Business Crimes Hotline

Indictment Issued in 'Click Fraud' Scheme

A former employee of a multimedia company has been indicted in a 'click fraud' scheme allegedly perpetrated against an Internet business. The victim business offers its users rewards, such as points towards purchase with Internet retailers, for viewing online advertisements, completing surveys, and participating in other on-line activities. The defendant's scheme involved using a program he developed to emulate those activities and fraudulently develop points in the program. United States v. Tam. (Case No. 06-00208, N.D. Ca.).

Investment Representative Guilty of Mail and Wire Fraud

An independent representative for a national financial services company pleaded guilty to nine counts of mail fraud and seven counts of wire fraud for his role in defrauding investors. According to the U.S. Attorney's Office for the Northern District of California, the defendant admitted to using his position with the Chamber of Commerce and the Rotary Club of a small California town to persuade investors to purchase municipal bonds through his services. But, instead of purchasing the bonds, he converted the investors' money to his own use and defrauded 30 investors out of over $5 million over a 14-month period. United States v. Torres. (Case No. 05-00252, N.D. Ca.).

CALIFORNIA

Executives of International Company Indicted for Falsely Inflating Revenues

Two top executives at an international technology company have been indicted for securities fraud, according to the DOJ. The defendants are accused of conspiring to improperly recognize revenue on deals they negotiated with at least four corporate business partners. The deals involved side agreements, such as granting the counter-party the right to return products or cancel orders, that were not revealed to the SEC or to the company's independent auditors. If these side agreements had been properly documented and reported, they would have made recognition of the revenue from the deals questionable. The purpose of the scheme was to ensure the company met quarterly financial goals and thereby sustain and increase the company's share price. After the scheme came to light, the company lost approximately $200 million in value. United States v. Chang. (Case No. 06-00187, N.D. Ca.).

Indictment Issued in 'Click Fraud' Scheme

A former employee of a multimedia company has been indicted in a 'click fraud' scheme allegedly perpetrated against an Internet business. The victim business offers its users rewards, such as points towards purchase with Internet retailers, for viewing online advertisements, completing surveys, and participating in other on-line activities. The defendant's scheme involved using a program he developed to emulate those activities and fraudulently develop points in the program. United States v. Tam. (Case No. 06-00208, N.D. Ca.).

Investment Representative Guilty of Mail and Wire Fraud

An independent representative for a national financial services company pleaded guilty to nine counts of mail fraud and seven counts of wire fraud for his role in defrauding investors. According to the U.S. Attorney's Office for the Northern District of California, the defendant admitted to using his position with the Chamber of Commerce and the Rotary Club of a small California town to persuade investors to purchase municipal bonds through his services. But, instead of purchasing the bonds, he converted the investors' money to his own use and defrauded 30 investors out of over $5 million over a 14-month period. United States v. Torres. (Case No. 05-00252, N.D. Ca.).