Daily Archives: September 11, 2015

Wall Street CEO Charged for Reverse Mergers

(CN) – New York Global Group founder Benjamin Wey was arrested Thursday morning and charged with securities fraud in connection with reverse mergers, the government said.
Manhattan U.S. Attorney Preet Bharara announced the unsealing of an indictment against Way and his Swiss banker Seref Dogan Erbek. Erbek remains at large, according to Bharara’s office.
Wey, 43, is accused of illegally making tens of millions of dollars through reverse merger transactions between Chinese companies and U.S. shell companies by manipulating stock prices.
Reverse mergers involve private companies acquiring an ownership majority in a public shell company before merging the two entities. Wey violated federal securities laws by not disclosing his ownership of more than five perfect of stock in the new companies, according to the indictment.
“Ben Wey fashioned himself a master of industry, but as alleged, he was merely a master of manipulation,” Bharara said in a statement. “The indictment charges that Wey used reverse merger transactions between Chinese companies and U.S. shell companies to illegally conceal his ownership interest and then, with the help of his alleged co-conspirator, manipulated the market so that he could sell his interest at artificially inflated prices.”
Wey manipulated stock prices by causing two Manhattan brokers to solicit their customers to buy stock in the merged entities while at the same time discouraging customers to sell those stocks, thereby artificially maintaining the share prices, according to a government press release.

Read on.

Forensic accounting in #FannieGate gets audited


A few months ago, HousingWire delved into a detailedforensic accounting report that looked at the complex legerdemain that went into the federal government putting the GSEs in conservatorship.

It revealed some head-scratching accounting and some three-card Monte-style mathematics. For starters, they said, Treasury justified the conservatorship of the GSEs via accounting gimmicks since they faced no liquidity issue at the time of the crisis and recession. They noted that Fannie Mae’s Cash Net Income, adjusted for non-cash items, was positive throughout entire crisis and recession.

Fannie Mae disclosed they held $36.3 billion cash in the bank on Sept. 30, 2008 with a maximum exposure of roughly $6 billion per quarter. That was enough liquidity to survive over 18 months, assuming it didn’t bring in another dime.

The full 27-page report, which can be read here, was from two activist investors involved in the FannieGate controversy with extensive legal and business backgrounds, Adam Spittler CPA, MS and Mike Ciklin JD, MBA, MRE.

Now, an independent audit of that report certifies that, yes, their findings are pretty much right in the center of the bulls-eye.

Evans Bank settles with New York over redlining

The State of New York announced Thursday that it reached a settlement with Evans Bank (EVBN) over allegations of unlawful discriminatory mortgage practices, also called redlining.

New York sued Evans Bank last year, accusing the bank of “systematically” denying its mortgages and services to African-Americans in the Buffalo metro area.

According to the lawsuit, Evans Bank allegedly created a map of its lending area, which included most of the city of Buffalo, but excluded the predominately African-American neighborhoods on Buffalo’s East Side.

Read on.