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SEC Sues Former Newspaper Execs!--A Tale of Two Hollingers
The story of newspaper giant Hollinger International and
the case against its controversial former British-Canadian CEO
Lord Conrad Black and his associates, accused of self-dealing
schemes that cost Hollinger and its shareholders hundreds of
millions of dollars. Read
more.
Eight Financial
Crime Suspects Among FBI's Most Wanted For November 2004--Three
Reported Captured
Among those sought--two Californians who raised $11
million for phony entertainment investments, a Cuban accused of
embezzling money from a Florida bank, a Pakistani stockbroker in
Florida suspected of defrauding investors of over $10 million,
three Floridians who have since been captured and pleaded guilty
to operating an offshore securities boiler room targeting foreign
investors, and two individuals captured in England who were
accused of combining a $30 million Virginia-based ponzi scheme
with a pitch to set up a corporation sole to evade taxes. Read
more.
Mega-Corps AIG and
PNC to Pay Over $240 Million in Penalties Over "Special
Purpose Entities"
Anatomy of a complex deal by two of the largest American
financial companies to try to keep hundreds of millions of
dollars of risky investments and bad loans off PNC's books by
using an SPE. Read more.
International Con
Man Martin Frankel Sentenced
Frankel used fronts to loot $200 million from seven
Southern insurance companies from his Connecticut compound, stole
identities and used a series of aliases to persuade others to
help him carry out his schemes. To continue the fraud and loot
other insurance companies, Frankel set up a bogus offshore
charity and under false pretenses convinced attorneys and two
Vatican officials to front for him. He fled the US and tried to
launder his money through diamonds and gold coins, was
apprehended on customs violations in Germany, later extradited to
the US, and finally convicted and sentenced in late 2004. Read
more.
Raphael Levy's
Second Major Financial Crime Conviction Recalls His Role in
Previous $117 Million Viaticals Scam
Levy's American Benefits Services was an affiliate of
convicted fraudster Frederick Brandau's Financial Federated Title
& Trust, one of the largest viatical frauds of the 1990s. Read
more.
Peregrine Execs
Indicted for Accounting Fraud
Peregrine
Systems was a San Diego company which collapsed in 2002 after
exposure of a $4 billion accounting fraud. Peregrine executives
met income reporting targets by such peculiar tactics as
recording sales on the "37th day of the month",
reaching into their "magic drawer" to find additional
customer contracts, and a practice they called "burn
cleaning." Read more.
CFTC Cracks Down on
Forex Scams
The number of fraudulent currency exchange schemes has
been growing. Here are some recent cases brought by the Commodity
Futures Trading Commission (CFTC), responsible for enforcing the
Commodity Exchange Act and currency futures contract trading. Read
more.
Effects of
Baltimore Real Estate Fraud Continue in Court
Some of Baltimore's neighborhoods were decimated by real
estate flipping schemes. By 2003 federal prosecutors had indicted
89 people over these activities. Read
more.
Federal Court
Issues Injunction Against Key Corporation Sole Promoter
"Corporation Sole" is the latest illegal tax
shelter scheme promoted by tax protestors, including some with
links to political extremist groups. Read
more.
Art Wars: Disputes
Over the Survival and Ownership of European Art Looted by Nazis
During WWII Continue in 2004
From a Picasso painting to the exotic Amber Room whose
whereabouts are still unknown, looted art claims spark courtroom
jousting, intrigue, and the imaginations of novelists and
journalists. Read more.
Operation Meltdown
Snares Diamond District Dealers
Diamond traffic intrigue, theft, murder, and money
laundering from New York to Antwerp to Australia. Read
more.
Stamp Scams Take
Many Forms
Counterfeit postage stamps plague the US Postal Service,
but also challenge collectors of rare stamps and sometimes
overlap with other frauds. In a class of its own is India's
so-called Stamp Racket, a massive counterfeiting operation that
enriched a gang of about 60 participants and suborned police
officers in several Indian states. Read
more.
New York Targets
Sales Tax Schemes by Art Galleries
A New York investigation has caught dozens of expensive
art galleries failing to collect sales tax from some of their
ultra-wealthy customers and in some cases even colluded with
those customers to forge documents falsely showing the art
objects purchased being shipped to an out-of-state address where
they wouldn't be subject to New York taxes. Some corporate execs
who faced criminal charges over accounting frauds were among the
privileged customers seeking to evade New York sales tax on art. Read
more.
Reports Say Georgia
Leads US in Mortgage Fraud
All the usual suspects--mortgage brokers, appraisers,
real estate attorneys, real estate agents, straw buyers--figure
in several high-profile mortgage fraud schemes which highlight
the widespread links between mortgage fraud, real estate
flipping, and identity theft. Read
more.
All of the individuals who were fugitives at the time the article was written are reported captured by early 2005. Check out the "Financial Crime News" February 2005 Special Report called "Mortgage Fraud Marathon" for links to the dozens of mortgage fraud stories published since June 2004.
The Elf Affair: Les
liaisons pernicieuses
For years French media headlines featured "L'affaire
Elf." Elf Aquitaine was a state-owned oil company which
maintained controversial relationships with French politicians
and leaders of certain oil-rich African countries alike. The Elf
scandal uncovered a web of clandestine financial deals involving
key Elf executives and a group of political intermediaries in
several countries. Read more
Tobashi Schemes
Backfired on Japanese Banks
"Tobashi" was a type of shell game that
Japanese banks played with the loans and investment losses they
didn't want to get caught with. Ill-advised lending caught up
with Japan's fourth largest brokerage, Yamaichi Securites, and
other large banks, brokerages, and finance companies, some of
whom were also caught making payoffs to gangsters. Read
more.
Prosecutors Target
Fraudsters Using Leadenhall Bank
Leadenhall Bank in the Bahamas was a favorite with tax
evaders and was also popular with fraudsters. Using the bank
cards issued by Leadenhall's affiliate, they didn't even have to
leave home to withdraw their cash. Read
more.
$11 Million
Restitution Fund for Victims of A.S. Goldmen
The TV crime drama which says its episodes are
"ripped from the headlines" may have borrowed a page
from the New York trial of the Marchiano brothers and their
associates. One of the penny stocks promoted by their firm A.S.
Goldmen crossed paths with a Florida con man's phony hedge fund
in a scheme to build a golf stadium. Read
more.
Parmalat's High
Stakes Shell Game
Parmalat S.p.A. was one of Italy's largest companies. Its
plan to create a worldwide dairy products company collapsed in a
pool of fraudulent accounting, sham offshore entities, and
massive debt. Read more.
Wine Investment
Scheme Echoes British Cases
Several states have issued orders against Ocean
International Marketing and other dubious sellers of investments
in supposedly rare wines. Some of these sellers are simply
running a vintage fraud scheme which has been popular in Europe
for several years. Some British promoters went to jail after
"The Champagne Trial" and The "Whisky Trial."
Read more.
A Matter of Timing:
Hedge Funds vs Mutual Funds
Some big mutual funds have agreed to pay hundreds of
millions of dollars in fines and settlements for allowing certain
hedge funds to engage in market timing. What is market timing
anyway? This story tells you what it is, who was caught doing it,
who was caught facilitating it. Read
more.
Allied Deals $600
Million Metals Fraud Was a Copycat Scam
When the Rastogi brothers tricked big banks into
financing hundreds of millions of dollars of international metal
shipments with forged documents to support letters of credit,
they were following in the footsteps of Madhav Patel, who shipped
phantom cargoes from sham sellers to sham buyers and submitted
forged documents to banks financing these bogus deals with
letters of credit. The scheme unraveled in 1999, but $200 million
is still missing and Patel is still a fugitive. Read
more.
Rare Coin Scams Not
a Rarity
In movies and mystery novels, rare coins are sometimes to
kill for, but in real life, they're more likely to be peddled by
specialized boiler rooms or crooked coin dealers--except for that
bizarre case in Utah. Read
more.
Since this story was written, other rare coin frauds have been reported in "Financial Crime News," including a federal case in New York that cost some investors their life savings. See "Three Arrested in Federal Case Against Rare Coin Boiler Rooms," March 3, 2005.
Baptist Foundation
Case Still Pending in Arizona State Court
The Baptist Foundation of Arizona was perhaps the largest
nonprofit bankruptcy in US history and certainly one of the
largest "affinity frauds" (fraud directed at people who
share a common identity, belief, or interest) of all time. BFA
raised $480 million by selling promissory notes for charitable
projects, while its leaders allegedly used the money for personal
real estate speculation and other noncharitable purposes. The
State of Arizona took on BFA and its auditors, Arthur Andersen,
but the case has had many delays. Read
more.
Criminal Trial of
BestBank Defendants Postponed
The obstacles of holding someone responsible for the $200
million 1998 collapse of Colorado-based BestBank and its
relationship with a dubious Florida "travel club" that
resulted in the issuance of thousands of allegedly fraudulent
subprime credit cards by BestBank. Read
more.
BestBank has figured in several other scandals, including Greater Ministries, and The Credit Store, an entity involved in the Lancer hedge fund scandal.
Settlements Net
over $3 Billion for Defrauded Worldcom Investors
The story of the WorldCom scandal compiled from documents
of the SEC case and the bankruptcy court report describing how
the scheme unfolded.Read
more.
S&L Era Echoes
in Erpenbeck Scandal
A collusive relationship between one of the biggest
homebuilders in the Cincinnati area and officers at a Kentucky
bank brought down both in a scandal costing the bank some $33
million and affecting over 250 Ohio and Kentucky homeowners who
found the new houses they bought subject to liens because of the
failure of builder Erpenbeck Company to pay off construction
loans. Read more.
Since this story was written, the bankers who conspired with Erpenbeck have pleaded guilty to federal charges and been sentenced. See "Financial Crime News" story "Two Kentucky Bankers Sentenced Over Erpenbeck Deals," February 5, 2005.
Return of the
"Elgin Marbles" Mystery
The holding of the 2004 Olympic Games in Athens, Greece
provided the occasion for renewed disputes over a group of marble
statues called the "Parthenon Marbles" by the Greeks
and the "Elgin Marbles" in England where they have been
housed at the British Museum since their removal from the
Parthenon by a British diplomat, Lord Elgin, in the early 19th
century. The Greeks want the statues back, the British Museum
says 'no way.' The highly emotional issue is complicated by
recurring allegations that Elgin and his associates may have
obtained the statues using forged documents. Read
more.
New York Nonprofits
Were Used As Fronts in Rehab Schemes
Abuse of a federal program (HUD's Section 203k for
nonprofit organizations to get FHA-insured loans to renovate
rundown urban houses) by real estate speculators who used
nonprofits as fronts to get properties for flipping cost HUD $50
million in New York City alone. Read
more.
Affiliates of MCA Financial in Detroit were also allegedly involved in this type of scheme. See "Financial Crime News" Feature "MCA Financial's Section 203(k) Deals Revealed," June 2004.
The Wild West
Virginia Bank Failure
Collapse of the First National Bank of Keystone (West
Virginia) in 1999 was one of the most costly bank failures in
American history. Never heard of it? The late J. Knox McConnell
and his female management team known as "Knox's Foxes"
plunged into securitizing subprime mortgages and ended up
draining the resources of the small town they called home and
over $750 million from the FDIC. An important (and colorful)
story of the dangers of irresponsible banking Americans should
know about which was under-reported by mainstream media. Read
more.
Since this story was written, the FDIC has obtained court judgments against several of the promoters of the securitization program adopted by Keystone, including a $161 million December 2004 judgment against Norwegian Harald Bakkebo, a fugitive under indictment in Louisiana for a separate financial crime case. See "Financial Crime News" "Spectacular Cases Show Financial Crime on the Rise in Norway," January 2005.
Was Seattle Art
Dealer A Front for Tax Fraud
The story of a Hong Kong economics professor accused by
the IRS of hiding millions of dollars of income and accused by
Washington authorities and media of selling fake Chinese
artifacts in his Seattle art gallery. Read
more.
Classic Real Estate
Scams Resurface in Florida
A revival of "swamp-selling" and the theft of
land by recording forged deeds in several cases in 2004. Read
more. Since the
article was written, another individual was charged in December
with stealing the properties of absentee owners in St Lucie
County. See "Financial Crime News" story Florida
Man Charged With Using Forged Deeds to Steal Real Estate,"
December 27, 2004
Litchfield
Financial and Developer Finance Settled with HUD Over Buyers
Source
HUD Sued Buyers Source in August 2003
Buyer's Source sold $25 million of overpriced lots to
1,000 buyers after soliciting them about buying their existing
timeshares. HUD cases targeted the sellers and
those who financed the real estate purchases. Read more- Telemarketers or Lenders
MCA Financial
Guilty Pleas Reveal Elaborate Real Estate Fraud
MCA Financial's Section 203(k) Deals Revealed
MCA Financial
set up a web of companies whose accounting fraud cost investors
and lenders $250 million. It bought and originated subprime loans
and resold them in pools to investors. But HUD's exam of MCA
Financial's deals found the company using nonprofit fronts to
flip rundown real estate in Detroit. Two articles detail how they
did this. Read more- Accounting
fraud, or flipping
scheme
Pioneers of
Factoring Fraud
Towers
Financial and National Century Funding Enterprises bought
healthcare receivables and collapsed in massive scandals with
losses soaring into the billions. How did this happen? Read
more.
The Itoman
Incident: Japan's Classic Case of Art Investment Fraud
In the late 1990s, Japanese banks embarked on a frenzy of
lending against inflated values of Western paintings. How long
could this last? Read
more.
Where in the World
is the Dominion of Melchizedek?
Well, nowhere, actually. It's one of the imaginary
countries used by international fraudsters in a variety of
schemes. Read more.