Posts Tagged With Fraud

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Merrill Lynch Commodities Inc. Enters into Corporate Resolution and Agrees to Pay $25 Million in Connection with Commodities Trading Practices

On June 25, 2019, DOJ announced that Merrill Lynch Commodities Inc. (“MLCI”), a global commodities trading business, entered into a non-prosecution agreement in connection with DOJ’s investigation into the market for precious metals futures contracts.  DOJ alleged that precious metals traders employed by MLCI provided misleading information to the futures markets by placing orders for futures contracts that the traders intended to cancel before execution.  DOJ maintained that these canceled orders created a misleading impression
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CEO of Public Commodities Trading Company Charged in $66 Million Accounting Fraud Scheme

On June 5, 2019, Venkata Meenavalli, the CEO of a publicly traded commodities trading company known as Longfin Corp. (“Longfin”), was indicted on charges of securities fraud.  Authorities maintain that Longfin purportedly engaged in sophisticated commodities trading and so-called “cryptocurrency” transactions, including “blockchain-empowered solutions.”  Prosecutors have alleged that the commodities transactions reported by Longfin were actually “sham” events between Longfin and separate entities that Meenavalli controlled, and that Longfin reported in its public filings with
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Opioid Manufacturer Insys Therapeutics Agrees to Enter $225 Million Global Resolution of Criminal and Civil Investigations

On June 5, 2019, authorities announced a $225 million global resolution of criminal and civil investigations into opioid manufacturer Insys Therapeutics, Inc. (“Insys”) in connection with the company’s marketing of the fentanyl spray Subsys.  Insys entered into a five-year deferred prosecution agreement, and operating subsidiary Insys Pharma, Inc. agreed to plead guilty to five counts of mail fraud.

According to charging documents, Insys used “speaker programs” to funnel bribes and kickbacks to practitioners in exchange
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Former Chief Financial Officer at Publicly Traded Transportation Company Charged with $245 Million Securities and Accounting Fraud Scheme; Two Other Defendants Previously Indicted Charged with Additional Offenses

On April 3, 2019, DOJ officials announced the indictment of the former CFO of publicly traded trucking company Roadrunner Transportation Systems, Inc. (“Roadrunner”) on numerous charges in connection with an alleged securities and accounting fraud scheme that resulted in the loss of over $245 million in shareholder value.  According to the indictment, former CFO Peter Armbruster and two former controllers of Roadrunner’s Truckload operating segment, Mark Woglsand and Bret Naggs, carried out a scheme to
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Lumber Liquidators Enters into Corporate Resolution for Securities Fraud and Agrees to Pay $33 Million Penalty

On March 12, 2019, Lumber Liquidators Holdings Inc. entered into a deferred prosecution agreement with DOJ and agreed to pay $33 million for filing materially false and misleading statements to investors based on its compliance with formaldehyde regulations.  According to the DPA, in 2014, U.S. flooring suppliers notified the company that its Chinese laminate products were emitting high levels of formaldehyde.  Despite visiting the Chinese laminate supplier and learning that the supplier could not demonstrate
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Mizrahi-Tefahot Bank LTD. Admits Its Employees Helped U.S. Taxpayers Conceal Income and Assets

On March 12, 2019, Mizrahi-Tefahot Bank Ltd. (“Mizrahi-Tefahot”), one of Israel’s largest banks, entered into a deferred prosecution agreement (“DPA”) with DOJ to settle a cross-border tax investigation.  Mizrahi-Tefahot admitted that, from 2002 until 2012, its employees helped U.S. customers evade U.S. taxes by concealing ownership and control of assets at the bank.  As part of the DPA, Mizrahi-Tefahot agreed to pay $195 million, which included restitution to the United States, disgorgement of fees paid
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Former KPMG Executive And Former PCAOB Employee Convicted of Wire Fraud

On March 11, 2019, a jury convicted David Middendorf, the former National Managing Partner for audit quality at KPMG LLP (“KPMG”), and Jeffrey Wada, a former employee of the Public Company Accounting Oversight Board (“PCAOB”), of wire fraud charges in connection with a scheme to use confidential PCAOB materials to improve KPMG’s performance on PCAOB inspections.  At trial, the government asserted that, beginning in fall 2015, Wada—an inspections leader at the PCAOB—began passing confidential information
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Mozambique’s Former Finance Minister Indicted Alongside Other Former Mozambican Officials, Business Executives, and Investment Bankers in Alleged $2 Billion Fraud and Money Laundering Scheme that Victimized U.S. Investors

On March 7, 2019, a four-count indictment was unsealed charging three former senior Mozambican government officials, investment bankers, and business executives in connection with a $2 billion fraud and money laundering scheme.  According to the indictment, between 2013 and 2016 the defendants organized loans made to entities controlled by the Mozambican government.  The defendants allegedly defrauded U.S. investors by misrepresenting the purpose of the loans and the ability of Mozambique and its state-owned entities to
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Chinese Telecommunications Conglomerate, Affiliates, and CFO Indicted in Separate Alleged Fraud Schemes

On January 28, 2019, indictments were unsealed in Seattle and Brooklyn against Chinese telecommunications conglomerate Huawei Technologies Co. Ltd., a number of Huawei affiliates (collectively, “Huawei”), and Huawei’s CFO in connection with two separate alleged fraud schemes.  The indictment in Seattle charged two Huawei affiliates with theft of trade secrets, attempted theft of trade secrets, wire fraud, and obstruction of justice.  According to the indictment, between 2012 and 2014, Huawei undertook concerted, company-wide efforts to
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Two Ukrainian Nationals Indicted in Computer Hacking and Securities Fraud Scheme Targeting U.S. Securities and Exchange Commission

On January 15, 2019, DOJ unsealed indictments charging two Ukrainian individuals with conspiring to hack into the SEC’s computer systems and profit by trading on critical information they stole.  The indictment alleges that, between February 2016 and March 2017, defendants hacked into the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system and stole thousands of files, including annual and quarterly earnings reports containing confidential, nonpublic, financial information, which the SEC requires publicly traded companies
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IAV GmbH to Pay $35 Million Criminal Fine in Guilty Plea for Its Role in Emissions Issues

On December 18, 2018, officials announced that Germany-based automotive system maker IAV GmbH  (“IAV”) has agreed to plead guilty to one felony count and pay a $35 million criminal penalty in connection with its role in Volkswagen AG’s (“VW’s”) use of so-called “defeat device” software to improve performance on U.S. emissions tests.  According to court filings, starting in 2006, IAV worked with VW to design, test, and implement this software in VW- and Audi-branded diesel
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Four Defendants Charged in Panama Papers Investigation for Their Roles in Panamanian-Based Global Law Firm’s Decades-Long Scheme to Defraud the United States

On December 4, 2018, four individuals were charged with wire fraud, tax fraud, money laundering, and other counts in connection with a criminal scheme involving Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian law firm.  According to the indictment, from 2000 through 2017, the defendants conspired with others to help U.S. taxpayers and clients of Mossack Fonseca to conceal assets from the IRS through fraudulent means.  These individuals allegedly used sham foundations and shell companies
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MoneyGram International Inc. Agrees to Extend Deferred Prosecution Agreement, Forfeits $125 Million in Settlement with Justice Department and Federal Trade Commission

On November 8, 2018, officials announced that money services business MoneyGram International, Inc. (“MoneyGram”) had breached a 2012 deferred prosecution agreement (“DPA”) with DOJ in relation to its anti-fraud and anti-money laundering (“AML”) programs.  MoneyGram was charged in November 2012 with failing to maintain an effective AML program and aiding and abetting wire fraud, after MoneyGram agents and others engaged in fraud schemes through the company’s payment systems.  At the time, DOJ agreed to defer
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Traders Plead Guilty to Commodities Fraud and Spoofing Conspiracy

On October 9, 2018, a former precious metals trader at an unnamed United States-based bank (“Bank”) pleaded guilty to charges of commodities fraud and spoofing conspiracy in connection with his participation in deceptive trading activity in the precious metals futures markets.  The defendant, John Edmonds, said that from approximately 2009 through 2015, he conspired with other precious metals traders to manipulate the markets for gold, silver, platinum, and palladium futures.  Edmonds said that he did
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North Korean Regime-Backed Programmer Charged in Conspiracy to Conduct Multiple Cyberattacks and Intrusions

On September 6, 2018, an indictment charged a North Korean citizen, Park Jin Hyok, with one count of conspiracy to commit computer fraud and abuse and one count of conspiracy to commit wire fraud in connection with his alleged involvement in a series of cyberattacks around the world.  According to allegations in the complaint, Park, a computer programmer at the Korea Expo Joint Venture, belongs to a hacking team known as the “Lazarus Group,” which
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New York Attorney Sentenced to 18 Months’ Imprisonment for Securities Fraud and Wire Fraud Conspiracies, and Ordered to Pay More Than $10 Million in Restitution

On August 17, 2018, Evan Greebel, a former partner at the law firm Katten Muchin Rosenman LLP, was sentenced to 18 months’ imprisonment and ordered to pay over $10 million in restitution for his role in a securities fraud involving Retrophin, a biopharmaceutical company.    In December 2017, a jury convicted Greebel of conspiring with Retrophin CEO Martin Shkreli and others to manipulate Retrophin’s stock price and steal cash and stock from the company.  The government
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CVS Pharmacy, Inc. to Pay $1.5 Million to Settle Civil Penalty Claims for Violations of The Controlled Substances Act

CVS Pharmacy, Inc. (“CVS”) agreed to pay $1.5 million to resolve a federal investigation into pharmacy stores located in Nassau and Suffolk counties on Long Island, New York.  The pharmacies were under investigation for potentially violating the Controlled Substances Act, a federal law that requires pharmacies to timely report the loss or theft of controlled substances to the DEA.  This civil settlement is the latest in a series of cases enforced by the United States
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As Part of National Healthcare Fraud Sweep, Los Angeles-Based Prosecutors Filed 16 Cases Alleging $660 Million in Fraudulent Bills

On June 28, 2018, federal authorities in Los Angeles, California announced criminal cases naming a total of 33 defendants charged with a variety of schemes to defraud public and private insurance programs out of more than $660 million.  As part of a nationwide effort to target healthcare fraud, prosecutors charged numerous defendants, including doctors, pharmacists, marketers, and an attorney.  First, nine defendants were charged in Operation “Spinal Cap,” which targeted a healthcare fraud scheme involving
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Theranos Founder and Former Chief Operating Officer Charged In Alleged Wire Fraud Schemes

On June 15, 2018, a federal grand jury indicted Elizabeth A. Holmes and Ramesh “Sunny” Balwani with two counts of conspiracy to commit wire fraud and nine counts of wire fraud.  According to the indictment, Holmes, the founder of Theranos, and Balwani, the former chief operating officer, engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients.  Theranos, based in Palo Alto, California, is a private healthcare
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Former Brooklyn Assemblywoman Pleads Guilty to Multiple Fraud Schemes and Witness Tampering

On June 12, 2018, former New York State Assemblywoman Pamela Harris pleaded guilty to two counts of wire fraud, one count of making false statements to the Federal Emergency Management Administration (FEMA), and one count of witness tampering.  DOJ alleged that from 2012 to 2014 Harris defrauded FEMA of nearly $25,000 by submitting falsified lease agreements that allegedly showed she was forced out of her residence by Hurricane Sandy.  In reality, Harris continued to live
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Investment Bank Vice President Arrested, Charged with Conspiracy and Securities Fraud in Insider Trading Scheme

On May 31, a complaint filed in Manhattan federal court charged Woojae Jung, the vice president at an investment bank, with conspiracy and securities fraud in connection with an insider trading scheme.  The complaint alleges that Jung obtained material non-public information through his position at the investment bank and, working with a co-conspirator located in South Korea, used this information to conduct securities trades through a brokerage account held in the co-conspirator’s name.  The complaint
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Former CEO, CFO and Director of Healthcare Services Company Charged in Elaborate $300 Million Investment Fraud Scheme

On May 16, 2018, three former executives of a publicly traded healthcare services company were charged with conspiracy to commit securities fraud and securities fraud for their respective roles in an alleged scheme to defraud investors in connection with a purported $300 million going-private transaction.  According to authorities, New Jersey residents Parmjit “Paul” Parmar, Sotirios “Sam” Zaharis, and Ravi Chivukula used a variety of fraudulent methods to inflate the value of unnamed “Company A” to
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Former CEO of Volkswagen AG Charged with Conspiracy and Wire Fraud in Diesel Emissions Investigation

On May 3, 2018, authorities announced the unsealing of wire fraud and conspiracy charges against former Volkswagen AG (“VW”) CEO and board chairman Martin Winterkorn in connection with VW’s use of so-called “defeat device” software to cheat U.S. vehicle emissions testing.  Winterkorn is accused of conspiring with other VW executives and employees to defraud the United States, defraud VW’s U.S. customers, and to violate the Clean Air Act through false representations regarding the compliance of
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Barclays Agrees to Pay $2 Billion in Civil Penalties to Resolve Claims for Fraud in the Sale of Residential Mortgage-Backed Securities

On March 29, 2018, officials announced that Barclays Capital, Inc. and several of its affiliates agreed to settle a civil action brought in December 2016 in relation to the underwriting and issuance of residential mortgage-backed securities (“RMBS”) between 2005 and 2007.  Barclays agreed to pay $2 billion in civil penalties in exchange for dismissal of the government’s amended complaint.  The complaint alleged that Barclays misled investors about the quality of underlying mortgage loans in 36
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