Content tagged “Fraud”

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.

Painter alleges investigative misconduct, seeks dismissal

Another conspiracy theory has emerged in the federal criminal case against former Alcohol and Tobacco Control Commissioner Murphy Painter. In a motion federal prosecutors characterize as "all bluster," Painter's defense attorney, Michael Fawer, urges a judge to dismiss the indictment against his client. He alleges that Shane Evans, the former investigator in the Office of Inspector General who served a search warrant on Painter's office, is related to Kelli Suire—Painter's former administrative assistant and a key witness in the case. Based on a report from a forensic computer expert working for the defense, Fawer also contends files were deleted while the computer was in Evans' possession over the weekend after it was seized. "By the time federal authorities picked up the case," the attorney writes in his memorandum to the judge, "it had been compromised." Prosecutors confirm that Evans—now chief of investigations for the East Baton Rouge Parish Coroner's Office—is...

Internal probe: No fraud at Ala. claims center

The head of security for the administrator of BP's multibillion-dollar settlement with Gulf Coast residents and businesses says an internal probe of alleged misconduct by an employee of a claims center hasn't turned up any evidence of fraud. BP said it received a tip in July that someone who worked at the Mobile, Ala., office helped people submit fraudulent claims in exchange for a portion of awards. But David Welker, a former FBI supervisor who now works for claims administrator Patrick Juneau, says in a letter dated Aug. 22 that his investigation found no evidence of fraud in any of the claims handled by the employee. BP cited the employee's alleged misconduct in its Aug. 5 request for a federal judge to temporarily suspend all settlement payments, according to The Associated Press.

AG and LDR crack down on tax fraud

After seeing an increase in the number of tax preparers completing fraudulent returns, Louisiana Secretary of Revenue Tim Barfield and the Louisiana Department of Revenue's Criminal Investigations Division are cracking down on such fraud. Since the renewed focus started earlier this year, investigators were ordered to target tax preparers who opened businesses only to illegally profit from the trust of taxpayers. Last week alone, six tax preparers were arrested on charges ranging from filing false public records to fraud. LDR has added two criminal investigators to the staff that are housed in the Louisiana Department of Justice. "This addition to our staff and our partnership with the attorney general's office has strengthened one of the core competencies of our department," LDR Secretary Tim Barfield says in a statement released this morning. "We are charged by the taxpayers of this state to protect their interests and focus on tax fraud and similar issues. The investment in these...

Decision days

A recent Securities and Exchange Commission ruling calling for three former Stanford Group executives to give up their licenses and pay millions in fines might not have set a legal precedent.

Green and two other former Stanford executives ordered to pay $5.5 million

Three former executives of the Stanford Group have been found liable in the $7 billion scam of convicted Ponzi-schemer R. Allen Stanford and ordered to collectively pay roughly $5.5 million for their roles in it. The ruling handed down by Securities and Exchange Commission Administrative Law Judge Carol Fox Foelak on Friday also bars Bernerd Young, Daniel Bogar and Jason Green from working in the securities industry. Though the SEC didn’t allege that any of the three knew about the fraud while they worked for Stanford, Foelak ruled their conduct was so "egregious" that they were nonetheless liable—essentially agreeing with the SEC’s charge that they didn't do enough to ensure that Stanford's marketing materials and disclosures were adequate. Young was Stanford Group's chief compliance officer, Bogar was its president and Green—a prominent figure in the Baton Rouge community and the firm's downtown Baton Rouge office—was head of its private client group.

An antique case

The last vestiges of a decade-old scandal involving a prominent Baton Rouge antiques dealer/auctioneer, the Stanford Group, securities fraud and one of the world's most-visited websites is still winding down in federal court.

Judge OK's interim payment of $55M to Stanford victims

A plan by a court-appointed receiver to distribute to investors assets recovered from R. Allen Stanford's Ponzi scheme has been approved by a federal judge in Dallas, Bloomberg reports. U.S. District Judge David Godbey accepted the plan by Ralph Janvey, the receiver appointed in 2009 to marshal and liquidate Stanford's personal and business assets, to make a $55 million interim distribution to about 17,000 claimants—or about 1 cent for each of the $5.1 billion the claimants lost in the fraud scheme. "We will follow it up in a subsequent distribution as the money comes in," Janvey's attorney, Kevin Sadler of Baker Botts, told Godbey at a court hearing in April, when the plan was originally proposed. A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government. Stanford...