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Saturday, April 25, 2015

New Federal Reserve Auditor, Inventories Up, CEI Same, Insider Trading, Fair Fund Delays & Alizadeh's Grand Jury Indictment

A summary of federal regulatory actions and government announcements for investors on Friday, April 24, 2015: 
Clive W. Blackwood was named executive vice president and general auditor by the Federal Reserve Bank of New York. Blackwood will take office June 1, 2015. Blackwood will be responsible for conducting internal audits at the New York Fed and reporting to the Board of Directors about the nature of the audits. He will also liaison between the Office of the Inspector General of the Board of Governors of the Federal Reserve System as well as the Government Accountability Office. Read the full story by clicking the link above.

The US Department of Commerce announced that March unfilled orders were unchanged, but inventories were up 0.1%. The report also said that overall shipments were up 1.1% and that capital good shipments were up as well at .6%. New orders for manufactured durable goods are up 4% to $240.2b. Excluding transportation, however, new orders were down .2%. What's the takeaway -- transportation is hot, but if you follow me you already knew that.
The SEC charged Frank Perkins Hixon, Jr., a 56 year-old resident of New York, with insider trading. From October 1985 through February 2014 Hixon worked as an investment banker for various firms specializing in the mining, metals, and materials industries. He is accused of leaking insider information and had been sentenced to 30 months of prison followed by three years of supervised release.  He was also fined $100,000, ordered to pay $710,000 in criminal forfeiture and $1.2 million in restitution to former employers. Hixon has already paid these amounts in full. Perhaps crime does pay.

The SEC announced charges against Veros Partners, Inc. for engaging in two fraudulent farm loan offerings. Included in the charges are the firm's president, Matthew D. Haab, and two associates, attorney Jeffrey B. Risinger and Tobin J. Senefeld. The SEC alleges that a Ponzi scheme was created to make payments to investors. The three used the scheme to raise ~$15 million from 80 investors, most of whom were Veros' clients. The SEC has obtained a temporary restraining order and emergency asset freeze. 

The SEC requested a third extension of time for both Credit Suisse disbursement funds due to complications in determining who the funds should be disbursed to. The SEC has already won an order for harmed investors granting over $100 million, but has yet to disburse those funds. The request has been granted and the SEC has been given until June 6. Why is this so hard?

The New York Fed announced the Indexes of Coincident Economic Indicators (CEI) for March. The index shows "economic activity expanding at a strong, but decelerating pace in New York City, growing at a moderate pace in New York State, but declining slightly in New Jersey." In other words, the same thing it showed last month. Here's February's CEI.
Source: New York Federal Reserve Bank
And, here's March's CEI:
Source: New York Federal Reserve Bank

Northern California developer and escrow agent indicted in multimillion dollar commercial loan fraud scheme. A federal grand jury indictment was made against Abolghasseni “Abe” Alizadeh, age 56, and Mary Sue Weaver, age 62, for various counts of "mail, wire and bank fraud in connection with schemes to defraud lenders in large commercial real estate transactions between mid-2004 and April 2008". Alizadeh used to a be a principal partner in Kobra Properties, a company that was once valued at $1b. Properties included "dozens of Jack in the Box, TGI Fridays, Sonic Burger, Qudoba Mexican Grills and other restaurants in the region". The indictment alleges that the two used altered purchase contracts to engage in a scheme to apply for loans at inflated amounts.  

Week in review: