FROM: U.S. JUSTICE DEPARTMENT
Friday, March 27, 2015
CEO and Managing Director Of US Broker-Dealer Sentenced for International Bribery Scheme
The former chief executive officer and former managing director of a U.S. broker-dealer (the Broker-Dealer), were sentenced to prison today for their roles in a scheme to pay bribes to a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (Bandes), in return for trading business that generated more than $60 million in commissions.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement. The sentences were imposed by U.S. District Judge Denise L. Cote of the Southern District of New York.
Benito Chinea, 48, of Manalapan, New Jersey, and Joseph DeMeneses, 45, of Fairfield, Connecticut, were each sentenced to four years in prison. They were also ordered to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme. On Dec. 17, 2014, both defendants pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.
“These Wall Street executives orchestrated a massive bribery scheme with a corrupt official in Venezuela to illegally secure tens of millions of dollars in business for their firm,” said Assistant Attorney General Caldwell. “The convictions and prison sentences of the CEO and Managing Director of a sophisticated Wall Street broker-dealer demonstrate that the Department of Justice will hold individuals accountable for violations of the FCPA and will pursue executives no matter where they are on the corporate ladder.”
“Benito Chinea and Joseph DeMeneses paid bribes to an officer of a state-run development bank in exchange for lucrative business she steered to their firm,” said U.S. Attorney Bharara. “Chinea and DeMeneses profited for a time from the corrupt arrangement, but that profit has turned into prison and now they must forfeit their millions of dollars in ill-gotten gains as well as their liberty.”
Chinea, the chief executive officer, and DeMeneses, a managing director in the Broker-Dealer, admitted that they worked with others, to arrange bribe payments to the Bandes official, Maria De Los Angeles Gonzalez, in exchange for her directing Bandes’s financial trading business to the Broker-Dealer. Previously, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (Clarke) and Jose Alejandro Hurtado (Hurtado), pleaded guilty for their involvement in this bribery scheme. A managing director of the Broker-Dealer, Ernesto Lujan, also pleaded guilty for his role in the scheme.
Background on the Broker-Dealer and Bandes
According to court documents, and as admitted by Chinea and DeMeneses at their guilty pleas, the Broker-Dealer, which was headquartered in New York City and had offices in Miami, established a group called the Global Markets Group in 2008, which included DeMeneses, Lujan and Clarke, and which offered fixed income trading services to institutional clients. One of the Broker-Dealer’s clients was Bandes, which operated under the direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding. Gonzalez was an official at Bandes and oversaw the development bank’s overseas trading activity. At her direction, Bandes conducted substantial trading through the Broker-Dealer. Most of the trades executed by the Broker-Dealer on behalf of Bandes involved fixed income investments for which the Broker-Dealer charged Bandes a mark-up on purchases and a mark-down on sales.
The Bribery Scheme
In pleading guilty, Chinea and DeMeneses admitted that, together with three Miami-based Broker-Dealer employees, Lujan, Clarke and Hurtado, they participated in a bribery scheme running from late 2008 through 2012, in which Gonzalez directed trading business to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this time period, the Broker-Dealer generated over $60 million in commissions from trades with Bandes.
Chinea and DeMeneses also admitted that in order to conceal their conduct, they and their co-conspirators routed the payments to Gonzalez, frequently in six-figure amounts, through third-parties posing as “foreign finders” and into offshore bank accounts. In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account. Chinea and DeMeneses also admitted that they agreed to use Broker-Dealer funds to reimburse DeMeneses and Clarke for the approximately $1.5 million from their personal funds they used to bribe Gonzalez. To conceal their true nature, Chinea and DeMeneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to corporate entities associated with DeMeneses and Clarke.
This case is being investigated by the FBI, and prosecuted by Senior Deputy Chief James Koukios and Trial Attorney Kevin R. Gingras of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York. Assistant U.S. Attorney Carolina Fornos of the Southern District of New York is responsible for the forfeiture aspects of the case. The U.S. Securities and Exchange Commission also assisted with this investigation.
Showing posts with label EXECUTIVE CRIME. Show all posts
Showing posts with label EXECUTIVE CRIME. Show all posts
Monday, March 30, 2015
Tuesday, July 22, 2014
FORMER QUALCOMM EXECUTIVE PLEADS GUILTY TO INSIDER TRADING, MONEY LAUNDERING
FROM: U.S. JUSTICE DEPARTMENT
Monday, July 21, 2014
Former Senior Executive of Qualcomm Pleads Guilty to Insider Trading and Money Laundering
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney L aura E. Duffy of the Southern District of California made the announcement. Wang pleaded guilty today in federal court in San Diego before U.S. District Judge William Q. Hayes .
“Not satisfied with his lucrative executive position at Qualcomm, Jing Wang traded on insider information about the company’s acquisitions and earnings to gain an illegal advantage in the financial market,” said Assistant Attorney General Caldwell. “Wang then laundered close to $250,000 in insider trading profits, and created a cover-up story to hide his crimes. We will continue to prosecute those who believe they can make easy money by breaking the laws that ensure a level playing field in the financial marketplace.”
“Jing Wang blatantly and repeatedly abused the trust placed in him by Qualcomm and the company’s shareholders,” said United States Attorney Duffy. “To make matters worse, he then misused the financial system to conceal his insider trading profits and enlisted his brother and stock broker to obstruct several investigations. Wang’s obstructive acts, though ultimately unsuccessful, were serious affronts to the rule of law. We will continue to use our excellent partnerships with the Criminal Division, the FBI, IRS-CI and our other law enforcement partners to not only prosecute securities fraud, but also disrupt attempts like Wang’s to obscure criminal conduct from the eyes of government investigators.”
According to court documents, Wang committed insider trading on three separate occasions over a ten-month period in 2010 and 2011. In early 2010, Wang purchased approximately $277,739 of Qualcomm stock prior to the company’s unexpected announcement of a dividend increase and stock repurchase program. In December 2010, while in Hong Kong, Wang purchased Atheros stock hours after Qualcomm’s Board of Directors made a non-public offer to purchase Atheros. Just a few weeks later, in January 2011, Wang directed his stock broker, Gary Yin, to sell the Atheros stock in a brokerage account held in the name of an offshore entity, Unicorn Global Enterprises, and used the proceeds to purchase Qualcomm stock, one day before Qualcomm announced record earnings results. In total, Wang illegally gained approximately a quarter of a million dollars from these three illegal transactions.
Wang also pleaded guilty to money laundering resulting from transferring the illegal proceeds in the Unicorn account – over $525,000 – to another nominee brokerage account in the British Virgin Islands for Clearview Resources Ltd. Wang also admitted in his plea agreement to obstructing justice by conspiring with his brother, Bing Wang, and Yin to fabricate evidence and concoct a false cover story that Bing Wang conducted the illegal stock trades.
Wang was originally indicted in September 2013. Bing Wang, who is currently believed to reside in China, remains charged and is wanted on an international arrest warrant. Gary Yin pleaded guilty to conspiring with Jing Wang and Bing Wang to obstruct justice and launder money, and is currently scheduled to be sentenced on Sept. 15, 2014.
The department appreciates the substantial assistance it received from the Securities and Exchange Commission’s Los Angeles Regional Office.
This case was investigated by the FBI’s San Diego Field Office and the Internal Revenue Service-Criminal Investigation’s San Diego Field Division. The case is being prosecuted by Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eric J. Beste of the Southern District of California.
Friday, September 27, 2013
SEC CHARGES FORMER QUALCOMM INC EXECUTIVE WITH INSIDER TRADING
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged a former executive at Qualcomm Inc. and his former financial advisor with insider trading ahead of major announcements by the San Diego-based wireless technology company for more than a quarter-million dollars in profits.
The SEC alleges that Jing Wang, a former executive vice president and president of global business operations at Qualcomm, used a secret offshore brokerage account to make illegal trades based on confidential information that he learned on the job. Gary Yin, a former registered representative at Merrill Lynch, helped Wang set up the account. Yin also created a secret offshore account of his own and traded on the non-public information gleaned from Wang. When Wang eventually realized that insider trading in the offshore accounts still may be discovered by the SEC or other regulators, he concocted a plan to conceal his trading activity by claiming the trades were made by his brother. Wang even convinced Yin to travel to China and go over the account statements with Wang’s brother so he could explain the trades if asked by investigators.
“Wang violated his duty as an insider to protect confidential information when he made timely illegal trades ahead of major announcements to the detriment of other Qualcomm shareholders who did not have the same information,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “Wang and Yin went to extraordinary lengths to conceal their trading and cover it up afterwards, but despite their expansive efforts they still wound up in law enforcement’s crosshairs.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Wang and Yin.
According to the SEC’s complaint, Wang and Yin became friends in 2005 as members of the same church. When Wang learned that Yin was a financial advisor at Merrill Lynch, he asked Yin to manage his money and opened a number of brokerage accounts at the firm’s San Diego branch office. Each account was disclosed to Qualcomm because, as a company officer, Wang was restricted in his ability to trade Qualcomm stock and required to pre-clear all Qualcomm trades with the company.
The SEC alleges that in early 2006, Wang approached Yin about hiding cash transactions. Yin suggested that Wang create an entity registered in the British Virgin Islands (BVI) and use the name of a non-U.S. citizen family member as the beneficial owner. Then he could open a brokerage account in the newly created entity’s name. Yin then helped Wang set up a secret account in the name of a BVI company called Unicorn Global Enterprises, and Wang’s older brother was listed as the owner. Yin similarly created his own BVI-registered entity named Pacific Rim and put it in his mother-in-law’s name. Yin opened a Merrill Lynch brokerage account for Pacific Rim and used it to hide funds that he was using for investments.
The SEC alleges that Wang and Yin used their secret offshore accounts to trade on material, non-public information that Wang learned as an executive at Qualcomm. In early 2010, Wang was aware that Qualcomm executives were planning a board proposal to increase Qualcomm’s quarterly dividends and request authority to initiate a stock repurchase program. Qualcomm informed Wang and all executives that they would not be permitted to trade Qualcomm stock. On March 1, Wang attended a Qualcomm board meeting where the quarterly dividend increase and stock repurchase were approved. Wang immediately instructed Yin to use all of the funds in the offshore Unicorn account to purchase Qualcomm stock. Yin knew that Wang did not pre-clear these trades and realized that the purchase was out of character for Wang because he previously never purchased Qualcomm stock on the open market in his Merrill Lynch accounts. Within the hour of executing the trades for Wang, Yin himself bought Qualcomm stock on the basis of the material, non-public information. The stock price increased 6.7 percent after Qualcomm publicly announced the quarterly cash dividend and stock repurchase program. Wang and Yin profited when they sold all of their shares.
According to the SEC’s complaint, Wang used the funds from that sale to conduct insider trading again – this time in the shares of San Jose-based Atheros Communications, which was the highly confidential target of a planned acquisition by Qualcomm. Wang was regularly briefed on the transaction internally tabbed as “Project Tango” to protect its confidentiality. Wang instructed Yin to sell all of his Qualcomm stock in the Unicorn account on Dec. 2, 2010, and prepare to buy as many shares of Atheros stock as possible with the funds in that account. He told Yin that he was leaving on a trip to China and would contact him to execute the Atheros trade. On December 6, Wang attended a Qualcomm board meeting in Hong Kong and a resolution was passed to pursue the acquisition. Wang learned that Qualcomm planned to acquire Atheros at $45 per share. Wang and Yin immediately communicated several times through phone calls and a text message, and Wang then purchased the maximum number of shares he could purchase with the existing funds in the Unicorn account at prices between $34 and $35 per share. At Wang’s encouragement, Yin also purchased Atheros stock for himself in his offshore account. When the news became public in early January, Atheros stock increased more than 20 percent. Yin sold all of his Atheros shares in the Pacific Rim account on January 12, and Wang sold his Atheros shares in the Unicorn account on January 25.
According to the SEC’s complaint, Wang took his next insider trading step merely four minutes after selling the Atheros stock, using the proceeds to purchase Qualcomm shares in advance of a company announcement that it would raise its revenue and earnings guidance for the 2011 fiscal year. Wang had learned the confidential information prior to the board meeting he attended in Hong Kong, where Qualcomm’s better-than-expected first quarter financial performance was further discussed. Wang learned that Qualcomm planned to announce its earnings results on January 26, and thus purchased his Qualcomm shares the day before the announcement. After Qualcomm issued a press release to announcing its positive first quarter results, Qualcomm’s stock increased 5.9 percent.
The SEC alleges that Wang made more than $244,000 in illegal profits through the insider trading scheme, and Yin realized gains of more than $27,000. Wang eventually realized that his illegal trading may be detected by Merrill Lynch or others. Wang first asked Yin to delete records of the trades in the Unicorn account, but because they were permanent records in Merrill Lynch’s systems they could not be erased. Around January 2012, Wang directed Yin to establish a new BVI corporation named Clearview Resources and open a new account at Merrill Lynch to which they transferred the insider trading proceeds in the Unicorn account to further distance Wang from the suspicious trades. A few months later, Wang informed Yin that the trades may have been detected because the SEC had subpoenaed his e-mails. So Wang devised a cover story and convinced Yin if ever questioned to say that the Atheros trades were made by Wang’s brother. Because Yin had never communicated with Wang’s brother, Wang instructed him to travel to China with the Unicorn account statements and review the trades with his brother so he could explain the trading if asked. Yin did so in May 2012. To further hide Wang’s ownership of the Unicorn account and his link to the Atheros trades, Yin removed the Unicorn account from Wang’s “household” in Merrill Lynch’s computer system in July 2012. “Householding” is a function used by Merrill Lynch to link related accounts.
The SEC's complaint charges Wang, who lives in Del Mar, Calif., with violating Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 16a-3. Yin, who lives in San Diego, is charged with violating Section 10(b) of the Exchange Act and Rule 10b-5. The SEC’s complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions. The SEC also seeks an officer-and-director bar against Wang.
The SEC’s investigation has been conducted by Ann C. Kim, Wendy E. Pearson, Nina Yamamoto, and Finola H. Manvelian of the Los Angeles Regional Office. The SEC’s litigation will be led by Sam Puathasnanon. The SEC appreciates the assistance of the Department of Justice’s Criminal Division, the U.S. Attorney’s Office for the Southern District of California, and the Federal Bureau of Investigation.
The Securities and Exchange Commission today charged a former executive at Qualcomm Inc. and his former financial advisor with insider trading ahead of major announcements by the San Diego-based wireless technology company for more than a quarter-million dollars in profits.
The SEC alleges that Jing Wang, a former executive vice president and president of global business operations at Qualcomm, used a secret offshore brokerage account to make illegal trades based on confidential information that he learned on the job. Gary Yin, a former registered representative at Merrill Lynch, helped Wang set up the account. Yin also created a secret offshore account of his own and traded on the non-public information gleaned from Wang. When Wang eventually realized that insider trading in the offshore accounts still may be discovered by the SEC or other regulators, he concocted a plan to conceal his trading activity by claiming the trades were made by his brother. Wang even convinced Yin to travel to China and go over the account statements with Wang’s brother so he could explain the trades if asked by investigators.
“Wang violated his duty as an insider to protect confidential information when he made timely illegal trades ahead of major announcements to the detriment of other Qualcomm shareholders who did not have the same information,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “Wang and Yin went to extraordinary lengths to conceal their trading and cover it up afterwards, but despite their expansive efforts they still wound up in law enforcement’s crosshairs.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Wang and Yin.
According to the SEC’s complaint, Wang and Yin became friends in 2005 as members of the same church. When Wang learned that Yin was a financial advisor at Merrill Lynch, he asked Yin to manage his money and opened a number of brokerage accounts at the firm’s San Diego branch office. Each account was disclosed to Qualcomm because, as a company officer, Wang was restricted in his ability to trade Qualcomm stock and required to pre-clear all Qualcomm trades with the company.
The SEC alleges that in early 2006, Wang approached Yin about hiding cash transactions. Yin suggested that Wang create an entity registered in the British Virgin Islands (BVI) and use the name of a non-U.S. citizen family member as the beneficial owner. Then he could open a brokerage account in the newly created entity’s name. Yin then helped Wang set up a secret account in the name of a BVI company called Unicorn Global Enterprises, and Wang’s older brother was listed as the owner. Yin similarly created his own BVI-registered entity named Pacific Rim and put it in his mother-in-law’s name. Yin opened a Merrill Lynch brokerage account for Pacific Rim and used it to hide funds that he was using for investments.
The SEC alleges that Wang and Yin used their secret offshore accounts to trade on material, non-public information that Wang learned as an executive at Qualcomm. In early 2010, Wang was aware that Qualcomm executives were planning a board proposal to increase Qualcomm’s quarterly dividends and request authority to initiate a stock repurchase program. Qualcomm informed Wang and all executives that they would not be permitted to trade Qualcomm stock. On March 1, Wang attended a Qualcomm board meeting where the quarterly dividend increase and stock repurchase were approved. Wang immediately instructed Yin to use all of the funds in the offshore Unicorn account to purchase Qualcomm stock. Yin knew that Wang did not pre-clear these trades and realized that the purchase was out of character for Wang because he previously never purchased Qualcomm stock on the open market in his Merrill Lynch accounts. Within the hour of executing the trades for Wang, Yin himself bought Qualcomm stock on the basis of the material, non-public information. The stock price increased 6.7 percent after Qualcomm publicly announced the quarterly cash dividend and stock repurchase program. Wang and Yin profited when they sold all of their shares.
According to the SEC’s complaint, Wang used the funds from that sale to conduct insider trading again – this time in the shares of San Jose-based Atheros Communications, which was the highly confidential target of a planned acquisition by Qualcomm. Wang was regularly briefed on the transaction internally tabbed as “Project Tango” to protect its confidentiality. Wang instructed Yin to sell all of his Qualcomm stock in the Unicorn account on Dec. 2, 2010, and prepare to buy as many shares of Atheros stock as possible with the funds in that account. He told Yin that he was leaving on a trip to China and would contact him to execute the Atheros trade. On December 6, Wang attended a Qualcomm board meeting in Hong Kong and a resolution was passed to pursue the acquisition. Wang learned that Qualcomm planned to acquire Atheros at $45 per share. Wang and Yin immediately communicated several times through phone calls and a text message, and Wang then purchased the maximum number of shares he could purchase with the existing funds in the Unicorn account at prices between $34 and $35 per share. At Wang’s encouragement, Yin also purchased Atheros stock for himself in his offshore account. When the news became public in early January, Atheros stock increased more than 20 percent. Yin sold all of his Atheros shares in the Pacific Rim account on January 12, and Wang sold his Atheros shares in the Unicorn account on January 25.
According to the SEC’s complaint, Wang took his next insider trading step merely four minutes after selling the Atheros stock, using the proceeds to purchase Qualcomm shares in advance of a company announcement that it would raise its revenue and earnings guidance for the 2011 fiscal year. Wang had learned the confidential information prior to the board meeting he attended in Hong Kong, where Qualcomm’s better-than-expected first quarter financial performance was further discussed. Wang learned that Qualcomm planned to announce its earnings results on January 26, and thus purchased his Qualcomm shares the day before the announcement. After Qualcomm issued a press release to announcing its positive first quarter results, Qualcomm’s stock increased 5.9 percent.
The SEC alleges that Wang made more than $244,000 in illegal profits through the insider trading scheme, and Yin realized gains of more than $27,000. Wang eventually realized that his illegal trading may be detected by Merrill Lynch or others. Wang first asked Yin to delete records of the trades in the Unicorn account, but because they were permanent records in Merrill Lynch’s systems they could not be erased. Around January 2012, Wang directed Yin to establish a new BVI corporation named Clearview Resources and open a new account at Merrill Lynch to which they transferred the insider trading proceeds in the Unicorn account to further distance Wang from the suspicious trades. A few months later, Wang informed Yin that the trades may have been detected because the SEC had subpoenaed his e-mails. So Wang devised a cover story and convinced Yin if ever questioned to say that the Atheros trades were made by Wang’s brother. Because Yin had never communicated with Wang’s brother, Wang instructed him to travel to China with the Unicorn account statements and review the trades with his brother so he could explain the trading if asked. Yin did so in May 2012. To further hide Wang’s ownership of the Unicorn account and his link to the Atheros trades, Yin removed the Unicorn account from Wang’s “household” in Merrill Lynch’s computer system in July 2012. “Householding” is a function used by Merrill Lynch to link related accounts.
The SEC's complaint charges Wang, who lives in Del Mar, Calif., with violating Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 16a-3. Yin, who lives in San Diego, is charged with violating Section 10(b) of the Exchange Act and Rule 10b-5. The SEC’s complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions. The SEC also seeks an officer-and-director bar against Wang.
The SEC’s investigation has been conducted by Ann C. Kim, Wendy E. Pearson, Nina Yamamoto, and Finola H. Manvelian of the Los Angeles Regional Office. The SEC’s litigation will be led by Sam Puathasnanon. The SEC appreciates the assistance of the Department of Justice’s Criminal Division, the U.S. Attorney’s Office for the Southern District of California, and the Federal Bureau of Investigation.
Thursday, April 5, 2012
FORMER OCEANS BANK EXECUTIVE SENTENCED FOR BRIBERY AND FALSE TAX RETURNS
FROM U.S. DEPARTMENT OF JUSTICE
Wednesday, April 4, 2012
Former Executive of Miami-Based Ocean Bank Sentenced to Serve 37 Months in Prison for Participating in Bribery Scheme and Filing False Tax Returns
WASHINGTON – A former executive of Ocean Bank, a financial institution headquartered in Miami, was sentenced today for participating in a scheme to accept bribes and for failing to report income on federal income tax returns, the Department of Justice announced.
Danilo P. Perez, a former vice president of Ocean Bank, was sentenced today in the U.S. District Court in Miami by District Judge Donald L. Graham to serve 37 months in prison followed by one year of supervised release.
On Jan. 25, 2012, Perez pleaded guilty to one count of conspiracy to solicit or demand money and other things of value to influence an employee of a financial institution and three counts of tax offenses. The charges against Perez stemmed from his accepting nearly $500,000 in cash and other items from co-conspirators in connection with his supervision of certain customer business with the bank. As vice president, Perez generally oversaw Ocean Bank’s lending relationships with corporate customers of the bank.
Perez admitted to accepting bribes, including payments for expensive watches, Super Bowl tickets and other items for his personal use, as well as substantial amounts of cash. Perez accepted the payments intending to be rewarded and influenced in connection with his role in approving Ocean Bank’s issuance of letters of credit, loans and overdraft privileges to his co-conspirators. Perez also admitted that he failed to report income from those bribes for tax years 2005, 2006 and 2007, resulting in lost tax revenue of approximately $91,000 to the federal government.
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