Archive

March 26, 2015

Ebrahim Shabudin, former Chief Operating Officer and Chief Credit Officer of United Commercial Bank, was convicted of securities fraud and other corporate fraud offenses stemming from the failure of the bank.  DOJ

March 25, 2015

Thomas E. Jackson and Preston J. Harrison, operators of Ohio-based Imperial Integrated Health Research and Development LLC, were convicted of defrauding their company’s investors and diverting investors’ funds for their own personal use in connection with their sale of the sports energy drink OXYwater.  DOJ

March 25, 2015

Schlumberger Oilfield Holdings Ltd., a wholly-owned subsidiary of Schlumberger Ltd., agreed to enter a guilty plea and pay a $232,708,356 penalty for violating the International Emergency Economic Powers Act by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan.  Whistleblower Insider

March 19, 2015

Bank of New York Mellon agreed to pay $714 million to settle charges the bank engaged in fraud and other misconduct when providing foreign exchange (“FX”) services to its customers.  As part of the settlements with the US and New York, BNYM admitted that contrary to representations to clients that it provided “best rates” and “best execution” for FX transactions, the Bank actually gave clients the worst reported interbank rates of the trading day.  The charges originated in a lawsuit brought by a whistleblower under the New York False Claims Act.  Whistleblower Insider

March 12, 2015

Miami-based lender Hencorp Becstone Capital L.C. agreed to pay $3.8 million to resolve allegations under the False Claims Act that it made false statements and claims to the Export-Import Bank of the United States in order to obtain loan guarantees.  According to the government, Ricardo Maza, a Peruvian-based former Hencorp business agent, created false documentation to obtain Ex-Im Bank guarantees on fictitious transactions on which no products were sold or exported, and that Maza then diverted the proceeds of the loans to himself and to his friends and business associates in Peru.  The allegations arose in a whistleblower lawsuit filed by Genaro Benites Caballero, the former owner of one of the purported purchasers, and Patricia Doris Lee Dominguez, a former attorney for the purported purchaser, under the qui tam provisions of the False Claims Act.  They will receive a whistleblower award of $608,000.  DOJ

February 3, 2015

Ratings Agency giant Standard & Poor’s Financial Services (S&P), along with its parent corporation McGraw Hill Financial Inc., agreed to pay $1.375B to settle charges it schemed to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). According to the government, S&P falsely represented that its ratings of RMBS and CDOs were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities. Instead, S&P issued inflated ratings that misrepresented the securities’ true credit risks causing RMBS and CDO investors to incur substantial losses. Whistleblower Insider

January 30, 2015

Maxim Chukharev, former information technology manager for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, was sentenced to 36 months in prison for conspiring to operate an unlicensed money transmitting business. According to the government, Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system” but instead was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. According to court records, before being shut down by the government in May 2013, Liberty Reserve conducted approximately 55 million transactions through its system totaling more than $6B in funds which encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking and other crimes.DOJ

January 22, 2016

Virginia has recovered more than $63 million collectively from eleven banks to settle allegations that the banks misled the Commonwealth of Virginia and the Virginia Retirement System through the sale of allegedly misrepresented residential mortgage-backed securities. This is the largest non-healthcare-related recovery ever obtained in a suit alleging violations of the Virginia Fraud Against Taxpayers Act. The eleven banks included in the settlement are Countrywide Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc., RBS Securities Inc., Barclays Capital Inc., Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., HSBC Securities (USA) Inc., Credit Suisse Securities (USA) LLC, and UBS Securities LLC. VA

December 18, 2014

Robert L. Holloway, former CEO of US Ventures LC, was sentenced to 225 months in prison and to pay $15.2M in restitution for orchestrating a $33M Ponzi scheme resulting in $15.2M in losses to investors.DOJ

December 18, 2014

Houston investment manager Robert Andres was sentenced to 56 months in prison and to pay more than $3.2M in restitution for orchestrating a $72M investment fraud scheme resulting in approximately $40M in losses to investors. According to his guilty plea, between October 2005 and 2011, Andres recruited investors for Winsome Investment Trust, where he served as the sole manager, attorney and trustee, by misrepresenting Winsome’s assets, asset allocation and the manner in which investor funds were invested. Andres also misappropriated approximately $2.2M in investor money for personal use, including to pay his hotel bills and living expenses. DOJ