news october 2008 international

International Fraud News October 2008

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IRS Issued $1.6 Billion in Fraudulent Tax Refunds

The Internal Revenue Service distributed roughly $1.6 billion in refunds to taxpayers who filed falsified tax returns in 2006 and 2007, despite efforts to stop them, according to a new report from the Treasury Department's inspector general. (Read more...)

Benefit fraud and error at £2.6bn

At least £2.6bn in UK benefits was lost to fraud and errors in the last financial year.

Official statistics confirmed that 2% of the total benefit bill was overpaid between April 2007 and March this year. (Read more...)

McAfee suspects fingered for $3.8m fraud

Police have arrested a former marketing exec at anti-virus firm McAfee on suspicion of scammming millions of dollars out of the security software firm. (Read more...)

Ex-health care CEO convicted in $1.9B fraud case

A federal jury on Friday convicted the former CEO of a failed health-care financing company in a $1.9 billion fraud case that prosecutors likened to the Enron or WorldCom scandals. (Read more...)

Lehman's: time to call in the Serious Fraud Office

Isn't it about time the Serious Fraud Office is called in over the collapse of Lehman Brothers? In the US, Federal investigators are crawling all over what is now unambiguously the worst financial crisis since the 1930s, yet in Britain, no criminal investigation of any aspect of the banking maelstrom has yet been announced. This is despite growing evidence of malfeasance in connection with the Lehman's insolvency in particular, but also more generally in the market-ing of some of the securities at the heart of the crisis. (Read more...)

Tajik president accused in £90m aluminium fraud case

The President of Tajikistan was today accused of involvement in a multimillion-pound aluminium fraud that has led to one of the most expensive lawsuits in British history. (Read more...)

Refco's Tone Grant Begins 10-Year Sentence for Fraud

Former Refco Group Ltd. President Tone Grant, a decorated U.S. Marine Corps veteran, entered a U.S. prison to begin serving a 10-year sentence for defrauding investors of $2.4 billion in an eight-year accounting scheme. (Read more...)

BT Fined for Fraud against MoD

BT has been fined £1.3 for call fraud by the Ministry of Defense. The MoD found that BT was calling each other on the phone to meet their call answering targets. (Read more...)

RM3 billion lost to fraud

KUALA LUMPUR (Oct 28, 2008): Police today said an estimated RM3 billion was lost in white collar crimes from 2006 to this month, a loss that reflects the size of the problem for businesses regardless of size. (Read more...)

Businessman sentenced in $107M bank fraud

SAN ANTONIO — A businessman has been sentenced to nine years and nine months after pleading guilty to charges related to bilking $107 million from a taxpayer-funded bank. (Read more...)

US senator guilty of corruption

Washington - The longest serving Republican in the US Senate, Ted Stevens, was convicted of seven corruption charges on Monday in a trial that threatened to end the 40-year career of the state of Alaska's political patriarch in disgrace. (Read more...)

Businessman Sentenced for $10 Million Fraud

A formerly high living San Antonio businessman will spend nearly ten years in less luxurious accommodations…a federal prison..after pleading guilty to ripping off $10 million from taxpayers, 1200 WOAI news reports. (Read more...)

Fraud, fraud, everywhere

The numbers are out: Fraud is rife in the GCC. And with the financial crisis threatening to ruin businesses, it’s likely to get worse. (Read more...)

Fake college boss guilty of fraud

The main defendant in a trial over a £16m fraud which saw 80,000 college students scammed has been found guilty.

Michael Smallman, 45, of Northallerton, was convicted of fraudulent trading while his wife Angela was convicted of money laundering. (Read more...)

Fraud Trial to Focus on Accounting at Heilig-Meyers

A securities fraud trial involving some of the biggest names on Wall Street begins Tuesday in New York, opening a window into the sale of asset-backed securities.

A group of large institutional investors, led by the American International Group, sued Bank of America in 2003, accusing it of fraud and deceit in connection with its sale of $648 million in securities offered by the Heilig-Meyers Company, once the nation’s largest publicly traded retailer of home furnishings and a onetime darling of Wall Street. The plaintiffs, who bought about $300 million of the now nearly worthless securities, are seeking more than $530 million in damages and compensation. (Read more...)

Poulsen begins defense in fraud trial

After doing their best to rebut allegations of fraud and witness intimidation through cross-examination, attorneys for Lance Poulsen got their first chance to mount a defense Monday. (Read more...)

Defense Lawyers See Bonanza From Lehman, Bear, Other Collapses

A rising number of defendants and suspects in government probes of collapsed financial firms may yield the biggest fee bonanza for the defense bar since the days of Enron Corp. and WorldCom Inc. The largest cases can generate millions in revenue. Former Enron Chief Executive Officer Jeffrey Skilling alone paid $23 million in legal fees even before he went on trial for fraud and was convicted. (Read more...)

UBS to Pay HealthSouth $100M for Abetting Fraud

HealthSouth Corp. says it will get $100 million from UBS in partial settlement of a derivative lawsuit over the investment bank's role in the health-care provider's $2.7 billion accounting fraud. The settlement agreement relates only to UBS and does not affect HealthSouth's claims against its former CEO Richard Scrushy and other defendants in the same action, or against the company's former independent auditor, Ernst & Young. (Read more...)

South Jordan man pleads guilty in $4.7 million fraud

A 40-year-old South Jordan man admitted this week to bilking two investors out of about $4.7 million.

Darin Layne Kracl pleaded guilty in 3rd District Court to one count each of second-degree felony securities fraud and third-degree felony theft. (Read more...)

Take in alleged fraud may be $30 million

If Wendell Spell bilked investors out of millions of dollars, he did it in textbook fashion.

According to those who dealt with him, he paid out good returns on what he said was an overseas venture to sell heavy equipment in the Middle East. He relied on word of mouth and let investors do the recruiting for him. And he bolstered his trustworthiness by invoking the word of God.

Now, as the 50-year-old ex-con from Clermont is nowhere to be found, numerous sources who did not want to be quoted say his alleged Ponzi scheme may have taken its victims for $20 million to $30 million. (Read more...)

Lawsuit claims Barclays is guilty of fraud

Barclays shunted hundreds of millions of dollars of toxic mortgage assets into two secretive investment vehicles that it had created itself. It did this just as the collapse of two Bear Stearns hedge funds last year alerted executives to the extent of the coming troubles in the credit markets, according to a lawsuit. (Read more...)

Md. man sentenced to 9 years for $32 million fraud

BALTIMORE – A Cockeysville man was sentenced to nine years in federal prison today for a complicated multimillion-dollar fraud involving the sale and lease of nonexistent computer hardware and software. (Read more...)

UBS to Pay HealthSouth $100M for Abetting Fraud

3 Nigerians busted for $30 million fraud

Three Nigerian men have been able to swindle the Citi Bank in New York of about 30 billion dollars by getting it to honour a forged cash payment request from Ethiopia's Central Bank.

They were arrested in Seoul on Thursday for allegedly withdrawing millions of dollars from Citi Bank in New York on the forged cash payment request, South Korean Police said. (Read more...)

Former NZ foreign minister cleared of fraud allegations

New Zealand's Electoral Commission has cleared the former foreign minister Winston Peters in an investigation into undeclared political donations. (Read more...)

Investigator recalls certain Livent file

A private investigator working for Livent Inc. said he still remembers pulling an internal company document out of the briefcase of company co-founder Garth Drabinsky and realizing it appeared to contain information about financial manipulations.

"That is probably the document that sticks uppermost in my mind," Gary Gill told a Toronto courtroom yesterday. (Read more...)

Cox warns US not to drop accounting rules

Christopher Cox has warned against making a knee-jerk reaction to the financial crisis and bowing to pressure to change accounting standards.

The SEC chairman made the comments as he testified before the House of Representatives' Committee on Oversight and Government Reform in relation to the financial crisis gripping the global economy. (Read more...)

Defendant Indicted in $20 Million Mortgage Fraud Scheme

An indictment was unsealed this afternoon in Brooklyn federal court charging Osmond Decoteau, 48, with wire fraud for masterminding a scheme to defraud mortgage lenders and banks of more than $20 million in connection with the sale of several properties located in Brooklyn and Florida. (Read more...)

Ex-Leeds director Simon Morris arrested in fraud and money-laundering probe

PROPERTY mogul Simon Morris was in custody last night after police staged a series of raids as part of a major investigation into fraud and money laundering allegations. (Read more...)

Fraud at Alarming Levels - KPMG’s latest GCC Fraud Survey 2008

Fraud at Alarming Levels - KPMG’s latest GCC Fraud Survey 2008 43% believe fraud is a major problem while 60% believe fraud is set to increase in the region.

In its latest Gulf Cooperation Council (“GCC”) Fraud survey (2008), KPMG, the global network of professional service firms providing audit, tax, and advisory services, revealed that losses resulting from financial crime in the region are likely to run into billions of US$ per annum given that respondents to the survey reported individual losses of some USD 100 million. (Read more...)

2 men arrested in arms deal fraud inquiry

LONDON (AP) - Two men have been arrested over allegations that Europe's largest defense contractor offered bribes to secure arms deals, Britain's serious fraud office said Tuesday. (Read more...)

Federal fraud trial begins for former judge

A former Pennsylvania Superior Court judge will be on the other side of the bench this week as he faces fraud charges in U.S. District Court in Pittsburgh.

According to published reports, Michael Joyce, 59, claimed a 2001 car accident left him in constant pain, yet prosecutors say he was regularly golfing and piloting a plane at least 50 times since the incident. (Read more...)

Jupiters Casino workers charged for $5m seafood fraud

THREE former Gold Coast casino workers have been charged over a $5 million fraud allegedly involving ''phantom'' food orders over eight years. (Read more...)

U.N. Cites $20 Million in Fraud

A U.N. task force has uncovered five new cases of corruption, fraud and mismanagement involving $20 million in contracts throughout the international body, according to the unit's annual report to the U.N. General Assembly and sources familiar with the findings. (Read more...)

Citigroup Wins Parmalat Case, $364 Million Jury Award

Citigroup Inc. beat a lawsuit seeking $1.92 billion in damages when a New Jersey state court jury ruled it didn't help corrupt executives at Parmalat SA loot the Italian dairy before the company collapsed in 2003. (Read more...)

International pact sought on cigarette smuggling

GENEVA, Oct 20 (Reuters) - Delegates from more than 150 countries met on Monday to push for a wide-ranging pact to curb the booming trade in cigarette smuggling. (Read more...)

Memento and IBM Join Forces to Help Financial Institutions Fight Fraud

Memento, Inc., a leader in enterprise fraud management, today announced an agreement with IBM to deliver fraud detection solutions to the financial services industry. The two companies will jointly develop, market and sell innovative, next-generation solutions for monitoring, detecting and investigating a wide variety of fraud types, including deposit account fraud, new account fraud and insider fraud. (Read more...)

Lehman faces criminal probes

New York - Lehman Brothers Holdings is the subject of three US federal criminal probes and at least 12 subpoenas of individuals to testify before grand juries, according to a lawyer for the bank that last month filed the largest bankruptcy in history. (Read more...)

Warning over UK's overseas bribes culture

British business will be issued with an unprecedented corruption health warning today by leading industrialised nations angry at London's failure to combat corporate foreign bribery, the Financial Times has learned. (Read more...)

FBI resources limited for economic probes: report

NEW YORK (Reuters) - The FBI, after years spent focusing on national security, is struggling to find agents and resources to investigate wrongdoing tied to the country's economic crisis, The New York Times reported in Sunday editions. (Read more...)

Man charged over $7.3m bank fraud

A Sydney man has been charged with defrauding a major bank of more than $7 million by using fake documents. (Read more...)

New York Threatens to Prosecute AIG for Fraud

AIG, the emerging "poster company" for corporate greed in the current financial meltdown, is coming under increasing pressure. New York Attorney General Andrew Cuomo has threatened legal action against the company unless it reigns in its lavish executive pay and perks and recovers what has already been spent. (Read more...)

Microsoft's Fast charged with 'accounting fraud'

Norwegian economic crime police have raided the headquarters of Microsoft-owned Fast Search and Transfer and charged the firm with accounting fraud. (Read more...)

It's Years More Jail for the "Tyco Two"

It looks like former Tyco International Ltd. chief executive Dennis Kozlowski and former chief financial officer Mark Swartz will be in the slammer for many years more, after all.

The New York State Court of Appeals upheld their criminal convictions today, according to Reuters. In a written decision, the court rejected the former executives' arguments that their trials were flawed and that the convictions should be overturned. (Read more...)

Feds investigate failure of Washington Mutual

Federal authorities said Wednesday they have opened an investigation into the failure of Washington Mutual Inc., the largest bank failure in U.S. history. (Read more...)

Former Enron broadband executive pleads guilty

Rather than face a second trial, the former chief executive of Enron Broadband Services pleaded guilty Tuesday to one count of wire fraud. (Read more...)

KPMG Prosecutor Assails Ex-Executives' Tax Schemes

Three former KPMG LLP executives and a lawyer helped wealthy clients evade hundreds of millions of dollars in taxes through ``a magical tax elimination scheme,'' a prosecutor told jurors at the start of their trial. (Read more...)

Almost £2 million VAT and tax fraud case: Director told pay £250

A DIRECTOR of a Swaffham employment agency was sentenced at Norwich Crown Court yesterday in connection with a revenue fraud case totalling almost £2 million. (Read more...)

Layoffs coming at Petters companies

About 50 employees of Petters Group Worldwide companies are expected to get layoff notices today, igniting the restructuring of businesses shaped by founder Tom Petters, who remains in jail on federal fraud charges. (Read more...)

Customers not affected by ATM fraud, says al-Jaidah

QIB chief executive officer Salah Mohamed al-Jaidah has said his customers have not been affected by the recent ATM fraud in the UAE, which is said to have incurred huge losses to many people in the region. (Read more...)

Serious Fraud Office investigates Clegg & Co Finance

The serious fraud office today announced it had commenced an investigation into possible offending associated with the collapse of Clegg & Co Finance Limited. (Read more...)

Interpol and U.N. to launch anti-corruption academy

VIENNA (Reuters) - The U.N. anti-crime agency and Interpol said Monday they would create an academy teaching officials worldwide how to curb corruption, which sucks roughly $1 trillion a year out of the global economy. (Read more...)

Jury Awards $31.8 Million in Damages Against KPMG in Accounting Fraud Trial

A jury today awarded $31.8 million against Big Four firm KPMG in an accounting fraud lawsuit. (Read more...)

Ex-Duane Reade Execs Charged with Fraud

The Securities and Exchange Commission charged a former CEO and a one-time CFO of drug store chain Duane Reade with fraud, saying they orchestrated elaborate multimillion-dollar accounting schemes that led the company to inflate earnings. (Read more...)

New Tips for Testing Fair Value amid Turmoil

Another standard-setter has entered the fray to try helping accountants and auditors deal with fair-value rules during the credit crisis. The guidance — from the International Auditing and Assurance Standards Board (IAASB) — is the latest in a rush of advice geared to dealing with the intricacies of marking assets to market. And it comes as critics increasingly are calling fair-value a major culprit behind the current financial turmoil. (Read more...)

Banks blindsided by global crisis: rogue trader

London - Governments and central banks do not understand markets, so it is "foolish" to trust them to resolve the current global financial crisis, British rogue trader Nick Leeson said Tuesday. (Read more...)

Fraudsters are cunning, but you can outfox them...

Financial fraud has been changing. While chip and PIN technology has cut fraud using lost or stolen cards, "phishing" scams – where fraudsters send emails purporting to be from a customer's bank and try to elicit confidential information from them – has rocketed. (Read more...)

Trial of National Century boss begins

Did National Century Financial Enterprises Inc. and its founder Lance Poulsen engage in a multibillion-dollar scam, or was there a misunderstanding followed by scapegoating?

Jurors in Poulsen’s criminal fraud trial heard both theories as government prosecutors and defense lawyers presented their opening arguments Thursday morning. (Read more...)

Lead Defendant in Aegis Company $60 Million Tax Fraud Conspiracy Sentenced to 223 Months in Prison

The lead defendant in a nationwide $60 million tax fraud conspiracy was sentenced today to more than 18 1/2 years in prison, federal officials announced. Michael A. Vallone of Orland Park, Ill., was one of the founders and the executive director of The Aegis Company. (Read more...)

Castroneves charged with tax evasion, fraud

Two-time Indianapolis 500 winner and Dancing With The Stars champion Helio Castroneves was indicted Thursday in Miami on tax evasion and tax fraud charges. (Read more...)

Credit card fraud reaches record high

Credit card fraud has hit a record high, with figures illustrating that it has gotten worse since the introduction of the chip and pin system.

Despite efforts to combat credit card and debit card fraud, there has been a 14 per cent increase in the number of incidents of fraud, according to new figures from the Association of Payment Clearing Services (APACS). (Read more...)

UK Fraud Office not to pursue TV phone-in probe

Britain's Serious Fraud Office said on Wednesday it would not launch a full investigation into the premium-rate phone-in row which damaged viewer confidence in broadcasters last year. (Read more...)

UK banking fraud losses rise to £301.7m

UK banking losses due to fraud in the first half of 2008 hit £301.7m compared to £263.6m in the same period last year, according to the latest figures from UK banking association APACS. (Read more...)

Trial to begin for Ohio exec in $1.9B fraud case

Entrepreneur Lance Poulsen founded an innovative business helping cash-starved medical providers like nursing homes pay off their bills earlier than slow-moving insurance reimbursements.

Along the way he became a yacht-owning multimillionaire and grew National Century Financial Enterprises into one of the country's largest health care financing businesses.

Federal prosecutors in a $1.9 billion corporate fraud trial allege Poulsen did something else: perpetrate fraud on the scale of Enron or WorldCom by fabricating company data, misleading investors and covering up shortfalls by moving money between accounts. (Read more...)