Kabul Bank’s controlling shareholders, key supervisors and managers led a sophisticated operation of fraudulent lending and embezzlement predominantly through a loan-book scheme. This resulted in Kabul Bank being deprived of approximately $935 million funded mostly from customer’s deposits. The loan-book scheme provided funds through proxy borrowers without repayment; fabricated company documents and financial statements; and used information technology systems that allowed Kabul Bank to maintain one set of financial records to satisfy regulators, and another to keep track of the real distribution of bank funds. Shareholders, related individuals and companies, and politically exposed people were the ultimate beneficiaries of this arrangement. Over 92 percent of Kabul Bank’s loan-book – or approximately $861 million – was for the benefit of 19 related parties (companies and individuals).
SIGIR audits, inspections, and investigations have found serious weaknesses in the government’s controls over Iraq reconstruction funds that put billions of American taxpayer dollars at risk of waste and misappropriation. The precise amount lost to fraud and waste can never be known, but SIGIR believes it is significant. As of June 30, 2012, SIGIR audit reports had questioned $635.8 million in costs, and SIGIR Investigations, working with other agencies, had resulted in $176.84 million in fines, forfeitures, and other monetary results.
When Citigroup agreed last month to pay $285 million to settle civil charges that it had defrauded customers during the housing bubble, the Securities and Exchange Commission wrested a typical pledge from the company: Citigroup would never violate one of the main antifraud provisions of the nation’s securities laws. To an outsider, the vow may seem unusual. Citigroup, after all, was merely promising not to do something that the law already forbids. But that is the way the commission usually does business. It also was not the first time the firm was making that promise. Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed not to violate the very same antifraud statute in July 2010. And in May 2006. Also as far as back as March 2005 and April 2000.
Reports of mortgage fraud in the U.S. surged by nearly 88% in the second quarter of this year as banks discovered more problem loans made during the housing boom, according to a government report released Wednesday. The Financial Crimes Enforcement Network, a Treasury Department agency, reported 29,558 “suspicious activity reports” related to suspected mortgage fraud in the April-June period. That was up from 15,727 in the same quarter a year earlier. The increase was attributed to mortgage servicers performing reviews of loan files after receiving demands from mortgage investors to repurchase defaulted mortgages. Government-controlled mortgage-finance giants Fannie Mae and Freddie Mac and other mortgage investors have been trying to recoup losses by forcing banks to buy back loans that don’t meet underwriting guidelines.
Despite aggressive law enforcement efforts, stricter government regulations and tighter borrowing standards, mortgage fraud “remains elevated,” and may be getting worse, the FBI said Friday. While top officials admitted they didn’t want to sound “alarmist,” they acknowledged the distressed housing market, bleak unemployment picture and weak economy continue to provide fertile ground for fraud in the mortgage industry. “It could get worse,” said Deputy Assistant FBI Director David Cardona, who oversees the FBI’s financial crimes units. “There could be more victims,” he said.
Christine Lagarde, the French politician entrusted with restoring the reputation of the International Monetary Fund after the resignation of Dominique Strauss-Kahn, is to face a criminal inquiry over corruption claims. The decision by a French court to investigate Ms Lagarde, 55, for allegedly aiding and abetting embezzlement and fraud – offences that carry a maximum sentence of 10 years in prison – represents a fresh embarrassment to the IMF just a month after it appointed her as managing director. She is accused of wrongdoing over her role in a €403 million ($543m) payment to businessman Bernard Tapie when she was the French finance minister.
In May 2011, the USAID Office of the Inspector General published a report on the agency’s supervision and oversight of assistance activities in Afghanistan and the Kabul Bank crisis. This report was quickly withdrawn and the Federation of American Scientists’ Steven Aftergood quoted a USAID official as saying that “At the time our report was issued, it was written utilizing information from non-classified sources. After our report had been issued, USAID subsequently classified two documents that were cited in our report. This action resulted in the report becoming classified and we removed it from the web site.” Now that an “Unclassified” version of the report has been released, a comparison of the two versions reveals the “classified” portions of the report that were concealed by USAID. These sections of the report indicate that a material loss review was commissioned by USAID/Afghanistan and completed in May 2010 indicating that $850 million, or 94 percent of the value of the bank’s outstanding loans, had been fraudulently diverted to “insiders” connected with the bank. The concealed sections also indicate that Deloitte and Da Afghanistan Bank failed to provide this report to USAID for nearly six months.
Afghan officials have issued an arrest warrant for the former governor of the central bank, Abdul Qadeer Fitrat. He is being investigated in connection with massive fraud at the privately owned Kabul Bank and the printing of unauthorised amounts of currency. Earlier, it emerged Mr Fitrat had fled Afghanistan for the US – he said his life was in danger for exposing fraud.
The World Bank has called for sweeping action to tackle corruption in the global road building sector, including laws penalising bid rigging, market division, and other forms of collusive behaviour in both developed and developing countries. In a report, Curbing Fraud, Corruption and Collusion in the Roads Sector, the World Bank said corruption in road contract procurement and subcontracting was a systemic problem in some countries. “Collusion and corruption are sometimes deeply ingrained in the roads sector,” the report stated. “Short-term palliatives, such as an independent procurement evaluator or technical auditor, may be the answer. More drastic measures may also be required including the use of bid ceilings, competitive negotiation, and turning procurement over to an independent agent”.
Because an extensive, well maintained network of roads is essential for economic development, road construction and maintenance projects have been a mainstay of the World Bank’s lending portfolio since its founding. This long experience in the roads sector is reflected in favorable project evaluations. The Bank’s Independent Evaluation Group reports that roads and other transport projects consistently score higher on measures of outcomes, institutional development, and sustainability than non-transport projects and the Bank’s Quality Assurance Group has found that roads projects are well-supervised. At the same time, roads projects around the globe remain plagued by fraud, corruption, and collusion. A Transparency International poll ranked construction as the industry most prone to corruption and a survey of international firms revealed that companies in the construction industry were more likely than firms in any other sector to have lost a contract because of bribery. World Bank-financed projects are not immune. Roughly one-fourth of the 500 plus projects with a Bank-funded roads component approved over the past decade drew one or more allegations of fraud, corruption, or collusion; to date, the Bank’s Integrity Vice Presidency (INT) has confirmed allegations in 25 projects resulting in 29 cases of misconduct under Bank rules.
Switzerland has opened a money- laundering probe at the request of Hermitage Capital Management Ltd., the first criminal investigation outside Russia linked to the death of lawyer Sergei Magnitsky in a Moscow prison. The allegations involving a former Russian tax official are the most recent lodged by Hermitage founder William Browder as he asks authorities around the world to sanction officials he blames for Magnitsky’s death. The lawyer, who alleged Interior Ministry officials fraudulently collected a $230 million tax refund using documents seized from Hermitage, died in 2009 after a year in pre-trial detention. “It’s been impossible to get any kind of real criminal investigation in Russia,” Browder said yesterday by phone. “It’s highly significant that a Western law enforcement agency is taking this seriously and is launching an investigation.”
Warrants in Jasper County, Missouri, Cass County, Missouri, Clay County, Missouri and Grand Saline, Texas have been issued for Donald Anthony Moses, aka Tony Moses, for financial exploitation of the elderly and felony theft targeting senior citizens by committing home-repair schemes. The most recent confirmed date that Moses committed a home-repair scheme was on 18 January 2011 in Manhattan, Kansas.
Deputy Assistant Director Michael C. Mines Lecture to the BKA Autumn Conference 2008 on Mortgage Fraud in Relation to the Subprime Crisis Briefing.
It appears another new round of fraudulent USDOT letters are starting to circulate among motor carriers. The letters appear to be from the “U.S. Department of Transportation Procurement Office” and signed by a fictitious name of “Julie P. Weynel – Senior Procurement Officer”. The letters are attempting to obtain banking information from the targeted companies.
Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say. The investigation from the Manhattan U.S. Attorney’s Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission, these people say. The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges.
The Commission brings this securities fraud action against Goldman, Sachs & Co. (“GS&Co”) and a GS&C6 employee, Fabrice Tourre (“Tourre”), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (“CDO”) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007ACI, was tied to the performance of subprime residential mortgage-backed securities (“RMBS”) and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-ACI contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.
Pfizer Inc. violated U.S. racketeering law in the marketing of its epilepsy drug Neurontin and should pay $142.1 million in damages, a jury decided. Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals claimed in a monthlong trial in federal court in Boston that Pfizer illegally promoted Neurontin for unapproved uses. The insurer said it was misled into believing migraines and bipolar disorder were among the conditions that could be treated effectively with Neurontin, approved in 1993 by the U.S. Food and Drug Administration for epilepsy. “The jury found Pfizer engaged in a racketeering conspiracy over a 10-year period,” Tom Sobol, a lawyer for Kaiser, said after yesterday’s verdict. “That bodes well for future cases.”
Bernie Madoff List of Counterparties, February 3, 2009.
The former New York police chief who became a national hero after the September 11 terrorist attacks was sentenced yesterday to four years in prison. Bernard Kerik, the city’s only police commissioner to ever plead guilty to a crime, confessed to eight felonies, including tax fraud and lying to White House officials. The sentencing marked a dramatic downfall for the son of a prostitute who began his career as a pony-tailed undercover officer and rose to become the head of America’s largest police department.
New York state Thursday sued Bank of America and two former top executives, alleging fraud and deception in the banking giant’s Merrill Lynch takeover in order to get billions in bailout funds. The news came as the top US stock market regulator, the Securities and Exchange Commission (SEC), announced a new agreement to settle its investigation calling for Bank of America to pay 150 million dollars. Andrew Cuomo, the New York state attorney general, announced the lawsuit against the bank, former chief executive Kenneth Lewis and former chief financial officer Joseph Price “for duping shareholders and the federal government in order to complete a merger with Merrill Lynch.”
GAO found that 40 executives for 10 companies received approximately $350 million in pay and other compensation in the years leading up to the termination of their companies’ underfunded pension plans. GAO identified salaries, bonuses, and benefits provided to small groups of high-ranking executives at these companies during the 5 years leading up to the termination of their pension plans. For example, beyond the tens of millions in base salaries received, GAO found that executives also received millions of dollars in stock awards, income tax reimbursements, retention bonuses, severance packages, and supplemental executive-only retirement plans.
Bernard B. Kerik, a former detective who rose to lead the New York Police Department through the 9/11 attack before his career crumbled in scandal, pleaded guilty Thursday to eight charges including tax fraud and lying to White House officials. Wearing a blue suit and a red tie in Federal District Court here, Mr. Kerik sat at the defense table in the packed courtroom with a subdued expression. In a deep, gravelly voice, he said, “Guilty, Your Honor,” as the judge read the charges against him.
After four months of testimony that cast a harsh light on the operatic lives of East Coast social royalty — with tales of greed, abuse and bitter family feuds — a jury on Thursday convicted legendary philanthropist Brooke Astor’s son of tricking her into changing her will. The jury, which deliberated 11 full days, found Anthony D. Marshall guilty on 14 of the 16 counts against him, including grand larceny involving the theft of cash and art, possession of stolen property, and conspiracy to defraud Astor. Marshall, 85, could receive up to 25 years in prison.
American Police Force is a private military company which claims to “service all 50 states and international countries” through law enforcement training, surveillance, kidnapping and ransom recovery services, as well as providing security to coalition forces in Iraq and Pakistan. At this time, it is difficult to verify any of these claims. The company is not listed in government contract databases, is not registered as a private investigative service, and only has “virtual offices” without physical addresses.
Executive Compensation Practices
* AIG is focused on repaying the govemnment and the taxpayers, selling assets, and preserving the value of AIG’s diverse businesses.
* In recognition of AlG’s obligation to taxpayers, the company has taken several voluntary steps to restrict executive compensation beyond the requirements of TARP. These restrictions are far more onerous than measures taken by any other company that has received federal assistance
* In all, 2008 total compensation for the top 47 AIG executives is 56% lower than their 2007 total compensation.