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The U.S. imposed a $4 million civil money penalty on a Florida private bank for anti-money laundering compliance failures, including delays in filing reports relating to a $1.2 billion Ponzi scheme run by jailed attorney Scott Rothstein, the Wall Street Journal reported today. Coral Gables, Fla.-based Gibraltar Private Bank and Trust Co.’s “substantial” anti-money laundering compliance program deficiencies led to its failure to monitor and detect suspicious activity despite red flags, according to a statement from the U.S. Department of Treasury’s Financial Crimes Enforcement Network, or FinCEN. The deficiencies caused Gibraltar to fail to file on a timely basis at least 120 suspicious activity reports involving nearly $558 million in transactions between 2009 and 2013, much of which related to Rothstein’s Ponzi scheme, for which he was convicted in 2010 and sentenced to 50 years in prison. Read more. (Subscription required.) 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

The official in charge of recovering funds from Bernard Madoff's Ponzi scheme said that he has new evidence that accountant Steven Mendelow played an instrumental role in growing and concealing the massive fraud, profiting in the process, Dow Jones Daily Bankruptcy Review reported today. Lawyers for trustee Irving Picard at a hearing yesterday asked Judge Stuart Bernstein to let him amend a $20 million lawsuit against Mendelow to reflect new allegations that he knew Madoff wasn't making the stock trades and enormous profits he peddled to his investors. In return for funneling new investors into his brokerage firm, Madoff guaranteed "special financial benefits," including a 17 percent return on some of Mendelow's accounts, Picard's lawyer said yesterday. Read more. (Subscription required.)

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For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case.

Molycorp has reached a settlement with the unsecured creditors’ committee in its chapter 11 case on the terms of a modified reorganization plan, Forbes.com reported yesterday. Under the proposed settlement, unsecured creditors (including deficiency claims arising from the 10 percent senior secured notes) would receive 7.5 percent of the reorganized company’s equity in the event of a standalone reorganization plan, with senior lender Oaktree Capital Management receiving 92.5 percent of the reorganized equity. If there is a sale of the entire company under the plan, unsecured creditors (again, including deficiency claims) would receive 7.5 percent of the proceeds of the sale, with Oaktree receiving 92.5 percent. Under the standalone option, the company’s reorganized equity value would be $417 million, meaning that the unsecured claim distribution would be valued at $31.3 million.

Bankruptcy Judge Tamara O. Mitchell approved a deal to provide health care benefits to retired Walter Energy Inc. miners, Dow Jones Daily Bankruptcy Review reported today. Judge Mitchell on Friday signed off on the creation of a voluntary employees beneficiary association (VEBA) to pay the health care benefits of retired miners represented by the United Mine Workers of America, court papers show. The VEBA fills the gap left when Judge Mitchell authorized Walter to stop funding its retirees' health benefits in connection with the sale of its Alabama mines to its lenders. The lenders have agreed to contribute $25 million to the VEBA, which will be administered by the union, once the sale closes. The sale is expected to close by the end of the month.

The U.S. Chamber of Commerce released a study on Friday that found inconsistencies in claims made to the asbestos trusts used to compensate people harmed from exposure to asbestos, The Hill reported today. The chamber’s Institute for Legal Reform (ILR) said that it analyzed information from 100 randomly selected personal information questionnaires submitted by asbestos plaintiffs in the bankruptcy proceedings of Garlock Sealing Technologies, Inc. and found that 69 percent of victims making claims failed to list every place they’ve been employed, making it impossible for the trusts to verify job site information. The chamber’s study also found that 15 percent of claimants failed to list the specific products from which they were allegedly exposed; 55 percent had date discrepancies and 21 percent of claims contained other troubling inconsistencies, such as differing medical diagnoses, conflicting job descriptions and implausible exposure allegations. Read more.

To read more about litigation or liquidation trusts in bankruptcy, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts.

A courtroom clash between failed supermarket operator Fresh & Easy LLC and its creditors appeared headed for mediation yesterday, but the overall direction of the company's chapter 11 case was clouded by looming legal battles with former employees, Dow Jones Daily Bankruptcy Review reported today. Appearing before Bankruptcy Judge Brendan Shannon, lawyers for Fresh & Easy tackled a number of roadblocks that threaten to drag out the bankruptcy proceeding and run up legal bills. The grocer's unsecured creditors are seeking greater access to information about the company's past business transactions, including the alleged transfer of at least $40 million in real-estate assets from Fresh & Easy to an affiliate of its private-equity backer Yucaipa Cos. But uncovering that information could be costly for the company, as could any future lawsuits it might trigger. Lawyers for Fresh & Easy and the judge said they hoped to avoid "bogging down" the case and to work toward a settlement that would put the dispute with unsecured creditors to rest.