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The U.S. Justice Department yesterday charged Deutsche Bank’s former head of subprime mortgage trading with civil fraud in connection with conduct dating back to the 2007-2009 financial crisis, Reuters reported. Paul Mangione, the former trader, is accused in the complaint of misrepresenting information about the loans underpinning two residential mortgage-backed securities that were sold to investors. The government’s case against the former trader, filed in a federal court in Brooklyn, came after the bank in January reached a $7.2 billion settlement in a related case over risky mortgage securities sold to investors. The Justice Department charged Mangione for his role in the alleged scheme in its complaint, saying he defrauded investors in a $1 billion security called ACE 2007-HE4 and another $400 million security called ACE 2007-HE5. The government also said he misled people about the origination practices of Chapel Funding LLC, one of the bank’s subsidiaries, and approved offering documents that misstated information about the loans, such as borrowers’ ability to repay and whether they complied with lending guidelines.

Martin Shkreli’s social-media habits have once again gotten him in serious trouble: A post of his about Hillary Clinton set off a Secret Service investigation and a request from federal prosecutors to revoke his bail because he poses “a risk of danger to the community,” the New York Times reported today. Prosecutors told the federal judge overseeing Shkreli’s case that they were concerned that his followers would “take his statements seriously — as has happened previously — and act on them.” Judge Kiyo A. Matsumoto scheduled a Sept. 14 hearing on the government’s motion, which, if upheld, would return Shkreli to jail. Shkreli, a pharmaceutical executive who gained infamy for his price increase for the lifesaving drug Daraprim, was convicted in August after a five-week federal trial on three of eight fraud counts related to hedge funds he ran. He remains free on $5 million bail, as he has been since shortly after his arrest in 2015.

The trustee recovering money for Bernard Madoff’s victims yesterday announced his biggest settlement in six years, recouping $687 million from an Irish fund that began sending client money to the imprisoned Ponzi schemer in the 1990s, Reuters reported. Thema International Fund Plc’s payment would boost the recovery by the trustee Irving Picard to about $12.7 billion, or more than 72 percent of the $17.5 billion in principal he has said Madoff’s customers lost. The payment represents transfers that Dublin-based Thema received from Bernard L. Madoff Investment Securities LLC in the six years before Madoff’s fraud was uncovered in December 2008, plus 19.26 percent of earlier withdrawals. Yesterday’s settlement requires approval by Bankruptcy Judge Stuart Bernstein. A hearing is scheduled for Oct. 25. 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. 

Already facing up to 20 years in federal prison, disgraced former lawyer Todd Prins now is tangling with the Internal Revenue Service, the San Antonio Express-News reported today. Prins tried making good on his delinquent income taxes — sending the agency $82,400 in October. Problem is, the IRS doesn’t want the payment, saying in a court filing on Wednesday in Prins’ personal bankruptcy case that the money was “likely stolen.” Prins transferred the money — belonging to a Houston company — out of his now-shuttered San Antonio law firm’s trust account to the IRS, the agency alleges in a complaint also filed on Wednesday. Prins, in a June court filing, said that the IRS’s failure to give him credit for paying the taxes contradicts his understanding of a confidential agreement reached with federal prosecutors.

"Real Housewives of New Jersey" star Christopher Laurita was found liable for fraud on Thursday by a federal judge in connection with a protracted bankruptcy case, NJ.com reported on Friday. Chris Laurita's clothing firm Signature Apparel filed for bankruptcy in 2009. In 2010, Anthony Labrosciano, the person designated by the court to settle the company's affairs, filed a lawsuit against Chris and Jacqueline Laurita; Chris' brother and sister-in-law Joseph and Adeline Laurita; and another brother Anthony Laurita, for allegedly using Signature Apparel bank accounts to pay for private jets, lavish vacations and expensive cars. Joseph and Adeline Laurita settled their portion of the case in 2014 for $1 million, but Chris and Jacqueline as well as Anthony Laurita remained in litigation over the matter. Bankruptcy Judge Robert E. Grossman ruled on Thursday that Chris Laurita and management company Iconix, a subsidiary of Studio IP, were liable for fraud, negligent misrepresentation and tortious interference with contractual relations for diverting some of Signature Apparel's assets. Laurita was also found liable for breach of his fiduciary duty, and Iconix was found liable for aiding and abetting Laurita's fiduciary breach.

Hackers have discovered that one of the most central elements of online security — the mobile phone number — is also one of the easiest to steal, the New York Times reported today. In a growing number of online attacks, hackers have been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim’s phone number to a device under the control of the hackers. But a particularly concentrated wave of attacks has hit those with the most valuable online accounts: virtual currency. The attackers appear to be focusing on anyone who talks on social media about owning virtual currencies or anyone who is known to invest in virtual currency companies, such as venture capitalists. And virtual currency transactions are designed to be irreversible. Accounts with banks and brokerage firms and the like are not as vulnerable to these attacks because these institutions can usually reverse unintended or malicious transactions if they are caught within a few days.

A federal grand jury on Monday indicted a Casper, Wyo., couple on charges of bankruptcy fraud, the Casper Star Tribune reported today. The IRS alleged James Edward Knight II and Ashley Elizabeth Knight lied on an application for chapter 7 bankruptcy in an attempt to avoid paying back taxes, at least some of which were related to the couple’s failed business, Ikon Welding. The IRS said that although the two claimed in bankruptcy court in September 2015 that they owned no businesses and had no bank accounts, Ashley Knight had used a bank account for a company called Superior Fabrication in late 2014. James Knight claimed ownership of Superior Fabrication on a job application in March 2015, IRS investigators said.

Three former executives at Transmar Commodity Group Ltd have been charged with defrauding banks to win a $400 million credit line for their now bankrupt New Jersey-based cocoa trading company, federal prosecutors said yesterday, Reuters reported. Peter G. Johnson, who was Transmar's chief executive; his son Peter B. Johnson, who oversaw Transmar's Euromar Commodities affiliate; and Thomas Reich, the former finance vice president, were each charged with bank fraud, wire fraud affecting a financial institution and conspiracy to commit fraud. Transmar, a Morristown, New Jersey-based unit of Transmar Group Ltd, had sold cocoa products to chocolate makers such as Hershey Co and Nestle SA prior to filing for chapter 11 protection last Dec. 31. Prosecutors accused the defendants of "lying repeatedly" from 2014 to December 2016 by giving banks false "borrowing base" reports that inflated the amount of collateral Transmar had to support its borrowings. Transmar owed the banks roughly $360 million at the time of the bankruptcy, prosecutors said.