An Elkhart, Ind.-based payroll firm accused of fraud has filed for bankruptcy, according to the South Bend Tribune. IOI's founder Najeeb Khan allegedly initiated $120 million in wire transfers without sufficient funds. The company is now run by a group of consultants after Khan's resignation last month. The consultants hope by declaring bankruptcy, they can reorganize and eventually sell IOI. To date, seven former clients filed lawsuits against the company.
Robert Shapiro, the former chief executive officer of Woodbridge Group of Companies, pleaded guilty to running a $1.3 billion fraud that caused more than 7,000 investors to lose money, according to prosecutors, Bloomberg News reported. Shapiro promised returns as high as 10 percent from investments in loans to property developers. Instead, he used money from new investors to repay earlier ones and stole as much as $95 million, routing money through a network of 270 limited liability companies he controlled, Miami U.S. Attorney Ariana Fajardo Orshan said yesterday. Losses to investors are expected to exceed $100 million, both sides agreed in a court filing. The scam ran from July 2012 until December 2017, when Woodbridge filed for chapter 11 protection. Shapiro pleaded guilty to conspiracy and tax evasion on Wednesday in Miami. He faces as long as 25 years in prison when he’s sentenced Oct. 15. In November, he agreed to pay $120 million to resolve related civil claims by the U.S. Securities and Exchange Commission. Two alleged co-conspirators are scheduled for trial in February.
Malaysia expanded efforts to prosecute Goldman Sachs Group Inc. employees it alleges were involved in the 1MDB fraud, filing criminal charges against more than a dozen current and former senior executives based around the world, Bloomberg News reported. Vice Chairman Richard J. Gnodde, who heads the Wall Street firm’s international business in London, and J. Michael Evans, a former partner at the U.S. bank who’s now president of Alibaba Group Holding Ltd., were among those named. Other high-profile people charged include a former adviser to Margaret Thatcher and the bank’s chief risk officer. The 17 current and former employees were directors of three Goldman Sachs units that Malaysia has accused of misleading investors when arranging $6.5 billion in bond sales for the state investment fund, whose full name is 1Malaysia Development Bhd., in 2012 and 2013. The charges mark an escalation of Malaysia’s campaign to recoup funds it says were embezzled from 1MDB. Law-enforcement agencies in the U.S. and Singapore are also investigating the money trail for billions of dollars that were allegedly siphoned off. U.S. prosecutors have charged two former bankers at Goldman Sachs, which received $600 million in fees for the bond sales.
The New York City-based federal appeals court on Thursday morning upheld Martin Shkreli’s conviction on securities fraud and conspiracy charges, along with an order requiring him to forfeit $7.3 million to the government, the National Law Journal reported. The U.S. Court of Appeals for the Second Circuit, in a seven-page summary order, rejected claims from the disgraced pharmaceutical executive that the judge in his case had relayed incorrect and confusing jury instructions, leading to a split verdict in 2017 that cleared him of five other counts, including wire fraud. A Brooklyn federal judge the following April sentenced Shkreli, the former CEO of Turing Pharmaceuticals, to serve seven years in prison, pay a fine and restitution and forfeit more than $7.3 million acquired through what prosecutors said amounted to a Ponzi scheme to defraud investors in his two hedge funds.
The trustee liquidating Bernard Madoff’s defunct investment-advisory business said he had reached an $860 million settlement with a pair of offshore funds that shunted money to the con man’s company for years, Bloomberg News reported. <b>Irving Picard</b> reached the accord with the liquidators for Kingate Global Fund Ltd. and Kingate Euro Fund Ltd., he said in a statement Wednesday. The arrangement essentially forces the funds to use their recoveries from the Madoff bankruptcy case to finance the settlement. The $860 million covers 93 percent of the withdrawals made by the Kingate funds from their accounts at Madoff’s New York-based firm, Picard said. The trustee has used such litigation to recover more than $13 billion for thousands of victims who invested directly with Madoff. The Kingate funds were founded in the British Virgin Islands in 1994 by two Italian investment advisers operating out of London. Picard sued the funds a decade ago, not long after Madoff’s $20 billion Ponzi scheme collapsed. Among Madoff’s biggest offshore “feeder” funds, they had invested about $1.7 billion with Madoff for their clients and lost about $750 million when the scam unraveled.
Former SFX Entertainment founder Robert Sillerman has agreed to pay a $179,000 fine after the U.S. Securities and Exchange Commission charged the businessman with fraud for illegally diverting company funds to personal accounts while misrepresenting celebrity endorsements and the financial health of his online publishing and entertainment business Function(x) to attract new investors, Billboard reported. Announced June 28, the settlement also permanently bars Sillerman from holding an officer or director role at any public company. According to the SEC's complaint, Function(x) incurred significant losses during the first quarter of 2017 and completed a public securities offering that brought in $4.8 million from investors in order to raise capital and fund operations. The complaint alleges that Sillerman then fraudulently diverted $500,000 of the offering proceeds to repay loans he made to the company where he held the title of CEO. Sillerman was also accused of misleading individuals to invest in Function(x) by falsely claiming two unnamed celebrities had agreed to invest in the company. In order to con investors into believing the celebrities were involved with Function(x), Sillerman allegedly created phony subscription documents with forged signatures from the two celebrities.
A federal judge yesterday ordered embattled drugmaker Insys Therapeutics to pay a $2 million fine and $28 million in forfeiture for charges of mail fraud, the Boston Herald reported. The latest blow for the pharmaceutical company comes a month after it filed for bankruptcy, and two months after it was ordered to pay an additional $195 million payment as part of a civil resolution. The company, and former executives in a separate case, are charged with bribing doctors to prescribe excessive doses of their fentanyl spray, Subsys. Federal Judge Rya Zobel issued the fine yesterday in U.S. District Court in Boston for five charges of mail fraud as agreed to between prosecutors and Insys in a joint recommendation. The charges stem from five payments the company made to a physician’s assistant based in New Hampshire for fabricated speaking engagements about the spray.
