Articles of Interest 098 - "I am one of the largest investors..."

Paul Greenwood and Stephen Walsh were arrested in the United States on February 29th, 2009, accused of running a fraudulent commodities trading and investment advisory scheme. On July 24th, 2009, they were charged with a six-counts, including money laundering.

Greenwood and Walsh informed clients – some of whom were “sophisticated” endowment funds and institutional investors – that their “conservative” enhanced stock indexing investment program beat the S&P 500 Index over a ten year period. Given the fact that the two issued USD554-million in promissory notes to cover investment losses and outright theft from the corporate entity that fronted their misdeeds, their claims to have uncovered financial alchemy would appear to be unfounded.

Bernard L. Madoff refused to accept clients employed in the financial services industry. Harry Markopolos, a whisteblower who complained repeatedly to the United States Securities and Exchange Commission (SEC), testified to the United States House of Representatives Committee on Financial Services on February 4th, 2009.

Markopolos dissected Madoff’s alleged “split-strike conversion strategy” into its component parts and revealed that Madoff’s alleged investment returns were numerically impossible. Third-party feeder funds and other financial institutions who shovelled money at Madoff – including Fairfield Greenwich Group of New York and Spain’s Banco Santander – could not perform the same calculations, costing them billions.

If professional investors don’t take the time to find out what’s behind the fancy and complex names of various investment products or “strategies”, how can they cry foul if all crumbles about them?

At what point does caveat emptor compel regulators and the judiciary to ignore the pleas of “wronged” professional investors who didn’t do their math homework and inject a little realpolitik into the global financial system? At what point do investment professionals actually take responsibility for their actions (or lack thereof)?

“I am one of the largest investors in America. I know these things.”

- Robert Citron, former Treasurer, Orange County, California, and convicted felon, to Merrill Lynch in 1993 about warnings from Merrill that Orange County’s derivatives positions faced catastrophe if interest rates rose. Interest rates subsequently rose. Orange County lost USD1.7-billion and declared Chapter 9 bankrupcy on December 6, 1994.

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Articles of Interest 097 - Bulgarian Bentleys

According to the CIA, Bulgaria’s GDP per head is USD12,900. A short while ago, Bulgaria’s tax authorities decided to investigate the 105 Bentley owners - http://www.bentleymotors.com/models/model_overview/default.aspx – to determine their sources of income. At an average price of USD270,000 in Bulgaria, that’s many years’ salary for the average car driver.

The Bulgarians are now chasing after a Bulgarian-born alleged fraudster linked to the sale of auction-rate securities, a sector of the investment market where TD Ameritrade refunded customers to the tune of USD456-million.

Perhaps Tzolov drove a Bentley in Sofia?

“I spent a lot of money on booze, birds and fast cars. The rest I just squandered..”

- George Best, Football club manager

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http://www.novinite.com/newsletter/print.php?id=105974


Bulgaria Launches Money Laundering Probe against Fugitive NY Broker

2009-07-20 16:03:14

Bulgaria's State Agency for National Security (DANS) has been ordered the collection of information about the activities, property and assets in Bulgaria owned by former Credit Suisse Group broker Julian Tzolov.

Bulgaria-born Tzolov was declared a fugitive by US federal prosecutors in June pursuing alleged fraud involving auction-rate securities.

The probe is to check allegations of money laundering against Bulgarian Julian Tzolov and his colleague Eric Butler, both formerly of Credit Suisse Securities (USA) LLC, who have been accused of engaging in an alleged fraudulent scheme.

The two are believed to have obtained higher commissions by selling clients higher-risk auction-rate securities backed by mortgages, when those clients wanted to buy lower-risk securities backed by student loans.

Julian Tzolov was caught by Spanish authorities in the middle of July with the assistance of the Federal Bureau of Investigation, after fleeing jurisdiction.

Tzolov and Eric Butler, both formerly of Credit Suisse Securities (USA) LLC, have been charged with conspiracy, securities fraud and multiple counts of wire fraud.


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Articles of Interest 096 - Ruthless

Another ruthless @#$% shaking down his community and his own family. Yet it would appear that nobody checked to see if he was indeed a qualified and registered investment advisor.

“Cowards die many times before their deaths;
The valiant never taste of death but once.”

- William Shakespeare (1564 - 1616), "Julius Caesar", Act II Scene 2

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http://www.theglobeandmail.com/news/national/family-of-earl-jones-call-on-the-investment-broker-to-come-forward/article1224071/


Family of Earl Jones call on the investment broker to come forward

'We want to express our profound regret for the pain and suffering he has caused and state our own sense of deception,' statement says

Montreal — The Canadian Press Last updated on Monday, Jul. 20, 2009 08:37AM EDT

The wife and daughters of a financial planner who allegedly bilked clients out of millions of dollars say they are devastated.

In a statement released to the media Sunday through a media relations firm, wife Kimberly and daughter
Kristine of Montreal investment broker Earl Jones say they too have experienced anger, despair and
disillusionment.

“We want to express our profound regret for the pain and suffering he has caused and state our own sense of deception,” they say in the statement.

“The Earl Jones we knew was a loving husband, devoted father and grandfather and a respected member of the community. The Earl Jones who has been revealed in recent days is a man we can scarcely believe exists.”

His daughter says she fears she will never recover the funds she entrusted to her father and that the family was unaware of his business activities and will co-operate fully with authorities.

“We are anxious for Earl to come forward and provide and explanation,” they write. Quebec's securities regulator alleges between $30-million and $50-million is missing from accounts run by Jones.

Jones, who has been missing since last week, has not been charged and there is no warrant out for his arrest. Some of the alleged victims are now turning to food banks.

Articles of Interest 095 - Lowering the bar?

Miguel Martinez was, until very recently, a member of the New York City Council. Now he has pled guilty to three charges, one of which was money laundering. It would be interesting to determine whether such “small fry” are considered “Politically Exposed Persons” (PEPs) by financial institutions and supervisory agencies.

Will his bank face sanction for potentially not delving down to the municipal level? Will this lower the bar even further in the classification of those deemed PEPs? Small town mayors? Student council representatives?

“It has been said that democracy is the worst form of government except all the others that have been tried.”

- Sir Winston Churchill, (1874 – 1965)

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http://cityroom.blogs.nytimes.com/2009/07/16/martinez-ex-councilman-pleads-guilty-to-fraud-and-money-laundering/?pagemode=print

JULY 16, 2009, 11:57 AM
Ex-Councilman Admits Fraud and Money Laundering

By RAY RIVERA
Michelle V. Agins/The New York Times

Miguel Martinez served on the City Council from 2002 until this week.
Miguel Martinez, a member of the New York City Council whose once-promising political career ended when he abruptly resigned this week, pleaded guilty on Thursday morning to three felony counts involving the misuse of public money intended for nonprofit organizations.

Each of the charges carries up to a maximum of 20 years in prison, but under a plea agreement with the United States attorney’s office in Manhattan, prosecutors have recommended that he serve 57 to 71 months. The sentencing was scheduled for Oct. 21.

The details of the schemes were unclear Thursday, but more information was expected at a news conference scheduled by the United States attorney’s office for Thursday afternoon.

Mr. Martinez, a Democrat, unexpectedly resigned Tuesday from his seat representing the Washington Heights and Inwood sections of Upper Manhattan.

In court, Mr. Martinez told a federal judge, Paul A. Crotty, that throughout his time on the Council, beginning in 2002, he stole about $106,000, a large portion of which was intended for nonprofit groups, including $15,000 intended for the Washington Heights Art Center and $40,000 for the Upper Manhattan Council Assisting Neighbors. Mr. Martinez also admitted that he had approved fraudulent invoices submitted to his office in exchange for $51,000.

“I was able to engage in these schemes because I was a New York City councilman,” Mr. Martinez said.

Mr. Martinez pleaded guilty to one count of conspiracy to commit mail fraud by depriving citizens of their right to honest government, one count of mail fraud and one count of money laundering. Though prosecutors had recommended the lenient sentence, Judge Crotty said he was not bound by that recommendation.