Business Crimes Hotline

Lobbyist Sentenced for False Personation of Senate Subcommittee

A former Washington, DC, lobbyist was sentenced to 6 months of home detention, 2 years of probation, and 250 hours of community service, as well as a $20,000 fine in connection with his false personation of Senate Subcommittee members, according to the United States Attorney's office. The defendant admitted that he was retained by a European client to secure a letter from a Senate Subcommittee to a British court attesting to the thoroughness of the Subcommittee's investigations in the hope that such a letter would bolster the position the client was taking in a matter in that court. When officials of the Subcommittee declined to authorize such a letter, defendant arranged to have the Subcommittee's letterhead recreated from a press release and sent the letter to the court without authorization. (United States v. Roberts, No. 05-00442, D.D.C).

FLORIDA

Florida Bank Agrees to Deferred-Prosecution Agreement in Money Laundering Case

The Department of Justice announced that a Florida-based bank has entered into a deferred-prosecution agreement with the government and will forfeit $10 million to resolve charges of failing to maintain an anti-money laundering program. The charges in the case stem from $50 million in suspect transactions by and through the bank from 1997 to 2004. According to prosecutors, a DEA undercover investigation revealed that millions of dollars of suspected drug money was wired to a handful of accounts managed by a branch manager. The bank failed to identify or report these suspicious transactions as required by the Bank Secrecy Act and other regulations. Under the agreement, the government will recommend that charges filed against the bank be deferred for 12 months, at which time they will be dismissed if the bank fully complies with its obligations. The $10-million forfeiture also settles the civil penalties assessed against the bank by the Office of Thrift Supervision and the Department of the Treasury.

IDAHO

Financial Planner Sentenced For Embezzlement to Pay for Nigerian Scam

An Idaho financial planner who lost a quarter of a million dollars in a Nigerian scam has been sentenced to three years in federal prison for stealing much of the money he lost from the company he worked for and from the company's pension plan, according to the U.S. Attorney for the District of Idaho. The defendant, who was the president of the company as well as the trustee of its pension plan, traveled to Spain in response to a fax he received offering millions of dollars in reward for assistance in moving money out of Nigerian accounts. He paid hundreds of thousands of dollars in fees and expenses, but never received his 'commission.' When he reported this fraud to the authorities, the ensuing investigation uncovered that the money he lost to fraud was, in turn, the proceeds of his own fraud. He then admitted to misappropriating the money and falsifying receipts to make it appear the funds had been invested on behalf of the pension fund. (United States v. Stone, No. 05-00183, D. Id.)

NEW JERSEY

Grand Juror Charged with Assisting Insider Trading

A Jersey City man who served on a grand jury that indicted two former executives of a pharmaceutical company was charged with contempt of court for violating his duty of grand jury secrecy by assisting others to commit insider trading based on information he obtained in grand jury proceedings, according to the U.S. Attorney's office. According to the complaint, throughout his time on the grand jury the defendant maintained contact with a friend working as a financial analyst and passed information to the analyst before the indictments were released to the public. The analyst and others then made short sales based on the information defendant provided. (United States v. Smith, No. 06-03556, D.N.J.).

NEW YORK

NYSE Traders Plead Guilty to Violating Federal Securities Laws

The DOJ announced that two former registered specialists on the New York Stock Exchange (NYSE) pled guilty to violating federal securities laws. The charges stem from the specialists' improper trading from 1999 through early 2003. Purchases and sales of securities on the NYSE must generally be done through a specialist, like the defendants, working on the floor of the exchange. The specialists are assigned specific securities as their 'post' on the floor. The specialist must fill buy and sell orders by matching them with orders from another investor in the same price range. If there are no matching orders, the specialist may fill the order from his or her own proprietary account. Defendants are alleged to have systematically violated these procedures, dealing from their own accounts despite the existence of matching orders, and profiting from their ability to trade ahead of public orders. Their illegal trades are alleged to have resulted in a total of over $ 2.5 million in illicit profits. (United States v. Bongiorno, No. 05-00390, S.D.N.Y.).

In the Courts and Business Crimes Hotline were written by Thomas M. Craig, Associate with Williams & Connolly, LLP, Washington, DC, and Associate Editor of this newsletter.

DISTRICT OF COLUMBIA

Kentucky Businessman Charged with False Statements

A Vice President of a Kentucky-based forklift truck manufacturer pled guilty to making false statements in an Iranian trade embargo investigation, according to the Department of Justice. The charge arose from an investigation by the Commerce Department into a scheme by two other executives of the company to sell forklift components to an Iranian company in violation of the trade embargo against Iran. During the course of the investigation, the defendant told investigators that he had instructed the other executives not to send the components to the Iranian concern, when he had in fact not done so. (United States v. Tatum, No. 06-00112, D.D.C).

Lobbyist Sentenced for False Personation of Senate Subcommittee

A former Washington, DC, lobbyist was sentenced to 6 months of home detention, 2 years of probation, and 250 hours of community service, as well as a $20,000 fine in connection with his false personation of Senate Subcommittee members, according to the United States Attorney's office. The defendant admitted that he was retained by a European client to secure a letter from a Senate Subcommittee to a British court attesting to the thoroughness of the Subcommittee's investigations in the hope that such a letter would bolster the position the client was taking in a matter in that court. When officials of the Subcommittee declined to authorize such a letter, defendant arranged to have the Subcommittee's letterhead recreated from a press release and sent the letter to the court without authorization. (United States v. Roberts, No. 05-00442, D.D.C).

FLORIDA

Florida Bank Agrees to Deferred-Prosecution Agreement in Money Laundering Case

The Department of Justice announced that a Florida-based bank has entered into a deferred-prosecution agreement with the government and will forfeit $10 million to resolve charges of failing to maintain an anti-money laundering program. The charges in the case stem from $50 million in suspect transactions by and through the bank from 1997 to 2004. According to prosecutors, a DEA undercover investigation revealed that millions of dollars of suspected drug money was wired to a handful of accounts managed by a branch manager. The bank failed to identify or report these suspicious transactions as required by the Bank Secrecy Act and other regulations. Under the agreement, the government will recommend that charges filed against the bank be deferred for 12 months, at which time they will be dismissed if the bank fully complies with its obligations. The $10-million forfeiture also settles the civil penalties assessed against the bank by the Office of Thrift Supervision and the Department of the Treasury.

IDAHO

Financial Planner Sentenced For Embezzlement to Pay for Nigerian Scam

An Idaho financial planner who lost a quarter of a million dollars in a Nigerian scam has been sentenced to three years in federal prison for stealing much of the money he lost from the company he worked for and from the company's pension plan, according to the U.S. Attorney for the District of Idaho. The defendant, who was the president of the company as well as the trustee of its pension plan, traveled to Spain in response to a fax he received offering millions of dollars in reward for assistance in moving money out of Nigerian accounts. He paid hundreds of thousands of dollars in fees and expenses, but never received his 'commission.' When he reported this fraud to the authorities, the ensuing investigation uncovered that the money he lost to fraud was, in turn, the proceeds of his own fraud. He then admitted to misappropriating the money and falsifying receipts to make it appear the funds had been invested on behalf of the pension fund. (United States v. Stone, No. 05-00183, D. Id.)

NEW JERSEY

Grand Juror Charged with Assisting Insider Trading

A Jersey City man who served on a grand jury that indicted two former executives of a pharmaceutical company was charged with contempt of court for violating his duty of grand jury secrecy by assisting others to commit insider trading based on information he obtained in grand jury proceedings, according to the U.S. Attorney's office. According to the complaint, throughout his time on the grand jury the defendant maintained contact with a friend working as a financial analyst and passed information to the analyst before the indictments were released to the public. The analyst and others then made short sales based on the information defendant provided. (United States v. Smith, No. 06-03556, D.N.J.).

NEW YORK

NYSE Traders Plead Guilty to Violating Federal Securities Laws

The DOJ announced that two former registered specialists on the New York Stock Exchange (NYSE) pled guilty to violating federal securities laws. The charges stem from the specialists' improper trading from 1999 through early 2003. Purchases and sales of securities on the NYSE must generally be done through a specialist, like the defendants, working on the floor of the exchange. The specialists are assigned specific securities as their 'post' on the floor. The specialist must fill buy and sell orders by matching them with orders from another investor in the same price range. If there are no matching orders, the specialist may fill the order from his or her own proprietary account. Defendants are alleged to have systematically violated these procedures, dealing from their own accounts despite the existence of matching orders, and profiting from their ability to trade ahead of public orders. Their illegal trades are alleged to have resulted in a total of over $ 2.5 million in illicit profits. (United States v. Bongiorno, No. 05-00390, S.D.N.Y.).

In the Courts and Business Crimes Hotline were written by Thomas M. Craig, Associate with Williams & Connolly, LLP, Washington, DC, and Associate Editor of this newsletter.