SEC Charges Black with Fraud
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Conrad Black and David Radler &quot;abused their control of a public company and treated it as their personal piggy bank,&quot; says Stephen Cutler, the SEC&#39;s head of enforcement.
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(InfoWorld) - The U.S. Securities and Exchange Commission has filed securities fraud charges against two Texas men who allegedly hijacked computers nationwide to send millions of spam e-mails and cheat investors out of more than $4.6 million. The men used networks of compromised computers, often called botnets, to send out spam about at least 13 penny stock companies, the SEC said Monday. The SEC began to investigate the operation after one of its enforcement attorneys received one of the e-mail messages at work. Darrel Uselton and his uncle, Jack Uselton, both repeat securities law violators, illegally profited during a 20-month scalping scam, the SEC said. The two obtained shares from 13 or more penny stock companies and sold those shares after pumping up the market through manipulative trading, spam e-mail campaigns, direct mailers and Internet-based promotions, the SEC said. The SEC defines scalping as recommending that other people purchase a security while secretly selling the same stock. In related actions, the Attorney General's Office for Texas and the Harris County District Attorney's Office indicted the Useltons for engaging in organized criminal activity and money laundering. The Texas authorities have seized more than $4.2 million from bank accounts controlled by the Useltons, the SEC said. The SEC's action is "intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines," SEC Chairman Christopher Cox said in a statement. The scheme, by combining get-rich-quick promises, computer intrusions and spam, was a "virulent threat to ordinary investors," he added. The SEC's complaint, filed in the U.S. District Court for the Southern District of Texas in Houston, alleges that the Useltons used an array of computer botnets to anonymously flood the inboxes of American investors with millions of spam e-mails touting near-worthless penny stocks. Each campaign, which featured a single company, lasted from several days to several weeks. Between May 2005 and December 2006, the Useltons obtained more than $4.6 million through their fraudulent scheme, the SEC alleged. The Useltons and the companies they controlled typically received unrestricted shares from penny stock companies for little or no money, in return for purported financing or promotional activities, the SEC said. Darrel Uselton was disciplined by the National Association of Securities Dealers in 2004 and 2005. Jack Uselton was permanently barred from violating the SEC's antifraud provision in a 2002 settled action, the SEC said. The SEC in March 2007 suspended trading in the securities of three of the companies involved as part of its antispam initiative. The SEC revoked the registration of a fourth company in December 2005.
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(InfoWorld) - U.S. and Canadian stock regulators filed fraud charges on Monday against several former executives of Nortel Networks, accusing them of twisting accounting practices to make it seem that the company was meeting Wall Street expectations. The U.S. Securities and Exchange Commission charged Frank Dunn, Nortel's former CEO and CFO, Douglas Beatty, the former CFO and controller, Michael Gollogly, the former controller and MaryAnne Pahapill, the former assistant controller. Meanwhile, the Ontario Securities Commission announced it would hold a hearing on May 1 to consider sanctions against Dunn, Beatty and Gollogly. The charges come as Nortel struggles to recover from the scandal. The company had fired or accepted resignations from all four managers by 2005, but is still repairing the damage to its financial records and its reputation. On March 1, Nortel said it would post yet another round of financial restatements and delay the filing of its 2006 annual report. The defendants all disregarded accounting practices and disclosure requirements in their effort to manipulate the books at the Canadian telecommunications equipment maker, the SEC said in charges filed in the U.S. District Court for the Southern District of New York. "The fraudulent conduct at issue here was egregious and long-running," said Linda Thomsen, director of the SEC's division of enforcement, in a statement. "Each of the defendants betrayed Nortel's investors and their misconduct gave rise to billions of dollars in shareholder losses." According to the SEC, between late 2000 and January 2001, Dunn, Beatty and Pahapill changed Nortel's revenue-recognition policies so they could appear to meet financial forecasts. And from July 2002 through June 2003, Dunn, Beatty and Gollogly created an illegal pool of reserve funds they used to fabricate profits, meet earnings targets and award bonuses. Then, in the second half of 2003, Dunn and Beatty tried to cover their tracks by explaining the company's $948 million restatement as an accounting error caused by internal control mistakes, the SEC said. That restatement was actually caused by the secret fund. Although he did not address the charges, one of the defendants quickly denounced the SEC for charging executives of a company outside U.S. borders. "I am disappointed that, after three years, the [SEC] has brought charges on the same day in respect of the same matter as the Ontario Securities Commission," said Dunn in a statement. "I think it would have been appropriate, under the circumstances, if the authorities in the United States had deferred to the Ontario Securities Commission in what is really a Canadian matter, and had acknowledged that the Canadian authorities are fully capable of addressing these important issues." However, the SEC insisted that it had jurisdiction since Nortel's stock trades on U.S. exchanges. "The action we take today sends a strong message that officers of U.S.-filing foreign corporations will be held to the same standards of accountability that are required of all participants in the U.S. financial markets," Thomsen said. Â
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The former N.Y.S.E. trader, Donald R. Foley II, who worked at Fleet Specialists, faced two counts of securities fraud.
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The U.S. Securities and Exchange  Commission filed civil suits on Wednesday charging that six  former top executives at the technology company Peregrine  Systems committed massive accounting fraud.
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The Securities and Exchange Commission said Tuesday it brought fraud and insider trading charges against former top executives of bankrupt credit card issuer NextCard Inc.
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CHICAGO -- Former media mogul Conrad Black was convicted yesterday of swindling the far-flung Hollinger International newspaper empire he once ran out of millions of dollars, becoming the latest in a wave of disgraced corporate executives to face possible prison time for financial fraud.
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US securities officials charged the disgraced former press baron, Conrad Black, and his former deputy, David Radler, with securities fraud in connection with alleged wrongdoing at Hollinger International.
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A New York stockbroker was indicted on  Thursday on securities fraud and other charges in connection  with New York Attorney General Eliot Spitzer's probe into late  trading in mutual funds, Spitzer said.
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The Securities and Exchange Commission on Thursday filed fraud charges against hedge fund manager Robert Berlacher and the Lancaster group of hedge funds, alleging they engaged in an illegal trading scheme involving at least 10 unregistered securities offerings.
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Federal prosecutors charged an ex-partner of McGuireWoods with fraud, claiming that he illegally obtained and sold shares of various companies.
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The U.S. government on Thursday  charged 13 people, including employees at major Wall Street  banks, with securities fraud, wire fraud, bribery and other  charges in what authorities are calling one of the most  pervasive insider trading rings in years.
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U.S. regulators on Monday charged  newspaper tycoon Conrad Black and his top lieutenant with  siphoning more than $85 million from the company they ran and  moved to bar them from serving as officers of a public company.
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Financial services regulator NASD said  on Monday it has charged H&R Block Financial Advisors Inc.  HRB.N with fraud related to the sale of Enron Corp.  ENRNQ.PK bonds immediately preceding Enron's bankruptcy in  2001.
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Newspaper tycoon Conrad Black and his top lieutenant were charged by regulators on Monday with siphoning more than $85 million from the company they ran, and they face a move to bar them from serving as officers of a public company.
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The U.S. Securities and Exchange Commission said on Tuesday it has charged the former general counsel of KLA-Tencor Corp  and Juniper Networks Inc  with fraudulently backdating stock options.
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The Securities and Exchange Commission has filed filed civil fraud charges against both Lord Conrad Black and his former deputy at Hollinger International, David Radler.