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Financial crime more than every other crime combined?

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Re: Financial crime more than every other crime combined

Postby admin » Mon Feb 28, 2011 11:32 pm

another good explanation of why financial crime pays

"...........the prosecutors, hopefully most prosecutors, are honest if they're playing by the set of the rules; they're hampered by the illegal constraints. The white-collar criminal has no legal constraints. You subpoena documents, we destroy documents; you subpoena witnesses, we lie. So you are at a disadvantage when it comes to the white-collared criminal. In effect, we're economic predators. We're serial economic predators........"

read the whole thing here

http://www.opednews.com/articles/3/The- ... 28-62.html
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Re: Financial crime more than every other crime combined

Postby admin » Mon Feb 28, 2011 10:33 am

FAIR Canada has issued a report entitled "A Decade of Financial Scandals" calling for government and regulatory action to improve prevention, detection and prosecution of financial fraud and to better compensate victims of investment frauds.

"The Canadian regulatory system is complex and fragmented. There are thirteen provincial and territorial securities regulators and two national SROs. In addition, there are many other provincial and federal regulators involved," said Ermanno Pascutto, Executive Director of FAIR Canada." "When it comes to investigation and prosecution of financial fraud, the complexity and fragmentation is far worse. With this bewildering array of regulators, investigation agencies and prosecutors, no one agency has ultimate responsibility for combating investment fraud."

"We make wide-ranging recommendations calling on the Federal and Provincial Governments and regulators to take coordinated action to combat financial fraud" said Mr. Pascutto. "Financial fraud has affected some 10% of Canadians and the system is simply not effective at protecting consumers, punishing fraudsters, or compensating victims."

FAIR Canada studied a cross-section of fifteen cases of financial scandals selected from across the country based on the high profile coverage they garnered, the number of investors affected and the significant amount of losses incurred. Findings from the review of the fifteen financial scams include...


Investment Fraud a Daily Event in Canada

While the FAIR Canada report focuses on fifteen financial scandals over the past decade, one only needs to read the media routinely to see how these types of scandals happen on a daily basis. Here are a few that have come across our desks over the last couple of months:

February 10, 2011 (The Globe and Mail) - BC securities regulator cracking down on fraud

February 9, 2011 (Vancouver Sun) - 'Wealth enhancement expert' drives dairy farmers to the brink

February 9, 2011 (Investment Executive) - Fraud conviction upheld against man who bilked Ontario investors of $40 million

January 31, 2011 (The Globe and Mail) - Bloc takes Tories to task on fraudster's release

January 5, 2011 (Toronto Sun) - Fraudster's sentence a joke - victim

December 22, 2010 (Canadian Business Online) - AMF Launches Suit against Hooshang Imanpoorsaid and Seeks $376,000 in Fines

November 25, 2010 (The Globe and Mail) - How did $170 million go missing?

November 16, 2010 (cbc.ca) - Ontario probes dropped charges in alleged Ponzi scheme

see the original, with links to each story at http://faircanada.ca/
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Re: Financial crime more than every other crime combined

Postby admin » Tue Aug 31, 2010 11:35 am

are the on-going trailer fee commissions that your fund manager pays to your salesperson an extremely sophisticated derivative of the definition of “secret commissions” under Section 426 of our Criminal Code because of their lack of dollars and cents amounts transparencies?


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Re: Financial crime more than every other crime combined

Postby admin » Sat Aug 28, 2010 11:55 am

Monday, June 28, 2010
http://unbiasedportfolio.blogspot.com/2 ... -scam.html

SKIM: Skimmed milk refers to milk which has
had the rich cream taken off the top, leaving a
less rich milk product.

For our purposes skimming refers to removing
a hidden fee from a mutual fund portfolio prior
to valuing the portfolio for an investor.

It also leaves a less rich portfolio for investors.

The media and casual investors intently follow the stories of investment scams and how they devastate the lives of investors and their families. It is understandable of course: a good human interest angle will definitely get the attention of readers!

In fact, the damage done by investment scams and frauds is very minor compared to the damage done within the standard “rules of engagement” between investors and investment firms. F.A.I.R. Canada has reported that as little as 2% of the dollars lost in major frauds over the past decade in Canada involved a regulated investment firm. In short the odds of being “scammed” in a recognized mutual fund are near zero. The odds on having your investments “skimmed” however are close to 100%!

THE SKIM: As an investor you put money into a fund to gain diversification and professional management. Those are worthy goals and the fund industry is fully capable of delivering on both fronts. The issue that leads to the skim is putting a value on the services you want. In effect the industry has clouded the process on two key fronts by:

n Adding mandatory “advice charges” to many mutual funds, most often through hidden and excessive sales fees being mislabelled as an advice fee.

n Portraying licensed fund sales persons as “Financial Planners”, “Advisors” or some form of Vice President / Director. These titles imply an advice or planning offering often not available.

The net effect, for most investors, is a steady skimming of your investment portfolio in return for little or no advice or planning services.

In fact, there is no requirement for a fund salesperson (your planner or advisor based upon their job title) to even talk with an investor in order to justify the skimmed fees for “advice”.

You can, in effect, be charged fees for an unlimited number of years without even knowing who your current advisor / salesperson is! Your salesperson could sell their clients to other salespeople and the advice fee continues to be skimmed annually and forwarded to the new “advisor” you have often never even met.

WHAT IS MISSING: At its most basic level, what is missing is the quality professional advice and financial planning most clients need—deserve but cannot identify or articulate without having experienced it. Basic advice such as:

n a detailed financial plan,
n an annual review of the Investment Policy Statement,
n disclosure of material information on changes made in fund management,
n an assessment of client need versus risk
n etc.

All of these would require a salesperson to spend time before a meeting doing preparation, time in a meeting reviewing client requirements and current finances, and post meeting time to implement any required changes. If a salesperson spent 3 hours per client per year doing a proper review then the fee likely could be earned.

Does it happen? No it does not. How do I know? I worked for a major bank with a large financial planning team. The bank would never allow sufficient time to do even a basic annual review. We always had literally thousands of uncompleted reviews and no prospect of ever getting caught up.

Why? Take 250 clients times (x) three (3) hours and you have 750 hours of review work. That is roughly 100 days of work per year.

So, the salesperson gets the fee if they do not do the work and

n they get the same fee if they do complete the work.

How many salespeople do you think will opt to do the work? What if you have 300 or 400 clients? The system clearly cannot work as it is structured.


As an ex-banker I was always amazed that bank robbers would risk up to ten years in jail to rob a bank for $300 (average take from a bank robbery these days is quite low) when instead passing bad cheques/cheque fraud could earn you thousands with virtually no risk of jail time. Only a dummy robs a bank using a mask and a gun these days.

Similarly, I cannot understand why fraudsters would go through the hard work and stress of scamming investors (false documents, false statements, a risky paper trail, high risk of being exposed and charged with a crime),

n when you can legally “skim” investment accounts with fees that add no apparent value and are not required to be disclosed to investors.

What Does Add Up:

Investors pay a number of innocuous sounding fees either directly or indirectly from their investment accounts. Most investors work on a basis of trust and have no clue what dollar amount they are paying in sales commissions nor what they should be receiving for those sales commission fees. This is the environment that makes the skim possible and lucrative.

The average financial planner / salesperson may have a portfolio under administration of $20 million dollars. At a mere 0.5% skim the portfolio is diminished by $100,000.00 per year. Many trailer fees are as high as 1% which translates to $200,000.00 being taken every year from client accounts. There is no accountability that would require any work to be done by the salesperson.

n The money is skimmed by the fund firms and forwarded directly to the salespersons firm.

Many salespeople lock clients into the fund via a deferred sales penalty program for up to seven years. In the simple example given, with a 0.5% trailer fee, the total money skimmed by the average salesperson over that sales cycle will be $700,000.00. Now picture a firm with 1,000 salespeople on staff. I think it becomes clear why fund sales are such a lucrative business and why your salesperson can drive a nicer car than you can.

For those who say, well the salespeople have to eat too – I will remind you of two things:

1. Front-end loaded fees: Salespeople often receive 5% of the invested funds up front from the fund firm. On a $20,000,000 portfolio that is $1 million dollars. The commission is split amongst the 600 or so client accounts of the salesperson and is again a hidden charge.
(Investor Economics data suggests the average portfolio for a salesperson in the advice business is just over $20 million)

2. With the skimmed fees we are talking about a forced, concealed payment for a service that is often neither articulated nor delivered to the client.


We do not have to be skimmed as fund investors. You have several options to help fix the problem.

1. Set clear expectations with your salesperson for what you expect for the fees you pay.

a.) Communication should include monthly updates, and semi-annual conversations as well as at least one face to face meeting every year.

b.) Investment information should include an estimate and explanation of all fees paid from your account, performance results versus a set benchmark, and current versus targeted asset allocations.

c.) Planning information should include a review of your financial situation, income, expenses, and liquidity needs going forward.

2. Ensure that your salesperson has the capacity to handle your account effectively. A salesperson with 100 clients is more likely to have the capacity for a review than a salesperson with 600 accounts. Ask about support staff but remember support staff is to aid with internal paperwork not to handle client reviews.

3. Purchase low cost mutual funds and you will not have as many worries about skimming. You can purchase funds without imbedded advice fees from a number of fund firms and can purchase ETF funds without imbedded advice fees as well. Ditching your advisor / salesperson does not ensure you avoid the skim as discount brokers often take the skimmed fees that normally went to the salesperson.

n That is of course the height of skimming as discount firms are not even licensed to provide any advice to investors.

It is not easy to be a wise investor when the market is such a deceptive place.

It truly is a “buyer beware” experience and not a safe place for those who tend to trust without verifying.

sois mike
Posted by sois mike at 4:18 PM
Labels: hidden fund fees, skimming commissions, trailer fee

http://unbiasedportfolio.blogspot.com/2 ... -scam.html
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Re: Financial crime more than every other crime combined

Postby admin » Tue Aug 24, 2010 9:50 am

Screen shot 2010-08-24 at 10.49.30 AM.png

This link will take you to a four minute expose describing exactly how easy it is to gain billions of dollars in an unethical and/or fraudulent manner, and if you are part of the "right" system, you will be completely above examination. Above prosecution.

It is free money for those who choose to take it. It is your money they are taking.

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Re: Financial crime more than every other crime combined

Postby admin » Thu Aug 19, 2010 5:38 pm

This post deals with the billions of dollars that was lost in the Asset Backed Commercial Paper (ABCP) fiasco. This cost you big money - approximately $1,000 for every man women and child in Canada. In terms of crime it costs nearly the same all the combined crimes committed in Canada. If you took all of the tax dollars paid for everyone you know for their entire life you would not even come close to the money scammed by "trusted criminals". This page provides a summary of the topic, hopefully, after reading this you will follow the recommended action to force the government to take action on this item and prevent it from ever occurring again. This is a true Canadian story of predatory practice by financial institutions and its enabling by government agencies.

First of all the word "crime" is used in the moral sense. Most people would think that taking billions of dollars for selling garbage would be a crime. However, even in fraudulent cases it is rare for for the perpetrators to be even charged much less convicted if it exceeds $10 million. With financial crimes in the billions, it has become apparent that police in Canada cannot act on cases larger than millions.If you are going to steal - steal big. We will tell you how they do it!

Probably the first thing you need to know is what are you are selling. Investments are the area to create and get away with the perfect crime. It is a self regulated (we police ourselves thank you) industry and below we will highlight just one (one out of thousands) of the perfect crimes that this industry gets away with, and describes how they use the help of regulators, professionals and politicians to assist them in the getaway. ABCP or Asset Backed Commercial Paper.

Investopedia defines and explains ABCP as "A short-term investment vehicle with a maturity that is typically between 90 and 180 days. The security itself is typically issued by a bank or other financial institution. The notes are backed by physical assets such as trade receivables, and are generally used for short-term financing needs. A company or group of companies looking to enhance liquidity may sell receivables to a bank or other conduit, which, in turn, will issue them to its investors as commercial paper. The commercial paper is backed by the expected cash inflows from the receivables. As the receivables are collected, the originators are expected to pass the funds to the bank or conduit, which then passes these funds on to the note holders." This paper is toxic when there is little to no chance that the receivables will ever be seen.

Now you know what you are selling here is how you proceed:

TWO GOVERNMENTS - Province of Alberta and the City of Lethbridge
ONE CRIME - Asset backed commercial paper - subprime mortgages and other debt<
ONE PROFITS FROM IT - Government regulators collect money from the investment dealers to enable the sale of questionable products
WE ALL SUFFER - Even if you have not personally invested in these toxic products, your tax dollars pay for these defaulted loans


TAKE TOXIC SUB PRIME MORTGAGES - Bad debt such as mortgages that have little to no chance of repayment
PACKAGE THEM - Put together a portfolio of some good products mixed with bad products and promise a good or reasonable rate of return
GET A CREDIT RATING AGENCY TO RATE THEM -These ratings are not provided by an independent agency. You pay the agency to provide a rating.
SELL THEM TO PUBLIC (Including Government agencies such as cities, universities, etc)
APPLY TO SECURITIES COMMISSIONS (PROVINCIAL GOVERNMENT AGENTS) FOR PERMISSION TO SELL TOXIC INVESTMENTS- When a product does not meet the the regulatory requirements you can apply and pay for exemptions from the regulations. To see the list of current exempted products go to http://www.albertasecurities.com/Compan ... rders.aspx

RETAIL INVESTORS (4.2 Billion) To be fair to these investors they see an investment that has a good credit rating and is approved for sale in the province by the provincial security commission. Many investors do not know that both the ratings and the exemptions have been paid for through a system that rewards conflict of interest rather than prevents such conflicts. This can be referred to as putting lipstick on a pig
FINANCIAL INSTITUTIONS - They get rid of their bad debts and get real assets such as cash
ALBERTA GOVERNMENT REGULATOR - ASC earns fees for approving toxic investments. The agency that gives permission to violate our laws hands out fines of 1/2 penny for every dollar scammed

THE GOOD NEWS (If you are the perpetrator)

NO INVESTIGATION No police will come; the police focus on street crimes. They typically look away at crimes over ten million. they do not have the resources or the skill sets to go after these crimes. The investment industry is self regulating.

Hey! I thought Canada had great banking laws to protect us from this. Yes, but this is not banking. The is investment manipulation, scheming and scamming to put customers money into investment bankers pockets. PricewaterhouseCoopers ranks Canada as the 4th most fraudulent country out of 54 countries. http://www.pwc.com/gx/en/economic-crime ... ndex.jhtml


Lethbridge answers........zero




Alberta Securities Commission (ASC) -ARE YOU ON THE JOB.......OR ON THE TAKE?


NONE..........ZIP.........Total silence from Ted Morton, Alberta Finance Minister in charge of the ASC. (Morton refuses in writing to provide answers or comments to our enquiries)


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Re: Financial crime more than every other crime combined

Postby admin » Sat Aug 07, 2010 9:59 am

45 REP skimming_042.jpg
(Part of a discourse/discussion between investment professionals to try to determine the best number to use to describe the amount of damages to the public in Canada from predatory financial abuse)

thanks for the morningstar copy, I had not seen it before.

If I may, can I ask you some dumb questions about it? I am trying to make certain that there is some accuracy in the figures that I throw about and I am not sure I am understanding it all.

Here is what I "think" I have read between the three documents:

(three docs)

1) first being the recent london telegraph article about "$7 billion skimmed off our savings" which talks about "hidden" fees and gouging (overcharging) http://www.telegraph.co.uk/finance/pers ... vings.html

2) second document is Keith Ambaschteer U of T Rotman School of business study of retail mutual fund overcharging (which I think is similar in style to the UK article) and or the resulting damage to Canadian fund investors from underperformance caused by the higher fees (search $25 Billion Pension Haircut)
doc found at:
https://docs.google.com/fileview?id=0Bz ... OTkw&hl=en

Globe and Mail coverage of $25 Billion Pension Haircut
http://www.theglobeandmail.com/report-o ... 758546.ece

3) third document is the Morningstar article, which states "Total fund management expenses paid in 2002 added up to more than $10 billion." and it appears to me to be a calculation of the "sum total" of management fees paid by Canadian mutual fund investors.

http://www.morningstar.ca/globalhome/in ... 9200315191

I dont want to be a bother here, but I do want to make sure I have my ducks in a row. I just don't see how the Morningstar article can be held up as describing "overcharging, gouging", or what to me amounts to professional predatory practices. (which is where my interest is)

I see the UK article not looking at a sum of management fees, but a look at hidden gouging. I see the $25 bil figure by Keith A as being more closely approximating similar analysis of damage to Canadians.

What do you think of this logic? Thanks for taking a moment to fight through my convoluted argument, I appreciate your helping me to get my story better fleshed out.


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Re: Financial crime more than every other crime combined

Postby admin » Fri Aug 06, 2010 11:42 am

7billion a year skimmed off our savings
More than £7.3billion a year is being “skimmed off” the value of Britons’ savings by City bankers and fund managers, an investigation by The Daily Telegraph has found.
By Holly Watt, Jon Swaine and Elizabeth Colman
Published: 10:36PM BST 30 Jul 2010

City bankers and fund managers are 'skimming off' more than £7.3billion a year from the value of Britons' savings Photo: Getty
A range of questionable hidden fees and levies are being deducted from investments, making it difficult for a typical saver to make money from the stock market. Britain’s eight million investors are losing an average of £800 a year each to the hidden levies.
An investor putting £50,000 into a fund providing typical returns over 25 years would lose out on £108,000 because of unnecessary charges, said David Norman, a former chief executive of Credit Suisse Asset Management.

Related Articles
HIdden fees cut value of pensions by half
Why British pensions should go Dutch
Customers have no way of claiming back their lost savings because fund managers are not doing anything illegal or beyond the rules. However, they are now likely to face increased scrutiny from regulators, while the Government could come under pressure to announce an inquiry to clean up the industry, which millions rely on to save for their retirement.
The problems have been compounded by the lacklustre stockmarket, which has hit savers as City firms have rushed to protect their profit margins by increasing fees.
Research has shown that fees in this country are far higher than those in America, where investment funds have been the subject of several regulatory and other official investigations.
Several senior City figures have decided to blow the whistle on the practices, with one fund manager describing the system as a “legalised cartel”.
Alan Miller, a former senior fund manager at New Star, one of Britain’s biggest investment firms, and a co-founder of SCM Private, told The Daily Telegraph: “The time is right for exposure of various elements of the industry.
“It is riddled with blatant self-interest and conflicts of interest that would never be tolerated elsewhere. Investors have become victims as the charges they have to pay have risen and risen while the returns they get have been consistently below par and the actual cost of managing their money has continued to fall.”
Research compiled by the Financial Services Authority and leading data analysts suggests that investors face losing three per cent of their investment each year in charges and fees. However, Mr Miller and Mr Norman said annual charges as low as 0.5 per cent were achievable.
When a saver invests in an ISA, unit trust or other fund, they are informed that they will pay an “annual charge” – typically 1.2 per cent of the value of their savings. The majority of funds levy exactly the same charge.
But the firm also deducts a range of other vaguely defined fees – covering everything from research to office costs from the savers’ money.
In particular, funds charge savers fees and commission every time they buy or sell shares. In some funds, hidden fees can be more than three times higher than the publicly-released annual fees.
For example, according to the data company Lipper, the Halifax UK Growth fund, one of the country’s most popular investment schemes, has only returned 7.47 per cent to savers over the past five years.
Therefore, someone investing £10,000 would have received interest of £747. However, that the fund has actually risen by 15.79 per cent and the extra returns have been pocketed by the fund manager and City brokers.
Data from Morningstar, a research company, shows the average investment fund has an annual charge of 1.25 per cent. But lesser known administrative fees amount to 0.45 per cent. And trading costs total another 1.35 per cent, according to the FSA and Financial Express. This 1.8 per cent being deducted from the total £406 billion invested amounts to £7.3 billion being “skimmed off” each year.
Julie Patterson, director of authorised funds and tax at the Investment Management Association said: “The UK fund management industry is one of the most competitive in the world.
“Less than 50 per cent of the annual management charge (AMC) is retained by the manager, to cover fund costs, including investment management and administration. The majority of the AMC is used to pay advisers, brokers and platforms. Charges for UK authorised funds are fully disclosed and they vary.”

(advocate comment........Keith Ambaschteer's University of Toronto study and release article titled, $25 BILLION DOLLAR PENSION HAIRCUT sums up damages to Canadians of nearly quadruple those skimmed by clever financiers in the UK. Prof John Coffee's (Columbia University) study for Govt of Canada Finance placed a regulatory burden damage of $10 billion each year just due to Canadian multiple regulators. (all of which have their hands in the pie)) (that makes $35 billion each year in damage to Canadians with just TWO studies, and not yet talking about a specific stock, or a misrepresented investment. The total damage is greater each year than the cost of each and every other crime in Canada combined.)

https://docs.google.com/fileview?id=0Bz ... OTkw&hl=en

link for U of T study by Keith A
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Re: Financial crime more than every other crime combined

Postby admin » Fri Jun 04, 2010 12:28 pm

The perfect crime, in eight steps.

Step one
The plan

It is 2005. In a tower in Toronto, sat the men, finance experts pondering how to profit from markets today. Where is the biggest kill?

“How about this? We create trusts, take investors money and put into the trusts telling them that they are secured investments.........”

The selling off of many things truly Canadian has left some investment banking types scratching their heads as to “what to sell next?” “How do we generate our next fee or commission?” The result is a plethora of complicated derivative investments, cooked up like crystals in a meth lab, in an attempt to create something to pass on to investors.

In a game of financial “hot potato” substandard investments get artfully passed from sophisticated investors (financial dealers) down to unsophisticated buyers (retail investors). The game is to pass these investments down to the ultimate loser as fast as possible, earn your commission and move on the the next deal. The lowest man on the totem pole is the lonely retail investor (that is you and I) and in a predatory environment, we are the prey, despite whatever your investment dealer might tell you.

Along come sub prime mortgages, people betting against those sub prime mortgages, institutions hedging the sub prime notes they already have, people concerned about the upside or the downside of this Asset Backed Commercial Paper.

They cook up these trusts, with cute names such as “Apollo, Rocket, Opus, and Planet”, take money off ordinary Canadians, send it overseas to a German bank as collateral against the sub prime market failing. God only knows what will happen in the end, but we will have our millions in fees, so do we really care? This is dual agency (acting on both sides of the transaction, seller AND trusted advisor) in Canada. Nothing like that is as easily allowed in real estate or other professions, but investments in Canada are still a game of self regulation, which in other words means, “anything goes”.

Step two
The con

These trusts do not qualify to be sold under most securities law in canada, so we need to put some lipstick on the pig with two items. First we need to have a better credit rating, and second, we need to get the securities commissions to look the other way for a little while. The credit rating agencies are for sale, so that one is easy. Luckily there is a loophole in the securities regulatory system that grants the regulators the “discretion” to hold sway over the law from time to time. Here is the exact wording from the new proposed national securities regulator,

“236. If the Chief Regulator considers that it would not be prejudicial to the public interest to do so, he or she may, on application or on his or her own initiative, make an order exempting a person, trade or security from any provision of Parts 3 to 10 or of the regulations.”

So this too will be a breeze. These so-called “regulators” get to “sell” permission slips to violate the securities act. This happens every day in Canada, to practically every sales organization in the country, and the beauty is that “there is no provision in the act that says we have to notify the public” when we do this. (Ontario Securities Commission (OSC) quote) What a gift for those seeking to profit from breaking the law. Are you starting to get the impression that we are all in the wrong business?

Step three
The insiders

We approach friends at one of 13 securities commissions.
We pay their salaries so we have an easy entrance. (Thank god for self regulation)

One of the gifts of self regulations is that we appoint, pay and some would say “own” the regulators of financial products in Canada. That makes it a simple matter of paperwork and an exchange of money to get these same financial regulators to approve of something called a “legal exemption”. Simply put, we apply at the easiest or closest securities commission for permission to sell these “hot potato” investments which cannot otherwise be sold. They do not meet our laws without this exemptive relief. All 13 securities commissions grant the relief, since all of them depend on the millions of dollars of revenue that we pay them for just this kind of thing. Presto! An otherwise illegal investment is turned into a legal one, and we do not even have to notify the public that we took this hidden step.

The second gift given to those who “self regulate” is a little game in Canada called ther “passport” system, whereby if one securities commission approves of a legal exemption, typically (and for money) the other twelve will go along. We are told that the passport system enables a smoother flow of securities rules across thirteen jurisdictions but what it does best is assist in the flow of financial abuse across jurisdictions.

Step four
The crime
We dump this product immediately onto other investment dealers knowing that they will “dispose” of the corpse by pushing it off onto unsuspecting retail investors. City treasury’s, mom and pop investors, university’s etc. Their “retail sales force” motivated by commissions and loyalty to the company, get into high gear, get on the phone and start calling the suckers, er customers that they hope to unload this product on. It must be noted and applauded that in Canada TD Bank was one of the only financial dealers who did not try to ride this gravy train. Thank you TD.

Step five
The lookouts

You always need to be on the lookout for the cops, even when you have “legal permission” to break the law. It just pays to cover all the bases.
In that respect our highly regarded regulators and self regulators have made their way into the RCMP and onto something called “joint management committee’s” inside the commercial crime division, the IMET. (Integrated Market Enforcement Team) With our own industry people, from our own industry associations so carefully placed, and above examination, we can “help” to ensure that the right people do not get criminally investigated.

Step six
The cleanup man

To put additional insurance on making sure that the right people do not get charged for this perfect crime, we need a “cleanup man”. The mafia-like guy who can dispose of any traces of the crime, any bodies (figuratively speaking, this crime involved no loss of life). In the United states when the sub prime crime reared its head, there was involvement by the president, FBI, Treasury secretary, Federal reserve as well as congressional hearings and senate hearings to question the culprits. Here in Canada, all those people paid salaries in similar capacities turned away for some reason. Also turning away were the self regulators, the securities commissions (who granted the permission to violate our laws). Perhaps they are afraid of being investigated themselves?

The person appointed to clean up the mess, and try to make sure the right people do not get hurt was a private lawyer, chosen for his ability and his connections in doing this kind of thing. Previously he had involvement in tobacco smuggling operations, (called the largest fraud in Canada by the RCMP) and he was able to get himself and senior exec’s free of criminal matters in this case. A fine of one billion against the company, (Imperial Tobacco) while he was the president of the parent company. So there is your experienced cleanup man.
The fist thing he does is to try and negotiate immunity from civil and criminal prosecution for the “boys” in the back-room. He succeeds in getting civil immunity for the boys but criminal immunity is not allowed. Not to worry, as the odds of any police in Canada investigating this one are slim to none. Remember that we have some of “our boys” on the inside at the RCMP.

Step seven
The penalty

One half of one cent for every dollar missing. Not bad.
After the cleanup, after the damage control, after negotiations for immunity, and a great deal of government money to pay back investors, the securities commissions awake from their slumber, feel that it might be safe to poke theirs heads up, and take some perceived action. They know that 99% of Canada still does not know that they granted permission in the first place to allow this product to be sold, so they feel pretty smug in stepping up and imposing “pretend” penalties on the culprits. Little do we know of the incestuous relationship between the culprits and the “regulators”. Susan Wolbergh Jenah was the vice chair of the OSC when she was busy signing her name to legal exemptions to allow these dubious products to be sold without meeting laws. Then a few years later she moves to the head of the Investment Industry Regulatory Organization of Canada (IIROC) (gang of investment dealers) and lo and behold she comes out now saying that “the dealers did not know what they were selling”? One wonders if she had a clue when she allowed them to be sold, or if she was just happy doing what she was told in order to collect a $400,000 salary at the time. Her new salary at IIROC went to $700,000. It is amazing what you can buy with a six figure salary. Do not go to jail. Collect $32 billion.

Step eight
The profit

99.5 cents profit on every dollar taken. “Shoot, I was hoping for 99.9%”, you could almost hear the investment dealers say. “We will have to give the securities commission people a $100,000 raise in salary so they get it “right” next time”.

The fines imposed amount to a huge number in the newspapers ($140 million), but in actual fact amount to less than one half of one penny for each and every dollar missing. $32 billion missing. Hundreds of millions of dollars in fees to the manufacturers, sellers, lawyers, regulators, receivers, mafia-type cleanup man, and so on. And nobody can be sued, nobody going to jail.

$32 billion is not quite equal to the cost of each and every other crime in the country, combined. Just about. Also just about the cost of running the province of Alberta every year. From one crime. One set of legal exemptions. What about the other 5000 legal exemptions since the year 2000?** Can anyone tell us what benefits came to the “dealers” and damages were done to the public by letting investment sellers like Nortel, CIBC, Fidelity, Global Strategy, Crocus, Mackenzie Financial, Yorkton, etc., etc sell investments that needed an exemption to the law?

It is hoped that Canada gets an improved securities regulatory system soon, as it is unlikely that the country can afford to let the most cunning, clever financial people people police themselves any longer on the honor system.

http://www.albertasecurities.com/Compan ... rders.aspx
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Re: Financial crime more than every other crime combined

Postby admin » Tue May 25, 2010 3:25 pm

Thoughts and comments from bill C-21 a new bill in 2010 to help victims of white collar crime:

Ordinary police budgets across Canada, according to Stats Canada, tell us that total police costs are in the order of $6 billion across the country.
That is the spending for crime that is in the neighborhood of $40 to $70 billion depending on whose numbers you accept. (Stats Canada, or Justice Canada or others)

Therefore spending on police in Canada is in the neighborhood of 15%, on average, of the amount which is calculated as the damage done by ordinary crime in Canada. Fifteen cents spent on police for every dollar in ordinary crime.

Now here is where the magic comes in to make one form of crime truly pay.

Financial crime in Canada is estimated by industry experts to be in the neighborhood of $40 billion to $70 billion, again depending upon whose estimates are used. (see http://www.investoradvocates.ca or http://www.breachoftrust.ca, film chapter 5)

RCMP IMET task force spending on this type of crime is $30 million per year, verses $6 billion on regular policing.
Lets divide $30 million police spending on financial or markets crime, between $40 billion in crime from this area.
The answer is .00075

Therefore spending on white collar crime enforcement, financial crimes, stock or bond market fraudsters, ponzi schemes etc, is literally in the “one thousandth's, fractionally compared to what is spent on all other crimes combined, despite financial crimes being equal to or greater than all other crimes combined. (According to experts financial crime is greater than all other crimes combined, in fact FBI studies in the United States puts it vastly larger than ordinary crimes.

Put another way, we spend about .00075 dollars (or .075 cents for every dollar of financial crime) That is 75/1000th’s of a penny for every dollar that the financial fraudsters get away with. CRIME PAYS for financial tricksters.
(This "crime pays" story applies and rewards not only the financial tricksters, but their lawyers, bankers, corporate bankers, securities commissions for sure, accountants, their charities, their politicians, and just about every one connected to the financial trickster industry, who might be profiting directly or indirectly by "looking the other way" at financial fraud.

It is not a pretty story, nor is is a pretty sight.

It is time to put into place an "industry of accountability". An entire subset of professionals engaged in clear, honest, transparent dealing, with laws enforced, ethics enacted, and prosecutions made for those who fail in these areas. An entirely new industry of experts, professionals, analysts, and advisors who have "turned over a new leaf" or found jobs inside an industry that cleans, protects and defends us from financial fraud and trickery, rather than using their talents to profit themselves and others from financial fraud and trickery. Simple to talk about. It will take a bit of time to enact. It should be doable in far less than 50 years, which is how long it has taken other industries (tobacco) to come clean (almost) or other forms of abuse (sexual, child abuse etc) to become talked about, admitted to and properly punished instead of looking away. I think it will honestly take more like 20 to 30 years due to the reluctance of the financial industry to give up this path to instant riches, but with the tobacco industry to use an but one example, we should be getting smarter and quicker about opening up types of abuse to the light of day, and fixing it, should we not?

That is my story and I am sticking to it.
Larry Elford
Written May 25, 2010
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Re: Financial crime more than every other crime combined

Postby admin » Sun Mar 21, 2010 5:28 pm

Twenty Things You Should Know About Corporate Crime
By Russell Mokhiber, AlterNet
Posted on June 16, 2007, Printed on March 21, 2010

The following is text from a speech delivered by Russell Mokhiber, editor of Corporate Crime Reporter to the Taming the Giant Corporation conference in Washington, D.C., June 9, 2007.

20. Corporate crime inflicts far more damage on society than all street crime combined.

Whether in bodies or injuries or dollars lost, corporate crime and violence wins by a landslide.

The FBI estimates, for example, that burglary and robbery -- street crimes -- costs the nation $3.8 billion a year.

The losses from a handful of major corporate frauds -- Tyco, Adelphia, Worldcom, Enron -- swamp the losses from all street robberies and burglaries combined.

Health care fraud alone costs Americans $100 billion to $400 billion a year.

The savings and loan fraud -- which former Attorney General Dick Thornburgh called "the biggest white collar swindle in history" -- cost us anywhere from $300 billion to $500 billion.

And then you have your lesser frauds: auto repair fraud, $40 billion a year, securities fraud, $15 billion a year -- and on down the list.

19. Corporate crime is often violent crime.

Recite this list of corporate frauds and people will immediately say to you: but you can’t compare street crime and corporate crime -- corporate crime is not violent crime.

Not true.

Corporate crime is often violent crime.

The FBI estimates that, 16,000 Americans are murdered every year.

Compare this to the 56,000 Americans who die every year on the job or from occupational diseases such as black lung and asbestosis and the tens of thousands of other Americans who fall victim to the silent violence of pollution, contaminated foods, hazardous consumer products, and hospital malpractice.

These deaths are often the result of criminal recklessness. Yet, they are rarely prosecuted as homicides or as criminal violations of federal laws.

18. Corporate criminals are the only criminal class in the United States that have the power to define the laws under which they live.

The mafia, no.

The gangstas, no.

The street thugs, no.

But the corporate criminal lobby, yes. They have marinated Washington -- from the White House to the Congress to K Street -- with their largesse. And out the other end come the laws they can live with. They still violate their own rules with impunity. But they make sure the laws are kept within reasonable bounds.

Exhibit A -- the automobile industry.

Over the past 30 years, the industry has worked its will on Congress to block legislation that would impose criminal sanctions on knowing and willful violations of the federal auto safety laws. Today, with very narrow exceptions, if an auto company is caught violating the law, only a civil fine is imposed.

17. Corporate crime is underprosecuted by a factor of say -- 100. And the flip side of that -- corporate crime prosecutors are underfunded by a factor of say -- 100.

Big companies that are criminally prosecuted represent only the tip of a very large iceberg of corporate wrongdoing.

For every company convicted of health care fraud, there are hundreds of others who get away with ripping off Medicare and Medicaid, or face only mild slap-on-the-wrist fines and civil penalties when caught.

For every company convicted of polluting the nation’s waterways, there are many others who are not prosecuted because their corporate defense lawyers are able to offer up a low-level employee to go to jail in exchange for a promise from prosecutors not to touch the company or high-level executives.

For every corporation convicted of bribery or of giving money directly to a public official in violation of federal law, there are thousands who give money legally through political action committees to candidates and political parties. They profit from a system that effectively has legalized bribery.

For every corporation convicted of selling illegal pesticides, there are hundreds more who are not prosecuted because their lobbyists have worked their way in Washington to ensure that dangerous pesticides remain legal.

For every corporation convicted of reckless homicide in the death of a worker, there are hundreds of others that don’t even get investigated for reckless homicide when a worker is killed on the job. Only a few district attorneys across the country have historically investigated workplace deaths as homicides.

White collar crime defense attorneys regularly admit that if more prosecutors had more resources, the number of corporate crime prosecutions would increase dramatically. A large number of serious corporate and white collar crime cases are now left on the table for lack of resources.

16. Beware of consumer groups or other public interest groups who make nice with corporations.

There are now probably more fake public interest groups than actual ones in America today. And many formerly legitimate public interest groups have been taken over or compromised by big corporations. Our favorite example is the National Consumer League. It’s the oldest consumer group in the country. It was created to eradicate child labor.

But in the last ten years or so, it has been taken over by large corporations. It now gets the majority of its budget from big corporations such as Pfizer, Bank of America, Pharmacia & Upjohn, Kaiser Permanente, Wyeth-Ayerst, and Verizon.

15. It used to be when a corporation committed a crime, they pled guilty to a crime.

So, for example, so many large corporations were pleading guilty to crimes in the 1990s, that in 2000, we put out a report titled The Top 100 Corporate Criminals of the 1990s. We went back through all of the Corporate Crime Reporters for that decade, pulled out all of the big corporations that had been convicted, ranked the corporate criminals by the amount of their criminal fines, and cut it off at 100.

So, you have your Fortune 500, your Forbes 400, and your Corporate Crime Reporter 100.

14. Now, corporate criminals don’t have to worry about pleading guilty to crimes.

Three new loopholes have developed over the past five years -- the deferred prosecution agreement, the non prosecution agreement, and pleading guilty a closet entity or a defunct entity that has nothing to lose.

13. Corporations love deferred prosecution agreements.

In the 1990s, if prosecutors had evidence of a crime, they would bring a criminal charge against the corporation and sometimes against the individual executives. And the company would end up pleading guilty.

Then, about three years ago, the Justice Department said -- hey, there is this thing called a deferred prosecution agreement.

We can bring a criminal charge against the company. And we will tell the company -- if you are a good company and do not violate the law for the next two years, we will drop the charges. No harm, no foul. This is called a deferred prosecution agreement.

And most major corporate crime prosecutions are brought this way now. The company pays a fine. The company is charged with a crime. But there is no conviction. And after two or three years, depending on the term of the agreement, the charges are dropped.

12. Corporations love non prosecution agreements even more.

One Friday evening last July, I was sitting my office in the National Press Building. And into my e-mail box came a press release from the Justice Department.

The press release announced that Boeing will pay a $50 million criminal penalty and $615 million in civil penalties to resolve federal claims relating to the company’s hiring of the former Air Force acquisitions chief Darleen A. Druyun, by its then CFO, Michael Sears -- and stealing sensitive procurement information.

So, the company pays a criminal penalty. And I figure, okay if they paid a criminal penalty, they must have pled guilty.

No, they did not plead guilty.

Okay, they must have been charged with a crime and had the prosecution deferred.

No, they were not charged with a crime and did not have the prosecution deferred.

About a week later, after pounding the Justice Department for an answer as to what happened to Boeing, they sent over something called a non prosecution agreement.

That is where the Justice Department says -- we’re going to fine you criminally, but hey, we don’t want to cost you any government business, so sign this agreement. It says we won’t prosecute you if you pay the fine and change your ways.

Corporate criminals love non prosecution agreements. No criminal charge. No criminal record. No guilty plea. Just pay the fine and leave.

11. In health fraud cases, find an empty closet or defunct entity to plead guilty.

The government has a mandatory exclusion rule for health care corporations that are convicted of ripping off Medicare.

Such an exclusion is the equivalent of the death penalty. If a major drug company can’t do business with Medicare, it loses a big chunk of its business. There have been many criminal prosecutions of major health care corporations for ripping off Medicare. And many of these companies have pled guilty. But not one major health care company has been excluded from Medicare.

Why not?

Because when you read in the newspaper that a major health care company pled guilty, it’s not the parent company that pleads guilty. The prosecutor will allow a unit of the corporation that has no assets -- or even a defunct entity -- to plead guilty. And therefore that unit will be excluded from Medicare -- which doesn’t bother the parent corporation, because the unit had no business with Medicare to begin with.

Earlier, Dr. Sidney Wolfe was here and talked about the criminal prosecution of Purdue Pharma, the Stamford, Connecticut-based maker of OxyContin.

Dr. Wolfe said that the company pled guilty to pushing OxyContin by making claims that it is less addictive and less subject to abuse than other pain medications and that it continued to do so despite warnings to the contrary from doctors, the media, and members of its own sales force.

Well, Purdue Pharma -- the company that makes and markets the drug -- didn’t plead guilty. A different company -- Purdue Frederick pled guilty. Purdue Pharma actually got a non-prosecution agreement. Purdue Frederick had nothing to lose, so it pled guilty.

10. Corporate criminals don’t like to be put on probation.

Very rarely, a corporation convicted of a crime will be placed on probation. Many years ago, Consolidated Edison in New York was convicted of an environmental crime. A probation official was assigned. Employees would call him with wrongdoing. He would write reports for the judge. The company changed its ways. There was actual change within the corporation.

Corporations hate this. They hate being under the supervision of some public official, like a judge.

We need more corporate probation.

9. Corporate criminals don’t like to be charged with homicide.

Street murders occur every day in America. And they are prosecuted every day in America. Corporate homicides occur every day in America. But they are rarely prosecuted.

The last homicide prosecution brought against a major American corporation was in 1980, when a Republican Indiana prosecutor charged Ford Motor Co. with homicide for the deaths of three teenaged girls who died when their Ford Pinto caught on fire after being rear-ended in northern Indiana.

The prosecutor alleged that Ford knew that it was marketing a defective product, with a gas tank that crushed when rear ended, spilling fuel.

In the Indiana case, the girls were incinerated to death.

But Ford brought in a hot shot criminal defense lawyer who in turn hired the best friend of the judge as local counsel, and who, as a result, secured a not guilty verdict after persuading the judge to keep key evidence out of the jury room.

It’s time to crank up the corporate homicide prosecutions.

8. There are very few career prosecutors of corporate crime.

Patrick Fitzgerald is one that comes to mind. He’s the U.S. Attorney in Chicago. He put away Scooter Libby. And he’s now prosecuting the Canadian media baron Conrad Black.

7. Most corporate crime prosecutors see their jobs as a stepping stone to greater things.

Spitzer and Giuliani prosecuted corporate crime as a way to move up the political ladder. But most young prosecutors prosecute corporate crime to move into the lucrative corporate crime defense bar.

6. Most corporate criminals turn themselves into the authorities.

The vast majority of corporate criminal prosecutions are now driven by the corporations themselves. If they find something wrong, they know they can trust the prosecutor to do the right thing. They will be forced to pay a fine, maybe agree to make some internal changes.

But in this day and age, in all likelihood, they will not be forced to plead guilty.

So, better to be up front with the prosecutor and put the matter behind them. To save the hide of the corporation, they will cooperate with federal prosecutors against individual executives within the company. Individuals will be charged, the corporation will not.

5. The market doesn’t take most modern corporate criminal prosecutions seriously.

Almost universally, when a corporate crime case is settled, the stock of the company involved goes up.

Why? Because a cloud has been cleared and there is no serious consequence to the company. No structural changes in how the company does business. No monitor. No probation. Preserving corporate reputation is the name of the game.

4. The Justice Department needs to start publishing an annual Corporate Crime in the United States report.

Every year, the Justice Department puts out an annual report titled "Crime in the United States."

But by "Crime in the United States," the Justice Department means "street crime in the United States."

In the "Crime in the United States" annual report, you can read about burglary, robbery and theft.

There is little or nothing about price-fixing, corporate fraud, pollution, or public corruption.

A yearly Justice Department report on Corporate Crime in the United States is long overdue.

3. We must start asking -- which side are you on -- with the corporate criminals or against?

Most professionals in Washington work for, are paid by, or are under the control of the corporate crime lobby. Young lawyers come to town, fresh out of law school, 25 years old, and their starting salary is $160,000 a year. And they’re working for the corporate criminals.

Young lawyers graduating from the top law schools have all kinds of excuses for working for the corporate criminals -- huge debt, just going to stay a couple of years for the experience.

But the reality is, they are working for the corporate criminals.

What kind of respect should we give them? Especially since they have many options other than working for the corporate criminals.

Time to dust off that age-old question -- which side are you on? (For young lawyers out there considering other options, check out Alan Morrison’s new book, Beyond the Big Firm: Profiles of Lawyers Who Want Something More.)

2. We need a 911 number for the American people to dial to report corporate crime and violence.

If you want to report street crime and violence, call 911.

But what number do you call if you want to report corporate crime and violence?

We propose 611.

Call 611 to report corporate crime and violence.

We need a national number where people can pick up the phone and report the corporate criminals in our midst.

What triggered this thought?

We attended the press conference at the Justice Department the other day announcing the indictment of Congressman William Jefferson (D-Louisiana).

Jefferson was the first U.S. official charged with violating the Foreign Corrupt Practices Act.

Federal officials alleged that Jefferson was both on the giving and receiving ends of bribe payments.

On the receiving end, he took $100,000 in cash -- $90,000 of it was stuffed into his freezer in Washington, D.C.

The $90,000 was separated in $10,000 increments, wrapped in aluminum foil, and concealed inside various frozen food containers.

At the press conference announcing the indictment, after various federal officials made their case before the cameras, up to the mike came Joe Persichini, assistant director of the Washington field office of the FBI.

"To the American people, I ask you, take time," Persichini said. "Read this charging document line by line, scheme by scheme, count by count. This case is about greed, power and arrogance."

"Everyone is entitled to honest and ethical public service," Persichini continued. "We as leaders standing here today cannot do it alone. We need the public’s help. The amount of corruption is dependent on what the public with allow.

Again, the amount of corruption is dependent on what the public will allow."

“"f you have knowledge of, if you’ve been confronted with or you are participating, I ask that you contact your local FBI office or you call the Washington Field Office of the FBI at 202.278.2000. Thank you very much."

Shorten the number -- make it 611.

1. And the number one thing you should know about corporate crime?

Everyone is deserving of justice. So, question, debate, strategize, yes.

But if God-forbid you too are victimized by a corporate criminal, you too will demand justice.

We need a more beefed up, more effective justice system to deal with the corporate criminals in our midst.
Russell Mokhiber is the editor of Corporate Crime Reporter.

© 2010 Independent Media Institute.
View this story online at: http://www.alternet.org/story/54093/
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Re: Financial crime more than every other crime combined

Postby admin » Sat Jan 02, 2010 11:20 pm

Unfortunately, in Canada today, financial crime does pay.

We have recently seen countless, large-scale financial fraud cases in Canada: Mount Real, Norshield, Norbourg, Triglobal, Globex, Earl Jones Corp., and most recently, PML - just to name a few. Convictions are few and sentencing - if any - is minimal.

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Re: Financial crime more than every other crime combined

Postby admin » Mon Dec 28, 2009 4:19 pm

image001-7.jpg (25.51 KiB) Viewed 15423 times
Want to be a corporate criminal? Move to Canada

The Globe and Mail

The real message sent to white-collar crooks like
Garth Drabinsky is that, even if you get convicted,
things won't be so bad

Margaret Wente
Wednesday, Aug. 05, 2009 09:11PM EDT
Madam Justice Mary Lou Benotto wants to send a message to white-collar crooks like Garth Drabinsky: Our justice system will deal with you severely. As she sentenced the former impresario to seven years in prison Wednesday, she argued that a crime like his is serious, because it “fosters cynicism [and] erodes public confidence in the financial markets.” Sternly, she noted, “Those in business must know that this must be the response.”

In fact, those in business must know Canada is a fine place to fleece the innocent and cook the books. Not for us the crusading prosecutors, the quick indictments, the speedy trials, and the lifetime jail sentences so popular in the United States.

Here, you can be pretty sure the law will take years to catch up to you (if it ever does). In the event you are found guilty, the penalty won't be so bad.

Thanks to our generous parole provisions, Mr. Drabinsky could get out of jail after 14 months or so. Not that he's going to the slammer any time soon. Not until his lawyer exhausts the appeals. “In the U.S., he probably would have been tried eight or nine years ago,” says forensic accountant Al Rosen, who thinks Canada's systematic failure to prosecute corporate fraud is a bad joke. “And he probably would've got 20 to 40 years.”

Today, after a decade of hefty legal bills, Mr. Drabinsky is so broke he has been reduced to begging money off distant acquaintances in exchange for discounts at his Yorkville art gallery. On the other hand, 10 years of freedom (and counting) may well be worth it. Journalists who began covering the Livent debacle early in their careers have grey hair now. Perhaps that explains the sense of anticlimax in the courtroom yesterday.

Compared to the obscure manipulations of Conrad Black (part of whose conviction may well be overturned by the U.S. Supreme Court), the fraud scheme carried out by Mr. Drabinsky and his partner, Myron Gottlieb, was plain vanilla. It involved an old-fashioned kickback scheme and a years-long effort to dupe the shareholders by making Livent's financial picture look far brighter than it was. The most surreal moment of the trial came when lawyer Eddie Greenspan (who also acted for Lord Black) proposed that instead of doing jail time, his client could embark on an inspirational speaking tour with the goal of urging young people to pursue their dreams in the performing arts. Had he made a similar proposal for Lord Black, he'd have been laughed right out of Chicago.

“ In the U.S., he probably would have been tried eight or nine years ago”

Lord Black, unlike Mr. Drabinsky, will have to serve almost all of his 61/2-year sentence. Mr. Drabinsky could well get out of jail first. Surely, Lord Black (who stood by his old friend when times got tough) must be tempted to contemplate the unfairness of it all. After all, if Canada and not the United States had gone after him, chances are he'd still be a free man.

These days, as newly exposed Ponzi schemes spring up like ragweed, Prime Minister Stephen Harper is vowing a crackdown on white-collar crime. “These crimes have real victims,” he declared last week, “and we should have a justice system that responds accordingly.” But don't expect anything to happen soon. Unfortunately, the body entrusted with laying charges in cases such as Livent is still the RCMP, far better known for tasering the innocent than nailing the fraudsters.

“I've turned over files to the RCMP and nothing happens,” laments Al Rosen, the forensic accountant. “We just don't have people who are trained in what to look for. We have bad securities acts. We have bad sentencing guidelines. We've had some bad court decisions. We're 80 years behind the U.S. If you're a crook, this is the best place to be.”

Back in court, the judge had more tough words. “Members of the business community must be put on notice that honesty is the currency in which they trade,” she said. “If they stray, the punishment will be certain and severe.” Stirring words indeed. If only the system worked that way.
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Re: Financial crime more than every other crime combined

Postby admin » Sat Dec 05, 2009 9:22 pm

Canadian White Collar Crime Penalties

Livent’s Garth Dabrinsky got 7 years prison sentence and Myron Gottlieb got 6 years prison sentence for accounting fraud during 1993 to 1997. Prosecuted in September 2009.
Vincent Lacroix pleaded guilty of bilking 9,200 investors of $115 million over a five-year period in the now-defunct Norbourg Asset Management. Vincent Lacroix on October 9, 2009 received the country’s longest sentence ever for a white-collar crime - a prison sentence of 13 years. But the 42-year-old failed financier could be a free man by December 2011 under the federal Accelerated Parole Review, which makes prisoners eligible for day parole after serving one-sixth of their sentence if their crimes weren’t violent.
On December 19, 2008, Brian McCarthy, C.E.O. of Betacom Corporation Inc., was sentenced to a conditional sentence of two years, less a day. In 2002 and 2003 the Mississauga-based company, which developed products to help the visually-impaired, overstated its revenue in successive quarters by between $700,000 to $2.3 million. Authorities found that the company booked false sales of $1.1 million and did not disclose a $300,000 loan. Douglas McIntyre, a chartered accountant pled guilty to three counts of fraud over $5,000 on May 30, 2007. McIntyre was sentenced to a conditional sentence of 18 months. Philip Spensieri, a chartered accountant pled guilty to one count of fraud over $5,000 on August 20, 2007. Spensieri was sentenced to a conditional sentence of 2 years less a day, and ordered to perform 240 hours of community service, followed by one year probation.

In May 2007, charges of theft and money laundering were laid against Steve McRae, a 39-year-old former HSBC Canada employee who allegedly stole $370,000 worth of stock certificates from unclaimed client accounts at its Toronto brokerage. Stole securities between July 1998 and March 2000. Arrested in January 2006.

Crown attorney Donna Gillespie told the court that the veteran financial planner Crackower — a past president of the Jewish charity, Toronto Freedom Lodge, and a bagpipe player at B'nai Brith conventions — artfully manipulated and plotted "the financial, emotional and physical destruction" of his clients, including many elderly women, from 1989 to 2003. He worked for Worldsource Financial Management Inc. Madam Justice Petra Newton sentenced the 63-year-old swindler of seniors to a 5 year term behind bars and ordered him to pay $3.4 million in restitution to 43 former clients and their families. Decision made in July 2006.

Michael Mitton was charged on September 26, 2006 under the Criminal Code with offences of fraud, conspiracy to commit fraud, laundering the proceeds of crime, possession of proceeds of crime, and extortion for acts related to Pender International Inc. On March 22, 2007, Michael Mitton was convicted of numerous charges under the Criminal Code and sentenced to a term of imprisonment of 7 years.

Kevin Steele, a Vancouver broker has been sentenced by a provincial court judge to 6 years in prison for defrauding 229 investors of $10.3 million. - most of them from these B.C. communities but also from the U.S. and other regions of the world. In May 2006, Vancouver resident Kevin Steele was charged in a commodities trading scam. This case did not represent any sort of investigative or prosecutorial challenge. It was originally investigated by the U.S. Commodity Futures Trading Commission, and Steele made it clear from the outset that he would cooperate with the RCMP investigation. He pleaded guilty.

Alan and Elliot Benlolo swindled 77 investors out of almost $3 million in an elaborate stock swindle that stole millions of dollars from victims in Canada, the United States, Australia and more than a dozen other countries around the world. The Ontario Superior Court judge sentenced each brother to 42 months in prison for the stock-swap fraud and to three years for their latest phony telephone invoice venture. They will serve the two sentences concurrently and be eligible for parole after 14 months. Alan Benlolo, Simon Benlolo, and Elliot Benlolo were charged for violating the false or misleading representations provisions of the Competition Act (Section 52) for operating a Yellow Pages type scam in 2000. After being found guilty by a jury on April 23, 2004, Madam Justice Molloy of the Ontario Superior Court sentenced Alan and Elliot Benlolo on October 1, 2004, to 3 years in federal penitentiary and a $400,000 fine each for their involvement in the scam. Simon Benlolo received a nine-month conditional jail sentence (including three months house arrest) and a $100,000 fine. Another individual who was involved in the scam, Victor Serfaty received a 18-month conditional jail sentence (including six months house arrest), 100 hours of community service and a $15,000 fine, though he did not appeal his sentence or fine.

Prior to March 1999, persons invested in Nelbar Financial Corporation "corporate
investment certificates" or in private companies through Nelbar or Essex Capital
Management Ltd. The executives charged were Nelson Allen and Robin Moriarty involving $11 million from 136 investors. On or about March 1, 2000, Allen and Moriarty were each charged with 30 counts of fraud over $5,000, defrauding the public, and falsifying books and records contrary to the Criminal Code of Canada. On February 21, 2003, Allen pleaded guilty to three counts of defrauding members of the public of more than $5,000. The plea was the result of a plea bargain in which the Crown agreed to consolidate the charges against Allen and withdraw the charges against Moriarty. On March 31, 2003, Mr. Allen was sentenced to a 4 years penitentiary term for fraud by the Ontario Superior Court.

R. v. Grundy, [2001] A.J. No. 1670 (Alta. CA.), 2002 ABCA 4
The offender, a broker, conducted unauthorized discretionary trading that resulted in shortfalls of $217,000. Over about a 1 year period he misappropriated cash and securities to cover the losses. He also forged client signatures and letters of instruction to perpetrate the fraud and generated forged computer printouts to conceal his misappropriations. His brokerage suffered a total loss of about $217,000. The first-time offender was 37. He had a grade 12 education, but had taken night courses to qualify as a registered representative in the securities industry. The trial judge found that at the time of the offences he was under considerable financial strain and marital strife. He was separated by the time of sentencing and providing child support for his two children. After he was dismissed by the brokerage, he found employment as a senior sales director with another company. The trial judge agreed that general deterrence and denunciation were the paramount principles of sentencing. The court held that these principles were satisfied by a conditional sentence of 2 years less a day which required the offender to observe a curfew from 8 p.m. to 7 a.m., take counselling, and perform 240 hours of community service in addition to making restitution of $218,000. The Court of Appeal held that the trial judge had under-emphasized the gravity of the offence and the offender's moral blameworthiness. The Court also noted that the sentence failed to meet the requirement for general deterrence because it lacked any deterrent or punitive qualities. The Court indicated that it would have imposed a
significant period of incarceration, but imposed a conditional sentence of 2 years less a day in view of the sentence already served. The Court also imposed a term of 24 hours a day house arrest except for medical emergencies, treatment or to perform the community service.

R. v. Wheeler, [2001] N.J. No. 240 (S.C-T.D.) 4~ years - defrauded hundreds of people of $3 million through phony investments. The first-time offender pled guilty to defrauding hundreds of people of approximately $3 million. The offender had run a phony investment scheme promising fabulous rates of return. The offender confessed to the crime. The offender was middle-aged and had three children. The offender had operated a gas station his whole life. The offender had lost his gas station and been petitioned into bankruptcy. The court had earlier decided not to order restitution for several reasons including the fact the amounts could not be clearly determined for all of the victims. The court decided that general deterrence required a sentence of 4 years imprisonment. The court indicated that it was imposing an additional 6 months because a restitution order was not feasible.

Ontario v. Bjellebo, [2000] O.J. No. 478 (Gen. Div.); [2003] 0.1. No. 3946 (CA.); application for leave to appeal dismissed, [2003] S.C.CA. No. 541
10 years - defrauded government of $118 million and investors of $22 million
Elinar Bellfield set up a yacht chartering business called Overseas Credit and Guaranty
Corporation (OCGC) in 1984 to sell units in limited partnerships to investors. He was later assisted in the operation of the company by Mr. Minchella. The incentive to Investors was the promise of substantial early tax losses that would create a positive cash flow. The Crown proved that numerous misrepresentations constituted a fraud on the public who were at risk of losing tax revenues from the individual investors. The Crown further proved that the misrepresentations also constituted a fraud on the investors whose tax loss claims were ultimately disallowed by Revenue Canada. Investors claimed $118 billion in losses to Revenue Canada and paid $22 million in interest payments to OCGC between 1984 and 1989. Finally, the Crown proved that the offenders uttered forged documents to further their misrepresentations to both the government and the investors.

The first-time offenders were convicted of two counts of fraud and two counts of uttering forged documents after a nine- month jury trial. Bellfield, the mastermind behind the
scheme was sentenced by the trial judge to 10 years imprisonment and a fine of
$1,000,000. Minchella was sentenced to 7 years imprisonment. In dismissing the offenders' appeals as to sentence, the Court of Appeal held at paragraph 13 that:
While at the high end, the sentences imposed by the trial judge fell within the acceptable range. This was a highly sophisticated and massive fraud involving $118,000,000 against the public purse and $22,000,000 against more than 600 individuals. It was perpetrated over a lengthy period of time, and involved thousands of documents, off-shore companies and accounts.

Golden Rule C.E.O. Glen Harvey on September 18, 2000 Harper was sentenced by Mr. Justice Sheppard to a period of one year imprisonment for each offence to be served concurrently and to a total fine of $3,951,672. On January 7, 2002 Harper's appeal from conviction was dismissed by Mr. Justice Frank Roberts of the Superior Court of Justice (Toronto Region). Harper's appeal from sentence was allowed: the term of imprisonment was reduced to six months on each count concurrent; the fine was reduced to $2 million. A cross-appeal as to sentence brought by the Commission was dismissed.

R v. Lawrence [1996] B.C.J. No. 3027 (C..0 IN the companion cse to Wilder, three offenders were found guilty by a jury of defrauding the government of $171/2 million. The fraud arose out of phony scientific research projects and was financed by the sale of tax credits under the short lived Scientific Research Tax Credit (SRTC) plan. The fraud was elaborate and involved the creation of a research infrastructure, attraction of investment money from thirty parties, creation of escrow accounts, and the use of inflated and bogus invoices, promissory notes and false statements to secure release of the funds held in escrow.

The investors received certificates that research was in fact being done. Mr. Lawrence was a lawyer who issued phony letters of comfort to the investors knowing the certificates were false. All offenders had exemplary, unblemished backgrounds. The trial judge held that the need for denunciation and general deterrence required substantial sentences. Mr. Lawrence and one other offender were sentenced to 7 years imprisonment and ordered to pay $1 million restitution. The other offender was sentenced to 6 years and also ordered to pay $1 million restitution. The Court of Appeal upheld the sentence noting at paragraph 22 that:

The fraud saw profits of 17 million dollars. It consisted of an elaborate plan which was put into effect over many months. It involved many players, an elaborate paper trail, and significant cunning and deceit.

Michael Holoday in 1994 received a jail sentence of 7 years for defrauding his clients of $20 million while at Midland Walwyn and First Marathon during the late 1980’s and early 1990’s.

Cases Where Charges Laid:

Nortel top three executives have been charged for alleged accounting fraud during 2002 and 2003.

Royal Group Technologies’ five executives are facing criminal charges relating to $27 million of improper land sales and $2 million improper sale of company warrants with proceeds paid to themselves. These crimes are alleged to have occurred between 1998 and 2003.

Philips Services’ executive Waxman faces criminal charges for misappropriation of estimated $20 million of copper inventories that were laid in December 2004. According to an RCMP press release, Waxman is alleged to have facilitated eight questionable transactions between January 1996 and December 1997. The spokesman claimed the money was transferred from Philip control and redirected to "shell companies" and dummy corporations under Waxman's control. During the time of the transactions, Waxman was president of Philip's Metals Recovery Group and corporate director for Philip Services.

Ian Thow of Berkshire Securities for alleged theft $10 to $37 million occurring before 1998 when he resigned from Berkshire. Berkshire fined $500,000 by MFDA.

Portus was a two-year nightmare for advisors and 26,000 investors. When it was ordered to stop selling what were marketed as principal-protected notes whose upside would depend on a portfolio of hedge funds, Portus had collected $790 million in client money. That was in February 2005. Only slowly did it come to light that clients hadn't bought individual principal-protected notes but that, instead, investor money was commingled to purchase notes collectively, with maturity dates extended to 2011.More than that, Portus deducted $109 million off the top to pay its own expenses, leaving only $529 million invested. Things got murkier when co-founder Boaz Manor left Canada for Israel Portus receiver KPMG found that $50 million in U.S. client money had never been invested. The receiver recovered some of it, but $17 million is still unaccounted for. Now, Portus principal Michael Mendelson has pleaded guilty to fraud, in part for using investor money to finance Portus's operations.

Bronson and Sorenson ponzi fraud charges in 2009 for alleged crimes committed between1999 to 2007.

Lost Prosecutions

Bre-X ‘s Felderhoff acquittal in August 2007 for fraud alleged to have been committed in 1997.

The International Monetary Fund Report, "Canada Financial Sector Assessment", dated Feb. 13, 2008 cited our securities enforcement as in real need of improvement. In that regard, former RBC DS investment banker Andrew Rankin negotiated a surprise reduced settlement agreement with the Ontario Securities Commission to resolve his outstanding legal matters on tipping. The OSC had lost on appeal and decided to cut their losses. There are those who do not cite Alan Rankin’s settlement leniency as a regulatory problem. Some critics argue that the OSC botched this case and it was patently unfair that Alan Rankin should go to jail, while his buddy Daniel Duic did not and Duic gets to keep most of his ill-gotten gains. In their opinion, Alan Rankin should have been the co-operating witness against Duic.

Atlas Cold Storage executives withdrawn fraud charges by OSC in , after stating that a "key witness" in the case had come forward with new information that reduced the chance the regulator could get a conviction. Atlas executives had been accused of overstating earnings and booking expenditures as capital assets.

No Cases


Non Bank ABCP

Income Trusts - Spinrite, Granby Industries, FMF Capital, etc.

Professional hedge fund trading of mutual funds to take advantage of international price differences in different time zones

Unnecessary foreign exchange transactions in RRSP and RRIF

YBM Magnex

Prepared By:

Diane A. Urquhart
Independent Financial Analyst
Site Admin
Posts: 2797
Joined: Fri May 06, 2005 9:05 am
Location: alberta

Re: Financial crime more than every other crime combined

Postby admin » Fri Nov 27, 2009 10:01 am

(1) Nortel execs approve more raises
Thursday, November 26, 2009

CBC National News

http://ismymoneysafe.org/video/CBCNatio ... 262009.wmv

CBC Power and Politics
http://ismymoneysafe.org/video/CBCPower ... 262009.wmv

Nortel Retention Review September 22, 2009 Document from CBC Website

http://ismymoneysafe.org/pdf/Nortel-ret ... 222009.pdf

CBC News Story and Comments
http://www.cbc.ca/money/story/2009/11/2 ... ument.html

(2) Court of Appeal of Ontario Decision Denies Minimum Severance Otherwise Payable under Provincial Employment Standard Acts
November 26, 2009

http://ismymoneysafe.org/pdf/ECOPY9MAIL ... 104054.PDF

The reasons for the severance appeal denial are the same reasons why the Federal Government must act to amend the Bankruptcy and Insolvency Act to give preferred status to pension and long term disability plan deficits and unpaid severance. It is clear from this November 26, 2009 decision that the Ontario courts have determined that the Federal Government has the intent for its Federal bankruptcy laws to cause a reduction in pension and long term disability income and to give the right to not pay severance to corporations that file for bankruptcy protection or bankruptcy. These Federal Government intended reductions in pension, long term disability and severance income are said to specifically apply in CCAA restructurings to enable corporations to be ongoing concerns. However, Nortel is liquidating and so the theory of compromise to enable ongoing concern makes no sense, especially where the purpose of strategic bankruptcies is to hoist costs onto the Canadian taxpayers by causing the greater use of social security programs and reduced income taxes from former employees and pensioners whose employment benefits are being severely cut.

(3) Induced Bankruptcies Cost Canadian Taxpayers Billions of Dollars
Federal Government Not Stopping the Abuses
November 19, 2009

http://ismymoneysafe.org/pdf/InducedBan ... 192009.pdf

(4) The House of Commons Standing Committee of Finance should hold a hearing on the role of credit default swaps in inducing bankruptcies and on how bankruptcies cause greater use of social security programs and lost income tax revenues from long term disabled and severed employees and pensioners, whose employment benefits are being severely cut. Bankruptcy laws and process should not condone effective thefts from bankruptcy estates and secret deals negotiated by the major creditors and the executives for their own benefit that are to the detriment of Canadian long term disabled and severed employees and pensioners.
Sent By:

Diane A. Urquhart
Independent Financial Analyst
Mississauga, Ontario
Site Admin
Posts: 2797
Joined: Fri May 06, 2005 9:05 am
Location: alberta


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