137 - Trading Fog

Carbon trading is a new global market receiving much attention. It is now becoming the focus of criminal enterprises that abuse the tax structure between countries and the mediocre regulations imposed upon the marketplace in many jurisdictions.

When regulators crack down and trading volumes decline by a quarter, there is plenty of annecdotal evidence to suggest that buccaneers are sailing the seas of carbon trading.

http://www.telegraph.co.uk/finance/newsbysector/energy/6912667/Carousel-frauds-plague-European-carbon-trading-markets.html

'Carousel' frauds plague European carbon trading markets

Why are mysterious UK businesses registering to trade carbon in Europe?

By Rowena Mason, City Reporter, Published: 6:07PM GMT 30 Dec 2009

It is a building site, formerly a derelict car park, in a deprived part of West London, where the neon glow of curry houses and late-night grocery stores could not be further from the wealth and glamour of London's financial markets.

Described as a "consulting" business, this is the address of a UK company that has signed up to trade carbon permits under the European Emissions Trading Scheme in Copenhagen. But there is no trace of its existence on the Companies House database.

At the newsagent next door, nobody has ever even heard of emissions trading – the system where companies buy andsell the right to emit carbon dioxide – and there has not been a building there for many years.

It is not the only oddity to emerge from the Danish Carbon Registry. All the expected big players are on the list – utilities, oil and heavy industry – the only sectors obliged by law to own permits to cover emissions.

Quite a few investment banks are also signed up, on behalf of industry or trading to make a profit.

But outnumbering these familiar names, hundreds of UK companies selling anything from hair loss treatments to electronics have mysteriously registered to buy and sell carbon permits in the Scandinavian nation – mostly in the last 18 months.

Many give addresses in the regions such as Yorkshire, Lancashire, Essex and other places not known for their links to the world of finance.

The appearance of these obscure British companies – among them businesses with unreachable addresses and Hotmail, Gmail or Yahoo email accounts for company representatives – has recently come to the attention of the Danish authorities.

While many are bound to be genuine individual private traders playing the carbon markets, investigators are examining the possibility that some of these unknown UK-based companies have used the system to commit "carousel" fraud linked to VAT.

As the Copenhagen summit on global warming (http://www.telegraph.co.uk/earth/copenhagen-climate-change-confe/) began this month, Denmark, the host nation, was bringing in an emergency ban to halt VAT on carbon. This followed similar suspensions in Britain, France, Spain and Holland.

According to sources, the Danish registry may be at the heart of Europe's problems with carbon trading fraud. Local media has repeatedly raised the fact that few, if any, checks are done on new traders and approval can be much quicker than in other countries.

Criminals profit by importing goods VAT-free, selling them through a series of companies, each liable to VAT, before exporting them again. Then, the first link in the chain often goes missing without accounting for the VAT and the final link reclaims the VAT it has paid from the state before disappearing.

It might sound like the tinpot scheme of local small-time crooks, but fleecing the tax man can bring in big money.

Just a few weeks ago, Europol, the cross-border police force, said that carbon trading fraudsters may have accounted for up to 90pc of all market activity in some European countries, with criminals mainly from Britain, France, Spain, Denmark and Holland pocketing an estimated €5bn (£4.5bn).

"It is estimated that in some countries, up to 90pc of the whole market volume was caused by fraudulent activities," Europol said.

Figures from New Energy Finance show the value of the global market falling from $38bn (£23bn) in the second quarter to $30bn in the three months to the end of September after several countries cracked down.

The London platform, the European Climate Exchange, where banks and energy companies tend to trade, is not affected by the fraud because it does not offer the spot contracts on which VAT was payable. But British traders can still defraud authorities by buying and selling permits on other European exchanges.

This organised criminal activity has even "endangered the credibility" of the current carbon trading system, according to Rob Wainwright, the director of Europol.

So why have fraudsters particularly targeted carbon trading? And what is being done to iron out problems in Europe before other areas – such as the US – start to trade carbon in the next few years?

Carousel fraud has been a known scam for years among mobile commodities, such as phones, computer chips and cigarettes.

But the attraction of carbon permits is their intangible nature, so there is no need physically to ship goods across borders.

All is done at the click of a mouse.

It now looks like Europe will start a so-called "reverse charge" mechanism, which would remove the need for VAT to change hands between carbon traders every time permits are sold.

But will this remove all problems from the system? It should certainly eradicate VAT fraud, but the very nature of carbon credits makes them "an incredibly lucrative target for criminals", Rafael Rondelez, who was involved with the Europol investigation, has warned.

His message is clear: other types of carbon fraud could soon spring up because there are "no strong regulations or checking principles as there is in banking to prevent such activities as money laundering."

136 - Fraud in the UK is Up? How Odd!

Fraud in the United Kingdom has risen dramatically since the bubble burst in global credit, property, share and all other markets. The numbers are staggering.

http://www.bdo.uk.com/bdo/live/news/2010/fraud-breaks-the-2billion-barrier.html

FRAUD BREAKS THE 2 BILLION POUND BARRIER

Set to treble over next three years

Reported fraud in the UK exploded in 2009 and broke the £2billion barrier for the first time according to new research from accountants and business advisers BDO LLP. The amount lost by businesses and the public sector to larger frauds increased last year by a startling 76 per cent during the recession, with both the number and size of frauds increasing dramatically.

BDO LLP (one of the UK’s largest teams of specialist fraud investigators) predicts that, unfortunately, this 76 per cent rise is just a precursor of things to come, and warns that annual reported corporate fraud could be as high as £5billion in a couple of years, as more fraud is discovered – both through management being focussed by the recession on questioning costs, and because tighter cashflow and credit makes fraud harder to hide.

Simon P. Bevan, Head of Fraud at BDO LLP, commented: “2009 saw the steepest increase since our report began seven years ago, with the average value of each fraud now over £5million compared to £1.8million in 2003.

“Based on my experience of the two previous recessions, I expect that reported fraud will treble over the next two years. There has always been a lag effect, with reported fraud continuing to rise for at least a couple of years after businesses start to come out of the recession.

“A large part of this will be a tidal wave of fraudulent borrowing that has only just started to appear, particularly through use of over-valued properties as security for loans, while the property market was booming. Currently many of these frauds are yet to be recognised by the banks, which still have them classified as non-performing loans.

“It is only when specialist recovery departments start thorough investigations and eventually litigating against alleged dishonest borrowers and their complicit advisors that the true nature of these potentially horrendous fraud losses will come to light. It will take many years for the excesses of the past years to work through the system.”

Advice for business owners – Question the good as well as the bad

Bevan explains: “Fraud has always been a risk to businesses, but during the good times often management fails to question good news. We see it time and time again, with businesses being cavalier with regard to risk in boom times, but wondering where it all went wrong when the rug is pulled from under their feet by a recession.

“For instance, in several cases we have investigated this year, we have seen seemingly profitable enterprises falling flat when questions are asked about a particular deal or contract. Sadly, the best salesman may turn out to have been the best fraudster - in collusion with the best customer - to bill fictitious sales which are reversed after the accounting year end.

“I often find that management’s most powerful defense is continuing to ask the question 'why?'. Managers and business owners need to keep asking why something is happening, especially when it sounds like good news, and they will sadly often unearth a much more unpleasant truth.”

‘WHY’ questions for businesses

Below is Simon P. Bevan’s ‘Top Ten’ of the most pertinent questions for businesses when it comes to identifying fraud:

1. Why are we spending so much on marketing?
2. Why is our gross margin decreasing?
3. Why is the property we took as security worth only 50% of what we thought?
4. Why is our bonus structure linked to revenue not profit?
5. Why are we making so much profit – are we being hoodwinked by management at a remote location?
6. Why didn’t I see this sooner?
7. Why didn’t I check the Financial Director’s CV in more detail?
8. Why didn’t I have better controls?
9. Why did I put so much trust in someone who I knew nothing about?
10. Why do certain potential suppliers not reply to our requests for tender?

Other findings of the research (which looks at reported frauds costing £50,000 or more) include:

• While many managers are running their businesses well and legally, there are others that are looking after ‘number one’ and are likely to be ‘cooking the books’. BDO’s FraudTrack has identified that the cost of management fraud has shown a whopping 48 per cent increase to £503million in 2009, from the previous year.

• Our findings show that fraud by mid-level managers is frequently not for direct personal gain, but just to keep their jobs and income stream. However, the consequences of this can be dire, with Boards making investment and divestment decisions based on false data. Ultimately the lost money needs to come from somewhere.
• Greed continues to overwhelmingly be the number one motive for fraud in the UK, accounting for over 80 per cent of frauds in 2009. Fraudsters will go out of their way to embed themselves in a business for personal gain, and they also make sure that they won't stand out from the crowd. From investigating hundreds of frauds in recent years, BDO finds that, sadly, it is often the most trusted people in an organisation that might defraud that business.

Industry sectors

• According to FraudTrack financial sector continues to head from bad to worse, with a massive 70 per cent increase on last year’s figures to £1.340billion. Fraud against the finance sector now accounts for 64 per cent of all reported fraud (by value). It is our experience that well over 90 per cent of larger frauds do not get reported to authorities (civil actions are more common, but even with these there is usually a settlement before the case concludes).
• It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming! Mortgage fraud alone is 18 per cent of all reported fraud this year (and accounts for 27 per cent of all fraud in the finance and insurance sector). These frauds typically work through a large loan being taken out on an overvalued property, with a crooked buyer in collusion with a corrupt valuer and/or lawyer. When these frauds hit here, they hit large, since the same team will work on many properties in succession.
• Frauds involving the ‘misuse of assets’ (typically other people’s investments, property and savings) has increased 325 per cent from £58million to £250million. Whilst the vast majority of people who handle other people’s assets are honest, there are people out there who cannot resist using them for their own gains. Bevan warns: “People should be on their guard against fraudsters, especially in positions of trust, and the old maxim is true: if it looks too good to be true then it often is.”
• We have seen fraud boom in the retail sector with fraud increasing by 730 per cent to £123million. Retailers are being hit hard but fraudsters remain undeterred and continue to target them. Bevan states: “Fraud and insolvency often go hand in hand. If you need a margin of 17 per cent to survive but are losing 3 per cent due to collusion between your buyers and your suppliers then it is hard to recover from that position.”
• There has been a particular increase in the hotel and catering sector – something which we have not seen before. Fake villas, fake organic food and someone trying to sell a world renowned hotel (even though the fraudster didn’t own it!) are all coming out of the woodwork. It’s interesting to see how fraudsters will turn their hands to anything.

Fraud, by region

• The trend continues to be for larger frauds to predominate in London and the south east, which experienced a rise in fraud of 117 per cent, from £745million to £1,619million – accounting for 77% of all reported fraud in the UK last year (up from 63% last year).
• Other areas of the country are much smaller by comparison (see chart on page 5). Another region worth mentioning though, is the north east with a 111 per cent increase (to £280million), although that was a result of one particularly large case.

- ends -

About BDO LLP

Simon P Bevan is BDO‘s head of the BDO’s Fraud Services Team. He has over twenty years’ experience of investigating fraud both in the UK and other international locations.

FraudTrack is prepared by BDO and is based on all reported fraud cases of over £50,000 from 01 December 2008 to 30 November 2009. The sources for the database are publicly available and include the UK’s national, regional and local press.

BDO LLP operates across the UK with some 3,000 partners and staff. BDO LLP is a UK limited liability partnership and a UK Member Firm of BDO International. BDO - Belfast, a separate partnership, operates under a licence agreement. BDO International is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity world-wide and no BDO Member Firm is responsible for the acts and omissions of another member. The network is coordinated by BDO Global Coordination B.V., incorporated in the Netherlands with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located.

The combined fee income of all the BDO Member Firms was $5.14 billion in 2008. The global network has 1,095 offices in 110 countries and more than 44,000 partners and staff provide business advisory services throughout the world.

BDO LLP and BDO - Belfast are both separately authorised and regulated by the Financial Services Authority to conduct investment business.

BDO is the brand name for the BDO International network and for each of the BDO Member Firms.

Contacts: Tim Prizeman or Will Richardson at Kelso Consulting (PR advisers)

Or

Charlotte Freeman, BDO LLP Press Office, Tel: 020 7242 2273

Email: willr@kelsopr.com
(weekend 01923 896763)
Tel: 020 7486 5888
Mobile: 07854 115 154
Email: charlotte.freeman@bdo.co.uk

135 - Musical Ponzi

Mr. Wady is accused of running a Ponzi scheme in the concert promotions business. If Mr. Wady's group of "investors" includes various notables from the music industry, he may find himself pursued by a combination of heavy metal, hip-hop and punk groups after his head. Given the antics of the average Top 40 bands, Mr. Wady's safest refuge might indeed be the segregation wing of the local penitentiary.

http://www.justice.gov/usao/az/press_releases/2010/2010-002(Wady).pdf

Office of the United States Attorney, District of Arizona

FOR IMMEDIATE RELEASE Public Affairs

Thursday, January 7, 2010 SANDY RAYNOR

Telephone: (602) 514-7625

Cell: (602) 525-2681

CHANDLER MAN ARRESTED IN MULTI-MILLION DOLLAR ENTERTAINMENT PONZI SCHEME

PHOENIX - A 37-count indictment has been unsealed charging Miko Dion Wady, 34, of Chandler, Ariz., with Wire Fraud and Transactional Money Laundering. Wady was arrested without incident yesterday by federal and local law enforcement officials in Tempe, Ariz. He will make his initial appearance before U.S. Magistrate Judge David K. Duncan at 3:00 p.m. today in federal district court in Phoenix.

According to the indictment, Wady operated and had an ownership interest in various business enterprises that purportedly were engaged in the business of promoting concerts or tours of well known entertainers and artists. The enterprises included Dezert Heat Entertainment, Inc.; Dezert Heat, Inc.; Dezert Heat Worldwide, LLC; NATO Enterprises, LLC; and NATO Entertainment, LLC.

The indictment alleges that Wady and others misled victim investors into believing that Wady entered into performance contracts and other business arrangements with nationally and internationally known entertainers, arranged performance venues throughout the world, and greatly profited by putting on these concert or tour events. The indictment alleges that from 2004 through 2007, Wady claimed to have promoted concerts for The Rolling Stones, U2, Barbara Streisand, Faith Hill, Tim McGraw, Mariah Carey, George Strait, Billy Joel, Jamie Foxx, Jimmy Buffet, Mary J. Blige, Pearl Jam, and at least 30 other well known artists and entertainers. Also according to the indictment, during this period, Wady appears to have actually promoted fewer than 10 concerts, all involving only local or lesser known artists.

According to the indictment, Wady utilized TransCapital, LLC, located in Mesa, Ariz., which was operated by James Cundiff and his two sons, Adam and Jeremiah Cundiff. TransCapital was allegedly established solely to secure “investment” financing for the concerts and tours purportedly being promoted by Wady. The indictment states Wady later used Dezert Heat Worldwide, another joint venture with the Cundiffs, for the same purposes.

The indictment purports that from August 2004 through March 2007, the Cundiffs, through TransCapital or Worldwide, entered into loan and event funding agreements with more than 250 victim investors, and obtained no less than $50 million dollars to finance approximately 150 concerts or concert tours purportedly being promoted by Wady. Allegedly victim investors were typically promised interest rates of four per cent per month for a maximum of six months or 24 per cent for one promoted

event.

The indictment alleges that Wady had no association or contractual arrangement with any of the significant concerts or tours, and the investor funds given to Wady from the Cundiffs were never actually used as represented to the victim investors. Most of the funds were instead allegedly returned by Wady to the Cundiffs within a short period of time, typically one or two days, under the guise that these repayments represented the net proceeds from some other concert or tour that was recently

completed. It is alleged in the indictment that because no actual investments were used for the represented concerts or tours, new victim investor monies were simply used to repay old victim investors, in what is commonly termed a Ponzi scheme.

The indictment indicates when the Ponzi scheme was discovered and collapsed in 2007, approximately 140 victim investors still had not been repaid their outstanding “investment” loans of approximately $25 million dollars.

It is alleged that between 2004 through March 2007, Wady used no less than $3 million dollars of victim investor funds to pay for a lavish personal lifestyle. During this period, Wady allegedly purchased for himself and others, at least 30 vehicles, including a Lamborghini, a Ferrari and a Bentley. Wady allegedly also purchased a $175,000 luxury 41 foot boat and $800,000 in real estate. All of these purchases were purported to be paid from funds he obtained from victim investors.

A conviction for Wire Fraud carries a maximum penalty of 20 years in federal prison, a $250,000 fine or both. A conviction for Transactional Money Laundering carries a maximum penalty of 10 years in prison, a $250,000 fine or both. An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation, the U.S. Postal Inspection Service and the Criminal Investigation Division of the Internal Revenue Service, with assistance from the Maricopa County Sheriff’s Office and the Mesa Police Department. The prosecution is being handled by Peter Sexton and Frederick A. Battista, Assistant U.S. Attorneys, District of Arizona, Phoenix.

CASE NUMBER: CR-09-1485-PHX-JAT

RELEASE NUMBER: 2010-002(Wady)

134 - Getting Back to Common Sense

Now that the recent rash of financial frauds, Ponzi schemes and other criminal activities seems to have somewhat subsided after the Great Recession of 2008-10, some lawmakers are making a name for themselves in plugging regulatory gaps that should never have existed. The very notion that unregulated offshore financial services companies in Florida could have operated without government scrutiny should be enough to clip the price of any financial security issued by the State of Florida.

http://www.miamiherald.com/news/5min/story/1417793.html

Stanford case may toughen Florida's banking laws BY MICHAEL SALLAH AND ROB BARRY msallah@MiamiHerald.com Eleven years after Florida regulators gave billionaire Allen Stanford unprecedented approval to open a rogue financial center in Miami, lawmakers are pushing to ensure it never happens again. After months of criticism, legislators are pressing for tough provisions to force regulators to investigate financial companies like Stanford's that sold millions in sham investments from a posh downtown high rise. The gaps in enforcement helped Stanford carry out what prosecutors are calling a $7 billion Ponzi scheme that fleeced thousands of investors. ``We need to fill this void and give it the best fix to protect the public,'' said Thomas Cardwell, recently appointed commissioner of the Office of Financial Regulation. ``It's very high on my agenda.'' The legislation would force state agents to monitor all offshore finance firms in Florida -- including foreign trust offices -- for fraud, money laundering and the destruction of key records. The proposal comes after a Miami Herald investigation revealed sweeping breakdowns in state oversight of Stanford's Miami's office that allowed the banker to run a special trust office -- the only one of its kind -- without government monitoring. Over the objections of the state's chief banking lawyer, Florida permitted the banker to operate without any fraud checks or money laundering requirements, in violation of state and federal law, the newspaper found. In the ensuing years, Stanford's employees sold millions in unregistered securities from the office, secretly diverting the money to pay for personal luxuries -- including mansions, yachts and a fleet of private jets, court records state. The 59-year-old banker is now awaiting trial on charges of defrauding more than 21,500 people worldwide. Office employees were stuffing checks from customers into pouches and sending the bags on jets to his bank headquarters in Antigua, shredding the records left behind, the newspaper found. Though state regulators were alerted to the practices during office visits in 2001 and 2005, they never took action. The new legislation, co-sponsored by Republicans Sen. Garrett Richter and Rep. Tom Grady, would stop regulators from letting companies like Stanford's operate outside state and federal jurisdiction. ``People place their trust in these institutions,'' said Richter, a longtime executive banker and chairman of the Senate Committee on Banking and Insurance. ``I think this is common sense regulation.'' The proposal would ban companies like Stanford's -- known as foreign trust representative offices -- from operating without being licensed and routinely inspected by state agents. In addition, it would require the offices submit to outside audits. When Florida allowed Stanford to open his center on the 21st floor of the Miami Center -- adorned with marble tables, ornate artwork and mahogany walls -- it never required him to report anything to state or federal regulators. In the first six years, the luxury offices attracted thousands of Latin American investors -- drawn to the safety of a U.S. company -- who bought more than $600 million in sham certificates of deposit, records show. MONEY TO EXPAND In the end, the office generated enough money to help Stanford's empire expand throughout the country, said Jonathan Winer, a former deputy assistant Secretary of State who investigated Stanford's Antiguan bank for money laundering. ``Stanford really had no real presence in this country before that.'' Margie Morinaga, whose family lost more than $400,000 in the scam, said she brought her father to Stanford's trust company because she thought the downtown Miami office was safely regulated. She and her father, a retired jeweler, 86, who now lives in Lima, were swept in by the company's advertisements, the firm's expensive decor and its prime location in downtown Miami. ``Fancy office, beautiful desks, wood floors, you could see the bay,'' she said. ``Everything was first class.'' But while Florida officials gave the office their approval, law enforcement agents investigating money laundering in the Caribbean were stunned by the state's decision, The Miami Herald found. ``I just couldn't understand why the authorities in Florida had allowed him to operate the way he appeared to be operating. There's something really wrong with that,'' said Rodney Gallagher, a former member of the British High Commission in Barbados. ``I thought what he was doing was completely illegal.'' While state officials said they had no choice but to allow the office to open because no laws barred foreign trust representative offices, experts say the state not only violated its own laws, it created a financial disaster. Beyond letting Stanford move vast amounts of money offshore in violation of anti-money laundering laws, state regulators agreed to waive any rights to examine Stanford's financial records. In fact, the decision to open the office raised serious questions among state agents, e-mails and internal records show. Richard Donelan, the state's chief banking counsel, tried at least four times to change the agreement that gave Stanford the freedom to send millions of dollars to Antigua in total secrecy. In one draft, he questioned why the state wasn't requiring Stanford to get licensed for sending money -- which would have brought his office under government regulation. But nothing was done. `RIGHT DIRECTION' Charlie Stutts, former general counsel for the Florida Comptroller's Office, said the new legislation was ``a step in the right direction.'' He said the state's deal with Stanford was riddled with problems. ``It's unbelievable that they were able to pull it off,'' said Stutts, a Tampa attorney who helped write Florida's banking law. Even after the office opened, regulators could have taken action, Stutts said. Beyond finding employees shredding records, examiners discovered more than a dozen stockbrokers selling CDs. ``That should have been a red flag -- that's a tip-off,'' Stutts said. ``CDs are securities. They had a right to go in there and do an audit.'' Though the legislation may help future investors avoid getting scammed, Morinaga said it won't help her father recover the money he lost from his retirement fund. ``It's too late for us,'' she said. ``This should never have happened in the first place.''

---

© 2010 Miami Herald Media Company. All Rights Reserved.
http://www.miamiherald.com

133 - Legal Laundering

In general, lawyers are a clever bunch. It is alleged that Mr. Weinroth used his legal position to launder funds through under-invoicing. Given his prominence in the Israeli legal community and his career in white-collar crime work, the amounts of money involved in the charges must pale in comparison to Mr. Weinroth's annual income. So why go to so much trouble - and potential consequences - for so little?

http://www.jpost.com/servlet/Satellite?cid=1261364566071&pagename=JPost%2FJPArticle%2FShowFull

Top attorney charged with bribery and money-laundering

Jan. 1, 2010
Dan Izenberg , THE JERUSALEM POST

The legal world was shocked on Thursday when the state charged attorney Yaakov Weinroth, one of the country's leading lawyers and a specialist in white-collar crimes, with bribery and money-laundering.

Weinroth is accused of providing legal services without charge or for an unusually low fee on behalf of an assessor in the Gush Dan branch of the Tax Authority.

At the same time the assessor, Yehoshua Vita, who is also included in the indictment, handled various applications by Weinroth regarding his own finances and those of clients, including Uzbekistan-born Israeli entrepreneur and industrialist Michael Cherney and Russian-Israeli Arkadi Gaydamak, who paid Weinroth more than NIS 30 million in legal fees for his tax work on their behalf.

Vita was also charged with fraud and breach of faith, while Weinroth was also indicted for allegedly violating the money-laundering law. He was accused of concealing the fact that an account-in-trust that he opened in his own name was actually meant for Gaydamak.

Weinroth allegedly hid that fact out of concern that the police might seize the funds in the account if they knew they belonged to Gaydamak, in the context of their criminal investigation against him.

Over the years, Weinroth has represented Binyamin Netanyahu, Avigdor Lieberman, the jailed former finance minister Avraham Hirchson and numerous other high-profile Israeli figures.

Weinroth's lawyer, Navot Tel-Tzur, denied the charges, saying, "The state prosecution had set a new record in filing baseless indictments lacking any foundation."

He also said he protested "the prosecution's concept of creating legal precedents by piling all kinds of vague crimes on the backs of defendants."

According to the charge sheet, Vita originally asked Weinroth to represent him in a criminal case in 1997. At the time, the attorney refused. Later Weinroth and his brothers submitted applications to Vita, in his capacity as an assessment officer in the Tax Authority, to assess their taxes.

This time, when Vita asked Weinroth to represent him, Weinroth agreed. He sent a letter to the president, requesting a pardon for Vita, and did not charge him for the legal work.

This, according to the indictment, was one of three "gifts" that Weinroth gave Vita.

Later Weinroth presented additional tax files to be assessed by Vita in his professional capacity. Then, on January 7, 2003, Vita asked Weinroth to appeal to the state attorney so that, despite his criminal record, he would be eligible for promotion to the post of deputy income tax commissioner. Weinroth took on the assignment personally and again did not charge Vita. This was Weinroth's second "gift."

Later that year, Gaydamak also became Weinroth's client. Meanwhile, the state attorney informed Weinroth that he opposed Vita's promotion.

According to the indictment, knowing that Vita would need his services again, he submitted Gaydamak's file to him and asked for an assessment.

At the same time, at Vita's request, Weinroth prepared the draft of a letter to be sent to the attorney-general to appeal the state attorney's decision. This time, Weinroth charged Vita NIS 2,000, but Vita did not pay the fee.

Meanwhile, Gaydamak paid Weinroth NIS 16m. for his work in obtaining the tax assessment from Vita. Previously Cherney had paid Weinroth NIS 14m. for his services.

After the Gaydamak file was completed, Weinroth charged Vita NIS 20,000 for all the work he had done for him, to be paid in 20 installments of NIS 1,000 each.

In an interview with Israel Radio, Tel-Tzur said that the fee Weinroth demanded from Vita was appropriate.

"Weinroth is known as a lawyer who takes on cases pro bono, charity cases," he said.

When the interviewer challenged him, saying that Vita was a senior civil servant, not a charity case, and one whom Weinstein must have known he might have dealings with regarding his tax files, Tel-Tzur replied, "That's correct, and that is why Weinroth took a fee that was appropriate from a salaried civil servant. It is a lawyer's privilege to ask for a fee in consideration of his client's means as well as the type and extent of the work involved."

According to Tel-Tzur, a lawyer does not charge thousands of shekels for writing "one-and-a-half letters and attending one meeting."

132 - Justification behind the PEP classification

If there was ever any doubt on why Politically Exposed Persons (PEPs) were classified for anti-money laundering legislation, the article below should answer any questions.

http://sify.com/news/37-Jharkhand-MLAs-face-criminal-cases-19-are-multi-millionaires-news-National-jmzrkcjcbab.html

37 Jharkhand MLAs face criminal cases, 19 are multi-millionaires

2009-12-25 17:10:00

Nearly half of the 81 newly-elected legislators in Jharkhand have criminal cases registered against them, while 19 of them are 'crorepatis' (multi-millionaires), official documents show.

As per Election Commission records, 37 legislators face criminal cases. The highest number of legislators with cases against them are from the Jharkhand Mukti Morcha (JMM) at 10.

The JMM is followed by the Congress, with seven of 14 legislators with criminal records.

The Jharkhand Vikas Morcha-Prajatantrik (JVM-P) has six legislators with criminal records, while four of five All Jharkhand Students Union (AJSU) members face criminal charges.

Four of the 18 Bharatiya Janata Party (BJP) members of the state assembly also have cases against them.

Two former ministers - Enos Ekka and Harinarayan Rai - who are in jail for amassing wealth disproportionate to their income also won.

Two other ex-ministers, Bandhu Tirkey and Nalin Soren, who also face corruption charges, have also been elected.

Meanwhile, 19 newly-elected legislators have declared assets more than Rs.1 crore.

The highest number of multi-millionaires are from the JMM (6), followed by the Congress (5) and the RJD (2). The BJP, the AJSU and the JVM-P have one each.

Multi-millionaire legislators include Geeta Koda, wife of former chief minister Madhu Koda in jail on money-laundering charges, and Ekka and Rai.

131 - Convergence equals opportunity

It's true - as narcotics trafficking and terrorist financing converge, authorities will have more tools in their arsenal to combat both. Detection of money laundering typologies may lead to possible terrorist financing as a result of the profits derived from narcotics production or sale. Narcotics produce incredibly fat margins, and the ensuing cash flows can provide for a variety of armed forces, whether guerilla or terrorist cell.

Those who require further evidence on the effective merger between narcotics and armed terrorists need only ring their local branch of the Taliban.

http://www.justice.gov/dea/pubs/pressrel/pr121809p.html

News Release
FOR IMMEDIATE RELEASE
December 18, 2009
Contact: DEA Public Affairs
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Three Al Qaeda Associates Arrested on Drug and Terrorism Charges

DEC 18 - DEA Acting Administrator Michele Leonhart and United States Attorney Preet Bharara announced today the arrests of three individuals for drug and terrorism charges. OUMAR ISSA, HAROUNA TOURÉ, and IDRISS ABELRAHMAN arrived in the Southern District of New York early this morning to face charges of conspiracy to commit acts of narco‑terrorism and conspiracy to provide material support to a foreign terrorist organization. The charges stem from the defendants' alleged agreement to transport cocaine through West and North Africa with the intent to support three terrorist organizations ‑‑ Al Qaeda, Al Qaeda in the Islamic Magreb ("AQIM"), and the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia, or "FARC"). All three organizations have been designated by the United States Department of State as Foreign Terrorist Organizations.

The charges in this case mark the first time that associates of Al Qaeda have been charged with narco‑terrorism offenses. ISSA, TOURÉ, and ABELRAHMAN were arrested in Ghana on December 16, 2009, at the request of the United States; thereafter, they were transferred to the custody of the United States and transported to the Southern District of New York. The defendants are expected to be presented in Manhattan federal court later today before United States Magistrate Judge JAMES C. FRANCIS IV.

"Today's arrests are further proof of the direct link between dangerous terrorist organizations, including Al Qaeda, and international drug trafficking that fuels their violent activities," said DEA Acting Administrator Michele Leonhart. "These narco‑terrorists do not respect borders and do not care who they harm with their drug trafficking conspiracies. Working with our narcotics law enforcement partners in Ghana and across the globe, DEA is making unprecedented progress in dismantling illicit drug networks in western Africa and around the world, and putting the criminals who operate them behind bars, where they belong."

"Today's allegations reflect the emergence of a worrisome alliance between Al Qaeda and transnational narcotics traffickers. As terrorists diversify into drugs, however, they provide us with more opportunities to incapacitate them and cut off the funding for future acts of terror," said United States Attorney PREET BHARARA. "We will continue to work with our partners at the DEA, in Ghana, and around the world to meet the threat narco‑terrorism poses to our national security."

According to the Complaint unsealed today in Manhattan federal court:

Al Qaeda And AQIM

Founded in 1989, Al Qaeda is a terrorist organization which has as its principal goal to attack the United States. Al Qaeda functions on its own and through various terrorist organizations that operate under it. The group now known as AQIM ‑‑ formerly the Salafist Group for Preaching and Combat ("GSPC") ‑‑ was founded in the late 1990s with the assistance of USAMA BIN LADEN. On September 11, 2006, AYMAN AL ZAWAHIRI, a high‑ranking Al Qaeda member and close associate of BIN LADEN, announced that GSPC had joined Al Qaeda and called for "our brothers of the GSPC to hit the foundations of the Crusader alliance, primarily their old leader the infidel United States."

The FARC

From 1964 until the present, the FARC has been an international terrorist group dedicated to the violent overthrow of the democratically elected Government of Colombia. The FARC is highly structured and organized as a military group. To further its goals, the FARC actively engages in narcotics trafficking as a financing mechanism and has evolved into the world's largest supplier of cocaine. For at least the past five years, the FARC has directed violent acts against U.S. persons and commercial and property interests in foreign jurisdictions, including in Colombia. The FARC leadership has directed the kidnapping and murder of U.S. citizens and attacks on U.S. interests in order to dissuade the United States from continuing its efforts to disrupt the FARC's cocaine manufacturing and trafficking activities.

The Narco‑Terrorism And Material Support Conspiracies

Between September 2009 and December 2009, ISSA, TOURÉ, and ABELRAHMAN, who stated that they were associated with Al Qaeda, conspired to assist purported representatives of the FARC in transporting hundreds of kilograms of cocaine from West Africa through North Africa and ultimately into Spain. In a series of telephone calls and meetings with two confidential sources working with the DEA who claimed to represent the FARC (the "CSs"), the defendants stated that they had a transportation route from West Africa through North Africa, and that Al Qaeda could provide protection for the cocaine along that route.

At an initial meeting with one of the DEA confidential sources ("CS‑1"), ISSA stated that his boss, TOURÉ, could facilitate this cocaine transportation. At a subsequent meeting, ISSA introduced CS‑1 to TOURÉ, describing him as a leader of a criminal organization that worked with Al Qaeda‑affiliated groups in North Africa.

During meetings with the CSs, TOURÉ described his strong relationship with Al Qaeda groups that controlled areas of North Africa, and discussed other instances in which he had transported drugs with Al Qaeda's assistance. TOURÉ stated that Al Qaeda would protect the FARC's cocaine shipment from Mali through North Africa and into Morocco en route to Spain. More specifically, TOURÉ discussed the option of two different transportation routes: one through Algeria and Libya, and the other through Algeria and Morocco. TOURÉ also discussed the possibility of kidnapping foreign nationals to raise money for the cause.

TOURÉ later agreed to introduce CS‑1 to a representative of the group that would handle the security of the cocaine while it was being transported. The CSs subsequently met with TOURÉ and ABELRAHMAN, who was introduced as a leader of a "militia" of armed men. ABELRAHMAN discussed with the CSs the shared goals of the FARC and ABELRAHMAN's organization, including the fact that they were committed to the same anti‑American cause.

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The defendants each are charged with one count of narco‑terrorism conspiracy, which carries a mandatory minimum sentence of 20 years and a maximum sentence of life in prison, and one count of conspiring to provide material support to a foreign terrorist organization, which carries a maximum sentence of 15 years in prison.

The charges unsealed today were the result of the coordinated efforts of the United States Attorney's Office for the Southern District of New York and the DEA's Special Operations Division and Ghana Office. Mr. BHARARA praised the outstanding investigative work of the DEA and thanked the Department of Justice's Office of International Affairs, its National Security Division, and the Department of State for their assistance. Mr. BHARARA also thanked the Government of Ghana for its cooperation.

Assistant United States Attorneys JEFFREY A. BROWN and CHRISTIAN R. EVERDELL are in charge of the prosecution.

The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.