%1

More than half of investors' funds have been recovered nearly four years after Bernard Madoff's arrest for running the biggest Ponzi scheme ever, the Wall Street Journal reported today. Trustee Irving Picard said Monday that he recovered, or reached deals to recover, more than $9.2 billion of the $17.3 billion in principal that investors lost as a result of Madoff's scheme, which landed him a 150-year prison sentence. Picard said that he collected $115.3 million by settling 18 cases between April 1 and Sept. 30. During that six-month period, Picard paid about $2.5 billion to Mr. Madoff's investors, bringing the total compensation they have received to $3.7 billion.

Peregrine Financial Group's former chief executive, who confessed to bilking customers of his futures brokerage out of more than $100 million, will likely be sentenced in the first part of next year, the U.S. Attorney's Office said yesterday, according to a Reuters report. Peregrine Financial filed for bankruptcy on July 10, a day after then-Chief Executive Russell Wasendorf Sr. attempted suicide and confessed to stealing from customers for nearly 20 years. Wasendorf was arrested on July 13 and in September pleaded guilty to mail fraud, lying to regulators and embezzling customer funds, crimes that could send him to prison for as many as 50 years.

Federal prosecutors say a former upstate New York man has been sentenced to more than two years in prison and will be required to make restitution for bankruptcy fraud, the Associated Press reported today. Authorities say that Kennedy J. Hyde was convicted by a federal jury in April, found guilty of filing for bankruptcy protection in 2008 while concealing $50,000 from the court in an Ohio bank. Prosecutors also say that Hyde claimed in his bankruptcy petition to reside in Oneonta, N.Y., when he actually lived in Ohio. U.S. District Court Judge Norman Mordue sentenced Hyde to 27 months, with the court deferring the precise restitution amount until gathering more information.

Societe Generale SA, Royal Bank of Canada, and Bank of America Corp. are among nine additional banks that were subpoenaed in New York and Connecticut’s probe of alleged manipulation of the London interbank offered rate (Libor), Bloomberg News reported yesterday. The subpoenas, issued by New York Attorney General Eric Schneiderman starting in August, bring to 16 the total number of banks that have been subpoenaed in the states’ investigation. Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating claims that banks rigged the Libor, a worldwide benchmark for borrowing. Florida Attorney General Pam Bondi has also issued subpoenas to more than a dozen financial institutions, including UBS AG, Deutsche Bank AG and HSBC Holdings Plc.

Two accountants accused of helping R. Allen Stanford swindle investors in a $7 billion Ponzi scheme are set to begin the last criminal trial stemming from the plot, Bloomberg News reported yesterday. Stanford Financial Group Co. Chief Accounting Officer Gilbert Lopez and Global Controller Mark Kuhrt face 10 counts of wire fraud and one count of conspiracy to commit wire fraud, which could send them to prison for more than 20 years if convicted by a jury. The men pleaded not guilty when they were indicted with the Texas financier in June 2009.

JPMorgan Chase & Co., Bank of America Corp. and 10 other lenders were sued by a group of U.S. homeowners who claim the banks conspired to manipulate the benchmark Libor rate, driving up the cost of mortgage loans, Bloomberg News reported yesterday. Libor, or the London interbank offered rate, is based on a British Bankers’ Association-commissioned daily survey that asks lenders to estimate how much it would cost to borrow money from each other for various periods in 10 different currencies. The figures are used to set interest rates for more than $300 trillion of securities and loans worldwide. The homeowners’ complaint, filed in federal court in Manhattan earlier this month, is one of several class action lawsuits seeking to hold banks responsible for the alleged manipulation of the rate used as a borrowing-cost benchmark. "Defendants' anticompetitive conduct had severe adverse consequences on the plaintiffs by increasing the interest rate charged on their LIBOR-based loans and causing them to suffer financial losses," the borrowers said in the Oct. 4 complaint. The lenders’ alleged conspiracy from January 2000 to February 2009 violated U.S. racketeering laws, the homeowners said.

Charges filed by the Justice Department last week accuse two former brokers at the New York office of Linkbrokers Derivatives, Marek Leszczynski and Benjamin Chouchane, of securities fraud and conspiracy for secretly adding a few pennies to the cost of securities trades processed by the firm to generate $18.7 million in gains, the New York Times DealBook blog reported yesterday. A sales trader and middle-office assistant at the firm, Henry A. Condron, entered a guilty plea and is cooperating in the government's case. The Securities and Exchange Commission also filed civil charges against the three men, and added another broker as a defendant who was not named in the criminal case.

Five longtime employees of Bernard Madoff's former investment firm face more charges related to the jailed con man's Ponzi scheme, which the government claims got its start in the 1970s, Bloomberg News reported today. U.S. Attorney Preet Bharara yesterday released a revised indictment expanding the charges against former Madoff employees Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez. The indictment adds to the 17 criminal counts filed against the former employees in November 2010, for a total of 33 counts.

The ink was barely dry on the government’s $25 billion mortgage settlement with the nation’s biggest banks earlier this year when scam artists seized on the opportunity, the Washington Post reported today. In Alabama, struggling homeowners received calls promising them cash payments from the settlement, if only they would provide the routing number to their bank accounts. In Illinois, homeowners were told they qualified under the settlement for a loan refinancing, but only after they paid a hefty upfront fee. In California, the attorney general herself received a call claiming that she was eligible for aid from the settlement. Illinois Attorney General Lisa Madigan said her office has seen an “explosion” in such scams since the bottom fell out of the housing boom in 2006. State and federal authorities have stepped up efforts to curb mortgage-related crimes. They have hired more investigators and created special task forces. They have ramped up efforts to alert the public to scams. They have held mortgage fraud summits in hard-hit states such as California, Nevada and Florida, and have supported laws to ban the practice of demanding upfront fees from consumers. Authorities have filed hundreds of lawsuits and sent out thousands of cease-and-desist orders to shady businesses.

John N. Beck II, a marketer of so-called get-rich-quick systems, filed for bankruptcy protection after a federal court imposed a lifetime ban that put him out of the infomercial and telemarketing businesses, Bloomberg News reported yesterday. Beck listed assets of as much as $10 million and debt of as much as $500 million in chapter 11 documents filed yesterday. A court ordered Beck and other marketers of three systems including "John Beck's Free & Clear Real Estate System" to pay $478 million for deceiving close to 1 million consumers, the Federal Trade Commission said in an Aug. 23 statement. "The court found that despite the marketers’ easy-money claims for the systems, which cost $39.95 each, nearly all the consumers who bought them lost money," the FTC said.