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2/28/2007
Porter Wright's SEC Action Blog: Meat and Potatoes for Securites Law
Former McAfee GC Indicted on Stock Option Backdating Charges
The Guardian Sits Down With Gary Aguirre
UBS Employee Faces Charges for Selling Tips to Hedge Funds
Blogs You Should Be Reading - Above the Law
2/27/2007
BusinessWeek Covers "Spies, Lies and KPMG"
Hedge Fund Dinner Scammers Face Charges
Dow Chemical Runs Afoul of OFAC, Facing Fine on Bribes
Citigroup Facing Scrutiny over Accounting for Associates First Capital
2/23/2007
LAW.COM Covers the Changing Nature of In-House Counsel
Veritas Pays $30 Million to Settle Charges
Shady Hedge Fiend Kirk Wright to Pay $20 Million
File Under Things You Wish You Hadn't Put in an Email: Mercury Interactive's "Magic Backdating Ink"
Montana PI Pleads Guilty to Wire Fraud, Swindling Law Clients
Refco Indictment Update, Tone Grant
Anti-Pretexting Bill Becomes Law
Jabre Capital Partners Makes Investment Management Backend Choice
Running Out the Clock on Backdating Charges
Dupont Chemist Swipes $400 Million in Trade Secrets
Monster Lawyer Expected to Pleade Guilty in Stock Options Case
SEC Drops Investigation of Gradient Analytics
FBI Laptops Go Missing (Lost and or Stolen)
Two From Brokerage Firm, Ferris Baker Watts Take Leave of Absense in Response to SEC Investigation
Morningstar Gives the Rundown on the SEC's Frontrunning Investigation
BestBank Execs Found Guilty of Conspiracy in Bank Failure
Real Estate Fraudster Nabbed by FBI Thanks to Kiwi P.I.
G-7 Names Hedge Funds to Axis of Evil
Boy Band Producer Finally Gets Nailed on Investment Scams
UK's Guardian Profiles Simon Freakley, CEO of Kroll
Allied Capital Cops to Swiping Einhorn's Private Phone Data
Former Homegold CEO Gets 20 Years
Siemens Division Pleads Guilty in Fraud
HP Taps New Top Counsel
Zombified
When it Rains it Pours
CFTC Files Complaint Against Cornerstone Capital Management
Senate Sides With Aguirre, Against SEC in Review of Pequot Investigation
Secretary Found Guilty in Coke Trade Secrets Theft
DOJ Probes Siemens
Technical Difficulties
Milberg Investigation Inches Closer to Lerach With Guilty Plea From Serial Plaintiff, Steven Cooperman
Wood River Capital Hedge Fiend to Face Criminal Charges
Actor's Mom (and Hedge Fund Manager) Busted in Fraudulent Trading Scheme
Enron's Kopper Reports to Jail
Porter Wright's SEC Action Blog: Meat and Potatoes for Securites Law
A new site to me and one worth your time is Porter Wright Morris & Arthur's blog on SEC Actions. Overseen by Porter Wright SEC Action Group Chair, Thomas O. Gorman, this is hard-chore nuts and bolts stuff. Their recent post on the SEC enforcement outlook for 2007 is very good read.
Definitely a site to bookmark...
-- MDT
Definitely a site to bookmark...
-- MDT
Labels: blogs, Porter Wright, SEC
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Former McAfee GC Indicted on Stock Option Backdating Charges
Kent Roberts got the boot from computer security software maker, McAfee about nine months ago when it came to light that Roberts had misled both the SEC and McAfee itself regarding his handling of stock options grants. Roberts is now facing seven criminal fraud counts in relation to his actions.
The McAfee case is one of the longer running of the backdating-related cases the SEC is currently pursing. The options grants in question go back to 2000. McAfee has already paid a $50 million fine to the SEC and is ultimately expected to see a financial restatement in the range of $100-150 million. Roberts, if convicted to do up to twenty years and pay up to $5 million in fines.
More on the Kent Roberts indictment via Mercury News.
-- MDT
The McAfee case is one of the longer running of the backdating-related cases the SEC is currently pursing. The options grants in question go back to 2000. McAfee has already paid a $50 million fine to the SEC and is ultimately expected to see a financial restatement in the range of $100-150 million. Roberts, if convicted to do up to twenty years and pay up to $5 million in fines.
More on the Kent Roberts indictment via Mercury News.
-- MDT
Labels: backdating, general counsel, indictment, Kent Robert, McAfee, SEC, stock options
The Guardian Sits Down With Gary Aguirre
What a stir Gary Aguirre created when he began making noise that his investigation into insider trading at Pequot Capital was quashed by SEC higher-ups when Aguirre suggested that the scheme may have involved Wall Street heavyweight, John Mack, patriarch of Morgan Stanley.
Aguirre claimed that he was told in no uncertain terms to leave Mack alone, a course of action he was disinclined to accept.. In the ensuing flap saw a fired (and fired-up Aguirre) turn whistleblower and testify before congress about conflict of interest issues at his former employer.
Well, Mr Aguirre is still hitting hard on what he believes are serious issues with the SEC's enforcement regime. Characteristically, he doesn't pull any punches in this interview with The Guardian.
For more background on Aguirre, try the tags below...
-- MDT
Aguirre claimed that he was told in no uncertain terms to leave Mack alone, a course of action he was disinclined to accept.. In the ensuing flap saw a fired (and fired-up Aguirre) turn whistleblower and testify before congress about conflict of interest issues at his former employer.
Well, Mr Aguirre is still hitting hard on what he believes are serious issues with the SEC's enforcement regime. Characteristically, he doesn't pull any punches in this interview with The Guardian.
For more background on Aguirre, try the tags below...
-- MDT
Labels: corruption, Gary Aguirre, homeland security, John Mack, whistleblower
UBS Employee Faces Charges for Selling Tips to Hedge Funds
The skinny....via BusinessWeek:
-- MDT
...BusinessWeek has learned federal authorities are on the verge of busting a scheme in which at least one employee of UBS (UBS) was allegedly selling information about upcoming changes in analyst ratings on stocks to traders not affiliated with the Swiss investment firm.Read the rest.
Sources says federal prosecutors in New York and securities regulators in Washington will soon file charges against a number of individuals caught up in the investigation, which has been going on since last fall. Criminal and civil charges could be filed as soon as Tuesday.
Investigators have found that traders working for at least two unidentified hedge funds were paying a UBS employee in New York for the information about impending ratings changes on stocks. But other traders were also buyers...
-- MDT
Labels: bribery, hedge fund, homeland security, investigation, UBS
Blogs You Should Be Reading - Above the Law
No longer just the title of Steven Seagal's debut flick, Above the Law is yet another new blog in the Dealbreaker.com / Dead Horse Media family of business oriented news-snark. See also Supermogul.
All three are the offspring of publisher Elizabeth Spiers, formerly of the quite well known blog empire, Gawker Media. If you're not currently reading any or all of the Dead Horse biz blogs, you probably should be.
Beware ads, however. They are plentiful.
- MDT
All three are the offspring of publisher Elizabeth Spiers, formerly of the quite well known blog empire, Gawker Media. If you're not currently reading any or all of the Dead Horse biz blogs, you probably should be.
Beware ads, however. They are plentiful.
- MDT
Labels: Above the Law, blogs, Dead Horse Media, Deakbreaker, Elizabeth Spiers
1 Comments.
This site deals deals with Law is yet another new blog in the Dealbreaker.com / Dead Horse Media family of business oriented news-snark. See also Supermogul.
familylaw
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BusinessWeek Covers "Spies, Lies and KPMG"
If you've been reading The Daily Caveat for any length of time, then you know we were on this story way back when...
Several months later, now that the dust has settled, BusinessWeek has a great piece, which delves into the international embroglio that saw KPMG file suit against U.S. investigative firm, Diligence, LLC. over charges of bribery and impersonation of law enforcement.
This is simply a must read for anyone interested in the investigative industry...
-- MDT
2/26/2007
Several months later, now that the dust has settled, BusinessWeek has a great piece, which delves into the international embroglio that saw KPMG file suit against U.S. investigative firm, Diligence, LLC. over charges of bribery and impersonation of law enforcement.
This is simply a must read for anyone interested in the investigative industry...
-- MDT
Labels: Bermuda, Diligence LLC, IPOC, KPMG
Hedge Fund Dinner Scammers Face Charges
A scenario...
You get some junk mail that offers above-market investment returns and an invite to a steak dinner. You figure, why not. After all, you like steak. But if the guy you dined with was John H. Williams, odds are he conned you into giving him your money, which instead of multiplying as promised he might as well have set a'fire right there at the table.
You see Williams, your host, was funneling your funds to Stephen Chesnowitz, a Canadian hedge fund trader with assets in the Cayman Islands and Canada. Now, actually disclosing that you have no idea how to run or manage a successful investment fund would sort of...impede the cashflow situation. So, rather than inform investors when deals went sour, these guys simply followed the tried and true falsify your financials model while maintaining rich salaries for themselves.
All told, the pair bilked about $9 million out of 150 or so unwitting investors. Williams is facing fraud charges in Maryland, while Chesnowitz is so far sitting pretty north of the border. Maryland is currently reviewing William's financial records, trying to determine where the money when and if any has been squirreled away that might be recoverable for investors.
Further details at The Washington Post.
-- MDT
You get some junk mail that offers above-market investment returns and an invite to a steak dinner. You figure, why not. After all, you like steak. But if the guy you dined with was John H. Williams, odds are he conned you into giving him your money, which instead of multiplying as promised he might as well have set a'fire right there at the table.
You see Williams, your host, was funneling your funds to Stephen Chesnowitz, a Canadian hedge fund trader with assets in the Cayman Islands and Canada. Now, actually disclosing that you have no idea how to run or manage a successful investment fund would sort of...impede the cashflow situation. So, rather than inform investors when deals went sour, these guys simply followed the tried and true falsify your financials model while maintaining rich salaries for themselves.
All told, the pair bilked about $9 million out of 150 or so unwitting investors. Williams is facing fraud charges in Maryland, while Chesnowitz is so far sitting pretty north of the border. Maryland is currently reviewing William's financial records, trying to determine where the money when and if any has been squirreled away that might be recoverable for investors.
Further details at The Washington Post.
-- MDT
Labels: Fraud, hedge fund, John H. Williams, LaJohn Capital, Stephen Chesnowitz
1 Comments.
What's the point of trying to find a few pennies to return to investors while these type of scams are allowed to continue without any regulations or safeguards in place?
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Dow Chemical Runs Afoul of OFAC, Facing Fine on Bribes
Dow Chemical has been fined by the SEC under the Foreign Corrupt Practices Act for offering bribes to officials of the Indian government in exchange for registering certain pesticides in Indian. Details at the Hindustan Times.
-- MDT
-- MDT
Labels: bribery, Dow Chemical, FCPA, SEC
Citigroup Facing Scrutiny over Accounting for Associates First Capital
Megabank, Citigroup, purchased sub-prime lender, Associates First Capital in 2000 for a little over $31 billion. The SEC, it seems, is quite interested in examining Citigroup's accounting practices when it comes to accounting for AFC's tax reserves and releases. Citigroup/AFC also remains under the gun in a long running investigation into the firm's (potentially abusive) lending practices.
-- MDT
-- MDT
Labels: Associates First Capital, Citigroup, SEC
1 Comments.
Did the Office of Risk Assessment identify the sub-prime crisis as a problem?
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LAW.COM Covers the Changing Nature of In-House Counsel
Typical great stuff from Law.com, this one a piece from Susan F. Friedman and the New York Law Journal. Friedman is a senior vice president of the Employed Lawyers Product Practice of Marsh. Not shockingly she recommends good insurance. But good corporate governance, that's important too. Read on.
-- MDT
-- MDT
Labels: backdating, corporate governance, general counsel, stock options, Susan Friedman
Veritas Pays $30 Million to Settle Charges
Suspect account is what fount Veritas in the crosshairs. To appease the SEC, the company will pay a $30 million fine, which follows a four an a half year investigation by the securities regulator. The San Francisco Gate has further details.
- MDT
2/22/2007
- MDT
Labels: accounting fraud, SEC, Veritas
Shady Hedge Fiend Kirk Wright to Pay $20 Million
Kirk Wright made white a name for himself. Having found his way on to the NFL Player's Union's list of recommended money managers, Wright, as my grandmother would say, fell in butter. He had it good. Only one problem...he was a total phony (well, that diploma from Harvard was real).
Between 1997 and 2006 Wright raised $185 million for his International Management Associates hedge fund management company. The money came from a pool of 500 investors, including many NFL players. Wright lived the high life on their money while giving vague assurances of amazing returns. Later he filed bogus financials to cover his tracks.
When it was clear he was busted, he took flight and played fugitive for a few weeks before coming to his current berth at an Atlanta-area detention center. Wright is awiating trial on multiple fraud counts and could face some lengthly time behind bars.
In the interim U.S. District Court Charles Pannell has levied over $20 million in fines and restitution to be paid back by Wright.
Further details via HedgeCo.
-- MDT
Between 1997 and 2006 Wright raised $185 million for his International Management Associates hedge fund management company. The money came from a pool of 500 investors, including many NFL players. Wright lived the high life on their money while giving vague assurances of amazing returns. Later he filed bogus financials to cover his tracks.
When it was clear he was busted, he took flight and played fugitive for a few weeks before coming to his current berth at an Atlanta-area detention center. Wright is awiating trial on multiple fraud counts and could face some lengthly time behind bars.
In the interim U.S. District Court Charles Pannell has levied over $20 million in fines and restitution to be paid back by Wright.
Further details via HedgeCo.
-- MDT
Labels: Fraud, hedge fund, Kirk Wright, NFL
File Under Things You Wish You Hadn't Put in an Email: Mercury Interactive's "Magic Backdating Ink"
It can be hard to protest one's innocence when your company is being pursued by regulators for stock option backdating irregularities and some pesky investigator turns up internal company emails with executives talking about "magic backdating ink." Hmmm... I wonder if the feds will show the Mercury Interactive executive team that magical white collar correctional facility? Details (coincidentally) at The Mercury News.
Take note of the quote-love for Mr. Peter Henning, Wayne State business law professor and friend of The Daily Caveat (Peter and I we share a fondness for the exploits of former Louisiana governor, felon and all around colorful character, Edwin Edwards).
You should already be reading Peter's fine White Collar Crime Prof blog, co authored with Ellen Podgor. You'll find more of Peter's recent comments on Mercury Interactive right here.
-- MDT
Take note of the quote-love for Mr. Peter Henning, Wayne State business law professor and friend of The Daily Caveat (Peter and I we share a fondness for the exploits of former Louisiana governor, felon and all around colorful character, Edwin Edwards).
You should already be reading Peter's fine White Collar Crime Prof blog, co authored with Ellen Podgor. You'll find more of Peter's recent comments on Mercury Interactive right here.
-- MDT
Labels: backdating, email, Mercury Interative, Peter Henning, stock options
Montana PI Pleads Guilty to Wire Fraud, Swindling Law Clients
Montanta-based Private Investigator, Michael Lair (President of wing-nutty ConsumerDefense.com) bilked as much as $300,000 from his lawyer-clients by claiming he could get information about companies of interest to them. It goes without saying that he didn't make good on actually providing the promised data.
This week Lair plead guilty to four counts of wire fraud in relation to these activities. In his plea agreement, Lair named several prominent law firms that he successfully swindled, including two New York firms: Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer and Kasowitz, Benson, Torres & Friedman.
"Information" is a little vague, but Lair has stated that he was asked by some law firms to gather information by illegal means (he actually used this as a sales tactic for his scams) implying that he was able to obtain information otherwise unavailable as a public record.
The Wall Street Journal law blog has a bit more on Mr. Lair.
-- MDT
2/21/2007
This week Lair plead guilty to four counts of wire fraud in relation to these activities. In his plea agreement, Lair named several prominent law firms that he successfully swindled, including two New York firms: Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer and Kasowitz, Benson, Torres & Friedman.
"Information" is a little vague, but Lair has stated that he was asked by some law firms to gather information by illegal means (he actually used this as a sales tactic for his scams) implying that he was able to obtain information otherwise unavailable as a public record.
The Wall Street Journal law blog has a bit more on Mr. Lair.
-- MDT
Labels: Kasowitz Benson, Michael Lair, Morvillo Abramowitz, wire fraud
Refco Indictment Update, Tone Grant
Tone Grant, former owner of Refco, plead not guilty in January to charges of conspiracy, fraud and money laundering. Grant stands accused to of helping to hide the collapsed derivatives trading firm's enormous losses and assisting those who wanted to pass off the company to unwary investors.
The activities that lead to Refco's final, scandal-ridden explosion weren't exactly uncharted territory for a company that had for years walked close to the edge. According to the Chicago Tribune:
Grant was followed at Refco by Phillip Bennett, who managed to convert the $300 million in losses under Grant's tenure into $720 million in debt, which he managed to hide rather effectively for a time. In 2005, Refco actually seemed poised to go public with an enormous public offering, but reality intruded. The gig was up and the house of cards came crashing down.
-- MDT
2/20/2007
The activities that lead to Refco's final, scandal-ridden explosion weren't exactly uncharted territory for a company that had for years walked close to the edge. According to the Chicago Tribune:
Refco was the subject of 142 regulatory actions, the most of any futures trading outfit, according to a Bloomberg News analysis. The Commodity Futures Trading Commission came after it repeatedly, in some of its most prominent administrative cases of the 1980s and 1990s.For a full accounting of Tone Grant's tenure at Refco (1981-1998), his legal woes and how he fits into the scandal that followed the company's demise, check out the full article from the Tribune.
Fellow trading executives say Refco flouted industry standards like no other firm, tossing aside the rulebooks, taking on the diciest accounts and fighting back against regulators that tried to intervene.
Refco traces its origins to a one-time poultry wholesaler who served time in prison for selling substandard chickens to the military. Ray Friedman eventually won a pardon and with his stepson, Thomas Dittmer, opened the forerunner of Refco around 1969.
Grant was followed at Refco by Phillip Bennett, who managed to convert the $300 million in losses under Grant's tenure into $720 million in debt, which he managed to hide rather effectively for a time. In 2005, Refco actually seemed poised to go public with an enormous public offering, but reality intruded. The gig was up and the house of cards came crashing down.
-- MDT
Labels: Fraud, indictment, money laundering, Phillip Bennett, Refco, Tone Grant
Anti-Pretexting Bill Becomes Law
House Resolution 4709, recently signed into law by the President explicitly protects telephone records by using pretextual tactics. The law disallows the sale of telephone records without the explicit prior approval of the customer (be careful what you sign...).
-- MDT
-- MDT
Labels: legislation, pretexting
Jabre Capital Partners Makes Investment Management Backend Choice
I wish that there was more to tell about goings on with Philippe Jabre's new venture. Since returning from semi-exile and re-entering that asset management arena, the business community has been hungry for every detail of the former GLG star's next move. So here it is. Not earth shaking, but news nonetheless: Jabre Capital Partners has selected Sophis to provide the back-end architecture the firm's portfolio and investment management.
-- MDT
-- MDT
Labels: GLG, hedge fund, Jabre Capital Partners, Sophis
Running Out the Clock on Backdating Charges
With a five year window for action on stock options backdating prosecutions, time is of the essence for regulators. With more than 150 firms under potential investigation and countess stones unturned. Some of the highest profile cases are nearing the end of that window, Brocade for example. Of course, the government can always ask potential defendands to give them more time...I'm sure they'd be willing.
Maybe...
-- MDT
2/16/2007
Maybe...
-- MDT
Labels: backdating, Brocade, prosecution, stock options
Dupont Chemist Swipes $400 Million in Trade Secrets
Documents unsealed by a Delaware court this week revealed Gary Min, a former research chemist with Dupont, was convicted back in November '06 of stealing trade secrets from his former employer. Min had been with Dupont for ten years before leaving to join polymer maker, Victrex, which has offices in the U.S., Europe and China.
In the two month window of Min's (secret) acceptance of his Victrex position and actually leaving Dupont in December '05, Min downloaded or viewed about 40,000 documents from Dupont's internal library - 10 % of Dupont's entire library, making him the number one user, with 15 times more activity that the next nearest employee.
Not being blithering idiots, Dupont took note of this and informed the Feds as well as Min's new employers at Victrex. Dupont also retained investigators to look into Min's behavior. At his home they found garbage bins stuffed with Dupont docs and subsequently more documents were discovered on his personal computer.
In February '06, when his home was raided by authorities, Min was caught in mid-shred and taken in for custody. Court papers have suggested that Min's motive in all this may have been related to a demotion he received at Dupont shortly before accepting the Victrex position...
Definitely check out the full story on Min, here, as the above summary just doesn't do justice to all the twists and turns of the tale. We'll keep an eye out for sentencing info on Min and post it here when it is available
-- MDT
2/15/2007
In the two month window of Min's (secret) acceptance of his Victrex position and actually leaving Dupont in December '05, Min downloaded or viewed about 40,000 documents from Dupont's internal library - 10 % of Dupont's entire library, making him the number one user, with 15 times more activity that the next nearest employee.
Not being blithering idiots, Dupont took note of this and informed the Feds as well as Min's new employers at Victrex. Dupont also retained investigators to look into Min's behavior. At his home they found garbage bins stuffed with Dupont docs and subsequently more documents were discovered on his personal computer.
In February '06, when his home was raided by authorities, Min was caught in mid-shred and taken in for custody. Court papers have suggested that Min's motive in all this may have been related to a demotion he received at Dupont shortly before accepting the Victrex position...
Definitely check out the full story on Min, here, as the above summary just doesn't do justice to all the twists and turns of the tale. We'll keep an eye out for sentencing info on Min and post it here when it is available
-- MDT
Labels: China, Dupont, espionage, Gary Min, trade secrets, Victrex
Monster Lawyer Expected to Pleade Guilty in Stock Options Case
Myron Olesnyckyj, former general counsel for jobsite, Monster.com is expected to plead guilty in relation to the stock options lawsuit filed by regulators against his former firm. Olesnyckyj (say it ten times fast - hell, say it once!) cut a deal with prosecutors that will see him testify against his former boss, Andrew McKelvey, Monster.com's founder and former CEO.
We've already seen a wave of GCs quietly or quite publicly dumped by firms under investigation by the SEC in relation to stock option backdating irregularities. How many will flip, like Olenyckyj, to testify against their former bosses...time will tell.
-- MDT
We've already seen a wave of GCs quietly or quite publicly dumped by firms under investigation by the SEC in relation to stock option backdating irregularities. How many will flip, like Olenyckyj, to testify against their former bosses...time will tell.
-- MDT
Labels: backdating, homeland security, Monster.com, stock options
SEC Drops Investigation of Gradient Analytics
You may recall that the SEC's looksee into Gradient Analytics was prompted by one Patrick Byrne, the...interesting CEO of Overstock.com. As with all things, Patrick Byrne, nobody covers it better and with more geniune disdain than Gary Weiss.
-- MDT
2/14/2007
-- MDT
Labels: Gary Weiss, Gradient Analytics, Overstock, Patrick Byrne
FBI Laptops Go Missing (Lost and or Stolen)
Also missing, you might imagine, is a bit of the agency's dignity. But the 160 laptops lost or stolen over the last four years (including some from counter-terrorism and counter-intelligence divisions) is actually down by about HALF from the preceding audit period, when 317 laptops walked out the door or got lost behind the water cooler.
So, um, I guess good work guys...
Due to the recent Veterans Afffairs laptop disappearance and related identity theft concerns, the Federal government issued a directive back in June of '06 that within 45 days all civilian agencies would be required to institute laptop security measures. So far compliance is at about 10%.
You can get the full story (both the '07 and '02 audit reports) over Justice Department's Office of the Inspector General. The '07 report is only available as a PDF at present. There is an HTML version of the '02 report, found here.
-- MDT
So, um, I guess good work guys...
Due to the recent Veterans Afffairs laptop disappearance and related identity theft concerns, the Federal government issued a directive back in June of '06 that within 45 days all civilian agencies would be required to institute laptop security measures. So far compliance is at about 10%.
You can get the full story (both the '07 and '02 audit reports) over Justice Department's Office of the Inspector General. The '07 report is only available as a PDF at present. There is an HTML version of the '02 report, found here.
-- MDT
Labels: audit, FBI, identity theft, laptop security
Two From Brokerage Firm, Ferris Baker Watts Take Leave of Absense in Response to SEC Investigation
Two executives from Baltimore-based brokerage firm, Ferris Baker Watts will be taking some time off in response to an ongoing SEC investigation. Louis Akers, director of Ferris's private client group, and Patrick Vaughan, director of retail sales will both be taking leaves of absence pending the results of an SEC investigation into trading activities at FBW.
More from the Washington Business Journal.
-- MDT
More from the Washington Business Journal.
-- MDT
Labels: Ferris Baker Watts, homeland security, investigation
Morningstar Gives the Rundown on the SEC's Frontrunning Investigation
Have brokers been tipping off hedge funds about pending mutual fund trades to help the hedgies (who have supplanted benefit mutual funds as brokers biggest client base) benefit from pending trades? Undoubtably this frontrunning practice exists and the SEC aims to find out exactly how endemic it has become. Morningstar's got the deets on the pending SEC investigation.
-- MDT
2/13/2007
-- MDT
Labels: front running, hedge fund, homeland security, investigation, SEC
BestBank Execs Found Guilty of Conspiracy in Bank Failure
Three former executives of Colorado's BestBank, Edward P. Mattar, III, Thomas Alan Boyd and Jack O. Grace, Jr. , have been found guilty of conspiracy in relation to the 1998 failure of BestBank. Details at Lawfuel.
-- MDT
-- MDT
Labels: BestBank, convicted, Edward P. Mattar, Jack O. Grace, Thomas Alan Boyd
Real Estate Fraudster Nabbed by FBI Thanks to Kiwi P.I.
Charles Elliott Fitzgerald has been on the run since 2003, when he disappeared from California along with $550 million dollars he swindled from mortgage lenders in phoney real estate deals. It was known all along by authorities that Fitzgerald had family in the pacific islands but for several years his location remained unknown.
Fitzgerald (an extremely odd duck) probably would have remained free indefinitely were it not for Trever Morley, a Wellington, New Zealand based private investigator. Morely was hired by an American client to track down Fitzgerald and the former police inspector managed to do that very thing. He found Fitzgerald in Samoa and informed his client who notified the FBI.
Fitzgerald was deported and is now back in California awaiting trial on bank fraud and money laundering. Kudos Morley!
Several Fitzgerald accomplices have already plead guilty and are awaiting sentencing, including:
-- MDT
2/12/2007
Fitzgerald (an extremely odd duck) probably would have remained free indefinitely were it not for Trever Morley, a Wellington, New Zealand based private investigator. Morely was hired by an American client to track down Fitzgerald and the former police inspector managed to do that very thing. He found Fitzgerald in Samoa and informed his client who notified the FBI.
Fitzgerald was deported and is now back in California awaiting trial on bank fraud and money laundering. Kudos Morley!
Several Fitzgerald accomplices have already plead guilty and are awaiting sentencing, including:
Mark Abrams, 45, of Long Beach, CAFurther details on Fitzgerald's scam and the current case, check out this December 13th post from RealBlogging.
Nicole LaViolette, 37, of Palm Springs, CA
Jamieson Matykowski, 33, of Laguna Niguel, CA
Timothy Holland, 35, of Santa Ana, CA
-- MDT
Labels: Charles Elliott Fitzgerald, FBI, fugitive, money laundering, New Zealand, Samoa, Trevor Morley
G-7 Names Hedge Funds to Axis of Evil
Ok, well...not quite. But they're going to be watching you guys very closely. Closer to home, the SEC is heating up its investigation into front running...taking a hard look at whether hedge funds are inappropriately benefiting from inside info supplied by investment banks. Other inside-the-beltway regulatory maneuvers are also afoot, including:
-- MDT
2/11/2007
High-ranking Treasury Department officials held 15 meetings over three days last year with representatives from prominent hedge funds, investors, lawyers and others to gather information about hedge funds' operations. Next week, the President's Working Group on Financial Markets -- comprising leaders from the Treasury, the Federal Reserve Board, the SEC and the Commodity Futures Trading Commission -- will meet and consider issuing a statement that highlights the importance of the funds to the market and the risks, insiders say.More on potential regulation and the steps the hedge fund industry are taking to prevent it, via The Washington Post.
-- MDT
Labels: front running, hedge fund, investigation, regulations, SEC
Boy Band Producer Finally Gets Nailed on Investment Scams
If creating audaciously bad music was a crime, Lou Pearlman would already be serving life in prison. As it happens, churning out crappy, pre-packaged teen idols like New Kids on the Block, The Backstreet Boys and O-Town (as your daughters...) isn't yet a crime in the United States.
Running a half-billion dollar investment scam is another story. Despite more that ten years of red flags that should have sent investors running scared and brought authorities knocking on his door, Pearlman managed to keep his investment program, a retirement plan for Trans Continental Airlines, active and afloat.
No longer. The hunt is on for Pearlman's assets and the fund is facing more than 1,400 investor claims.
Running a half-billion dollar investment scam is another story. Despite more that ten years of red flags that should have sent investors running scared and brought authorities knocking on his door, Pearlman managed to keep his investment program, a retirement plan for Trans Continental Airlines, active and afloat.
No longer. The hunt is on for Pearlman's assets and the fund is facing more than 1,400 investor claims.
Labels: investment scam, Lou Pearlman, ponzi scheme
UK's Guardian Profiles Simon Freakley, CEO of Kroll
The Observer's profile of Kroll CEO, Simon Freakley is a nice piece, overall. Not exactly hard-hitting journalism mind you but interesting nonetheless. The mag uses Brit, Freakley as a local-angle excuse to examine Kroll and how the company has diversified its business in recent years beyond its core investigative and security enterprises. Well worth a read...
-- MDT
2/09/2007
-- MDT
Labels: Kroll, Simon Freakley
Allied Capital Cops to Swiping Einhorn's Private Phone Data
In response to a subpoena from the U.S. attorney's office for the District of Columbia, Allied Capital has owned up to hiring private investigators to obtain the phone records of David Einhorn, hedge-fund manager and proprietor Greenlight Capital.
Heretofore Allied had denied doing any such thing, over Einhorn's protestations and those of several others who also suspected that they were the victims of similar misconduct. Among that number would be Herb Greenberg, noted business journalist of TheStreet.com.
As in the HP embroglio, the suspicion here is that the investigators hired by Allied used pretextual tactics to obtain the private phone records - essentially, that they pretended to be Einhorn, Greenberg, etc. to get access to the victim's private documents.
While the name of the particular P.I. firm hired to do this bit of dirty work hasn't come out yet, as with the individuals involved in the HP Kona 2 investigation, it is just a matter of time. We'll see if prosecutors choose to go as hard after Allied as the feds and California AG have with HP.
And to you loyal, if sporadic, Daily Caveat commenters who just knew that Mr. Einhorn, poker playin', short sellin' goat that he is, was making it all of this up, let me officially, maturely say un to you...neener neener.
More on the Einhorn/Allied blood feud, from Forbes.
-- MDT
Heretofore Allied had denied doing any such thing, over Einhorn's protestations and those of several others who also suspected that they were the victims of similar misconduct. Among that number would be Herb Greenberg, noted business journalist of TheStreet.com.
As in the HP embroglio, the suspicion here is that the investigators hired by Allied used pretextual tactics to obtain the private phone records - essentially, that they pretended to be Einhorn, Greenberg, etc. to get access to the victim's private documents.
While the name of the particular P.I. firm hired to do this bit of dirty work hasn't come out yet, as with the individuals involved in the HP Kona 2 investigation, it is just a matter of time. We'll see if prosecutors choose to go as hard after Allied as the feds and California AG have with HP.
And to you loyal, if sporadic, Daily Caveat commenters who just knew that Mr. Einhorn, poker playin', short sellin' goat that he is, was making it all of this up, let me officially, maturely say un to you...neener neener.
More on the Einhorn/Allied blood feud, from Forbes.
-- MDT
Labels: Allied Capital, BLX, David Einhorn, Herb Greenberg, Patrick Harrington, pretexting, Small Business Administration
Former Homegold CEO Gets 20 Years
The former chief executive of bankrupt mortgage lending company, Homegold, one Ronald Sheppard was sentenced this week to 20 years on charges of conspiracy, securities fraud and obtaining property by false pretenses. He had faced a potential maximum of 25 years in the case.
Homegold had attempted to cover large losses by funneling in cash from a subsidiary. $275 million and 8,000 defrauded investors later the company collapsed. Four other Homegold execs have already been convicted. Former chairman John Sterling Jr. has been indicted and is awaiting his turn at bat.
Check here for further details on Sheppard, who claims to be a victim in all this. That's a hard pill to swallow when you picture him shredding all those documents to cover his own ass.
-- MDT
Homegold had attempted to cover large losses by funneling in cash from a subsidiary. $275 million and 8,000 defrauded investors later the company collapsed. Four other Homegold execs have already been convicted. Former chairman John Sterling Jr. has been indicted and is awaiting his turn at bat.
Check here for further details on Sheppard, who claims to be a victim in all this. That's a hard pill to swallow when you picture him shredding all those documents to cover his own ass.
-- MDT
Labels: Fraud, Homegold, John "Jack" Sterling. Jr., lending, Ronald Sheppard
Siemens Division Pleads Guilty in Fraud
No, not THAT Siemens division. In this instance we're talking about Siemens Medical Solutions, USA, which has of late been embroiled in its own share of scandal. The Siemens unit has agreed, as a part of a plea deal, to pay $2.5 million in fines and restitution in penance for shady dealings surrounding Siemens Medical's acquisition of contract to supply radiological equipment to Illinois' John H. Stroger Jr. Hospital. Details on Siemen's scam here.
-- MDT
-- MDT
Labels: Fraud, minority owned company, Siemans Medical, Siemens
HP Taps New Top Counsel
Michael Holston will assume the role of vice president and general counsel for HP, which cleaned house after news of Patricia Dunn's Kona 2 investigation exploded into the newspapers. Holston replaces Ann Baskins who departed HP in September in response to the scandal over the technology company's internal leak investigation.
Investigators working on behalf of HP used pretextual tactics (in this case, assumed identities) to access private phone records of HP directors and even journalists, hunting for the source of high level company leaks. These tactices were supposedly vetted by HP's general counsel's office and also run past outside counsel Wilson Sonsini. WS has also been dumped by HP as the company tries to creep out from under the long shadow of its own making.
-- MDT
2/08/2007
Investigators working on behalf of HP used pretextual tactics (in this case, assumed identities) to access private phone records of HP directors and even journalists, hunting for the source of high level company leaks. These tactices were supposedly vetted by HP's general counsel's office and also run past outside counsel Wilson Sonsini. WS has also been dumped by HP as the company tries to creep out from under the long shadow of its own making.
-- MDT
Labels: HP, Patricia Dunn, pretexting, Wilson Sonsini
Zombified
My beloved workhorse 17 inch Powerbook appears to be toast. I am hoping to be able to pull of my most recent data before sending zombified brick in to Apple for repairs.
Blog posting will continue thanks to my trusty (somewhat dusty) Titanium G4 laptop, which has been kicking around the home office since 2001 or so - a veritable fossil.
But it works, at least. Slowly...methodically...but it DOES work.
Hopefully, the 17incher can be resurrected (THANKS Applecare!).
Think a good thought for the laptop, k?
Blog posting will continue thanks to my trusty (somewhat dusty) Titanium G4 laptop, which has been kicking around the home office since 2001 or so - a veritable fossil.
But it works, at least. Slowly...methodically...but it DOES work.
Hopefully, the 17incher can be resurrected (THANKS Applecare!).
Think a good thought for the laptop, k?
Labels: technical difficulties
When it Rains it Pours
Potential hard drive failure....I've got troubles in mind.
Look for posts later in the day, when I can get alternate web access.
-- MDT
2/06/2007
Look for posts later in the day, when I can get alternate web access.
-- MDT
Labels: technical difficulties
CFTC Files Complaint Against Cornerstone Capital Management
New York-based hedge fund, Cornerstone Capital Management and company executive Joseph Profit (oh come on - he made that name up!) are facing fraud charges from the Commodity Futures Trading Commission. The CTFC complaint, filed in the Georgia Northern District Court accuses Profit and Co. of concealing material information from the National Futures Association and defrauded investors by missrepresenting potential rates of return.
Further details via Hedgeweek. You can check out Cornerstone's NFA suspension here as well as the CTFC press release here.
-- MDT
Further details via Hedgeweek. You can check out Cornerstone's NFA suspension here as well as the CTFC press release here.
-- MDT
Labels: CFTC, Cornerstone Capital Management, Fraud, hedge fund, Joseph Profit
Senate Sides With Aguirre, Against SEC in Review of Pequot Investigation
And they ain't happy. Back in July the Senate began looking into the SEC's insider trading investigation of hedge fund, Pequot Capital after complaints from former SEC investigator, Gary Aguirre,
Aguirre alleged that he was discouraged by agency higher ups from pursing information from John Mack, Morgan Stanley grand poo-bah and good buddy to Pequot founder, Arthur Samburg. Aguirre was eventually fired by the SEC and turned whistleblower, telling his tale loud and long for anyone who would listen.
The Senate listened and after extensive hearings, they've filed a report highly critical of the SEC. The NYT has a summary.
Try clicking on the tags below for further background...
-- MDT
Aguirre alleged that he was discouraged by agency higher ups from pursing information from John Mack, Morgan Stanley grand poo-bah and good buddy to Pequot founder, Arthur Samburg. Aguirre was eventually fired by the SEC and turned whistleblower, telling his tale loud and long for anyone who would listen.
The Senate listened and after extensive hearings, they've filed a report highly critical of the SEC. The NYT has a summary.
Try clicking on the tags below for further background...
-- MDT
Labels: Arthur Samberg, Gary Aguirre, homeland security, insider trading, investigation, John Mack, Pequot Capital
Secretary Found Guilty in Coke Trade Secrets Theft
On Friday Joya Williams, former Coca-Cola Company executive assistant, was found guilty of attempting to steal trade secrets from her employer. Back in May of '05 William's gang contacted Coke's prime sugar-water competitor, Pepsi offering to ransom Coke secrets for 475,000. Pepsi called the cops... Williams' two coconspirators, Ibrahim Dimson and Edmund Duhaney each plead guilty to one count of conspiracy back in October '06.
- MDT
2/05/2007
- MDT
Labels: Coke, Edmund Duhaney, Ibrahim Dimson, Joya Williams, Pepsi, trade secrets
DOJ Probes Siemens
Joining the SEC on Siemen's crowded legal dance card is the U.S. Department of Justice. What the DOJ is looking for is unknown as is how deeply they're planning to probe. But it ain't good news, that's for sure.
-- MDT
-- MDT
Labels: bribery, Department of Justice, SEC, Siemens
Technical Difficulties
Over the weekend the 7 year old AirPort that had heretofore been the nerve center of the supercomputer network at Daily Caveat HQ finally bit the bullet. With company in town and the Superbowl on Sunday there was not time to seek out a suitable replacement.
Hopefully I'll be able to resume the regular stream of things by tomorrow, but for today, since you've already bothered to navigate your way over, try checking out some of our friends featured in the Links section to your right.
There's lots of good stuff to be found over there - all the folks I steal from and am influenced by. Just click a category to expand the list of featured blogs.
-- MDT
2/02/2007
Hopefully I'll be able to resume the regular stream of things by tomorrow, but for today, since you've already bothered to navigate your way over, try checking out some of our friends featured in the Links section to your right.
There's lots of good stuff to be found over there - all the folks I steal from and am influenced by. Just click a category to expand the list of featured blogs.
-- MDT
Labels: technical difficulties
Milberg Investigation Inches Closer to Lerach With Guilty Plea From Serial Plaintiff, Steven Cooperman
Steven Cooperman is a colorful character. Eye doctor, art dealer bitter divorcee and serial securities litigation plaintiff for the biggest firm in the business, the embattled Milberg Weiss. And did I mention insurance fraudster? Well that too...
Convicted in 2000 of insurance fraud via faked art theft and facing years in prison, Cooperman offered information to prosecutors about Milberg's alleged kickback payments to selected lead plaintiffs in their securities class action cases. In exchange, Cooperman was hoping for the soft touch from federal prosecutors. The deal that Cooperman struck remains under seal.
Cooperman's information on Milberg's practices was seconded by Richard Purtich, a Los Angeles insurance lawyer who claimed that he had personally been the conduit for millions in payments from Milberg to Cooperman. Cooperman, in his own divorce proceedings had himself seperately admitted taking payments from Purtich's hand.
In his divorce testimony, Cooperman also mentioned two direct meetings with Bill Lerach, the former Milberg star who has so far remained untainted by the investigation and indictment of his former firm. Cooperman claimed that on one occasion Lerach personally gave him an enevlope stuffed with $16,000 in cash.
One case in particular in which Cooperman had served as the lead plaintiff proved to be of special interest to investigators: the 1995 AHI Healthcare shareholder class action. Former Milberg partner Alan Schulman, who has been openly hostile to the Milberg's conduct was the team leader on the AHI case. Schulman is known to be cooperating with investigators, giving prosecutors special insight into the case.
This week Cooperman plead guilty to taking more than $6 million in illegal kickbacks from Milberg Weiss and the 50 some odd pages of documentation filed indicates that prosecutors are closing on on Lerach. Court documents filed earlier this week make specific reference to "Partner B," the unnamed individual in the Milberg indictment long believed to be Bill Lerach, placing him at the center of the kickback scheme.
Lerach's lawyers are playing tough, but this can't be good news. Expected, but still not good...
-- MDT
Convicted in 2000 of insurance fraud via faked art theft and facing years in prison, Cooperman offered information to prosecutors about Milberg's alleged kickback payments to selected lead plaintiffs in their securities class action cases. In exchange, Cooperman was hoping for the soft touch from federal prosecutors. The deal that Cooperman struck remains under seal.
Cooperman's information on Milberg's practices was seconded by Richard Purtich, a Los Angeles insurance lawyer who claimed that he had personally been the conduit for millions in payments from Milberg to Cooperman. Cooperman, in his own divorce proceedings had himself seperately admitted taking payments from Purtich's hand.
In his divorce testimony, Cooperman also mentioned two direct meetings with Bill Lerach, the former Milberg star who has so far remained untainted by the investigation and indictment of his former firm. Cooperman claimed that on one occasion Lerach personally gave him an enevlope stuffed with $16,000 in cash.
One case in particular in which Cooperman had served as the lead plaintiff proved to be of special interest to investigators: the 1995 AHI Healthcare shareholder class action. Former Milberg partner Alan Schulman, who has been openly hostile to the Milberg's conduct was the team leader on the AHI case. Schulman is known to be cooperating with investigators, giving prosecutors special insight into the case.
This week Cooperman plead guilty to taking more than $6 million in illegal kickbacks from Milberg Weiss and the 50 some odd pages of documentation filed indicates that prosecutors are closing on on Lerach. Court documents filed earlier this week make specific reference to "Partner B," the unnamed individual in the Milberg indictment long believed to be Bill Lerach, placing him at the center of the kickback scheme.
Lerach's lawyers are playing tough, but this can't be good news. Expected, but still not good...
-- MDT
Labels: Bill Lerach, Melvyn Weiss, Milberg, Milberg Weiss, securities, Steven Cooperman
Wood River Capital Hedge Fiend to Face Criminal Charges
John H. Whittier, the former head of defunct hedge fund Wood River Capital Management was arraigned in New York this week on charges stemming from the $88 million securities fraud he perpetrated on investors in 2004 and 2005. The SEC originally filed civil charges against Whittier and WRC back in October 2005. Whittier could serve as much as 20 years on each count.
-- MDT
-- MDT
Labels: Fraud, hedge fund, John Whittier, Wood River Capital
Actor's Mom (and Hedge Fund Manager) Busted in Fraudulent Trading Scheme
Directors Financial Group, an Illinois hedge fund operated by Sharon Vaughn has been ordered to distribute its assets to investors - some $25 million - based on an SEC complaint filed last March.
The SEC accused Vaughn of defrauded clients in the by investing in a fraudulent prime-bank trading scheme, noting that Vaughn failed to perform adequate due diligence and neglected to disclose her trading strategy to investors. She followed this up by withholding and then submitting fraudulent documents to the SEC.
-- MDT
2/01/2007
The SEC accused Vaughn of defrauded clients in the by investing in a fraudulent prime-bank trading scheme, noting that Vaughn failed to perform adequate due diligence and neglected to disclose her trading strategy to investors. She followed this up by withholding and then submitting fraudulent documents to the SEC.
In addition to the order to dispense DFG's assets Vaughn will also pay a $200,000 penalty. The U.S. Attorney's Office for the Northern District of Illinois has also put forth indictments for the two promoters who sold Vaughn on the dodgy bank trading scheme in the first place.
Interestingly, Sharon Vaughn is the mother of actor Vince Vaughn.More here on Vaughn, via Financial Alternatives.
-- MDT
Labels: Directors Financial Group, Fraud, hedge fund, homeland security, Sharon Vaughn, Vince Vaughn
Enron's Kopper Reports to Jail
Former Enron Corporation finance executive Michael J. Kopper, who ran many of the illict partnerships used to obfuscate Enron's creative accounting, reported to prison yesterday in Big Spring, Texas.
Kopper was a chief underling for Andy Fastow and in exchange for lenience provided information useful to the prosecution in convicting his former boss (Fastow is currently serving time one state over in Oakdale, Louisiana).
In exchange for his cooperation Kopper received a 37 month term our of the 15 years possible in his sentencing.
-- MDT
Kopper was a chief underling for Andy Fastow and in exchange for lenience provided information useful to the prosecution in convicting his former boss (Fastow is currently serving time one state over in Oakdale, Louisiana).
In exchange for his cooperation Kopper received a 37 month term our of the 15 years possible in his sentencing.
-- MDT
Labels: Andy Fastow, Enron, Louisiana, Michael Kopper
