Do corporate whistle-blower laws actually deter fraud?

High-profile financial frauds in recent years spurred state and federal authorities to implement or strengthen “whistle-blower” incentives, which offer tipsters financial rewards (and a shield from employer retaliation) for blowing the lid on corporate fraud.

These initiatives can help deter fraud, according to research by CUNY-Baruch College’s Heemin Lee.

Lee examined two classes of companies. One was made up of those subject to state-level False Claims Act (FCA) rules that have a qui tam provision, which allows a private citizen to file a lawsuit on behalf of the government and obtain a portion of any money recovered. The other was composed of companies that are subject to the Securities and Exchange Commission (SEC) whistle-blower program. read more »

Venezuela Lawmaker Asks SEC to Probe Goldman's ‘Hunger Bonds’ Deal

The head of Venezuela’s National Assembly asked U.S. authorities to investigate a $2.9 billion bond deal involving Goldman Sachs Group Inc. and Nomura Securities Co., saying the transaction fleeced the country for the benefit of political elites.

Julio Borges, an opponent of President Nicolas Maduro, addressed letters to the U.S. Securities and Exchange Commission, the Financial Crimes Enforcement Network and Financial Industry Regulatory Authority asking officials to undertake a probe. The letters were posted by opposition lawmaker Angel Alvarado, a member of the National Assembly’s Finance Committee.

Borges has railed against the transaction since it was revealed late last month, saying that Wall Street banks were providing a lifeline to a despotic regime desperate for cash by purchasing national assets at fire-sale prices. According to the letter, Goldman Sachs paid just 31 cents on the dollar for bonds from the state oil company with a face value of $2.8 billion that had been held by Venezuela’s central bank. The price was more than 10 cents less than what similar notes were trading for at that time, according to Borges. read more »

F.B.I. Investigating Deals Involving Paul Manafort and Son-in-Law

Federal investigators are examining financial transactions involving Paul Manafort and his son-in-law, who embarked on a series of real estate deals in recent years fueled by millions of dollars from Mr. Manafort, according to two people familiar with the matter.

The transactions involve the financing of apartments and luxury homes in New York and California using money from Mr. Manafort, as well as from other investors solicited by the son-in-law, Jeffrey Yohai, including the actor Dustin Hoffman and his son. F.B.I. agents have reviewed financial records related to Mr. Yohai, who has been accused in a lawsuit of defrauding investors, the sources said. read more »

Bernie Madoff: ‘I Always Wanted to Please Everybody’

Bernard Madoff has had eight years in prison to think about what went wrong. He’s concluded that a few of his investors were partially to blame for his fall from a legitimate securities trader to the biggest Ponzi schemer in U.S. history.

He blames the “Big Four,” his earliest and richest clients.

In April, Madoff was questioned for three days as part of a lawsuit that seeks to force his investors to return their profit to his firm’s receiver. Madoff went into great detail about his rise and fall and his relationship with The Big Four. The deposition testimony, a transcript of which is in court records, shows how Madoff sees things now: read more »

U.S. prosecutors seek 35 years in prison for meningitis outbreak exec

Prosecutors have asked a federal judge to sentence a Massachusetts pharmacy executive to at least 35 years in prison after he was convicted of racketeering and fraud charges for his role in a deadly 2012 U.S. meningitis outbreak.

Barry Cadden, the co-founder of the now-defunct New England Compounding Center, was convicted of those charges by a jury in March but cleared of the harshest charge he faced, second-degree murder charges. His lawyers urged the judge to consider a much shorter sentence of about three years. read more »