Content tagged “Fraud”

'WSJ': Invoking anti-fraud law, Louisiana doctor gets rich

Over two decades, Metairie internist William LaCorte has received $38 million from five of the 12 lawsuits he's filed accusing health care companies of defrauding taxpayer-funded programs such as Medicare, The Wall Street Journal reports. Those five suits have together led the government to recover hundreds of millions of dollars. Dr. LaCorte is a so-called serial whistleblower, one of the more prolific plaintiffs among a growing number of Americans who use the U.S. False Claims Act to finger alleged wrongdoing. Critics say the act's incentives go too far, encouraging people to file suits that often go nowhere. Of the 5,400 suits filed from fiscal 1987 through 2010 that had outcomes, 74% didn't result in settlements or judgments, Justice Department statistics show. Government agencies say they rely on citizen suits under the act to help find misdeeds. They are "instrumental in bringing to the government allegations of fraud that might otherwise go undetected," a Justice...

Stanford losses not covered by SIPC, appeals court rules

The U.S. Securities and Exchange Commission can't force a brokerage account insurer to pay victims of R. Allen Stanford's $7 billion fraud because their purchases weren't covered, an appeals court has ruled. Bloomberg reports the U.S. Court of Appeals in Washington says the 7,000 investors in certificates of deposit sold by Stanford didn't qualify as customers of a brokerage who would be insured by the Securities Investor Protection Corp., as the SEC argued. The CDs were bought at Antigua-based Stanford International Bank LLC, which wasn't an SIPC member, the court says. The Stanford case is the first in which the SEC has gone to court to force SIPC to extend coverage. SIPC, a nonprofit corporation funded by the brokerage industry, has come under criticism from U.S. senators for allegedly favoring its Wall Street members over fraud victims in recent years. In a pair of letters recently sent to President Barack Obama, a bipartisan group of lawmakers—including Louisiana Reps.

Awaiting justice

Despite a recent win at the U.S. Supreme Court, some Louisiana victims of R. Allen Stanford's $7 billion Ponzi scheme have doubts they will ever see the money they are owed.

Supreme Court OKs class-action suits for Stanford victims

The Supreme Court says class-action lawsuits from investors who lost billions in former Texas tycoon R. Allen Stanford's massive Ponzi scheme can go forward. The justices this morning issued a ruling against individuals, law firms and investment companies that allegedly aided Stanford's fraud. They had sought to have the lawsuits thrown out. Federal law says class-action suits related to securities fraud cannot be filed under state law, as these suits were. But a federal appeals court said these could move forward because the main part of the fraud involved certificates of deposit, not stocks and other securities. The high court agreed in a 7-2 decision. Baton Rouge attorney Phil Preis, who represents a group of Louisiana victims, says the distinction between federal and state law is important because state law allows victims to pursue a negligence claim against the entities that they say aided the fraud, rather than having to prove those entities actually knew what was going on.

'Business Report': How to protect your company from fraud

Bookkeeper Susan Fonte was responsible for maintaining the financial records, paying the bills and opening the mail for a Mandeville real estate development firm for about five years. As Business Report contributing writer Alison Lee Satake details in a feature from the current issue, Fonte stole more than $192,000 from the company between 2008 and 2010 by forging her boss's signature on checks and depositing the funds into her own personal checking account, according to federal court documents. She also illegally obtained a debit card linked to her boss's personal checking account and withdrew more than $95,000 through several ATM transactions. In June 2012 she was sentenced to 15 months in prison and ordered to pay full restitution to her former employer. "Although fraud happens to all types of companies, small businesses are particularly vulnerable," Satake writes. "Many do not invest in the tools or maintain the level of oversight needed to prevent fraud." The cost is...

Cooking the books

Bookkeeper Susan Fonte was responsible for maintaining the financial records, paying the bills and opening the mail for a Mandeville real estate development firm for about five years.

Five years since swindle, some Stanford victims now threatened with lawsuit

This month marks five years since investors with the now-defunct Stanford Group—which had a large presence in Baton Rouge—first learned they were victims of a $7 billion Ponzi scheme. And, though R. Allen Stanford has since been convicted and sent to prison for the massive fraud, most of the 28,000 investors who thought they were buying certificates of deposit from Stanford International Bank in Antigua have yet to recoup more than 1% of their lost savings. Now, adding insult to injury, some local victims are getting emails from a receiver in the case threatening to sue them in connection with claims they filed to recover their funds. "We're being terrorized again after five years," says Blaine Smith, a local Stanford victim, who lost more than $1 million through Stanford and is among those who have received the emails. "It's really kind of sick." Smith says the emails are coming from Grant Thornton, an Antiguan-based receiver that is supposed to be helping victims recoup...

JPMorgan settles Madoff fraud claims for $1.7 billion

JPMorgan Chase & Co., already beset by other costly legal woes, has agreed to pay $1.7 billion to settle criminal charges accusing the bank of ignoring obvious warning signs of Bernard Madoff's massive Ponzi scheme, federal authorities announced this morning. The government says the $1.7 billion payment represents the largest ever bank forfeiture and the largest Department of Justice penalty for a Bank Secrecy Act violation. The Associated Press reports the settlement includes a so-called deferred prosecution agreement that requires the bank to acknowledge failures in its protections against money laundering but also allows it to avoid criminal charges. No individual executives were accused of wrongdoing. The deal was announced by the office of U.S. Attorney Preet Bharara, who scheduled an afternoon news conference to detail the agreement to resolve criminal charges: two felony violations of the Bank Secrecy Act in connection with the bank's relationship with Bernard L. Madoff...

Big money scams

A new FINRA Investor Education Foundation survey concludes that many Americans can't identify the classic red flags of fraud. Many are vulnerable because they don't know what to look for when engaging in a financial activity, lacking an understanding of reasonable returns on investments. A look at the most common scams:

High court hears tale of Stanford's Ponzi scam

Investors who lost their life savings in convicted Texas financier R. Allen Stanford's $7 billion Ponzi scheme got their day in court today on the first day of the Supreme Court's 2013 term, but it was unclear whether their plea will pay dividends. Unable to recover their investments from Stanford or his fraudulent entities, including a bank based in Antigua, the plaintiffs filed class-action lawsuits in state and federal courts in Texas and Louisiana. But a law passed by Congress in 1998 was intended to preclude such lawsuits and assert federal jurisdiction. Faced with conflicting lower court rulings, the Supreme Court must decide whether to side with the defrauded investors or the financial institutions, law firms and insurance companies accused of aiding Stanford's scheme. The federal government, seeking to protect the Securities and Exchange Commission's regulatory authority over security fraud claims, is siding with the defendants. Ironically, USA Today reports, the case...

The final decision

When the U.S. Supreme Court convenes Oct. 7, justices will hear a case that could decide whether victims of the Stanford Group scandal will finally be compensated, some five years after the Ponzi scheme fell apart.