Global Corruption
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Man Found Guilty Of Engaging In Unprecedented Insider Trading Scheme

Man Found Guilty Of Engaging In Unprecedented Insider Trading Scheme | Global Corruption |
 Mathew Martoma, a former portfolio manager at billionaire Steven A. Cohen's SAC Capital Advisors hedge fund, was found guilty on Thursday of engaging in what prosecutors called the most lucrative insider trading scheme in U.S. history.

A federal jury in Manhattan found Martoma, 39, guilty on all three of the conspiracy and securities fraud charges that he faced, over a scheme that allowed SAC Capital to make profits and avoid losses of $275 million.

The verdict was the eighth insider trading conviction of a current or former employee at SAC Capital, the $14 billion hedge fund that has long been in federal authorities' cross-hairs.

As news photographers snapped pictures, Martoma walked stone-faced out of the courthouse and into a waiting SUV with his wife and defense team. They did not speak to reporters. "We are very disappointed and we plan to appeal," his lawyer, Richard Strassberg, said through a spokesman.

Martoma, 39, faces up to 45 years in prison.

The conviction continued an unbroken winning streak at trial for federal prosecutors in New York, who have secured guilty pleas or verdicts against 79 individuals since October 2009 as part of a broad crackdown on insider trading on Wall Street....
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Global Corruption
Corruption is a particularly viral form of cancer. It is caught here and there but it reappears somewhere else as soon as vigilance is relaxed. It is not eliminated, just driven underground. The corrupt merely suspend their operations temporarily. It lingers, hovering always in the background for its next opportunity.
- Gerald E. Caiden
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Corruption Eruption E-Magazine > > > "On Planet Corruption every day a new Eruption"

Corruption Eruption E-Magazine >   >  >            "On Planet Corruption every day a new Eruption" | Global Corruption |

*** Key findings from PwC's 17th Annual Global Economic Crime Survey

*** Cyber crime: the Achilles heel of the business world
*** Ukraine’s $19-billion question of debt and corruption

*** FBI announces campaign to crack down on public corruption

*** Ukraine’s $19-billion question of debt and corruption

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The Ponzi Scheme Blog: September 2014 Ponzi Scheme Roundup

The Ponzi Scheme Blog: September 2014 Ponzi Scheme Roundup | Global Corruption |
Below is a summary of the activity reported for September 2014. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 239 years of newly imposed sentences for people involved in Ponzi schemes; at least 11 newly discovered schemes involving over 135,000 victims and more than $328 million; and an average age of approximately 51 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.
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All aboard the "Corruptour" for a glimpse of Mexico's graft

All aboard the "Corruptour" for a glimpse of Mexico's graft | Global Corruption |
Visitors looking to explore the dark side of Mexico's northern industrial city of Monterrey board a striking blue bus, painted with the faces of local politicians alongside pigs and rats clutching bags of money.

The bus stops at 10 city landmarks while a recording plays, detailing how public money has been allegedly misspent and siphoned off at these places - the government palace, state congress and other public buildings.

This is the "Corruptour", set up by the Mexican anti-graft organisation Via Ciudadana in one of Latin America's most affluent cities to expose the abuse of power and misuse of public funds that is rife in Mexico and goes largely unpunished.

The group hopes the tour will mobilise Mexicans to hold elected to account and take action against graft.

"The bus tour aims to fight indifference and wake people up and show them... with clear examples the impact corruption has," Miguel Trevino, a Via Ciudadana leader and Corruptour organiser, told the Thomson Reuters Foundation by telephone from Monterrey.

"When you ask people what their top concerns are, they'll answer violence, unemployment and the state of the economy, instead of corruption. But we believe corruption is a national problem, the root cause of our problems and one that is linked to violence."
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Pakistani officials bribed by military contractors: Inspector General

Pakistani officials bribed by military contractors: Inspector General | Global Corruption |

ate Department investigators uncovered evidence that agents working for one of the largest U.S. military contractors paid tens of thousands of dollars in bribes to Pakistani officials to obtain visas and weapons licenses, but records show the government closed the case without punishing DynCorp.
The nearly four-year investigation by the State Department’s Office of Inspector General found that in one case, DynCorp paid more than $17,000 for “facilitation” services to subcontractor Speed-Flo Filters for visas for 15 people. Typically, the visas would cost about $3,000 in total, records obtained through the Freedom of Information Act show.
In a separate deal, the company signed a contract with another subcontractor called Inter-Risk for 138 weapons licenses for $248,000, while the standard government fee is about $100 per-license, according to records.
But investigators closed the case after deciding they couldn’t prove or disprove the company had the “requisite corrupt” intent required to prove a violation of the Foreign Corrupt Practices Act (FCPA), which bars U.S. companies from bribing foreign officials.
“There was no evidence to support the allegations that DynCorp or its employees had specific knowledge of bribes paid Pakistani government officials,” an investigator wrote in a memo closing out the case last year.

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Unfettered corruption

Partisan judicial elections, and the campaigns and fund-raising that accompany them, were an important component of the corruption that finally felled Traffic Court. But as the latest case illustrates, the entire Pennsylvania judiciary is produced - and tainted - by the same poisonous political process.

Municipal Court Judge Joseph C. Waters Jr.'s crimes go to the heart of the system's dangers. Waters offered a campaign contributor "anything you need," a promise he kept more faithfully than those he made to the people who elected him. When the judge's backers called in favors, according to the plea, Waters enlisted two fellow jurists to rule the way his supporters wanted. And they did, prosecutors allege, bottling up a civil claim by Houdini and, in a separate case, reducing a felony gun charge.

Transcripts of federal wiretaps depict the judges as making these arrangements in a clipped, almost opaque patois: "Who's your guy?" "The defendant." "No problem." Like the Traffic Court scandal, the shorthand suggests that in certain corners of the judiciary, such conversations are not so unusual.

The other judges referred to in Waters' plea, Dawn Segal and Joseph O'Neill, have not been charged with any crime, but they are not hearing cases while the allegations are examined by judicial disciplinary officials. The Supreme Court deserves credit for acting quickly in that respect.

However, after scandals ranging from the high court to the low one at issue, it's difficult to divine a good reason for state lawmakers' failure to come close to replacing judicial elections with an appointment process - or to produce any other comprehensive reform of the commonwealth's tarnished court system. The inescapable consequence is that judicial corruption is still on the loose.
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​A ​Courageous Reporter And A Corrupt Chinese Communist Official

​A ​Courageous Reporter And A Corrupt Chinese Communist Official | Global Corruption |
It took enormous courage in 2012 for a Chinese reporter to go into print to expose one of the Chinese Communist Party's most senior officials for taking bribes and building a fortune by abusing his public office. Reporter Luo Changping did just that. As a result, Liu Tienan, the former deputy head of the National Reform and Development Commission, pleaded guilty in a trial in the northern province of Hebei on September 24.

According to documents released by the court, Liu Tienan was accused of accepting about $5.8 million in bribes from five companies between 2002 and 2012. Liu Tienan also received a Porsche and a Beijing villa. Transcripts from the one-day trial show the 59-year-old tearfully confessed to the crimes. A verdict is expected to come at a later date. He faces 10 years to life.

Liu Tienan's difficulties all started when reporter Luo Changping first wrote an article in Caijing, a widely read business magazine in December 2012, where he noted that a top official was involved in accepting bribes from major companies. He did not name the official in the magazine. But, the reporter then followed up on his own blog on China's weibo online service with details about the corruption that involved Liu Tienan as well as members of his family.

These reports came before China's President Xi Jinping launched his major campaign against corruption, which has seen the arrest of hundreds of Communist Party senior officials over the last 18 months. Today's trial of Liu Tienan is one of the first involving a top official triggered from an investigation by a journalist.
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BRIBERY | Global Corruption |
D Michael Brown's curator insight, September 29, 1:25 PM

Nice visualization of how Bribery hurts development.

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Former Hong Kong chief secretary says he accepted secret payoff from Beijing

Former Hong Kong chief secretary says he accepted secret payoff from Beijing | Global Corruption |
A former top Hong Kong civil servant told a court on Tuesday that he had received a secret payment of HK$11 million ($1.4 million) "from Beijing" in 2007 through a businessman intermediary, local media reported.

Hong Kong's former chief secretary, Rafael Hui, was testifying in one of the financial hub's largest corruption trials, charged with accepting "concealed and disguised" payments from property tycoons Thomas and Raymond Kwok, the billionaire co-chairmen of Asia's largest developer, Sun Hung Kai Properties Ltd, seeking government favor.

Hui's testimony broadens the corruption implications of the case beyond Hong Kong, which returned to Chinese rule in 1997, and raises new questions on the ties between Hong Kong and Chinese officials.
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China launches int'l campaign against corruption suspects abroad - CCTV News - English

China launches int'l campaign against corruption suspects abroad - CCTV News - English | Global Corruption |
China's Supreme People's Procuratorate (SPP) announced the launch of a half-year campaign targeting fugitive suspects of corruption and other duty-related crimes on Friday.

Prosecutors were told to spare no effort to bring suspects that have fled abroad to justice and to seize illegal gains.

"The authority of law must be resolutely upheld and crimes must be strongly cracked down and deterred," according to a statement issued after the SPP's conference on the campaign.

The statement also vowed vigorous use of confiscation rules in China's law to make it impossible for corrupt officials to economically benefit from their corruption.

The statement said prosecutors should intensify collaboration with other procuratorial agencies and other departments such as police, foreign affairs, court and the central bank to maintain an efficient and well-organized system.

Systems of information sharing, intelligence exchange and work coordination should be established and improved to apprehend fugitives, it said.

It also pushed to reinforce international cooperation framework, make full use of current bilateral and multilateral judical agreements and treaties and innovate in cooperation platforms to conduct more flexible and practical international cooperation via diversified forms and channels.

Based on a comprehensive investigation, the campaign should focus on key targets and cases, the statement said.
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Scooped by Jim Wesberry! | SEC Announces Cases Targeting International Pyramid Scheme Operators | SEC Announces Cases Targeting International Pyramid Scheme Operators | Global Corruption |
The Securities and Exchange Commission today announced charges against the operators of an international pyramid scheme that raised more than $129 million from investors worldwide, primarily in the U.S., China, and Taiwan.  The case follows another against a separate pyramid scheme that lured investors in the U.S., China, and Korea with seminars, webinars, and YouTube videos.
The newest case, filed in federal court in San Francisco, charges Hong Kong-based eAdGear Holdings Limited and California-based eAdGear, Inc., along with operators Charles S. Wang and Qian Cathy Zhang, of Warren, N.J., and Francis Y. Yuen, of Dublin, Calif.  According to the SEC complaint, even though eAdGear claimed to be a successful Internet marketing company, nearly all of its revenue was generated by investors, not its products or services. 

The complaint alleges that eAdGear’s operators used money from new investors to pay earlier investors as well as to repay a personal loan and purchase million-dollar homes for themselves. It alleges the operators concealed and perpetuated the scheme by displaying sham websites on eAdGear’s own site to make it appear as if it had real, paying customers and manipulated revenue distributions to investors to appear profitable.

“eAdGear and its operators falsely claimed that they were running a profitable Internet marketing company when in reality, they were operating a Ponzi and pyramid scheme that preyed on Chinese communities and caused investors to lose millions of dollars,” said Jina L. Choi, director of the SEC’s San Francisco Regional Office.

The eAdGear case follows one filed Monday in federal court in Georgia against Zhunrize Inc. and CEO Jeff Pan for allegedly defrauding investors of more than $105 million since 2012.  Despite its claims to be a legitimate multi-level marketing company, Zhunrize derived most of its funds from selling memberships, not products, according to the SEC complaint. 

“Zhunrize claimed to offer investors the opportunity to be an ‘e-commerce Business Owner’ selling products to customers through a website.  In fact, it was a pyramid and ‘profits’ came from fees paid by later investors,” said William Hicks, associate regional director of the SEC’s Atlanta Regional Office.
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Russian govt to protect anti-corruption whistleblowers – report

Russian govt to protect anti-corruption whistleblowers – report | Global Corruption |
Russia’s State Duma plans to widen legal protection for people who help fight corruption among state officials, reporting the cases to police or the media. The bill is currently in the works, Izvestia reported.

The amendments to the existing anti-corruption law have been suggested by MP Ilya Kostunov, of United Russia, who's a member of the lower house of parliament's security and anti-corruption committee.

According to Kostunov, many people who report cases of corruption within their work environment are forced to quit their jobs by their bosses. The new bill should help protect these people, the deputy says.

"There is a presidential decree that enacts protection for those who report corruption cases. According to this decree, anti-corruption fighters can only be fired by a prosecutor's order, and they should also be guaranteed free legal assistance. But these rules are widely being flouted," Kostunov said.

The suggested amendment includes sanctions against managers who penalize anti-corruption fighters. If someone who reports lawbreakers is mistreated for that at work, the boss – no matter how high-ranking – should be fired. Similar articles are included in anti-corruption laws in the United States and Canada, where those who act against informants are held criminally responsible, the sponsor of the new Russian law said.
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Scooped by Jim Wesberry! | SEC Charges Arizona-Based Software Company for Inadequate Internal Accounting Controls Over Its Financial Reporting | SEC Charges Arizona-Based Software Company for Inadequate Internal Accounting Controls Over Its Financial Reporting | Global Corruption |
Washington D.C., Sept. 25, 2014 — The Securities and Exchange Commission today sanctioned a Scottsdale, Ariz.-based software company for having inadequate internal accounting controls over its financial reporting, which resulted in misstated revenues in public filings.
An SEC investigation found that JDA Software Group Inc. failed to properly recognize and report revenue from certain software license agreements it sold to customers because its internal accounting controls failed to consider information needed for determining a critical component of revenue recognition for software companies.  If companies are unable to demonstrate this component – known as vendor specific objective evidence of fair value (VSOE) – when determining the fair value of certain services related to a software license agreement, then they cannot immediately recognize the entire revenue from that agreement.  With proper internal controls that appropriately considered VSOE, JDA would have recognized revenue from certain sales ratably over the term of a services agreement.

JDA agreed to settle the SEC’s charges by paying a $750,000 penalty.

“Companies must have adequate internal accounting controls designed to comply with their financial reporting obligations to the public,” said Michael Maloney, Chief Accountant of the SEC’s Enforcement Division.  “VSOE is a critically important component in determining the timing in which software companies recognize revenue, and JDA’s internal accounting controls surrounding VSOE were inadequate in various ways.”
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World must tackle corruption to end poverty - Cameron | Reuters

World must tackle corruption to end poverty - Cameron | Reuters | Global Corruption |
British Prime Minister David Cameron urged world leaders to adopt 10 “simple and inspiring” global goals to end extreme poverty in 15 years, including one that targets bribery and corruption.

Every indicator on poverty - from women dying in childbirth to children denied an education - shows that the more corrupt a society, the poorer its people, Cameron said on Wednesday at an event on the sidelines of the United Nations' annual meetings.

“Why in too many cases does aid not get through to the people who need it the most? The answer: corruption. Why do so many countries with massive mineral wealth have rich elites and large numbers in grinding poverty? Corruption,” he said.

“So don’t let anyone keep corruption out of how we tackle poverty.”

Yet getting countries to agree on anti-corruption goals has proved challenging, said Helen Clark, the U.N. Development Programme (UNDP) administrator.
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New technologies shape emerging trends in fraud investigations

New technologies shape emerging trends in fraud investigations | Global Corruption |
Lynda Schwartz conducted one of her first forensic investigations in 1990. This gave her the opportunity to investigate correspondence that was made using technology that was relatively new at the time: email.

Schwartz, CPA/CFF, CGMA, a forensic accountant with Upland Advisory, had no email review tools, but she designed a search string in the email program itself. How times have changed. As technologies have evolved, so too have the tools that forensic investigators use to manage the volume of data they encounter. Today, Schwartz starts with a quick internet search and a scan of social media sites. Most of her investigation engagements include the use of well-developed electronic evidence management and analysis tools, including Big Data analysis techniques.

Schwartz said the underlying frauds are not all that different from those CPAs investigated decades ago, but now they are technology-enabled. Also, changes in technology and controls sometimes create new opportunities for well-known fraud schemes to recur.

“Fraud never changes, it just changes its clothes,” she said. “Many of the same frauds we’ve been investigating for years show up in many different guises.”

David Zweighaft, CPA/CFF, and the managing director at DSZ Forensic Accounting & Consulting Services, said he’s seeing many of the classic frauds now committed by a different cast of players. Medicaid fraud is a good example. While it is not new, Zweighaft notes that this type of fraud has become a favored activity of organized crime groups based in Eastern Europe. Those groups set up phony doctors’ offices and defraud the government with fictitious billing.

Another example involves data breaches, which have received a lot of media attention recently thanks in part to the breach at Home Depot disclosed in September. Once again, stealing data from companies is not a new crime. Zweighaft said the change is that crimes that had been perpetrated by small groups of malicious hackers for political and ideological purposes are now committed by organized groups that have made fraud their primary, profit-driven focus, whether they are based in the United States or halfway around the world.
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Bank of America to Pay $7.65M for Violations in Accounting for Merrill Lynch Acquisition

The Securities and Exchange Commission has charged Bank of America Corporation with violating the internal controls and recordkeeping provisions of the federal securities laws after the bank assumed a large portfolio of structured notes and other financial instruments as part of its acquisition of Merrill Lynch.

Bank of America agreed to pay a $7.65 million penalty to the SEC to settle the charges stemming from regulatory capital overstatements that it made due to its internal accounting control deficiencies and books and records failures.

Bank of America agreed to acquire Merrill Lynch in September 2008 for $50 billion as the financial crisis took on greater urgency. Federal officials feared that Merrill would collapse like Lehman Brothers and Bear Stearns as the venerable investment bank suffered from $52.2 billion in losses and write-downs stemming from the collapse of the subprime loan market, prompting its stock price to plunge over 80 percent from its highs in 2007.

Regulatory capital refers to the amount of capital that a bank must hold under applicable rules, and it is intended to provide a buffer against adverse market conditions. According to the SEC’s order instituting a settled administrative proceeding, at the time of its Merrill Lynch acquisition, Bank of America permissibly recorded the inherited notes at a discount to par. Bank of America was required to realize losses on the notes as they matured because it redeemed the notes at par. For the purposes of calculating and reporting its regulatory capital, the applicable rules required Bank of America to deduct the realized losses as they occurred.

However, according to the SEC’s order, by the time 90 percent of the notes had matured as of March 31, 2014, Bank of America had yet to deduct any of the realized losses from its regulatory capital. Therefore, with each passing fiscal quarter and fiscal year since 2009 as more and more notes matured, Bank of America overstated its regulatory capital by greater and greater amounts in its regulatory filings, eventually reaching billions of dollars. 
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Detroit-Area Operator of Adult Day Care Center, Two Home Health Care Company Owners Convicted in $29 Million Medicare Fraud Conspiracy | OPA | Department of Justice

Detroit-Area Operator of Adult Day Care Center, Two Home Health Care Company Owners Convicted in $29 Million Medicare Fraud Conspiracy | OPA | Department of Justice | Global Corruption |
A federal jury in Detroit late yesterday convicted the operator of an adult day care center and two individuals who owned and operated a network of home health care companies for their participation in a $29 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Detroit Office and Special Agent in Charge Jarod Koopman of the Internal Revenue Service – Criminal Investigation (IRS-CI) Detroit Field Office made the announcement.

According to evidence presented at trial, Felicar Williams, 51, of Dearborn, Michigan, operated Haven Adult Day Care Center LLC (Haven), which purported to provide adult day care services for patients suffering from mental health disorders such as schizophrenia and dementia.  At Williams’s direction, Haven billed Medicare for sophisticated mental health services purportedly provided by other, unlicensed staff members. 

Evidence at trial also established that Abdul Malik Al-Jumail, 54, and his daughter, Jamella Al-Jumail, 25, both of Brownstown, Michigan, owned and operated a series of fraudulent home health care companies, including ABC Home Care Inc., Associates in Home Care Inc., Accessible Home Care Inc., Swift Home Care LLC, and Be Well Home Care LLC.  The companies billed Medicare for home health services that were not needed or not provided.  At the instruction of both Abdul Malik Al-Jumail and Jamella Al-Jumail, employees of the home health companies fabricated patient medical records to make it appear that the services were needed and provided.

According to evidence presented at trial, Abdul Malik Al-Jumail paid kickbacks to Williams to obtain billing information about patients at Haven.  He then used the information to bill Medicare for home health care services that were never provided.

In addition, the evidence at trial showed that, on May 2, 2012, the day her father was arrested, Jamella Al-Jumail instructed an employee to retrieve falsified patient medical records from the company.  Later that day, Jamella Al-Jumail and others helped burn the false records. 
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Interference of a VA Official for the Financial Benefit of a Contractor

We substantiated that Ms. Susan M. Taylor, Deputy Chief Procurement Officer (DCPO),  VHA, PLO, engaged in conduct prejudicial to the Government when she pressured contracting staff under her authority to give preference to and award a task order for reverse auction services to FedBid, Inc. (FedBid). We also found that she engaged in a
conflict of interest when she improperly acted as an agent of FedBid in matters before the Government, improperly disclosed non-public VA information to unauthorized persons, misused her position and VA resources for private gain, and engaged in a prohibited
personnel practice when she recommended that a subordinate senior executive service (SES) employee be removed from SES during her probation period, as Ms. Taylor identified the subordinate as the person she suspected of making protected disclosures of Ms. Taylor’s ethic violations. Further, we found that Ms. Taylor interfered with the VA
Office of Inspector General’s (OIG) review of the FedBid contract and that she did not testify freely and honestly concerning her involvement in the solicitation and award of the task order to FedBid, as well as other matters. We made a criminal referral of the conflict of interest and false statements to the U. S. Department of Justice (DOJ...

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Fictitious case to snare judge was elaborate

Fictitious case to snare judge was elaborate | Global Corruption |
The Khoury identity was fabricated, his gun arrest staged, and the criminal charges against him set up - all to test whether Municipal Judge Joseph C. Waters could be induced to influence the case as a favor to a campaign donor.

Waters pleaded guilty Wednesday to federal mail-fraud and wire-fraud charges stemming in part from a phone call he made to the judge who presided over part of the Khoury case. That judge, Dawn A. Segal, has been pulled from the bench by the Pennsylvania Supreme Court, pending an investigation by the state's Judicial Conduct Board.

Asked about the Khoury case Friday, Waters' attorney, Michael J. Engle, said: "As I understand it, none of it was real. This whole sting was orchestrated."

While federal authorities have in the past turned to staged prosecutions to root out corruption in the judicial system, the practice remains relatively rare as the technique can raise complex ethical quandaries about tampering with the legal system.

When federal agents sent corrupt, fur-coated defense lawyer Barry H. Denker into the field wearing a wire in the late '80s to help convict three Philadelphia judges on the take, they first sought the OK of FBI directors in Washington. And the defendants in those cases were real people facing real charges.

Other times, the strategy doesn't quite work as planned. Hoping to catch former Philadelphia Traffic Court Judge Michael J. Sullivan in accepting a bribe to fix traffic tickets, investigators staged a fake citation for an undercover agent. Sullivan, who was acquitted this year on corruption charges, rejected the man's offer of a $200 kickback.
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News - Features - Good governance: end poverty now

News - Features - Good governance: end poverty now | Global Corruption |

Bribery has a clear inverse relationship with MDG achievement. In countries where more people paid more bribes to obtain basic services, more women died during childbirth, fewer children lived beyond five years of age, more people went without clean drinking water or toilets, and fewer girls finished secondary school.

Bribery also wipes out the benefits of economic growth. For example, any gains made in improving access to safe drinking water when family incomes rise are offset by the negative effect of bribery.

Many different forms of public sector corruption can hurt development. Primary school completion rates, for example, are affected by teacher absenteeism, the lack of availability of text books due to corruption and the quality of facilities such as classrooms, often left in disrepair because funds for building get diverted due to corruption.

Our analysis of public sector corruption and MDG achievement, using the Transparency International Corruption Perceptions Index scores and other indices, shows that when such abuses are widespread, they take away almost one-third of the gains that better schooling can produce for reducing poverty. Even in countries with a higher capacity to deliver educational services, public sector corruption adversely affects children’s chances of completing their primary education.

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China's communist party expels senior internet regulator for graft

China's communist party expels senior internet regulator for graft | Global Corruption |
A senior Chinese internet regulator has been expelled from the ruling Communist Party on graft charges, China's top anti-graft body said on Friday, as it works to crack down on corruption in media and the internet.

Gao Jianyun, an official of the International Communication Office of the party's Central Committee, which is charged with regulating the Internet, including censorship, was placed under investigation in April, state media reported.

Gao used his position to seek benefits for others and solicit "huge bribes", the anti-graft body said, as well as to support a mistress and a child.

Party investigators have handed the case over to judicial authorities, it added.

President Xi Jinping is presiding over the worst crackdown on the Internet and online censorship in China in recent memory.
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China to streamline corruption reporting

China to streamline corruption reporting | Global Corruption |
The process under which local Chinese graft inspectors report their findings will be further streamlined next year in a bid to catch more corrupt officials, the Communist Party of China's (CPC) discipline watchdog said on Friday.

According to the CPC's Central Commission for Discipline Inspection (CCDI), local discipline inspection agencies nationwide will give reports on their work only to superior inspection agencies.

They will follow instructions from superior agencies first when investigating a corruption case.

Currently, each local discipline inspection agency is under the dual leadership of the CPC committee at the same level and the inspection agency of a superior level.
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Scooped by Jim Wesberry! | SEC Charges Four Insurance Agents in Securities Fraud Targeting Elderly Investors | SEC Charges Four Insurance Agents in Securities Fraud Targeting Elderly Investors | Global Corruption |
The Securities and Exchange Commission today announced charges against four insurance agents for unlawfully selling securities in what turned out to be a multi-million dollar offering fraud targeting elderly investors.
The SEC previously charged a Colorado man who allegedly orchestrated the scheme and recruited active insurance agents to help him solicit investors in Colorado and several other states.  The scheme raised approximately $4.3 million during a nearly 18-month period.  The SEC’s investigation further found that the four insurance agents charged today solicited funds without registering with the SEC as a broker-dealer as required under the federal securities laws.

“When individuals act as a broker and sell securities to the public, they must comply with registration, supervision, and compliance requirements that exist to protect investors,” said Julie K. Lutz, Director of the SEC’s Denver Regional Office.  “These insurance agents improperly operated outside of that regulatory framework and thereby placed their clients at risk.”

According to the SEC’s order instituting administrative proceedings, the scheme primarily targeted retired annuity holders by using insurance agents to sell interests in a company called Arete LLC, which was controlled by the Colorado man orchestrating the scheme: Gary Snisky.  The insurance agents told investors that their funds would be used by Snisky to purchase government-backed agency bonds at a discount.  However, Snisky did not purchase bonds or conduct any such trading, and he misappropriated approximately $2.8 million of investor funds to pay commissions and make personal mortgage payments.

The SEC’s Enforcement Division alleges that the following three brokers raised approximately $1.5 million for Snisky and received almost $90,000 in commissions:

Kenneth C. Meissner of Fair Oaks Branch, Texas
James Doug Scott of Perkasie, Penn.
Mark S. “Mike” Tomich of Belmont, Mich.
The other insurance agent – David C. Sorrells of Linden, Texas – entered into a cooperation agreement with the SEC.  Without admitting or denying the findings, Sorrells consented to an order finding that he violated Section 15(a) of the Securities Exchange Act of 1934.  He agreed to be barred from the securities industry, cease and desist from future violations of Section 15(a), and pay disgorgement of $207,213.34.  He also is subject to an additional financial penalty.  The settlement reflects substantial assistance that Sorrells provided in the SEC’s investigation.

The SEC’s Enforcement Division alleges that Meissner, Scott, and Tomich violated Section 15(a) of the Exchange Act, and is seeking disgorgement, penalties, and securities industry bars in the matter, which will be litigated before an administrative law judge. 
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Michigan Physician Pleads Guilty for Role in Medicare Fraud Scheme | OPA | Department of Justice

Michigan Physician Pleads Guilty for Role in Medicare Fraud Scheme | OPA | Department of Justice | Global Corruption |
A Detroit-area physician who made fraudulent referrals for home health care in a $1.3 million Medicare fraud scheme pleaded guilty today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Dr. Vicha Janviriya, 77, of Southfield, Michigan, pleaded guilty before U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  Sentencing is scheduled for Jan. 21, 2015.

According to court documents, Janviriya admitted that from February 2006 through September 2012, he falsified medical documentation and falsely certified Medicare beneficiaries as homebound or requiring home health care services.  In many cases, he had never met those beneficiaries.  Janviriya admitted that he knew the false home health certifications would be used to support false claims to Medicare for services that were never rendered or not medically necessary, or where the Medicare beneficiary referrals were obtained through the payment of kickbacks. 

Between February 2006 and September 2012, Janviriya caused Medicare to pay approximately $1,366,496 based on his false home health certifications.
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SEC Charges Barclays Capital with Systemic Compliance Failures After Acquiring Lehman’s Advisory Business

SEC Charges Barclays Capital with Systemic Compliance Failures After Acquiring Lehman’s Advisory Business | Global Corruption |
The Securities and Exchange Commission today charged Barclays Capital Inc. with failing to maintain an adequate internal compliance system to ensure the firm did not run afoul of any federal securities laws after its wealth management business in the U.S. acquired the advisory business of Lehman Brothers in September 2008. 
Investment advisers are required to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and its rules.  An SEC examination and subsequent investigation found that Barclays failed to enhance its compliance infrastructure to integrate and support the acquisition and rapid growth of the advisory business from Lehman.  The deficiencies in its compliance systems contributed to other securities law violations by Barclays.

To settle the SEC’s case, Barclays agreed to pay a $15 million penalty and to undertake remedial measures, including engaging an independent compliance consultant to conduct an internal review.

“When a firm acquires an advisory business, it must devote the attention and resources necessary to build a robust compliance system,” said Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.  “Barclays failed to establish this critical compliance foundation when it acquired Lehman’s advisory business, and as a result subjected its clients to a host of improper practices and inadequate disclosures.”

According to the SEC’s order instituting a settled administrative proceeding, Barclays failed to adopt and implement written policies and procedures and maintain certain required books and records to prevent the other violations.  For instance, Barclays executed more than 1,500 principal transactions with its advisory client accounts without making the required written disclosures or obtaining client consent.  Barclays also earned revenues and charged commissions and fees that were inconsistent with its disclosures for 2,785 advisory client accounts.  Barclays also violated custody provisions of the Advisers Act, and underreported its assets under management by $754 million when it amended its Form ADV on March 31, 2011.  The violations resulted in overcharges and client losses of approximately $472,000 and additional revenue to Barclays of more than $3.1 million.  Barclays has since reimbursed or credited its affected clients approximately $3.8 million including interest. 
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SEC Charges Software Company in Silicon Valley and Two Former Executives Behind Fraudulent Accounting Scheme

SEC Charges Software Company in Silicon Valley and Two Former Executives Behind Fraudulent Accounting Scheme | Global Corruption |
The Securities and Exchange Commission today charged a Silicon Valley-based software company and two former executives behind an accounting fraud in which timesheets were falsified to hit quarterly financial targets.
An SEC investigation found that company vice presidents Patrick Farrell and Sajeev Menon were atop a scheme at Saba Software in which managers based in the U.S. directed consultants in India to either falsely record time that they had not yet worked, or purposely fail to record hours worked during certain pay periods to conceal budget overruns from management and finance divisions.  The improper time-reporting practices enabled Saba Software to achieve its quarterly revenue and margin targets by improperly accelerating and misstating virtually all of its professional services revenue during a four-year period as well as a substantial portion of its license revenue.

Saba Software agreed to pay $1.75 million to settle the SEC’s charges, and Farrell and Menon agreed to settle the case as well.

Under the “clawback” provision of the Sarbanes-Oxley Act, executives can be compelled to return to the company and its shareholders certain money they earned while their company was misleading investors.  In a separate order instituted today, the SEC required Saba Software’s CEO Babak “Bobby” Yazdani to reimburse the company $2.5 million in bonuses and stock profits that he received while the accounting fraud was occurring, even though he was not charged with misconduct. 

“CEOs and CFOs can be deprived of bonuses and stock profits if there is misconduct on their watch that requires a restatement by their employer,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “We will not hesitate to pursue clawbacks in appropriate cases.”
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Federal grand jury indicts 19 accused of Atlanta fraud ring

A federal grand jury has indicted 19 people accused of cashing stolen treasury checks, credit-card fraud and identity theft, the U.S. Attorney’s office announced Wednesday.
“These indictments and arrests are a direct result of an extensive 16 month multi-agency investigation focusing on a network of individuals who facilitated their criminal enterprise through various fraudulent schemes and other criminal activities,” said J. Britt Johnson, Special Agent in Charge of the FBI in Atlanta. “The elaborate networking of this group allowed them to expand their criminal activities throughout multiple states as they increased their victim base.”
According to United States Attorney Sally Quillian Yates, the charges, and other information presented in court: From approximately June 2012 until September 2014, the 19 conspirators worked together to steal and then cash United States Treasury checks from various sources, including the mail. The checks had been refunds to taxpayers, pension payments to retired federal employees, military families, and Social Security benefits.
“Fraud and identity theft crimes are now perceived as lucrative alternatives for criminal organizations,” Yates said. “People who commit these crimes prey upon unsuspecting victims, stealing the victims’ money and compromising their livelihoods, sometimes causing lifelong financial consequences.”
The fraud totaled about $350,000, authorities said.
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