Tag: Fraud

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Politics

Bernie Madoff earned $710 in jail after Ponzi fraud conviction

Bernie Madoff earned $710 in prison after Ponzi fraud conviction

Bernie Madoff is leaving federal court in New York on March 10, 2009.

Jin Lee | Bloomberg via Getty Images

Some people might argue that Bernie Madoff was massively overpaid even at just 24 cents an hour to work as a jailer.

Madoff, the late king of the Ponzi scheme who ripped off thousands of people for billions of dollars, earned just $ 710 after working nearly 3,000 hours while in a federal prison in North Carolina for 12 years before dying of kidney failure in April, as newly published records show.

And when he died at the age of 82, Madoff didn’t leave much of his personal belongings: eight AAA batteries, four religious paperback books, a Casio calculator, four packets of popcorn, a packet of ramen soup, a box of filtered fish, and not much more.

Bureau of Prison records, first reported by online publication The City, also show that while Madoff received generally positive reviews for his performance as a carer, at some point a supervisor stated that he was “more closely monitored than most of the others need “and” not “very reliably.”

This was certainly the case when Madoff ran Bernard L. Madoff Investment Securities in New York, where for decades he led a luxurious lifestyle and satisfied clients with constant investment returns on their portfolios.

These returns turned out to be a deception.

In 2008, federal prosecutors accused Madoff of running the largest Ponzi scheme in history, using money from some investors to distribute alleged profits to others.

Madoff’s sons, Mark and Andrew, had told authorities that he had confessed to them that his business was an outright fraud.

Madoff pleaded guilty to 11 crimes in Manhattan federal court in 2009 and was sentenced to 150 years in prison.

Mark Madoff killed himself in 2010 at the age of 46, two years from the day this father was arrested. Andrew Madoff died of lymphoma four years later at the age of 48.

While in custody in Butner, North Carolina, Madoff served as the first vigilante in a section of the detention center dedicated to educational programs. He later asked to be transferred to work in the chapel area, The City noted in its report.

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Last year, Madoff’s attorney revealed in court records that the sociopathic con man was terminally ill with kidney disease when he asked a judge to release Madoff early on compassionate grounds.

Manhattan federal judge Denny Chin dismissed the motion in June 2020, ruling that Madoff had “committed one of the most egregious financial times of all time” and that “many people are still suffering from it.”

About 500 victims wrote to oppose Madoff’s release.

One of Madoff’s victims had written to Chin, “I wholeheartedly believe that my husband would be alive today if he did not deal with the stress and emotional distress that the loss of almost all of our money has meant to our family. “

In December, the Justice Department announced that the Madoff Victim Fund had distributed a total of $ 3.2 billion to nearly 37,000 people betrayed by Madoff. This dollar amount represents more than 80% of the total casualty losses.

The fund’s money comes from recovering assets associated with Madoff. The fund predicts that it will ultimately return more than $ 4 billion in total assets.

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Politics

FTE Networks executives charged with securities fraud conspiracy

FTE Networks executives charged with securities fraud conspiracy

SEC report on FTE Networks’ management team: Michael Palleschi as CEO and Chairman of the Board of Directors and David Lethem, CFO.

Source: SEC

The former top executives of FTE Networks, a former telecommunications company whose shares were delisted from the New York Stock Exchange last year, were separately indicted on Thursday by the federal and Manhattan prosecutors on a number of criminal charges.

The two men, Michael Palleschi and David Lethem, have also been sued by the Securities and Exchange Commission on a civil lawsuit for the same conduct that underlies the criminal charges against them in federal court.

Palleschi, the ex-CEO of FTE Networks, and Lethem, the company’s former chief financial officer, are charged in federal proceedings and SEC complaint of a comprehensive plan to fraudulently conceal FTE Networks’ deteriorating financial condition from 2016 to 2019.

The men are also accused in these cases of embezzling millions of dollars from the company to pay for the use of private jets, luxury cars, personal credit cards, unauthorized transfers, stock issues and unapproved salary increases.

The grand jury’s indictment received from Manhattan DA Cyrus Vance Jr.’s office allegedly stole more than $ 28 million in property trust from Manhattan-based Benchmark Builders as of November 2018.

The men allegedly diverted these assets from the company, which was a wholly owned subsidiary of FTE Networks, to repay millions in loans received from FTE. In this case, you are accused of serious first-degree theft.

Palleschi, a 46-year-old Naples, Florida resident, was arrested Thursday morning in New York state while Lethem, 62, was arrested in Florida.

They are due to appear in separate federal courts later on Thursday.

Palleschi was Chairman of the Board of Directors and CEO of FTE from 2014 to May 2019, while Lethem, of Fort Meyers, Florida, was CFO from June 2014 to March 2019.

The federal indictment accuses them of working with others in “a complex scheme to fraudulently misrepresent investors, lenders and accountants” that the company’s financial condition was better than it actually was.

The program, which allegedly ran from 2016 to 2019, included hiding the convertible and warrant features of the company’s $ 22 million convertible bonds and recognizing more than $ 12 million in fake revenue, the indictment said Grand jury that was unsealed on Thursday.

The obfuscation of the debt features eventually led FTE Networks to re-estimate a net loss of $ 92 million for 2017, the indictment reads.

This indictment states that Palleschi and Lethem, along with others, made these false statements and omitted key facts in financial documents “to mask a trend of rising RTD operating losses” and to avoid a fall in the company’s shares.

The indictment states that if FTE’s share price had fallen below certain levels, it would have resulted in debt clauses on the company and forced it into bankruptcy.

The two men are charged on six counts, including conspiracy to commit securities fraud, wire transfer fraud, improperly influencing the conduct of audits, and aggravated identity theft.

The case is being prosecuted by the US Attorney’s Office for the Southern District of New York, based in Manhattan.

“Palleschi and Lethem have instead chosen to lie about FTE’s finances to make the company appear financially healthier than it was, defrauding FTE’s shareholders and lenders,” said SDNY US attorney Audrey Strauss.

“Rather than being open to their investors, Palleschi and Lethem have chosen the easy way to make money by hiding the real financial health of RTD through fake documents and fake signatures.”

The SEC complaint accuses Palleschi and Lethem of directly violating or aiding and abetting violations of the anti-fraud, reporting, and proxy solicitation provisions of securities laws.

FTE Networks is currently renting out residential properties. The company’s current interim CEO, Michael Beys, is an attorney and former federal attorney in the US Attorney’s Office for the Eastern District of New York, the sister jurisdiction of the SDNY.

Beys said in an interview with CNBC on Thursday, “The company has partnered and will continue to work with SDNY and SEC.”

“We look forward to justice being served,” Beys said.

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“The company continues to move forward and hopefully brings back value for shareholders in the company,” he said. “We are the good guys and will continue to try to recover from the chaos that Palleschi and Lethem have left behind.”

Benchmark Builders, which was acquired by FTE Networks in 2017, said Thursday that executives from that company had alerted the Manhattan prosecutor’s office to the alleged crimes of Palleschi and Lethem.

“Today’s charges are the culmination of a difficult decision we made to protect our subcontractors and customers in late 2018 when we contacted the Manhattan District Attorney about the misuse of trust funds,” Benchmark Builders said in an email to CNBC .

“We invested our own personal resources in the company to protect the subcontractors and their workers and parted ways with RTD almost 2 years ago,” the company said.

“Not a single subcontractor or customer was affected by these events, and not a single worker missed a paycheck. Construction in this city can be tough business, but we’ve always put integrity first and that’s what led to today’s events. We We are pleased to have this behind us and will work with a new focus on customer care.

The SEC lawsuit calls for permanent injunctions, penalties, and a ban on both men from acting as officers and directors of public companies, as well as “skip and prejudice interest and a recovery of the stock-based compensation paid to Palleschi during the alleged fraud.” said the SEC.

Eric Bustillo, director of the SEC’s Miami regional office, said: “The defendants have engaged in an outrageous scheme to fraudulently increase RTD revenues in order to misrepresent the company’s financial position while holding millions of dollars Abusing dollars for their own personal use. “

“We pledge to hold executives accountable who provide materially false financial reports to the public and those who rob companies for their personal gain,” said Bustillo.

FTE, based in New York and Naples, Fla., Had previously traded its shares on the OTCQX over-the-counter market, but was trading on the NYSE US market in December 2017.

It was suspended from trading on the NYSE two years later and delisted on May 21, 2020.

A press release released in late 2019 said the company was notified of delisting because the NYSE found that FTE or its management were engaged in “business that the exchange believed to be contrary to the public interest.”

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Politics

Males charged in shell firm inventory fraud scheme, used SEC filings

Men charged in shell company stock fraud scheme, used SEC filings

Three men have embarked on a brazen scheme to “secretly kidnap” and take over dormant mailbox companies, whose shares they then fraudulently inflated to sell to ignorant investors, according to the indictment, which was unsealed on Friday.

The 2017-2019 men allegedly used fake resignation letters to take control of four mailbox companies, then used the Securities and Exchange Commission’s EDGAR public filing system and fake press releases to fraudulently “pump up” their stock prices by seeking new business opportunities says.

Millions of shares of those stocks, which the defendants bought in many cases for less than 1 cent a share, were then sold over-the-counter by the men and others at gains of up to 900%, according to the court record.

The defendants – Mark Allen Miller, Christopher James Rajkaran and Saeid Jaberian, also known as Andre Jaberian – are charged in 15 cases of securities fraud, securities fraud conspiracy and wire transfer fraud.

The indictment states that Minnesota residents, Miller and Jaberian, as well as an unidentified person who is a relative of Miller, actually became the nominal CEOs and presidents of the companies affected by the scam.

Prosecutors believe the men made hundreds of thousands of dollars in illegal profits just from the behavior described in the indictment, according to a spokeswoman for the US prosecutor in Minnesota.

The indictment, filed in the U.S. District Court in Minnesota, was first reported Friday on the Twitter account of Seamus Hughes, associate director of the Extremism Program at George Washington University.

Hughes regularly scours the federal court’s online archive system, PACER, for interesting criminal and civil litigation documents that were not previously reported.

The Securities and Exchange Commission did not immediately respond when CNBC asked if the agency had taken any action against the defendants and whether they had made changes to the EDGAR file system to prevent tampering by suspected fraudsters.

None of the defendants could be reached for comment.

Rajkaran, a resident of Queens, New York and Guyana, was arrested on Friday as a possible aviation hazard after appearing in court in Brooklyn, New York.

The other two defendants, Miller and Jaberian, are due to appear in federal court in Minnesota on July 2.

The four mailbox companies affected by the alleged conspiracy were Digitiliti, Encompass Holdings, Bell Buckle Holdings, and Utilicraft Aerospace Industries.

While the companies were supposedly doing business – online privacy services, computer software, debt collection, and aerospace – all were actually dormant mailbox companies “with no business or income to speak of,” the indictment said.

The companies had all stopped filing required documents with the SEC and the Secretary of State, but their shares were publicly traded on the over-the-counter market.

After the corporate quartet was identified, “the conspirators then bought shares in the dormant public letterbox companies at low prices on the OTC market,” the indictment said.

“The conspirators were able to buy hundreds of thousands or even millions of shares because the shares traded for a fraction of a penny per share.”

In the Digitiliti case, according to the indictment, Miller drafted a fake resignation letter and board minutes in September 2017, falsely stating that the company’s previous CEO had resigned and Miller had been appointed president and CEO.

Miller then filed with the SEC papers falsely identifying himself as the company’s new head and asked for “the login codes that allow him access to the company’s SEC-EDGAR filing account.”

This in turn “allowed Miller to make public filings with the SEC on behalf of the company.”

The EDGAR system is used by publicly traded companies to disclose material events, including quarterly and annual financial results, changes in management, and sales and purchases of significant amounts of company stock by insiders and others.

The indictment states that Miller bought 50,000 Digitiliti shares in November 2017.

“After Digitiliti’s kidnapping, the Defendant Miller used his control over the company to issue a false and misleading press release on behalf of the company,” the indictment stated.

“On or about July 9, 2018, Miller issued a press release falsely claiming that Digitiliti was ‘negotiating’ with a private company that is trying to ‘buy’ Digitiliti.”

The press release also falsely alleged that the private company “has a proven track record of generating revenue and succeeding in a highly desirable sector of the market,” according to the indictment.

Miller sold his 50,000 Digitiliti shares three weeks later.

During the alleged hijacking of Encompass Holdings from June to November 2017, Miller and Rajkaran together bought more than 40 million shares in the company at low prices, the indictment said.

As with Digitiliti, Miller claimed in a forged letter of resignation and board minutes that he had become president and CEO, the indictment said.

Rajkaran then began posting about the company on investorhub.com to “promote and raise the price of ECMH stock,” the indictment stated.

“For example, he announced that the new CEO is’ likely to have nearly 20 million real estate holdings”[s] and construction machinery … heard, he owns several shopping centers in Mn ‘, “the indictment reads.

Miller then released a press release falsely claiming that Encompass “had signed a letter of intent to acquire approximately $ 6.4 million in assets from DDG Properties. according to the indictment.

“None of that was true.”

The stock price rose in response to the allegations, and Miller shortly thereafter sold 12 million shares in the company at fraudulently inflated prices and made a gain of more than 300%, the indictment said.

Rajkaran achieved an earnings return of around 150% after dumping more than 34 million shares, according to the indictment.

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Health

DOJ expenses 14 individuals in alleged Covid-related health-care fraud

DOJ charges 14 people for alleged health-care fraud related to Covid-19

Paul Hennessy | LightRocket | Getty Images

Federal prosecutors have charged 14 people — including a medical doctor and owners of laboratories, pharmacies and a home health agency — in multiple Covid-related fraud schemes that allegedly bilked consumers and insurers out of $143 million, the Department of Justice announced Wednesday.

In addition, the Center for Program Integrity at the Centers for Medicare & Medicaid Services announced it took administrative action against more than 50 medical providers for their involvement in health-care fraud schemes relating to Covid-19.

The DOJ’s Fraud Section, which leads the Medicare Fraud Strike Force, announced it is prosecuting cases in the following districts: Western District of Arkansas, Northern District of California, Middle District of Louisiana, Central District of California, Southern District of Florida, District of New Jersey and the Eastern District of New York.

“These medical professionals, corporate executives, and others allegedly took advantage of the COVID-19 pandemic to line their own pockets instead of providing needed health care services during this unprecedented time in our country,” Deputy Attorney General Lisa Monaco said. “We are determined to hold those who exploit such programs accountable to the fullest extent of the law.”

FBI Director Christopher Wray also said the agency is committed to combating Covid-related health-care fraud. “Medical providers have been the unsung heroes. … It’s disheartening that some have abused their authorities.”

The defendants allegedly engaged in various types of schemes “designed to exploit the COVID-19 pandemic,” the DOJ said in a news release.

“For example, multiple defendants offered COVID-19 tests to Medicare beneficiaries at senior living facilities, drive-through COVID-19 testing sites, and medical offices to induce the beneficiaries to provide their personal identifying information and a saliva or blood sample,” the DOJ said. “The defendants are alleged to have then misused the information and samples to submit claims to Medicare for unrelated, medically unnecessary, and far more expensive laboratory tests, including cancer genetic testing, allergy testing, and respiratory pathogen panel tests.” The DOJ said the proceeds of the schemes were allegedly laundered through shell corporations and used to buy exotic cars and luxury real estate.

In another example, a defendant allegedly exploited telehealth regulation expansions to submit fraudulent claims to Medicare for telemedicine encounters that never happened, according to the DOJ. Telehealth regulations had been broadened after Covid-19 was recognized as a national emergency to give Medicare beneficiaries greater access to a wider range of services so they could avoid risky travel to health-care sites.

Here are some of the cases the DOJ announced it is prosecuting:

In Arkansas, a man who owns two testing laboratories was charged with health-care fraud in connection with an alleged scheme to defraud the U.S. of more than $88 million. The man allegedly used access to beneficiary and medical provider information from prior lab testing orders to submit hundreds of fraudulent claims for urine, drug and other tests. Some of the falsely submitted claims were for beneficiaries who were already dead.

A doctor in New Jersey allegedly ordered expensive and medically unnecessary cancer genetic testing for Medicare beneficiaries that attended a Covid-19 testing event that he participated in. The man also allegedly billed Medicare for services to beneficiaries that he never provided, totaling about $19 million in health-care fraud schemes.

Another man in the state who was a partner at a diagnostic testing lab allegedly offered kickbacks in exchange for respiratory pathogen tests that were improperly bundled with Covid tests and billed to Medicare. The man allegedly paid and received bribes in a scheme totaling $5.4 million.

In New York, charges were brought against two people who owned several pharmacies and sham pharmacy wholesaling companies for allegedly committing health-care fraud, wire fraud and money laundering totaling $45 million. The two and their co-conspirators allegedly acquired billing privileges for multiple pharmacies. They also allegedly submitted fraudulent claims to Medicare by abusing emergency Covid-19 rules to avoid otherwise applicable limits on refills for expensive drugs. The DOJ news release said the defendants “allegedly used an elaborate network of international money laundering operations to conceal and disguise the proceeds of the scheme.”

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Health

DOJ expenses 14 folks for alleged health-care fraud associated to Covid-19

DOJ charges 14 people for alleged health-care fraud related to Covid-19

Paul Hennessy | LightRocket | Getty Images

The federal prosecutor has indicted 14 people in multiple fraud programs that allegedly charged consumers and insurers with $ 143 million, the Justice Department said on Wednesday.

In addition to those charged by the DOJ, more than 50 medical providers are facing administrative actions by the Center for Program Integrity and Centers for Medicare & Medicaid Services for participating in healthcare fraud programs related to Covid-19.

The DOJ’s fraud division, which heads the Medicare Fraud Strike Force, announced that it is pursuing cases in the following counties: Western District of Arkansas, Northern District of California, Middle District of Louisiana, Central District of California, Southern District of Florida, Borough of New Jersey and the eastern borough of New York.

“These health professionals, executives and others have allegedly taken advantage of the COVID-19 pandemic to fill their own pockets instead of providing the health services they need in our country at this unprecedented time,” said Assistant Attorney General Lisa Monaco. “We are determined to hold those who use such programs accountable to the fullest extent of the law.”

FBI Director Christopher Wray also said the agency is determined to fight healthcare fraud related to Covid-19.

The DOJ’s announcement also found that the profits from the fraudulent operations were allegedly laundered by Shell companies and used to purchase exotic cars and luxury homes.

After Covid-19 was recognized as a national emergency, telehealth regulations were expanded to allow Medicare beneficiaries better access to a wider range of services to avoid risky trips to health locations. The defendant allegedly used these extensions to bring fraudulent claims to Medicare over telemedicine encounters that the DOJ said never took place.

In Arkansas, a man who owns two testing laboratories was charged with more than $ 88 million in healthcare fraud in connection with an alleged fraud program against the United States. The man allegedly used access to beneficiary and medical provider information from previous laboratory test assignments to file hundreds of fraudulent claims for urine, drug and other tests. Some of the falsely submitted claims concerned deceased beneficiaries.

A doctor in New Jersey allegedly ordered expensive and medically unnecessary cancer genetic testing for Medicare beneficiaries attending a Covid-19 testing promotional event he attended. The man also reportedly billed Medicare for services to beneficiaries he never performed, totaling around $ 19 million in healthcare fraud systems.

Another man in the state who was a partner in a diagnostic testing lab allegedly offered setbacks in exchange for breath tests that were not properly bundled with Covid tests and billed to Medicare. The man reportedly paid and received bribes totaling $ 5.4 million.

In New York, charges were brought against two people who owned several pharmacies and bogus pharmacy wholesalers for allegedly guilty of healthcare fraud, wire fraud and money laundering totaling $ 45 million. The two and their co-conspirators have reportedly acquired billing privileges for several pharmacies. They also allegedly filed fraudulent claims with Medicare by abusing the Covid-19 emergency rules to avoid otherwise imposed restrictions on refilling expensive drugs.

The report alleges that the defendants “allegedly used an ingenious network of international money laundering activities to hide and disguise the proceeds of the system.”

“Medical providers have been the unsung heroes … It’s disheartening that some have abused their agencies,” Wray said.

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Entertainment

Former Dance Faculty Comptroller Pleads Responsible in $1.5 Million Fraud

Former Dance School Comptroller Pleads Guilty in $1.5 Million Fraud

A Maryland woman who had gambled away nearly $ 1.5 million in funds from the elite dance school where she was the inspector pleaded guilty to fraud in Washington District Court Thursday.

The plea is the second time in 8 years that Sophia Kim has been successfully charged with stealing from dance organizations with links to the Unification Church.

Ms. Kim, 60, was hired in 2017 to serve as director of the Kirov Academy of Ballet, a school founded in 1990 by Rev. Sun Myung Moon to promote what he called “the heavenly art of dance” and to be creative point of sale for his daughter-in-law, a former member of the Washington Ballet.

At its peak in the early 2000s, the school featured nearly a dozen top ballet dancers each year, including some who continue to direct the American Ballet Theater, the National Ballet of Canada, and other leading companies.

According to an affidavit from the Federal Bureau of Investigation, Ms. Kim was playing with funds she oversaw as the academy’s inspector. Over a nine month period in 2018, investigators found Ms. Kim wrote checks to herself and used her Academy debit card 120 times to withdraw cash and record losses at the MGM Grand Casino near her home in Temple Hills, Md.

When the school discovered the lack of funds, they reported Ms. Kim to the FBI and she was arrested at the casino in November 2019.

“Kim treated her company’s funds as her personal bank account,” said Timothy Thibault, assistant special agent for the crime department at the FBI’s Washington branch, in a statement announcing the guilty plea.

Last year, Ms. Kim said in an interview that she never intended her gambling to hurt the academy.

Ms. Kim joined the Unification Church as a teenager in South Korea, immigrated to the United States, and married a Church attorney. They settled in Northern Virginia, and after raising three children, Ms. Kim was hired as an accountant at Kirov. She later moved to the Korean Cultural and Freedom Foundation, a church-based nonprofit group that donated money to the Kirov, Little Angels children’s dance group, and the Seoul-based Universal Ballet.

In 2013, Ms. Kim, also known as Sookyeong Kim Sebold, was found guilty of misappropriating foundation funds that were largely lost in New Jersey casinos. She was imprisoned for two years. After her release, Ms. Kim was hired as the academy’s inspector, a decision the school did not discuss. On Friday, academy officials did not respond to a request for comment on Ms. Kim’s request.

The Kirov is now both a music school and a dance academy and is headquartered in a former convent near the Catholic University in Washington District Court in Washington on Thursday.

The plea was the second time in 8 years that Ms. Kim had been found guilty of stealing dance organizations with ties to the Unification Church.

Ms. Kim, 60, was hired in 2017 to serve as director of the Kirov Academy in Washington, a school founded in 1990 by Rev. Sun Yyung Moon to promote what he called “the heavenly art of dance.” and to serve as a creative medium for his daughter-in-law, former member of the Washington Ballet.

At its peak in the early 2000s, it found that the school produced nearly a dozen top ballet dancers each year, including some who continue to direct the American Ballet Theater, the National Ballet of Canada, and other leading companies.

According to an affidavit from the Federal Bureau of Investigation, Ms. Kim was playing with funds she oversaw as the academy’s inspector. Over a nine-month period in 2018, investigators said, Ms. Kim wrote checks to herself and used her Academy debit card 120 times to withdraw cash and make losses at the MGM Grand Casino near her home in Temple Hills, Maryland, balance.

When the school discovered the lack of funds, they reported Ms. Kim to the FBI and she was arrested at the casino in November 2019.

“Kim treated her company’s funds as her personal bank account,” said Timothy Thibault, assistant special adviser for the FBI’s Washington Field Office crime department, in a statement declaring the guilty plea.

Last year, Ms. Kim said in an interview that she never intended her gambling to hurt the academy.

Ms. Kim joined the Unification Church as a teenager in Korea, immigrated to the United States, and married a Church attorney. They settled in Northern Virginia, and after raising three children, Ms. Kim was hired as an accountant at Kirov. She later moved to the Korean Cultural and Freedom Foundation, a church-based non-profit organization that donated money to the Kirov, the children’s dance group The Little Angels, and the Seoul-based Universal Ballet.

In 2013, Ms. Kim, also known as Sookyeon Kim Sebold, was found guilty of embezzling money from the Foundation, and most of it was lost at New Jersey casinos. She was imprisoned for two years. After her release, Ms. Kim was hired as the academy’s inspector, a decision the school did not discuss. On Friday, academy officials did not respond to a request for comment on Ms. Kim’s request.

The Kirov is now a music school and dance academy and is headquartered in the former monastery near the Catholic University.

Acting US District Attorney Channing D. Phillips said, “We have no tolerance for criminals to raid the coffers of the companies and institutions that make our district great.”

The fraud charge carries a legal sentence of up to thirty years in prison and a fine of up to $ 3 million, double the Academy’s losses. Ms. Kim’s sentencing is scheduled for September.

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Politics

‘We Construct the Wall’ founder, linked to Steve Bannon, faces tax, fraud expenses

'We Build the Wall' founder, linked to Steve Bannon, faces tax, fraud charges

Brian Kolfage Jr., Senior Airman in the U.S. Air Force, a triple amputee who lost both his legs and arm on his second deployment to Iraq in 2004, takes part in the Veterans Day parade in the November 11, 2014 5th Avenue in New York (USA).

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Brian Kolfage, who was previously charged with Steve Bannon for his role in an allegedly fraudulent crowdfunding campaign to build a wall along the U.S.-Mexico border, was charged Tuesday on Tuesday on additional charges of fraud and filing a false tax return.

A federal grand jury in Florida accused Kolfage of failing to report hundreds of thousands of dollars in income for his 2019 taxes, on recent indictments.

An indictment and a first appearance for Kolfage are scheduled for May 27 in a courthouse in Pensacola before Judge Elizabeth Timothy, court records show.

Kolfage was charged with wire fraud and money laundering conspiracy in federal court in Manhattan last year along with three employees, including Bannon.

Former President Donald Trump pardoned Bannon and dozens of others on his last night in office. Trump did not apologize to Kolfage.

The allegations all stemmed from “We Build the Wall,” the alleged fundraiser to privately build parts of the border wall that Trump had promised.

The Justice Department claimed that Kolfage, who founded the campaign, and his staff defrauded “hundreds of thousands of donors” by raising millions of dollars “on the false pretext that all of this money would be spent on building” the border wall.

Instead, the defendants planned to pass some of this money on to Kolfage, “which he used to finance his lavish lifestyle,” the Justice Department said.

Harvey Steinberg, a Kolfage attorney, did not immediately respond to CNBC’s request for comment.

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Business

Potential Cryptocurrency Fraud Is One other Blow to Turkey’s Stability

Possible Cryptocurrency Fraud Is Another Blow to Turkey's Stability

A cryptocurrency exchange in Turkey shut down this week on charges of fraud and frozen an estimated $ 2 billion in investor money. Authorities said they were looking for the company’s founder.

Turkish authorities raided offices in Istanbul The private news agency Demiroren reported that it was connected to Thodex, a cryptocurrency trading platform, and arrested more than 60 people on Friday morning.

The 27-year-old founder of Thodex, Faruk Fatih Ozer, left Turkey for Albania on Tuesday.

According to Oguz Evren Kilic, an Ankara attorney who represents Thodex investors, the cryptocurrency firm has nearly 400,000 active users, whose accounts were nominally valued at $ 2 billion. If their money were lost, the losses would add another element of instability to the already shaky Turkish economy.

The standard of living in Turkey is suffering from double-digit inflation and a shaky currency. Although cryptocurrencies are inherently risky, many Turks have turned to them to protect their savings as the Turkish lira has lost more than a quarter of its value against the dollar in the past year.

Last week, Turkey’s central bank banned the use of cryptocurrencies for purchases, citing the “significant risks” involved.

Thodex had applied with advertisements in which Turkish celebrities in bright red outfits hung over a highly polished black car.

“Certainly the economic situation has an influence on it,” said the lawyer Kilic in an interview. “In times of crisis like this, people want to reduce the depreciation of their assets.”

The falling lira has increased the cost of imported goods and fueled inflation, which has led to a steady erosion of living standards. According to official figures, the annual inflation rate in March was 16 percent. Many economists say they underestimate the real rate of inflation.

In a statement posted on Thodex’s website, the company’s founder, Mr. Ozer, insisted that he had only left the country to consult with overseas investors and would be returning. He said the allegations were a “smear campaign” and accused the shutdown of the trading platform as a cyberattack.

Thodex “didn’t make anybody a victim,” he said, adding that only about 30,000 accounts “have a suspicious situation”.

Mr. Kilic noted that none of Thodex’s customers could gain access to their accounts. “If you can’t access the account, you are a victim,” he said.

On Twitter, people responded to a statement by Thodex with crying facial emojis. “There are people who trust you and invest everything in you,” wrote one user.

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Business

DoorDash sues Olo for fraud, says software program firm charged it an excessive amount of

DoorDash sues Olo for fraud, says software company charged it too much

The DoorDash grocery delivery app is demanding $ 7 million in damages from its partner, software company Olo. He accuses him of breaking a contract and fraudulently overloading him.

Olo is a software company that helps restaurants like Shake Shack and Chili’s manage their online orders. The company went public on the New York Stock Exchange in mid-March, expanding its presence at a time when online grocery ordering is soaring. The stock rose 39% on day one. However, Olo’s shares fell 7% on Wednesday, falling to their lowest level since their debut at one point, as more details of the DoorDash litigation were revealed in court filings in the New York State Supreme Court on Tuesday.

DoorDash told the court it was overwhelmed by Olo, who had promised the delivery app that its fees “would never be higher than the fees charged by any other delivery platform provider.” The two companies entered into a partnership in 2017. Since then, the delivery app has made up almost 20% of Olo’s sales. This contract runs until March 2022.

“In order to maximize the income for the IPO, Olo has defrauded its largest business partner,” said DoorDash in the legal document.

DoorDash claimed it found it was cluttered after acquiring another grocery supplier, Caviar, in 2019.

When DoorDash allegedly confronted Olo with evidence of these violations, it said that Olo told the company that the clauses “simply disappeared after six months through a minor amendment that only deals with the fees themselves, and that DoorDash never had a right to those had lowest fees “.

Olo also previously claimed that caviar is not a competitor to DoorDash because Caviar restaurants’ customers are in a higher price range than DoorDash’s.

Olo disclosed the disagreements between the companies in his S-1 filing with the Securities and Exchange Commission in February. DoorDash is said to be seeking “more than $ 7.0 million in damages.”

On Wednesday, Olo said, “DoorDash’s allegations are unfounded.” It declined to comment on the ongoing litigation, saying “the evidence speaks for itself”.

The Financial Times was the first to cover the recent filing of DoorDash in court.

Categories
Politics

Supreme Courtroom to resolve whether or not shareholders can sue for fraud

Supreme Court to decide whether shareholders can sue for fraud

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The Supreme Court will hear arguments from Goldman Sachs in a longstanding case that could have a material impact on shareholders wishing to bring securities fraud lawsuits.

The arguments are slated to begin Monday at 10 a.m. ET and be broadcast live as the court continues to convene remotely as a precaution against Covid-19.

The case, which dates back to the Great Recession, concerns statements made by the investment bank during the marketing of “Abacus,” an investment known as a synthetic secured bond.

Goldman promoted Abacus to its clients without disclosing that hedge fund manager John Paulson played a role in the selection of its subprime mortgage portfolio. Paulson’s hedge fund Paulson & Co. had put enormous stakes on the failure of Abacus.

After Abacus collapsed in the housing crisis, Paulson made $ 1 billion and Goldman’s clients lost roughly the same amount. Goldman ultimately paid $ 550 million to clear the 2010 Securities and Exchange Commission fraud charges – the largest penalty a Wall Street bank has ever faced. In the settlement, the bank did not admit or deny the allegations.

The shareholders who filed the lawsuit, including the Arkansas Teacher Retirement System and a plumber and pipe fitter pension fund, said they lost up to $ 13 billion when Goldman’s shares fell following the SEC’s fraud investigation.

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Shareholders alleged that Goldman lied in claiming “Integrity and honesty are at the heart of our business” and “Our customers’ interests always come first” even when marketing Abacus and other CDOs it bets against would have.

Those statements, according to shareholders, were making Goldman stock artificially high.

Goldman has argued that the statements cited by shareholders are too vague and general to be the basis of a securities fraud case. The bank has also argued that the statements did not affect the share price.

While many securities fraud cases are based on false comments that cause the stock price to rise, Goldman shareholders instead argue that Goldman’s alleged manipulation was “inflationary maintenance” or prevented the stock from falling. The Supreme Court has never recognized such an argument, although some lower courts have recognized it.

The shareholders, who have been litigation since 2011, are attempting to classify the case on behalf of all Goldman stock buyers between February 2007 and June 2010.

A district court has ruled that shareholders can do so twice, and the US Court of Appeals approved that decision in April.

Goldman called on the Supreme Court to review the 2nd Circuit decision, saying it would be “devastating” for public corporations to abandon them. It has identified the case as the most important securities case to be heard in the Supreme Court since 2014, when judges ruled on a case with oilfield services giant Halliburton.

Goldman attorney Kannon Shanmugam, a partner in law firm Paul, Weiss, wrote in court records that a loss to the bank would mean shareholders filing future securities fraud lawsuits would be able to cite “boilerplate aspirations.” that almost all businesses do. “

In a letter from a court friend, the Society for Corporate Governance wrote that the 2nd Circuit statement could have a dissuasive effect on companies seeking statements promoting diversity or countering harassment in the workplace.

The decision gives “a financial incentive to companies to remain silent on important social issues for fear that even general or ambitious statements will become the basis of allegations of crippling liability for securities fraud,” wrote Jeremy Marwell, the group’s attorney and a partner at the Vinson & Elkins company.

Financial transparency groups, on the other hand, have argued that Goldman should be held accountable.

Stephen Hall, legal director at Better Markets, who filed a brief in support of shareholders, said Goldman’s argument was “strained.”

“As we explain in the letter, the bank’s top executives knew well before the ABACUS deal that they were increasingly doing business that created strong conflicts of interest, and they also knew they needed to better manage those conflicts,” said Hall in a statement.

“Such good intentions, however, along with honest statements, were completely abandoned when the bank aggressively attempted to capitalize on the downward mortgage market at the expense of investors and ultimately shareholders in 2007,” he added.

Barbara Roper, director of investor protection for the Consumer Federation of America, said a win for Goldman would “unleash companies and introduce a wide range of misleading behaviors that could seriously harm US investors.”

The Justice Department filed a brief under President Joe Biden in February saying it did not support either party.

In the letter, the DOJ asked the judges to reverse the opinion of the 2nd Circuit and order the appeals court to re-examine the case, while giving greater consideration to Goldman’s argument that his statements were too general to affect the stock price.

Shanmugam will represent Goldman in Monday’s arguments. Shareholders will be represented by Tom Goldstein, a seasoned Supreme Court attorney known for publishing SCOTUSBlog. Sopan Joshi, a Justice Department attorney, will represent the United States.

A decision in this case is expected by the summer.

The case is Goldman Sachs Group v Arkansas Teacher Retirement System, No. 20-222.