Two brokers who formerly worked for Sky Capital LLC have pleaded guilty to a $140 million stock fraud scheme with other broker-dealers, who denied involvement in the criminal misconduct.
In 2009, the Securities and Exchange Commission charged Michael Passaro, Arn Wilson and three others, including Robert Grabowski, who served as president of Thornwater Company LP in which the two brokers had worked for to deceive investors in a wire and mail fraud from 1998 to 2006.
The brokers engaged in “boiler room” sales tactics to mislead investors and manipulated the shares in two Sky Capital companies that were traded on the Alternative Investment Market of the London Stock Exchange through mail and the phone; in 2006, the London Stock Exchange suspended the trading, making the investments worthless.
The defendants allegedly manipulated the spread for Sky Capital securities so that investors who bought stocks from the firm had paid an inflated price; the brokers received undisclosed commissions from the stock fraud scheme; the six raised at least $61 million in the stock fraud scheme from 2002 to 2006 that prevented the investors from selling their shares because of a “no net sales” policy implemented by Sky Capital.
Passaro and Wilson agreed to disgorge their ill-gotten profits from the stock fraud and pay their income tax from undisclosed funds. They and others will face 65 years of imprisonment if proven guilty.
Manhattan District Attorney Cyrus R Vance Jr, one of New York City’s top prosecutors, wants the state to start requiring prison time for perpetrators of million-dollar securities fraud schemes.
Vance said he’ll push lawmakers to boost penalties for violating the state Martin Act and to require prison in the biggest cases.
The Martin Act prohibits deception and misrepresentation in offering stocks, bonds or other securities to investors.
The worst Martin Act offense now is a low-level felony that can carry up to four years in prison. It can apply to dealers who defraud 10 or more people and gain as little as $250.
Vance wants penalties to increase with the size of a scheme; those who swindled $1 million or more would spend at least a year in prison and could spend up to 25 years behind bars.
Vance also said he’ll push state lawmakers to make sentences increase with the size of a securities scheme, and he said he’s eyeing broader application of the securities law in the future.
The District Attorney suggested he plans to put the law to work in a growing array of cases, including commodities schemes, insider trading and scams that target brokers and dealers.
Life Partners Holdings change in marketing is likely to gain regulator attention and spark lawsuits from its investors.
According to Investment News, Life Partners has instructed its sales force to advertise annual returns of 7 percent over 7 years, rather than previous claims of 12 to 14 percent. Continue reading Changes at Life Partners Holdings likely to spark lawsuits, more regulation
The congressional panel examining the root causes of the nation’s financial crisis have voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations.
The Financial Crisis Inquiry Commission is likely to detail the referrals in releasing its final report, based on testimony from more than 700 people in coast-to-coast hearings and a review of documents.
The panel investigated the roles of subprime mortgage brokers and lenders, companies that bought, repackaged and resold mortgage backed securities, bond ratings agencies and insurers that wrote protection on bad bonds.
While the commission accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with implications for both political parties.
An Illinois court has dismissed a lawsuit alleging Walgreens pharmacy stores of fraud for dispensing expensive brand-name prescription drugs instead of generic alternatives.
The fraud suit was filed by Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust. This organization pays the difference for prescription drugs when its price exceeds a co-payment.
Walgreens allegedly filled 97 percent of Zantax and Prozac prescriptions for Pirelli customers with the name-brand capsules instead of much less-expensive generic alternatives, ranitidine and fluoxetine, repsectively. The generic versions have price caps stipulated by Pirelli’s Pharmacy Benefit Manager, according to a CourthouseNews.com report. Continue reading Prescription drug fraud lawsuit against Walgreens dismissed
Following increased pressure from the FTC, Google and Mozilla are introducing opt-out features to their Chrome and Firefox browsers.
Soon, users will have the option to stop personalized advertisements, ads tailored to your Web-surfing habits that have sparked significant privacy concerns.
Last month, the FTC’s Bureau of Consumer Protection proposed a “Do Not Track” tool to curb concerns over personalized or behavioral advertising.
Thus far, no companies have openly agreed to participate in Firefox’s “Do Not Track” program, though Mozilla is urging advertisers to “honor people’s choices.”
A Mississippi man faces up to 20 years in prison after pleading guilty to charges he tried to defraud the federal BP Gulf Coast Claims fund established following last summer’s oil spill.
According to an AP report, Dennis L. Moore, 39, filed false documents related to a fictitious business he owned. He sought $90,000 in damages from the fund.
Moore plead guilty to federal charges of defrauding BP PLC and the Gulf Coast Claims Facility, established as a $20 billion federal account to pay damage claims from residents and businesses adversely impacted by the summer-long spill
Moore will be sentenced in April and faces a 20-year prison term and a fine of $250,000.
Federal securities fraud class-action cases rose in the second half of 2010, according to a report prepared by the Stanford Law School in cooperation with Cornerstone Research.
The report shows 104 class-action cases alleging federal securities fraud were filed in the second half of the year, up from 72 filings in the first six months of the year.
The number of lawsuits alleging disclosure violations in merger-and-acquisition transactions increased to 40 filings in 2010 from seven in 2009, a six-fold increase; filing activity also spiked against Chinese companies.
The sharp increase in federal litigation alleging disclosure violations in M&A transactions suggests that plaintiff lawyers are scrambling for new business as traditional fraud cases seem to be on the decline.
Life settlements company Life Partners Holdings confirmed this week that it’s under investigation by the Securities and Exchange Commission.
The investigation was first reported by Wall Street Journal, according to a New York Times report. Life Partners Holdings deals in life insurance, but not in the traditional sense.
Instead of offering insurance policies, Life Partners acts as an investor and offers to buy existing policies off consumers and then collects the payout when that person dies. The SEC is curious as to how Life Partners determines the life-span of a policy holder.
According to the original WSJ report, Life Partners’ customers were out-living the company’s estimates, meaning the investors in the policy were paying more than they expected and cutting into profits.
The company has aided the sale of about 6,400 policies worth $2.8 billion.
JP Morgan Chase admits it over-charged thousands of military families on the home mortgages and that it also wrongfully foreclosed on at least 14 families, according to an exclusive report from NBC News.
The admission comes on the heels of a lawsuit filed by Marine Capt. Jonathan Rowles and his wife. Rowles rides in the backseat of an F/A 18 Delta fighter jet, a job he’s held for five years. For about that long, the Rowles’ have been fighting the nation’s second-largest home-loan lender.
Military families are protected by the Servicemembers Civil Relief Act, which guarantees them a home-loan interest rate of no more than 6 percent and protects them from foreclosure. Chase, it found, was violating the SCRA thousands of times in loans given to military families. NBC News learned that as many as 4,000 military families have been over-charged on their mortgages by Chase.
Chase said it plans to begin issuing as much as $2 million in refund checks to its military customers. Most of the families who had their homes taken from them through foreclosure will have them returned.
NBC reports if the Rowles’ hadn’t discovered the over-charge and pressed their lawsuit forward, these thousands of military families would still be paying too much on their home loans.