Daily Archives: January 11, 2016

Michigan credit union ex-CFO shockingly confesses to embezzling $20 million

Walked right into sheriff’s office and spilled his guts

In a development seemingly out of nowhere, the former chief financial officer of a Michigan credit union and a man described as a “community hero,” walked into the Oakland County sheriff’s office last week and confessed to embezzling $20 million from the credit union over the last 12 years.

The Detroit Free Press has the full details on Michael LaJoice, who served as chief financial officer of Clarkston Brandon Community Credit Union, and his shocking confession.

From the Detroit Free Press:

Michael LaJoice was known for charitable giving and was honored in 2013 as a community hero in Fenton for being an everyday person who went out of his way to help others and the community.

Earlier this week, a little more than two years after receiving that Community Hero Award from the Fenton Regional Chamber of Commerce, the businessman and accountant walked into the Oakland County Sheriff’s Office and told detectives that he embezzled about $20 million over a dozen years from Clarkston Brandon Community Credit Union, while he was the chief financial officer.

How David Bowie Changed Wall Street

David Bowie was known for his ability to reinvent himself. But he also helped inspire a pocket of Wall Street that tries to create money out of weird things like billboard rental income, cellphone tower lease payments and literary or film libraries.

In 1997, Mr. Bowie bundled up nearly 300 of his existing recordings and copyrights into a $55 million security that paid the buyer — Prudential Insurance Company of America — a 7.9 percent annual rate over 10 years, backed by the income from his royalties and record sales, and the licensing of his songs for films or other uses.

The so-called Bowie bonds were among the first in what would become a wave of esoteric asset-backed securities deals based on intellectual property, including a more recent one involving Miramax’s film library(including titles like “Pulp Fiction” and “The English Patient”). Bankers have also come up with securities backed by franchise revenue for the restaurant chains Sonic and Church’s Chicken, among others.

The buyers in these deals, which are negotiated privately by the banks that put the transactions together, tend to be specialized hedge funds or big institutions that can negotiate terms with the bankers. Individual investors never got their hands on a Bowie bond because Prudential never sold any of its stake.

Read on.

Citigroup Tops List of U.S. Banks With Exposure to China

The Street:

Investors bearish on China are now running from the big banks, and most appear to be running from Citigroup (C).

This selloff makes sense considering Citigroup tops the chart of the big four U.S. banks with exposure to Xi Jinping’s cooling economy, which sent markets into a tailspin last week upon the release of dismal manufacturing numbers. (The Dow Jones industrials and S&P 500 each fell 6%.)

And while all the big U.S. banks have been wise to pare their Chinese holdings over the past few years — Bank of America (BAC) notably dodging a bullet by dropping China Construction Bank in 2013 — Citigroup booked more than $20.5 billion in assets tied to China last quarter, according to its quarterly SEC filing.

The $20.5 billion constitutes nearly $14 billion in loans and about $7 billion in securities and trading account assets. The total assets mark an 8% drop from last year and 3% drop from the second quarter, but still pose a significant risk relative to its peers.

JPMorgan Chase (JPM) places second on the list of big-bank exposure to China, with $16.3 billion of assets tied to China, an 18% year-over-year drop. Its Chinese holdings come largely in the form of more than $8 billion in loans.

Bank of America posted $12.5 billion in China-related assets last quarter, claiming $1 billion were hedged, marking an approximate 8% decline from last year.

Wells Fargo (WFC) may be the safest play given today’s market headlines. Despite a market cap of more than $250 billion, the San Francisco-based giant only booked $2.4 billion in assets tied to China last quarter.

Banks on Hook for Debtor’s Hidden Assets

PASADENA, Calif. (CN) – A bankruptcy trustee can try to recover the market value of a debtor’s life settlements from banks that bought the man’s unmatured term life insurance policies, the Ninth Circuit ruled Friday.
The debtor, David Green, filed for Chapter 7 bankruptcy in 2007 – about five months before he died.
But Green failed to disclose a number of assets when he filed the petition and the appointed trustee of the bankruptcy estate, Leslie Gladstone, seeks to recover three undisclosed life settlements as fraudulent transfers, according to the Circuit’s opinion.
The banks involved in the bankruptcy transactions – U.S. Bank and Coventry First – paid $507,000 for the life settlements at issue and received $9 million in death benefits when Green died.
When Gladstone learned about Green’s undisclosed assets, she pursued an adversary proceeding against the banks, but the bankruptcy court granted the banks’ motions for summary judgment.
Gladstone appealed the decision, and a federal judge reversed the bankruptcy court’s judgment and an order denying Gladstone leave to amend her complaint. The banks appealed, but the Circuit affirmed the district court’s ruling.
Writing for the three-judge panel, Chief Judge Sidney Thomas said that “the question presented in this case is whether the debtor’s interests in the term life insurance policies, including the secondary market value of the policies and resulting life settlements, constitute a recoverable ‘interest of the debtor in property'” under to the relevant statute.

Read on.

NY AG Cuomo Won’t Be Charged For Deep-Sixing Moreland Panel

Law360, New York (January 11, 2016, 1:21 PM ET) — Manhattan U.S. Attorney Preet Bharara said Monday that Gov. Andrew Cuomo’s highly controversial 2014 budget-season move to shutter a statewide anti-graft investigation did not appear to have violated federal law but warned that the Moreland Commission’s work was still generating potential leads.

The prosecutor, who has made combating public corruption a top priority and who has successfully tried other top players from the state capital of Albany, signaled that Cuomo — who many suggested was sure to be charged — was off the hook for one…

Source: Law360

Six bankers charged, five absent as UK begins Euribor rigging case

Yet, not one bank exec charged for this…

Six bankers were formally charged in British court on Monday with conspiring to manipulate Euribor benchmark interest rates, while another five accused in the case did not appear for the hearing.

The case involving 11 former Deutshce Bank (>> Deutsche Bank AG), Barclays (>> Barclays PLC) and Societe General (>> SOCIETE GENERALE) employees is Britain’s fourth prosecution of rate-fixing allegations since it joined a global inquiry kick-started by U.S. regulators in 2008.

It covers allegations of manipulation of Euribor, which alongside the London Interbank Offered Rate, Libor, is one of two main benchmarks used to set terms for $450 trillion in securities worldwide.


Read on.

Someone alert Maine Gov. LePage: Maine DEA arrest 3 for drug trafficking in several Maine counties

Did Maine DEA find ‘D-Money, Shifty, and Smoothie’, the names that Maine Gov. claimed that were traveling to the state to distribute heroin and “impregnating white girls” in Maine? Well, check out this story as the DEA charged two women and one male from drug trafficking heroin in several counties in Maine:

The Maine Drug Enforcement Agency arrested three people Tuesday night and charged them with distributing heroin in Knox, Lincoln and Kennebec counties.

For the past month, agents from the MDEA Mid-Coast and South Central District Task Forces conducted an investigation into the distribution of heroin in the three counties. The investigation revealed that 42-year-old James Millay of Thomaston and 35-year-old Jody Daniello, Thomaston, would travel weekly from Thomaston to China to purchase heroin from 41-year-old Donna Johnson, of China and others. Millay and Daniello would then resell the heroin throughout Knox and Lincoln counties.

On Tuesday night, drug agents and State Police conducted a traffic stop on Route 17 in Jefferson of Millay’s and Johnson’s vehicle. Seized in the vehicle was 20 grams of heroin, which is equal to 200 doses. Both were arrested and transported to the Two Bridges Regional Jail in Wiscasset. Later agents searched Johnson’s home, located on Fire Road 31 on China Lake and found 39 grams (390 doses) of heroin, a loaded .38 caliber handgun and $5000 of suspected drug proceeds.

Read on.