Articles Posted in Fraud

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Illegal sales practices: Wells Fargo To Settle

Wells Fargo & Co. has agreed to pay $185 million to settle federal regulators’ investigation for illegal sales practices.  The bank acknowledged that it pushed employees to open as many as 2 million accounts without customers’ approval.  As a result of the scandal, Wells Fargo said, effective January 1, 2017, it would eliminate any sales goals for credit cards, checking accounts and other retail banking products.

The bank’s CEO, John Stumpf, who is set to testify before the Senate Banking Committee on September 19, said he takes responsibility for the improper sales tactics. He indicated that the bank now has improved its training programs and supervision.  The bank also indicated that the employees involved in the improper sales practices were low-level employees and the practices were not intended to increase bank profits.

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The headlines are full of stories of identity theft and investment fraud.  There are steps you can take to keep from being an easy target.

  • Guard your Social Security number! Memorize the number and don’t carry your Social Security card unless you know you are going to need it (for example, it’s your first day at a new job and the employer will want to make a copy of it.)
  • Just Say No. Don’t give your Social Security number to everyone who asks. If you have private insurance, doctors, dentists, laboratories, and other healthcare providers generally do not need your Social Security number to process your claim – they should only need your insurance information. If the medical provider asks for it, ask why they want it and what happens if you don’t want to give it. Be prudent in deciding whether to give it to them. Similarly, public schools, summer camps, and frequent shopper cards often request Social Security numbers, but if the number isn’t required to enroll in those programs, you shouldn’t give it.  For more information, review the Social Security Administration’s pamphlet Identity Theft and Your Social Security Number.
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West Palm Beach False Claims Act | IRS Phone Fraud

FINRA recently released an Investor Alert, entitled Tools of the Fraud Trade: Phones and Emotions, warning seniors and other investors about a new IRS impersonation scam.

The basic scam involves a very aggressive and authoritative caller who tells the victim that he or she owes back taxes and proceeds to demand immediate payment of taxes by credit card or other electronic payment.  These demands may be accompanied by threats of prosecution if the victim doesn’t pay.  The fraudster may use a fake badge number, may use personal information about the victim found on the internet, and may have a fake caller ID number intended to link the call to the IRS in some way.  These lies are intended to build up the fraudster’s credibility, in order to get the victim to let his or her guard down.

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The Department of Justice announced that high-ranking officials of the governing body for soccer worldwide – referred to as “football” outside of the United States – the Fédération Internationale de Football Association (“FIFA”), and others have been charged with racketeering, wire fraud, money laundering, and bribery.  According to the Justice Department, the soccer officials allegedly conspired to solicit and receive in excess of $150 million in bribes and kickbacks from sports marketing executives and others in return for their official support.  The alleged kickbacks relate to the commercialization of the media and marketing rights for various soccer events including, FIFA World Cup qualifying matches, the CONCACAF Gold Cup, and the CONCACAF Champions League, as well as the sponsorship of the Brazilian national soccer federation by a major U.S. sportswear company.

FIFA is comprised of more than 200 member associations globally, each representing a particular nation or territory, including the United States and four U.S. territories overseas.  Six continental confederations assist FIFA in governing soccer in different regions of the world.  The U.S. Soccer Federation is a member of a group of 41 associations known as CONCACAF which stands for the Confederation of North, Central America and Caribbean Association Football and is headquartered in Miami, Florida.  Other CONCACAF member nations include Canada, Mexico, Jamaica, Cuba and the Bahamas.

The Justice Department alleges that 14 defendants, including two current FIFA vice-presidents and the current and former presidents of CONCACAF, have participated in a 24-year scheme of corruption and bribery.  Swiss authorities arrested seven of the defendants in Zurich at the request of the United States, Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel, and Jose Maria Marin.  In addition, the Department of Justice announced that four individuals and two companies have already pleaded guilty they include Charles Blazer, the former general secretary of CONCACAF, and Jose Hawilla, the owner and founder of Traffic Group, a multinational sports marketing group based in Brazil.

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According to the Department of Justice, rating agency Standard & Poor’s Financial Services, LLC (“S&P) and its parent company McGraw Hill Financial, Inc. have agreed to settle multiple lawsuits brought by the federal government, 19 states, and the District of Columbia concerning ratings S&P gave to certain mortgage securities just before the 2008 financial meltdown.  The press release issued by the Justice Department said the ratings at issue were given to residential mortgage-backed securities (“RMBS”) and collateralized debt obligations (“CDOs”) during the period 2004 to 2007.  RMBS are created when a bank or other financial institution pools together mortgage loans. CDOs pool together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

The lawsuit filed by the Justice Department in 2013 alleged that S&P had engaged in a scheme to defraud investors by knowingly inflating the credit ratings it gave to RMBS and CDOs which resulted in substantial losses to investors and ultimately contributed to the worst financial crisis since the Great Depression .  The government claimed that S&P’s rating decisions were based, in part, on its business concerns, rather than independent and objective as they were required to be.   Reportedly, lawsuits filed by Arizona, Arkansas, California, Connecticut, Colorado, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Washington, and the District of Columbia contained similar allegations.

As a part of the settlement, S&P agreed to a statement of facts that contained an admission by S&P that its ratings for CDOs were partially made based on the effect they would have on S&P’s business relationship with issuers.  It also admitted that, despite knowledge within the S&P organization in 2007 that many loans in RMBS transactions it was rating were delinquent and losses were probable, it continued to issue and confirm positive ratings.

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Aubrey Lee Price, an alleged fraudster who was missing and had been declared dead by a Florida judge last year at his wife’s request, was arrested when he was found alive and well in Brunswick, Georgia. According to CBS News, Price was pulled over for having tinted windows that were too dark. During the routine traffic stop, police learned his identity and he was arrested.

CBS News reported that Price vanished in June 2012 after sending letters to family members indicating that he was going to board a ferry in Key West, Florida and planned to take his life. In July 2012, Price was indicted by a federal grand jury on a charge that he defrauded the Montgomery Bank & Trust out of more than $21 million. The letters sent by Price shortly before his disappearance allegedly included an admission that he had created false account statements to hide between $20 and $23 million of losses in investors’ funds.

In addition, the Securities and Exchange Commission (“SEC”) claims that Price bilked approximately 115 investors in Georgia and Florida out of nearly $40 million. Previously, the SEC obtained an order freezing Price’s assets, including a working corn farm in Venezuela, according to InvestmentNews.

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The Florida Office of Financial Regulation (“FL OFR”) announced that six alleged investment fraudsters have been charged with causing $3 million in investment losses to Florida residents. According to FL OFR’s press release, the Broward County Sheriff’s Office arrested five Florida residents – Eddy Ubaldo Marin, Kenneth Saluk, Roberto Alford, Farrell Jeanty, and Peter Lanceault. In addition, a detainer was filed against a sixth individual, Christopher Fardella.

The individuals have been charged with various felony counts including: violation of the Florida Racketeer Influenced Corrupt Organizations Act; violation of the Florida Securities and Investor Protection Act; grand theft; sales of unregistered securities; and sales of securities by an unregistered dealer, associated person or issuer. The Florida Securities and Investor Protection Act allows for the recovery of triple the amount of damages.

According to FL OFR, a joint investigation by the Broward Sheriff’s Office and FL OFR, discovered that the individuals were selling securities in various companies through an entity known as FMN Holdings, LLC. However, according to law enforcement, neither FMN Holdings nor the individuals were licensed to promote or sell securities in the State of Florida to Florida residents.

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The U.S. Attorney’s Office for the Southern District of Florida announced that one Palm Beach and four Broward County residents have been charged with securities fraud in four separate cases involving micro-cap stocks.

Ft. Lauderdale resident, Jack Freedman, is charged with securities fraud in connection with Green Planet Group, Inc. (symbol: GNPG). Specifically, Freedman, a stock promoter, is charged with manipulating the quoted share priced and trading volume of GNPG common stock. According to Yahoo Finance, Green Planet engages in the production and distribution of fuel-based energy conservation and clean-air products.

Richard Green of Davie and Peter Santamaria of Coconut Creek are charged with conspiring to commit securities fraud in connection with stock in VDO-PH International. (symbol: VDPH). The government alleges that Green and Santamaria engaged in a scheme to manipulate the publicly quoted share price and trading volume of VDPH. According to the Securities and Exchange Commission, VDPH purports to be a software development company.

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In honor of Consumer Awareness Week, the Florida Department of Financial Services has added new financial education resources on its website. The OnDemand Library includes short educational videos on a variety of financial and insurance topics. The videos include explanatory materials on such topics as identity theft, annuities, trust mills, and reverse mortgages. In addition, a new video concerning business identity theft aims to help small business owners from becoming a victim of this growing trend.

Florida’s Chief Financial Officer, Jeff Atwater, has additional financial resources on his website at

On Guard for Seniors focuses specifically on financial and insurance issues faced by Florida’s rapidly increasing population of seniors. It also contains tips on how to prevent becoming a victim of financial fraud.