fraud

Authorities Arrest Two More in Madoff Case

Two years now since the collapse of Bernie Madoff's massive Ponzi scheme, the picture of the largest fraud ever perpetrated is becoming clearer all the time. And while Madoff himself insisted that he acted alone, investigators and prosecutors insist that a fraud of such magnitude would have to have required the complicity and support of an entire team. To that end, indictments have been handed to two additional former Madoff employees, who now await prosecution.

The indictments were reportedly handed to Jo Ann "Jodi" Crupi and Annette Bongiorno, both having been arrested by FBI agents and remain in custody pending $5 million in bail to be posted for each. The number of those indicted in the Madoff case has now reached eight as authorities strive to put the pieces back together.

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Tags: Annette Bongiorno, bernie madoff, fbi, fraud, Jo Ann Crupi, Jo Ann Jodi Crupi, Jodi Crupi, madoff, ponzi, ponzi scheme

Alleged Swindler Scammed Out of $800,000 by New York City Limo Driver

by Carrie Coolidge (RSS feed) —

Filed under: Wealth, Celebrity Design, Crimes and Misdemeanors

Tony Chan Chun Chuen is allegedly swindled by New York Limo driver.

A New York City limo driver allegedly stole the credit card information belonging to a Hong Kong-based near billionaire and racked up nearly $800,000 in fraudulent charges, according to court documents filed in a Federal Court in Brooklyn.

Astonishingly, the victim is so wealthy, he wasn't even aware he had been defrauded of hundreds of thousands of dollars until it was brought to his attention by the company that had issued the charge card.

It all started when celebrity feng shui adviser, Chan Chun Chuen, also known as "Tony Chan" (seen above), traveled by private jet in July 2008 arriving at New Jersey's Teterboro Airport before being transported to Manhattan by Queens, N.Y.-based driver, Peter S. Rahhaoui. According to an indictment filed in U.S. District Court, Eastern District of New York, Rahhaoui later used Chan's American Express card to "receive payment and other things of value". The fraudulent activity allegedly occurred between August 2008 and November 2009 .

U.S. Secret Service Agent Kwame Davis testified that he had been contacted by a fraud investigator working on behalf of American Express who was investigating a pattern of fraudulent activity for a card issued to Chan Chun Chuen. According to Kwame's testimony, a large number of charges were posted on a monthly basis by A&S Limousine Service, for amounts ranging between $4,300 and $19,242. According to court documents, the total amount of these charges was $794,986.

But in a strange twist of events, the victim's own alleged misdoings are now being used as a defense by Rahhaouhi.

Tags: American Express, billionaire, Can Chun Chuen, court, feng shui, fraud, fraud investigation, Hong Kong, legal action, Nina Wang, Tony Chan

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Former Money Manager Defrauds Investors of $800-$900 Million

by Lisa Palladino (RSS feed) —

Filed under: Wealth, Crimes and Misdemeanors

Former Money Manager Admits to Defrauding Investors of $800-900 Million

Former money manager Paul Greenwood, 62, pleaded guilty in late July to securities fraud, admitting that he cheated charities, schools, pension funds, and others out of $800-$900 million, even using some of those funds to buy collectible Steiff Teddy Bears and invest in horses. He faces up to 85 years in prison and hundreds of millions of dollars in fines. Sentencing is set for December 1, 2010, and an auction to sell the Teddy Bears and other "collectibles" is expected later this year.

Greenwood, a hedge fund manager and the general partner of WG Trading Co., pleaded guilty to six charges including conspiracy and securities fraud and is cooperating with the United States against co-defendant Steven Walsh, who pleaded not guilty. Greenwood and Walsh, his fellow manager of WG Trading and WG Investors, were indicted last July on charges that they conspired to defraud investors of $554 million. The U.S. said the scheme stretched from 1996 until their arrest in February 2009.

Greenwood said he entered into the conspiracy with Walsh and that the two claimed they had an "index arbitrage fund" that promised institutional investors high returns. He and Walsh took out money for their personal use, "in excess of $75 million," he said, spending the money on "a house, a horse farm [that previously was owned by Paul Newman and his wife, Joanne Woodward], and antiques."

According to the plea agreement, Greenwood will have to forfeit at least $331 million to the government, representing the money he and Walsh allegedly obtained as a result of their securities and wire fraud. Greenwood also agreed to pay the U.S. an $83.5 million judgment, the proceeds he "personally obtained" as a result of the fraud.

The case is U.S. v. Greenwood, 09-cr-722, U.S. District Court, Southern District of New York (Manhattan). Read the full story, as reported by Bloomberg, here.

Tags: crimes, fraud, Greenwood, indictments, Paul Greenwood, theft

Anne Hathaway's Jewelry Heads To Government Auction

by Deidre Woollard (RSS feed) —

Filed under: Auctions, Crimes and Misdemeanors

Looks like an upcoming government auction will feature some jewelry that once belonged to Anne Hathaway. The jewelry, along with Rolex watches, a Tiffany clock and a Cartier figurine were owned by her ex-boyfriend, fraudster Raffaello Follieri. The goods were bought with money generated from his illegal activities and represent ill-gotten gains. The items will be sold at a government auction and the U.S. government will keep the cash. Hathaway broke up with Follieri in June 2008 and turned items over to the FBI. Follieri remains in federal prison serving a 4 1/2 year prison sentence on 14 felony counts. The Smoking Gun has FBI evidence photos of the inventory prepared by federal investigators, The jewelry's total value has not been disclosed.

[via LA Times]

Tags: anne hathaway, fraud, fraudsters, government auction, Raffaello Follieri, treasury auction

Lake St. Louis, Estate of the Day

by Deidre Woollard (RSS feed) —

Filed under: Estates

Kenny at Homes of the Rich drew our attention to this one, the home of Darain Atkinson the founder of the now bankrupt US Fidelis, a company that dealt in vehicle service contracts. This sprawling home on Lake St. Louis in Missouri is a nine-bedroom compound that has a beauty parlor, bowling alley, observation tower, meditation room, art studio, gym, safe room and more. Reports say that the listing price of $14.9 million is at least $2 million short of the anticipated construction and land-acquisition costs.

While the home was being built questions on how Atkinson could pay for the home began to arise. According to an article in the St. Louis Post-Dispatch, the bankruptcy filing of US Fidelis shows 331 payments totaling about $7.2 million on expenses related to the compound's construction including charges from an architectural blacksmith, a landscaping company, a home theater company, lighting and millwork companies. A bankruptcy judge has frozen Atkinson's assets, he and his brother, Cory are accused of defrauding US Fidelis to the tune of around $100 million. Ironically, in an interview last year, Atkinson said he was building such a lavish manse to accommodate the charitable fund-raisers he planned to host. The home is on 6.7 acres with indoor and outdoor swimming pools and an eight-car garage.

Tags: darain atkinson, estate of the day, fraud, missouri real estate, us fidelis

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Scott Rothstein Pleads Guilty to Running Ponzi Scheme

by Carrie Coolidge (RSS feed) —

Filed under: Dining, Real Estate Developments

On Wednesday, disbarred Florida attorney, Scott Rothstein, appeared in the federal courthouse in Miami and pleaded guilty to running a $1.2 billion Ponzi scheme from 2005 to 2009.

Rothstein was was charged with one count of conspiracy to violate the Racketeering Influenced Corrupt Organization (RICO) statute; one count of conspiracy to commit money laundering; one count of conspiracy to commit mail fraud and wire fraud; and two counts of wire fraud. Rothstein is scheduled for sentencing on May 6, 2010. He faces a total maximum statutory term of imprisonment of 100 years.

As part of the plea agreement, Rothstein agreed to forfeit $1.2 billion, including 24 pieces of real property, numerous luxury cars, boats, and other vessels, jewelry, sports memorabilia, business interests, bank accounts, among other financial interests.

Rothstein admitted to running a Ponzi scheme from 2005 through November 2009. Rothstein engaged in a pattern of racketeering activity through his law firm, Rothstein, Rosenfeldt, and Adler, P.A., located in Ft. Lauderdale, FL. Specifically, RRA was the criminal enterprise through which Rothstein and possibly others fraudulently obtained approximately $1.2 billion from investors through bogus investment and other schemes.

Rothstein used the law firm to fraudulently induce investors to loan money to non-existent borrowers based upon promissory notes and requests for short-term bridge loans for business financing; and invest funds based upon anticipated pay-outs from purported confidential civil settlement agreements.

As part of the loan scheme, Rothstein solicited investors to loan money to purported RRA clients through promissory notes and short-term bridge loans. Rothstein falsely represented to the investors that the purported clients were willing to pay high rates of return on these loans. In the settlement agreement scheme, Rothstein and other co-conspirators solicited clients to invest in purported civil case settlement funds. Rothstein and his co-conspirators falsely told investors that these settlements ranged in amounts from hundreds of thousands to millions of dollars.

Rothstein falsely represented to investors that these settlements could be purchased at a discount and would be repaid over time to the investors at full face value. In addition, investors were told that these funds would be held in the trust account of RRA. In both instances, the Information alleges that the purported investment vehicles never existed, but were part of an elaborate Ponzi scheme in which new investors' money was used to repay money owed to earlier investors.

Rothstein used the investors' funds to fund bank accounts, purchase luxury vehicles and numerous homes, and an equity investment in Gianni Versace's South Beach mansion, called Casa Casuarina.

"(This) guilty plea is an important step in bringing to justice those who perpetrated a $1.2 billion Ponzi scheme under the guise of operating a legitimate law firm," says United States Attorney Jeffrey H. Sloman. "The United States Attorney's Office will continue to pursue all leads and evidence as they are uncovered. Rest assured, those who are criminally culpable will be held accountable. Victims can also take comfort in knowing that the United States will do everything it can to identify, seize and equitably refund fraud proceeds."

Added FBI Special Agent in Charge John V. Gillies, "Scott Rothstein used a classic approach to mislead investors---an ostentatious lifestyle, a charismatic personality, and guarantees of sky-high returns-all red flags in the world of Ponzi schemes. It is a lesson for all investors to learn that they need to look beyond the hype."

Tags: fraud, Jeffrey H. Sloman, JeffreyH.Sloman, John V. Gillies, JohnV.Gillies, money laundering, MoneyLaundering, ponzi scheme, PonziScheme, RICO, RRA, scott rothstein, ScottRothstein, wire fraud, WireFraud

Bernie Madoff's $7 Million Luxury Yacht Scam

by Jared Paul Stern (RSS feed) —

Filed under: Yachts & Sailing, Wealth

Super-fraudster Bernie Madoff bought a $7 million luxury yacht in the South of France using cash channeled through his London office and had it registered in his wife's name in order to launder money stolen from hapless clients, the Times of London reports. In 2006 Madoff told his associates at Madoff Securities International in London's Mayfair to transfer money to a French shipyard for a powerful 88-ft. Leopard motoryacht (above), alleging that their euro bank accounts would make the transaction easier.

Madoff later transferred cash to the London firm's accounts to square the difference, the paper reports. The Italian-built Leopard, which "epitomizes luxury and comfort," accommodates up to six people in cabins and is capable of speeds up to 40 knots. Madoff christened the yacht The Bull, an ironic reference to the then-booming stock market he was supposedly exploiting on behalf of his clients. Prosecutors have claimed that Madoff moved at least $250 million though his London firm.

Tags: Bernard Madoff, BernardMadoff, Bernie Madoff, BernieMadoff, fraud, Leopard yachts, LeopardYachts, London, yacht

Sir Elton And The Case Of The Fake Gods

by Deidre Woollard (RSS feed) —

Filed under: Celebrity Shopping, Art

Sir Elton John is a noted art collector with an impressive collection and as, has happened to many avid collectors, he found himself in possession of some fakes. A French court has awarded Sir Elton John $500,000 in compensation for the purchase of four marble statues of Olympic gods that bore the signature of 18th century artist Luigi Grossi but were in fact, fakes. He had bought the four-foot-high statues in an antiques store in Paris in 1996 while shopping with another dedicated art and antiques collector, the late designer Gianni Versace. A valuation of John's collection turned up the fact that the sculptures were worth not genuine and worth just $20,000 (he had paid $360,000). Dealer John Renoncourt will be paying Sir Elton John the compensation.

Unfortunately, fakes, looted antiquities, and questions of provenance can be a risk when shopping for art and antiquities. I'm currently reading The Medici Conspiracy, which is a fascinating account of the story of Giacomo Medici, an antiquities dealer who illegally dealt in a wide variety of antiquities, real, fake and those that were a pastiche of real and fake elements. Often with faked works, like Sir Elton, the buyer only finds out when they have a valuation done of their collection. Unfortunately, not even the signature of a famous artist on a work proves that it is the real deal.

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Tags: art, elton john, EltonJohn, expire-images:2008-6-27, fakes, fraud, sir elton

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