Worldwide: Fraud Watch (June 2007)

Welcome to the June edition of Mishcon Fraud Watch, prepared by the Fraud & Insolvency 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.

Assets Recovery Agency (ASA)

The ARA has published their 2006/07 Annual Report and 2007/08 Business Plan.
Assets Recovery Agency, 24 May 2007

The Financial Services Authority has fined BNP Paribas £350,000 for anti-fraud failures after a senior member of staff transferred £1.4m from clients' accounts without their permission.
The Daily Telegraph, 11 May 2007

The Cybercrime Working Group of the Fraud Advisory Panel has advised the government that it should consider extending legislation to cover web-based virtual communities.
Fraud Advisory Panel press release, 1 May 2007

The House of Lords Select Committee on European Union has published a report on carousel fraud in the EU.
Select Committee report 'Stopping the Carousel: Missing Trader Fraud in the EU', 25 May 2007

The Home Office has published a consultation document on proposals to increase the ability of government to seize criminal assets.
Home Office consultation document 'Organised Crime: revenues, economic and social costs, and criminal assets available for seizure', 24 May 2007

The Home Office has published a consultation document on the Asset Recovery Agency Action Plan.
Home Office consultation document 'Asset Recovery Action Plan, A Consultation Document', 24 May 2007

The House of Lords Select Committee on European Union has published a report on carousel fraud in the EU.
Select Committee report 'Stopping the Carousel: Missing Trader Fraud in the EU', 25 May 2007

The Home Office has published a consultation document on proposals to increase the ability of government to seize criminal assets.
Home Office consultation document 'Organised Crime: revenues, economic and social costs, and criminal assets available for seizure', 24 May 2007

The Home Office has published a consultation document on the Asset Recovery Agency Action Plan.
Home Office consultation document 'Asset Recovery Action Plan, A Consultation Document', 24 May 2007

The Serious Crime Bill had its third reading in the House of Lords on 9 May 2007. The Bill provides for, amongst other things: information to be shared or processed to prevent fraud; the transfer of functions of the Director of the Assets Recovery Agency to the Serious Organised Crime Agency; and the Proceeds of Crime Act 2002 to be amended in relation to certain investigations and in relation to accredited financial investigators and search warrants.

Michael Arnold, who manages Peter Maxwell Davies, Master of the Queen's Music, has been arrested in connection with a £500,000 fraud. Mr Arnold has been bailed pending further inquiries.
The Times, 21 May 2007

Batches of the schizophrenia drug, Zyprexa, have been recalled following the discovery of packets containing counterfeit drugs.
Financial Times, 25 May 2007

Four people have been found guilty of a £7.5m fraud on three financial institutions. The fraud operated between 1996 and 2000 through a number of companies collectively known as Engineering with Excellence. Over £85m of false invoices were submitted to Riggs Bank Europe Limited, NMB Heller Limited and Banca Nazionale Dell Agricoltura over the period.
Serious Fraud Office press release, 17 May 2007

Athif Sarwar, the son of MP Mohammad Sarwar, has been found guilty of laundering money through his cash and carry business. The scam, which took place in 2003 and lasted two months, involved £850,000. Mr Sarwar plans to appeal.
Daily Mail, 25 May 2007

BMO Financial Group, one of Canada's largest banks, has dismissed two commodity traders and is investigating possible fraud in the trading and valuation of its natural gas portfolio.
Financial Times, 18 May 2007

Tyco International, the US electronics group, will pay nearly $3bn to settle claims from shareholders that its leadership engaged in massive accounting fraud and overstated income by $5.8bn.
Financial Times, 16 May 2007

Betonsports has accepted that it had committed repeated "mail and wire fraud, operated an illegal gambling business, laundered money and admitted to multiple state felony charges". The company has also agreed to co-operate with the US government's case against founder Gary Kaplan and British former chief executive David Carruthers.
Financial Times, 25 May 2007

Lord Black of Crossharbour has said he is confident there is not "a jury in the world" that would convict him on the testimony of David Radler, his former business partner.
The Independent, 18 May 2007

Adedy, Greece's leading civil-service union, has called on the Serious Fraud Office and the Financial Services Authority to investigate JP Morgan and North Asset Management, a London-based hedge fund, over their roles in a controversial Î 280m Greek government bond trade.
Sunday Times, 27 May 2007

Mishcon's Fraud Watch is published by the Fraud & Insolvency 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.

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