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Brookline Man to Plead Guilty to Foreign Economic Espionage

BOSTON—A Brookline man has agreed to plead guilty to foreign economic espionage for providing trade secrets over an 18-month period to an undercover agent posing as an Israeli intelligence officer. This is the first prosecution in Massachusetts for foreign economic espionage and only the eighth in the nation.

ELLIOT DOXER, 42, a former Akamai Technologies, Inc. employee, was charged in an information and has agreed to plead guilty to foreign economic espionage for providing Akamai trade secrets to an undercover agent posing as an Israeli intelligence officer. The plea hearing is scheduled for August 29 at 3:15 p.m.

United States Attorney Carmen M. Ortiz said, “Economic espionage poses a tremendous risk, not only to corporate America, but to the safety and well being of our nation’s security. I want to thank Akamai Technologies, Inc. for their outstanding cooperation in this matter, which played an important role in assisting law enforcement with bringing Mr. Doxer to justice.”

“The Boston area is a worldwide leader of innovative technology and research. Preventing those intent on stealing trade secrets and American technology from local industry leaders, regardless of their motivation, is a high priority for the FBI,” said Richard DesLauriers, Special Agent in Charge of the FBI in Boston. “Mr. Doxer’s criminal actions are an affront to the dedicated workers in the thriving technology industry. The arrest of Mr. Doxer is a significant achievement by the FBI and the USAO, District of Massachusetts, to thwart Mr. Doxer’s goal of attempting to deprive Akamai Technologies of valuable business technology and confidential business information.”

The parties have stipulated in an agreed statement of facts that on June 22, 2006, DOXER sent an e-mail to the Israeli consulate in Boston stating that he worked in Akamai’s finance department and was willing to provide any information that might help Israel. In later communications, DOXER said that his chief desire “was to help our homeland and our war against our enemies.” He also asked for payment in light of the risks he was taking.

In September 2007, an FBI agent posing as an undercover Israeli intelligence officer spoke to DOXER and established a “dead drop” where the agent and DOXER could exchange written communications. From September 2007 through March 2009, DOXER visited the dead drop at least 62 times to leave information, retrieve communications, or check for new communications.

Included in the trade secret information that DOXER provided the undercover agent were an extensive list of Akamai’s customers; contracts between Akamai and various customers revealing contact, services, pricing, and termination date information; and a comprehensive list of Akamai’s employees that revealed their positions and full contact information. DOXER also broadly described Akamai’s physical and computer security systems and stated that he could travel to the foreign country and could support special and sensitive operations in his local area if needed.

We also acknowledge the government of Israel for their cooperation in this investigation, and underscore that the information does not allege that the government of Israel or anyone acting on its behalf committed any offense under U.S. laws in this case.

DOXER was arrested on October 6, 2010, on a complaint charging him with wire fraud.

That charge will be dismissed as part of the plea agreement. The charge of foreign economic espionage carries a maximum penalty of 15 years in prison, a three-year term of supervised release and a $500,000 fine.

The case is being prosecuted by Assistant U.S. Attorneys William D. Weinreb and Scott Garland respectively in Ortiz’s Antiterrorism and National Security Unit and Cybercrimes Unit, and trial attorneys Kathleen Kedian and David Recker of the Department of Justices’ Counterespionage Section. Akamai Technologies cooperated fully in the investigation.

The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Houston Venture Capitalist Charged with Fraud

HOUSTON—Harvard H. Hill, of Houston, has been charged with three counts of wire fraud in connection with an investment in the general partnership of a Houston-based venture capital fund he promoted, United States Attorney José Angel Moreno announced today.

Hill, 74, surrendered to FBI agents this morning as a result of the return of the three-count indictment on July 21, 2011. He made his initial appearance this morning before U.S. Magistrate Judge Mary Milloy. He is scheduled to appear again today at 1:45 p.m., at which time the issue of bond will be decided.

The indictment alleges that Hill defrauded an investor in the general partnership that managed the James Sunbelt Investment LP Fund that Hill promoted. Hill, who has operated venture capital funds in Houston under the name Houston Partners, solicited an investor to become a special limited partner in the general partnership. Under the supposed structure of the fund, the general partnership would receive 20 percent of the fund’s profit distributions and a 2 percent annual management fee. The special limited partner would receive a percentage of the general partnership’s stake, so the ability to repay the special limited partner depended in significant part on the amount invested in the fund given the annual 2 percent management fee.

The indictment alleges that Hill misrepresented that millions of dollars were already in the fund under the management of the general partnership, provided false information listing the names of companies in which the fund was supposedly invested and falsely claimed that professors at Rice and MD Anderson Cancer Center had agreed to serve on the fund’s Scientific Advisory Board. The indictment further alleges that within a week of the investor wiring $500,000 to Hill in July 2006, Hill had transferred over half the funds to a personal account in his name, a bank account controlled by a member of Hill’s family and an account in the name of another fund in which Hill had past due expenses. According to the indictment, within two months of receipt of the investment, more than 80 percent of the money had been spent and was not used for promoting and managing the fund.

Each wire fraud count carries a potential punishment of up to 20 years in prison and a $250,000 fine.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Gregg Costa.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

Swiss International Bank's Former Head of North America Offshore Banking, Others Charged with Conspiracy

Superseding Indictment Alleges Defendants Helped U.S. Taxpayers Hide Assets in Secret Accounts

WASHINGTON – Markus Walder, former head of North America Offshore Banking at an international bank headquartered in Zurich; Susanne D. Rüegg Meier, a former manager with the international bank; Andreas Bachmann, a former banker at a subsidiary of the international bank; and Josef Dörig, the founder of a Swiss trust company, have been charged with conspiring with other Swiss bankers to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today.   The four are charged in a superseding indictment together with four other defendants (Marco Parenti Adami, Emanuel Agustino, Michele Bergantino and Roger Schaerer) who were charged in an indictment returned on Feb. 23, 2011.

According to the superseding indictment, the international bank’s managers and bankers engaged in illegal cross-border banking that was designed to assist U.S. customers evade their income taxes by opening and maintaining secret bank accounts at the bank and other Swiss banks.   As of the fall of 2008, the international bank maintained thousands of secret accounts for U.S. customers with as much as $3 billion in total assets under management in those accounts.   The conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including U.S. customers who inherited secret accounts at the international bank.

Moreover, according to the superseding indictment, the conspirators utilized a representative office in New York City to provide unlicensed and unregistered banking services to U.S. customers with undeclared accounts.   Walder, Schaerer, their co-conspirators and others allegedly made false statements and provided misleading information to the Federal Reserve Bank of New York and to the IRS in order to conceal the international bank’s U.S. cross-border banking business and the role of the New York representative office in that business.

The superseding indictment alleges that Walder supervised the U.S. cross-border banking business, including the New York representative office headed by Schaerer, a Geneva-based team of bankers led by manager Marco Parenti Adami and a Zurich-based team of bankers led by manager Rüegg Meier.   Rüegg Meier was a member of senior management at the international bank and also served as a private banker, providing unlicensed and unregistered banking services to U.S. customers with undeclared accounts at the bank.   The superseding indictment further alleges that Bachmann was a private banker for a wholly-owned subsidiary of the international bank who traveled to the United States to assist U.S. taxpayers in evading their U.S. taxes through the use of secret bank accounts.   It is further alleged that Dörig, founder of a Swiss trust company, was a preferred provider of the international bank who assisted U.S. customers in forming and maintaining nominee tax haven entities and opening secret accounts at the international bank and its subsidiaries in the names of the entities.

According to the superseding indictment, the defendants and their co-conspirators solicited U.S. customers to open secret accounts because Swiss bank secrecy would permit them to conceal from the IRS their ownership of accounts at the international bank and other Swiss banks.   It is further alleged that they provided unlicensed and unregistered banking services and investment advice to customers in the United States in person while on travel to the United States, including at the international bank’s representative office in New York City and by mailings, email and telephone calls to and from the United States.   It is further alleged that the international bank’s employees destroyed statements and other account records that were sent via email or facsimile to the representative office in New York so that records regarding the undeclared accounts would not be maintained in the United States.

The superseding indictment alleges that the defendants and their co-conspirators caused U.S. customers to travel outside the United States to conduct banking related to their secret accounts; opened secret accounts in the names of nominee tax haven entities for U.S. customers; accepted IRS forms that falsely stated under penalties of perjury that the owners of the secret accounts were not subject to U.S. taxation; advised and caused United States customers to structure withdrawals from their secret accounts in amounts less than $10,000 in an attempt to conceal the secret accounts and the transactions from American authorities; mailed bank checks in amounts less than $10,000 to customers in the United States; and advised U.S. customers to utilize offshore charge, credit and debit cards linked to their secret accounts and provided the customers with such cards, including cards issued by American Express, Visa and Maestro.

According to the superseding indictment, after the bank decided to close the secret accounts maintained by U.S. customers, the defendants encouraged and assisted U.S. customers to transfer their secret accounts to other foreign banks as a means of continuing to hide their assets from the IRS and discouraged the customers from disclosing their secret accounts to the IRS through the IRS’s Voluntary Disclosure Program.

Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; and Douglas H. Shulman, Commissioner of the IRS, made the announcement.

A criminal indictment is only an accusation and a defendant is presumed innocent until proven guilty. If convicted, the defendants each face a maximum of five years in prison and a maximum fine of $250,000.

U.S. Attorney MacBride and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsels Kevin M. Downing and John E. Sullivan and Trial Attorneys Mark F. Daly, Tino M. Lisella, Michelle M. Petersen and Melissa Siskind of the Tax Division, and Assistant U.S. Attorney Mark Lytle, who are prosecuting the case.

Barry Minkow Sentenced to Five Years’ Imprisonment for Stock Manipulation Conspiracy

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced that defendant Barry Minkow, 44, of San Diego, California, was sentenced today on one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, for his participation in a scheme to manipulate the stock price of Lennar Corporation (Lennar) through false and misleading statements about Lennar’s business operations and management. At today’s hearing, U.S. District Court Judge Patricia A. Seitz sentenced Minkow to five years in prison, to be followed by three years of supervised release. In addition, the court ordered Minkow to pay $583,573,600 in restitution.

According to documents filed with the court, Minkow operated Fraud Discovery Institute, a for-profit fraud investigation firm based in California. In this way, Minkow developed ties with federal law enforcement agencies as a purported fraud-finder. During his plea hearing, Minkow admitted making false and misleading statements alleging widespread improprieties in Lennar’s financial reporting and business structure, and attacking the personal character of Lennar’s management.

According to court documents, Minkow was hired to put economic pressure on Lennar to pay money demanded by a business partner in a prior land deal. To this end, beginning in January 2009, Minkow used the Internet, press releases, e-mail communications, Youtube.com videos, and the U.S. mail to broadcast false and misleading statements about Lennar, with the intent of artificially depressing Lennar’s stock price. Minkow then used his relationship with federal law enforcement agencies to report false allegations of criminal conduct purportedly committed by Lennar and its management. Once Minkow confirmed that his allegations had successfully induced law enforcement to open a criminal investigation, Minkow used that knowledge and information to trade Lennar securities for his own benefit.

Mr. Ferrer commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office and the Washington, D.C. Office of the Securities and Exchange Commission. This case is being handled by Assistant United States Attorney Cristina Perez Soto.

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 pacer.flsd.uscourts.gov.

No, Your Money Isn't Safe

By Zach Foster
Best read with companion article No, We're Still Not Protected

The companion article stated:

"The truth is that, while there are a few more restrictions on what the clowns on Wall Street can do, Americans are not better off than they were a year ago before the magical everything-proof shield was signed into law.  Banking is still highly unstable in the country, and the banks still exist as entities only because they were artificially revived in the form of massive bailouts.  All across the political spectrum, Americans are angry that the massive bailouts ever happened, and they haven’t forgotten that this bailout, spearheaded by Treasury Secretary Tim Geithner (who was present at the appointment ceremony for the head of the CFPB), happened under President Obama’s watch and he failed to take action against it."

Banking will never be stable in America until the Federal Reserve, whose hands are in every cookie jar, from Chase and Wells Fargo to your community bank, is fully audited and eventually dissolved, and the farce of fractional reserve banking is done away with.

Fractional reserve banking is one of the key factors causing the Great Depression.  Many people don’t know this, but the amount of money printed on their bank account statement is NOT the amount of money that exists in their community bank vault.  The standard reserve requirement for larger banks set by the Federal Reserve is ten percent,[1] meaning out of every hundred dollars a person saves in the bank, only ten of those dollars actually have to exist in a vault.  This system is a bridge of thin ice, since theoretically only ten percent of a bank’s customers need to take out all of their money in order for the bank to run out of money and close down (the true meaning of bankruptcy).

Economist Murray Rothbard makes a compelling case that fractional reserve banking goes hand-in-hand with inflation,[2] since the only way to account for the ninety percent of a bank’s money that doesn’t exist is to hastily print paper money, and printing more money further devalues the American dollar (this is exactly why America needs to return to the gold standard[3]).

The image used is artwork by the author.  It was compiled from various images from Wikimedia Commons as well as text added by the author.

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[1] http://www.federalreserve.gov/monetarypolicy/reservereq.htm

[2] Rothbard, Murray. “Take Money Back.”

[3] Paul, Ron. Gold, Peace, and Prosperity.  The Foundation for Rational Economics and Education. Pp. 31-32, 39

VIDEO: What Wall Street Reform Means To You

By Katelyn Sabochik

One year ago today, President Obama signed the Wall Street Reform bill into law.

This groundbreaking law does three important things. First, it brings to an end taxpayer funded bailouts -- so taxpayers will never again be left paying the bill if a big bank fails. Second, it stops the reckless risk-taking by Wall Street that put consumers in jeopardy and led to the economic crisis. And third, this law puts in place the strongest consumer protections in history.

Here’s a quick video we put together last year to explain it.