A federal bankruptcy judge yesterday narrowed a $905 million lawsuit filed by the trustee seeking money for Bernard Madoff's victims against executives who ran a now-defunct Florida accounting firm that had close ties to the swindler, Reuters reported. Bankruptcy Judge Stuart Bernstein said that Irving Picard cannot recover alleged improper transfers made before 2001 to Palm Beach-based Avellino & Bienes, which ran the earliest "feeder funds" that sent client money to Madoff. The decision is a setback for Picard, in one of the larger of his more than 1,000 lawsuits seeking to recoup money from people he believes benefited improperly from Madoff's fraud. Picard accused principals Frank Avellino and Michael Bienes of helping conceal Madoff's Ponzi scheme, including in 1992 when Madoff created fake account statements to help their firm defend itself in a U.S. Securities and Exchange Commission probe. The trustee said the duplicity enabled Avellino, Bienes and their wives to reap millions of dollars to buy multiple luxury homes, art by Pablo Picasso and Edgar Degas for the Avellinos, and a cold storage compartment to store Dianne Bienes' furs. But in a 62-page decision, Judge Bernstein agreed with the defendants that Picard lacked power to recover transfers made before Jan. 1, 2001. Read more.
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.
Federal prosecutors are poised to launch one of the largest asset seizures in U.S. history as they step up their investigation into billions of dollars siphoned away from a Malaysian government investment fund, the Wall Street Journal reported today. Authorities are expected to file civil lawsuits today seeking to seize more than $1 billion worth of assets, which are expected to include properties and other assets purchased with money allegedly misappropriated from the Malaysian fund. The Wall Street Journal has reported that people linked to the fund have invested millions of dollars in real estate and businesses in the U.S. Agents from the Federal Bureau of Investigation’s international corruption unit have also been conducting a wide-ranging criminal investigation into people and institutions connected with 1Malaysia Development Bhd., known as 1MDB, a sovereign-wealth fund set up by Prime Minister Najib Razak in 2009 to drive the country’s economy.
Prosecutors in New York last week accused Omar Amanat of participating in a conspiracy to defraud investors in Kit Digital Inc., Bloomberg News reported yesterday. Lawyers for the prosecution told the judge he owes money all over world, and that Amanat claims he has just $2,700 in the bank and a negative net worth yet pays $10,000 a month to rent his $4.75 million home. His arrest widens the sprawling criminal case surrounding Kit Digital, a troubled video-software startup that became one of the largest of its kind before going bankrupt in 2013. Last September, former Chief Executive Kaleil Isaza Tuzman was jailed in Colombia at the request of U.S. prosecutors who accused him of cheating Kit investors. Rounding off Kit’s woes, former Chief Financial Officer Robin Smyth in March pleaded guilty to fraud, admitting he conspired to mislead investors and regulators about the company’s financial health. Smyth is cooperating with prosecutors. Amanat’s arrest muddies a roller-coaster life story which, by his own account and media reports, goes from early financial success to a brush with death on Sept. 11 and repeated legal brawls. Read more.
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.
Chesapeake Energy Corp., the company Aubrey McClendon built into a natural-gas giant, was sued along with his former partner by lease holders who say the pair conspired to rig bids for drilling rights during the shale boom, Bloomberg News reported yesterday. The lawsuit against Chesapeake and Tom Ward comes four months after a federal grand jury indicted McClendon on March 1 for allegedly fixing shale lease auctions. McClendon died a day later when the SUV he was driving slammed into a bridge in Oklahoma City, where he lived and worked. The suit, brought by Chisholm Partners LLC and its investors, accuses Chesapeake and Ward of working together to artificially lower prices while McClendon led his company and Ward was chief executive officer at SandRidge Energy Inc. The plaintiffs are seeking at least $30 million in damages in the lawsuit filed July 13 in a federal court in Kansas City, Kansas.
