UK: Mishcon Fraud Watch (October 2006)

Welcome to the October edition of Mishcon Fraud Watch, prepared by the Corporate Investigations & Asset Recovery Group at Mishcon de Reya. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this bulletin. We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.

Michael Brown has been sentenced to two years in prison after pleading guilty to one charge of perjury and another of passport deception. Mr Brown is the subject of an ongoing investigation into alleged fraud in connection with bank accounts of his Swiss-based bonds trading company.
The Independent, 26 September 2006

The Fraud Bill had its second reading in the House of Commons on 12 June 2006 and waits the publication of a report following Standing Committee stages on 20 and 22 June 2006. The Bill makes provision for, and in connection with, criminal liability for fraud and obtaining services dishonestly.

Technology

Gerald Smith, a property developer, has been jailed for eight years for his part in a £34m fraud at Izodia, a failed e-commerce software company.
Financial Times, 12 September 2006

A federal judge has ruled that a class-action fraud claim against tobacco manufacturers can go ahead. The judge ruled that manufacturers had 'substantial evidence' that light cigarettes were at least as dangerous as regular cigarettes.
The New York Times, 26 September 2006

Lord Phillips has ruled that the United States government is entitled to request the extradition of Stanley and Beatrice Tollman, owners of a luxury travel business. Mr Tollman is accused of a large-scale fraud against banks involving the collapse of his US motel companies. Mr and Mrs Tollman are jointly accused of tax evasion.
The Daily Telegraph, 7 September 2006

Mahdi Gabayzadeh, the former chief executive of American Tissue, has been found guilty on charges of conspiracy and wire fraud. The judge found that Mr Gabayzadeh inflated American Tissue's accounts in order to defraud banks and investors of $300m.
The New York Times, 26 September 2006

Jerry Cook, a former executive at Perrigrine Systems, has been extradited to the US. Mr Cook has been charged with conspiracy to defraud shareholders.
Daily Mail, 15 September 2006

Lucent Technologies faces legal action from the US Securities and Exchange Commission in connection with an investigation into allegations of corrupt practices in the company's Chineseoperations.
Financial Times, 8 September 2006

John Deuss has temporarily stepped down as chairman and chief executive of Bermuda Commercial Bank, while investigations into alleged money laundering and illegal banking are carried out in Holland and Bermuda.
Independent on Sunday, 17 September 2006

Emilo Botin, chairman of Banco Santander, has been charged in connection with alleged tax irregularities. The allegations relate to the acquisition of Banesto in 1994.
The Times, 8 September 2006

Mishcon's Fraud Watch is published by the Corporate Investigations & Asset Recovery Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has pioneered the use of financial fraud techniques in numerous fields, including the rapidly growing areas of theft of confidential information and counterfeiting. The Group founded and run both the Asset Protection & Recovery Network, made up of international legal fraud specialists and the Financial Fraud Group, for risk and compliance officers.