Online Payment Platform Owners Charged With Money Laundering

Two Canadian brothers and their money-service business allegedly processed $250 million in transactions without a license on behalf of customers, including Ponzi schemers and a child pornography website, according to U.S. prosecutors.

Firoz and Fehran Patel, who live in the Montreal area, were charged in Washington, D.C., federal court with operating an unlicensed money-service business, money-laundering conspiracy and violating compliance requirements. Their company, MH Pillars Ltd., which did business as Payza, also was charged. The four-count indictment, brought earlier this month, was unsealed late Tuesday. read more »

Federal Court Orders Former Church Pastor Pay More than $8.6 Million for Commodity Fraud Scheme that Preyed on Church Congregation

The Commodity Futures Trading Commission (CFTC) today announced that Judge Brian J. Davis of the Middle District of Florida has ordered Defendants Maverick International, Inc. (Maverick), and its principals Edward Rubin and Wesley Allen Brown to pay $8,605,274.92 in combined restitution and civil monetary penalties for commodity futures fraud, commodity pool fraud, and related violations of federal commodity laws.

Brown used his role as a pastor of a Flagler Beach, Florida, church to defraud church members by convincing them to deposit funds with the Defendants.  In imposing the civil monetary penalty on Brown, the Court considered his “trusted position as a pastor” and his “defrauding of elderly church members.” read more »

Aon Hewitt wins 401(k) lawsuit over robo-adviser kickbacks

It's the fourth time a retirement-plan record keeper has prevailed in a lawsuit scrutinizing fees received from Financial Engines. Aon Hewitt has won a lawsuit alleging that it engaged in a kickback scheme with a 401(k) plan robo-adviser that inflated costs for retirement plan participants.

The lawsuit, originally filed in January 2017 on behalf of participants in the Caterpillar Inc. 401(k) plan, alleged that two units of Aon Hewitt — Hewitt Associates, which provided record keeping and administrative services, and Aon Hewitt Financial Advisors — received "improper kickbacks" from robo-adviser Financial Engines.

Aon Hewitt subcontracted with Financial Engines to provide investment advisory services to plan participants, but "did not perform any material services" in exchange for the fees Financial Engines paid to Hewitt. read more »

Child abuse imagery found within bitcoin's blockchain

Researchers discover illegal content within the distributed ledger, making possession of it potentially unlawful in many countries

German researchers have discovered unknown persons are using bitcoin’s blockchain to store and link to child abuse imagery, potentially putting the cryptocurrency in jeopardy.

The blockchain is the open-source, distributed ledger that records every bitcoin transaction, but can also store small bits of non-financial data. This data is typically notes about the trade of bitcoin, recording what it was for or other metadata. But it can also be used to store links and files.

Researchers from the RWTH Aachen University, Germany found that around 1,600 files were currently stored in bitcoin’s blockchain. Of the files least eight were of sexual content, including one thought to be an image of child abuse and two that contain 274 links to child abuse content, 142 of which link to dark web services.

“Our analysis shows that certain content, eg, illegal pornography, can render the mere possession of a blockchain illegal,” . “Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users.” read more »