Articles Posted in Bank fraud

IMG_0094-300x225PrivatBank, a Ukrainian based institution, is suing one of its original founders in U.S. court in an effort to gain control of the bank and prevent future fraud. The lawsuit was filed on May 21st in the state of Delaware against Ihor Kolomoyskiy and Hennadiy Boholyubov. However, executives of PrivatBank worry that Kolomoyskiy’s wealth and political connections may decrease their chances of a positive outcome in the lawsuit.

Kolomoyskiy founded PrivatBank in 1992, but has been living in exile for over two years. With connections to the newly appointed president, Volodymyr Zelenskiy, Kolomoyskiy has returned from exile and now seeks to regain control of PrivatBank. However, according to the lawsuit, Kolomoyskiy is responsible for numerous fraudulent acts using the bank’s funds.

Along with Boholyubov, Kolomoyskiy is accused of using PrivatBank to lend money to the various companies and entities that they controlled. These funds were then laundered through Delaware, which is known for its corporate-friendly laws, and used to acquire numerous properties in the United States.

F9944B73-7006-4DA2-91E8-1D1BAF75A50E-1-300x200The chief financial officer (CFO) and deputy chairwoman of the Chinese-based tech giant Huawei, Meng Wanzhou, has faced extradition from Canada to the United States after appearing in a Canadian court. This case involves allegations that charge Meng with 13 counts related bank and wire fraud. The company is still standing by Meng in this case, and have stated their support for her as well as their willingness to fight the extradition.

The start of these charges is linked to an alleged long-running scheme that involved Meng and other Huawei officials deceiving banks on a global scale, as well as the U.S. government, in order to go against American sanctions and do business with Iran.

While there are many other reports about the past details of Meng’s case, the main topic at this time is the continued effort by Huawei to support Meng as they fight against these charges.

money launderingDeutsche Bank is facing legal action for its involvement in a $20 billion Russian money-laundering scheme, known as the Global Laundromat. Upon the announcement of these allegations, Deutsche Bank expressed its deep concern of “significant disciplinary action” in a confidential report by The Guardian.

According to the report, Deutsche Bank was found to be involved in an extensive scheme which was linked to criminals formerly involved with the Kremlin, as well as the KGB and FSB. The money-laundering scheme took place between 2010 and 2014 when an estimated $80 million was moved into western-based accounts. In order for Russian funds to make their way into the US and Europe, shell companies were used to create and send falsified loans back and forth to each other. Eventually, the shell companies would purposely default on the loan, allowing judges involved in the scandal to authenticate the debt. The billions of dollars in illegal funds were then routed to the desired accounts using the Deutsche Bank network.

However, according to the report, Deutsche Bank was unaware of its part in the global money laundering scheme until 2017 when The Guardian published their initial report. Today, Deutsche Bank not only faces the embarrassment of its unknown involvement but also risks diminishing its overall market value as investors continue to drop their shares given the reports of the scandal.

tax havenA whistleblower by the name of Rudolf Elmer claimed that during his work as a private banker and internal auditor for the Swiss financial institution, Julius Baer Bank & Trust Company Ltd., he discovered actions that he found to be deceitful when relocated to the Cayman Islands. When Elmer acted as a whistleblower in this situation, instead of being supported in his efforts, he was fired, removed from the financial world, given time in prison, and even suffered a mental breakdown.

Whistleblower is a legal term that signifies anyone who chooses to report a person or organization for illicit activity. A large portion of whistleblowers are insiders and have directly interacted with the company in question as an employee.

Whistleblowers have the right to take legal action in the government’s name while the government may choose to step in at any point of the process to handle the allegations they find particularly detrimental or unlawful. The United States has a set of laws in place that are designed to protect whistleblowers known as the Whistleblower Protection Act, which has been around for over 30 years with the last major update being in 2012.

Yesenia Jesse Guitron, a Wells Fargo employee in Napa County California who began working for Wells Fargo in 2008 complained to the company when she noticed some of her co-workers were offering to open free accounts which were actually premium accounts with heavy fees. She says she repeatedly complained to the company several times over the years about this but nothing was done. Thousands of customers were improperly charged, many became overdrawn and some had their credit wrecked. Guitron was fired in 2010, without warning. Guitron filed a lawsuit claiming Wells Fargo fired her for speaking out against the fraudulent practices she witnessed.

Now, more than seven years after being ousted from her job – a Bay Area journalists’ group is scheduled to honor Yesenia Guitron for her role in bringing her former company’s misdeeds to light. Guitron, who worked for Wells Fargo N.A.’s St. Helena branch from 2008 to 2010, will receive a James Madison Freedom of Information Award from the Society of Professional Journalists’ Northern California chapter. The ceremony is scheduled for March 27 in San Francisco, SPJ NorCal announced last month.
Guitron, who will receive the society’s award for whistleblowers, was one of several Wells Fargo workers to describe aggressive sales targets that compelled employees to open bank accounts, credit cards, mortgages and other services in customers’ names without their permission or knowledge. The revelation of the fake accounts starting in 2013 led to hundreds of millions in dollars in fines, the dismissal of more than 5,300 workers and the resignation of chief executive John Stumpf.

The SEC says  Banamex had sub-standard internal controls over the accounts receivable factoring program used by OSA.  Banamex lacked the controls necessary to test the authenticity of the factored documents prior to advancing funds to OSA and recording them as accounts receivable. The SEC also says the banking subsidiary also lacked controls sufficient to identify and respond to “red flags that arose during the relationship between Banamex and OSA potentially warning Banamex of the ongoing fraud.”Citigroup recorded losses from the fraud in 2013 ($360 million) and 2014 ($113 million).

The bank agreed to pay a $4.75 million penalty to settle the SEC’s charges. It did so without admitting or denying the SEC’s findings and agreed to cease and desist from future violations. After the fraud was discovered in 2014, Banamex fired as many as 11 former employees.