Business Crimes Hotline

FLORIDA

Japanese Firm Operating Cargo Vessel Sentenced to Pay $1.75 Million

Hiong Guan Navegacion Japan Co. Ltd. (“Hiong”), a Japanese corporation that operated a commercial cargo ship, was sentenced to three years' probation and $1.75 million in penalties for conspiring to falsify and falsifying environmental compliance records, according to the DOJ. From the fine, $400,000 will go to the National Fish and Wildlife Foundation. Last November, Hiong pled guilty to falsifying the “Oil Record Book” for the M/V Balsa-62. Federal and international law requires that all ships properly dispose of oily water and sludge by processing it through an oil-water separator and burning the sludge in the ship's incinerator to avoid polluting ocean waters. Federal law also requires all ships traveling in U.S. waters to record accurately each disposal of oily water or sludge in an Oil Record Book, and to have the book available for inspection by the U.S. Coast Guard. According to the DOJ, Hiong used a bypass pipe on the vessel to circumvent the pollution prevention equipment on board, which caused the ship to dump oily water and sludge directly overboard and into the ocean.

NEW YORK

Bernard Madoff's Former Accountant Charged with Fraud

The U.S. Attorney's Office for the Southern District of New York announced that David G. Friehling, Bernard Madoff's former accountant, has been charged with securities fraud, aiding and abetting investment adviser fraud, and four counts of filing false audit reports. The criminal complaint filed in the case states that from 1991 to 2008, Friehling was retained by Madoff to audit Bernard L. Madoff Investment Securities, LLC's (“BLMIS”) books. During that time, Friehling allegedly certified and audited BLMIS's financial statements, including statements of income, cash flow, and reports on internal controls.

The U.S. Attorney's Office alleges that Friehling falsely certified that he had prepared such statements in accordance with standard accounting practices and was paid approximately $12,000 to $14,500 per month for his services. “Although Mr. Friehling is not charged with knowledge of the Madoff Ponzi scheme,” said Acting U.S. Attorney Lev L. Dassin, “He is charged with deceiving investors by falsely certifying that he audited the financial statements of Mr. Madoff's business.” See United States v. Friehling, No. 09 MAG 729 (Sealed Complaint), March 17, 2009, available at http://www.nylj.com/nylawyer/adg ifs/decisions/031909friehling.pdf.

Dreier Now Thought to Have Defrauded His Clients of $700 Million

Prosecutors filed a superseding indictment in the case against lawyer Marc Dreier alleging that he defrauded his clients of $700 million. Prosecutors had previously estimated the fraud at $400 million. The new indictment alleges an additional money-laundering charge against Dreier and identifies additional accomplices and victims.

Former Accounting Firm Vice Chairman and Board Member Pleads Guilty to Conspiring to Defraud the U.S.

Adrian Dicker, a United Kingdom chartered accountant and former vice chairman and board member at a major international accounting firm, pled guilty to conspiring with certain tax shelter promoters to defraud the United States in connection with tax shelter transactions, according to the DOJ and the IRS. Dicker, who resides in New Jersey, also pled guilty to tax evasion in connection with a multi-million-dollar tax shelter that he helped sell to a client of the accounting firm. The DOJ and IRS did not identify the accounting firm Dicker worked for, but according to Dicker's guilty plea, he was a partner in the firm's New York office and was one of the leaders of the firm's “Tax Solutions Group.” This group, which included another firm partner and the firm's CEO, was devoted to designing, marketing, and implementing high-fee tax strategies for wealthy clients, including tax shelter transactions, according to the DOJ. Between 1998 and 2000, Dicker allegedly earned approximately $6.7 million in net profits from the Tax Solutions Group, in addition to salary and bonuses. Dicker will be sentenced on Dec. 11, 2009 by U.S. District Judge Gerard E. Lynch.

CALIFORNIA

Hitachi Displays Ltd. to Pay $31-Million Fine for LCD Price-Fixing Conspiracy

Japanese electronics manufacturer Hitachi Displays Ltd. agreed to plead guilty and pay $31 million for its role in a conspiracy to fix the prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (“LCD panels”). Hitachi Displays is a subsidiary of Hitachi Ltd. According to the DOJ, Hitachi Displays Ltd. conspired to fix the prices of LCD panels sold to Dell for use in desktop monitors and notebook computers from April 2001 to March 2004. Hitachi Displays Ltd. allegedly participated in meetings and conversations in Japan, Korea, and the United States to discuss fixing the price for LCD panels. In those meetings, the company agreed to sell the LCD panels to Dell at predetermined levels. Four other companies and seven individuals have been charged thus far in the government's probe. To date, more than $585 million in criminal fines have been imposed and four individuals have pled guilty and have been sentenced to serve time in jail.

FLORIDA

Japanese Firm Operating Cargo Vessel Sentenced to Pay $1.75 Million

Hiong Guan Navegacion Japan Co. Ltd. (“Hiong”), a Japanese corporation that operated a commercial cargo ship, was sentenced to three years' probation and $1.75 million in penalties for conspiring to falsify and falsifying environmental compliance records, according to the DOJ. From the fine, $400,000 will go to the National Fish and Wildlife Foundation. Last November, Hiong pled guilty to falsifying the “Oil Record Book” for the M/V Balsa-62. Federal and international law requires that all ships properly dispose of oily water and sludge by processing it through an oil-water separator and burning the sludge in the ship's incinerator to avoid polluting ocean waters. Federal law also requires all ships traveling in U.S. waters to record accurately each disposal of oily water or sludge in an Oil Record Book, and to have the book available for inspection by the U.S. Coast Guard. According to the DOJ, Hiong used a bypass pipe on the vessel to circumvent the pollution prevention equipment on board, which caused the ship to dump oily water and sludge directly overboard and into the ocean.

NEW YORK

Bernard Madoff's Former Accountant Charged with Fraud

The U.S. Attorney's Office for the Southern District of New York announced that David G. Friehling, Bernard Madoff's former accountant, has been charged with securities fraud, aiding and abetting investment adviser fraud, and four counts of filing false audit reports. The criminal complaint filed in the case states that from 1991 to 2008, Friehling was retained by Madoff to audit Bernard L. Madoff Investment Securities, LLC's (“BLMIS”) books. During that time, Friehling allegedly certified and audited BLMIS's financial statements, including statements of income, cash flow, and reports on internal controls.

The U.S. Attorney's Office alleges that Friehling falsely certified that he had prepared such statements in accordance with standard accounting practices and was paid approximately $12,000 to $14,500 per month for his services. “Although Mr. Friehling is not charged with knowledge of the Madoff Ponzi scheme,” said Acting U.S. Attorney Lev L. Dassin, “He is charged with deceiving investors by falsely certifying that he audited the financial statements of Mr. Madoff's business.” See United States v. Friehling , No. 09 MAG 729 (Sealed Complaint), March 17, 2009, available at http://www.nylj.com/nylawyer/adg ifs/decisions/031909friehling.pdf.

Dreier Now Thought to Have Defrauded His Clients of $700 Million

Prosecutors filed a superseding indictment in the case against lawyer Marc Dreier alleging that he defrauded his clients of $700 million. Prosecutors had previously estimated the fraud at $400 million. The new indictment alleges an additional money-laundering charge against Dreier and identifies additional accomplices and victims.

Former Accounting Firm Vice Chairman and Board Member Pleads Guilty to Conspiring to Defraud the U.S.

Adrian Dicker, a United Kingdom chartered accountant and former vice chairman and board member at a major international accounting firm, pled guilty to conspiring with certain tax shelter promoters to defraud the United States in connection with tax shelter transactions, according to the DOJ and the IRS. Dicker, who resides in New Jersey, also pled guilty to tax evasion in connection with a multi-million-dollar tax shelter that he helped sell to a client of the accounting firm. The DOJ and IRS did not identify the accounting firm Dicker worked for, but according to Dicker's guilty plea, he was a partner in the firm's New York office and was one of the leaders of the firm's “Tax Solutions Group.” This group, which included another firm partner and the firm's CEO, was devoted to designing, marketing, and implementing high-fee tax strategies for wealthy clients, including tax shelter transactions, according to the DOJ. Between 1998 and 2000, Dicker allegedly earned approximately $6.7 million in net profits from the Tax Solutions Group, in addition to salary and bonuses. Dicker will be sentenced on Dec. 11, 2009 by U.S. District Judge Gerard E. Lynch.