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A former State Street Corp. executive was convicted yesterday of participating in a scheme to defraud several of the bank’s customers by charging them secret commissions on billions of dollars of trades, Reuters reported. A federal jury in Boston found Ross McLellan guilty on five of six counts the one-time State Street executive vice president faced, including conspiracy, securities fraud and wire fraud. The verdict came on the second day of jury deliberations and followed a trial of about three weeks. U.S. District Judge Leo Sorokin scheduled McLellan’s sentencing for Oct. 10. McLellan is one four ex-employees of the Boston-based bank who since 2016 have faced U.S. charges that they engaged in schemes to overcharge institutional clients, allowing State Street to earn millions of dollars.

Bank of America Corp. was accused in a lawsuit of providing more than 100 accounts used to perpetrate what the U.S. regulators called a $102 million Ponzi scheme, Bloomberg News reported. The class-action suit filed on behalf of people who lost money follows a complaint last week by the Securities and Exchange Commission alleging that five men and three companies defrauded more than 600 investors. One of the alleged ringleaders once commissioned a song about himself for a party in Las Vegas with lyrics celebrating his $10,000 suits and his partner’s affinity for champagne, according to Monday’s complaint in federal court in Ocala, Florida. The brother and sister who sued to recover losses from their late father’s investment claim the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed," according to the complaint. The lender is accused of failing to spot suspicious activity, including deposits of hundreds of thousands of dollars into accounts with relatively small, negative or nonexistent balances, followed by transfers within the same week to other accounts or investors seeking to cash out.

A federal jury convicted the co-founder of a Wayzata oil services company and his associate of multiple fraud charges yesterday for their roles in what prosecutors described as a complex stock manipulation that triggered more than $30 million in illegal bonus payments, the Minneapolis Star Tribune reported. Jurors found Ryan Gilbertson, guilty of all but one of the 22 counts for which he stood trial for 10 days in Minneapolis. Co-defendant Douglas Hoskins, accused of aiding and abetting the scheme, was convicted on six counts and acquitted on 10 others. Gilbertson, of Delano, and Hoskins, of Wayzata, were first charged in a March 2017 indictment outlining a scheme tied to the 2012 initial public offering for Gilbertson’s Dakota Plains Holdings. Gilbertson controlled about 40 percent of the company’s promissory notes and was entitled to more than $12 million of the $32.8 million in bonus payments. 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. 

Financial services company MetLife Inc. was charged with fraud Monday by Secretary of State William F. Galvin’s office for allegedly failing to make pension payments to hundreds of Massachusetts retirees the company had wrongly presumed to be dead, the Boston Globe reported. More than 400 Massachusetts pensioners with an average age of 72 were deemed to be deceased by MetLife after they failed to respond to notices from the company that their pension plans had been transferred to MetLife, according to Galvin. MetLife then allegedly released the pension funds that were supposed to be held in reserves and reported them as assets in public filings, inflating the company’s bottom line. The complaint states that MetLife did not take reasonable steps — such as through certified mail, e-mail, or telephone calls — to notify the pensioners, and that the company’s only contact with the pensioners was two “perfunctory” letters, sent more than five years apart.

A Texas oil and gas businessman who called himself the “Frack Master” has been charged with securities fraud in connection with a scheme that defrauded investors out of $62.6 million, U.S. prosecutors said on Thursday, Reuters reported. Christopher Faulkner was arrested on Monday at the Los Angeles International Airport and charged in a criminal complaint filed in federal court in Dallas, Texas, prosecutors said. The criminal charges came two years after the U.S. Securities and Exchange Commission sued Faulkner, a frequent media commentator on oil-and-gas topics, and his Dallas-based Breitling Energy Corp. and accused them of fraud. The complaint charged the Dallas resident with securities fraud, mail fraud and money laundering. According to the complaint, from 2009 to 2016, Faulkner established several companies through which he acquired and then sold to investors working and royalty interest in oil and gas prospects in Texas, Oklahoma, Kansas and North Dakota.

The U.S. Supreme Court agreed to consider narrowing the nation’s securities-fraud laws, accepting an appeal from an investment banker found by the Securities and Exchange Commission to have duped investors about a startup company’s financial condition, Bloomberg News reported. The banker, Francisco V. Lorenzo, said the SEC didn’t have enough proof to hold him liable for taking part in a scheme to defraud investors. A divided federal appeals court said that it was enough that Lorenzo, who worked at Charles Vista LLC, sent two emails misrepresenting the financial condition of a client, Waste2Energy Holdings Inc. The company was seeking to develop a way to generate electricity from solid waste, but the technology never materialized. An in-house judge at the SEC concluded the emails were “staggering” in their falsity. In his appeal, Lorenzo says allegations of false statements, without more, aren’t enough to hold someone liable for a fraudulent scheme. Lorenzo was also accused of violating securities-fraud provisions that specifically concern false statements, but the appeals court threw those claims out. The panel said Lorenzo wasn’t the one who actually made false statements, because the emails were drafted by Lorenzo’s boss and sent at his direction.