August 7, 2018
A truly mesmerizing tale about 75-year-old "Butch" Ballow who is described in the FBI release as a "financial predator" who engaged in "outrageous" and "despicable" fraud dating back to the 1980s. At the end of Butch's trail, he faces 40 years in the clink and ordered to pay over $37 million in restitution -- yeah, good luck with that later bit. In recent years, the aging crook used phony companies to sell land and ownership interests in a number of proposed resort developments in Mexico. Potential investors were even taken on tours of the properties. As you may imagine, no resorts got built. Maybe the feds will show some compassion and put him in a cell with another inmate named "Sundance"?
News broke last week that the feds decided to stop torturing Jesse Litvak. Jesse, you may recall, was a mortgage-backed securities sales-trader charged with criminal securities fraud. Jesse, in selling to an institutional customer, told the customer that he was flipping the bond to it after just having bought it himself at the customer's price. Instead, Jesse had it in inventory at a much lower cost. Jesse was twice tried, twice convicted, and twice freed on appeal. The government announced it won't try him a third time. Jesse persisted, won, and I say, good for him.
Raymond Clark pled guilty in the United States District Court for the Western District of New York to wire fraud and money laundering in connection with allegations that he had induced three victims to send him $870,000 for supposed investments, including investments in hedge funds and publicly traded companies. Clark kept the investors' money and spent it on personal expenses. As part of the plea agreement, Clark will pay restitution to the victims.
An SEC press release announces that the SEC "has updated its list of unregistered firms that use misleading information to primarily solicit non-U.S. investors, adding 16 soliciting entities, four impersonators of genuine firms, and nine bogus regulators." My, my, my, what a wonderful and innovative idea to regulation: Publish lists of suspected bad guys. Why, geez, that's almost as useful and effective as going out and getting the malefactors. Then again, why do the actual work of charging and convicting folks when you can publish and update a list. Yeah, I know, I'm being unfair and overly cynical. But did you notice that it's like 100 degrees out today and you can chew the air. You think I'm in a bubbly mood? As more fully set forth in part in the release:
The SEC's list of soliciting entities that have been the subject of investor complaints, known as the Public Alert: Unregistered Soliciting Entities (PAUSE) list, enables investors to better inform themselves and avoid being a victim of fraud. The latest additions are firms that the SEC staff found were providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and recordkeeping requirements.
The United States District Court for the District of Massachusetts entered a final judgment against Yasuna Murakami, a former Massachusetts-based hedge fund manager, and two advisory entities (MC2 Capital Management, LLC and MC2 Canada Capital Management, LLC) he operated in connection with a scheme to defraud investors by hiding trading losses and misappropriating investor funds. Murakami and his two companies settled with the SEC and collectively agreed to pay over $7.9 million in disgorgement and prejudgment interest, to be deemed satisfied by a restitution order entered in a related criminal case against Murakami. The SEC permanently barred Murakami from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.
Virginia Beach naval officer Randolph M.. Prince pled guilty in United States District Court for the Eastern District of Virginia to to wire fraud and making a false statement in connection with his 2014 tax return. Federal prosecutors had alleged that Prince defrauded the Navy out of over $2.7 million through a procurement fraud scheme in which:
he, as a member of his Navy unit's supply staff, steered government contracts to sham companies who were created and run by his friends. Prince had the authority to make purchase requests for military equipment on behalf of his command, and also had the ability to sign for goods when a company delivered them to his unit on the back end.
Prince took advantage of his position to direct purchases to the sham companies, which had been opened for the sole purpose of receiving government contracts from Prince. When a contract landed on the desk of one of these companies, Prince, and others, would generate fraudulent documentation to suggest the company had honored its end of the bargain. With this documentation in hand, the Navy would then pay the company. However, the sham companies never provided the Navy with anything at all. Instead, they distributed the Navy money amongst Prince and his associates.
After a three-day bench trail in the United States District Court for the Middle District of Pennsylvania, Henry Okpalefe was convicted on conspiracy to commit mail fraud, wire fraud and money laundering. Okpalefe was sentenced to 216 months' imprisonment and three years' supervised release, and ordered to pay $23 million in restitution and forfeit $504,787. As set forth in the Press Release:
[B]etween 2008 and 2010, Okpalefe and his co-conspirators stole over $23 million from hundreds of lawyers and law firms in the Middle District of Pennsylvania and nationwide. Under the guise of seeking legal representation, the conspirators contacted attorneys and law firms in the United States using fake email accounts. Once an attorney or law firm agreed to represent the purported client, the conspirators sent bank checks through the mail and instructed them to deposit the money into their IOLTA accounts. From there, the attorneys were provided with wire instructions and they wired their legitimate funds to Asian bank accounts. Before the counterfeit checks were returned as fraudulent, the money had already been withdrawn by co-conspirators in Asia and distributed to conspirators' bank accounts in Nigeria and Canada. Okpalefe and his co-conspirators operated in Canada, Nigeria, Japan and South Korea.