Fraud trial of disgraced crypto star Sam Bankman-Fried begins

The trial of Sam Bankman-Fried, the former CEO of one of the cryptocurrency industry's biggest exchanges, begins on Tuesday to determine whether he committed massive fraud against more than a million clients.

The 31-year-old -- once one of the most respected figures in crypto -- now faces decades in prison and could see his name alongside Bernie Madoff and Elizabeth Holmes as one of the era's most prominent fraudsters.

The first day of the trial will be devoted to jury selection for a case that is set to last about six weeks.

In just a few years, the curly-haired Massachusetts Institute of Technology graduate turned his FTX platform into the world's second biggest crypto exchange, making him the tech world's latest billionaire wunderkind feted from Wall Street to Silicon Valley.

FTX had become a near-household name through a frenzied marketing campaign that included celebrity partnerships with stars such as supermodel Gisele Bundchen and basketball star Stephen Curry, and buying the naming rights for the Miami Heat's home arena.

Bankman-Fried also stepped in as a kind of savior of the industry when other crypto companies started facing difficulties, with FTX swooping in to offer them a financial lifeline.

At the height of his career, Bankman-Fried was thought to be worth $26 billion.

But his steep rise was only matched by his ignominious downfall, which saw him escorted last year by police from his luxury apartment in the Bahamas and extradited to face charges in the United States.

His empire began to crumble last November when a news report pointed to unhealthy ties between the FTX platform and Alameda Research, the company's crypto-focused investment arm.

The revelations kept growing and major investors pulled their money out of FTX, sinking it swiftly into bankruptcy and casting Bankman-Fried as a financial pariah.

Once the dust had settled, some $8.7 billion was still unaccounted for, according to the receiver appointed to manage the liquidation.

Federal prosecutor Damian Williams has accused Bankman-Fried and his associates of systematically diverting funds from FTX clients to prop up Alameda Research, but also wire fraud, securities and commodities fraud, and money laundering.

Danielle Sassoon, an assistant US attorney in Williams' office, told a hearing that the number of victims of Bankman-Fried's alleged actions could be "in excess of a million."

- Pointing fingers -

SBF -- as Bankman-Fried is known -- was extradited at the end of December from the Bahamas, where FTX was headquartered, and released on a $250 million bail upon his arrival in New York.

Pending the trial, Bankman-Fried was placed under house arrest at the Silicon Valley home of his parents, both professors at Stanford University.

But US District Judge Lewis Kaplan rescinded that decision, ordering Bankman-Fried behind bars over alleged attempts at witness intimidation.

According to prosecutors, while holed up at his parents' home, Bankman-Fried spoke regularly to journalists and passed documents to The New York Times in an effort to alter the testimony of Caroline Ellison, his ex-girlfriend and a former Alameda executive.

Ellison has also been indicted in the case: she and three other former executives have pleaded guilty and agreed to cooperate with US authorities, which may prove Bankman-Fried's undoing in front of the jury.

His former colleagues are expected to take the stand in the courtroom -- where Bankman-Fried will likely admit egregious management errors but no wrongdoing, and point the finger at Ellison.

"I didn't ever try to commit fraud on anyone. I was shocked by what happened this month," a contrite Bankman-Fried told an interviewer days after his company's collapse.

Agence France-Presse

Germany vows to beef up finance watchdog after Wirecard drama

FRANKFURT AM MAIN, Germany -- German Finance Minister Olaf Scholz said Sunday he wanted to overhaul the country's finance watchdog Bafin and give it more powers after a massive fraud scandal involving digital payments firm Wirecard.

Wirecard filed for bankruptcy late last month after admitting that 1.9 billion euros ($2.1 billion) was missing from its accounts, a case that has triggered criticism of the auditors and regulators meant to be overseeing the firm.

Scholz told the Frankfurter Allgemeine Sonntagszeitung newspaper he wanted to ditch the current two-stage procedure whereby Bafin is only called in when red flags are raised in a first vetting of accounts by a private monitoring body.

"We need far-reaching reforms," Scholz said, adding that Bafin needed to step in earlier and have the right to launch "special audits on a large scale".

"I want to give Bafin more control rights over financial reports, regardless of whether the company has a banking division," he went on.

"If we decide that Bafin needs more money, more employees and more competencies, I will work to ensure that happens." 

Bafin chief Felix Hufeld has admitted that his watchdog "had not been effective enough" at preventing the Wirecard disaster.

But auditing firm EY has also come under scrutiny for signing off on Wirecard's accounts for years before finally warning last month of an "elaborate and sophisticated fraud" at the payments provider.

The scandal has raised questions about whether auditing firms should be rotated more frequently, Scholz said, and whether it makes sense for them to advise and monitor a company at the same time.

German shareholders' association SdK, which has launched legal action against two EY auditors and one former employee over Wirecard, welcomed Scholz's proposals.

Bafin needs to be "completely rebuilt," SdK chief Daniel Bauer told the Handelsblatt financial daily.

"It's not enough to increase the number of employees," he warned. "They have to be the right employees who actually understand the subject matter."

Agence France-Presse

Nissan, ex-CEO Ghosn charged in US with hiding $140 mn from investors

WASHINGTON - US securities regulators on Monday charged Japanese automaker Nissan and its former CEO Carlos Ghosn with hiding more than $140 million in Ghosn's expected retirement income from investors.

Ghosn will pay $1 million in fines to settle the matter and will be barred from serving as a corporate executive for 10 years, the Securities and Exchange Commission (SEC) said in a statement. 

Nissan will pay a $15 million fine. 

The SEC also charged ex-board member Greg Kelly with aiding in the fraud. He agreed to a $100,000 fine and a five-year corporate officer ban.

But Ghosn, his former right-hand man Kelly, and Nissan neither admitted nor denied the SEC's allegations.

Attorneys for Ghosn welcomed the deal, saying it allowed him to focus on fighting similar allegations in Japan.

The SEC said Ghosn, 65, working with Kelly and other subordinates, devised ways to disguise large amounts of Ghosn's compensation.

The machinations allegedly stemmed from a shift in Japanese policy in 2009 that required disclosure of individual director compensation above 100 million yen, a little more than $1 million at the time.

"Ghosn became concerned about criticism that might result in the Japanese and French media if his total compensation became publicly known," the SEC said.

Ghosn directed subordinates to lobby the Japanese government to rescind the policy. 

When that failed, "Ghosn and Nissan subordinates took steps to conceal from public disclosure a substantial portion of Ghosn's compensation," the SEC order said.

Ghosn and Kelly allegedly "fraudulently inflated" Ghosn's pension allowance by more than $50 million and created a "false disclosure" to disguise the increase, the SEC said in an order.

Subordinates of Ghosn falsely told the company's chief financial officer that another big set of payments under a long-term incentive plan went to many Nissan employees and not primarily to Ghosn, the order said. 

Ghosn also instructed an employee to change the currency in which Ghosn's pension would be paid.

Under a 2007 compensation agreement, Ghosn was to be paid in yen, but a 2011 clause allowed Ghosn to choose whether to be paid in yen or US dollars, resulting in an increase of about $22 million in retirement payments, the SEC said.

"Investors are entitled to know how, and how much, a company compensates its top executives," said Stephanie Avakian, co-director of enforcement at the SEC. "Ghosn and Kelly went to great lengths to conceal this information from investors and the market."

Ghosn's legal team underscored Monday that the settlement involved no legal finding against him.

GHOSN 'SATISFIED' 

"We are satisfied with the conclusion of this agreement in the United States," said a statement from his attorneys, noting no court had found that Ghosn committed "punishable acts."

"The settlement specifically allows Mr Ghosn to continue to fight the allegations against him in Japan, which Mr Ghosn intends to pursue vigorously," it said, expressing confidence he will eventually be acquitted.

He is awaiting trial on charges of under-reporting millions of dollars in salary and of using company funds for personal expenses. News reports in Japan have said hearings will begin in April.

Following his arrest last November in Japan, Ghosn denied wrongdoing and accused Nissan executives of plotting against him, claiming they opposed his plans to further integrate the firm with France's Renault.

Avakian also said Nissan had misrepresented Ghosn's pension allowance to investors, a move that "advanced Ghosn and Kelly's deceptions and misled investors, including US investors."

The SEC order in the Nissan settlement also cited the car company's "significant cooperation" with US officials and corporate governance changes implemented in the wake of the scandal. 

These included having the board's compensation committee composed entirely of outside directors and making more of the company secretary's decisions subject to audit and internal controls.

"Nissan is firmly committed to continuing to further cultivate robust corporate governance," the company said in a statement.

The settlement came as the Wall Street Journal reported that Nissan's general counsel Ravinder Passi raised doubts on whether an internal probe at Nissan into Ghosn was tainted by conflicts of interests, clouding the carmaker's efforts to move beyond the scandal.

It also comes 2 weeks after Hiroto Saikawa resigned as chief executive amid allegations that he himself padded his salary.

source: news.abs-cbn.com

Biggest US college fraud bust nets actors Felicity Huffman, Lori Loughlin

BOSTON - Federal authorities arrested dozens on Tuesday for a $25 million scheme to help wealthy Americans, including actresses Felicity Huffman and Lori Loughlin and some CEOs, cheat their children's way into elite universities, such as Yale and Stanford.

The largest college admissions fraud scam unearthed in US history was run out of a small college preparation company in Newport Beach, California that relied on bribes to sports coaches, phony test takers, and even doctored photos depicting non-athletic applicants as elite competitors to land college slots for the offspring of rich parents, prosecutors said.

"These parents are a catalog of wealth and privilege," Andrew Lelling, the US attorney in Boston, said at a news conference. "For every student admitted through fraud, an honest, genuinely talented student was rejected."

William "Rick" Singer, 58, pleaded guilty on Tuesday to charges related to running the scheme through his Edge College & Career Network, which charged from $100,000 to as much as $2.5 million per child for the services, which were masked as contributions to a scam charity Singer runs.

"I was essentially buying or bribing the coaches for a spot," Singer said as he pleaded guilty to charges including racketeering, money laundering, and obstruction of justice. "And that occurred very frequently."

John Vandemoor, a former Stanford University sailing coach who worked with Singer, also pleaded guilty to racketeering conspiracy.

It was the latest in a series of scandals that have rocked the high-stakes, high-stress world of admissions to top colleges. Prosecutors in Boston in recent years have also charged Chinese nationals with cheating on entrance exams, while the College Board, which administers the SAT tests, was rocked in 2016 by a security breach that exposed hundreds of questions planned for tests.

Some 300 law enforcement agents swept across the country to make arrests in what agents code-named "Operation Varsity Blues." Huffman and Loughlin were due to appear in federal court in Los Angeles later on Tuesday, prosecutors said.

Prosecutors have so far named 33 parents, 13 coaches, and associates of Singer's business.

Other parents charged include Manuel Henriquez, the chief executive of specialty finance lender Hercules Capital; Gordon Caplan, the co-chairman of international law firm Willkie Farr & Gallagher; Bill McGlashan Jr., who heads a buyout investment arm of private equity firm TPG Capital; and Douglas Hodge, the former CEO of the investment management firm Pimco.

Representatives for the companies and for Huffman and Loughlin either declined to comment or did not respond to requests for comment.

The alleged masterminds of scam and parents who paid into it could all face up to 20 years in prison if convicted.

Huffman, a former best actress Oscar nominee who is married to actor William H. Macy, starred in ABC's "Desperate Housewives."

Loughlin, best known for her role in the ABC sitcom "Full House" and the recent Netflix sequel "Fuller House," is married to clothing company founder Mossimo Giannulli, who was also charged in the scheme.

'HELP THE WEALTHIEST'

On a call with a wealthy parent, prosecutors said, Singer summed up his business: "What we do is help the wealthiest families in the US get their kids into school ... my families want a guarantee."

Prosecutors said it was up to the universities what to do with students admitted through cheating.

Yale University and the University of Southern California (USC) said in separate statements that they were cooperating with investigators.

"The Department of Justice believes that Yale has been the victim of a crime perpetrated by its former women's soccer coach," Yale said in a statement.

The coach, Rudolph Meredith, resigned in November after 24 years running the women's soccer team. Meredith, who accepted a $400,000 bribe from Singer, is due to plead guilty, prosecutors said. His lawyer declined to comment.

Prosecutors said the scheme began in 2011 and also helped children get into the University of Texas, Georgetown University, Wake Forest University, and the University of California, Los Angeles (UCLA).

Part of the scheme involved advising parents to lie to test administrators that their child had learning disabilities that allowed them extra exam time.

The parents were then advised to choose one of 2 test centers that Singer's company said it had control over: one in Houston, Texas, and the other in West Hollywood, California.

Test administrators in those centers took bribes of tens of thousands of dollars to allow Singer's clients to cheat, often by arranging to have wrong answers corrected or having another person take the exam. Singer would agree with parents beforehand roughly what score they wanted the child to get.

In many cases, the students were not aware that their parents had arranged for the cheating, prosecutors said, although in other cases they knowingly took part. None of the children were charged on Tuesday.

Singer also helped parents stage photographs of their children playing sports or even Photoshopped children's faces onto images of athletes downloaded from the internet to exaggerate their athletic credentials.

Wake Forest said it had placed head volleyball coach Bill Ferguson on administrative leave after he was among the coaches accused of accepting bribes.

According to the criminal complaint, investigators heard McGlashan of TPG Capital listening to Singer tell him to send along pictures of his son playing sports that he could digitally manipulate to make a fake athletic profile.

"The way the world works these days is unbelievable," McGlashan said to Singer, according to court papers.

source: news.abs-cbn.com

Trump campaign ex-chief Manafort faces years in prison

ALEXANDRIA, Va. - Paul Manafort, U.S. President Donald Trump's former campaign chairman, will be sentenced by a U.S. judge in Virginia on Thursday for bank and tax fraud uncovered during Special Counsel Robert Mueller's investigation into Russia's role in the 2016 election.

U.S. District Judge T.S. Ellis could effectively deliver a life sentence to Manafort, 69, if he follows federal sentencing guidelines cited by prosecutors that call for 19-1/2 to 24 years in prison for the eight charges the veteran Republican political consultant was convicted of by a jury in Alexandria last August.

The sentencing hearing is scheduled for 3:30 p.m. EST (2030 GMT)

Manafort was convicted after prosecutors accused him of hiding from the U.S. government millions of dollars he earned as a consultant for Ukraine's former pro-Russia government. After pro-Kremlin Ukrainian President Viktor Yanukovych's ouster, prosecutors said, Manafort lied to banks to secure loans and maintain an opulent lifestyle with luxurious homes, designer suits and even a $15,000 ostrich-skin jacket.

Manafort faces sentencing in a separate case in Washington on March 13 on two conspiracy charges to which he pleaded guilty last September. While he faces a statutory maximum of 10 years in the Washington case, U.S. District Judge Amy Berman Jackson potentially could stack that on top of whatever prison time Ellis imposes in Virginia, rather than allowing the sentences to run concurrently.

Jackson on Feb. 13 ruled that Manafort had breached his agreement to cooperate with Mueller's office by lying to prosecutors about three matters pertinent to the Russia probe including his interactions with a business partner they have said has ties to Russian intelligence. Jackson's ruling could have an impact on the severity of his sentence in both cases.

Mueller is preparing to submit to U.S. Attorney General William Barr a report on his investigation into whether Trump's campaign conspired with Russia and whether Trump has unlawfully sought to obstruct the probe. Trump has denied collusion and obstruction and Russia has denied election interference.

Manafort is the only one of the 34 people and three companies charged by Mueller to have gone to trial. Several others including former campaign aides Rick Gates and George Papadopoulos, former national security adviser Michael Flynn and former Trump personal lawyer Michael Cohen have pleaded guilty, while longtime Trump adviser Roger Stone has pleaded not guilty.

Gates, a key witness against Manafort, has yet to be sentenced due to his ongoing cooperation with prosecutors.

STUNNING DOWNFALL

Mueller's charges led to the stunning downfall of Manafort, a prominent figure in Republican Party circles for decades who also worked as a consultant to such international figures as former Angolan rebel leader Jonas Savimbi, former Philippine President Ferdinand Marcos and Yanukovych.

Defense lawyers have asked Ellis to sentence Manafort to between 4-1/4 and 5-1/4 years in prison. They are expected to tell the judge Manafort is remorseful and that the sentencing guidelines cited by prosecutors call for a prison term disproportionate to the offenses he committed.

"The Special Counsel's attempt to vilify Mr. Manafort as a lifelong and irredeemable felon is beyond the pale and grossly overstates the facts before this court," his lawyers wrote in their sentencing memo.

Prosecutors have not suggested a specific sentence. Mueller's office, in court filings, said that only Manafort is to blame for his crimes, that he has shown no remorse and that his lies to prosecutors after his guilty plea should be taken into account.

"The defendant blames everyone from the Special Counsel's Office to his Ukrainian clients for his own criminal choices," prosecutors wrote.

Manafort will be sentenced by a judge who faced criticism by some in the legal community for making comments during the trial that were widely interpreted as biased against the prosecution.

Ellis repeatedly interrupted prosecutors, told them to stop using the word "oligarch" to describe people associated with Manafort because it made him seem "despicable," and objected to pictures of Manafort's luxury items they planned to show jurors.

"It isn't a crime to have a lot of money and be profligate in your spending," Ellis told prosecutors.

At one point, Ellis chided prosecutors for spending time on a loan that a bank ultimately did not give Manafort, even though it is a crime to defraud a bank regardless of whether the loan is granted.

Ellis apologized later in the trial after erroneously accusing prosecutors of letting a tax expert witness be present to hear testimony from other witnesses without the court's permission. Ellis had granted permission.

source: news.abs-cbn.com

Singapore police raid Wirecard office following fraud reports

FRANKFURT/SINGAPORE - Singapore police raided the premises of German payments company Wirecard in the city state on Friday following a series of investigative reports in the Financial Times alleging fraud and creative accounting.

The raid intensified pressure on Munich-based Wirecard, a constituent of Germany's blue-chip DAX index that has shed $10 billion in value since the FT ran the first of a series of three investigative reports at the end of January.

Wirecard has rejected the FT reports as defamatory and said earlier on Friday it would sue the newspaper.

"Police confirm that they have raided the premises of Wirecard entities in Singapore," a police spokeswoman told Reuters.

Singapore police opened inquiries this week following the FT's reporting, which cited the preliminary findings of an investigation by law firm Rajah & Tann that found evidence of series offences of forgery and false accounting.

Wirecard said: "We actively approached the authorities yesterday and pledged our full cooperation in the investigation activities.

"This morning, Wirecard met with Singapore law enforcement at Wirecard's headquarter in Singapore and provided the police with comprehensive supporting material in regards to their enquiry into the defamatory allegations in the FT series of articles.

"We would like to reconfirm that the accusations against employees of Wirecard are unfounded. We are working closely with the Singapore police to clear all allegations."

The FT did not respond to a request for comment.

Wirecard CEO Markus Braun, the company's largest shareholder with a 7 percent stake, said on Monday that no evidence had been found of criminal misconduct either by the company's own compliance team or by Rajah & Tann. Investigations were continuing and would be finished quickly, he said.

Wirecard, founded in 1999, has been a perennial target for speculative short sellers - market players who seek to profit from falls in a company's share price - who have questioned its accounting methods and rapid international expansion.

Yet it also has strong support in the financial community, with 24 out of 28 market analysts rating the stock either a 'strong buy' or a 'buy', according to Refinitiv data.

Their median price target is 210 euros - more than double Friday's level of 101.15 euros, down 9 percent on the session.

LEGAL ACTION

An FT story, published online on Thursday, alleged that Wirecard staffers had engaged in the 'round tripping' of funds to inflate reported revenues, and that managers from its Munich head office had been aware of the practice.

"In the article published yesterday, Wirecard employees are slanderously prejudged with unproven and false allegations," Wirecard said in an earlier statement.

"We will use all available legal means to protect the company and in particular our employees and their personal rights. Wirecard is taking legal actions against FT and its unethical reporting."

Wirecard did not say in which jurisdiction it planned to bring legal action. A spokeswoman added the company would act to protect the personal reputations of individuals named in the newspaper's reporting.

The company was also cooperating with the authorities in ongoing investigations into suspected market manipulation in Wirecard stock being conducted by the Munich state prosecutor with the backing of financial regulator Bafin.

Contacted by Reuters, the Munich prosecutor said it was aware of the Singapore police raid but this did not change its view that there was insufficient evidence to launch a criminal probe against Wirecard's managers.

source: news.abs-cbn.com

Apple, Samsung fined millions for slowing phones in Italy

ROME - Italy's competition authority on Wednesday said it was fining Apple and Samsung 10 and five million euros ($11.5 and $5.7 million) respectively for the "planned obsolescence" of their smartphones.

The ruling is believed to be the first against the manufacturers following accusations worldwide that they encourage operating system updates for older phones which slow them down, thereby encouraging the purchase of new phones.

An investigation by the anti-trust authority revealed that "Apple and Samsung implemented dishonest commercial practices", a statement said.

Operating system updates "caused serious malfunctions and significantly reduced performance, thus accelerating phones' substitution."

Samsung told owners of its Note 4 phone to install a new version of Google's Android operating system intended for the more recent Note 7 but which rendered the old model sluggish.

Likewise, Apple told iPhone 6 owners to install an operating system designed for the iPhone 7, leading to problems for owners of the older model.

Apple was also found to have failed to tell customers about "essential" characteristics of its phones' lithium batteries, including their average life and how to prolong that life, resulting in a bigger fine than for Samsung.

The Italian anti-trust authority opened its investigation in January following customer complaints around the same time as a similar probe in France.

The US company was forced to admit last year that it intentionally slowed down older models of its iPhones over time, sparking concerns it was unfairly nudging consumers to upgrade.

At the time, Apple denied it intentionally shortened the life on any of its products. It said it slowed models to extend the performance of the phone, which uses less power when running at slower speeds, and prevent unexpected shutdowns.

The California-based group also faces a class-action suit in the United States.

source: news.abs-cbn.com

Trump says Manafort case 'does not involve me'

CHARLESTON, West Virginia - President Donald Trump tried to distance himself from his former campaign chairman Paul Manafort's conviction on Tuesday on bank and tax fraud charges, saying it did not involve him.

"I feel very badly for Paul Manafort," Trump said as he arrived in West Virginia for a rally on Tuesday night. "It does not involve me," he said.

"It has nothing to do with Russian collusion, we continue the witch hunt," Trump said.

A jury found Manafort guilty of two of nine bank fraud charges, all five tax fraud charges he faced and one of four charges of failing to disclose foreign bank accounts.

His trial is the first stemming from Special Counsel Robert Mueller's investigation of Russia's role in the 2016 US election. The charges against Manafort largely predate his work on President Donald Trump's successful campaign.

Prosecutors accused Manafort, a 69-year-old veteran Republican operative, of hiding from US tax authorities $16 million he earned as a political consultant for pro-Russian politicians in Ukraine to fund an opulent lifestyle and then lying to banks to secure $20 million in loans after his Ukrainian income dried up and he needed cash.

source: news.abs-cbn.com

Three held as $1.8 billion fraud ripples through Indian banks

NEW DELHI/MUMBAI - India's federal police detained two employees of Punjab National Bank, the state-run lender that says it has been the victim of a $1.77 billion fraud, in the first arrests in a fast-widening probe into the country's biggest-ever bank scam.

Gokulnath Shetty and Manoj Kharat are suspected of steering fraudulent loans to companies linked to billionaire jeweler Nirav Modi and entities tied to jewelry retailer Gitanjali, which is led by Modi's uncle, Mehul Choksi.

India's Income Tax department warned in an internal note seen by Reuters that domestic banks could take a hit of more than $3 billion from loans and corporate guarantees provided to Modi and Choksi.

The arrests, late on Friday, came 2 days after India's second-largest state-run lender said it had been hit by massive fraud, sending its share price tumbling.

The accusations against the 2 relatively junior PNB officials were detailed in the lender's disclosure, and also contained in a preliminary police report.

The Central Bureau of Investigation (CBI) also arrested a third person, Hemant Bhat, whom a source described as the "authorised signatory" of the companies tied to Nirav Modi.

All three appeared before a hot, packed courtroom in Mumbai on Saturday afternoon, where they were ordered to remain under police custody until March 3 to allow the CBI to continue its investigation. No charges have yet been laid.

"CBI must get fair chance to investigate this very serious offence, which has consequences for the country's economy," said judge S R Tamboli, as PNB employee Shetty shifted nervously and blinked frequently. The other 2 stood passively.

Family members of the accused present at the court defended them, saying they were innocent.

Kharat's uncle told Reuters the PNB employee was "just following orders of superiors" and added "he wasn't aware of what he is doing".

PROBE WIDENS 

A police source said six more PNB employees were "being examined" after the CBI conducted additional searches at the PNB's branch in southern Mumbai where the alleged fraud took place.

Police sources say Modi, whose high-end jewellery has been worn by Hollywood stars including Kate Winslet, and Choksi left India last month and their whereabouts are unknown. Neither Modi nor Choksi have so far commented on the allegations.

Gitanjali has previously denied Choksi's involvement in the fraud and said he would take "necessary legal action" to get his name removed from the police case.

TV station NDTV on Friday reported Modi was at a suite in a New York hotel, citing household staff who answered the door.

On Saturday, a police source said that the CBI had sent a notice through Interpol in a bid to help locate Modi.

Meanwhile the Enforcement Directorate, India's financial crime agency, said on Saturday it conducted additional searches at 21 locations of companies tied to Modi, seizing 250 million rupees ($3.89 million) in precious stones, metals and jewellery.

Both authorities have conducted dozens of raids since PNB disclosed the fraud, targeting PNB, Modi and Choksi, with the Enforcement Directorate now having seized diamonds, gold and jewellery worth 56.7 billion rupees.

A tax department spokeswoman told Reuters officials had seized 29 properties and 105 bank accounts linked to Modi.

FINANCIAL IMPACT 

The biggest bank fraud in India's history has sent rumbles through India's financial system, raising fears about the scale of problems in the banking sector that is already saddled with $147 billion of soured debt.

PNB said on Friday it was running an audit of its systems to prevent a recurrence of such a fraud, but did not see a long-term hit to its operations. The bank, which has $120 billion in total assets, has lost more than a fifth of its market value since it disclosed the fraud.

The Hindu newspaper reported on Saturday that the Central Vigilance Commission, which investigations corruption in the government, has summoned senior officials of the Reserve Bank of India and the Finance Ministry to assess how all internal checks and balances failed to detect the fraud.

PNB officials were also summoned, the report said, citing an official aware of the development.

The RBI did not reply to an emailed request for comment. A Finance Ministry spokesman was not immediately reachable.

Scrutiny of banks' technical systems will intensify even further after India's City Union Bank Ltd on Saturday said it had suffered 3 "fraudulent remittances" of nearly $2 million that had been pushed through the SWIFT financial platform.

The case was reminiscent of the $81 million cyber heist that hit Bangladesh's central bank in 2016.

source: news.abs-cbn.com

Pinay judge found guilty of mortgage fraud

A Filipino American judge in Illinois was found guilty of mail and bank fraud in a $1.4 million real estate scheme.

A federal jury found Cook County Judge Jessica Arong O’Brien, the first Filipina elected as a judge in the state of Illinois, guilty of the charges against her.

Authorities first charged O’Brien back in April 2017 with fraud for lying on loan and refinancing documents for two investment properties. They said O’Brien then made profit by unloading the homes to a straw buyer whom she paid.

Authorities added she pocketed at least $325,000 from the transactions.

Under Illinois law, the conviction means O’Brien loses her spot on the bench. A sentence hearing has been set for July 6th.

In a statement to Balitang America, O’Brien said, “This too shall pass. I still do believe that ultimately, the truth will set me free.”

Read more on Balitang America.

source: news.abs-cbn.com

HSBC in $100 million forex fraud settlement

NEW YORK - British financial giant HSBC has agreed to pay more than $100 million to US authorities after admitting to defrauding clients during multi-billion-dollar foreign exchange transactions, the Justice Department said Thursday.

The settlement follows an indictment handed down Wednesday against a former Barclays trader similarly accused of defrauding the former California computing giant Hewlett-Packard by manipulating foreign exchange markets.

Under the terms of the agreement, which is under review by a federal judge in Brooklyn, HSBC will pay a $63.1 million fine and an additional $38.4 million in restitution and disgorgement -- or the return of ill-gotten gains, the Justice Department said.

"HSBC's admissions in connection with this resolution confirm that the company misused confidential client information for its own profit on more than one occasion," John Cronan, the acting head of the department's criminal division, said in a statement.

"This sort of misconduct not only harmed their clients, costing the victims money, but it also ran a serious risk of undermining the public's confidence in our financial markets."

Prosecutors say that in 2010 and 2011, traders on HSBC's foreign exchange desk used confidential client information to conduct trades in British currency that deliberately drove the price of sterling in a direction benefitting the bank and harming the clients.

US officials only identified one of the two clients: the British oil and gas explorer Cairn Energy.

HSBC has agreed to continue cooperating with investigators and foreign authorities in any related investigations, including cases brought against individuals and to enhance its internal safeguards against misconduct.

The Justice Department said HSBC received no leniency for voluntarily disclosing the matter, adding that initially the bank's cooperation with investigators was also "deficient in certain respects."

But that HSBC soon "changed course" after prodding from the government, earning "substantial cooperation credit."

The bank faces charges of wire fraud but these are likely to be dropped once HSBC fulfills its obligations under the settlement.

Thursday's settlement comes barely a month after the lapse of a landmark 5-year, $1.9-billion deal between US authorities and HSBC in which the British lender avoided prosecution after admitting in 2012 to widespread money-laundering and sanctions violations.

In October, HSBC's former head of foreign exchange cash trading, Mark Johnson, was convicted of 8 counts of conspiracy and one count of wire fraud after a four-week trial. He is due to be sentenced next month.

HSBC was one of 6 major US and European banks that were fined a total $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market.

source: news.abs-cbn.com

'Pharma Bro' Martin Shkreli convicted of fraud

A US jury on Friday convicted former hedge fund manager and pharmaceutical executive Martin Shkreli, once dubbed "The Most Hated Man in America," of securities fraud.

The 34-year-old, who is best known for jacking up the price of HIV drug Daraprim from $13.50 a pill to $750 overnight in 2015, was found guilty on three of eight different counts against him following a month-long trial.

The 12-member jury convicted him on two counts of securities fraud, as well as conspiracy to commit securities fraud on the fifth day of deliberations at a federal court in Brooklyn, New York.

Shkreli -- who is out on bail -- said he was "delighted" with the verdict, saying he had been acquitted on the most serious charges and thanked his defense lawyer, calling him "the greatest lawyer on the planet."

He was accused on an eight-count indictment for allegedly stealing $11 million in stock from his first pharmaceutical company Retrophin to pay off investors who lost money in two of his hedge funds.

He faced up to 20 years in prison if found guilty. On Friday his attorney told reporters that he was hopeful his client may be able to avoid a prison term.

Government prosecutors said the evidence against Shkreli was overwhelming, arguing that he told "lies upon lies" to investors for years in running a Ponzi-like scheme across multiple firms.

Shkreli declined to testify. The defense portrayed him as a troubled genius who camped out in his office in a sleeping bag for two years to build single handedly a successful pharmaceutical to ultimately repay wealthy investors.

source: news.abs-cbn.com

Pharma bad-boy Shkreli quits Turing after fraud charges

NEW YORK, United States - Reviled US pharmaceutical and hedge fund figure Martin Shkreli resigned as chief executive of Turing Pharmaceuticals on Friday, a day after his arrest on fraud charges, the company said Friday.

"We wish to thank Martin for helping us build Turing Pharmaceuticals into the dynamic research-focused company it is today, and wish him the best in his future endeavors," Ron Tilles, who was appointed as Turing interim chief executive, said in a statement.

US police officials arrested Shkreli on Thursday and charged him with a brazen fraud scheme in which he lied to investors, moved money between investments to cover losses in other vehicles and siphoned off cash for personal expenses.

The allegations concern Shkreli's activities from 2009-2014 at another company and two hedge funds, prior to his career at Turing.

On Thursday, Turing released a statement that said the allegations against Shkreli "are personal and have no bearing on Turing Pharmaceuticals."

Shkreli denied the charges in court and was released after posting $5 million bond.

Shkreli, 32, rose to infamy earlier this year after he, as founder and CEO of Turing, bought rights to toxoplasmosis drug Daraprim and promptly raised the price from $13.50 a tablet to $750.

The move -- and Shkreli's arrogant response to the controversy -- was angrily denounced by US politicians, including Democratic presidential contender Hillary Clinton.

Acting chief Tilles, who is also Turing's chairman, vowed to make Daraprim affordable.

"We remain committed to ensuring that all patients have ready and affordable access to Daraprim," he said. "Turing Pharmaceuticals is poised for great success in the coming years."

Shkreli, who has built a heavy presence on social media, chatted with viewers and played Internet chess in a livestream broadcast Friday afternoon.

"Thanks for your support," Shkreli told some 800 viewers on the Youtube broadcast. "I can't talk about the allegations."

Shkreli is also chief executive of KaloBios Pharmaceuticals, which has not commented on his arrest. Shares of KaloBios remained suspended Friday for the second day in a row.

source: www.abs-cbnnews.com

SEC sues Emgoldex over alleged investment scam

MANILA - The Securities and Exchange Commission (SEC) has sued Emgoldex for allegedly selling and offering investment schemes without a license.

SEC said two cases were filed before the Department of Justice (DOJ) against related entities Emgoldex, Global Intergold, and Prosperous Infinite Philippines Holdings Corp.

The companies allegedly sold unregistered securities to the public without a license, thus violating Section 8 and 28 of the Securities and Regulation Code (SRC).

Each violation of the SRC is punishable, if convicted, with a fine of not more than P5 million or imprisonment of 7-21 years, or both.

SEC has also issued a cease and desist order against the firms.

Lalaine Monserate, assistant director of the SEC’s Enforcement and Investor Protection Department, said the companies operate a "Ponzi" scheme, wherein high return payouts are promised through recruitment.

Most investors who have fallen victim to the investment scheme are young Filipinos and overseas Filipino workers, as most of the selling and marketing of unregistered securities are largely done online.

SEC chairperson Teresita Herbosa said the government agency is open to receive and assist victims, including OFWs, with their affidavits.

As early as February, SEC already issued a warning against investing in Emgoldex.

SEC alleged that the company lures investors through promises of high returns, where an investment of P1,000 would earn profits ranging from P5,000 to P10,000 or a placement of P35,000 would yield P180,000 to P360,000.

source: www.abs-cbnnews.com

How to protect yourself vs ATM fraud

MANILA, Philippines - Fraudsters victimize thousands of people every year. Here in the Philippines, you may have seen the news of ATM fraud that recently hogged the headlines.

Authorities acknowledge that each year, millions of pesos are lost in cases of bank fraud, underscoring the fact that despite taking precautions, we can still fall prey to the tricks of scammers.

The most common fraud cases involve credit cards and ATM cards.

In the case of credit card scams, thieves try to get hold of the card physically or electronically, then use the card to purchase various items, often using the whole credit limit. Electronic information is stolen through websites or phishing attacks, while actual card theft is done through various tactics, including intercepting delivery of the card. In the case of ATM fraud, scammers are able to acquire your card information and PIN number to withdraw whatever amount is in your account.

If you’re lucky, you would be able to detect fraud early on. Some credit card companies call to verify purchases you have made, while others send you an SMS to inform you that your card has just been used. These are very good alerts when your card information falls into the wrong hands and should spur you into action.

Here are some steps you can take if you suspect you’ve fallen victim to fraudsters.

· Report the case to the bank or credit card firm. Call your bank immediately to alert them to the possible fraud. Most financial institutions have 24-hour hotlines that you can call from wherever you are around the world. Give all the information you have at hand. This would initiate the process of getting the financial institution involved to protect your account.

· Change your passwords and PIN codes. If you have noticed mysterious withdrawals in your bank account, immediately change your PIN codes. ATM hackers usually know your PIN code and changing it would stop them from further emptying your account.

· Close your account. If you misplace your ATM card or credit card, it may be a good idea to close your account and open a new one altogether. This way, would-be thieves would be unable to access your money or your credit line.

· Contact utility and credit card companies that have the fraudulent account in your name. There is a possibility that the thieves would use your identity or personal information to transact in your behalf. Take precaution by informing other card companies and utilities that they may transact with using your information.

· Alert the police. You may want to file a police report if you believe you have been victimized by bank thieves.

Here are some precautionary steps you can take to protect yourself from fraudsters:

· Consider getting credit card insurance. Although this is seen by most as another expense, it is a small amount that can protect you from major liabilities in the future caused by bank hackers and scammers who are ready to exploit every weakness they detect in the banking or retail systems.

· Regularly check your transaction history. Go through your bank statements and credit card statements to check for transactions that you didn’t make. Purchases made online or transactions made in distant countries would show up in these statements, alerting you to unauthorized use of your card or personal information.

· Set limits for your cards. You can ask your bank to establish a daily withdrawal limit for your ATM card to keep your losses to a minimum should your ATM card fall in the wrong hands. Similarly, you can ask your credit card issuer to lower your credit card limit. These will help limit your exposure should you be victimized by hackers.

· Don’t keep large sums of money in one account. Limit the amount of money you have in your bank account or put these in separate accounts. Instead of leaving most of your money lying around in deposit or checking accounts, you may wish to putting some in other deposit or investment instruments.

· Always guard your personal information. Do not be careless about your personal information. Don’t give this out to just about anybody who calls you on the phone, claiming to offer a new card or loan. Keep private your complete name, birthdate, and account numbers, among others.

source: www.abs-cbnnews.com

Beware of fake World Cup streaming sites

MANILA – A security software firm has warned fans of the World Cup against websites offering free streaming of the games, saying that some of them may be fake.

In a statement, Kaspersky Lab said a number of websites that claim to stream World Cup games may be harmful, with others aimed at stealing a user’s personal information.

It said websites that ask users to download their program or provide credit card details – which are huge red flags – should be avoided.

“When you search on Internet for the live World Cup broadcast, you will sometimes find purchased advertisements that lead to fraudulent or malicious content,” said Kaspersky Lab researcher Dmitry Bestuzhev.

“When you go to the website, it asks you to download a special plugin available for all browsers. This is supposed to be the player needed to watch the online broadcast of the games. In reality, it is an adware program, which may not show you anything but will drain your computer’s resources,” he added.

Kaspersky Lab encouraged users to be on the safe side and watch the World Cup by logging through an authenticated cable service provider.

source: www.abs-cbnnews.com

Why Malaysia is now haven for Internet scams

US victims losing millions of dollars a year

KUALA LUMPUR - Hundreds of American women are being ensnared by Internet scammers based in Malaysia, with some losing over a quarter of a million dollars, as the country becomes an epicenter for online crime perpetrated by Africans, U.S. officials say.

The mostly Nigerian conmen, who enter Malaysia on student visas, take advantage of the country's good Internet infrastructure to prey on lonely, middle-aged women, wooing them on dating websites before swindling their savings, they said.

The scams are more sophisticated than most Nigeria-based operations - which most Internet users have experienced at some time either via email or advertising - helped by Malaysia's advanced banking system, which allows perpetrators to quickly set up accounts and receive international transfers.

U.S. officials say Malaysian police lack the resources and expertise to tackle the problem and have yet to launch a single prosecution of a case involving a U.S. victim.

Malaysian police were reported by local media last December as saying that the number of Internet scam cases more than doubled in 2013 with total losses of more than $11 million. A total of 476 Africans had been apprehended for suspected involvement, the report said.

The Malaysian police and the Nigerian embassy in Kuala Lumpur did not respond to Reuters' request for comment. A spokesman for Nigeria's Economic and Financial Crimes Commission said he was not aware of scammers operating in Malaysia, but added they were known to have international networks.

Tim Scherer, consul general at the U.S. embassy in Kuala Lumpur, told Reuters that complaints about such scams now made up more than 80 percent of inquiries to duty officers at the mission, with a dozen new cases reported every week.

Citizens of Australia, Canada and Europe had also been targeted, he said.

"These are not rich widows who are being preyed on, these are middle-class Americans who don't have this kind of money to spare," he said. "It can really transform their lives in a very terrible way."

The U.S. embassy estimates that U.S. victims are losing several million dollars a year, with two women in the past 12 months losing more than $250,000 each. There are more than 600 cases a year, and the amount lost by each victim averages in the tens of thousands of dollars, it said.

The actual figure of total losses is probably far higher, Scherer said, because many victims are too embarrassed to come forward or do not know who to contact. He said the scammers were highly sophisticated, often grooming victims for months and using convincing techniques such as forging letters purportedly from the U.S. ambassador in Malaysia.

FAKE ROMANCE

Large teams of scammers typically trawl dating or Christian websites and contact middle-aged women, the U.S. officials said. They pretend to be a Western man who then gets into legal or business difficulties in Muslim-majority Malaysia.

One U.S. victim told Reuters she transferred a total of$260,000 to Malaysia, where the man who claimed to love her said he was being prevented from returning to the United States by Malaysian bureaucracy - which required hefty payments to negotiate.

The 59-year-old widow from Phoenix, Arizona, who declined to be identified, said she had gone heavily into debt to make the payments to "Charles", and even flew to Malaysia in March to meet him. He never showed up, but a European woman claiming to be his lawyer managed to bilk another $25,000 out of the woman before she returned to Arizona.

Another victim, a women in her late 50s in the eastern United States, said she sent her life savings of $300,000 over two months to a Malaysia-based "American" man she met on dating site Match.com, three years after her husband died.

"I felt like I was in love with this man and we'd be moving forward with a life together real soon," she told Reuters.

Match.com did not respond to a Reuters request for comment. Along with other major U.S.-based dating sites, it features prominent warnings about scammers, specifically telling users to be wary of people who say they are Americans based abroad.

STUDENT SCAM

The conmen have exploited Malaysia's drive to become a global education hub, securing student visas to attend college, the U.S. officials said.

Malaysia has pursued a policy of attracting international students for more than a decade, allowing dozens of foreign colleges to set up Malaysian campuses.

Scherer said it was likely that many of the Nigerians in Malaysia were not genuine students. As of March, there were 9,146 Nigerians on student visas in Malaysia, the education ministry said, out of 123,000 overseas students in total.

"Once in the country as students, there's very little effort to verify their studies," Scherer said.

An official with Malaysia's education ministry said that last year it tightened its vetting and tracking of overseas students.

"We are aware of problems with some international students, especially Nigerians," the official said.

source: www.abs-cbnnews.com

Texas tycoons hid $550 M in profits offshore, U.S. tells jury

NEW YORK -- Texas tycoons Sam and Charles Wyly employed a labyrinthine system of offshore trusts to conceal stock trades in four companies on whose boards they sat, netting themselves more than $550 million in undisclosed profits, a U.S. government lawyer told a federal jury on Thursday.

"This is a case about lies, deception and fraud," said Bridget Fitzpatrick, a lawyer for the U.S. Securities and Exchange Commission, at the start of a civil trial in New York against Sam Wyly and the estate of his late brother, Charles.

The SEC has accused the Wylys of concealing stock trading from 1992 to 2004 in Sterling Software Inc, Michaels Stores Inc, Sterling Commerce Inc, and Scottish Annuity & Life Holdings Ltd through the use of more than a dozen trusts and 40 different entities in the Isle of Man.

But Stephen Susman, a defense attorney for the Wylys, told the jury that the brothers relied on an "army of lawyers" to tell them what they were legally required to do and never intended to violate any securities law.

"The Wylys acted in complete good faith - the exact opposite of being a liar and fraudster, as charged by the SEC," he said during his opening statement.

The trial, which follows years of litigation and investigation of the Wylys by the SEC, is the latest test of the regulator's ability to win verdicts against individuals, following a recent series of losses in fraud and insider trading cases.

The jury of eight women and four men will be asked to decide whether the Wylys controlled the securities held in the offshore system, as the government claims, or whether trustees had sole power to sell the stock, as the Wylys contend.

In her opening statement to the jury, Fitzpatrick argued that every transaction in the offshore entities originated as a "recommendation" from the Wylys that was effectively a command.

"The Isle of Man trustees were not independent," she said. "They did everything the Wylys wanted."

Susman, however, pointed to language in the trust contracts that granted the trustees authority over stock sales.

According to the government, the brothers sold more than $750 million of stock in the four companies, while failing to disclose that such transactions had occurred. They used the proceeds to buy everything from jewelry for their wives to a horse ranch in Dallas, Fitzpatrick said.

Susman told the jury he did not dispute that the trades occurred and that they used the profits to buy various items. But, he said, the trusts were created to protect assets and reduce tax liabilities, not to hide anything from the SEC.

The trial will feature testimony from several people involved in operating the offshore system, including the Wylys' former lawyer, Michael French. French will appear as a government witness after reaching a deal this month to settle charges against him by paying $794,609 and admitting to aiding in the Wylys' alleged scheme.

The 79-year-old Wyly will also take the stand, though his lawyers have indicated he will only testify for up to two hours at a time due to unspecified medical issues. Charles Wyly died in a 2011 car crash.

The SEC has also accused the Wylys of earning $31.7 million from insider trading of Sterling Software.

The jury will not consider those charges. Once the jury phase is over, U.S. District Judge Shira Scheindlin will preside over a second proceeding on the insider trading claims.

The trial comes after several recent upsets for the SEC in other fraud and insider trading cases, most prominently in October when a jury cleared Mark Cuban, owner of the Dallas Mavericks basketball team, of insider trading.

The case is SEC v. Wyly et al, U.S. District Court, Southern District of New York, No. 10-05760.

source: www.abs-cbnnews.com

Fil-Canadians get tips to avoid scam, fraud

CANADA - Community partners in Toronto recently kicked off Fraud Prevention Month this March, with a warning to the general public that anybody can be a victim of scams and fraud.

The Toronto Police Service's Financial Crimes Unit and community partners were one in educating the public about telltale signs to avoid becoming a victim.

As new types of fraud have emerged because of technology, advocates of fraud prevention urged consumers to be vigilant.

The Crime Prevention Association of Toronto gave tips on protecting oneself from scammers, particularly for newcomers to Canada.

"Most of the time, like in banking, you have to be very careful of giving away your personal information because your PIN number, your card, is your security. We have close-knit communities but we don't do the door-to-door stuff anymore. So, someone might come to you saying they're from a charity or they want money or need money, and very often it's not the truth," said Janet Sherbanowski, executive director of the Crime Prevention Association of Toronto.

Community services officer Clarita Mendigoria advised the public not to be too trusting.

" You have to be very careful. You have to protect yourself by all means," she said.

For investors, industry experts warn against guarantees that sound too good to be true.

"If you're being told it's absolutely guaranteed to succeed, in the investment industry, it's something that is not coming. You have to be aware of that; be cautious of that. The other aspect is high-pressure sales tactics. If you're being told to decide now, this deal is going to be over tomorrow, that's actually a huge red flag," said Ian Strulovitch, director of Public Affairs of the Mutual Fund Dealers Association of Canada.

Allister Field, Enforcement Manager of the Ontario Securities Commission added, "Any opportunity that requires you to recruit family and friends is something that you need to be worried of. Many fraudulent schemes require many investors to keep the scam going. So, if there's any emphasis on bringing people into the opportunity, that's a red flag as well."

In the unfortunate instance that you smell something suspicious or have become a victim, law enforcers urge the public to report them without fear.

"If an incident has taken place, you can call the Canada Anti-fraud Centre and they will log that so that if anybody else has that same occurrence, that will then be a multiple occurrence and a police force will be dispatched to investigate that," said Sgt. Vance Morgan of the Royal Canadian Mounted Police.

source: www.abs-cbnnews.com

How BDO is combating debit card fraud

MANILA, Philippines – BDO Unibank Inc. has tapped a new software solution to detect, prevent and significantly reduce fraud on debit cards.

The bank said it will use FICO's Falcon Fraud Manager, one of the world's leading analytics and decision management software firms, to analyze cardholder account transactions against fraud profiles on a real-time basis.

BDO senior vice president and head for transaction banking Emmanuel Narciso said the new software will boost not only security of clients who use debit cards for purchase and payment transactions but also the use of online payments.

"We're aiming for significantly increased purchase usage among our debit cardholders. Our success will depend largely on our ability to assure customers that they can use their cards, both online and in stores, to make purchases in an easy, safe, and secure manner," he said.

FICO's studies showed that there is a growing number of payment card fraud over the last two years in the Philippines, coinciding with the rapid growth of card adoption and usage.

Banks are therefore more cautious about growing card portfolios too quickly without effective fraud controls in place.

In 2013, banks lost as much as P220 million to ATM fraud.

"By building its debit card program upon the industry's most advanced fraud detection solution, BDO is backing its commitment to protect its customers so they can fully enjoy the convenience of their debit cards, just as they do their credit cards," said FICO president for Asia Pacific Dan McConaghy.

BDO ATM debit cards allow clients to withdraw cash through BDO, Expressnet, MegaLink and BancNet ATMs nationwide and through MasterCard/Cirrus and Visa/Plus ATMs worldwide (for MasterCard and VISA ATM Debit Card, and pay without cash for purchases, goods and services at major establishments nationwide and abroad (for MasterCard and VISA ATM Debit Card).

Clients can also view balance information, transfer money, pay bills and buy prepaid mobile reloads anytime, anywhere using BDO's electronic channels.

 source: www.abs-cbnnews.com