From the information that surfaced, ‘ Eaglewood’  probably started in 2007 when undercover detectives were following two convicted drug dealers to an unknown individual, who was later identified as Eyad Iktilat. After being arrested, one of them was found to have been carrying over 1,36 million euros in a bag.

Iktilat appeared to be a big fish, with plenty of luxury cars and real estate. Royal Oak Taxis, a rundown, fortified garage and cafe was run by Israeli-born Iktilat.  He was also a director of the nearby Euro Foreign Exchange, through which up to £1m a day in drug money would be laundered.

Iktilat, of Euston, north London, denied counts of money laundering, conspiracy to supply cocaine and cannabis, and possession of cocaine, but was convicted after a five-month trial. Initially jailed for 21 years, his sentence was increased to 30 on appeal. “He did not believe he was doing anything wrong. He believed he was acting as a bank,” said an officer. In two years, an estimated £100m passed through the ramshackle breeze-block taxi building. It was then taken to the bureau de change. There, manager Jean-Claude Frigieri, 56, of West Molesey, Surrey, bought up to €450,000 at a time, sometimes several times a day, from a bank note wholesaler called Interchange, which had no idea about his criminal dealings. He was convicted of money laundering and jailed for 10 years.

The money laundering consisted of buying 500 euro notes at Euro Foreign Exchange with drug money; the first stage in concealing the dirty origin of the money. And a perfect way to reduce the weight and volume of the drug money. Did you hear that Colombian cartels prefer 500 euro notes as payment for supplying cocaine rather than $100 notes?

The Guardian reports that Iraqi refugee Maythem al-Ansari was the main banker. When police swooped on his £3m west London home they had to use a digger and angle grinders to smash through a fortified security wall. He arrived in Britain in 1999 as Mithum Mohammed, later changing his name to al-Ansari, a famous banking name in Saudi Arabia. He worked as a bus driver but swiftly built up a multi-million-pound property empire. By 2004 he was investing in restaurants and vineyards and specializing in properties in Park Lane and Mayfair. The 42-year-old used business links to lend an air of legitimacy, and could exchange large amounts without attracting suspicion, making him the perfect cover for someone to change large amounts of cash into euros.

For a 5% ‘ introduction fee’ criminals could use the money laundering services of the taxi company, being the exchange to 500 euro notes. Details on the use of the notes were not made public, but you can assume they were used to pay for the cocaine on one hand, and used to invest in real estate and other goods for the criminals themselves on the other. Only a couple of criminals actually build up a ‘ legitimate’  business with dirty money. Most of them just try to find ‘clever’ ways to enjoy their lifestyles without being caught in the web…

Among the sentenced was a London ‘hero’ fire fighter, commended for his role in the bombing response, who was going down in the aftermath of the London bombings. He was on sick leave suffering from ‘ stress’ .  Owning two audis and leading a ‘ champagne lifestyle’ , some people had some doubts about the ‘ stress’ . He was however arrested while putting 100 kilogram of cocaine in smaller bags. The drugs had been picked up from a beach in the a coastal town the previous night, having been smuggled from continental Europe on a rigid-hulled inflatable speedboat. Try to talk you out of that one; that must be stressy.

http://www.bbc.co.uk/news/uk-12120309

http://www.bbc.co.uk/news/uk-11930487

http://www.guardian.co.uk/world/2011/jan/05/police-smash-london-drug-gangster-syndicate

http://www.policeprofessional.com/news.aspx?id=11787

According to the court document, Hertz and co-conspirators engaged in a bid-rigging conspiracy from at least as early as October 2001 until at least November 2006.   As a part of the bid-rigging conspiracy, Hertz and co-conspirators designated in advance which co-conspirator provider, either his employer or another financial institution, would be the winning bidder for certain investment agreements or other municipal finance contracts.   Hertz and co-conspirators also agreed to submit intentionally losing bids for investment agreements or other municipal finance contracts that were steered to other financial institutions, giving the false appearance that these deals had been bid competitively in accordance with relevant U.S. Treasury regulations, or the requirements of the municipality.

According to the court documents, Hertz also participated in a fraud conspiracy with a broker located in Minnesota from as early as 1998 until at least November 2006.   As part of this conspiracy, the broker gave Hertz information about the prices, price levels or conditions in competitors’ bids, a practice known as a “last look,” which is explicitly prohibited by U.S. Treasury regulations.   On some occasions, the broker signaled Hertz to change his bids to specific numbers so that his employer could make more money.   Hertz and co-conspirators also submitted intentionally losing bids to the broker for certain investment agreements to make it appear that his employer had competed for those agreement or contracts, when in fact, it had not.   As a result of the bid manipulation, Hertz’s employer won investment agreements and other municipal finance contracts at artificially determined price levels, which deprived municipal issuers of money and property.

We have seen quite a lot of bid rigging and price fixing (“gentlemen’s”) agreements in construction and infrastructure projects, cargo shipping and manufacturing.

In the Netherlands, the antitrust authority (NMa) is looking into possible price rigging in the mortgage market. Profit margins on Dutch mortgages are unusually high in Europe, according to a report by the Netherlands Competition Authority (NMa). The mortgage market is in the hands of a few big banks (sounds familiar?). Since July 2009, the interest rate margin, which is the difference between a bank’s borrowing costs and lending rate to consumers, has risen between 30 to 100 basis points, NMa said. “Since mid-2009 the margin in the Netherlands for mortgages with a fixed interest rate period between five to 10 years has been on a high level, both historically as well as compared with Belgium, Germany and France”. The Dutch banking association NVB said it was confident about the outcome of the NMa’s investigation, which will be completed in the spring of next year. NMa invited banks and other parties to react to the findings.

We will bring you updates and new interesting news as it comes along..

http://www.justice.gov/atr/cases/f264700/264760.htm

http://blogs.forbes.com/billsinger/2010/12/01/hertz-bid-rigging-plea/

http://www.justice.gov/opa/pr/2010/November/10-at-1366.html

http://www.rnw.nl/africa/bulletin/profits-dutch-mortgages-%E2%80%9Csuspiciously%E2%80%9D-high

http://www.reuters.com/article/idUKLDE6A012620101101

“These 17 companies fixed prices for baths, sinks, taps and other bathroom fittings for 12 years in six countries covering 240 million people. The cartel will have harmed businesses such as builders and plumbers and, ultimately, a large number of families. However, as the objective of anti-cartel enforcement is not to precipitate the fall of companies in financial difficulties, the Commission reduced the fines on five companies to a level they could afford. Companies should be in no doubt that the Commission will continue its fight on cartels and the level of fines will continue to be such that it should dissuade them from engaging in illegal behaviour in the first place,” said Joaquín Almunia, Commission Vice President and Competition Commissioner.

Ideal Standard, owned by U.S. private equity company Bain Capital LLC, received the single biggest fine of 326 million euros. Villeroy & Boch was fined 71 million euros.

Back in 2004, the EU raided the offices of Grohe, American Standard and other bathroom-products makers in five European countries and in March 2007 sent official objections to a number of the companies, including Grohe and American Standard.

According to the EU, the coordination took place during meetings of national trade associations in Germany (over 100 meetings), Austria (over 80), Italy (65), and also Belgium, France and The Netherlands, and in bilateral contacts. It consisted of fixing price increases, minimum prices, and rebates, and exchanging sensitive business information.

How did all of this came to light? US firm Masco, whose main subsidiaries are Hansgrohe and Hüppe, got full immunity under the Leniency Program as it was the first to provide information about the cartel to the European Commission.

Financial problems of related companies made the EU decide to lower the fines for these specific companies. The size of the fines “shouldn’t push the companies off the cliff,” Almunia said. “We wouldn’t want a company to go bankrupt because of a fine.”

The fine against Villeroy & Boch is “not justified” according to the company and it announced it will take legal measures to respond. Ideal Standard’s fine was cut by 30 percent reduction because it cooperated with the investigation. Still the penalty is claimed to be “ excessive” and the company sees “strong grounds to appeal.”

Villeroy & Boch shares Villeroy & Boch fell 1.24 euros, or 24 percent, to 3.883 euros in Frankfurt trading, the biggest drop since October 1998. Would this be the time to finally do some home improvement? Will we actually see a drop in bathroom furniture prices now the price rigging is behind us?

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/790&format=HTML&aged=0&language=EN&guiLanguage=en

http://www.businessweek.com/news/2010-06-23/ideal-standard-villeroy-fined-on-eu-bathroom-cartel.html

From a ‘fraud triangle’ point of view, we have 2 out of 3 covered already; rationalization (the pay cut) and opportunity (inadequate internal controls). Who knows what caused the (financial or psychological) pressure to finalize the triangle?

http://www.justice.gov/opa/pr/2010/June/10-crm-637.html

http://www.bankinfosecurity.com/articles.php?art_id=2602

Sources claim the the investigation started when a drug trafficker informed the police about the banker’s role in a money laundering scheme. Based on the suspicions, investigators infiltrated a drug network and sought help from the banker to launder money that the police spy pretended came from trafficking, the government office said in a statement. The banker took the bait. Based on the suspicions, investigators infiltrated a drug network and sought help from the banker to launder money that the police spy pretended came from trafficking, the government office said in a statement. The Swiss government alleges that Holenweger made false representations to banks in the process, while the money from the offshore accounts was used by industrial giant Alstom to bribe officials to win projects and increase market share in foreign countries.

In March 2003 the UK Serious Fraud Office (SFO) arrested three Alstom executives in a corruption probe. UK sources claim that Alstom used money on an offshore account to bribe officials abroad for approx $65 million to secure contracts. According to Swisster, bribes – commonly labeled as “commissions” – were long seen as a way for European businesses to secure business in overseas markets but France outlawed such practices in 2000 after the OECD called for states to stop approving them. Alstom updated its code of ethics this year and maintains it now has “rules and control procedures at the best international standards”.

Banker’s taking customer service to the next (illegal) level; a blast from the past or still common practice? Some things really change.

http://www.swisster.ch/news/business/zurich-banker-charged-alstom-fraud-case.htm

http://www.businessweek.com/ap/financialnews/D9FHECQ80.htm

The New York investigation has prompted several other states to examine how their pension funds solicit investments, and firms including the Carlyle Group have settled related cases.

“This case has started a national investigation of public pension funds all across the nation,” attorney general Mr. Cuomo said in a conference call with reporters on Thursday. “A significant amount of this country’s wealth is in these public pension funds and I fear — seeing what we’ve seen in New York — that it’s going to be a serious problem for the nation.”

http://www.nytimes.com/2010/04/16/business/16pension.html?src=me&ref=business

http://www.businessweek.com/news/2010-04-15/quadrangle-settles-with-cuomo-in-state-pension-probe-update1-.html

The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.  At the heart of the fraud claim is the allegation that Goldman sold the mortgage securities to other investors commenting that the portfolio was selected by an independent third party specialized in credit risk, while in fact Paulson & Co had a big influence on the selection. Goldman allegedly did not disclose that side of the deal to its clients, who would possible have made a different decision if they would have that information. ‘Regular’ investors, including giant like AIG, lost billions on the portfolio. Paulson & Co filled its pockets to the max; it is a zero sum game after all (not taking Goldman’s fees into account).

The SEC allegations are part of a civil suit, not a criminal one. It is one of the first cases against behavior in US financial institutions that caused the housing/financial crisis. More to follow…

http://www.nytimes.com/2010/04/17/business/17goldman.html?hp

http://www.sec.gov/news/press/2010/2010-59.htm

http://www.nytimes.com/2009/12/24/business/24trading.html?_r=1&src=me&ref=business

http://www.nytimes.com/2010/04/17/business/17nocera.html?hp

http://financialcrimeonline.com/archives/24

http://financialcrimeonline.com/archives/780

The justice department produced evidence that Daimler companies paid bribed in 22 countries, including China, Russia and Iraq. The total amount of bribes paid by Daimler (or should we say: received by as corrupt officials globally) is said to be in the tens of millions.

As a part of its deferred prosecution agreement, Daimler agreed to retain an independent compliance monitor for three years to oversee its implementation of an effective compliance program. The monitor is former FBI Director Louis Freeh, who was brought in two years ago to help Daimler with its compliance program after it began talks with the Justice Department.

http://www.mainjustice.com/2010/04/01/daimler-settles-fcpa-charges/

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/01/AR2010040103680.html

The (DEA) investigation apparently started when in 2005 dogs sniffed cocaine in an airplane in Miami. The money used to buy the plane was traced back to Mexican exhange houses; that is how the interest for the money flow from the exhange houses from Wachovia started.

Wachovia admitted offering correspondent banking services to 22 Casa de Cabio’s  (CDC) through three methods: wire-transferring money on behalf of third-party customers; accepting bulk cash transfers made by armored cars and other methods; and accepting checks and traveler’s checks put in pouches or digitally scanned through “remote deposit capture.”

From May 2004 to May 2007, Wachovia processed at least $373 billion in wire transfers on behalf of CDCs, the bank admitted. It processed $4.7 billion in bulk cash and $47 billion in ‘remote deposite capture’ deposits for all correspondent banking customers, including Mexican exchange houses, Wachovia admitted.

The case is USA v. Wachovia Bank, 10-cr-20165, U.S. District Court, Southern District of Florida (Miami).

http://www.businessweek.com/news/2010-03-17/wachovia-to-pay-160-million-to-end-laundering-probe-update1-.html

http://www.nytimes.com/2010/03/18/business/18launder.html

Now Germany takes it a step further; the German Ministry of Finance allegedly considers to buy the same ‘stolen’ ‘HSBC files’ on Swiss bank accounts held by German citizens. German media reported over the weekend that an informant had offered data of up to 1,500 possible tax evaders with accounts in Switzerland which could lead to 100 million euros for state coffers…. for the reasonable price of 2.5 million euros….

The incident follows a similar case two years ago, when German authorities opened a tax-evasion probe aimed at hundreds of investors in Liechtenstein, using data purchased from a former employee of LGT Group. Crown Prince Alois, who rules Liechtenstein, called the probe an “attack” on his country.

Now The Netherlands’ tax authorities intend to use international tax treaties to get the file for free from the Germans. If the files hold data that is relevant for The Netherlands’ revenue service, there is a fair chance the data will be shared with them.. And so the stolen data spreads across Europe.

So while governments make a economic and ethical decision to pay for stolen data, banks are left with a challenge. What if word got out (yes it just did) that foreign governments are willing to pay millions of dollars for client files related to their (wealthy) citizens? Better get your bank’s security right.

http://www.businessweek.com/news/2010-02-01/germany-says-stolen-tax-data-won-t-harm-stable-swiss-ties.html

http://www.dw-world.de/dw/article/0,,5196492,00.html

http://financialcrimeonline.com/archives/773