Hagens Berman Blog

Whistleblower News: Post-Bitcoin Boom, 'Fat Leonard' Scandal

by HB Whistleblower Legal Team


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After the Bitcoin Boom: Hard Lessons for Cryptocurrency Investors

Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter.

Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.

“I got too caught up in the fear of missing out and trying to make a quick buck,” he said this week. “The losses have pretty much left me financially ruined.”

Mr. Roberts, 28, has a lot of company. After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com.

The virtual currency markets have been through booms and busts before — and recovered to boom again. But this bust could have a more lasting impact on the technology’s adoption because of the sheer number of ordinary people who invested in digital tokens over the last year, and who are likely to associate cryptocurrencies with financial ruin for a very long time.

“What the average Joe hears is how friends lost fortunes,” said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time. “Irrational exuberance leads to financial overhang and slows progress.” read more »

Feds indict three more in ongoing ‘Fat Leonard’ scandal

A federal grand jury in San Diego on Friday charged three retired sailors — a captain and two senior enlisted personnel — in the ongoing Fat Leonard corruption scandal.

Unsealed indictments allege that Capt. David Williams Haas, 50, took at least $145,000 in bribes from Leonard Glenn “Fat Leonard” Francis, the Malaysian tycoon and defense contractor who since his late 2013 arrest in a San Diego sting has ratted out a string of corrupt sailors who steered ships to his port services.

The portly Francis plied commanders and other key figures with cash, “Thai SEAL team” prostitutes, luxury resort rooms and other perks in order to bilk $35 million from American taxpayers.

Prosecutors have charged 32 defendants and 20 have pleaded guilty to public corruption charges over the past five years.

Separate indictments released Friday targeted retired Master Chief Petty Officer Ricarte Icmat David, 61, and retired Chief Petty Officer Brooks Alonzo Parks for allegedly taking other perks from Francis. read more »

SEC Charges Unregistered Brokers Who Sold Woodbridge Securities to Main Street Investors

The Securities and Exchange Commission today charged five individuals and four companies for unlawfully selling securities of Woodbridge Group of Companies LLC to retail investors.  Woodbridge collapsed into bankruptcy in December 2017 and the SEC previously charged the company, its owner, and others with operating a massive $1.2 billion Ponzi scheme.

The Florida-based defendants named in the SEC’s complaints, Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager, and their companies, were among Woodbridge’s top revenue producers, selling more than $243 million of its unregistered securities to more than 1,600 retail investors. The complaints allege that defendants reaped millions of dollars in commissions on their sales of Woodbridge securities even though they were not registered as broker-dealers and were not permitted to sell securities.  Barry Kornfeld also violated a prior SEC order which barred him from acting as a broker.

“The broker-dealer and securities registration provisions are vital protections for retail investors,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.  “Our actions allege the defendants, while not registered as broker-dealers, pocketed millions of dollars in unlawful commissions from their widespread sales of unregistered Woodbridge securities.”

According to the SEC’s complaints, the defendants touted Woodbridge as a “safe and secure” investment.  The Kornfelds allegedly solicited investors at seminars and a “conservative retirement and income planning class” they taught at a Florida university.  The SEC alleges that Klager pitched Woodbridge investments in newspaper ads while Costa recommended them during a radio program he hosted and Robbins used radio, television, and internet marketing. read more »