïssa, a native of Tunisia, began his career at SNC-Lavalin in 1985 and quickly gained a reputation for his ability to obtain contracts in the Middle East. In 2002, he was named senior vice-president for the Middle East and North Africa, and general manager of the country’s Libyan office. Five years later he was promoted to lead the company’s lucrative construction division. During that time Ben Aïssa, who worked out of the company’s offices in Montreal and Tunis, helped secure huge Libyan contracts worth billions, including, among others, ones for a new airport for Benghazi and a new prison. Ben Aïssa developed a close relationship with two of Gadhafi’s sons, including Saadi. SNC also covered Saadi’s expenses during a lavish trip he made to Canada in 2008. After he left the company, Ben Aïssa denied he’d been forced to resign, as the company suggested, and threatened to sue. The company is co-operating with authorities to “obtain the answers required about situations concerning ex-employees as expeditiously as possible,” Quinton added in her statement. Neither Ben Aïssa’s Montreal spokesperson nor his lawyers returned requests for comment.

Thursday, 26 April 2012

Credit card fraud websites shut down on three continents

Three men have been arrested and 36 criminal websites selling credit card information and other personal data shut down as part of a two-year international anti-fraud operation, police have confirmed. The Serious Organised Crime Agency (SOCA), working with the FBI and US Department of Justice, as well as authorities in Germany; the Netherlands; Ukraine; Australia and Romania, swooped after identifying the sites as specialising in selling card and bank details in bulk. The move comes as a blow to what is a growing black market for stolen financial data. Detectives estimated that the card information seized could have been used to extract more than £500m in total by fraudsters. SOCA claimed it has recovered more than two and a half million items of compromised personal and financial information over the past two years. “The authorities have shut down 36 websites but it is difficult to know how many other people had access to that data. They could spring back up somewhere else if a gang is not eradicated completely,” said Graham Cluley of internet security firm Sophos. He added: “This is big business and, just as in any legitimate company there are people who specialise in different things, so there are those who actually get their hands on the personal data and those who sell it on; they are not often the same person.” An investigation by The Independent last summer found that scammers were making a “comfortable living” getting their hands on sensitive information and selling it online. Card details were being offered for sale for between 4p and £60 per card – depending on the quality – according to one source in the business. Some cards would be sold with incomplete or unreliable information; others ready to use. Some of the card details for sale on the websites shut down by SOCA were being sold for as little as £2 each. Investigators said that the alleged fraudsters were using Automated Vending Carts, which allowed them to sell large quantities of stolen data. They are said to be a driver of the growth in banking fraud over the last 18 months because of the speed with which stolen data can be sold. Lee Miles, Head of Cyber Operations for SOCA said: “This operation is an excellent example of the level of international cooperation being focused on tackling online fraud. Our activities have saved business, online retailers and financial institutions potential fraud losses estimated at more than half a billion pounds, and at the same time protected thousands of individuals from the distress caused by being a victim of fraud or identity crime.” An alleged operator in Macedonia was one of those arrested, while two British men accused of buying the information were also detained. Britain’s Dedicated Cheque & Plastic Crime Unit also seized computers suspected of being used to commit fraud.

Friday, 9 March 2012

A4e faces new fraud investigation


The government has launched an investigation into an allegation of attempted fraud against the welfare-to-work company A4e. The Department for Work and Pensions (DWP) said it had been made aware of an allegation of attempted fraud in relation to a mandatory work activity contract with the firm, which is already facing a police investigation in relation to previous allegations. A statement said: "As a result of this new allegation, DWP has immediately commenced its own independent audit of all our commercial relationships with A4e. "We have required A4e to make available all documentation which our auditors may require and provide full access to interview any A4e employees. This is separate from the independent review of internal controls which A4e has previously announced. "The chief executive of A4e was informed of this at a meeting with a senior DWP official earlier today. "We have made it absolutely clear to A4e that we take this matter very seriously, and that if, at any point during the audit or thereafter, we find evidence of systemic fraud in DWP's contracts with A4e, we will not hesitate to immediately terminate our commercial relationship." A4e said: "The board has made consistently clear in all previous statements that we take any allegations of fraudulent or otherwise illegal activity extremely seriously. There is absolutely no place for this type of misconduct at A4e. "We obviously acknowledge the concerns raised by DWP, and we welcome and will co-operate fully with their planned investigations. "A4e has more than 3,500 staff and operates out of 200 offices in the UK. From December 2005 to date, nine cases relating to A4e have been referred to the Department of Work and Pensions to review claims submissions. "Of these nine referrals, one, dating back to May 2008, resulted in the prosecution of an individual member of A4e staff, which was widely reported at the time. "Another is the case now being handled by Thames Valley police. In each of the remaining, closed cases, the DWP's view was that these were not incidences of malpractice. "The board has asked White & Case LLP to lead an independent and thorough review of A4e's controls and procedures. That process will be carried out concurrently, and all findings will be provided to DWP."

Thursday, 8 March 2012

The shooting of three IRA members by the SAS in March 1988 is linked to a major review commissioned by the Prime Minister David Cameron


The shooting of three IRA members by the SAS in March 1988 is linked to a major review commissioned by the Prime Minister David Cameron, it has emerged. Sir Desmond de Silva , PC,QC, a member of the Gibraltar Bar, was asked by the Prime Minister to chair a Review into the assassination of a well-known Belfast lawyer - Patrick Finucane, in 1989. As this case has had attached to it allegations of state collusion in the murder Sir Desmond’s Review will involve an examination of the activities of the intelligence services, the police and the army in Northern Ireland at the time. In order to properly discharge the work of this Review, Her Majesty appointed him a member of Her Privy Council. A Gibraltar connection springs from the SAS shootings of IRA operatives on the Rock. Mairead Farrell, who was one of the IRA operatives who was shot dead in Gibraltar, was engaged to be married to Seamus Finucane the brother of Patrick, whose own killing allegedly by agents of the state, Sir Desmond is currently investigating. It is understood that once the Review is complete and his Report is presented to Parliament Sir Desmond will return to his busy practice in London and abroad. Although he has been involved with the prosecution of some very high profile cases he is, perhaps, best known as a hugely successful defence QC who has, in Gibraltar alone, defended in many contested cases before the Supreme Court. On the October 12 2011 the Secretary of State for Northern Ireland appointed Sir Desmond de Silva QC to carry out an independent review into state involvement in the murder of Pat Finucane in 1989. Sir Desmond de Silva is determined to expose the truth about this “appalling” murder. “I know from my work internationally over many years that it is only when the truth is fully exposed that communities can put the trauma of conflict behind them to secure a lasting peace. Naturally, I will be applying the key principles of independence, thoroughness and impartiality in carrying out my work. The Government may have set my remit but it is now for me to take the task forward independently. There have been suggestions that this Review is not capable of hearing from individuals who may have information that could assist me in my work. This is not the case; I will certainly wish to see such individuals.” Sir Desmond asked any who may be able to assist to come forward and contact the Review at any stage to provide information or make representations. BBC reported that when they met last October 2011, the family of Pat Finucane cut short a meeting with Mr Cameron after the Prime Minister failed to order an inquiry into the killing. His family have long campaigned for an independent public inquiry. Pat Finucane’s widow Geraldine told reporters she felt so angry she could hardly speak. Mr Finucane’s family said they were “insulted” at the proposal for a review of the case and said they would continue their campaign for an independent public inquiry and would not participate in the review. Sir Desmond has written to the family asking them to contribute to the review.

Britain's biggest ever Ponzi scheme Kautilya Pruthi faces 14 years in jail


Kautilya Pruthi, 41, swindled investors out of £38m under a scheme that resulted in massive contractual losses. Among the 800 victims were former England cricketer and Strictly Come Dancing star Darren Gough and Unchained Melody singer Jerome Flynn, who are rumoured to have lost as much as £1m each. Pruthi blew £10m in three years renting luxury homes across the South East, buying Bentleys, Ferraris, Lamborghinis and Jaguars, while lavishing more than £370,000 on his lovers. He confessed to fleecing investors in January and John Anderson, 46, and Kenneth Peacock, 43, were convicted of carrying on an unauthorised regulated activity earlier this week. Anderson and Peacock were cleared of a charge of recklessly making misleading false or deceptive promises.

Wednesday, 7 March 2012

Allen Stanford faces decades behind bars after being convicted of a $7 billion fraud that snared investors in 113 countries


A MONTH after Sir Fred Goodwin was stripped of his title for leaving Royal Bank of Scotland shredded, another erstwhile knight of the financial-services realm has been put in his place—this time a jail cell. Allen Stanford faces decades behind bars after being convicted of a $7 billion fraud that snared investors in 113 countries, from Latin America to Libya. When in 2008 the sky fell in on Bernard Madoff, the only fraudster to have taken investors for more, the Texas-born Mr Stanford was still swaggering. He had done so much for Antigua, the Caribbean island where he based his empire, that it made him a Sir. He took to the airwaves to tut-tut rivals who had been felled by subprime mortgages. His star rose further when he sponsored an international cricket tournament. He was said to be worth over $2 billion. He certainly lived like he was. Within a few months, however, the authorities had swooped in, closing his Antigua-based bank and his brokerage operations. Prosecutors accused him of flogging bogus certificates of deposit and raiding the bank, siphoning deposits to a Swiss account used to finance his passion for yachts, jets and islands. His lawyers tried to have him declared incompetent to stand trial, saying a prison beating had led to loss of memory and an addiction to anti-anxiety drugs. When that ruse failed, they argued in court that he had been his group’s visionary, uninvolved in its day-to-day running, even as they claimed the businesses had been viable until they were “disembowelled” upon being seized. Countering this narrative was damning evidence from the prosecution’s star witness, Mr Stanford’s former chief financial officer, who testified that he and his boss had falsified documents and that the firm had presented hypothetical returns as the real thing in client pitches. Others said that, for all his public bravado, he had been aware of a hole in the accounts. When another colleague suggested he raise more money to plug this, he reportedly said: “I’ll go to the Libyans. They love me.” Victims cheered the verdict, but their victory is hollow. Three years on, they are yet to receive a penny from the court-appointed receiver, Ralph Janvey. Of the $216m he had recovered by late last year, more than half had been eaten up by legal and other fees. His team reckons that total recoverable assets may be a mere $500m, or 7% of the account balances shown at the time of Mr Stanford’s arrest (though that could increase if lawsuits seeking $600m from Stanford brokers, customers who extracted more than they paid in and political organisations that received donations from Mr Stanford succeed). Investors also bemoan the hefty cost of litigating jurisdictional issues. Mr Janvey is locked in a fight over how to divide up the estate with a separate receiver in Antigua, who has control over the fraudster’s bank accounts in Switzerland and Britain. America’s Securities and Exchange Commission has backed the victims’ cause, taking the unprecedented step of suing the Securities Investor Protection Corporation after the congressionally-chartered group balked at paying them up to $500,000 each in compensation (on the ground that Stanford’s operations were based offshore). Too little, too late, scream the SEC’s critics. Its district office in Fort Worth, Texas, first concluded that the Caribbean kingpin’s businesses were a Ponzi scheme in 1997, only to be ignored then and several times subsequently by enforcement staff. This story has only one true villain, but many others come out looking bad.

Tuesday, 6 March 2012

Allen Stanford was convicted on Tuesday of running a $7 billion Ponzi scheme, a verdict that caps a riches-to-rags trajectory for the former Texas financier and Caribbean playboy.

Aaron M. Sprecher/Bloomberg News



It was a vindication for the U.S. government, which closed down Stanford's financial empire in February 2009 but had failed for years to address signs that the business was built on air. The Stanford case was the biggest investment fraud since Bernard Madoff's.

Stanford was found guilty on 13 counts of a 14-count criminal indictment, including fraud, conspiracy and obstructing an investigation by the U.S. Securities and Exchange Commission. He was found not guilty on one count of wire fraud. The charges carry a possible prison sentence of nearly 20 years.

As Stanford, 61, was led out of the courtroom after the verdict, he touched his fist to his heart and looked at the bench where his mother and two daughters sat. He has been jailed since his June 2009 arrest.

"We're disappointed in the outcome," said Stanford's defense attorney Ali Fazel. "We do expect an appeal." He said he expects sentencing in several months.

The verdict came less than a day after the Houston federal jury said it could not reach a decision, and U.S. District Judge David Hittner instructed jurors to keep deliberating.

Still, the verdict may prove only a moral victory for Stanford's victims. Most have received none of the money back they invested in Stanford's certificates of deposit.

"For all the investors I think there is a sense of relief that they weren't just fools," said Cassie Wilkinson, a Houston investor in Stanford funds who attended the six-week trial. "There was a jury of 12 people who found the same thing - that we were just conned."

Stanford's unraveling was one of the most closely watched fraud cases since Madoff's. Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors have called a $64.8 billion Ponzi scheme. He is serving a 150-year prison sentence.

The guilty verdict did not end the case. The jury of eight men and four women, including a pawn shop operator and a retired hairdresser, returned to the courtroom on Tuesday afternoon to consider the government's demand that more than $300 million in assets tied to Stanford be forfeited.

The money, which has been frozen, is held in more than 30 bank accounts in Geneva, the United Kingdom and Canada in the names of Stanford and other entities, according to the government. Stanford, wearing a navy blue suit, also was back in the courtroom to hear the testimony in the forfeiture case.

"Every single dollar that the U.S. is seeking to forfeit is CD depositor money that stems from Mr. Stanford's crimes and belongs to the victims of his crimes," prosecutor Andrew Warren said in opening statements.


Stanford's personal fortune was once valued at $2.2 billion.

At trial, prosecutors told how he repeatedly raided the bank he owned in Antigua, Stanford International Bank, using it as his "personal ATM."

He bought a castle in Florida for one of his girlfriends and his oldest daughter lived in a million-dollar condominium in Houston. He wore custom-made suits, lived in luxury homes and on a yacht in the Caribbean and bankrolled a $20 million prize for an international cricket tournament.

The government's star witness, former Stanford aide James Davis, testified that he and Stanford faked documents and made up financial reports to calm investors and fool regulators. They funneled millions of dollars from Stanford International Bank to a secret Swiss bank account that Stanford tapped for his personal use, Davis testified.

Davis, 63, has pleaded guilty to three criminal counts.

Stanford's lawyers portrayed their client as a visionary who was not involved in his firm's daily activities. They blamed Davis for any fraud and argued that Stanford's businesses were viable until the government shut down Stanford Financial Group in Houston in February 2009. Left with no money, Stanford was declared indigent by the court and his defense was paid for with public funds.

Wendell Odom, a criminal defense attorney in Houston who observed much of the trial, said Stanford's attorneys did a good job of discrediting Davis by getting him to admit to being a liar. But they failed to develop an alternative theme for the jury. "There was just too much evidence," he said.


While in jail awaiting trial, Stanford was beaten by another inmate, leaving him with a brain injury and broken bones in his face. He then became addicted to an anti-anxiety medication. His lawyers argued that those events caused him to lose his memory, making him incompetent to stand trial.

After eight months at a prison hospital in North Carolina, he was deemed competent to stand trial. Before his trial began on January 23, Stanford's lawyers said their client wanted to tell his story to the jury, raising the possibility that he would take the stand. Ultimately, he did not testify.

Stanford grew up in Mexia, Texas. He studied finance at Baylor University, where Davis, who later become chief financial officer of Stanford Financial Group, was his roommate.

In the 1980s, Stanford bought up real estate in Houston with his father, later selling it at a profit. In 1986, he opened an offshore bank on the Caribbean island of Montserrat and, after banking regulations there tightened, he moved his operation to Antigua.

The bank specialized in aggressively selling certificates of deposit to wealthy people, his former employees testified at the trial. They targeted clients in Latin America, especially Venezuela, and oil company workers with fat pensions who lived along the U.S. Gulf Coast.

In Antigua, he became a philanthropist and sponsor of cricket, the national sport, and was known as "Sir Allen" after being knighted there in 2006. By 2008, Stanford made No. 205 on Forbes magazine's list of the wealthiest Americans.

But questions surfaced about how Stanford International Bank's CDs could persistently pay above market rates. By February 2009, investors were trying to withdraw their money and, on February 17 of that year, the government descended on his headquarters in Houston and shut it down.

Antigua stripped him of his knighthood and seized his local assets.

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