Mishcon Fraud Watch - November 2009
Welcome to the November 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
Banking and Finance
Trevor Baines, a British entrepreneur, and his wife have been found guilty of money laundering, false accounting and artificially inflating share prices at a court in the Isle of Man. The charges relate to securities fraud in the United States involving Roys Poyiadjis, a former senior executive at AremisSoft, a software firm.
Anil Dawar
The Times, 14 October 2009
The Financial Services Authority has fined Seymour Place, a firm of stockbrokers, for failing to establish effective controls to guard against employee fraud. The move came after it was discovered that an ex-employee had stolen almost £150k from client accounts.
Peter Taylor
The Daily Telegraph, 9 October 2009
According to Financial Fraud Action UK, bank card fraud losses were down 23% to £232.8m in the first half of 2009, compared with the same period last year. Online banking fraud losses were up 55% to £39m and cheque fraud losses down 26% to £15.6m over the same period.
Financial Fraud Action UK, 7 October 2009
Serious Fraud Office (SFO)
AMEC, an engineering firm, has agreed to pay the SFO almost £5m plus costs following the discovery of unlawful conduct at the firm. The SFO launched an investigation into AMEC after the company reported that it had received irregular payments in connection with a project in which AMEC is a shareholder.
Serious Fraud Office press release, 26 October 2009
Fraud charges have been brought against six individuals, Xclusive Tickets Limited and Xclusive Leisure and Hospitality Companies. The charges relate to an alleged £5m online ticket scam involving tickets for sporting and music events. The SFO and City of London Police launched an investigation after they received a number of complaints from the public that tickets had not been received or refunded.
Richard Bright
The Daily Telegraph, 9 October 2009
The SFO has announced that it intends to seek the Attorney General's consent to prosecute BAE Systems on charges relating to alleged overseas corruption.
SFO press release, 1 October 2009
EUROPE
Banking and Finance
Helmut Kiener, founder of K1, has been arrested on suspicion of fraud and breach of trust relating to K1. Mr Kiener and K1, a hedge fund, are also being investigated by the FBI. Mr Kiener denies any wrongdoing.
Michael Herman
The Times, 30 October 2009
Energy
Authorities over Europe are investigating an alleged scam involving the trading of carbon credits. The scam, which is thought to be worth more than £1bn, involves the purchase of carbon emission allowances.
Rajeev Syal
The Observer, 4 October 2009
Religion
Two branches of the Church of Scientology in France have been fined over £550k after being found guilty of fraud.
Jason Burke
The Guardian, 28 October 2009
NORTH AMERICA
Banking and Finance
The State of California has launched legal action against State Street, an institutional money manger. Jerry Brown, the Californian Attorney-General, alleges that State Street overcharged the Californian Public Employees' Retirement System and the Californian State Teachers' Retirement System by $56m over an eight-year period. State Street denies any wrongdoing.
Matthew Garrahan
Financial Times, 21 October 2009
Family
Anthony Marshal, the son of New York socialite Brooke Astor, has been found guilty of defrauding his late mother.
James Bone
The Times, 9 October 2009
Pharmaceuticals
Baxter, a US pharmaceutical company, has reached an out of court settlement after being accused of fraudulently overcharging Medicaid, the US healthcare programme for poor families. Baxter denies any wrongdoing.
Rajeev Syal and Adam Luck
The Observer, 11 October 2009
Securities and Exchange Commission (SEC)
The SEC has charged Lambros Ballas, a securities broker with Global Arena Capital Corporation, with alleged securities fraud. It is alleged that Mr Ballas repeatedly created and distributed fake press releases to manipulate the stock prices of multiple publicly traded companies.
SEC press release 2009-226, 22 October 2009
The SEC has charged Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP in connection with an alleged insider trading scheme. The scheme is alleged to have generated more than $25 million in illicit gains.
SEC press release 2009-221, 16 October 2009
The SEC has charged Ronnie Eugene Bass, Abner Alabre, Brian J. Taglieri and their companies, HomePals Investment Club LLC and HomePals LLC with conducting an alleged Ponzi scheme and affinity fraud. It is alleged that the scheme collected at least $14.3m from hundreds of Haitian-American investors residing in South Florida and New Jersey.
SEC press release 2009-219, 16 October 2009
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.