Posts Tagged With Asset Forfeiture

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Acting Principal Deputy Assistant Attorney General Trevor N. McFadden of the Justice Department’s Criminal Division Speaks at ACI’s 19th Annual Conference on Foreign Corrupt Practices Act

On April 20, 2017, Acting Principal Deputy Assistant Attorney General Trevor N. McFadden spoke at the American Conference Institute (“ACI”) about the Department of Justice’s continued focus on white collar crime.  Affirming the Department’s commitment, McFadden said, “While we are boosting our focus on violent crime prosecutions, the Criminal Division is fully engaged in combating crime in all its forms, and no matter what color collar its perpetrators wear.  McFadden highlighted the work of the ... Continue Reading

Peruvian National Pleads Guilty in Manhattan Federal Court to Commodities and Wire Fraud for Running Million-Dollar Ponzi Scheme

On April 7, 2017, Pedro Jaramillo pled guilty in the Southern District of New York to one count of commodities fraud and one count of wire fraud in connection with a scheme to defraud more than two dozen investors, mostly from Latin American countries including Peru, of more than $1.2 million dollars.  According to court documents, between January 2014 and December 2016, Jaramillo solicited investments from investors, representing that investor monies would be invested in ... Continue Reading

Man Sentenced to 78 Months in Prison for Fraudulent Investment Companies and Obstructing SEC Investigation

On March 3, 2017, Stanley Jonathan Fortenberry was sentenced in the Northern District of Texas to 78 months in prison, as well as $890,310 in restitution and $311,254 in forfeiture, for running two investment fraud schemes and obstructing an SEC investigation.  The schemes, which ran for more than four years and defrauded investors out of approximately $900,000, raised funds for social media projects and an oil and gas drilling project but misled investors about the ... Continue Reading

Former Securities Lawyer Sentenced to Six Years in Prison for Securities Fraud

On February 15, 2017, James Seltzer, a former securities lawyer, was sentenced to six years in prison and ordered to pay more than $4.5 million in restitution for securities fraud.  According to the plea agreement, from at least October 2007 through May 2011, Seltzer made misrepresentations to investors in connection with the purchase and sale of securities.  Seltzer misrepresented to investors that he would use their money to make certain investments for their exclusive benefit ... Continue Reading

Owner of Real Estate Investment Firm Sentenced in Manhattan Federal Court to 10 Years in Prison for $17 Million Securities Fraud

On October 28, 2016, Carlton Cabot, the former owner and chief executive officer of Cabot Investment Properties LLC (“CIP”) was sentenced in the Southern District of New York to 10 years in prison and ordered to pay $17 million in restitution and forfeiture for defrauding investors through CIP real estate investments.  Between 2003 and 2012, CIP offered 18 separate tenants-in-common (“TIC”) securities offerings to investors in the United States.  Investors in each security were entitled ... Continue Reading

Managing Director of Venture Capital Firm Sentenced in Manhattan Federal Court in Connection with Multimillion-Dollar Ponzi Scheme

On October 25, 2016, Gregory Gray, senior managing director of Archipel Capital, LLC, was sentenced in the Southern District of New York to two years in prison, three years supervised release and ordered to forfeit $5,000,000 and pay $5,000,000 in restitution for securities fraud and perjury in connection with his scheme to defraud an investor of approximately $5 million to cover up mismanagement of other investors’ funds.  Between June 2012 and November 2013, Gray raised ... Continue Reading

Importing Company’s Founder Sentenced to 124 Months for His Role in $26 Million Ponzi Scheme

On September 23, 2016, Eric Aronson, founder and head of Permapave Industries LLC and Permapave USE Corporation (“Permapave”), was sentenced to 124 months’ imprisonment, followed by three years’ supervised release, and was ordered to forfeit $26 million in criminal proceeds in the EDNY.  Aronson had pled guilty to securities fraud on September 12, 2014 for his role in a Ponzi scheme which defrauded more than 200 investors out of $26 million between August 2006 and ... Continue Reading

Jacob “Kobi” Alexander Pleads Guilty to Securities Fraud

On August 24, Jacob “Kobi” Alexander, an Israeli national, pled guilty to one count of securities fraud for his role in an options backdating scheme involving Comverse Technologies Inc.  Alexander was ordered extradited from Namibia on August 22, 2016.  At the time of the offense, Alexander was the Chief Executive Officer and member of the Board of Directors of Comverse, an S&P 500 company.  Between 1998 and 2006, Alexander and his coconspirators engaged in a ... Continue Reading

Principal Deputy Assistant Attorney General Caroline D. Ciraolo Delivers Remarks Regarding Offshore Tax Enforcement Efforts

On August 17, Principal Deputy Assistant Attorney General Caroline D. Ciraolo delivered remarks at the Panama Bankers Association Anti-Money Laundering Conference on the Tax Division’s offshore tax enforcement efforts.  Ciraolo stated that offshore tax enforcement is one of the Tax Division’s highest priorities.  She explained that the one role of the Tax Division is to petition the federal courts to enforce IRS requests for records related to taxpayers’ offshore assets and activities, sometimes through “John ... Continue Reading

United States Seeks to Recover more than $1 Billion Obtained from Corruption Involving Malaysian Sovereign Wealth Fund

On July 20, Attorney General Lynch and Assistant Attorney General Leslie R. Caldwell announced the filing of civil forfeiture complaints seeking the forfeiture and recovery of assets associated with an international money laundering conspiracy.  The members of the conspiracy are alleged to be officials of 1Malaysia Development Berhad (“1MDB”), their relatives, and associates, and they are alleged to have misappropriated more than $3.5 billion in funds belonging to 1MDB from 2009 through 2015.  1MDB was ... Continue Reading

New Jersey Clinical Lab at Center of Largest Physician Bribery Case Pleads Guilty

On June 28, Biodiagnostic Laboratory Services, LLC (“BLS”), a New Jersey clinical lab at the center of a long-running and elaborate test referral scheme, pled guilty in federal court to conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act and one count of conspiracy to commit money laundering.  BLS played a central role in an enterprise that took millions of dollars in bribes and resulted in more than $100 million in payments to ... Continue Reading

United States Supreme Court Rules that Untainted Assets Cannot Be Frozen

On March 30, the Supreme Court ruled that allowing the government to freeze untainted assets violates defendants’ right to counsel of their choosing under the Sixth Amendment.  The defendant had obtained $45 million from the government, and fraudulently spent that money.  The government froze $2 million of the defendant’s assets that did not stem from fraud as “property of equivalent value” to the fraudulent proceeds.  In reversing the Eleventh Circuit ruling that permitted the asset ... Continue Reading

General Motors Is Criminally Charged and Enters DPA with $900 Million Forfeiture

On September 17, General Motors was criminally charged in the Southern District of New York with concealing a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), from the spring of 2012 through February 2014, and, in the process, misleading consumers concerning the safety of certain of GM’s cars.  The defect consisted of an ignition switch that had been designed and manufactured with too-low torque resistance and could therefore ... Continue Reading

Second Circuit Restricts Government’s Ability to Seize Assets Without a Warrant

On August 10, a panel of the Second Circuit held that the government may not rely on “exigent circumstances” to indefinitely seize property in the absence of a warrant.  The defendant, William R. Cosme, was arrested in December 2012 and charged with wire fraud.  At the time of his arrest, the government froze two of his bank accounts and seized several of his cars.  No warrant was ever obtained, but the district court issued an ... Continue Reading

Two Convicted in Multi-Million Dollar Investment Fraud Scheme that Victimized Professional Hockey Players and Long Island Investors

On July 9, a federal jury in Central Islip, New York convicted Philip A. Kenner, a financial advisor, and Tommy C. Constantine, a part-time race car driver, on charges of wire fraud, wire fraud conspiracy, and money laundering conspiracy.  Kenner and Constantine pocketed millions of dollars raised from Long Island businessmen and professional athletes, ostensibly for the purpose of funding the development of land in Hawaii and a startup credit card business in Arizona.  The ... Continue Reading

Department of Justice Seeks Forfeiture for Bribe Payments to the Republic of Chad’s Former Ambassador to the United States and Canada

On June 30, DOJ filed a complaint seeking the civil forfeiture of approximately $34 million from Griffiths Energy International Inc. (“Griffiths Energy”), a Canadian energy company that was allegedly using bribes to  influence the award of Chadian oil development rights in exchange for shares in the company.  The complaint alleges that Griffiths Energy used $34 million in company shares to bribe Chad’s Ambassador to the United States and Canada.  Allegedly, Ambassador Mahamoud Adam Bechir, along ... Continue Reading

New York Securities Lawyer Sentenced to 18 Months in Prison for Orchestrating Stock Manipulation Scheme

On May 26, Adam S. Gottbetter, a New York corporate and securities lawyer, was sentenced to 18 months in prison for orchestrating a stock market manipulation scheme designed to artificially inflate the stock price of two publicly traded companies.  Gottbetter conspired with others to manipulate the price and volume of securities to, among other things, make the companies more attractive to potential investors in various private offerings that Gottbetter would broker. The scheme also involved ... Continue Reading

Ripple Labs Inc. Resolves Criminal Investigation

On May 5, Ripple Labs Inc. (“Ripple”), along with its wholly owned subsidiary XRP II, LLC (“XRP II”), reached a non-prosecution agreement with the U.S. Attorney’s Office in the Northern District of California to resolve a criminal investigation.  Ripple is the developer and seller of XRP, the second most used form of digital currency.  The U.S. Attorney’s Office investigated allegations that Ripple and XRP II failed to comply with laws regulating the exchange of virtual ... Continue Reading

Schlumberger Oilfield Holdings Ltd. Plead Guilty and Agrees to Pay Over $232.7 Million for Violating U.S. Sanctions by Facilitating Trade with Iran and Sudan

On April 30, Schlumberger Oilfield Holdings Ltd. (“SOHL”)—a wholly owned subsidiary of Schlumberger Ltd.—pled guilty to facilitating illegal transactions with Iran and Sudan.  As part of the plea agreement, SOHL agreed to forfeit more than $77 million and pay a $155.1 million fine—the largest criminal fine in connection with an International Emergency Economic Powers Act prosecution to date.  In the agreed-upon statement of facts, the company acknowledged that its U.S. employees (1) approved capital expenditure ... Continue Reading

Attorney General Restricts Use of Asset Forfeiture in Structuring Offenses

On March 31, Attorney General Holder announced that DOJ would narrow the circumstances in which it seeks forfeiture in connection with “structuring” offenses.  Structuring occurs when, instead of conducting a single transaction in an amount that would require a financial institution to make a report or maintain a record, a violator conducts a series of currency transactions, purposely keeping each transaction at an amount below the relevant threshold to avoid triggering the record-keeping requirement.  Although ... Continue Reading

CEO and Managing Director of U.S. Broker-Dealer Sentenced for International Bribery Scheme

On March 27, the former chief executive officer and a former managing director of Direct Access Partners, a U.S. broker-dealer, were each sentenced to four years in prison for bribing a senior official in Venezuela’s state economic development bank—known as “Bandes”—in exchange for trading business that generated more than $60 million in commissions.  In addition to their prison sentences, the men, Benito Chinea and Joseph DeMeneses, were respectively ordered to pay $3.6 million and $2.7 ... Continue Reading

Commerzbank AG Admits to Sanctions and Bank Secrecy Violations, Forfeits $563 Million and Pays $79 Million Fine

On March 12, Commerzbank AG, a global financial institution, and its U.S. branch entered into a DPA for violations of the International Emergency Economic Powers Act and the Bank Secrecy Act and agreed to forfeit $563 million and pay a $79 million fine.  The bank moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese businesses. It used non transparent payment messages, amended payments to avoid U.S. sanctions filters, and employed ... Continue Reading

President of Investment Advisory Firm Sentenced to Six Years in Prison for Investment Fraud Scheme

On February 13, James Tagliaferri, the former president of TAG Virgin Islands, was sentenced to six years in prison in connection with a multimillion-dollar scheme to defraud his clients.  As part of the scheme, Tagliaferri (1) accepted undisclosed compensation in exchange for investing his clients’ funds in certain securities; (2) used client funds for illegitimate purposes, such as to pay other clients; and (3) placed fictitious instruments in client accounts.  In total, Tagliaferri caused clients ... Continue Reading

Former Hedge Fund Controller Pled Guilty to Embezzlement

On January 29, Lawrence J. Herzing pled guilty to one count of wire fraud.  Herzing embezzled more than $9 million from Contrarian Capital Management, the hedge fund where he worked.  Between 2004 and 2013, Herzing used his position at the hedge fund on 32 occasions to wire money from his employer to accounts that he controlled.  Herzing’s sentencing is scheduled for April 24, 2015. United States v. Herzing, 14-mj-00247 (D. Conn.). DOJ Press Release ... Continue Reading

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