Mishcon Fraud Watch - April 2009
Welcome to the April 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
Credit and debit card fraud losses in the UK totalled £609.9m in 2008 according to APACS (the UK trade association for payments and for those institutions that deliver payment services to customers). Over the same period online banking and cheque fraud losses were estimated at £52.5m and £41.9m respectively.
APACS press release, 19 March 2009
The City of London Police has arrested nine people in connection with an alleged £40m mortgage fraud. The arrests were made in connection with an investigation into Eastbourne Financial Services Limited, which is now in liquidation.
City of London Police press release, 13 March 2009
Hugh Rodley and David Nash have been found guilty of an attempted fraud on Sumitomo Mitsui Banking Corporation. The fraud was planned to take place in 2004 and, had it succeeded, would have been worth £229m.
Owen Bowcott
The Guardian, 5 March 2009
Government
The National Fraud Strategic Authority has launched the National Fraud Strategy. The strategy aims to strengthen the counter-fraud community’s response and provide help, protection and support to individual consumers and businesses.
National Fraud Strategy, 19 March 2009
Measures on plea negotiations and extending the powers of Crown Courts have been announced by the Attorney General. The criminal justice measures are in a response to a recent consultation and form part of the National Fraud Strategy.
Attorney General’s Office press release entitled “Criminal justice measures to enhance fraud prosecutions” and the Government response to the consultation document entitled “Plea Negotiations and Crown Court Powers”, 19 March 2009
Serious Fraud Office (SFO)
The SFO has begun an investigation into an alleged fraud on the Corporate Banking Department of Allied Irish Banks Plc.
SFO press release, 26 March 2009
Haroon Khatab has been banned from conducting investment and financial management business for four years following his release from prison. Mr Khatab has twice been convicted on fraud charges. This is the first Serious Crime Prevention Order which has been issued in an SFO prosecution.
SFO press release, 20 March 2009
North America
Art
Lawrence Salander, owner of Salander-O'Reilly Galleries in New York, has been charged with alleged fraud, forgery and falsifying business documents.
Ed Pilkington
The Guardian, 27 March 2009
Securities and Exchange Commission (SEC)
The SEC has charged John H. Min and his company Dime Financial Group LLC for raising more than $6m in a fraudulent investment scheme that targeted churches.
SEC press release 2009-71, 31 March 2009
The SEC has charged Henry Morris, New York's former Deputy Comptroller, for allegedly accepting millions of dollars in kickbacks from investment management firms seeking to manage the assets of the New York State Common Retirement Fund, New York's largest pension fund.
SEC press release 2009-62, 19 March 2009
The SEC has charged David G. Friehling and his firm, Friehling & Horowitz, CPAs, P.C. (F&H), the auditors of Bernard Madoff's broker-dealer firm, with securities fraud. It is alleged that the auditors claimed to have conducted legitimate audits, when they had not.
SEC press release 2009-60, 18 March 2009
The SEC has charged Vincent Smith, John Laskey and Kevin Brooks, all current or former executives with Quest Software, in connection with alleged stock option backdating.
SEC press release 2009-57, 12 March 2009
The SEC has charged Anthony Vassallo and Kenneth Kenitzer, residents of California, in connection with an alleged multi-million dollar investment fraud.
SEC press release 2009-55, 11 March 2009
The SEC has charged Sunwest Management Inc, an Oregon-based real estate company, with securities fraud in connection with the alleged misrepresentation of financial risk to potential property investors.
SEC press release 2009-38, 2 March 2009
Middle East
Banking and Finance
Seven people have been charged in connection with an alleged scheme to defraud Dubai Islamic Bank of $501m.
Simeon Kerr
Financial Times, 10 March 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.