Mishcon Fraud Watch - June 2010
Welcome to the June 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
Serious Fraud Office (SFO)
The SFO has dropped charges against the UK operations of AIG Financial Products over allegations of running derivatives trades that contributed to the near failure of the company two years ago.
Michael Herman
The Times, 27 May 2010
Reports and Surveys
Company directors worldwide are increasingly worried about personal liability for fraud and corruption, according to a recent survey by Ernst & Young. The research shows that some companies are underprepared as they are reducing spending on legal compliance to cut costs.
Michael Peel
Financial Times, 19 May 2010
The number of victims of card fraud has leapt by 40 per cent in a year to more than 2.4 million people, according to the annual British Crime Survey. Based on population figures and the percentage of people with cards, it is estimated that the number of victims in England and Wales rose from 1.77 million in 2007-08 to 2.41 million last year.
Richard Ford
The Times, 19 May 2010
Financial Services
The SFO has begun a formal investigation into fraud allegations following the collapse of E-Clear, the credit card processing firm, which failed with debts of nearly £100m.
Simon Evans
Independent on Sunday, 23 May 2010
NORTH AMERICA
Securities and Exchange Commission (SEC)
The SEC has charged Gedrey Thompson and two associates, through his firm GTF Enterprises Inc., over allegations of conducting an affinity fraud and Ponzi scheme.
SEC press release 2010-87 26 May 2010
The SEC has charged Spongetech Delivery Systems Inc., an affiliate, and five other people over allegations of hyped fictional customers and grossly exaggerated sales figures through dozens of bogus press releases and fraudulent SEC filings to inflate demand for stock.
SEC press release 2010-70 5 May 2010
Financial Services
Stephen H. Brinck Jr, and the investment bank of which he is a former executive, Thomas Weisel Partners, have been accused of making unauthorised deposits into the accounts of three corporate customers with auction rate securities to raise $15.7m to pay executive bonuses. Mr Brinck denies the allegations.
Susan Kapner
Financial Times, 18 May 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.