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Global bitcoin exchange Kraken said yesterday that significant progress has been made in the investigation into claims of creditors of bankrupt exchange MtGox, Reuters reported. MtGox Co Ltd, a Tokyo-based bitcoin exchange, was forced to file for bankruptcy in 2014 after hackers stole an estimated $650 million worth of customer bitcoins. Kraken was appointed in November of that year to assist Tokyo district court-appointed trustee Nobuaki Kobayashi in the bankruptcy investigation of missing bitcoins, receiving claims and distributing remaining assets to creditors of MtGox. Kraken said in a statement, citing the Tokyo-based trustee, that out of the 9,863 persons who filed bitcoin-only claims through the Japanese trustee or through Kraken's online service, 7,952 claimants have been approved.

Bankruptcy Judge Stuart Bernstein ruled yesterday that victims of Bernard Madoff's fraud cannot pursue a Florida lawsuit to recover $11 billion from the estate of Jeffry Picower, who they say helped perpetuate the swindler's Ponzi scheme, Reuters reported. Judge Bernstein said that the lawsuit by A&G Goldman Partnership and Pamela Goldman, their third effort to sue in Florida, violated an injunction barring Madoff victims from pursuing claims belonging to Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC. Picard had in December 2010 won a $7.2 billion settlement with the estate of Picower, who died in October 2009. But a slew of litigation ensued from Madoff customers, including many who say the trustee undervalued their claims, against Picower and other alleged enablers of Madoff. Picard has estimated that Madoff's victims lost $17.5 billion in the fraud, which was uncovered in December 2008. 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. 

A former ​lower-level ​Dewey & LeBoeuf LLP employee ​charged in ​a financial fraud case alongside leaders of the defunct law firm has struck a deal with prosecutors to have the case against him dropped in a year, the Wall Street Journal reported today. Former Dewey client relations manager Zachary Warren had been scheduled to go to trial in March. A prosecutor with the Manhattan District Attorney’s Office told a judge yesterday that under a deferred prosecution agreement,​ Warren would no longer face criminal charges if he completes 350 hours of community service. Assistant District Attorney Peirce Moser said in court that prosecutors plan to focus their attention on a retrial slated for September against two of Dewey’s former executives, ex-chief financial officer Joel Sanders and former executive director Stephen DiCarmine.​ Sanders and DiCarmine have pleaded not guilty and have maintained their innocence.

Martin Shkreli, the former pharmaceutical executive who faces criminal securities fraud charges, is challenging a request from prosecutors to put a parallel civil case against him on hold, Bloomberg News reported on Friday. The civil case, brought by the U.S. Securities and Exchange Commission, “jeopardizes Mr. Shkreli’s livelihood, reputation and future career prospects” and should move forward, his attorneys said in a court filing on Thursday. The lawyer charged along with Shkreli, Evan Greebel, also asked to allow some information-sharing to proceed in the SEC’s case. Shkreli, the 32-year-old biotechnology company founder who gained notoriety after raising the price of a rare drug by more than 5,000 percent, was arrested at his Manhattan apartment in December. He stands accused of illegally using assets in one of his former drug companies, Retrophin Inc., to pay off investors who lost money in hedge funds he ran. Defendants facing parallel civil and criminal securities cases sometimes seek to move forward on both fronts to get a glimpse of the prosecution’s evidence. Civil cases are usually put on hold, though, at the government’s request.

KaloBios Pharmaceuticals, the struggling drug company Martin Shkreli took over in November, may survive bankruptcy and its brush with Shkreli, who was ousted as chief executive after his arrest on securities fraud charges, the Wall Street Journal reported today. Bankruptcy Judge Laurie Selber Silverstein rejected a request to have a trustee appointed to oversee KaloBios’s affairs, after warnings that displacing the leadership team that came on board after Shkreli left would upset the prospective deal. Revived hope of a deal for a potentially lucrative drug, benznidazole, could pull KaloBios out of chapter 11 bankruptcy, the company’s lawyers told Judge Silverstein at a hearing yesterday. KaloBios is lining up financing to move ahead on a restructuring built around benznidazole, a treatment for Chagas' disease. The affliction is on an FDA list of ailments that could earn a ticket for fast-track regulatory treatment known as a priority review voucher. Priority review vouchers have sold for hundreds of millions of dollars, as Shkreli told investors in December, when he was trumpeting the commercial outlook for benznidazole.

Interim U.S. Trustee Andrew Vara said in court papers yesterday that the outlook is so bleak for a bankrupt biotechnology company briefly led by controversial investor Martin Shkreli that its management should be replaced by an independent trustee, Reuters reported. KaloBios Pharmaceuticals Inc., based in South San Francisco, Calif., filed for chapter 11 protection in December just weeks after Shkreli was arrested for engaging in what U.S. prosecutors said was a Ponzi-like scheme at his former hedge fund. Vara yesterday asked the U.S. Bankruptcy Court in Delaware to consider putting KaloBios under a trustee or having the company's case converted to a chapter 7 bankruptcy. KaloBios is down to nine employees, has no ongoing trials and has no significant ongoing operations, Vara said. Additionally, a potentially pivotal deal to acquire a drug made by privately held Savant Neglected Diseases LLC is now off the table and KaloBios has only $2.9 million in unencumbered cash, Vara said. 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.