Some White-Collar Crime Cases Unraveling This Year

"A former Nasdaq stock market chairman was arrested on a securities fraud charge Thursday, accused of running a fraudulent investment business that lost at least $50 billion before he confessed to senior employees it was a "giant Ponzi scheme," authorities said. Madoff, 70, the founder of Bernard L. Madoff Investment Securities LLC, maintained a separate and secretive investment-advising business that served between 11 and 25 clients and had a total of about $17.1 billion in assets under management, prosecutors said."

Bernard Madoff's hedge fund fraud news stories from The Associated Press
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"Marc Dreier, founder and sole equity partner at the 250-attorney law firm Dreier LLP in New York, has stunned the city's legal community. The Harvard Law School graduate is a 30-year veteran lawyer, whose firm has specialties in bankruptcy, litigation and employment law."

Marc Dreier's fraud news stories from The Associated Press



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Former U.S. Treasury Secretary "Rubin registered proceeds of $30.6 million, while Prince got $26.5 million, former Chief Operating Officer Robert Druskin got nearly $32 million and former Global Wealth Management unit chief Todd Thomson got $25.7 million, according to the lawsuit."

Investors accuse Citi execs of "suspicious" trades

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Steven Schulman, 57, and David Bershad, 68, were key players in the scheme targeting now-defunct energy giant Enron Corp., AT&T Inc., Lucent, WorldCom, Microsoft Corp., Prudential Insurance and other companies.

Lawyers sentenced in kickback case in LA

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"Wall Street investment banks are marketing and selling complex schemes meant to allow foreign investors, including offshore hedge funds, to avoid paying billions of dollars in dividend taxes illegally, according to a Senate subcommittee report released Wednesday. The 77-page report, by the Senate Permanent Subcommittee on Investigations, is based on scores of internal data and documents and singles out Morgan Stanley, Lehman Brothers, Deutsche Bank, Merrill Lynch, UBS and Citigroup. The Senate subcommittee that prepared the report, led by its chairman, Carl Levin, Democrat of Michigan, has held extensive inquiries into tax and offshore abuses. It holds a hearing on the report’s findings on Thursday."

Some Banks Are Accused of Aiding a Tax Dodge

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"Four former top executives of Fannie Mae were sued on Monday, one day after the mortgage finance giant was seized by the U.S. government, in an investor lawsuit that claims the four lied about the company's financial position and artificially inflated its share price. The lawsuit, filed in U.S. District Court for the Southern District of New York, seeks class action status for investors who bought Fannie Mae securities between November 16, 2007, and September 5, 2008, according to the complaint, filed by the law firm of Coughlin Stoia Geller Rudman & Robbins."

Former Fannie Mae execs sued in investor complaint

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"Bank of America Corp, said it is ready to settle federal and state probes into the marketing of auction-rate securities, joining eight other companies that reached agreements. The bank said it has been in talks for nearly a month with the U.S. Securities and Exchange Commission and regulators in New York and Massachusetts on a resolution that would provide "liquidity relief" to customers hurt when the $330 billion market seized up in February."

Bank of America says ready to settle on auction rates

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"Citibank will refund millions of dollars to credit card customers and pay $3.5 million to the state of California to settle a lawsuit that accused the company of stealing funds from some of its customers who had died, gone bankrupt or fallen behind in their payments. The settlement, announced Tuesday, requires repayment of more than $14 million that the bank wrongly took from the accounts of 53,000 customers nationwide in so-called credit sweeps from 1992 to 2003, Attorney General Jerry Brown said. California customers, who lost $1.6 million during that period, are entitled to 10 percent interest on their refunds, Brown said."

Citibank settles with state, to repay millions

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"A federal bankruptcy judge has rejected a settlement involving the Countrywide Financial Corporation, the mortgage lender, saying he was not convinced that it was fair to nearly 300 borrowers who claimed to have been hurt by the company’s abusive practices. The settlement called for Countrywide, acquired by Bank of America last month, to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, Ronda J. Winnecour, to cover costs and settle litigation in 293 separate cases. In her complaint, Ms. Winnecour said that in dealing with the borrowers, Countrywide had made inaccurate claims, filed unnecessary court papers and demanded improper fees and charges. She also accused it of losing or destroying more than $500,000 in checks paid by homeowners in foreclosure."


Judge Rejects Countrywide Settlement

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"New Hampshire securities regulators on Thursday accused banking giant UBS of defrauding the state's leading issuer of student loans. In a civil complaint, the Bureau of Securities Regulation said that while UBS Securities LLC was steering bigger clients out of the auction-rate securities market last winter because of signs the market would collapse, it was advising the New Hampshire Higher Education Loan Corp. to stay in. "Our investigation revealed that UBS had knowledge that a market collapse was looming but did not disclose that information to the New Hampshire Higher Education Loan Corp.," said Jeff Spill, the bureau's deputy director. UBS denied defrauding anyone."

UBS faces fraud charge in New Hampshire

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"Two banks, JPMorgan Chase and Morgan Stanley, on Thursday became the latest banks to reach settlements with the New York attorney general, Andrew M. Cuomo, and other regulators as part of an investigation into the collapse of the auction-rate securities market. The pair of banks will repurchase a combined $7 billion of the troubled securities from investors. Morgan Stanley agreed to pay a fine of $35 million, while JPMorgan will pay a fine of $25 million. JPMorgan and Morgan Stanley are the third and fourth to reach settlements, after deals by UBS and Citigroup last week. Regulators continue to investigate other banks as well."

2 Banks Agree to a Buyback of $7 Billion in Securities

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"The Swiss bank UBS has reached a $19.4 billion agreement to buy back bonds in the biggest settlement yet over claims that banks misled investors to buy auction-rate securities, the Massachusetts secretary of state’s office said Friday. The agreement has been reached between UBS Financial Services and the Securities and Exchange Commission and regulators in several states, including Massachusetts and New York.
Brian McNiff, a spokesman for the secretary of state, William F. Galvin, said an official announcement might not come until Monday. The deal was first disclosed in The Boston Globe."

UBS to Spend $19.4 Billion to Buy Back Securities

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"Two Wall Street giants agreed on Thursday to buy back more than $17 billion of auction-rate securities that were improperly sold to retail customers, likely paving the way for other banks and brokerage firms to take similar actions. Citigroup reached a settlement Thursday morning with state and federal regulators, agreeing to buy back about $7.3 billion of auction-rate securities that it sold to retail customers and pay a $100 million fine for its conduct. Merrill Lynch said it would buy back about $10 billion in auction-rate investments that it sold to retail investors, a move that gets ahead of regulators investigating the company."

2 Banks Will Buy Back $17 Billion in Securities

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"A multi-state task force is probing a total of 12 Wall Street firms, including Citigroup, over how they handled clients' investments in auction rate paper, the Texas state securities commissioner said on Thursday. New York attorney general Andrew Cuomo and the Securities and Exchange Commission on Thursday morning announced that Citigroup had reached a $7 billion settlement with individuals who bought auction-rate paper."

States in auction-rate probes of 12 firms

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"Bank of America Corp, the largest U.S. retail bank, said on Thursday it received subpoenas and requests for information relating to auction-rate securities from federal and state government agencies. Separately, the Charlotte, North Carolina-based bank said Countrywide Financial Corp, the mortgage lending giant it bought last month, has responded to subpoenas from the U.S. Securities and Exchange Commission and faces a formal investigation by that agency."

Bank of America gets subpoenas, reports SEC probe


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"The Internal Revenue Service, bolstered by recent court rulings, offered more than 45 corporations on Wednesday the chance to settle disputes involving two tax shelters used to defer payment of billions of dollars. The questionable shelters, known as Lilo and Silo, involve corporations leasing, on paper only, subways, bridges, sewers and other infrastructure, often overseas, and then leasing the facilities back to their owners or operators. I.R.S. officials said that more than 45 corporations, including many large banks, had bought more than 1,000 of the shelters, improperly deferring taxes and bolstering their balance sheets. Under the settlement, the I.R.S. said it would allow the companies to keep 20 percent of the deductions claimed through 2007 from use of the shelters — if they agreed to get out of them by December 2010 at the latest. The companies would have to pay the remaining 80 percent of the improperly claimed deductions — a level still likely to hit many with seven-figure tax bills."

I.R.S. Offers to Settle Tax-Shelter Dispute

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"Investors sued U.S. bank Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) and its affiliates on Monday, charging them with causing losses through the incorrect valuation of a now-defunct bond fund's shares and making risky investments in the fund."

Wachovia, affiliates sued over bond fund losses

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"Congressional investigators say businesses have failed to pay the IRS some $58 billion over the past decade in taxes they were supposed to have withheld from their employees' paychecks and forwarded to the government."

Businesses owe $58 billion in tax withholdings

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"A federal grand jury is investigating mortgage lenders Countrywide Financial Corp., New Century Financial Corp. and IndyMac Bancorp Inc., a person familiar with the situation told The Associated Press on Thursday. Subpoenas seeking documents have been issued to all three companies, according to the person, who was not authorized to speak publicly about the case and requested anonymity."

AP source: Grand jury investigating lenders

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"Samuel Israel III bilked his investors out of $250 million, but they are hoping to recoup some of their money from one of Wall Street’s deepest pockets: Goldman Sachs.
Bayou’s creditors were taking aim at Goldman even before Mr. Israel, the former manager of the Bayou Group hedge fund firm, surrendered to the authorities on July 2. His faked suicide on a Hudson River bridge 40 miles north of Manhattan and subsequent disappearance on the day he was to start a prison term had set off an international manhunt."

Defrauded Fund Investors Sue Goldman

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"Massachusetts' top securities regulator on Tuesday accused Oppenheimer & Co. of fraud over the investment bank's sales of auction-rate securities to customers who couldn't access their money after the market for the risky investments froze."

Mass. regulator accuses Oppenheimer & Co. of fraud

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"Faced with a federal investigation into its private banking practices, the Swiss banking giant UBS said on Thursday that it would stop offering offshore banking services to clients in the United States."

New Offshore Bank Limits for U.S. Clients, UBS Says

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"Executives and employees at the major credit ratings agencies were often aware of problems in the AAA grades awarded to thousands of mortgage-related securities whose downgrades helped plunge the nation into a financial meltdown. At the same time, according to documents from the big credit ratings agencies presented at a House hearing Wednesday, pressure from bond and securities issuers translated into inflated ratings that put investors at risk. The companies - Standard & Poor, Moody's and Fitch Inc. - made enormous profits as they evaluated a ballooning number of mortgage-backed bonds, many of which were given top marks as long as housing prices went up."

Hearings show credit raters caved to pressure