Articles Posted in Bank whistleblower case

Howard Wilkinson, the mysterious  former employee of Danske Bank who uncovered $234 BILLION in money laundering, will be featured on “60 Minutes” this Sunday at 7:00 p.m. ET on CBS. This is his first major statement made in the U.S. Wilkinson discovered the scheme while working for the bank’s branch in Tallinn Estonia. He is represented by Kohn, Kohn & Colaptino. Wilkinson’s job was to run the market trading side of the bank for the Baltic region. A colleague asked him for some help getting information about a customer registered in the United Kingdom as Lantana Trade LLP. He checked the firm’s assets and income on the British business registry. When he did so, Lantana was listed as dormant. However, he saw by looking at their account at the bank, transactions worth multiple millions of dollars a day. As this is considered the largest money laundering scheme ever uncovered, there has been intense interest in it. Given the players involved including various persons in Russia, the story is expected to be the basis of a major Hollywood film.

For his part, Wilkinson, a British citizen, did not wish to have his name become public. The suspicious payments flowing through the bank came from Russia through Danske to the West. Wilkinson was dragged into the spotlight after an Estonian newspaper published his name in September.

In a press release following the leak of Mr. Wilkinson’s identity, his counsel  Stephen Kohn, made the following statement:

According to Reuters, a newly filed lawsuit alleges that four years before the bank ended its scamming auto insurance program,  Wells Fargo executives were specifically warned that the bank’s fraudulent car insurance program could be overcharging customers. According to the report, a complaint released from seal this week said that executives were briefed in 2012 about the auto insurance program which was ended in 2016.  which resulted in 800,000 people being forced to buy insurance they didn’t need.  The bank called it “collateral protection insurance.” Reuters reports that company execs were warned that the plan could be overcharging customers four years before the bank ended the program in September 2016.

The class action lawsuit was filed in August of this year in the Central District of California but was kept under seal at the request of Wells Fargo until some details were released this week. It is unusual for such a case to be sealed by the court and unclear as to why this was kept from the public The plaintiffs in the suit are seeking reimbursement for wrongful charges and say that Wells Fargo pressured drivers with poor credit into insurance policies more often than well-off customers.

In television commercials, Wells Fargo says that “we’re sorry we screwed up.”

The whistleblower who revealed the massive $200 Billion money laundering scheme from Russia through the Danish Bank Danske Bank is Howard Wilkinson, head of markets at Danske in Estonia from 2006 to 2014, according to press reports. He apparently warned manages as early as 2013 that the bank had breached numerous regulatory requirements and had a near total process failure.  The bank did not begin its own investigation until 2017.

Danske Bank’s CEO resigned last week after an inquiry revealed that 200 billion euros ($235 billion) of payments, many of which the bank said were suspicious, had been moved through its Estonian branch over a period of eight years.“I can confirm that I worked as Head of Markets in the Baltics based in Tallinn from 2007 until my last working day in April 2014, just four months after my first whistleblower report to the top management in Copenhagen,” a newspaper reported Wilkinson as saying.

The case, which has triggered regulatory, political and financial shockwaves, is a risk for Denmark’s entire financial sector, the Systemic Risk Council, which monitors threats to the stability of the country’s financial system, said.

The Royal Bank of Scotland will pay a $4.9 billion settlement to end the federal civil claims that RBS misled investors in the underwriting and issuing of residential mortgage-backed securities (RMBS) between 2005 and 2008. It is the largest penalty under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud.

The wrongdoing asserted includes using contemporaneous calls and emails of RBS executives – how RBS routinely made misrepresentations to investors about significant risks it failed to disclose about its RMBS  and also alleged that;

  • RBS failed to disclose systemic problems with originators’ loan underwriting. RBS’s reviews of loans backing its RMBS (known as “due diligence”) confirmed that loan originators had failed to follow their own underwriting procedures, and that their procedures were ineffective at preventing risky loans from being made. As a result, RBS routinely found that borrowers for the loans in its RMBS did not have the ability to repay and that appraisals for the properties guaranteeing the loans had materially inflated the property values. RBS never disclosed that these material risks both existed and increased the likelihood that loans in its RMBS would default.

According to Reuters, Estonia’s parliament will hold a special meeting on Tuesday to talk about a money laundering case involving Danske Bank. The meeting was scheduled a week after authorities received a criminal complaint against the bank from Bill Browder. Browder, who is now based in London,  persuaded the US and other western nations to sanction Russian officials who Browder and the US Government say were involved in a tax-fraud scheme which stole $230 million from Browder’s Russia-based corporations. Before Russia asked the hedge fund guru Browder to leave, he operated Russia’s biggest western-backed hedge fund, Hermitage Capital.  Hermitage employee Sergei Magnitsky was arrested after bringing the 2007 tax-fraud scheme to the attention of Russian prosecutors. Magnitsky died in a Moscow prison.

Browder says in his application to Estonia’s police that some of that money was laundered through Estonian banks. He says that $18m ultimately went to a Swiss account controlled bySedrgey Roldugin, godfather to Putin’s eldest daughter.

His applications make use of financial records leaked from the Panamanian law firm Mossack Fonseca and reported in 2016 as part of the “Panama Papers”.The bank has launched its own investigation into the allegations and will present its findings in September. The Estonian parliament has summoned the country’s justice minister, Urmas Reinsalu, Prosecutor General Lavly Perling and the chairman of the Financial Supervision Authority, Kilvar Kessler, for the meeting.

The whistleblower which I featured in yesterday’s blog who was awarded $30 million by the Commodities Futures Trading Commission for blowing the whistle on JPMorgan Chase, will also receive an additional $48 million from the Securities and Exchange Commission. That means he will receive $78 million!  His name is Edward Siedle and he is  a former lawyer for the Securities and Exchange Commission, now turned forensic investigator, who alerted the SEC to the bank’s wrongdoing. Prior to this, Mr. Siedle, investigated  pension funds for overcharging beneficiaries, alerted regulators of a mutual fund scam being run by JPMorgan Chase in 2011, The Post has learned.

The larger part of his whistleblower award comes from  a $267 million settlement between JPMorgan and the SEC, which investigated the bank for steering high-net-worth clients toward its own investment funds that could cost more than those managed by rivals. The CFTC joined the investigation because some of the JPM investment products involved commodities. The bank agreed to pay $100 million to settle the CFTC probe. Siedle said he has filed about two whistleblower suits a year since the program started, and has no immediate plans for the award.

–Jeffrey A. Newman

Wells Fargo has agreed to pay over $1 Billion in fines and penalties for fraudulently creating accounts without customers’ authorizations; forcing customers to pay fees the bank should have covered requiring borrowers to pay for insurance policies they did not need and in some cases pushing them into default. The bank paid $185  million to federal regulators in 2016.The Federal Reserve said that Wells Fargo had engaged in widespread consumer abuses and other compliance breakdowns. In addition, in March Wells Fargo reported to federal agencies that it has been asked about its wealth-management business which may have directed customers to inappropriate investments which benefitted the bank.

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are the regulators levying the penalty. Notably, the bureau is led by Mick Mulvaney, who wants the agency to take a gentler towards banks. Some analysts wonder whether the bank has been punished enough to alter its culture.Wells Fargo can afford the $1 Billion sanction as it earned a profit of $22.2 billion last year and $5.9 billion in this year’s first quarter.

Jeffrey A. Newman represents whistleblowers

 A New York-based  pediatrics practice Freed, Kleinberg, Nussbaum, Festa & Kronberg M.D., LLP (Practice), as well as various current and former partner physicians of the Practice, including Arnold W. Scherz, M.D., Mitchell Kleinberg, M.D., Michael Nussbaum, M.D., Robert Festa, M.D., and Jason Kronberg, D.O. (Partners) have agreed to pay $750,000 to settle allegations of Medicaid fraud. The agreement settles allegations that the Practice and Partners did not routinely enroll all of their employee providers treating Medicaid patients in the Medicaid program, and instead used the Partners’ Medicaid provider identification numbers to bill for the treatment of Medicaid beneficiaries by unenrolled employee providers. An investigation conducted by the Attorney General’s office found that the false claims occurred at many of the practice’s Long Island locations. The pediatrics practice has locations in Holbrook, Port Jefferson, Shirley, and Wading River, NY. New York’s Medicaid program will receive $450,000 as part of the $750,000 settlement agreement.

“Providers who are not properly enrolled in Medicaid before treating Medicaid beneficiaries undermine the integrity of the program and its efforts to serve our neediest New Yorkers,” said Attorney General Schneiderman. “Those serving Medicaid beneficiaries must be properly credentialed and thoroughly vetted prior to Medicaid enrollment to ensure that beneficiaries get the care they deserve from qualified professionals.”

Specifically, the settlement agreement resolves allegations that, from July 1, 2004 through December 31, 2010, the Practice and Partners did not enroll all of their provider employees in Medicaid prior to allowing them to treat patients who were Medicaid beneficiaries. Instead, providers employed by the Practice would treat Medicaid patients and bill under the Partners’ Medicaid identification numbers, as if the billing Partners were the ones seeing those patients, even when they had not.


Three major banks, Deutsche Bank, UBS and HSBC have agreed to pay $46.6 million to settle allegations of schemes to manipulate precious metals futures market trading, the Commodity Futures Trading Commission said. Also eight people  charged  have been charged with federal crimes, the Department of Justice announced. Charges included conspiracy, wire fraud, commodities fraud, commodities fraud and spoofing offenses. German banking giant Deutsche Bank AG and its Deutsche Bank Securities will pay a $30 million civil penalty and undertake remedial action, the CFTC said. Some Deutsche Bank traders allegedly “engaged in a scheme to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques” and by trading in a manner to trigger customer stop-loss orders.

Jeffrey Newman represents whistleblowers

The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities.

An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets.  When one customer detected some hidden markups and confronted State Street employees, they falsely called it a “fat finger error” and “inadvertent commissions” in order to conceal the scheme.

“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges.