How to Get Out of Debt With the Get Out of Debt Guy » corruption

Corrupt Criminal Club: Member’s Only

Amanda Miller — Tue, 24 Jan 2012 14:00:50 +0000

On Wednesday of last week word broke about the largest insider trading scheme involving single stock charged to date. Three defendants have pled guilty and are cooperating with the government’s investigating a scheme that allegedly netted more than $61.8 million in illegal profits.

Charges were announced against seven investment professionals, who worked at three different hedge funds and two other investment firms, for engaging in a scheme in which they provided each other with material, non public information (“Inside Information”) about two publicly traded technology companies, Dell and NVIDIA (NVDA).

Using the Dell Inside Information, the three hedge funds netted more than $61.8 million in illegal profits and one of the investment firms avoided $78,000 in losses.

Those charged in the complain unsealed last week were Todd Newman, a former portfolio manager at a Connecticut-based hedge fund (“Hedge Fund A”); Anthony Chiasson, a former portfolio manager and co-founder of a Manhattan-based hedge fund (“Hedge Fund B”); Jon Horvath, a research analyst who worked in the New York office of a Connecticut-based hedge fund (“Hedge Fund C”); and Danny Kuo, a research analyst and fund manager at an investment firm with offices in California and Nevada (“Investment Firm D”).

Also unsleaded were the guilty pleas of Jesse Tortora, a former research analyst at Hedge Fund A; Spyridon “Sam” Adondakis, a research analyst at Hedge Fund B; and Sandeep “Sandy” Goyal, a research analyst who worked at the Manhattan office of a global asset management firm (“Investment Firm 1″). They pled guilty to their roles in the insider trading scheme and are cooperating with the Government’s investigation.

According to the Complaint and Informations unsealed:

Tortora and Adondakis were part of a circle of research analysts at different investment firms who obtained Inside Information directly or indirectly from employees who worked at public companies, and then shared it with each other and with the Hedge Fund portfolio managers for whom they worked. Horvath and Kuo were allegedly part of the circle as well, and used and shared Inside Information similarly.

For example, in 2008 and 2009, Tortora admitted to providing Adondakis, Horvath and Kuo with Inside Information related to Dell’s first and second quarter 2008 earnings that he had received from Goyal, who had a source inside Dell’s investor relations department. Tortora also admitted to providing the Dell Inside Information to Newman, the portfolio manager for whom he worked. Adondakis admitted to providing the Dell Inside Information to Chiasson, the portfolio manager for whom he worked. Both Torota and Adondakis told their portfolio managers that the information came from a source at Dell.

In exchange for the Dell Inside Information, Tortora admitted to arranging with Newman to pay Goyal via a sham research consulting arrangement Hedge Fund A made with an individual (“Individual 1″), the proceeds of which were deposited in a joint account Individual 1 shared with Goyal. In fact, Individual 1 never provided any research consulting services, but Hedge Fund A nonetheless made four $18,750 payments to Individual 1 between February 2008 and September 2008. Individual 1 also received a $100,000 bonus from Hedge Fund A in January 2009.

The Dell Inside Information was allegedly used to execute illegal trades in the first and second quarters of 2008. For example, beginning in July 2008, the Dell Insider provided Goyal initial information concerning Dell’s revenues and/or gross margins for the second quarter. After the close of the quarter in 2008, but prior to Dell’s public earnings announcement on August 28 of that year, the Dell Insider provided to Goyal, who in turn provided to Tortora, more specific information concerning Dell’s margins that confirmed the gross margin would be lower than market expectations. On August 5, 2008, Tortora forwarded an email to Adondakis, Horvath and Kuo, that he is alleged to have originally sent to Newman, that included the Inside Information he had received from Goyal.

In the days before the August 28, 2008 earnings announcement, Goyal had additional communications with Tortora and again confirmed that Dell’s gross margin would be lower than market expectations. Tortora admitted to passing this information on to Newman and to Adondakis, who admitted to providing the information to Chiasson.

In Tortora email sent by TORTORA on August 25, 2008, he wrote, “did new apple and dell checks today and both sound bad, same as before.” Trading records show that Hedge Funds A, B, and C all allegedly sold quantities of Dell shares “short,” based at least in part on the Inside Information they received during the period prior to the company’s second quarter earnings announcement. Hedge Fund A reaped $2.8 million in allegedly illegal profits, Hedge Fund B made more than $50 million, and Hedge Fund C made $1 million. Trading records also show that Kuo allegedly avoided approximately $78,000 by trading on the Inside Information for Investment Firm D.

In all, the conduct alleged in the complaint relating to the Dell Inside Information resulted in more than $61.8 million in illegal insider trading profits realized by Hedge Funds A, B, and C.

In addition, in multiple fiscal quarters, Kuo allegedly obtained confidential financial information about NVIDIA, a publicly traded technology company, shortly before its public earnings release and provided it to Tortoa, Adondakis, and Horvath. The information included NVIDIA’s gross margin and revenue information. As alleged, email communications from Kuo to the other research analysts stated explicitly that the information was coming from an employee inside NVIDIA.

Newman, Chiasson, Horvath, and Kuo are each charged with one count of conspiracy to commit securities fraud and one count of securities fraud. The conspiracy charge carries a maximum potential penalty of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. The securities fraud charge carries a maximum potential penalty of 20 years in prison and a maximum fine of $5 million.

Tortora, Adondakis, and Goyal each pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud. They each face a statutory maximum sentence of 25 years in prison.

Manhattan U.S. Attorney Preet Bharara said: “The charges unsealed today allege a corrupt circle of friends who formed a criminal club whose purpose was profit and whose members regularly bartered lucrative inside information so their respective funds could illegally profit. And profit they allegedly did – to the tune of more than $61 million on illegal trades of a single stock – much of it coming in a $53 million short trade. Here, The Big Short was The Big Illegal Short. We have demonstrated through our prosecutions that insider trading is rampant and has its own social network, a network we intend to dismantle. We will be unrelenting in our pursuit of those who think they are above the law” – Source.

If you have been scammed and would like to file a scam report, please click here.

Investment Fraudster Defrauds Over 200 Out Of $14 Million

Amanda Miller — Mon, 23 Jan 2012 20:02:12 +0000

From How to Get Out of Debt

Bradley Stark, the fraudster defendant who represented himself at trail was convicted by a federal jury for deceiving investors about an investment scheme that involved more than 200 victims and more than $14 million.

Following Stark’s five-day trial he has been convicted on all counts of an indictment charging him with seven counts of wire fraud and one count of securities fraud related to his fraudulent securities offerings.

The government presented evidence at trial that Stark incorporated Sardaukar Holdings as an international business corporation in the British Virgin Islands, to engage in the business of investing and managing clients’ financial assets. From October 2004 thorough early July 2005, Stark operated Sardaukar from his residence in Riverside, California.

Stark used materially false and fraudulent representations to solicit individuals to invest in Sardaukar. For example, according to evidence presented at trial, he represented to investors, and encouraged and allowed others to represent to investors, that:

he had previous institutional trading experience;
that he was a registered securities broker or dealer;
he had hundreds of millions of dollars in investments from private and institutional clients;
he would invest the investor’s funds in sophisticated financial transactions, including tri-party repurchase agreements, commodities futures and currency trading;
historically, investments in Sardaukar had yielded high rates of return, often more than 20 to 30 percent per month; and
for $50,000 investors could purchase an insurance contract through him that would insure invested principal against any loss.

Stark also knowingly and intentionally failed to advise investors that he had been convicted in April 2003 of a federal felony offense, uttering a false and counterfeit security, and in May 2003 in the State of Colorado, of fraud by check.

In addition, the government presented evidence at trial that Stark squandered the majority of investor funds on luxury cars, travel/entertainment and jewelry. He also transferred more than $1 million to his wife.

Based on Stark’s representations, several individuals in the NDTX entered into agreements to provide funds to him for investment. These individuals in turn, using many of the false representations Stark had made to them, raised money from investors in the NDTX and elsewhere, which was sent to Stark for investment.

The largest investor in Sardaukar Holdings was a company in the Dallas area, Megafund Corporation, which was run by Stanley Leitner. Leitner, who testified for the government at trial, was previously convicted in the NDTX of wire fraud, securities fraud and money laundering, in connection with his operation of Megafund, and is currently serving a 210-month federal prison sentence.

Each of the wire fraud counts carries a statutory maximum sentence of 20 years in prison and a $250,000 fine; the securities fraud count carries a maximum statutory sentence of five years in prison and a $250,000 fine – Source.

If you have been scammed and would like to file a scam report, please click here.

Fraudulent Treasury Strips Investment Program Results In $4 Million Investor Lost

Amanda Miller — Thu, 17 Nov 2011 12:00:01 +0000

From How to Get Out of Debt

It was announced this week that Tyrone Gilliams, Jr., was indicted on charges of securities and wire fraud for operating a fraudulent United States Treasury Strips investment program. Treasury Strips are securities derived from United States Treasury Bonds.

Gilliams is the owner of TL Gilliams, LLC. In the summer of 2010, Gilliams personally solicited $4 million dollars from an investor for purposes of trading in United States Treasury Strips. Upon receiving the money from the investor, Gilliams misappropriated almost all of it.

A substantial portion of the investor’s money was used by Gilliams to fund a black-tie gala called the “Joy to the World” festival, which was held at the Ritz-Carlton hotel in Philadelphia on December 18, 2010. Gilliams spent more than $1 million on that event and on promoting the “Gatta Be Jokin Comedy Jam” in the Bahamas in December 2010. He used another $450,000 of the $4 million to refund a deposit from a prior investor. Gilliams also misappropriated approximately $1.6 million for what he claimed was a gold investment in Ghana.

The Indictment charges Gilliams with one count of securities fraud and one count of wire fraud. Each count carries a maximum potential penalty of 20 years in prison. He also faces a maximum fine of $5 million or twice the gross gain or loss from the offense on the securities fraud count, and of $250,000 or twice the gross gain or gross loss from the offense on the wire fraud count.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty – Source.

If you have been scammed and would like to file a scam report, please click here.

Former Chief Accountant Of Beazer Homes Convicted Of Fraud

Amanda Miller — Wed, 02 Nov 2011 12:30:08 +0000

From How to Get Out of Debt

Last Friday former chief accounting officer, Michael Rand, for Beazer Homes was convicted for seven crimes relating to an accounting fraud conspiracy at Beazer over a seven year time span along with document destruction and obstruction of justice.

The government has been investigating Beazer for just over 3 and a half year (since March 2007) and in July of 2009 a bill of information was filed against Rand and Beazer. Beazer accepted responsibility for those charges and, in a deferred prosecution agreement, agreed to pay restitution of $50 million.

Rand was convicted of directing an accounting fraud conspiracy to falsify reported profits at Beazer by lying to Beazer’s auditors, fraudulently achieving earnings targets, falsifying Beazer’s books and records, and deceiving the public by boosting and lowering earnings at Beazer.

According to the evidence at trial, Rand executed the conspiracy in two main ways: Between 2005 and 2006, Rand entered into a hidden oral side agreement with another company through one of its employees, which was designed to allow Beazer to obtain cash and to improperly report revenue from purported “sales” of model homes. This activity was in direct contravention of the accounting rules and hidden from Beazer’s auditors. Between 2000 and 2007, Rand directed a scheme to commit securities fraud and create false books and records at Beazer by practicing “cookie jar accounting,” which allowed Rand and others to falsely report profits in Beazer’s publicly reported financial statements.

Rand was convicted of conspiracy to commit securities fraud, to make false and misleading statements to auditors and accountants, to circumvent Beazer’s internal accounting controls, and to falsify the books, records, and accounts of Beazer. Rand was also convicted of engaging in a wire fraud conspiracy, and securities fraud upon Beazer investors and others in connection with the sale of Beazer’s common stock.

The jury also convicted Rand of two charges of obstruction of a Federal Grand Jury investigation and a charge of destroying documents in violation of the Sarbanes-Oxley Act (also known as the Public Company Accounting Reform and Investor Protection Act).

The evidence at trial showed that after being notified of the Federal Grand Jury’s investigation of Beazer in March 2007, Rand deleted nearly ten thousand e-mails, including e-mails containing evidence of his accounting fraud as well as the mortgage fraud occurring at Beazer Mortgage Corporation, an entity shut down by Beazer as a result of this investigation.

Finally, the jury convicted Rand of lying to hinder an investigation by the FBI Office in Charlotte, North Carolina, and the U.S. Attorney’s Office in the Western District of North Carolina, by making numerous false statements to investigators on behalf of the Audit Committee of Beazer’s Board of Directors, after learning that such false statements would be reported to the FBI and U.S. Attorney’s Office.

Rand faces maximum statutory penalties totaling 125 years in prison based on the charges of conviction. However, the sentence will be determined by the District Court, and will be influenced by the Federal Sentencing Guidelines, which the Court consults in order to determine a defendant’s actual sentence.

“This was an important case. Our free markets are dependent on the honesty and integrity of the people who manage our publicly traded corporations. When senior executives like Rand put personal gain ahead of their responsibility to investors, they jeopardize the very foundations of our economy. Our Office is proud to be a part of the effort to root out corporate corruption,” United States Attorney David Brown stated.

“Michael Rand selfishly profited while so many others were suffering in the struggling housing industry. [The] verdict is a stark reminder that the FBI partners with many law enforcement agencies to expose these type of criminal schemes and bring those offenders to justice,” said Special Agent in Charge Briese – Source.

If you have been scammed and would like to file a scam report, please click here.

How to Get Out of Debt With the Get Out of Debt Guy » corruption

Corrupt Criminal Club: Member’s Only

Other Related Articles to Read

Investment Fraudster Defrauds Over 200 Out Of $14 Million

Other Related Articles to Read

Fraudulent Treasury Strips Investment Program Results In $4 Million Investor Lost

Other Related Articles to Read

Former Chief Accountant Of Beazer Homes Convicted Of Fraud

Other Related Articles to Read