A federal bankruptcy judge has ordered U.S. Marshals to arrest Jonathan Burden to force him to show up in court, after the self-proclaimed real estate investor failed to pay $26,800 in sanctions and failed yet again to show up for a hearing, WWLTV.com reported. Burden is accused in at least seven lawsuits of tricking New Orleans area homeowners into signing over their properties to him and, in some of the cases, of filing false documents to seize people’s homes out from under them. He has repeatedly ignored court orders and tied up those cases in civil court, even while the FBI and New Orleans Police Department investigate him over the allegations of criminal fraud. But Thursday was the first time a judge has ordered Burden to be forced into court, with U.S. Bankruptcy Judge Meredith Grabill issuing the order to force Burden to appear at a hearing on Nov. 30. It’s unclear when federal marshals plan to arrest him or if they will hold him in jail until the hearing.
The Madoff case makes more law: A claim against a bankrupt estate can’t be set off against liability for receipt of a fraudulent transfer because one arose before bankruptcy and the other arose after.
Sam Bankman-Fried was found guilty on Thursday for his role in the collapse of crypto exchange FTX, CNN reported. After 15 days of testimony and about four and a half hours of deliberations, jurors returned a verdict that found him guilty on seven counts of fraud and conspiracy. Bankman-Fried looked sunken as the verdict was read out. After the jury was released, he stood, head bowed and shaking as his lawyer spoke in his ear. A few feet behind him, his parents stood watching. As Bankman-Fried was escorted out of the room, he turned back and smiled at his parents. His father, Joe Bankman, put his arm around his wife’s shoulders. As their son left the room, Barbara Fried broke down in tears. In remarks outside the courthouse, U.S. Attorney Damian Williams lauded the jury’s verdict, saying the government has “no patience” for fraud and corruption. “These players like Sam Bankman-Fried might be new, but this kind of fraud, this kind of corruption, is as old as time,” he said. But Bankman-Fried’s attorney said they were “disappointed.” The sentencing hearing date will be March 28, 2024. He faces up to 110 years in prison. Bankman-Fried was found guilty of stealing billions of dollars from accounts belonging to customers of his once-high-flying crypto exchange FTX. He was also found guilty of defrauding lenders to FTX’s sister company, hedge fund Alameda Research, which held FTX customer funds in a bank account.
Eight months after a pair of brothers in rural North Carolina pleaded guilty to charges tied to a multi-million dollar Ponzi scheme, they’ve both been sentenced by a federal judge, the Triangle Business Journal reported. Joseph Floyd IV last week was handed a three-and-a-half-year sentence in federal prison for conspiracy to sell and deliver unregistered securities. Floyd’s brother and co-conspirator, William Floyd, was previously sentenced to just over a year in prison for his role in the scheme. Both Floyds were ordered to pay more than $10.6 million in restitution. They could have faced up to five years in prison for orchestrating a situation described as a “mess” by one of their victims. The Floyds owned and operated Floyd’s Insurance Agency in Whiteville, North Carolina, offering what they described as a “loan program.” More than 150 people and businesses invested funds in exchange for interest-bearing promissory notes, thinking they were conservative investments with high interest rates – to the tune of 6 to 10 percent. When profit checks came, they considered it proof that the business was legitimate. But in actuality, by 2012, the company had borrowed more than $20 million from investors and did not have the means to service the debt through legitimate means. And the notes were never registered with the U.S. Securities Exchange Commission, a regulatory requirement meant to prevent misrepresentations and forms of fraud. To forestall bankruptcy, the Floyds ran the loan program as a Ponzi scheme, where principal and profits were paid to existing investors with funds raised from more recent investors — all without disclosing the situation to their investors. They also controlled a Chapel Hill company called Monthly Payment Plan Inc., that would provide loans to enable consumers to finance a portion of their annual insurance premiums. The promissory notes were entered into by the insurance company and individual investors, but Floyd’s Insurance Agency did not use the borrowed funds to finance insurance premiums. Instead, it loaned the funds to Monthly Payment Plan on an “as-needed” basis for this purpose. Monthly Payment Plan was to repay the principal balance with interest.
Glen Point Capital co-founder Neil Phillips was convicted of manipulating the foreign-exchange market to hit a “barrier” rate and trigger a $20 million option, Bloomberg News reported. The former hedge fund executive was found guilty on Wednesday of commodities fraud by a jury in federal court in Manhattan. Prosecutors had accused Phillips of directing $725 million in trades on Dec. 26, 2017, to intentionally raise the value of the South African rand against the U.S. dollar. Phillips was found not guilty of a related conspiracy charge. He faces a maximum of 10 years in prison on the fraud count. U.S. District Judge Lewis Liman scheduled his sentencing for March 14. The defense had argued that his actions were part of a longer-term strategy and also fell within standard industry practices associated with barrier trading. He contended that alleged victim Morgan Stanley, which sold Glen Point the option for around $2 million, engaged in similar trades to hedge its own risk from the bet.
An alter ego may be of the same ilk as a partnership or agency, so there may be no inconsistency between the Fifth Circuit opinion and the Bartenwerfer concurrence.
Gemini Trust Co. and Barry Silbert’s Digital Currency Group were sued by New York’s top law-enforcement officer for allegedly defrauding customers of $1.1 billion, escalating legal woes for two companies hit hard by last year’s plunge in cryptocurrency markets, Bloomberg News reported. The lawsuit filed today by New York Attorney General Letitia James accuses Gemini, which operated a crypto exchange, and DCG’s Genesis Global Capital unit of failing to disclose to investors the risks of a crypto-lending program they started in 2021. The venture’s assets collapsed last year amid several high-flying bankruptcies, including Sam Bankman-Fried’s FTX. Gemini, founded by Tyler Winklevoss and Cameron Winklevoss, lied to customers about how risky loans were in its venture with Genesis and failed to disclose that at one point, almost 60% of its third-party loans were to Bankman-Fried’s crypto trading firm Alameda Research, the state claims. Genesis and DCG were accused in the suit of trying to conceal spiraling losses. The claims by New York come after the US Securities and Exchange Commission in January sued Genesis and Gemini over their failed crypto-lender venture, known as Gemini Earn. And Genesis, which filed for bankruptcy, has sued its parent DCG seeking to recover about $620 million in outstanding loans. Gemini has also sued DCG as well as Silbert, seeking to recover “damages and losses” from alleged “fraud and deception.”
Oregon Supreme Court allows substitution of a bankruptcy trustee as the real party in interest because denial would chiefly punish the debtor’s creditors.
