COURT FINES INVESTMENT ADVISER $2.5 MILLION FOR MISREPRESENTATIONS

The following excerpt is from the SEC website:

February 23, 2012

FEDERAL COURT ENTERS ORDER IMPOSING $2.5 MILLION CIVIL PENALTY AGAINST INVESTMENT ADVISER ROBERT GLENN BARD AND VISION SPECIALIST GROUP, LLC

The Securities and Exchange Commission announced that on February 2, 2012, United States District Judge William C. Caldwell of the United States District Court for the Middle District of Pennsylvania entered an order imposing a $2,500,000 civil penalty jointly and severally against defendants Robert Glenn Bard and Vision Specialist Group, LLC. In an earlier order on November 10, 2011, the Court found that defendants made false statements to thirty-three of their investment advisory clients on 146 separate occasions about what type of securities and holdings they had, where the assets were, and the value of the assets, and that they charged at least one client excessive fees. In assessing the penalty, the Court found that the egregiousness of defendants’ behavior, the recurrent nature of the conduct, the lack of cooperation with authorities, defendants’ degree of scienter, and the risk of loss created by defendants’ actions all weighed in favor of imposing a substantial penalty.

This case arises out of allegations by the Commission in a complaint filed on July 30, 2009, that defendant Bard, an investment adviser, and his solely-owned company Vision Specialist Group, LLC, had violated the federal securities laws through fraudulent misrepresentations regarding client investments, account performance and advisory fees, the creation of false client account statements, and forgery of client documents. On November 10, 2011, the Court granted the Commission’s motion for summary judgment. The Court found Bard and Vision Specialist liable for violations of § 17(a) of the Securities Act of 1933, § 10(b) of the Exchange Act of 1934, and Rule 10b-5 thereunder, and §§ 206(1) and 206(2) of the Investment Advisers Act of 1940. In that order, the Court also entered permanent injunctions against the defendants for violations of those provisions, and held the defendants jointly and severally liable for disgorgement of $450,000, plus prejudgment interest in an amount to be determined."

FOUNDERS OF CANOPY FINANCIAL, INC., SENTENCED TO 13 AND 15 YEARS IN PRISON FOR FRAUD

The following excerpt is from the SEC website:

February 23, 2012
United States v. Jeremy Blackburn and Anthony Banas, Criminal Action No. 09 CR 976 (N.D. Ill. March 1, 2010)
“The U.S. Securities and Exchange Commission (Commission) announced that on February 15, 2012, co-founders of the bankrupt Canopy Financial, Inc., a health care transaction-software company based in Chicago, were sentenced to 15 and 13 years in prison for defrauding investors and clients of more than $93 million. Anthony Banas, Canopy’s chief technology officer, was sentenced to 160 months in prison, while Jeremy Blackburn, Canopy’s former president and chief operating officer, was sentenced to 180 months in prison. Both men pleaded guilty in late 2010 to one count of wire fraud, admitting they engaged in a fraud scheme that cheated investors of approximately $75 million and also misappropriated more than $18 million from customer accounts intended for health care savings and expenses. In imposing sentence, United States District Judge Ruben Castillo of the Northern District of Illinois noted that this case was the most aggravated financial fraud he had seen in his 18 years on the federal bench. The judge ordered both men to pay mandatory restitution and forfeiture totaling $93,125,918.

According to their plea agreements, Blackburn and Banas used false information about Canopy’s financial condition, including a bogus auditor’s report and falsified bank statements, to fraudulently obtain approximately $75 million from several private equity investors in 2009. Approximately $39 million of that money was used to redeem shares of other Canopy investors, including approximately $1.6 million that went to Blackburn and $975,000 that went to Banas, while another $29 million obtained from investors was deposited into Canopy operating accounts.

Also according to their plea agreements, Blackburn and Banas misappropriated Canopy operating funds for their own benefit. Blackburn took approximately $6 million in unauthorized withdrawals and transfers from Canopy bank accounts during 2009. Blackburn typically directed a Canopy employee, or occasionally Banas, to transfer Canopy funds to his bank accounts or to pay for his personal expenses, including credit card balances, luxury car purchases, and travel on a private jet. Blackburn also paid for personal home renovations, bought sports tickets and purchased jewelry and watches using misappropriated Canopy funds. Banas used misappropriated Canopy money to invest $300,000 in a nightclub. Banas also spent $400,000 between 2007 and 2009 on other personal expenses.

Blackburn admitted that he created phony bank statements during 2009 to conceal the transfer of more than $18 million from special health care accounts in which Canopy held funds as custodian for the benefit of more than 1,600 clients and customers to make payments to medical providers. The funds were transferred to Canopy’s own operating accounts, as well as to benefit Blackburn and Banas personally.
The Commission’s cases against Blackburn (SEC v. Canopy Financial, Inc., et al., Case No. 09-CV-7429, USDC, N.D.IL (LR-21324) and Banas (SEC v. Anthony T. Banas, Case No. 10- CV 3877 USDC N.D. IL) (LR-21566) resulted in permanent injunctions against both individuals for violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], ordered disgorgement of $1,779,759.83 and prejudgment interest of $71,182.03 against Blackburn in April 2011 and disgorgement of $975,548.25 and prejudgment interest of $32,910.45 against Banas in June 2010.”

FDIC CLOSES FAILED BANK; FAILS TO FIND ACQUIRER

The following excerpt is from the Federal Deposit Insurance Corporation website:

“The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of Home Savings of America, Little Falls, Minnesota. The bank was closed today by the Office of the Comptroller of the Currency, which appointed the FDIC as receiver.
The FDIC was unable to find another financial institution to take over the banking operations of Home Savings of America. The FDIC will mail directly to depositors of Home Savings of America, checks for the amount of their insured money.

Customers with questions about today's transaction, including those with accounts in excess of $250,000, should call the FDIC toll-free at 1-800-523-8089. The phone number will be operational this evening until 9:00 p.m., Pacific Standard Time (PST); on Saturday from 9:00 a.m. to 6:00 p.m., PST; on Sunday from noon to 6:00 p.m., PST; on Monday from 8 a.m. to 8 p.m., PST; and thereafter from 9:00 a.m. to 5:00 p.m., PST. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/homesvgs.html.

Beginning Monday, depositors of Home Savings of America with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.asp to determine their insurance coverage.
As of December 31, 2011, Home Savings of America had $434.1 million in total assets and $432.2 million in total deposits. The amount of uninsured deposits will be determined once the FDIC obtains additional information from those customers.
The FDIC as receiver will retain all the assets from Home Savings of America for later disposition. Loan customers should continue to make their payments as usual.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.8 million. Home Savings of America is the eleventh FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution closed in the state was Patriot Bank Minnesota, Forest Lake, on January 27, 2012.”

SEC GOES TO COURT TO HELP INVESTORS IN BISYS GROUP INC., REPORTING CASE

The following excerpt is from the SEC website:

February 22, 2012
SEC v. The BISYS Group, Inc. 07 Civ. 4010 (RJS) (S.D.N.Y.)
SEC SEEKS COURT APPROVAL FOR PLAN OF DISTRIBUTION IN BISYS FINANCIAL REPORTING CASE
Washington, D.C., February 22, 2012 — On December 23, 2011, the Securities and Exchange Commission filed a motion in SEC v. The BISYS Group, Inc. 07 Civ. 4010 (RJS) (S.D.N.Y.), a financial reporting case, seeking court approval of a plan to distribute the approximately $25 million available for distribution to investors harmed by the conduct alleged in that case (the “Distribution Plan” or “Plan”). In connection with that motion, on February 8, 2012, the Hon. Richard J. Sullivan issued an order appointing A.B. Data, Ltd., the claims administration firm that served as the court-appointed claims administrator in a parallel class action, In re BISYS Securities Litigation, 04-Civ-3840 (JSR) (S.D.N.Y.) (the “Class Action”), as the claims administrator in the Commission’s case. The Court’s order also directed the posting of notice of the proposed Plan on the Commission’s website and A.B. Data’s website and set a deadline of March 12, 2012 for the submission of any comments or objections.

A copy of the proposed Distribution Plan and the Court’s order setting the schedule for proceedings on the proposed plan can be found here: [imbed links] Additional information can also be found on the Commission’s Investor Claims Funds webpage here:http://www.sec.gov/divisions/enforce/claims/bisys.htm.

If approved by the Court, the Distribution Plan will govern the distribution of the approximately $25 million paid by BISYS in settlement of the case, plus additional funds that may added from the approximately $225,000 paid in settlement by the defendant in a related case, SEC v. Wevodau, 08-Civ-8343 (RJS) (S.D.N.Y.). Under the terms of the Distribution Plan, the available funds will be distributed to shareholders who acquired and held BISYS stock during the period beginning on October 23, 2000 and ending on April 22, 2004) (the “Recovery Period”), and suffered a loss on their investment, as calculated under the Plan. The Plan will be administered by A.B. Data, the claims administration firm that served as the court-appointed claims administrator in the Class Action. Persons eligible to receive a distribution under the proposed Plan are persons who acquired BISYS shares during the Recovery Period, and who incurred a Net Recognized Loss, as defined under the Plan, with respect to their purchase of BISYS shares and (a) submitted a claim that was not deemed deficient in the Class Action; or (b) who opted out of the class in the Class Action.

The Commission’s complaint, filed May 23, 2007, alleged that BISYS violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934 by engaging in a variety of improper accounting practices that resulted in material overstatements of BISYS’s reported financial results by roughly $180 million in fiscal years 2001, 2002, and 2003. As a result, the Commission alleged that BISYS filed annual and quarterly reports, and other documents, that materially misstated its results for the fiscal years ended June 30, 2001, 2002, and 2003, interim quarters during those fiscal years, and the quarters ended September 30, and December 31, 2003. On July 18, 2007, the Court entered a final judgment against BISYS, to which BISYS consented without admitting or denying the allegations in the complaint, pursuant to which BISYS paid a total of approximately $25 million in disgorgement and pre-judgment interest in settlement of the case.

For additional information regarding the Commission’s civil actions against BISYS and Wevodau, see Litigation Release Nos. 20125 (May 23, 2007), and20756 (September 30, 2008).
BISYS is now known as Citi Investor Services, Inc.”

MUNICIPAL TAX LIEN BID RIGGERS PLEAD GUILTY

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The following excerpt is from the Department of Justice Antitrust website:

"WASHINGTON — Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.
According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.
Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

TOTAL COMPANIES SETTLE ROYALTY UNDERPAYMENT ALLEGATIONS FOR $15 MILLION

The following excerpt is from the Department of Justice website:

Wednesday, February 22, 2012
“Total Fina S.A., Total Minatome Corporation, Total Exploration Production USA Inc., Fina Oil and Chemical Company, Elf Exploration Inc., Total E&P USA I nc. and their affiliates have agreed to pay the United States $15 million to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, the Justice Department announced today.

Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced.   Each month, companies are required to report and pay to the U.S. Department of the Interior the amount of royalty that is due.   This settlement resolves claims by the United States under the False Claims Act that the Total defendants improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, improperly reported processed gas as unprocessed gas to reduce royalty payments, and engaged in a variety of other under-reporting of royalties that had been the subject of a series of outstanding administrative actions.

“ When companies are permitted to remove natural gas and other non-renewable resources from public lands, we must require them to keep their end of the bargain and pay their fair share of royalties,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.   “Through this case and others like it, we are demonstrating our commitment to protect natural resources and support important federal programs from which we all benefit.”

Total, the fifth largest publicly-traded integrated international oil and gas company in the world,  has operations in more than 130 countries, and engages in all aspects of the petroleum industry, including oil and gas exploration, development and production, refining, marketing, trading and shipping. The Total and Fina corporate families merged in 1999, and became known as Total Fina.   In 2000, the company acquired Elf Aquitaine.

“The Department of the Interior and ONRR remain committed to ensuring that energy companies accurately report production and pay the required royalties,” said Greg Gould, Interior’s Acting Deputy Assistant Secretary for Natural Resources Revenue.  “We will continue to pursue every dollar due to taxpayers, Indian landowners, and the Federal Government from extracting these precious natural resources from Federal and American Indian lands.”

Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act, and from a series of administrative actions separately initiated and pursued by the Department of the Interior’s Office of Natural Resources Revenue (and its predecessor, the Minerals Management Service).   Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens may file actions on behalf of the United States and share in any recovery.  Because Mr. Wright is deceased, his heirs will receive $23,000 plus interest as their share of the settlement.   This represents a 25 percent share of the $92,000 in the settlement that is allocated to claims pursued by Mr. Wright.   The United States will intervene against the Total defendants for the purpose of completing this settlement.   The Department of Justice previously intervened against several other defendants in the Wright lawsuit.   Settlements in the case to date exceed $280 million.

The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division, the U.S. Attorney for the Eastern District of Texas, and the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.  

The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.).   The allegations contained in the complaint against the Total companies are merely accusations and do not constitute a determination of liability.”