Filed under: Fraud

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Feds charge more than 500 in Ponzis, frauds

U.S. Attorney General Eric Holder announces the results of "Operation Broken Trust." (Chip Somodevilla/Getty)

U.S. officials said Monday they have charged more than 500 people in what they dubbed the largest-ever nationwide sweep of scam artists preying on individual investors.

The announcement comes as federal agencies and the Obama administration are facing pressure to punish big-name companies and individuals for their role in the financial mess. So far, the U.S. has won few high-profile cases, compared with the aftermath of the savings and loan crisis and the dot-com bust. Get the full story »

Research firm exec arrested in insider trading probe

An executive of a California research firm was arrested Wednesday on securities fraud and conspiracy charges after U.S. prosecutors accused him of arranging for inside information to be leaked to hedge funds, the latest development in an investigation of the industry.

The arrest of Don Ching Trang Chu of Primary Global Research stems from wiretaps and the cooperation of Richard Choo-Beng Lee, a hedge fund manager who pleaded guilty last year as part of the insider-trading prosecution of Galleon Group hedge fund founder Raj Rajaratnam and 22 other traders, lawyers and executives. Get the full story »

UBS sued for $2B for role in Madoff scam

The trustee seeking to recover money for defrauded Bernard Madoff investors has sued UBS AG and others for more than $2 billion, accusing them of collaborating in the imprisoned swindler’s massive Ponzi scheme.

UBS was accused of assisting Madoff’s fraud by sponsoring foreign feeder funds that sent client money to the once-respected money manager, lending them “an aura of legitimacy” while shielding itself from liability through secret side agreements. Get the full story »

Chicago hedge fund Balyasny examined in probe

A three-year insider-trading investigation shifted into high gear Monday as government agents raided the offices of three large hedge funds, sending shock waves through the financial world. In coordinated raids in New York, Connecticut and Massachusetts, Federal Bureau of Investigation agents seized documents at the offices of Level Global Investors LP, Diamondback Capital Management LLC and Loch Capital Management LLC.

Another hedge fund whose activities are being examined is Chicago-based Balyasny Asset Management LP, the people familiar with the matter say. Balyasny, which reported $1.8 billion in assets under management at midyear, didn’t respond to requests for comment. Get the full story »

FBI raids offices of 2 hedge funds

Federal Bureau of Investigation agents raided the Connecticut offices of two hedge funds, Diamondback Capital Management LLC and Level Global Investors LP, amid a massive insider-trading investigation.

“The FBI is executing court-authorized search warrants in an ongoing investigation,” said Richard Kolko, an FBI spokesman, who declined to comment further.

Both hedge funds are run by former managers of Steve Cohen’s SAC Capital Advisors. Get the full story »

Honey executive sentenced to 30 months in prison

A honey import executive who pleaded guilty to conspiring to avoid more than $5 million in U.S. anti-dumping duties has been sentenced to 30 months in prison.

Hung Ta Fan, who also used the name Michael Fan, was sentenced Friday in U.S. District Court in Chicago and was ordered to pay about $5.38 million in restitution. He pleaded guilty to the charges in August. Get the full story »

Pre-prison high life for Winnetka money manager

By Lisa Black | Convicted of stealing millions from investors, a Winnetka man who declared himself so broke he was assigned a public lawyer is living on the 19th floor of a $2,600-a-month luxury resort and spa overlooking Florida’s Gulf Coast.

Steven Green, 52, persuaded a federal judge to allow him to delay reporting to prison by a month — from Oct. 26 to Nov. 30 — so that he could move his wife to Pensacola Beach, Fla., before he begins his 78-month incarceration.

Office Depot CEO steps down

Office Depot Inc.’s Chairman and CEO Steve Odland is stepping down by mutual agreement with the board.

The disclosure on Monday that Odland has resigned comes only days after the company, Odland and another executive agreed to pay civil penalties tied to Office Depot’s disclosure of corporate information to a select group of investors and analysts.

U. of C. trustee named in Ponzi suit

From Crain’s Chicago Business | Hedge fund operator Steven Stevanovich, a University of Chicago trustee who once donated $7 million to the school, has been accused in a lawsuit of reaping at least $323 million in “false profits” by participating in a Ponzi scheme. Stevanovich’s attorney and a spokesman for the U. of C. did not immediately return calls. Get the full story>>

How to avoid being skimmed at ATM

The next time you pull up to an ATM, take a closer look at the machine. Does it look a little clunkier than usual?

Look too at what’s around you: Are there mirrors? Is there a brochure-holder over your shoulder? Does it look like there might be a false panel or an extra light bar attached to the machine? Get the full story »

Actor Hagman awarded $11.5M from Citi

Larry Hagman, the actor who played the villainous J.R. Ewing in 1980s TV show “Dallas,” became a victim of fraud and misconduct at the hands of Citigroup Inc., a FINRA arbitration panel ruled this week.

The total award includes $10 million in punitive damages that Citi must pay to charities selected by Hagman, $1.1 million in compensatory damages and nearly $440,000 in legal fees. Get the full story »

Conrad Black’s attorneys in appeals court today

From Canada’s National Post | Attorney’s for former Sun-Times publisher and media mogul Conrad Black will appear in Chicago’s 7th Circuit Court of Appeals to argue that Black’s fraud convictions should be tossed. Black was released from prison after serving two years of a 6.5-year sentence for breaking the so-called “honest services” law.
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Ill. man gets 23 years for $77M Ponzi scheme

Tearful, angry victims of a $77 million Ponzi scheme that targeted hundreds of often working-class Italian-Americans crowded into a Chicago courtroom Thursday to tell their stories before a judge handed the convicted swindler a maximum 23-year prison term.

The federal judge rejected prosecutors’ recommendation of a 12 1/2 year sentence for Frank Castaldi — in part because he had reported the two-decade scam himself — saying that would let the 57-year-old accountant and businessman off too easy, given the lives he ruined.

Defense contractor found guilty in fraud

A former body armor magnate, who supplied the U.S. military and law enforcement agencies, and another executive were found guilty by a jury on Tuesday of orchestrating a $190 million fraud. Get the full story »

Suburban man sentenced in $28M Ponzi scheme

A judge has sentenced the owner of a suburban Chicago printer repair company to 10 years in federal prison in a $28 million Ponzi scheme.

In a Monday statement, the U.S. attorney’s office said Matthew Scott was also ordered to pay nearly $5 million in restitution. Prosecutors accused the owner of Northlake-based Gelsco of swindling around 75 people. Some lost their life savings.