Search
Most Recent
AdSurfDaily Agape agent American Integrity Aronson asset sales Attorney av bar reg baker bank bank of america Bankruptcy baumann bermudez black diamond blackwell bridge loan bull cattle CD celebrity cftc charity china China Voice church cityfund claims claims process clawback commission commodities commodity pool computer program congress Crown Forex currency death sentence denver diamond bar disgorgement Distribution Dodd-Frank donnan Dreier dunhill e-bullion elderly E-M Management SEC england Fairfield family FBI FDIC Fees female ponzi scheme financial advisor fine FINRA football forex fraud fufta fugitive Full Tilt gift card guilty plea GunnAllen hawaii Heckscher HSBC india invers forex janvey John Morgan JP Morgan kansas ken bell kenzie las vegas lawsuit lawyer libya Lifland machado Madoff Marian Morgan metro dream homes mets milberg millers a game Morgan European Holdings mortgage multiple schemes NCAA Net Winner new jersey notes objection Oxford Patrick Kiley paul burks PermaPave Pettengill Petters Picard poker Ponzi ponzi scheme ponzi scheme database ponzi scheme list Prime Rate profitable sunrise prosun pta puerto rico Rakoff real estate receiver receivership regulation relief defendants religion remission repeat offender restitution Rothstein RRA sec sentencing simmons sipa sipc snelling standing stanford stettin subpoena td bank telexfree treasury bonds treasury strip Tremont Trevor Cook UBS UFTA uga utah venture advisors Wachovia wilpon wire fraud woman zeek zeek rewards zeekler zeekrewards
Social
Recent SEC Releases
Friday
Jun242011

Texas Man Indicted for $4 Million Ponzi Scheme

A Texas man was indicted today for his role in a Ponzi Scheme estimated to have pulled in $4 million of investor funds.  Christopher Blackwell, 32, was charged with two counts of wire fraud under 18 U.S.C. 1343.  Each charge carries a maximum sentence of twenty years in federal prison along with a $250,000 fine.

Prosecutors allege that Blackwell, operating AV Bar Reg Inc. and Millers A Game LLC, claimed to have an established trading program in which investors could receive gains of 25% - 30% per month.  In attempting to bolster his credibility and reputation, Blackwell made a variety of representations concerning his academic and professional background.  These claims included masters and doctoral degrees from a Spanish university and previous employment at Goldman Sachs and the Bank of Madrid.  All of these claims were false.  

Thus far, twenty victims have been identified.  The Securities and Exchange Commission filed a complaint against Blackwell in February, which was settled in March.  

 

A copy of the criminal complaint is here.

A copy of the complaint filed by the Securities and Exchange Commission is here.

Friday
Jun242011

Stanford Receiver Seeks Possession of Libyan Withdrawals

In a lawsuit filed earlier this month, Stanford receiver Ralph Janvey sought to have a federal judge determine if $55 million should be returned to defrauded investors rather than to the Libyan government.  Along with the lawsuit, filed June 6, Janvey also obtained a court order freezing $55 million worth of Libyan assets in United States banks.

Recent filings have accused the Libyan Investment Authority, the investment arm of the Libyan government, of advanced knowledge of the impending crisis involving Stanford and subsequent action on that information by withdrawing funds days before Stanford's scheme would collapse.  According to court filings, the Libyans withdrew $55 million between November 2008 and late-January 2009.  The Securities and Exchange Commission filed civil charges against Stanford's operations weeks later on February 16, 2009.

While the lawsuit has been filed under seal in Texas federal court, Janvey's attorneys have indicated that the money should be returned for the benefit of defrauded investors because the withdrawals constituted a fraudulent transfer, governed by the Texas Uniform Fraudulent Transfer Act ("TUFTA"). Under TUFTA, an action must be brought to recover a fraudulent transfer within four years of the transfer.  The judge presiding over the case has scheduled a December hearing to determine ownership of the funds.  Stanford's trial was recently postponed from September to January of next year due to medical issues.

Thursday
Jun232011

HSBC Seeks Dismissal of Madoff Trustee's Suit

In December 2010, HSBC and  a dozen 'feeder-funds' were sued by Irving Picard for $9 billion.  Picard, the court-appointed trustee overseeing the liquidation of Madoff's firm, charged that the banking giant and funds were complicit in Bernard Madoff's fraud.  During a hearing in New York today, HSBC argued that Picard and his attorneys lacked standing to bring such a suit on behalf of defrauded investors.  Such a legal strategy is a common argument used to counter trustee-initiated lawsuits.

Under 28 U.S.C. §754, receivers are vested with "complete jurisdiction and control of all such property with the right to take possession thereof."  Under this theory of exclusive jurisdiction, Picard argued in a filing earlier this month that as a trustee, he had "standing to assert common law claims to seek damages."  Had HSBC reacted appropriately to the red flags surrounding Madoff's activities Picard argued, the scheme would have been uncovered much earlier, saving billions in losses.

In addition to contesting Picard's standing in bringing the suit, HSBC has also pointed to massive losses it incurred as a result of Madoff's fraud.  HSBC has alleged that it sustained losses of nearly $1 billion invested in the feeder funds that evaporated when Madoff's fraud was exposed.  District Judge Jed Rakoff has indicated that he plans to issue a written ruling by the end of July.

Wednesday
Jun222011

SEC Adopts New Hedge Fund Regulations 

The SEC today adopted new regulations aiming to implement key provisions of the recent Dodd-Frank Act, including some provisions that may aid in the future detection of ponzi schemes.  Until the Dodd-Frank Act, many private advisers overseeing large asset bases were largely excluded from regulatory scrutiny.  

Among the new requirements include the mandatory disclosure by advisers to private funds of basic organization information about each fund under management including size and ownership, and identification of individuals/entities providing key tasks for the fund such as auditors, custodians, administrators, and marketers.  Additionally, funds will have to disclose the use of practices that may present a potential conflict of interest, including the use of compensation for client referrals and the recent focus on the use of soft dollars.

The new regulations offer much-needed transparency that arguably will result in better regulatory oversight and faster detection of questionable business practices.  Proponents argue that warning signs, such as the use of a a 'mom-and-pop' auditor in a multi-billion dollar fund (see Madoff) or consistent out-performance of market indices, will be much more visible with the enactment of the regulations.  

One potential limitation of the new regulations is their inapplicability to advisers of private funds with less than $100 million in assets.   Such funds would be exempt unless they agree to voluntarily register with the SEC.  The new regulations are currently scheduled to take effect March 30, 2012.

Wednesday
Jun222011

Court: Political Committees Must Return Stanford Donations

A Dallas federal court today ordered the return of nearly $2 million in political donations made by Robert Allen Stanford that had been sought by Ralph Janvey, the court-appointed receiver.  While noting that there appeared to be no bad faith on the part of the five Republican and Democratic national political committees, District Court Judge David Godbey agreed with Janvey that the money should be returned to benefit the defrauded investors of Stanford's scheme.  In total, the amount to be returned exceeds $1.7 million including court-ordered pre-judgment interest.

In his order granting Janvey's motion for summary judgment, Judge Godbey recognized the inherent principles of equity and the fact that the political committees would "endure no greater hardship than that suffered by other innocent victims of the Stanford defendants’ Ponzi scheme who must do the same.” Janvey has filed a large amount of 'clawback' lawsuits that seek funds from investors who received distributions in excess of their principal amount invested with Stanford.  According to the Stanford Receivership website, Janvey has filed 844 clawback lawsuits to date.

Also of interest is the apparent effort by the political committees to avoid such an outcome.  One of the attorneys representing Janvey has indicated that he intends to seek reimbursement for legal fees expended in litigating the issue.