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An Austrian hedge fund that helped direct investments from abroad into Bernard Madoff’s Ponzi scheme agreed to pay $76.5 million to victims of the fraud in a settlement with the trustee who is unwinding the con man’s firm, Bloomberg News reported. Trustee Irving Picard said yesterday that he reached the deal with Alpha Prime Fund Ltd., which is domiciled in Bermuda and managed in Austria. The settlement brings the total recovered by Picard to $12.8 billion. More than $10 billion has been distributed to victims of Madoff’s fraud, while some money has been set aside pending resolution of lawsuits by victims seeking more cash than the trustee says they’re entitled to.

A Lake City farmer has been sentenced to 18 months in federal prison for committing fraud to get bank loans, crop insurance proceeds and ease a bankruptcy burden, the Associated Press reported. Federal prosecutors say that Clint Devries was sentenced on Wednesday after pleading guilty in September to two counts of making false statements and one count of bankruptcy fraud. Prosecutors say that he lied from 2013 through 2015 to a bank about the amount of crops he had in storage and other things to obtain farm operating loans. He later defaulted on more than $400,000 in loans from the bank. Officials say he also lied to the Federal Crop Insurance Corp. to fraudulently obtain crop insurance proceeds, and that in 2015, he lied to a bankruptcy trustee about sales of his crops.

A federal court yesterday approved a $25 million settlement with students who said that they were duped by Donald Trump and his now-defunct Trump University, which promised to teach them the "secrets of success" in the real estate industry, NBCNews.com reported. The U.S. Court of Appeals for the Ninth Circuit in San Francisco finalized the settlement after it was first approved by a judge last March following an appeal by Sherri Simpson, a Florida woman who said she spent roughly $19,000 on Trump University workshops. Simpson had wanted to opt out of a class action suit in order to pursue a separate suit against Trump, but the court rejected that. Students had alleged that Trump University, which was open from 2005 to 2010, used false advertising and high-pressure sales techniques to lure them to free investor workshops at which they were sold expensive seminars and told they would be mentored by real estate gurus, leading to the loss of thousands of dollars in tuition. A "one-year apprenticeship" at the educational institute cost $1,495; a "membership" over $10,000; and "Gold Elite" classes ran $35,000. Trump faced two lawsuits in California and one in New York, brought by New York Attorney General Eric Schneiderman. They were folded into one class action suit after Trump was elected, according to court documents. Trump paid the $25 million in January of last year, but it was held in escrow until the court upheld the settlement.

The scale of problems with the virtual-currency boom is starting to become clear as digital tokens have slid more than 50 percent in value from their peaks in early January, with steep drops on Monday pushing the value of Bitcoin specifically below $7,000, the New York Times reported. The leaders of the two main regulatory agencies in the U.S. that oversee the technology, the Securities and Exchange Commission and the Commodity Futures Trading Commission, are to testify today before the Senate banking committee about their efforts to police virtual currency markets. In the past two weeks, both have brought major cases, but people in the young industry said that regulators had barely made a dent. Some virtual currency enthusiasts argue that the problems are no different from what has happened in other booms, like the internet bubble of the 1990s. But even true believers say that the design of virtual currencies — meant to cut out middlemen and government authorities — has made bad behavior more prevalent amid this particular bubble. “Cryptocurrencies are almost a perfect vehicle for scams,” said Kevin Werbach, a professor at University of Pennsylvania’s Wharton School. “The combination of credulous buyers and low barriers for scammers were bound to lead to a high level of fraud, if and when the money involved got large. The fact that the money got huge almost overnight, before there were good regulatory or even self-regulatory models in place, made the problem acute.” Read more. 

In related news, Securities and Exchange Commission Chair Jay Clayton said in prepared testimony for today’s Senate Banking Committee hearing that the SEC is not trying to undermine the potential benefits of cryptocurrencies but instead is trying to raise awareness that many promoters of bitcoin and other coins and tokens might be running afoul of securities laws, the Washington Examiner reported. "These warnings are not an effort to undermine the fostering of innovation through our capital markets — America was built on the ingenuity, vision and spirit of entrepreneurs who tackled old and new problems in new, innovative ways," Clayton said. Instead, he and other regulators have been warning investors to think twice about putting money into cryptocurrencies or "initial coin offerings" because they might run afoul of U.S. securities laws and lack protections. Read more. 

Cryptocurrencies and fraudulent transfers are the topic of an article in the February edition of the ABI Journal and a forthcoming ABI Podcast. 

U.S. Attorney Craig Carpenito announced that the owner of a New Jersey trucking company was sentenced to 18 months in prison for committing tax evasion and bankruptcy fraud while operating his wine delivery business, according to a press release. Giacomo Giorlando of Morganville, N.J., previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with three counts of tax evasion and one count of bankruptcy fraud. Judge Sheridan imposed the sentence today in Trenton federal court.

A criminal bankruptcy fraud trial for a former Billings, Mont., neurosurgeon has been postponed to give the defense more time to reach a plea deal, the Billings Gazette reported. U.S. District Judge Susan Watters of Billings has reset a jury trial for Dr. John Henry Schneider for April 9. The trial had been set for Feb. 12. The judge previously continued the first trial from Dec. 11. Schneider pleaded not guilty in October to five counts of bankruptcy fraud for allegedly lying to hide his assets after filing for bankruptcy in 2014. Meanwhile, Schneider and the trustee in the bankruptcy appear to have reached an agreement to settle a complaint the trustee filed in U.S. Bankruptcy Court against Schneider accusing the doctor of breach of contract, fraud and negligent misrepresentation.