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):
Category Archives: USAO
Virginia Security Contractor to Pay $44,000 Over Allegations of Illegally Exporting Firearms Accessories
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.
Liberty Reserve Exec Gets 20 Years For Laundering
Arthur Budovsky, 42, was sentenced today in the Southern District of New York to 20 years imprisonment for running a massive money laundering enterprise through his company Liberty Reserve S.A. (“Liberty Reserve”), a virtual currency once used by cybercriminals around the world to launder the proceeds of their illegal activity.
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.
GreenScam–SEC: Co. Misled Investors About Green Tech
| The Securities and Exchange Commission today announced fraud charges against a Texas-based technology company and its founder accused of boosting stock sales with false claims about a supposedly revolutionary computer server and big-name customers purportedly placing orders to buy it.
Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of the company’s board of directors for allegedly recruiting investors while hiding they were being compensated to promote the company’s stock. The SEC alleges that Servergy Inc. and William E. Mapp III sold $26 million worth of company stock in private offerings while misleading investors to believe that the Cleantech CTS-1000 server (the company’s sole product) was especially energy-efficient. They said it could replace “power-hungry” servers found in top data centers and compete directly with top server makers like IBM, Dell, and Hewlett Packard. However, neither Mapp nor Servergy informed investors that those companies were manufacturing high-performance servers with 64-bit processors while the CTS-1000 had a less powerful 32-bit processor that was being phased out of the industry and could not in reality compete against those companies. The SEC further alleges that when Servergy was low on operating funds, Mapp enticed prospective investors by falsely claiming well-known companies were ordering the CTS-1000, and he specifically mentioned an order purportedly received from Amazon. In reality, an Amazon employee had merely contacted Servergy because he wanted to test the product in his free time for personal use. Servergy has since cut ties with Mapp, who served as CEO. The company agreed to pay a $200,000 penalty to settle the SEC’s charges. The litigation continues against Mapp in U.S. District Court for the Eastern District of Texas. “We allege that Mapp deceived investors into believing that Servergy’s groundbreaking technology was generating lucrative sales to major customers when it was technologically behind its competitors and made no actual sales,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. While serving in the Texas House of Representatives, Paxton allegedly reached an agreement with Mapp to promote Servergy to prospective investors in return for shares of Servergy stock. According to the SEC’s complaint, Paxton raised $840,000 in investor funds for Servergy and received 100,000 shares of stock in return, but never disclosed his commissions to prospective investors while recruiting them. Similarly, former Servergy director Caleb White allegedly raised more than $1.4 million for Servergy and received $66,000 and 20,000 shares of Servergy stock while never disclosing these commissions to investors. White has agreed to settle the SEC’s charges by paying $66,000 in disgorgement and returning his shares of Servergy stock to the company. The SEC’s litigation continues against Paxton. “People recruiting investors have a legal obligation to disclose any compensation they are receiving to promote a stock, and we allege that Paxton and White concealed the compensation they were receiving for touting Servergy’s product,” Mr. Shipchandler said. The SEC’s complaint charges Servergy, Mapp, Paxton, and White with violating Sections 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Servergy, Mapp, and White also allegedly violated Sections 5(a) and (c) of the Securities Act, and Paxton and White allegedly violated Section 17(b) of the Securities Act and Section 15(a) of the Exchange Act. Servergy and White neither admitted nor denied the SEC’s charges in their settlements. The SEC’s investigation was conducted by Samantha S. Martin and Carol J. Hahn and supervised by Jessica B. Magee and David L. Peavler in the Fort Worth office. The SEC’s litigation will be led by Matthew J. Gulde and Ms. Magee. |
Chasing the Jackpot in America’s Cash Stream-AMM
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
American Metals Market Report on Hong Kong Unsealing by FormerFedsGroup of 13 Metric Tons of Mutilated Clad Coins Processed by Wealthy Max
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.
Private Contractor Pleads Guilty to Bribing Former U.S. Postal Service Contracting Official
A private contractor pleaded guilty today to paying bribes to a U.S. Postal Service (USPS) contracting official in order to receive contracts to deliver the mail.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and USPS Inspector General David C. Williams made the announcement.
Barbara Murphy, 52, of Rocky Mount, North Carolina, pleaded guilty before U.S. District Judge George Jarrod Hazel of the District of Maryland, who set sentencing for June 13, 2016.
According to a factual stipulation filed with the court, Murphy was the sole owner of ER&R Transportation and MC&G Trucking LLC, which she used to bid for and perform on transportation contracts with USPS. Murphy admitted that from January 2011 to July 2012, she bribed Gregory Cooper, a former USPS contracting officer representative. These bribes included cash paid directly into Cooper’s bank accounts, automobile loan payments, college tuition for Cooper’s daughter, five cell phone bill payments, an airline ticket and fitness equipment, Murphy admitted.
According to the plea agreement, Murphy gave all of these benefits in exchange for Cooper’s favorable treatment of her companies when contracting opportunities with the USPS arose, in violation of Cooper’s lawful duty to the USPS. Specifically, Cooper recommended to his superiors that 10 USPS contracts on which Murphy bid during the relevant time period be awarded to Murphy’s companies, she admitted. Additionally, Murphy admitted that Cooper provided her with advice on how to address specific issues that arose from her contract performance and drafted documents that Murphy provided to the USPS.
On Nov. 15, 2015, Judge Hazel sentenced Cooper to 15 months in prison for bribery.
The USPS Office of the Inspector General investigated the case. Trial Attorneys Mark Cipolletti and Monique Abrishami of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney David Salem of the District of Maryland are prosecuting the case.
Wealthy Max Arranges Events in Hong Kong to Fight Civil Forfeiture Case Challenges Members of Congress and Other Government Officials to See for Themselves if the Company is Guilty
Feb. 9, 2016 – PRLog — Washington, DC – Wealthy Max Limited (Wealthy Max), a claimant in a federal civil forfeiture case involving supposedly counterfeit coins, today announced that it had invited the 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, to attend a briefing and product audit in Hong Kong. The event is being held as part of the Company’s fight against the civil forfeiture of $2.388 million owed to it by the U.S. Mint. It will also demonstrate once and for all that Wealthy Max does not traffic in counterfeit U.S. coins.
On February 23rd there will be a briefing by Wealthy Max executives and a public unsealing of 13 metric tons of damaged U.S. coins that were destined to be shipped to the U.S. Mint until the civil fortitude caused a halt to operations. The unsealing will be overseen by former U.S. FBI agents who are members of the FormerFedsGroup.com.
On February 24th Wealthy Max will organize a trip to Foshan, China, to visit metal recycling companies where the Company sources its coins. Participants will see the hand-sorting process that yields damaged U.S. coins, as well as the growing stockpiles of coins that would have been returned to the U.S. Mint, but for this unjust civil forfeiture action.
“The members of the House Financial Services Subcommittee on Domestic Monetary Policy and Technology have oversight responsibility for the U.S. Mint, and should have a keen interest in this case, as it reflects unprecedented executive branch over reach, which could impact perceptions of the government’s commitment to full faith and credit in our currency,” said Bradford L. Geyer, counsel for Wealthy Max. “Going back to the founding documents of our country, the Secretary of the Mint, with Congressional oversight, has the sole responsibility for the minting of coins and sourcing materials to be used in those coins. The actions of the U.S. Attorney’s Office and the Department of Homeland Security have effectively usurped this responsibility.”
“Wealthy Max has been a reliable supplier to the U.S. Mint for over a decade and we have successfully redeemed more than 160 shipments of coins in that time,” said Matthew Wong, director, Wealthy Max Limited. “We were shocked by the accusations against us, and the unjust seizure of our property by the U.S. government. We have been treated like criminals who have no rights. This is why we are demanding our property back, and more, we are demanding justice for ourselves and others who have been wronged by the U.S. authorities. Before these officials accuse us of being criminals, they should come to Hong Kong to see for themselves our product and our supply chain.”
In addition to the members of congress and their staffs, and the other U.S. government officials who have been invited to this event, Wealthy Max has extended invitations to local and international media, and members of the American Chamber of Commerce in Hong Kong.
Big Brothers Big Sisters of America to Pay $1.6 Million to Resolve Allegations of False Claims For Federal Grants
– Big Brothers Big Sisters of America Corporation (Big Brothers) has agreed to pay the United States $1.6 million to resolve allegations of false claims for funds under Department of Justice grants awarded to help children at risk, announced United States Attorney Zane David Memeger and Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. Big Brothers is a not-for-profit organization that provides mentoring services to boys and girls throughout the United States. The organization, originally based in Philadelphia, Pennsylvania, now is headquartered in Tampa, Florida.
Big Brothers is a national organization that acts through approximately 300 independent affiliate agencies across the United States. Since 2004, Big Brothers has received millions of dollars in grants from the Justice Department to support initiatives on behalf of children at risk. As a condition of those grants, Big Brothers was required to maintain sound accounting and financial management systems in accordance with federal regulations and guidelines designed to ensure that grant funds would be properly accounted for and used only for appropriate purposes.
The United States alleges that Big Brothers violated these regulations and guidelines with respect to three grants awarded by the Justice Department from 2009 to 2011, by commingling the grant funds with general operating funds, failing to segregate expenditures to ensure that the funds for each grant were used as intended, and failing to maintain internal financial controls to safeguard the proper use of grant funds. These allegations were documented in a 2013 audit of the three grants performed by the Department of Justice Office of the Inspector General. Since 2013, Big Brothers has replaced its management team and begun implementing policies aimed at correcting deficiencies in its management and accounting of federal grant funds.
“The US Attorney’s office is committed to protecting federal grants and ensuring that the funds are appropriately spent,” said Memeger. “Federal grant recipients must administer these grants with transparency and diligence, and the compliance measures implemented pursuant to this settlement agreement will help to achieve those goals.”
“Organizations such as Big Brothers have an obligation to the populations they serve as well as to the taxpayer to ensure that government grant funds are used for their intended purpose,” said Mizer. “The settlement announced today exemplifies the Department’s commitment to hold those who mishandle such funds accountable.”
“We appreciate the support of the U.S. Attorney for the Eastern District of Pennsylvania and the Civil Division in working with us on these kinds of cases,” said Department of Justice Inspector General Michael E. Horowitz. “The OIG’s auditors and investigators will continue to work with each other closely to uncover misuses of grant funds, and with our law enforcement partners to ensure that justice is served.”
In addition to paying the United States $1.6 million, Big Brothers has agreed to institute a strict compliance program that requires the organization to engage in regular audits, both internally and by independent auditors; establish a compliance team, an employee code of conduct, whistleblower policies, and a disciplinary policy for employees who engage in or fail to disclose abuses of federal grant funds; provide regular employee training on these policies; and employ risk assessment tools to detect abuses that might otherwise go undetected.
The investigation was conducted by the Department of Justice Office of the Inspector General. The settlement was handled by Assistant U.S. Attorneys Joel M. Sweet and Scott W. Reid in coordination with Trial Attorney David W. Tyler of the Justice Department’s Civil Division, Commercial Litigation Branch. The claims resolved by this settlement are allegations only; there has been no determination of liability.
Executives of Swiss and Las Vegas Companies Convicted in International Investment Fraud Scheme
A federal jury in Las Vegas convicted two men of conspiracy, wire fraud and securities fraud yesterday for their roles in an approximately $10 million international investment fraud scheme involving numerous victims.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office made the announcement.
Anthony Brandel, 48, of Las Vegas, and James Warras, 69, of Waterford, Wisconsin, were each convicted of one count of conspiracy, nine counts of wire fraud and eight counts of securities fraud following a five-day trial before Senior U.S. District Judge Kent J. Dawson of the District of Nevada. The defendants are scheduled to be sentenced on March 2, 2016, by Judge Dawson.
According to evidence presented at trial, Brandel and Warras conspired with others in the United States and Switzerland to promote investments and loan instruments that they knew to be fraudulent. The conspirators told victims that, for an up-front payment, a Swiss company known as the Malom (Make A Lot of Money) Group AG would provide access to lucrative investment opportunities and substantial cash loans. To effectuate this scheme, the defendants fabricated bank documents purporting to show that the Malom Group had large amounts of money in several European financial institutions. And as part of an effort to defraud an investor who held an equity stake in a corporation that had filed for bankruptcy, Warras submitted a sworn affidavit to the U.S. Bankruptcy Court in the District of New Hampshire in which he made false statements about the value of certain bonds that the defendants promoted to the investor.
Brandel and Warras were charged together with four other defendants, including Joseph Micelli, 62, a former California attorney who pleaded guilty to conspiracy to commit wire fraud and securities fraud and is set to be sentenced on Feb. 23, 2016. The remaining defendants are either at large or awaiting extradition from other countries.
The FBI’s Las Vegas Field Office investigated the case. Assistant Chief Brian R. Young and Trial Attorneys Melissa Aoyagi and Anna G. Kaminska of the Criminal Division’s Fraud Section are prosecuting the case with assistance from the Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the District of Nevada. The Securities and Exchange Commission’s Enforcement Division, which referred the matter to the department and is conducting a parallel civil enforcement investigation, also provided valuable assistance.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, visit www.stopfraud.gov.