Legal Radar

Prosecutors Charge Several Operators on $500M Laundering Case

Federal prosecutors have charged several individuals running an offshore laundering scheme that claimed to have let clients manage stocks, avoid paying taxes, and laundering millions of dollars.

A recent indictment revealed in a Brooklyn federal court that same individuals have laundered $500 million of securities transactions to over 100 Americans and aided in tax fraud.

The men hid their client’s ownership in offshore companies in a 5-year period. Some clients utilized certain entities to conceal transactions for stock manipulation, and laundering the earnings via offshore accounts.

The indictment came after a 2-year undercover stint by the FBI in which an agent undercover went to Belize to meet with the accused and to create offshore entities.

Robert Bandfield, Andrew Godfrey, Kelvin Leach, Rohn Knowles, Brian De Wit and Cem Can --- all defendants, were all charged with a single count of securities fraud and 1 count of money laundering. Can, Godfrey, and Bandfield were also charged for a conspiracy to defraud the American government. 

Fraud Case Against Ex-CEO Dismissed Due to Lack of Evidence

A federal Court of Appeals recently reversed a couple multiple fraud counts against an ex-CEO of a now-defunct Indiana investment company after prosecutors failed to back up charges with evidence.

Timothy Durham, the ex-CEO of Fair Finance Co., was sentenced to 50 years of jail time for taking part in a fraud that affected thousands of investors over $200 million.

The Court of Appeals made a ruling saying that the failure of federal prosecutors to offer compelling evidence to back up counts of wire fraud led to having the charges dropped.

Durham’s lawyers said that not enough proof of money trail brought up indicated wire fraud. The Court of Appeals agreed since the printouts didn’t specifically show how the money was used for fraud.

The Court of Appeals did allow the remaining convictions for Durham to stand: 8 counts of wire fraud, 1 count of conspiracy to commit wire fraud, 1 count of securities fraud.

The case is being send back to a district court for a re-sentencing.

Experts: Taxi Service App for Women Could Be in Legal Conflict

A NY city taxi service app, SheTaxis, will offer women to request a female taxi driver. The app targets women who are uneasy of being driven by a male driver or for other reasons that would make female drivers desirable to operate behind a wheel.

Is SheTaxis actually legal? According to legal experts, no, who indicated that such service would likely run into local and federal sex discrimination laws.

The app service will begin in September 16 in NY and will provide female riders with female taxi drivers. It’ll entail app ride requests via the app, which will then dispatch drivers wearing pink scarves.

The NY human rights laws also bars public services from refusing to serve any consumer based on sex.

The app will deploy female drivers hired by licensed cab companies that have partnered with SheTaxis.

A spokesperson from the NY City Taxi and Limousine Commission, indicated that SheTaxis will be subjected to the very same regulations and rules like other public transport services in the city.

Airlines Make Settlement on Obese Suit

A husband from an obese NY woman who died while taking a vacation in Europe after not being able to fly back the U.S. for medical treatment, agreed to a $10 million settlement from several airlines who didn’t want his wife to board.

Janos Soltesz, 57 years old, settled a wrongful death suit against Lufthansa, Delta, and KLM Royal Dutch airlines.

The complaint alleged the airlines to have sent his obese wife, Vilma, in a goose chase that ultimately led to her death.

Vilma took a flight to Budapest on Sept 18, 2012. Her trouble began after she started getting sick and asked for medical treatment in the country.

The couple tried to board home via a KLM Royal Dutch Airlines flight but Vilma was refused to her seat. They tried a Delta flight but the airline had no wheelchair support. A flight for the Lufthansa Airline was booked but the captain demanded the couple off the plane to make room for other passengers.

Vilma died several days later.

Promoter for Bitcoin Pleads Guilty

Charles Shrem, a Bitcoin promoter, pleaded guilty in a Manhattan federal court just recently to a single criminal count from what prosecutors believed to be a drug scheme involving his present virtual currency exchange as well as an internet-based black market.

Shrem, 24, pleaded guilty to aiding and abetting an operation of a non-licensed money-transfer business. Robert Faiella, believed by the Manhattan attorney’s office to be Shrem’s partner, also pleaded guilty to running a non-licensed money-transfer business.

Regarding both plea deals, one of the sentencing guidelines include up to 60 months of prison time. There’s also a fine of $250,000 or twice as much money derived from the criminal activity or twice the loss to the victim. The last sentence will be decided by Jed Rakoff, a U.S. District Judge.

One important victory for Shrem was that the government made a decision to halt the laundering cout against him.

Faiella indicated in court that he didn’t know Bitcoins were utilized to purchase illegal drugs.

Court of Appeals Adds Life to BASF Fraud Case

The 3^rd U.S. Circuit Court of Appeals brought to life a fraud case against a BASF SE unit and a NY-based law firm, Cahill Gordon & Reindel LLP, who defended it for years regarding the asbestos litigation --- reversing a lower court judge who shot down the supposed class action.

The plaintiffs, those representing alleged asbestos victims, said that Cahill and Cahill have gathered and destroyed or kept evidence hidden of products contaminated with asbestos made by Engelhard, BASF’s predecessor, to evade any legal actions and enforced swift settlements.

The decision from the 3^rd Circuit has left BASF and Cahill to shield itself from a likely class action that accuses the firm of fabricating the harmful material, then preventing victims from having their day in court.

Plaintiffs alleged the defendants of taking part in a scheme targeted at the integrity of the judicial process which includes destruction of evidence.

New attorneys for BASF discovered and created a group of old documents, which allegedly has been stored in a Cahill facility. Such documents led to the alleged class action.

Gay Marriage Ruling in Louisiana Could be a Game Changer

A U.S. district judge recently preserved Louisiana’s ban on gay marriage. The ruling broke most of the federal courts on the constitutional issue, which will ultimately be settled in the U.S. Supreme Court.

While he made his disagreed ruling despite winning streaks of previous ruling, Martin Feldman, a U.S. District Judge, felt he wasn’t convinced that same sex couples have a right to be married to each other. Feldman said decisions by other federal courts on bringing down same sex marriage bans are nothing but a “pageant of empathy,” while doubting their legal thinking.

The court ruling puts an end to a winning streak for movement on marriage equality. Ever since the Supreme Court last year made an invalidation Defense of Marriage Act provisions shooting down federal benefits on gay couples, almost 20 federal courts made their ruling against gay marriage bans in 16 states.

Several other federal courts ruled against gay couples in Hawaii and Nevada in previous high profile cases submitted prior to the decision last year.

Court Makes Reverse Ruling Against Goldman Sachs

Goldman Sachs Group Inc. won’t be needed to make advance legal payments to an ex-computer programmer of the company, Sergey Aleynikov, as ruled by a federal court early this week.

The present issue is to whether or not Aleynikov, a former VP at a New York investment bank, can make claims that he was an officer under Goldman’s bylaws. Legal payments for the officers of the firm are shouldered by the company under the bylaws.

The 3^rd Circuit Court of Appeals in Philadelphia made a ruling that such terms were deemed ambiguous and pushed the case back to the lower court.

The 2-1 decision overturned a last lower court ruling which favored Aleynikov’s claim for lawyer’s fees.

Aleynikov, who previously worked at Goldman for two years, was convicted in federal court for stealing the company’s private trading court. After a one-year stint in prison, his conviction was reversed. Charges were handled by NY state prosecutors in an ongoing litigation claiming similar state law violations.