The Collar
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Bank Robbers Post Strong Quarter
Continue reading… 27 CommentsAs the banking industry wobbled in the face of a debilitating credit crisis, bank robbers reported strong results for the third quarter (July 1 through September 30) of 2007.
The FBI reported 1,578 violations of the Federal Bank Robbery and Incidental Crimes Statute during the period, with thieves walking away with $19,769,819.51 of loot. So far, only $2,209,768.06 has been recovered.
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Fraudster Sells Deceased Owners' Properties
Continue reading… 0 CommentsFor one determined fraudster, homeowners' deaths became a reason to celebrate.
Thirty-five-year-old Duane McKinney of Washington, D.C., could face up to 108 months in prison after he was found guilty last week of involvement in a scheme to fraudulently obtain property titles and sell them as if they were his own.
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Movie Stars Can't Save Wesley Snipes From Prison
Continue reading… 59 CommentsAlthough prosecutors urged a federal judge to give actor Wesley Snipes the maximum three-year prison sentence for tax violations—a request that was ultimately granted—the court had additional materials to consider when deciding on a sentence.
Among those were a stack of character references submitted on Snipes's behalf that describe the actor as a man of strong character and integrity (.pdf).
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A Letter You Never Want to Receive
Continue reading… 8 CommentsTurns out there are things you can get in the mail from your lender that are even less desirable than bills. Just ask LendingTree's mortgage customers from October 2006 through early 2008, who received the following surprise this week:
April 21, 2008
Dear LendingTree Customer:
We want you to know that some loan request forms our customers sent to LendingTree may have been seen by lenders without our consent. These lenders then used the forms to market their own mortgage loans to our customers. While we don't believe that the forms were used for any other purpose, we want you to know what happened and what we did to correct this situation, as well as what you can do to monitor your credit records.
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And You Thought Your Tax Season Was Rough...
Continue reading… 0 CommentsWith the wounds of tax season still fresh, it's OK to feel a little warm and fuzzy about this one. Just two days after the April 15 tax filing deadline, former Internal Revenue Service agent Harry Willner was sentenced to a year in jail for his role in a fraudulent tax scheme. [Thanks, White Collar Crime Prof Blog]
According to the Justice Department, in addition to his job at the IRS, Willner also served as an officer for NIA Advertising. In 2002, the company reported hundreds of thousands of dollars in net operating losses. From the Department of Justice:
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Internet Fraudsters Steal Hearts and Cash
Continue reading… 3 CommentsThere was a time when you only had to worry about a potential lover breaking your heart. Now it seems that you've got to keep your eyes on your bank account, too.
As Americans have turned in greater numbers to the Internet in search of love, scammers have found a fresh batch of potential victims and created a new field of fraudulent activity: "romance fraud: a scam designed to prey on [people's] emotions to get [their] money," CNN reports.
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Feds Finger Bank Teller in Robberies
Continue reading… 0 CommentsDespite growing concern about more sophisticated crimes, financial institutions still have to protect themselves from old-fashioned bank robberies.
Just ask the Department of Justice, which last week charged 20-year-old Christina Dasrath—a teller at a bank branch in New York City—in connection with a pair of apparent robberies.
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Former Newark Mayor Is Convicted
Continue reading… 0 CommentsNot to be upstaged by former New York Gov. Eliot Spitzer, former Newark Mayor Sharpe James was found guilty on fraud charges Wednesday in connection with a property scheme involving a female companion. Sharpe's companion, Tamika Riley, was convicted as well.
From a Department of Justice press release:
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What's Different About Israel's Tough Sentence?
Continue reading… 0 CommentsEllen Podgor—over at the White Collar Crime Prof Blog—makes a great point about the 20-year sentence that Bayou Group cofounder Samuel Israel received Monday:
This time it is 20 years for a white collar offender. But unlike Bernie Ebbers who received 25 years, Jeffrey Skilling who was given 24 years, and the Rigas sentences of 20 and 15 years—the accused—Samuel Israel III—plead guilty.
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Prosecutors Want Three Years for Snipes
Continue reading… 6 CommentsWith puzzling disregard for his portrayal of beloved base stealer "Willie Mays Hayes" in the 1989 comedy Major League, federal prosecutors have recommended that 45-year-old actor Wesley Snipes serve three years in prison—the maximum penalty—and pay at least $5 million in fines after being convicted of tax charges in February.
"For nearly a decade, Snipes has engaged in a campaign of criminal tax conduct combining brazen defiance with insidious concealment," the government said in a court filing. "By these means, Snipes has escaped paying more than $15 million in income tax to the Internal Revenue Service (IRS), and has pursued an intended fraudulent harm to the United States Treasury of more than $41 million."
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Mortgage Fraud on the Rise
Continue reading… 1 CommentThe adjusted FraudBlogger Index—a measurement of mortgage fraud activity maintained by MortgageDaily.com—increased more than 18 percent from the fourth quarter of 2007 to the first quarter of 2008.
Based on activity by state, activity jumped the most in Florida, Ohio, and Georgia. Texas also took a turn for the worse.
Rank State Dollar Amount Adjusted Index Value Q1 2008 Adjusted Index Value Q4 2007 Adjusted Index Value Q1 2007 1. Florida $103.7 million 107 60 23 2. Ohio $109.8 million 90 30 77 3. Georgia $163.8 million 57 40 40 4. Texas $15.0 million 47 17 20 5. Pennsylvania $19.7 million 40 20 3 Full release here.
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20-Year Sentence for Hedge Fund Cofounder
Continue reading… 0 CommentsBayou Group cofounder Samuel Israel received a 20-year prison sentence and was forced to turn over $300 million for his role in a $400 million fraud case, Bloomberg reports.
From Bloomberg:
Israel's sentence is among the stiffest given to a white-collar offender in the seven years since Enron Corp. collapsed. Others included former WorldCom Inc. Chairman Bernard Ebbers, who received 25 years for fraud, and former Enron Chief Executive Officer Jeffrey Skilling, who got a 24-year sentence.
Full story here.
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Former Federal Agent Gets 26 Months
Continue reading… 0 CommentsYou know it's ugly when someone in an inspector general's office has to be inspected.
But such was the case for 43-year-old Scott Allen Gompert. The former special agent in the Office of the Inspector General at the U.S. Department of Health and Human Services was sentenced to 26 months in prison last week after pleading guilty to charges involving fraud and forgery.
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Clinton Pledges to Go After Corporate Crime
Continue reading… 0 CommentsIn a speech Friday announcing her anticrime plan, Sen. Hillary Clinton pledged to get tough on white-collar crime.
From MSNBC:
In this morning's speech, Clinton noted that white-collar crime cost people their pensions and their jobs and contributed to the economic woes communities face. As president, she would pledge to pursue corporate criminals like street criminals, directing her attorney general to conduct a 90-day review of all deferred prosecution agreements and report on how to strengthen prosecution efforts against corporate wrongdoers.
Full article here.
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Why Seniors Are Targeted
Continue reading… 1 CommentThe FBI recently posted new information about fraud and senior citizens:
Why are the elderly such an attractive target for con artists?
Many seniors have a "nest egg."
They're less likely to report a fraud because they don't know where to go or they're too embarrassed to talk about it.
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2008 Could Be Busy for Securities Lawyers
Continue reading… 1 CommentGrace Lamont, a partner at PricewaterhouseCoopers, predicts the number of federal class action securities lawsuits filed will increase this year, according to the ABA Journal. The number of federal securities class actions totaled 163 in 2007, up from 109 in 2006, the publication says.
From the ABA Journal:
"I think in 2008 what we're going to see is a further increase," Lamont told an audience made up largely of lawyers, accountants and insurance company executives, predicting that the subprime mortgage crisis is surely going to bump up the number of filings. Already, halfway through 2007, the number of federal subprime-related securities class action filings rose sharply, she said.
The growing role being played by unions and pension funds as plaintiffs in securities class actions is apparently driving up damages awards, Lamont said, probably because of the fact that these institutional plaintiffs are well-funded and can afford to pursue cases aggressively.
Full article.
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Longer Sentences for White-Collar Offenders
Continue reading… 0 CommentsIn a new paper, Peter Henning, a professor at Wayne State University Law School and a former federal prosecutor, examines the Sarbanes-Oxley Act's impact on sentences for white-collar offenders.
From the abstract:
The Sarbanes-Oxley Act [marked] a change in the sentencing atmospherics for corporate crime that propelled judges to give out sentences that were unthinkable even five years earlier.
This article considers how the Sarbanes-Oxley Act changed the approach to sentencing of white collar defendants involved in corporate crimes. It uses a hypothetical case to illustrate how sentences under the Guidelines have tripled from what they would have been just a few years earlier.
View full abstract here.
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Wall Street Titans Are Sued
Continue reading… 0 CommentsThe Wall Street Journal has an interesting story that begins with a look at a 74-year-old, disabled woman who lost her life savings—$55,000—in the credit crisis.
She and 22,000 other people, many elderly, lost about $750 million when a Philadelphia lender called American Business Financial Services Inc. went bankrupt three years ago. ABFS had funded its operation partly by selling notes directly to the public, pitching them in newspaper ads and mass mailings that promised high interest rates. When it went under, these notes, which carried no collateral and weren't insured, became worthless.
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Ex-NYMEX Board Member Gets Five Months
Continue reading… 0 CommentsSteven Karvellas, a former board member of the New York Mercantile Exchange, will spend five months in prison after pleading guilty yesterday to charges involving fraud and tampering with evidence, Reuters reports.
From Reuters:
Between September 2002 and May 2003, while he was serving as chairman of the exchange's Adjudication and Compliance Review Committee, Karvellas delayed the allocation of customer orders and "if the market went up, he would take that order for himself," said Manhattan District Attorney Robert Morgenthau, likening Karvellas to "a fox in the chicken house."
By either not filling the orders or filling them at less favorable prices, Karvellas "was able to engage in risk-free investing and deprived the customer of the profits it deserved," according to the plea agreement he signed.
Full article here.
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14 Charged in Alleged Stock Scheme
Continue reading… 11 CommentsThe Securities and Exchange Commission has charged three companies and 11 people in an alleged scheme to illegally issue and sell penny stocks "in a purported diamond and gold mining company." Through this activity, the defendants obtained more than $64 million from tens of thousands of investors across the country, the SEC says.
The SEC complaint alleges that CMKM Diamonds, Inc., with assistance from a transfer agent and an attorney, fraudulently issued hundreds of billions of shares of purportedly unrestricted stock to the scheme's mastermind. The complaint also alleges that CMKM's CEO Urban Casavant generated investor interest in the company through false press releases, Internet chat boards, and "funny car" race events across the country without disclosing that he ran the company from his house in Las Vegas and that CMKM's primary activity was to issue and promote its own stock.
"The allegations in this case highlight the significant investor harm that results from abuses in the penny stock market," Rosalind Tyson, acting regional director of the SEC's Los Angeles regional office, said in a press release. "Although CMKM's stock sold for well under a penny a share, the defendants were able to reap millions in profits by conspiring to flood the market with billions of unregistered shares while falsely promoting CMKM's value."
