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Fort Bend Securities Trader Indicted for Fraud, Theft of Investor Funds

Press ReleaseTexas State Securities BoardApril 7, 2015

AUSTIN, Texas – Jeffrey Ray Filla was arrested April 6 after having been indicted in Fort Bend County on securities fraud and other charges stemming from his sale of investments in Prophecy Fund LP, a commodities trading program whose collapse he tried to conceal with false financial statements and misrepresentations to investors.
According to the indictment, Filla failed to disclose that he moved a significant portion of the funds investors placed in Prophecy accounts into an unrelated business — Auto Direct LLC, an automobile sales lot in Rosenberg. Filla was the sole managing member of Auto Direct.
Fort Bend County Assistant District Attorney Scott Carpenter is prosecuting the case following an investigation by the State Securities Board and the Fort Bend County Sheriff’s Office. The Fort Bend County grand jury indictment, issued March 23, also charged Filla with theft, money laundering, and misapplication of fiduciary property.
Filla, a resident of Richmond, solicited members of a church he attended in Sugar Land to invest in Prophecy Fund. After raising money for Prophecy, Filla engaged in a number of fraudulent practices to try to convince investors that Prophecy was thriving.
According to the indictment, Filla provided investors with falsified financial statements that were supposedly issued by an auditing firm; made distributions to one investor with funds from another investor, Ponzi style; and failed to forward investor funds to trading firms Filla said he used in operating Prophecy.
With Prophecy and Auto Direct out of money and shut down, Filla filed for bankruptcy June 17, 2014 in the Bankruptcy Court for the Southern District of Texas, Houston Division.

Texas Medicaid regulators hit with legal setback

Eric Dexheimer

Austin-American Statesman

November 25, 2014

The Texas agency charged with investigating health care fraud suffered a serious setback Tuesday, when a state appeals court ruled that the Health and Human Services Commission’s Office of Inspector General’s expansive use of a key tactic — withholding Medicaid payments from doctors it investigates — was illegal.

The 3rd Court of Appeals found the agency had improperly expanded a law allowing regulators to withhold payments from providers against whom there was a “credible allegation of fraud.” Since 2011, the inspector general has withheld tens of millions of dollars from 127 providers, much of it from dentists and orthodontists, as it developed cases against them.

SEC to Pay $30 Million Whistleblower Award, Its Largest Yet

Wall Street Journal

Rachel Louise Ensign

September 22, 2014

Blowing the whistle is increasingly worth big bucks.

The Securities and Exchange Commission said Monday that a foreign tipster will collect a record whistleblower award of more than $30 million, more than twice as much as the highest previous award.

The award came less than a week after Attorney General Eric Holder gave a New York speech in which he said he wanted to boost payouts to motivate more tipsters under a separate whistleblower initiative.

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Holder Proposes Bigger Rewards for Wall Street Whistleblowers

Wall Street Journal

Devlin Barrett

September 17, 2014

The Obama administration is scouring Wall Street for whistleblowers, urging anyone with information about corporate misconduct to tell the government-and proposing changes to make it far more profitable to do so.

In three separate speeches Wednesday, senior Justice Department officials appealed to witnesses inside companies to come forward with evidence of wrongdoing. Attorney General Eric Holder told an audience at the New York University School of Law that he wants to boost the potential payouts to whistleblowers by changing the existing law that caps such rewards in cases involving banks.

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Credit Suisse Pleads Guilty to Fraud

New York Times

Ben Protess and Jessica Silver-Greenberg

May 19, 2014

Credit Suisse has done what no other bank of its size and significance has done in over two decades: plead guilty to criminal wrongdoing.

In a sign that banking giants are no longer immune from criminal charges, despite concerns that financial institutions have grown so large and interconnected that they are too big to jail, federal prosecutors demanded that Credit Suisse’s parent company plead guilty to helping thousands of American account holders hide their wealth.

As part of a deal announced on Monday, the Swiss bank met the demands, agreeing to one count of conspiring to aid tax evasion in a scheme that “spanned decades.” Credit Suisse, which has a giant investment bank in New York and whose chief executive is an American, will also pay about $2.6 billion in penalties and hire an independent monitor for up to two years.

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A.G. Eric Holder Defends White-Collar Crime Record

Todd Ruger

Legal Times

April 3, 2014

Attorney General Eric Holder Jr. defended the U.S. Department of Justice’s track record holding large companies and financial institutions accountable for wrongdoing, telling lawmakers on Capitol Hill that the agency’s record “will stand the test of time.”

“We have gotten pleas both from institutions and from individuals,” Holder testified today at a Senate Appropriations subcommittee hearing. “We’ve also done creative and, I think, appropriate things, appropriately aggressive things, with regard to our use of the civil law as well.”

Holder on Thursday touted the Justice Department’s $13 billion settlement with JPMorgan Chase & Co. and the $1.2 billion agreement with Toyota. “We’re making good on our determination to protect consumers and address fraud in all its forms,” the attorney general said.

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SEC Chair Promises ‘Active Year in Enforcement’


Corporate Counsel

Andrew Ramonas

January 28, 2014

The U.S. Securities and Exchange Commission in 2014 is preparing for “a very busy year in enforcement” and an expansion of its arsenal against wrongdoing on Wall Street, SEC Chairwoman Mary Jo White said Monday.

The SEC’s agenda this year includes the conclusion of all major investigations connected to the 2008 financial crisis, more admissions of guilt in settlements with the agency, and new tools and new regulations intended to combat financial fraud and ensure market integrity, White said in remarks prepared for the 41st Annual Securities Regulation Institute in Coronado, Calif.

“It is a constant, but always exciting, challenge to keep pace and indeed to accurately see around the next corner for the newest market developments or another innovative variant of, or new venue for, fraud,” White said.

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High Court Snubs Appeal Of Abramoff Underling’s Conviction

Law 360

Emily Atkin

October 7, 2013

The U.S. Supreme Court on Monday declined to hear an appeal brought by a former lobbyist who was convicted of bribing public officials in the Jack Abramoff scandal, effectively refusing to clarify the high court’s 2010 ruling that limited the use of a sweeping anti-corruption law.

In a one-line order with no elaboration, the Supreme Court dismissed the appeal of Abramoff associate Kevin A. Ring, who in 2010 was found guilty of bribing public officials with meals, trips and other gifts.

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13 Alleged Anonymous Hackers Indicted In Cyberattacks

Law 350

Matthew Heller

October 3, 2013

Federal prosecutors on Thursday brought criminal conspiracy charges against 13 alleged members of the hacker group Anonymous, accusing them of orchestrating a worldwide series of cyberattacks on the websites of anti-piracy groups, government agencies, intellectual property law firms and others.

According to a grand jury indictment filed in Virginia federal court, the attacks were part of a coordinated campaign dubbed “Operation Payback” that between September 2010 and January 2011 flooded targeted websites with a “huge volume of irrelevant Internet traffic with the intent to make the resources on the websites unavailable to customers and users of those websites.”

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‘Fabulous’ Fabrice Tourre Asks for New Trial

Wall Street Journal

Justin Baer, Saabria Chauhuri

October 1, 2013

Former Goldman Sachs Group Inc. trader Fabrice Tourre is seeking to reverse a federal jury’s decision that found him liable for defrauding investors in a mortgage-linked deal that soured during the financial crisis.

In a motion filed Monday, Mr. Tourre asked U.S. District Judge Katherine Forrest to dismiss each of the six civil counts that went against him, or order a new trial, on grounds the jury’s findings were either “seriously erroneous” or weren’t supported by the case the Securities and Exchange Commission brought against him.

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SEC Ramps Up Fine Amounts to Deter Misconduct

Wall Street Journal

Jean Eaglesham

October 2, 2013

he Securities and Exchange Commission is ramping up its penalties in an “aggressive” bid to deter misconduct by imposing more punitive sanctions, the agency’s co-chief of enforcement said Tuesday.

“Monetary penalties speak very loudly and in a language any potential defendant understands,” Andrew Ceresney told a legal conference in New York.

Mr. Ceresney, appointed as the SEC’s co-director of enforcement in April by incoming SEC Chairman Mary Jo White, said the agency’s new leadership intends to take a tougher stance on punishing companies and individuals in civil enforcement actions.

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SEC Aims to Get Tougher on Fraud

Wall Street Journal

Andrew Ackerman

September 30, 2013

Wall Street’s main cop, under the new leadership of a former prosecutor, plans to ramp up its policing of financial fraud.

Securities and Exchange Commission Chairman Mary Jo White, laying out a broad enforcement agenda for the first time since taking the helm at the agency five months ago, said the agency will seek charges against more individuals and pursue larger fines against companies that commit wrongdoing.

“We need to be certain our settlements have teeth and send a strong message of deterrence,” Ms. White said in a speech before institutional investors. “That is why in each case I have encouraged our enforcement teams to think hard about whether the remedies they are seeking would sufficiently redress the wrongdoing and cause would-be future offenders to think twice.”

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SEC lawsuit against Mark Cuban heads to trial

USA Today

David Koenig, AP

September 29, 2013

With the Dallas Mavericks’ season-opening game still a month away, the basketball team’s outspoken owner, Mark Cuban, will be seeing a different kind of court this week.

The government’s insider-trading case against Cuban, 55, goes to trial Monday in federal court in Dallas. Cuban is expected to testify, and experts say the verdict could come down to whether jurors find the billionaire and regular on the ABC reality show “Shark Tank” to be likable or smug.

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Ex-Halliburton manager charged in Gulf spill probe

Houston Chronicle

Michael Kunzelman

September 19, 2013

A former Halliburton manager was charged Thursday with destroying evidence following BP’s 2010 oil spill in the Gulf of Mexico, a case that coincides with a guilty plea to a related charge by the Houston-based oilfield services company.

Anthony Badalamenti, who had been the cementing technology director for Halliburton Energy Services Inc., was charged in federal court with instructing two other employees to delete data during a post-spill review of the cement job on BP’s blown-out well.

Halliburton was BP PLC’s cement contractor on the drilling rig that exploded in the Gulf in April 2010, killing 11 workers and triggering the largest offshore oil spill in U.S. history.

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Harris County DA tosses conviction, drops 2 pending cases

Houston Chronicle

Brian Rogers

August 2, 2013

Prosecutors have seven years to charge suspects accused of complicated fraudulent schemes and missing that window because the statute of limitations has run out is a tough disappointment.

Robin Sue Cooper, Rodney Holmes and Regina Holmes were indicted on first-degree felony charges of fraud March 28, 2012. To be valid, the indictments had to be handed down a week earlier, an error was made by an investigator who lost his job earlier this year after his partner was arrested for stealing evidence

Dustin Deutsch was fired after his fellow investigator and partner in a private investigation business, Lonnie Blevins, was indicted on federal charges of theft, accused of stealing and selling hundreds of thousands of dollars in rare comic books from an embezzlement case.

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University to Pay Millions in Fraud Suit

Wall Street Journal

Melinda Beck

July 30, 2013

Northwestern University agreed to pay nearly $3 million to settle claims that a former cancer researcher fraudulently used federal grant money for personal expenses, including food, hotels and airfare for family trips between 2003 and 2010.

The settlement in the civil suit was unsealed Tuesday by the U.S. Attorney for the Northern District of Illinois, which investigated claims brought by a whistleblower under the False Claims Act.

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No Warrant Needed for Cell Site Data, Fifth Circuit Says

July 30, 2013

Mike Scarcella

Legal authorities do not need a warrant to obtain records detailing a cellphone’s location, a federal appeals court in New Orleans has ruled, overturning a trial judge who said subscribers enjoy a Fourth Amendment privacy interest in the data.

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Feds target ambulance service providers

Houston Chronicle

Cindy George

July 27, 2013

Based on Houston’s status as a Medicare fraud “hot spot,” federal health officials announced Friday that they are placing an unprecedented six-month moratorium on private ambulance company enrollments in government insurance programs.

Beginning Tuesday, the Centers for Medicare and Medicaid Services will stop approving new or pending applications for ground ambulance suppliers in eight area counties including Harris – the nation’s leader in the number of private Emergency Medical Service providers. The agency will place the same limitations on home health care companies in Miami and Chicago, which are also high-fraud areas.

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Walmart’s India fallout started with allegations of bribery in Mexico

Economic Times

Rasul Bailay & Chaitali Chakravarty

July 25, 2013

If not for Mexico, a Gurgaon based transport company might still be plying trucks for Bharti Walmart, the joint venture of the world’s largest retailer in India, moving goods from its distribution centre in Palwal, Haryana, to stores across India. A few months ago, the owner of this company expressed his inability to keep costs down in a meeting with Michael Maxwell, the vice-president for distribution and transportation in Bharti Walmart, as he had to pay off traffic policemen for movement of trucks.

This confession led Bharti Walmart to terminate the transporter’s services as it violated an American anti-corruption law, which was part of the company’s operating procedure all along but had become sacrosanct because of the way its provisions were allegedly flouted by Walmart’s Mexican subsidiary and the possible punishments that could follow for its parent in the US.

As a result of this, back in the US, Walmart is facing several probes and shareholder suits related to allegations of corrupt business practices in Mexico and hushing up a previous internal inquiry into the matter. The main probe is under the Foreign Corrupt Practices Act (FCPA), a law that prohibits American companies and their foreign subsidiaries from bribing officials. It has two key provisions: the anti-bribery provisions of the FCPA are enforced by the Department of Justice and the accounting provisions by the Securities and Exchange Commission (SEC).

Feds: Halliburton agrees to plead guilty in spill


Houston Chronicle

June 26, 2013

Halliburton Energy Services has agreed to plead guilty to destroying evidence in connection with the 2010 Gulf oil spill, the Department of Justice said Thursday.

Federal officials said in a news release that a criminal information charging Halliburton with one count of destruction of evidence was filed in federal court in Louisiana.

Halliburton has agreed to pay the maximum fine, be on probation for three years and continue to cooperate with the government’s criminal investigation, according to the news release, which did not list the amount of the fine.

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SEC Policy Requires Admission of Wrongdoing

Sue Reisinger

June 25, 2013

General counsel are going to be closely watching how the Securities and Exchange Commission enforces a new policy that would force corporations to admit misconduct in “egregious” cases. It’s a policy that’s likely to greatly impact a company’s litigation strategy, according to attorney Christopher LaVigne.

Then the agency started insisting on admissions when there were guilty pleas in parallel criminal cases, he said, and since June it has been requiring admissions of liability in egregious cases-or else the defendant goes to trial.

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SEC Is Seeking to Ban Cohen

Wall Street Journal

Jean Eaglesham and Jenny Strasberg

July 20, 2013

U.S. securities regulators accused Steven A. Cohen of ignoring “red flags” that should have alerted him to insider trading at his hedge-fund firm and moved to ban the billionaire for life from the industry where he made his fortune.

After circling Mr. Cohen for years, the Securities and Exchange Commission filed an administrative action against him Friday. It marked the first time he was personally accused of wrongdoing in a long-running insider-trading probe.

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Justice Sequestered

New York Times

Editorial Board

July 20, 2013

The madness of Washington’s across-the-board budget cuts known as sequestration is causing real damage to the American justice system — undermining the sound functioning of the courts and particularly imperiling the delivery of effective legal representation to poor people accused of federal crimes.

The $350 million reduction in the federal judiciary’s budget for fiscal 2013 has resulted in a roughly 8 percent cut to the network of high-quality federal defender offices across the country.

One thing that might help is a louder and more forceful declaration from Chief Justice John Roberts Jr. about the damage the sequester is doing to America’s courts — the subject of a much-needed Senate Judiciary subcommittee hearing scheduled for Tuesday by Senator Christopher Coons, a Delaware Democrat

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Whistleblower Attys On Edge As Dodd-Frank Split Deepens

Law 360

July 18, 2013

Max Stendahl

The Fifth Circuit ruled Wednesday that anti-retaliation provisions in Dodd-Frank only protect tipsters who disclose alleged fraud to the U.S. Securities and Exchange Commission, setting up a potential circuit split on an issue that could dramatically change how the whistleblower bar does business.

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SEC Seeks Admissions of Fault

Wall Street Journal

June 18, 2013

Jean Eaglesham, Andrew Ackerman

The Securities and Exchange Commission intends to make companies and individuals admit wrongdoing as a condition of settling civil charges in certain cases, or be forced to fight the charges in court, the agency’s Chairman Mary Jo White said Tuesday.

The move marks a watershed change to the SEC’s decades-old policy of allowing companies and individuals to settle charges without admitting or denying liability.

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Former Investment Banker and His Associate Plead Guilty in San Francisco to Insider Trading Scheme

Department of Justice Office of Public Affairs

A former San Francisco investment banker and his college friend both pleaded guilty today for their roles in an insider trading scheme involving two impending corporate mergers, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Northern District of California Melinda Haag.

Jauyo Lee, aka “Jason Lee,” 29, of New York, and Victor Chen, 29, of Sunnyvale, Calif., both pleaded guilty before U.S. District Judge Richard Seeborg in the Northern District of California to one count of conspiracy to commit securities fraud and one count of securities fraud. Lee and Chen were charged in a criminal information on March 21, 2013.

“Insider trading undermines ordinary investors’ faith in our financial markets, and the Justice Department has zero tolerance for it,” said Acting Assistant Attorney General Raman. “Today’s guilty pleas show that you cannot trade on inside information, pocket the profit and expect to escape responsibility. Having now admitted their conduct, Mr. Lee and Mr. Chen must face the consequences.”

“Securities professionals cannot exploit their positions of trust to enrich themselves and their friends,” said U.S. Attorney Haag. “Those tempted to corrupt our markets in this manner should know: the government will get to the bottom of suspicious trading and prosecute securities fraud vigorously.”

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Cohen’s SAC to pay $616 million in SEC insider trade settlement


Jonathan Stempel and Katya Wachtel

March 15, 2013

Hedge fund titan Steven A. Cohen’s firm is paying $615.7 million to settle charges that it improperly traded in two stocks, in what is the largest-ever, insider trading settlement, U.S. securities regulators said on Friday.

SAC Capital Advisors has long been the focus of a federal insider trading probe, and the settlement removes a major distraction that had prompted some investors to pull their money out of the $15 billion hedge fund. But it does not end the scrutiny as the U.S. Department of Justice and the Federal Bureau of Investigation are still investigating SAC’s trading of other stocks.

The accord “does not preclude the future filing of additional charges against any person, including Steve Cohen, who is not named as a defendant in these cases,” George Canellos, acting director of the SEC enforcement division, said on a conference call.

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Accounting Fraud Cases Plummet During 2012

The National Law Journal

April 10, 2013

Class actions asserting accounting irregularities fell sharply last year, following a one-time increase in 2011 attributed to a surge of Chinese reverse mergers, according to a Cornerstone Research report. The consulting firm found that accounting fraud case filings dropped to their lowest number in six years. Even so, accounting fraud cases brought larger settlements than most shareholder litigation.

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Senators Aim to Scrap Mandatory Minimum Sentences

The National Law Journal

March 22, 2013

Senators Patrick Leahy, D-Vt., and Rand Paul, R-Ky., introduced on Wednesday the Justice Safety Valve Act, which allows judges to sentence offenders below the mandatory minimums they’re currently required to impose. The option is already available in some drug cases; this law would extend the discretion to all federal crimes. Leahy cited a 2010 survey by the U.S. Sentencing Commission, in which nearly 70 percent of more than 600 federal district court judges said they wanted the safety valve provision for all crimes.

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Ex-Lawyer Skips Retrial, Pleads Guilty in Tax Shelter Scheme

The New York Law Journal

September 14, 2012

Former Jenkens & Gilchrist tax lawyer Donna Guerin folded her cards yesterday and pleaded guilty to helping wealthy clients cheat the Internal Revenue Service out of hundreds of millions of dollars through illegal tax shelters.

Just three months after Southern District Judge William Pauley granted a new trial to Guerin and two codefendants because of juror misconduct, Guerin admitted to issuing opinion letters intended to protect clients from IRS scrutiny by attesting that the complex transactions at issue had economic substance.

“I knew in my heart then and I acknowledge to your honor today that many of our clients were only interested in reducing their tax liability,” Guerin said, with her attorney, Mark Rotert of Stetler, Duffy & Rotert in Chicago, by her side.

Guerin, 52, pleaded guilty to one count of conspiracy and one substantive count of tax evasion pursuant to a plea agreement with the government. While both counts carry a maximum of five years in prison, she will likely receive less when she is sentenced by Pauley on Jan. 11. Guerin will also forfeit $1.6 million.


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Inquiry on Tax Strategy Adds to Scrutiny of Finance Firms

New York Times

September 1, 2012

The New York attorney general is investigating whether some of the nation’s biggest private equity firms have abused a tax strategy in order to slice hundreds of millions of dollars from their tax bills, according to executives with direct knowledge of the inquiry.

The attorney general, Eric T. Schneiderman, has in recent weeks subpoenaed more than a dozen firms seeking documents that would reveal whether they converted certain management fees collected from their investors into fund investments, which are taxed at a far lower rate than ordinary income.

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Federal Trial Set to Open for Ex-Mayor of Detroit

Steven Yaccino

New York Times

September 3, 2012

During his nearly seven-year stint as mayor of Detroit, there was little about Kwame M. Kilpatrick that was not big. His 6-foot-4 frame. His “hip-hop mayor” persona and the 1 ½-carat diamond that pierced his ear. His wide appeal made him, at the age of 31, the youngest person ever to lead the city.

Now four years since he left office, the criminal charges Mr. Kilpatrick will face when his federal trial begins with jury selection on Thursday are no exception in size: more than 30 counts that include racketeering, bribery and fraud during his time in public office.

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Citibank schemed with firm to hide its woes: Ex-Dewey partner

Casey Sullivan


August 31, 2012

A former Dewey & LeBoeuf partner who has been accused by Citibank of defaulting on a loan is making a provocative countercharge: He claims the bank participated in a “fraudulent scheme” to help a few leaders of the now defunct law firm hide Dewey’s dire financial situation from him and the broader partnership.

In a 23-page motion filed in New York federal court this month, former Dewey partner Steven Otillar argues that he and other partners were “fraudulently induced” into signing up for a Citibank loan program that financed their capital contributions to the firm. The motion was filed in response to a request made by Citibank in May for summary judgment. In its lawsuit, Citibank argues that Otillar has no legal grounds to claim he doesn’t owe payment on the loan.

Feds, insurers team up to battle health care fraud


Houston Chronicle


Stepping up their game against health care fraud, the Obama administration and major insurers announced Thursday they will share raw data and investigative know how on a scale not previously seen to try to shut off billions of dollars in questionable payments.

At a White House event with insurance executives, Health and Human Services Secretary Kathleen Sebelius said the new public-private partnership will allow government programs and the insurance industry to take the high ground against scam artists constantly poking the system for weaknesses.

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Insider trading bill clears House without key reforms

USA Today

Brian Tumulty

February 9, 2012

Legislation clarifying that members of Congress are subjected to federal anti-fraud laws covering stock trading and requiring them to publicly to disclose transactions on a timely basis overwhelmingly cleared the House on Thursday.

House Republican Majority Leader Eric Cantor suggested the 417-2 margin puts “some pressure on the Senate to go ahead and take up our bill.”

But public watchdog groups and the lawmakers who authored the original version of the legislation – known as the STOCK (Stop Trading on Congressional Knowledge) Act – said the Senate version calls for tougher reforms that should be in a final bill.

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Gupta Wasn’t Rajaratnam’s Only Goldman ‘Insider,’ U.S. Says


Patricia Hurtado

February 8, 2012

A second “insider” at Goldman Sachs Group Inc. (GS) allegedly leaked tips to hedge fund manager Raj Rajaratnam, U.S. prosecutors told the judge presiding over the case of former Goldman Sachs director Rajat Gupta.

The government’s disclosure about another Goldman Sachs tipster for Rajaratnam, who was convicted of insider trading in May, came during yesterday’s arraignment of Gupta on revised insider-trading charges that broaden the scope of the alleged conspiracy. Gupta, 63, pleaded not guilty.

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STOCK Act: Insider Trading Ban May Muzzle Whistleblowers

Huffington Post

Michael McAuliff

February 7, 2012

The bill to ban insider trading by members of Congress may have unintended consequences, including possibly muzzling whistleblowers and putting any business owner who talks to legislators at risk of breaking the law, some observers warn.

At issue is an amendment added to the STOCK Actthat passed the Senate last week.

The provision, sponsored by Sen. Chuck Grassley (R-Iowa), requires people who offer “political intelligence” that can be used to make money to register alongside lobbyists as political intelligence consultants. According to the firm Integrity Research Associates, political intelligence is a $100 million-a-year business with 30 to 50 firms operating in Washington alone.

Stanford’s attorneys say ex-CFO was behind fraud

Bloomberg Business Week

Juan A. Lozano

February 7, 2012

Attorneys for jailed Texas tycoon R. Allen Stanford suggested to jurors Tuesday that letters, emails and other documents show it was not the financier but his top money man who was actually behind an alleged Ponzi scheme that took billions from investors.

During sometimes contentious questioning of James M. Davis, the former chief financial officer for Stanford’s companies, the financier’s attorneys claimed it was Davis alone who altered financial statements and requested that bribes be sent to an auditor as part of efforts to hide the alleged fraud at Stanford’s Caribbean bank.

They also accused Davis of lying in his testimony, in which he accused Stanford of orchestrating the fraud, in order to get a reduced sentence. Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors in exchange for a possible reduced sentence.

Olympus Hotline Didn’t Blow Whistle

Wall Street Journal

Juro Osawa

January 4, 2012

To understand why it took more than a decade for the misdeeds at OlympusCorp. to surface, consider this: The two executives who allegedly masterminded the concealment of $1.5 billion in losses also oversaw the company’s whistleblowing hotline.

The Japanese camera maker had a culture in which employees “were afraid to express views that were different” from those held by the company’s “autocratic leadership,” according to a recent report by an independent panel tasked with investigating the coverup.

That culture was a key reason Olympus executives Hideo Yamada and Hisashi Mori were allegedly able to hide what they were doing for 13 years-even though they at times needed help from other managers, said the panel, which was appointed by Olympus’s board to investigate the scandal.

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S.E.C. Wins Delay in Citigroup Fraud Case

New York Times

Edward Wyatt

December 27, 2011

A federal appeals court granted an emergency ruling late Tuesday that temporarily halted proceedings in theSecurities and Exchange Commission‘s case against Citigroup. The decision will allow the court to consider an appeal of a lower court’s decision to throw out a $285 million fraud settlement between the commission and Citigroup.

The United States Court of Appeals for the Second Circuit, based in New York, ruled that further action in the case would be delayed until at least Jan. 17, giving it time to rule on whether it would grant an expedited hearing of the appeal and whether the two sides should have to simultaneously prepare for a trial.

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Former Chairman of Anglo Irish Bank Arrested

Deal Book

By: Mark Scott

December 9, 2011

Sean FitzPatrick, the former chairman and chief executive of the bankrupt Anglo Irish Bank, was arrested Friday in connection with an investigation into alleged fraud at the firm, according to a person familiar with the situation.

This is the second time Anglo Irish’s former chairman has been arrested. In 2010, Mr. FitzPatrick, 63, was questioned by police about the same fraud investigation related to the misuse of customer deposits.

Mr. FitzPatrick resigned after admitting that he had concealed loans from shareholder totaling $112 million that he had received from the bank. Mr. FitzPatrick declared bankruptcy last year in the wake of the nationalization of Anglo Irish.

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Rajaratnam Ordered to Pay $92.8 Million Penalty

November 8, 2011

Peter Lattam, Dealbook

A federal judge on Tuesday ordered the convicted hedge fund titan Raj Rajaratnam to pay a $92.8 million penalty, the largest ever assessed against a person in aSecurities and Exchange Commission insider trading case.

Combined with the fines and forfeitures ordered last month when he was sentenced to 11 years in prison for insider trading, Mr. Rajaratnam will be paying a total of $156.6 million.

“The penalty imposed today reflects the historic proportions of Raj Rajaratnam’s illegal conduct and its impact on the integrity of our markets,” said Robert S. Khuzami, the S.E.C.’s head of enforcement.

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Medicare Fraud Strike Force Charges 91 Individuals for Approximately $295 Million in False Billing

September 7, 2011

Department of Justice

WASHINGTON – Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.

Attorney General Holder and Secretary Sebelius were joined in the announcement by FBI Executive Assistant Director Shawn Henry, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and HHS Inspector General Daniel R. Levinson.

As part of a coordinated action, 70 individuals were charged by Strike Force prosecutors in indictments unsealed yesterday and today in six cities alleging a variety of Medicare fraud schemes involving approximately $263.6 million in false billings. As part of takedown operations last week, 18 additional defendants were charged in Detroit and one defendant was charged in Miami in cases unsealed on Sept. 1, 2011, for their alleged roles in Medicare fraud schemes involving approximately $29.4 million in fraudulent claims. Additionally, two individuals are scheduled to appear in court today on charges filed on Aug. 24, 2011, for their roles in a separate $2 million health care fraud scheme. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.

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Rajaratnam Should Spend More Than 24 Years in Prison for Trades, U.S. Says

August 9, 2011


Edvard Pettersson, Bob Van Voris and David Glovin

Galleon Group LLC co-founder Raj Rajaratnam, labeled by prosecutors as the “face of illegal insider trading,” should spend as long as 24 years and five months in prison, the U.S. told the judge who will sentence him.

Lawyers for Rajaratnam, in a separate court filing yesterday, asked U.S. District Judge Richard Holwell in Manhattan for a prison term “substantially below” what federal guidelines recommend. Rajaratnam’s attorneys, citing their client’s poor health, urged Holwell not to force him to die in prison.

Rajaratnam, 54, was convicted in May of all 14 criminal counts of conspiracy and securities fraud he was charged with. He’s scheduled to be sentenced Sept. 27. Prosecutors said he should serve at least 19 years, seven months in prison.

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Goldman Sachs Sued by U.S. Over Securities Sold to Failed Credit Unions

August 9, 2011


Gregory Mott and Joel Rosenblatt

Goldman Sachs Group Inc. (GS) was accused by the National Credit Union Administration in a lawsuit of violating federal and state laws in the sale of mortgage-backed securities to now-failed corporate credit unions.

The NCUA said in a statement that it seeks damages of more than $491 million from Goldman Sachs. The complaint, filed yesterday in federal court in Los Angeles, is the fourth case aimed at recovering almost $2 billion from “sellers and underwriters of questionable securities,” the NCUA said. The agency said it expects to file five to 10 such cases.

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For-Profit College Group Sued as U.S. Lays Out Wide Fraud

August 8, 2011

New York Times

Tamara Lewin

The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.

While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.

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Researchers Expose Cunning Online Tracking Service That Can’t Be Dodged


Ryan Singel

Researchers at U.C. Berkeley have discovered that some of the net’s most popular sites are using a tracking service that can’t be evaded – even when users block cookies, turn off storage in Flash, or use browsers’ “incognito” functions.

The service, called KISSmetrics, is used by sites to track the number of visitors, what the visitors do on the site, and where they come to the site from – and the company says it does a more comprehensive job than its competitors such as Google Analytics.

But the researchers say the site is using sneaky techniques to prevent users from opting out of being tracked on popular sites, including the TV streaming site

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U.K. Tabloid’s Lawyer Had a Ringside Seat

July 28, 2011

Wall Street Journal


Tom Crone had insight into how the dirt was dug-and defended-at the News of the World, the now-closed tabloid at the center of the U.K. phone-hacking scandal.

Now he may be on a collision course with James Murdoch, the deputy chief operating officer of News Corp.

Mr. Crone, who was the top lawyer at the tabloid, joined forces last week with its former editor, Colin Myler, to challenge the testimony Mr. Murdoch gave at a parliamentary committee hearing two days earlier.

The two men said that in 2008 they had informed Mr. Murdoch-who was then overseeing News Corp.’s European and Asian operations-of a key 2005 email that suggests that interceptions of voice mails at the paper went beyond a single reporter and a private investigator.

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Sky Capital Founder Mandell Is Convicted in Eight-Year $140 Million Fraud

By Patricia Hurtado and Chris Dolmetsch


July 26, 2011

Sky Capital Holdings Ltd. founder Ross Mandell was convicted of operating what the U.S. said was an eight-year long scheme that defrauded investors out of $140 million.

Mandell, 54, of Boca Raton, Florida, was found guilty yesterday by a federal jury in New York of all four counts he was charged with, conspiracy, securities fraud, wire fraud and mail fraud, after a trial before U.S. District Judge Paul Crotty in Manhattan.

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Judge declares mistrial in Roger Clemens perjury case

Los Angeles Times

July 14, 2011

Richard A. Serrano

The judge in the Roger Clemens federal perjury trial abruptly declared a mistrial on the second day of testimony after the government inadvertently allowed the jury to hear statements from a U.S. congressman discussing the credibility of one of the key witnesses against the former All-Star baseball pitcher.

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Chasing Fraud, Then Chasing Cash

Wall Street Journal

July 8, 2011

Jean Eaglesham

It is easier for regulators to get their man than it is to get their money.

Since late 2005, the Securities and Exchange Commission and Commodity Futures Trading Commission have ordered $12.3 billion in penalties for alleged wrongdoing. The total includes fines, the return of ill-gotten profits and repayment of restitution to investors.

But more than $4.5 billion hasn’t been paid yet, according to the two agencies. The SEC is owed $3.78 billion, while the CFTC hasn’t collected $752 million in fines alone.

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Behind the Gentler Approach to Banks by U.S.

New York Times

July 8, 2011

As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.

Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.

Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled ”an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, Description: Click for Enhanced Coverage Linking Searches a prominent Wall Street law firm, told clients in a memo that September.

The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.

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DOJ Says Travel Sponsorship Doesn’t Violate Bribery Law

Wall Street Journal

July 7, 2011

Samuel Rubenfeld

A company seeking to fly two foreign government officials to the U.S. to learn about their product would not be violating foreign bribery law if it follows specific criteria, the Justice Department said last week in an opinion procedure release.

Corporate hospitality has become a major sticking point recently with companies running scared amid the implementation of anti-bribery legislation out of the U.K. that bans even commercial bribery and provides a strict corporate liability for the act.

The U.S., for its part, has been aggressive in its enforcement of the Foreign Corrupt Practices Act, which bans bribery of foreign officials for business purposes. With little in the way of judicial precedent to go on, however, the Justice Department’s occasional opinion procedures releases are a major window through which companies can understand how to comply with the FCPA.

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AG: Massachusetts to get $2M in bank settlement

The Associated Press

July 7, 2011

Massachusetts is to receive about $2 million of a $211 million settlement that JPMorgan Chase & Co. has agreed to pay after admitting one of its divisions rigged dozens of bidding competitions to win business from state and local governments.

The state Attorney General’s office says widespread price-fixing and bid-rigging deals allowed the bank to see competitors’ offers to municipalities and nonprofits investing money raised from bond offerings.

Banks compete for municipalities’ business by submitting the best yield they can offer.

Mistrial Declared in FCPA Sting Case

The Blog of Legal Times

July 7, 2011

U.S. District Court Judge Richard Leon declared a mistrial this afternoon in a sprawling foreign bribery sting case that involved allegations of a corrupt deal to sell $15 million in supplies to the defense minister of Gabon.

The high-profile trial against four of the 22 individuals caught up in the sting began on May 17. The jury began deliberations on June 28.

Following the announcement, Justice Department prosecutor Joey Lipton told the court that the government intends to retry the case.

Anthony verdict a victory for “reasonable doubt,” experts say


July 5, 2011

Alex Dobuzinskis

A Florida jury cleared Anthony of the murder charge she faced in the 2008 death of her daughter, Caylee, but found her guilty of lying to police about the incident.

A number of media commentators had expected Anthony to be found guilty of murder in the case, even though prosecutors were forced to rely largely on circumstantial evidence.

Doug Berman, a criminal law professor at Ohio State University, said popular opinion came to the conclusion the 25 year-old Anthony was guilty, but that jurors must hold to a higher standard than the average citizen watching on TV.

That standard is guilt beyond a reasonable doubt.

“In some sense, it’s a sign that the system worked well,” Berman said. “The job of the system is not to turn this into a Hollywood ending, but to have all the actors in the system do the job to the best of their ability.”

Josh Niewoehner, a Chicago attorney who worked on the successful defense of R&B singer R. Kelly against charges of child pornography, said he welcomed the Anthony verdict.

“I commend the jurors for listening to the evidence and not listening to the media,” Niewoehner said.

“It’s a good day for justice in the sense that you have to prove every element of every crime beyond a reasonable doubt,” he added.

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High Tide: UK Bribery Act Now In Effect

Samuel Rubenfeld

Wall Street Journal

July 1, 2011


The long-awaited U.K. Bribery Act is now in effect. Everyone has something to say about it. Are you ready? Even if you’re not, here it comes. Here is a Q/A, an overview and avideo on the law. Another video is availablehere. Here is a review and a roundup of reactions to the law by experts, and one lawyer says the SFO has its hands tied behind its back while trying to enforce it. Transparency International writes on why we need the law, and a press release they put out on it.

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Jury convicts ousted Illinois Gov. Rod Blagojevich of trying to sell Obama’s old Senate seat


June 27th

Washington Post

Rod Blagojevich, who won two terms as Illinois governor before scandal made him a national punch line, was convicted Monday of a wide range of corruption charges, including trying to sell President Barack Obama’s Senate seat.

The verdict, coming after his first trial ended last year with the jury deadlocked on most charges, was a bitter defeat for Blagojevich, who spent 2½ years professing his innocence on reality TV shows and later on the witness stand. His defense team insisted that hours of FBI wiretap recordings were just the ramblings of a politician who liked to think out loud.

Blagojevich becomes the second straight Illinois governor convicted of corruption. His predecessor, George Ryan, is now serving 6½ years in federal prison.

Former U.S. Army Major Pleads Guilty to Bribery Related to Contracting in Support of Iraq War

A former U.S. Army major pleaded guilty today to bribery related to his work as a contracting officer’s representative in Kuwait from 2004 to 2006, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

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AstraZeneca pulls plug on free trips for doctors


May 27, 2011

Ben Hirschler

In an industry first, drugmaker AstraZeneca (AZN.L) is scrapping payments for doctors to attend international medical congresses.

The move follows increased scrutiny of the $850 billion-a-year industry’s potentially undue influence on prescribers and could put pressure on rivals to follow suit.

AstraZeneca chief executive David Brennan announced the change of policy in low-key fashion at an industry conference in Istanbul earlier this month.

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SEC Announces Deferred Prosecution for Tenaris

May 18, 2011

Sue Reisinger

The Securities and Exchange Commission announced that it has entered into a deferred prosecution agreement with Tenaris S.A. of Luxembourg over bribe payments – the first time the agency has ever used such a deal.

In a statement, the SEC said it used the approach to reward the company’s cooperation in the investigation and to encourage other companies and individuals to do likewise.

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Lindsey Manufacturing Executives Guilty in Bribery Case

May 10, 2011


Edvard Peterson

Two executives with a California maker of emergency electricity towers were found guilty of paying bribes including a Ferrari to officials at a Mexican state-owned utility to obtain orders.

The jury returned guilty verdicts today on all counts of conspiracy and violating the Foreign Corrupt Practices Act against Keith Lindsey, 66, the president of closely held Lindsey Manufacturing Co., and Steve Lee, 60, the company’s chief financial officer, said Thom Mrozek, a spokesman for U.S. Attorney Andre Birotte Jr. in Los Angeles.

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SciClone Reports Possible FCPA Violations To DOJ, SEC

May 10, 2011

Wall Street Journal

Joe Palazzolo

An internal investigation by SciClone Pharmaceuticals Inc. uncovered evidence of sales and marketing activities that might violate the Foreign Corrupt Practices Act, the company said Tuesday.

The Foster City, Calif.-drug company also announced in a statement that the president of SciClone’s Hong Kong-based international sales arm, Hans Schmid, resigned on Monday. The statement provided no further detail on Schmid’s resignation but mentioned it in the context of the FCPA investigation.

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Retardation issue set for 2nd round in courts

May 8, 2011

Houston Chronicle

Mike Tolson

Some called him Dr. Death, a latter-day incarnation of a psychologist who a generation earlier earned the title by repeatedly testifying for the state in death penalty cases.

Whether Fort Worth psychologist George Denkowski deserved the dubious honorific can be debated, as his work was not always friendly to the prosecutors who hired him. But no one doubts that he had an impact. When the state’s capital punishment machinery was thrown into disarray by a U.S. Supreme Court decision banning execution of the mentally retarded, Denkowski was willing to help restore order. By the time he was done – albeit discredited, scorned by peers in his field and reprimanded by a state licensing board – more than a dozen men were kept on or sent to death row and his bank account was significantly fatter, $300,000 to the good for his work in Harris County alone.

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JPMorgan Said to Face SEC Subpoena Along With Credit Suisse

May 6, 2011


Jody Shenn, Shannon D. Harrington and Karen Freifeld

JPMorgan Chase & Co. (JPM) received a subpoena from the U.S. Securities and Exchange Commission over failed mortgages, a person familiar with the investigation said, as the agency probes banks including Credit Suisse Group AG (CS) for allegedly failing to share refunds from sellers of faulty debt.

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U.S. accuses Deutsche Bank of mortgage fraud

Larry Neumeister, AP

May 3, 2011

The federal government sued Deutsche Bank Tuesday, saying the bank committed fraud and padded its pockets with undeserved income as it repeatedly lied so it could benefit from a government program that insured mortgages.

The lawsuit in U.S. District Court in Manhattan seeks to recover hundreds of millions of dollars in insurance claims that the government has had to pay when homeowners defaulted on their mortgages. The lawsuit also asked for punitive damages. The government said the bank made substantial profits between 2007 and 2009 from the resale of the risky mortgages, leaving the government to foot the bill for loans that defaulted. The mortgage insurance is issued by the Federal Housing Administration.

Hedge Funds Track Traders as Probe Puts ‘Fear’ in Firms


Saijel Kishan

April 7, 2011

The U.S. government isn’t the only one investigating insider trading on Wall Street. Hedge funds have joined the hunt.

Some are engaging people like Jeremy Kroll, co-founder of K2 Global Consulting LLC, a New York-based investigations firm. Kroll has created software that scrutinizes the personal, social and business relationships of traders and analysts to help detect and thwart possible misuse of confidential information. At least five multibillion-dollar hedge funds have signed on, said Kroll, who declined to name them.

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New York Man Sentenced to 16 Months in Federal Prison for Role in $1.7 Million Insider Trading Scheme

Press Release

US Attorneys Office

April 7, 2011

A former vice president in the Los Angeles office of the Lippert Heilshorn & Associates investor relations firm has been sentenced to 16 months in federal prison for providing confidential information that was used in an insider trading scheme that generated $1.7 million in illegal profits for his associates.

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Comverse To Pay $2.8 Million To Settle FCPA Violations

April 7, 2011

Wall Street Journal

Comverse Technology Inc. agreed to pay $2.8 million to U.S. regulators to settle foreign bribery violations. According to a non-prosecution agreement it signed with the Justice Department, Comverse accepted responsibility for violating the books and records provisions of the Foreign Corrupt Practices Act for failing to accurately record payments made from 2003 to 2006 by employees and a third-party agent of the company’s subsidiaries to individuals connected to a Greek telecoms provider in order to obtain purchase orders.

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SEC Says Johnson & Johnson To Pay More Than $70M In Settlement

April 8, 2011


The Securities and Exchange Commission today charged Johnson and Johnson (J&J) with violating the Foreign Corrupt Practices Act (FCPA) by bribing public doctors in several European countries and paying kickbacks to Iraq to illegally obtain business.

The SEC alleges that since at least 1998, subsidiaries of the New Brunswick, N.J.-based pharmaceutical, consumer product, and medical device company paid bribes to public doctors in Greece who selected J&J surgical implants, public doctors and hospital administrators in Poland who awarded contracts to J&J, and public doctors in Romania to prescribe J&J pharmaceutical products. J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program.

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Judge Rules Former GC Can’t Disclose Privileged Info in Whistleblower FCA Suit

Nate Raymond

The American Lawyer

April 7, 2011

Since 2005, three former executives of Unilab, a medical testing company now owned by Quest Diagnostics, have quietly been trying to get the U.S. government to intervene in a False Claims Act whistleblower suit alleging violations of anti-kickback laws. The Justice Department may yet intervene–but if it does, the purported whistleblowers and their lawyers at Troutman Sanders won’t see any of the DOJ’s recovery, according to a 31-page ruling Tuesday by Manhattan federal district court judge Robert Patterson.

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‘Insider is charged at FDA

March 30, 2011

Wall Street Journal

A longtime chemist at the Food and Drug Administration was charged Tuesday with insider trading by federal authorities, who alleged he made as much as $3.6 million trading drug company stocks based on confidential drug-approval information.

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European Lawmakers Resign After Accusations of Bribery

March 21, 2011

Associated Press

Two European Parliament lawmakers have resigned and a third has stepped down from his position in his party after a British newspaper reported they had agreed to propose legislation in return for bribes.

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How Offshore Tax Havens Save Companies Billions


March 17, 2011

The top corporate income tax level in the United States is 35 percent. In the United Kingdom, it’s 28 percent. But in Ireland, it’s only 12.5 percent, and in Bermuda there’s no corporate income tax at all. That means multinational companies that shift their earnings through Ireland or Bermuda can save billions of dollars in taxes each year.

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Ex-UBS Banker Poteroba Sentenced to 22 Months Prison for Insider Trading

March 21, 2011


Igor Poteroba, a former UBS AG (UBSN) investment banker who pleaded guilty to insider trading, was sentenced to 22 months in prison.

U.S. District Judge Paul A. Crotty in Manhattan also ordered Poteroba to pay a $25,000 fine and to serve three years of supervised release after his prison term. In December, Poteroba, 37, pleaded guilty to one count of conspiracy to commit securities fraud and three counts of securities fraud.

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Ex-employee of LyondellBasell pleads guilty in multimillion-dollar kickback scheme


March 11, 2011

A former LyondellBasell employee from Bellaire has pleaded guilty to four felony charges in connection with a multimillion-dollar kickback scheme, U.S. Attorney Jose Angel Moreno announced Friday.

Jonathan Paul Barnes, 55, is accused of conspiracy to commit wire fraud, conspiracy to engage in international money laundering, making a false statement in a passport application and bulk cash smuggling.

The conspiracy charges each carry a punishment of up to 20 years in prison. The passport charge carries a punishment of up to 10 years imprisonment, while bulk cash smuggling carries a maximum punishment of five years’ incarceration.

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Morgan Stanley Leak Shows Attack by China-Based Hackers Who Took On Google

Michael Riley

February 28, 2011

Bloomberg News

Morgan Stanley experienced a “very sensitive” break-in to its network by the same China-based hackers who attacked Google Inc.’s computers more than a year ago, according to e-mails stolen from a cyber-security company working for the bank.

The e-mails from the Sacramento, California-based computer security firm HBGary Inc., which identify the first financial institution targeted in the series of attacks, said the bank considered details of the intrusion a closely guarded secret.

“They were hit hard by the real Aurora attacks (not the crap in the news),” wrote Phil Wallisch, a senior security engineer at HBGary, who said he read an internal Morgan Stanley report detailing the so-called Operation Aurora attacks.

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Madoff victims’ advocate: Citi saw red flags

Grant McCool

February 22, 2011

Citigroup saw several red flags in the dealings of Bernard Madoff’s firm years before his multibillion-dollar fraud was exposed in late 2008, the firm’s liquidator said in a newly unsealed lawsuit.

Irving Picard, a court-appointed trustee seeking to recover money for former Madoff clients, made the accusations in one of several complaints he has filed against big banks he says “enabled” the massive, decades-long Ponzi scheme by turning a blind eye to it.

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SEC probing mutual funds’ muni pricing: report

Sakthi Prasad


February 18, 2011

U.S. securities regulators are probing whether some mutual funds have overstated the value of thinly traded risky municipal bonds at a time when investors were withdrawing money from muni-bond funds, the Wall Street Journal reported, citing people familiar with the matter.

The probe by the U.S. Securities and Exchange Commission is part of the regulator’s broader effort to investigate possible abuses in the municipal bond market, the Journal said.

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Allen Stanford files $7bn case for damages against U.S. prosecutors claiming ‘illegal tactics’ were used in fraud probe

Daily Mail Reporter

February 18, 2011

Jailed Texas financier R. Allen Stanford has filed a lawsuit accusing prosecutors and federal agents of depriving him of his constitutional rights by using abusive law-enforcement tactics.

The flamboyant 60-year-old is accused of having cheated investors out of $7billion in a pyramid Ponzi scheme.

He pleaded not guilty to 21 counts of fraud, money laundering and obstruction and faced up to 375 years in jail if convicted.

But Stanford filed a lawsuit on Wednesday seeking $7.2billion in damages claiming that U.S. prosecutors ‘undertook illegal tactics’ in their investigation.

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From Prison, Madoff Says Banks ‘Had to Know’ of Fraud

By Diana B. Henriques

Published: February 15, 2011

Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.

In his first interview for publication since his arrest in December 2008, Mr. Madoff – looking noticeably thinner and rumpled in khaki prison garb – maintained that family members knew nothing about his crimes.

But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.

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SEC charges ex-IndyMac executives with fraud

Charles Riley

February 13, 2011

CNN Money

The Securities and Exchange Commission charged three former senior-level executives of IndyMac Bancorp with securities fraud on Friday.

The complaint alleges that former CEO Michael Perry and former CFOs A. Scott Keys and S. Blair Abernathy mislead investors about the now-defunct mortgage lender’s deteriorating financial condition.

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Court could redefine insider trading

Arthur Davis

January 28, 2011

Wall Street Journal

WASHINGTON (MarketWatch) – Last year, the Supreme Court threw dozens of political and financial corruption cases into disarray, and left prosecutors and district judges scrambling.

They created this chaos by reining in the Department of Justice’s over-reliance on a vague, ill-defined “honest services” statute that had been pressed into use too often, and by reminding us that our Constitution demands that the power of jail and punishment demands specific notice of what is criminal and what is not.

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Federal Judge Adds Probation to $296 Million Guidant Plea Deal

Amy Forliti

The Associated Press

A federal judge signed off Wednesday on a plea agreement that calls for Boston Scientific Corp.’s Guidant unit to pay $296 million for failing to properly disclose changes made to some implantable heart devices, but added three years of probation to the deal.

U.S. District Judge Donovan Frank had rejected the plea deal last spring as insufficient. His acceptance Wednesday came after Guidant filed papers giving him more information about its compliance policies and community service programs.

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SEC: Wall Street, Meet the FCPA

By Ashby Jones

January 14, 2011

When we think of Foreign Corrupt Practices Act cases, we tend to think of big, multi-national companies. Technology behemoths. Manufacturing companies. Shipping concerns.

But scrutiny under the FCPA, a 1977 law that essentially criminalizes bribery of foreign officials, seems to be making its way to Wall Street.

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Conrad Black Won’t Be Retried on Honest Services Fraud Charges, U.S. Says

Andrew M. Harris


January 13, 2011

Conrad Black, the former Hollinger International Inc. chairman, won’t be retried on two charges related to the so-called honest services fraud statute, a federal prosecutor told a U.S. judge.

The U.S. Court of Appeals in Chicago last year overturned two of the four criminal counts upon which a federal jury had convicted Black in 2007.

“It is not our current intention to retry any of the defendants,” Assistant U.S. Attorney Julie Porter said during a 15-minute court appearance today. Black had served more than two years of his 6 1/2-year sentence before being freed on bail during his appeal.

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Hedge Fund Insider Trading Prosecutions Rely on Suspects Turned Informant

David Glovin


January 11, 2011

UBS AG investment banker Nicos Stephanou, facing more than 10 years in prison for insider trading, made a quick decision following his arrest two years ago: He decided to become a government informant. For months, Stephanou secretly recorded telephone calls with four friends about pending deals and told investigators all he knew about their insider trading. After his testimony at a trial put one of them behind bars for six years, prosecutors helped him stay out of prison for his own crimes.

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2010 FCPA Enforcement Shatters Records

Melissa Aguilar

January 04, 2011

Compliance Week

Multinational companies beware: That promised new era of Foreign Corrupt Practices Act enforcement has already arrived.

The number of FCPA enforcement actions jumped 85 percent in 2010, shattering the prior record set in 2009, according to data tracked by the law firm Gibson Dunn & Crutcher. The Department of Justice and the Securities and Exchange Commission brought a combined 74 FCPA enforcement actions in 2010, far surpassing any prior year in the statute’s 33-year history.

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Half-Baked Justice? Corporate Prosecutions Are All Over the Map

Sue Reisinger

The initials BP are by now a household word. It is a name that in the public mind at least has become synonymous with longtime legal, environmental, and safety issues.

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Eleventh Circuit Holds That It is a Federal Crime For an Employee To Use His Employer’s Computer For “Non Business Reasons” After Receiving Clear Instruction From Employer Not to Do So

Orin Kerr

The Volokh Conspiracy

January 4, 2011

Last week, the Eleventh Circuit decided an important case, United States v. Rodriguez, on the computer crime statute known as the Computer Fraud and Abuse Act, 18 U.S.C. 1030. The decision by Judge Pryor touches on the same issue that was in play in the Lori Drew case: When does violating express conditions on computer use constitute a crime? The court’s conclusion seems right on its specific facts, but I worry that it will be construed as adopting a very broad theory that would be quite troubling.

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Allen Stanford’s Fraud Trial Delayed due to Competency Issues

Juan A. Lozano

The Associated Press

January 07, 2011

A judge has delayed the trial of former Texas billionaire and financier R. Allen Stanford, who is accused of bilking investors out of $7 billion in a Ponzi scheme.

U.S. District Judge David Hittner determined that Stanford is not mentally competent to go forward with his case. The financier’s trial had been set to begin Jan. 24.

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Federal crackdown takes aim at financial fraud

Pete Yost
Associated Press
December 6, 2010

A nationwide law enforcement crackdown targeting financial fraud has led to cases against 343 criminal defendants involving $8.3 billion in estimated losses, Attorney General Eric Holder announced Monday.

“Operation Broken Trust” is the first national effort of its kind aimed at a broad array of investment fraud schemes, and the 3 ½ -month campaign was organized by the Obama administration’s Financial Fraud Enforcement Task Force.

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Ted Stevens Prosecutors Appeal Civil Contempt Finding


Mike Scarcella
Legal Times
November 18, 2010


Two Justice Department prosecutors want a federal appeals court in Washington to review a judge’s ruling in October that maintained a civil contempt finding against the attorneys for their work in the prosecution of Ted Stevens.

Lawyers for Justice prosecutors William Welch II and Brenda Morris filed a notice of appeal today in the U.S. District Court for the District of Columbia. Morris and Welch were transferred from the department’s Public Integrity Section after the collapse of the Stevens case in April 2009 amid allegations of prosecutorial misconduct.

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Kevin Ring Convicted Yet DOJ Wants More in an Honest Services Statute

White Collar Crime Prof. Blog
November 15, 2010

According to a DOJ Press Release, “a federal jury in Washington convicted Kevin A. Ring, a former lobbyist who worked with Jack A. Abramoff, on five counts related to a scheme to corrupt public officials by providing a stream of things of value.” The Press Release states that:

“The jury found Ring guilty on one count of conspiring to corrupt congressional and executive branch officials by providing things of value to them and their staff in order to induce or reward those who took official actions benefitting Ring and his clients. In addition, Ring was convicted of one count of paying a gratuity to a public official and three counts of honest services wire fraud for engaging in a scheme to deprive U.S. citizens of their right to the honest services of certain public officials. The jury acquitted Ring on three counts of honest services fraud. A previous federal jury failed to reach a verdict in the case and the court declared a mistrial.”

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DOJ Promises More Wiretaps In White Collar Cases

Hillary Russ
Law 360
November 4, 2010

The head of the U.S. Department of Justice’s Criminal Division said Thursday that the department’s use of wiretaps would “continue to go up dramatically” in all kinds of cases, including in the department’s all-out assault on white collar crime in the wake of the financial crisis.

“We have begun increasingly to rely, in white collar cases, on undercover investigative techniques that have perhaps been more commonly associated with the investigation of organized and violent crime,” said Lanny Breuer, assistant attorney general of the DOJ’s Criminal Division, at the Practising Law Institute in New York on Thursday.

Last year, prosecutors and regulators from the U.S. Securities and Exchange Commission said they would use more of the blue collar investigative techniques to combat white collar crimes.

The DOJ’s Criminal Division has beefed up its Office of Enforcement Operations, which reviews and approves all applications for federal wiretaps across the U.S., Breuer said.

The OEO has a new director, Paul O’Brien, and has “substantially increased” the number of attorneys who review applications for wiretaps, Breuer said

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White-Collar Experts Are Recruited to Handle Expected Increase in Government Enforcements

Nate Raymond
New York Law Journal
November 4, 2010

Law firms are stepping up their hiring of white-collar lawyers in anticipation of increased investigations by government agencies into financial fraud and corporate bribery of foreign officials.

Over the last two months, firms have recruited white-collar partners from other firms, many of whom have prosecutorial experience. Recruiters say law firms are seeking to bolster their practices in anticipation of more investigations by the U.S. Department of Justice and the Securities and Exchange Commission.

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SEC Aims to Streamline Complaint Process

Suzanne Barlyn
Wall Street Journal
October 25, 2010

Technology to electronically catalog all tips and complaints about alleged securities violations is slated to be up and running by year’s end, the Securities and Exchange Commission’s enforcement chief said. The launch is a step in the agency’s efforts to avoid bottlenecks and duplication in the handling of complaints, which traditionally have been fielded by individual SEC offices and filed there. Complicating matters is the variety of forms in which such complaints come-mail, phone calls, emails and interviews.

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Abramoff associate Ring stands trial a second time

Nedra Pickler
October 18, 2010

A federal judge is proceeding with the trial of a junior member of Jack Abramoff’s lobbying team, despite last-minute wrangling over whether his fundraising help for members of Congress was part of a corruption scheme. Kevin Ring, the only member of the Abramoff team still facing prosecution, went on trial Monday for the second time on charges that he lavished expensive meals and event tickets on federal officials in exchange for favors for their clients. Ring’s first trial ended a year ago with jurors unable to reach a unanimous decision on his guilt or innocence.

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Insurers No Longer Must Cover Allen Stanford’s Legal Bills, Judge Rules

Brenda Sapino
Texas Lawyer
October 14, 2010

R. Allen Stanford and two other Stanford Financial Group executives are cut off from insurance money to pay their legal bills. On Wednesday, U.S. District Judge Nancy Atlas issued an order finding that two insurance companies holding directors and officers policies for SFG are not required to pay for the defense of three former SFG executives in a criminal case, United States v. Robert Allen Stanford, et al. She also wrote that the insurance companies do not have to pay for the defense in a separate U.S. Securities and Exchange Commission civil suit, Securities and Exchange Commission v. Stanford International Bank Ltd., et al.


U.S. says six freight forwarders plead guilty

Diane Bartz, Jeremy Pelofsky
September 30, 2010

In the latest plea agreements in a long-running probe, BAX Global has agreed to pay a fine of $19.7 million; Panalpina World Transport (Holding) Ltd will pay $11.9 million; Kuehne + Nagel will pay $9,865,044; EGL Inc will pay $4.5 million; Schenker, a part of the Deutsche Bahn Group will pay $3.5 million; and Geologistics International Management (Bermuda) will pay $687,960. The companies arrange cargo delivery for customers. “The department’s investigation uncovered six different conspiracies harming businesses and consumers in the United States and across the globe,” said Christine Varney, who heads the Justice Department’s antitrust division.


SEC Charges 2 Ex – State Street Workers Over Subprime

Mike Scarcella
The National Law Journal
October 4, 2010

BOSTON/NEW YORK (Reuters) – Two former top State Street Corp. executives were hit with securities fraud charges on Thursday for misleading investors about a risky subprime mortgage-laden fund and tipping off favored clients. The U.S. Securities and Exchange Commission said it charged John Flannery, a former member of State Street’s executive management group, and James Hopkins, the former head of product engineering for North America.


2nd Circuit Upsets Order Requiring Wiretap Turnover in SEC Case Against Galleon

Daniel Wise Blog
September 30, 2010

A unanimous federal appeals panel in Manhattan on Wednesday overturned an order requiring the defendants in the sprawling Galleon securities fraud case to turn over to the Securities and Exchange Commission approximately 18,000 wiretapped conversations they had been given by prosecutors in a parallel criminal prosecution. Judge Gerard E. Lynch of the 2nd U.S. Circuit Court of Appeals, writing for the panel, concluded that Southern District of New York Judge Jed S. Rakoff, who is handling the SEC’s civil disgorgement proceeding against Galleon Group, had “clearly exceeded” his jurisdiction “by ordering the disclosure of thousands of conversations involving hundreds of parties, prior to any ruling on the legality of the wiretaps and without limiting the disclosure to relevant conversations.” In its civil action, the SEC is seeking access to communications involving 550 separate individuals recorded during a 16-month period within the criminal investigation.


Federal Prosecutor in Stevens Case Commits Suicide

Mike Scarcella
The National Law Journal
September 28, 2010

A Justice Department prosecutor who played a lead role in the corruption case against former U.S. Sen. Ted Stevens, R-Alaska, has committed suicide.

Nicholas Marsh, who was transferred from the Public Integrity Section amid a criminal investigation of the government’s handling of the case against Stevens, killed himself over the weekend. Marsh had been working in the Office of International Affairs. NPR first reported the suicide Monday morning.

“Our deepest sympathies go out to Nick’s family and friends on this sad day,” Assistant Attorney General Lanny Breuer said in a written statement. “The Department of Justice is a community, and today our community is mourning the loss of this dedicated young attorney.”


Justice Dept. ensures prosecutors brush up on duties

Brad Heath
USA Today
September 28, 2010

The Justice Department is taking steps to make sure federal prosecutors live up to their constitutional duty to turn over evidence to the people they charge with crimes. Those changes followed the collapse last year of the government’s corruption case against former Alaska senator Ted Stevens. The department dropped the case months after a jury found Stevens guilty, because the government conceded that prosecutors had hidden evidence that could have undermined the testimony of their star witness.


Fraud Cases Get Rehashed After Court Ruling

Michael Rothfeld
Wall Street Journal
September 25, 2010

Federal lawmakers and Justice Department officials are weighing new legislation to salvage a fraud statute used to pursue corporate and public corruption, as prosecutors grapple with the fallout of a Supreme Court ruling that weakened the law.

The court’s decision in June to limit prosecutions for honest-services fraud has affected cases against high-profile defendants such as former Enron Chief Executive Jeffrey Skilling, whose appeal was the basis for the ruling, and lesser-known ones such as Edward J. Price III, the former mayor of Mandeville, La.

The law, making it a crime to deprive someone of the “intangible right of honest services,” has long been used to prosecute officials or executives accused of placing their interests above those of taxpayers or shareholders. Defense lawyers criticized it as unconstitutionally vague.


Countrywide CFO’s Defense: What About the Lawyers?

David Hechler,
September 22, 2010

As the Securities and Exchange Commission’s fraud case against former executives at Countrywide Financial Corp. moves toward its Oct. 19 trial date, the executives charged have previewed their defenses in their failed motions for summary judgment. Perhaps not surprisingly, one top exec has argued that he relied on the advice of in-house lawyers. No, it wasn’t Angelo Mozilo, Countrywide’s founder and CEO, whom the SEC accuses of playing the central role in misleading investors about the company’s lending practices. The exec in question was Eric Sieracki, the former chief financial officer of the mortgage giant, which was acquired by Bank of America Corp. in 2008.


U.S. Tech Probe Nears End

Thomas Catan and Brent Kendall
Wall Street Journal
September 17, 2010

Several of the U.S.’s largest technology companies are in advanced talks with the Justice Department to avoid a court battle over whether they colluded to hold down wages by agreeing not to poach each other’s employees. The companies, which include Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Intuit Inc. and Walt Disney Co. unit Pixar Animation, are in the final stages of negotiations with the government, according to people familiar with the matter.


‘Willful Blindness’ Jury Charge Proper in Tax Fraud Conviction, 3rd Circuit Rules

Charles Toutant,
September 16, 2010

A U.S. appeals court has upheld the tax fraud conviction of real estate magnate Charles Kushner’s brother-in-law, finding use of a “willful blindness” jury charge satisfied the willfulness element of a criminal tax offense. The instruction may, where warranted by the trial evidence, “properly apply to a defendant’s knowledge of his legal duties,” the 3rd U.S. Circuit Court of Appeals panel held on Sept. 9 in U.S. v. Stadtmauer, 09-1575. The court rejected a challenge to the charge by Richard Stadtmauer, an accountant and law school graduate who began working for Kushner in 1985 and eventually became executive vice president of the Kushner Cos.


Foreign Corrupt Practices Act Review

The Department has reviewed the Foreign Corrupt Practices Act (“FCPA”) Opinion request of a U.S. limited partnership (the “Requestor”) that was submitted on March 9, 2010, along with supplemental information submitted by the Requestor, most recently on August 2, 2010. The partnership is a “domestic concern” within the meaning of the FCPA and thus eligible to request an Opinion of the U.S. Attorney General, pursuant to 28 C.F.R. Section 80.4, regarding whether certain specified, prospective – not hypothetical – conduct conforms with the Department’s present enforcement policy regarding the antibribery provisions of the FCPA.


Criminal Contempt Charges Against Immigration Counseling Service Underline a Big Problem in Texas

Law Blog
September 13, 2010

In an unusual case, a Houston jury on Sept. 1 found that a non-attorney business owner and his immigration counseling service were in criminal contempt after they violated a permanent injunction 1,023 times that restricts them from representing clients in legal matters. Officials with the Supreme Court of Texas Unauthorized Practice of Law Committee (UPLC) say complaints about immigration consulting businesses run by nonlawyers are a problem in Texas. Many people who use such services do not speak English. They are unaware that the people who run the businesses may not be attorneys and that their immigration issues might be mishandled by nonlawyers, officials say.


DOJ, FBI Investigation Manuals Sought in FCPA Case

Blog of the Legal Times
September 7, 2010

Defense lawyers representing a group of arms industry defendants who are charged in an international bribery conspiracy are demanding access to internal Justice Department and FBI manuals that govern the planning and execution of undercover operations.

The lawyers say the reliability of the government’s undercover sting, which last year culminated in the arrest of 22 people, is central to the defense. FBI audit reports that the defense lawyers have received show certain alleged violations occurred during the course of the sting.


SEC settlement comes at “low cost” to Nacchio

Andy Vuong, Denver Post
September 8, 2010

In March 2005, regulators filed a sweeping lawsuit against former Qwest chief executive Joe Nacchio and several other former executives, accusing them of engaging in a “massive financial fraud” and seeking as much as $300 million in ill- gotten gains.

Last week, the Securities and Exchange Commission quietly agreed to settle the suit with the imprisoned Nacchio – without garnering any substantial penalty not already imposed through his 2007 criminal insider-trading conviction. The SEC had sought as much as $216 million in forfeitures from Nacchio.

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The BP blowout: What the evidence reveals

Dave Fehling
September 9, 2010

The report BP released on its website Wednesday morning is the company’s version of the events that led to the Deepwater Horizon blowout, but the 11 News I-Team has been sifting through evidence gathered by a more objective source. That is the Deepwater Horizon Joint Investigation, the ongoing effort by the U.S. Coast Guard and the new Bureau of Ocean Energy, Management and Enforcement (BOEMRE).


DOJ Picks up Support in Prosecution of Former Congressman

The Blog of the Legal Times
August 27 2010

A watchdog group in Washington is supporting the U.S. Justice Department in the prosecution of former Rep. Richard Renzi (R-Ariz.), charged in an extortion case in Arizona that is raising constitutional issues of separation of powers. Citizens for Responsibility and Ethics in Washington wants to file a friend-of-the-court appellate court brief backing the government in its effort to keep the prosecution of Renzi moving forward in the U.S. District Court for the District of Arizona. The prosecution has stalled-the case is pending in the U.S. Court of Appeals for the 9th Circuit-as the government and Renzi’s defense lawyers appeal trial court rulings.


Blago guilty on just 1 count; feds vow retrial

Michael Tarm and Michael Babwin
August 18 2010

A federal jury found former Illinois Gov. Rod Blagojevich guilty on Tuesday of one count of lying to federal agents, and the judge said he intends to declare a mistrial on the more serious remaining 23 counts.


Judge decries lenient treatment of banks but approves Barclays Deal

Stephen Hsu
The Washington Post
August 19, 2010


A federal judge Wednesday denounced the Obama administration’s treatment of major global banks accused of violating U.S. laws, saying the government lets them off easy by declining criminal prosecution in exchange for payments of hundreds of millions of dollars.


Swiss Approve Deal for UBS to Reveal U.S. Clients Suspected of Tax Evasion

Lynnley Browning
New York Times
July 17, 2010

Swiss lawmakers approved a final deal on Thursday to hand over to American authorities data on thousands of suspected tax cheats with accounts at UBS, Switzerland’s largest bank. The Justice Department and the Internal Revenue Service plan to use the approval, which came after months of intense legal and diplomatic wrangling between the two sides and within Switzerland, as a springboard to force other Swiss banks to hand over details of similar clients, a person briefed on the matter said Thursday. Through a tax treaty between Bern and Washington that forms the legal basis for requiring UBS to identify clients with undisclosed private banking accounts, the American authorities plan “to make treaty requests of other banks operating in Switzerland for these types of accounts,” said this person, who spoke on the condition of anonymity because he was not authorized to speak publicly about the plan. “UBS was not the only bank.”

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DOJ Keeps Pressure on Former Abramoff Associate in Corruption Prosecution

Mike Scarcella
July 7, 2010

Just two weeks after the U.S. Supreme Court narrowed the scope of the honest services fraud laws, Justice Department attorneys Tuesday said they are pushing forward on the corruption prosecution of ex-lobbyist Kevin Ring, a former Jack Abramoff associate who is charged in a bribery scheme. At a hearing Tuesday in Washington federal district court, Public Integrity Section trial attorney Peter Koski said the high court’s June 24 ruling in Skilling v. United States has “no impact whatsoever” on the prosecution of Ring. The Supreme Court in Skilling said the honest services law can reach only bribery and kickback schemes.


Cases against Wall Street lag despite Holder’s vows to target financial fraud

Jerry Markon
Washington Post
June 18, 2010

Since taking office at the height of the financial crisis, President Obama has promised to hold Wall Street accountable for the meltdown. Attorney General Eric H. Holder Jr. reinforced that message in November when he vowed to prosecute Wall Street executives and others responsible for the crisis. “We will be relentless in our investigation of corporate and financial wrongdoing, and we will not hesitate to bring charges,” Holder said as he launched a financial fraud task force. Nearly 1 1/2 years into Obama’s tenure, despite several cases against mortgage companies whose lending practices contributed to the crisis, the administration has not brought any charges against the big Wall Street banks that took those loans, converted them into toxic securities and pumped them into the world’s financial markets. Law enforcement sources say no such charges are imminent. “The attorney general got out ahead of the facts and the evidence in saying, ‘We’re going to go down to Wall Street with a pitchfork and roust those fat cats out of their offices and put them in jail,’ ” said Tim Coleman, who prosecuted major fraud cases before leaving the Justice Department five years ago. “This was a case, in general, of people making business judgments and taking risks and having them go badly. That’s not criminal misconduct.”


Holder Memo – “Individualized Assessment”

White Collar Crime Professors Blog
May 27, 2010

AG Eric Holder issued a Memorandum on Department Policy on Charging and Sentencing that is different from former AG Ashcroft’s Memo of 2003. It’s a 2 1/2 page Memo with the term “individualized assessment” used four times, and “individualized justice” used one time. These terms tell the story of the Memo that moves policy from strict uniformity to understanding that not all people and cases are alike. He says it best when he states that “equal justice depends on individualized justice, and smart law enforcement demands it.” The Memo repeals two prior memos of Deputy Attorney General Comey, and the charging and sentencing memo of 2003 issued by Attorney General John Ashcroft.

Although the Memo aims for similar treatment for those who commit similar crimes and have the same culpability, it recognizes individuality and unique circumstances. It is wonderful to see included in this Memo an Attorney General’s statement that “prosecutors must always be mindful of our duty to ensure that these decisions are made without unwarranted consideration of such factors as race, gender, ethnicity, or sexual orientation.” It is also wonderful to see that new AUSAs can’t just charge individuals haphazardly as “all charging decisions must be reviewed by a supervisory attorney.”

One of the most commendable aspects of this Memo is the AG’s statement that “charges should not be filed simply to exert leverage to induce a plea.”

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FBI Targets Cyber ‘Mules’


The FBI is planning a major prosecution to bust up the operations that cyber criminals use to turn funds stolen online into hard cash, a top bureau official said Tuesday.

The Federal Bureau of Investigation is targeting the end of the criminal supply chain the “money mules” who receive transfers of stolen funds in their banks accounts-to raise public awareness and dissuade people from becoming mules, said Patrick Carney, acting chief of the FBI’s Cyber Criminal Section.

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More trouble for Wall Street banks

By GREG GORDON McClatchy Newspapers
May 13, 2010

The Wall Street investment banks at the center of the subprime mortgage meltdown face broadening state and federal inquiries into whether they duped investors into buying dicey mortgage securities or manipulated ratings agencies into bestowing investment grades on those faulty products. The Justice Department and the Securities and Exchange Commission have expanded preliminary criminal inquiries into conduct by Goldman Sachs and Morgan Stanley to four other banks, a person who is familiar with the inquiry said Thursday, speaking on the condition of anonymity because of the sensitivity of the matter. Hilder & Associates has expertise in defending clients’ rights involving SEC and DOJ investigations. Call for a consultation.

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Criminal charges likely from Gulf oil spill, legal experts say

By Marisa Taylor
McClatchy Newspapers
May 13, 2010

WASHINGTON – Federal investigators are likely to file criminal charges against at least one of the companies involved in the Gulf of Mexico spill, raising the prospects of significantly higher penalties than a current $75 million cap on civil liability, legal experts say.

The inquiry by the Homeland Security and Interior Departments into how the spill occurred is still in its early stages and authorities have not confirmed whether a criminal investigation has been launched.

But environmental law experts say it’s just a matter of time until the Justice Department steps in – if it hasn’t already – to initiate a criminal inquiry and take punitive action.

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Senators Consider Whether Financial Fraud Should Mean More Prison Time

David Ingram
The National Law Journal
May 04, 2010

Amid the flurry of securities fraud investigations, a Senate Judiciary subcommittee today is considering whether the laws governing conduct on Wall Street need an overhaul.

The subcommittee on crime and drugs, chaired by Sen. Arlen Specter, D-Pa., is hearing testimony from academics, advocates and at least one voice from Big Law. One major point of dispute: a proposed requirement for some financial services employees to meet a fiduciary duty to their customers, or else face criminal charges and potential prison time.

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Top cop: SEC may not delay civil cases

May 4, 2010

Lanny Breuer, assistant attorney general for the criminal division, expects the Justice Department to develop a closer working relationship with SEC enforcement staff, saying the Obama administration “cares very deeply about comprehensive approaches” toward enforcement.

“Just because there’s a civil action … and a parallel criminal action, the days are gone where the civil action will necessarily be stayed until the criminal action is over,” Breuer said after a speech at the Council of Foreign Relations in New York. He did not discuss specific cases. Hilder & Associates is familiar with simultaneous criminal and civil actions. Hilder & Associates advises and protects its clients and clients’ rights in both civil and criminal actions.

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Report: Congress makes too many vague laws

By Mark Sherman
May 4, 2010

A conservative think tank and criminal defense lawyers are forming an unusual alliance to try to get Congress to quit writing criminal laws so loosely that they subject innocent people to unjust prosecution and prison.

A new study by the Heritage Foundation and the National Association of Criminal Defense Lawyers finds that nearly two dozen federal laws enacted in 2005 and 2006 to combat nonviolent crime lack an adequate provision that someone accused of violating the laws must have had a “guilty mind,” or criminal intent.

Hilder & Associates provides white collar defense against such laws. Allegations will be vigorously defended against with our expertise and knowledge.

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Financial Fraud Enforcement Task Force Launches

President Obama’s Financial Fraud Enforcement Task Force today announced the launch of is a one-stop shop for the American people to learn how to protect themselves from fraud and to report it wherever – and however – it occurs. It will also serve as a hub of information about the task force’s work. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.

Hilder & Associates has the knowledge and expertise to advise you through investigations and allegations of fraud by this or other government agencies.

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Law Review: Getting a fair shake for white-collar defendants

By Chris Mondics
Published: April 13, 2010 Philadelphia Inquirer

Because of the current economic downturn now comes evidence that not only politicians and prosecutors but jurors, too, are susceptible to the wave of revulsion that inevitably follows an economic collapse. And that it can heighten the risk of jail time for white-collar defendants, even if they are innocent.

A study by Julie Blackman & Associates, a Montclair, N.J., jury-consulting firm with clients in New York and Philadelphia, concludes that jurors bring their frustrations over the troubled economy into the courtroom and that many have their minds made up before they even hear what the witnesses have to say.

“These days many jurors are angry and suspicious,” said the study. “Many feel betrayed by the personal excesses that are believed to be behind this country’s current strife.” Hilder & Associates have the knowledge and experience to defend against white collar crime allegations, and ensure that clients’ rights are well protected.

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U.S Accuses Goldman Sachs of Fraud

Louis Story, Gretchen Morgenson
Published: April 16, 2010 New York Times

Goldman Sachs, the Wall Street powerhouse, was accused of securities fraud in a civil lawsuit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly intended to fail.

The move was the first time that regulators had taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market.

The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment. In a statement, Goldman called the commission’s accusations “completely unfounded in law and fact” and said it would “vigorously contest them and defend the firm and its reputation.”

Hilder & Associates will defend clients’ rights during SEC investigations or all magnitudes

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Sentences Get Harsher in White-Collar Cases

Peter J. Henning
New York Times
August 12, 2010

These types of long sentences that are effectively life prison terms have become more common even as federal judges regained their authority to decide the punishment for a conviction without having to follow the Federal Sentencing Guidelines strictly. In addition to Mr. Petters and Mr. Madoff, tough sentences were handed out in other significant fraud cases in the past few years. Hilder and Associates protects its clients’ rights with expert navigation through sentencing procedures.

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Tax Whistleblower Rewards

The IRS will pay whistleblowers 15 to 30% of the recovery provided the tax fraud exceeds $2 million. The reward is paid only upon completion of an investigation into the tax fraud or underpayments and collection of the taxes. In order to recover, whistleblowers need to be the original source of information provided to the IRS.

Contact Hilder & Associates to learn how we may assist in developing your case with the IRS.

False Claims Act

The False Claims Act allows lawsuits against corporations and individuals that have defrauded the Federal government. The lawsuit allows the whistleblower to recover government losses. The matter is filed under seal, which means that it is not publicly disclosed. During this time period, the government investigates the fraud allegations. The seal is in place for 60 days, but may be extended longer while the government is conducting its investigation. Upon conclusion of the investigation, the government will decide whether to intervene or become a party to the lawsuit. Should the government become a party, the litigation is handled jointly by the whistleblower’s attorney and the government. Should the government decline to intervene, the whistleblower may proceed without government intervention.

The whistleblower must be the first to raise allegations in order to collect a reward. Under the FCA, whistleblowers are entitled from 15 to 30% of the government’s recovery. Under statutory provisions, the defendant of the whistleblower may also be responsible for the whistleblower’s attorney fees and case related expenses.

HP reportedly under investigation for bribery

By: Eric Ogg

Hewlett-Packard is being scrutinized by authorities in Germany and Russia for paying bribes to win a contract to sell computers to the Russian government, according to

The Wall Street Journal. HP’s offices in Moscow were reportedly raided Wednesday by Russian investigators looking into the matter on behalf of the German prosecutors. The German authorities also are looking into allegations of breach of trust, tax evasion, and money laundering by HP, though they are focusing on 10 individuals.

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U.S. Cashes In on Corporate Corruption Overseas

By: Ken Stier
Published: Time Magazine April 7, 2010

Why must Daimler AG, the German automaker, pay big fines to the U.S. government because two of its subsidiaries, one in Germany and the other in Russia, made improper payments to government officials of countries other than the U.S., such as China, Egypt and Serbia? Welcome to the age of the Foreign Corrupt Practices Act (FCPA), a far-reaching bit of American legislation that cracks down on corporate bribery in all its forms and is rattling the cages of corporate chiefs the world over. The Department of Justice (DOJ) has jurisdiction over all related criminal violations under the act, and the Securities and Exchange Commission (SEC) keeps tabs on the civil violations committed by U.S. companies. What’s more, the law doesn’t just mean the U.S. government is looking for past incidents of corruption; it’s also stirring the pot to see who may be corruptible in the future.

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Montgomery County Has Begun to Target White-Collar Offenders

March 24, 2010

Montgomery County District Attorney’s Office has announced that it will launch a white-collar crime unit to address money laundering, embezzlement and fraud in the County. The District Attorney announced that the unit will focus on fraud cases involving banking, mortgage, loans and Ponzi schemes. Hilder & Associates represents several clients in the Montgomery area, and has the knowledge and experience necessary to vigorously defend your rights. Call for an appointment.

Retention of Overpayments As False Claims

March 25, 2010

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (“PPACA”). Part of the legislation addresses “overpayments”. Section 64.02 defines “overpayments” as “any funds that a person receives or retains under Medicare or Medicaid to which the person, after applicable reconciliation, is not entitled under such Title.” The legislation goes on to say that all overpayments must be reported and refunded within “sixty days after the date on which the overpayment was identified” or “the date any corresponding cost report is due.” The Act goes further and states that “the payment retained by a person after the deadline for reporting and returning the overpayment” is an “obligation” for the purposes of the False Claims Act.

However, to prove a violation the government must prove that the withholding act was done with reckless disregard or deliberate indifference regarding the truth or falsity of the claim. Hilder & Associates defends the rights of doctors and caretakers across the country. Call today for an appointment

Tribal gaming could chip in to Texas revenue pot

By: Carlos Bullock
Published: Houston Business Journal March 5, 2010

At the direction of Gov. Rick Perry and Texas’ top legislative leaders, state agencies and universities are identifying ways to cut spending by 5 percent to help offset what is expected to be a budget shortfall of at least $10 billion next year. This belt tightening is clearly warranted, but so is identifying and tapping into new sources of revenue without raising taxes. After all,

forecasts from the state Comptroller’s Office indicate the national recession is taking its toll on Texas. A weakened state economy means less state revenue to cover what by all accounts will be mammoth budget gaps not only next year but in subsequent years as well.

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FDA Criminal Division to Increase Prosecutions

Published: Wall Street Journal March 4, 2010

WASHINGTON-The Food and Drug Administration plans to increase prosecutions of pharmaceutical and food industry executives as part of an effort to refocus its criminal division, which has been under attack in Congress and is criticized in a new government report.

In a letter to Sen. Chuck Grassley (R., Iowa), the FDA says an internal committee has recommended that the FDA and its Office of Criminal Investigations “increase the appropriate use of misdemeanor prosecutions, which allows responsible corporate officials to be held accountable and is a valuable enforcement tool.”

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More Health Care Fraud Prosecutions are Expected

Recently, Attorney General Eric Holder announced that health care fraud prosecutions would be accelerated. The AG recapped recent health care fraud prosecutions by saying that:

“last year brought record levels of achievement in our fight against health care fraud. In 2009, the Justice Department reached an all-time high in the number of health care fraud defendants charged, more than 800. We also obtained more than 580 convictions. And on the civil enforcement front, our health care fraud recoveries last year under the False Claims Act exceeded a stunning $2.2 billion.”

The law firm of HILDER & ASSOCIATES, P.C. has experience in defending health care prosecutions. Contact the Firm for assistance.

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Attorney General Eric Holder Speaks at National Summit on Health Care Fraud

White House wants 12 percent budget increase for SEC

Published February 2, 2010 AP, Houston Chronicle

President Barack Obama is seeking a 12 percent budget increase for the Securities and Exchange Commission, including 382 million for more than 100 new enforcement staff to work on its burgeoning caseload targeting fraud and market manipulation. The increase in funding and staff reinforces the importance of obtaining legal representation. Hilder & Associates has the knowledge and experience needed to enforce your rights.

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Defend the Interests of the United States including Aggressive Pursuit of Financial Fraud and other Economic Crimes

February 1, 2010
Press Release

The FY 2011 Budget requests a $234.6 million increase, including 708 new positions (143 agents and 157 attorneys), to restore confidence in our markets, protect the federal treasury and defend the interests of the U.S. Government. This includes an additional $96.8 million for economic fraud enforcement, which is a 23 percent increase over the FY 2010 level. This increase will continue the department’s efforts to aggressively pursue traditional law enforcement and litigation activities ranging from mortgage fraud, corporate fraud and other economic crimes, to other mission-critical activities that support the overall functioning and efficiency of the department.

As the Government enhances its efforts, Hilder & Associates, P.C. remains a solid and reliable source of support for clients in need of representation against economic fraud charges.

Attorney general calls white-collar crime a priority

By DANIEL WAGNER and TOM RAUM Houston Chronicle Associated Press

WASHINGTON – Attorney General Eric Holder on Thursday told a panel studying the financial crisis that fighting white-collar crimes is “a real priority,” even if it bumps up against another urgent mission, combating terrorism. Holder told the bipartisan Financial Crisis Inquiry Commission that the FBI is investigating 2,800mortgage fraud cases, up 400 percent from five years ago, and that he hopes to have 50 new FBI agents and 155 new attorneys working financial crimes cases in the coming year.

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Andrew Goldsmith Appointed as National Coordinator of Criminal Discovery Initiatives

The Department of Justice today announced the appointment of Andrew Goldsmith as the new national coordinator for its criminal discovery initiatives. The position was established as part of the Department’s ongoing efforts, initiated last year at the direction of the Attorney General, to review and improve its criminal discovery and case management policies and procedures. “Andrew brings a wealth of knowledge and experience in this field, and I am pleased he is taking on this crucial role,” said Deputy Attorney General David W. Ogden. “He will be instrumental in overseeing our efforts to ensure all of our prosecutors and law enforcement agents have the necessary training and tools to achieve fair and just results in the nation’s courts.” As the national coordinator, Goldsmith will oversee the implementation of a number of initiatives designed to provide prosecutors with the training and resources they need to meet discovery obligations in criminal cases.

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Corporate Fraud Task Force Moves Into the Financial Fraud Task Force


In a recent press release, President Barack Obama announced that he was establishing an interagency Financial Fraud Enforcement Task Force. The executive order (13519) lists a long list of individuals offices that will be represented on this task force (e.g. Homeland Security, FTC, SBA). Yes, TARP is also at the table. At the head of the task force is the Attorney General with the Deputy AG directing the work of the task force. The task force clearly has a mission of coordinating efforts for financial fraud prosecutions. Perhaps the most interesting aspect of the task force is found near the end of the executive order – “The Task Force shall replace, and continue the work of, the Corporate Fraud Task Force” which had been created by a 2002 Executive Order. The use of a task force is not new for DOJ. In addition to the Corporate Fraud Task Force, we have seen task forces like the Katrina Hurricane Task Force that focused on fraud. Hilder & Associates, P.C. guides, protects and defends its clients when faced with accusations from such a task force.

White Collar Crime Prof Blog
Download the Press Release from President Obama

SEC accuses 3 former mortgage execs of fraud

Published: USA Today
Marcy Gordon, AP Business Writer

Federal regulators on Monday accused three former top executives of collapsed mortgage lender New Century Financial of fraud, saying they misled investors as the company’s subprime loan business was failing in 2006. In a case stemming from the mortgage market meltdown, the Securities and Exchange Commission filed a lawsuit seeking injunctions, and unspecified civil fines and restitution against New Century’s former CEO and co-founder Brad Morrice, former chief financial officer Patti Dodge and former controller David Kenneally.

Hilder & Associates, P.C. has the knowledge and experience to guide, advice, and protect clients’ rights in situations involving the SEC and other financial fraud cases.

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House Financial Services Committee passed H. R. 3817

On November 4, 2009 The House Financial Services Committee passed H.R. 3817, the Investor Protection Act. The aim of the legislation is to improve investor protection and confidence. The Act aims to achieve these goals while improving enforcement powers at the U.S. Securities and Exchange Commission. Among the provisions will be a whistle blower program to create incentives to identify wrongdoing in the securities markets and reward individuals whose tips lead to successful enforcement actions. Hilder & Associates P.C. represents whistle-blowers and can offer assistance regarding all matters before the SEC and other regulatory agencies as well as representation of whistle-blower and Qui Tam suits.

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Investigation is Sending Shock Waves Through Silicone Valley

Published: November 7, 2009 Wall Street Journal

A widening insider-trading probe is causing new tremors in Silicon Valley, as prosecutors say a network of employees at technology companies acted as paid informants for managers of a San Francisco hedge fund implicated in the case. Philip Hilder & Associates, has ample knowledge experience in defending insider trading cases and aggressively defends the rights of their clients.

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U.S. poised to bring more insider trading cases

Published: October 20, 2009 Reuters

Fresh from laying charges in the largest hedge fund insider trading case in history, U.S. federal investigators are poised to bring further “significant” cases. The targets will include financial professionals also involved in insider trading, a source familiar with the matter. Hilder & Associates has rich knowledge and experience to vigorously protect client’s rights in insider trading cases. Call for a consultation.

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SEC May Send Staff to ‘Fraud College’ to Detect Future Madoffs

Published: September 3, 2009 Bloomberg News

The Securities and Exchange Commission may create a “fraud college” to train staff in detecting market abuses after the agency failed to stop Bernard Madoff’s $65 billion Ponzi scheme, Chairman Mary Schapiro said. Hilder & Associates, P.C. has the experience and knowledge necessary to vigorously protect client’s rights in any and all securities litigation.

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False Claims Amendment: Claims Act Amendment Signed into Law

On May 20, 2009 President Obama signed into law the Fraud Enforcement and Recovery Act (FERA) which reinforces the federal government’s ability to prosecute contractors accused of fraud. Hilder & Associates, PC has rich experience with this and related law. To learn more, or talk to an attorney, please contact our offices.

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The Accountability in Deferred Prosecution Act of 2009

The Accountability in Deferred Prosecution Act of 2009 was introduced on April 2, 2009. A deferred prosecution agreement is an agreement between federal prosecutors and an organization to conditionally defer prosecution of that organization. The Act requires the Attorney General to issue public written guidelines for deferred prosecution agreements and non-prosecution agreements; established rules for choosing independent monitors for deferred prosecution agreements; makes the deferred prosecution agreement transparent by placing on the DOJ Website; and requires a deferred prosecution agreement to be filed in U. S. District Court allowing the Court to approve an agreement if it is consistent with Guidelines and in the interest of justice. The law firm of Hilder & Associates, P.C. has experience in negotiating non-prosecution agreements.

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The Whistleblower Protection Enhancement Act of 2009

The Whistleblower Protection Enhancement Act of 2009 was introduced in Congress on March 12, 2009. This legislation would expand protection for federal employee whistleblowers. The legislation would also expand whistleblower protection to employees, including former employees of national security agencies. Furthermore, the legislation extends whistleblower protection to contractors and employees of the Transportation Security Administration (TSA).

The law firm of Hilder & Associates, P.C. has experience representing whistleblowers, including the Enron whistleblower.

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U.S. Department of Justice releases 2010 Budget

U.S. Department of Justice releases 2010 Budget requests seeking additional funds to aggressively pursue mortgage fraud, corporate fraud, and other economic crimes; which includes additional federal prosecutors, FBI Agents, and civil litigators. Hilder & Associates, PC has vast experience in defending cases involving these as well as other types of fraud. Hilder & Associates, PC is well equipped to meet your needs during these uncertain times.

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Stephen Hsu
The Washington Post
August 19, 2010


Date: September 1, 2010


Date: September 1, 2010

Date: September 1, 2010