Tag Archives: Mark Johnson

Former Global Head of HSBC’s Foreign Exchange Cash-Trading Found Guilty of Orchestrating Multimillion-Dollar Front-Running Scheme

Posted on by

Monday, October 23, 2017

The former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.”

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.

Mark Johnson, 51, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud.  Sentencing date has not been scheduled.  U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial.  Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.

“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco.  “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”

“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde.  “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution.”

“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said Assistant Director in Charge Vale.  “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries.  We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.”

According to the evidence presented at trial, in November and December 2011, Johnson cheated an HSBC client out of millions of dollars by misusing information provided to him by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries.  HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.  HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential.  Instead, Johnson misused confidential information he received about the client’s transaction to cheat the client out of millions of dollars, the evidence showed.

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pound Sterling for their own benefit in their HSBC “proprietary” accounts.  Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pound Sterling, benefiting their proprietary positions and HSBC at the expense of their client.

As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions.  In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.5 million from the execution of the FX  transaction for the victim company.

The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office.  The Criminal Division’s Office of International Affairs provided significant support.  Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country, focusing on cases of national significance and international scope.  Fraud Section prosecutors have vast experience in investigating and prosecuting securities and financial fraud, health care fraud and foreign corruption.  The Section is routinely the national leader in large, sophisticated white collar investigations and prosecutions, frequently in partnership with U.S. Attorneys’ Offices and in coordination with foreign law enforcement agencies.  Learn more about the Criminal Division’s Fraud Section at: https://www.justice.gov/criminal-fraud.

Former Janesville Pharmacy Owner Sentenced for Health Care Fraud

Posted on by

Friday, September 1, 2017

Madison, Wis. – Jeffrey M. Anderson, Acting United States Attorney for the Western District of Wisconsin, announced that Mark Johnson, 55, Janesville, Wis., was sentenced today by U.S. District Judge James Peterson to 24 months in federal prison for health care fraud.  Johnson will begin serving his sentence in October.

On August 4, 2016, Johnson’s arrest was announced in conjunction with the unsealing of a 46-count indictment returned by the grand jury, charging him with health care fraud, making false statements in a health care fraud audit, and identity theft.

On May 24, 2017, Johnson entered a guilty plea to Count 1 of the indictment. Pursuant to the Federal Sentencing Guidelines, all the charged conduct was considered by the court at sentencing. Johnson defrauded Medicare and Medicaid from approximately January 2008 to March 2014. During this time-period, he was a licensed pharmacist, and the owner and president of Kealey Pharmacy and Home Care, Inc., a pharmacy located in Janesville, Wisconsin. Kealey Pharmacy was a retail pharmacy providing, among other things, prescription drugs to customers. Kealey was reimbursed for these prescriptions in a number of ways, including reimbursement payments under Medicare and Medicaid.

Johnson submitted false and fraudulent claims to Medicare and Medicaid obtaining reimbursement for medication that was not, in fact, provided to beneficiaries. On occasion, also created false prescription orders using the identities of physicians and then submitted claims for reimbursement for medication pursuant to these false prescription orders. also lied in his responses to an audit being conducted by the State of Wisconsin Department of Health Services of paid Medicaid claims in 2013. obtained approximately $740,000 in fraudulent prescription reimbursements during his fraud scheme.

At sentencing, Judge Peterson noted that Johnson’s criminal conduct caused a considerable financial loss to the Medicare and Medicaid programs, which are designed to protect the sick and the vulnerable.

The charges against Johnson were the result of a lengthy investigation conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Postal Inspection Service. Federal investigators began investigating Johnson after being alerted to the possible fraud by two employees who worked at the pharmacy.

Acting U.S. Attorney Anderson commended the outstanding work of the investigators in the case and praised the two former employees who came forward with concerns about possible fraud. Anderson said, “Johnson’s case is an example of this U.S. Attorney’s Office’s commitment to prosecuting those in the health care profession who abuse the public trust by defrauding the Medicare and Medicaid programs.”

The prosecution of this case is being handled by Assistant U.S. Attorney Meredith P. Duchemin.