“Mortgage lenders that fail to follow FHA program rules put taxpayer funds at risk and increase the chances of borrowers losing their homes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.”
“M&T Bank bypassed its responsibility to originate and underwrite mortgages in accordance with the standards required by the FHA,” said First Assistant U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”
During the time period covered by the settlement, M&T Bank participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance. DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their quality control program.
The settlement announced today resolves allegations that M&T Bank failed to comply with certain FHA origination, underwriting and quality control requirements. As part of the settlement, M&T Bank admitted to the following facts: Between Jan. 1, 2006, and Dec. 31, 2011, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s quality control requirements. Prior to 2010, M&T Bank failed to review all Early Payment Default (EPD) loans, which are loans that become 60 days past due within the first six months of repayment. Between 2006 and 2011, M&T also failed to review an adequate sample of FHA loans, as required by HUD.
Additionally, M&T created a quality control process that allowed it to produce preliminary major error rates that were significantly lower (sometimes below one percent) than what the rate would have been if M&T had calculated its preliminary major error rate by dividing the number of loans with preliminary major errors by the number of loans reviewed to determine what percent of loans contained a preliminary major error.
M&T Bank also failed to adhere to HUD’s self-reporting requirements. While M&T Bank identified numerous FHA insured loans with “major errors” between 2006 and 2011, M&T Bank did not report a single loan to HUD until 2008, and thereafter self-reported only seven loans to HUD. As a result of M&T’s conduct and omissions, HUD insured hundreds of loans approved by M&T that were not eligible for FHA mortgage insurance under the Direct Endorsement program and that HUD would not otherwise have insured. HUD subsequently incurred substantial losses when it paid insurance claims on those loans.
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“This recovery on behalf of the Federal Housing Administration should serve as a reminder of the potential consequences of not following HUD program rules and the value of private citizen assistance, including whistleblowers, in pursuing lenders that violate the rules,” said Inspector General David A. Montoya of the Department of Housing and Urban Development.
“It is critically important that FHA-approved lenders comply with HUD’s underwriting standards and originate mortgages that borrowers can sustain,” said HUD General Counsel Helen Kanovsky. “We are pleased M&T Bank worked with the Department of Justice and HUD to arrive at an agreeable settlement that protects FHA’s insurance fund.”
The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by a former employee of M&T Bank, Keisha Kelschenbach. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. The share to be awarded in this case has not yet been determined.
The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division and the U.S. Attorney’s Office for the Western District of New York.
The lawsuit is captioned U.S. ex rel. Kelschenbach v. M&T Bank Corp, 13-CV-0280(S) (W.D.N.Y.).
The American Metal Market Daily is the online resource for metals industry news and proprietary pricing information covering the steel, non-ferrous and scrap markets. Since its first print issue published in 1882, AMM has been the trusted name in metals industry information. This is what AMM has learned about growing concerns reporrted by members of and recent actions taken by the Institute of Scrap Recycling Industries, Inc. (ISRI) on their behalf (click below to access the article):
Alexandria, VA — Pax Mondial LLC, doing business as Mondial Risk Management Company (MRMC), agreed to pay the United States $44,000 to settle civil fraud claims that it illegally exported firearms accessories from the United States to Afghanistan in 2012. At the time, MRMC was providing security services to support work on the Kandahar Helmand Power Project, a United States Government reconstruction project funded by the U.S. Agency for International Development (USAID).
The settlement, reached between MRMC and the U.S. Department of Justice in January 2016, resolves claims that MRMC violated the Arms Export Control Act (AECA) by shipping weapons accessories from the continental United States to a U.S. Army/Air Post Office (APO) in Afghanistan between April 2012 and June 2012. Working under a subcontract for security services with USAID implementer Black and Veatch, MRMC obtained these accessories, which included rifle stocks, replacement pistol magazines, and other weapons parts, to supply its security teams in Kandahar, Afghanistan. The government alleged that MRMC knowingly failed to adhere to its subcontract provisions and U.S. laws and regulations regarding the export of such materials in violation of the False Claims Act (31 U.S.C. § 3729 et seq.).
“I commend the work of our special agents and their federal partners,” said Ann Calvaresi Barr, USAID’s Inspector General. “It is vital that U.S. Government contractors comply with rules governing their work and conduct overseas, especially those concerning international shipments of weapons and related accessories. Failure to adhere to those rules is not acceptable.”
During the investigation, federal authorities identified a number of export violations, including MRMC’s failure to consult with the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), a step that is required under both U.S. export laws and MRMC’s subcontract provisions. Authorities also found that MRMC had failed to acquire the requisite permits, licenses, and registrations in order to ship these controlled items and had not registered as an exporter with DDTC. MRMC did not disclose these violations to U.S. authorities until early 2013, long after the shipments had been made.
Under the settlement, Pax Mondial made no admission of liability. The company registered with the Department of State’s DDTC while the investigation was underway.
The settlement is a result of joint investigative efforts by the USAID Office of Inspector General; U.S. Immigration and Customs Enforcement’s (ICE’s) Homeland Security Investigations (HSI); and the U.S. Attorney’s Office for the Eastern District of Virginia.
Assistant Attorney General Leslie R. Caldwell for the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara for the Southern District of New York made the announcement.
In January, Budovsky pleaded guilty to one count of conspiring to commit money laundering. In imposing sentence, the court noted that Budovsky ran an “extraordinarily successful” and “large-scale international money laundering operation.” U.S. District Judge Denise L. Cote also ordered Budovsky to pay a $500,000 fine.
“The significant sentence handed down today shows that money laundering through the use of virtual currencies is still money laundering, and that online crime is still crime,” said Assistant Attorney General Caldwell. “Together with our American and international law enforcement partners, we will protect the public even when criminals use modern technology to break the law.”
“Liberty Reserve founder Arthur Budovsky ran a digital currency empire built expressly to facilitate money laundering on a massive scale for criminals around the globe,” said Manhattan U.S. Attorney Bharara. “Despite all his efforts to evade prosecution, including taking his operations offshore and renouncing his citizenship, Budovsky has now been held to account for his brazen violations of U.S. criminal laws.”
According to the indictment, Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system” and allowed people all over the world to send and receive payments using virtual currency. At all relevant times, Budovsky directed and supervised Liberty Reserve’s operations, finances, and business strategy and was aware that digital currencies were used by other online criminals, such as credit card traffickers and identity thieves.
Liberty Reserve grew into a financial hub for cybercriminals around the world, trafficking the criminal proceeds of Ponzi schemes, credit card trafficking, stolen identity information and computer hacking. By May 2013, when the government shut it down, Liberty Reserve had more than 5.5 million user accounts worldwide and had processed more than 78 million financial transactions with a combined value of more than $8 billion. United States users accounted for the largest segment of Liberty Reserve’s total transactional volume – between $1 billion and $1.8 billion – and the largest number of user accounts – over 600,000.
Four co-defendants, Vladimir Kats, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev, have already pleaded guilty. Marmilev and Chukharev were sentenced to five years and three years in prison, respectively. Judge Cote is expected to sentence Kats and El Amine May 13. Charges remain pending against Liberty Reserve and two individual defendants who are fugitives.
The U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations investigated this case as part of the Global Illicit Financial Team. The U.S. Secret Service’s New York Electronic Crimes Task Force assisted with the investigation. The Judicial Investigation Organization in Costa Rica, Interpol, the National High Tech Crime Unit in the Netherlands, the Spanish National Police’s Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.
Trial Attorney Kevin Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorneys Christian Everdell, Christine Magdo and Andrew Goldstein of the Southern District of New York are prosecuting the case. The Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section provided substantial assistance.
WASHINGTON, April 26, 2016 /PRNewswire/ — The FormerFeds Group LLC, today announced the release of its White Paper on the U.S. Mint’s Mutilated Coin Redemption Program including recommendations to improve coin redemption procedures. This program was suspended by the Department of the Treasury in November 2015 for a review of its security processes. The FormerFeds Group White Paper was commissioned by GeyerGorey LLP, the law firm representing Wealthy Max Limited (Wealthy Max), a claimant in a federal civil forfeiture case involving redemption of supposedly counterfeit coins.
The White Paper was produced by a team of professional researchers, analysts and retired FBI agents all working in the FormerFeds Group organization. The document reviews the history and development of the U.S. Mint’s Mutilated Coin Redemption Program since its founding in 1911, and recent concerns about the possibility of criminal exploitation of the program. It concludes with several policy recommendations for the Mint and Treasury Department to consider when determining how best to restructure and relaunch the program. A copy of the White Paper can be downloaded here.
“Over the last six months the FormerFeds Group has worked closely with the Wealthy Max legal defense team to provide investigation support, internal compliance review and auditing and most recently policy research and recommendations,” saidRoy Johnson, Special Agent in Charge, FormerFeds Group LLC. “Our investigation into this program has found no evidence counterfeit mutilated coins have ever been redeemed, yet concerns have lingered about this possibility. This White Paper uses our research and analysis capabilities to present a neutral review of the current program, and generate practical recommendations for improvements in security that will not significantly increase costs. We believe there is consensus among all stakeholders that the Mutilated Coin Redemption Program is worthwhile and should be maintained in a manner that addresses security concerns. Our White Paper reflects the FormerFeds Group contribution to this discussion.”
On April 25th the White Paper was delivered to multiple officials at the U.S. Mint and is also being sent to members of the House Financial Services Subcommittee on Domestic Monetary Policy and Technology as well as senior officials from the Departments of Treasury, Justice and Homeland Security.
The primary recommendation of the FormerFeds Group White Paper is that the U.S. Mint require all large scale coin redeemers to implement a rigorous compliance program with third party validation, to demonstrate coins being redeemed are genuine U.S. currency. Each shipment of coins would need to be inspected and validated prior to being submitted to the U.S. Mint for redemption. The costs of the compliance program would be borne by the organizations redeeming coins and thus would not add to the government’s expenses associated with this program.
“The FormerFeds Group thinks the institution of a well-structured and documented compliance program for coin redeemers is an effective and viable approach to addressing concerns regarding the potential redemption of coins that are not genuine U.S. currency. We would welcome the opportunity to sit down with Mint officials to discuss our recommendations in greater detail,” concluded Raymond J. Carr, Special Agent in Charge, FormerFeds Group.
The FormerFedsGroup is an international provider of compliance, investigative, crisis management and business development services for private and non-government organizations. The organization is staffed with experienced professionals, all of whom have over 20-years of experience in United States federal law enforcement.
SOURCE The FormerFeds Group LLC
The American Metal Market Daily attended the FormerFedsGroup.Com unsealing of 13 metric tons of Wealthy Max US clad coins in Hong Kong. American Metal Market is the online resource for metals industry news and proprietary pricing information covering the steel, non-ferrous and scrap markets. Since its first print issue published in 1882, AMM has been the trusted name in metals industry information. This is what AMM has learned about the scrap industry and the coin redemption industry in what is a fascinating read.
Cash and Carry: The US Mint vs. Wealthy Max
Chasing the Elusive Jackpot in America’s Cash Stream
I’ve been following a blog for a while that I find informative and interesting: Grand Jury Target: Tracking Federal Prosecutions of Corporate Executives. The blog is by Sara Kropf, a trial lawyer in Washington, D.C. A March 8th post was titled: “Why Are we Falling for the Department of Justice’s Sales Pitch? The blog recounted Ms. Kropf’s experience at the recent White Collar Crime seminar, including the constant pitches by DOJ officials to rush in to confess.
This approach—to quickly rush to DOJ to win cooperation credit—seems to be the sad reality of current white collar practice when you represent large companies. (Don’t even get me started in the antitrust amnesty program and the problematic incentives that program creates.)
Check out the blog. I think you’ll be well rewarded for your time.
Thanks for reading this one too!
The country’s oldest and most respected metals market trade publication, AMM, attended the Hong Kong unsealing of 13 metric tons of US clad coins on February 23rd that were processed in Foshan, China by the Wealthy Max quality assurance line in September, 2014, immediately following its processing of four shipments of mutilated clad coins that were seized by the government as being counterfeit. Now, the US Attorney’s Office of the Eastern District of Pennsylvania, which played no role in creating this mess, has, sensibly, reasonably and in good faith, has started referring to the coins as not meeting Mint specifications rather than in the preposterous terms used by the US Attorney’s Office of New Jersey and the Department of Homeland Security who, preposterously, continue to allege counterfeiting in one of the most slipshod, ramshackle and careless investigations in recent memory. Linked here is the carefully researched article.
Two water treatment chemicals executives were indicted in Newark, New Jersey, for their roles in a conspiracy to eliminate competition among suppliers of liquid aluminum sulfate to municipalities and pulp and paper companies in the United States, the Department of Justice announced today.
Vincent J. Opalewski, former president, vice president and general manager of a water treatment chemicals manufacturer headquartered in Parsippany, New Jersey, and Brian C. Steppig, director of sales and marketing of a water treatment chemicals manufacturer headquartered in Lafayette, Indiana, are the second and third executives charged in connection with the conspiracy, which sought to eliminate competition for contracts to supply liquid aluminum sulfate. Liquid aluminum sulfate is a coagulant used by municipalities to treat drinking and waste water and by pulp and paper companies in their manufacturing processes.
“Municipalities and pulp and paper companies deserve competitive prices for water treatment chemicals,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “These charges reflect our ongoing efforts to hold accountable those who conspire to cheat their customers responsible for their crimes.”
“These charges send a message that anyone intent on corrupting the free market will be identified and brought to justice,” said Acting Special Agent in Charge Andrew Campi of the FBI’s Newark Division. “Our mission is to protect victims who don’t see these crimes occurring, but who always end up paying the price.”
The indictment, returned by a grand jury in the U.S. District Court for the District of New Jersey, alleges that Opalewski, from 2005 to 2011, and Steppig, from 1998 until 2011, and their co-conspirators participated in the conspiracy by meeting to discuss each other’s liquid aluminum sulfate business, agreeing to stay away from each other’s historical customers, submitting intentionally losing bids to favor the intended winner of the business, withdrawing inadvertently winning bids and discussing with each other prices to be quoted to municipalities and pulp and paper companies.
The charges contained in the indictment are allegations and not evidence of guilt. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation into collusion in the liquid aluminum sulfate industry is being conducted by the New York Office of the Antitrust Division and the FBI’s Newark Division. Anyone with information regarding price fixing, bid rigging or customer allocation in the sale and marketing of liquid aluminum sulfate should contact the Antitrust Division’s New York Office at 212-335-8000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.