Posts Tagged With Fraud

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Former Investment Advisor Arrested for $20 Million Fraud

On August 24th, Daryl Gene Bank, the former owner of an Investment Company in Virginia Beach, was arrested and, along with his co-conspirator Raeann Gibson, charged with conspiracy to commit mail and wire fraud, and engaging in unlawful monetary transactions.  Bank and Gibson allegedly entered into a conspiracy to operate multiple fraud schemes between January 2012 and July 2017.  The co-conspirators prepared materially false and misleading investment offerings, and knowingly omitted material information, to at ... Continue Reading

Two International Bank Managers Charged in Libor Interest Rate Manipulation Scheme

On August 24, 2017, Danielle Sindzingre and Muriel Bescond, both French bank managers, were indicted and charged with one count of conspiring to transmit false reports concerning market information that tends to affect a commodity, as well as four counts of transmitting these false reports.  The two French bank managers allegedly transmitted false and misleading information in connection with the London Interbank Offer Rate (LIBOR), a benchmark interest rate that is calculated for various currencies ... Continue Reading

Former ArthroCare Corporation CEO Convicted for Role in $750 Million Securities Fraud

On August 18, 2017, a federal jury found former CEO of ArthroCare Michael Baker guilty of one count of conspiracy to commit wire fraud and securities fraud, seven counts of wire fraud, two counts of securities fraud and two counts of making false statements.  Baker and his co-conspirators were alleged to have artificially inflated sales and revenue by determining which of their products would meet Wall Street needs, based on analysts’ forecasts, and then “parked” ... Continue Reading

Mylan Pays $465 Million to Resolve False Claims Act Investigation for Underpaying EpiPen Rebates

On August 17, 2017, Mylan Inc. and Mylan Specialty L.P. resolved claims brought under the whistleblower provisions of the False Claims Act (“FCA”), agreeing to pay $465 million in a civil settlement with government regulators.  The government alleged that Mylan erroneously and knowingly reported EpiPen to Medicaid as a generic medication, despite the unavailability of any equivalent pharmaceutical, allowing them to charge high prices on the private market while evading corresponding obligations to Medicaid under ... Continue Reading

Five Individuals Charged with Participating in Three Insider Trading Schemes Generating More Than $5 Million in Profits on Inside Information Misappropriated from an Investment Bank

On August 16, 2017, five individuals were arrested and charged for their roles in overlapping insider trading schemes.    Michael Siva, Roberto Rodriguez, Rodolfo Sablon, Jhonatan Zoquier, and Jeffrey Rogiers were each charged with conspiracy, wire fraud, and multiple counts of securities fraud and fraud in connection with a tender offer.  The U.S. Attorney’s Office also announced the unsealing of guilty pleas from August 9, 2017 by Daniel Rivas and James Moodhe, who admitted to engaging ... Continue Reading

Former Broker Sentenced to 15 Months Imprisonment for $131 Million Market Manipulation Scheme

In July and August, several individuals were sentenced for their involvement in a $131 million securities fraud scheme. From 2009 to 2015, the coconspirators fraudulently controlled the price and volume of shares traded in a publicly traded company called ForceField Energy Inc. by using nominees to buy and sell company stock without disclosing this to other investors, orchestrating ForceField stock trading that would appear as real trading volume and interest, and hiding payments to stock ... Continue Reading

Former Cocoa Company Executives Arrested for Defrauding Lenders of $400 Million

On August 8, 2017, a federal court in New York unsealed the indictment charging Peter G. Johnson, Peter B. Johnson, and Thomas Reich with defrauding banks by using false “borrowing base” reports that were designed to secure a $400 million line of credit for their company.  As part of this fraud, the defendants allegedly lied repeatedly about the financial condition of the company and, through “borrowing base” reports required by the banks, deceived lenders about ... Continue Reading

Martin Shkreli, Former Hedge Fund Manager, Convicted in Multi-Million Dollar Fraud Scheme

On August 4, 2017, Martin Shkreli was convicted by jury of three counts charging him with securities fraud and securities fraud conspiracy.  The conviction related to Shreli’s role as the founder and managing member of two hedge funds, MSMB Capital Management LP and MSMB Healthcare Management LP, and as the former CEO of the biopharmaceutical company, Retrophin Inc.  The trial, which lasted six weeks before United States District Court Judge Kiyo A. Matsumoto, convicted Shkreli ... Continue Reading

Former President and Chairman of the Board of Gerova Financial Group Sentenced to Six Years for Defrauding Shareholders

In August, former president and board chairman of Gerova Financial Group Gary Hirst was sentenced to 78 months in prison, one year of supervised release and $19,038,650.53 in forfeiture for defrauding shareholders in a scheme that lost Gerova $72 million.  From 2009 through 2011, Hirst and his co-conspirators caused over five million shares of Gerova stock to be issued in the name of a foreign nominee, Ymer Shahini, for the purpose of concealing the coconspirators ... Continue Reading

Short Hills, New Jersey, Investment Manager Sentenced to 33 Months in Prison for $675,000 Ponzi Scheme

On July 27, 2017, Mark Moskowitz, an investment manager with an office in Short Hills, New Jersey, was sentenced to 33 months in prison and ordered to pay restitution and forfeiture of nearly $700,000.  He had previously pled guilty to one count of wire fraud.  Moskowitz controlled an investment fund for which he concealed losses and falsely told investors that the fund was growing.  Based on his false representations investors provided additional funds to Moskowitz.  ... Continue Reading

Chicago Trader Sentenced for Misappropriating More than $1.7 Million in Client Funds

On July 26, 2017, Randall Rye, a twenty-six year old owner of Faster Than Light Trading LLC, was sentenced to more than five and a half years imprisonment for defrauding clients out of $1.7 million.  Rye promised substantial profits from his proprietary trading program and claimed to invest clients’ money using a computer algorithm.  Rye misappropriated the funds for his own personal use, including for travel expenses and expensive event tickets.  United States v. Rye ... Continue Reading

Former CEO of Virtual Currency Companies Pleads Guilty to $9 Million Fraud

On July 20, 2017, Homero Joshua Garza pled guilty to one count of wire fraud for a scheme in which companies he owned and operated sold fraudulent virtual currency products to consumers.  Virtual currency is a digital representation of monetary value that functions as a form of currency; a virtual currency “miner” is computer hardware that runs software which solves computer algorithms to validate groups of transactions in that virtual currency, awarding the operator of ... Continue Reading

Former Credit Suisse Banker Pleads Guilty to Conspiring with U.S. Taxpayers and Other Swiss Bankers to Defraud the United States

On July 19, 2017, Susanne D. Rüegg Meier, the former head of the Zurich Team of Credit Suisse’s North American desk in Switzerland, pled guilty to conspiring to defraud the U.S.  From 2002 to 2011, she participated in a conspiracy to aid U.S. taxpayers in evading their income taxes by concealing assets and income in Swiss accounts.  The tax loss associated with her conduct was somewhere between $3.5 and $9.5 million.  In particular, Rüegg Meier ... Continue Reading

CEO of Virginia Health Care Technology Company Sentenced to Almost Ten Years in Prison for $49 Million Shareholder Fraud and $7.5 Million Employment Tax Fraud

On July 19, 2017, Sreedhar Potarazu was sentenced to 119 months and 29 days—approximately ten years—in prison for fraud and failure to account for and pay employment taxes.  Potarazu, an ophthalmic surgeon in Maryland and Virginia, founded a Delaware corporation, which operated in McLean, Virginia and provided healthcare-related data analysis and services.  Potarazu provided materially false and misleading information to the company’s shareholders in order to induce more than $49 million in capital investments into ... Continue Reading

Participants in Long Island Boiler Room Indicted for $147 Million Stock Manipulation Scheme

On July 12, 2017, a nine-count indictment against 14 defendants was unsealed, involving charges for conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive securities fraud.  The charges relate to alleged stock manipulation of five publicly traded companies: National Waste Management Holdings, Inc., CES Synergies, Inc., Grilled Cheese Truck, Hydrocarb Energy Corporation, and Intelligent Content Enterprises, Inc.  According to prosecutors, the defendants bought shares from corporate insiders ... Continue Reading

Man Who Laundered Millions from Massive Computer Hacking and Telecommunications Fraud Scheme Gets 48 Months in Prison

On June 28, 2017, Muhammad Sohail Qasmani was sentenced to 48 months in prison in connection with a scheme to launder more than $19.6 million as part of a global computer hacking and telecommunications fraud scheme.  According to the documents filed in this and related cases, Noor Aziz of Karachi, Pakistan, allegedly led a scheme to  access without authorization the computer systems that ran the internal telephone networks of numerous businesses and organizations in the ... Continue Reading

Former State Street Corporation Executive Pleads Guilty in Scheme to Defraud Clients Through Secret Trading Commissions

On June 28, 2017, Edward Pennings, a former senior managing director at Boston-based State Street Corporation, pled guilty to one count of conspiracy to commit securities fraud and wire fraud.  According to Pennings’ admissions, Pennings conspired to add secret commissions to fixed income and equity trades performed for at least six clients of the bank’s “transition management” business—work that involved moving investments of institutional clients between and among asset managers or liquidating large investment portfolios—on ... Continue Reading

Chicago Businessman Arraigned on Fraud Charges in Connection with $7 Million Reverse Mortgage Scheme that Targeted Elderly Homeowners

On June 22, 2017, Mark Steven Diamond and Cynthia Wallace were arraigned on charges for his alleged role in a reverse mortgage scheme.  Diamond, a mortgage loan originator, allegedly targeted elderly homeowners and lenders with a home repair and loan fraud scheme.  The government alleges that the scheme caused lenders to make reverse-mortgage loans to homeowners who either did not sign up for them or did so unwittingly after Diamond intentionally misrepresented the terms.  According ... Continue Reading

Union County, New Jersey, Man Charged in Microcap Stock Manipulation Scheme

On June 21, 2017, James Farinella was arrested and charged with securities fraud for operating a “pump-and-dump” scheme in 2012.  According to the complaint, Farinella bought nearly all of the free-trading shares of Pazoo Inc., a sham business with no real operations, in June 2012.  Farinella and his co-conspirators then began trading Pazoo stocks between their accounts in order to simulate the appearance of a stock that was heavily traded and rising in price.  The ... Continue Reading

Chief Digital Officer of Premium Cable Network Pleads Guilty in Manhattan Federal Court to Defrauding His Employer of More Than $7 Million

On June 20, 2017, Emil Rensing, an executive at a premium cable network (the “Network”) pled guilty in connection with a scheme to defraud the Network of more than $7 million through false statements about services to be provided by companies Rensing controlled that were, in large part, never performed.  According to the allegations in the charging documents and statements made in court proceedings, Rensing, through his position as Chief Digital Officer of the Network, ... Continue Reading

Former Visium Portfolio Manager Stefan Lumiere Sentenced to 18 Months in Prison Following Conviction at Trial for Securities Mismarking Scheme

On June 14, 2017, Stefan Lumiere, a former portfolio manager at Visium Asset Management, L.P. (“Visium”), was sentenced to 18 months in prison in connection with a scheme relating to the mismarking of securities in a fixed-income hedge fund.  Lumiere was convicted of securities and wire fraud following a six-day jury trial.  According to the allegations in the charging documents and statements made in court proceedings, Visium managed several hedge funds, including a credit fund, ... Continue Reading

Former Chief Financial Officer of ArthroCare Corp. Pleads Guilty to Multimillion Dollar Securities Fraud Scheme

On June 14, 2017, Michael Gluk pled guilty to a multimillion dollar securities fraud scheme that involved falsely inflating his company’s sales and revenue numbers through end-of-quarter transactions with the company’s distributors.  Gluk, who was employed as CFO of ArthroCare Corp., also admitted to filing government forms with information that materially misrepresented the company’s quarterly and annual sales, revenues, expenses, and earnings, as well as providing false testimony in SEC proceedings and federal district court.  ... Continue Reading

Acting Assistant Attorney General Chad A. Readler of the Civil Division Testifies Before the House Judiciary Committee Subcommittee on Regulatory Reform, Commercial & Antitrust Law at a Hearing on Oversight of the Civil Division

On June 8, 2017, Acting Assistant Attorney General Chad A. Readler testified before the House Judiciary Committee Subcommittee on Regulatory Reform, Commercial & Antitrust Law.  During his prepared remarks, Readler discussed a number of topics, including national security, health and safety, various forms of financial fraud, and immigration actions.  According to Readler, the Civil Division and U.S. Attorneys recovered $4.7 billion under the False Claims Act in 2016, bringing the total amount recovered under the ... Continue Reading

Chairman and CEO of Purported Oil and Gas Company Charged in Manhattan Federal Court with $300 Million International Fraud Scheme

On June 1, 2017, Raheem J. Brennerman was charged in connection with a scheme to fraudulently obtain more than $300 million in bank loans for several companies controlled by Brennerman.  According to the indictment, Brennerman operated a purported oil and gas company called The Blacksands Pacific Group, Inc. (“Blacksands”) as well as several subsidiaries and associated entities.  Brennerman applied for business loans by falsely representing that Blacksands was successfully involved in the exploration and development ... Continue Reading