Whistleblower News: Crypto Fraud, SEC Charges Hedge Fund05/09/2018
Accused Crypto-Fraudster Faces Skeptical Judge Over His Defense
A Brooklyn, New York, man accused of peddling cybercurrency offerings backed by non-existent investments in real estate and diamonds claims he can’t be prosecuted for securities fraud. But a judge wasn’t buying that defense.
“There is no blockchain, there is no real estate, there were no diamonds,” U.S. District Judge Raymond Dearie said at a hearing Tuesday. “It was a grand misrepresentation. It just wasn’t there. It’s a gossamer, there’s nothing to it."
The case filed against Maksim Zaslavskiy in November is believed to be the first criminal fraud prosecution focused on an ICO. The Securities and Exchange Commission also sued.
“Cryptocurrencies are in a novel class," his lawyer, Len Kamdang, argued Tuesday. "It’s very difficult to apply securities laws to this asset."
Kamdang noted that another judge in the same courthouse separately concluded that bitcoin was a commodity that can be regulated by the Commodities Futures Trading Commission
Dearie interrupted him.
"Is it possible that it’s both?” the judge asked. “Don’t panic, but we are in a new world here." read more »
Man who defrauded 15 people of $6M in Ponzi scheme convicted
Federal prosecutors say a jury found 76-year-old John William Cranney guilty Tuesday of wire fraud, mail fraud and money laundering.
Prosecutors say from 2001 through 2012, Cranney took money from friends and business associates and told them he was investing it in a fund or a retirement plan he said he managed. Instead, he spent the money on personal bills and debts to fund his failing nutrition products distributorship. read more »
SEC Charges Hedge Fund Adviser With Deceiving Investors by Inflating Fund Performance
The Securities and Exchange Commission today announced that it has charged New York-based investment adviser Premium Point Investments LP with inflating the value of private funds it advised by hundreds of millions of dollars. The SEC also charged Premium Point’s CEO and chief investment officer Anilesh Ahuja as well as Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.
According to the SEC’s complaint, the scheme ran from at least September 2015 through March 2016 and relied on a secret deal where in exchange for sending trades to a broker-dealer, Premium Point received inflated broker quotes for mortgage-backed securities (MBS). In addition, the defendants allegedly used “imputed” mid-point valuations, which were applied in a manner that further inflated the value of securities. This practice allegedly boosted the value of many of Premium Point’s MBS holdings and further exaggerated returns. The complaint alleges that the defendants overstated the funds’ value in order to conceal poor fund performance and attract and retain investors.
“Investors rely on their investment advisers to fairly and accurately value securities, and that is especially true when the securities trade in opaque markets,” said Daniel Michael, Chief of the Enforcement Division’s Complex Financial Instruments Unit. “As we allege, Premium Point masked its true performance, which denied investors the opportunity to make informed investment decisions.” read more »
Former Military Sealift Command Contractor Sentenced to 87 Months for Bribery and Fraud
A former contractor at the Military Sealift Command was sentenced to 87 months for his role in a bribery and fraud conspiracy through which he received nearly $3 million in bribes from approximately 1999 to approximately 2014.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; Acting United States Attorney Tracy Doherty-McCormick for the Eastern District of Virginia; Special Agent in Charge Martin Culbreth of the FBI’s Norfolk Field Office; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office and Special Agent in Charge Clifton J. Everton, III of the Naval Criminal Investigative Service (NCIS)’s Norfolk Field Office, made the announcement.
Scott B. Miserendino, Sr., 59, formerly of Stafford, Virginia, pled guilty on January 24, 2018, to one count of conspiracy to commit bribery and honest services mail fraud, one count of bribery, and three counts of honest services mail fraud.
Miserendino was a government contractor at MSC, an entity of the U.S. Department of the Navy that provides support and specialized services to the Navy and other U.S. military forces. According to the plea agreement, Miserendino and Joseph P. Allen, the owner of a government contracting company, conspired to use Miserendino’s position at MSC to enrich themselves through bribery. read more