June 22nd, 2010 at 1:10pm
Ten months after admitting his responsibility in the Ponzi scheme perpetrated by Ponzi-king Bernard Madoff, his former finance chief was released on a $10 million bail.
Frank DiPascali, 53, left U.S. District Court in Manhattan. He had provided information to investigators that has led to the arrests of Bernard Madoff’s former auditor and two computer programmers (hmmm, computer programmers, really dangerous types).
U.S. District Judge Richard Sullivan has twice rejected bail packages that were acceptable to prosecutors, instead noting DiPascali’s “crucial” role in the fraud, which DiPascali admitted he had known about since the 1980s or early 1990s and presumably voluntarily participated in.
Read the full article from the Associated Press in Yahoo News.
April 19th, 2010 at 10:19am
Attorney General Edmund G. Brown Jr. announced he is taking bond rating firm Moody’s Investor Service to court to force it to explain how it decided to give its highest ratings to subprime mortgage-backed securities that ruined investors and caused the government to force taxpayers to bail out the makers of these “risky and toxic” financial products. Moody’s had refused to respond to the Attorney General’s subpoena, forcing Brown to take court action.
Brown accuses Moody’s and other ratings firms of working closely with the Wall Street firms that formulated the securities in order to earn what amounted to billions of dollars in revenue from those same firms, ignoring ethical, regulatory and legal considerations about remaining “arm’s length” as a rating agency.
“A central question in the aftermath of the financial meltdown is whether Moody’s gave investment banks and other securities packagers unwarranted high ratings at the expense of investors, who depended upon the integrity and independence of Moody’s ratings,” according to AG Brown.
The subpoena from Attorney General Brown’s office seeks to learn:
- Whether Moody’s knew that the AAA ratings it gave to high-risk securities weren’t warranted
- Whether Moody’s made fraudulent representations about the quality of its ratings
- Whether Moody’s made fraudulent representations concerning the independence of its ratings
- Whether Moody’s conspired with companies it rated to the detriment of investors
- Whether Moody’s profited from giving inaccurate ratings to some securities
- Whether Moody’s compromised its own standards and safeguards in order to increase its own profits.
Read the press release by the California Attorney General’s Office.
April 16th, 2010 at 1:40pm
The Securities and Exchange Commission (SEC) has filed a civil complaint against Goldman Sachs alleging that the financial giant worked with one of its key clients to create collateralized debt obligations (CDOs) consisting of subprime mortgage-backed securities. Goldman Sachs then sold the CDOs to investors knowing that the client was betting heavily against the very same product.
The SEC’s complaint says that Goldman Sachs vice-president Fabrice Tourre, who was personally charged in the complaint, put the plan into operation in 2007, bragging in an email to a friend that he was “the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!” Fabrice Tourre has since been promoted to executive director of Goldman Sachs International in London. Mr. Tourre also has a profile on LinkedIn.
John Paulson, the hedge fund manager of Paulson & Co. was involved in choosing which securities would be part of the portfolio, according to the SEC’s complaint, but neither he nor Paulson & Co. have been charged with any crime. The SEC also alleged that Paulson took a short position against its ABACUS 2007-AC1 CDO in a bet that its value would fall spectacularly. Here is Paulson & Co.’s response to the SEC’s civil complaint.
More than $1 billion was lost by ABN Amro and IKB Deutsche Industriebank AG, two of the European banks that bought these toxic securities. According to the report in Yahoo News, John Paulson’s hedge fund ended up with the profits from those two banks’ losses.
Informed readers know that Goldman Sachs, which earned a staggering $4.79 billion in 4th quarter 2009, was one of the top recipients of corporate welfare at the largesse of taxpayers through the generosity of the Bush and Obama administrations. Rolling Stone writer Matt Taibbi, in his 2009 expose of Goldman Sachs, refers to the firm as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
And derivatives expert and Huffington Post blogger Janet Tavakoli, who also is the founder of Tavakoli Structured Finance, accuses Goldman Sachs of “malicious mischief” and of creating “bad securities”. Further, “the SEC itself has shirked its responsibilities in these matters for years” she said, adding that the SEC’s “hands have been forced by public voices” rather than its regulatory mandate to protect investors.
Read more on Yahoo and MSN. You can also read the SEC’s complaint against Goldman Sachs here.
This article was also published in Examiner.com by Monique Bryher.
March 14th, 2010 at 11:49am
Harry Markopolos’ much-awaited book on how he discovered and doggedly chased Bernie Madoff for ten years - is finally out.
Markopolos’ book is called No One Would Listen and is published by Wiley Publications. Lifting the veil on Madoff and his Ponzi scheme and occurring at the same time as the bursting of the real estate bubble, this book is a tale of a financial calamity unseen since the Great Depression.
A great story on Harry Markopolos, his hunt to bring down Madoff and his new book can be found in the New York Daily News. Monique Bryher posted a synopsis of Markopolos’ keynote speech at the July 2009 annual convention of the Association of Certified Fraud Examiners in Las Vegas.
March 14th, 2010 at 11:16am
A man who is accused of running a $142 million mortgage fraud and securities fraud ring in the Murrieta area has been denied a reduction in his bail.
Riverside County Superior Court Judge Richard T. Fields had previously reduced James B. Duncan’s bail from $144 million to $5 million but denied a motion from Duncan’s defense attorney to lower the bail further.
James Duncan and six others were arrested in November 2009 for their participation in an investment scheme that enriched themselves while causing their investors to lose millions in cash and see their homes foreclosed. Duncan’s attorney, James J. Warner, told the court that not only had the district attorney exaggerated the losses but that the real bad guy was Christopher Oetting, who was in charge of setting up the phony companies, soliciting the investors and managing their funds. Oetting hanged himself last month in Palm Desert after pleading guilty to his crimes but alleged that James Duncan was the mastermind and had received millions of dollars from the scheme.
Read the full article in the Press Enterprise.
June 5th, 2009 at 7:03am
Former Countrywide executive Angelo Mozilo, the man who almost singlehandedly built the subprime lending industry and made himself a mega-millionaire as it collapsed, wreaking havoc on world markets, will now spend many of those millions defending himself from federal regulators, who have charged him with civil fraud. The Securities and Exchange Commission also accuses Mozilo in its civil lawsuit of engaging in insider trading for dumping his Countrywide stock for nearly $140 million in profits when it was clear the lending firm’s risk lending practices were going to tear the company apart at the seams.
Read the Full Article in Examiner.com.
