Posts Tagged With Fraud

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Technology Company’s Former CEO and Founder Sentenced to 49 Months in Prison for Defrauding Investors

On September 29, 2017, the Honorable Denise L. Cote of the Southern District of New York sentenced former technology company CEO and founder Maryse Liburdi to 49 months in prison for a scheme to defraud investors in her company.  Liburdi was also sentenced to three years of supervised release, and ordered to pay $7.07 million in forfeiture, and an additional $7.07 million in restitution to victims of the scheme.  From at least 2010 to 2015, ... Continue Reading

Former Broker-Dealer Managing Director Sentenced for Public Pension Fund Bribery Scheme

On September 29, 2017, the Honorable J. Paul Oetken of the Southern District of New York sentenced a New York broker-dealer’s former managing director of institutional fixed income sales Deborah Kelley to three years’ probation, including six months of home confinement. Kelley was also ordered to pay a $50,000 fine, $187,900 in forfeiture, and complete 1000 hours of community service; restitution will be determined within 90 days.  Kelley pled guilty to conspiracy to commit securities ... Continue Reading

Nine Indicted for Insider Trading Allegations

On September 28, 2017, nine defendants were indicted on fraud charges based on allegations they traded on nonpublic information regarding an impending corporate acquisition, resulting in illegal profits of $866,629.  According to the indictment, in 2015 Shane Fleming, a vice president of corporate sales at Life Time Fitness, Inc. of Minnesota, obtained inside information about the sale of Life Time Fitness to two private equity firms.  This information was shared with his friend and business ... Continue Reading

Residential Home Funding Corp. Settles Civil Mortgage Fraud Suit

On September 28, 2017, acting Manhattan U.S. Attorney settled a mortgage fraud lawsuit against Residential Home Funding Corp. (“Residential Home”) based on their participation in the Federal Housing Administration’s Direct Endorsement Lender Program (“DEL Program”).  Residential Home agreed to pay $1.67 million, based on an ability to pay analysis, and admitted and accepted responsibility for failure to maintain a compliant quality control program and for approving FHA insurance loans that did not meet HUD-established standards.  ... Continue Reading

Federal Grand Jury Indicts Former Head of SoCal Software Company and IT Executive of Australian Bank for Bribery Scheme Relating to Purchase of Company

On September 27, 2017, a Los Angeles grand jury returned a 15-count indictment for Eric Pulier, the founder, CEO and largest shareholder of software company ServiceMesh, Inc., and Jon Waldron, a former IT manager at the Commonwealth Bank of Australia (“CBA”), relating to charges that ServiceMesh paid bribes to CBA executives to approve contracts that inflated the company’s revenues, which in turn caused Computer Sciences Corporation (“CSC”) to pay a $98 million incentive bonus as ... Continue Reading

Former Executive of a Tenet Hospital and Health Clinic Owner and Operator Charged for $400 Million Fraud and Bribery Scheme

On September 26, 2017, a former Tenet Healthcare Corporation Hospital CEO, Bill Moore, along with an owner and operator of an Atlanta-based chain of pre-natal clinics, Edmundo Cota, were charged for orchestrating a fraud and bribery scheme that caused Tenet to bill Georgia and South Carolina Medicaid Programs for over $400 million.  Moore was charged with one count of conspiracy to defraud the United States and pay and receive health care bribes, two counts of ... Continue Reading

Israeli Citizen Gets 3 Years’ Imprisonment for Foreign Exchange Fraud

On September 25, 2017, the Honorable Deborah A. Batts of the Southern District of New York sentenced Fadi Ewiess to three years in prison after pleading guilty to wire fraud in connection with his role in a scheme to defraud investors through Golden Bridge FX, a purported foreign exchange (“forex”) trading platform through which customers could place bets on the direction that currencies would move as against other currencies.  Through Golden Bridge, Ewiess and others ... Continue Reading

Former CEO Charged with Insider Trading

On September 20, 2017, Peter C. Chang, the former President, CEO and Chair of the Board of Directors of Alliance Fiber Optic Products, Inc. (“AFOP”), was arrested and charged with securities fraud and fraud in connection with a tender offer.  AFOP, which is publicly traded on the NASDAQ, is a manufacturer of fiber optic components based in Sunnyvale, California.  According to the government, Chang acquired confidential information about AFOP based on his position in the ... Continue Reading

Investment Fund Manager Sentenced to 12 Years’ Imprisonment for Ponzi Scheme

On September 15, 2017, Brian R. Callahan was sentenced to 12 years’ imprisonment and three years’ supervised release after pleading guilty to securities fraud and wire fraud.  Callahan was also ordered to pay approximately $67.6 million in restitution.  Between 2006 and 2012, Callahan, who managed four different investment funds, raised more than $118 million from at least 40 investors.  Instead of investing the money in mutual funds, hedge funds and other securities, as he told ... Continue Reading

Judge Ordered Allied Home Mortgage Entities to Pay $296 Million for Civil Mortgage Fraud

On September 14, 2017, United States District Court Judge George C. Hanks Jr. of the Southern District of Texas ordered the Allied Home Mortgage Entities (“Allied”) to pay $296 million for FCA violations for which it had previously been held liable.  In November 30, 2016, a unanimous jury found Allied and Allied’s CEO Jim C. Hodge, liable for violating the False Claims Act (“FCA”) and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ... Continue Reading

Civil Fraud Complaint Filed Against Former Head of Subprime Mortgage Trading at Deutsche Bank

On September 11, 2017, the United States filed a civil complaint pursuant in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) in the Eastern District of New York against Paul Mangione, the former head of subprime trading at Deutsche Bank.  The government alleges that he engaged in a scheme to sell two residential mortgage-backed securities (“RMBS”) by misrepresenting the quality of the underlying loans to investors, resulting in losses of hundreds of ... Continue Reading

Russian Cyber-Criminal Pled Guilty for Participation in Cybercrime Ring That Caused Losses of $50 Million in Online Identity Theft

On September 8, 2017, Roman Valeryevich Seleznev pled guilty in separate criminal actions in the District of Nevada and the Northern District of Georgia to one count of participation in a racketeering enterprise and one count of conspiracy to commit bank fraud for his role in an identity theft and credit card fraud ring known as “Carder.su.”  Seleznev admitted that, as part of the crime ring, he sold stolen credit card account data and other ... Continue Reading

Individuals Charged with Securities and Wire Fraud

On September 6, 2017, Craig Carton and Michael Wright were arrested and charged with securities fraud, wire fraud and conspiracy.  According to DOJ, Carton and Wright, along with a third individual, induced investors, including a hedge fund, to provide them with funds that would be used to purchase and re-sell concert tickets on the secondary market.  The three individuals allegedly misrepresented to investors that they had access to blocks of concert tickets through a relationship ... Continue Reading

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

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