Financial and Investment Fraud

July 12, 2018

Navnoor Kang, the former head of the New York State Common Retirement Fund, the third-largest pension in the country, was sentenced to 21 months in prison for conspiracy to commit securities fraud and wire fraud.  Kang accepted bribes in return for steering over $2 billion worth of investments to particular firms, generating massive commissions for those who bribed him.  The USAO of SDNY coordinated with the SEC, which brought its own civil enforcement action against Kang.  USAO SDNY

July 12, 2018

Nevada announced that James Limperis, 54, of Las Vegas, pleaded guilty to one count of Theft, a category “B” felony. The theft occurred between April and October 2012. According to the indictment, Limperis is accused of withdrawing more than $1,700,000 from an escrow account holding his victim’s money, and placing it into his own bank account. Ultimately, the defendant spent the funds on personal expenses without the victim’s consent. NV

July 11, 2018

A Florida man was charged with assuming the identity of a New Jersey doctor to submit more than $1 million in fraudulent medical claims for medical services purportedly rendered at a Morris County medical center that, in reality, did not exist. Yoandi Marrero, 33, of Hialeah, Florida, and PA Clinical Center, Inc., the registered company he allegedly used to front the phantom medical practice, were charged with insurance fraud and attempted theft by deception (2nd degree); theft by deception (3rd degree); and identity theft (4th degree) in an indictment handed up by a state Grand Jury in Trenton today. Marrero was also charged with fourth degree identity theft in the alleged scheme. NJ

July 3, 2018

Illinois announced a $20 million settlement with Royal Bank of Scotland as a result of the bank’s misconduct in its marketing and sale of risky residential mortgage-backed securities (RMBS) leading up to the 2008 economic collapse. The settlement with Royal Bank of Scotland resolves an investigation by Madigan’s office over the bank’s failure to disclose the true risk of RMBS investments. IL

June 29, 2018

Albert Golant was charged multiple counts of wire and bank fraud in connection with a scheme to obtain funds from third-party vehicle brokers, investors, and other lenders under the premise of purchasing luxury vehicles to send abroad. Golant would allegedly then misappropriate the money for his own personal benefit. Under the charges, Golant allegedly diverted tens of millions of dollars to himself that he used primarily on gambling. USAO EDWI

June 11, 2018

Ne York announced that former Judge Richard Sherwood has pleaded guilty to running a scheme that looted more than $11 million from trusts he oversaw. For nearly a decade, Sherwood and his co-conspirator, Thomas Lagan, allegedly pilfered millions in funds from charitable trusts they managed. Sherwood faces up to ten years in prison. As part of the plea, Sherwood forfeited $3,742,211.65 in previously seized funds, as well as a residence that previously belonged to two of his victims. Sherwood also pleaded guilty to separate federal charges for money laundering and tax fraud. NY

June 7, 2018

New Jersey announced that Harshad Patel and his businesses – AP Surgery Center, LLC and AP Diagnostics Imaging, Inc. – have paid a $718,000 settlement for allegedly defrauded the State’s Charity Care Fund by under-reporting annual gross receipts from his businesses. The Charity Care Fund is used to provide subsidies to hospitals that provide “charity” medical care – care for persons not covered by health insurance and who cannot afford to pay. According to the state, Patel and his businesses allegedly under-reported their annual gross receipts on the forms they submitted to DOH for six years, evading more than $1 million in Charity Care Fund assessments in the process. The two relators who flagged the unlawful conduct to the state, Allstate Insurance Company and the Medical Investigation Group, received a $215,400 award. NJ

May 30, 2018

The SEC charged a former registered representative with defrauding long-standing brokerage customers in an $8 million investment scam. According to the SEC’s complaint, Steven Pagartanis, who was affiliated with a registered broker-dealer, told some investors – including retirees who had been Pagartanis’s customers for many years – that he would invest their funds in either a publicly-traded or private land development company. He promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments. At Pagartanis’s direction, his investors wrote checks payable to a similarly-named entity that was secretly controlled by Pagartanis. In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed “interest” payments to his customers. To conceal the scam, which unraveled earlier this year when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies. SEC

May 16, 2018

The SEC announced settled charges against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) for failing to report suspicious sales of billions of penny stock shares. Broker-dealers are required to file Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose. According to the SEC, from October 2013 to June 2014, Chardan, an introducing broker, liquidated more than 12.5 billion penny stock shares for seven of its customers and ICBCFS cleared the transactions. Chardan failed to file any SARs even though the transactions raised red flags, including similar trading patterns and sales in issuers who lacked revenues and products. The SEC found that ICBCFS similarly failed to file any SARs for the transactions despite ultimately prohibiting trading in penny stocks by some of the seven customers. The SEC’s orders found that Chardan and ICBCFS violated the Exchange Act and an SEC financial recordkeeping and reporting rule and that Chardan’s anti-money laundering (AML) officer, Jerard Basmagy, aided and abetted and caused the firm’s violations. The SEC also found that ICBCFS failed to produce documents promptly to SEC staff.  Without admitting or denying the SEC’s findings, the parties agreed to settlements requiring Chardan to pay a $1 million penalty, ICBCFS to pay $860,000, and Basmagy to pay $15,000.  Both firms consented to censures and, along with Basmagy, to cease and desist from similar violations in the future.  Basmagy also agreed to industry and penny stock bars for a minimum of three years. SEC