Labels: Adidas, Heinrich Kieber, Michelin, money laundering, tax evasion, Total

Labels: Louis Posner, money laundering

Labels: money laundering, Supreme Court

Labels: drogas, money laundering, Wachovia

Labels: drogas, money laundering, Wachovia

Labels: Butch Ballow, Harry Dempsy Ballow, John A. Mortiz, money laundering, pump and dump

Labels: Eliot Spitzer, money laundering

Labels: money laundering, UK

Labels: Bank of New York, Mellon, money laundering, Russia

Labels: J Turquey, money laundering, tax havens

Labels: Bank of New York, lawsuit, money laundering, Russia

Labels: David Bershad, kickbacks, Melvyn Weiss, Milberg, Milberg Weiss, money laundering, Seymour Lazar, Steven Cooperman, Steven Schulman

Labels: Former Soviet Union, GlobalOptions, influence, lobbying, money laundering, Neil C. Livingstone, organized crime

Refco was the subject of 142 regulatory actions, the most of any futures trading outfit, according to a Bloomberg News analysis. The Commodity Futures Trading Commission came after it repeatedly, in some of its most prominent administrative cases of the 1980s and 1990s.

Fellow trading executives say Refco flouted industry standards like no other firm, tossing aside the rulebooks, taking on the diciest accounts and fighting back against regulators that tried to intervene.

Refco traces its origins to a one-time poultry wholesaler who served time in prison for selling substandard chickens to the military. Ray Friedman eventually won a pardon and with his stepson, Thomas Dittmer, opened the forerunner of Refco around 1969.

Labels: Fraud, indictment, money laundering, Phillip Bennett, Refco, Tone Grant

Mark Abrams, 45, of Long Beach, CA
Nicole LaViolette, 37, of Palm Springs, CA
Jamieson Matykowski, 33, of Laguna Niguel, CA
Timothy Holland, 35, of Santa Ana, CA

Labels: Charles Elliott Fitzgerald, FBI, fugitive, money laundering, New Zealand, Samoa, Trevor Morley

U.S. Attorney Donald W. Washington said the charges included trafficking in counterfeit goods, money laundering, making false statements to a federal agent, false representations and use of a Social Security account number, operating an unlicensed money transmitting business and forfeiture.

Labels: Louisiana, money laundering

Labels: bribery, KPMG, money laundering

Law firm, partners, plead not guilty to federal charges in LA

ERIC BERKOWITZ
Associated Press
July 17, 2006

A top class-action law firm and two of its partners pleaded not guilty Monday to charges of secretly paying more than $11 million in kickbacks to get people to take part in shareholder lawsuits. Also pleading not guilty in federal court were Seymour M. Lazar, who is accused of acting as a paid plaintiff in some of the firm's cases, and Paul T. Selzer, who is charged with laundering money on Lazar's behalf.

In a 20-count indictment handed down in May, prosecutors alleged that Milberg Weiss Bershad & Schulman, along with partners David J. Bershad and Steven G. Schulman, secretly paid Lazar and others since 1984 to act as plaintiffs in class-action suits against major corporations.

Federal prosecutors alleged that secret kickback arrangements allowed the firm to be among the first to file lawsuits on behalf of shareholders and secure the lucrative position as lead plaintiffs' counsel. The indictment also alleged that "the paid plaintiffs purchased the securities at issue anticipating that the securities would decline in value, in order to position themselves to be named plaintiffs in securities fraud class actions and to obtain kickbacks" from the firm and others.

All the individual defendants were in court to enter their pleas except Lazar, who was unable to attend for medical reasons. Bershad and Schulman are on leave from the firm.

The case, which is the result of an ongoing federal investigation, has already resulted in plea deals with two people allegedly involved in the payoff schemes. Retired real estate mortgage broker Howard Vogel agreed in April to plead guilty to one count of making a false declaration before a court and admitted to receiving $2.5 million in kickbacks from Milberg Weiss in connection with class actions in which he was the plaintiff.

Los Angeles attorney Richard Purtich agreed in May to plead guilty to a federal tax offense by acting as an intermediary through which Milberg Weiss paid his former client Steven G. Cooperman more than $2.5 million in fees for acting as plaintiff in several class actions.
The firm denies any wrongdoing. In a statements released after Monday's arraignment, Bershad's attorney, Robert Luskin, said the indictment "is a disgrace and the charges are utterly baseless," and the firm said it is "confident that we will be fully vindicated"...

Labels: David Bershad, Howard Vogel, hulman, kickbacks, Melvyn Weiss, Milberg, Milberg Weiss, money laundering, Steven Cooperman

Labels: Enron, money laundering

BWC's financial chief lived in high style - Prison sentence now looms in wake of Gasper's guilty plea

Sunday, June 11, 2006
T.C. Brown and Sandy Theis
Plain Dealer Reporters

Terry Gasper lived the high life on a civil servant's salary. He financed his fine living through the generosity of others - brokers and dealers eager to feast at the in vestment trough he man aged at the Ohio Bureau of Workers' Com pensation. Overflowing with billions of dollars, it is one of the state's largest investment pools.

Those indebted to Gasper for lucrative state investment contracts gave him unfettered access to a luxurious $485,000 condo in the Florida Keys at the Coral Harbour Club, a condo complex with deep-water docks, a heated swimming pool, lighted tennis courts and an oceanfront Tiki hut.

They also wined and dined him at some of the top restaurants in Cleveland and Columbus. A marketer whom prosecutors have yet to identify provided $9,000 in college tuition for his son. And he got a $25,000 investment in a limited partnership and many thousands of dollars in meals, concert and sporting event tickets and other gifts.

But the good life came crashing down around Gasper's ears this past week, when the 59-year-old pleaded guilty in federal and state courts to racketeering, money laundering and ethics violations. Prosecutors estimate that Gasper's quid pro quo manner of doling out state investment business has cost taxpayers $20 million to $50 million...

Labels: money laundering

Labels: money laundering

Labels: database, money laundering

RBI wants banks to screen prospective staff

Business Standard
Our Banking Bureau
Mumbai
April 14, 2006

Banks would soon have to do a background check of candidates before recruiting them as employees. The Reserve Bank of India (RBI) is working on guidelines, making it mandatory for banks to run a check on the background of prospective employees. The background checking will be as per requirements of the financial action task force (FATF) on anti-money laundering (AML).

Speaking at a seminar on anti-money laundering organised by the Indian Banks’ Association (IBA), Lalit Srivastava, RBI general manager, said as per FATF guidelines, the RBI had already asked banks not to outsource the task of customer identification as per know your customer norms to direct selling agents (DSAs).

On lessons learnt from the recent IPO scam, Srivastava said penal action against banks found guilty in IPO allotment scam should not be evaluated on the basis of amount of penalties. The penalty for continued non-compliance could cost a bank heavily in its dealings in the international market and with its correspondent banks...

Labels: background checks, money laundering

Milberg Weiss Partners to Be Indicted Within Month, Lawyer Says

Feb. 23, 2006
Bloomberg
By Jef Feeley

Steven Schulman and David Bershad, partners in New York's Milberg Weiss Bershad & Schulman, were told by prosecutors that they will be indicted within the next month on charges they participated in a scheme to pay kickbacks to clients, Schulman's lawyer said.

Assistant U.S. Attorney Richard Robinson told Schulman and Bershad on Feb. 20 that they are facing indictment on wire fraud and money laundering charges over the fees, according to Edward Hayes, who represents Schulman in a federal criminal probe over the payments. Robinson told the two men they could be indicted in the next 30 days, Hayes said in an interview yesterday.

A lawyer for Melvyn Weiss, the firm's lead partner, said Feb. 21 that prosecutors told Weiss and William Lerach, Weiss's former partner, that there are no plans to charge them in the five-year probe of possible kickbacks. The two men run firms that accounted for 57 percent of securities fraud settlements last year, according to a Cornerstone Research survey.

"Mr. Schulman absolutely denies he was involved in any kickback scheme and that any referral fees involved in his cases were 100 percent legitimate,'' Hayes said. Neither Bershad, a founding member of Milberg Weiss, nor his attorney, Andrew Lawler, were immediately available yesterday to comment on Hayes's statements. Tom Mrozek, a spokesman for the U.S. attorney's office in Los Angeles, which has been conducting the investigation, declined to comment on "any aspect'' of the investigation.


Federal prosecutors have been investigating claims that Milberg Weiss Bershad Hynes & Lerach, the biggest firm representing shareholders in securities fraud cases before it split in two in 2004, illegally paid shareholders to file the suits. At the time of the breakup, Milberg Weiss had represented clients in half of all securities class actions filed in the past decade. The firm took part in suits that paid clients $30 billion in settlements.

Hayes said prosecutors allege Schulman knew about a scheme to pay referral fees to lawyers who sent them clients with securities-fraud claims. Some of the fees allegedly later made their way to the clients, he added. "The government contends there are millions in fees'' at issue in the case, Hayes said.

Schulman will be charged with fraud over allegedly knowing about the fee scheme and not taking steps to stop it, Hayes said. He'll face money laundering charges because he knew some lawyers were reportedly helping plaintiffs hide the source of money they received from the fees, Hayes said.

A referral fee is paid from one firm to another for referring a client and splitting up the work, said George M. Cohen, a law professor and legal ethics teacher at the University of Virginia at Charlottesville. "In many cases, it's not really a huge issue,'' Cohen said, though problems may arise if such fees are used by "lawyers who are less competent and can't get business in a legitimate way.'' "Basically, the rules say you can have some kind of referral fee as long as both lawyers are contributing to the representation or they agree to a joint representation,'' Cohen said. "Then it's OK, as long as the client understands that this is what's going on.''

The Milberg case may be a little different, and the claim "is that they were making payments to a named plaintiff in various class actions, that he was getting extra payments to bring the claims in class actions,'' Cohen said. "The argument is that if the person is paid extra for serving in that capacity, they may not necessarily act in the best interests of the class, but may act in the best interest of themselves or the law firm.''

Investigators are relying on accusations made by two former Milberg partners about the kickback scheme, Hayes said. "We don't believe these individuals have any legitimate proof of any wrongdoing,'' Hayes said. "Every document they've pointed to is inconsistent with the allegations'' over the fees, he said.
Hayes added the charges are an attempt to pressure Schulman and Bershad into cooperating with prosecutors in their continuing investigation of Weiss's and Lerach's actions. Lerach now leads San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins. Weiss leads New York-based Milberg Weiss Bershad & Schulman.

Before 1995, law firms that were the first to file suits against companies whose stock declined often received most of the legal fees when the cases were settled. A change in the law that year gave control of shareholder suits to firms that represent the biggest shareholders.

On Milberg Weiss's Web site, Bershad is listed as a securities and commercial litigator. The site said he has negotiated "more than 100 complex class-action settlements,'' including cases against Lucent and Rite Aid that brought in a total of $900 million for investors. Schulman also is listed as a securities fraud litigator on the site and recently represented Disney investors seeking to recoup former company President Michael Ovitz's $140 million severance.

Two other men already have been indicted in connection with the federal investigation of referral fees among securities lawyers. Paul T. Selzer, a California lawyer, and Seymour Lazar, a retired attorney, have been charged with money laundering in connection with the alleged kickback scheme. Selzer is accused of helping to funnel illegal payments to Lazar, who served as lead plaintiff in securities fraud cases. Selzer allegedly used referral payments made to him by Milberg Weiss to settle Lazar's legal bills with his firm and to make political contributions on his behalf.

Labels: Melvyn Weiss, Milberg Weiss, money laundering

NASD sues Oppenheimer - Regulator claims the brokerage supplied it with inaccurate data

OTIS BILODEAU AND ERIK SCHATZKER
Bloomberg News
January 10, 2006

Oppenheimer Holdings Inc. and Albert Lowenthal, chief executive officer of the Toronto-based brokerage, were sued by NASD for allegedly giving the regulator inaccurate data during a review of mutual fund sales practices.

Lowenthal, 60, approved the submission of "flawed, inaccurate, and incomplete data" about sales discounts, NASD said in a civil complaint Monday. Oppenheimer & Co., a New York- based unit of Oppenheimer Holdings, was aware the information was flawed, yet didn't notify NASD or make corrections promptly, according to the lawsuit...

...Oppenheimer also has run afoul of the New York Stock Exchange and Treasury Department. It agreed last month to pay $4.4 million in settlements with those regulators over accusations the firm failed to do enough to police its employees and guard against money laundering. Oppenheimer didn't admit or deny wrongdoing in those cases.

NASD's suit today marks the second time in eight months that the regulator, formerly known as the National Association of Securities Dealers, has accused Oppenheimer of failing to produce documents and data. The first complaint, in May, involved an NASD investigation of reporting violations on municipal bond transactions...

Labels: money laundering

Ex-Qwest exec pleads guilty to wire fraud

By JON SARCHE
Associated Press Writer
December 28 2005

Former Qwest Communications executive Marc Weisberg pleaded guilty Wednesday to wire fraud and agreed to cooperate with federal prosecutors trying to convict other company officials of wrongdoing, including former Chief Executive Joseph Nacchio.

Weisberg, a former senior vice president who oversaw investments, mergers and acquisitions for Denver-based Qwest Communications International Inc., pleaded guilty to a single count of fraud. He had faced eight counts of wire fraud and three counts of money laundering.

Prosecutors declined comment through U.S. Attorney's spokesman Jeff Dorschner. Weisberg's attorneys did not immediately return calls. He faces a March 3 sentencing hearing.

Labels: insider trading, Joe Nacchio, money laundering, Quest

Status of high-profile corporate scandals

November 23, 2005
By The Associated Press

A look at some of the high-profile corporate scandals of recent years and the status of legal action in each.

ADELPHIA COMMUNICATIONS CORP. -- Michael Rigas, a son of the founder of Adelphia Communications Corp., pleaded guilty on Wednesday to a charge of making a false entry in a financial record, eliminating the need for his retrial on securities fraud and bank fraud charges in a scandal that forced the cable giant into bankruptcy. John Rigas and his son Timothy were convicted in federal court last year of conspiracy, bank fraud and securities fraud. On June 20, John Rigas was sentenced to 15 years in prison, and Timothy Rigas to 20 years. They are free pending appeal. A fourth executive, Michael Mulcahey, was found not guilty of conspiracy and securities fraud. Last month, John and Timothy were indicted in Philadelphia on charges they and other family members didn't pay $300 million in taxes.

WORLDCOM INC. -- Bernard Ebbers, who as CEO of WorldCom oversaw the largest corporate fraud in U.S. history, was sentenced on July 13 to 25 years in prison. The sentence was handed down in Manhattan three years after WorldCom collapsed in an $11 billion accounting fraud, wiping out billions of investor dollars. A judge ruled in September that Ebbers can stay out of prison while he appeals his conviction.

HEALTHSOUTH CORP. -- Former CEO Richard Scrushy was acquitted on June 28 on all 36 counts of conspiracy, false reporting, fraud and money laundering in an alleged $2.7 billion earnings overstatement at the rehabilitation and medical services chain over seven years beginning in 1996. He blamed the fraud on 15 former HealthSouth executives who pleaded guilty. Hannibal "Sonny" Crumpler, a former HealthSouth executive, the second person to stand trial in the fraud was convicted last Friday of conspiracy and lying to auditors for his role in the fraud.

TYCO INTERNATIONAL LTD. -- Former Chief Executive L. Dennis Kozlowski and Chief Financial Officer Mark H. Swartz were convicted June 17 on 22 of 23 counts of grand larceny, conspiracy, securities fraud and falsifying business records. Prosecutors accused the two of conspiring to defraud Tyco of millions of dollars to fund extravagant lifestyles. The two were sentenced Sept 19 to eight and one-third to 25 years in prison. A judge refused to release Kozlowski and Swartz on bail while they are appeal their convictions.

ENRON CORP. -- Enron founder Kenneth Lay, former CEO Jeffrey Skilling and former top accountant Richard Causey are scheduled to go to trial in January on federal fraud and conspiracy charges. Former CFO Andrew Fastow pleaded guilty in January 2004 to two counts of conspiracy, admitting to orchestrating schemes to hide the company's debt and inflate profits while pocketing millions of dollars. He agreed to serve the maximum 10-year sentence, which will begin in July 2006, after he testifies against his former bosses.

Fastow's wife, Lea Fastow, completed a yearlong sentence in July on a misdemeanor tax charge for failing to report her husband's kickbacks. Former Enron treasurer Ben Glisan Jr. is serving a five-year sentence for his role in the scandal. And two former Merrill Lynch & Co. executives were sentenced to short prison terms for their roles in a bogus Enron sale of power barges.

CREDIT SUISSE FIRST BOSTON -- The company's former investment banking star, Frank Quattrone, was convicted in May 2004 on federal charges of obstruction of justice, after his first trial ended in a hung jury. Quattrone, who made a fortune taking Internet companies public during the dot-com stock boom, was sentenced to 18 months in prison. He is free on bail, appealing the conviction.

MARTHA STEWART: The founder of the homemaking empire was released March 4 after serving five months in prison, and finished serving an additional five months and three weeks of home confinement at the end of August. She was convicted in federal court last year of conspiracy, obstruction of justice and making false statements related to a personal sale of ImClone Systems Inc. stock. Her former broker at Merrill Lynch, Peter Bacanovic, served a five-month sentence and was released June 16. He still faces five months of home confinement. Stewart's conviction was not related to the company she founded, Martha Stewart Living Omnimedia Inc.

CENDANT CORP.: Former Cendant Corp. Vice Chairmen E. Kirk Shelton was convicted in January of conspiracy and securities, wire and mail fraud. He was sentenced on August 3 to 10 years in prison and ordered to pay full restitution for his role in an accounting scandal that cost investors and the company more than $3 billion. Shelton was ordered to pay $3.27 billion to Cendant including an initial "lump sum" payment of $15 million last month. Shelton delivered cash, company stock and company-funded insurance policies, a combination that Cendant said is at least $2.4 million short and fluctuates daily. Shelton stood trial with former Cendant Chairman Walter Forbes, whose case ended in a mistrial and will be retried. Four other former executives have already pleaded guilty.

Labels: 2006, Andy Fastow, Cendant, Dennis Kozlowski, Enron, Health South, money laundering, Tyco

Probers Irked Over Holdout By Aide at UBS

By MEGHAN CLYNE
Staff Reporter
New York Sun
October 13, 2005

Frustrating and puzzling congressional investigators, a high-ranking Treasury Department official who later assumed a top post at the world's largest "wealth management" firm, UBS, has not been made available by the Swiss bank to answer questions about whether the firm possibly laundered billions of dollars for state sponsors of terrorism, congressional staff said yesterday.

The official, David Aufhauser, served as the Treasury Department's general counsel from March 2001 to November 2003, according to a UBS press release announcing his hiring at the firm. During that time, Mr. Aufhauser supervised 1,600 lawyers in several divisions of the department, including, among others, the Financial Crimes Enforcement Network, the Office of Terrorist Financing, and the Office of Foreign Assets Control, which, among its many activities, ensures adherence to the terms of America's economic sanctions, including the Cuban embargo.

It was in violation of those sanctions that Mr. Aufhauser's current employer, UBS, procured $5 billion in American banknotes for Cuba, Iran, Libya, and Yugoslavia as part of the Extended Custodial Inventory Program, run by the Federal Reserve Bank of New York. The Federal Reserve program, in cooperation with international banks, allowed clients to exchange old banknotes for new ones. One condition of the program was that American currency neither be distributed to nor accepted from nations against which America maintains economic sanctions.

When, in April 2003, American troops liberating Iraq found $762 million in American cash in hideouts belonging to Saddam Hussein, the banknotes were traced to UBS and the ECI program. In the process of probing the origins of the Iraqi cash - which UBS has told congressional investigators was initially sent to the Central Bank of Iran - American investigators subsequently discovered that the Swiss bank had also provided $3.9 billion in American currency for Cuba, $1 billion for Iran, $30 million for Libya, and less than $1 million for Yugoslavia. Cuba, Iran, and Libya appear on the State Department's official list of state sponsors of terrorism.

As a result of an investigation by the Federal Reserve Bank of New York in cooperation with the Department of the Treasury, UBS was censured by the Swiss Banking Commission, and paid a $100 million fine to the Federal Reserve in May 2004. The next month, Mr. Aufhauser was announced as the new global general counsel for UBS's investment bank and UBS's general counsel for North America.

Mr. Aufhauser had left the Treasury Department in November 2003, according to materials distributed by UBS, seven months after the discovery of the American cash in Iraq. He worked briefly for a Washington law firm, William & Connolly LLP - where he had spent his career between 1977 and 2001 as a securities litigator before joining the Treasury Department - before being brought on by UBS in June 2004.

Prior to his departure from the Treasury Department, Mr. Aufhauser had earned a reputation as a committed foe of money laundering and terrorist financing operations...

Labels: money laundering

Russian girl at top school probed over 'hot money'

Abul Taher and Ed Habershon
October 09, 2005
The Sunday Times

A RUSSIAN teenager who was studying at an independent boarding school in Britain has had her bank account frozen on suspicion of money laundering. Tamara Platash, 18, who until last summer was a pupil at Sherborne school for girls in Dorset, was studying for A-levels when she and her mother were questioned by officers over the payment of more than £300,000 into her bank account from sources in China and Hong Kong.

When Platash — described as attractive, assertive and “a model pupil” — allegedly tried to transfer £200,000 back to an account in China, police were alerted and immediately froze the money. Dorset police questioned Irina, Platash’s mother, when she flew to Britain at the end of the summer term. Police say seven cash sums totalling £303,730 were deposited in Platash’s account over five months.

Both she and her mother, who are believed to be in Russia, are being investigated by the Assets Recovery Agency (ARA), which last week said it believed “the funds are linked to money laundering”. The police have dropped their inquiries for lack of evidence.

“We could not prove where exactly the money had come from or where it was going,” said Detective Sergeant Andrew Strong of Dorset police. “We might have been able to make more progress if we had been given more access to information in both China and Russia.”

The ARA, a government agency that pursues cases through the civil courts, has obtained a High Court order that allowed it to keep Platash’s account frozen. The agency plans to present its full case to the High Court in the near future. The burden of proof is lower in a civil court than at a criminal hearing and a judge will determine, on the balance of probabilities, whether the money is the proceeds of crime

Jane Earl, director of the ARA, said: “So far, the respondents have not put forward a convincing explanation of how these funds were acquired.” Platash is understood to be from Pyatigorsk, a city at the foot of the Caucasus mountains in the Stavropol region of southern Russia. Her mother is believed to run a travel business in the city...

...A source close to the Platash family said the money in Tamara’s account may have come from legitimate sources in China, as her mother owns businesses in that country. Platash is believed to have spent the summer in China working as a translator. Neither she nor her mother could be reached for comment this weekend...

Labels: China, money laundering

Russia legal onslaught targets YUKOS assets-papers

October 6, 2005
Reuters

MOSCOW, Oct 6 (Reuters) - Russian media said on Thursday that fresh raids at the Amsterdam and Moscow offices of crippled oil firm YUKOS were a further step in seizing its remaining assets and isolating its imprisoned founder.

Four offices in Russia with links to the oil firm were raided in connection with an alleged money laundering scheme to spirit $7 billion out of the country in 2000-2003. The firm's Netherlands-based YUKOS Finance B.V. subsidiary was also raided in Amsterdam.

Prosecutors have said they were about to file new charges against former YUKOS CEO Mikhail Khodorkovsky, who is serving an eight-year sentence for fraud and tax evasion. Khodorkovsky's lawyer said prosecutors launched the searches to keep their politically ambitious client as long as possible under their control in a Moscow pre-trial centre rather than move him to a penitentiary with a milder regime outside Moscow.

"We are in no doubt that the authorities will use any pretext to keep him where he is and to maintain full control over him," Yevgeny Baru told Ekho Moskvy radio. Khodorkovsky can be held in pre-trial custody in Moscow, where he can be strictly monitored, if he is subject to a new investigation. Authorities appear to be concerned that he may somehow be able to conduct business from his cell if he is moved to a prison with a less strict regime away from the capital.

Khodorkovsky, who says he is the victim of Kremlin intrigue, has held a week-long hunger strike and launched a botched attempt to run for parliament after being sentenced on May 31.
"The aim of the authorities is to break down a defiant Khodorkovsky," former economy minister Yevgeny Yasin told Kommersant daily. "If he had kneeled repentant in front of the authorities nothing would have happened.

However, most other newspapers said that YUKOS's new problems were most likely motivated by business interests. "The new searches and the fact Khodorkovsky has not been sent to a proper prison yet are connected," Vedomosti business daily quoted a source close to prosecutor's office as saying.

"But the new charges, which (Khodorkovsky) can face soon, are ... mainly an attempt to get hold of YUKOS shareholders' money abroad," the source said. Russia has crushed YUKOS with $27 billion of back tax claims in a legal assault Khodorkovsky says was politically motivated.
In December, bailiffs forcibly sold off YUKOS' main production unit, Yuganskneftegaz, and state oil firm Rosneft ended up buying it for $9.4 billion, significantly less than estimates made at the time by investment bankers of its value.

YUKOS' Western creditor banks owed some $475 million and YUKOS' main shareholder, Menatep Group, have been chasing YUKOS Finance B.V. through the Dutch courts in a bid to recover their debts. Igor Yurgens, first vice-president of Russian investment bank Rennaisance Capital, told Kommersant that the new legal onslaught against YUKOS could be an attempt by its rivals to seize what was left of the company.

"They want to get the whole of YUKOS," he said.

The original article appears here.

- MDT

Labels: money laundering

Lawyer guilty of operating a brothel

Portland Press Herald
By KEVIN WACK
October 1, 2005

Gary H. Reiner leaves U.S. District Court in Portland after Friday's verdict, trailed by his wife, Bonnie, and his attorney, Steve Gordon. Reiner's sentencing date has not been set, but he could be facing a prison term of more than five years. A federal jury convicted Kittery lawyer Gary H. Reiner on Friday of operating a lucrative brothel that maintained the facade of a legitimate massage parlor for years.

Reiner, 54, sat with his head tilted down, his hands clasped together at his chin, as the jury returned guilty verdicts on all four prostitution and money-laundering counts he faced. The conviction was the culmination of a five-year federal effort to close the Danish Health Club in Kittery and prosecute the people who ran it. FBI agents raided and shut down the club 16 months ago, and since then five other defendants have pleaded guilty. "We're gratified," said Assistant U.S. Attorney Toby Dilworth. "It was a long investigation and a long trial."

Jurors took about three-and-a-half hours to reach their verdict after closing arguments in U.S. District Court in Portland. Their decision was followed by hours of uncertainty inside the Edward T. Gignoux U.S. Courthouse, as Reiner waited to learn whether he would remain free until his sentencing or be taken into custody. Around 6 p.m., Judge D. Brock Hornby agreed to release Reiner on $210,000 bail, including $10,000 cash, after Reiner's wife, Bonnie, arrived with the deed to the family's home in Eliot.

"I'm grateful that I had my day in court," Reiner told reporters before leaving the courthouse. "I accept the jury's verdict. And I'm going to talk with my lawyers and review my options." Reiner's sentencing date has not been set. Dilworth said he could conservatively be facing a sentence of more than five years. During the five-day trial, prosecutors presented evidence that showed Reiner, the Danish Health Club's longtime lawyer, took on an expanded role after the club's manager died in 2001. There was testimony that Reiner held meetings with pimps, disciplined prostitutes and wrote the copy for advertisements in an adult magazine.

The government's case relied on several witnesses with checkered pasts, most of whom testified as part of plea agreements or in exchange for immunity from prosecution. Reiner took the stand in his own defense, saying he suspected there was prostitution at the club, but he never had solid evidence. During closing arguments, Dilworth questioned the plausibility of Reiner's denials. "Ask yourselves if someone can really be that unaware," Dilworth told the jury, "and especially a man like the defendant, who was involved in every detail."

Explaining why Reiner chose to run the brothel, the prosecutor compared Reiner to a convicted pimp who testified during the trial. "They both made a lot of money off of those women who worked in that club," Dilworth said. But the government's evidence showed that Reiner profited far less than Mary Ann Manzoli, the widow of the club's former owner. The club's total revenues from 2000 to 2004 were about $3.9 million, according to the government. Reiner and his law firm were paid less than $100,000 per year, or about half of what one Massachusetts woman collected while working as a prostitute in the club, according to the government's calculations.

The defense maintained that Reiner took on a larger role in 2001 because the club was in disarray. Testimony showed that the defendant felt a deep loyalty to Manzoli, whose late husband, Leo, asked Reiner to take care of his wife's interests before he died in 1996. Defense lawyer Steve Gordon portrayed his client during closing arguments as a family man who was so well-respected that local police placed troubled youths in his home. Gordon also attacked the credibility of a key government witness, a police officer-turned-private investigator named Russell Pallas. Pallas' wife worked as a prostitute at the club while Pallas was the operation's manager. "A man who is willing to sell his wife for money is a man who is willing to sell anything for his freedom," Gordon said.

The trial raised questions about the close relationship between Reiner and Kittery's longtime police chief, Edward Strong. Reiner testified that he contacted Strong after hearing about federal surveillance of the club and asked the police chief to let federal authorities know they could call him with any questions. Pallas testified that Strong contacted the FBI and reported back to Reiner, a charge that Strong denies. During his closing argument, Gordon assailed the prosecution for presenting evidence that suggested - but did not prove - police wrongdoing. "The way they dealt with that issue is by innuendo, and it is false innuendo," Gordon said.

After the verdict, Dilworth deflected a question about the Kittery Police Department, saying the town's police chief wasn't on trial. Reiner is likely to forfeit hundreds of thousands of dollars to the government. The judge delayed ruling on that issue, but not before Reiner got back on the witness stand to testify about his assets. Minutes earlier, the 12 jurors had been polled, and each said they agreed with the guilty verdict. "Do you think you're guilty?" Dilworth asked Reiner during the forfeiture hearing. Reiner, an experienced defense lawyer, responded, "I've been found guilty, Mr. Dilworth."

Labels: money laundering

United Kingdom: A Month in Money Laundering - August 2005

September 19, 2005
By John Hammersley
Deloitte & Touche, LLP

Welcome to the August 2005 edition of A Month in Money Laundering. This edition includes news on an agreement by Latin American banks to share information related to money laundering crimes (2 August), changes to Indian Central Bank KYC rules (3 August), and grants from the Asian Development Bank to Thailand and the Philippines to develop anti-money laundering measures (15 and 24 August). These issues and others are summarised in this edition of A Month in Money Laundering.

Regards
Michael Corrigan
Partner, Governance and Regulation
Deloitte & Touche LLP

2 August

Latin American banks agree on joint initiative on money laundering. 623 banks based in Latin America have resolved to share information related to financial crime and money laundering. The agreement is part of the US Government's "Buddy Banks" initiative, designed to prevent money laundering in the region. The banks will discuss best practice models and techniques for detection of money laundering activities. The plan is being supported by the US Treasury Department. It has been estimated that some US$1bn is laundered in Latin America each year.

3 August

Australia and Indonesia open joint law enforcement centre. The final stage of a new regional centre for joint law enforcement efforts between Indonesia and Australia was opened in Indonesia by Australian Justice Minister, Chris Ellison, today. The centre includes classrooms and conference facilities for training anti-money laundering officers. The Australian Government is contributing more than AUS$38 million over five years to the development of the facility.

Indian Central Bank relaxes money laundering identification rules. The Reserve Bank of India (RBI) has responded to industry pressure and relaxed its 'know your customer' (KYC) rules on deposit accounts for amounts between US$1,100 and US$45,000. Previously rules required banks to establish customers’ identities by relying on documents such as a passport or driving licence but in many instances this was proving difficult. Several banks complained to the RBI of the enormous burden of identifying customers who are often illiterate, poor and undertaking relatively small transactions. In some circumstances, new customers may now be identified by way of referral from an existing customer.

4 August

Spanish anti-money laundering office reports increase in activity. Spanish anti-money laundering agencies have reported a rise in money laundering activity during 2004. Some 334,452 cases of suspected money laundering were reported to Sepblac, the Spanish antimoney laundering office in 2004, an increase of 14 per cent on 2003. The office also announced that fines for breaches of money laundering regulations totalled just under some €28m for the year.

IMF hosts training workshop for African countries. The International Monetary Fund (IMF) has conducted a five-day workshop on Combating the Financing of Terrorism (CFT) in Tunisia. The workshop was held in collaboration with the Joint African Institute and was attended by representatives from Djibouti, Egypt, Eritrea, Ethiopia, Libya, Sudan and Tunisia. The IMF's Legal Department, the World Bank, and the United Nations Office against Drugs and Crime provided training to 30 delegates on developing a legislative framework on money laundering.

5 August

Nauru aiming to be removed from FATF list of non-cooperative countries. Money laundering experts in Nauru have said the country should be removed from the Financial Action Task Force's (FATF) list of non-cooperative countries and territories when the group meets in October. Dr Kieren Keke, Chairman of Nauru's anti-money laundering unit, cited the Government’s significant progress towards developing anti-money laundering reforms. The Asia Pacific Review Group of the FATF have approved a visit to Nauru within the next month. Dr Keke added, "I can say with confidence that Nauru does not pose any money laundering risk to the international community and this is a statement that senior officials of the APG have made directly to me".

6 August

Vietnam to issue guidance for banks on money laundering decree. The State Bank of Vietnam (SBV) is to issue guidance on the implementation of the new anti-money laundering decree in response to concerns about the complexity of the rules and the security of confidential information. The decree requires credit organisations to report to the Anti-Money Laundering Centre any cash transaction over US$13,300 and any savings deposit of more than US$33,000. The guidance stresses that no third party individuals or organisations can access information contained in reports without the permission of the Government.

8 August

Ukrainian ministers resolve to toughen fight on money laundering. The Cabinet of Ministers’ resolution requires ministries to submit their response to proposals on implementation of an anti-money laundering framework to the State Department for Financial Monitoring within a month. The proposal provides for analysis of the current anti-money laundering framework in the country and guidance on the development of the system to international standards. The proposals follow the Ukraine’s removal from the FATF’s list of noncooperative countries and territories and it is hoped that the implementation of stricter rules will help the international perception of Ukraine’s financial markets.

9 August

US Treasury Secretary praises Latvia’s progress with preventing money laundering. John Snow, US Treasury Secretary, has praised the Latvian Government’s measures against money laundering. Mr Snow praised the involvement of the Prime Minister as head of Latvia’s anti-money laundering task force and pledged US help in providing training for Latvian officials and financial experts. He also raised the possibility of increased information exchange between the countries. The Latvian Prime Minister, Aigars Kalvitis, has openly voiced his aim for Latvia’s inclusion in the Financial Action Task Force (FATF).

10 August

European Commission (EC) assists Philippines’ campaign against laundered money. The Philippines Government has agreed a deal with the EC aimed at fortifying the Philippines’ Anti-Money Laundering Council (AMLC) campaign against laundered money. The Government has said that the project will help prevent and minimise money laundering by strengthening the investigatory powers of the Central Bank and the AMLC. The staff of supervising authorities, financial institutions, and judicial and law enforcement agencies will benefit from training in anti-money laundering rules and procedures, and basic financial investigation methods.

11 August

Africa holds sub-regional workshop on anti-money laundering. This workshop, funded by the Commonwealth Secretariat aims to develop cooperation between the public and private sectors on money laundering issues. This five day workshop will cover various topics including the responsibilities of governments, financial institutions, law enforcement agencies and the requirements of international standards as well as addressing current issues.

12 August

Financial Action Task Force require New Zealand to adopt firmer controls against money laundering. Following a recent evaluation of the nation’s financial sector by the Financial Action Task Force (FATF), New Zealand Foreign Minister, Phil Goff, admitted that "some re-regulation will be required." While the FATF found no specific evidence that New Zealand was being used to launder money or finance terrorism, the report called for more stringent anti-money laundering regulations to ensure that problems did not arise in the future.

15 August

Asian Development Bank (ADB) provides grant to Thailand to help fight money laundering. The grant of US$300,000 will help Thailand formulate a 3 year action plan to comply with requirements of the FATF recommendations. Thailand has taken a number of steps to combat money laundering over recent years but still has gaps that it needs to fill. "Thailand can benefit from more developed countries' experiences while sharing its own experiences in establishing legal and institutional frameworks with its Mekong neighbours." said ADB official, Shigeko Hattori.

16 August

Singapore passes Bill with tougher measures for remittance firms and money changers. A new Bill passed in Parliament will require remittance licence holders to carry out business only if they are incorporated as a company with a minimum paid-up capital of US$100,000. "The higher entry requirement will ensure these companies have a minimum level of financial resources to implement anti-money laundering measures and make weaker players exit the market", said Mr Tharman Shanmugaratnam, Deputy Chairman of the Monetary Authority of Singapore (MAS).

17 August

Indonesia and Singapore work on draft extradition agreement. Delegates have held a two day technical meeting to discuss a draft extradition agreement. During the meeting, delegates exchanged versions of the draft document. Indonesian Foreign Minister, Hassan Wirayudha, said at least 20 crimes, including, money laundering and terrorism financing, will be included in the final draft. Indonesia already has extradition agreements with Australia, Thailand, Philippines, Malaysia and the Hong Kong Special Administrative Region.

Argentina looking to amend money laundering bill with help from United States. Argentinean Economy Minister, Roberto Lavagna, Senior US Treasury Official, Daniel Glaser, and six other US officials, met in Argentina to discuss revisions to a bill dealing with bank secrecy rules applying to financial institutions, the national tax and Argentina's Financial Information Unit. The amendments need to be passed by both of Argentina’s houses of Congress and may still meet opposition.

19 August

Macedonia to set up Government advisory agency on money laundering. The Macedonian Government has announced plans for a new advisory body for combating money laundering and terrorism financing and appointed Vladimir Naumovski, current Director of the Directorate for Money Laundering Prevention, as the new body’s Chairman. Ministers earlier adopted a draft agreement between the US and Macedonian Governments on technological cooperation on money laundering prevention.

21 August

Peru to restructure banking supervision on money laundering. Peru's banking and insurance regulator announced today that it will restructure its anti-money laundering financial intelligence unit (FIU) to strengthen supervision of the country's banks, insurers and pension fund managers in the near future. The proposed changes will allow it to monitor more transactions. Between 1998 and July 2005, the regulator investigated about 800 reports of possible money laundering.

23 August

Japan proposes to extend the scope of money laundering controls. The Japanese Government is to tighten its control over money laundering by requiring non-financial firms such as jewellers to identify their customers and report suspicious transactions. Although the proposals still need to be discussed by Ministers, the Government is hoping to extend the scope of businesses placed under the planned controls to including jewellers, precious metal dealers, real estate firms and leasing companies.

US concerned about money laundering in Venezuela. The US Government has expressed concern that Venezuela isn't doing enough to comply with international recommendations on money laundering control. "It's important for Venezuela to meet its obligations in the international community and be part of the solution to money laundering and terrorism financing in this region," said US Treasury Official, Daniel Glaser. Glaser, US representative to the Financial Action Task Force, was in Brazil to meet with authorities regarding the region's efforts to combat money laundering.

24 August

Asian Development Bank gives anti-money laundering grant to Philippines. The Asian Development Bank (ADB) is helping the Philippines combat money laundering with a technical assistance grant of US$400,000. The ADB will undertake an assessment of key ‘vulnerabilities’ to money laundering. The grant, from the ADB's Cooperation Fund for Regional Trade and Financial Security Initiative, is supported by the Governments of Australia, Japan, and the United States.

26 August

New Zealand to tighten its money laundering laws. The New Zealand Government is proposing tighter money laundering laws following advice from the Financial Action Task Force earlier this month. The recommendations include a comprehensive monitoring framework for institutions, a registration requirement for those dealing with money transfers or currency exchange services and evaluations for "fit and proper persons". Further changes would involve statutory requirements for firms to comply with customer due diligence, and a requirement to verify and retain the identities of senders of wire transfers.

28 August

US to aid Bangladesh in combating money laundering. Senior officials and bankers in Bangladesh are to receive training from the US FBI in relation to investigating money laundering activities. The training is a result of the Government’s initiative to ratify a new law against money laundering. An enforcement and prosecution agency is also to be established to implement the proposed act

Looking Forward

Hong Kong

Casinos will be required to track the identity of gamblers making cash transactions of more than HK$500,000 (US$65,000), according to a draft bill to be presented to the legislature after Hong Kong’s elections next month.

Egypt

The Egyptian city of Sharm al-Sheikh will host an economic forum on money laundering and terror finance, said Union of Arab Banks (UAB) Secretary General, Fuad Shakir. The two-day event will consider means to combat money laundering and trace terrorist funds without jeopardising the secrecy of bank accounts and transactions.

Financial Action Task Force

The Middle Eastern and North African Financial Action Task Force (MENAFATF) will hold its second Plenary Meeting in Beirut, Lebanon on 26 September 2005.

Labels: Department of Justice, General Re, money laundering

Jury Orders Westar Executives to Turn Over Millions in Fraud Case

David Twiddy
The Associated Press
September 19, 2005

A federal jury on Thursday ordered two former Westar Energy Inc. executives convicted of looting the utility to relinquish millions of dollars in cash and assets. Former CEO David Wittig was told to hand over his Topeka, Kan., home, thousands of shares of stocks, a life insurance policy and $9.7 million in bonuses and other payments made while he worked at Westar, the state's largest electric utility.

His co-defendant, former chief strategy officer Douglas Lake of New Canaan, Conn., was ordered to turn over $2.5 million in stock dividends and sales, as well as several thousand stock shares. Both men also must forfeit any award they receive from an ongoing arbitration fight they're having with Westar over pay and benefits they say the company still owes them.

Prosecutors had sought $27.9 million from Wittig and $9.4 million from Lake, including all the salary and benefits they had received before being forced out of the company in late 2002. U.S. Attorney Eric Melgren, whose office prosecuted the case, had little comment on the verdict, beyond commending attorneys and investigators in the case.

Lake's attorney, Edward Little, said "we're obviously still disappointed in the main verdict and will vigorously appeal that to the 10th Circuit (Court of Appeals)." Wittig's attorney, Adam Hoffinger, didn't return a phone call seeking comment.

Jurors convicted the men of 39 counts, including conspiracy, wire fraud, money laundering and circumventing internal controls, part of a scheme prosecutors said was aimed at looting the company.

Sentencing was set for Jan. 9. The men face up to five years each for the conspiracy count, 10 years for each count of circumventing internal controls, 20 years for each count of wire fraud and 10 years for each count of money laundering.

Labels: money laundering

Chilling expose` dives into murky waters

August 14, 2005
REVIEW BY JAMES PRESSLEY

William Brittain-Catlin, a former investigator for Kroll Associates Inc., nurses a dark vision of capitalism.

'Offshore' - THREE STARS out of four

By William Brittain-Catlin

Capital, as he describes it, is a protean beast, a "wild animal let out of a cage." The nation state has become "a servant of stateless capital," its citizens suppressed by the "controls of bourgeois capitalist society, in particular the work ethic."

Never mind his hyperventilating style. "Offshore: The Dark Side of the Global Economy" is a convincing description of a perverse world in which capitalism is a giant shell game, where mainstream multinationals shunt assets and liabilities around the globe to evade taxes, hide debt and buy political favor. The fall guys for this scam are shareholders, taxpayers and society at large.

"Offshore" has many strengths, offering a solid primer on how capital slithers in and out of brass-plate subsidiaries as companies ranging from GE and Wal-Mart seek to lower their taxes. The author chooses to bring offshore finance into focus through the lens of the Cayman Islands. The sun-soaked British dependency proves an effective setting for this dark drama, as Brittain-Catlin combines snippets of the Caymans' seagoing past (Columbus, turtles and Blackbeard the Pirate) with its role in the collapses of companies such as Enron Corp.

In lean prose, the author captures the convoluted story of U.S. energy trader Enron in 20 pages and boils the fraud at Italian food company Parmalat down to nine. The summations create crisp snapshots on how multinationals funnel profits offshore even as they milk governments onshore.

Enron, for example, used hundreds of Cayman subsidiaries to slash its U.S. taxes and hide losses. The Houston-based company also used its clout, including a friendly connection to President George W. Bush, to keep the government from regulating energy-derivatives trading, he says.

Enron combined offshore freedom with the kind of onshore protection that prompted government bailouts of Chrysler Corp. and the entire U.S. savings and loan sector. "The modus operandi for the corporation is to pass the cost of its losses onshore onto society and its taxpayers, while the corporation runs off with the profit and parks it offshore," Brittain-Catlin writes.

The same dichotomy lies at the heart of the success of Lakshmi Mittal, the author says. The Indian magnate created the world's biggest steel company -- with mills from Cleveland to Kazakhstan -- through offshore holding companies in tax havens such as the Netherlands Antilles. Yet he built Mittal Steel Co. with the help of politicians like U.K. Prime Minister Tony Blair and soft loans from the European Bank for Reconstruction and Development.

"Offshore" blames this mess on Western philosophy. Brittain-Catlin traces the roots to Immanuel Kant, who argued that the individual had absolute moral autonomy -- a vital bulwark against the utilitarianism of the age. Along the way, though, this freedom was subverted in the struggle against absolutism, the author argues. Political freedom suppressed individual rights, forcing us to conform with bourgeois mores. "What was billed as freedom in fact turns out to be a pretext for coercion," he says.

It doesn't take too much imagination to draw a line from the age-old urge for autonomy to a modern German's desire to protect himself from punitive taxation by dragging a suitcase full of cash to a bank in Luxembourg. Unfortunately, Brittain-Catlin muddies the argument with a sometimes-tortuous line of reasoning that leads from Greek mythology to the hypocrisy of the European bourgeoisie. Equally irritating is the author's failure to offer any solution. He challenges neocons and reformists alike, yet offers no answers of his own.

One thing is clear: Brittain-Catlin rejects the argument that there is a legitimate use for offshore finance. "A distinction cannot be made," he says, "between the use and abuse of offshore tax havens any more than it can be made between the light and dark side of the international financial system." That distinction, made routinely by bankers and accountants, has worn thin in our age of terrorism, money laundering and corporate fraud. Bankers may bristle at Brittain-Catlin's rhetoric; they cannot ignore his message.

Labels: Enron, Kroll, money laundering, Parmalat

Marketer Found Guilty Of Data Theft

Associated Press
Saturday, August 13, 2005; Page D02

LITTLE ROCK, Ark., Aug. 12 -- A Florida man was found guilty Friday of stealing information from data-management company Acxiom Corp. in what prosecutors said was the largest federal computer theft trial ever.

A jury convicted Scott Levine, the owner of defunct e-mail marketing contractor Snipermail.com, on 120 counts of unauthorized access to data, two counts of access device fraud and one count of obstruction of justice. Jurors cleared Levine of 13 counts of unauthorized access of a protected computer, one conspiracy count and one count of money laundering.

Statutory maximum sentences for his convictions total 640 years in prison and fines of $30.7 million, but his punishment likely will be much less under federal sentencing guidelines. Sentencing was set for Jan. 9.

Prosecutors said Levine and his company stole 1.6 billion customer records, including names, e-mail and postal addresses. The government did not charge anyone with identity theft.

Six Snipermail employees pleaded guilty to conspiracy charges and testified against Levine in the case.

"We're very pleased with the outcome," U.S. Attorney H.E. "Bud" Cummins said outside U.S. District Court. "These are very serious crimes, a huge amount of data that was stolen for monetary gain and he should be held accountable."

Levine's lawyer, David Garvin, said the verdicts were "compromised" because the jury found Levine guilty based on the same evidence jurors acquitted him on in the other counts.

Little Rock-based Acxiom, which serves large corporations by collecting and managing information for marketing purposes, said it has tightened its security since the unauthorized access was discovered two years ago.

Labels: database, identity theft, money laundering

Daimler faces SEC probe over Iraq trucks

by Allan Hall
The Evening Standard
August 10, 2005

[The SEC]...is probing the sale of DaimlerChrysler Actros trucks in connection with the UN's oilforfood scandal, it was claimed today. According to Stern magazine, in 2002 Iraq had ordered 150 of the vehicles, 50 of which were delivered via Moscow. The Daimler branch in Russia sold them to the Russian Engineering Company, which in turn sold them to the Iraqi state-controlled GAMCO....

...Under investigation is whether DaimlerChrysler deliveries to Iraq under Saddam Hussein violated US anti-corruption laws. The SEC has demanded files and bank documents from the carmaker. The UN's oil-for-food programme, designedto allow Iraqis access to food despite strict UN sanctions, was in operation from 1996 to 2003. It has since come under heavy fire for widespread corruption in its ranks. The accusations range from money-laundering to kickbacks and conspiracy.

Yesterday, a leading figure in the programme, Alexander Yakovlev, admitted to money-laundering and other charges. An independent panel led by Paul Volcker, former US Federal Reserve Bank chair, has also accused the former head of the programme, Benon Sevan, of receiving kickbacks.

All sales within the framework of the oil-for-food programme were first approved by the UN. Then Geneva-based company Cotecna arranged shipment and payment. A German businessman told Stern that Cotecna was a 'bottleneck' in the transactions and companies often had to stand in line waiting for execution of their contracts. Reportedly, companies could 'buy' their way to the front of the line.

The SEC wants to know if DaimlerChrysler might have also paid a bribe to move up to the head of the queue. Since DaimlerChrysler is listed on the New York Stock Exchange, the SEC can investigate the carmaker even though it is a German company...

Labels: bribery, DaimlerChrysler, Department of Justice, money laundering, UN

Prosecutors Step Up Probe of Milberg Weiss Law Firm

LA Business Journal
Auguat 8, 2005

A federal grand jury in Los Angeles heard testimony three weeks ago from Alan Schulman, a former partner in the high profile law firm of Milberg Weiss, which is being investigated by federal prosecutors for possibly making secret, illegal payments to plaintiffs in its securities class-action lawsuits, the Wall Street Journal reported. The cooperation of Schulman was being seen as a major coup for prosecutors, who have been investigating the New York-based law firm for four years. Prosecutors have informed William Lerach, the high profile former partner of the firm, and two other former partners, David Bershad and Melvyn Weiss, that they could face indictment for conspiracy. It is illegal to make payments to plaintiffs in such cases to avoid a conflict between lead plaintiffs and class members. The investigation was first made public in June when a Seymour Lazar, a retired Palm Springs attorney, who was a plaintiff in at least 50 Milberg Weiss securities cases, was charged by the grand jury with fraud, conspiracy and money laundering for allegedly taking $2.4 million under the table.

The Fortune article said Alan Schulman, a then-Milberg Weiss partner who now practices in San Diego with another firm, believed Lerach was "reckless," "vindictive," and "dangerous" and would ultimately ruin the firm. But Milberg's head, New York's Melvyn Weiss, wouldn't rock the boat at that time, and Schulman departed...

Labels: Bernstein Litowitz and Berger, money laundering

Ex-HealthSouth COO Has Charges Dropped

Stephen Taub
CFO.com
July 20, 2005

Federal prosecutors moved to dismiss the indictment of former HealthSouth Corp. president and chief operating officer James P. Bennett for his role in the company's $2.7 billion accounting scandal, according to press reports. The one-sentence motion did not provide a reason for the request, according to the Associated Press.

Bennett was indicted in February — shortly after former chief executive officer Richard Scrushy went on trial — on 39 counts of insider trading; conspiracy to commit wire, mail, and securities fraud; making false statements to HealthSouth's auditor, Ernst & Young; money laundering; and lying to the Federal Bureau of Investigation, reported the Birmingham Business Journal.

According to the Journal, Bennett was the only former employee formally charged with insider trading in connection with the HealthSouth scandal. Knowing that fraud was taking place, the government alleged, Bennett sold 960,000 shares of HealthSouth stock, for $17.4 million, the newspaper reported...

The full CFO.com piece appears here.

-- MDT

Labels: 2006, Health South, insider trading, money laundering

Ex-Lawyer Is Indicted on Kickbacks in Lawsuits

By JOHN M. BRODER
June 25, 2005

LOS ANGELES, June 24 - A federal grand jury here has indicted a retired 78-year-old Palm Springs lawyer for allegedly receiving at least $2.4 million in kickbacks from one of the nation's most prominent plaintiffs' law firms.

The indictment charges that the defendant, Seymour M. Lazar, and members of his family served as plaintiffs in dozens of class action and shareholder lawsuits filed by the New York law firm of Milberg Weiss Bershad & Schulman, perhaps the country's most aggressive filer of lawsuits against corporations.

Milberg Weiss has won billions of dollars in claims on behalf of shareholders against corporations, including lawsuits filed on behalf of investors in Enron, Halliburton, Lucent Technologies, HealthSouth and Tyco. President Bush and many other Republicans consider the firm and others like it to be enemies of business who use courts to enrich themselves at the expense of consumers.

The indictment, handed up by a federal grand jury here on Thursday, charges Mr. Lazar with mail fraud, money laundering and conspiracy to obstruct justice, among other charges. Milberg Weiss is not a defendant in the indictment and is not named anywhere in it. It is referred to only as "the New York law firm" with whom Mr. Lazar did business. But a spokesman for Milberg Weiss confirmed that it was the law firm cited throughout the indictment...

...According to the indictment, Mr. Lazar, as a shareholder in the sued companies, would have been entitled to a prorated portion of any settlement won by Milberg Weiss. Instead, it said, the law firm illegally paid him part of its lawyers' fees, frequently funneled through a second defendant, Paul T. Selzer, 64, a lawyer in Palm Springs.

Mr. Lazar's lawyer, Thomas H. Bienert, said he believed that the government was trying to pressure his client to take a plea deal and testify against Milberg Weiss. "It appears this is an effort to get Mr. Lazar to say negative things about his class action counsel and become a government witness," Mr. Bienert said...

..."Milberg Weiss has cooperated with the government's investigation, which has continued for more than three years," it said. "Although the indictment does not name Milberg Weiss, it unfairly implicates the firm in the wrongdoing alleged against Lazar. We are outraged that the allegations have been made against the firm and reject them as baseless."

Labels: Enron, money laundering, Tyco

TYCO INTERNATIONAL LTD. -- Former Chief Executive L. Dennis Kozlowski and Chief Financial Officer Mark H. Swartz were convicted Friday on 22 of 23 counts of grand larceny, conspiracy, securities fraud and falsifying business records. Prosecutors accused the two of conspiring to defraud Tyco of millions of dollars to fund extravagant lifestyles. The two executives each face up to 30 years in prison.

HEALTHSOUTH CORP. -- Former CEO Richard Scrushy could spend the rest of his life in prison if convicted on all 36 counts of conspiracy, false reporting, fraud and money laundering for allegedly orchestrating a $2.7 billion earnings overstatement at the rehabilitation and medical services chain for seven years beginning in 1996. A Birmingham, Ala., federal jury has been deliberating in the case since May 19.

WORLDCOM INC. -- Bernard Ebbers, former chief of the one-time telecom giant, was found guilty of fraud, conspiracy and making false regulatory filings in WorldCom's $11 billion accounting scandal. The case against him was largely based on the testimony of former CFO Scott Sullivan, who agreed to testify against his boss as part of a plea deal. Ebbers is due to be sentenced next month and faces up to 85 years in prison.

ENRON CORP. -- Enron founder Kenneth Lay, former CEO Jeffrey Skilling and former top accountant Richard Causey are scheduled to go to trial in January on federal fraud and conspiracy charges. Former CFO Andrew Fastow pleaded guilty in January 2004 to two counts of conspiracy, admitting to orchestrating schemes to hide the company's debt and inflate profits while pocketing millions of dollars. He agreed to serve the maximum 10-year sentence, which will begin in July 2006, after he testifies against his former bosses.

In addition, Fastow's wife will complete a year-long sentence next month on a misdemeanor tax charge for failing to report her husband's kickbacks. Former Enron treasurer Ben Glisan Jr. is serving a five-year sentence for his role in the scandal. And two former Merrill Lynch & Co. executives were sentenced to short prison terms for their roles in a bogus Enron sale of power barges.

ADELPHIA COMMUNICATIONS CORP. -- Founder John Rigas and his son Timothy were convicted in federal court last year of conspiracy, bank fraud and securities fraud. The two are to be sentenced Monday. Another Rigas son, Michael, was acquitted of conspiracy charges before the case ended in a mistrial with jurors deadlocked on 17 counts against him. A fourth executive, Michael Mulcahey, was found not guilty of conspiracy and securities fraud.

CREDIT SUISSE FIRST BOSTON -- The company's former investment banking star, Frank Quattrone, was convicted in May 2004 on federal charges of obstruction of justice, after his first trial ended in a hung jury. Quattrone, who made a fortune taking Internet companies public during the dot-com stock boom, was sentenced to 18 months in prison. He is free on bail and appealing the conviction.

MARTHA STEWART: The founder of the homemaking empire was released March 4 after serving five months in prison, and is serving an additional five months confined to her home. She was convicted in federal court last year of conspiracy, obstruction of justice and making false statements related to a personal sale of ImClone Systems Inc. stock. Her former broker at Merrill Lynch, Peter Bacanovic, began serving a five-month sentence in January, and still faces five months of home confinement. Stewart's conviction was not related to the company she founded, Martha Stewart Living Omnimedia Inc.

Labels: 2006, Andy Fastow, Dennis Kozlowski, Enron, Health South, money laundering, Tyco

While terrorism and tax evasion are two of the main culprits behind the move against suspicious financial activity, many institutions believe regulation and the heavy fines have increased at a rate disproportionate to the offences. Mid-level institutions are especially hard-pressed to comply, or to pay the price of non-compliance. As a result, money-laundering has become a major operational risk for financial institutions. In Britain, for example, Board Members are held personally responsible for ensuring regulatory compliance...

...Tough new regulatory regimes are costing financial institutions millions of dollars in fines plus incalculable damage to reputations as regulators attempt to get a grip on international money-laundering. The US is the most aggressive, with fines last year totalling hundreds of millions of dollars.

Labels: money laundering

BankAtlantic: Gov't has subpoenaed for compliance issues

April 20, 2005
South Florida Business Journal

In its statement disclosing a slight first quarter earnings drop, BankAtlantic Bancorp said Patriot Act, anti-money laundering and Bank Secrecy Act compliance problems at its banking division have led to government subpoenas....

In its most recent statement, though, the Fort Lauderdale-based holding company said it cannot predict whether or to what extent regulators or other federal agencies will pursue civil or criminal regulatory action or monetary or other penalties against it or its bank.

Labels: money laundering

U.S. Seeks Access to Bank Records to Deter Terror

By ERIC LICHTBLAU
New York Times

WASHINGTON, April 9 - The Bush administration is developing a plan to give the government access to possibly hundreds of millions of international banking records in an effort to trace and deter terrorist financing, even as many bankers say they already feel besieged by government antiterrorism rules that they consider overly burdensome.

The initiative, as conceived by a working group within the Treasury Department, would vastly expand the government's database of financial transactions by gaining access to logs of international wire transfers into and out of American banks. Such overseas transactions were used by the Sept. 11 hijackers to wire more than $130,000, officials said, and are still believed to be vulnerable to terrorist financiers.

Government officials said in interviews that the effort, which grew out of a brief, little-noticed provision in the intelligence reform bill passed by Congress in December, would give them the tools to track leads on specific suspects and, more broadly, to analyze patterns in terrorist financing and other financial crimes. They said they were mindful of privacy concerns that such a system is likely to provoke and wanted to include safeguards to prevent misuse of what would amount to an enormous cache of financial records.

The provision authorized the Treasury Department to pursue regulations requiring financial institutions to turn over "certain cross-border electronic transmittals of funds" that may be needed in combating money laundering and terrorist financing.
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The plan for tracking overseas wire transfers is likely to intensify pressure on banks and other financial institutions to comply with the expanding base of provisions to fight money laundering, industry and government officials agreed. The government's aggressive tactics since the attacks of Sept. 11, 2001, have already caused something of a backlash among banking compliance officers - and even some federal officials, who say the effort has gone too far in penalizing the financial sector for lapses and has effectively criminalized what were once seen as technical violations.

The initiative, still in its preliminary stages, reflects heightened concerns by administration and Congressional officials about the government's ability to track and disrupt financing for terrorist operations by Al Qaeda and other groups - an effort identified by President Bush as a top priority in the campaign against terrorism.

Terrorist money has been difficult to identify, much less seize, in part because terror operations are conducted on relative shoestring budgets. Planning and operations for the attacks on Sept. 11, 2001, were believed to have cost Al Qaeda $400,000 to $500,000, with no unusual transactions found, according to the 9/11 commission, and the 1998 embassy bombings in East Africa cost only $10,000.

While counterterrorism officials have made some inroads in tracking terrorist money, clear successes have been few and sporadic, experts say, and a number of recent reports have pointed up concerns about the government's ability to deter and disrupt such financing.

"I don't think we really have a full grasp of how to deal with the problem yet," said Dennis M. Lormel, the former head of the Federal Bureau of Investigation's terrorism-financing unit, who is now in the private sector. "The framework is certainly getting better, but in general, we don't have the full capability yet to get at the money."

The federal government has taken a number of aggressive steps since the Sept. 11 attacks to disrupt terrorist financing. It has expanded its list of terrorist-related groups banned from financial dealings with the United States, it has set up new investigative offices to track terrorist financing, and it has required more financial data and tighter compliance from financial industries as part of the antiterrorism law known as the USA Patriot Act and other measures.

Senior officials throughout the administration have emphasized repeatedly that they want the financial sector to be a full partner in the stepped-up efforts to deter terrorist financing.

But in a letter in January to Treasury Department officials, 52 banking associations around the country said that a "lack of clarity" by the government in explaining what is expected of them in complying with regulations to deter terrorist financing and money laundering has "complicated, and in some cases undermined" those efforts.

The result, banking officials say, is that many banks, now in a defensive mode, are sending the government far more reports than ever before on "suspicious activities" by their customers - and potentially clogging the system with irrelevant data - for fear of being penalized if they fail to file the reports as required.

Some smaller community banks have sold out to larger companies for fear of increased liability, banking officials say, and banks have dropped some money-transmittal businesses that do significant business overseas because of the risk. Some executives, meanwhile, are steering away from serving on bank boards, concerned that they will be hit with punitive measures, banking industry officials say.

"It seems like the rules keep changing on us, and there's a lot of confusion and anxiety in the industry about what constitutes a proper compliance program," said John Byrne, who oversees compliance issues for the American Bankers Association.

Of particular concern to industry officials are five criminal enforcement actions in the last several years against banks for failing to comply with laws to combat money laundering. None of the cases involved terrorist financing, but prosecutors say most centered on egregious lapses by banks in turning a blind eye toward possible money laundering, for instance, by accepting duffel bags from drug dealers with hundreds of thousands of dollars in cash.

Tensions over the issue broke into public display last month in Hollywood, Fla., at a conference sponsored by Money Laundering Alert, an industry newsletter, as even some federal officials expressed sympathy for the bankers and criticism of what they characterized as overly aggressive tactics by the Justice Department.

By sharply increasing prosecutions against banks over compliance failures, "law enforcement is shooting the messenger," said Herbert A. Bierne, a senior enforcement official with the Federal Reserve System's board of governors. "You shoot the messenger, you stop getting the messages."

The Federal Reserve System has begun meeting with Justice Department officials to resolve internal friction over the enforcement actions, and it is seeking changes that would require such prosecutions to be overseen by Justice Department officials at headquarters in Washington, rather than at the discretion of federal prosecutors in the field, officials said.

Lester Joseph, a Justice Department official who oversees money-laundering cases, told the conference that the department, despite its keen interest in tracking terrorist financing, had no interest in singling out banks for technical violations and had begun no concerted crackdown.

But he added, "When we detect evidence of what we perceive as a crime, we're going to pursue that."

The Treasury Department's Financial Crimes Enforcement Network, or Fincen, which is leading the effort to gain access to international wire transfers, has created a working group with about 20 employees; begun meetings with the Federal Bureau of Investigation, the Department of Homeland Security and other agencies; and developed a general concept for how to proceed. Officials also have begun looking at similar models in Canada and Australia.

A final plan is not expected until the end of the year, and a senior official at Fincen, speaking on the condition of anonymity because the plan is still in development, acknowledged in an interview that numerous logistical and legal issues must still be worked out.

For instance, although some rough estimates cited by Fincen suggest that there are at least a half-billion international wire transfers a year totaling trillions of dollars, officials want to develop clearer data. The financial data demanded by Fincen is likely to total several hundred million records, and the agency wants to minimize the logistical and financial disruption to banks, officials said.

Officials are looking at whether to give higher priority to wire transfers from the Middle East or other regions considered high risk, but they said they want to avoid provoking a public outcry over charges of ethnic profiling or driving terrorist financiers out of banks and into underground markets.

Advocates see the international transfers as a vital tool in tracking terrorist financing.

"The idea is for the government to make it more difficult and more risky for terrorists to move money, and right now international wire transfers provide the fastest, cheapest and most reliable way for the terrorists to do that," said John Roth, a former staff member for the Sept. 11 commission and a co-author of its terrorist financing report.

But some within the financial industry are skeptical.

"This strikes me as a fruitless exercise, an impossible task," said Charles A. Intriago, a former federal prosecutor who runs Money Laundering Alert. "This risks further burdening the industry, and it's tough to see how it will produce much if any useful data for the government in tracking terrorist financing."

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