Mishcon Fraud Watch - July 2010
Welcome to the July edition of Mishcon Fraud Watch, prepared by the Fraud & Insolvency Group at Mishcon de Reya. 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 judgement 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
Government
Plans are being laid for a new single "super agency" to tackle white-collar crime by merging the prosecution arm of the FSA with the SFO, the City of London Police economic crime directorate and the Crown Prosecution Service fraud unit. It could be functioning in shadow form, without waiting for legislation, within a year.
Frances Gibb
The Times, 24 June 2010
Reports and surveys
Organisations around the world lose an estimated five percent of their annual revenues to fraud, according to a recent survey of Certified Fraud Examiners. The study found that corruption and billing schemes were the leading types of fraud reported in European cases and others throughout the world.
ACFE Press Release, 2 June 2010
NORTH AMERICA
Securities and Exchange Commission (SEC)
The SEC has announced fraud charges and an emergency asset freeze against purported fund manager Daniel Spitzer, based in the U.S. Virgin Islands, who allegedly perpetrated a $105 million Ponzi scheme against investors.
SEC press release 2010-112 28 June 2010
The SEC has announced a settlement with Technip, a global engineering, construction and services company based in Paris, for multiple violations of the Foreign Corrupt Practices Act (FCPA). The SEC alleged that Technip was part of a four-company joint venture that bribed Nigerian government officials over a ten year period in order to win construction contracts in Nigeria worth more than $6 billion. The SEC also charged that Technip engaged in books and records and internal controls violations related to the alleged bribery.
SEC press release 2010-110 28 June 2010
The SEC has charged Milowe Allen Brost and Gary Allen Sorenson and two others with perpetrating a $300 million international Ponzi scheme on investors in a purportedly successful gold mining operation.
SEC press release 2010-99 10 June 2010
The SEC has charged Luis Felipe Perez with conducting a $40 million Ponzi scheme with funds primarily raised from investors in the local Hispanic community to purportedly support jewellery businesses and pawn shops.
SEC press release 2010-95 2 June 2010
Courts
The United States Supreme Court has struck down as vague and open to abuse a fraud law used against executives such as Jeffrey Skilling of Enron and the former media baron Lord Black.
Andrew Clarke
Guardian, 25 June 2010
Financial Services
The Securities and Exchange Commission has stepped up its inquiries into a Goldman Sachs complex mortgage-backed deal, involving Hudson Mezzanine Funding, a $2bn collateralised debt obligation, which was not part of the civil fraud charges filed against the bank in April. Goldman has denied the SEC's complaint.
Francesco Guerrera and Justin Baer
Financial Times, 10 June 2010
EUROPE
Financial Services
Former investment Société Générale banker Jerome Kerviel, is standing trial in Paris accused of carrying out one of the biggest trading frauds in history - losing France's second biggest bank Euros 4.5bn through unauthorised speculative trades, breach of trust, forgery and fraudulent use of the bank's computer system. Kerviel denies the charges.
Kim Willsher
Guardian, 8 June 2010
Media
Former Vivendi Universal chairman and chief executive, Jean-Marie Messier, has appeared in a Paris court over allegations of corporate fraud after being accused of misleading the stock market and share price manipulation when he led the company in a large number of takeovers between 2000 and 2002. He denies any wrongdoing.
Henry Samuel
Daily Telegraph, 3 June 2010
EASTERN EUROPE
Police
Moscow police Lieutenant-colonel Artyom Kuznetsov, is facing allegations of being involved in a $230m tax fraud case.
Catherine Belton
Financial Times, 24 June 2010
Mishcon de Reya
Mishcon's Fraud Watch is published by the Fraud & Insolvency Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has pioneered the use of financial fraud techniques in numerous fields, including the rapidly growing areas of theft of confidential information and counterfeiting. The Group founded and run both the Fraud Network, made up of international legal fraud specialists and the Financial Risk Group, for risk and compliance officers.