Business Crimes Hotline

CALIFORNIA

Japanese Corporation Guilty of Price Fixing in Memory Market

A Japanese Corporation agreed to plead guilty and to pay an $84 million fine for participating in an international conspiracy to fix prices in the computer memory market, according to DOJ. According to charges filed in federal court in San Francisco, the company conspired with other manufacturers of Dynamic Random Access Memory (DRAM) to fix the prices of DRAM sold to U.S. computer companies. This is the fourth foreign memory producer implicated in the conspiracy; two Korean companies and a German manufacturer have previously pled to similar charges. (Case No. 06-00059, N.D. Cal.)

Californian Guilty of Using 'Bots' to Commit Computer Fraud

A California man has pled guilty to using computer servers he controlled to transmit malicious code over the Internet to scan for and exploit vulnerable computers. In what the DOJ calls the first prosecution of its kind, the accused admitted to conspiring to violate the Computer Fraud Act and the CAN-SPAM Act. Described as a “bot herder,” he used malicious code to direct over 400,000 infected computers to surreptitiously download adware from computer servers he controlled. He was paid a fee for each installation by the advertising affiliates. He also generated revenue by selling access to his “botnet” to others for the purpose of launching denial of service attacks or generating spam e-mail. At sentencing, he faces up to 25 years in prison. (Case No. 05-01060, C.D. Cal.)

Former Credit Lyonnais CEO Guilty of False Statements

A former chairman and chief executive officer of Credit Lyonnais pled guilty to two felony charges of causing Credit Lyonnais to make false statements to the Federal Reserve Bank, according to a statement issued by the DOJ. The charges stem from a larger investigation involving the takeover of an insolvent insurance company. Credit Lyonnais secretly gained control of the defunct company's bond portfolio in an attempt to illegally takeover the newly formed company that acquired the defunct company's insurance business. The former executive was ordered to pay a $500,000 fine, serve 5 years' probation, and be banished from the United States for 3 years. (Case No. 03-00760, C.D. Cal.)

CONNECTICUT

Bulk Mail Company Charged with Mail Fraud

A mail consolidation and transportation company and its president were charged with mail fraud in connection with a scheme to defraud their clients, according to the U.S. Attorney's office. The company is accused of billing for the delivery of bulk mailings that were not mailed, but actually disposed of by a recycler. (Case No. 06-00020, D. Conn.)

MICHIGAN

Former Vice President of Mortgage Banking Company Convicted of Mail Fraud

A former vice president of a mortgage banking company was sentenced to 2 years' imprisonment as a result of her conviction for mail fraud in a scheme to defraud the company's investors. The former executive admitted that the company, through her actions, fraudulently sold securities representing pooled interests in mortgages and land contracts owned by the company. The company misrepresented to current and prospective investors the actual past performance of the pools, some of which contained fraudulently inflated assets. The company also misappropriated and used for its own purposes some of the genuine pool assets. In addition to her confinement, she was also ordered to pay $65.7 million in restitution. Case No. 01-80524, E.D. Mich.)

NEW JERSEY

Former Stockbroker Receives Over 7 Years for Kickback Scheme

A former stock broker from Staten Island was sentenced to 88 months in federal prison for his role in a stock manipulation and kickback scheme that caused customer losses totaling more than $7 million, according to an announcement by the U.S. Attorney for the District of New Jersey. The broker worked at three different New York firms between 1999 and 2002. At each firm, he received kickbacks in the form of 30% to 70% commissions on the sale of certain stocks to his customers. According to prosecutors, the kickbacks came from both the firms' managers and the companies whose stock was being sold. (Case No. 05-00399, D. N.J.)

CALIFORNIA

Japanese Corporation Guilty of Price Fixing in Memory Market

A Japanese Corporation agreed to plead guilty and to pay an $84 million fine for participating in an international conspiracy to fix prices in the computer memory market, according to DOJ. According to charges filed in federal court in San Francisco, the company conspired with other manufacturers of Dynamic Random Access Memory (DRAM) to fix the prices of DRAM sold to U.S. computer companies. This is the fourth foreign memory producer implicated in the conspiracy; two Korean companies and a German manufacturer have previously pled to similar charges. (Case No. 06-00059, N.D. Cal.)

Californian Guilty of Using 'Bots' to Commit Computer Fraud

A California man has pled guilty to using computer servers he controlled to transmit malicious code over the Internet to scan for and exploit vulnerable computers. In what the DOJ calls the first prosecution of its kind, the accused admitted to conspiring to violate the Computer Fraud Act and the CAN-SPAM Act. Described as a “bot herder,” he used malicious code to direct over 400,000 infected computers to surreptitiously download adware from computer servers he controlled. He was paid a fee for each installation by the advertising affiliates. He also generated revenue by selling access to his “botnet” to others for the purpose of launching denial of service attacks or generating spam e-mail. At sentencing, he faces up to 25 years in prison. (Case No. 05-01060, C.D. Cal.)

Former Credit Lyonnais CEO Guilty of False Statements

A former chairman and chief executive officer of Credit Lyonnais pled guilty to two felony charges of causing Credit Lyonnais to make false statements to the Federal Reserve Bank, according to a statement issued by the DOJ. The charges stem from a larger investigation involving the takeover of an insolvent insurance company. Credit Lyonnais secretly gained control of the defunct company's bond portfolio in an attempt to illegally takeover the newly formed company that acquired the defunct company's insurance business. The former executive was ordered to pay a $500,000 fine, serve 5 years' probation, and be banished from the United States for 3 years. (Case No. 03-00760, C.D. Cal.)

CONNECTICUT

Bulk Mail Company Charged with Mail Fraud

A mail consolidation and transportation company and its president were charged with mail fraud in connection with a scheme to defraud their clients, according to the U.S. Attorney's office. The company is accused of billing for the delivery of bulk mailings that were not mailed, but actually disposed of by a recycler. (Case No. 06-00020, D. Conn.)

MICHIGAN

Former Vice President of Mortgage Banking Company Convicted of Mail Fraud

A former vice president of a mortgage banking company was sentenced to 2 years' imprisonment as a result of her conviction for mail fraud in a scheme to defraud the company's investors. The former executive admitted that the company, through her actions, fraudulently sold securities representing pooled interests in mortgages and land contracts owned by the company. The company misrepresented to current and prospective investors the actual past performance of the pools, some of which contained fraudulently inflated assets. The company also misappropriated and used for its own purposes some of the genuine pool assets. In addition to her confinement, she was also ordered to pay $65.7 million in restitution. Case No. 01-80524, E.D. Mich.)

NEW JERSEY

Former Stockbroker Receives Over 7 Years for Kickback Scheme

A former stock broker from Staten Island was sentenced to 88 months in federal prison for his role in a stock manipulation and kickback scheme that caused customer losses totaling more than $7 million, according to an announcement by the U.S. Attorney for the District of New Jersey. The broker worked at three different New York firms between 1999 and 2002. At each firm, he received kickbacks in the form of 30% to 70% commissions on the sale of certain stocks to his customers. According to prosecutors, the kickbacks came from both the firms' managers and the companies whose stock was being sold. (Case No. 05-00399, D. N.J.)