Mark Scott, a former equity partner at the law firm Locke Lord LLP, was convicted on Thursday of conspiracy to commit money laundering and bank fraud, reports FinanceFeeds.

He was one of the defendants in a lawsuit targeting individuals involved in the fraudulent cryptocurrency scheme OneCoin. Scott was suspected of laundering approximately $400 million in proceeds of OneCoin through fraudulent investment funds that he set up and operated for that purpose, writes FinanceFeeds’ Maria Nikolova.

Scott could face up to 20 years in prison on the charge of conspiracy to commit money laundering and up to 30 years for conspiracy to commit bank fraud.

Read the FinanceFeeds article.

In a matter of days, President Trump will ask the Supreme Court to rule on his bold claim that he is absolutely immune from criminal investigation while he remains in office, writes Adam Liptak for The New York Times.

The new case, concerning an investigation by Manhattan prosecutors into hush-money payments to two women who said they had affairs with Trump, will be the Supreme Court’s first chance to consider the president’s arguments that he is beyond the reach of the justice system.

Liptak explains the Supreme Court’s options: Announce next month whether it will hear the case and to rule by June, or simply deny review, leaving in place the appeals court ruling and effectively requiring Trump’s accountants to turn over his tax returns.

Read the  NY Times article.

Robert Shapiro, the former chief executive of Woodbridge Group of Cos., received the maximum sentence of 25 years in prison for running a $1.3-billion fraud that caused more than 7,000 retirees and other investors to lose money, reports Bloomberg.

Shapiro lured investors with promises of returns as high as 10 percent from investments in loans to property developers. Instead, he used money from new investors to repay earlier ones and used $36 million to buy luxury homes, wines, paintings and custom jewelry for his wife, according to Bloomberg’s Bob Van Voris.

“Prosecutors said Shapiro moved money through a network of 270 limited liability companies that he controlled. Investors lost $450 million, according to the government,” Van Voris writes.

Read the Bloomberg article.

An attorney and former police officer was found guilty Friday in a Virginia federal court of defrauding his former employer, an autism education organization and the campaign of a Virginia Democratic political leader, reports The Washington Post.

“David Miller, 70, conspired with his wife to embezzle more than $1.5 million by creating fake law firms that siphoned funds from then-Senate Majority Leader Richard L. Saslaw (D-Fairfax), SkyLink Aviation, and the Community College Consortium on Autism and Intellectual Disabilities,” according to the Post‘s Rachel Weiner. “Linda Wallis Miller, who had served as Saslaw’s campaign treasurer, pleaded guilty to the three fraud schemes in 2015 and was sentenced to 56 months in prison. David Miller faces up to 20 years in prison on each of the 10 counts of conviction when he is sentenced Jan. 24.”

Read the Post report.

Attorney Peter Idziak, who practices in residential mortgage lending, has joined the Dallas office of Texas-based Polunsky Beitel Green, LLP.

Idziak is an honors graduate from both Harvard University and the University of Texas School of Law.

He works in residential lending law, regulatory matters, and compliance issues.

Idziak is licensed to practice in both Texas and New York. He works with the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and the Home Mortgage Disclosure Act (HMDA).

He also provides guidance concerning Veterans Administration (VA), Federal Housing Administration (FHA) and Government-Sponsored Enterprise (GSE) requirements.

Over the past few decades, Republican and Democratic administrations have increasingly leaned on deferred prosecution agreements in corporate criminal cases and non-prosecution agreements to settle allegations against corporations, according to a Washington Post report.

For example, JPMorgan Chase, the country’s largest bank, has repeatedly resolved federal investigations over the last eight years by striking a deal: It wouldn’t be prosecuted as long as it stayed out of trouble, writes the Post‘s Renae Merle.

“This comes at a time when the Trump administration is prosecuting fewer white-collar crimes,” she explains. “The number of cases brought against corporations fell to 99 last year, compared with 181 in 2015, according to the U.S. Sentencing Commission. Most were against small companies, 62.9 percent employed fewer than 50 workers, the commission reported.”

Read the Post article.

For nearly seven years, a small South Carolina law firm allegedly helped operate a nationwide scheme that authorities say preyed on desperate military veterans, misled investors and netted millions of dollars in profit, reports The Post and Courier of Charleston.

The Upstate Law Group, owned by Candy Kern-Fuller, allegedly worked with a network of salesmen to lure in cash-strapped veterans and persuade them to sign over their monthly pensions and disability payments, according to Post and Courier reporter Andrew Brown.

The businesses then persuaded retirees to invest in the federal benefit payments, promising up to an 8 percent return on their money. Participating veterans received a lump-sum payout for handing over several years of future income to the investors.

“The problem is the entire arrangement is illegal, according to state and federal authorities. Federal law prohibits veterans from assigning their pension or disability payments to another person,” Brown explains.

In a similar case, federal officials have arrested the alleged ringleader of a nationwide business in which veterans sold their military pensions.

Read the Post and Courier article.

Reuters is reporting that former Wall Street investment banker Sean Stewart was found guilty on Monday of insider trading a second time for passing tips about healthcare industry mergers to his father.

“Prosecutors said Stewart, who worked at JPMorgan Chase & Co and Perella Weinberg Partners, passed tips to his father Robert from 2011 to 2015,” reports Reuters’ Brendan Pierson. “They said the tips yielded $1.16 million of profit for Robert Stewart and his friend Richard Cunniffe, to whom he had forwarded some of them.”

Stewart was convicted on the charges in 2017, but an appeals court ordered a new trial. He had served about a year of his three-year sentence.

Read the Reuters article.

U.S. prosecutors have accused three JPMorgan traders of rigging futures trades in precious metals for nearly a decade, making millions of dollars for the bank at the expense of counterparties that included the bank’s own clients, reports Bloomberg.

The charges outlined in the criminal indictments were the latest turn in a years-long investigation that has previously yielded guilty pleas from traders at several banks, including two from JPMorgan, according to the Bloomberg report.

Prosecutors said more than a dozen JPMorgan employees ultimately helped make manipulative “spoof” trades for the bank, in part by using the strategy their new colleagues brought in May 2008 after JPMorgan took over Bear Stearns.

Read the Bloomberg article.

A $98 million verdict secured by Boyd, Powers & Williamson has been inducted into the VerdictSearch Texas Verdicts Hall of Fame.

In reaching the December 2017 verdict, a Dallas County jury found that BBVA Compass Bank and one of its executives had committed fraud during loan renewal and modification negotiations with a developer of three luxury subdivisions in northeast Tarrant County following the 2008 financial crisis.

Lead trial attorney Derrick Boyd presented evidence, including email correspondence, showing that the bank executive had been actively working to sell the properties while simultaneously promising developer David Bagwell that the bank was not selling the loans and intended to extend his loan.

A $96.2 million final judgment in the case in 2018 preserved all but one portion of the verdict and added pre- and post-verdict interest.

Read details of the case.

While law firms can and have gone bust for a multitude of reasons, the looming economic downturn will have law firms of all sizes reflecting on their future, predicts Bloomberg Law’s Meghan Tribe.

She quotes Jeffrey Lowe, head of Major, Lindsey & Africa’s law firm practice: “The lesson to take away is no matter how old you are, no matter how revered you are or how long you’ve been around, you can’t count on being around five years from now, 10 years from now, or certainly 20 years from now if you don’t adapt.”

Law firms should be “battening down the hatches” now and looking at the profitability of different practices to get a head start on dealing with issues ahead of an economic slide, Lowe advises.

Read the Bloomberg Law article.

Two powerful Wall Street investment bankers could be on the hook for millions of dollars in back taxes and penalties after one of the world’s most prestigious law firms allegedly botched their pay packages, according to a report in the New York Post.

The Post‘s Kevin Dugan writes: “The two bankers — Michael Kramer and Derron Slonecker — face an IRS crackdown on $10.4 million in compensation after their bank’s law firm, Weil, Gotshal & Manges, screwed up a deadline for routine paperwork, according to sources and a report Weil commissioned on the matter.”

The report says the law firm may have failed to disclose the alleged mistake to their client, investment bank Perella Weinberg Partners, in a timely fashion, according to Dugan.

Read the  NY Post article.

The Houston Chronicle reports the U.S. Securities and Exchange Commission is investigating Houston-based SAExploration Holdings for allegedly providing “material misstatements” and misleading financial information to its investors and to the federal agency over the past four years, according to documents filed by the company with the SEC.

In the new SEC documents, the Houston-based international oilfield services company reported that it has fired its general counsel, who also served as its chief financial officer, and has removed its chairman and chief executive officer.

The ex-GC is Brent Whiteley, who had been an executive at SAExploration since March 2011 and also held the title of chief financial officer. Long-time chairman and CEO Jeff Hastings has resigned from the board and has been placed on administrative leave.

Read the Houston Chronicle article.

Breaking with eight other circuits, the Seventh Circuit ruled Wednesday that the Federal Trade Commission lacks authority to seek restitution from companies that defraud consumers, and vacated a $5 million judgment against a credit-monitoring company, reports Courthouse News Service.

The case involves a lower court’s imposition of $5 million in restitution from the target of an FTC action. Regulators said Michael Brown and his company, Credit Bureau Center, offered consumers “free” credit reports and then automatically enrolled them in a $29.94 monthly membership to a credit-monitoring service without notice.

Section 13(b) of the Federal Trade Commission Act authorizes the FTC to seek restraining orders and injunctions, but not specifically restitution, writes Courthouse News’ Lorraine Bailey.

Read the Courthouse News Service article.

By Shane Randolph and Jeff Nicholson
Opportune LLP

With over $370 trillion of global financial contracts referencing LIBOR (London Inter-bank Offered Rate), many oil and gas companies are curious about how the phase-out of LIBOR by 2021 could impact their organization. Many companies are beginning to ask how this transition will impact their organization and what steps can be taken now. The following is a discussion of:

• why LIBOR is being phased out;
• the transition plan for the phase-out;
• items companies should consider; and
• the steps that can be taken now.

Why is LIBOR Being Phased Out?
LIBOR has been the default local and international benchmark interest rate for a diverse range of financial products for decades. The rate is based on various banks’ proprietary observations rather than robust market transactions. This has left the rate vulnerable to manipulation and major rate-fixing scandals came to light starting in 2007. As a result, the U.K.’s Financial Conduct Authority (FCA) decided that it will no longer compel banks to submit LIBOR estimates by the end of 2021.

What is the Transition Plan?
As a response to the issue in the U.S., the U.S. Federal Reserve Board (the “Fed”) convened the Alternative Reference Rates Committee (ARRC) in 2014 to establish a viable alternative to the U.S. dollar LIBOR. The ARRC determined in 2017 that the overnight indexed swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR), a broad treasury repurchase agreement financing rate used when banks borrow or loan treasuries overnight, would be its preferred alternative reference rate. Accordingly, the Fed began publishing the SOFR daily rate on April 3, 2018 to prepare for its use as a benchmark rate.

The current transition timeline proposed by AARC has SOFR being the primary replacement for LIBOR in the U.S. by the end of 2021. The table below shows the ARRC’s anticipated completion dates and milestones to be achieved by those dates.

There are concerns about utilizing SOFR as a benchmark rate, and it will take time for enough liquidity to develop in the SOFR market to alleviate concerns regarding its viability as a benchmark. One issue is that SOFR is a spot rate from the median of overnight transactions, and it is likely to vary materially from day-to-day. Another issue is that SOFR has only a one-day tenor, whereas LIBOR has many different tenors.

What Should Companies Consider?
Companies should inventory all agreements that reference LIBOR. Also, when executing new agreements, management should carefully consider language addressing alternative or fallback rates if LIBOR is unable to be determined. If contracts are not amended to include alternative rates or fallback provisions in the absence of LIBOR before the relevant LIBOR index is discontinued, it could cause settlement issues or render contracts invalid.

From an accounting and financial reporting standpoint, the impact could be substantial. The primary areas affected include hedge accounting and accounting for debt modifications. In addition, discount rates for impairment testing, lease accounting, asset retirement obligations and fair value estimates will need to be assessed. Fortunately, both the U.S. and international accounting regulatory bodies, FASB and IASB, appear to be aligned and will provide significant relief for the transition, particularly in the areas of hedge accounting and debt modifications. As of now, the actions by the FASB and IASB are tentative proposals, but additional guidance should be provided by the end of 2019.

What Steps Can Be Taken Now?
At this stage in the process, companies should increase organizational awareness, carefully monitor the execution of new agreements referencing LIBOR and create an inventory of existing agreements and valuation models.

Increasing organizational awareness will be key for the transition away from LIBOR. While some may be aware of the impending LIBOR replacement, there may be a lack of appreciation of how broadly the event will impact the organization beyond hedging and debt activities. Increasing awareness throughout the organization will also assist in monitoring the execution of new agreements referencing LIBOR.

In summary, the replacement of LIBOR will have a significant impact globally. Oil and gas companies are encouraged to consider the impact to their organization and take steps to assess existing agreements and carefully monitor the execution of new agreements.

As a Managing Director at Opportune, Shane Randolph assists companies and financial institutions throughout North America, South America, Europe and Asia-Pacific in their understanding of what is possible as they deal with the challenges of implementing risk management programs and highly technical accounting pronouncements. He oversees the risk management, derivatives, stock-based compensation and complex securities service offerings of Opportune. He assists clients with the entire risk management life cycle, including strategy, execution, compliance, valuation and hedge accounting. He has undergraduate and graduate degrees in accounting from Oklahoma State University. He also is a member of the American Institute of Certified Public Accountants and maintains a Series 3 Securities License.

Jeff Nicholson is a Senior Consultant in the complex securities, hedging and stock-based compensation practice of Opportune LLP. He holds a Bachelor’s degree in Business Administration and Management from the University of Colorado, Boulder and a Graduate degree in Finance from the University of Colorado, Denver.

Nothing is more basic to private equity deal making than shielding the private equity firm and its funds from liability for the obligations of the fund’s affiliated acquisition vehicles and portfolio companies; and this certainly includes liabilities for breach of an NDA, points out Glenn D. West in the Weil, Gotshal & Manges Global Private Equity Watch blog.

The article discusses a case that distinguishes between affiliates entitled by the non-disclosure agreement that are entitled to receive confidential information and affiliates actually bound by the agreement.

Read the article.

A Madoff whistleblower accused General Electric of using accounting tricks to mask the extent of its financial problems and called it “a bigger fraud than Enron,” reports The Washington Post.

“Harry Markopolos, who alerted regulators about Bernie Madoff, published a report Thursday that said GE’s accounting irregularities added up to $38 billion,” writes the Post‘s Jonelle Marte. “The investigator, who is collaborating with a hedge fund that wasn’t named, says GE understated its costs and liabilities and misled investors in its financial statements.”

GE chief executive Lawrence Culp responded that the allegation is “market manipulation — pure and simple.” He also said Markopolos never talked to company officials about his allegations.

Read the Post article.

Bloomberg Law reports that Fifth Third Mortgage Co. beat an appeal by an attorney found personally liable for his role in a mortgage fraud scheme.

Ira Kaufman argued the district court erred in finding him personally liable for aiding the fraud in his capacity as owner of Traditional Title Co., LLC, because the Illinois Limited Liability Company Act shields individuals for liability for wrongs committed in their capacity as members of an LLC, writes Bloomberg’s Julie Steinberg.

“But he was sued in his individual capacity, the appeals court said. The LLC law doesn’t shield him here because he was found liable for his individual acts, the Seventh Circuit said Aug. 9,” according to Steinberg.

Read the Bloomberg Law article.

A post on the website of Mackay, Caswell & Callahan discusses the basics of drafting contracts associated with Section 1031 exchanges.

The author explains that this section in the tax code allows taxpayers to use borrowed tax money to purchase more investment or business property.

The article covers the required elements in the exchange agreement, the differences between these agreements and qualified exchange accommodation agreements, assignability, the cooperation clause and release of liability, compliance with receipt requirements, and more.

Read the article.

New Orleans attorney Gregory Joseph St. Angelo, former general counsel at a failed First NBC Bank who pleaded guilty earlier this month to a bank fraud charge, was indefinitely suspended following a Louisiana Supreme Court order, reports Louisiana Record.

St. Angelo had pleaded guilty to a federal charge of conspiracy to commit bank fraud after the former general counsel reached a plea agreement with the U.S. Attorney’s Office.

“By the time First NBC Bank failed in late April 2017, the balances on loans issued to St. Angelo and certain entities totaled approximately $46.7 million, and First NBC Bank had also paid St. Angelo approximately $9.6 million for purported tax credit investments,” a criminal bill of information said.

Read the Louisiana Record article.