STANFORD BAIL ORDER REVOKED

FROM THE HOUSTON CHRONICLE

reprinted as fair use

by Kristen Hays

R. Allen Stanford won't trade his orange prison-issue jumpsuit for street clothes anytime soon, a judge ruled Tuesday.

Senior U.S. District Judge David Hittner revoked a magistrate's order granting Stanford's release on bail.

Stanford, 59, faces 21 counts of conspiracy, fraud, bribery and obstruction of justice. He's accused of helping bilk investors in a $7 billion fraud centered on certificates of deposit issued by an offshore bank that was part of his fallen global empire, Houston-based Stanford Financial Group.

His lawyer, Dick DeGuerin, said he will appeal Hittner's decision to the 5th U.S. Circuit Court of Appeals. “We are very disappointed,” DeGuerin said.

Justice Department spokesman Ian McCaleb said prosecutors “believe the judge made the correct ruling today.”

A Houston grand jury indicted Stanford and four others in the alleged scheme, including a former top regulator in the Caribbean nation of Antigua and Barbuda where Stanford International Bank is located. A sixth defendant was indicted in Miami, accused of destroying records.

A separate criminal charge in Houston accuses James Davis, Stanford Financial Group's former chief financial officer, of conspiracy and fraud. His lawyer has said Davis is cooperating with prosecutors. Davis is scheduled to make a first court appearance later this month.

While the others named in the Texas indictment are free pending trial, prosecutors argued that Stanford is a flight risk because he hasn't lived in the U.S. for 15 years, has international contacts, has access to significant cash from others and has a motive to disappear because he faces decades in prison if convicted.

DeGuerin argued in vain for Hittner to uphold U.S. Magistrate Judge Frances Stacy's order last week that Stanford be released on $500,000 bond, noting his client's repeated — and rebuffed — efforts to turn himself in to federal authorities before he was indicted June 18.

But Hittner sided with the government, noting in his order that Stanford's professed ties to Houston “are tenuous at best and of recent vintage,” established only when the frequent world traveler and Caribbean resident realized authorities were closing in and a criminal trial was looming.

“Although he claims his children are moving to Houston, that, too, is only due to Stanford's impending trial in Houston,” Hittner wrote.

He also noted that prosecutors presented evidence of a bank account known only to Stanford and Davis, his chief financial officer, from which $100 million was withdrawn in late 2008 as the Securities and Exchange Commission was investigating.

DeGuerin argued that Stanford, identified by Forbes last year as the 205th richest American with a net worth of more than $2 billion, is penniless since his assets were frozen in February when the SEC filed civil charges that he and others ran a “massive Ponzi scheme” within his financial empire.

However, prosecutors suggested the withdrawals from the bank account, as well as $36,000 paid up front for a year's rent by a friend of Stanford's daughter, illustrate his access to cash.

STANFORD DENIED BAIL

reprinted from Houston Bizjournal

as fair use

Judge orders Stanford in jail until trial

Houston Business Journal - by Greg Barr Senior Reporter

R. Allen Stanford

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A federal judge on Tuesday revoked a prior order to release R. Allen Stanford on bail and ordered that he remain behind bars pending his trial on conspiracy and fraud charges.

U.S. District Judge David Hittner had weighed arguments presented June 29 by prosecutors, who said the beleaguered Houston financier accused of masterminding a $7 billion Ponzi scheme was a flight risk, as well as admonitions by his defense attorney countering those claims.

Taking into account the evidence against Stanford, the nature of the charges, the severity of the proposed punishment and other factors, Hittner wrote in his decision to revoke a June 25 magistrate’s decision to grant Stanford’s release on $500,000 bail that it is “sufficient to weigh in favor of detention” and that he poses a “significant risk to flee the court’s jurisdiction prior to trial.”

The judge said Stanford’s family ties to Houston are “tenuous at best and of recent vintage,” noting that it was only when it became clear that an indictment would be returned against him that he began making living arrangements in Houston, and that he was found in Virginia when the indictments were handed down.

“Moreover Stanford’s longtime residence in Antigua and his frequent travels across the globe and to multiple foreign countries belie his contention that he has strong ties to Houston,” the judge wrote.

Stanford surrendered his Antigua-Barbua passport to federal authorities on June 29, according to a court filing, but a second expired passport issued from Antigua has yet to be accounted for.

According to a Reuters report, Stanford attorney Dick DeGuerin said he would appeal the decision to the Fifth Circuit Court of Appeals.

Stanford, 59, faces 21 counts of conspiracy, fraud, bribery and obstruction of justice and remains behind bars pending Hittner’s decision. Five other former associates face similar charges for participating in an alleged Ponzi scheme that prosecutors said involved the sale of $7 billion worth of certificates of deposit. Stanford pleaded not guilty to the charges.

Trial has been set for Aug. 25.

MADOFF - WHO'S NEXT?

MADOFF - WHO'S NEXT? THE NEW YORK TIMES OUTLINES THE OTHER PLAYERS

reprinted as fair use

Here is a look at the status of other crucial people involved in the Bernard L. Madoff case.

Family

Mr. Madoff's family members are all facing at least one private lawsuit, but none have been cited by prosecutors or regulators.

Person	Relationship	Status or Legal Situation
Ruth Madoff Peter Madoff Mark Madoff Andrew Madoff Shana Madoff	Wife Brother Son Son Niece	None have been cited by prosecutors or regulators. All face at least one private lawsuit. Peter Madoff faces at least five lawsuits. Ruth Madoff has given up claims to all but $2.5 million in family assets.

Senior Staff and Associates

Two of Mr. Madoff's senior staff members or associates have been sued by the S.E.C. and one is facing criminal charges.

Person	Relationship	Status or Legal Situation
Frank DiPascali	Chief of staff for investment accounts	No action by prosecutors. Named in at least two private lawsuits.
Annette Bongiorno	Madoff employee	No action by prosecutors.
Maurice "Sonny" Cohn	Co-founder with Mr. Madoff of Cohmad Securities	Sued by the Securities and Exchange Commission. Sued by the Madoff bankruptcy trustee over the firm's dealings with Mr. Madoff.
David Friehling	Outside C.P.A. for Madoff firm	Facing criminal fraud charges in federal court in New York. Sued by S.E.C.

Major Investors

A handful of investors and companies that worked closely with Mr. Madoff are being sued, while others have settled out of court.

Person	Relationship	Status or Legal Situation
Fairfield Greenwich	Founded by Walter Noel and Jeffrey Tucker	Sued in a civil fraud complaint by Massachusetts regulators. Sued by the Madoff trustee over $3.5 billion withdrawn from Madoff accounts. A defendant in at least seven private lawsuits.
J. Ezra Merkin	Founder of the Ascot Partners feeder fund	Sued by New York's attorney general, Andrew M. Cuomo. Sued by New York University and at least five other plaintiffs.
Stanley Chais	Founder of three partnerships that invested with Mr. Madoff	Sued by S.E.C. Sued by Madoff trustee over $1 billion withdrawn from Madoff accounts. Named in at least eight other plaintiffs' lawsuits.
Jeffry Picower	Investor and philanthropist	Shut down his Picower Foundation in December 2008, citing Madoff losses. Sued by the Madoff trustee over $5.1 billion withdrawn from Madoff accounts.
Tremont Funds	Robert Shulman, co-founder	Sued by at least 12 plaintiffs who invested with Mr. Madoff's company through their funds.
Maxam Capital Management	Sandra L. Manzke, founder	Sued by at least 12 plaintiffs who invested with Mr. Madoff.
Bank Medici	Sonja Kohn, founder	Austrian regulators have taken control of the bank. Court exhibits in lawsuits against Cohmad Securities show Ms. Kohn as a recipient of commissions from Mr. Madoff, which she denies. Named in at least three plaintiffs' lawsuits.
Banco Santander	Sponsored two hedge funds that invested with Mr. Madoff	Paid $235 million to settle with Madoff trustee over affiliated fund's withdrawals. Named in at least one lawsuit.
Kingate fund managers	Ran hedge funds that invested with Mr. Madoff	Sued by Madoff trustee for return of $255 million withdrawn in late 2008. Sued by at least one private investor.

NEW FINANCIAL ADVISOR? CHECK HIM OUT

In the wake of the Bernard Madoff scandal, the advice "Know who you give your money to" is certainly worth restating. Granted, a lot of people who gave money to Madoff knew him well, and clearly didn't a Ponzi, but a little home work can still go a long way.

The website http://www.finra.org/index.htm is a good first stop.

Managed by the Financial Industry Regulation Agency, you can run a "broker check" which will list the qualifications, licenses, registrations and exams that the person you are dealing with has passed.

You can also find a broker's employment history for the last 10 years.

While the disclosure section points to problems that a broker may have had in the past.

JUDGE HANDS OUT 150 TO BERNARD MADOFF

In a packed federal courtroom in lower Manhattan this morning, US District Judge Denny Chin sentenced convicted master-fraudster Bernard Madoff to 150 years in prison.

Worth noting is the Judge's reasons for the maximum sentence allowed: "Objectively speaking, the fraud was staggering and the breach of trust was massive."

He described Madoff's crimes as "extraordinarily evil," adding that Madoff's was "not merely a bloodless crime that takes place on paper but one that takes a staggering human toll."

The Judge concluded, "No other white collar case is comparable in terms of the scope, duration and enormity of the fraud and the degree of the betrayal."

STANFORD - ANOTHER NIGHT IN JAIL

Prosecutors in Houston argued today that Allen Stanford holds Antiguan citizenship, that he didn't confess right away to holding an Antiguan passport, that he may have access to hidden vast wealth and is therefore a flight risk. The judge hearing an appeal on the $500,000 bond set Friday against the alleged $7 billion Ponzi schemer, has kept Stanford in jail for another night. The case continues tomorrow.

CNN on Bernie Madoff - Sentencing Tomorrow

CNN ON BERNIE MADOFF

SENTENCING TOMORROW

reprinted as fair use

By Aaron Smith, CNNMoney.com staff writer


Bernard and Ruth Madoff have been stripped of their vast riches.

The government announced Friday night that it had seized all of Bernard Madoff's property in a deal that also forces his wife to give up homes and property worth millions.

Federal prosecutors obtained a $170 billion legal judgment against Madoff.

Madoff, 71, masterminded the largest and most sweeping Ponzi scheme ever, and now faces the possibility of spending the rest of his natural life in prison.

Madoff is scheduled to be sentenced on Monday morning in a federal court in Manhattan.

On Friday, prosecutors urged U.S. District Judge Denny Chin to hand out the full possible sentence of 150 years. Earlier in the week, Madoff argued in court papers that he should be sentenced to a term of as little as 12 years.

The court papers released Friday night indicate that Bernard and Ruth Madoff will give up any claim on nearly $80 million worth of property.

These include $60 million and three homes: A Manhattan apartment valued at $7.5 million, a $7 million house in Montauk, N.Y., and a $7.45 million home in Palm Beach, Fla.

In addition, the government will get $1.48 million from the sale of a Madoff home in Cap d'Antibes, France, as well as furniture, artwork, jewelry other items. The Madoffs will also lose their interest in "tens of millions of dollars" in loans they had made to family, employees and friends.

Madoff confessed on March 12 to a scam that stole billions of dollars from thousands of victims. He used his investment firm, Bernard L. Madoff Securities, which he founded in 1960, as a front.

In a Ponzi scheme, the scammer uses fresh money from unsuspecting investors to make payments to more mature investors, creating the false appearance of legitimate returns. In Madoff's case, he sent statements to victims claiming that their investments had grown several times over, but in actuality he had stolen, not invested, their money.

Investigators said that Madoff maintained an aura of exclusivity, while his alleged accomplices courted new investors because they needed a constant influx of fresh funds. Investigators believe that Madoff had been running his scam since at least the 1980s until he finally ran out of money in December 2008, when he admitted the fraud to family members.

Sentence: 150 years, or 12?

Madoff pleaded guilty to 11 criminal counts, including fraud, money laundering, perjury, false filing with the Securities and Exchange Commission, and other crimes. Prosecutors with the U.S. Attorney's office in New York requested the maximum sentence of 150 years, based on the number of victims, the amount of money he stole and the extent of the damage he caused.

Many of his victims were wiped out financially by the scam and they have sent letters to the judge requesting a life sentence.

But Madoff's lawyer Ira Lee Sorkin requested a 12-year sentence. Sorkin explained, in his letter to the judge, that his septuagenarian client isn't likely to outlive the sentence by more than a year.

"Mr. Madoff is currently 71 years old and has an approximate life expectancy of 13 years," wrote Sorkin. "A prison term of 12 years -- just short of an effective life sentence -- will sufficiently address the goals of deterrence, protecting the public and promoting respect for the law."

In his letter, Sorkin described Madoff as "non-violent," noted his "voluntary surrender" to authorities and complained about the "desire for a type of mob vengeance" in the victims' impact letters.

Compensating the victims

Thus far, federal investigators have identified 1,341 investors in Madoff's firm, with losses exceeding $13 billion. They're still tallying the damage.

A group of victims sent the judge a 141-page collection of letters detailing the extent of damage that Madoff had inflicted on them. Many of the victims said they had banked their life savings with Madoff's firm and they were ruined as a result of his scam.

Eleven of the letter-writers requested, and were granted, the right to speak in court on Monday.

There are two ways for victims to get compensated, or at least partially compensated, for their losses: through seized assets and through the Securities Investor Protection Corporation, an organization that shields investors in brokerage firms.

Many of the Madoffs' other assets have been seized as well, including a home in Palm Beach, Fla., an $800,000 yacht named The Bull, and a legitimate investment firm that Madoff kept separate from the scheme. The value of these and other assets will eventually be used to compensate victims, based on how much they invested in Madoff's firm.

Also, SIPC will pay up to $500,000 for any eligible claimant who lost money to Madoff, based on how much they put in. This coverage comes from dues paid by brokerage firms.

Some victims are unhappy with this system. Joe Stewart of Las Vegas explained, in a written statement to CNNMoney.com, that as an indirect investor he is not covered by SIPC. Another victim, Dana Foy of Jemez, N.M., complained that SIPC will only compensate him for the $150,000 he invested in the firm, not the $600,000 that the firm told him his investments were worth.

"In any other Ponzi scheme, the rule is [that] cash in, minus the cash [that the investor took] out, is going to be the value of your claim," said SIPC Chief Executive Steve Harbeck to CNNMoney.com.

Harbeck said that indirect investors who unknowingly gave their money to Madoff through a separate firm aren't necessarily barred from compensation, depending on their particular case. "There are very few things in law that are black and white," he said.

Harbeck said that victims have until July 2 to file a claim with U.S. Bankruptcy Court in New York.

Madoff's next home

For three months since his December arrest, Madoff managed to avoid jail by posting $10 million worth of bail. He spent the time under house arrest, ensconced in his Manhattan apartment.

But since his confession in March, he has been incarcerated in the Metropolitan Correctional Center in lower Manhattan, a holding facility for convicts awaiting sentencing. This has given him a taste of life behind bars.

Once he is sentenced, he will probably be transferred to a medium-security federal prison, according to prison consultants. Madoff's status as a non-violent offender should keep him out of maximum-security, consultants said. But they added that the massive scale of his crimes and his hefty sentence would make him ineligible for a low-security prison or a minimum-security prison camp, which inmates usually prefer because of safety, fewer restrictions and better quality of life.

In a medium-security prison, he would live in a cell, separated from the outer world by double layers of razor wire fencing with electronic detection systems, according to the Federal Bureau of Prisons. He would have to work a menial job, possibly in a kitchen or laundry room, for 12 to 40 cents an hour.

The BOP will have the final say as to where Madoff will serve his sentence. BOP spokeswoman Felicia Ponce said they try to place inmates within 500 miles of their families.

Keeping that in mind, Alan Ellis, attorney and author of the "Federal Prison Guidebook," believes that Madoff will probably get sent to Federal Correctional Institute Otisville or FCI Ray Brook, both in upstate New York, FCI Fairton in New Jersey or FCI McKean in Pennsylvania.

Madoff will have to learn how to survive in the medium-security environment, where there are many violent offenders, according to prison consultants.

"There will be people who think that Bernie can give them stock tips, but I don't see anyone being his big pal," said Larry Levine, founder of Wall Street Prison Consultants who served 10 years for his ties to organized crime. "I believe he'll be treated like an outcast."

TheFraudReport on Twitter

CHECK OUT THEFRAUDREPORT ON TWITTER

http://twitter.com/thefraudreport

Identity Theft, Document Fraud and Illegal Employment

from

The Center for Immigration Studies

reprinted as fair use



In May of this year, a Supreme Court decision severely impeded the use of identity theft charges as an immigration enforcement tool. In June, several people were arrested after a fraud scheme was uncovered at a Florida driver's license bureau. In July, a new Utah law targeting illegal aliens and document fraud will take effect. As these examples show, illegal immigration is inherently tied to document fraud and identity theft. As states continue to search for answers, it is apparent that the Federal government has not yet found a working legislative solution to deter these crimes.

A new Backgrounder by the Center for Immigration Studies considers how illegal aliens perpetrate document fraud and identity theft, the effects on the victims of this crime, as well as some proposals to deter it. "Illegal, but Not Undocumented: Identity Theft, Document Fraud and Illegal Employment," is written by Ronald Mortensen, PhD, a retired career U.S. Foreign Service Officer and former Society for Human Resource Management senior executive. The Backgrounder is available online at: http://www.cis.org/identitytheft.

The findings include:

* Illegal immigrants are not "undocumented." They have fraudulent documents such as counterfeit Social Security cards, forged drivers licenses, fake "green cards," and phony birth certificates. Experts suggest that approximately 75 percent of working-age illegal aliens use fraudulent Social Security cards to obtain employment.

* Most (98 percent) Social Security number (SSN) thieves use their own names with stolen numbers. The federal E-Verify program, now mandated in only 14 states, can detect this fraud. Universal, mandatory use of E-Verify would curb this and stop virtually 100 percent of child identity theft.

* Illegal immigration and high levels of identity theft go hand-in-hand. States with the most illegal immigration also have high levels of job-related identity theft. In Arizona, 33 percent or all identity theft is job-related (as opposed to identity theft motivated simply by profit). In Texas it is 27 percent; in New Mexico, 23 percent; in Colorado, 22 percent; California, 20 percent; and in Nevada, 16 percent. Eight of the 10 states with the highest percentage of illegal aliens in their total population are among the top 10 states in identity theft (Arizona, California, Florida, Texas, Nevada, New York, Georgia, and Colorado).

* Children are prime targets. In Arizona, it is estimated that over one million children are victims of identity theft. In Utah, 1,626 companies were found to be paying wages to the SSNs of children on public assistance under the age of 13. These individuals suffer very real and very serious consequences in their lives.

* Illegal aliens commit felonies in order to get jobs. Illegal aliens, who use fraudulent documents, perjure themselves on I-9 forms, and commit identity theft in order to get jobs are committing serious offenses and are not "law abiding."

* Illegally employed aliens send billions of dollars annually to their home countries, rather than spending it in the United States and helping stimulate the American economy. In October 2008 alone, $2.4 billion was transferred to Mexico.

* Tolerance of corruption erodes the rule of law. Corruption is a serious problem in most illegal aliens' home countries. Allowing it to flourish here paves the way for additional criminal activity and increased corruption throughout society.

* Leaders support perpetrators and ignore victims. Political, civic, religious, business, education, and media leaders blame Americans for "forcing" illegal aliens to commit document fraud and identity theft. No similar concern is expressed for the American men, women, and children whose lives are destroyed in the process.

* The Social Security Administration and Internal Revenue Service facilitate illegal immigrant-driven identity theft. Both turn a blind eye to massive SSN fraud and take no action to stop it. The Social Security Administration assigns SSNs to new-born infants that are being used illegally. The IRS demands that victims pay taxes on wages earned by illegal aliens using their stolen SSNs, while taking no action to stop the identity theft.

* State and local governments need to adopt tougher laws to supplement federal efforts. The Bureau of Immigration and Customs Enforcement (ICE) is targeting large document fraud rings and the most egregious employers, but their resources are limited and stretched across multiple priorities. In 2007, identity theft cases represented only 7 percent of the total ICE case load.

* Employers must do their part. They can ensure that they have a legal workforce by using a combination of the federal government's E-Verify and Social Security Number Verification Service systems and by signing up for the federal government's IMAGE program or privately conducted audits.

The Center for Immigration Studies is an independent research institute that examines the impact of immigration on the United States.

INSIDE FACEBOOK CLICK FRAUD

from

www.techcrunch.com

reprinted as fair use

How advertisers engage in click fraud

First, its hard to even see the ads in the first place. On search engines they are there on the parked domain page, or you see them when you type in a query. But on Facebook ads are hyper targeted to users based on deep demographic data - like single men who live in San Diego and like the Xbox and U2, for example. If you aren’t a user who fits that description on Facebook, you don’t see the ads.

So the bad guys just create thousands of fake Facebook accounts with a wide variety of demographic information. This sounds like a lot of work, but it’s highly automated. One advertiser told me how he paid $200 to an Indian operation for 2,000 Facebook accounts. Another said the going rate was just $10 per 100 accounts if you supply the unique email accounts. Once the accounts are created, they use software to fill out the varied demographic information, and that software also manages all these accounts.

The fraudster then logs in to Facebook via these accounts and views the ads that are displayed. The right competitive ads come up and Bingo, the software then clicks them. Facebook rules allow an account to click any advertisement up to six times in a 24 hour period, and all those clicks are charged. All you need is a few accounts to view the ads and then click to the max. Facebook even makes it easy to find the ads. They have an “Ad Board” that shows all ads targeted to that user (mine has 15 ads on it).

Often the fraudsters have their art down to a science and their software clicks ads so fast and moves on to the next one that it doesn’t even hang around long enough for the underlying URL to resolve. Facebook still sees (and charges for) the click, but the advertiser’s server never registers a page view. That’s what bugs advertisers the most.

Antigua puts offshore sector under scrutiny

from

www.caribbean360.com

reprinted as fair use

Offshore companies in Antigua and Barbuda are now under the scrutiny of local authorities as a consequence of the criminal charges filed against the former boss of the country's financial regulatory body over his involvement in an alleged fraud at the Stanford International Bank (SIB).

Finance Minister Harold Lovell said in an interview on Observer Radio yesterday that in addition to firing the Financial Services Regulatory Commission (FSRC) administrator and Chief Executive Officer Leroy King and temporarily replacing him with banking official Everett Christian, the Cabinet has instructed the agency to take a closer look at other businesses in the offshore sector.

"The Board has been instructed to conduct immediately, a compliance audit of all registered companies," he said. "We want to make sure that the world can see that in light of what has happened we are not simply sitting down and doing nothing. We are taking proactive steps, so that is why we have ordered the compliance audit, to ensure that there are no other situations like this."

The audit will be led by the interim FSRC CEO Christian, Country Manager of the Antigua and Barbuda Investment Bank and head of the Antigua and Barbuda Chamber of Commerce and Industry. He will hold the top position at the FSRC for six months, during which time the Board will advertise the position.

Lovell added that a public relations campaign will be created to in an effort to repair the damage caused by the development.

"We have given a directive to the Board that they should look to hire a communications consultant or public relations company in order to address this issue so that we can fight back as far as the image of Antigua and Barbuda is concerned," the Finance Minister said.

At the same time, he said, he did not believe that the situation would have much of an impact on the island's online gaming industry or its dispute with the United States on that matter.

Lovell said he is expected to meet with new US Trade Representative Ambassador Ron Kirk, who was appointed by the new Barack Obama administration, to discuss the issue soon.

"He has responded to the correspondence that I sent and indicated that he would be willing to meet with me, so we are now making arrangements through the Embassy in Washington for a
meeting to be held, as soon as possible, so that we can recommence the discussions toward finding an amicable settlement to this matter," he explained.

Meantime, there has been no indication that Antigua and Barbuda's placement on the United Kingdom's white list of countries of approved gaming jurisdictions is in jeopardy.

The UK Department of Culture, Media and Sport (DCMS) which is responsible for the law regulating gambling, has given no indication of any imminent review of the country's status, even though it said this week that all jurisdictions, including Antigua & Barbuda, are subject to continuing monitoring to ensure compliance with criteria.

The uncertainty facing Antigua and Barbuda has arisen from allegations that the former FSRC head helped investor Sir Allen Stanford carry out an alleged US$8 billion fraud at the Antigua-based SIB, by "looking the other way" as it happened. US regulators claim that King received hundreds of thousands of dollars and other gifts from Sir Allen to conduct sham audits and examinations of the Bank's books.

He is specifically charged with conspiracy to commit wire and mail fraud, conspiracy to launder illegal proceeds and conspiracy to obstruct the United States' Securities and Exchange Commission (SEC) in their investigations into Sir Allen and SIB.

STANFORD GRANTED BAIL-BUT STAYS LOCKED UP

A federal judge in Houston heard Allen Stanford's guilty plea and then, after a lengthy hearing ordered him released on a $500,000 bond, which is to include $100,000 cash. But the prosecutors objected, insisting that he is a flight risk, so judge ordered Stanford held in jail overnight until she could listen to further arguments.

STANFORD - BAIL HEARING THURSDAY

R. Allen Stanford, now formally indicted on 21 counts --- including criminal conspiracy to commit mail, wire and securities fraud in an estimated $7 billion Ponzi scam, faces a federal judge in Houston Texas on Thursday who will decide custody.

Stanford, who maintains his innocence, will ask for bail. The judge will have to decide if he is a flight risk. Granting it may entail electronic monitoring, plus a huge cash sum, which Stanford probably doesn't have, seeing as how his personal accounts have been frozen by the IRS in a $250m unpaid tax case. Denying it could see Stanford spend years in jail awaiting trial and, if convicted, never coming out.

CHECK FRAUD - Let Us Count The Ways

A Primer On Check Fraud

Noting the rise of check fraud, here's how it's being done:

Forged Signatures - Legitimate checks with illegitimate signature. Banks don’t usually verify signatures until there is a problem and need to assign liability.

Forged Endorsements - Someone has stolen your check and cashed it. Consumers need to verify their bank statements regularly.

Counterfeit Checks - Shred old checks so they cannot be scanned and used again.

Check Floating - Never deposit a check for someone else on the grounds that you then pay him/her only after the check clears. Banks credit deposits before clearance, and you are responsible for any sums withdrawn from your account.

Check Washing - Altering a legitimate check by changing the name it is payable to. Usually involves checks stolen in the mail.

MEDICAL IDENTITY THEFT

from The New York Times

reprinted as fair use

Medical Problems

Could Include Identity Theft

By WALECIA KONRAD

Brandon Sharp, a 37-year-old manager at an oil and gas company in Houston, has never had any real health problems and, luckily, he has never stepped foot in an emergency room. So imagine his surprise a few years ago when he learned he owed thousands of dollars worth of emergency-service medical bills.

Mr. Sharp, as it turned out, was a victim of a fast-growing crime known as medical identity theft.

At the time, Mr. Sharp was about to get married and buy his first home. Before applying for a mortgage he requested a copy of his credit report. That is when he found he had several collection notices under his name for emergency room visits throughout the country.

“There was even a $19,000 bill for a Life Flight air ambulance service in some remote location I’d never heard of,” said Mr. Sharp, who made this unhappy discovery in 2003. “I had emergency room bills from places like Bowling Green, Kan., where I’ve never even visited. I’m still cleaning up the mess.”

The last time federal data on the crime was collected, for a 2007 report, more than 250,000 Americans a year were victims of medical identity theft. That number has almost certainly increased since then, because of the increased use of electronic medical records systems built without extensive safeguards, said Pam Dixon, executive director of the nonprofit World Privacy Forum and author of a report on medical identity theft.

And uncountable, Ms. Dixon said, are the people who do not yet know they are victims. They may not know that their medical information has been tampered with for months or even years until, as in Mr. Sharp’s case, it shows up in collections on a credit report.

Medical identity theft takes many guises. In Mr. Sharp’s case, someone got hold of his name and Social Security number and used them to receive emergency medical services, which many hospitals are obliged to provide whether or not a person has insurance. Mr. Sharp still does not know whether he fell victim to one calamitous perp who ended up in several emergency rooms or a ring of accident-prone conspirators.

In another variant of the crime, someone can use stolen insurance information, like the basic member ID and group policy number found on insurance cards, to impersonate you — and receive everything from a routine physical to major surgery under your coverage. This is surprisingly easy to do, because many doctors and hospitals do not ask for identification beyond insurance information.

Even more common, however, are cases where medical information is stolen by insiders at a medical office. Thieves download vital personal insurance data and related information from the operation’s computerized medical records, then sell it on the black market or use it themselves to make fraudulent billing claims.

In a widely reported case in 2006, a clerk at a Cleveland Clinic branch office in Weston, Fla., downloaded the records of more than 1,100 Medicare patients and gave the information to her cousin, who in turn, made $2.8 million in bogus claims.

When people are not aware their medical identities have been stolen, insurance companies may simply continue to pay the fraudulent claims without the victim’s knowledge. The person might learn of the fraud only when trying to make a legitimate claim, and the insurance company informs them they have reached their lifetime cap on benefits.

Or victims may eventually discover erroneous information in their medical files during a doctor or hospital visit. And that may pose a bigger danger than the financial risks. The medical records may now contain vital information like blood type, allergies, prescription drug use or a history of disease that is just plain wrong. In an emergency, doctors could treat you based on this erroneous information.

And there are none of the consumer protections for medical identity theft victims that exist for traditional identity theft. Under the Fair Credit Reporting Act you can get a free copy of your credit report each year, put a fraud alert on your account and get erroneous charges deleted from your record. If your credit card is stolen and the thief goes on a spending spree, you’re not liable for more than $50 worth of the charges.

With medical identity theft, though, the fraudulent charges can remain unpaid and unresolved for years, permanently damaging your credit rating. Under the federal law known as Hipaa — the Health Insurance Portability and Accountability Act — you are entitled to a copy of your medical records, but you may have to pay a hefty fee for them.

Worse, Hipaa privacy rules can actually work against you. Once your medical information is intermingled with someone else’s, you may have trouble accessing your files. Privacy laws dictate that the thief’s medical information now contained in your records must be kept confidential, too.

Even when you are able to correct a record, say in your doctor’s office, the erroneous information may have been passed on to dozens of other health care providers and insurers. Victims must track down and resolve these errors largely on a case-by-case basis, Ms. Dixon says.

Medical providers contend that they are taking precautions against identity theft. At Cleveland Clinic, for example, security personnel routinely audit electronic medical record systems and all records are password-protected. Many Blue Cross Blue Shield insurers use software to screen for spikes in claims from providers that look suspicious. They also work with providers on encrypting medical files and carrying out data access restrictions, said Calvin Sneed, senior antifraud consultant at the Blue Cross and Blue Shield Association.

And some medical centers and doctors’ offices now require patients to show photo ID and attach photos to patient charts.

But privacy advocates worry that these steps do not go nearly far enough, especially in light of President Obama’s plans to spend $20 billion to increase the use of electronic medical records nationwide as part of the stimulus package. “Without aggressive safeguards, we could be building an infrastructure for massive medical fraud,” said Ms. Dixon.

STANFORD LIQUIDATORS FEUD

from Bloomberg reprinted as fair use
By Lindsay Fortado and Laurel Brubaker Calkins HOUSTON, USA (Bloomberg) -- Allen Stanford’s UK assets seized in a fraud probe have sparked a legal fight between court-appointed liquidators from the US and Antigua who are both seeking the right to distribute the money to creditors. Lawyers told a London court at a three-day hearing this week that that they can’t reach an agreement on which receiver should control the 120 million pounds ($198 million) held by Antigua-based Stanford International Bank in the UK. “Cooperation has been sought” with the US receiver, said Antony Zacaroli, the lawyer for the Antiguans. “It hasn’t been achieved yet.” The liquidators are also clashing in federal court in Texas over which has the authority to recover Stanford’s international assets. Stanford, the sole shareholder of Stanford Financial Group Co., was accused Feb. 17 in a US Securities and Exchange Commission lawsuit of operating an $8 billion Ponzi scheme. Stanford, 59, has denied wrongdoing. US District Judge David Godbey in Dallas froze Stanford’s corporate and personal assets and placed them under the control of Dallas receiver Ralph Janvey. Antiguan receivers Nigel Hamilton-Smith and Peter Wastell were given authority over the bank’s assets by the island government. Both receivers have issued reports stating they have located less than $1 billion in assets, far less than needed to repay the depositors. Stanford International Bank was established and incorporated in Antigua 19 years ago and is regulated by the island’s Financial Services Regulatory Commission, so the bank’s funds should be liquidated there, Zacaroli told Justice Kim Lewison Thursday at the start of the hearing. Stanford’s UK assets are all in SIB’s name, he said. “This isn’t just a receptionist, this isn’t just a person receiving post,” Zacaroli said of the bank’s Antigua office. “There were 88 employees there.” Stanford’s global operations were based in Houston and the US receiver should be responsible for distributing the bulk of his assets to creditors, said Janvey’s lawyer, Stuart Isaacs. “If you entrust the assets to the office holder who’s in charge of the group, that person can act more efficiently and more effectively for shareholders,” Isaacs said Thursday. Stanford, two associates and three affiliated companies were accused by the SEC of defrauding investors through the sale of bogus certificates of deposit by SIB. In a separate dispute, the Antiguan receiver last week asked Godbey, the Dallas judge, to delay approving a request for $20 million in legal fees by Janvey. Paying such a high fee may improperly siphon assets that could be used to repay depositors holding Stanford’s bogus certificates, the receivers said. The Antiguan receivers have asked Godbey to defer approval of Janvey’s fees until he’s ruled on their request to place SIB under Chapter 15 of the US Bankruptcy Code, a move Janvey opposes. Hamilton-Smith and Wastell seek to deal with SIB separately in bankruptcy court, leaving Janvey to handle the remaining Stanford companies through his receivership.

INSIDER THEFT/FRAUD ON THE RISE

INSIDER THEFT/FRAUD

CYBER-ARK SURVEY WARNS OF DANGERS

According to a survey conducted by security information company Cyber-Ark, the economic decline of the major Western powers coincides with an increase in the number of employees who said they would take corporate data with them if they were fired.

In the survey, w respondents were asked "What would you take with you," six times as many (47%) as in 2008 said they would take financial reports or merger and acquisition plans, and four times as many (46%) as in 2008 said they'd take CEO passwords and R&D plans.

Reduce Employee Theft

from pre-employ.com

reprinted as fair use

Reduce Employee Theft

with Increased Background Screening

by Tom Ahearn

While many employees are honest, hard working, and – in this down economy – happy to have a job, it only takes a one “bad hire” due to poor background screening to take down an entire company.

Employee theft and other illegal acts can weaken or even ruin a corporation. However employee theft is defined – fraud, pilfering, larceny, embezzlement, etc. – the end result is that businesses lose because an employee unlawfully takes something from an employer. According to the Association of Certified Fraud Examiners (ACFE), employee theft costs businesses in the U.S. $6 billion and an average of 7% of revenues annually. The ACFE's Report on Occupational Fraud and Abuse shows how costly employee theft can be and includes these facts:

• The median loss for companies caused by employee theft was $175,000.
• More than one-quarter of employee theft involved losses of at least $1 million.
• The most common employee theft was corruption (27%) and fraudulent billing (24%).
• Financial statement fraud was the most costly employee theft with a median loss of $2 million.

Since a single person can destroy a business with employee theft, pre-employment background screening gains greater importance since it reduces the risk of a bad hiring decision. The first step to preventing employee theft is to perform background screening on job applicants thoroughly before hiring them in the first place. The background screening should include at least the following:

• Social Security Number (SSN) Address Locator.
• Criminal & Civil History.
• Drug Testing.
• Driver License Violations.
• Verification of Education/References/Past Employment (including reasons for leaving).

Employers may also consider running a credit check during the background screening, since prospective employees with financial difficulties are more prone to commit employee theft. However, employers must follow federal Fair Credit Reporting Act (FCRA) guidelines for background screening that legally require employers to notify the job applicants in writing that a credit report may be requested. They also need to receive the applicant's written consent for the background screening.

Dealing with confusing federal regulations can be tricky business for employers, and can lead to legal troubles if those regulations are not followed correctly. By hiring a reputable background screening firm, businesses can protect their company from employee theft and ensure their survival during the current economic crisis.

FRAUD PREVENTION FOR THE ELDERLY

FROM: americanchronicle.com

reprinted as fair use

Top Ten Elder Fraud Prevention Methods

We all want to protect our loved ones from danger, but it's impossible to be with them every moment of the day. And unfortunate as it is, scam artists see your aging Mom or Dad as an easy target, knowing full well that elderly individuals are more likely to fall for their scams. Elder fraud often goes unreported, but it's estimated that over $40 billion is stolen from America's seniors every year (1), and, due to a lack of proper senior citizen fraud protection in place, this figure is increasing. Families and friends are fighting back and providing their loved ones with senior citizen fraud protection tips and tools to combat these elder fraud scam artists.

If it's too good to be true, then it probably is' rings true in many instances. Law enforcement agencies often remark on just how difficult it is to bring elder fraud perpetrators to justice - once an investigator has begun looking into the scheme, the scammers are already moving on to another ploy. There's just no way to catch them all, which means it's up to you to help your parents understand and implement senior citizen fraud protection tactics and be on the lookout for people who wish to do them, their property, or their savings significant harm.

How can you help your parents fight back against elder fraud? Aside from a quick lesson in senior citizen fraud protection, a handy cheat sheet by all the phones or computers in the home is often the best way to avoid these common elder fraud tricks, which include the following top ten ways to beat the bad guys.

What to Include on Your Senior Citizen Fraud Protection Cheat Sheet

1. Avoid sending money or providing personal financial information. Be cautious who you disclose your bank account, credit card, and social security numbers to. Suspicious, but realistic looking checks made out for a considerable amount of money should be an elder fraud red flag. Your parents should know that if they weren't expecting a check, it could be a fake. Tell your loved ones if they have concerns related to this type of senior citizen fraud that protection comes from asking someone they trust for help. Checks such as these are usually accompanied with directions instructing the recipient to call a phone number. The message tells the caller to send taxes on the money he or she just received through a wire transfer service. The scam, of course, is that once the recipient sends the money, their check bounces.

2. Do not speak at length with people who are unfamiliar to you - tell your parents to decline answering questions of a private matter over the phone, Internet, or at the door. Above all, the key to senior citizen fraud protection is caution. If a telemarketer who is pushing a product begins asking for too much information, tell your loved one to request the name of his or her employer, the address, and a phone number. If a caller asks to speak to the man of the house and there isn't one, tell your mother never to indicate that she lives alone.

3. Do not sign any documents without reviewing them carefully. Your loved one can often be signed up for something he or she may not be interested in and begin receiving phone calls that solicit other products. If anything appears suspect, tell your loved one to contact his or her lawyer or a trusted friend immediately. Many elder fraud con artists will pose as door-to-door salesmen and try to sell your loved one something on the spot, introducing multiple new products and a whirl of paperwork that needs to be signed now and paid for to 'secure' it. This potential elder fraud ploy is dangerous, because the friendly salesman is no longer some distant threat with no face; he appears to be knowledgeable and trustworthy. Tell your parents one of the most important senior citizen fraud protection tools available to them is not to allow anyone into the home they don't know.

4. Make sure to verify all claims. One of the newest elder fraud alerts is related to home construction or improvement, and much like any other industry, scams abound. The best senior citizen fraud protection tip in this instance is to use a well-known contractor in the area. Tell your parents to request references and contact the Better Business Bureau or the National Fraud Information Center if they're unsure. Create a contract and make sure the work is carried out to the letter; a fly-by-night scheme will probably try to talk down the contract, but if it's in writing, your loved one ultimately has more recourse. And if the contractor wants the money upfront, tell your loved one to move on to the next choice.

5. Reach out for help before investing or spending considerable amounts of money. Tell your loved one to call you with questions about any investment that involves a significant transfer of money or shares. In many cases, the AARP (American Association of Retired Persons) can be a lifesaver; this organization regularly sends out information on the latest elder fraud schemes and offers senior citizen fraud protection tips as well as financial planning assistance and consumer rights, all of which can help your parents judiciously decide on various offers and purchases.

6. Shred all bills, notices, and personal mail before throwing them away. Information regarding your loved one's financial situation is often retrieved by con artists from discarded mail that is not shredded (also known as 'dumpster diving'). It's all too easy for elder fraud scammers to get bank account and credit card numbers from statements as well as details on safe deposit boxes, ATM cards, addresses, phone numbers, social security numbers, and more. Remind your loved one that one of the most important senior citizen fraud protection tips is to tear up all mail before throwing it away. Or, better yet, give him or her the gift of a paper shredder!

7. Recognize predatory lending practices. This senior financial abuse and elder fraud practice, also known as loan fraud, is often perpetrated by mortgage brokers, appraisers, and home contractors looking for a quick buck. Seniors approach these seemingly knowledgeable individuals looking to refinance their homes, but are bombarded by fast-talking scammers who incorporate a must-act clause into the deal. In the end, your loved one will walk away with a high-cost loan with exorbitant fees totaling more than 5% of the entire amount. When talking with your loved one about predatory lending and senior citizen fraud protection tips, remind him or her that other tricks include pre-payment penalties, 'flipping' (when a loan is refinanced to generate fee income without providing any net tangible benefit to the borrower), mandatory arbitration, and other unnecessary additions. Don't let your parents make this decision alone; help them be more informed consumers.

8. Avoid health insurance scams by identifying the red flags. Many lower income seniors rely on their Medicare health insurance, which is why many elder fraud scams originate here. Often, less-than-reputable medical equipment companies target seniors, offering free supplies in return for their Medicare numbers. Tell your loved one that the doctor must order and sign for all equipment and products before Medicare will pay for it. Remind your parents of the most important senior citizen fraud protection tips when it comes to health insurance, including never signing blank insurance claim forms, never providing unchecked medical authorization for billing purposes, always reviewing Medicare's payment terms closely, never giving out their Medicare numbers to someone they don't know, and verifying with their physician if they are unsure of a product or equipment that's been ordered.

9. Bypass the 'Sucker List' altogether. Many seniors are eager to win something and often enter numerous sweepstakes, sign up for free magazines, or register for contests. Companies with elder fraud scam artists will keep records of these submissions, meaning your loved ones could end up on what is called the 'Sucker List,' making your parents that much more of an elder fraud target. This list usually contains not only people who the scammers believe to be a good target, but have already been successfully targeted before.

10. Just hang up. Scammers know that senior citizens are more polite, more trusting, and a lot less likely to hang up when the call becomes personal; unfortunately, elder fraud con artists take full advantage of this fact. Tell your loved one that if he or she doesn't know the caller and questions regarding financial or personal matters come up, they can simply hang up on the caller with no questions asked. Hanging up is one of the simplest senior citizen fraud protection methods.

An Ounce of Prevention...

If your loved one has been a victim of elder fraud, please urge them to report it to the proper authorities. Falling for a scam is embarrassing to many seniors, making it one of the most under reported crimes. Their assistance in the matter can help bring con artists to justice and perhaps inspire other seniors to implement better methods of senior citizen fraud protection.

Another invaluable senior citizen fraud protection tool is helping your loved one sign up for the national 'do not call' registry to prevent harassing telemarketer calls. It's a free service, and you can either call 888-382-1222 or register online at www.donotcall.gov. Another website that offers helpful senior citizen fraud protection tips of its own - www.fraud.org/elderfraud - helps fight against con artists by posting regular updates and information. Walking your loved one through potential elder fraud scenarios is as helpful as checking in regularly to go over financial transactions, bills, and emails as well as posting (in plain sight) the senior citizen fraud protection tips outlined above.

Ultimately, the only way to prevent elder fraud is through education, and this requires you to be firm on the subject, providing an insightful look into the various methods of senior citizen fraud protection. Caution is always the key to protection, and your loved one should be provided with a list of helpful sources to contact for additional information, including the National Consumer League's Fraud Center, AARP, the Better Business Bureau, and Consumer Action. Above all, make sure your loved one always knows who he or she is dealing with in the course of transactions or investments. And, as always, it's important to remember that an ounce of prevention is worth a pound of 'cure.'

IMF UNHAPPY WITH UNREGULATED CARIBBEAN

FROM THE JAMAICA OBSERVER

reprinted as fair use

By Al Edwards

The rise of the unregulated financial organisations (UFOs) between 2006 and 2008 in Jamaica, led by the likes of David Smith's Olint and Carlos Hill's Cash Plus, threatened to both undermine and destabalise the country's legitimate financial sector. The demise of these schemes has marked a return to a semblance of the status quo and a time to reflect on why these organisations became so popular. To that end, the IMF has recently published a working paper entitled Ponzi Schemes in the Caribbean by Ana Carvajal, Hunter Monroe, Catherine Pattillo and Jamaica's very own Brian Wynter.

The IMF notes that in several Caribbean states, unregulated investment schemes grew quickly by claiming unusally high monthly returns and through a system of referrals by existing members. It posits that such high returns are usually associated with Ponzi Schemes.

"Such schemes are pervasive and persistent phenomena and emerge on a regular basis even in developed countries with strong regulatory frameworks as shown by the recent experience in the United States with US$50 billion alleged Ponzi scheme run by Bernard Madoff. However, their impact has been greater in countries with weaker regulatory frameworks. This is illustrated by the well-known case of Albania and by more recent and ongoing cases in the Caribbean and Colombia," reads the working paper.

In the case of Ponzi schemes, returns may be paid to investors out of the money paid in by subsequent investors rather than from genuine profits. These schemes usually offer higher returns than any legitimate business activity could plausibly sustain, in order to lure investors. Ponzi schemes usually have to attract new investments at an exponentially growing rate to sustain payments to existing investors and inevitably collapse when the new investment needed exceeds the size of the target market.

"Ponzi schemes are insolvent from the moment that they take in money from investors. Their liabilities to investors exceed their assets as the value of liabilities increases at the inflated rate of return, while assets may be depleted by the running costs of the schemes or possibly suffer from other depredations.

"As the experience of different countries has shown, the "business opportunity" advertised to lure investors into putting their money in a Ponzi scheme can vary in nature, from straightforward investments in stocks or bonds, to less traditional financial sector products such as currency trading, to investments in non-financial assets, such as real estate and cars. These business opportunities are only limited by the imagination of the perpetrator and the gullibility of the investor," says the IMF.

As far as Jamaica is concerned, many of the schemes purported to make their returns from foreign currencies trading, but nowhere in this world has this form of trading made consistent returns of above 10 per cent per month. Jamaica's main regulatory body, the Financial Services Commission has yet to unequivocally determine whether the likes of Olint, Cash Plus and World Wise were either Ponzi or pyramid schemes. The lead principal of Olint, David Smith, still maintains that his operation was not a duplicitous scheme which saw him taking investors' money to pay out high returns.

The labels Ponzi scheme and pyramid scheme are often used interchangeably to describe specific forms of investment fraud where sustainability depends on the influx of new "investors" to the scheme. However, from a technical perspective, there are differences in the way the two types of schemes operate. Pyramid schemes are a form of fraud where the expected benefit to members depends primarily on the number of individuals they recruit, which is not necessarily the case in a Ponzi scheme. Ponzi schemes often grow larger than pyramid schemes as they can take in unlimited amounts from an individual and can continue to operate indefinitely, as long as payments demanded by investors from the scheme do not exceed payments by investors into the scheme.

"There are a number of similarities between the life-cycles of pyramid schemes and Ponzi schemes. Both types of schemes typically proceed through the following stages: initiation; validation, when large and easy rewards earned by initial members generate strong word of mouth publicity; expansion, when a large number of people join or massive investments are received; and collapse when defaults occur, the inflows of new funds or members stops, and the promoters may seek to abscond with money. The schemes are inherently likely to collapse and default on most members. Pyramid schemes grow exponentially for a given rate of recruitment until they exhaust the pool of potential members. Inflows in a Ponzi scheme must also grow exponentially, if investors do not reinvest all earnings," noted the IMF working paper.

The collapse of the Stanford Group of Companies and its ramifications for Antigua has placed the spotlight on the Caribbean and the proliferation of unregulated investment schemes in the region. Such types of schemes can undermine investor confidence in financial institutions and may explain why leading commercial banks like Jamaica's National Commercial Bank took measures to ensure that these schemes would not gather into epidemic proportions with the potential to destabilise entire financial sectors.

"The longer that these schemes operate, the more damage they are able to inflict. Thus, the main policy lesson that can be extracted from countries' experiences with Ponzi schemes is the need for a rapid and early response from financial regulators and law enforcement authorities, to identify and stop the schemes and protect investors' interests. However, responding swiftly has proven to be a challenge in many countries.

"Other policy lessons involve tackling the social dimensions of the phenomenon by means of programmes to enhance financial litereacy and personal financial responsibility amongst members of the public. In the case of Ponzi schemes operated by regulated entities such as offshore banks, the lessons point more simply towards the dangers of weak regulatory frameworks and inadequate supervision.

The recent Caribbean experience has heightened the awareness of regulators and potential investors to the risks associated with UFOs. However, awareness alone will not prevent a recurrence and the experience shows that fraudulent schemes will emerge on a regular basis, even in financial markets with strong regulatory frameworks.

Thus it is necessary that countries work together in enhancing their legal and regulatory frameworks," suggested the IMF.

The working paper on Ponzi Schemes in the Caribbean poses two questions that are yet to be answered by Caribbean institutions set up to keep UFOs in check; namely what are the key conditions that need to be in place for regulatory agencies to be able to take adequate actions against the schemes, and second, what are the key actions that authorities should take?

THE HAMMER FALLS FOR STANFORD

The auctioneer's hammer is set to fall for Allen Stanford's treasures in Miami.

What's left of his south Florida empire now sits in the warehouse of AMC Liquidators

The artwork and furnishings of Stanford Financial Group's Miami office --- their way into the sale's rooms --- include carved entry tables with marble tops, bronze sculptures of eagles poised for a kill and a wall tapestry depicting French royalty on horseback. Estimated to be worth $2 million, the sale will be the contents of the 12th, 21st, 26th and 27th floors of the Miami high-rise that Stanford's group rented. at 201 S. Biscayne Blvd.

The entire haul is visible at: http://www.amcliquidators.com/Stanford_Capital_Liquidation.asp

Notes Pamela Grimmé, whose husband runs AMC, "A lot of his (Stanford's) furniture was very regal. I think he took himself very seriously."

WHEN 419 FRAUD BECOMES A COMIC ROUTINE

EVERY NOW AND THEN A 419 LETTER COMES OUT OF NIGERIA THAT IS SO FAR FETCHED, YOU'D THINK A COMEDY WRITER HAD PUT IT TOGETHER AS A SKETCH.

MEET THE WIDOW OF THE LATE DICTATOR, FRAUDSTER, MURDERER AND GENERAL ALL-AROUND-NASTY-PIECE-OF -WORK, SANI ABACHA.

SHE SAYS HE GAVE HER $24 MILLION AND NEEDS YOUR HELP RETRIEVING IT.

HUH???

reprinted here because it's just too stupid for words, fair usage or not!

---

ATTN: THE PRESIDENT/CEO
Dear Sir / Madam,

I am Dr. Mrs. Marian Abacha, wife to the late Nigerian Head of state,General Sani Abacha who died on the 8th of June 1998 while still on active service for our Country. When my husband was alive I used to move funds running into millions of United States Dollars to Brazil and Lebanon. However, on the eve of my husband's death in June 8, 1998,he gave me the sum of US$24m(million) in cash to move to Lebanon as usual,but immediately my husband died I moved the funds to EUROPE through a diplomatic courier service to a security company in EUROPE.

The funds have been in the security company in EUROPE. Because of the restriction placed on
my family by the Nigerian Government, I Simply cannot travel to secure the funds from the
security company in EUROPE. What I now need from you are as follows:

(1) You should travel to EUROPE to secure the funds in cash on my behalf and deposit it in
your bank account in your country.

(2) You will be entitled to 10% of the total sum involved for your assistance.

(3) As soon as you confirm to me by e-mail your readiness to travel to EUROPE, I will fax a
copy of my Power of Attorney to the security company in EUROPE authorizing them to release
the funds to you.

(4) As soon as you have the funds in your custody, I will give you my account details in the
Bahamas where you will transfer my funds to on my behalf. Your URGENT
response is needed.

All correspondence must be through my Attorneys fax:xxx-x-xxxxxxx.
Attentioned to my attorney (MR.MIKE GREEN). Please do not forget to include your direct
telephone and fax numbers, including your mobile phone for easy reach. I hope I can trust you with my family's last financial hope.

Best regards,
DR.MRS.MARIAN ABACHA

Law Firms Make Easy Pickings For Embezzlers

NATIONAL LAW JOURNAL

reprinted as fair use

Embezzlement Seems To Be On The Upswing During Recession

by Leigh Jones

James Rittinger would like to forget about the paralegal who embezzled nearly $300,000 from his New York law firm in 2005.

But she won't go away. In late May, Rittinger learned that Kathy Foer-Morse had done it again, this time at a small practice in Pennsylvania. And if that weren't enough of a reminder, prosecutors told Rittinger that she was using the money pilfered from the Pennsylvania firm to pay restitution for stealing from his firm, Satterlee Stephens Burke & Burke.

Foer-Morse, who was out on bail for stealing from Rittinger's firm when she got the job at Norristown, Pa.'s High Swartz, now is in the Montgomery County jail. A spokesman for the Montgomery County District Attorney's office said that she currently does not have counsel. Prosecutors charge that she swiped nearly $101,000 from High Swartz by writing 12 company checks to herself. High Swartz did not respond to requests for comment.

Rittinger, chairman of Satterlee Stephens, said that the law firm had "a pretty good system" to keep track of money flowing through the 60-attorney shop when Foer-Morse worked there. It has a better one now. Rittinger said his firm "enhanced" its background checks after discovering that Foer-Morse had skimmed $285,000 from his firm's accounts. He said that the firm now has additional safeguards in place.

The connection between the two firms may be unusual, but both businesses were victims of what accountants, practitioners and trade groups say is a growing problem for firms: embezzlement. Recessionary pressures felt by employees and partners alike are increasing the likelihood that trusted colleagues or workers will steal from law firms, where large sums are often at employees' disposal.

Since March alone, at least 12 people have been in court for stealing from law firms. In early June, for example, securities class action attorney Steven Eugene Cauley admitted that he took $9.3 million from a client escrow account to make shaky investments and cover overhead expenses at his Little Rock, Ark., office.

While accounts of embezzlement committed by partners often involve the highest dollar amounts, embezzlement by staffers appears to be more common.

For example, since March:

• A legal assistant at a Portsmouth, N.H., law firm turned herself in after authorities accused her of stealing $80,000 from the firm where she worked.

• A former legal secretary was indicted on charges of stealing more than $550,000 from a one-man law firm in Downers Grove, Ill.

• A Connecticut woman pleaded guilty to embezzling $1.7 million from the South Windsor, Conn., law firm where she worked as a paralegal.

ESPECIALLY VULNERABLE

Law firms are especially vulnerable to embezzlement for a number of reasons, said Michael Downey, a partner in the St. Louis office of Chicago-based Hinshaw & Culbertson. His practice focuses on legal ethics and professional service risk management. Embezzlement happens most frequently within solo and small firms, Downey said. (About 80% of the nation's 1.1 million attorneys work in law firms of 50 attorneys or fewer, according to the latest information available from the American Bar Foundation).

Attorneys tend to delegate business matters to employees and provide too little oversight, he said. In small firms, one person often is handles accounts payable and receivable. "It's someone whom they rely on for almost everything," Downey said. Lawyers are more interested in practicing law and too seldom trained to run businesses, he said; they're eager to hand over financial responsibilities to staff.

In addition, attorney ethics rules require lawyers to maintain separate accounts for clients' funds, meaning that large sums of money sit idle in office accounts, tempting workers desperate to cover a mortgage payment or a child's tuition bill. Busy lawyers also tend to cut corners when conducting background checks and following up on an applicant's references, Downey said.

Law firm embezzlement is part of an overall increase in occupational fraud that cost the nation's businesses an average of 7% of their revenues in 2007, according to the Association of Certified Fraud Examiners (ACFE), a 50,000-member trade group. The ACFE defines occupation fraud as employee embezzlement, fraud by third parties, fraud by vendors, financial statement fraud and corruption.

The results of an ACFE survey released in April found that occupational fraud has increased since the recession began in December 2007. Of the 507 respondents, more than half said that they encountered more workplace fraud in 2008, and 49% said that fraud losses had risen in 2008. In addition, 70% said that they expected employee embezzlement to be the most common type of fraud perpetrated during the next 12 months and 88% expected fraud of all kinds to increase during the next 12 months.

The motivation for embezzling has changed amid the economic downturn, said Stephen Pedneault, principal of Forensic Accounting Services in Glastonbury, Conn.

"It used to be a sense of entitlement," Pedneault said. "Now, desperation comes up a lot." He helps law firms forensically analyze the fraud to determine when and how it occurred. A common thread in embezzlement cases, he said, is an absence of controls and procedures to track money running through the firm.

Once the crime has occurred, uncovering the details of the crime and setting up safeguards going forward often are the only comforts available. "Having someone arrested doesn't get your money back," Pedneault said. He advises law firms to buy insurance to cover intentional acts, but many don't take that step.

Columbia, Md., attorney Michael Nagle this month received a $29 check as partial reimbursement for the $700,000 that his firm, Nagle & Zaller, lost to embezzlement. Former office manager Christine McClain-Sloane wrote 250 fraudulent checks during eight of the 11 years she worked at the five-attorney firm. Nagle and his partner discovered the embezzlement weeks after she left in 2005. Had she stopped embezzling six months before her departure and covered her tracks, Nagle said, the firm likely never would have discovered the missing money. "As we were making more money, she took bigger and bigger amounts," he said.

'NEVER GOING TO SEE THAT MONEY'

McClain-Sloane pleaded guilty in 2008 to two counts of felony theft scheme and is serving an 18-year prison term. Before sentencing, Nagle said, McClain-Sloane repaid $50,000. The firm also got her five-year-old SUV, worth about $7,000. Since then, he has received that one small check this month "We're never going to see that money," he said of the rest.

Nagle & Zaller made changes to its operations after discovering the crime. It no longer has a single employee handling incoming and outgoing checks. It closely monitors accounts with heavy activity, such as one that it uses to pay court clerk fees, and it performs routine audits of its books. "Now we know," Nagle said.

Law firm embezzlers have common traits, said Downey of Hinshaw & Culbertson. Often, they are legal assistants — which means that they are likely to be women — who have worked at the firm for several years and have considerable control over the firm's accounts. They avoid taking vacations because others may discover their crimes in their absence. Drug, alcohol or gambling problems frequently are involved.

Besides the financial loss and sense of betrayal that the embezzlement can cause, attorneys left holding the bag risk running afoul of ethics rules. The American Bar Association's Model Rules of Professional Conduct, adopted by nearly every state, require law firms to hold client property in safekeeping and to keep client funds separate from other funds. They also make clear that attorneys have a legal fiduciary duty to their clients.

In general, a law firm is not obligated to notify police of embezzlement. In fact, a firm may try to recover the money by assuring the employee that it won't call in the police, Downey said. When the embezzler is an attorney, a firm has an ethical duty to notify the attorney ethics body. It also has an ethical obligation to notify clients when money from their accounts is taken.

At Nagle & Zaller, the office manager did not steal from client funds, said Nagle, adding that the firm was not negligent in handling its business matters. But, he added, "It's embarrassing that we trusted someone that much and got betrayed."

SEASON OF EMBEZZLEMENT

A few of the cases of embezzlement reported by news organizations since March:

• Little Rock, Ark., attorney Steven Eugene Cauley admits in June to pilfering $9.3 million in client funds.

• Paralegal Patricia Baddeley-Meehan — out on bail for embezzling $1.7 million from South Windsor, Conn., law firm Berman & Russo — is charged in May with stealing from clothing stores where she worked.

• Legal secretary Mary Marra indicted in May for stealing $550,000 from solo practitioner Justin Tedrowe in Downers Grove, Ill.

• Illinois ethics board files complaint against attorney Steven David Gustafson for conversion of more than $800,000 in client funds.

• Legal assistant Tanya Tennyson pleads guilty in March to stealing $50,000 from Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter in Rapid City, S.D.

• Bookkeeper Ronda Nixon convicted by a Kentucky jury in March of stealing $93,000 from Pruitt & Thorner in Catlettsburg, Ky., to buy makeup, lingerie and massages.

• Brooklyn, N.Y., attorney Steven T. Rondos charged in March with stealing $4 million from 23 guardianship accounts.