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Paul Merrell

JPMorgan Chase Nears a $2 Billion Deal in a Case Tied to Madoff - NYTimes.com - 0 views

dealbook.nytimes.com/...-deal-in-a-case-tied-to-madoff

banksters JPMorgan Madoff litigation settlement

shared by Paul Merrell on 07 Jan 14 - No Cached
  • Working through a long list of legal problems, JPMorgan Chase is starting the new year with another steep payout to the government. The bank plans to reach as soon as this week roughly $2 billion in criminal and civil settlements with federal authorities who suspect that it ignored signs of Bernard L. Madoff’s Ponzi scheme, according to people briefed on the case. All told, after reaching the Madoff settlements with federal prosecutors in Manhattan and regulators in Washington, the bank will have paid some $20 billion to resolve government investigations over the last 12 months.
Paul Merrell

Criminal action is expected for JPMorgan in Madoff case - 0 views

www.cnbc.com/101266885

banksters JPMorgan Ponzi-scheme Madoff liability

shared by Paul Merrell on 13 Dec 13 - No Cached
  • JPMorgan Chase and federal authorities are nearing settlements over the bank's ties to Bernard L. Madoff, striking tentative deals that would involve roughly $2 billion in penalties and a rare criminal action. The government will use a sizable portion of the money to compensate Mr. Madoff's victims. The settlements, which are coming together on the anniversary of Mr. Madoff's arrest at his Manhattan penthouse five years ago on Wednesday, would fault the bank for turning a blind eye to his huge Ponzi scheme, according to people briefed on the case who were not authorized to speak publicly.
  • A settlement with federal prosecutors in Manhattan, the people said, would include a so-called deferred-prosecution agreement and more than $1 billion in penalties to resolve the criminal case. The rest of the fines would be imposed by Washington regulators investigating broader gaps in the bank's money-laundering safeguards. The agreement to deferred prosecution would also list the bank's criminal violations in a court filing but stop short of an indictment as long as JPMorgan pays the penalties and acknowledges the facts of the government's case. In the negotiations, the prosecutors discussed the idea of extracting a guilty plea from JPMorgan, the people said, but ultimately chose the steep fine and deferred-prosecution agreement, which could come by the end of the year.
  • The government has been reluctant to bring criminal charges against large corporations, fearing that such an action could imperil a company and throw innocent employees out of work. Those fears trace to the indictment of Enron's accounting firm, Arthur Andersen, which went out of businesses after its 2002 conviction, taking 28,000 jobs with it. Ever since, prosecutors have increasingly relied on deferred-prosecution agreements, which rebuke companies without threatening their health. Although a Wall Street bank has never faced a deferred-prosecution agreement, according to a University of Virginia Law School database, Wachovia and the banking arm of American Express have entered into such deals. The agreements, however, have fueled concern that some banks, having grown so large and interconnected, are too big to indict.
  • Paul Merrell on 13 Dec 13
     
    I'll say it again: there will no deterrence against future financial crimes by the megabanksters until some of them are sentenced to prison time. A criminal prosecution of a corporation is criminal prosecution of an imaginary being. One must prosecute human beings to actually deter misconduct. 
Gary Edwards

MF Global: Where's the Cash? -- Part II | ZeroHedge - 0 views

www.zerohedge.com/...mf-global-wheres-cash-part-ii

Banksters Bankruptcy MF-Global Corzine

shared by Gary Edwards on 16 Feb 12 - No Cached
  • Gary Edwards on 16 Feb 12
     
    It's complicated.  The bottom line is that we know where the $1.6 Billion in customer assets, squandered and "lost" by Corzine, is.  JP Morgan is holding the bulk of it, and due to recent changes in the 546(e) section of the Federal Bankruptcy code, JP Morgan and the other big banksters will be able to keep that money from it's rightful owners.  Oh, yeah.  One other thing.  The big banksters now running off with the assets of investors are the very same people who lobbied hard and heavy ($$$) to have the changes in the code pushed through by their unwitting stooges in Congress. excerpt: This week in The Institutional Risk Analyst we published a comment on the ongoing financial genocide at MF Global, "MF Global: Where's the Cash?"  http://us1.irabankratings.com/pub/IRAstory.asp?tag=515 The comment correctly identifies the location of the "missing" $1.6 billion as JP Morgan Chase and other bank custodians of MF Global.  The trouble is that even though we now know where the missing customer money has gone, namely JPMorgan, there is little chance that the defrauded customers of Jon Corzine will ever recover a dime. Here's the link to a video by William Rochelle of Bloomberg News explaining how the safe harbor in Section 546(e) of the Bankruptcy Code likely will prevent MF Global customers from ever getting their $1.6 billion back -- even when it's located, as it has been evidently. ... (MONEY SHOT) The problem here is that the existing laws against pillaging customer accounts and other acts of fraud are in conflict with the bankruptcy statute designed to make the world safe for large banks and over-the-counter derivatives.  Specifically, the post 2005 bankruptcy laws prohibit trustees from clawing back the $1.6 billion in stolen customer funds.  Indeed, the Bankruptcy Court and trustee are precluded from pursuing the banks just as the trustee in the Madoff fraud has likewise been stymied.    In addition to the clients of MF Global who were ap
Gary Edwards

Why Isn't Wall Street in Jail? | Rolling Stone - Matt Taibi - 2 views

www.rollingstone.com/...t-wall-street-in-jail-20110216

Banksters financial-collapse Matt-Taibi

shared by Gary Edwards on 17 Mar 12 - No Cached
  • Gary Edwards on 17 Mar 12
     
    Must read stuff.  Very lengthy Bankster expose, this time involving Bankster connections to Obama, the political establishment, and the corruption of the DOJ, SEC and other regulatory agencies.  Very lengthy.  Includes stories about the misfortunes of those few honest individuals who tried to do the right thing in a sea of thieves, liars and crooks. excerpt: Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth - and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people. This article appears in the March 3, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive February 18. The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom - an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities - has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions - from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before hi
Gary Edwards

5 Signs You're Dealing With Someone Who's A Fraud - 0 views

www.businessinsider.com/be-dealing-with-a-fraud-2011-6

fraud enron michael-barron virtual-realty

shared by Gary Edwards on 02 Jun 11 - No Cached
  • Gary Edwards on 02 Jun 11
     
    exerpt: Just one bad apple can have awful consequences (see Madoff, Bernie or Kozlowski, Dennis). But how to spot the bad apples when you're picking from the tree? On the company's website, Crowe Horwath LLP Partner and Leader of Fraud, Ethics, and Anti-corruption Services, Jonathan T. Marks has published a short paper detailing tell-tale signs that might help someone sort out who will be an asset to their business and who could wreak major havoc and "spoil the bunch." We've combed through it and delved deep to look at what these signs are and how you might be able to use them.
Gary Edwards

Robert Murphy on the SEC and Government bungling of fraudulent investment scams - 0 views

mises.org/3273

sec financial-crisis financial-solutions madoff fredrick-von-mises banksters

shared by Gary Edwards on 09 Jan 09 - Cached
  • Gary Edwards on 09 Jan 09
     
    Whenever a government regulatory agency proves itself to be incredibly incompetent or corrupt, the respectable media swoop in to declare that the "free market" has failed and the agency in question obviously needs more money and power. Whether it's the Department of Education's failure to produce kids who can read, the FBI's accusations against innocent people in high-profile cases, or the FDA cracking down on tomatoes, the answer is always the same: proponents of bigger government argue that yes, mistakes were made, but the solution of course is to shovel more taxpayer money into the agencies in question. In the private sector, when a firm fails, it ceases operations. The opposite happens in government.
Paul Merrell

Martin Shkreli Arrested on Securities Fraud Charges - 0 views

www.bloomberg.com/...artin-shkreli-securities-fraud

Shkreli criminal-prosecution embezzlement fraud

shared by Paul Merrell on 18 Dec 15 - No Cached
  • Martin Shkreli, a boastful pharmaceutical executive who came under withering criticism for price gouging vital drugs, denied securities fraud charges on Thursday following an early morning arrest, and was freed on a $5 million bond. While the 32-year-old has earned a rare level of infamy for his brazenness in business and his personal life, what he was charged with had nothing to do with skyrocketing drug prices. He is accused of repeatedly losing money for investors and lying to them about it, illegally taking assets from one of his companies to pay off debtors in another. “Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Attorney Robert Capers said at a press conference.
  • Evan Greebel, a New York lawyer, who is alleged in the federal indictment to have helped Shkreli in his schemes, was also arrested and charged. Like Shkreli, he pleaded not guilty, and he was freed on a $1 million bond. Both men and their lawyers declined to comment after their court appearance.
  • Read the full text of the indictment here In the federal indictment and a complaint by the Securities and Exchange Commission, authorities say Shkreli began losing money and lying to investors from the time he began managing money. In his mid-20s, he got nine investors to place $3 million with him and at one point he had only $331. Securities fraud is hardly unheard of on Wall Streeet and the amounts involved here are nowhere near on the scale of Bernie Madoff. But Shkreli’s case has drawn such attention because of his defiant price-gouging and his own up-by-the-bootstraps history. The son of immigrants from Albania and Croatia who did janitorial work and raised him and his brothers in working-class Brooklyn, Shkreli seemed at first to embody the American dream and then to mock it. After dropping out of an elite Manhattan high school, he worked as an intern for Jim Cramer’s hedge fund as a 17-year-old and quickly impressed with his ability to call stocks. He created hedge funds, taught himself biology and, after earning a BA at Baruch College in New York City, began hedge funds investing in biotech.
  • ...9 more annotations...
  • He became famous within a certain world but entered public consciousness after he raised the price more than 55-fold for Daraprim in September from $13.50 per pill to $750. It is the preferred treatment for a parasitic condition known as toxoplasmosis, which can be deadly for unborn babies and patients with compromised immune systems including those with HIV or cancer. His company, Turing Pharmaceuticals AG, bought the drug, moved it to a closed distribution system and instantly drove the price into the stratosphere. He drew shocked rebukes from Congress, doctors and presidential candidates, and brought public attention to the rising prices of older drugs. Donald Trump called Shkreli a “spoiled brat,” and the BBC dubbed him the “most hated man in America.” Bernie Sanders, the Democratic presidential candidate, rejected a $2,700 campaign donation from him, directing it to an HIV clinic. A spokesman said the campaign would not keep money “from this poster boy for drug company greed.” All the criticism seemed at first to have some impact and Shkreli said he would lower the price. Then he reneged. When Hillary Clinton tried one more time last month to get him to cut the cost, he dismissed her with the tweet “lol.” At a Forbes summit in New York this month, wearing a hooded sweatshirt, he said if he could have done it over, “I probably would have raised the price higher,” adding, “My investors expect me to maximize profits.”
  • Shkreli did further damage to his public image with other acts and boasts. He spent millions on the only copy of a Wu-Tang Clan album that music fans are desperate to hear and then told Bloomberg Businessweek that he had no immediate plans to listen to it. He takes often to Twitter and message boards, bragging about his business strategies, musical tastes and politics; he live-streams from his office for long stretches. The SEC complaint and federal indictment lay out a series of schemes and cover-ups carried out by Shkreli. Capers said authorities began investigating him as early as 2014.
  • Barely 23, he was managing hedge fund Elea Capital in New York and lost it all in 2007. Around then, a trade with Lehman Brothers ended with a $2.3 million judgment against him, prosecutors said. In 2010, he lost his clients’ $3 million investment in his new fund, MSMB Capital. In 2011, he bet that shares of Orexigen Therapeutics Inc. would fall and wound up owing $7 million to his broker, Merrill Lynch, authorities said. He couldn’t pay, and he, an unnamed accomplice and MSMB Capital eventually extinguished the debt with a $1.35 million settlement, they said. Part of that money came from his next firm, authorities said. After the collapse of MSMB Capital, Shkreli launched MSMB Healthcare with about $5 million from 13 investors. He paid himself “far in excess” of the agreed-upon 1 percent management fee and 20 percent profit incentive, according to the SEC.
  • Shkreli then used cash from MSMB Healthcare to invest in Retrophin, the pharmaceutical company he founded in 2011, even though it “had no products or assets,” prosecutors said. Later, he used the assets of Retrophin to repay angry investors in his hedge funds, prosecutors said. Shkreli is confident that he will be cleared of the charges, according to a statement on his behalf. Shkreli is particularly disappointed that his litigation with Retrophin has become a government enforcement matter, according to the statement. He also denied the charges regarding the MSMB entities, which he said involve complex accounting matters that prosecutors and the SEC fail to understand, according to the statement. “It is no coincidence that these charges, the result of investigations which have been languishing for considerable time, have been filed at the same time of Shkreli’s high-profile, controversial and yet unrelated activities,” according to the statement. “The government suggested that Mr. Shkreli was involved in a Ponzi scheme. Ponzi victims do not make money, yet Mr. Shkreli’s investors enjoyed strong results.”
  • As Shkreli’s losses mounted, so did his lies. He fabricated portfolio statements and, with his lawyer’s help, deceived the SEC and outside accountants. He backdated records, manufactured a phony loan agreement between Retrophin and a hedge fund, and created sham consulting agreements with Retrophin as a way to route the company’s cash to his earlier investors. Greebel, the arrested lawyer, made sure Retrophin’s outside accountants were unaware of Shkreli’s financial maneuvers and helped him concoct the consulting agreements used to repay the hedge fund investors, the U.S. said. The cases mirror a lawsuit brought by Retrophin. Shkreli blithely dismissed his old company’s claims, saying, “The $65 million Retrophin wants from me would not dent me. I feel great. I’m licking my chops over the suits I’m going to file against them.” Earlier, he had denied wrongdoing in a post on InvestorsHub after Retrophin disclosed it had received a subpoena from federal prosecutors and the preliminary findings from its own investigation of Shkreli. He called the company’s allegations “completely false, untrue at best and defamatory at worst.”
  • “Every transaction I’ve ever made at Retrophin was done with outside counsel’s blessing,” he said on the investment blog in February, without identifying the lawyers. When Shkreli was working for Cramer’s firm, he was still a teenager. After recommending successful trades, Shkreli eventually set up his own hedge fund, quickly developing a reputation for trashing biotechnology stocks in online chatrooms and shorting them, to enormous profit. Widely admired for his intellect and sharp eye, he set up Retrophin to develop drugs and acquire older pharmaceuticals that could be sold for higher profits. Turing, which is less than a year old and has raised $90 million in financing, has followed a similar strategy with the purchase of drugs, including Daraprim. Shkreli recently bought a majority stake in KaloBios Pharmaceuticals Inc. after Turing received a warning from the New York attorney general that the distribution network for Daraprim may violate antitrust laws. State officials made their concerns known to Turing and Shkreli in an Oct. 12 letter obtained by Bloomberg.
  • KaloBios recently acquired the license for benznidazole, a standard treatment for Chagas, a deadly parasitic infection most common in South and Central America. The firm announced plans to increase the cost from a couple hundred dollars for two months to a pricing structure like that for hepatitis-C drugs, which can run to nearly $100,000 for 12 weeks.
  • With the federal charges and regulatory actions, Shkreli could be banned from running a public company, which could put the future of KaloBios into question. Trading in KaloBios shares was halted after the stock fell 53 percent. It’s less clear what the impact could be on Turing, which is closely held.
  • Federal authorities will have to ask a judge to impose an asset freeze if they want to guarantee Shkreli doesn’t dispose of ill-gotten gains. The charges suggest that a small group of health-care firms—ones that acquire the rights to drugs and significantly increase their prices—is drawing the scrutiny of regulators and prosecutors, with a possible chilling effect on aggressive drug-pricing strategies. Legislators are already paying attention. A hearing of the Senate Special Committee on Aging on Dec. 9 scrutinized such tactics. Before Shkreli started Turing, Retrophin raised the price of Thiola, used to treat a rare condition causing debilitating recurrences of kidney stones, from $1.50 a pill to $30. “Some of these companies seem to act more like hedge funds than traditional pharmaceutical companies,” said Senator Susan Collins, a Maine Republican who ran the recent hearing. George Scangos, CEO of biotechnology giant Biogen Inc., went further, saying in an interview, “Turing is to a research-based company like a loan shark is to a legitimate bank.”
  • Paul Merrell on 18 Dec 15
     
    Couldn't happen to a nicer guy.
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