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Former Bank Employee Pleads Guilty to Manipulating U.S. Treasury Securities Prices

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A former trader at a global financial institution pleaded guilty today to manipulating U.S. Treasury securities prices

According to court documents, Tyler Forbes, 27, of Manlius, New York, was employed as a trader on the U.S. Treasuries desk of a global financial institution. From approximately January to June 2019, Forbes engaged in an unlawful “spoofing” scheme to manipulate the price of certain U.S. Treasury securities traded in the secondary (or “cash”) market — predominantly two and three-year U.S. Treasury notes, as well as 10-year U.S. Treasury notes. Forbes’s spoofing strategy involved electronically placing large, non-bona fide “spoof orders” that he intended to cancel prior to execution on one side of the market, while simultaneously entering smaller, genuine orders that he intended to execute on the opposite side of the market. Many of Forbes’s genuine orders were “iceberg” orders, meaning that only a portion of the order’s full size was visible to other market participants at any given time, whereas all of Forbes’s spoof orders were fully displayed. The purpose of Forbes’s “spoof orders” was to create a false appearance of market depth and activity in order to mislead other traders, and to artificially raise or depress the prevailing market price so that Forbes could execute his genuine orders more easily or more profitably.

Forbes pleaded guilty to one count of manipulation of security prices. He is scheduled to be sentenced on July 28 in the Eastern District of New York and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division and Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division made the announcement.

The FBI investigated the case.

Deputy Chief Avi Perry and Trial Attorney Sara Hallmark of the Criminal Division’s Fraud Section are prosecuting the case.

Press release distributed by the DOJ.

Featured image: by DonkeyHotey is marked with CC BY 2.0.

TRO and asset freeze against alleged perpetrators of nearly $450M Ponzi Scheme

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"Personal Injury Stethoscope" by sandiegopersonalinjuryattorney is marked with CC BY-SA 2.0.

Washington D.C. — The Securities and Exchange Commission today announced charges and an asset freeze against several Las Vegas-area individuals and companies allegedly behind a nearly half-billion dollar Ponzi scheme involving purported personal injury settlements. The SEC charged certain defendants with violations of the antifraud provisions of the federal securities laws, certain individual defendants with acting as unregistered brokers, and all defendants with engaging in an unregistered securities offering.

According to the SEC’s complaint filed in U.S. District Court for the District of Nevada, attorney Matthew Beasley and cohorts Jeffrey Judd and Christopher Humphries falsely told hundreds of investors, including many in their own church community, that they would earn 12.5 percent quarterly returns by making purportedly risk-free investments in J&J Consulting Services. Beasley and Judd created the company to supposedly advance funds to tort plaintiffs who had reached settlements with insurance companies. But according to the complaint, none of the $449 million raised from investors over a five-year period was used for this purpose. The alleged perpetrators instead used investor money to purchase luxury homes, cars, boats, and a private jet for themselves, and paid fictitious returns to investors in Ponzi-like fashion to keep the scheme going.

“As alleged in our complaint, Beasley, Judd, and others enriched themselves through lies and deception, using their religious and community networks to fleece investors out of hundreds of millions of dollars after promising them a nearly 50 percent annual increase on their initial investment,” said Tanya Beard, Acting Director of the SEC’s Salt Lake Regional Office.

The entities charged with fraud in this action are J&J Consulting Services, Inc. (Nevada), J&J Consulting Services Inc. (Alaska), J and J Purchasing LLC, and Beasley Law Group PC, whereas the affiliated individuals are Judd, Beasley, and Humphries. Individuals charged with acting as unregistered brokers are Judd, Humphries, Shane Jager, Jason Jongeward, Denny Seybert, and Roland Tanner. Finally, the entities and individuals named as relief defendants in this action are The Judd Irrevocable Trust, PAJ Consulting Inc, BJ Holdings LLC, Stirling Consulting L.L.C., CJ Investments, LLC, Rocking Horse Properties LLC, Triple Threat Basketball, LLC, ACAC LLC, Anthony Michael Alberto, Jr., and Monty Crew LLC.

The asset freeze obtained by the SEC against Beasley and the other defendants prevents any further dissipation of investor funds. The SEC is seeking permanent injunctions and disgorgement of ill-gotten gains plus interest and penalties.

The SEC’s continuing investigation is being conducted by Joni Ostler, Laurie Abbott, and Pasha Salimi of the Salt Lake Regional Office, and supervised by Tanya Beard. The litigation will be led by Tracy Combs and Casey Fronk.

Press release distributed by the SEC.

Featured image: by sandiegopersonalinjuryattorney is marked with CC BY-SA 2.0.

US Leads Seizure of One of the World’s Largest Hacker Forums and Arrests Administrator

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"Symposium Cisco Ecole Polytechnique 9-10 April 2018 Artificial Intelligence & Cybersecurity" by Ecole polytechnique / Paris / France is marked with CC BY-SA 2.0.

The Department of Justice today announced the seizure of the RaidForums website, a popular marketplace for cybercriminals to buy and sell hacked data, and unsealed criminal charges against RaidForums’ founder and chief administrator, Diogo Santos Coelho, 21, of Portugal. Coelho was arrested in the United Kingdom on Jan. 31, at the United States’ request and remains in custody pending the resolution of his extradition proceedings.

Court records unsealed today indicate that the United States recently obtained judicial authorization to seize three domains that long hosted the RaidForums website. These domains were “raidforums.com,” “Rf.ws,” and “Raid.lol.” According to the affidavit filed in support of these seizures, from in or around 2016 through February 2022, RaidForums served as a major online marketplace for individuals to buy and sell hacked or stolen databases containing the sensitive personal and financial information of victims in the United States and elsewhere, including stolen bank routing and account numbers, credit card information, login credentials and social security numbers.

“The takedown of this online market for the resale of hacked or stolen data disrupts one of the major ways cybercriminals profit from the large-scale theft of sensitive personal and financial information,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This is another example of how working with our international law enforcement partners has resulted in the shutdown of a criminal marketplace and the arrest of its administrator.”

“Our interagency efforts to dismantle this sophisticated online platform – which facilitated a wide range of criminal activity – should come as a relief to the millions victimized by it, and as a warning to those cybercriminals who participated in these types of nefarious activities,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “Online anonymity was not able to protect the defendant in this case from prosecution, and it will not protect other online criminals either.”

“The seizure of the RaidForums website – which facilitated the sale of stolen data from millions of people throughout the world – and the charges against the marketplace’s administrator are a testament to the strength of the FBI’s international partnerships,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office said. “Cybercrime transcends borders, which is why the FBI is committed to working with our partners to bring cybercriminals to justice – no matter where in the world they live or behind what device they try to hide.”

“This global investigation signifies the remarkable dedication of the U.S. Secret Service and highlights our partnerships with our foreign law enforcement counterparts essential to disrupting sophisticated networks of cyber criminals,” said Special Agent in Charge Jason D. Kane of the U.S. Secret Service’s Criminal Investigative Division. “This case exemplifies teamwork at all levels of law enforcement to stop these cyber criminals from defrauding citizens of the United States and in our partner countries.”

Prior to its seizure, RaidForums members used the platform to offer for sale hundreds of databases of stolen data containing more than 10 billion unique records for individuals residing in the United States and internationally. At the time of its founding in 2015, RaidForums also operated as an online venue for organizing and supporting forms of electronic harassment, including by “raiding” – posting or sending an overwhelming volume of contact to a victim’s online communications medium – or “swatting” – the practice of making false reports to public safety agencies of situations that would necessitate a significant, and immediate armed law enforcement response.

The seizure of these domains by the government will prevent RaidForums members from using the platform to traffic in data stolen from corporations, universities and governmental entities in the United States and elsewhere, including databases containing the sensitive, private data of millions of individuals around the world.

In addition, a six-count indictment against Coelho was unsealed in the Eastern District of Virginia charging him with conspiracy, access device fraud and aggravated identify theft in connection with his role as the chief administrator of RaidForums. According to the indictment, between Jan. 1, 2015, and on or about Jan. 31, 2022, Coelho allegedly controlled and served as the chief administrator of RaidForums, which he operated with the help of other website administrators. As administrators, Coelho and his co-conspirators are alleged to have designed and administered the platform’s software and computer infrastructure, established and enforced rules for its users, and created and managed sections of the website dedicated to promoting the buying and selling of contraband, including a subforum titled “Leaks Market” that described itself as “[a] place to buy/sell/trade databases and leaks.”

To profit from the illicit activity on the platform, RaidForums charged escalating prices for membership tiers that offered greater access and features, including a top-tier “God” membership status. RaidForums also sold “credits” that provided members access to privileged areas of the website and enabled members to “unlock,” and download stolen financial information, means of identification, and data from compromised databases, among other items. Members could also earn credits through other means, such as by posting instructions on how to commit certain illegal acts.

According to the indictment, Coelho also personally sold stolen data on the platform, and directly facilitated illicit transactions by operating a fee-based “Official Middleman” service. For the Official Middleman service, Coelho allegedly acted as a trusted intermediary between RaidForums members seeking to buy and sell contraband on the platform, including hacked data. Notably, to create confidence amongst transacting parties, the Official Middleman service enabled purchasers and sellers to verify the means of payment and contraband files being sold prior to executing the transaction.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; U.S. Attorney Jessica D. Aber for the Eastern District of Virginia; Special Agent in Charge Jason D. Kane of the U.S. Secret Service’s Criminal Investigative Division; and Assistant Director Steven M. D’Antuono of the FBI’s Washington Field Office made the announcement.

Senior Trial Attorney Aarash Haghighat of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Carina A. Cuellar for the Eastern District of Virginia are prosecuting the case against Coelho. The Justice Department’s Office of International Affairs provided significant assistance throughout the criminal investigation.

The law enforcement actions against RaidForums and Coelho are the result of an ongoing criminal investigation by the FBI’s Washington Field Office and the U.S. Secret Service. The department also thanks the support provided by Joint Cybercrime Action Taskforce (Europol), National Crime Agency (UK), Swedish Police Authority (Sweden), Romanian National Police (Romania), Judicial Police (Portugal), Internal Revenue Service Criminal Investigation, Federal Criminal Police Office (Germany) and other law enforcement partners.

Anyone that has any information regarding Coelho or RaidForums should file a complaint at ic3.gov with #RaidForums in the description.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Press release distributed by DOJ.

Featured image: by Ecole polytechnique / Paris / France is marked with CC BY-SA 2.0.

Former Goldman Sachs Investment Banker Convicted in Massive Bribery and Money Laundering Scheme

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"Housing Market" by free pictures of money is marked with CC BY 2.0.

Roger Ng Found Guilty of Conspiring to Violate the Foreign Corrupt Practices Act and Commit Money Laundering in Connection with 1MDB Scheme

A former Managing Director of The Goldman Sachs Group Inc. (Goldman Sachs) was convicted last week by a federal jury in the Eastern District of New York for conspiring to commit bribery, to circumvent internal accounting controls, and to commit money laundering in connection with a multibillion-dollar scheme involving Malaysia’s state-owned investment and development fund, 1Malaysia Development Berhad (1MDB).

“Roger Ng participated in a massive bribery and money laundering scheme involving the corruption of high-level foreign officials in Malaysia and the United Arab Emirates,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This trial demonstrates the commitment by the Department of Justice to prosecute and hold accountable individuals who engage in corruption and use our financial system to launder funds related to their illicit schemes. We will continue to pursue criminal wrongdoers and will seek to bring them to justice, wherever they are, deprive them of their ill-gotten gains, and, wherever possible, return corrupt proceeds to those harmed by corruption — as we have throughout our longstanding investigation into the 1MDB scheme.”

Following an eight-week trial, Ng Chong Hwa, aka Roger Ng, of Malaysia, was found guilty of conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to a dozen foreign officials in Malaysia and the United Arab Emirates, conspiring to violate the FCPA by circumventing the internal accounting controls of Goldman Sachs, and conspiring to launder billions of dollars related to the scheme.

“Today’s verdict is a resounding victory for justice and for the people of Malaysia who are the victims of this massive scheme carried out in a frenzy of greed by the defendant and his co-conspirators to get rich by stealing millions of dollars from the 1MDB fund intended to benefit that country’s economy,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The Department of Justice and this office are committed to addressing corporate culture by vigorously combating white-collar crime and holding corrupt individuals accountable for violating U.S. laws here and abroad in order to enrich themselves.”

“The FBI and our domestic and international law enforcement partners maintain an unwavering commitment to combating international corruption,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “This conviction serves a reminder that the FBI will always hold accountable those who abuse the U.S. financial system to further their corrupt schemes, as well as the persons and companies that enable them.”

“Today’s conviction of Roger Ng demonstrates the cooperation of law enforcement and prosecutorial agencies around the world to combat foreign corruption,” said Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation (IRS-CI), Los Angeles Field Office. “Roger Ng and his co-conspirators enriched themselves while depriving the citizens of Malaysia of billions of dollars that were supposed to be invested on their behalf. The Internal Revenue Service-Criminal Investigation is proud to stand with our law enforcement partners in the United States and around the world who participated in this most significant investigation.”

1MDB is a Malaysian state-owned and controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people.

Ng was employed as a Managing Director by various subsidiaries of Goldman Sachs and acted as an agent and employee of Goldman Sachs from approximately 2005 to May 2014, and was also a stockholder of Goldman Sachs.

According to evidence presented at trial, between approximately 2009 and 2014, Ng and his co-conspirators laundered billions of dollars misappropriated and fraudulently diverted from 1MDB, including funds 1MDB raised in 2012 and 2013 through three bond transactions it executed with Goldman Sachs, known as “Project Magnolia,” “Project Maximus” and “Project Catalyze.” As part of the scheme, Ng and others, including Tim Leissner, the former Southeast Asia Chairman and participating managing director of Goldman Sachs, conspired to and did pay more than $1 billion in bribes to 12 government officials in Malaysia and the United Arab Emirates to obtain and retain lucrative business for Goldman Sachs, including the 2012 and 2013 bond deals. They also conspired to and did launder the proceeds of their criminal conduct through the U.S. financial system, including funding major Hollywood films such as “The Wolf of Wall Street” and purchasing, among other things, a $51 million Jean-Michael Basquiat painting from New York-based Christie’s auction house, a $23 million diamond necklace from a New York jeweler, millions of dollars in Hermès handbags from a dealer based on Long Island, and a luxury real estate property in Manhattan.

Ng and his co-conspirators, including co-defendant Low Taek Jho, aka Jho Low, a wealthy Malaysian socialite, used Low’s close relationships with high-ranking government officials in Malaysia and the United Arab Emirates to obtain and retain business for Goldman Sachs through the promise and payment of hundreds of millions of dollars in bribes. In the course of executing the scheme, Ng conspired with others at Goldman Sachs to and did circumvent the investment bank’s internal accounting controls. Through its work for 1MDB during that time, Goldman Sachs received approximately $600 million in fees and revenues, while Ng received $35 million for his role in the bribery and money laundering scheme. In total, Ng and the other co-conspirators misappropriated more than $2.7 billion from 1MDB.

Low remains a fugitive. In August 2018, Leissner pleaded guilty to conspiring to launder money and conspiring to violate the FCPA by both paying bribes to various Malaysian and United Arab Emirates officials and circumventing the internal accounting controls of Goldman Sachs. Leissner agreed to forfeit $43 million and shares of stock valued at more than $200 million, and is awaiting sentencing.

In October 2020, Goldman Sachs and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, admitted to conspiring to violate the anti-bribery provisions of the FCPA in connection with the scheme. Goldman Sachs entered into a deferred prosecution agreement with the Department of Justice’s Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section (MLARS), and the U.S. Attorney’s Office for the Eastern District of New York. GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York. Goldman Sachs paid more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.

The investigation was jointly conducted by the FBI’s International Corruption Unit and IRS-Criminal Investigation. The government’s criminal case is being handled by the Criminal Division’s Fraud Section, MLARS, and the U.S. Attorney’s Office for the Eastern District of New York. Co-Principal Deputy Chief Brent Wible of the Fraud Section, Bank Integrity Unit Chief Jennifer E. Ambuehl of MLARS, and Assistant U.S. Attorneys Alixandra E. Smith, Drew G. Rolle, and Dylan Stern of the Eastern District of New York are prosecuting the case. The Justice Department’s Office of International Affairs provided critical assistance.

The department appreciates the significant assistance provided by the U.S. Securities and Exchange Commission; the Board of Governors of the Federal Reserve System, including the Federal Reserve Bank of New York; the Government of Malaysia, including the Attorney General’s Chambers of Malaysia, the Royal Malaysia Police and NCB Interpol Malaysia; the United Kingdom Financial Conduct Authority; the United Kingdom Prudential Regulation Authority; the Attorney General’s Chambers of Singapore; the Singapore Police Force – Commercial Affairs Division; the Monetary Authority of Singapore; the Office of the Attorney General and the Federal Office of Justice of Switzerland; the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg; and the Ministry of Justice of France.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

The Bank Integrity Unit in MLARS investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions. The unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

Note: Click to view a video statement from AAG Polite.

Press release distributed by the DOJ.

Featured image: by free pictures of money is marked with CC BY 2.0.

Former DHS Employee Convicted of Scheme to Defraud the US

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"Symposium Cisco Ecole Polytechnique 9-10 April 2018 Artificial Intelligence & Cybersecurity" by Ecole polytechnique / Paris / France is marked with CC BY-SA 2.0.

Charges Involved Theft of Proprietary Software and Sensitive Databases from U.S. Government

A former Acting Branch Chief of the Information Technology Division of the U.S. Department of Homeland Security (DHS-OIG) was convicted today by a jury of multiple federal charges stemming from the theft of proprietary software and sensitive databases from the U.S. government.

Murali Y. Venkata, 56, of Aldie, Virginia, was convicted of conspiracy to defraud the U.S. government, theft of government property, wire fraud, aggravated identity theft, and obstruction. Venkata, along with co-conspirators Charles K. Edwards, who previously served as the Acting Inspector General of DHS-OIG, and Sonal Patel, another official at DHS-OIG, executed a scheme to steal confidential and proprietary software from the government along with the personally identifying information (PII) of hundreds of thousands of federal employees. Venkata worked for DHS-OIG from June 2010 until he was placed on administrative leave in October 2017 following the charges in this case, including serving for a period as an Acting Branch Chief in the Information Technology Division. Before he joined DHS-OIG, Venkata worked at the U.S. Postal Service’s Office of Inspector General (USPS-OIG). At both agencies, Venkata had access to software systems, including one used for case management and other systems holding PII of federal employees.

Edwards pleaded guilty in January 2022 and Patel pleaded guilty in April 2019 to stealing property from the U.S. government for the purpose of developing a commercial version of a case management system to be offered for sale to government agencies. Venkata was convicted for his role in the conspiracy, which included exfiltrating proprietary source code and sensitive databases from DHS-OIG facilities, as well as assisting Edwards in setting up three computer servers in Edwards’s residence so that software developers in India could access the servers remotely and develop the commercial version of the case management system.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Matthew M. Graves for the District of Columbia, Inspector General Joseph V. Cuffari of DHS-OIG, and Inspector General Tammy Whitcomb of USPS-OIG made the announcement.

Senior Litigation Counsel Victor R. Salgado and Trial Attorney Celia Choy of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Christine M. Macey, of the Fraud, Public Corruption, and Civil Rights Section of the U.S. Attorney’s Office for the District of Columbia prosecuted the case. Assistant U.S. Attorney David B. Kent, also of the Fraud, Public Corruption, and Civil Rights Section for the District of Columbia, provided significant assistance in the investigation of this matter.

Press release distributed by the DOJ.

Featured image: by Ecole polytechnique / Paris / France is marked with CC BY-SA 2.0.

California Man Convicted for $27 Million PPP Fraud Scheme

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"Numbers And Finance" by kenteegardin is marked with CC BY-SA 2.0.

A federal jury convicted a California man for submitting fraudulent applications seeking money from the Paycheck Protection Program (PPP), submitting false statements to a financial institution, and money laundering.

According to court documents and evidence presented at trial, Robert Benlevi, 53, of Encino, submitted 27 PPP loan applications to four banks between April and June 2020 on behalf of eight companies solely owned by Benlevi. In the applications, Benlevi sought a total of $27 million in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In his fraudulent applications, Benlevi represented that each of his companies had 100 employees and average monthly payroll of $400,000, even though he knew that the companies did not have any employees or payroll expenses. The evidence further showed that Benlevi also submitted fabricated IRS documents falsely stating that each of the companies had an annual payroll of $4.8 million.

Based on Benlevi’s fraudulent loan applications, three of Benlevi’s companies — 1Stellar Health LLC, Bestways2 Health LLC, and Joyous-Health4U LLC — obtained $3 million in PPP funds. Although Benlevi falsely represented that the funds sought through the PPP loan applications would be used to pay payroll and certain other business expenses, the evidence showed that he instead used them for personal expenses, including cash withdrawals, payments on his personal credit cards, transfers to other personal and business accounts he controlled, and renting an oceanfront apartment in Santa Monica. In a single day, Benlevi withdrew from the Bestways2 Health account $248,000 of PPP funds in cashier’s checks, which were deposited into other accounts that Benlevi controlled.

Benlevi was convicted of bank fraud, false statements to a financial institution, and money laundering. He is scheduled to be sentenced on June 27 and faces up to 30 years in prison for each of the bank fraud and false statement charges, and up to 10 years in prison for each count of money laundering. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Tracy L. Wilkison of the Central District of California; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office; Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG); and Special Agent in Charge Weston King of the SBA Office of Inspector General (SBA-OIG) Western Region made the announcement.

The FBI, SBA-OIG, and FDIC-OIG investigated the case.

Trial Attorneys Emily Culbertson and Justin Givens of the Criminal Division’s Fraud Section are prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Press release distributed by the DOJ.

Featured image: “Numbers And Finance” by kenteegardin is marked with CC BY-SA 2.0.

SEC Proposes Rules for the Registration and Regulation of Security-Based Swap Execution Facilities

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"New York Stock Exchange" by David Blaikie is marked with CC BY 2.0.

The Securities and Exchange Commission proposed this week new Regulation SE under the Securities Exchange Act of 1934 (the Exchange Act) to create a regime for the registration and regulation of security-based swap execution facilities (SBSEFs). The new regulatory framework was one of the major reforms required under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the over-the-counter derivatives market.

“This proposal would increase the transparency and integrity of the traditionally opaque over-the-counter security-based swap market, fulfilling a mandate under the Dodd-Frank Act of 2010 to register and regulate the platforms that trade these instruments,” said SEC Chair Gary Gensler. “Among other things, today’s proposal would create a framework for the registration of security-based swap execution facilities, based upon the 14 core principles for these entities spelled out in the Dodd-Frank Act. This framework would harmonize with the swap execution facility framework promulgated by our sibling agency, the Commodity Futures Trading Commission.”

If adopted, today’s proposal would implement the Exchange Act’s trade execution requirement for security-based swaps and address the cross-border application of that requirement; implement Section 765 of the Dodd-Frank Act to mitigate conflicts of interest at SBSEFs and national securities exchanges that trade security-based swaps; and promote consistency between proposed Regulation SE and existing rules under the Exchange Act.

In developing this proposal, the Commission sought to harmonize as closely as practicable with parallel rules of the Commodity Futures Trading Commission (CFTC) that govern swap execution facilities (SEFs) and swap execution generally. The Commission seeks to obtain regulatory benefits comparable to those under the CFTC regime while minimizing costs imposed on SBSEFs and their members.

The Commission previously proposed rules regarding SBSEFs in three separate releases between 2010 and 2013. Given the length of time that has passed since they were issued and the significant market changes that have taken place in the interim, the Commission is withdrawing all previously proposed rules, rule amendments, and interpretations regarding SBSEFs.

The proposing release will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

Press release distributed by the SEC.

Featured image: by David Blaikie is marked with CC BY 2.0.

2019 court case against Hadari Oshri exposes her dodgy, aggressive legal maneuvers

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Editor
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AN IMPORTANT NOTE: On June 22, 2021, Hadari Oshri –Marc Lubaszka’s business partner– filed a frivolous civil harassment restraining order (CHRO) against Investor News reporter Aitana Vargas to stop the publication of her investigative series “A Special Report: The Harrowing Impunity of White-Collar crime,” and any subsequent installments or future media coverage. On August 3, 2021, Vargas filed an anti-SLAPP motion to strike Oshri’s CHRO petition. In a hearing held on September 13, 2021, Los Angeles Superior Court Judge Doreen Boxer granted Vargas’s anti-SLAPP motion and denied Oshri’s civil harassment petition for failure to sustain the applicable burden of proof. Oshri will now have to pay Vargas’s attorney’s fees for filing a frivolous case. The Israeli entrepreneur also declined to go on a recorded interview or provide statements via email.

2019 court case against Hadari Oshri exposes her dodgy, aggressive legal maneuvers

California – As Hadari Oshri’s Xehar, Inc. was falling through the cracks, her dodgy, aggressive legal tactics were exposed in a court case filed against her by former business associate Matthew Wilkinson back in May 2019.
The case was initially scheduled for trial on August 6, 2019, but it was postponed several times at Oshri’s request on the basis that she was preoccupied with an “eviction” and that she’d would be out of the country for the “Holidays.“
Oshri’s exact words were: “I am asking from the court to postponment this case, (  check attchment )” because “My maind was dealling with the eviction situetion that I have with my apartment, I was busy in payment solution for my leandloaed, I came up with $14,000  (  check next page   ).”
*Read minute order on first continuance.
The court agreed to re-schedule the trial on October 10. However, on September 9, Oshri asked that the hearing be postponed again until October 24th or November 2019.
In court filings, Oshri wrote: “The court date is set up to be one day after Yom Kipur, I am not going to be in USA, until After the Holiday season, when the Jujed asked me if that date is Ok i was not ( check a…,”

Hadari Oshri accused of “stall tactics” to delay court proceedings

Court documents also show that Wilkinson was frustrated with Oshri’s delay tactics and asked the court to deny her request: “I ask that the Plaintiff’s request to postpone trial be denied as this is just another stall tactic being used by the defendant. Prior to our original court date on August 6, 2019, I received an email from the defendant with a 16-page answer to the court case, yet she said in court that she needed a postponement.”
The court granted Oshri’s request to delay the proceedings one last time and scheduled the trial for October 31, 2019.
*Read court order granting final postponement.
Hadari Oshri asked the court to postpone a legal case against her several times.

Hadari Oshri’s whopping 46-affirmative defenses failed

In addition to Oshri’s delay tactics, her Counsel, John Tamborelli, put together a reply to Wilkinson’s complaint invoking nearly every single affirmative defense in the book: a whopping 46 potential legal protections.
In her response, not only did Oshri deny responsibility, but she also accused Wilkinson of having “unclean hands,” having committed “fraud,” “deceit” and “misrepresentation.”
Tamborelli went on to argue that her client was “unfairly pressured” or “induced” by the “plaintiff into consenting to the contract” in a moment where Oshri was suffering “weakness of mind,” “financial pressure” and “distress.”
“Oshri would not otherwise have consented to the contract,” the reply says.
And as if nearly 50 affirmative defenses were not enough to sway the Judge, Oshri still reserved the right to assert additional affirmative defenses.
But Oshri’s startling legal plan didn’t fly with the court: None of the affirmative defenses portraying the plaintiff as an ill-intentioned businessman worked, and the judge ruled against her in the amount of $10,150.
*Read Hadari Oshri’s failed 46-Affirmative Defense reply.

Hadari Oshri ordered to pay judgment in full immediately

Court documents show that after losing her appeal, Oshri asked the court for mercy and proposed a payment plan. “I am working on my income and I do not have stable income at this moment to make big payment at once,” the fashion fairy entrepreneur stated.
Oshri’s request was denied and the court ordered her to pay the judgment in full, and to do so immediately.
Wilkinson didn’t respond to a request for comment.
In 2020, Oshri and her former Counsel, John Tamborelli, were named as a defendants in a personal injury case filed in Los Angeles.

In 2019, Dan Weber filed a small claims court against Oshri for money owed. The case was never heard because he was unable to serve legal documents on her. She still has not paid off the debt.
**Since Hadari Oshri filed a meritless case against Investor News contributor Aitana Vargas and had previously declined to provide written comments or go on a recorded interview, it is our policy not to seek further comments from the entrepreneur. Oshri is always welcome to reach out and agree to the proposed interview terms. The same policy applies to her former Counsel, John Tamborelli.
***To contact the newsroom, send an email to info@investornews.io. To contact and send tips to news correspondent Aitana Vargas, use aitana_investigations@protonmail.com. All malicious emails, phone calls and text messages are reported to law enforcement.
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Read Hadari Oshri’s losses mount up as she fails again to silence her victims.
Read La reportera Aitana Vargas pide 23.000 dólares en honorarios tras pulverizar la querella mordaza de Hadari Oshri.
Read Hadari Oshri sued for copyright infringement in 2017.
Read Hadari Oshri deactivates LinkedIn account following PPE exposé.
Read “A Special Report: The Harrowing Impunity of White-Collar Crime (Part I): Marc Lubaszka, the ultimate white-collar conman on the run: From a Hollywood Hills mansion to Venezuela’s illegal gold mines and back.” 
Read “A Special Report: The Harrowing Impunity of White-Collar Crime (Part II): Marc Lubaszka’s nonexistent private jets failed to deliver PPE amid the COVID-19 pandemic.”
Read “A Special Report: The Harrowing Impunity of White-Collar Crime (Part III): Pursuing flash money, rapper Dylan Raw partners with conman Marc Lubaszka and becomes his patsy.”
Read “A Special Report: The Harrowing Impunity of White-Collar Crime (Part IV): Hadari Oshri allegedly linked to attempted $370M nonexistent PPE COVID-19 scheme.”

$90 Million Yacht of Sanctioned Russian Oligarch Viktor Vekselberg Seized by Spain at Request of US

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"Jennifer Aniston's Yacht?" by RobW_ is marked with CC BY-NC-ND 2.0.

Note: Footage of the seizure is available here. View the statement from the Attorney General on today’s seizure here.

Spanish law enforcement this week executed a Spanish court order freezing the Motor Yacht (M/Y) Tango (the Tango), a 255-foot luxury yacht owned by sanctioned Russian oligarch Viktor Vekselberg. Spanish authorities acted pursuant to a request from the U.S. Department of Justice for assistance following the issuance of a seizure warrant, filed in the U.S. District Court for the District of Columbia, which alleged that the Tango was subject to forfeiture based on violation of U.S. bank fraud, money laundering, and sanction statutes. Separately, seizure warrants obtained in the U.S. District Court for the District of Columbia target approximately $625,000 associated with sanctioned parties held at nine U.S. financial institutions. Those seizures are based on sanctions violations by several Russian specially designated nationals.

According to documents filed in this case, the U.S. investigation alleges that Vekselberg bought the Tango in 2011 and has owned it continuously since that time. It further alleges that Vekselberg used shell companies to obfuscate his interest in the Tango to avoid bank oversight into U.S. dollar transactions related thereto. Additionally, after Vekselberg was sanctioned by the U.S. Treasury Department on April 6, 2018, the warrant alleges that Vekselberg and those working on his behalf continued to make U.S. dollar payments through U.S. banks for the support and maintenance of the Tango and its owners, including a payment for a December 2020 stay at a luxury water villa resort in the Maldives and mooring fees for the yacht. Vekselberg had an interest in these payments and therefore a license was required from the Treasury Department, which was not obtained.

“Today marks our taskforce’s first seizure of an asset belonging to a sanctioned individual with close ties to the Russian regime. It will not be the last,” said Attorney General Merrick B. Garland. “Together, with our international partners, we will do everything possible to hold accountable any individual whose criminal acts enable the Russian government to continue its unjust war.”

“Today’s action makes clear that corrupt Russian oligarchs cannot evade sanctions to live a life of luxury as innocent Ukrainians are suffering,” said Deputy Attorney General Lisa O. Monaco. “Today the Department of Justice delivers on our commitment to hold accountable those whose criminal activity strengthens the Russian government as it continues to wage its unjust war in Ukraine. That commitment is one we are not finished honoring.”

“Today we announce another example of the FBI using our worldwide presence and partnerships, as well as our expertise and experience, to track and seize illicit money and assets, to counter threats to our safety and national security,” said FBI Director Christopher Wray. “We will continue to use every lawful tool to go after designated Russian oligarchs’ assets – however and wherever they hide them.”

The seizure was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2 and run out of the Office of the Deputy Attorney General, the task force will leverage all the Department’s tools and authorities against efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression.

“The seizure of this luxury yacht demonstrates our determination to hold accountable those who support Vladimir Putin’s unwarranted invasion of another sovereign nation,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “We will continue to use every tool to enforce the sanctions aimed at Putin’s regime and the oligarchs who support it.  Working with our federal and international partners, we will be unflagging in our efforts to bring to justice those who violate these sanctions, and to seize assets where appropriate and lawful.”

“Today’s seizure of Viktor Vekselberg’s yacht, the Tango, in Spain is the result of an unprecedented multinational effort to enforce U.S. sanctions targeting those elites who have enabled Russia’s unprovoked and illegal invasion of Ukraine,” said Director Andrew Adams of Task Force KleptoCapture. “For those who have tied their fortunes to a brutal and lawless regime, today’s action is a message that those nations dedicated to the rule of law are equally dedicated to separating the oligarchs from their tainted luxuries. This seizure is only the beginning of the Task Force’s work in this global effort to punish those who have and continue to support tyranny for financial gain.”

“The FBI will continue to work with its partners to protect the integrity of the banking system and support the enforcement of sanctions programs,” said Special Agent in Charge Michael F. Paul of the FBI’s Minneapolis Field Office. “FBI agents and analysts, regardless of where they are assigned around the world, will work tirelessly to ensure those who attempt to evade sanctions are held accountable.”

“The Russian invasion of Ukraine was an unprovoked act of aggression that has targeted the lives and well-being of millions of people and threatened international security,” said Acting Special Agent in Charge Ricky J. Patel of Homeland Security Investigations (HSI) New York.  “For decades, the Putin regime has been supported by a group of Russian oligarchs that abused their power for private gain to amass untold riches. As DHS’s investigative arm, HSI stands at the forefront of combatting global networks that seek to violate U.S. law and exploit our nation’s financial systems.  Working with our partners at the U.S. Department of Justice and the FBI, we will hold Putin’s oligarchs accountable and deny them the lavish lifestyles they cherish.”

Upon receipt of a request from the United States pursuant to a bi-lateral treaty for mutual legal assistance in criminal matters, the Spanish central authority for mutual legal assistance forwarded the request to a Spanish prosecutor, who obtained a freezing order from a Spanish court. The order was executed by Spain’s Guardia Civil on April 4.

The Tango, International Maritime Organization number 1010703, is believed to be worth approximately $90 million or more. The yacht is now in Mallorca.

The burden to prove forfeitability in a forfeiture proceeding is upon the government.

The matter of the Tango is being investigated by the FBI’s Minneapolis Field Office with assistance from the HSI New York Field Office.

Assistant U.S. Attorney Karen P. Seifert for the District of Columbia and Paralegal Brian Rickers and Legal Assistant Jessica McCormick for the District of Columbia are handling the seizure. The Justice Department’s Office of International Affairs provided significant assistance in working with the Spanish authorities, as well as the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS).

Press release distributed by the FBI.

Featured image: by RobW_ is marked with CC BY-NC-ND 2.0.

Woman Pleads Guilty for $43.8 Million COVID-19 Relief Fraud Scheme

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Administrator
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"MTA Deploys PPE Vending Machines Across Subway System" by MTAPhotos is marked with CC BY 2.0.

An Oklahoma woman pleaded guilty in the Western District of New York for a scheme to defraud the Paycheck Protection Program (PPP) of over $43.8 million in COVID-19 relief loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

According to court documents, Amanda J. Gloria, 45, of Altus, admitted that she conspired to submit at least 153 fraudulent PPP applications seeking a total of approximately $43.8 million on behalf of at least 111 entities between approximately May 2020 and June 2021. Gloria admitted that she falsified or aided and assisted with falsifying various information on these loan applications, including the number of employees, payroll expenses and documentation, and federal tax filings. Gloria then submitted or aided and assisted with the submission of the fraudulent PPP applications to financial institutions. In total, the recipient entities unlawfully obtained approximately $32.5 million in PPP funds. From those fraudulently obtained funds, Gloria personally received at least approximately $1.7 million.

Gloria also admitted that she conspired with Adam D. Arena to submit a fraudulent PPP loan application seeking approximately $954,000 for ADA Auto Group LLC, a previously inactive Florida-based business owned and controlled by Arena. After fraudulently obtaining the PPP loan, Gloria directed Arena to launder the proceeds, including by transferring nearly $25,000 to a bank account held in the name of WildWest Trucking LLC, an Oklahoma-based business owned and controlled by Gloria. Gloria also admitted that she submitted and fraudulently obtained a separate PPP loan for WildWest Trucking LLC for approximately $421,000. Arena pleaded guilty in November 2021 to one count of conspiracy to commit bank fraud and one count of engaging in a monetary transaction with criminally derived proceeds in a related case.

Gloria is scheduled to be sentenced on July 20 and faces up to 30 years in prison for conspiracy to commit bank fraud and up to 10 years in prison for money laundering. A federal district judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; U.S. Attorney Trini E. Ross for the Western District of New York; Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Stephen Belongia of the FBI’s Buffalo Field Office; and Special Agent in Charge Thomas Fattorusso of IRS Criminal Investigation (IRS‑CI) made the announcement.

The FBI and IRS-CI are investigating the case.

Assistant Chief Cory E. Jacobs and Trial Attorney Jennifer Bilinkas of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Laura A. Higgins for the Western District of New York are prosecuting the case.

The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the PPP. Since the inception of the CARES Act, the Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at https://www.justice.gov/criminal-fraud/ppp-fraud.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866‑720‑5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Press release distributed by the DOJ.

Featured image: by MTAPhotos is marked with CC BY 2.0.

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