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Financial Institution Fraud

This archive displays posts tagged as relevant to fraud by or involving financial institutions. You may also be interested in the following pages:

Page 1 of 25

COVID Frauds of the Week: PPP Loans for Fraudsters Who Like Nice Things

Posted  11/20/20
money in a spiral form with a bankroll of cash on top
It was another busy week for the DOJ, with at least 13 individuals charged for their attempts to defraud the Paycheck Protection Program out of cash meant to help real businesses with real employees, rather than to fund fraudsters’ extravagant lifestyles and idiotic, selfish behavior. Aditya Raj Sharma, 47, of Maple Grove, Minnesota—fake entrepreneur and apparent fan of swimming—was arrested and charged with...

Sunshine State Local Elections Shine Light on How Dark Shell Company Data Can Be

Posted  11/18/20
By Sarah “Poppy” Alexander
top-secret-seal
Amidst the ongoing saga of the US national elections, Florida local elections may not have made much of a ripple.  But one small scandal in the Sunshine State reveals a lot about the ongoing problem the US has with shell corporations and their hidden ownership structures. The story is convoluted, as most shell company stories are.  A political donor, Proclivity, who had never donated money in Florida before,...

October 14, 2020

Michael Allen Worley of Baton Rouge, Louisiana, was sentenced to 12 years in prison following his plea of guilty on charges including bank fraud.  Worley admitted that between 2014 and 2018 he fraudulently obtained more than $40 million in loans and investments from banks and private equity firms for himself and his businesses.  Worley’s fraud included false statements that inflated his assets, understated and omitted his liabilities, misrepresented his income, and misrepresented the intended use of loan proceeds. Worley was also ordered to pay $15.75 million in restitution to his victims.  USAO MD LA

October 13, 2020

Nissan Motor Acceptance Corporation, an auto financing subsidiary of the car manufacturer, has agreed to pay a civil penalty of $4 million and provide up to $1 million in restitution to customers to settle charges that the company engaged in illegal collections and repossession practices.  The company was alleged to have repossessed cars despite the customer having made payments or taken other actions to avoid repossession; imposed improper storage fees; refused to return personal property to customers; overcharged customers making payments by telephone; and mislead customers regarding their right to bankruptcy relief.  CFPB

September 30, 2020

Morgan Stanley & Co. LLC will pay a total of $10 million in civil monetary penalties to the SEC and CFTC.  In an agreement with the SEC, the company will pay a $5 million civil monetary penalty arising from charges that the firm violated the short sale procedures of Regulation SHO. Specifically, Morgan Stanley improperly used “long” and “short” aggregation units when it hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps.  The aggregation units were not independent and did not have separate trading strategies.  As a result, Morgan Stanley should have netted the long and short positions of both units together or across the entire broker-dealer and marked the orders as long or short based on that netting. The CFTC, which also imposed a $5 million penalty, charged that Morgan Stanley failed to comply with swap data reporting obligations, inaccurately reporting swap data for approximately three million swaps. SEC; CFTC

September 30, 2020

Marcus Schulz will pay over $1 million – a $670,000 penalty and $427,000 in disgorgement – to resolve CFTC allegations that, while employed as an energy trader, he passed on confidential information to an outside broker, including information about his employers block trade orders.  The broker would then arrange to take the other side of the order at prices that allowed the broker and others involved in the scheme to make a profit on offsetting trades, which profits they shared with Schulz.  CFTC

September 29, 2020

JPMorgan Chase & Co. has agreed to pay $920 million to the CFTC and $35 million to the SEC, as well as enter into a three-year deferred prosecution agreement with the DOJ, in order to resolve charges of fraudulently engaging in unlawful trading in both the precious metals and U.S. Treasury futures contracts.  Between at least 2008 through 2016, numerous traders in JPMorgan’s New York, London, and Singapore offices—including the heads of both the precious metals and Treasuries sections—placed hundreds of thousands of spoof orders to artificially drive up supply and demand, ultimately succeeding in manipulating market prices.  Additionally, JPMorgan failed to identify, investigate, and stop the misconduct; JPMorgan also initially responded to government requests in a manner that was misleading.  The penalties imposed by the CFTC—which includes the highest restitution ($311.7 million), disgorgement ($172 million), and civil monetary penalty ($436.4 million) —amount to the highest monetary relief ever imposed by the CFTC in a spoofing case.  CFTC; SEC; USAO CT

The FinCEN Files Prove We Need an Anti-Money-Laundering Whistleblower Program

Posted  09/25/20
dryer with money filled in it
The FinCEN Files. It sounds ominous, and recalls the Panama Papers, the Paradise Papers, and others. Like those earlier stories, the FinCEN Files expose powerful players, including a large number of highly regulated banking giants. The FinCEN Files, published by the International Consortium of Investigation Journalists and BuzzFeed News, document over 200,000 suspicious financial transactions via documents leaked...

August 20, 2020

TD Bank, N.A. has been ordered to pay an estimated $97 million in restitution to about 1.42 million customers, as well as a civil monetary penalty of $25 million, for engaging in deceptive practices that violated the Consumer Financial Protection Act of 2010 and the Fair Credit Reporting Act.  In connection with its optional Debit Card Advance (DCA) service, TD Bank allegedly interfered with its customers’ ability to understand terms and conditions by misrepresenting DCA as “free” or a “feature” of their new checking accounts, when in reality it could result in fees of $35 per overdraft transaction.  Furthermore, in connection with consumer account information, TD Bank allegedly failed to implement policies that would ensure the accuracy of that information before it was provided to consumer reporting agencies.  CFPB

August 19, 2020

The Bank of Nova Scotia (Scotiabank) has been ordered to pay $127.4 million to the CFTC and $60.4 million in criminal fines, forfeiture, and restitution to the DOJ for attempting to manipulate prices and spoofing in precious metals futures contracts, making false and misleading statements to investigators, and failing to comply with swap dealer conduct and supervision requirements.  The alleged misconduct occurred over the eight years ending in 2016 and involved four precious metals traders in New York, London, and Hong Kong.  From the penalty paid to the CFTC, a record-breaking $42 million will go toward resolving the price manipulation and spoofing allegations, and a record-breaking $17 million will go toward resolving the false and misleading statements allegations.  In addition to the fines, Scotiabank has entered into a deferred prosecution agreement and agreed to retain an independent monitor.  CFTC; DOJ; USAO NJ 
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