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Westlake Legal Group > Posts tagged "Frauds and Swindling"

Fraudulent Jobless Claims Slow Relief to the Truly Desperate

Westlake Legal Group 00virus-uifraud1-facebookJumbo Fraudulent Jobless Claims Slow Relief to the Truly Desperate Unemployment Insurance Unemployment Labor and Jobs Impostors (Criminal) Identity theft Frauds and Swindling Coronavirus (2019-nCoV)

When Alexandria Preston had to leave her job as a medical assistant to care for her two children during the pandemic, she didn’t encounter endless delays like so many others trying to get unemployment benefits.

But three weeks later, the payments stopped coming. Then her account was canceled entirely — forcing her to dip into the savings she had set aside for dental work for her 12-year-old daughter, who has cystic fibrosis.

Ms. Preston’s claim had been flagged with the date 9/9/9999 — an indication that it was being reviewed for identity fraud, a vexing problem for an already strained unemployment system that has delayed payments to hundreds of thousands of jobless people.

“It was two weeks of not knowing anything and not getting any answers,” said Ms. Preston, who lives in Bangor, Maine.

More than 40 million workers have filed for unemployment benefits since the early days of the coronavirus pandemic — over seven times the number of requests in all of 2019. And all of those claims have been convenient cover for identity thieves filing bogus applications that could cost billions of dollars.

“Fraudsters have been able to hide in the flood of data,” said Pam Dixon, executive director of the World Privacy Forum, a public interest research group. “It is a perfect storm of identity fraud. Anyone who has experienced a major breach in the past three or four years could fall victim to this.”

The coronavirus has made the unemployment system, which is administered by the states, an attractive target in other ways, too: The CARES Act relief package added an extra $600 a week to successful claims and expanded eligibility to self-employed and similar workers, who are not subject to the same employment verifications that typically apply.

Having your application flagged for review doesn’t necessarily mean someone else tried to pose as you — it just means your state thought it warranted further inspection. Fraudulent claims have forced states to dial up their scrutiny and deploy systems that mark potentially suspicious claims. And those reviews take time.

Ms. Preston, 29, said she had been told that a review of her account would delay payments for at most 72 hours, but that wasn’t even close. “I had called hundreds of times every day for the following week and still didn’t get anything,” said Ms. Preston, whose daughter has to be completely isolated during the pandemic.

The Maine Labor Department said in a Facebook post that claimants should email their identification — an idea that made Ms. Preston nervous, because officials have warned against exactly that in the past. She did it anyway.

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Updated 2020-07-02T10:12:10.279Z

A little less than a week later, her payments resumed.

“It was very stressful going without any payment for three weeks and not having any idea when it would be fixed,” she said.

Officials in Maine said they did not comment on specific cases, but added that everyone whose claim was being flagged would now receive instructions on how to verify their identity through a mailed letter.

Improper payments nationwide could cost up to $26 billion this year, largely because of fraud, according to congressional testimony from Scott Dahl, who just retired as inspector general at the Department of Labor. The department is investigating more than 400 matters related to unemployment insurance, and it expects that number to continue to rise.

The damage to families can be life changing — far more consequential than having to cut up a compromised credit card. Some have gone without income for months, consumer advocates said.

“People are losing their cars, their homes, and they are moving back in with other family because they cannot pay for things,” said John Tirpak, executive director of the Unemployment Law Project, a nonprofit advocacy and legal services organization in Washington State. “It is quite a crisis for many people, and it is not a few isolated incidences.”

Washington may have been the hardest-hit state: Criminals collected as much as $650 million in benefits, although the state has already recouped about $350 million with the help of federal law enforcement, according to a spokesman for the state’s Employment Security Department.

Roughly 200,000 claimants in Washington were flagged for identification fraud in mid-May, and in mid-June 50 members of the National Guard started to help process the remainder of those claims, which were recently resolved. But there are still 71,000 people who have filed since March and have not received benefits.

Michael DeMaddalena said the delays had made him homeless. He was about to start a job as a cook at T-Mobile Park, home to the Seattle Mariners, on March 24 before the virus put the major-league baseball season on hold. He filed more than three months ago, but the $835 a week he appeared to be eligible for has never arrived.

In mid-April, Mr. DeMaddalena lost the room he had been renting for $100 a week, and with shelters on lockdown because of the pandemic, he had nowhere to go. He set up a tent close enough to a Starbucks to get free Wi-Fi so he could keep tabs on his application.

Since then, he has twice provided Washington’s Employment Security Department proof of his identity — by faxing and uploading copies of his Social Security and identification cards. But his disqualification remains unexplained.

State officials declined to discuss Mr. DeMaddalena’s case, but a Seattle law firm took a statement from him as part of a legal action demanding prompt payment of benefits that it said had been halted in response to fraudulent filings from overseas.

“I have done everything they have asked — and no response, no nothing,” Mr. DeMaddalena, 50, said. He said he had little more than the clothes on his back. “It is one thing to visualize my story, and another to walk in my shoes and sleep in my tent and not have running water.”

In a memo obtained by The New York Times in May, the Secret Service suspected a well-organized Nigerian crime ring for the problems in Washington, and said there was evidence of coordinated attacks in at least six other states: North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.

But the agency said it was likely that other states would be vulnerable. Michigan has cleared about 220,000 of the 340,000 active claims it stopped paying in late May, but tens of thousands more need to be analyzed, according to state officials. New York identified roughly 9,000 impostor claims, which would have cost up to $160 million.

Pennsylvania initially flagged 58,000 claims, all through its pandemic unemployment system, which covers self-employed workers and others who typically do not receive benefits. The majority of those have been verified as authentic, the state said. It declined to provide additional details, citing an active investigation.


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  • Frequently Asked Questions and Advice

    Updated June 30, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


Julia Simon-Mishel, a supervising attorney at the unemployment compensation unit at Philadelphia Legal Assistance, said fraudsters had used stolen personal information to have benefits deposited into accounts they controlled. The state responded by switching to paper checks, she said.

“That has caused significant delays,” she said. “It has been really traumatic for clients who live in neighborhoods where the mail is not secure and not consistent.”

Some applicants have been unable to collect benefits because identity-theft problems from years past continue to haunt them.

“They can’t complete an application — and they are not receiving any money even though they are entitled to it, even though they are on the verge of eviction,” said Laurie Yadoff, director of an economic advocacy and community health project at Coast to Coast Legal Aid of South Florida, who has worked with several clients with lingering problems.

One of them, Kristina Guzman, tried to file for benefits immediately after she was furloughed in mid-March from her job at a casino near Hollywood, Fla. But she was blocked because someone else had filed in her name nearly six years ago. She told officials back then that it was fraudulent and thought that was the end of it.

Ms. Guzman, 31, said she had tried to call the state unemployment’s identity theft line daily — starting two minutes before it opened, at 7:28 a.m. — but could never get through.

“It goes straight into ‘This line is busy,’ and there is no call-back number,” she said.

Ms. Guzman said she had twice tried paper applications and filed a complaint to have a supervisor call her back. Then she received a letter saying that if she didn’t get in touch by phone, her application would be closed. In early May, she started trying the governor’s office.

Florida’s Department of Economic Opportunity, which was reviewing more than 20,000 potentially fraudulent claims, said it could not comment on specific accounts because of privacy concerns, but told The Times that it would look into Ms. Guzman’s case.

Last week, she was informed that her account had been unlocked — the department told her it had received her contact information from the governor’s office — and that her payment was on its way.

But Ms. Guzman is still dealing with the repercussions of the three-month delay: Her landlord is trying to evict her and her 11-year-old daughter from their apartment.

“I am basically in a hole,” she said.


If you’re having trouble resolving an identity theft issue with your unemployment claim — or want to prevent one in the future — privacy experts and legal advocates have some suggestions:

  • First, immediately report the bogus claim to your state labor department. The World Privacy Forum offers a guide with links to each state’s unemployment fraud page.

  • Notify your employer of the claim, too, because it will also need to file documentation, said Pam Dixon, the privacy forum’s executive director.

  • File a complaint at the National Center for Disaster Fraud on its website or call 866-720-5721.

  • Check your credit report for unusual activity. Each of the Big Three credit reporting companies — Equifax, Experian and TransUnion — is offering a free credit report weekly at annualcreditreport.com through April.

  • Freeze your credit files at each of the bureaus, which will prevent fraudsters from opening new credit-related accounts in your name.

  • Use a new email address for financial and government transactions.

  • Be on high alert for other fraud. If criminals have enough information to file an unemployment claim, they could try to apply for other benefits — or even try to file a tax return to collect a refund.

  • Reviews like this take time, but long delays can be frustrating. You may be locked out of your account or simply unable to get a representative on the phone. In that case, legal advocates suggest, contact your state or federal representatives. Legal Aid may also be able to help.

  • A delay shouldn’t keep you from collecting what you’re owed. If you return to work before getting benefits that you were eligible to receive, you are still entitled to collect that money.

  • Consider creating an online benefits account with your state even if you are employed and do not need to file a claim. That makes it more difficult for scammers to create a new account with your information — and if they try, their behavior is more likely to be detected.

  • The U.S. Department of Labor’s and the Federal Trade Commission’s websites have more resources about identity theft.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How Berkshire Hathaway May Have Been Snookered in Germany

FRANKFURT — Only a few weeks after Berkshire Hathaway bought what looked like an upstanding example of German engineering prowess, a manager in Warren Buffett’s widely admired corporate empire received an unsettling email.

“I have to get rid of something I witnessed in the last few months,” the anonymous author wrote in slightly awkward English. “There is a falsification of data going on.”

The whistle-blower’s tip eventually led to the exposure of an elaborate conspiracy involving fake sales invoices, phantom customers and hacked computer systems, according to testimony in a legal dispute. The case showed that even Mr. Buffett, one of the shrewdest investors in the world, can be hoodwinked.

What looked like a profitable German manufacturer of specialized pipes for the oil and gas industry was, in fact, nearly bankrupt, according to testimony.

As a result, according to the findings of an American arbitration panel, Precision Castparts, a Berkshire Hathaway subsidiary, paid 800 million euros, or $870 million, for a company that was worth only about one-fifth that price.

The acquisition of the company, Wilhelm Schulz, was an expensive misstep for Mr. Buffett’s holding company, which has also been hit hard by the pandemic. Early in May, Berkshire Hathaway reported a loss of almost $50 billion in the first quarter as lockdowns and the economic downturn took a toll on the company’s portfolio of airlines and financial firms.

The case also dents the mythos of the Mittelstand — the midsize manufacturing companies that underpin the German economy. German prosecutors have opened a criminal investigation focusing on eight suspects at Wilhelm Schulz, all of them former high-ranking executives, finance officials or information technology specialists. None have been charged.

The investigation was reported earlier by the Handelsblatt newspaper.

The circumstances that allowed Mr. Buffett’s organization to be tripped up by a little-known German manufacturer were detailed by the arbitration panel that considered a complaint filed by Precision Castings, which is based in Portland, Ore. The tribunal found that Wilhelm Schulz executives and employees had “engaged in a pervasive scheme” to conceal the company’s dire financial condition so that Precision Castparts would go ahead with the acquisition.

“This is not a close case,” the tribunal found. “The evidence strongly points to fraud, and there is little in the record to suggest otherwise.”

Lawyers representing interests of the sellers, three German holding companies owned primarily by members of the Schulz family, deny wrongdoing and have asked the U.S. District Court for the Southern District of New York to dismiss the arbitrators’ decision.

ImageWestlake Legal Group 00buffett-fraud-5-articleLarge How Berkshire Hathaway May Have Been Snookered in Germany Wilhelm Schulz GmbH Schulz, Wolfgang Precision Castparts Corporation Mergers, Acquisitions and Divestitures Germany Frauds and Swindling Buffett, Warren E Berkshire Hathaway Inc Arbitration, Conciliation and Mediation
Credit…Houston Cofield/Bloomberg, via Getty Images

On the surface, Wilhelm Schulz seemed like the kind of solid industrial company that has made Germany an export powerhouse. Based in Krefeld, north of Düsseldorf in Germany’s industrial heartland, Schulz appeared to have a strong position in its market niche: specialized pipes for the oil and gas industry.

The chief executive, Wolfgang Schulz, was the son of Wilhelm Schulz, who put his name on the company when he founded it only months after the end of World War II. Wolfgang Schulz was well known locally as the owner of a pro ice hockey team, the Krefeld Penguins. Mr. Schulz has denied wrongdoing and vowed to clear his name.

Precision Castparts began thinking about acquiring Wilhelm Schulz after being approached by an intermediary in 2016.

Berkshire Hathaway had acquired Precision Castparts only a few months earlier for $37 billion, Mr. Buffett’s biggest acquisition ever. Though best known for its aircraft parts, Precision Castparts also makes products for oil and gas production, an industry that was suffering even before the pandemic caused fuel prices to plummet.

Wilhelm Schulz seemed like a way for Precision Castparts to increase its presence overseas, and a rare opportunity to buy a German company. Many midsize German manufacturers are owned by families that are loath to sell.

Precision Castparts dispatched employees to Krefeld, where they spent six months poring over Wilhelm Schulz’s financial records. They examined lists of the biggest customers, interviewed Schulz employees and visited Schulz facilities.

Credit…Salma Fotoagentur

But unbeknown to Precision Castparts, Schulz had narrowly avoided bankruptcy only weeks before. The company had been unable to make payments on a €325 million credit line from Commerzbank, according to the arbitrators’ report. A lawyer hired by Schulz had advised the company that it was obligated under German law to file for insolvency.

Schulz avoided that fate only because it persuaded Commerzbank to front it €8 million more, saying it was waiting for payment from a big customer. The bridge loan came with a proviso. If Schulz couldn’t pay, Commerzbank would effectively take control of the company.

Schulz was also raising cash by borrowing against accounts receivable — money that customers owe but have not yet paid — a common practice known as factoring. But some of the documentation that Schulz presented to the lender (and later reviewed by Precision Castparts before the purchase) was fabricated by using Photoshop software to create fake invoices and delivery receipts, the arbitrators found.

How could Precision Castparts’ auditors miss these glaring problems? One incident described in the arbitrators’ report illustrates how Schulz employees made the company look healthier than it was.

In October 2016, as Precision Castparts was going through Schulz’s financial records, a Schulz information technology employee engineered a five-day outage of the computer system used to track sales and orders. A team at Schulz exploited the downtime to fabricate nearly 50 orders, worth tens of millions of euros, that were backdated to make it look as if they had been placed in 2014 and 2015, according to the arbitrators’ report.

Orders were recorded from companies with which Schulz no longer did business, according to testimony. One supposed customer had effectively ceased to exist years earlier.

The deal closed in February 2017, and the news was reported in Bloomberg News and The Wall Street Journal. Handelsblatt trumpeted, “Warren Buffett Strikes Again in Germany.”

The whistle-blower’s email arrived in early March.

The informant, later identified in the arbitrators’ report as someone who worked in information technology at Schulz, wrote that a small team of co-workers was entering fake customer orders into the company’s computer system to “make our company look much better than we really are.”

“I regard this as a criminal act and don’t want to work for a company which uses such methods any longer,” the email said.

Alarmed, Precision Castparts flew in consultants who specialize in accounting fraud, along with its own financial controllers.

After months of digging, one investigator discovered the backdated computer invoices. Another learned from Schulz employees not involved in the fraud that companies that were supposed to be among the firm’s biggest customers were not customers at all. Auditors found emails in which Schulz employees appeared to be discussing how to artificially pump up sales.

In 2018, in an attempt to get some of its money back, Precision Castparts invoked a provision of the sales contract that required disputes to be settled by arbitrators.

Credit…Felix Schmitt for The New York Times

In April, a tribunal in New York found that Wolfgang Schulz and his employees had “engaged in a pervasive effort to present a fundamentally misleading picture of the financial condition” of the company. An expert who testified concluded that fake transactions inflated Wilhelm Schulz’s profits by €160 million.

Through a spokesman, Mr. Schulz, 73, declined to respond to the accusations in detail, citing the continuing criminal investigation. Last year, German authorities searched his home. Mr. Schulz said through a spokesman that he “clearly rejects the accusations of fraud.”

His lawyers argue that Wilhelm Schulz was worth the €800 million that Precision Castparts paid for it. Any loss of value was caused by poor management since the acquisition took place, including a decision to fire all the top executives after irregularities were discovered, they say.

Precision Castparts “continues to aggressively use the Schulz brand in the market, even as it demands return of the purchase price,” Schulz Holding said in a statement.

Precision Castparts has prevailed in the legal battle so far. The arbitration tribunal awarded it €643 million in damages — the purchase price minus Wilhelm Schulz’s estimated true value of €157 million.

It’s doubtful whether Precision Castparts will be able to collect the money. The three holding companies that sold their shares in Wilhelm Schulz have declared insolvency. Wolfgang Schulz sold almost all of his stake in the Krefeld Penguins in April for an undisclosed price. Jan-Philipp Hoos, a Düsseldorf lawyer who is serving as bankruptcy administrator of the holding companies, declined to comment.

The financial hit comes at an especially bad time for Precision Castparts. Its main customers, aircraft makers like Boeing as well as oil and gas producers, have been hit hard by the economic effects of the pandemic.

But Wilhelm Schulz does not seem to have shaken Mr. Buffett’s faith in Germany, a country whose engineering he has often praised.

“We view this as a unique situation involving individual circumstances,” David Dugan, a spokesman for Precision Castparts, said in an email. The experience with Wilhelm Schulz, he said, “does not impact our view of German industry.”

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Behind Wirecard’s Collapse: Allegations of Lies, Spies and Missing Billions

In the elite corridors of corporate Germany, Markus Braun had become a legend.

A little-known entrepreneur until just a few years ago, Mr. Braun had forged an obscure Bavarian company called Wirecard into a German tech icon, winning a coveted spot on the benchmark DAX stock index. Wirecard provided the invisible financial plumbing that, with a wave of plastic over a card reader almost anywhere in the world, made transactions happen. Hedge funds and global investors scrambled to buy shares.

When critics raised red flags about the company’s seemingly miraculous success, questioning murky accounts and income that could not be traced, Mr. Braun, a methodical executive from Austria who was the company’s biggest shareholder, hit back repeatedly, and the stock price skyrocketed.

But on Thursday, Mr. Braun’s empire came crashing down after Wirecard filed for insolvency proceedings, days after the financial technology company acknowledged that 1.9 billion euros ($2.1 billion) that it claimed to have on its balance sheets probably never existed. Its longtime auditor, EY, formerly Ernst & Young, said the company had carried out “an elaborate and sophisticated fraud.” Mastercard and Visa said Friday that they were considering cutting ties.

Wirecard, which owes creditors €3.5 billion, said its survival was not assured, sending its battered shares below €2 Friday from over €100 a week ago. The European Commission on Friday opened an investigation into Germany’s financial regulator for failing to catch the problems, despite numerous reports of wrongdoing.

How one of Germany’s most feted companies fell from grace — it is the first listed member of the 30-year-old DAX to go bust — is something investigators in several countries are still trying to piece together. German prosecutors arrested Mr. Braun on Monday on accusations of inflating sales volume with fake income to lure investors, and authorities are searching for Jan Marsalek, his former chief operating officer, who was fired Monday and may be in Asia.

The Philippine government is investigating the missing €1.9 billion, which Wirecard claimed to have held in two Philippine banks; the banks said last week that they had never dealt with Wirecard.

But one thing is sure: Anyone paying attention should not have been surprised. Since 2008, Wirecard had attracted skeptics who wondered how the company could generate the worldwide revenue it claimed. The questions, raised by analysts and investigated in a series of articles in The Financial Times, were repeatedly waved away by Mr. Braun, whose global ambitions grew with the stock price.

Wirecard and lawyers for Mr. Braun did not respond to requests for comment. Mr. Braun did not enter a plea before he was freed on bail, because he was not charged.

ImageWestlake Legal Group 25WIRECARD-03-articleLarge Behind Wirecard's Collapse: Allegations of Lies, Spies and Missing Billions Wirecard AG Phishing (Computer Fraud) Germany Frauds and Swindling Financial Times ERNST&YOUNG Cyberattacks and Hackers credit cards Braun, Markus (1969- ) Banking and Financial Institutions Accounting and Accountants
Credit…Arne Dedert/DPA, via Associated Press

Though Wirecard was smaller and less known globally than rivals like PayPal, the criticism was seen as an attack on a homegrown success story. It drew the attention of Germany’s financial regulator, BaFin, which investigated the people asking the questions — often short-sellers, who stood to gain by falling shares, and journalists — rather than the repeated allegations of financial shenanigans.

Critics said they were subject to a harassment campaign, including phishing attacks by hackers to gain access to email accounts and intimidating surveillance outside their homes and offices. Wirecard has denied any wrongdoing.

Scrutiny of BaFin has intensified since the president, Felix Hufeld, acknowledged this week that officials had failed to prevent a calamity. “The situation is a complete disaster,” he said.

Credit…Armando Babani/EPA, via Shutterstock

Britain’s financial regulator on Friday ordered Wirecard’s U.K. subsidiary, which handles e-payments and prepaid cards, to suspend activities.

And EY, which faces litigation from distressed shareholders and bondholders who say it didn’t do its job, now says it was duped: “There are clear indications that this was an elaborate and sophisticated fraud involving multiple parties around the world.”

Mr. Braun, 50, who lives in Vienna, joined the Munich-based company in 2002 when it was a fledgling start-up and on the verge of collapse. A computer science expert and self-described “pathological optimist,” he had previously worked for KPMG’s consulting business.

He built up Wirecard by initially offering its services to pornography and gambling sites — growing businesses that other online payment companies tended to avoid. By 2005 the company was listed on the Frankfurt Stock Exchange, and Mr. Braun opened a banking division, which issued Visa and Mastercard credit cards.

Questions about Wirecard’s finances began surfacing in 2008 after the head of a German shareholder association alleged the company’s 2007 consolidated accounts were incomplete and misleading. Wirecard hired EY to conduct an audit, which showed no irregularities. An author of the association’s report was prosecuted and briefly jailed for not disclosing short positions he held in Wirecard stock, from which he profited when the share price fell.

Wirecard continued to prosper by making contactless payments seem effortless and attracting what it said were thousands of new merchants. Between 2011 and 2014, the company raised €500 million from shareholders and began an aggressive international expansion. It bought up small third-party payments companies called merchant acquirers around Asia, luring more investors and lifting the share price.

Credit…Philipp Guelland/EPA, via Shutterstock

The accounting scandal centers on escrow accounts set up by several of those businesses, which allowed Wirecard to operate in countries where it didn’t have a license, including Singapore, Indonesia, Malaysia, Dubai and beyond.

The merchant acquirers, which provide retailers with credit card payment terminals that were then plugged into Wirecard’s payments system, generated a large chunk of revenue and profit for the company over years. They were supposed to have deposited revenue for Wirecard into the escrow accounts. But the company said this week that the funds might never have existed.

Analysts and short-sellers said they had quickly noticed irregularities.

Mark Hiley, a founding partner of the London-based independent research provider The Analyst, which makes recommendations for short-sellers, was among a handful of outspoken critics. Since 2014, he has written 43 reports highlighting why Wirecard was what he called “a house of cards” as it dished out hundreds of millions of euros to acquire such operations throughout Asia.

“When you looked at the local companies’ financial filings, you could see they were very small businesses, with very low revenue and limited profitability,” Mr. Hiley said. “We were concerned: Why were they paying so much money for these small, barely profitable companies?”

The mystery deepened when Wirecard reported the merchant acquirers were suddenly raking in big money. “They literally went from unprofitable businesses to highly profitable ones in the first year,” Mr. Hiley said. “It just didn’t pass the smell test.”

The businesses provided Wirecard monthly reports of combined revenue from merchant transactions, but no detailed breakdown, according to Mr. Hiley. While Wirecard said such income eventually accounted for around half its total revenues — making Wirecard look ever more profitable to investors — the arrangement prevented Wirecard’s auditors from being able to verify the accounts.

Scrutiny grew when Wirecard bought an Indian payments business for €340 million in 2015, its biggest deal to date. That year, J Capital Research, which provides investment advisory services, published a report stating that Wirecard’s Asia operations were smaller than the company had led investors to believe. Wirecard accused short-sellers of paying for the report.

The next year, Financial Times journalists who had begun running a series of articles raising similar questions, as well as analysts, hedge funds and short-sellers who had been critical of Wirecard, reported becoming targets of prolonged hacking campaigns.

Among them was Matthew Earl, an investor and co-author of a report by Zatarra, a financial research and investigations firm that claimed to have identified alleged money laundering inside the Wirecard empire. Mr. Earl said he suspected that Wirecard was falsifying its profit and balance sheets, partly through buying companies at high prices — including the Indian firm — where the purchase money went to related parties and was then returned back to Wirecard.

Soon after the reports were published, Mr. Earl said, he started being followed and watched at his home and office, and became the target of a phishing campaign featuring sophisticated emails that included extensive personal details about him and his family.

“I estimate I received a total of 3,000 phishing emails, while emails were also fabricated and circulated to discredit me,” Mr. Earl said in an interview. He said he had also received “extremely aggressive letters” from Wirecard’s lawyers that threatened a libel suit and a police complaint.

Mr. Hiley of The Analyst recounted a similar experience when he sent an investigator to India last year to verify his suspicion that the business was not bringing in as much money as Wirecard claimed. When the investigator went to the address listed for the local affiliate in Chennai, he found a small office in a dilapidated building.

The investigator called Mr. Hiley immediately. “There is no real business here,” Mr. Hiley recalled the investigator’s telling him. “There’s a few employees, a few broken laptops, but I can’t find any customers,” the investigator added. When the investigator left, Mr. Hiley said, he was followed in his taxi “by a couple of guys in tuk tuks,” and was so spooked that he changed hotels for safety.

Despite the critical reports, Wirecard was becoming part of Germany’s corporate elite. It leapt into the DAX index in September 2018, knocking out the stalwart Commerzbank and causing a sensation in the country. In April 2019, BaFin filed a criminal complaint against several short-sellers and two Financial Times journalists after Wirecard accused them of negative reporting to drive down the share price.

Mr. Braun was moving more into the spotlight, becoming an A-list speaker at technology and payment conferences, where he was hailed as a “hero” and “rock star,” and eventually began wearing Steve Jobs-style black turtlenecks. He promoted the concept of a fully cashless society from which players like Wirecard stood to benefit, and predicted that all retail payments would be digital within a decade.

“The aim of the board is to conquer the world in a powerful, organic way,” the German newspaper Welt reported him saying in 2018.

But late last year, as more reports of suspected wrongdoing emerged, the company delayed EY’s annual report for 2019 and hired KPMG to provide an independent assessment of its books.

The audit, released in April, did little to douse the growing fire. In the most serious finding, covering 2016 to 2018, KPMG said it was unable to verify the existence of €1 billion in revenue that Wirecard booked through three third-party acquiring partners.

As institutional investors called on him to resign, Mr. Braun remained defiant, saying the audit had found no evidence of wrongdoing. He refused to restate Wirecard’s accounts for those years.

German financial regulators redirected their scrutiny from critics to the company itself. On June 5, prosecutors raided Wirecard headquarters and opened proceedings against management on suspicion of releasing misleading information that may have affected Wirecard’s share price. On June 17, EY said it would not publish its long-delayed annual report and audit because it could not account for the missing €1.9 billion.

Mr. Braun and the board said the company was the victim of fraud. But two days later, Mr. Braun was out.

By Friday, Wirecard had all but crumpled into insolvency.

Ronen Bergman contributed reporting.

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Bethenny Frankel’s Dark Journey to Find Medical Masks

It was late March, with the coronavirus starting to peak in New York and hospitals already running short on supplies, when Bethenny Frankel, the entrepreneur and reality television star, received an email from a publicist offering her access to 500 million medical masks, or about enough to fill 25 Madison Square Gardens.

Ms. Frankel was intrigued. While spending eight seasons on the “Real Housewives of New York City,” she began flying to places like Guatemala and the Bahamas to aid in disaster relief. Now, with the disaster down the road, she wanted to help. She called the New York governor’s office, and her home state drafted her to find masks.

“There is no mask store,” she said. “I was ready to get them from a guy in Washington Square Park.”

The publicist connected her with the source, an Idaho man named Jake Uhlenkott, who describes himself on LinkedIn as a “Farmerpreneur // Management Consultant // Recording Artist.” Working in her pajamas at her Hamptons home, Ms. Frankel reached out.

“The 500m is real,” he wrote in a text message to her on March 24. “Not for long. But it is definitely real. 100% confidential. Can you secure funding?”

So began Ms. Frankel’s journey into the market for masks, a sort of high-stakes house of mirrors, where lives and millions of dollars were on the line and things were rarely what they seemed.

The coronavirus arrived in America early this year, and demand for hand sanitizer, face masks and other supplies skyrocketed. With suppliers unable to keep up, and federal officials slow to respond, local governments, hospitals and individuals scrambled to compete for the dwindling supply, causing prices to soar and luring both do-gooders and opportunists.

The result was chaos. As I reported on that disarray, Ms. Frankel’s story stood out. Her path through the mess, the characters she encountered and the fact that states relied upon a Real Housewife to find lifesaving medical gear all reflected the feeble preparations of government and industry and the opportunism that often follows disaster. So I retraced Ms. Frankel’s steps and tried to decipher what really happened.

That offer for 500 million masks was enticing but flawed: The supplies were abroad and would take at least a week to arrive. Ms. Frankel’s government contacts needed gear immediately and she was wary of faraway masks, so she asked Mr. Uhlenkott if he knew of any caches already on the continent.

A day later, he told her he had found five million masks made by the manufacturer 3M, the gold standard, in Canada. Ms. Frankel confirmed with New York State officials that they were interested. And like that, a deal was on.

Ms. Frankel, 49, is a fast-talking, sharp-witted businesswoman who became famous by playing that part over 15 years of reality television. On the side, she started her Skinnygirl line of cocktails, jeans and deli meat, which now has more than $50 million in sales a year.

In 2017, she flew to Houston after Hurricane Harvey to give about 1,000 families each $1,000 in aid. Since then, her charity BStrong has expanded its disaster-relief missions to earthquakes in Puerto Rico, hurricanes in Mexico and wildfires in California and Australia. As a result, she knew how to get supplies and had a fat Rolodex of contacts.

So when the coronavirus began to appear in American headlines, celebrities including Billy Joel, Ellen DeGeneres and Charlize Theron began funneling their money to her charity to turn it into masks for hospitals. When word spread that she was buying masks, sellers flooded her with offers.

“Everybody knew a guy who knew a guy,” she said. “You feel like you’re in a Moroccan bazaar, and wherever you’re turning, left and right, everybody is holding shiny objects.”

Many of the offers carried price tags more appropriate for governments than her charity, so within days, she was working with New York State, New York City, Michigan, Arizona, Louisiana and Chicago.

“She did a tweet that basically said, ‘Hey, Michigan, I can help you,’” said Tricia Foster, Michigan’s chief operating officer.

Ms. Frankel promised to secure some of the stockpiles. With her inbox full of strangers, Mr. Uhlenkott, who was introduced by someone she knew, seemed like a decent bet.

Mr. Uhlenkott had started selling masks that week. A pianist and former field director for Rick Santorum’s 2012 presidential campaign, he canceled plans to record his first album in Los Angeles and decamped to his family’s home in the Idaho wilderness when the virus arrived. There, like thousands of other suddenly idle people, he saw a business opportunity in masks.

ImageWestlake Legal Group 00frankel2-articleLarge Bethenny Frankel’s Dark Journey to Find Medical Masks Quarantines Protective Clothing and Gear New York City Masks Frauds and Swindling Frankel, Bethenny Coronavirus (2019-nCoV)
Credit…Kyle Green for The New York Times

With so much money on the line, Ms. Frankel’s team asked for credentials. He sent a document introducing his company, Nexus PPE — a nod to the acronym for “personal protective equipment” — and the four men behind it, including a U.S. Army Special Forces veteran and a Harvard graduate. For good measure, Mr. Uhlenkott added: “I’m personal friends with Princess Alexandra of Luxembourg if you need another reference.”

The document said Nexus PPE was established in 2008. Idaho records show that the Harvard graduate’s father did incorporate the company that year — as Nexus Wealth Management, a small financial planner in Boise. On March 25, the day after Mr. Uhlenkott contacted Ms. Frankel, records show he became a company director and changed its name to Nexus PPE. He said later that it was easier than starting a new firm.

While Mr. Uhlenkott tried to secure the five million masks in Canada, his suppliers told him they had found 10 million 3M masks, this time in New York. Officials in Albany wanted those, too, so Ms. Frankel’s team sent him an $82.5 million purchase order for the now 15 million masks, contingent on inspection. It was more than five times the normal price.

For days, New York officials asked to see the goods, and Ms. Frankel offered to send her driver, but Mr. Uhlenkott couldn’t provide an address. There were various excuses related to customs, logistics and an unnamed billionaire in California who supposedly controlled the stockpile.

“What I’m being told is that the owners are nervous about seizures and trying to protect their assets…and asses,” he said in a text message to Ms. Frankel on March 27.

“My patience is running low,” she replied. “I went to bat for you with this whole group. Stakes are high so kick this into gear. I don’t care how.”

Two days later, Mr. Uhlenkott sent blurry photos and a video of boxes in a warehouse that didn’t look like the masks they had agreed upon. Ms. Frankel was suspicious. “You better be able to prove what you have been selling,” she said in a text message.

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New York had seen enough. “When you’ve got lives at stake, you’re willing to at least hear these guys out,” said Rich Azzopardi, a senior adviser to Gov. Andrew M. Cuomo. “We got pretty far along with these guys, but no money changed hands.”

In an interview, Mr. Uhlenkott said his original source for the 500 million masks was real and reliable, but to find supply already in North America, he went with a new seller who turned out to be slippery. “It seemed like everything was a shell, offshore, this kind of stuff,” he said of the source. “But at the same time it was like, well, maybe those are the people that actually have the masks.”

Mr. Uhlenkott dropped out. But first, he introduced Ms. Frankel directly to his source. “That was when I got excited,” Ms. Frankel said. “That was when I thought, OK. Now, this is real. Because now we’re actually not talking to some middleman. We’re talking to the actual people.”

The first time they spoke, Ralph Frengel put Ms. Frankel at ease. He was a smooth-talking salesman for a company called Astoria Enterprises. He had plenty of masks available and he seemed like a dealmaker. “It felt legitimate,” she said.

On April 3, Mr. Frengel sent a menu of sorts, including eight separate stockpiles that together totaled 275 million 3M masks. “Let me know what you think you can do from this inventory,” he said in an email.

Ms. Frankel alerted her contacts in government. This time, New York City was on board, as BuzzFeed News reported. They agreed to buy 10 million 3M masks for $66.5 million — a high price — once they were inspected.

But Mr. Frengel and two Astoria colleagues first demanded a purchase order directly from the city, according to emails reviewed by The Times. They also said the money should be put in an escrow account their lawyer controlled, the emails show.

Ms. Frankel and city officials balked. They wanted to see the masks. In an email, the lawyer representing Ms. Frankel’s team told Mr. Frengel that without immediate inspection “we will be forced to conclude, as the City of New York already believes, that the representations made about the existence and number of 3M N95 masks are untrue.”

Mr. Frengel replied that inspections were cumbersome and that he and his Astoria colleagues didn’t appreciate the accusation.

Each time a pallet of masks is inspected, “it then must be re-shrink-wrapped, taken across the warehouse, weighed and the manifest tag must be dated, and updated over and over again,” he said. “The suggestions made yesterday afternoon did not sit well with some of Astoria’s principal investor/owners.”

Three weeks after she was first pitched 500 million masks, Ms. Frankel exited the deal empty-handed. “We all were completely gutted,” she said.

There appear to be three main men behind Astoria Enterprises, and two of them are ex-convicts.

Mr. Frengel, the salesman, was convicted in 1992 for stealing a $100,000 pearl necklace from a jewelry store. “It’s not as bad as it sounds,” he said. The store owed him money and he was strung out on drugs. “Freebasing cocaine,” he said. “Highly addictive.” His records since show repeated run-ins with the law, including a restraining order against him and at least two federal tax liens.

Michael Carnicle, the Astoria official in control of the mask supply, served three years in prison in the 1980s after getting caught with $1 million in counterfeit bills. A federal court later found that he had helped fake certificates of deposits from a Russian bank to prop up a company that wanted to turn the 1990s TV hit “American Gladiators” into a Las Vegas show. Most recently, he went to prison for not filing his tax returns. He was released in January.


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  • Frequently Asked Questions and Advice

    Updated May 20, 2020

    • How many people have lost their jobs due to coronavirus in the U.S.?

      Over 38 million people have filed for unemployment since March. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.

    • Is ‘Covid toe’ a symptom of the disease?

      There is an uptick in people reporting symptoms of chilblains, which are painful red or purple lesions that typically appear in the winter on fingers or toes. The lesions are emerging as yet another symptom of infection with the new coronavirus. Chilblains are caused by inflammation in small blood vessels in reaction to cold or damp conditions, but they are usually common in the coldest winter months. Federal health officials do not include toe lesions in the list of coronavirus symptoms, but some dermatologists are pushing for a change, saying so-called Covid toe should be sufficient grounds for testing.

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

    • Should I pull my money from the markets?

      That’s not a good idea. Even if you’re retired, having a balanced portfolio of stocks and bonds so that your money keeps up with inflation, or even grows, makes sense. But retirees may want to think about having enough cash set aside for a year’s worth of living expenses and big payments needed over the next five years.

    • How can I help?

      Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities.


Astoria’s chief executive, Lucian Alter, used to own a business duplicating pornography tapes until it burned down in Los Angeles, according to The Los Angeles Daily News in 1990. Mr. Alter disputed that in an interview, saying he supplied the magnetic tape for cassettes.

According to its website, Astoria Enterprises offers “high-quality, cost-effective information technology business solutions and professional consulting services,” language that appears verbatim on several other businesses’ websites. On Twitter, the company describes itself as a “a good listener and just a nice person to hang out with.” A closer inspection suggests they help with gambling on the internet and speculating on foreign currencies.

Mr. Frengel was near Palm Springs, Calif. Mr. Carnicle was in Las Vegas. Mr. Alter was in Tel Aviv. Astoria, however, was registered in Cyprus, the Mediterranean island that has been a haven for money laundering.

When I first reached Mr. Frengel and asked if he sold masks, he replied, “I don’t think so. I’d have to look back through my records.” When I said I had spoken with Ms. Frankel, he admitted he was a mask middleman but denied advertising millions of masks, despite numerous emails showing he did. “I just probably forwarded an email,” he said.

In reality, he was pitching Astoria’s stockpiles around the country. Paul Echevarria, a Florida businessman who manufactures cannabidiol, or CBD, said he went down a weeklong rabbit hole with Mr. Frengel and Astoria for millions of 3M masks supposedly stored in a Miami warehouse. Mr. Echevarria planned to resell the masks to the Florida government and had state officials ready to inspect them, but Mr. Frengel wouldn’t provide an address.

The men behind Astoria gave me purchase orders from the state of Florida that they said came from Mr. Echevarria. Mr. Echevarria said he had never seen the documents. When I sent the files to Florida officials, they replied that the documents were forged and were now in possession of the state attorney general. It was unclear who was behind the forgery.

Ultimately, the Astoria trio gave the same answer on why they would never let prospective buyers inspect what they were selling: They never received formal purchase orders from the governments involved, which they said they needed to protect themselves from scams.

Yet none of the men could say for sure whether the masks they were selling even existed.

“I never saw them. I live in California,” Mr. Frengel said. “I had no reason not to believe.”

Mr. Alter, Astoria’s C.E.O., told me, “Sir, this is something that is really confidential, but yes, we have access to millions of masks.” When I asked him Astoria’s source, he laughed. “Where am I getting my product?” he said. “I think it’s funny.”

Mr. Carnicle was more forthcoming, though his story evolved over two hourlong phone calls.

At first he said that Astoria’s suppliers were construction companies in New York and New Jersey that had stockpiled the gear. Which companies? “They don’t want to be on the front page of The New York Times,” he said. “The government is already looking at them.”

When pressed further, he admitted that wasn’t exactly true.

He forwarded documents suggesting Astoria had plans to buy masks from two other companies. One firm was offering 310 million 3M masks, which is more than what 3M produces in three months. The other company was days old and run by an Indiana man who had once faced federal fraud charges.

No, Mr. Carnicle said. He hadn’t seen the masks.

Thousands of people have entered the mask market over the past two months, and a large chunk of them have been offered millions of 3M masks. Courtney Enloe, 3M’s head of litigation, said probably all of those cases are frauds.

“The typical scheme is somebody will reach out and say we need $X million up front for Y stash of respirators, and they just never had them,” Ms. Enloe said. “I have been solicited. The head of 3M’s litigation has been solicited.” Over the past several weeks, 3M has filed 10 lawsuits against people claiming falsely to have access to its masks.

Federal authorities have also charged several people in recent weeks, including a Georgia man who demanded upfront payments from the Department of Veterans Affairs for $750 million of 3M masks and other gear that he knew didn’t exist.

Credit…Joe Carrotta for The New York Times

Amid all this fraud, there is some good news. Ms. Frankel’s BStrong charity and its partner organization, Global Empowerment Mission, have donated more than two million masks and isolation gowns to hospitals and other groups in all 50 states. They cobbled together supplies from smaller purchases and also closed several larger deals, including one million hazmat suits for New York State and 200,000 surgical masks for New York City.

Over three years of relief work, Ms. Frankel said, she has learned that crises breed corruption. Money is flowing and people are desperate. “It’s so disheartening,” she said. “At the racetrack, you think you might get screwed. But when you’re dealing with the biggest health crisis in 100 years, you have to be a really sick, sick, bad person to exploit that.”

Yet, to Mr. Carnicle, it was Ms. Frankel who was trying to cheat Astoria. He said he reported her team to federal authorities for attempted fraud. “You could be impeding an investigation,” he told me, “or else I would tell you more.”

Susan Beachy contributed research.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Chinese Coffee Chain’s Scandal Renews U.S. Calls for Oversight

Westlake Legal Group 29China-scandal-1-facebookJumbo Chinese Coffee Chain’s Scandal Renews U.S. Calls for Oversight Venture Capital United States Politics and Government United States Economy Stocks and Bonds Securities and Commodities Violations Rubio, Marco Pensions and Retirement Plans Nasdaq Stock Market Luckin Coffee Law and Legislation International Trade and World Market Frauds and Swindling Company Reports Communist Party of China Coffeehouses China Accounting and Accountants

HONG KONG — Luckin Coffee had an audacious goal: take on Starbucks in China. Last year, unprofitable, burning through cash and not even two years old, it went to Wall Street to raise over half a billion dollars. Just a few months ago, it was valued at $12 billion.

The one-time darling has now imploded spectacularly in an accounting fraud that has roiled China, a cautionary tale that has renewed a push in the United States to cut Chinese companies off from Wall Street.

Lawmakers from both parties say Chinese companies do not play by the same rules, adding to rising tensions between Washington and Beijing. And Luckin, which disclosed this month that it had fabricated most of its 2019 revenue, is also resurfacing frustrations from American regulators over the ability to prosecute Chinese companies often given cover by Chinese officials who cite the need to protect state secrets.

“The Luckin Coffee scandal is just one of many examples of Chinese fraud, and it should be a major wake-up call for policymakers and regulators that the time for action is now,” said Senator Marco Rubio, Republican of Florida.

China’s most powerful regulator has announced an investigation, and it made an unusual public statement to say it would work with Washington. Former regulatory officials and lawyers have expressed skepticism that China’s investigation of Luckin Coffee is anything more than perfunctory.

The country’s moves have failed to ease American lawmakers’ broader concerns and have added to the risk of further clashes over financial relations.

“If Chinese companies want access to the U.S. capital markets, they must comply with American laws and regulations for financial transparency and accountability,” said Mr. Rubio, who is pushing a bipartisan bill that would force Chinese companies to abide by federal auditing rules and disclosure requirements.

Soon after he and three other senators proposed the bill, known as the Equitable Act, last year, two Senate colleagues introduced a similar bill that also aims to mandate the delisting of foreign companies that fail to comply with auditing regulations.

White House national security officials say they have the same concerns, but some advisers to President Trump who encourage trade with China and have close ties to Wall Street firms have tried to downplay the issues. The same split occurs over many other policy debates on China.

Congressional aides said that federal regulators had tried to grapple with Chinese companies’ lack of transparency, with little success. A law could help, they said.

Mr. Trump’s trade war with China has already set in motion some efforts to decouple the world’s two biggest economies. Some supply chains are shifting out of China. Access to critical technology is being limited. And American lawmakers from both parties have discussed other legislation that would make it harder for Americans and their pension funds to invest in Chinese companies.

“There is no question that the lack of transparency and opacity by many Chinese companies, including as it relates to ownership structure and company ties to the Chinese Communist Party, create real and material risk for U.S. investors and for our capital markets,” said Senator Robert Menendez, Democrat of New Jersey, a co-sponsor of the bill with Mr. Rubio.

The Luckin scandal has given American lawmakers a prominent example as they make their case.

When it asked stock investors in America to back it last year, Luckin was an unprofitable start-up that handed out cash and aggressive subsidies to its customers. It promised to overtake Starbucks with its smartphone app for coffee delivery, thousands of stores and nearly 17 million customers, which it attracted by aggressively doling out coupons for Luckin drink products.

Investors were so enthusiastic that they sent its shares jumping 20 percent on its first day of trading on the Nasdaq and the company raised some $645 million. Big names like BlackRock, the world’s largest asset manager, and Singapore’s sovereign wealth fund quietly invested large sums. Venture capitalists sang its praises.

Even when some market watchers began to warn that Luckin’s rosy outlook and revenue growth did not seem right, the stock kept soaring. In January, Luckin executives raised over a billion dollars through a secondary share issue and stock-like bonds. By then the market was valuing the company at $12 billion

Around the same time, an investor, Carson Block, published an investigative report by an anonymous author that accused Luckin of fraud. A number of skeptical investors like him took positions to bet against its stock.

Then, in April, those predictions came to bear. The company said an internal investigation had discovered that a top executive and other employees had fabricated some $310 million worth of transactions over 2019. In a day, some $5 billion was shaved off the company’s market value. Louis Dreyfus, one of the world’s biggest commodities traders, and other powerful investors lost millions.

Nasdaq, the New York-based exchange, announced it was halting trading in Luckin shares until the company answered its questions.

A spokesman for Luckin declined to comment.

The test now will be whether the S.E.C. can conduct its own investigation, with access to corporate documents and executives.

The China Securities Regulatory Commission, the market regulator, has pledged to investigate. Over the weekend officials from the State Administration for Market Regulation raided the offices of Luckin executives.

The commission in China this week did what many in the international regulatory community thought unthinkable: It said publicly that it would cooperate with the S.E.C.

The regulator also said that it already cooperates with the Public Company Accounting Oversight Board, or PCAOB, a nonprofit auditing corporation created by U.S. legislation in 2002. The group, it said, had been invited on several occasions since 2018 to join inspections of accounting firms, coincidentally the most recent on April 3, the day after Luckin made its disclosure.

American regulators, though, warn of the opposite.

Last week, Jay Clayton, the chairman of the S.E.C., said his agency was effectively powerless to investigate corporate skulduggery because of China’s lack of assistance. In 2018, the S.E.C. and the oversight board complained that they faced “significant challenges” in overseeing the financial reports for U.S.-listed companies based in China.

Judith Burns, a spokeswoman for the S.E.C., declined to comment.

The recent statement from the Chinese commission is being read in different ways.

Eric J. Pan, managing director of Rock Creek Global Advisors and former head of International Regulatory Policy at the S.E.C. said he interpreted it as “a pre-emptory defense against expected criticism,” of the Chinese regulator.

“The C.S.R.C. basically is saying that it is doing everything properly, and it is the PCAOB that is acting unreasonably,” Mr. Pan said.

To some, it was an indication that China may be worried about the impact of the scandal on its domestic stock market and the reputation of Chinese companies.

“It will have an impact on Chinese companies who do things properly when they try to raise capital in U.S. stocks,” said Zhang Yifan, a private equity investor at Commando Capital, an investment fund in China.

“It will indeed lead to a very serious crisis of trust. It will take years to ease,” Mr. Zhang said.

In Washington, Republican operatives and politicians say they intend to keep the spotlight on China as the November election approaches, in part to paper over the deep failures of the Trump administration in addressing the coronavirus pandemic.

That could give an opening for lawmakers from both parties to move forward with the bills aimed at forcing Chinese companies to be more transparent or risk being delisted.

In February 2019, the U.S.-China Economic and Security Review Commission released a report with a complete list of all Chinese companies on the three largest U.S. stock exchanges. As of Feb. 25 of that year, there were 156 companies on the exchanges with a collective market value of $1.2 trillion, the report said. At least 11 were state-owned companies.

A significant number had denied access to information sought by the accounting oversight board, the commission found.

Some Washington policy experts doubt the U.S. government will be able to take meaningful action against opaque Chinese companies. Michael Pillsbury, an informal China adviser to Mr. Trump, said the S.E.C. often makes the logical argument that Chinese companies would simply choose to list on exchanges in other countries.

“It’s in the tool kit of the means of punishing China,” he said. “But you can’t just to do it out of the blue. It’s not a finely calibrated strategy.”

Cao Li contributed reporting from Hong Kong.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Former U.A.W. Chief Charged With Misusing Union Funds

Westlake Legal Group 0uawprobe-facebookJumbo Former U.A.W. Chief Charged With Misusing Union Funds Williams, Dennis (1953- ) United Automobile Workers Organized Labor Jones, Gary (1956- ) Frauds and Swindling Federal Bureau of Investigation embezzlement

Federal prosecutors have charged a former president of the United Auto Workers union with embezzlement of union funds and other crimes, the biggest step yet in a broad investigation of financial wrongdoing by union and management officials.

In a criminal filing unsealed Thursday, the former official, Gary Jones, is accused of misusing more than $1 million of union money, even before he was elected president in 2018.

He is the highest-ranking U.A.W. official charged in the inquiry. In August, his home in Canton, Mich., was raided by agents from the Federal Bureau of Investigation. He resigned Nov. 20 after the union’s executive board found he had submitted false and misleading expense records and was moving to oust him.

Last fall, Mr. Jones guided the union through a 40-day strike against General Motors that ended with substantial pay increases, promises of large investments in plants in the United States and a process for temporary workers to become permanent employees.

More than a dozen people have been charged in the investigation, which began in 2015 and has focused on misuse of millions of dollars of U.A.W. funds in various ways. Three former Fiat Chrysler executives have been sentenced on charges that they allowed U.A.W. officials to divert money from worker training to personal travel and shopping. One of the Fiat Chrysler executives was found to have used training funds to buy a Ferrari sports car and renovate his home.

The allegations have also prompted a lawsuit by General Motors accusing Fiat Chrysler of bribing union officials to get a leg up on G.M. in contract negotiations.

Mr. Jones’s predecessor as union president, Dennis Williams, has also been a focus of the investigation. A plea agreement in February with a onetime deputy to Mr. Jones indicated that Mr. Williams had urged the use of union money to benefit himself and other officials.

Another senior union official, Joe Ashton, who once held a seat on G.M.’s board, has been charged with taking kickbacks from companies that supplied the union with commemorative watches.

Before becoming U.A.W. president, Mr. Jones headed a regional office spanning 17 states and organized union conferences in Palm Springs, Calif. Prosecutors contend in court filings that he and other officials spent more than $1 million in union money for extended stays in luxury villas, lavish dinners, and expensive clothing, cigars and golf clubs.

On the day Mr. Jones’s home was raided, federal agents also searched other locations, including the union’s 1,000-acre retreat, known as Black Lake, in Onaway, Mich.; the Hazelwood, Mo., office of U.A.W. Region 5, which Mr. Jones once led; and Mr. Williams’s home in Corona, Calif.

Among the sites searched at the Michigan retreat was a lakeside cabin being built for the exclusive use of Mr. Williams, who led the union from 2014 to 2018.

Mr. Williams, who joined the union as a welder, later served as a regional leader and secretary-treasurer. When the charges involving the misuse of training funds to benefit Fiat Chrysler and U.A.W. officials emerged in 2017, he said the union “had absolutely no knowledge of the fraudulent activities detailed in this indictment until they were brought to our attention by the government.”

As the case widened this year, an associate of Mr. Jones’s in Region 5, Edward N. Robinson, was charged on Oct. 31 with drawing more than $1.5 million from union accounts over several years and sharing the money with a person prosecutors identified only as “U.A.W. Official A.”

Two days later, the U.A.W. board convened and announced that Mr. Jones would take a paid leave. Rory Gamble, a union vice president who led the bargaining with Ford, was named interim president.

Union officials have confirmed that references in court filings to “Official A” and “Official B” referred to Mr. Jones and Mr. Williams.

Another union official, Vance Pearson, was charged in September with embezzlement, money laundering, wire fraud, conspiracy and other offenses. Mr. Pearson, who led the Region 5 office after serving as Mr. Jones’s lieutenant there, resigned on Nov. 24 as the union’s board took steps to remove him. He pleaded guilty on Feb. 7 after agreeing to cooperate with prosecutors in the investigation and awaits sentencing.

The plea agreement stated that a request by Mr. Williams, Mr. Jones’s predecessor, was “to a great extent” behind an order for over $13,000 worth of cigars and cigar paraphernalia in 2016. The agreement also said that Mr. Williams had directed Mr. Pearson to procure a private villa for him in California for months at a time, and that Mr. Pearson also helped arrange for Mr. Williams’s wife to charge expenses to the union through a resort.

At the time of Mr. Pearson’s plea, a lawyer for Mr. Williams did not respond to a request for comment, and a lawyer for Mr. Jones declined to comment.

The federal investigation is also looking into other unidentified union officials, according to court filings.

Noam Scheiber contributed reporting.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Can You Really Hire a Hit Man on the Dark Web?

SAN FRANCISCO — On a website called Azerbaijani Eagles, you can commission a murder for $5,000. The site Slayers Hitmen provides more options, with a beating going for $2,000. Death by torture costs $45,000.

But don’t expect someone to get the job done. Experts and law enforcers who have studied these sites — almost all of them located on the so-called dark web or dark net — say they are scams. There has not been a known murder attributed to any of them.

That doesn’t mean the sites aren’t involved in a very dark trade. They have become catch points for real people who are looking to pay to have someone murdered. And a number of men and women are sitting in jail after paying one of these sites — and getting caught by the police.

In one of the most recent cases to make its way through the courts, a nurse from Illinois was sentenced to 12 years in prison after pleading guilty to sending $12,000 in Bitcoin to the site Sicilian Hitmen International Network. She had hoped to have the wife of her boyfriend killed.

Twenty-four hit-man-for-hire sites are the subject of an upcoming academic paper that was shared in advance with The New York Times by a professor at Michigan State University, Tom Holt, and his student, Ariel Roddy.

The Michigan State paper, which is being reviewed for publication, is the first academic effort to illuminate what has been a subject of endless intrigue. For years, the potential anonymity granted by the internet has fed predictions that there would be marketplaces for death and assassination.

ImageWestlake Legal Group merlin_169918581_60368ed2-5947-495f-83da-cea5ec6017f0-articleLarge Can You Really Hire a Hit Man on the Dark Web? Frauds and Swindling Computers and the Internet Camorra Bitcoin (Currency) Assassinations and Attempted Assassinations 18th Street Gang

A screenshot of the darknet site for Slayers Hitmen which lists a beating going for $2000 and death by torture at $45,000.

But it was the emergence of the dark web over the last decade or so that allowed hit-man sites to proliferate. Unlike most sites on the traditional internet, dark web sites use technology that allows both sides of an online interaction to hide their identity and location, from each other and law enforcement.

“It’s a fantastic opportunity to defraud people because you give them just enough sense of danger,” said Emily Wilson, the head of research at Terbium Labs, a security firm focused on the dark net. “What are you going to do if they don’t go through with it?”

When the first hit-man sites were discovered, an oftrepeated assumption was that the dark web was crawling with legitimate assassins waiting to kill on command.

Promotional material posted to the mainstream internet played on that assumption. One site, which provides readers with a link to the dark net address of the 18th Street Gang, holds itself out as a “guide to real hit men, facts and stories.” The site claims that people who say hit-man sites are scams are just trying to discourage people from seeking them out.

“Most customers order from reliable hit men sites that have been proven as legitimate,” the site says.

On many of the sites examined by the team at Michigan State, considerable effort was expended trying to prove their legitimacy so customers would feel comfortable making a payment in Bitcoin, the digital currency. Hit men are not the sort of thing you pay for with a credit card.

The site 18th Street Mafia includes a page with links to news stories about real killings it says it helped commit. None of the articles, however, indicate that the site, or even a hit man, was responsible.

For skeptical members of the media, the site says: “We can provide video proof of our services, with time stamps. Again, such proof is not possible for fake services.”

The 18th Street Mafia did not respond to requests for comment.

The representative for another site, Darkmamba, said in an email that proving its legitimacy has been difficult because “the point of our services and many other, including underground criminal forums, is to indeed complete the job without leaving anything that could get traced back to us.”

“We use Ricin in most of our jobs and due to its nature which does not raise a lot of suspicion,” the representative said. Ricin is a poison found in castor beans.

One of the most surprising findings of the study was that the prices charged by these sites were broadly in line with what past academic research has established as the going price for real-life hit men — about $11,000 in Australia and $18,000 in England.

The most prolific research on these sites has been conducted by Chris Monteiro, a systems administrator in London who has pursued his investigations as a morbid passion project on top of his regular job.

Mr. Monteiro hacked into one of the sites created by the most notorious purveyor of assassination sites, a figure going by the name Yura.

After breaking into the Besa Mafia site and a few others, Mr. Monteiro found information about 283 people who had paid for hit-man services. He also found messages suggesting that the operators had little intention of going through with the killings.

“I need you to help me do some videos to prove the Besa Mafia legit, but WITHOUT killing anyone,” the operator wrote in one email, trying to get a contractor to produce lifelike videos. “I am not a murderer and I don’t want anyone be murdered.”

Law enforcement agencies around the world have been hesitant to collaborate with Mr. Monteiro or use his evidence because of the way he acquired it. But Mr. Monteiro has worked with media organizations, including Wired and 48 Hours, which have passed his information to law enforcement officials, eventually leading to the arrests of people who paid the sites to connect them with a hit man.

Mr. Monteiro has identified nine cases in which people he exposed were arrested in connection with commissioning hits. In one of the most gruesome cases, a man in Minnesota was arrested after he was found to have killed his wife himself when the hit man he had commissioned on the Besa Mafia website for about $6,000 dollars in Bitcoin did not come through.

The British National Crime Agency did monitor and — working with police in Bulgaria — take down one of the sites that Mr. Monteiro had targeted, called Crime Bay. Its operators were based in Bulgaria.

“Investigations are ongoing and the N.C.A. will continue to work with international law enforcement partners to identify users of sites like these,” said Lucy Sneddon, a spokeswoman for the N.C.A.

A police investigator in Russia is believed to have been killed by two teenagers who were hired by a drug trafficker on the dark net. An investigation by the B.B.C. found that the killing was commissioned on one of the broad marketplaces on the dark net where drugs and stolen credit cards are sold. It was, by most accounts, the first known assassination to be successfully commissioned on the dark web.

But there has still not been a killing commissioned on one of the dedicated hit-man-for-hire sites.

“Why would you set up a dedicated site online when you know absolutely that law enforcement are going to be flooding that site trying to find you?” Ms. Wilson said. “You are making yourself too big of a target.”

Still, the sites have continued to proliferate. A few months ago, a middle-aged executive in Singapore was sent to jail for five years after paying the Camorra Hitman site to kill the boyfriend of his young ex-lover in a staged car accident that, not surprisingly, didn’t happen.

Ms. Wilson said these sites take attention from the real crime being committed on the dark net, like the drug markets and the sites selling the sensitive personal information of millions of Americans.

“There is actual crime, but we are too busy talking about some guy who wants to kill his ex-girlfriend’s new boyfriend,” she said.

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Pardon Closes the Book on Milken’s Case but Can’t Rewrite It

Westlake Legal Group 18stewart2-facebookJumbo Pardon Closes the Book on Milken’s Case but Can’t Rewrite It United States Politics and Government Trump, Donald J Sentences (Criminal) Milken, Michael R Frauds and Swindling Banking and Financial Institutions Amnesties, Commutations and Pardons

By pardoning Michael R. Milken, a potent symbol of the “greed is good” 1980s and arguably the most significant white-collar criminal of his generation, President Trump has sent two powerful messages: When it comes to justice, money counts. And white-collar crime doesn’t really matter.

So much for the rule of law, already under siege by the Trump administration, and the notion that no one, no matter how rich or powerful, is above it.

Lest history be entirely rewritten, it’s worth considering what Judge Kimba M. Wood told Mr. Milken at his sentencing on Nov. 21, 1990, on charges including conspiracy and fraud:

“When a man of your power in the financial world, at the head of the most important department of one of the most important investment banking houses in this country, repeatedly conspires to violate, and violates, securities and tax laws in order to achieve more power and wealth for himself and his wealthy clients, and commits financial crimes that are particularly hard to detect, a significant prison term is required in order to deter others.”

She added that Mr. Milken, who was a senior executive at Drexel Burnham Lambert, had committed “serious crimes warranting serious punishment and the discomfort and opprobrium of being removed from society.”

Mr. Milken, advised by a team of the country’s most experienced and expensive lawyers, pleaded guilty rather than face a trial on even more expansive charges. Contrary to subsequent myth, he was not charged because he championed junk bonds. He was not charged because the savings-and-loan industry all but collapsed (though Mr. Milken’s junk-bond dealings played a direct role in the collapse of some institutions). He was not charged because of the resulting recession, which cost millions of people their jobs. Rather, he was charged so that “our financial markets in which so many people who are not rich invest their savings” can be “free of secret manipulation,” Judge Wood said at his sentencing.

Mr. Milken fainted outside the courtroom after she imposed a 10-year prison term.

Mr. Milken’s transgressions didn’t end with his guilty plea and imprisonment. Released two years into his term after a diagnosis of prostate cancer, he faced a lifetime ban on deal making. That didn’t stop him from negotiating CNN’s $7.5 billion sale to Time Warner in 1996 on behalf of his old friend and client Ted Turner, for which Mr. Milken collected a $50 million fee, and working for another friend and client, the billionaire Ronald O. Perelman. In 1998, Mr. Milken agreed to pay $47 million to settle a Securities and Exchange Commission complaint that he had violated the ban — he neither admitted nor denied the allegations — and the government dropped a criminal investigation into his activities after his release.

Mr. Milken’s wealthy and powerful friends have been clamoring for a pardon for years on his behalf, but the prospect seemed remote until Mr. Trump’s election. Even Bill Clinton, who as president found a justification to pardon the notorious commodities trader and tax evader Marc Rich, balked at granting Mr. Milken a pardon.

Until Mr. Trump’s move was announced Tuesday, I had hoped to have written the last about Mr. Milken. He was a major character in my book “Den of Thieves,” which chronicles the rise and fall of Mr. Milken and his co-conspirator Ivan F. Boesky, the takeover speculator and model for the Gordon Gekko character in the “Wall Street” movies. (As someone who incriminated Mr. Milken and cooperated with the government, Mr. Boesky seems to have little chance of a pardon of his own from Mr. Trump.)

After the book was published in 1991, one of Mr. Milken’s former lawyers, Michael Armstrong, sued me, my research assistant and my publisher, claiming $35 million in damages in a case financed by Mr. Milken and his brother. (We won a resounding victory, albeit after nearly a decade of costly litigation.) I returned to the subject of Mr. Milken in an article for The New Yorker about his post-prison deal making while that case was pending.

But since then, Mr. Milken appears to have focused on nurturing his vast wealth (estimated to be in the billions of dollars even after he paid his $600 million fine) and devoting himself to reputation-enhancing charitable pursuits, ably chronicled by other reporters. The 1998 S.E.C. complaint and the threat of a return to prison seem to have worked, and so far as I’m aware, Mr. Milken has avoided the siren call of deal making for others. He deserves credit for his impressive record of good works.

While none of that warrants a presidential pardon, it’s not hard to fathom why Mr. Milken’s saga would resonate with Mr. Trump.

Like the president, Mr. Milken studied business at the Wharton School of the University of Pennsylvania but was largely shunned by New York’s elite.

Mr. Milken’s early clients were corporate raiders who, like Mr. Trump, were disdained by establishment firms like Goldman Sachs and Morgan Stanley. Mr. Milken and his junk-bond-fueled takeovers were seen as disruptive forces, threats to a complacent status quo on Wall Street and in corporate America, just as Mr. Trump has upended Washington.

And of course Mr. Milken underwent years of distracting investigations and related bad publicity. He was even represented for a time by Mr. Trump’s celebrity lawyer Alan Dershowitz (who at one point attacked me in an advertisement in The New York Times). In one of his many startling about-faces, the Trump lawyer Rudolph W. Giuliani went from being Mr. Milken’s principal accuser and the architect of his plea deal as U.S. attorney to a Milken champion and advocate for a pardon.

Seen as an underdog, even a very wealthy and well-connected one, Mr. Milken has long inspired a counternarrative that he was a victim of a media and Wall Street establishment jealous of his wealth and success. However unfounded in fact, that version of reality has now gotten a presidential stamp of approval.

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Wells Fargo’s Ex-Chief Fined $17.5 Million Over Fake Accounts

Westlake Legal Group 23wells-facebookJumbo Wells Fargo’s Ex-Chief Fined $17.5 Million Over Fake Accounts Wells Fargo&Company Stumpf, John G Office of the Comptroller of the Currency Frauds and Swindling Fines (Penalties) Banking and Financial Institutions

In a rare example of personal accountability for corporate wrongdoing, Wells Fargo’s former chief executive, John G. Stumpf, was fined $17.5 million on Thursday by the bank’s main federal regulator, which also took punitive action against seven other executives for the bank’s toxic sales culture and illegal acts.

In a settlement with the Office of the Comptroller of the Currency, Mr. Stumpf also agreed to a lifetime ban from the banking industry for his role in the company’s misdeeds, which included foisting unwanted products and sham bank accounts on millions of customers. Two other former senior executives agreed to lesser fines and restrictions on their work in the industry, and the regulator said it was taking enforcement action against five others.

Regulators sharply rebuked the former leaders for favoring profits and other market rewards over protecting their customers.

“The bank had better tools and systems to detect employees who did not meet unreasonable sales goals than it did to catch employees who engaged in sales practices misconduct,” the office said.

All told, the regulator was seeking tens of millions of dollars in personal fines from the executives, who could face even more serious consequences: A Justice Department investigation into the actions of Wells Fargo and its leaders remains open.

While it is not unusual for companies to face regulatory or even criminal charges, senior executives — particularly chief executives — usually avoid personal repercussions. The largest American banks, for example, have all paid many billions of dollars to settle civil cases stemming from their mortgage securitization activities in the lead-up to the 2008 financial crisis, but their chief executives have not given up a penny to regulators.

The fine against Mr. Stumpf was the largest against an individual in the O.C.C.’s history, according to a spokesman for the office. But the regulator sought a larger penalty — a $25 million fine — from Carrie L. Tolstedt, the bank’s former retail banking leader, who is fighting the agency’s civil charges against her.

Ms. Tolstedt, who left the bank in 2016, “acted with the utmost integrity” and will be vindicated by “a full and fair examination of the facts,” her lawyer, Enu Mainigi, said in a statement.

Mr. Stumpf, in a sworn statement to the O.C.C., blamed Ms. Tolstedt and others for what he acknowledged was “systemic” misconduct throughout the bank.

Wells Fargo’s problems erupted into public view in late 2016, setting off a crisis that continues to reverberate more than three years later. Mr. Stumpf, the chief executive at the time, was quickly ousted. His successor, Timothy J. Sloan, resigned last year after failing to quell the bank’s turmoil.

The eight executives charged on Thursday “failed to adequately perform their duties and responsibilities” and contributed to problems that stretched back more than a decade, the regulator said.

Wells Fargo’s new chief executive, Charles W. Scharf, said in a memo to employees on Thursday that the bank would stop all payments to the former executives, if any were pending.

“This was inexcusable. Our customers and you all deserved more from the leadership of this company,” wrote Mr. Scharf, who joined Wells Fargo in October.

“We are reviewing today’s filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals,” he added. “Wells Fargo will not make any remaining compensation payments that may be owed to these individuals while we review the filings.”

Wells Fargo has been operating since early 2018 under a set of growth restrictions imposed by the Federal Reserve, a rare move that has hobbled the bank’s turnaround efforts. It is one of a dozen enforcement actions that Wells Fargo is working to resolve, Mr. Scharf has said.

This is a developing story. Check back for updates.

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Africa’s Richest Woman Is Barred From Her Bank and Under Investigation

Westlake Legal Group 20dossantos-sub-facebookJumbo Africa’s Richest Woman Is Barred From Her Bank and Under Investigation Sonangol Group Politics and Government Frauds and Swindling EuroBic dos Santos, Isabel Angola

Isabel dos Santos, Africa’s richest woman and the daughter of Angola’s former president, is under scrutiny by her bank and the Angolan government after a leak of more than 700,000 documents showed how she exploited the country’s wealth to enrich herself.

EuroBic, a Lisbon-based arm of a bank where Ms. dos Santos is the biggest shareholder, said on Monday that it was ending its “commercial relationship” with her and investigating transfers worth tens of millions of dollars, transactions that were revealed on Sunday by The New York Times and other news outlets working with the Washington-based International Consortium of Investigative Journalists.

Angola’s attorney general said on Monday that the government would “use all possible means” to bring Ms. dos Santos back to the country, where she faces possible corruption charges and where her assets were frozen last month, along with her husband’s and those of a Portuguese business associate, Agence France-Presse reported. The Angolan government, led until September 2017 by her father, José Eduardo dos Santos, said the three were responsible for more than $1 billion in lost government money.

The leaked documents, which include emails, invoices, slide presentations and contracts, provided a paper trail showing how Ms. dos Santos and her husband, Sindika Dokolo, amassed a fortune of more than $2 billion through their stakes in vital Angolan industries like telecommunications, diamonds and construction. Angola, rich in oil and diamonds, is nevertheless impoverished, with one of the world’s highest infant mortality rates and endemic corruption.

The leaked materials also revealed that in November 2017, when Ms. dos Santos was chairwoman of Angola’s state oil company, Sonangol, more than $57 million was transferred from that company to the bank account of a Dubai company owned by a friend of hers. Ms. dos Santos has said the money was for fees owed to consultants and accountants, including Boston Consulting Group, McKinsey & Company and PwC, formerly called PricewaterhouseCoopers. It is not clear whether that sum matched bills from the consultants; the companies declined to provide billing details, citing client confidentiality. About $38 million was transferred in the hours after Angola’s new president at the time — her father’s successor — announced on Nov. 15, 2017, that she was being fired from Sonangol, the documents show.

Those transfers drained Sonangol’s account at EuroBic, the European arm of an Angolan bank where Ms. dos Santos owns a 42.5 percent stake. In EuroBic’s statement on Monday, cutting commercial ties with Ms. dos Santos and associates of hers, the bank said it would audit the November 2017 transfers and report its findings to Portugal’s central bank.

EuroBic’s headquarters, steps from Ms. dos Santos’s sprawling Lisbon apartment, plays a central role in her business empire, which encompasses more than 400 companies and subsidiaries. Most global banks, bound by tough reporting requirements on doing business with so-called politically exposed persons, have avoided doing business with her. EuroBic, though bound by the same rules, continued to do extensive business with Ms. dos Santos and her husband, the documents show.

Ms. dos Santos didn’t immediately respond to questions about EuroBic’s announcement that were emailed Monday evening to her London law firm.

But she made her position on the leaked documents clear on Sunday, when news organizations around the world simultaneously published their investigations — the work of more than 120 reporters in 20 countries, who spent months analyzing the documents and interviewing hundreds of people in Angola, Portugal and other countries where she has had business interests.

“The ICIJ report is based on many fake documents and false information, it is a coordinated political attack in coordinations with the ‘Angolan Government,’” Ms. dos Santos wrote on Twitter. “715 thousand documents read? Who believes that?”

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