Guilty Plea in Embezzlement by Bank Agent

Defendant Stole Items while Providing Foreclosure Services

ALBANY, NY—United States Attorney Richard S. Hartunian and Special Agent in Charge Clifford C. Holly of the Federal Bureau of Investigation, Albany Division, announced today that Sean DeCelle pled guilty before United States Magistrate Judge David R. Homer to embezzlement by an agent of a federally insured bank.

Defendant DeCelle, age 44, of Troy, New York, admitted that, in or about 2009, while acting as an agent of and connected in a capacity with Quantum Bank (hereinafter “the bank”), the deposits of which were then insured by the Federal Deposit Insurance Corporation, he knowingly and with intent to injure and defraud the bank, took assets of and intrusted to the custody and care of the bank and to him. Specifically, the defendant admitted that he stole certain items belonging to a Ms. Jeanne Wells, d/b/a Marie’s Dreamhouse, Inc., 2804 Route 42, Westkill, New York, while he was providing foreclosure services at that location on behalf of the bank. On June 6, 2010, the defendant was interviewed at his residence by Special Agents of the Federal Bureau of Investigation, at which time he admitted the theft and wrote out a list of items he had taken, which included steamer trays, fans, a meat slicer, wooden chairs, bowls, a tea pot, a silverware separator, and a blender, and the FBI took pictures of a number of these items located within his residence.

Defendant DeCelle faces a maximum statutory penalty of up to one (1) year imprisonment, a $100,000 fine, or both, and a period of up to one year supervised release to follow any term of imprisonment, as well as mandatory restitution. Sentencing was set for Monday, September 26, 2011, at 1:30 p.m., before Magistrate Judge Homer in Albany.

The investigation in this matter was conducted by the Albany Division of the Federal Bureau of Investigation, and the case was prosecuted by the United States Attorney’s Office for the Northern District of New York.

Image courtesy of Wikimedia Commons

Fed issues rule on standards for debit card interchange fees

The Federal Reserve Board on Wednesday issued a final rule establishing standards for debit card interchange fees and prohibiting network exclusivity arrangements and routing restrictions. This rule, Regulation II (Debit Card Interchange Fees and Routing), is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Debit card interchange fees are established by payment card networks and ultimately paid by merchants to debit card issuers for each electronic debit transaction. As required by the statute, the final rule establishes standards for assessing whether debit card interchange fees received by debit card issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees is effective on October 1, 2011.

The Board also approved on Wednesday an interim final rule that allows for an upward adjustment of no more than 1 cent to an issuer's debit card interchange fee if the issuer develops and implements policies and procedures reasonably designed to achieve the fraud-prevention standards set out in the interim final rule. If an issuer meets these standards and wishes to receive the adjustment, it must certify its eligibility to receive the adjustment to the payment card networks in which it participates. Comments on the interim final rule are due by September 30, 2011. The fraud-prevention adjustment is effective on October 1, 2011, concurrent with the debit card interchange fee limits. The Board will re-evaluate this adjustment in light of feedback received during this comment period.

When combined with the maximum permissible interchange fee under the interchange fee standards, a covered issuer eligible for the fraud-prevention adjustment could receive an interchange fee of up to approximately 24 cents for the average debit card transaction, which is valued at $38.

In accordance with the statute, issuers that, together with their affiliates, have assets of less than $10 billion are exempt from the debit card interchange fee standards. To assist payment card networks in determining which of the issuers are subject to the debit card interchange fee standards, the Board plans to publish by mid-July and annually thereafter lists of institutions that are above and below the small issuer exemption asset threshold. Also, the Board plans to annually survey the networks and publish a list of the average interchange transaction fees each network provides to its covered and exempt issuers. This information should enable issuers, including small issuers, to more readily compare the interchange revenue they would receive from each network.

The final rule prohibits all issuers and networks from restricting the number of networks over which electronic debit transactions may be processed to less than two unaffiliated networks. The effective date for the network exclusivity prohibition is April 1, 2012, with respect to issuers, and October 1, 2011, with respect to payment card networks. Issuers of certain health-related and other benefit cards and general-use prepaid cards have a delayed effective date of April 1, 2013, or later in certain circumstances.

Issuers and networks are also prohibited from inhibiting a merchant's ability to direct the routing of the electronic debit transaction over any network that the issuer has enabled to process them. The merchant routing provisions are effective on October 1, 2011.

Image courtesy of Wikimedia commons

Secretary Geithner Supports Christine Lagarde For IMF Managing Director

WASHINGTON – Today, the U.S. Department of the Treasury issued the following statement from Secretary Tim Geithner.

“I am pleased to announce our decision to support Christine Lagarde to head the International Monetary Fund. Minister Lagarde’s exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy. We are encouraged by the broad support she has secured among the Fund’s membership, including from the emerging economies. I also want to commend my friend, Agustin Carstens, on his strong and very credible candidacy.”

Fed and other banks announce extension of liquidity swap arrangements

Federal Reserve and other central banks announce an extension of the existing temporary U.S. dollar liquidity swap arrangements through August 1, 2012

The Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank today announced an extension of the existing temporary U.S. dollar liquidity swap arrangements through August 1, 2012. The Bank of Japan will consider the extension at its next Monetary Policy Meeting. The swap arrangements, established in May 2010, had been authorized through August 1, 2011.

Palm Beach Owner of Three Precious Metals Firms Charged in $25 Million Precious Metals Investment Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Henry Gutierrez, Postal Inspector in Charge, United States Postal Inspection Service, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that Jamie Campany, 47, of Palm Beach County, has been charged in a Criminal Information with multiple counts of mail and wire fraud. The Information charges Campany with five counts of mail fraud and four counts of wire fraud, in violation of Title 18, United States Code, Sections 1341 and 1343, respectively. Campany is scheduled to make his initial appearance in court before U.S. Magistrate Judge Lurana S. Snow tomorrow at 11:00 a.m. in federal court in Fort Lauderdale.

According to the Information, Campany was the owner of three investment firms specializing in purported gold, silver, platinum, and palladium bullion purchases on behalf of individual clients. Among his companies were Global Bullion Exchange, LLC (“Global”), in Lake Worth, Florida, and various affiliated licensee businesses throughout Palm Beach, Broward and Miami-Dade counties and other locations outside of Florida. In addition to Global, Campany owned and operated two predecessor firms, Barclay Trading Group, Inc. (“Barclay”) and The Bullion Group, Inc., both with offices in West Palm Beach.

As alleged in the Information, Campany’s three businesses conducted a sophisticated telemarketing operation to solicit investors to purchase precious metal bullion using purported “leverage” financing. These same investors were led to believe that they would need only to provide a fraction of the total cost of the purchased metals, with the remainder of the purchase price to be covered by margin-type financing, which would purportedly be extended to the investor by a purported “clearing firm.”

As further detailed in the Information, from about September 2006 to April 2007 when Barclay was succeeded by Global, the purported “clearing firm” with which Barclay had initially associated began delaying and ultimately ignoring requests by Barclay’s customers to sell their precious metals investments. As a result, the unsatisfied clients began to complain and threatened Barclay with litigation. In addition, the clearing firm’s failure to sell the clients’ holdings left Barclay insolvent.

As further alleged in the Information, in an attempt to prevent further complaints, litigation, and possible governmental enforcement action, Barclay began to satisfy its clients’ requests for liquidation of their investments by making payments to these clients using funds it had received from newer investors. After Global succeeded Barclay, Global continued this same Ponzi strategy. Global thereafter used Diversified Investment Group, Inc. (“Diversified”), a shell company controlled by defendant Campany, as its purported “clearing firm.” In fact, however, the Information alleges that no bullion was purchased, even though clients paid substantial commissions and fees totaling approximately 18% of the total purported value of the metal allegedly purchased.

According to the Information, Campany also misrepresented to the investors that their holdings had been financed through so-called “margin” credit. Thus, the investors were charged substantial interest on these non-existent “loans” and were subjected to periodic false “margin calls” during market declines. A margin call required investors to supply additional funds upon demand to increase their account equity levels. Moreover, investors who could not comply with such “margin calls” were informed that their investment positions had been forcibly liquidated and taken by Diversified as a secured creditor.

In a recent litigation filed in Miami-Dade Circuit Court by a court-appointed assignee, it is estimated that more than 1,400 investors were defrauded by Campany’s scheme out of more than $25 million.

Campany faces a maximum sentence of twenty years’ imprisonment and a maximum $250,000.00 fine for each of the Information’s nine counts.

Mr. Ferrer commended the investigative efforts of the FBI, U.S. Postal Inspection Service and Florida’s Office of Financial Regulation. In addition, Mr. Ferrer thanked the Commodity Futures Trading Commission and National Futures Association for their assistance in this case. The case is being prosecuted by Assistant U.S. Attorney Peter B. Outerbridge.

An Information is only an accusation, and a defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.  Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or pacer.flsd.uscourts.gov.

Sound Financial Advice!

By Zach Foster

“Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market.”

--Ron Paul, September 10, 2003 (four years before the housing bubble burst)

It is clear that Ron Paul understood economics better than most, if not all, members of Congress, and following his advice probably would have averted many of the terrible economic situations many Americans find themselves in today.  Congressman Paul knew that excessive spending, dishing out artificial credit, and government manipulation of free market practices led to the current economic recession which many are calling the Second Great Depression.

Dr. Paul’s extensive knowledge of solid economics, driven in part by his partnership with great economists like Ludwig Von Mises and Murray N. Rothbard[1], can help the country get back to a solid financial footing.  His solutions will not be overnight remedies as promised by the current administration and even some of the Republican contenders.

As President, Ron Paul would veto any unbalanced budget Congress sends him.  This practice would put in check the recent trend reflected both in the federal and various state governments of legislatures passing budgets with huge deficits.  Deficit is merely a nicer word for incurring extra debt and without a plan for paying it off.

Ron Paul would eliminate reckless and unconstitutional government departments.  If anything, this would achieve a major pillar of Republican ideology by SHRINKING the size of the federal government. Not all sections of various departments of various branches of government are necessary for running the country, and many of these departments serve only as red tape that either hinder economic growth or restrict individual liberties, or even both.  The last two Presidential administrations have been growing government faster than underground farmers grow marijuana in Humboldt County.  Even George W. Bush, the so-called maverick conservative, added 7,000 pages of new federal regulations over business and the economy, and even began opposing free trade by imposing tariffs on various imports.[2]

Ron Paul will not raise the debt ceiling.  He understands that raising the debt ceiling only furthers the country’s already out of control debt and puts the country in an even more precarious position should any of its creditors come knocking (ever heard of China?).  Government spending must be limited just the way credit card companies limit spending of careless clients who can’t pay their credit card debt.  The average credit card delinquent’s debt is in the tens of thousands.  The federal government’s debt is in the ball park of FOURTEEN TRILLION.[3]

Ron Paul would work to fully audit and then abolish the Federal Reserve.  The basic fact that damn the institution is that the Federal Reserve is only a quasi-governmental institution that can manipulate interest rates and the value of money without consulting any government authority.  Furthermore, every dollar that the federal government wishes into existence is PRINTED by the Federal Reserve and LOANED to the federal government with INTEREST FEES.  Basically, every dollar the federal government creates, it’s already in debt for.  Does anyone see a problem with this???  Congressman Paul makes an initial case for this in his 2008 book The Revolution, and outlines an excellent plan to end the Fed and restore the value of American currency in his book End the Fed.  These ideas are justified and the economic theories confirmed by celebrated economist Murray N. Rothbard in his books The Origins of the Federal Reserve, The Case Against the Fed, and What Has Government Done To Our Money?.

Ron Paul would oppose all unnecessary regulations on small businesses and entrepreneurs.  He knows that, unlike the careless and parasitic mega-corporations and huge banks that have stained the good reputations of capitalism and the free market, small businesses and entrepreneurs are the lifeblood of the American economy.  By creating jobs for themselves and others, small businesses and entrepreneurs leave other jobs open for other people and raise the number of employed citizens who work, earn, save for their retirement so they don’t have to sponge off the public coffers, and best of all, they spend most of their earnings on consumer goods like housing, cars, and food, thus stimulating the local and national economies.

Ron Paul would fight for lower taxes.  He strongly believes that hard workers should be able to keep what they earn rather than have the money robbed from their paychecks when only some of it will actually go to good things like roads and schools, while most of it will be blown on fruitless multi-billion dollar domestic programs, the wars in Iraq, Afghanistan, Libya (and Yemen too?), and generous foreign aid packages.  The author wrote in an earlier article:

“Walter E. Williams, distinguished Professor of Economics at George Mason University and syndicated columnist, explains how tax cuts on big business benefits the middle class.  ‘If a tax is levied on a corporation, and if it is to survive, it will have one of three responses, or some combination thereof. One response is to raise the price of its product, so who bears the burden? Another response is to lower dividends; again, who bears the burden? Yet another response is to lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of the tax.’  What this also means is that when big businesses are taxed less, profits are higher and more disposable, therefore jobs are created, prices don’t rise, and wealth is spread more liberally and plentifully…”[4]

Ron Paul is the candidate who has a solid voting record and solid qualifications in virtually every sector of political issues Americans are debating about.  Ron Paul’s Presidency can lead the country back to prosperity[5] while protecting and preserving civil liberties and abiding strictly by Constitutional law.  Visit RonPaul2012.com for more details on his platform.

Image courtesy of Wikimedia Commons

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[1] Paul, Ron. End the Fed. Chapter 3.  Grand Central Publishing.  September 2009.

[2] Tanner, Michael.  Of Course That Implies He Has Principles. Cato Institute. http://www.cato-at-liberty.org/of-course-that-implies-he-had-principles/

[3] Federal Debt Limit (Debt Ceiling). The New York Times. June 2011. http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html

[4] Foster, Zach. The Failure to Vote on the James Zadroga 9/11 Health Bill. The Political Spectrum. December 2010. http://political-spectrum.blogspot.com/2010/12/failure-to-vote-on-james-zadroga-911.html

[5] Restore America’s Prosperity. http://www.ronpaul2012.com/wp-content/uploads/wpsc/product_images/RP-Economy-SJim.jpg

President Obama Launches the Advanced Manufactur​ing Partnership

Good morning,

Last week, President Obama visited Pittsburgh, Pennsylvania where he toured Carnegie Mellon University’s National Robotics Engineering Center (NREC) and delivered remarks announcing the launch of the Advanced Manufacturing Partnership (AMP), a $550 million dollar project to bring together industry, government, and higher education.

Today, the President travels to Bettendorf, Iowa, to visit the Davenport Works factory of AMP participant Alcoa. The factory is a state-of-the-art aluminum rolling mill that serves as the manufacturing hub for Alcoa's $3 billion aerospace business. You can watch the event live at 2:05 PM EST on Whitehouse.gov/live.

 

The Advanced Manufacturing Partnership (AMP) is a national effort that brings together industry, universities and the federal government to invest in emerging technologies that will create high quality manufacturing jobs and enhance our global competitiveness. As President Obama remarked in Pittsburgh:

“We’ve launched an all-hands-on-deck effort between our brightest academic minds, some of our boldest business leaders, and our most dedicated public servants from science and technology agencies, all with one big goal, and that is a renaissance of American manufacturing. Throughout our history, our greatest breakthroughs have often come from partnerships just like this one.

American innovation has always been sparked by individual scientists and entrepreneurs, often at universities like Carnegie Mellon or Georgia Tech or Berkeley or Stanford. But a lot of companies don’t invest in early ideas because it won’t pay off right away. And that’s where government can step in. That’s how we ended up with some of the world-changing innovations that fueled our growth and prosperity and created countless jobs -- the mobile phone, the Internet, GPS, more than 150 drugs and vaccines over the last 40 years was all because we were able to, in strategic ways, bring people together and make some critical investments.”

The President’s plan, which leverages existing programs and proposals, will invest more than $500 million to jumpstart this effort. These investments will build domestic manufacturing capabilities in critical national security industries and reduce the time needed to make advanced materials used in manufacturing products. Additionally, we will invest in next-generation robotics, increase energy-efficiency in the manufacturing process and develop new technologies that will dramatically reduce the time required to design, build, and test manufactured goods.

Former Massachusetts Scientist Convicted of Fraud Scheme Involving a Multi-Million Dollar Federal Research Grant

BOSTON, MA—A federal jury in Boston has convicted Christopher D. Willson, a former Massachusetts scientist and businessman, in connection with a fraud scheme involving a multi-million dollar federal research grant.

On June 21, Willson was found guilty of one count of conspiracy to defraud the United States and to commit wire fraud, six counts of wire fraud and four counts of false claims.

Willson was the chief scientist and senior vice president of EV Worldwide, LLC (EVW), a Pittsfield, Mass. company. From 2000 through 2005, United States Congressman John Olver arranged for an earmark directing the Federal Transit Administration (FTA) to transfer approximately $4.3 million to EVW through a regional transit agency called the Pioneer Valley Transit Authority (PVTA).

According to Congressman Olver’s testimony, he intended the earmarked funds to be spent by EVW to develop an electric battery that would be used to propel public transit buses. The federal grant required EVW to match the federal funds, dollar-for-dollar, with its own resources. For every dollar EVW spent on the project, the company could seek up to 50 percent reimbursement from the FTA.

Evidence presented at trial showed that, from 2004 through 2005, Willson submitted 10 fraudulent invoices in which he falsely claimed that EVW was matching the FTA funds, when in fact, EVW was millions of dollars in debt and had nearly no other non-public source of funds. Willson repeatedly contacted and met with Congressman Olver and grant officials at the FTA and PVTA to discuss the company’s claimed progress and federal grant funding, but he never informed them of the company’s financial problems. As a result of this deception, Willson fraudulently obtained more than $700,000 in federal funds for EVW.

Willson used the money to pay EVW’s CEO, Michael Armitage, approximately $250,000, paid himself approximately $100,000, and to provide approximately $110,000 to fund a separate Canadian research company, Hydrogen Storage Media, Inc., which he and Armitage had founded.

U.S. District Judge Rya Zobel scheduled sentencing for October 6, 2011. Willson faces up to 20 years in prison for each of the six counts of wire fraud, up to five years in prison for each of the four counts of false claims and up to five years in prison on the conspiracy count. Willson also faces maximum fines of $250,000 per count.

United States Attorney Carmen M. Ortiz; Assistant Attorney General Lanny A. Breuer of the Criminal Division, United States Department of Justice; Theodore L. Doherty III, Special Agent in Charge of U.S. Department of Transportation, Office of Inspector General, Office of Investigations; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office made the announcement today.

The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz’s Springfield Branch Office and Trial Attorney Edward J. Loya, Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by the Department of Transportation, Office of Inspector General, IRS-CI, and the FBI’s Boston Field Office, with assistance from the Defense Contract Audit Agency.

Trade Credit and International Trade During the 2008-09 Global Financial Crisis

Brahima Coulibaly, Horacio Sapriza, and Andrei Zlate

Abstract:  This paper studies the role of the credit crunch in the severe contraction of trade and economic activity at the height of the 2008-09 global financial crisis, using firm-level data from six emerging market economies in Asia. We construct firm-specific measures of global demand, which allow us to disentangle the effect of falling demand from that of financial constraints on sales. The results indicate that: (1) Although the fall in demand adversely affected the sales of all firms during the crisis, sales declined by less for firms with better pre-crisis financial conditions. (2) In the face of the decline in external financing opportunities, some firms relied more on trade credit from suppliers to supplement operating capital during the crisis, which allowed them to post relatively better sales. (3) Export-intensive firms with comparable financial vulnerability resorted less to trade credit as an alternative source of finance, and hence experienced sharper declines in sales than the domestically-oriented firms. These findings point to the presence of credit frictions among the factors that contributed to the disproportionately large decline in international trade during the crisis. (Read the full paper)

Former Bank Lawyer Indicted in Multi-Million Dollar Fraud and Money Laundering Conspiracies

Attorney Allegedly Assisted Bank President and Senior Loan Officer with Massive Insider Dealing and Fraud that Preceded Bank’s Failure

ATLANTA, GA—ROBERT E. MALONEY, JR., 47, of McDonough, Georgia, was arraigned on federal charges this afternoon before United States Magistrate Judge Janet F. King. A superseding indictment charges MALONEY and two former top officers of “FirstCity Bank” of Stockbridge, Georgia: MARK A. CONNER, 45, formerly of Canton, Georgia, and Tallahassee, Florida, and CLAYTON A. COE, 44, of McDonough, Georgia, with conspiracy to commit bank fraud, bank fraud, conspiracy to commit money laundering, and related crimes in connection with misconduct at FirstCity Bank in the years before the bank’s seizure by state and federal authorities on March 20, 2009.

A federal grand jury in Atlanta returned the superseding indictment against CONNER, COE, and MALONEY on June 22, 2011. The grand jury previously returned an indictment against CONNER and COE on March 16, 2011. Federal agents arrested CONNER and COE on March 20 and March 27, 2011, respectively, upon their return to the United States from the Turks and Caicos Islands in the British West Indies. U.S. District Judge Steve C. Jones has ordered CONNER to remain in the custody of the U.S. Marshals Service pending trial, based on a risk of flight. COE was released to home detention and electronic monitoring. Arraignments for CONNER and COE on the superseding indictment have been scheduled for July 1, 2011 before United States Magistrate Judge Janet F. King.

FDIC Inspector General Jon Rymer said, “The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to join our law enforcement colleagues in announcing the indictment of Mr. Maloney for his alleged role in this multi-million dollar bank fraud and associated money laundering activities. It is especially important to investigate and prosecute cases where trusted professionals, such as attorneys who owe a fiduciary duty to the bank, violate that duty and abuse their positions to undermine the integrity of the financial services industry. The FDIC OIG is particularly concerned when fraudulent schemes mislead the FDIC’s examiners and contribute to bank failures that cause losses to the Deposit Insurance Fund. We are committed to preventing such threats to the safety and soundness of FDIC-insured banks throughout the country.”

Christy L. Romero, Acting Special Inspector General for the Troubled Asset Relief Program said, “Today’s indictment involves another unfortunate example of allegedly brazen criminal conduct by senior bank officials who tried to conceal their fraud from regulators and improperly access TARP funds. As the bank’s top legal officer, Maloney maintained a position of trust within the bank and had a special duty to prevent and detect misconduct. The indictment alleges that Maloney violated his important gatekeeper responsibilities and conspired with Conner and Coe in a criminal scheme that victimized unwitting federally-insured banks who invested millions of dollars into fraudulent loans. Fortunately, their attempts to victimize Treasury and the American taxpayers by obtaining TARP funds were unsuccessful. SIGTARP will continue to work with our law enforcement partners to bring to justice those who sought to cover their fraud with taxpayer dollars through TARP.”

IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, “IRS Criminal Investigation is committed to protecting the integrity of our financial institutions and we will use all the legal tools available to assist in the investigation and prosecution of those who attempt to damage that integrity.”

According to United States Attorney Yates, the charges and other information presented in court: CONNER served in a variety of top positions at FirstCity Bank between 2004 and 2009, including as Vice Chairman of the Board of Directors, as a member of the banks' loan committee, as President, and later as acting Chairman and Chief Executive Officer. COE served as a Vice President and as FirstCity Bank’s Senior Commercial Loan Officer. MALONEY served as FirstCity Bank’s in-house counsel, or corporate counsel, between 2006 and 2009. While serving in these positions, CONNER, COE, MALONEY, and their co-conspirators allegedly conspired to defraud FirstCity Bank’s loan committee and Board of Directors into approving multiple multi-million dollar commercial loans to borrowers who, unbeknownst to FirstCity Bank, were actually purchasing property owned by CONNER or COE personally.

The indictment charges that CONNER, COE, MALONEY, and their co-conspirators misrepresented the essential nature, terms, and underlying purpose of the loans and falsified documents and information presented to the loan committee and the Board of Directors. CONNER, COE, and their co-conspirators then allegedly caused at least 10 other federally-insured banks to invest in, or “participate in” the fraudulent loans based on these and other fraudulent misrepresentations, shifting all or part of the risk of default to the other banks. COE’s bonus compensation was tied to the origination of FirstCity Bank loans, including the fraudulent loans with which he and CONNER allegedly assisted each other. MALONEY is alleged to have taken extra payments in the form of “legal fees” from the fraudulent transactions, even though as corporate counsel he was actually a salaried employee of FirstCity Bank. He also allegedly helped launder and distribute funds to or for the benefit of CONNER, COE, other co-conspirators, or to himself through an attorney trust account maintained at the bank.

In the process of defrauding FirstCity Bank and the “participating” banks, CONNER, COE, MALONEY, and their co-conspirators allegedly routinely misled federal and state bank regulators and examiners to conceal their unlawful scheme. They also unsuccessfully sought federal government assistance through the U.S. Treasury Department’s Troubled Asset Relief Program (“TARP”) and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud.

The superseding indictment charges CONNER, COE, and MALONEY with conspiracy to commit bank fraud, bank fraud, making false entries in the records of an FDIC-insured financial institution, and conspiracy to commit money laundering. It also charges CONNER alone with conducting a continuing financial crimes enterprise at the bank between February 2006 and February 2008, during which CONNER’s and his co-conspirators' crimes allegedly generated over $5 million in unlawful gross proceeds, and it charges COE alone with making a false federal credit application.

The charges for bank fraud conspiracy, bank fraud, false entries, and making a false credit application carry a maximum sentence of 30 years in prison and a potential fine of up to $1 million on each count. The charge against CONNER for conducting a continuing financial crimes enterprise carries a mandatory minimum sentence of 10 years in federal prison, a maximum sentence of life in prison, and a potential fine of up to $10 million. The money laundering conspiracy charge against CONNER, COE, and MALONEY carries a maximum sentence of 10 years in prison and a potential fine of up to twice the value of criminally-derived funds. In determining the actual sentences for each defendant, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being investigated by Special Agents of the FDIC, Office of Inspector General; the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), the Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation.

Assistant United States Attorneys Douglas W. Gilfillan and David M. Chaiken are prosecuting the case.

For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

A Refreshing Model of Free Markets

An anecdote by Zach Foster

This piece originally appeared in The Political Spectrum in January

Today as I was driving home from the gym I saw a couple of kids had set up a lemonade stand on the corner near their home.  I’d just finished working out and was pretty thirsty, plus it’s always great to see kids earning their own cash, so I stopped and bought a glass of lemonade (which was delicious, they did a good job).  I evaluated the situation and was highly pleased with what I saw.

These two kids got their parents’ permission to pick some lemons from the tree in their yard and used them to make the sweet drink I was currently enjoying.  They also invested in buying plastic cups from the discount store.  Then they set up a stand which was attracting the business of thirsty passers-by.  These kids, plain and simple, made a financial investment and created a job for themselves, in which they were turning a good profit.

Better yet, they also hired their little brother, who was a few years younger than them, to hold up their sign for drivers to see as they passed.  They not only created their own jobs, but also a job for their little brother.  He wasn’t making anywhere near as much money as his older siblings, but he was very young, probably too young to have the skills to set up his own stand.  He was very happy that he was making money.  What he didn’t realize was that on top of the money he was earning by working for his enterprising siblings, he was learning valuable skills so that he might one day set up his own lemonade stand.

After their business day was done, these kids most likely would have spent the money they made at the local toy store or candy store, thus stimulating the economy.  What these kids were doing was practicing a perfect model of the free market system.  I was genuinely impressed!  Then I chuckled, realizing that I had just supported not only these young entrepreneurs, but also the free market system in my community.  Then I laughed, knowing this would have infuriated my Marxist friends.

Jupiter Man Sentenced in $1.6 Million Precious Metals Investment Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and Amos Rojas, Jr., Special Agent in Charge, Florida Department of Law Enforcement, FDLE), Miami Field Office, J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, and Edward M. Morley, Chief, Stuart Police Department, announce yesterday’s sentencing of defendant Christopher Arthur Kertatos, 40, of Jupiter, Florida. U.S. District Court Judge K. Michael Moore sentenced Kertatos to 42 months in prison, following his earlier plea of guilty to conspiracy to commit mail fraud and eight counts of mail fraud for his involvement in a $1.6 million fraud involving the precious metals market.

According to statements made in court and documents filed in the case, Kertatos was the operator of Bullion Trading Group, with offices located in Stuart and West Palm Beach, Florida. Bullion Trading employed brokers who solicited private investors nationwide to invest in precious metals, such as gold, silver, and palladium. Though false representations as to material facts in the solicitation of funds, Kertatos and others helped secure nearly $1.6 million in funds from the victim investors. The victims were made to believe that their money was being invested in the precious metal market. In fact, however, Kertatos and his co-defendants actually used the funds for their personal benefit.

Mr. Ferrer commended the FBI, FDLE, State of Florida’s Office of Financial Regulation, and the Stuart Police Department for their work in the case. This case was prosecuted by Assistant U.S. Attorney Carmen Lineberger.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

2011 American Eagle Silver Proof Coins Available June 30

WASHINGTON - The United States Mint will open sales for the 2011 American Eagle Silver Proof Coin at noon Eastern Time (ET) on June 30, 2011.  The coins will be priced at $59.95 each.  Orders will be limited to 100 units per household. 

The obverse (heads side) of the coin features a rendition of Adolph A. Weinman's Lady Liberty in full stride, with her right hand extended and branches of laurel and oak in her left.  The reverse (tails side), by former United States Mint Chief Engraver John Mercanti, features a heraldic eagle with shield, an olive branch in the right talon and arrows in the left.

The American Eagle Silver Proof Coin contains .999 silver.  The one-ounce coin is struck on specially burnished blanks and carries the "W" mint mark, indicating its production at the United States Mint at West Point.  Each coin is encapsulated in protective plastic and placed in a blue presentation case with a Certificate of Authenticity.

Orders will be accepted at http://www.usmint.gov/catalog/ or at 1-800-USA-MINT (872-6468).  Hearing- and speech-impaired customers with TTY equipment may order at 1-888-321-MINT.  The American Eagle Silver Proof Coin is also available for purchase through the United States Mint's Online Subscription Program.  Customers who enroll in the program can have the American Eagle Silver Proof Coin and other select products automatically billed and shipped as each product becomes available.  Visit http://www.usmint.gov/catalog/ for more information about this convenient shopping method.

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Note:  To ensure that all members of the public have fair and equal access to United States Mint products, orders placed prior to the official on-sale date and time of June 30 2011, at noon ET shall not be deemed accepted by the United States Mint and will not be honored.  For more information, please review the United States Mint's Frequently Asked Questions, Answer ID #175.

Consumer Financial Protection Bureau Seeks Public Input On Key Element Of Nonbank Supervision Program

Notice and Request for Comment on Statutory Requirement to Define ‘Larger Participant’ in Certain Consumer Financial Markets

WASHINGTON – The Consumer Financial Protection Bureau (CFPB) today announced the release of a Notice and Request for Comment seeking public input on a key element of the agency’s nonbank supervision program: the statutory requirement to define who is a “larger participant” in certain consumer financial markets.

Last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) charged the CFPB with ensuring that both banks and nonbanks comply with federal consumer financial laws. Historically, banks, thrifts, and credit unions have been subject to examinations by federal regulators, but other types of companies providing consumer financial services generally have not. Today, there are thousands of such companies that are not banks, and these nonbanks’ products form a significant portion of the consumer financial marketplace.

“Consumers deserve the peace of mind that financial companies -- both banks and nonbanks -- are following the rules,” said Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB. “The CFPB will be able to examine companies that have never been subject to federal oversight to ensure that no one is gaining an unfair advantage by breaking the law.  This will ultimately create fair competition, better product offerings, and more transparent markets for consumers.”

The Dodd-Frank Act authorizes the CFPB to examine all sizes of nonbank mortgage companies, payday lenders, and private education lenders. Generally, before CFPB begins its nonbank supervision program in other markets, the Act requires that the agency first define by rule who is “a larger participant of a market for other consumer financial products or services.” The CFPB must issue an initial “larger participant” rule no later than July 21, 2012 -- one year after the designated transfer date.

To prepare for this eventual rulemaking, the CFPB is seeking public input through a Notice and Request for Comment, which identifies six markets for potential inclusion in an initial rule: debt collection; consumer reporting; consumer credit and related activities; money transmitting, check cashing, and related activities; prepaid cards; and debt relief services. The larger participant rule will not impose substantive consumer protection requirements.  Instead, the rule will enable CFPB to begin a supervision program for larger participants in certain markets.

The general issues discussed in the Notice include: 

·         What criteria to use to measure a market participant;

·         Where to set the thresholds for inclusion;

·         Whether to adopt a single test to define larger participants in all markets (measure the same criteria and use the same thresholds), or instead use tests tailored for specific markets;

·         What data are available to be used for these purposes;

·         What time period to use to measure the size of a market participant; 

·         How long a participant should remain subject to supervision after initially meeting the larger participant threshold, even if subsequently falling below the threshold; and

·         What consumer financial markets to include in the initial rule. 

Public comments on the questions listed in the Notice will help the CFPB develop a proposed initial rule defining large participants. The CFPB is committed to principles of open government and to maintaining a robust dialogue with stakeholders and the public.  The Notice and Request for Comment is available online, and contains information about how to submit responses.

Notice and Request for Comment: http://www.consumerfinance.gov/notice-and-comment/defining-larger-participants-in-certain-consumer-financial-products-and-services-markets/.

Fact Sheet: Treasury Sanctions Major Iranian Commercial Entities

Treasury Targets Commercial Infrastructure of IRGC, Exposes Continued IRGC Support for Terrorism

Today, the U.S. Department of the Treasury took action to designate two major Iranian commercial entities: Tidewater Middle East Co. (Tidewater) and Iran Air. Tidewater is a port operating company owned by Iran’s Islamic Revolutionary Guard Corps (IRGC) that has been used by the IRGC for illicit shipments.  Iran’s national airline carrier, Iran Air, is a commercial airline used by the IRGC and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) to transport military related equipment. Treasury also designated an individual and an entity for their ties to a company that provided support and weapons to Hizballah on behalf of the IRGC. 

The IRGC continues to be a primary focus of U.S. and international sanctions against Iran because of the central role it plays in all forms of Iran’s illicit conduct, including Iran’s nuclear and ballistic missile programs, its support for terrorism, and its involvement in serious human rights abuses.  As Iran’s isolation has increased, the IRGC has expanded its reach into critical sectors of Iran’s economic infrastructure – to the detriment of the Iranian private sector – to generate revenue and conduct business in support of Iran’s illicit activities.  Today’s actions target core commercial interests of the IRGC, while also undermining the IRGC’s ability to continue using these interests to facilitate its proliferation activities and other illicit conduct.

 

Pursuant to Executive Order (E.O.) 13382 – an authority aimed at freezing the assets of proliferators of weapons of mass destruction (WMD) and their supporters thereby isolating them from the U.S. commercial and financial systems – Treasury today designated:

•Tidewater Middle East Co.: for being owned by Mehr-e Eqtesad-e Iranian Investment Company, Mehr Bank and the IRGC; •Mehr-e Eqtesad-e Iranian Investment Company: for being owned or controlled by Mehr Bank.

•Iran Air: for providing material support and services to the IRGC and MODAFL, and Iran Air subsidiary Iran Air Tours. 

Pursuant to E.O. 13224, which targets for sanctions terrorists and those providing support to terrorists or acts of terrorism, Treasury today designated:

•Iranian official Behnam Shahriyari for acting for or on behalf of Liner Transport Kish (LTK); and the Behnam Shahriyari Trading Company for being owned or controlled by Behnam Shariyari.

    

Tidewater Middle East Co. (Tidewater) Tidewater-managed ports are a crucial component of Iran’s infrastructure and transport network, and shipments into Tidewater facilities provide an avenue of revenue to the IRGC in support of its illicit conduct. The Iranian Government has repeatedly used Tidewater-managed ports to export arms or related materiel in violation of United Nations Security Council resolutions (UNSCRs).

Tidewater has operations at seven Iranian ports, including Bandar Abbas’s main container terminal, Shahid Rajaee, which has played a key role in facilitating the Government of Iran’s weapons trade.

 

Tidewater operations are at the following ports:

•Bandar Abbas (Shahid Rajaee Container Terminal) •Bandar Imam Khomeini Grain Terminal •Bandar Anzali •Khorramshahr Port (one terminal) •Assaluyeh Port •Aprin Port •Amir Abad Port Complex

Incidents of weapons shipments involving Tidewater-managed facilities include:

·       An IRGC-Qods Force weapons shipment seized by Nigeria in late October 2010 was loaded at the Shahid Rajaee container terminal at Bandar Abbas.

·       A container shipment of arms-related material, which was discovered in October 2009 aboard the German-owned and IRISL-chartered ship, the Hansa India, was loaded at Bandar Abbas.

·       A container shipment of arms-related material departed Bandar Abbas in January 2009 on the Cypriot-flaged and IRISL-chartered ship, the M/V Monchegorsk, before it was stopped by the U.S. Navy and later seized by Cypriot authorities.

Tidewater was designated today for being owned by Mehr-e Eqtesad-e Iranian Investment Company, Mehr Bank and the IRGC. Bonyad Taavon Sepah, an entity formed by IRGC commanders to structure IRGC investments, along with Ansar Bank and Mehr Bank – both created by Bonyad Taavon Sepah – were designated by Treasury pursuant to E.O. 13382 in December 2010.

Mehr-e Eqtesad-e Iranian Investment Company was also sanctioned today for being owned or controlled by IRGC-created Mehr Bank, which was designated by Treasury pursuant to E.O. 13382 in December 2010.

In August 2010, Treasury issued the Iranian Financial Sanctions Regulations (IFSR) to implement the financial provisions of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA). Under the IFSR, Treasury has the authority to prohibit, or impose strict conditions on, foreign financial institutions’ direct access to the U.S. financial system if they knowingly facilitate significant transactions or provide significant financial services for the IRGC or its agents or affiliates – such as Tidewater – that have been designated by the United States under the International Emergency Economic Powers Act, which provides the authority for designations under E.O. 13382 and 13224. 

The entity being designated today, Tidewater Middle East Co., is separate and distinct from Tidewater Inc., an international shipping company headquartered in the United States and listed on the New York Stock Exchange as TDW.  Today's sanctions are not imposed on Tidewater Inc.

Iran Air Iran Air serves as Iran’s national air carrier, operating a fleet of approximately 40 aircraft covering 35 international and 25 domestic destinations.  Iran Air Tours is a subsidiary that operates a portion of Iran Air’s domestic flights. Iran Air has provided support and services to MODAFL and the IRGC through the transport and/or transfer of goods for, or on behalf of, these entities. On numerous occasions since 2000, Iran Air shipped military-related electronic parts and mechanical equipment on behalf of MODAFL.

MODAFL was designated by the U.S. Department of State in October 2007 under E.O. 13382 and has brokered a number of transactions involving materials and technologies with ballistic missile applications.

Iran Air has shipped military-related equipment on behalf of the IRGC since 2006, and in September and November 2008, Iran Air shipped aircraft-related raw materials to a MODAFL-associated company, including titanium sheets, which have dual-use military applications and can be used in support of advanced weapons programs.

Rockets or missiles have been transported via Iran Air passenger aircraft, and IRGC officers occasionally take control over Iran Air flights carrying special IRGC-related cargo. The IRGC is also known to disguise and manifest such shipments as medicine and generic spare parts, and IRGC officers have discouraged Iran Air pilots from inspecting potentially dangerous IRGC-related cargo being carried aboard a commercial Iran Air aircraft, including to Syria.

Additionally, commercial Iran Air flights have also been used to transport missile or rocket components to Syria.

Adopted in March 2008, UNSCR 1803 called upon all States in accordance with their national legal authorities and legislation and consistent with international law, in particular the law of the sea and relevant international civil aviation agreements, to inspect the cargoes to and from Iran of aircraft owned or operated by Iran Air Cargo, provided there are reasonable grounds to believe that the aircraft is transporting goods prohibited under UNSCR 1803 or previous UNSCRs.

Iran Air Tours serves as Iran Air’s domestic air carrier, operating a fleet of 14 aircraft connecting 13 Iranian cities with two main hubs in Tehran and Mashhad, Iran. 

Behnam Shahriyari and Shahriyari Trading Company Iranian official Behnam Shahriyari was designated today for acting for or on behalf of Liner Transport Kish (LTK), an IRGC-linked shipping company that was designated by Treasury pursuant to E.O. 13224 in December 2010 for providing material support, including weapons, to Hizballah on behalf of the IRGC.  Shahriyari acted as LTK’s business and marketing manager.  Additionally, Shahriyari operates the Behnam Shahriyari Trading Company, also designated today.

Background on the IRGC The IRGC has a growing presence in Iran’s financial and commercial sectors and extensive economic interests in the defense production, construction, and oil industries, controlling billions of dollars in corporate business.  Given its increased involvement in commercial activity, imposing financial sanctions on commercial enterprises of the IRGC has a direct impact on revenues that could be used by the IRGC to facilitate illicit conduct.

The IRGC was first designated by the United States pursuant to E.O. 13382 in October 2007 for having engaged, or attempted to engage, in proliferation related activities.  The IRGC was also designated by the United States in June 2011 pursuant to E.O. 13556 for its role in the sustained and severe human rights abuses in Iran since the disputed June 2009 presidential election.  The UN, European Union, Japan, South Korea and others have all targeted the IRGC and/or its affiliates for sanctions because of its illicit activities.