Madoff whistleblower and FBI target New Zealand
6 December 2012
Madoff whistleblower and FBI
target New Zealand
The man who blew the whistle on American Bernie Madoff, and two Federal Bureau of Investigation (FBI) investigators of massive U.S. insider trading activities, are heading to New Zealand.
They will be attending two inaugural events being hosted by the New Zealand Serious Fraud Office (SFO) in February 2013 – one of those, open to the business community.
Simon McArley, Acting Chief Executive of the SFO, has announced the Office is hosting an Economic Crime Seminar and also the inaugural international Economic Crime Agency Network (ECAN) conference.
New Zealand’s banking, legal, accounting, fraud prevention, law enforcement and other interested business communities will be welcome at the Economic Crime Seminar in Auckland on 11 February.
The ECAN conference on 12 and 13 February is for members only. It will be attended by delegates from international agencies such as the FBI, the UK Serious Fraud Office, Malaysian Anti-Corruption Commission and the European Commission Anti-Fraud Office.
Simon McArley says when New Zealand was asked to host the ECAN conference, the team saw it as an exciting opportunity to increase the understanding of the drivers and impact of economic crime in New Zealand and internationally.
“We are fortunate to have secured a range of very experienced overseas experts and we were keen for New Zealand business people to be able to hear them too. Thanks to Wynyard Group and Deloitte we have been able to share them through the seminar,” he says.
Harry Markopolos, uncovered evidence over nine years that Bernie Madoff's wealth management business was actually a massive Ponzi scheme, the largest financial fraud in U.S. history. Madoff was eventually sentenced to 150 years in prison. Markopolos’ book on the Madoff fraud, ‘No One Would Listen: A True Financial Thriller’, was published in 2010.
"Over the past two years the SFO has dealt with six actual or alleged Ponzi schemes. While those have been of varying sizes and impact, the total losses involved will likely exceed $500 million. The presentation from Harry Markopolos is timely given the recent conviction in the B'On case and the suspicions around Ross Asset Management," Simon McArley says.
The FBI agents, James Barnacle and Francine Gross, were both involved in investigations into the insider trading activities of Raj Rajaratnam and Rajat Gupta. They will also talk about investigating the US$7 billion Ponzi scheme operated by R. Allen Stanford.
The fourth international speaker, Commander Stephen Head from the Economic Crime Directorate of the City of London Police, will describe recent changes to the structure of fraud investigations in the UK following the National Fraud Indicator report which measured the level of economic crime.
ECAN has been established for agencies involved primarily with the investigation and prosecution of economic crime to benefit from an international network.
Simon McArley says, “With the increasing globalisation of fraud it is important for those agencies investigating serious fraud and corruption to have strong international relationships to enable us to investigate and prosecute cross-border criminal activity. ECAN will mean improved international cooperation, which provides quicker and better results for those affected by fraud.”
For information about attending the seminar see http://economiccrimeseminar.eventbrite.co.nz
Information about Mr Harry Markopolos
For more information about Mr Markopolos visit www.apbspeakers.com
Information about Raj Rajaratnam
In 2009, Rajaratnam was arrested by the FBI in the U.S. on allegations of insider trading, which also caused the Galleon Group, a hedge fund operated by Rajaratnam, to close. In 2011, he was found guilty on 14 counts of conspiracy and securities fraud. He was sentenced to 11 years in prison and fined a total criminal and civil penalty of over US$150 million. To date, this is the largest sentence in U.S. history for insider trading. At the time of his arrest the profit of Rajaratnam’s insider trading was estimated to be US$60 million.
about Rajat Gupta
In 2011, Rajat Gupta was arrested by the FBI on allegations of providing insider information to Raj Rajaratnam. In 2012, Gupta was found guilty on three counts of securities fraud and one count of conspiracy. He was found not guilty on two other securities fraud charges. In October, Gupta was sentenced to two years’ imprisonment. Prosecutors estimated that as a result of the information provided by Gupta, Rajaratnam benefited by US$11.2 million in profits, or losses avoided.
Information about R. Allen
In early 2009, Stanford became the subject of several fraud investigations, and was charged by the U.S. Securities and Exchange Commission with fraud and multiple violations of U.S. securities laws. It was alleged that Stanford misappropriated billions of dollars of investors' money and falsified the Stanford International Bank's records to hide the fraud. He was subsequently arrested by the FBI.
In March 2012,
Stanford was convicted of operating a Ponzi scheme which
cheated investors out of more than US$7 billion over 20
years. In June, Stanford was sentenced to 110 years’
imprisonment. This was one of the largest Ponzi schemes in
Recent New Zealand Conviction for operating a Ponzi scheme
In October this year, Jacqueline Bradley was sentenced to seven years and five months' imprisonment following conviction on 75 Crimes Act charges as a result of an SFO prosecution.
Mrs Bradley was a director of B'On Financial Services Ltd (B'On) which she ran with her late husband. B'On sought funds from clients on the pretext of investing in various funds they had established both in New Zealand and offshore.
However, the money paid to B'On for investment was not used in accordance with the requirements of their clients. Instead it was used to make repayments to other investors, and to fund the personal lifestyle of the Bradleys through their Family Trust.
Between April 2003
and November 2009, the offending totalled $14.4 million
(plus an additional AUD$840,000 from Australian
Role of the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO operates three investigative
• Evaluation & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.
The SFO operates under two sets of investigative powers.
Part I of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
Part II of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”
The SFO’s Annual Report 2012
sets out its achievements for the past year, while the
Statement of Intent 2012-2015 sets out the SFO’s three
year strategic goals and performance standards. Both are
available online at: www.sfo.govt.nz