In court documents, the Securities and Exchange Commission says it’s trying to stop a $68 million Ponzi scheme run by Millenium Bank and the people who control it. “[The SEC] claims that defendants William Wise, Kristi Hoegel and others hoodwinked 375 investors by selling them ‘self-styled ‘certificates of deposit’ that promised returns “up to 321 percent higher than legitimate bank-issued CDs,” according to the Courthouse News Service. The complaint says the defendants withdrew investor’s funds for their own personal use, and notes that both Hoegel and Wise have had run-ins with regulators in the past.
“The world was almost brought low by the American banking system and we are supposed to think that no one did anything wrong?” That’s what Jesse Eisinger wonders in the New York Times, as he ponders the fact that virtually no one at Lehman Brothers, Bear Stearns, Merrill Lynch or any of the other firms deemed responsible for the financial crisis have been charged with any criminal violations.
The Securities and Exchange Commission accused Banc of America Securities LLC, of ”rigging municipal bond sales with dummy bids, defrauding hospitals, schools, and other state-run organizations,” according to Consumerist. The company, now known as Banc of America Merrill Lynch, will settle the charges by repaying $137 million in profits. And because it self-reported the bidding practices, the SEC says it won’t be required to pay a civil penalty. | SEC press release
“The sting announced Monday, named ‘Operation Broken Trust,’ targeted fraudsters and Ponzi schemers around the country who victimized the elderly and other vulnerable people with pump-and-dump and other scams,” says the Wall Street Journal. The journal says the sweep represents more than 120,000 victims who collectively had over $10 billion in losses. So far, prosecutors have scored 100 convictions.
SEC Enforcement Director Robert Khuzami says the Internet has made it easier for such scams to proliferate, and that the anonymity the Web allows makes it harder for law enforcement to prosecute such cases, according to Reuters.
Khuzami made his comments as the FBI, SEC and other agencies announced the results of a Operation Broken Trust, a nationwide sweep that has resulted in actions against 343 criminal defendants and 189 civil defendants. Those cases involved losses of more than $10 billion.
A Canadian Business Web site says a Nebraska man convicted of swindling elderly investors out of millions is set to ask the state’s Supreme Court to reinstate a lawsuit against his business attorney. Bryan Behrans says his attorney, Christian Blunk, gave him bad advice and is responsible for the fraud. He wants Blunk to pay the nearly $8 million he owes investors. But a lower court dismissed Behrans lawsuit because Behran refused to testify on Fifth Amendment grounds and wanted the suit postponed until criminal proceedings against him had wrapped up. The court will hear arguments on this week.
Bloomberg says Vietnam charged a company executive with stock fraud for the first time ever since the country’s stock exchange opened more than 10 years ago. Criminal proceedings against Le Van Dung, chairman of Vien Dong Pharma Joint-Stock Co., for “stock-price manipulation” began Nov. 24, Bloomberg reported, citing a statement by the company that posted on the Ho Chi Minh City Stock Exchange website.
Prosecutors had asked a judge to sentence George Georgiou, a Canadian convicted of manipulating stocks and causing the collapse of a financial firm in the Bahamas, to 30 years because they believe he perjured himself during trial. He’ll do 25 instead. Georgiou was previously barred from the securities industry in Canada in 1995, according to the Philadelphia Inquirer.
Dealbook says Steven L. Rattner, who oversaw the restructuring of auto companies that got public aid through the Troubled Asset Relief Program, settled charges with the Securities and Exchange Commission over his role in a kickback scheme to secure business with the with the New York state pension fund. Ratner agreed to pay $6.8 million. As the settlement was announced, New York’s attorney general sued Rattner, too, demanding $26 million and a lifetime ban from the securities industry. Rattner told Dealbook: “I will not be bullied simply because the Attorney General’s office prefers political considerations instead of a reasoned assessment of the facts,” and “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity…”
Twenty-one states will spend $750,000 to expand an education program that teaches medical workers how to spot signs that their older patients might be victims of, or vulnerable to, investment fraud, says Bloomberg. “One out of five Americans age 65 or older have been conned by investment scammers, a total of more than 7.3 million people, according to a June 15 survey of 2,022 adults. ”