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This is a photo of the National Register of Historic Places listing with reference number 7000063

Monday, March 5, 2012

KAZAKHSTANI NATIONAL PLEADS GUILTY TO "HACK AND DUMP" SCHEME

The following excerpt is from the Department of Justice website:

Friday, March 2, 2012
“WASHINGTON – Alexey Li, 21, a citizen of Kazakhstan who entered the United States on a student visa, pleaded guilty today before U.S. District Judge Ewing Werlein, Jr. to aiding and abetting money laundering, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.

Li and three co-conspirators were charged in an indictment filed in the Southern District of Texas and unsealed in December 2011.

According to court documents, Li agreed to launder funds generated in a sophisticated “hack and dump” stock scheme that caused more than $400,000 in losses.  The indictment charges that Li’s co-conspirators illegally accessed brokerage accounts to engage in a stock fraud scheme in which the compromised accounts were used to purchase borrowed shares of stock at above-market prices from the defendants’ personal brokerage accounts.  Li’s co-conspiratorsthen repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts.

At sentencing, Li will face a maximum penalty of 10 years in prison and a $250,000 fine.

This case was investigated by the FBI.  The case is being prosecuted by Trial Attorney Ethan Arenson of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.

Criminal indictments are only charges and are not evidence of guilt.  All defendants are presumed innocent until and unless proven guilty by proof beyond a reasonable doubt in a court of law.”



Sunday, March 4, 2012

COURT ENTERS SUMMARY JUDGEMENT AGAINST INSIDE TRADERS JOHN AND MARLEEN JANTZEN

The following excerpt is from the SEC website:

March 1, 2012
“On Wednesday, February 29, 2012, United States District Judge James R. Nowlin of the Western District of Texas, Austin Division, entered summary judgment against Austin residents Marleen Jantzen, a former assistant to an executive at Dell, Inc., and husband John Jantzen, a Commission-registered securities broker. The Commission previously charged the Jantzens with insider trading in connection with a September 21, 2009 public announcement that Dell would acquire Perot Systems, Corp. in a tender offer transaction.
The Court found that both Jantzens insider traded in violation of Sections 10(b) and 14(e) of the Exchange Act, and Rules 10b-5 and 14e-3(a) thereunder, and that Marleen Jantzen also violated Exchange Act Rule 14e-3(d). The Court enjoined the Jantzens from future violations of those provisions and ordered them to pay disgorgement of $26,920.50, representing profits gained as a result of the illegal insider trading, plus prejudgment interest. The Court deferred a final ruling on the Commission’s request for monetary penalties, pending submission of further briefing by the parties.

In granting this relief, the Court specifically found that “Marleen tipped John and took unprecedented and persistent action to ensure that they were able to maximize their informational advantage.” The Court also found that the evidence showed “a high degree of scienter, particularly with regard to John, who as a licensed securities broker certainly knew what he was doing.”

The Commission’s complaint, filed on October 5, 2010, alleged that Marleen Jantzen learned through an internal Dell email material, nonpublic information regarding Dell’s impending tender offer for the shares of Perot Systems, Inc., and thereafter tipped her husband to the inside information. The Court found that on September 18, 2009, the last trading day before the tender offer announcement, Marleen Jantzen made a highly unusual cash transfer to the couples’ joint brokerage account. Within minutes of this transfer, John Jantzen bought Perot Systems call options and stock and Dell securities in the joint account—in total, purchasing 500 shares of Perot Systems common stock and 24 Perot Systems call option contracts.

On September 21, 2009, Dell and Perot Systems jointly announced the tender offer for Perot Systems’ shares. The stock price immediately rose from $17.91 to $29.56, or approximately 65% from the prior day’s closing price. When John Jantzen cashed out that day, the couple reaped one-day trading profits of $26,920.50“.

OP-ED TEXT ON WALL STREET REFORMS BY U.S. TREASURY SECRETARY TIM GEITHNER

The following excerpt is from a Department of the Treasury e-mail:

 You are subscribed to Wall Street Reform for U.S. Department of the Treasury.
Geithner Op-Ed: ‘Financial Crisis Amnesia’

  "WASHINGTON – In an op-ed to be published in the March 2, 2012 edition of the Wall Street Journal, Treasury Secretary Tim Geithner discusses the perils of financial crisis amnesia, contrasting the terrible costs of crisis with the complaints of those attempting to weaken or repeal crucial Wall Street reforms.

 The full text of the piece follows. Financial Crisis Amnesia By Tim Geithner

My wife looks up from the newspaper with bewilderment at another story about people in the financial world or their lobbyists complaining about Wall Street reform. Four years ago, on an evening in March 2008, I received a call from the CEO of Bear Stearns informing me that they planned to file for bankruptcy in the morning. Bear Stearns was the smallest of the major Wall Street institutions, but it was deeply entwined in financial markets and had the perfect mix of vulnerabilities. It took on too much risk. It relied on billions of dollars of risky short-term financing. And it held thousands of derivative contracts with thousands of companies. These weaknesses made Bear Stearns the most important initial casualty in what would become the worst financial crisis since the Great Depression. But as we saw in the summer and fall of 2008, these weaknesses were not unique to that firm. In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising—the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require. When the CEO of Bear Stearns called that night, it was not because I was his firm's supervisor or regulator, but because I was then the head of the Federal Reserve Bank of New York, which serves as the fire department for the financial system. The financial safeguards in the law at that moment were tragically antiquated and weak. Neither the Fed, nor any other federal agency, had the necessary comprehensive authority over investment firms like Bear Stearns, insurance companies like AIG, or the government-sponsored mortgage giants Fannie Mae and Freddie Mac. Regulators did not have the authority they needed to oversee and impose prudent limits on overall risk and leverage on large nonbank financial institutions. And they had no authority to put these firms, or bank holding companies, through a managed bankruptcy that wound them down in an orderly way or to otherwise adequately contain the damage caused by their failure. The safeguards on banks were much tougher than those applied to any other part of the financial system, but even those provisions were not conservative enough. A large shadow banking system had developed without meaningful regulation, using trillions of dollars in short-term debt to fund inherently risky financial activity. The derivatives markets grew to more than $600 trillion, with little transparency or oversight. Household debt rose to an alarming 130% of income, with a huge portion of those loans originated with little to no supervision and poor consumer protections. The failure to modernize the financial oversight system sooner is the most important reason why this crisis was more severe than any since the Great Depression, and why it was so hard to put out the fires of the crisis. The failure to reform sooner is why the crisis caused gross domestic product to fall at an annual rate of 9% in the last quarter of 2008; why millions of Americans lost their jobs, homes, businesses and savings; why the housing market is still so far from recovery; and why our national debt has grown so significantly. For all these reasons, President Obama asked Congress to pass tough reforms quickly, before the memory of the crisis faded. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by the president on July 21, 2010, put in place safer and more modern rules of the road for the financial industry. Yet only four years after the financial crisis began to unfold, some people seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform. Remember the crisis when you hear complaints about financial reform—complaints about limits on risk-taking or requirements for transparency and disclosure. Remember the crisis when you read about the hundreds of millions of dollars now being spent on lobbyists trying to weaken or repeal financial reform. Remember the crisis when you recall the dozens of editorials and columns against reform published on the opinion pages of this newspaper over the past three years. Are the costs of reform too high? Certainly not relative to the costs of another financial crisis. Credit is relatively inexpensive and growing across most of the U.S. financial system, although it is still tight for some borrowers. If the costs of reform were a material drag on credit growth, then loans to businesses would not have grown faster than the overall economy since the law passed and its implementation began. Are these reforms complex? No more complex than the problems they are designed to solve. And, it should be noted, most of the length and complexity in the rules is the result of the care required to target safeguards where they are needed, not where they would have a damaging effect. Is there some risk that these reforms will go too far with unintended consequences? That depends on the quality of judgment of regulators in the coming months as they flesh out the remaining reforms. But our system provides considerable protection against that risk, with the rules subject to long periods of public comment and analysis and with room in the law to get the balance right. The greater error would be for Congress or the regulators, under tremendous pressure from lobbyists, to once again exempt large swaths of the financial industry from rules against abuse. These reforms are not perfect, and they will not prevent all future financial crises. But if these reforms had been in place a decade ago, then the rise in debt and leverage would have been less dangerous, consumers would not have been nearly as vulnerable to predation and abuse, and the government would have been able to limit the damage that a financial crisis could have on the broader economy. President Obama, along with Sen. Chris Dodd and Rep. Barney Frank, deserves enormous credit for pushing for tough reforms quickly. My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve.”
 Mr. Geithner is secretary of the U.S. Treasury.

Saturday, March 3, 2012

FINAL JUDGEMENT ENTERED AGAINST FORMER CFO OF QUEST COMMUNICATIONS

The following excerpt is from the SEC website:

February 28, 2012
“COURT ENTERS FINAL JUDGMENT AGAINST FORMER CFO OF QWEST COMMUNICATIONS INT’L ROBERT S. WOODRUFF
The U.S. Securities and Exchange Commission announced today that the United States District Court for the District of Colorado entered a Final Judgment dated February 3, 2012, in a civil action against Robert S. Woodruff, the former chief financial officer of Qwest Communications International Inc., a Denver-based telecommunications company. Woodruff, without admitting or denying the Commission’s allegations, consented to the entry of a Final Judgment that enjoins him from violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; finds that he is liable for disgorgement of $1,731,048, plus prejudgment interest of $640,427, imposes a civil penalty of $300,000; and prohibits him from acting as an officer or director of a public company for a period of five years. It is anticipated that the Commission will ask the Court to add the disgorgement, interest and penalty to a Fair Fund which was established in SEC v. Qwest Communications, Inc., Civ No. 04-cv-1267 (D. Colorado). The Commission thus far has distributed approximately $275 million from the Fair Fund to harmed investors
According to the SEC’s complaint, from at least April 1, 1999 through March, 2001, Woodruff and others at Qwest engaged in a large-scale financial fraud that hid from the investing public the true source and nature of the company’s revenue and earnings growth. The complaint alleged that, although Qwest publicly touted its purported growth in services contracts which would provide a continuing revenue stream, in fact, the company fraudulently and repeatedly relied on revenue recognition from one-time sales of assets known as “IRUs” and certain equipment without making required disclosures. The complaint also alleged that Woodruff and others fraudulently and materially misrepresented Qwest’s performance and growth to the investing public. The complaint further alleged that Woodruff sold Qwest stock in violation of the insider trading prohibition of the securities laws."

Friday, March 2, 2012

U.S. TREASURY SECRETARY TIM GEITHNER ON FINANCIAL CRISIS REFORMS

The following excerpt is from a Department of the Treasury e-mail:

 You are subscribed to Wall Street Reform for U.S. Department of the Treasury.
Geithner Op-Ed: ‘Financial Crisis Amnesia’

  WASHINGTON – In an op-ed to be published in the March 2, 2012 edition of the Wall Street Journal, Treasury Secretary Tim Geithner discusses the perils of financial crisis amnesia, contrasting the terrible costs of crisis with the complaints of those attempting to weaken or repeal crucial Wall Street reforms.

 The full text of the piece follows. Financial Crisis Amnesia By Tim Geithner

My wife looks up from the newspaper with bewilderment at another story about people in the financial world or their lobbyists complaining about Wall Street reform. Four years ago, on an evening in March 2008, I received a call from the CEO of Bear Stearns informing me that they planned to file for bankruptcy in the morning. Bear Stearns was the smallest of the major Wall Street institutions, but it was deeply entwined in financial markets and had the perfect mix of vulnerabilities. It took on too much risk. It relied on billions of dollars of risky short-term financing. And it held thousands of derivative contracts with thousands of companies. These weaknesses made Bear Stearns the most important initial casualty in what would become the worst financial crisis since the Great Depression. But as we saw in the summer and fall of 2008, these weaknesses were not unique to that firm. In the spring of 2008, more Americans were starting to face higher mortgage payments as teaser interest rates reset and they could no longer refinance out of them because the value of their homes stopped rising—the leading edge of a wave of foreclosures and a terrible fall in house prices. By the time Bear Stearns failed, the recession was then already several months old, but it would of course get much worse in coming months. These problems were partly the result of amnesia. There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require. When the CEO of Bear Stearns called that night, it was not because I was his firm's supervisor or regulator, but because I was then the head of the Federal Reserve Bank of New York, which serves as the fire department for the financial system. The financial safeguards in the law at that moment were tragically antiquated and weak. Neither the Fed, nor any other federal agency, had the necessary comprehensive authority over investment firms like Bear Stearns, insurance companies like AIG, or the government-sponsored mortgage giants Fannie Mae and Freddie Mac. Regulators did not have the authority they needed to oversee and impose prudent limits on overall risk and leverage on large nonbank financial institutions. And they had no authority to put these firms, or bank holding companies, through a managed bankruptcy that wound them down in an orderly way or to otherwise adequately contain the damage caused by their failure. The safeguards on banks were much tougher than those applied to any other part of the financial system, but even those provisions were not conservative enough. A large shadow banking system had developed without meaningful regulation, using trillions of dollars in short-term debt to fund inherently risky financial activity. The derivatives markets grew to more than $600 trillion, with little transparency or oversight. Household debt rose to an alarming 130% of income, with a huge portion of those loans originated with little to no supervision and poor consumer protections. The failure to modernize the financial oversight system sooner is the most important reason why this crisis was more severe than any since the Great Depression, and why it was so hard to put out the fires of the crisis. The failure to reform sooner is why the crisis caused gross domestic product to fall at an annual rate of 9% in the last quarter of 2008; why millions of Americans lost their jobs, homes, businesses and savings; why the housing market is still so far from recovery; and why our national debt has grown so significantly. For all these reasons, President Obama asked Congress to pass tough reforms quickly, before the memory of the crisis faded. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by the president on July 21, 2010, put in place safer and more modern rules of the road for the financial industry. Yet only four years after the financial crisis began to unfold, some people seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform. Remember the crisis when you hear complaints about financial reform—complaints about limits on risk-taking or requirements for transparency and disclosure. Remember the crisis when you read about the hundreds of millions of dollars now being spent on lobbyists trying to weaken or repeal financial reform. Remember the crisis when you recall the dozens of editorials and columns against reform published on the opinion pages of this newspaper over the past three years. Are the costs of reform too high? Certainly not relative to the costs of another financial crisis. Credit is relatively inexpensive and growing across most of the U.S. financial system, although it is still tight for some borrowers. If the costs of reform were a material drag on credit growth, then loans to businesses would not have grown faster than the overall economy since the law passed and its implementation began. Are these reforms complex? No more complex than the problems they are designed to solve. And, it should be noted, most of the length and complexity in the rules is the result of the care required to target safeguards where they are needed, not where they would have a damaging effect. Is there some risk that these reforms will go too far with unintended consequences? That depends on the quality of judgment of regulators in the coming months as they flesh out the remaining reforms. But our system provides considerable protection against that risk, with the rules subject to long periods of public comment and analysis and with room in the law to get the balance right. The greater error would be for Congress or the regulators, under tremendous pressure from lobbyists, to once again exempt large swaths of the financial industry from rules against abuse. These reforms are not perfect, and they will not prevent all future financial crises. But if these reforms had been in place a decade ago, then the rise in debt and leverage would have been less dangerous, consumers would not have been nearly as vulnerable to predation and abuse, and the government would have been able to limit the damage that a financial crisis could have on the broader economy. President Obama, along with Sen. Chris Dodd and Rep. Barney Frank, deserves enormous credit for pushing for tough reforms quickly. My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve.”
 Mr. Geithner is secretary of the U.S. Treasury.

FINAL JUDGEMENT ENTERED IN MAGNUM D'OR RESOURCES, INC., KICKBACK SCHEME

The following excerpt is from the SEC website:

February 24, 2012
COURT ENTERS JUDGMENTS AGAINST DEFENDANTS MAGNUM D’OR RESOURCES, INC., DAVID DELLA SCIUCCA, JR., AND DWIGHT FLATT
Securities and Exchange Commission v. Magnum d’Or Resources, Inc., et al., Civil Action No. 11-60920-CIV-JORDAN/BANDSTRA (S.D. Fla.)
The Securities and Exchange Commission announced that on February 13, 2012, the Court entered a final judgment of permanent injunction and other relief, by consent, against defendant Magnum d’Or Resources, Inc. The final judgment against Magnum enjoins the company from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities and Exchange Act of 1934 and Exchange Act Rule 10b-5. In addition to injunctive relief, the Court orders Magnum to pay disgorgement in the amount of $7,728,824, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest in the amount of $233,543.01, and imposes a civil penalty in the amount of $725,000. Also, on December 8, 2011 and January 4, 2012 the United States District Court for the Southern District of Florida entered judgments of permanent injunction and other relief, by consent, against defendants David Della Sciucca, Jr. and Dwight Flatt, respectively. The judgments enjoin Sciucca and Flatt from violations of Sections 5(a) and 5(c) of the Securities Act. Sciucca and Flatt also are barred from participating in any penny stock offering and from owning, receiving or purchasing Form S-8 stock. The judgments against Sciucca and Flatt provide for disgorgement and the imposition of civil penalties in amounts to be determined by the Court upon motion of the Commission.

The Commission commenced this action by filing its Complaint on April 29, 2011, against Magnum, Sciucca, Flatt, and others. The Complaint alleges Magnum issued stock pursuant to false Form S-8 registration statements, and used bogus consultants to funnel more than $7 million in illicit stock proceeds back into the company. The Complaint also alleges that in facilitating this kickback scheme, Magnum garnered the assistance of Flatt, Sciucca, and others, who liquidated Magnum S-8 stock, kept a portion of the sales proceeds, and then returned the remaining sales proceeds to Magnum under the guise of loan agreements. The Complaint further alleges that Magnum made false and misleading statements in its Form S-8 registration statements and in various press releases during the relevant time period.”