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Tag: Office of the Comptroller of the Currency

  • BULLETIN: Traders Operated ‘The Cartel’; Banks Charged Criminally

    breakingnews72Forex traders at four multinational banks — Citicorp, JPMorgan Chase & Co., Barclays PLC and Royal Bank of Scotland plc — formed “The Cartel” and conspired to manipulate the prices of the U.S. dollar and the euro, the U.S. Department of Justice said today.

    All four banks have been charged criminally in an investigation that began when Eric Holder was Attorney General, said Loretta Lynch, Holder’s successor.

    UBS AG, a fifth multinational, has been charged criminally with manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates, the Justice Department said. The UBS prosecution came about after the agency ripped up an earlier nonprosecution agreement (NPA) with bank, alleging that UBS had violated the terms of a pact reached in December 2012 to resolve the LIBOR matter.

    Barclays also breached an NPA struck in June 2012 over the LIBOR matter and has agreed to pay an additional $60 million, the Justice Department said.

    The charges, all felonies, include conspiring to fix prices and rig bids. They are filed against Citicorp, Barclays, JPMorgan and RBS.

    A felony charge of wire fraud was filed against UBS, the Justice Department said.

    “In other words,” Lynch said, according to her prepared remarks released by the Justice Department, “UBS promised, in other resolutions, not to commit additional crimes — but it did.”

    As for Citicorp, Barclays, JPMorgan and RBS, Lynch said, “Starting as early as December 2007, currency traders at several multinational banks formed a group dubbed ‘The Cartel.’ It is perhaps fitting that those traders chose that name, as it aptly describes the brazenly illegal behavior they were engaged in on a near-daily basis. For more than five years, traders in ‘The Cartel’ used a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion.”

    All five of the banks have agreed to plead guilty to the criminal charges at the “parent level,” the Justice Department said.

    Here, according to the Justice Department, are the market-manipulation timelines and the agreed-to criminal fines:

    • Citicorp, involved from as early as December 2007 until at least January 2013, $925 million.
    • Barclays, involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, $650 million.
    • JPMorgan, involved from at least as early as July 2010 until January 2013, $550 million.
    • RBS, involved from at least as early as December 2007 until at least April 2010, $395 million.
    • UBS (for NPA breach that occurred after December 2012), $203 million.

    A statement by the Justice Department includes the type of language the agency normally directs at street criminals when it is trying to send a message. In this instance, however, the language is directed at the banks. From the statement (italics added):

    Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

    Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

    Holder, Lynch said, “oversaw this investigation from its inception.

    “His relentless work made this resolution possible, and I want to thank him for his commitment to this important effort,” she said.

    Lynch replaced Holder last month.

  • On Zeek Rewards, Cheerleaders, Currency And Exclamation Points

    Source: screen shot from Zeekler site.

    Owing to time constraints, the PP Blog hasn’t written much about Zeek Rewards, an MLM “program” married to a penny-auction site known as “Zeekler.” For simplicity, we’ll refer to both arms as “Zeek.”

    The structure of Zeek and precisely what it does are just plain baffling. Even so, it appears to have a legion of loyal followers, including followers on well-known Ponzi forums such as MoneyMakerGroup and TalkGold. The Ponzi-board presence of Zeek affiliates is potentially problematic in the sense that some of them also are pushing obvious fraud schemes such as JSS Tripler/JustBeenPaid, which advertises a return of 60 percent a month and does not disclose its base of operations.

    Yesterday, for instance, a MoneyMakerGroup poster “defending” JSS/JBP while dissing naysayer “Lynndel” was showcasing his Zeek affiliate link below his JSS/JBP “defense.”

    “I am sorry to bring it up to you, but every business is a ponzi online or not,” poster “masikk08” wrote in response to “Lynndel’s” pointed criticism of JSS/JBP.

    Let’s stop for a moment to assess what we just read: A JSS/JBP “defender” who’s also a Zeek affiliate just told you that “every business” is a Ponzi scheme.

    Those words from your potential Zeek sponsor are just plain absurd. They also are devoid of any real-world understanding of the Ponzi menace. Ponzis have put people out of their homes, ruined lives, caused divorces, caused bankruptcies, destroyed college plans and dreams of passing on money to children and caused or contributed to suicides. A number of Ponzi/pyramid-related, murder-for-hire plots have been investigated. A California man believed to have used his ecommerce platform to facilitate Ponzi schemes has been sentenced to death for arranging the contract slaying of his wife, a potential witness against him.

    “Every business makes money off of new customers and nothing lasts forever either,” the MoneyMakerGroup poster and Zeek affiliate continued, mixing an irrelevant point with a bromide.

    “But we have to make the best out of what opportunities we have,” he droned. “I get paid and everyone I know gets paid with JBP. So I can not agree with your statement. But if you do not like to make money with JBP, there are other opportunities you may be interested in. JBP is not for everyone you know.”

    Let’s assess those words: That people are getting paid is not evidence that no underlying crime exists. Successful Ponzis always pay. Bernard Madoff “paid” — right up until the day he didn’t.

    Below the post, “masikk08” used an all-caps headline to attract attention to Zeek: “I HAVE A GIFT FOR YOU,” the headline reads. When the link is clicked, it resolves to a Zeek page.

    “Zeek Affiliates are giving away up to 500 FREE BIDS to each of their registered and new customers!” the promo begins. It goes on to explain that the the bid giveaway is “AMAZING” and that the giveaway began in August 2011 and will “continue throughout the year!”

    Given that we’re approaching May 2012, it appears as though the giveaway has been extended well into 2012.

    Some JSS/JBP affiliates came under fire in January by CONSOB, the Italian securities regulator. From a U.S. perspective, both JSS/JBP and Zeek are using offshore payment processors. This, coupled with the Ponzi-board presence and the processors’ histories of enabling investment scams, could mean that money “earned” in one or more scam “programs” is passing through Zeek.

    Zeek Cash Auctions

    From the tempting-fate department, Zeek and its affiliates, using photos of U.S. currency,  also advertise what effectively are auctions for sums of U.S. cash  — all while affiliates laud the “program” for providing a return. These things easily could catch the attention of the Treasury Department’s Office of the Comptroller of the Currency, not to mention the SEC and potentially even the CFTC and the FTC.

    Bidders potentially could receive substantial sums of cash at a significant discount. There is a certain incongruity about this, perhaps particularly in the sense that the cash auctions create the appearance that U.S. currency is being used as bait and potentially as a loss leader. But the strangest thing of all is that successful bidders apparently have the option of receiving the full value of the U.S. currency via AlertPay or SolidTrustPay, both of which are based in Canada and both of which are friendly to fraud schemes.

    This opens the door to questions such as these: What registrations, if any, with which regulators in which countries does Zeek require — and does it have them? Which agency is its principal regulator? If a successful bidder pays less than the face value of the U.S. currency, is Zeek eating the loss? Is Zeek buying currency in bulk — or is it simply divining a sum available for bid and debiting its own bank or processing account for that sum when it sends the electronic equivalent of that sum to the successful bidder via the offshore processors?

    Is Zeek selling U.S. currency at a loss or at a profit? If at a loss, why? If at a profit, how? Is there a risk to the U.S. and the currency markets if other “opportunities” model Zeek?

    Blogger “Oz” at BehindMLM.com has written a number of articles that raise legitimate questions about Zeek. (It’s worth taking the time to use the search form at BehindMLM to check out the articles/editorials about Zeek.)

    As time allows, we’ll add to our coverage of Zeek. We’re reading a lot about it from a variety of sources. The source volume and competing claims about the “program” create an atmosphere of confusion, and the overall Zeek “story” is far from clear.

    For the purposes of this column, we’ll raise one final point: AdSurfDaily, which prosecutors have described as an international Ponzi scheme that operated over the Internet and plucked at least $110 million, once spouted that it would try to incorporate an auction arm of some sort. That arm never materialized.

    Zeek appears to have ASD-like elements, leading to questions about whether regulators could become concerned that Zeek was selling unregistered securities as investment contracts and using wordplay to mask an investment program as something else.

    ASD’s auction dream was speculative at best. Our initial take on Zeek is that it shared ASD’s now-ancient dream — indeed, other MLM’s have had the same dream — but Zeek actually put the dream into action. The question is whether that dream is compliant with any number of regulations that could come into play — or whether Zeek jumped the gun and now is trying to become compliant after the fact and after gathering an unknown sum of money while operating unlawfully.

    Lots of people — perhaps millions — support MLM in one form or another. It is virtually impossible to quantify all of the disingenuous presentations, which often are hyperbolic — if not completely over-the-top. A certain sphere within the MLM universe is dominated by hucksters. These hucksters often display a remarkable lack of awareness. Some of them are tone-deaf politically and have a tin ear for real-world PR.

    So, for the purpose of this first column on Zeek, we leave you with two questions: If you place a successful bid for a sum of U.S. currency on Zeekler, do you have any legal or political concerns if your cash equivalent is delivered via an offshore processor that has processed payments for one scam or collapsed scheme after another?

    And why can’t you get your money through PayPal?