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Business Crimes Hotline
CALIFORNIA
Three Individuals Sentenced for Falsely Obtaining Discounted Software
Three people were convicted following a bench trial on 30 counts of conspiracy, mail fraud, wire fraud, and money laundering on charges related to a scheme to defraud a major software company by fraudulently obtaining and reselling discounted software, according to federal prosecutors. The company operated a program to provide steep discounts on software intended for resale to academic institutions, and the defendants allegedly obtained the discounts by representing that the software was intended for qualifying institutions. They then resold the products to non-academic entities. The victim company estimated its total loss to be in excess of $60 million. (United States v. Griffen, 02-cr-40081, N.D. Ca.)
Four Brokers Guilty of 'Pump and Dump' Securities Fraud
Four stockbrokers affiliated with a San Diego brokerage house were convicted in a federal jury trial on securities fraud charges related to a 'pump and dump' scheme, according to federal prosecutors. The brokerage firm is alleged to have pressured its brokers to sell 'house stocks' in which the brokerage had an undisclosed financial interest. In return, the brokers received additional incentive compensation. The brokers also acted to prevent customers from selling the house stocks, engaged in unauthorized trades, and used false statements to induce further sales of the house stocks. The effect of the scheme was to drive up the price of the stocks (the 'pump') so that the brokerage could realize significant profits on its own sales (the 'dump'). The total cost of the scheme to its victims exceeded $5 million, according to the DOJ. (United States v. Laurienti, 03-cr-00620, C.D. Ca.).
FLORIDA
Executive Guilty of Fraudulent Participation in Federal Disadvantaged Business Enterprise Program
An executive with a Florida construction contracting company was convicted by a federal jury of conspiracy, mail and wire fraud, and money laundering on charges stemming from a scheme to defraud the Federal Aviation Administration as well as local aviation officials by fraudulently acquiring electrical construction work at Miami International Airport by abusing the federal Disadvantaged Business Enterprise ('DBE') and the local Community Small Business Enterprise ('CSBE') programs, according to the DOJ. The scheme involved causing a qualified participant in the DBE and CSBE programs to apply for work, and then transferring the work to an unqualified company. The qualified company received a fee of between 3% and 5% of the value of the work it purportedly performed. The fraudulent transfer was then concealed with falsified documents, according to the evidence presented at trial. (United States v. Maxwell, 05-cr-20571, S.D. Fl.)
CALIFORNIA
Three Individuals Sentenced for Falsely Obtaining Discounted Software
Three people were convicted following a bench trial on 30 counts of conspiracy, mail fraud, wire fraud, and money laundering on charges related to a scheme to defraud a major software company by fraudulently obtaining and reselling discounted software, according to federal prosecutors. The company operated a program to provide steep discounts on software intended for resale to academic institutions, and the defendants allegedly obtained the discounts by representing that the software was intended for qualifying institutions. They then resold the products to non-academic entities. The victim company estimated its total loss to be in excess of $60 million. (United States v. Griffen, 02-cr-40081, N.D. Ca.)
Four Brokers Guilty of 'Pump and Dump' Securities Fraud
Four stockbrokers affiliated with a San Diego brokerage house were convicted in a federal jury trial on securities fraud charges related to a 'pump and dump' scheme, according to federal prosecutors. The brokerage firm is alleged to have pressured its brokers to sell 'house stocks' in which the brokerage had an undisclosed financial interest. In return, the brokers received additional incentive compensation. The brokers also acted to prevent customers from selling the house stocks, engaged in unauthorized trades, and used false statements to induce further sales of the house stocks. The effect of the scheme was to drive up the price of the stocks (the 'pump') so that the brokerage could realize significant profits on its own sales (the 'dump'). The total cost of the scheme to its victims exceeded $5 million, according to the DOJ. (United States v. Laurienti, 03-cr-00620, C.D. Ca.).
FLORIDA
Executive Guilty of Fraudulent Participation in Federal Disadvantaged Business Enterprise Program
An executive with a Florida construction contracting company was convicted by a federal jury of conspiracy, mail and wire fraud, and money laundering on charges stemming from a scheme to defraud the Federal Aviation Administration as well as local aviation officials by fraudulently acquiring electrical construction work at Miami International Airport by abusing the federal Disadvantaged Business Enterprise ('DBE') and the local Community Small Business Enterprise ('CSBE') programs, according to the DOJ. The scheme involved causing a qualified participant in the DBE and CSBE programs to apply for work, and then transferring the work to an unqualified company. The qualified company received a fee of between 3% and 5% of the value of the work it purportedly performed. The fraudulent transfer was then concealed with falsified documents, according to the evidence presented at trial. (United States v. Maxwell, 05-cr-20571, S.D. Fl.)
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