Welcome to the September edition of Mishcon Fraud Watch, prepared by the Fraud & Insolvency Group at Mishcon de Reya. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct that forms the subject matter of this bulletin. We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.

UNITED KINGDOM

Assets Recovery Agency (ARA)

The ARA has been granted two confiscation orders worth £238,473 against Sunita Gupta and Romesh Chander Gupta of Birmingham, who have been convicted of selling counterfeit designer clothes.
ARA press release, 6 August 2007

Airlines

A US court has fined British Airways $300m after the company admitted price-fixing on cargo and passenger flights.
The Guardian, 25 August 2007

Banking and Finance

The City of London Police are investigating a number of suspected mortgage frauds after lenders reported an "unusually high" number of defaults on commercial and residential property in the last 6 months.
The Times, 30 August 2007

The Financial Services Authority has dropped plans to include the City of London's main investment banks in the Financial Services Compensation Scheme. The scheme compensates victims of financial fraud and mis-selling.
Financial Times, 6 August 2007

Communications

British Telecom has paid a six-figure sum to two whistle-blowers who accused managers of allegedly covering up a £1.5m fraud connected to payments to consultants.
The Independent, 24 August 2007

Surveys

The latest Fraud Track survey from
BDO Stoy Hayward has found that reported business fraud increased 42% to £538m for the first half of 2007.
BDO Stoy Hayward, 13 August 2007

NORTH AMERICA

Banking and Finance

Eugene Plotkin, a former analyst at Goldman Sachs, has pleaded guilty to insider trading in a number of schemes that earned him more than $6m over three years.
The Daily Telegraph, 29 August 2007

The Refco Litigation Trust, which represents creditors of the collapsed futures and commodities broker, has brought a lawsuit against a number of the company's legal, accountancy and financial advisers alleging they "knowingly assisted" Refco insiders to conceal $340m worth of debt.
The Daily Telegraph, 22 August 2007

The Securities and Exchange Commission has brought charges of fraud and misuse of client money against Sentinel Management Group. Sentinel manages short-term cash for hedge funds and futures brokers.
Financial Times, 21 August 2007

Communications

Gregory Reyes, the former chief executive of Brocade Communications, has been convicted of conspiracy and fraud in connection with backdated stock options.
Financial Times, 8 August 2007

WESTERN EUROPE

Banking and Finance

German state prosecutors have launched a formal investigation into whether seven former and current executives at WestLB broke the law by not properly informing the supervisory board about large trading losses in the stock market.
Financial Times, 30 August 2007

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Mishcon's Fraud Watch is published by the Fraud & Insolvency Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has pioneered the use of financial fraud techniques in numerous fields, including the rapidly growing areas of theft of confidential information and counterfeiting. The Group founded and runs both the Asset Protection & Recovery Network, made up of international legal fraud specialists and the Financial Fraud Group, for risk and compliance officers.

www.mishcon.com

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.