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French authorities placed the chief of the International Monetary Fund under official investigation on Wednesday, The New York Daily News reported yesterday. Christine Lagarde is being questioned over her role in a $531 million (400 million euro) payment to business tycoon Bernard Tapie in 2008. At the time, Lagarde was the finance minister under former French President Nicolas Sarkozy, whom Tapie supported in the 2007 election. Investigators are looking into whether Tapie’s ties with the conservative politician and other top brass in the government played a role in the controversial payout that critics considered far too generous. Tapie was embroiled in a legal dispute with the now defunct, state-owned bank Credit Lyonnais over the questionable sale of Adidas in 1993. Tapie, the then-majority shareholder, sold his stake but later accused Credit Lyonnais of defrauding him by intentionally undervaluing the company. Lagarde, who has no plans to resign, has been managing director of IMF, which works toward global economic growth and stability, since July 2011.

India’s antitrust regulator fined 14 carmakers, including the local units of Honda Motor Co. and General Motors Co., a combined 25.4 billion rupees (US$420 million) for stifling competition in the market for spare parts as the industry faces similar scrutiny in China, Bloomberg reported today. The fines were equivalent to 2 percent of the carmakers’ three-year average revenue in India, according to a Competition Commission of India order dated Aug. 25. The regulator also ordered the companies to provide spare parts and diagnostic tools to independent garages, and honor warranties on cars repaired by them after markups reached as high as 4,817 percent. The Indian penalties come at a time the auto industry’s bracing for the results of a similar investigation by Chinese authorities. At least eight carmakers have recently lowered prices in response to a probe by China’s National Development and Reform Commission.

Countrywide Financial Corp. co-founder Angelo Mozilo hasn’t entirely escaped prosecutors’ wrath for his company’s risky lending, Bloomberg News reported yesterday. A U.S. government task force wielding an innovative legal strategy plans to bring a civil case against him over the excesses of the subprime-mortgage boom. The last-ditch effort comes three years after the Justice Department abandoned a criminal probe of Mozilo. In 2012, public anger over the lack of prosecutions stemming from the financial crisis spurred the Obama administration to create a team devoted to investigating fraud in mortgage-backed securities. The group has wrestled at least $20 billion from Wall Street banks using a law with a relatively low threshold for suing and a long period to bring cases. Relying on the same anti-fraud law, the Financial Institutions Reform, Recovery and Enforcement Act, the U.S. attorney’s office in Los Angeles is preparing to sue Mozilo and as many as 10 other former Countrywide employees. The case may be helped along by an imminent U.S. settlement with Bank of America Corp., which acquired Countrywide in 2008.

The federal government has ordered a chain of 31 furniture and appliance stores located near military bases to stop what it claims are misleading and deceptive sales practices, NBC.com reported yesterday. The Consumer Financial Protection Bureau announced yesterday that it had fined USA Discounters Ltd. $50,000 for tricking thousands of military customers into paying fees for legal protections they already had and for services it did not provide. “Targeting service members with scams disguised as legal benefits is unconscionable, and we will not allow this injustice to continue,” said CFPB director Richard Cordray in a statement. The privately held company based in Norfolk, Va., was also ordered to refund more than $350,000 to military customers.

The U.S. is withholding documents that might show the government sued Standard & Poor’s for $5 billion in retaliation for downgrading the country’s debt, the ratings company said, asking a court to compel the records’ production, Bloomberg News reported yesterday. A federal judge in April ruled that S&P could seek potential evidence from the Justice Department to mount a retaliation defense to U.S. claims that it gave fraudulent ratings to mortgage-backed securities. Since then the government has turned over documents with redactions ranging from the omission of a single word on a page to multiple pages, S&P said yesterday in court papers. S&P is the only credit rating company sued by the Justice Department over the claim that it gave fraudulent ratings to mortgage-backed securities. The company has said that it was singled out after it downgraded the U.S. debt in August 2011. The Justice Department and ex-U.S. Treasury Secretary Timothy Geithner denied there’s a connection between the downgrade and the suit. The U.S. may seek as much as $5 billion in civil penalties from S&P.

Lawyers for Bernard Madoff's two sons are asking a bankruptcy judge to reject the latest bid by Irving Picard, the court-appointed trustee handling the bankruptcy of Madoff's firm, to sue the Madoff brothers over their alleged role in their father's Ponzi scheme, Dow Jones Daily Bankruptcy Review reported today. Defense lawyers for Mark and Andrew Madoff in filings with the U.S. Bankruptcy Court in New York blasted Picard's latest attempt to hold the brothers accountable for their father's misdeeds, noting that the trustee "was dealt a resounding defeat" in a similar lawsuit he pursued in the U.K. Amanda Remus, Picard's spokeswoman, said that the U.K. litigation "was a narrow action" brought by the liquidator of Madoff's international securities business and dealt with the brothers' liability related to specific transactions set up by their father. (Subscription required.)
http://bankruptcynews.dowjones.com/Article?an=DJFDBR0120140813ea8dmlsji…

Don’t miss Irving Picard’s keynote, “Tales from the Madoff Bankruptcy,” at ABI’s 34th Annual Midwestern Bankruptcy Institute on Oct. 16-17 in Kansas City, Mo. Click here to register: http://www.abiworld.org/MW14/index.htm

A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending, the New York Times DealBook Blog reported today. That investigation culminated yesterday with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers. In the indictment, prosecutors outline how Brown assembled “a payday syndicate” that controlled every facet of the loan process — from extending the loans to processing payments to collecting from borrowers behind on their bills. The authorities argue that Brown, along with Ronald Beaver, who was the chief operating officer for several companies within the syndicate, and Joanna Temple, who provided legal advice, “carefully crafted their corporate entities to obscure ownership and secure increasing profits.”

In a setback for the trustee seeking money for former customers of fraudster Bernard Madoff, a U.S. appeals court refused to void two settlements benefiting investors who sued "feeder funds" that sent their money to Madoff, Reuters reported on Saturday. Friday's unanimous decision by a three-judge panel of the U.S. Court of Appeals for the Second Circuit left intact a $410 million settlement with J. Ezra Merkin, a Wall Street hedge fund manager who oversaw the Ariel Fund Ltd and Gabriel Capital LP, and an $80 million settlement with Fairfield Greenwich Ltd. The Merkin settlement had been negotiated by New York Attorney General Eric Schneiderman and also resolved claims by Bart Schwartz, the receiver of the Ariel and Gabriel funds. Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, claimed the settlements impeded his ability to recoup fraudulent transfers that Madoff made to Merkin and Fairfield, and which belong to the firm's estate. Writing for the appeals court, however, Circuit Judge Robert Sack said Picard "is incapable of establishing either that the settlements would in fact have an immediate adverse economic consequence for the BLMIS estate, or that the estate is likely to suffer irreparable harm" if the settlements go ahead.
http://www.reuters.com/article/2014/08/08/us-madoff-feederfunds-idUSKBN…

Don’t miss Irving Picard’s keynote, “Tales from the Madoff Bankruptcy,” at ABI’s 34th Annual Midwestern Bankruptcy Institute on Oct. 16-17 in Kansas City, Mo. Click here to register: http://www.abiworld.org/MW14/index.htm

Bankruptcy Judge Sandra Klein recommended jail time for Girls Gone Wild founder Joe Francis after he failed to turn over luxury cars owned by Girls Gone Wild to the lawyers who are handling the bankruptcy of the porn business, the Wall Street Journal. The Girls Gone Wild brand, whose low-budget, late night commercials advertised topless coeds on spring break, was sold to new owners earlier this year. Francis said that he can’t return the vehicles, a 2007 Cadillac Escalade and a 2012 Bentley Flying Spur, because a strip-club owner in Mexico — angry that several Girls Gone Wild promotions fell through — took them, according to court papers. Judge Klein didn’t buy that argument and last month decided to fine him $5,000 a day until the vehicles are returned.

A U.S. financial regulator could upend the business model of law firms that file waves of cookie-cutter lawsuits to collect money from people who haven't paid their bills, the Wall Street Journal reported yesterday. The U.S. Consumer Financial Protection Bureau last month filed its first lawsuit against a debt-collection firm, Marietta, Ga.-based Frederick J. Hanna & Associates, accusing it of violating federal consumer-protection laws. The suit could signal the regulator's intent to target similar high-volume law firms over allegations that debt-collection claims can be out of date, incorrect in their amounts, lacking in documentary support or overlapping with claims filed against the same debtors. The CFPB's case accused Hanna & Associates of churning out more than 350,000 credit card collection complaints against consumers, some of whom may in fact owe nothing or owe less than is claimed. Lawyers for the firm typically spend less than a minute reviewing each suit, the CFPB alleged. Roughly 77 million Americans have debt in collections, according to a recent study published by the Washington, D.C., think tank Urban Institute. The vast majority of borrowers sued in such cases don't appear in court, so many cases end in a default judgment allowing the collector to garnish wages, freeze bank accounts or put a lien on property.