Mishcon Fraud Watch - December 2011
Welcome to the December edition of Mishcon Fraud Watch. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.
We make no judgment whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this bulletin. We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.
UNITED KINGDOM
Financial Services
Rupinder Sidhu has appeared in court on charges of insider trading after allegations that close friend and AKO trader Anjam Ahmad passed him trading-strategy information which enabled him to spread bet and make about £500,000. Mr Sidhu denies the charges.
Caroline Binham
Financial Times, 30 November 2011
Following the conviction of Edward Davenport and two others in September, David McHugh, David Horsfall and Richard Stephens, have been sentenced at Southwark Crown Court after operating Gresham Ltd as a sham business and fraudulently obtaining advance fee payments totalling more than £4 million.
Serious Fraud Office, 11 November 2011
Reports & Surveys
A report by the International Development Select Committee has called for changes to the way settlement agreements are structured and called on the Government to consult on proposals put forward by the SFO that could facilitate plea bargains.
Jonathan Russell
The Daily Telegraph, 30 November 2011
NORTH AMERICA
Securities and Exchange Commission (SEC)
The SEC has charged a longtime Bernie Madoff employee David Kugel with fraud for his role in creating fake trades to facilitate the massive Ponzi scheme.
SEC press release 2011-247, 21 November 2011
The SEC has charged Garfield M. Taylor and several family members and friends with conducting a multi-million dollar Ponzi scheme.
SEC press release 2011-246, 18 November 2011
The SEC has charged hedge fund managers James N. Fry and Michelle W. Palm and their firm Arrowhead Capital Management LLC for facilitating a multi-billion dollar Ponzi scheme operated by businessman Thomas Petters.
SEC press release 2011-237, 9 November 2011
The SEC has obtained a record financial penalty of $92.8 million against billionaire hedge fund manager Raj Rajaratnam for widespread insider trading.
SEC press release 2011-233, 8 November 2011
Financial Services
Allied Home Mortgage and its founder, James Hodge, have been sued by US prosecutors for more than $2.5bn in damages for allegedly engaging in reckless lending practices that defrauded a federal insurance programme.
Kara Scannell
Financial Times, 1 November 2011
EUROPE
Pharmaceuticals
The European Medicines Agency is under investigation by the European Anti-Fraud Office over alleged conflicts of interest related to a scandal over the French diabetic drug Mediator.
Jeremy Laurance
The Independent, 15 November 2011
ASIA
Companies
Olympus faces allegations of making more than $1bn in acquisition-related payments after claims that money was used secretly to cover losses on investments dating back to the 1990s.
Jonathan Soble
Financial Times, 9 November 2011
Mishcon de Reya
Mishcon's Fraud Watch is published by the Dispute Resolution Department of Mishcon de Reya. Widely recognised as the leader in the field of fraud investigations, the Department has pioneered the use of financial fraud techniques in numerous fields, including the rapidly growing areas of theft of confidential information and counterfeiting. The Department founded and run both the Fraud Network, made up of international legal fraud specialists and the Financial Risk Group, for risk and compliance officers.