Medtronic's 3rd Settlement, Economic Mobility, $55M Fraud, Free OFAC Event & Savings Bonds

Government Alerts For Investors, April 2 in Review

The Department of Justice announced that Medtronic (NYSE: MDT)...

has agreed to pay $4.41 Million to settle allegations that it violated the False Claims Act by giving false statements to the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Defense (DoD). Yesterday's settlement was the third federal lawsuit against the company since the company moved its headquarters from Minnesota to Dublin, Ireland in January.

Both Governor Lael Brainard and Chair Janet Yellen provided some entertainment at the "Economic Mobility: Research and Ideas on Strengthening Families, Communities, and the Economy" Ninth Biennial Federal Reserve System Community Development Research Conference, held in Washington, D.C. The discussion blamed income inequality on everything from race and geography, to education and sales tax. It was a great event. Thanks to the St. Louis Fed for organizing.

Federal Court Imposes $55 Million Final Judgment Against Investment Adviser CEO

The United States District Court for the District of New Mexico entered a final judgment against Charles R. Kokesh ordering him to pay civil penalties of $2,354,593 as well as disgorgement and prejudgment interest totaling $53,004,432. The case went to five-day trial; the jury ultimately found  Kokesh guilty of securities fraud by misappropriating and misusing millions of dollars from at least 1995 through July 2007.

5/11 - OFAC Spring Symposium In DC, Registration Is Free
OFAC invites you to join their 2015 Symposia which is to take place in Washington, D.C. The Spring Symposium is scheduled for May 11, 2015, and the Fall Symposium will be held in September 22, 2015. 

Historical Echoes: Pop Culture Sold Savings Bonds
This article, published yesterday, was written by Megan Cohen a research librarian in the Federal Reserve Bank of New York's Research and Statistics Group.  The article reflects on the use of icons such as Lucille Ball to sell U.S. savings bonds. "Unfortunately for pop culture aficionados" Cohen writes, "big-name promotions for U.S. savings bonds died down in more recent decades." U.S. savings bonds are no longer available at your bank as they were prior to 2012, but they are still available for purchase online through the U.S. Treasury.

Medtronic (#MDT) Settles Third Federal Charge Since Move To Ireland

Domestic manufacture is a required component of many military and Veterans Administration contracts. Congress has mandated that the United States use its purchasing power to buy goods made in the United States or in designated countries.  We take that mandate seriously and will not hesitate to take appropriate legal action to ensure compliance. - U.S. Attorney Andrew M. Luger of the District of Minnesota

The Department of Justice announced that Medtronic (NYSE: MDT) has agreed to pay $4.41 Million to settle allegations that it violated the False Claims Act by giving false statements to the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Defense (DoD). 

Between 2007 and 2014 Medtronic sold products manufactured in China and Malaysia which are prohibited countries under the Trade Agreements Act of 1979 (TAA). Medtronic allegedly purchased spinal surgery devices from China and then relabeled them “Manufactured in Memphis, TN” before selling them to the VA and DoD certifying that they were made in the USA. The suit was originally filed by three whistle-blowers that will receive a total of  $749,700 of the recovered funds. 

Yesterday's settlement was the third federal lawsuit against the company since the company moved its headquarters from Minnesota to Dublin, Ireland in January.  On Feb. 5 the company settled allegations of over-billing for $1.25 million and on Feb. 6 it agreed to pay $2.8 million to settle claims for billing non-reimbursable procedures. Wrong-doing has been denied in all three cases.

OFAC Spring Symposium In DC, Registration Is Free

2015 OFAC Symposia Save the Date

OFAC invites you to join their 2015 Symposia which is to take place in Washington, D.C. The Spring Symposium is scheduled for May 11, 2015, and the Fall Symposium will be held in September 22, 2015.

Mixed CEI, Central Bank Solvency, Insider Trading, Kraft's Wheat Futures, and Justice In the Rothstein Ponzi Scheme

 The New York Fed published the Coincident Economic Indicators (CEI) index for February which shows "economic activity continued to expand at a strong pace in New York City, a moderate pace in New York State, and a sluggish pace in New Jersey." This may be why the FRB of NY Governor recently announced a visit to Northern New Jersey to sit with community leaders.

A paper titled Central Bank Solvency and Inflation was published by the New York Fed's Liberty Street Economics group The paper claims, "As long as the central bank can affect the return on these short-term assets by adjusting the IOER, controlling inflation with a large balance sheet seems no different than it was before the Great Recession." I'll publish additional commentary on this paper later.

Friends Charged With Making $1.1M From Insider Trading On Cooper Tire and Rubber (CTB) The SEC charged Amit Kanodia, of Brookline, Massachusetts, an entrepreneur and private equity investor, and Iftikar Ahmed, of Greenwich, Connecticut, a general partner at a venture capital firm, with insider trading on the proposed acquisition of Cooper Tire and Rubber (NYSE: CTB) by Apollo Tyres Ltd. (NSE: APOLLOTYRE).
 

CFTC Accuses Kraft (KRFT) Foods Group, Inc. and Mondelēz Global LLC of Market Manipulation

The U.S. Commodity Futures Trading Commission (CFTC) announced a civil enforcement complaint against Kraft Foods Group, Inc. and Mondelēz Global LLC for manipulation of wheat and wheat futures prices. In response to high cash wheat prices in late Summer 2011, both parties "developed, approved, and executed" a strategy to buy $90 million of December 2011 wheat futures. The CFTC complaint alleges that Kraft and Mondelēz made this trade to send a signal to the market resulting in lower cash wheat prices. When the price shifts occurred Kraft and Mondelēz earned over $5.4 million in profits. This was only one of several allegations made in the complaint.

Timothy Scronce, an executive at PCTEL greed to settle SEC charges against him for using "false accounting entries to inflate TelWorx’s quarterly revenues and earnings in the months leading up to the purchase to inflate the price PCTEL paid for the companies."

Justice In The Scott Rothstein’s Ponzi Scheme. Andrew Ceresney, Director of Enforcement at the SEC, provided a statement on the jury verdict in the trial of George Levin, a man that raised $157 million from 150 investors for Scott Rothstein’s Ponzi Scheme. Rarely do these cases go to litigation so this is surprising. "We will continue to hold accountable those who raise monies from investors through fraudulent means," said Ceresney.

The SEC announced that it was imposing a preliminary injunction freeing all assets of American Energy Development Corp. (OTC: AEDC) and claims that David Craven and Alexander J. Craven (father and son) are guilty of manipulating the markets for gain in the stock AEDC. British citizens, the two are both residing in Switzerland and England, respectively. Together, they gained control of over 87% of the shares of AEDC and inflated the share price using "wash and matched trading". The two allegedly used $1.6 million for a promotional campaign featuring a 16-page mailer mailed out to 1.2 million U.S. residents. The Cravens then dumped over $4 million of the stock on investors via overseas trading accounts.

SEC Looking For Help building a case against Life Partners Holdings, Inc. To read more about this story click the link above.

SEC Looking For Help Building Case Against Life Partners Holdings, Inc.

SEC is now looking for people that can help with confirming SEC violations in the case of the  Life Partners Holdings, Inc., Brian D. Pardo, R. Scott Peden and David M. Martin. If you can, you may be eligible to receive an award. To learn more about how the program works go the SEC Office of the Whistleblower website click here.

And, don't forget, it's against the law for your company to impose penalties on you if you talk to the SEC. Just yesterday the SEC settled its first case against a company for doing so. The company lost and had to pay fines.

To read more about that story click here.

Friends Charged With Making $1.1M From Insider Trading On Cooper Tire and Rubber (CTB)

The SEC charged Amit Kanodia, of Brookline, Massachusetts, an entrepreneur and private equity investor, and Iftikar Ahmed, of Greenwich, Connecticut, a general partner at a venture capital firm, with insider trading on the proposed acquisition of Cooper Tire and Rubber (NYSE: CTB) by Apollo Tyres Ltd. (NSE: APOLLOTYRE).

The SEC alleges that Kanodia tipped Ahmed before the acquisition was announced after originally finding out about the deal from his wife. Kanodia's wife was the general counsel at Apollo at the time and was working on the deal. Even though the deal never went through, Cooper Tire's stock price, a company based in Findlay, Ohio, jumped 41% when it was announced. Ahmed bought up significant amounts of Cooper stock and when the deal was announced, Ahmed sold his holdings for a $1.1 million gain. Later, Ahmed paid Kanodia $220K for his "help" through his Lincoln Charitable Foundation. The SEC alleges this payment was a kickback and has named the charity as one of the relief defendants.

Investment Representative Turns To Citizens Bank Armed Robbery: Gets 3-5 Years

Perhaps the winner in the "seriously?" category this week is the sad story of Leonard Eric Burd who is currently serving a 3-5 year prison term for robbing a bank in Natick, MA. The SEC published an order on March 31 officially barring Burd from being an investment representative.

Burd was a registered rep from October 1997 through October 2013. The broker-dealers he worked with include UBS Financial Services, Financial, LLC and Summit Brokerage Services.

In August 2014, Burd plead guilty to robbing a Citizen's Bank in Natick, MA while armed with a gun. Allegedly, Burd entered the Natick, MA Citizens Bank "located at the Stop & Shop on Providence Highway". An article in the Natick Patch said he passed a note to a teller requesting money -- evidently he was wearing a wig.

Whistleblower Charges, OPEC, Bankruptcy & Investment Reps Turning To Armed Robbery

A daily summary of government alerts for investors (GAFI). These are announcements and/or publications from government institutions that impact investors.

• The SEC settled its 1st Whistleblower protection case against engineering firm KBR (NYSE: KBR). As a result, the company must pay $130K in fines and change the language in its employee confidentiality agreement. 
• Facing a maximum sentence of 5 years in prison, Swiss asset manager, Peter Amrein, 53, pled guilty of conspiring with U.S. taxpayers to evade income taxes.
• On March 26, the SEC obtained a judgment of over $5 million for a penny stock fraud case against StratoComm Corporation. The CEO of the company, Roger D Shearer and former Director of Investor Relations, Craig Danzig were also listed on the order. The order says that StratoComm issued and distributed public statements about the nature of the penny stock company. In actuality, StratoComm had no product and no revenue. 
• The SEC charged former CEO of Silicon Valley-based technology firm Polycom (Nasdaq: PLCM) with using ~$200,000 in corporate funds for personal perks -- these perks were not explained to investors. He also created false reports to support these expenses including the use of "Polycom funds to travel with his friends and girlfriend to luxurious international resorts." Polycom the company was also charged and agreed to pay $750,000 to settle the charges.
• Perhaps the winner in the "odd but true" category is the sad story of Leonard Eric Burd. Burd was a registered rep from October 1997 through October 2013. The broker-dealers he worked with include UBS Financial Services, Financial, LLC and Summit Brokerage Services. In August 2014 he plead guilty to robbing a Citizen's Bank in Natick, MA while armed with a gun or C4 explosives. He was sentenced to 3 to 5 years of prison.
• The CFTC charged Maverick International, Inc. and its Principals Wesley Allen Brown and Edward Rubin with pool fraud and other violations. Purportedly based out of Wilmington, Delaware, the company is being charged with operating a fraudulent commodity pool.  The charges allege that as early as June 18, 2008 Maverick accepted more than $2 million to trade commodity futures contracts. They used the money to pay for their own personal and business expenses. The hearing is set for April 8.
• The SEC published a bulletin about what really happens to the value of stock after bankruptcy. Please circulate. I'll be writing another post dedicated exclusively to this announcement shortly. 
• On Monday, April 6 the President of the NY FRB will be meeting with several community leaders in New Jersey. Jersey continues to suffer more than New York in terms of economic recovery.
• In other news, the US Energy Information Administration (EIA) confirmed that OPEC earned about $730 billion in net oil export revenues which represents an 11% decline from the $824 billion earned in 2013. The decrease is attributed to a decline in crude oil pries. The report suggests we could expect revenues to decline to $380 billion in 2015.

http://www.eia.gov/todayinenergy/detail.cfm?id=19231

FRB of NY President Meeting With Community Leaders in New Jersey

On Monday April 6,  FRB of NY President William C. Dudley will meet with several community leaders in New Jersey. The agenda for the day is posted below.
       
Open press events:

Speech at the New Jersey Performing Arts Center (NJPAC)
Time: 8:30 AM
Location:  NJPAC, Rehearsal Banquet Room, 1 Center Street, Newark, NJ 07102
Text and Q&A with the audience is expected.  Press may RSVP by contacting Debra Kinzler at dkinzler@njpac.org, 973-297-5159 or Angela Thomas at angela@pranamarketing.com, 201-503-1333.

Overview and tour of Teachers Village
Time: 10:00 AM
Location: 35 Maiden Lane, Newark, NJ 07102
Text is not expected.  Press may RSVP by contacting Lonnie Soury at lsoury@soury.com, 212-414-5857. 

Visit to Stevens Institute of Technology
Time: 4:00PM
Location: 1 Castle Point Terrace, Hoboken, NJ 07030
Text is not expected.  Press may RSVP by contacting Danielle Woodruffe at dwoodruf@stevens.edu, 201-216-5139.

SEC Settles 1st Whistleblower Protection Case Against #KBR: Employees Can Now Testify Without Fear of Retribution

The Securities and Exchange Commission today announced the first enforcement action against a violation involving the use of restrictive language in employee confidentiality agreements. This language is prohibitive in the process of enforcing securities laws and makes whistleblowers reluctant to come forward even if they are given an award.

By requiring its employees and former employees to sign confidentiality agreements imposing pre-notification requirements before contacting the SEC, KBR potentially discouraged employees from reporting securities violations to us.

-Andrew J. Ceresney, Director of the SEC’s Division of Enforcement

KBR (NYSE: KBR) is an engineering firm based in Houston, Texas that is charged with violating Rule 21F-17.  KBR required witnesses in certain internal investigations interviews to sign confidentiality agreements. The agreements warned that they could face legal action or be fired for discussing matters without KBR's approval. This includes securities law violations which is in violation of Rule 21F-17. KBR  has agreed to pay $130,000 to settle the charges. The company also amended it's confidentiality agreements.

The order made no mention of any other violations against KBR or its employees, but perhaps this change in policy and language was needed before a whistleblower at the company would come forward.

If you have information about one of the cases the SEC is working on now you may be eligible for whistleblower award too. There are currently 35 cases that the SEC is seeking information on. You can read more about these cases on the Whistleblower website. Some of the cases are also listed below.

2015-35	SEC v. Lawrence "Lee" Loomis, Loomis Wealth Solutions, LLC, John Hagener, and Lismar Financial Services, LLC Case Number: 10-cv-00458 (United States District Court for the Eastern District of California) Case Filed: February 23, 2010 Qualifying Judgment/Order: January 21, 2015
2015-34	SEC v. Steven Scoppetuolo, Robert Tocci, Sarang Ahuja, Richard White and Eric Gordon Case Number: 10-cv-20475 (United States District Court for the Southern District of Florida) Case Filed: February 16, 2010 Qualifying Judgment/Order: March 27, 2013
2015-33	SEC v. Robert A Walker, Dennis L. DeSender, and DLD Financial, LTD Case Number: 11-cv-03655 (United States District Court for the District of Minnesota) Case Filed: December 21, 2011 Qualifying Judgment/Order: January 30, 2015
2015-32	SEC vs. Mark F. Spangler and The Spangler Group, Inc. Case Number: 12-cv-00856 (United States District Court for the Western District of Washington) Case Filed: May 17, 2012 Qualifying Judgment/Order: November 13, 2014
2015-31	SEC v. John Gray, Christian Keller, Kyle Martin, and Aaron Shepard Case Number: 15-cv-00551 (United States District Court for the Northern District of California) Case Filed: February 5, 2015 Qualifying Judgment/Order: March 2, 2015
2015-30	SEC v. World Capital Market Inc.; WCM777 Inc.; WCM777 Ltd. d/b/a WCM777 Enterprises, Inc.; and Ming Xu a/k/a Phil Ming Xu Case Number: 14-cv-02334 (United States District Court for the Central District of California) Case Filed: March 27, 2014 Qualifying Judgment/Order: February 20, 2015
2015-29	SEC v. China Sky One Medical, Inc., and Yan-Qing Liu Case Number: 12-cv-07543 (United States District Court for the Central District of California) Case Filed: September 4, 2012 Qualifying Judgment/Order: March 4, 2015
2015-28	In the Matter of Sandra Dyche Administrative Proceeding File No.: 3-16398 Case Filed: February 20, 2015 Qualifying Judgment/Order: February 20, 2015
2015-27	SEC v. Edwin Yoshihiro Fujinaga and MRI International, Inc. Case Number: 13-cv-01658 (United States District Court for the District of Nevada) Case Filed: September 11, 2013 Qualifying Judgment/Order: January 27, 2015
2015-26	In the Matter of The Goodyear Tire & Rubber Company Administrative Proceeding File No.: 3-16400 Case Filed: February 24, 2015 Qualifying Judgment/Order: February 24, 2015
2015-25	In the Matter of BDO China Dahua CPA Co., Ltd.; Deloitte Touche Tohmatsu Certified Public Accountants Ltd.; Ernst & Young Hua Ming LLP; KPMG Huazhen (Special General Partnership); PricewaterhouseCoopers Zhong Tian CPAs Limited Administrative Proceeding File Nos.: 3-14872, 3-15116 Case Filed: February 6, 2015 Qualifying Judgment/Order: February 6, 2015
2015-24	SEC v. Lee Chi Ling Case Number: 13-cv-05364 (United States District Court for the Eastern District of New York) Case Filed: September 26, 2013 Qualifying Judgment/Order: February 11, 2015
2015-23	SEC v. Broadwind Energy, Inc., J. Cameron Drecoll, and Stephanie K. Kushner Case Number: 15-cv-01142 (United States District Court for the Northern District of Illinois) Case Filed: February 5, 2015 Qualifying Judgment/Order: February 18, 2015
2015-22	In the Matter of VCAP Securities, LLC, and Brett Thomas Graham Administrative Proceeding File No.: 3-16389 Case filed: February 19, 2015 Qualifying Judgment/Order: February 19, 2015
2015-21	SEC v. GLR Capital Management, LLC, GLR Advisors, LLC, Geringer, Luck & Rode LLC, and John A. Geringer Case number: 12-cv-02663 (United States District Court for the Northern District of California) Case filed: May 24, 2012 Qualifying Judgment/Order: February 3, 2015
2015-20	SEC v. Chan Tze Ngon and Jiang Xiangyuan Case number: 13-cv-06828 (United States District Court for the Southern District of New York) Case filed: September 26, 2013 Qualifying Judgment/Order: January 16, 2015
2015-19	In the Matter of UBS Securities LLC Administrative Proceeding File No.: 3-16338 Case filed: January 15, 2015 Qualifying Judgment/Order: January 15, 2015
2015-18	SEC v. Wwebnet, Inc. and Robert L. Kelly Case number: 12-cv-06581 (United States District Court for the Southern District of New York) Case filed: August 28, 2012 Qualifying Judgment/Order: January 16, 2015
2015-17	SEC v. Magdalena Tavella, Andres Horacio Ficicchia, Gonzalo Garcia Blaya, Lucia Mariana Hernando, Cecilia de Lorenzo, Adriana Rosa Bagattin, Daniella Patricia Goldman, Mariano Pablo Ferrari, Mariano Graciarena, and Fernando Loureyro Case number: 13-cv-04609 (United States District Court for the Southern District of New York) Case filed: July 3, 2013 Qualifying Judgment/Order: January 9, 2015
2015-16	In the Matter of Oppenheimer & Co. Inc. Administrative Proceeding File No.: 3-16361 Case filed: January 27, 2015 Qualifying Judgment/Order: January 27, 2015
2015-15	SEC v. Avon Products, Inc. Case number: 14-cv-09956 (United States District Court for the Southern District of New York) Case filed: December 17, 2014 Qualifying Judgment/Order: January 8, 2015
2015-14	SEC v. Advanced Equity Partners, LLC, Premiere Consulting, LLC, Peter D. Kirschner, and Stuart M. Rubens Case number: 13-cv-62100 (United States District Court for the Southern District of Florida) Case filed: September 26, 2013 Qualifying Judgment/Order: December 9, 2014
2015-13	In the Matter of International Capital Group, LLC, Brian R. Nord, Larry Russell, Jr., and Todd J. Bergeron Administrative Proceeding File No.: 3-16366 Case filed: January 29, 2015 Qualifying Judgment/Order: January 29, 2015
2015-12	In the Matter of Standard & Poor's Rating Services Administrative Proceeding File No.: 3-16348 Case Filed: January 21, 2015 Qualifying Judgment/Order: January 21, 2015
2015-11	In the Matter of Standard & Poor's Rating Services Administrative Proceeding File No.: 3-16346 Case Filed: January 21, 2015 Qualifying Judgment/Order: January 21, 2015
2015-10	In the Matter of EDGA Exchange, Inc., and EDGX Exchange, Inc. Administrative Proceeding File No.: 3-16332 Case Filed: January 12, 2015 Qualifying Judgment/Order: January 12, 2015
2015-9	SEC v. Michael B. Ferguson and Transactions Unlimited Case Number: 14-cv-04188 (United States District Court for the Northern District of California) Case Filed: September 29, 2014 Qualifying Judgment/Order: November 13, 2014
2015-8	SEC v. John N. Irwin, CPA and Jacklin Associates, Inc. Case Number: 11-cv-04429 (United States District Court for the Eastern District of Pennsylvania) Case Filed: July 11, 2011 Qualifying Judgment/Order: December 19, 2014
2015-7	SEC v. Alternative Green Technologies, Inc., Mitchell Segal, Belmont Partners, LLC, Joseph Meuse, Howard Borg, David Ryan, Vikram Khanna, and Panascope Capital Inc. Case Number: 11-cv-09056 (United States District Court for the Southern District of New York) Case Filed: December 12, 2011 Qualifying Judgment/Order: December 15, 2014
2015-6	SEC v. Larry R. Polhill Case Number: 13-cv-01729 (United States District Court for the Central District of California) Case Filed: September 24, 2013 Qualifying Judgment/Order: December 6, 2014
2015-5	SEC v. Bill C. (Billy) Crafton, Jr. Case Number: 14-cv-02916 (United States District Court for the Southern District of California) Case Filed: December 10, 2014 Qualifying Judgment/Order: December 17, 2014
2015-4	SEC v. Heart Tronics, Inc., Mitchell Jay Stein, Willie James Gault, J. Rowland Perkins, II, Martin Bert Carter, Mark Crosby Nevdahl, and Ryan Allan Rauch Case Number: 11-cv-01962 (United States District Court for the Central District of California) Case Filed: December 21, 2011 Qualifying Judgment/Order: December 10, 2014
2015-3	SEC vs. Brian N. Hollnagel and BCI Aircraft Leasing, Inc. Case Number: 07-cv-04538 (United States District Court for the Northern District of Illinois) Case filed: August 13, 2007 Qualifying judgment/order: December 18, 2014
2015-2	In the Matter of Morgan Stanley & Co. LLC Administrative Proceeding File No.: 3-16310 Case Filed: December 10, 2014 Qualifying Judgment/Order: December 10, 2014
2015-1	In the Matter of Bruker Corporation Administrative Proceeding File No.: 3-16314 Case Filed: December 15, 2014 Qualifying Judgment/Order: December 15, 2014

http://www.sec.gov/about/offices/owb/owb-awards.shtml