Financial and Investment Fraud

April 25, 2019

Morgan Stanley will pay $150 million to the State of California to resolve allegations under the California False Claims Act, Corporate Security Law and False Advertising Law, that the bank concealed the risk of residential mortgage-backed securities sold to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) between 2003 to 2007. CA

April 25, 2019

Indianapolis-based trucking company Celadon Group, Inc., has agreed to pay $42.2 million in restitution to shareholders, $7 million of which will be credited to a disgorgement pursuant to agreement with the SEC, to settle allegations of accounting fraud.  Celadon was alleged to have avoided the recognition of $20 million in impairment charges and losses by recording a series of equipment trades as sales at inflated values.  Celadon management is further alleged to have falsely stated to its auditors that the equipment was sold at fair market value. Celadon has entered into a deferred prosecution agreement calling for specific compliance measures and cooperation in ongoing investigation of the accounting fraud.  SEC; DOJ; USAO SD IN

April 15, 2019

Munich-based UniCredit Bank AG (UCB AG) and affiliated entities have agreed to pay more than $1.3 billion to resolve criminal charges and related allegations of unlawful conduct by the Department of Justice, Department of Treasury Office of Foreign Assets Control (OFAC), the Federal Reserve, the New York Department of Financial Services, and the New York County District Attorney's Office. As part of the settlement, UniCredit admitted that between 2002 and 2011 it processed financial transactions worth hundreds of millions of dollars through U.S. financial institutions on behalf of the Islamic Republic of Iran Shipping Lines and other entities subject to sanctions under the International Emergency Economic Powers Act (IEEPA).  DOJ; Treasury; Fed; DANY

April 12, 2019

General Electric has agreed to pay $1.5 billion to resolve alleged FIRREA violations committed by its subsidiary, WMC Mortgage, in subprime residential mortgage-backed securities originated between 2005 and 2007. WMC had allegedly encouraged lax quality and fraud controls by compensating loan analysts based on the number of mortgages they approved, resulting in profits of $65 billion in the two-year period. An estimated 78% percent of WMC’s loans contained at least one piece of false information. DOJ

April 9, 2019

London-based Standard Chartered Bank has agreed to pay $1.1 billion to resolve criminal charges and related allegations of unlawful conduct by the Department of Treasury Office of Foreign Assets Control (OFAC), the Federal Reserve, the New York Department of Financial Services, the New York County District Attorney's Office, and the United Kingdom's Financial Conduct Authority. As part of the settlement, Standard Chartered admitted that it processed thousands of financial transactions worth hundreds of millions of dollars through U.S. financial institutions for the benefit of Iranian and other entities and individuals subject to sanctions. In addition, Standard Chartered admitted that it had deficiencies in its compliance programs and had falsified the records of New York financial institutions.  In addition to the financial penalties, Standard Chartered agreed to the extension of an existing deferred prosecution agreement through 2021, and committed to undertaking specified compliance initiatives.  DOJ; Treasury; Fed; DANY; UK

April 9, 2019

Antonio Carlos de Godoy Buzaneli of Florida was sentenced to 20 years in prison for his role in a scheme that raised approximately $150 million from investors for his company Providence Holdings International, Inc., which Buzaneli represented would invest in the factoring of accounts receivable in Brazil. In fact, much of the investors’ funds were used to make Ponzi-style payments to other investors, and to make commission payments to Providence’s nationwide network of brokers. USAO Minn

April 2, 2019

After being charged in 2017, Thomas Lanzana, Blackbox Pulse, LLC, Nikolay Masanko, and White Cloud Mountain, LLC have been ordered to pay more than $2.7 million in restitution and civil penalties in connection with their marketing of a foreign exchange trading scheme through which they fraudulently solicited and accepted funds from customers for the purported purpose of trading forex in a commodity pool.  In fact, defendants misappropriated customers' funds, fabricated account statements, and misrepresented trades and balances.  CFTC

April 2, 2019

Former CEO of Jumio, Daniel Mattes, will pay more than $17 million to settle SEC charges of defrauding investors in the Silicon Valley based private mobile payments company. The SEC complaint alleges that Mattes exaggerated Jumio’s 2013 and 2014 revenues while selling his personal shares to investors in the private, secondary market. When Jumio filed for bankruptcy in 2016, the shares became worthless and investors lost everything. Mattes is barred from being an officer or director of a publicly traded company in the U.S. Further, he must pay more than $16 million in disgorgement and prejudgment interest plus a $640,000 penalty. The SEC also settled separate proceedings against Jumio’s former CFO, Chad Starkey, for failing to exercise reasonable care concerning the financial statements and signing stock transfer agreements that falsely implied that the board of directors had approved Mattes’ sales. SEC