arrested the founder of German investment firm K1 Group, Helmut Kiener

Police arrested the founder of German investment firm K1 Group, Helmut Kiener, in connection with a fraud investigation at the firm, a local prosecutor said Thursday.
European and U.S. authorities are investigating whether K1 embezzled millions of dollars from several global banks, including J.P. Morgan Chase & Co., Barclays PLC, BNP Paribas SA and Société Générale SA, the prosecutor said.arrested Helmut Kiener, the founder of the K1 hedge fund, which is suspected of bilking numerous banks, including Barclays Capital, JPMorgan Chase, BNP Paribas and Société Générale, out of about $400 million.That came after prosecutors and police raided Mr. Kiener’s office and home Wednesday in the course of an investigation into suspected fraud and breach of trust at K1 Global, a fund registered in the British Virgin Islands.The state prosecutor, Dietrich Geuder, based in the Bavarian town of Würzburg, said that Mr. Kiener was awaiting a hearing Thursday and that another unidentified suspect was being investigated.BNP, the largest French bank, would only say that ‘‘at the request of the authorities, we are cooperating with them.’’ JPMorgan Chase and Barclays declined to comment, given that the investigation is ongoing. Société Générale said its exposure was ‘‘negligible.’’All four banks’ losses were accounted for on their balance sheets already, indicating that the investigation has been under way for some time.
Mr. Kiener, a psychologist who founded the K1 fund of funds after starting out in marketing in the late 1980s, claimed on his Web site a growth rate of more than 844 percent since 1996, the year he began. While some of the money he solicited may have been put to good use, generating legitimate returns over the period, prosecutors believe that at least a part were used in unauthorized ways.Handelsblatt, the German newspaper, said Mr. Kiener may have used the money to swell the apparent size of the fund, a tactic closer to that of Bernard L. Madoff than Raj Rajaratnam. Calls to Mr. Kiener’s home in Aschaffenburg, near Frankfurt, went unanswered.This is not the first time Mr. Kiener has attracted the notice of German authorities. BaFin, the country’s financial regulator, has tried several times since 2001 to block his funds from doing business with German investors.

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Authorities accuse Stanford of leading a $7 billion Ponzi scheme by promising inflated returns to about 28,000 investors

lawyer tracking down money lost in what authorities say was a massive Ponzi scheme run by R. Allen Stanford says he hopes to gain control of more than $1.5 billion that would be then returned to fleeced investors.Court-appointed receiver Ralph Janvey filed a report in federal court in Dallas late Wednesday outlining his plan to go after the $1.5 billion and provide allegedly defrauded Stanford investors a return of as much as 20 cents on the dollar.But John Little, a lawyer appointed to represent investors, said Janvey's recovery goal is "something of a fantasy" and that investors should prepare to get back as little as 2 cents on the dollar.
Authorities accuse Stanford of leading a $7 billion Ponzi scheme by promising inflated returns to about 28,000 investors on certificates of deposits at his Antiguan bank. The Securities and Exchange Commission said Stanford instead used the money from new investors to pay off old ones. They also accuse him of skimming more than $1 billion to fund his lavish lifestyle.Stanford denies the allegations. His attorney did not return a message left by The Associated Press.Janvey, who is winding down Stanford's businesses and collecting a pot of money to return to investors, has about $71 million in cash on hand. He is pursuing the rest through lawsuits and other means, such as liquidating nearly $51 million in Stanford assets, including the sale of the Stanford Bank of Panama, according to court papers.
Janvey is also attempting to lay claim to about $335 million in foreign accounts. Courts in Canada have sided with Janvey, but courts in the United Kingdom are favoring liquidators appointed by the government of Antigua. The fate of those accounts remains uncertain.Whether the receiver reaches his goal of $1.5 billion hinges on a federal appeals court approving his plan to pursue nearly $900 million in claims against investors and former financial advisers. The appeals court is scheduled to hear arguments on the case Monday.A federal district judge in July ruled that Janvey could not go after the principal that people invested in the CDs. The SEC and other parties have asked the appeals court to limit Janvey's ability to pursue claims to people who profited from Stanford's alleged scheme. Janvey also wants to go after investors who lost money.Little said he believes a total recovery of around $150 million is more realistic than the $1.5 billion Janvey wants to get, in part because the courts rarely permit a receiver to go after investors who are "net losers." The SEC branded Janvey's plan to sue net loser investors as "an extraordinarily expensive effort" that is "not necessary or appropriate in the first place."Kristie Blumenschein, an attorney in Janvey's Dallas law firm, acknowledged that "the ultimate success of these efforts is necessarily uncertain."In other court filings, the SEC is opposing Janvey's latest request for payment for fees and expenses. Janvey asked for $8.9 million for June through August to pay himself and the large team of lawyers and consultants he hired to wind down Stanford's businesses and unravel his alleged schemes. That would bring his total bill from mid-February to the end of August to nearly $30 million.Little, meanwhile, filed a request for nearly $240,000 in fees covering his work from July through September. Janvey opposes Little's fee request, but the SEC, Stanford and other defendants do not.Besides the civil case in Dallas, Stanford and some executives of the Stanford Financial Group are accused in a criminal indictment in Houston of orchestrating the alleged fraud. Stanford and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt have pleaded not guilty to various criminal charges in Houston, including wire and mail fraud.The three executives are free on bond; Stanford remains jailed.
James M. Davis, Stanford's former chief financial officer, pleaded guilty to three counts: conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct the investigation.

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Tom Petters and his organization nearly imploded eight years before

Tom Petters and his organization nearly imploded eight years before federal authorities were told that he was at the center of a huge Ponzi scheme.
In the first day of testimony at Petters' trial in St. Paul, executives from General Electric Credit Corp. (GECC) and big-box retailer Costco told jurors Thursday that they determined in 2000 that Petters had created false documents to stave off an impending financial catastrophe. The documents included purchase orders for electronic goods and copies of bogus checks.The witnesses told of a $50 million line of credit with GECC set up by a subsidiary of Petters Co. Inc. in 1998 that by 2000 was having trouble repaying its debts.Jack Marrone, a GE executive in Chicago, testified that Petters wrote checks to the company in an effort to clear up the matter, but the checks bounced.Paul Feehan, GE Capital's manager of corporate lending at the time, testified that he called Petters directly to discuss his company's mounting financial troubles. "I got a series of promises. There was always a new excuse and the excuses kept piling up," he said.Feehan said he and Marrone wrote Costco to check on the inventory of electronics goods that Petters claimed to have bought with the money he borrowed. Petters immediately called back and "read me the riot act," Feehan said. "He was very adamant that I stay away from Costco."
As the credit line languished, Feehan said he'd call the Petters company several times a day, maybe a dozen times a week, demanding payment. The company eventually did settle up, and the GE lending unit terminated the line of credit.
Scott Haggbloom, a merchandise buyer for Costco, said the purchase orders submitted by Petters to GE were for quantities and dollar amounts much larger than normally handled by the retailer."I don't write many purchase orders for over $1 million," Haggbloom said when shown a purchase order for goods totaling $5 million.
Government prosecutors are trying to show jurors that Petters submitted bogus Costco purchase orders and other documents to GE Capital in an attempt to hold off the company's collection efforts. The pattern continued over the next decade until Deanna Coleman, one of Petters' top executives, told authorities in September 2008 that he was running a mammoth Ponzi scheme, prosecutors contend.Proving that Petters used bogus purchase orders and other documents to obtain credit as early as 2000 might undercut his defense team's efforts to portray him as an innocent victim of corrupt executives in his company. The defense argues that those subordinates worked with unsavory, outside business associates to perpetrate a $3.5 billion investment fraud.Prosecutors are also trying to demonstrate Petters' direct involvement with fraudulent documents, and that Coleman (named Deanna Munson at the time) operated more as an administrator than a decision-maker.The government's witnesses testified Thursday that most of their business dealings were with Petters directly, although Coleman's name surfaced occasionally in documents entered into evidence.
"I don't even know who Deanna Munson is," Feehan said.
Marrone acknowledged approving loans based on inventory assurances from Coleman. When the checks bounced, he said he talked to Petters.
In 2000, the government says, GE Credit learned that Petters had been submitting bogus documents to make it look like Costco was paying for his company's merchandise when no such deals took place.After the GE unit confronted Petters, he and Robert White, one of his executives who has pleaded guilty in connection with the alleged Ponzi scheme, sent GE Credit eight company checks totaling $38.5 million. Despite Petters' assurances that the Petters Co. Inc. checks were good, they bounced, the government says.The trial, in U.S. District Court in St. Paul, is expected to last up to six weeks. If convicted of the conspiracy, fraud and money laundering charges he's facing, Petters, 52, could spend the rest of his life in prison.

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charged CDR Financial Products and its founder and chief executive, David Rubin,

charged CDR Financial Products and its founder and chief executive, David Rubin, with secretly manipulating the competition among banks and other investment firms for the lucrative business of helping governments raise money. The indictment said the participating banks then kicked back part of their profit to Mr. Rubin and his firm.The charges were the first in a wide-ranging antitrust investigation of the municipal bond business that has been in progress for several years. Federal investigators in New Mexico had previously looked at CDR’s involvement in bond sales in that state, as well as its contributions to Gov. Bill Richardson. The attention prompted Mr. Richardson to withdraw from consideration as President Obama’s commerce secretary, but the government eventually decided not to pursue criminal charges against him.From at least the late 1990s, the indictment said, Mr. Rubin and his firm, based in Beverly Hills, engaged in a variety of schemes that shortchanged the Internal Revenue Service and imposed hidden costs on local governments. In some cases, they increased their profit by adding derivatives to the bond transactions,only to have the derivatives sour, leaving local governments with unexpected bills.
Two other CDR executives, Zevi Wolmark, the former chief financial officer, and Evan Andrew Zarefsky, a vice president, were also indicted. All three men are residents of California, but their firm worked nationwide.A spokesman for Mr. Rubin and CDR, Allan Ripp, said, “The allegations that the government is making are a fiction.”
“There is no way that CDR could have been carrying out the kind of dramatic conspiracy that is alleged,” Mr. Ripp added. He said he was unable to respond to individual charges because the activity dated back many years and the indictment did not identify those suspected of conspiring.
“It’s hard to connect the dots,” Mr. Ripp said.
A lawyer for Mr. Zarefsky, Daniel L. Zelenko, said, “the government just doesn’t understand the municipal bond industry, and these charges show that. Mr. Zarefsky did absolutely nothing wrong.”Municipal bonds, which are issued by states as well as municipalities, are a primary means for governments to finance their operations. The interest on the bonds is tax-exempt, so the I.R.S. has special rules for how the money is handled.The indictment said CDR and its co-conspirators routinely violated those rules and subsequently certified falsely that the transactions had followed the rules.Local governments that took the certifications at face value ended

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Charles E. Coughlin former Navy commander retried on charges that he lied about injuries he suffered during the 2001 terrorist attack

Federal prosecutors said today that they will retry a former Navy commander on charges that he lied about injuries he suffered during the 2001 terrorist attack on the Pentagon to collect more than $300,000 from a victims' fund. A jury last month acquitted Charles E. Coughlin of Severna Park on three mail fraud charges but deadlocked on charges of theft of public money, filing a false claim and two counts of mail fraud. The jury also deadlocked on a theft charge against Coughlin's wife, Sabrina. Prosecutors said they intend to retry Sabrina Coughlin, too. U.S. District Judge Henry H. Kennedy Jr. set a June 8 trial date.

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Glenn Marshall former leader of the Mashpee Wampanoag Tribe who has pleaded guilty to federal fraud and embezzlement charges

former leader of the Mashpee Wampanoag Tribe who has pleaded guilty to federal fraud and embezzlement charges is scheduled to be sentenced in Massachusetts.U.S. District Judge Rya Zobel in Boston is slated to sentence Glenn Marshall on Thursday.The 59-year-old Falmouth resident admitted in Feburary to making illegal campaign contributions to members of Congress, embezzling tribal funds, wire fraud, filing false tax returns and fraudulently receiving Social Security disability benefits.According to the initial plea agreement, Marshall faces 46 to 57 months in prison.

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LexisNexis online information service is warning 32,000 people their personal information may have been improperly accessed

LexisNexis online information service is warning 32,000 people their personal information may have been improperly accessed in a credit card fraud scheme that postal officials say bilked hundreds.
New York-based LexisNexis says in a letter mailed Friday that former customers of the service may have viewed information including names, birth dates and Social Security numbers.
U.S. Postal Service officials have launched a criminal investigation and say 300 people in the databases of LexisNexis and a Santa Fe, N.M., company called Investigative Professionals were victims in the credit card fraud scheme. No suspects have been arrested.

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Julian Tzolov, a former Credit Suisse Group broker expected to plead guilty to fraud charges

Julian Tzolov, a former Credit Suisse Group broker accused last year of deceiving investors about investments known as auction-rate securities, is expected to plead guilty to fraud charges, his lawyer said in a court hearing last month.

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Julian Tzolov, a former Credit Suisse Group broker expected to plead guilty to fraud charges

Julian Tzolov, a former Credit Suisse Group broker accused last year of deceiving investors about investments known as auction-rate securities, is expected to plead guilty to fraud charges, his lawyer said in a court hearing last month.

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Extradite Police Equipment Foundation (PEF) National Co-ordinator, Kenny Martins, to the United States to face charges of fraud.

President Umaru Yar'Adua may extradite Police Equipment Foundation (PEF) National Co-ordinator, Kenny Martins, to the United States to face charges of fraud.The government is in a dilemma over the demand for a $1 million legal fee by the lawyer representing it in a lawsuit instituted by Calvary Security Group in the United States, which was allegedly defrauded of $97.25 million by Martins.
Calvary Security had taken Nigeria to court in New York on the basis that it went into business with the PEF because evidence was produced that it was a government parastatal.Although the fee demanded by the U.S. legal firm was the least proposal submitted by the eight legal firms contacted to defend the country, Yar'Adua is said not to be disposed to paying the $1 million, which he considers a huge amount.It was learnt that he was furious when the issue was mentioned to him, and lamented that his government is not prepared to waste such money on an irrelevant legal battle brought on by the misdeed of one person.A source in Aso Rock and another at police headquarters in Abjua confirmed on Sunday that Yar'Adua has mandated the Foreign Affairs Ministry and the Ministry of Justice to collaborate on the way forward.Yar'Adua would not mind extraditing Martins to face the law in the U.S., if that will help clear the image of Nigeria and prevent it from paying the legal fee.
Martins, who was arrested last Tuesday by the police, is expected to be charged to court today in Abuja.The case instituted against Nigeria came up for mentioning in a New York court on April 24 and was adjourned to July 26 to enable the country prepare its defence.
The source explained: "If you are in the shoes of Yar'Adua, will you pay such an amount in a case in which all that Nigeria needs do is prove that the PEF is not a government parastatal?"In this era of economic meltdown, Yar'Adua is right in questioning the sum demanded as legal fee. Just because of the misdeed of a single individual, we are about losing such a big sum. You can call Yar'Adua a tight-fisted man if you like."Calvary Security is demanding $30 million in damages, aside the request that the money collected from it by Martins be returned by Nigeria.

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Jason Michael Collins is free on a $50,000 bond after being charged with 15 felony counts

Jason Michael Collins is free on a $50,000 bond after being charged with 15 felony counts. The 31-year-old faces a preliminary hearing April 22 in Schoolcraft County District Court. State Police say the investigation began when two local residents told Newberry police in August 2006 that they had lost about $300,000 as members of an investment club run by Collins.
According to court records cited by The Mining Journal of Marquette, Detective Sgt. Gregory Cunningham says a friend in Ohio and two sons of one of the original complainants -- including Collins' brother-in-law -- also were taken in by the scam. Sheriff's officials say they have no records identifying a lawyer for Collins.

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Indicted 68-year-old Thom Randle on charges of mail fraud, computer fraud and money laundering.

A Chico man has been indicted on charges he stole nearly $700,000 from a Catholic charity where he served on the board of directors.
A federal grand jury in Sacramento on Thursday indicted 68-year-old Thom Randle on charges of mail fraud, computer fraud and money laundering. Prosecutors say Randle embezzled $693,000 from the Columbian Retirement Home by transferring the charity's funds to his own accounts between September 2004 and September 2005. The nonprofit retirement facility is operated by the Knights of Columbus. Randle was the charity's vice president of finance. Court documents list no attorney for Randle. He is not in custody

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€10 million in VAT refunds are being held back because of the major investigation into fraud at the VAT office

€10 million in VAT refunds are being held back because of the major investigation into fraud at the VAT office, The Sunday Times reports today.Sources said the investigation had so far revealed that a web of criminals, acting as middlemen, were receiving the lion’s share of a three-way scam involving VAT department staff and businessmen.It is understood that one individual told investigators that he had been involved in the fraudulent practice for a number of years, though it appears that for others the period can be measured in months. It is still too early to establish how much revenue the department has lost as a result of the scam, but it is known that the amount runs into millions.Six VAT department employees have so far been suspended on half pay in line with public service regulations.Some details of how the fraud was carried out have also emerged. It appears that intermediaries would approach businessmen and inform them that they could dodge paying VAT and pocket thousands in the process.After assuring the businessmen that they could not be caught because they were in cahoots with department staff, it would be established how much each party would receive.The businessmen would file their VAT return normally, but at a later stage, the staff involved would alter the return, change the figures and issue refunds and receipts.
It appears that in practice only refunds that exceeded €50,000 were queried and verified by more senior officials within the department and therefore the reimbursements were issued in figures of less than that in the knowledge that the possibility of ever being checked was negligible. Some businessmen are believed to have received illegal refunds of up to €250,000.A number of companies are also being investigated, and it appears that the police already have sufficient evidence to proceed against some of those under investigation.The crime only came to light after a businessman who had been approached with the plan decided to pass on the information to Finance Minister Tonio Fenech last December.Police raided the VAT offices in Birkirkara last week and confiscated a number of computers.The Finance Ministry is planning a full-blown review of the systems used at the VAT department, to weed out any traces of corruption and restore faith in one of the government’s major financial resources.When contacted yesterday and asked why it took so long for this fraud to come to light, Mr Fenech said it was difficult to establish at this stage.“I would prefer to see the outcome of the police investigation. However, when a fraudulent practice involves the collusion of a number of individuals from within the organisation then this becomes harder to detect. On the other hand, one would have expected that sufficient controls are in place in the department capable of identifying any wrongdoing taking place particularly on a regular basis.“In this case it seems these have failed and after the police investigations are carried out, the ministry will conduct a detailed internal review to establish the weaknesses of the current system, whether proper control procedures were in place and whether management carried out appropriately their responsibilities.”Asked whether he was certain that the fraud had been stopped, the minister said that all refunds had been withheld to ensure they were appropriately verified and legitimately due. The refunds were meant to be issued at the end of March.Only adequate checks and balances and internal controls could ensure that the risk of fraud was minimised – and clearly these had become “faulty”, Mr Fenech said

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Israeli fraud investigators Tuesday questioned Foreign Minister Avigdor Lieberman for a third time regarding a long-standing probe

Israeli fraud investigators Tuesday questioned Foreign Minister Avigdor Lieberman for a third time regarding a long-standing probe over business dealings, a police spokesman said.Avigdor Lieberman attended his first Cabinet meeting on April 5.For five hours, investigators asked Lieberman about suspicions of money laundering, fraud and breach of trust in a corruption investigation that dates back several years, police spokesman Mickey Rosenfeld said.
Lieberman was also questioned by the Israeli National Fraud Investigation Unit for several hours on Thursday and Friday.
The interrogation was "under warning," which means that anything he discloses in the interviews may be used as evidence if he is charged.The allegations include receiving a bribe via his daughter Michal's consulting firm.Lieberman denies the allegations and has said they are motivated by politics. His daughter and lawyer also have been questioned by authorities."This investigation is going on for 13 years. In today's investigation Lieberman cooperated and answered investigators' questions," Lieberman's spokeswoman Irena Etinger said Thursday.Lieberman has emerged as a controversial figure in Israel, where his right-wing Yisrael Beytenu movement came in third in recent Israeli elections, behind Likud and Kadima.
Over the years, his comments directed toward Arabs have been slammed as racist.During last week's handover ceremony to his new job, Lieberman bluntly distanced himself from the Annapolis peace process -- the effort started in 2007 to revive peace talks between Israel and the Palestinians.Lieberman's predecessor, Tzipi Livni, told Israel Radio that Lieberman had "erased in 20 minutes, years of efforts to advance the peace process" when he declared that Israel was not bound by commitments it made at the summit in Annapolis.Israelis generally have become frustrated with the peace processes in recent years and have moved to the political right.
That is partly because of the ongoing rocket attacks from Hamas-controlled Gaza on southern Israeli cities that sparked the country's Gaza offensive late last year. Yisrael Beytenu has benefited from that public mood.

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Rick Shumway brokered mortgages for mobile homes. He rarely, if ever, met his customers. Few of his victims even remember his name.

Rick Shumway brokered mortgages for mobile homes. He rarely, if ever, met his customers. Few of his victims even remember his name.
Shumway got his customers to borrow more than they needed, then skimmed money off the top of their mortgages and put it in his pocket, federal prosecutors said. The tally of his handiwork: 200 people were taken for more than $900,000, prosecutors say. Shumway also owes a bank more than $500,000. But the fallout is more than that. More than 100 of his loans went through National City Mortgage in Ohio, a division of National City Bank, 163-year-old bank decimated by the subprime mortgage mess. Its stock went from $38 to less than $2 in 2007 before it was sold. Fannie Mae the Federal National Mortgage Association, part of the multibillion-dollar federal bailout backed some of those loans, according to Shumway. Other loans were with Accredited Home Lenders Inc., a California bank that went belly-up when the subprime bubble burst.
Most of the people who borrowed from Shumway had shaky credit, and they knew it. They had bankruptcies and credit card problems. They were so happy to get a mortgage that they never looked at the fees or the amount they borrowed. They didn't question why buying a doublewide with a sticker price of $60,000 left them with a mortgage of twice that amount. They are factory workers, nurses and back office staff. They worked hard when there was work.

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Chris Devine is accused of defrauding nearly 70 million dollars from businessman C. Robert Allen.

The operator of the Salt Lake City marathon is facing accusations of fraud, just one week before the big race in downtown Salt Lake.
According to a report in today's Salt Lake Tribune, 55-year-old Chris Devine is accused of defrauding nearly 70 million dollars from businessman C. Robert Allen. The lawsuit was filed in New York City. Devine is also battling accusations from athletes, marathon vendors, and business associates of failing to pay bills and race winnings on time.No criminal charges have been filed and Devine claims he's a victim of bad management by others.Devine established the Salt Lake City marathon in 2004. Its fifth running is next Saturday. His company, Devine Racing, also owns other marathons, including one in New Jersey and another in Palm Beach.

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indicted 24 people 10-block stretch of the neighborhood in Spring Valley contains at least 14 of the 220 houses that were subjected to foreclosure

Federal prosecutors indicted 24 people in a massive mortgage fraud scheme that they said was led in part by a gang member from San Diego and netted participants $11 million in profits.

In an indictment unsealed yesterday, prosecutors laid out a wide-ranging racketeering conspiracy that ran from 2005 to 2008 and targeted homes across the county. Among the identified leaders was Darnell Bell, a documented member of the Lincoln Park street gang.

Bell, 38, used his status in the gang to recruit other members for the scheme and "maintain discipline," according to the indictment. The sweeping conspiracy involved almost every element in the real estate transaction chain. The defendants include a real estate broker, a group of straw buyers, an escrow officer, an appraiser, tax preparers and a notary.
Prosecutors allege the network used fake buyers to purchase homes for more than the asking price, with the defendants pocketing the overage. Lenders were duped into funding mortgages for the inflated price and later suffered losses when the buyers walked away and the property was foreclosed. The value of the properties involved is estimated at $100 million. The ring allegedly netted at least $11 million while defrauding mortgage lenders of an estimated $100 million. The 220 homes they bought around the county ended up in foreclosure.
10-block stretch of the neighborhood in Spring Valley contains at least 14 of the 220 houses that were subjected to foreclosure as a result of the scam that a San Diego gang member organized, authorities say. The steep streets of the neighborhood, north of Jamacha Boulevard and east of state Route 125, are a rare location where a moderate income can buy a home with views of the city or the Sweetwater Reservoir. But like other San Diego County communities in which incomes are modest and where predatory lending was common during the real estate boom, the neighborhood continues to suffer through a wave of vacancies and foreclosures.
Today, most of the homes involved in the mortgage fraud case are occupied by new owners, some of whom found them to be particularly good deals as lenders struggled to get rid of the properties. Newly planted flowers are blooming in some front yards. Still, the community is pocked with vacancies, including foreclosures not connected with the scheme.
“Every block has at least two homes for sale,” said Susan Wos, 62, who bought one of the foreclosed homes involved in the scam, a four-bedroom house on San Miguel Avenue, for $242,000 in January. A real estate Web site lists its last sale price in 2006 at $550,000.
For a while, neighbors on her street say, it seemed like nearly every other home on the block was empty. The house next door to Wos was empty when she moved in, and remains so, though a sign in front says it is in escrow. Across the street a few doors down hangs a “for rent” sign. Another house nearby was in foreclosure last year and since sold, a neighbor said.
“There were a lot of them that were empty,” said Lisa Chance, who rents a home with her husband and three children, and for a while was looking across at two empty houses before Wos moved in.
According to a federal indictment, the fraud scheme that victimized the neighborhood involved 24 defendants, including a real estate broker, an escrow officer, an appraiser, tax preparers and straw buyers. The ring members overbid on homes between 2005 and 2008, duped lenders into giving them excessive mortgages, then walked away from the properties and pocketed the extra money, authorities said.
San Diego County communities that have been hit hardest by foreclosures overall include Chula Vista, parts of southeastern San Diego, Spring Valley, El Cajon, Oceanside, Vista and Escondido, said Gabe del Rio, vice president of lending and home ownership for Community HousingWorks, a nonprofit affordable-housing agency in San Diego.
“These are sort of working-class neighborhoods,” del Rio said. “A lot of predatory lending practices occurred within those communities.”
Many of the homeowners in these communities who found themselves in over their heads as the interest rate on their loans rose had low to moderate incomes, and others were people not fluent in English, del Rio said.
Having multiple foreclosures in a neighborhood hurts a community in several ways, said Michael Stepner, a former San Diego city planning director who teaches at the NewSchool of Architecture and Design. Problems can include break-ins, vandalism and squatters in vacant properties, depressed property values and other issues.
“It brings down the whole neighborhood,” Stepner said. “You feel uncomfortable, you feel unsafe. You may not even feel like taking care of your house because of the return on investment, because the neighborhood might go downhill so fast. It spreads.”
Neighbors who watched as the foreclosed homes involved in the fraud case sat vacant say that while they were empty a while – some longer than others – they didn't feel particularly unsafe.
“We didn't have a problem with people coming in and hanging out or anything,” said Chance, who is in her mid-30s. “It's really quiet around here at night.”
On Maria Avenue a few blocks away, where two houses next door to one another were affected, neighbors also said there were no problems, and that only one of the homes was empty for several months.
The neighborhood is recovering, said Tadele Bayou, 49, an engineer who in October bought the house that sat empty the longest. There were about a half-dozen vacancies on the street when he moved in with his wife and two children; there are now only a couple, he said. Though there are still signs of wear in the house Bayou bought, marigolds, jasmine and other flowers have been meticulously planted in the front yard, and the interior is now nearly immaculate. In the evening, the family watches the sun set over an expansive panorama that reaches to the Coronado Islands off Baja California – all for about $310,000. He had been surprised, and pleased, to learn the three-bedroom house sold for almost twice that amount in 2006. “The view is just the best,” he said. “We see the sunset, we see the ocean. It worked out.”

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Tech Mahindra Ltd, the technology arm of India's Mahindra Group, placed a successful bid for controlling equity in fraud-hit Satyam Computer Services

Tech Mahindra Ltd, the technology arm of India's Mahindra Group, placed a successful bid for controlling equity in fraud-hit information technology firm Satyam Computer Services Ltd on Monday, news reports said. Tech Mahindra outbid Larsen and Toubro Ltd, which already owns 12 per cent equity in Satyam, and Nasdaq-listed technology company Cognizant, which was backed by US-based private equity investor Wilbur Ross, NDTV Profit television channel reported quoting company sources. Satyam's new board of directors, appointed by the government after the company's owner Ramalinga Raju admitted to fraud to the tune of 1 billion dollars in January, met in Mumbai to select the highest bidder who also has the capability to run the IT major. Satyam's board was expected to make a formal announcement later Monday. Shares of Tech Mahindra rose by over 40 per cent as news of the successful bid filtered in. The total valuation of 51 per cent controlling equity in Satyam at the rate of 60 rupees per share works out to 29.88 billion rupees (599 million dollars). Satyam Computer is India's fourth-largest information technology services firm and operates in 66 countries. It has 53,000 employees and counts 185 Fortune 500 companies as its customers.

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Lin Castre Gosman, the wife of former health care magnate Abe Gosman, on Friday pleaded guilty to several fraud-related charges

Lin Castre Gosman, the wife of former health care magnate Abe Gosman, on Friday pleaded guilty to several fraud-related charges in connection with the couple’s high-profile bankruptcy case.
Gosman, 60, was charged with lying about the whereabouts of jewelry, artwork and furniture she stashed in a public storage facility. The former Palm Beach socialite also admitted to mortgage fraud for failing to disclose in 2005 a $66 million judgment against her when she tried to get a second $350,000 mortgage on a home in Jupiter.Gosman was indicted in November on several felony counts, including bankruptcy and mortgage fraud.She also admitted to tax fraud for failing to disclose a foreign bank account in Switzerland, that she received distributions form a foreign Belize trust, and the substantial interest and dividend income she earned on money held in a foreign account.Gosman has agreed to pay $343,966 as restitution to the Internal Revenue Service for her 2004 through 2008 tax liabilities.Sentencing is set for July 8.

Abe Gosman once was one of Palm Beach County's biggest philanthropists. He filed for Chapter 11 bankruptcy protection in 2001. In 2005, the court found that Gosman had shifted assets to his wife.

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RAIDED:Geneva offices of currency trading company ACM and seize documents, a computer and other evidence in a suspected financial fraud case.

Squad of 28 police officers raid the downtown Geneva offices of currency trading company ACM and seize documents, a computer and other evidence in a suspected financial fraud case. Swisster discovers the unprecedented affair, being directed by an inspector and detective for the cantonal force’s financial fraud brigade, may take weeks to unravel and has involved the questioning of top officials from the company, who are refusing to comment.

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Convicted William Gallion and Shirley Cunningham, Jr.--two of the three plaintiffs lawyers accused of scamming 440 Kentuckian fen-phen plaintiffs

federal district court jury in Frankfurt convicted William Gallion and Shirley Cunningham, Jr.--two of the three plaintiffs lawyers accused of scamming 440 Kentuckian fen-phen plaintiffs--on nine counts, including wire fraud and conspiracy.The conviction followed a seven-week trial, which featured testimony from Chelsey, who appeared under an immunity agreement with prosecutors. According to a story in the Louisville Courier-Journal, assistant U.S. attorney E.J. Walbourn told jurors in closing arguments that the defendants "treated their own clients like a gravy train" and "got caught with their hands in the cookie jar." The men face as much as 20 years in prison and a fine of $250,000.The convicted lawyers said they would appeal. "We really feel that there are many legal issues that need to be looked at on appeal," Steven Dobson, the lawyer for Cunningham, told reporters following the verdict. "I'm so disappointed for him and his family."Cunningham and Gallion were convicted on all nine counts upon which they were charged, which consisted of eight wire fraud counts and one conspiracy count. The men face up to 20 years in prison. Click here and here for stories from the Cincinnati Enquirer and Bloomberg. Click here, here, here, and here for earlier LB posts.The crux of the charges against the pair involved whether they had distributed enough of a $200 million fen-phen settlement to their 440 clients. Prosecutors argued that the two men tried to keep well over half of the settlement, an amount that far exceeded the one-third provided by contracts made with the class members. Lawyers for the two men had argued that they were innocent, and that the defendants were inexperienced in handling large awards in class action lawsuits and had made mistakes. (In other words, we’re not criminals, we’re just bad lawyers.) Defense lawyers attempted to pin the blame on famed Cincinnati plaintiffs lawyer Stan Chesley, whom they had hired as a consultant for counsel in splitting up the settlement. Chesley was not charged. Last year’s six-week criminal trial was chock full of odd twists and turns. There were tales of drunken lawyers, charitable funds created for the benefit of the fen-phen attorneys, a judge admitting on the stand to being embarrassed by his handling of the case, and allegations of juror stalking.Topping off all the weirdness: Gallion and Cunningham are the former owners of the racehorse Curlin, a Breeder’s Cup Winner and twice named Horse of the Year.

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Hayim Regensberg guilty Friday of securities fraud and wire fraud. The 44-year-old faces up to 20 years in prison on each of nine counts.

Federal prosecutors say a Manhattan investment adviser has been convicted of bilking clients of more than $11 million, partly through a Ponzi scheme.A jury found Hayim Regensberg guilty Friday of securities fraud and wire fraud. The 44-year-old faces up to 20 years in prison on each of nine counts.His lawyer didn't immediately respond to telephone and e-mail messages Friday evening.
Prosecutors say that from 2004 to 2007, Regensberg made risky investments with his clients' money but told them he invested in other, safer investments.They say he also ran a Ponzi scheme, paying early investors with newer clients' money, and that he forged a bank statement showing an account held $9 million in investors' money when it actually had $9,000.

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Franco Della Torre, 66, trial of nine alleged members of an international cigarette smuggling ring, all of them Swiss residents

The accused include Franco Della Torre, 66, regarded as the ringleader, and Alfredo "Fredy" Bossert, 73, the owner of a currency-exchange business in Lugano.
trial of nine alleged members of an international cigarette smuggling ring, all of them Swiss residents, begins on Wednesday. They are accused of supporting Italian criminal organisations and money laundering.According to the Federal Prosecutor's Office, the accused were part of a criminal enterprise involved in the smuggling of cigarettes between Montenegro and Italy. They are said to have laundered more than $1 billion (SFr1.15 billion) from the illegal trade in Switzerland.In the dock are four Swiss, three Italians, one Spaniard and one Frenchman, living in the Italian-speaking canton of Ticino and the French-speaking cantons of Jura and Vaud.The prosecution claims that between 1994 and 2001, money from two criminal organisations based in southern Italy, the Camorra of Naples and the Sacra Corona Unita of Apulia, was channelled into the Swiss banking system via money exchange businesses in Ticino. It is alleged that practically all the money was brought over the border in cash by couriers.The money was then invested in the purchase of cigarettes on the international "grey" cigarette market. They were bought from duty-free, bonded warehouses in Rotterdam or Antwerp or from wholesalers and taken illegally to Montenegro, avoiding any payment of duty.The indictment says that well-known freight companies based in Switzerland were among those used to transport them, including Danzas, Mundotrans or Swissair Cargo.The mafia then used speedboats to transfer the cigarettes across the Adriatic from Montenegro to the Apulian coast and from there to the black markets in Naples and Apulia, where they were sold for a profit.

A total of 4.3 million crates – some 215 million cartons – are thought to have been smuggled to Italy, but the indictment says that some were also sold on the black markets in Spain and Britain.
Montenegro, which at that time was politically isolated, also did well out of the business, lawyers argue, since the country awarded import licences and demanded transit fees.

The accused were in possession of these licences or sublicences. If the fees were not paid, the local Montenegrin authorities prevented the smugglers' boats from leaving.High-ranking politicians are said to have been involved in the activities.Bossert alone is said to have received and laundered the equivalent of $795 million."In particular by setting up and running the logistics of the finances he helped the criminal organisations to make large profits and thereby contributed to the long-term strengthening of their power," says the indictment. The other accused face similar charges.
All of the defendants have to answer charges of involvement in a criminal organisation and money laundering.In concerted raids all over the country on August 31, 2004, the Federal Prosecutor's Office struck a serious blow against the cigarette mafia and arrested a number of people.The accused in the present trial were released conditionally or on bail after being detained for questioning for 100 days.

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Dan Wickline, 62, was sentenced to 18 months in prison while his son Chad Wickline, 34, received a 30-month sentence

Dan Wickline, 62, was sentenced to 18 months in prison while his son Chad Wickline, 34, received a 30-month sentence. Both men last July put an end to an ongoing trial by pleading guilty in U.S. District Court in Columbus to a count of conspiracy to commit money laundering. Chad Wickline also pleaded guilty to a count of mail fraud.
The men worked through Liberty Resources, which marketed debt-elimination services over the Internet. Liberty charged a fee to help consumers get out from under credit card debt and they received documents from the business claiming that the debt had been eliminated by the program, the U.S. Attorney’s office said.But when customers stopped paying on their credit cards, thinking their debt was cleared, card issuers sued them for payment. Some filed for bankruptcy, the government said.
As part of Friday’s sentencing, the men are required to pay restitution to victims along with federal income taxes plus interest and penalties on money they received between 2002 and 2006, when the government said the fraud took place.The two were indicted in 2007 following an investigation by the IRS, Postal Service and attorney’s office. Three other people tied to Liberty have since entered guilty pleas and been sentenced.

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Harry Markopolos tells 60 Minutes correspondent Steve Kroft about his futile efforts to expose a Ponzi scheme

first television interview, Harry Markopolos tells 60 Minutes correspondent Steve Kroft about his futile efforts to expose a Ponzi scheme that lost investors billions of dollars. Kroft's report will be broadcast this Sunday, March 1, at 7 p.m. ET/PT.

Madoff is currently under house arrest, accused of running what may be the largest investor fraud operation in history. Markopolos, a financial analyst and fraud investigator, says a lot of people had serious doubts about what Madoff was doing. The proof is in the firms that didn't put money in his fund. "I would say that hundreds of people suspected something was amiss with the Madoff operation. If you look at who the victims were not, you'll notice that the major firms on Wall Street had no money with Mr. Madoff," he tells Kroft.

Markopolos tells Kroft there were ample ways the SEC could have figured out that Madoff was a fraud. For example, Markopolos concluded that for Madoff to execute the trading strategy he said he was using he would have had to buy more options on the Chicago Board Options Exchange than existed. All the SEC had to do was talk to people in the options industry, as Markopolos did. "I would talk to the people I had trading relationships with and ask 'Did you have a trading relationship with Mr. Bernard Madoff?' And they all said 'No. We don't think he's for real.'"
Markopolos submitted information on Madoff to the SEC in 2000, 2001, 2005, 2007 and finally last April of 2008. While a case file was opened and the SEC discovered that Madoff had misled them, the governmental watchdog agency never found the fraud. They are not trained to do that, says Markopolos. "What I found from my dealings with the SEC over eight and a half years is that their people are totally untrained in finance," he says. "Most of them are just merely lawyers without any financial industry experience." What SEC staffers are good at, he says, is scrutinizing paperwork required by the SEC. "They can check every piece of paper perfectly and find misdemeanors and they'll miss all the financial felonies occurring…even when pointed to fraud they are incapable of finding fraud, that's how bad they are," Markopolos tells Kroft. In an ironic twist, Madoff once said the SEC was an effective watchdog. In a video of a roundtable discussion he participated in at the non-profit Philoctetes Center in New York obtained by 60 Minutes,

Madoff can be heard saying, "In today's regulatory environment, it's virtually impossible to violate rules. This is something the public really doesn't understand but it's impossible for a violation to go undetected, certainly not for a considerable period of time."

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Christopher G. Brooks, 39, was sentenced in U.S. District Court in Seattle for his role in fraudulently netting more than $1.6 million

Christopher G. Brooks, 39, was sentenced in U.S. District Court in Seattle for his role in fraudulently netting more than $1.6 million for him and his wife by participating in 54 fraudulent loan transactions worth more than $27 million.

The scheme of Brooks and his wife, Amani Moss, involved home sellers agreeing to overstate their homes’ sales prices, with the difference between the home’s true sale price and the overstated price going to the couple’s Peachtree Development company.

Government officials said Brooks and Moss would recruit “straw buyers” for the homes, who would be paid up to $10,000. The couple would prepare false mortgage loan statements for the “straw buyers” and submit them to lenders.In one example cited by officials, the couple were involved in sale of a home on 240th Way Northeast in Redmond. The government alleges that Moss provided false information to First Guaranty Financial Corp. on a $1.6 million loan, saying that the buyer earned $101,277 a month. The government alleged that $778,000 of the loan’s proceeds returned to the couple.The pair also participated in transactions in Seattle, Federal Way, Issaquah, Mukilteo, Sammamish, Tacoma, Covington, Kenmore and Black Diamond.“His actions, his behavior, along with many others that jumped on this particular bandwagon to commit fraud, set in motion this chain reaction of economic and financial adversity that spread not only throughout our entire country but to global financial markets as well,” said U.S. District Judge Ricardo Martinez, at Brooks’ sentencing.

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Frances M. Flood and Susie Strohm, former executive officers of ClearOne Communications, guilty of all counts charged in the indictment

Frances M. Flood and Susie Strohm, former executive officers of ClearOne Communications, guilty of all counts charged in the indictment (conspiracy, making false statements to an accountant, securities fraud and perjury). Ms. Strohm was convicted of one count of perjury and acquitted on all other charges in the indictment. The trial started Feb. 2. Sentencing is set for May 7 at 2 p.m.

At the time of the conduct alleged in the indictment (2001-2002), Flood was the chief executive officer and president of ClearOne Communications, Inc. Strohm held the position of chief financial officer. She also was controller and vice president of finance. The trial concerned the specific conduct of the two defendants. ClearOne Communications, Inc., was not charged in the indictment.

According to the indictment, in 2001, ClearOne started selling products to distributors in order to recognize revenue at the time of shipment. In order to get distributors to take large amounts of products at the end of quarters or fiscal years, ClearOne made secret promises to distributors that the distributors would pay for the inventory when it was sold rather than under contract terms. The defendants lied to ClearOne's auditors about those promises. Ms. Flood faces up to 5 years in prison for a conviction on conspiracy count; up to 20 years per count for three counts of making false statements to an accountant; up to 20 years per count for two convictions on securities fraud counts; and up to 5 years for perjury. Ms. Strohm faces up to 5 years in prison for the perjury conviction. We are very pleased with the verdict. We believed all along there was criminal conduct involved as set forth in the indictment. The jury sorted through a lot of evidence on different issues and arrived at a verdict that confirmed there was criminal conduct at ClearOne Communications during 2001 and 2002. We appreciate their service in this case

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Laura Pendergest-Holt, the first person arrested in the $8 billion Allen Stanford fraud investigation, can walk free once she posts $300,000 bond

Laura Pendergest-Holt, the first person arrested in the $8 billion Allen Stanford fraud investigation, can walk free once she posts $300,000 bond, a Houston judge ruled on Friday.

Pendergest-Holt, the 35-year-old chief investment officer for the Stanford Financial Group who was arrested by the FBI on Thursday, spent the night in a Houston detention center, then faced U.S. Magistrate Judge Mary Milloy in court.

U.S. prosecutors had asked the judge to set bond at $1 million, an amount that Pendergest-Holt's attorney, Dan Cogdell, called "outrageous."
While agreeing it was a serious case, Milloy lowered the amount to $300,000 and ordered Pendergest-Holt, who appeared in court dressed in a dark pants suit and heels, to wear an electronic tracking device after her release.
The tall, slender brunette appeared grim for most of the hearing but occasionally turned in her chair to smile at her husband, equity fund manager Jim Holt.FBI agents had arrested her at Stanford's Houston-based headquarters and accused her of obstructing an investigation by the U.S. Securities and Exchange Commission into what the agency called "massive ongoing fraud" by Stanford Financial Group Chairman Allen Stanford and three of his companies.The developments could signify that prosecutors are closing in on the Texas billionaire, who has dual U.S. and Antigua Barbuda citizenship and has been a prominent sponsor of cricket, golf, tennis and polo events.Under questioning from Pendergest-Holt's lawyer, FBI agent Vanessa Walther said there is no arrest warrant for Stanford and he is believed still to be in northern Virginia, where he was served court papers last week.

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Robert Cephas Brown Jr. and 49-year-old Duane Allen Eddings were indicted Thursday on multiple felony charges

55-year-old Robert Cephas Brown Jr. and 49-year-old Duane Allen Eddings were indicted Thursday on multiple felony charges, including mail fraud, wire fraud and money laundering. Authorities say they operated under multiple names, including Trebor Company, and lured investors with promises of high returns. One plan they are accused of offering promised to double investors' money in three months. According to the indictment, Brown spent the money on limousine services, a Ferrari Testarossa and expensive clothes, hotels and restaurants. He also allegedly withdrew more than $3.5 million of investors' money in cash.

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Broome County Security Division Case Integrity Unit recently filed criminal charges upon the conclusion of an investigation

Broome County Security Division Case Integrity Unit recently filed criminal charges upon the conclusion of an investigation of several local welfare recipients who received social services benefits they were not entitled to. In the sweep, twenty four people were arrested and charged with various violations of NYS penal law welfare fraud statutes, which identified $161,612 in fraudulent payments made to beneficiaries. Those charged will begin appearing in Binghamton City Court on Monday, March 2nd.

“Many are seeking assistance during these tough economic times,” said Broome County Executive Barbara J. Fiala. “We are entrusted to protect program integrity and ensure hard earned taxpayer dollars go to the people who truly deserve them. Recipients will be held accountable for any aid they received that they were not entitled to.”

The fraudulent recipients were charged for such offenses as failing to disclose income derived from rental properties, undisclosed bank account assets and earned income from various sources while receiving social services benefits. The charges filed on these beneficiaries range from misdemeanors to various felony levels. In 2008, the Case Integrity Unit identified, avoided and recovered nearly 6 million dollars through the fraud detection program lead by the County Security Division.“Our mission is to review applicants for assistance as well as those that have received past assistance to assure the integrity of our social service programs,” stated Director of Broome County Security James D. Dadamio. “Let this serve as a reminder that we will continue to protect taxpayer dollars from being distributed into the wrong hands.”

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Texas billionaire R. Allen Stanford, chairman of the Stanford Group, and James M. Davis, the firm's chief financial officer, misappropriated billions

Stanford, chairman of the Stanford Group, and James M. Davis, the firm's chief financial officer, misappropriated billions of dollars of investors' money and falsified the bank's financial statements to conceal the fraud, the agency said in the complaint filed in federal court in Dallas. Securities and Exchange Commission yesterday amended its civil complaint against Texas billionaire R. Allen Stanford to accuse him of conducting a "massive Ponzi scheme" through companies he controlled.
The SEC on Feb. 17 brought civil charges against Stanford, Davis and Laura Pendergest-Holt, the firm's chief investment officer. In an $8 billion investment fraud, investors were lied to about the safety of investments sold by the banks including Antigua-based Stanford International Bank as certificates of deposit and were promised unrealistically high rates of return, the SEC alleged. Pendergest-Holt appeared in federal court yesterday after her arrest Thursday on charges that she obstructed the SEC's investigation of the Stanford scandal by lying about her knowledge of the firm's activities and by omitting key details. During a court hearing, Pendergest-Holt was painted alternately as the scapegoat and as one of the few people who knows where millions of dollars stolen from investors are hidden.

The chief investment officer of troubled Stanford Financial Group was forced to borrow money from her attorney, Dan Cogdell, to post bond to cover her $300,000 bail and avoid spending the weekend in jail. She must wear an ankle monitor as she heads to Dallas for more hearings in her case.

Adding a new dynamic to the scandal, the regulators now say the fraud was a Ponzi scheme, in which early investors are paid returns from money put in by later investors. Investigators allege that Stanford and Davis diverted at least $1.6 billion of investors' money through personal loans to Stanford. Stanford and Davis also invested an undetermined amount of customer funds in speculative, unprofitable private businesses, some of which they controlled, the SEC said in the new complaint. The regulators also say that Stanford faked historical data on other investments, which he then used to lure in more investors for the certificates of deposit. Pendergest-Holt "facilitated" the alleged scheme by misrepresenting to investors that she managed the bank's multibillion-dollar investment portfolio and employed a large team of analysts to monitor it, the SEC said in the filing.
Cogdell said that his client was "set up" by Stanford and Davis. The SEC froze the assets of three of Stanford's companies. FBI agents served Stanford with legal papers last week, and he was ordered to surrender his passport. He has not been charged with a crime.

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Stephen Walsh appeared before a federal magistrate this week along with Paul Greenwood.

Stephen Walsh appeared before a federal magistrate this week along with Paul Greenwood. According to charges filed by the Securities and Exchange Commission the men, while operating WG Trading Investors of Greenwich, Conn., were involved in conspiracy, wire and securities fraud. The complaint details actions back to 1996 and said the men promised investors that their money would be invested in a stock index arbitrage strategy.

“Instead, Greenwood and Walsh essentially treated their clients’ investments as their personal piggy bank to purchase multi-million dollar homes, a horse farm and horses, luxury cars, and rare collectibles such as Steiff teddy bears,” the SEC said.

The SEC obtained an emergency court order freezing the assets of Greenwood and Walsh as well as their companies: WG Trading Investors, L.P. (WGTI), which is an unregistered investment vehicle; WG Trading Company, Limited Partnership (WGTC), which is a registered broker-dealer located in Greenwich, Conn.; and Westridge Capital Management, Inc. (Westridge), which is a registered investment adviser located in Santa Barbara, Calif.After appearing in a Manhattan court Feb. 25 the men were released on $7 million bond.Also this week, the University of Pittsburgh and Carnegie Mellon University filed suit against the two men for using a total of $114 million in investments from those institutions. Earlier this month, the National Futures Association was unsuccessful in attempting to audit the actions of WG Trading Investors — an NFA member — and suspended the membership of Walsh and Greenwood. That attracted the interest of the universities, who contacted the Securities and Exchange Commission.Walsh, a 1966 graduate of UB, is listed among its “Donors of Distinction.” In 2001, he pledged $250,000 to the UB athletics department. Later, the basketball office complex inside Alumni Arena was named after Walsh.When asked about his involvement with UB, the university released a statement: “Mr. Walsh has been an inactive member of our foundation board since March 2004. Furthermore, we have a policy that prohibits investing funds with any member of our foundation board.”Walsh was also listed as a former executive with the New York Islanders hockey team in the 1990s.

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$8 billion fraud case involving Texas financier R. Allen Stanford

$8 billion fraud case involving Texas financier R. Allen Stanford — with its toxic stew of frozen assets, growing stack of lawsuits and hundreds of furious investors and advisers — is shaping up to be a long-running nightmare that could take years to unravel. Investors' accounts in financial companies controlled by him may remain frozen for more than two years, according to Walter Pagano, head of the forensic-accounting division of Eisner LLP in New York and a former revenue agent with the Department of the Treasury. What's more, the roughly 250 advisers who work for Stanford companies face uncertain futures since they've become ensnared in what the Securities and Exchange Commission described as "a massive, ongoing fraud" in a complaint brought against Mr. Stanford last week. The SEC's civil investigation into Stanford International Bank Ltd. of St. John's, Antigua, and Stanford Group Co. and Stanford Capital Management, both of Houston, "could take more than six months to 27 months on average," Mr. Pagano said. Meanwhile, Mr. Stanford was found Thursday in Virginia, where FBI agents acting at the SEC's behest served him with legal documents. He was not arrested and has not been charged with any crime, though federal agents continue to investigate the case.

A federal court ordered that Stanford's assets be frozen last week and appointed attorney Ralph Janvey of Dallas as receiver. Mr. Janvey, a partner in the Dallas law firm Krage & Janvey LLP, did not return calls seeking comment, but securities attorneys said it is unlikely that he will unfreeze the assets before a thorough investigation is conducted.

Financial-fraud attorney Thomas Ajamie, managing partner for Ajamie LLP of Houston, who represents several Stanford clients, said he does not expect assets to be unfrozen for at least 90 days, "and possibly much longer."Meanwhile, investors have started to file what is expected to be numerous lawsuits against Mr. Stanford, his financial companies and top Stanford executives, including James Davis, a director and chief financial officer of Stanford International Bank and Laura Pendergest-Holt, chief investment officer of the bank and its affiliate, Stanford Financial Group of Houston. Stanford's media relations department referred all inquires to the SEC, which in turn referred calls to Mr. Janvey. Although financial advisers have not yet been named as defendants in the lawsuits, it is possible that they will be, securities fraud attorneys said.
The Stanford advisers' difficulties stem from the sale of certificates of deposit with suspiciously high returns and a proprietary mutual fund wrap program called Stanford Allocation Strategy. According to the SEC complaint, Stanford Group advisers have sold more than $1 billion worth of the mutual funds "by using materially false and misleading historical performance data."

Stanford expanded the mutual fund program, using the false data, from less than $10 million in 2004 to more than $1.2 billion, according to the SEC. That generated more than $25 million in fees, the complaint said.

What's more, the fraudulent performance of the wrap program "was used to recruit registered financial advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to Stanford International Bank's CD program," according to the SEC complaint. The unusually high returns of the CDs touted by Stanford were in fact illusory, the SEC complaint alleges. What's more, according to the SEC, investments in the CDs were not placed in liquid financial instruments as promised but rather in illiquid assets such as real estate and private equity. Financial advisers received a 1% commission when they sold the CDs, and they were eligible to receive as much as a 1% trailing commission throughout the terms of the CD. In addition, according to the SEC complaint, Stanford advisers were trained to "provide security to clients" by describing the CDs as liquid investments, when they were not. In 2007, Stanford International Bank sold $6.7 billion worth of CDs to 50,000 customers, according to the SEC.
Asked about the company's Caribbean-based bank product in an interview with InvestmentNews last November, Jason Green, president of Stanford Financial Group's private-client group, described it as a proprietary "time deposit" offered through a Regulation D offering, an SEC form which allows the sale of unregistered securities to accredited investors in the United States under certain circumstances.
The "time deposit" had no Federal Deposit Insurance Corp. insurance, Mr. Green said, but offered "competitive" returns based on a "global portfolio." "It's a good, unique product," he said during the interview.

Stanford clients who filed a class action against a number of Stanford companies last week in U.S. District Court in Dallas were told by their advisers that the CDs were "a very safe vehicle for investment," according to Chris Fonville, an attorney for Fleming & Associates LLP of Houston, which is representing the plaintiffs.

Any Stanford adviser who recommended an investment in a Stanford Bank CD that was "clearly unsuitable under New York Stock Exchange or Finra rules" may face a lawsuit from one of his clients, said James Dunlap, a securities litigation attorney with an eponymous firm in Atlanta. The Financial Industry Regulatory Authority Inc. is based in New York and Washington.

Mr. Dunlap is representing Johan Dahler, a Stanford client who filed a civil complaint against the company in Harris County, Texas, district court last week.

The "disproportionately large" commission given to Stanford advisers who sold the CDs may be cited in a complaint brought against them, Mr. Dunlap said.

A 1% commission for the sale of a CD and possible 1% trailing fee is considered unusually high, industry insiders said. One independent registered adviser in Texas, who asked not to be identified, said the amount "is too high. We get a few basis points for that kind of business."
The adviser said Stanford's "bank product" was popular when he interviewed with Stanford Financial Group several years ago. "It sounded like a CD, but it paid 8.5% and was backed up by a bank in the Caribbean. It just didn't sound right," the adviser said. A 1% upfront and trailing commission is "a very, very rich payout for a cash product," said Tim Welsh, president of Larkspur, Calif.-based Nexus Strategy LLC, a wealth management industry consultant. "Typically, the commission is zero or minimal basis points." he said. In addition to potential lawsuits, Stanford advisers likely will have to deal with angry clients who can't get their money and, as Mr. Dunlap put it, "may not be able to get it for a very long time." "Clients are furious," said Rick Peterson, president of an eponymous Houston-based recruiting firm. "They're telling advisers to do your due diligence and find us a respectable home ASAP or we're taking our business elsewhere." Stanford advisers are "utterly shellshocked, according to Tim White, another Houston-area industry veteran. "They are devastated. This is like death for these guys," Mr. White said. The Stanford Financial Group's wealth management unit inspired great loyalty, he said. "They have a lot of pride and an esprit de corps that is difficult to match in the business" Mr. White said. While Stanford advisers may be reluctant to leave the company, they may have no choice, according to Mr. White, who is a partner in executive-recruiting firm Kaye/Bassman International Corp. of Plano, Texas. He has worked with Stanford.
"If the situation is not resolved to the client's satisfaction, then they will be compelled to move [to follow the client]. The client calls the tune in this business," Mr. White said. And to make matters even worse, several attorneys involved in lawsuits against Stanford said they were told that Mr. Janvey, the court-appointed receiver, has instructed Stanford advisers not to talk to their clients for the time being.
"They're in limbo, and that's a tough position for an adviser to be in," Mr. Ajamie said. Comparisons to the Stanford case and the alleged Ponzi scheme run by New York investment manager Bernard Madoff intensified last week when The Wall Street Journal reported that federal prosecutors are investigating whether Mr. Stanford was operating a Ponzi scheme de-frauding investors around the world. "The difference is that Madoff investors came from a close-knit circle, while anyone off the street could walk in and open a Stanford ac-count," Mr. Dunlap said.

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Antiguans expressed shock prime minister said it could be "catastrophic" for the nation.

Antiguans expressed shock on Tuesday at news their top investor, the Texas billionaire Allen Stanford, was charged with "massive" fraud, and their prime minister said it could be "catastrophic" for the nation."The fall-out threatens catastrophic and immediate consequences," Baldwin Spencer, the leader of the tiny twin-island state of Antigua and Barbuda said in a televised address. "There is no need for panic."

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Stanford Bank is healthy in Venezuela ?

Venezuela's top banking regulator says Stanford Bank is healthy in the country despite fraud allegations elsewhere that led U.S. authorities to shut down offices and freeze assets.Venezuela's superintendent of banks, Edgar Hernandez Behrens, said Stanford Bank Venezuela is in fine shape and that "the situation is normal." He was seeking to reassure Venezuelan depositors who panicked at the news of fraud allegations and sought to withdraw funds.Hernandez said Wednesday that Stanford Bank Venezuela is not affiliated with Stanford Bank on the Caribbean island of Antigua, where some fraud accusations have centered.The U.S. Securities and Exchange Commission has shut down Stanford Bank, owned by Texas billionaire

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Stanford Financial Group sponsors the Stanford St. Jude Championship on the PGA Tour and the Stanford Financial Tour Championship on the LPGA Tour.

Stanford Financial Group sponsors the Stanford St. Jude Championship on the PGA Tour and the Stanford Financial Tour Championship on the LPGA Tour.With its assets frozen and its chairman accused of fraud, will Stanford Financial Group be able to follow through on those sponsorship obligations? Will either tour want the company to remain as title sponsor?PGA Tour commissioner Tim Finchem released a very brief statement today, saying, "We want to categorically state that the PGA TOUR event in Memphis will be played as scheduled this year."So the PGA Tour event in Memphis goes on, regardless of what happens with the title sponsor. The LPGA may be in a trickier spot. That tour's Stanford-sponsored tournament is the season-ending, showcase tour championship.A tour can't cancel it's "tour championship," can it? Yet the LPGA has much shallower pockets than the PGA Tour, and fewer options for finding new sponsorship (if necessary).

In a statement quoted by the Associated Press, spokesman David Higdon said, "The LPGA has been closely monitoring the developments regarding the situation with Allen Stanford and some of his companies. We remain in close contact with our tournament owner of the Houston event sponsored by Stanford Financial, and they will continue to update us on any new developments related to this matter."

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Panama's biggest scam to date

latest financial scam perpetrated by the Stanford International bank which has an office in Panama. Although only about 20% the size of the Bernie Madoff pyramid scheme, it has to rank as Panama's biggest scam to date. Obviously this is not a home grown fraud, but unfortunately the fact that it has been operating in Panama will not be good for the Banking commission and Panama's reputation.The history section of the Stanford website has this quote from the father of the founder:"Build the business, step by step, on a firm foundation of hard work, clear vision and value for the client." -Lodis B. StanfordHere is what Bloomberg had to say about the Panama operation.Feb. 18 (Bloomberg) -- Panama's banking regulator said it took over
a local affiliate of Stanford Financial Group after fraud accusations by
U.S. authorities prompted a

"massive withdrawal of funds."
Stanford Bank (Panama) SA was taken over by the government as of 7
a.m. local time today, according to a statement posted on the Web site
of Panama's superintendent of banks. A similar statement was taped to
the door of a shuttered Stanford branch in Panama City.
"I was here yesterday and they said I could come back tomorrow to
close my account," said Marcus Edval, 32, who was trying to withdraw his
entire $50,000 from the bank. "No one knows what's going on."
The Securities and Exchange Commission yesterday accused R.
Allen Stanford of running a "massive, ongoing fraud" through his
Houston-based Stanford Group. Co. In addition to Panama, Stanford has
offices in Antigua, Venezuela, Mexico, Ecuador, Peru and Colombia.

I guess something went terribly wrong with the vision of those running the company today as the SEC closed them down and filed charges of fraud.

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Charges filed by the Securities and Exchange Commission (SEC) portray the flamboyant Sir Allen Stanford as the ponzi-master’s offshore equivalent

Charges filed by the Securities and Exchange Commission (SEC) portray the flamboyant Sir Allen Stanford as the ponzi-master’s offshore equivalent, perpetrating a fraud of “shocking magnitude” based on “false promises” and fabricated performance data, primarily through his Antigua-based bank.The central allegation is that Stanford International Bank hoodwinked investors over the safety and liquidity of uninsured certificates of deposit (CDs). It took in some $8 billion, consistently offering rates well above those of big banks—sometimes more than twice as high. Despite assurances that the money was going into liquid securities, much of it was apparently ploughed into sticky assets such as property and private equity.How well these performed is unclear, but the stated returns were suspiciously smooth and impressive: consistently in the low double digits for over a decade, with a loss of just 1.3% last year, when stockmarkets around the world crashed. Unlike Mr Madoff, Sir Allen has not been accused of running a ponzi scheme, although it is possible that large sums have been lost in unwise bets. Hundreds of the bank’s 30,000 clients descended this week on its neo-Georgian headquarters, conveniently located next to the airport of St John’s, the Antiguan capital, demanding their money back. Depositors also besieged Stanford’s smaller, onshore Bank of Antigua, as well as operations in Venezuela and Panama. A big chunk of the client base is Latin American, although Americans reportedly ploughed in as much as $1.5 billion. The SEC says it is, so far, unable to account for the bulk of assets. In total, the group claims to have more than $50 billion “under advisement”.The hoodwinking ran deep, according to the SEC’s complaint. The portfolio was not, as claimed, monitored by a team of more than 20 analysts, but by the sole shareholder himself and his chief financial officer, an old college classmate. Many of the holdings were known only to these two. Among those on the cosy investment committee were Sir Allen’s father and a neighbour with cattle-ranching experience.

Investors can perhaps be forgiven for failing to spot this in-bred governance structure. Other warning signs were more obvious: the implausibly small auditing firm that Stanford used—a trick out of Mr Madoff’s book; the labyrinthine corporate structure; and a stunning lack of transparency. The chief investment officer told staff not to reveal too much about the oversight of investments because it “wouldn’t leave an investor with a lot of confidence”.

Once again, regulators are shuffling uncomfortably in the spotlight. Antigua’s financial regulator has lived down to its reputation for being supine even by Caribbean standards. It gave Stanford a clean bill of health a few months ago (although, contrary to the bank’s claims, it did not perform a full audit). Sir Allen’s local largesse and political connections may have helped here. His knighthood came from a grateful Antiguan government, not Queen Elizabeth.
American regulators have been more assiduous, yet they are still open to charges of foot-dragging. FINRA, which oversees brokers, fined Stanford several times in recent years, including a $10,000 penalty for misrepresenting the “risks and potential benefits” of its CDs. Such a small fine will fuel suspicion that the self-regulatory body is too close to the industry. The SEC began probing Stanford as far back as 2006.Even then, it was arguably late to the game. Law enforcers had been sniffing around Sir Allen since the late 1990s, when he lost his banking licence in Montserrat, another Caribbean island. His group’s murkiness has long alarmed those who looked closely. “There was no excuse for anyone with an ounce of sophistication to invest,” says David Marchant of Offshore Alert, a newsletter. At least one trading partner grew wary long before regulators tightened the noose: in early 2008 Pershing, a Stanford custodian, sought an independent report on its financial health. In December, after being told that this was “not a priority”, it stopped processing the bank’s transfers.The SEC stepped up its probe after its Madoff mis-steps. But a bigger impetus may have been a deeply sceptical report on Stanford’s investment returns, published in January by Alex Dalmady, an independent analyst. The blogosphere picked this up, and within days it was making headlines worldwide. This offers hope for those who despair of the SEC’s bungling, suggesting that in the internet age forensic vigilantes and devil-may-care bloggers can, to some extent, fill the gap left by dilatory regulators and libel-constrained mainstream media

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Texas financier R. Allen Stanford disappears

The Texas financier accused of cheating thousands of customers out of $8B is currently missing, federal authorities said.

Federal authorities raided all three of his headquarters but could not find 58-year-old Allen Stanford.CNBC reported that Stanford unsuccessfully tried to hire a private jet from Houston to Antigua. The jet company would not accept his credit card.On Tuesday, the Securities and Exchange Commission filed a complaint against Stanford and three of his companies. The SEC claims that roughly $8 billion of so-called certificates of deposit were sold to investors with promises of "improbable and unsubstantiated high interest rates," the Associated Press reported.In Antigua and Caracas, lines of people gathered outside of banks affiliated with Stanford, according to Reuters.
Panicky depositors rushed to pull money from banks on Wednesday as leaders in the Caribbean and Latin America urged calm, concerned that their slumping economies could be harmed by the fraud case against Texas financier R. Allen Stanford.
Hundreds of people lined up outside two branches of the Bank of Antigua, a Stanford-owned institution that has been flooded with fearful customers since the U.S. Securities and Exchange Commission filed a complaint Tuesday accusing him of an $8 billion fraud."People have to come to get their money," said Rasta Kente, an electrician who joined a line that stretched around the corner at a downtown bank branch. Three security officers allowed only a few people to enter at a time.Many of those waiting clutched portable radios to listen to financial news.
Local regulators said the bank's finances are sound and appealed for calm. The bank, owned by the Stanford Financial Group, one of Stanford's Houston-based financial advisory firms, was flooded by depositors even though it is not part of the U.S. complaint."If individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid," said K. Dwight Venner, governor of the Eastern Caribbean Central Bank, the banking regulator for Antigua and seven other islands.U.S. regulators on Tuesday charged Stanford, a Texas billionaire who has become one of the most successful businessmen in the Caribbean, and three of his companies of perpetrating a "massive" $8 billion fraud that centered around high-interest-rate certificate of deposits.The U.S. Securities and Exchange Commission froze the assets of Houston-based Stanford Group Company, Houston's Stanford Capital Management, and Antigua-based Stanford International Bank. The latter also has offices in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela.The charges have "profoundly serious implications" for Antigua, Prime Minister Baldwin Spencer said late Tuesday. The regional central bank said it will do "what it takes" to preserve the soundness of the banking system in the twin-island nation of Antigua and Barbuda.Colombian authorities, meanwhile, suspended the activities of Stanford International Bank's local brokerage Wednesday morning to protect "clients and investors," according to a statement from the Colombian Superintendency of Finance.The brokerage posted the equivalent of $3.5 million in losses last year, more than any of the 39 brokerages licensed to trade on Colombia's exchange, and ended 2008 with 21,493 billion pesos, or $8.6 million, in capital, the Superintendency said. Stanford does not operate a retail bank in Colombia.

Regulators in Panama took over branches of Stanford's unit there following a run on deposits Tuesday. The Superintendent of Banks said it was responding to "an isolated event as a consequence of decisions adopted by foreign authorities," and said that it did not reflect "a deterioration in the financial situation of the bank in Panama."

Assets at the bank's four Panama branches, which La Prensa said held $200.8 million in deposits at the end of 2008, are held largely in liquid, fixed-income investments that can easily be converted into cash to cover deposits if necessary, Martinez Stagg said.In Venezuela, where Stanford Bank has 14 local branches and about 15,000 clients, the nation's top bank regulator also urged calm.Banking Superintendent Edgar Hernandez warned that in addition to local depositors, a group of Venezuelans has an additional $2.5 billion in assets in Stanford's Bank in Antigua — fueling reports that some wealthy investors were traveling to Antigua Wednesday to talk to bank officials.In the Virgin Islands, Gov. John deJongh said he is worried the probe will worsen the U.S. territory's flagging economy, potentially costing jobs and investment in local projects.Stanford had pledged to build an office complex on land adjacent to St. Croix's airport.

Stanford, 58, owns a home in St. Croix and operates his businesses from Houston and Antigua. He was knighted in this Caribbean island in 2006 and helped sponsor high-stakes cricket matches

.Forbes magazine has estimated his personal fortune at $2.2 billion.In Mexico, the president of Stanford Fondos, a local mutual fund distributor run by Stanford Financial Group, said its operations have been unaffected by the SEC investigation because that group was not named in the fraud case.

Stanford Fondos managed $49.9 million, in investments for 3,414 clients as of November, according to Mexico's National Banking and Exchange Commission.

In addition to Stanford himself, the civil lawsuit filed Tuesday in federal court in Dallas names as defendants James Davis, the chief financial officer of Stanford International Bank, as well as Laura Pendergest-Holt, the chief investment officer of Stanford Financial Group.While not named in the SEC's civil complaint, regulators said Stanford was aided in running the Antigua-based operation by his father, who lives in Mexia, Texas, and another Mexia resident with a background in cattle ranching and car sales. Davis, who was named in the lawsuit, was Stanford's college roommate.

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Bruce E. Hammonds, a former Merrill Lynch & Co. employee in San Antonio got Merrill Lynch clients to invest in a partnership he controlled

Bruce E. Hammonds, a former Merrill Lynch & Co. employee in San Antonio, admitted that for more than two years, starting in August 2006, he got Merrill Lynch clients to invest in a partnership he controlled without the knowledge of the investment giant or the investors who thought the money was going into a Merrill Lynch fund.
The firm fired him in June for co-mingling investor funds with his personal funds and not disclosing the partnership.After his termination, he kept soliciting investors for the partnership, the U.S. Attorney's Office said in a filing with the court.Hammonds used the money for himself and gave some to relatives and business partners, prosecutors said. No one else has been charged in the case, but Hammonds faces up to 10 years in prison when he is sentenced May 29.

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