Eideard

Jerome O’Hara (left) with his attorney
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Two of Bernard Madoff’s former computer programmers were sued by U.S. regulators for allegedly helping to hide his fraud for more than 15 years and trying to cover their tracks after a “crisis of conscience” in 2006.

Jerome O’Hara, 46, and George Perez, 43, wrote programs to generate fake trade blotters, stock records and other documents to back nonexistent transactions, the Securities and Exchange Commission said today in a statement announcing its civil lawsuit.

“Without the help of O’Hara and Perez, the Madoff fraud would not have been possible,” George Canellos, head of the SEC’s New York office, said in the statement….

“O’Hara and Perez had a crisis of conscience in 2006 and tried to cover their tracks,” the SEC said in the statement.

They allegedly sought to delete about 218 of 225 so-called special programs from a computer, known as “House 17,” used to process money management account data. They didn’t delete the monthly backup tapes, the SEC said.

O’Hara and Perez then cashed out hundreds of thousands of dollars from their personal accounts at Madoff’s firm, before confronting him and refusing to generate more bogus records, the SEC said.

I love these “crises of conscience”. They always seem to come after people accumulate a small fortune. I suspect that they just got cold feet. We’ll probably be hearing that they had a Jesus experience. Just watch.

It took less than two minutes Monday for the high-stakes patent case in the Supreme Court to descend to the level of questioning whether “Lorenzo Jones” could get a patent on one of his hare-brained inventions, if Bernard Bilski and Rand Warsaw could get one on their theory about managing business risk. “Jones,” an old-time radio figure who thought his creations in a garage would bring him fame and fortune, made an appearance in the first question, by Justice Antonin Scalia.

Scalia also suggested the seeming absurdity of a patent for Dale Carnegie’s influential 1936 book, How to Win Friends and Influence People. But it was the “Lorenzo Jones” comment that set the tone for the entire argument in Bilski, et al., v. Kappos (08-964). It would take a most inventive analyst to find a way in the argument for the risk-management idea under review to fit into the Patent Act’s coverage. The idea had no defenders whatsoever on the bench

The largest question left unanswered when the one-hour argument was over was whether the Court would go forward and issue a major new ruling interpreting patent law, when the practical result here seemed so evident. Lawyers and judges have invested heavy resources in the Bilski case, and it does raise a fundamental question that may well need answering. But, when there may well be no formulation of patent law that would salvage the Bilski-Warsaw creation, why bother?

J. Michael Jakes, a Washington lawyer arguing for a patent on that invention, faced a seemingly unending litany of hypotheticals to test how far he would take his plea for wide access to a patent monopoly. Justice Sonia Sotomayor wondered if a patent would be available on “a method of speed-dating,” Justice Ruth Bader Ginsburg asked about methods for avoiding corporate takeovers or picking a jury, Justice Stephen G. Breyer brought up a successful businessman’s right to protection for “how he made his money” and a method for teaching antitrust law that “would keep 80 percent of the students awake,” Chief Justice John G. Roberts, Jr., wondered about a business model counseling “buy low and sell high,” and Justice Anthony M. Kennedy questioned patent rights for someone who went to the Bureau of Statistics and worked out a table of life expetancy. On and on the hypotheticals went.

These schmucks actually want a software patent on managing hedge funds according to the weather.

Revolving doors were invented for Wall Street bankers
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Swiss bank UBS has been slapped with an $13+million fine, the third-largest ever levied by the City regulator, after it was discovered that four of the bank’s employees were able to use customer money to trade in currencies and metals markets.

As a result of the trading activity, the bank has been forced to pay compensation of more than $42million although the FSA established that it had not itself profited from the trading…

At one stage as many as 50 unauthorised transactions a day were taking place in foreign exchange and precious metals by four employees who were using customers’ money without authorisation and allocating losses to customer accounts. The events took place between January 2006 and December 2007 and were only uncovered by an internal whistleblower…

The FSA concluded that UBS had failed to manage and control key risks, failed to respond to warning signs that the internal controls were inadequate and failed to provide an appropriate level of supervision over customer-facing employees.

The bank made apologies, blah, blah – swore to implement oversight and regulation, blah, blah – it will never happen again, blah, blah.

Don’t hold your breath!

A former State Department official who is now a lobbyist has been charged with earning hundreds of thousands of dollars representing the Sudanese government in violation of United States sanctions.

A federal indictment accuses the lobbyist, Robert J. Cabelly, who had worked on Africa issues for the State Department during the 1980s and ’90s, with illegally acting as an unregistered agent of a foreign country, money laundering, passport fraud and making false statements.

Between 2005 and 2007, the indictment says, Mr. Cabelly violated United States sanctions against Sudan by helping it find international investors to develop that country’s largely untapped oil reserves…

According to the indictment, Mr. Cabelly was paid at least $530,000 a year, and had additional unreported funds directly deposited into accounts in the Cook Islands.

Once the Oil Patch Boys get their greedy fingers into a country they are relentless. They have enough of our dollars to pay for any size flunky they wish for – to do their dirty work.

That includes Cabelly, btw – if you thought I was only referring to Bush and Cheney.

Daylife/Reuters Pictures used by permission

By all appearances, Raj Rajaratnam was a self-made billionaire, having built Galleon Group into a giant hedge fund with a specialty in technology companies.

But prosecutors said on Friday that he had profited not from his trading genius but from his Rolodex, and they arrested him on charges of conspiracy and securities fraud in what they called the biggest insider trading scheme ever involving a hedge fund.

In all, six people were arrested, accused by prosecutors and the Securities and Exchange Commission of earning more than $20 million from illegal trading in companies like Google, Akamai and Hilton Hotels over nearly three years.

Mr. Rajaratnam is accused of tapping a vast network of informants across a swath of corporate America: a senior official at I.B.M. considered a contender for the top job at that firm; executives of Intel and the consulting firm McKinsey & Company; two former Bear Stearns employees who had moved to a hedge fund, New Castle Partners; and an analyst at Moody’s Investors Service.

While trading secrets, though, one crucial piece of information was not shared — several of the phones were tapped.

The wiretaps were made with the help of an unnamed cooperating witness, a former Galleon employee who was said to ply Mr. Rajaratnam with information originally to land a job. The witness, who began cooperating in November 2007, has agreed to plead guilty in the hopes of receiving a lesser sentence.

“This case should serve as a wake-up call for Wall Street,” Preet Bharara, the United States attorney for the Southern District of New York, said at a news conference on Friday. He added that the investigation was continuing.

Wake-up call my Sweet Aunt Josephine’s rosy cheeks! RTFA. It’s like cleaning out the White House and leaving behind a thoroughly corrupt Congress.

The SEC was pressed into dumping a few bad apples like Madoff – and now Rajaratnam – who sit in the midst of a network of corruption and deceit that remains without thoroughgoing regulation or oversight.

Daylife/AP Photo used by permission

A man on the run, wanted for fraud by US authorities, inadvertently revealed where he was hiding through a series of extravagant Facebook updates.

Cameroon-born Maxi Sopo’s messages made it clear he was living the high life in the Mexican resort of Cancun.

He also added a former US justice department official to his friend list who ended up helping to track him down.

US officials say Mr Sopo and an associate falsely obtained more than $200,000 in credit from banks.

In recent status updates Mr Sopo said he was “loving it”, described himself as “living in paradise” and said he was “just here to have fun”.

The 26-year-old, who is currently in custody in Mexico City, initially sold roses in Seattle nightclubs after arriving in the US in 2003. He then allegedly moved on to bank fraud.

The former justice department official whom Mr Sopo befriended on the social networking site said he had only met the fugitive a few times in the city’s nightclubs and had no idea that he was on the run. He was able to discover exactly where Mr Sopo was living and the information was passed to the Mexican authorities who arrested him last month.

This guy qualifies as Dumber!

Or maybe you can?

More than 1,200 Harris County DWI convictions will be set aside and the cases revisited, prosecutors said after the sentencing of Deetrice Wallace, a Department of Public Safety contractor who faked inspections of alcohol breath testing devices.

About 1,000 defendants convicted of driving while intoxicated can petition for a retrial without evidence submitted by Wallace, the prosecutor said. Some defendants had more than one case affected.

Wallace signed off on about 4,000 test slips. Of those, some did not result in convictions and others were not in Harris County. ADA Terese Buess did not know how other counties would address the problem.

The prosecutor was not optimistic about seeking 1,200 convictions again because the office will not have test results, and other evidence has been destroyed, including videotapes.

Buess prosecuted Wallace for three counts of tampering with a governmental record, a state jail felony. State District Judge Jeannine Barr sentenced her to a year behind bars…

Buess said Wallace manipulated the machines instead of changing the reference sample every month, and pocketed $146,000.

One defendant who will be able to get a new trial, she said, was sentenced to 60 years in prison for a felony DWI.

If you’re employed by law enforcement you must be trustworthy. Right?

Was lack of oversight invented in Texas?

As Congress debates the government’s role in health care, a new report finds that state and federal officials failed to detect millions of dollars in Medicaid prescription drug abuse.

An audit of the government program in five large states found about 65,000 instances of beneficiaries improperly obtaining potentially addictive drugs at a cost of about $65 million during 2006 and 2007 — including thousands of prescriptions written for dead patients or by people posing as doctors…

The states targeted by the GAO — California, Illinois, New York, North Carolina and Texas — accounted for 40% of Medicaid’s prescription drug payments in fiscal years 2006 and 2007. They are not fully taking advantage of federal databases or technology that could spot fraud, the report said.

The GAO found:

• About 65,000 cases where Medicaid beneficiaries visited six or more doctors and up to 46 different pharmacies to acquire prescriptions — a practice known as “doctor-shopping” that allows purchasers to exceed the legal limit of drugs.

• Sixty-five doctors or pharmacists writing or filling prescriptions after being banned from Medicaid, some for illegally selling such drugs.

• About 1,800 prescriptions written for dead patients and 1,200 prescriptions “written” by dead physicians.

Obama’s proposals on digitizing medical records could bring a crushing decline in this kind of fraud. As the Feds roll it out the biggest problem will be dragging some states into the 21st Century. And this kind of spot-check can and should be routine throughout the system.

Here in New Mexico – now that we’ve brought the state’s unemployment/employment departments back from outsourcing in India – they still managed to buy a software management package that has missed peoples’ unemployment checks several times. IT is still ruled by political hacks.

They will be watching Juan Carlos Guzmán-Betancourt very closely at his jail in Vermont.

The last time the silver-tongued Colombian conman with a taste for the high life was locked up he walked out of a British prison after persuading the authorities to let him go to the dentist on his own.

But after illegally crossing the border from Canada, the man who British police have likened to the legendary US conman Frank Abagnale, played by Leonardo DiCaprio in the film Catch Me If You Can, now faces the prospect of up to eight countries and the US state of Nevada asking for his extradition…

The Colombian has at least 10 identities and has been pursued in Canada, Colombia, Japan, Mexico, Russia, Thailand and Venezuela. He’s been convicted of larceny in Virginia and New York and credit card fraud in Florida, and deported from the US three times.

RTFA. I can never resist reading about a good con.

Excluding Congress of course.

What sort of counterfeit do you need?

It would not ordinarily go down in the annals of crime. But when Robert Fitzsimmons was arrested this summer and accused of cashing a check made out to his long-dead father at a Pay-O-Matic check cashing store in Manhattan, he became one of the first people in the country accused of stealing some of the $787 billion in federal stimulus money.

At issue was one of the millions of $250 stimulus checks that were sent to all Social Security recipients in May; Mr. Fitzsimmons was accused of cashing one that was made out to his late father, according to a complaint filed in Federal District Court in Manhattan, which goes on to accuse him of stealing Social Security money for at least four years. His lawyer, Julia Gatto, said he intended to plead not guilty.

Compared with the immense size of the stimulus program, the actual number of arrests so far has been microscopic. Earl E. Devaney, the chairman of the Recovery Accountability and Transparency Board, the watchdog for stimulus money, said recently that federal prosecutors were looking at only nine stimulus-related cases, including accusations of Social Security fraud and of businesses improperly claiming to be owned by women and members of minorities.

“Quite frankly, I’m a little surprised it’s that small,” Mr. Devaney testified recently before the Senate, explaining that his office passes along questionable expenses to the various federal inspector general offices following the money, as well as to the Department of Justice. “I know, from talking to them, they’re very interested in sending some very loud signals early, as often as they can, with this money.”

The small number of cases is partly a function of how much stimulus money has been spent so far, and how it has been spent. While more than $150 billion of it has been pumped into the economy, according to a recent report by the White House, some $62.6 billion of that was in the form of tax cuts. Of the rest, $38.4 billion was sent to states for fiscal relief; $30.6 billion was spent to help those affected by the recession by expanding unemployment benefits and other safety-net programs, and $16.5 billion was spent in areas like infrastructure, technology and research.

Will the fraud investigators check up on what the states do with the money?

As much as I may distrust my fellow citizens, I trust state governments even less. They practically invented graft.