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Aug 14, 2017

White Collar | Top News - August 14, 2017




Law360 White CollarWHITE COLLAR

Monday, August 14, 2017

TOP NEWS

Transmar Commodity Group Ltd. CEO Peter G. Johnson, his son and a financial executive at the belly-up New Jersey cocoa distributor denied charges Friday that they engaged in a massive $360 million bank fraud, and Manhattan U.S. District Judge Jed S. Rakoff put the case on track for an April trial. Read more »
A New York federal judge sentenced inveterate white collar fraudster Jason Galanis to 173 months in prison for masterminding a $63 million bond fraud against a Native American tribal entity, with all but 60 months of it to run concurrently with the stretch he earned for running the Gerova Financial Ltd. pump-and-dump scheme. Read more »
U.S. District Judge Jed S. Rakoff tightened DMX's bail conditions Friday after hearing that the rapper, who is accused of a large-scale tax fraud, used cocaine and other drugs in recent weeks and traveled without authorization.Read more »
Convicted insider trader Raj Rajaratnam and two other executives with his defunct hedge fund Galleon Group asked a New York federal judge on Thursday to dismiss a bankruptcy trustee's $135 million fraud case against them, saying the complaint "completely distorts the reality" of the company's wind-down. Read more »
The U.S. Department of Justice is investigating “a large group of individuals and entities” tied to a $4.5 billion fraud on Malaysian sovereign wealth fund 1MDB, the agency said in its request to pause related civil forfeiture cases Thursday in California federal court. Read more »
An accounting firm that was sued after it gave $6 million in settlement funds meant for Bank of America Corp. investors to a fraudster had two potential defenses spiked by a Pennsylvania federal judge on Friday, with the court saying the suit against Heffler Radetich & Saitta LLP couldn’t be stopped by procedural stumbling blocks. Read more »
INVESTIGATIONS

Five Democratic lawmakers on Friday asked the head of the House Financial Services Committee to issue a subpoena to Deutsche Bank for documents related to a purported Russian money laundering scheme as well as loans made to President Donald Trump and his family. Read more »
The Hollywood Police Department said investigators have determined that an assistant U.S. attorney for the Southern District of Florida found dead on a Hollywood, Florida, beach earlier this year took his own life, according to Thursday news reports. Read more »
SECURITIES

Prosecutors have accused Platinum Partners co-founder Mark Nordlicht's lawyers of making a "veiled threat" to a former Platinum employee over his potential cooperation in the government's $1 billion securities fraud suit, a claim the defense calls "false and unfounded." Read more »
Analysis
The end of Libor, the benchmark rate at the center of a multibillion-dollar global rigging scandal, is drawing another step closer as Britain’s finance watchdog was due to close a consultation on Saturday on how it will force banks to contribute to setting the standard — and now attention is turning to what will replace it in the longer term. Read more »
An attorney for Bloomberg, The Associated Press, Reuters, The New York Times Co., Daily News LP and NYP Holdings asked a New York federal judge on Friday to release the names of jury members who convicted controversial former pharmaceutical executive Martin Shkreli on two counts of securities fraud and another conspiracy charge. Read more »
Prosecutors announced Friday that two men were arrested and two previously pled guilty to charges they raised $15 million by falsely claiming investors would make impressive profits in oil and gas projects, then used two-thirds of the cash to benefit themselves and advertise to new investors.Read more »
PUBLIC INTEGRITY

Federal prosecutors who are leading the corruption case against the former mayor of Reading, Pennsylvania, on Friday blasted a bid by the former city council president to cut short his time behind bars, rejecting his claims to have cooperated with the government. Read more »
A Pennsylvania state senator Thursday announced his intention to introduce legislation that would allow government agencies to receive restitution for fraud committed against them, in response to a 2016 state Supreme Court ruling that said public bodies were largely precluded from being made whole.Read more »
CYBERSECURITY

A Lithuanian appeals court said Friday that a man accused of scamming Google Inc. and Facebook Inc. out of over $122 million by posing as a major hardware manufacturer can be extradited to the United States. Read more »
ASSET FORFEITURE

The Third Circuit concluded Friday that two contested $5 million forfeiture orders connected to the racketeering convictions of two Pennsylvania men accused of loan sharking and illegal gambling must be re-examined in the wake of the U.S. Supreme Court’s decision in the recent Honeycutt case.Read more »
LEGAL ETHICS

A Wisconsin-based insurance company being sued over $3 million stolen by a credit union employee told a Minnesota federal judge on Thursday that the National Credit Union Administration Board should be forced to turn over dozens of emails with lawyers about a policy rescission agreement after it argued that it didn't get the benefit of legal counsel. Read more »
HEALTH

A pair of medical assistants who sued a California podiatrist under the False Claims Act and tried to intervene in his criminal case to get a slice of the winnings had their appeal rejected by the Ninth Circuit on Thursday, with the court saying they didn’t have enough of an interest in the case to step in.Read more »
A man accused of spearheading a $45 million Medicare fraud scheme and subjecting an immigrant to forced labor received 12 months of probation Friday after he pled guilty to a lesser charge when a mistake forced prosecutors to halt his trial. Read more »
A Massachusetts federal judge allowed the federal government to use various alternative procedures to notify potential victims of Insys Therapeutics’ alleged opioid racketeering and bribery scheme, finding that patients whose doctors took bribes can be considered victims. Read more »
IMMIGRATION

The Fifth Circuit on Thursday upheld the convictions of two brothers who abused the H-1B system by bringing in workers without lining up jobs for them, saying the men's objections to the trial court's judgment were non-starters. Read more »
A Houston tortilla factory forfeited $1 million after being convicted of conspiring to "encourage and induce unlawful immigration," the U.S. Department of Justice announced Friday, the same day the owners pled guilty to misdemeanors associated with hiring undocumented employees.Read more »
GOVERNMENT CONTRACTS

Virginia-based operational equipment supplier ADS Inc. will pay $16 million to settle False Claims Act allegations it illegally snagged government contracts set aside for small businesses and women- or minority-owned businesses, one of the largest settlements ever obtained for small-business contract fraud, the Department of Justice announced Thursday. Read more »
EXPERT ANALYSIS

The Second Circuit's far-reaching ruling in Allen will immediately impact the U.S. Department of Justice’s ability to prosecute individuals implicated in international investigations. The decision is likely to impact the Lava Jato Foreign Corrupt Practices Act investigation, as well as shape the DOJ’s future cooperation with governments in Latin America, say Nicholas Berg and Lindsey Sullivan of Ropes & Gray LLP. Read more »
The U.S. Supreme Court’s decision last year in Escobar should alter the way the government, defendants and courts approach discovery into the government’s knowledge and deliberations in False Claims Act cases, say Ethan Posner and Noam Kutler of Covington & Burling LLP. Read more »
With the Seventh Circuit’s recent affirmation of the spoofing and fraud convictions against Michael Coscia in the first criminal prosecution under the spoofing statute, traders would do well to keep in mind the different pieces of evidence that the government used to assemble the puzzle for the jury, say Clifford Histed and Gilbert Perales of K&L Gates LLP. Read more »
Series
As law firms hold sensitive information not only related to the firm but to the firm’s clients, an insider threat — whether it's a "bad actor employee" or inadvertent activity — poses a particular concern. There are steps that privacy officers can initiate to help minimize these threats, says Patricia Wagner, chief privacy officer for Epstein Becker Green. Read more »
Opinion
During the jury selection process, many times parties submit proposed voir dire questions, but the court ultimately chooses the questions to be asked and does all of the questioning of the jury panel. While this approach is judicially efficient, rarely do we learn anything meaningful from the panel members, say Lisa Blue of Baron and Blue and Robert Hirschhorn of Cathy E. Bennett & Associates. Read more »
LEGAL INDUSTRY
Analysis
Women make up half of all law school graduates and have done so for over two decades — but they’re still woefully underrepresented when it comes to appearing and speaking in court, a problem experts say can stymie their careers and prevent professional advancement. Here, Law360 looks at some things that are being done by law firms, judges and clients to help close the gender gap in litigation. Read more »
Steptoe & Johnson LLP on Thursday asked a California federal judge to send a suit alleging it underpays female attorneys to arbitration, saying that the former associate who brought the claims had signed agreements on two separate occasions to arbitrate any disputes she would have with the firm. Read more »
The Administrative Office of the U.S. Courts fixed a vulnerability with its online PACER/ECF system that could have granted unlimited access to website owners whose visitors were logged in to PACER, the Free Law Project said Wednesday. Read more »
Attorneys who travel abroad with privileged or confidential information on their portable devices must understand what their ethical duties are when pressed by U.S. border agents to search their phones, tablets and computers, according to a panel of experts Friday at a continuing legal education session in New York. Read more »
Attorneys considering entering the relatively new and volatile world of marijuana law need to educate themselves about the ethical rules and regulatory minefields surrounding the nascent industry, according to experts speaking Friday morning at a continuing legal education panel in New York City. Read more »
In a rare pro bono victory at U.S. Citizenship and Immigration Services’ Atlanta office, a Troutman Sanders LLP attorney working on behalf of the legal resource organization Kids in Need of Defense secured asylum for a teenage boy who faced violent retaliation for refusing to join a gang and sell drugs in his home country of Guatemala. Read more »
On the latest episode of Law360’s Pro Say podcast, the team discusses how employers should deal with mentally ill workers to avoid discrimination lawsuits, a landmark decison upholding a "spoofing" conviction, and the latest in the IP fight over beloved television show "Reading Rainbow."  Read more »
A D.C. Circuit decision could have far-reaching implications for the SEC's oversight of self-regulatory organizations, lawmakers have urged the DOJ to walk back its stance on gay rights protections in the workplace, and the National Labor Relations Board chairman confirmed his intention to leave the agency this year. These are some of the top stories in corporate legal news you may have missed last week. Read more »
For those who missed out, here's a look back at the law firms, stories and expert analyses that generated the most buzz on Law360 last week. Read more »
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TOP NEWS

Transmar Commodity Group Ltd. CEO Peter G. Johnson, his son and a financial executive at the belly-up New Jersey cocoa distributor denied charges Friday that they engaged in a massive $360 million bank fraud, and Manhattan U.S. District Judge Jed S. Rakoff put the case on track for an April trial. Read more »
Analysis
Banks have spent the last several years investing in technology to both serve their customers and simplify regulatory compliance, but with the Trump administration looking to ease the operating environment, financial institutions will have to hope their systems are nimble so those investments don't go to waste. Read more »
Convicted insider trader Raj Rajaratnam and two other executives with his defunct hedge fund Galleon Group asked a New York federal judge on Thursday to dismiss a bankruptcy trustee's $135 million fraud case against them, saying the complaint "completely distorts the reality" of the company's wind-down. Read more »
The Federal Energy Regulatory Commission told a California federal court Thursday that a dismissal bid by one of the four Barclays PLC traders accused of market manipulation should be denied, arguing that the five-year statute of limitations tolled long enough for the case to include him. Read more »
Analysis
The end of Libor, the benchmark rate at the center of a multibillion-dollar global rigging scandal, is drawing another step closer as Britain’s finance watchdog was due to close a consultation on Saturday on how it will force banks to contribute to setting the standard — and now attention is turning to what will replace it in the longer term. Read more »
POLICY & REGULATION

Five Democratic lawmakers on Friday asked the head of the House Financial Services Committee to issue a subpoena to Deutsche Bank for documents related to a purported Russian money laundering scheme as well as loans made to President Donald Trump and his family. Read more »
LITIGATION

An accounting firm that was sued after it gave $6 million in settlement funds meant for Bank of America Corp. investors to a fraudster had two potential defenses spiked by a Pennsylvania federal judge on Friday, with the court saying the suit against Heffler Radetich & Saitta LLP couldn’t be stopped by procedural stumbling blocks. Read more »
Capital One Financial Corp. on Thursday urged a Maryland federal court not to end its counterclaims accusing Intellectual Ventures I LLC of monopolizing the banking technology market in violation of the Clayton and Sherman acts.Read more »
A Wisconsin-based insurance company being sued over $3 million stolen by a credit union employee told a Minnesota federal judge on Thursday that the National Credit Union Administration Board should be forced to turn over dozens of emails with lawyers about a policy rescission agreement after it argued that it didn't get the benefit of legal counsel. Read more »
The last week has seen a new dispute between a now-defunct Czech credit union and a British debt collection firm, a lawsuit against a South Korean bank and a claim targeting a Chicago-based alternative investment manager.Read more »
In Law360's latest roundup of new actions at the Trademark Trial and Appeal Board, Uber takes on a mortgage lender with a similar name, Novartis faces drug name pushback from a rival pharma giant, Coachella targets a "Filmchella" application, and General Motors says its "Hummer" trademark is alive and well. Read more »
DEALS

In this week’s Taxation With Representation, Invitation Homes inks a tax-free merger with Starwood Waypoint Homes to form an $11 billion industry heavyweight, Vantiv buys U.K. peer Worldpay for £8 billion, and Envision Healthcare Corp. parts ways with its medical transportation business for $2.4 billion. Read more »
EXPERT ANALYSIS

Amendments to Regulation CC that will become effective next year add several new indemnities for electronically created checks and items deposited through remote deposit capture. This creates a new form of risk for financial institutions that must be cabined, say attorneys with Dykema Gossett PLLC. Read more »
The Consumer Financial Protection Bureau's pilot study on electronic mortgage closing technologies shows promise for breaking down the complicated closing process. However, further dialogue and analysis of the benefits, opportunities and risks of e-closings are critical to ensuring that all voices are heard and major risks are identified, says Eamonn Moran of Kilpatrick Townsend & Stockton LLP in the final