Market Milking and Research Troubles

Navinder Singh Sarao is the guy who was arrested in 2015 for spoofing the U.S. equity futures market and perhaps contributing to the flash crash of 2010; he pleaded guilty in November and is awaiting sentencing. One fun fact about Sarao is that, before his arrest, he spent a lot of time complaining to securities regulators, sometimes in all caps, about market manipulation by high-frequency traders. "I don’t like the HFT arena and have complained to the exchange numerous times about their manipulative practices, please BAN IT," he told the U.K. Financial Conduct Authority. I once said that Sarao "seems like a recognizable type," "the sort of day-trader who whines a lot about how markets are rigged against him and how he'd be making so much more money if it weren't for those evil high-frequency traders."

Except that Sarao was making a lot of money. "By the time Sarao was arrested in April 2015, he had about $50 million tied up in investments around the world," in vehicles with subtle names like the "NAV Sarao Milking Markets Fund." And then it ... disappeared: read more »

Why the Trump Organization Was Cited in a Brazil Corruption Probe

It may have found itself managing a hotel backed by “shady” characters and “possible corruption.

When Donald Trump pulled his name off a beachfront hotel in Rio de Janeiro in December, his company said it was due to delays in the project and called the move part of “normal housecleaning” in the weeks before he took up the presidency.

Brazilian prosecutors and lawmakers investigating pension funds that backed the project paint a picture that may provide a different explanation. In court documents and interviews, investigators say the Trump Organization, in a deal negotiated by daughter Ivanka and son Donald Jr., found itself managing a hotel backed by shady characters, profligate pension funds and built on, prosecutors suspect, corruption.

The federal prosecutor’s office is investigating whether the FIP LSH fund that owns the hotel—it sat unfinished with prostitutes loitering at its entrance during a recent visit—bribed two state pension funds in exchange for $41 million of investment and artificially inflated the property’s value. They are also examining whether the Trump Organization profited “via illicit payment of commissions and bribes” to the pension funds, according to the court documents. No one from the Trump Organization or the company itself has been targeted in the probe. read more »

US government closer to clawing $100M from Lance Armstrong

A federal judge on Monday refused to block the government’s $100 million lawsuit against Lance Armstrong, putting the former cyclist on course for trial in a 2010 case stemming from his performance-enhancing drug use.

The lawsuit was filed by Armstrong’s former U.S. Postal Service teammate Floyd Landis. The federal government joined in 2013 after Armstrong publicly admitted he cheated to win the Tour de France seven times from 1999-2005. Armstrong was stripped of those titles and banned from competition.

Armstrong has also taken huge hits financially, losing all his major sponsors and being forced to pay more than $10 million in damages and settlements in a series of lawsuits. The Landis lawsuit would be the biggest by far, and the ruling from U.S. District Judge Christopher Cooper in Washington was a major setback for Armstrong with a trial most likely in the. read more »

Lexington Ponzi scheme founder, 70, gets nearly 15-year prison term for ZeekRewards

A federal judge Monday handed Paul Burks, founder of ZeekRewards.com, three concurrent prison sentences of 14 years and eight months for his lead role in the Lexington Ponzi scheme.

Judge Max Cogburn Jr. agreed with U.S. attorneys' "fair and generous" sentencing recommendation, a minimum 15 years and eight months and a maximum 19 years and seven months for the 70-year-old Burks.

Burks could have been sentenced to up to 59 years under federal sentencing guidelines.

ZeekRewards.com, founded in 2010, was one of the largest Ponzi schemes in U.S. history at $939 million, according to federal regulatory officials and prosecutors. read more »

 

 

Gold scam in the form of $4 million Ponzi scheme unveiled by CFTC

The U.S. Commodity Futures Trading Commission (CFTC) announced the filing of a federal civil enforcement action in Florida charging Defendants Carlos Javier Ramirez, Gold Chasers, Inc., and Royal Leisure International, Inc., all with last known addresses in Orlando, Florida, with misappropriating customer funds and engaging in fraudulent sales solicitations in connection with the purported purchase of physical gold.

According to the CFTC Complaint, since at least February 14, 2012 through at least January 31, 2016, Defendants fraudulently offered contracts to sell gold to at least 20 customers who reside in the U.S., Puerto Rico, and abroad, marketing one of their schemes through a website. Defendants allegedly fraudulently obtained at least $4.1 million from customers. Of that amount, Defendants misappropriated approximately $3.95 million of their customers’ funds, and also paid false profits to some customers, in the manner of a Ponzi scheme, according to the Complaint. read more »

 

 

SEC Charges Fuel Cell Company and Officers With Defrauding Investors

The Securities and Exchange Commission today charged a California-based penny stock company and four corporate officers with misleading investors about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.

The SEC alleges that while raising approximately $7.9 million from investors in Terminus Energy Inc., the company and its officers claimed to have a viable prototype capable of being sold and earning revenue.  According to the SEC's complaint, Terminus did not have the fuel cell technology or the funding to match their claims, and the officers were instead converting substantial amounts of investor funds to their own use.

According to the SEC’s complaint, the company failed to disclose to investors that Terminus’s operations manager George Doumanis is a convicted felon who went to prison for securities fraud and was secretly acting as an officer of the company despite being barred from participating in penny stock offerings.  Emanuel Pantelakis served on the Terminus board of directors despite having been permanently barred by the Financial Industry Regulatory Authority.  Also charged in the SEC’s complaint are Terminus’s CEO Danny B. Pratte and its former president, director, and legal counsel Joseph L. Pittera. read more »

Doing right by whistleblowers

The United States Securities and Exchange Commission’s Whistleblower Programme has been heralded a game-changer since its first award was issued in 2012; that said, it has its critics. Jane Norberg, director of the Office of the Whistleblower, and leading practitioners discuss the future focus of the programme.

Borne in the wake of the global financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act passed relatively quickly in the hope of, among other objectives, bringing greater accountability and transparency to America’s financial system. read more »

SFO investigating ABB's UK subsidiaries

The UK Serious Fraud Office (SFO) has launched an investigation into bribery allegations at Swedish-Swiss engineering company ABB’s UK subsidiaries

In a short statement, the SFO confirmed that it was looking into the activities of the “subsidiaries, their officers, employees and agents for suspected offences of bribery and corruption”.

It also said that the inquiry related to its ongoing investigation into the activities of Monaco-based Unaoil, a company that claims to provide “industrial solutions to the energy sector in the Middle East, Central Asia and Africa”.

The Unaoil investigation was initiated in March 2016 following an exposé in Australian newspaper The Age of shady dealings that the company had allegedly conducted on behalf of clients – including ABB – in order to win contracts around the world. read more »