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Two British Virgin Islands funds managed by Kingate Management Ltd. filed for bankruptcy in New York to protect a recent settlement with the trustee responsible for marshaling funds to repay victims of Bernard Madoff’s Ponzi scheme, the Wall Street Journal reported. Kingate Euro Fund Ltd. and Kingate Global Fund Ltd. sought chapter 15 protection on Thursday at the U.S. Bankruptcy Court in New York, telling a judge they are concerned about the threat of litigation from Deutsche Bank AG. In court papers, representatives for the Kingate funds said news of the settlement, worth as much as $400 million, has prompted Deutsche Bank to try to revive a dispute over efforts dating back to 2011 to buy bankruptcy claims that would give the German bank a stake in the settlement proceeds. The Kingate funds are among the largest offshore fund managers that fed cash to Bernard Madoff. The funds collapsed shortly after Madoff’s fraud was exposed in 2008 and have been in a liquidation proceeding in the British Virgin Islands since 2009.

The Consumer Financial Protection Bureau (CFPB) on Friday filed a complaint in federal court in the Central District of California against Certified Forensic Loan Auditors, LLC (CFLA), Andrew Lehman and Michael Carrigan, according to a press release. The complaint alleges that CFLA and Lehman have engaged in deceptive and abusive acts and practices and have charged unlawful advance fees in connection with the marketing and sale of financial advisory and mortgage assistance relief services to consumers. CFLA is a foreclosure relief services company incorporated in California and headquartered in Houston. Lehman is CFLA’s president and CEO. The Bureau’s complaint alleges that Carrigan, who was the company’s sole auditor, provided substantial assistance to CFLA and Lehman. Concurrent with the complaint, the Bureau and Carrigan filed a proposed stipulated final judgment and order to resolve the substantial assistance claims against Carrigan. The Bureau alleges that CFLA and Lehman violated the Consumer Financial Protection Act of 2010 (CFPA) and Regulation O by making deceptive and unsubstantiated representations about the company’s mortgage assistance relief services and its ability to help consumers avoid foreclosures or negotiate loan modifications. Specifically, the complaint alleges that the company has made deceptive and unsubstantiated claims about the efficacy and content of its services, as well as misleading or false claims about the experience and qualifications of the persons providing the services. The Bureau also alleges that the company’s representations and services constituted abusive acts and practices in violation of the CFPA. Finally, the Bureau alleges that CFLA and Lehman have charged consumers for the company’s fees before services were actually rendered, in violation of Regulation O. 

A lawsuit is accusing a New York business consultant known for throwing lavish wine parties at five-star eateries like Daniel for bilking Wall Street executives out of millions, the New York Post reported. Omar Khan, who runs the Sensei International consulting firm on Park Avenue, used his fancy Rolodex to stage wine-fueled shindigs that lured more than a dozen captains of industry into a “Ponzi-like scheme,” according to the lawsuit filed in New York State Supreme Court yesterday. The suit claims that Khan met many of his alleged victims at his own parties, which “centered around vintage wines and expensive cuisine.” Khan then used his connections — as well as claimed ties to famous names like Philippe Rothschild of the Mouton winery — to convince his alleged victims to invest in his growing events business, the suit said. In addition to Robert Van Brugge, CEO and chairman of Sanford C. Bernstein, victims include Kresimir Penavic, a former senior research scientist at Renaissance Capital, the $110 billion hedge fund founded by James Simons; Robert Gelfond, director at the Cato Institute; Peter Slagowitz, CEO of Spurs Capital; and Lorine Schaefer, a vice president at Morgan Stanley, court documents say.

A former Chicago real estate executive is facing up to five years in federal prison for hiding assets in a bankruptcy filing, the Chicago Sun-Times reported. Brett Immel was convicted on Aug. 26 by a federal jury in Chicago of fraudulently concealing income and bank accounts in his 2009 bankruptcy petition, according to the U.S. State’s Attorney’s Office of the Northern District of Illinois. In October 2009, Immel and his wife filed for joint chapter 7 bankruptcy in Illinois and sought to discharge more than $6 million in debts, prosecutors said. In his financial disclosures, Immel disclosed only a personal checking account that he was no longer using, prosecutors said. It held about $1,000. Meanwhile, Immel had been depositing thousands of dollars a month into two other accounts that he failed to list in his bankruptcy filing, prosecutors said. Immel used those two undisclosed accounts to pay nearly all of his personal expenses, including a home mortgage, lease payments on a luxury car, furniture purchases, shopping at high-end clothing stores, child and pet care expenses, and groceries, prosecutors said.

The U.S. government yesterday charged the founder of reverse mortgage provider Live Well Financial Inc. with engineering a $140 million fraud by inflating the value of its bonds, in what he called a “self-generating money machine,” Reuters reported. Michael Hild, who was also Live Well’s chief executive, generated more than $24 million of compensation tied to the scheme, which ran from September 2015 to May 2019, according to federal prosecutors in Manhattan who announced the charges. Founded in 2005, Live Well said it would close on May 3 and terminate its employees, after authorities said the Richmond, Virginia-based company failed to repay lenders sitting on tens of millions of dollars of losses. Live Well later took a $141 million writedown, and was put into chapter 7 bankruptcy on July 1 following a request by three lenders: affiliates of Flagstar Bancorp Inc., Industrial and Commercial Bank of China Ltd and South Korea’s Mirae Asset Financial Corp.

Student debt is soaring — it is now nearly $1.5 trillion — and defaults are at a record. That has been fertile ground for companies that promise to help stretched borrowers navigate the maze of federal programs that can reduce or forgive debts for those who qualify, such as public-service workers or people on low incomes, the Wall Street Journal reported. Some companies operate legally, although there is nothing they offer that borrowers can’t get themselves for free, regulators say. Other firms are outright scams, or make promises to borrowers that are illegal, regulators and consumer advocates warn. Financial Preparation Services of Irvine, Calif. boasts on its website three glowing testimonials for its debt-relief services for student loans. It quotes Anthony Zwichirowski of California, Dawn Robinson of New Hampshire and a smiling Dean Edelman of Virginia, who says using the company “was the smartest move I have made since graduating.” One or more of the three ostensibly happy borrowers also appears, with slight variations, on at least 25 other websites of purportedly different companies offering student-loan debt-relief in the last four years. Financial Preparation Services has submitted claims for federal relief based on fictitious information, according to a former employee. Sales teams within the company also switched regularly to using new corporate names and websites, the former employee said. The company is one of several about which federal regulators are demanding information, according to a bankruptcy court filing.