Financial Institution Fraud

June 5, 2017

The Securities and Exchange Commission today charged  a Salt Lake City-based brokerage firm with securities law violations related to its alleged practice of clearing transactions for microcap stocks that were used in manipulative schemes to harm investors. To help detect potential securities law and money laundering violations, broker-dealers are required to file Suspicious Activity Reports (SARs) that describe suspicious transactions that take place through their firms.  The SEC’s complaint alleges that Alpine Securities Corporation routinely and systematically failed to file SARs for stock transactions that it flagged as suspicious.  When it did file SARs, Alpine Securities allegedly frequently omitted the very information that formed the bases for Alpine knowing, suspecting, or having reason to suspect that a transaction was suspicious.  As noted in the complaint, guidance for preparing SARs from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clearly states that “[e]xplaining why the transaction is suspicious is critical.” SEC

July 27, 2017

The CFPB filed two complaints and proposed final judgments in federal court against four California-based credit repair companies and three individuals, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Park View Law, known formerly as Prime Law Experts, Inc., Blake Johnson, Eric Schlegel, and Arthur Barens, for misleading consumers and charging illegal fees. The complaints allege that the companies not only charged illegal advance fees for credit repair services, but also misrepresented their ability to repair consumers’ credit scores. CFPB

May 22, 2017

Los Angeles-based Citigroup subsidiary Banamex USA agreed to forfeit $97.44 million to resolve an investigation into BUSA’s Bank Secrecy Act (BSA) violations.  In its agreement, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money laundering compliance program to guard against money laundering and willfully failing to file Suspicious Activity Reports. DOJ

April 26, 2017

April 26 – The CFPB took action against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to servicemembers, for violating a Bureau consent order. In 2015, the CFPB ordered SNAAC to pay both redress and a civil penalty for illegal debt collection tactics, including making threats to contact servicemembers’ commanding officers about debts and exaggerating the consequences of not paying. SNAAC failed to provide more than $1 million in refunds and credits, affecting more than 1,000 consumers. The CFPB’s order requires SNAAC to make good on the redress it owes to those consumers and pay an additional $1.25 million penalty. CFPB

April 26, 2017

An Indian national pleaded guilty to one count of conspiracy to commit money laundering for his role in liquidating and laundering victim payments generated through various telephone fraud and money laundering schemes via India-based call centers. According to admissions made in connection with the plea, Chaudhari and his co-conspirators perpetrated a complex scheme in which individuals from call centers located in Ahmedabad, India, impersonated officials from the IRS or U.S. Citizenship and Immigration Services in a ruse designed to defraud victims located throughout the United States. Using information obtained from data brokers and other sources, call center operators targeted U.S. victims who were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Victims who agreed to pay the scammers were instructed how to provide payment, including by purchasing stored value cards or wiring money, and upon payment, the call centers would immediately turn to a network of “runners” based in the U.S. to liquidate and launder the fraudulently-obtained funds. DOJ

April 24, 2017

New York announced that nine individuals have been variously charged with money laundering, mortgage fraud, grand larceny, conspiracy, and other charges related to their participation in a scheme to defraud mortgage lenders that spanned two New York City boroughs and resulted in over $1 million in ill-gotten mortgage loans. According to the indictment, from 2012 to 2015, defendants Defreitas, McKayle, Mackey, and Persaud allegedly engaged in a scheme to defraud mortgage lenders and steal mortgage proceeds. In the course of the scheme, the defendants allegedly used sham corporations to acquire title to four properties in Brooklyn and Queens, and then conspired with defendants Downes, Harmon, Whyte, Gregoire, and Blackwood-Sambury to obtain mortgages to “buy” the properties in manufactured resales. The defendants are alleged to have concealed the fact that the buyers couldn’t afford the homes by submitting fraudulent mortgage applications showing grossly inflated incomes from fake jobs, bank accounts with fabricated balances and other false information. NY

April 14, 2017

HSBC Bank agreed to pay roughly $2.1 million to resolve charges it violated the False Claims Act for misconduct in connection with HSBC’s participation in the Small Business Administration (SBA) Express loan program.  According to the government, HSBC sought reimbursement from the SBA without revealing facts suggesting that borrowers submitted false information to HSBC to obtain many of the loans, or the fact that HSBC had included the loans on an internal list of fraudulent or potentially fraudulent loans.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery. DOJ (SDNY)