Pfizer H.C.P. Corp. Agrees to Pay $15 Million Penalty to Resolve Foreign Bribery Investigation

Source- http://www.fbi.gov/washingtondc/press-releases/2012/pfizer-h.c.p.-corp.-agrees-to-pay-15-million-penalty-to-resolve-foreign-bribery-investigation

WASHINGTON—Pfizer H.C.P. Corporation, an indirect wholly owned subsidiary of Pfizer Inc., has agreed to pay a $15 million penalty to resolve an investigation of Foreign Corrupt Practices Act (FCPA) violations, Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, and Assistant Director James W. McJunkin in charge of the FBI’s Washington Field Office announced today. In a related matter, Pfizer Inc. and Wyeth LLC reached settlements today with the Securities and Exchange Commission (SEC) under which Pfizer Inc. agreed to pay more than $26.3 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of its subsidiaries. Wyeth, which had been acquired by Pfizer Inc. in 2009, agreed to pay $18.8 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of Wyeth subsidiaries.

As part of the resolution, the department today filed a two-count criminal information charging Pfizer H.C.P. with conspiracy and violations of the FCPA in connection with improper payments made to government officials, including publicly employed regulators and health care professionals in Bulgaria, Croatia, Kazakhstan, and Russia. The department and Pfizer H.C.P. agreed to resolve the investigation by entering into a deferred prosecution agreement. Both the information and the deferred prosecution agreement were filed today in the U.S. District Court in the District of Columbia.

Pfizer H.C.P. is incorporated under the laws of the state of New York, and its parent company, Pfizer Inc., is a global pharmaceutical, animal health, and consumer product company headquartered in New York City.

“Pfizer took short cuts to boost its business in several Eurasian countries, bribing government officials in Bulgaria, Croatia, Kazakhstan, and Russia to the tune of millions of dollars,” said Principal Deputy Assistant Attorney General Raman. “The Department of Justice recognizes the significant efforts the company made to eliminate such improper practices, not only by implementing compliance reforms, but also by assisting U.S. authorities in our ongoing FCPA investigations of other companies and individuals.”

“Corrupt pay-offs to foreign officials in order to secure lucrative contracts creates an inherently uneven marketplace and puts honest companies at a disadvantage,” said Assistant Director McJunkin. “Those that attempt to make these illegal backroom deals to influence contract procurement can expect to be investigated by the FBI and appropriately held responsible for their actions.”

According to court documents, Pfizer H.C.P. made a broad range of improper payments to numerous government officials in Bulgaria, Croatia, Kazakhstan, and Russia—including hospital administrators, members of regulatory and purchasing committees, and other health care professionals—and sought to improperly influence government decisions in these countries regarding the approval and registration of Pfizer Inc. products, the award of pharmaceutical tenders, and the level of sales of Pfizer Inc. products. According to court documents, Pfizer H.C.P. used numerous mechanisms to improperly influence government officials, including sham consulting contracts, an exclusive distributorship, and improper travel and cash payments.

Pfizer H.C.P. admitted that between 1997 and 2006, it paid more than $2 million of bribes to government officials in Bulgaria, Croatia, Kazakhstan, and Russia. Pfizer H.C.P. also admitted that it made more than $7 million in profits as a result of the bribes.

The agreement recognizes the timely voluntary disclosure by Pfizer H.C.P.’s parent company, Pfizer Inc.; the thorough and wide-reaching self-investigation of the underlying and related conduct; the significant cooperation provided by the company to the department and the SEC; and the early and extensive remedial efforts and the substantial and continuing improvements Pfizer Inc. has made to its global anti-corruption compliance procedures.

Pfizer H.C.P. received a reduction in its penalty as a result of Pfizer Inc.’s cooperation in the ongoing investigation of other companies and individuals. In addition to the $15 million penalty, the agreement requires Pfizer Inc. to continue to implement rigorous internal controls and to cooperate fully with the department.

Due to Pfizer Inc.’s extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, Pfizer H.C.P. is not required to retain a corporate monitor, but Pfizer Inc. must periodically report to the department on implementation of its remediation and enhanced compliance efforts for the duration of the agreement.

In the 18 months following its acquisition of Wyeth, Pfizer Inc., in consultation with the department, conducted a due diligence and investigative review of the Wyeth business operations and integrated Pfizer Inc.’s internal controls system into the former Wyeth business entities. The department considered these extensive efforts and the SEC resolution in its determination not to pursue a criminal resolution for the pre-acquisition improper conduct of Wyeth subsidiaries.

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Carmelo Provenzano and Daniel Dragan Plead Guilty in Connection with $3.5 Million Fraud Through Foreign Currency Investment Ponzi Scheme

Source- http://www.fbi.gov/newark/press-releases/2012/two-new-jersey-men-plead-guilty-in-connection-with-3.5-million-fraud-through-foreign-currency-investment-ponzi-scheme

CAMDEN, NJ—Two men claiming to run New Jersey-based hedge funds using a secret computer program to invest in foreign currency today admitted to defrauding victims out of more than $3.5 million, U.S. Attorney Paul J. Fishman announced.

Carmelo Provenzano, 29, of Garfield, New Jersey; and Daniel Dragan, 41, of Lebanon, New Jersey, pleaded guilty to separate informations charging them with wire fraud conspiracy before U.S. District Judge Jerome B. Simandle in Camden. A third co-conspirator, George Sepero, has been indicted by a grand jury in connection with the scheme and is awaiting trial.

According to documents filed in this case and statements made in court:

Beginning in 2009, Dragan and Provenzano claimed to run a series of hedge funds in New Jersey, luring investors with the prospect of extraordinary profits in foreign currency trading. The defendants made numerous misrepresentations and omissions to induce their victims to invest in “Caxton Capital Management” and “CCP Pro Consulting Inc.” Dragan and Provenzano claimed they and their conspirators owned and controlled a proprietary computer algorithm for trading foreign currencies; that they had used the algorithm to achieve returns of more than 170 percent in the prior two years; and that any investment funds would be highly liquid and could be withdrawn on a few days’ notice.

Relying on these and other misrepresentations, investors sent the defendants a total of more than $3.5 million. Dragan and Provenzano invested little or no money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures.

Dragan and Provenzano spent investor money on credit card bills averaging approximately $25,000 per month; bar tabs of $18,241—including a $4,000 tip—and $14,034 on separate nights at Drai’s Hollywood nightclub in Los Angeles; and flights to Paris and elsewhere. Provenzano bought a luxury Range Rover Sport SUV costing more than $71,000, with a down payment of more than $65,000.

The defendants furthered the scheme by e-mailing victims fake statements showing their principal had been invested in the foreign currency markets and was achieving substantial results. Many of these e-mails were purportedly sent by an individual named “Mel Tannenbaum,” a fictional character of Provenzano’s invention.

The defendants also e-mailed to several investors “screen shots” of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets. In reality, the shots reflected trading in fictional accounts set up by the conspirators to dupe investors.

The wire fraud conspiracy count to which Dragan and Provenzano pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gain or loss from the offense. Provenzano’s sentencing is scheduled for November 16, 2012, and Dragan’s sentencing is scheduled for November 20, 2012.

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SEC Charges Pfizer with FCPA Violations

Source- http://www.sec.gov/news/press/2012/2012-152.htm

Washington, D.C., Aug. 7, 2012 – The Securities and Exchange Commission today charged Pfizer Inc. with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries bribed doctors and other health care professionals employed by foreign governments in order to win business.

The SEC alleges that employees and agents of Pfizer’s subsidiaries in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products. They tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.

Additional Materials
SEC Complaint Against Pfizer
SEC Complaint Against Wyeth
More SEC FCPA Cases

The SEC separately charged another pharmaceutical company that Pfizer acquired a few years ago – Wyeth LLC – with its own FCPA violations. Pfizer and Wyeth agreed to separate settlements in which they will pay more than $45 million combined to settle their respective charges. In a parallel action, the Department of Justice announced that Pfizer H.C.P. Corporation agreed to pay a $15 million penalty to resolve its investigation of FCPA violations.

“Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit. “These charges illustrate the pitfalls that exist for companies that fail to appropriately monitor potential risks in their global operations.”

According to the SEC’s complaint against Pfizer filed in U.S. District Court for the District of Columbia, the misconduct dates back as far as 2001. Employees of Pfizer’s subsidiaries authorized and made cash payments and provided other incentives to bribe government doctors to utilize Pfizer products. In China, for example, Pfizer employees invited “high-prescribing doctors” in the Chinese government to club-like meetings that included extensive recreational and entertainment activities to reward doctors’ past product sales or prescriptions. Pfizer China also created various “point programs” under which government doctors could accumulate points based on the number of Pfizer prescriptions they wrote. The points were redeemed for various gifts ranging from medical books to cell phones, tea sets, and reading glasses. In Croatia, Pfizer employees created a “bonus program” for Croatian doctors who were employed in senior positions in Croatian government health care institutions. Once a doctor agreed to use Pfizer products, a percentage of the value purchased by a doctor’s institution would be funneled back to the doctor in the form of cash, international travel, or free products.

According to the SEC’s complaint, Pfizer made an initial voluntary disclosure of misconduct by its subsidiaries to the SEC and Department of Justice in October 2004, and fully cooperated with SEC investigators. Pfizer took such extensive remedial actions as undertaking a comprehensive worldwide review of its compliance program.

The SEC further alleges that Wyeth subsidiaries engaged in FCPA violations primarily before but also after the company’s acquisition by Pfizer in late 2009. Starting at least in 2005, subsidiaries marketing Wyeth nutritional products in China, Indonesia, and Pakistan bribed government doctors to recommend their products to patients by making cash payments or in some cases providing BlackBerrys and cell phones or travel incentives. They often used fictitious invoices to conceal the true nature of the payments. In Saudi Arabia, Wyeth’s subsidiary made an improper cash payment to a customs official to secure the release of a shipment of promotional items used for marketing purposes. The promotional items were held in port because Wyeth Saudi Arabia had failed to secure a required Saudi Arabian Standards Organization Certificate of Conformity.

Following Pfizer’s acquisition of Wyeth, Pfizer undertook a risk-based FCPA due diligence review of Wyeth’s global operations and voluntarily reported the findings to the SEC staff. Pfizer diligently and promptly integrated Wyeth’s legacy operations into its compliance program and cooperated fully with SEC investigators.

In settling the SEC’s charges, Wyeth neither admitted nor denied the allegations. Pfizer consented to the entry of a final judgment ordering it to pay disgorgement of $16,032,676 in net profits and prejudgment interest of $10,307,268 for a total of $26,339,944. Wyeth also is required to report to the SEC on the status of its remediation and implementation of compliance measures over a two-year period, and is permanently enjoined from further violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. Wyeth consented to the entry of a final judgment ordering it to pay disgorgement of $17,217,831 in net profits and prejudgment interest of $1,658,793, for a total of $18,876,624. As a Pfizer subsidiary, the status of Wyeth’s remediation and implementation of compliance measures will be subsumed in Pfizer’s two-year self-reporting period. Wyeth also is permanently enjoined from further violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The settlements are subject to court approval.

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The Former Chairman of the Board of Home Diagnostics Inc., George Holley, Pleads Guilty to Insider Trading Scheme

Source- http://www.fbi.gov/newark/press-releases/2012/former-chairman-of-the-board-of-publicly-traded-company-pleads-guilty-to-insider-trading-scheme

TRENTON, NJ—The former chairman of the board of Home Diagnostics Inc., a health products company that previously traded on the NASDAQ stock exchange, admitted today to insider trading, U.S. Attorney Paul J. Fishman announced.

George Holley, 72, of Norwalk, Connecticut, pleaded guilty mid-trial to two counts of an indictment charging him with securities fraud. The government rested its case yesterday, and the defendant entered his plea this morning before U.S. District Judge Joel A. Pisano in Trenton federal court.

According to documents filed in this case and statements made in court:

Holley was the founder of Home Diagnostics Inc., a Florida-based company that sold diabetes management products, such as blood glucose monitoring systems. In February 2010, Home Diagnostics was purchased by Nipro Corp. a Japanese Company, for a purchase price of $11.50 a share, approximately 90 percent more than Home Diagnostics’ then-share price. Holley, who at the time served as Home Diagnostics’ chairman of the board, admitted that in the weeks before the public announcement of the sale to Nipro, he disclosed inside information concerning the sale to his cousin and friend and told them to buy Home Diagnostics stock just three weeks before the merger was publically announced. News of the merger caused Home Diagnostics stock to nearly double in price.

Holley, who was released on bond, faces a maximum prison term of 20 years and a maximum fine of $5,000,000 on each count. Sentencing before Judge Pisano is scheduled for December 4, 2012.

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James Scott Brownn Sentenced for $52 Million Ponzi Scheme

Source- http://www.fbi.gov/kansascity/press-releases/2012/kansas-attorney-sentenced-for-52-million-ponzi-scheme

ANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Leawood, Kansas attorney was sentenced in federal court today for his role in a fraud conspiracy that stole more than $52 million from its victims.

James Scott Brown, 67, of Leawood, was sentenced in the U.S. District Court in St. Louis, Missouri, before U.S. Chief District Judge Linda R. Reade, Northern District of Iowa, to three years in federal prison without parole. The court also ordered Brown to pay more than $34 million in restitution.

Co-defendant Martin T. Sigillito, 63, of Webster Groves, was convicted at trial of leading the conspiracy and awaits sentencing. Co-defendant Derek J. Smith, 68, of Oxfordshire in the United Kingdom, pleaded guilty to his role in the conspiracy and awaits sentencing.

On September 16, 2011, Brown pleaded guilty to participating in a conspiracy to commit wire and mail fraud. During a 10-year period from 2000 to 2010, investors in the United States loaned a total of $52.5 million to co-conspirators through a Ponzi scheme that was known as the British Lending Program (BLP). Victims believed they were loaning money for legitimate real estate development projects in England, but, in reality, most of their money was kept by Sigillito and Brown (or used to pay interest and principal to other lenders).

Brown, an attorney, practiced law in England for several years prior to 2000. Brown also participated in the UMKC program at Oxford University. Between 2000 and 2010, Brown did not actively practice law; instead, Brown’s primary occupation was the BLP, from which he took substantial fees. Brown did business as British American Group and as J. Scott Brown and Associates.

Sigillito is an attorney and an ordained priest and bishop in the church of the American Anglican Convocation. Sigillito, doing business as Martin T. Sigillito and Associates Ltd., maintained an office in Clayton, Missouri. The business claimed to provide international business consulting services but did not have any actual associates or law partners and employed only a single clerical assistant. Sigillito portrayed himself as an expert in international law and finance and an experienced international businessman and attorney.

Smith was a structural engineer and a business and real estate speculator/developer who resided near London, England. Smith did business as Princess Hotels Management and as Distinctive Properties. Smith was previously successful, but, during the 1990s, he acquired distressed hotel properties that were not profitable due to a recession in the English real estate market. By the end of the 1990s, Smith was in need of capital to maintain his ownership of several small hotels which were not trading profitably and to support his retention of several options to purchase land.

The British Lending Program

The British Lending Program (BLP) operated as a Ponzi scheme and served as a fee-generating machine for the benefit of co-conspirators. Sigillito and Brown marketed the BLP to lenders based upon a number of false, fraudulent, and deceptive material representations.

Rather than sending the funds to England for use in real estate projects as promised to investors, Sigillito pooled lender’s funds in his attorney trust account in the United States. Rarely would funds from this account ever be sent to Smith. Rather, the funds were used to pay fees to Sigillito and Brown for initiating the loans. In cases where lenders requested payments of interest on their loan or sought to withdraw their funds from the program, the funds used to pay them came not from any profitable business of Smith’s but instead from funds that had been contributed.

Smith received the benefit of a total of approximately $6.1 million during the time in which approximately $52.5 million in loan funds were received in the BLP. In contrast, during the same period, Sigillito took “fees” totaling more than $6 million, Brown took “fees” totaling approximately $1.4 million, and approximately $27 million was used to pay interest and principal to lenders. All BLP funds were dissipated, and as of June 2010, the BLP had no funds.

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Robin Bruhjell Brass Who Ran $2 Million Ponzi Scheme Sentenced to Eight Years in Federal Prison for Investor Fraud

Source- http://www.fbi.gov/newhaven/press-releases/2012/washington-depot-woman-who-ran-2-million-ponzi-scheme-sentenced-to-eight-years-in-federal-prison-for-investor-fraud

David B. Fein, United States Attorney for the District of Connecticut, announced that Robin Bruhjell Brass, 55, of Washington Depot, was sentenced today by United States District Judge Robert N. Chatigny in Hartford to 96 months of imprisonment (an upward departure over the advisory Sentencing Guidelines range), followed by three years of supervised release, for operating a long-running Ponzi scheme that defrauded investors of approximately $2 million. Brass has been detained since her arrest on November 15, 2011.

“This defendant preyed upon the elderly and other vulnerable people, deceived them into believing their investments with her were safe, and insured and guaranteed and then stole almost two million dollars of their hard-earned savings,” stated U.S. Attorney Fein. “Hopefully, this lengthy sentence will serve as a warning to all would-be fraudsters and a reminder to the investing public to be vigilant before entrusting their life savings to so-called investment advisors. You should research your investment advisors and verify the information you are provided. I commend Connecticut’s Department of Banking for initiating this investigation and the U.S. Postal Inspection Service, SIGTARP, and FBI for pursuing it thoroughly to secure justice. I applaud the victims who appeared in court today and told the court about the fraud and the painful ways in which it has affected their lives.”

According to court documents and statements made in court, Brass represented herself as a successful investment advisor and solicited funds from investors, including investors who were elderly and in a vulnerable physical condition. Brass told some potential investors that their money would be safe if invested with her because she had a formula for investing that ensured against loss and guaranteed a good return on investment. She also told some investors that her investment funds were federally insured and that she would personally guarantee investments in the fund with her own substantial personal assets. As part of the scheme, Brass reassured some of her investors by sending fraudulent account statements to them purporting to represent their account balances and that their investments were performing well. Brass told some investors that she could not repay them because the state of Connecticut had “frozen” her accounts. These statements were false.

Brass failed to invest all of the funds entrusted with her and used some of the money to pay personal expenses for herself and her family—such as credit card bills, college tuition bills, home furnishings, and clothing—and to make “lulling” payments to previous investors. Brass also used investors’ money to make loan payments to a bank that received funds though the Troubled Asset Relief Program (TARP).

The investigation revealed that Brass operated this Ponzi scheme and defrauded individuals, many of them elderly, of at least $1.9 million over seven years. At sentencing today, the court found that Brass abused her victims’ trust and that Brass obstructed justice by trying to silence her victims by telling them that their funds were “frozen” and that if they came forward they might never see their money.

Six victims spoke at today’s sentencing. One victim told the court that she was recovering from a near-catastrophic car accident when Brass approached her about investing her insurance settlement money with her. Brass took the insurance proceeds from the victim on the day they were received and diverted them to her own use. As a result, the victim, who is battling cancer, told the court that she has been forced to forego physical therapy and other recommended medical treatments that she now cannot afford. Another victim, now 92-years-old, told the court that Brass stole more than $600,000 of her money over the course of seven years, some of it taken when Brass already knew that she was the subject of state and federal investigations.

A hearing to determine restitution will be scheduled.

On April 25, 2012, Brass pleaded guilty to one count of mail fraud.

This matter was investigated by the U.S. Postal Inspection Service, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Federal Bureau of Investigation, and the State of Connecticut Department of Banking. The case was prosecuted by Assistant U.S. Attorney Susan L. Wines.

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Pennsylvania Investment Advisor Robert G. Bard Indicted For Three Million Dollar Fraud Scheme

Source- http://www.justice.gov/usao/pam/news/2012/Bard_07_19_2012.htm

The United States Attorney's Office for the Middle District of Pennsylvania announced that an indictment charging Robert G. Bard, of Warfordsburg, Fulton County, Pennsylvania, was unsealed today following his arrest.

Bard was indicted by the federal grand jury in Harrisburg, on Wednesday, in a 21-count Indictment charging one count of securities fraud, 14 counts of wire fraud, three counts of mail fraud, one count of bank fraud, one count of investment advisor fraud, and one count of making false statements to the FBI.

Bard was arrested today and before a federal magistrate judge in Harrisburg for his initial appearance in court. Bard faces up to 20 years' imprisonment on the securities fraud charge, up to 20 years' imprisonment on the wire and mail fraud charges, up to 30 years' imprisonment on the bank fraud charge, and up to five years' imprisonment on the investment advisor fraud and false statements charge, as well as substantial fines and penalties if convicted.

According to U.S. Attorney Peter J. Smith, Bard allegedly operated Vision Specialist Group (VSG), a registered investment advisor in Pennsylvania and West Virginia, between December 2004 and August 2009. On July 30, 2009, the Securities and Exchange Commission (SEC) filed a civil complaint against Bard and VSG, and the U.S. District Court for the Middle District of Pennsylvania issued a preliminary injunction against Bard and VSG on August 11, 2009.

In November 2011, the U.S. District Court determined that Bard and VSG violated securities laws and issued a permanent injunction. In February 2012, the Court determined that Bard was liable for a civil penalty of $2.5 million, as well as disgorgement of $450,000 in profits which resulted from his fraud.

The Indictment alleges that Bard, through VSG, defrauded at least 43 investors of over $3 million by materially misrepresenting and failing to fully disclose the types of investments he made for them and fabricating the performance of their accounts. Bard allegedly created false account statements to conceal millions of dollars in losses his clients sustained as a result of risky and speculative investments he made in penny stocks and other volatile securities.

Bard also allegedly failed to advise his clients that he was terminated from his prior employment as a stock broker for forging customer signatures, or that he filed for bankruptcy in July 2005. Rather, he allegedly told clients that he was a deeply religious man who had 18 years of financial success and that they could trust him with their life savings.

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SEC Charges Bristol-Myers Squibb Executive With Insider Trading in Stock Options of Potential Acquisition Targets

Source-  http://www.sec.gov/news/press/2012/2012-148.htm

Washington, D.C., Aug. 2, 2012 – The Securities and Exchange Commission today charged an executive at Bristol-Myers Squibb with insider trading on confidential information about companies being targeted for potential acquisitions. His illegal trading took place as recently as just weeks ago.

The SEC alleges that Robert D. Ramnarine, who lives in East Brunswick, N.J., made more than $300,000 in illegal profits by misusing nonpublic information he obtained while helping Bristol-Myers Squibb evaluate whether to acquire three other pharmaceutical companies. He used multiple personal brokerage accounts to illegally trade in stock options of these potential target companies. Prior to some trading, Ramnarine conducted Internet research from his Bristol computer to determine whether he could be detected by regulators. He searched for such phrases as “can stock option be traced to purchaser” and “illegal insider trading options trace” and viewed such articles as “Ways to Avoid Insider Trading.” Ramnarine even viewed a press release on the SEC’s website announcing an enforcement action arising from illegal trading in call options in advance of an acquisition announcement.

“Ramnarine tried to educate himself about how the SEC investigates insider trading so he could avoid detection, but apparently he ignored countless successful SEC enforcement actions against similarly ill-motivated individuals who paid a heavy price for their illegal trading,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit. “Executives at pharmaceutical companies or in any industry should know better than to abuse confidential, market-moving information, and our charges against Ramnarine should serve notice that when you violate insider trading laws, no matter how you scheme, you will be caught.”

The SEC is seeking a court order to freeze Ramnarine’s brokerage account assets. In a parallel criminal action, the U.S. Attorney’s Office for the District of New Jersey announced the arrest of Ramnarine today.

According to the SEC’s complaint filed in federal court in New Jersey, Ramnarine is an executive in the treasury department at Bristol-Myers Squibb. He conducted his insider trading schemes from August 2010 to July 2012, illegally trading in stock options of Pharmasset Inc., Amylin Pharmaceuticals Inc., and ZymoGenetics Inc. in advance of announcements that those companies would be acquired.

The SEC alleges that just as Bristol was finalizing its agreement with ZymoGenetics in late August 2010, Ramnarine started to buy out-of-the-money call options. A call option is a security that derives its value from the underlying common stock of the issuer and gives the purchaser the right to buy the underlying stock at a specific price within a specified period of time. Typically, investors will purchase call options when they believe the stock of the underlying securities is going up. Ramnarine made $30,551 in illegal profits by trading ZymoGenetics call options in advance of a Sept. 7, 2010 public announcement that Bristol-Myers Squibb was acquiring ZymoGenetics.

The SEC further alleges that in advance of a Nov. 21, 2011 announcement that Pharmasset would be acquired by Gilead Sciences Inc., Ramnarine bought Pharmasset call options based on material, nonpublic information that he obtained from participating in Bristol-Myers Squibb’s evaluation of a possible acquisition of Pharmasset. This was part of an auction process conducted by Pharmasset and its investment bankers during the weeks before the Gilead-Pharmasset announcement. Ramnarine made $225,026 in illegal profits when he sold the calls immediately after the public announcement of Pharmasset’s sale.

According to the SEC’s complaint, Ramnarine very recently sold or “wrote” put options and purchased call options in advance of a June 29, 2012 announcement by Bristol-Myers Squibb that it would acquire Amylin. A put option is a security that derives its value from the underlying common stock. When investors sell or “write” puts, they obligate themselves to sell the underlying security at a certain price before the expiration date. Investors usually write puts when they believe the price of the underlying stock price is moving up. Ramnarine’s trades were based on material nonpublic information that he obtained by working on financing and capital structure matters as part of Bristol’s due diligence process leading up to the acquisition announcement. Ramnarine made $55,784 in illegal profits by trading Amylin put and call options in advance of the public announcement.

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SEC Charges N.Y.-Based Fund Manager Peter Siris and Others With Securities Law Violations Related to Chinese Reverse Merger Company

Source- http://www.sec.gov/news/press/2012/2012-146.htm

Washington, D.C., July 30, 2012 – The Securities and Exchange Commission today charged New York-based investment manager Peter Siris and two of his firms with a host of securities law violations mostly related to his activities with a Chinese reverse merger company, China Yingxia International Inc.

The SEC alleges that Siris, an active investor in Chinese companies and former newspaper money columnist, misled investors in his two hedge funds through which he invested $1.5 million in China Yingxia. Siris understated his involvement with the company particularly after it went out of business, and used his insider status to make illegal trades based on nonpublic information as he received it. In an attempt to circumvent the registration provisions of the securities laws, Siris also received shares from the China Yingxia CEO’s father and improperly sold them without any registration statement in effect. Siris further engaged in insider trading ahead of 10 confidentially solicited offerings for other Chinese issuers.

Siris and his firms agreed to pay more than $1.1 million to settle the SEC’s charges. The SEC also separately charged five individuals and one firm for securities law violations related to China Yingxia.

“Siris operated by his own set of rules in his dealings with China Yingxia and other Chinese issuers,” said Andrew M. Calamari, Acting Director of the SEC’s New York Regional Office. “He was the go-to person when Chinese reverse merger companies wanted to raise capital or needed advice about operations, but he used his prominence and reputation in this area to illegally game the system to his advantage.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Siris and his firms Guerrilla Capital Management LLC and Hua Mei 21st Century LLC became involved with China Yingxia in 2007 and their misconduct continued until 2010. Along with being one of three “consultants” that improperly raised money for China Yingxia, Siris and Hua Mei acted as advisers to the purported nutritional foods company.

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Joseph Mazella the Founder and President of the Great Atlantic Group Inc., Pleads Guilty of Operating Multi-Million-Dollar Ponzi Scheme

Source-  http://www.fbi.gov/newyork/press-releases/2012/jury-finds-staten-island-new-york-real-estate-developer-guilty-of-operating-multi-million-dollar-ponzi-scheme 

BROOKLYN, NY—Following two weeks of trial, a federal jury in Brooklyn, N.Y., today returned guilty verdicts against Joseph Mazella, the founder and president of the Great Atlantic Group Inc., a Staten-Island based real estate and financial consulting company, on charges of securities fraud, wire fraud, and money laundering. These charges arose out of the defendant’s operation of a Ponzi scheme that led to more than $14 million in losses. When sentenced by U.S. District Judge Carol B. Amon, the defendant faces a maximum sentence of 25 years in prison on the most serious charge.

The verdicts were announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York.

The evidence at trial proved that Mazella solicited money from prospective investors by telling them that he would invest their money in real estate projects, including projects in Trenton, N.J., a warehouse in Utica, N.Y., and a golf course in Greene County, N.Y. Mazella told his victims that their money would be safe and that he would pay them a fixed rate of return. Mazella encouraged several investors, typically senior citizens, to apply for reverse mortgages on their residences and to invest the proceeds with him. From approximately January 2007 until approximately December 2010, investors gave Mazella more than $14 million. By January 2007, though, the evidence showed that Mazella was operating Great Atlantic as a Ponzi scheme in which he paid returns to investors from existing investors’ deposits or money paid by new investors. Mazella also used investors’ money to pay his personal expenses, including payments for a Porsche, a mortgage on his personal residence and family expenses.

“The evidence at trial showed that the defendant callously and systematically defrauded his victims of their lives’ savings. Mazella’s victims, many of whom are senior citizens on a fixed income, turned to him to ensure their security in their golden years. Instead, their security was raided to fund his fraud, and they will feel the impact of Mazella’s crimes for the rest of their lives,” said U.S. Attorney Lynch.

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SEC Freezes Assets of Insider Traders in Nexen Acquisition

Source- http://www.sec.gov/news/press/2012/2012-145.htm

Washington, D.C., July 27, 2012 – The Securities and Exchange Commission today obtained an emergency court order to freeze the assets of traders using trading accounts in Hong Kong and Singapore to reap more than $13 million in illegal profits by trading in advance of this week’s public announcement that China-based CNOOC Ltd. agreed to acquire Canada-based Nexen Inc.

The SEC alleges that Hong Kong-based firm Well Advantage Limited and other unknown traders stockpiled shares of Nexen stock based on confidential information about the deal in the days leading up to the announcement. Well Advantage is controlled by prominent Hong Kong businessman Zhang Zhi Rong, who also controls another company that has a “strategic cooperation agreement” with CNOOC.

The SEC took the emergency action to freeze the traders’ assets within days of the public announcement of the deal and less than 24 hours after Well Advantage placed an order to liquidate its entire position in Nexen. The SEC’s investigation continues.

“Well Advantage and these other traders engaged in an all-too-familiar pattern of misusing inside information to place extremely timely trades and profit handsomely from their illegal acts,” said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. “Despite the challenges of investigating misconduct in the U.S. by trading accounts located overseas, we have moved swiftly to freeze the assets of these suspicious traders and will hold them accountable for their actions.”

According to the SEC’s complaint filed in federal court in Manhattan, CNOOC and Nexen announced before the markets opened on Monday, July 23 that CNOOC agreed to acquire Nexen for approximately $15.1 billion. Nexen’s stock subsequently rose sharply that day to close at nearly 52 percent higher than Friday’s closing price.

The SEC alleges that Well Advantage and certain unknown traders were in possession of material nonpublic information about the impending acquisition when they purchased Nexen’s stock in the days leading up to the public announcement. Well Advantage purchased more than 830,000 shares of Nexen on July 19 and had an unrealized trading profit of more than $7 million based on Nexen’s closing price on the day of the announcement. The other unknown traders used accounts located in Singapore to purchase more than 676,000 Nexen shares in the days preceding the announcement. They immediately sold nearly all of the stock once the announcement was made for illicit profits of approximately $6 million.

The emergency court order obtained by the SEC freezes the traders’ assets valued at more than $38 million and prohibits the traders from destroying any evidence. The SEC’s complaint charges Well Advantage and the unknown traders with violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. In addition to the emergency relief, the Commission is seeking a final judgment ordering the traders to disgorge their ill-gotten gains with interest, pay financial penalties, and permanently bar them from future violations.

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Lyndon Lydell Parrilla Pleads Guilty to Defrauding Investors Out of More Than $5 Million

Source- http://www.fbi.gov/boston/press-releases/2012/owner-of-foreign-exchange-currency-trading-company-pleads-guilty-to-defrauding-investors-out-of-more-than-5-million

BOSTON—A Los Angeles man pleaded guilty today in federal court to charges that he defrauded investors out of more than $5 million.

Lyndon Lydell Parrilla, 32, pleaded guilty before U.S. District Court Judge George A. O’Toole, Jr., to seven counts of wire fraud and three counts of money laundering for his role in the operation of Green Tree Capital.

Had the case proceeded to trial, the government would have proven that Parrilla, through Green Tree, solicited more than $5 million from customers, purportedly for the purpose of trading in the foreign currency exchange (FOREX) market. Parrilla traded, at most, a small portion of customer funds in FOREX and instead spent most of it on personal expenses for himself and his employees. To hide this fraud, Green Tree continued to e-mail account statements to customers purporting to show trading gains and losses. In many instances, the account statements showed that customers’ accounts had gained value through successful FOREX trading. In fact, Parrilla defrauded the Green Tree customers out of almost all of the more than $5 million they entrusted to him. As part of this prosecution, the government has seized from Parrilla a Mercedes S63, which is subject to forfeiture.

Sentencing is scheduled for October 25, 2012. Parrilla faces up to 20 years in prison on the wire fraud counts and 10 years in prison on the money laundering charges, to be followed by three years of supervised release, and a $250,000 fine.

The Commodity Futures Trading Commission, which conducted a parallel civil investigation, referred the case to the United States Attorney’s Office and cooperated with criminal authorities.

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John Kinnucan Pleads Guilty in Manhattan Federal Court to Insider Trading Charges

Source- http://www.fbi.gov/newyork/press-releases/2012/oregon-based-research-consultant-pleads-guilty-in-manhattan-federal-court-to-insider-trading-charges

NEW YORK—John Kinnucan, the president of Broadband Research LLC, an investment research firm located in Portland, Oregon, pleaded guilty today to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme in which Kinnucan obtained material, non-public information (inside information) about publicly traded companies and sold that information to Broadband’s clients, including hedge funds and money managers (BBR clients), announced Preet Bharara, the U.S. Attorney for the Southern District of New York. Kinnucan pleaded guilty before U.S. District Judge Deborah A. Batts.

U.S. Attorney Bharara said, “John Kinnucan engaged in an orchestrated campaign to obstruct a federal investigation into his illegal conduct, the very conduct for which he now stands convicted. Today the truth came out of his own mouth, and he admitted that he is a securities fraudster, and his attempts to obstruct justice in a repugnant and disturbing manner were ultimately fruitless. Briefly a cause célèbre, as some called him, Mr. Kinnucan is now a felon facing sentencing for his insider trading crimes.”

According to the charging documents in the case as well as statements made by Kinnucan during the plea proceedings:

From 2008 through 2010, Kinnucan obtained inside information about publicly traded companies, including quarterly revenue numbers, and sold that information to BBR Clients. The inside information came from co-conspirators who were employed at publicly traded companies, such as F5 Networks Inc., Sandisk Corporation, and Flextronics International Ltd.

In order to develop and maintain his network of public company sources, Kinnucan befriended public company employees and offered to provide some of them with consulting fees and/or other non-monetary consideration. Specifically, Kinnucan paid one of his sources approximately $27,500 for inside information and invested $25,000 in the business of another source.

After he obtained inside information from public company sources, Kinnucan provided it to BBR clients with the understanding that they would use the information to execute securities transactions. For example, in June 2010 and early July 2010, Kinnucan repeatedly sought information about F5’s quarterly financial results for the quarter ending on June 30, 2010, from an F5 employee. In a telephone call on the morning of July 2, 2010, Kinnucan informed the F5 employee that the guidance F5 previously provided to the investment community for the quarter which ended June 30, 2012, was $220 million. The F5 employee then told Kinnucan that the unadjusted revenue number was actually $232 million, confirming that F5 would beat Wall Street’s consensus estimates. Within minutes of the July 2, 2010 conversation with the F5 employee, Kinnucan called numerous BBR clients to provide them with the information. After receiving the F5 inside information from Kinnucan, at least two BBR Clients executed securities transactions in F5 based, in whole or in part, on Kinnucan’s inside information, earning profits and avoiding losses of more than $1.5 million.

In order to attract and retain BBR clients, and in an effort to hide the true identity of his public company sources, Kinnucan lied to existing and prospective BBR clients about the sources of his inside information, including by falsely stating that none of his sources was employed at public companies and that he did not pay his sources.

In an effort to obstruct the ongoing federal criminal investigation, from December 2011 through February 2012, Kinnucan made nearly 25 threatening telephone calls to prosecutors and agents responsible for the investigation of his unlawful activities. In these telephone calls, Kinnucan made repeated references to genocide, sexual and other forms of violence and threatened physical harm to one of the prosecutors handling this matter. He also made multiple telephone calls to one cooperating witness and attempted to contact another in an effort to intimidate and harass them.

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Ward Onsa was Sentenced to 78 Months for Operating a Multi-Million-Dollar Ponzi Scheme

Source- http://www.fbi.gov/newyork/press-releases/2012/hedge-fund-portfolio-manager-sentenced-to-78-months-for-operating-a-multi-million-dollar-ponzi-scheme

BROOKLYN—A hedge fund manager was sentenced today in Brooklyn federal court to serve 78 months in prison for running a Ponzi scheme. Ward Onsa, 60, of Naples, Florida, the manager of New Century Hedge Fund Partners LP, was sentenced by U.S. District Judge Dora L. Irizarry. Onsa pleaded guilty in December 2011 to operating the scheme, which resulted in losses to investors of over $3 million dollars. The court also ordered restitution to be paid to the defendant’s victims.

The sentence was announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York.

According to court documents, the defendant operated Ward Onsa & Company, as an investment manager, until 2005, when a series of trading losses and default judgments bankrupted the entity. Onsa then organized the New Century Hedge Fund and, between 2005 and 2010, solicited and received over $5 million in investor funds, primarily from individual retirement accounts. Onsa told the New Century investors that their money would be used to purchase securities, futures contracts, and options designed to profit when the Dow Jones Industrial Average reached 10,748. Onsa’s trading theory was that the market would not go above this level. As the market surged past the 10,748 level, however, the investments that the defendant made with the New Century investors’ retirement money plummeted in value.

The defendant also funneled money from New Century to himself and his earlier Ward Onsa & Company investors. Instead of disclosing the trading losses or the payments to Ward Onsa & Company investors, Onsa issued fake account statements to his investors falsely claiming consistent and steady earnings in the market. The defendant continued to solicit additional money from New Century investors through 2010 and used that new money to pay back the losses of the earlier Ward Onsa & Company investors.

U.S. Attorney Lynch extended her grateful appreciation to the FBI, the lead agency in government’s criminal investigation.

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SEC Charges Ronald Feldstein for Role in Facilitating Fake Investment in Penny Stock Company

Source- http://www.sec.gov/news/press/2012/2012-144.htm

Washington, D.C., July 25, 2012 — The Securities and Exchange Commission today charged a New York man for his role in a scheme to disseminate news of a fake investment to boost a struggling penny stock company.

The SEC alleges that Ronald Feldstein pretended to be the president of a private company, LED Capital Corp., and entered into an investment agreement with penny stock issuer Interlink-US-Network Ltd. Feldstein in fact held no such position at LED Capital Corp. and was merely being paid by Interlink’s management to play the role of a purported Interlink investor so they could spread news of a much-needed capital infusion. Feldstein then helped Interlink disseminate the false information in an SEC filing.

The SEC charged Interlink last year as part of a complaint against several perpetrators of an alleged green product-themed Ponzi scheme.

“Feldstein was nothing more than a fake president for hire who schemed with a public company to tout news of a sham investment and deceive investors,” said Andrew M. Calamari, Acting Regional Director of the SEC’s New York Regional Office.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Feldstein purportedly committed LED Capital Corp. – which in reality had no operations or assets – to pay $6 million for a minority block of Interlink shares that had an actual market value of less than $1.2 million. Although Feldstein knew the actual owner of LED Capital Corp., he concealed the purported contract committing his company to pay more than a 500 percent premium for a minority block of shares in a penny stock company that had liabilities far exceeding its assets. When SEC investigators spoke with the actual owner, he testified that he has been the sole officer-stockholder of LED Capital Corp. and never had any knowledge of the purported agreement. He testified that Feldstein had no authority or permission to act on behalf of the company, which he said doesn’t and likely never would have $6 million available to it. For his performance as the phony president of LED Capital Corp., Interlink awarded Feldstein shares of its common stock that had a market value of more than $400,000.

The SEC alleges that when Interlink sought to inform the stock market of the remarkable investment, Feldstein offered crucial assistance in developing the substance of a Form 8-K filing with the SEC to disclose the purported agreement. After Interlink’s CFO e-mailed Feldstein a draft Form 8-K for his review, Feldstein responded “Not good” and thereafter discussed the contents with Interlink’s CFO. Based on Feldstein’s comments, the agreement was instead called a “memorandum of understanding.” Feldstein then separately signed a memorandum of understanding on behalf of “LED Capital LLC” – a company similar in name to LED Capital Corp. but that does not actually exist. On Dec. 14, 2010, Interlink filed with the SEC the version of the Form 8-K that reflected Feldstein’s input.

The SEC’s complaint charges Feldstein with aiding and abetting violations by Interlink and its President of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder as well as violations by Interlink of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder. The Commission seeks injunctions from future violations of these provisions, disgorgement of ill-gotten gains, and a monetary penalty.

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