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An experienced whistleblower attorney, successful trial attorney, former criminal prosecutor, and former reporter Representing whistleblowers reporting fraud on the Federal State Governments

Current precious metals traders and one former trader in the New York offices of a U.S. bank  were charged in an indictment unsealed for their alleged participation in a racketeering conspiracy and other federal crimes in connection with the manipulation of the markets for precious metals futures contracts, which spanned over eight years and involved thousands of unlawful trading sequences. Those charged in the indictment are:

  • Gregg Smith, 55, of Scarsdale, New York.  Smith was an executive director and trader on Bank A’s precious metals desk in New York.  He joined Bank A in May 2008 after it acquired another U.S. bank (Bank B).
  • Michael Nowak, 45, of Montclair, New Jersey.  Nowak was a managing director and ran Bank A’s global precious metals desk.  He joined Bank A in July 1996.

The U.S. Securities and Exchange Commission (SEC) is investigating several major investment advisor companies for failure to reveal conflicts of interest including revenue-sharing arrangements resulting in millions in income. In one recent lawsuit filed against Commonwealth Financial Network, The SEC says the firm has failed to disclose material conflicts of interest related to revenue sharing received for certain client investments. The Complaint says that since at least 2007, Commonwealth had a revenue-sharing agreement with the broker-dealer, National Financial Services through which, it required most of its clients use for trades in their accounts. Under that agreement, the SEC alleges, Commonwealth received a portion of the money that certain mutual fund companies paid to the broker to be able to sell their funds through the broker if Commonwealth invested client assets in certain share classes of those funds.

Between July 2014 and December 2018, Commonwealth received over $100 million in revenue sharing from the broker related to client investments in certain share classes of “no transaction fee” and “transaction fee” mutual funds, the complaint states. The arrangement between Commonwealth and NFS was also interesting as it was structured. According to the SEC Complaint, Commonwealth purchased or sold no transaction fee mutual funds share and clients did not pay a transaction fee. HOWEVER, clients did pay fees to the mutual fund for their share of fund expenses for as long as they held the fund and in turn the mutual fund paid a portion of these fees to NFS. NFS then shared a portion of those fees it received with Commonwealth.

The SEC’s complaint explains that Commonwealth’s receipt of the revenue sharing from NFS created significant conflicts of interest between Commonwealth and its clients.  These conflicts included financial incentives for Commonwealth to invest clients in mutual funds which would lead to greater revenue for Commonwealth.  The Complaint says that Commonwealth breached its fiduciary duty to its clients by failing to disclose the conflicts of interest created by its receipt of compensation through the revenue sharing agreement. Specifically, the SEC’s complaint alleges that Commonwealth “failed to tell its clients that (i) there were mutual fund share class investments that were less expensive to clients than some of the mutual fund share class investments that resulted in revenue sharing payments to Commonwealth, (ii) there were mutual fund investments that did not result in any revenue sharing payments to Commonwealth, and (iii) there were revenue sharing payments to Commonwealth under the broker’s ‘transaction fee’ program.”

Cloudflare Inc., cloud-based networking and cybersecurity services, expected to go public next week, may have violated U.S. economic and trade sanctions regulations as its products may have been used by entities designated by the U.S. as terrorists and narcotics traffickers.

Cloudflare voluntarily disclosed potential economic and trade sanctions violations to the Treasury Department, the company said in documents that declared the company’s intention to go public.

Cloudflare said that it determined that its products were used by, or for the benefit of, certain individuals and entities that have been blacklisted by the U.S. A number of the parties made payments to the company in connection with their use of the platform. Those parties included entities that have been designated by the U.S. as terrorists and narcotics traffickers or are affiliated with governments currently subject to comprehensive U.S. sanctions, according to the filing.

The owner of a chiropractic business was sentenced to 6 months in prison for tax evasion after pleading guilty to the charge in June 2019, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

Richard Rogers, a Northborough, Massachusetts chiropractor, operated his practice from his residence.  According to court documents, Rogers evaded his taxes from 2012 through 2016 by concealing his income from the Internal Revenue Service (IRS). Rogers encouraged his clients to pay in cash and used a nominee bank account to negotiate check payments when he was not paid in cash. He paid creditors using postal money orders, and used credit card accounts opened with a fictitious social security number. Rogers also concealed the ownership of his residence by titling the property in the name of a trust. Rogers did not file federal tax returns from at least 2008 through 2016, despite his obligation to do so.

United States District Judge Timothy S. Hillman also ordered Rogers to pay $155,164 in restitution to the IRS.

Yahoo will pay approximately A $117 million to settle a lawsuit over multiple data breaches. The lawsuit alleged that the company negligently disclosed  users’ personal information, including email addresses, phone numbers, dates of birth, other account information, as well as security passwords. According to the complaint, Yahoo users were subject to numerous disclosures of personal information, despite assurances from the company of privacy protection.

The complaint claimed that the massive breaches were due to Yahoo’s disregard of users’ privacy interests and threats. The Yahoo data breach class action lawsuit contended that the plaintiffs and Yahoo users would not have signed up for the service had they known their private information would be compromised.

Under the terms of the Yahoo data breach class action settlement, Yahoo will improve security measures when it comes to user data.

The Securities and Exchange Commission is expanding the pool of public companies being examined about their compliance with U.S. sanctions against IRan and many other nations on our blacklist of individuals and entities grows. It is increasing its comment letters to companies and requesting more information related to dealings in countries targeted by U.S. sanctions. According to the Wall Street Journal over 42 companies received letters from the SEC regarding activity in areas subject to sanctions enforced by the Treasury Department’s Office of Foreign Assets Control.

T SEC has sent letters to companies such as  PayPalHoldings Inc., Bank of New York Mellon Corp. and Chinese travel-services provider Ctrip.comLtd. with sanctions-related questions. 1,500 individuals or entities were added to the U.S. sanctions list

 

 

The United States has imposed new sanctions on Irans complex and extensive shipping that it uses to sell oil, and the U.S. will pay $15 million to anyone with information that disrupts the scheme. The reward could be rendered to individuals living within or outside the United States.

The Treasury Department placed sanctions on 26 individuals and “entities” affiliated with the Islamic Revolutionary Guards Corps Quds Force. The sanctions freeze any assets within the United States concerning those individuals or corporations affiliated with the shipping network. It also prevents them from doing business with Americans. It also identified 11 ships, placing anyone who owns or operates them on a Treasury list and exposing any port that lets them in, or firms that fuel or offload them, to future sanctions.

 Rostam Ghasemi, Iran’s former minister of petroleum oversees and operates the network.

 International SOS Assistance, Inc., International SOS Government Services, Inc., International SOS, LP, Air Rescue Americas, Inc. Arnaud Vaissié; and Pascal Rey-Herme (collectively, “International SOS”), will pay $940,000 settling allegations that it overcharged TRICARE, the health care insurance system for members of the military services and their families. The overcharges related to aeromedical evacuation services by concealing discounts it received from third-party air ambulance providers in violation of the False Claims Act.

International SOS, is a provider of overseas healthcare services for the government and it had negotiated discounts from third-party air ambulance providers, which it was required to pass along to TRICARE. Instead, International SOS did not disclose the actual cost of the aeromedical evacuation services during the quoting process; billed TRICARE at the higher non-discounted amount; and received payment from TRICARE for the inflated costs, which International SOS contends it retained as a fee.

This settlement resolves allegations in a lawsuit by a former International SOS Regional Flight Desk Manager, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive $165,000 as his share of the recovery in the case. The relator was represented by Franklin J. Rooks, Jr., Esq. of Morgan Rooks, P.C., and Jared A. Jacobson, Esq. of Jared Jacobson Law, LLC.

The Clearing Corporation will pay $20 million to the US as penalties, following a Securities and Exchange Commission investigation finding the company failed to implement policies to manage certain risks as required by U.S. laws and SEC and CFTC rules.  According to the SEC’s and CFTC’s  orders, Chicago-based OCC failed to establish and enforce policies and procedures involving financial risk management, operational requirements, and information-systems security.  The SEC’s order also found that OCC changed policies on core risk management issues without obtaining required SEC approval.

As the U.S.’s sole registered clearing agency for exchange-listed option contracts on equities, OCC was designated in 2012 as a systemically important financial market utility, or SIFMU.  That designation makes OCC subject to enhanced regulation and transparency regarding its risk management systems because disruption to OCC’s operations might be costly not only for itself and its members, but other market participants or the broader financial system.  Today’s enforcement action is the SEC’s first charging violations of SEC clearing agency standards adopted in 2012 and in 2016, and the CFTC’s first charging violations of Core Principles applicable to Derivatives Clearing Organizations.

“As a clearing agency, OCC performs a range of services that are critical to the effective operation of the securities markets,” said SEC Chairman Jay Clayton.  “Today’s resolution is intended to ensure that OCC will have appropriate policies and procedures in place to meet its obligations to our financial system.”

New York’s Department of Consumer Protection has sued T-Mobile allegedly sold used phones as new devices, charging illegal taxes and charging fees for unwanted services.

The lawsuit says there were more than 2,000 violations of the city’s consumer protection law which were revealed in consumer complaints and a year-long investigation by the city’s Department of Consumer and Worker Protection. It found deceptive practices in stores across the five boroughs.