Mishcon Fraud Watch - October 2009
Welcome to the October 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
City of London Police
Andrew Wetherall, a former KPMG director, has been sentenced to four years in prison after pleading guilty to charges of false accounting and fraud by false representation.
City of London Police press release, 15 September 2009
Michael Sanchez, Rashid Hammou and Paul Joseph Kelly, former owners of Flight International (Southend), have been sentenced to a total of thirteen years in prison after pleading guilty to charges of conspiracy to defraud a number of airline companies. The men used the travel agency to book flights, for which they did not pay.
City of London Police press release, 8 September 2009
Serious Fraud Office
Christopher Law, Geraint Roberts and Paul Harvey, former senior executives of Alfred McAlpine Slate Ltd, have been jailed after pleading guilty to overstating deliberately the company's production and sales figures over a number of years.
Serious Fraud Office press release, 18 September 2009
NORTH AMERICA
Securities and Exchange Commission (SEC)
The SEC has charged 3001 AD LLC, a virtual reality technology company, its principals and three former sales agents in connection with an alleged fraudulent offering scheme. The SEC alleges that the scheme raised approximately US$20m from approximately 500 investors.
SEC press release 2009-210, 29 September 2009
The SEC has charged Reza Saleh, a trader at Perot Systems, with insider trading. The SEC alleges that Mr Saleh purchased Perot Systems call options around the time of a tender offer for the company by Dell Inc. Immediately following the tender offer announcement Mr Saleh sold option contracts making a profit of approximately US$8.6m.
SEC press release 2009-203, 23 September 2009
The SEC has charged Philip Barry, a money manager, and his firms Leverage Group, Leverage Option Management Co Inc, and North American Financial Services in connection with an alleged US$40m Ponzi scheme. The SEC claims that Mr Barry made misrepresentations to the schemes 800 investors in order to secure their investment.
SEC press release 2009-193, 8 September 2009
Banking and Finance
Irving Picard, the bankruptcy trustee appointed to wind down Madoff Investment Securities, is planning to sue Mr Madoff's sons, brother and niece for nearly US$200m. The family members all worked for companies owned by Mr Madoff. All deny any knowledge of Mr Madoff’s corrupt activities.
Andrew Clark
The Guardian, 29 September 2009
EUROPE
Government
The Italian Senate has approved a tax amnesty that includes the repatriation of money held abroad through accounting fraud. The bill also includes provisions to release Italian banks from having to inform the central bank of suspicions of money laundering. The bill has still to complete its passage through Parliament.
Guy Dinmore
Financial Times, 24 September 2009
EASTERN EUROPE
Bankers at Ukraine’s central bank are being investigated in connection with allegations of fraudulent manipulation of the currency markets. The bankers deny any wrongdoing.
Roman Olearchyk
Financial Times, 12 September 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.