Securities Fraud

December 8, 2015

A federal jury in Las Vegas convicted Anthony Brandel and James Warras of conspiracy, wire fraud and securities fraud for their roles in an approximately $10 million international investment fraud scheme involving numerous victims.  According to evidence presented at trial, Brandel and Warras conspired with others in the US and Switzerland to promote investments and loan instruments they knew to be fraudulent.  Specifically, they misrepresented to victims using fabricated bank documents that, for an up-front payment, a Swiss company known as the Malom (Make A Lot of Money) Group AG would provide access to lucrative investment opportunities and substantial cash loans.  DOJ

November 4, 2015

Tampa, Florida investment advisor and founder of OM Global Investment Fund LLC Gignesh Movalia was sentenced to 18 months in prison and to pay $5,394,419 in restitution for perpetrating a $9 million investment fraud scheme involving Facebook stock.  In connection with his guilty plea, Movalia admitted raising more than $9 million from 130 investors by falsely claiming to have access to pre-initial public offering shares of Facebook Inc.  DOJ

August 13, 2015

Florida investment advisor Gignesh Movalia pleaded guilty to perpetrating a $9 million investment fraud scheme involving Facebook stock.  Specifically, Movalia, who was the founder and manager of OM Global Investment Fund LLC, solicited investments by falsely touting access to pre-IPO shares of Facebook which he then used for and lost in other investments that he concealed from investors.  DOJ

March 26, 2015

Ebrahim Shabudin, former Chief Operating Officer and Chief Credit Officer of United Commercial Bank, was convicted of securities fraud and other corporate fraud offenses stemming from the failure of the bank.  DOJ

March 25, 2015

Thomas E. Jackson and Preston J. Harrison, operators of Ohio-based Imperial Integrated Health Research and Development LLC, were convicted of defrauding their company’s investors and diverting investors’ funds for their own personal use in connection with their sale of the sports energy drink OXYwater.  DOJ

February 3, 2015

Ratings Agency giant Standard & Poor’s Financial Services (S&P), along with its parent corporation McGraw Hill Financial Inc., agreed to pay $1.375B to settle charges it schemed to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). According to the government, S&P falsely represented that its ratings of RMBS and CDOs were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities. Instead, S&P issued inflated ratings that misrepresented the securities’ true credit risks causing RMBS and CDO investors to incur substantial losses. Whistleblower Insider

January 30, 2015

Maxim Chukharev, former information technology manager for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, was sentenced to 36 months in prison for conspiring to operate an unlicensed money transmitting business. According to the government, Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system” but instead was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. According to court records, before being shut down by the government in May 2013, Liberty Reserve conducted approximately 55 million transactions through its system totaling more than $6B in funds which encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking and other crimes.DOJ

September 9, 2014

Don Langford, former chief credit officer and senior vice president of Nebraska-based TierOne Bank, pleaded guilty for his role in a scheme to defraud TierOne’s shareholders and regulators. Specifically, Langford conspired with others to hide losses at the bank by cooking the bank’s books and reporting falsified information to stakeholders, regulators, external auditors, and the investing public. The bank even made an unsuccessful attempt to get taxpayer TARP funds in November 2008. TierOne filed for bankruptcy shortly after the Office of Thrift Supervision shut the bank down in June 2010. DOJ

August 29, 2014

Former CEO of ArthroCare Corporation Michael Baker and former ArthroCare CFO Michael Gluk were sentenced to serve 20 years and 10 years in prison, respectively, for their leading roles in a $750 million securities fraud scheme. On June 2, 2014, they were convicted by a jury of wire fraud, securities fraud, and conspiracy to commit wire and securities fraud in connection with their scheme to artificially inflate the share price of ArthroCare stock through sham transactions. DOJ

August 21, 2014

Bank of America agreed to pay $16.65 billion to resolve federal and state mortgage fraud claims against the bank and its former and current subsidiaries, including Countrywide Financial Corporation andMerrill Lynch. It is the largest civil settlement with a single entity in American history. And it includes a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), the largest FIRREA penalty ever. As part of the settlement, BofA acknowledged misrepresenting the quality of billions of dollars worth of risky mortgage loans. Whistleblower Insider