Financial and Investment Fraud

December 10, 2018

Steven Pagartanis pled guilty to conspiring to commit mail and wire fraud for orchestrating a Ponzi scheme that ran for 18 years. Pagartanis solicited elderly victims by guaranteeing a fixed return of 4.5 to 8 percent annually in real estate-related investments. Pagartanis directed his victims to make checks payable to an entity he secretly controlled and then utilized a network of bank accounts to launder the stolen funds, which he used to pay for exorbitant personal expenses and to cover purported “interest” payments. Pagartanis’ scheme resulted in actual losses of over $9 million and many of his victims lost substantial portions of their life savings. A civil case against Pagartanis has also been filed by the SEC. DOJ

November 30, 2018

As part of an ongoing investigation into price fixing in the international freight forwarding industry, Roberto Dip and Jason Handal, executives in a Louisiana-based freight forwarding company, pleaded guilty to charges arising from a conspiracy between competitors to fix prices for freight forwarding services.   Dip and Handal also agreed to cooperate with the ongoing investigation.  DOJ

November 28, 2018

Edwin Fujinaga, the former president and CEO of MRI International, Inc., which purported to be a medical collections and investment company, was convicted after a five-week trial for his role in a $1.5 billion ponzi scheme. Fujinaga solicited investments from over 10,000 Japanese residents, promising investors that their funds would be used to purchase medical debt. In fact, less than two percent of investor funds were used to purchase medical claims.  Fujinaga diverted the remainder for personal use and to pay off earlier investors.  In 2013, the Japanese government revoked MRI's license to market securities.  USAO NV Subsequent sentencing.

November 27, 2018

Following a guilty plea for receiving over $1 billion in bribes, the former Venezuelan national treasurer, Alejandro Andrade Cedeno ("Andrade"), was sentenced to ten years in prison and agreed to a forfeiture money judgment of $1 billion.  Andrade received the bribes in cash as well as private jets, yachts, cars, homes, champion horses, and high-end watches, in exchange for selecting the bribers to conduct currency exchange transactions for the Venezuelan government. DOJ

November 19, 2018

In a deferred prosecution agreement, Société Générale S.A. will pay penalties of $1.34 billion to federal and state prosecutors and regulators in relation to criminal charges that SG violated sanctions laws by processing billions of dollars in illegal transactions involving Cuban credit facilities through the U.S. financial system on behalf of entities subject to U.S. economic sanctions. According to a stipulated statement of facts, from approximately 2004 through 2010, SG operated 21 credit facilities that provided significant money flow to Cuban banks, entities controlled by Cuba, and Cuban and foreign corporations for business conducted in Cuba, primarily for the finance of oil transactions between a Dutch commodities trading firm and a Cuban corporation with a state monopoly on the production and refining of crude oil in Cuba.  The total penalties include: $717.2 million in civil forfeitures; $81.265 million to the Federal Reserve; $53.9 million to the Office of Foreign Assets Control; $325 million to the New York State Department of Financial Services; and, $162.8 million to the New York County District Attorney.  USAO SDNY

November 16, 2018

The CFTC and State of Utah have charged Rust Rare Coin, Inc. (RRC) and owner Gaylen Dean Rust for their roles in a precious metals Ponzi scheme. According to the DOJ press release, beginning in 2008 until only just recently, Rust fraudulently obtained over $170 million for RRC by lying to at least 200 investors in at least 17 states to get them to invest money in a silver pool. Investors were told the company's silver holdings amounted to between $77 to $80 million, and they stood to gain between 20-40% profit each year as a result of RRC’s buying and selling strategy. In reality, however, the defendants did not have nearly as much silver and were using investor contributions to pay other investors, as well as personal expenses. CFTC, UT AG