Mishcon Fraud Watch - February 2009
Welcome to the February 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
Abraham Arad Hochman, a former director of Langbar International, and five other men have been arrested by Spanish police in connection with an alleged stock exchange fraud. None of the men have been charged.
David Blackwell, Megan Murphy and Mark Mulligan
Financial Times, 29 January 2009
Lothian and Borders police have launched an investigation into whether Sir Fred Goodwin and the Royal Bank of Scotland fraudulently sought investment from shareholders knowing that the bank was insolvent. The move follows a complaint by a Scottish Nationalist MSP.
Iain Harrison
The Sunday Times, 25 January 2009
Serious Fraud Office (SFO)
Haroon Khatab and Umar Khatab, the former owners of Tahir Tandoori Frozen Foods, an Indian Frozen Food company, have been jailed for their part in an accounting fraud. The men were found guilty of defrauding investors of £220,000.
SFO press release, 19 January 2009
Five directors in a property investment business have admitted taking part in an investment fraud worth approximately £65m. The fraud ran from 2001 until 2003 and involved selling buy-to-let properties through PPP Ltd, Practical Property Portfolios Ltd and Napeer Holdings Ltd.
SFO press release, 16 January 2009
The Serious Fraud Office has opened an investigation into the UK business operations of Bernard Madoff.
SFO press release, 8 January 2009
North America
Banking and Finance
The Securities and Exchange Commission has charged Arthur Nadel, an investment adviser, with fraud in connection with six hedge funds for which he acted.
SEC press release 2009-10, 21 January 2009
The Securities and Exchange Commission has charged Gordon B. Grigg, an investment adviser, and his firm ProTrust Management Inc. with securities fraud.
SEC press release 2009-12, 21 January 2009
The Securities and Exchange Commission has charged CRE Capital Corporation, a currency trading company, and its president James G. Ossie with operating a Ponzi scheme.
SEC press release 2009-6, 15 January 2009
The Securities and Exchange Commission has charged Joseph Forte, an investment fund manager, and his firm, Joseph S Forte LP, with conducting a multi-million dollar Ponzi scheme.
SEC press release 2009-5, 8 January 2009
Western Europe
Banking and Finance
Investors who lost money through Bernard Madoff’s alleged Ponzi scheme are planning to take legal action against a number of banks in France. The banks are accused of helping to channel money into the scheme. The move follows the launch of lawsuits in Luxembourg and the threat of lawsuits in Switzerland.
Adam Sage
The Times, 14 January 2009
Middle East
Property
Police in Dubai are investigating fraud allegations against Dynasty Zarooni, a property company. Investors allege that they were defrauded out of $100m by Kabir Mulchandani, the chairman, his business partner and two other employees. They all deny any wrongdoing.
Financial Times, 12 January 2009
Asia
Information Technology
Two PricewaterhouseCoopers (PwC) auditors based in India have been detained by police in connection with an investigation into alleged accounting fraud at Satyam Computer Services.
Joe Leahy
Financial Times, 26 January 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 Fraud Group, for risk and compliance officers.