Mishcon Fraud Watch - January 2009
Welcome to the January 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)
James Cahill and Jonathan Shulton, former directors of Phones 4 U dealerships, have pleaded guilty to fraudulent trading. The men admitted defrauding £1.6m by abusing an introductory sales commission system.
SFO press release, 19 December 2008
Philip Bates, an independent financial adviser, has been jailed after he was found guilty of defrauding a number of insurance companies into paying over £1m in up-front commissions on fake policies.
SFO press release, 12 December 2008
A compensation order of £415,000 has been made against Ian Selby in connection with his involvement in a fraud against the pension fund of Cheney & Son, a manufacturing company based in Birmingham.
SFO press release, 8 December 2008
The SFO has been refused leave to appeal an earlier ruling on a case involving price-fixing allegations against a number of drugs companies, including Goldshield.
Graham Ruddick
The Daily Telegraph, 4 December 2008
North America
Banking and Finance
Matthew Devlin, an ex-Lehmans sales representative, has pleaded guilty to securities fraud. Mr Devlin admitted stealing confidential information from his wife, a partner at public relations firm, Brunswick. Four other people were also charged in connection with the $4.8m fraud.
Joanna Chung, Greg Farrell, Justin Baer and Andrew Edgecliffe-Johnson
Financial Times, 19 December 2008
The Securities and Exchange Commission has charged Bernard Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud. It is alleged that Mr Madoff operated a Ponzi scheme through his investment firm, using more than $50bn of client money.
SEC press release, 11 December 2008
Eight former employees of Fidelity Investments have agreed to pay more than $1m to settle an enforcement action against them. The eight were accused of improperly receiving travel, entertainment, and gifts paid for by outside brokers courting business from Fidelity.
SEC press release, 11 December 2008
Zurich Financial Services and Converium Holding AG, have agreed to pay $25m to settle civil securities fraud charges. The companies were accused of artificially inflating performance figures. Neither company admits or denies the SEC findings.
SEC press release, 11 December 2008
Western Europe
Food and Beverages
A court in Milan has jailed Calisto Tanzi, the former chief executive of Parmalat, after he was found guilty of falsifying accounts, market-rigging and misleading investors and regulators.
Vincent Boland
Financial Times, 19 December 2008
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 Fraud Group, for risk and compliance officers.