U.S. Charges 47 After Long-Term Undercover
|U.S. Attorney's Office November 19, 2003|
JAMES B. COMEY, the United States Attorney for the Southern District of New York, and PASQUALE D'AMURO, Assistant Director In Charge of the New York Office of the Federal Bureau Of Investigation ''FBI', announced today the filing in Manhattan federal court of criminal charges against 47 defendants, resulting from an 18-month-long undercover investigation of fraudulent schemes and other criminal conduct principally in the foreign currency exchange, or 'Forex' markets.
The investigation, which was conducted jointly by the Office of the United States Attorney and the FBI, in coordination with the Commodities Futures Trading Commission 'the 'CFTC' and the United States Securities & Exchange Commission 'the 'SEC', represents law enforcement's most substantial infiltration into corruption in the Forex markets.
The criminal charges announced today allege fraud and other criminal offenses by key players at virtually every level of the foreign currency markets, including by: operators of foreign currency 'boiler rooms,' who are alleged to have defrauded more than a thousand individual investors around the country out of tens of millions of dollars; inter-bank currency brokers, who allegedly participated in rigged currency trading schemes; and currency traders at some of the world's largest financial institutions, who are alleged to have engaged in schemes to defraud their own employers and to have accepted secret cash kick-backs.
The investigation uncovered a wide variety of other alleged misconduct by Forex market participants and others, including various schemes to defraud investors in publicly traded securities, perjury, money laundering, extortion, bankruptcy fraud, narcotics trafficking, and firearms offenses.
Among the principal charges announced today are those contained in a criminal Complaint charging 20 defendants with allegedly participating in a rigged Forex scheme that has pervaded the Forex markets for some 20 years. According to court documents, the scheme ' referred to by its participants as the 'Game,' or 'Points For Cash' involved currency traders at large financial institutions allegedly engaging in rigged trades that were purposely designed to produce losses for their employers' accounts, and corresponding profits for the co-conspirators in the rigged trades. In exchange for orchestrating 'profits' for their counter-parties, the currency traders allegedly received cash kickbacks, including in cash-stuffed envelopes delivered to them in diners, the court papers allege. In just a few months, the undercover investigation revealed approximately 123 rigged trades, totaling in excess of $650,000, and cash pay-offs to the currency traders totaling hundreds of thousands of dollars.
The defendants charged in connection with today's announcement include the following: currency traders at JP Morgan Chase, Societe Generale, UBS Warburg Dillon Read, Dresdner Kleinwort Benson, and Israel Discount Bank; a former member of the Federal Reserve Bank's Foreign Exchange Committee; three practicing attorneys; and numerous officers of various publicly-traded companies.
A separate document has been included with this release outlining the specifics of each alleged scheme, a list of each defendant, the exact charges each faces, and the maximum penalties.
Of the 47 defendants charged in connection with today's announcement, 40 defendants were taken into custody by the FBI yesterday and today, 2 defendants were previously arrested, and 4 defendants are still being sought. The defendants in custody are scheduled to be presented before various United States Magistrate Judges in federal courts in Manhattan and elsewhere today.
Separately, the CFTC and the SEC today announced the filing of charges, including commodities fraud charges against Madison Deane & Associates, Inc., Madison Deane Asia Corporation, New York Capital Assets, Inc., ISB Clearing Corp., Free Star Capital Inc., Montgomery Sterling, Inc., William Holbrook & Associates, LLC, Oxford Capital Group LLC, First Lexington Group, Walter Scott Lev, Itradecurrency USA, L.L.C., and principals of these various firms, as well as an injunctive action against United Currency Group and its CEO, ADAM SWICKLE, in connection with a fraudulent offering of unregistered securities.
Mr COMEY stated: 'Today's charges run the gamut of fraud. With more than 1000 victims, from small investors, to large banks, the losses are in the millions. We believe that today's charges will go a long way to clean up what has become for some a culture of corruption in the forex market, but realize that there is much more to do.'
Mr. D'AMURO stated: 'As a trusted business associate of the defendants, our undercover FBI Agent learned that many of the fraudulent activities in foreign currency exchange markets had been ongoing for the past 20 years. In fact, they bragged to the Agent that law enforcement would never be capable of getting close enough to stop them. The FBI agent provided us —quite literally—with an inside look into the manipulation and exploitation of the foreign currency exchange markets. Consistent with one of the basic rules of the marketplace—'let the buyer beware'—the FBI's message to those who seek to manipulate our markets and defraud investors is simple—Beware: The person you are conspiring with may well be an undercover FBI agent.'
Mr. COMEY praised the investigative efforts of the FBI and its undercover agents who worked this case, and thanked the CFTC and the SEC for their assistance in this
Mr. COMEY is a member of President Bush's Corporate Fraud Task Force. He also noted the investigation is continuing.
Assistant United States Attorneys MARC WEINSTEIN, DEIRDRE McEVOY, MARGARET CIEPRISZ and RITA GLAVIN are in charge of the prosecutions.
The charges contained in the Indictments and Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.