FERA Goes Forward

The Senate Judciary Committee has issued a report (SR 111-10) on The Fraud Enforcement and Recovery Act of 2009 (S. 386, FERA). Follow this link to see conclusions and changes made.

Ponzimonium!

How lucky for us that Charles Ponzi had such an interesting name! So little you can do with "Jones scheme". And who knew Ponzi's eponomyous scheme still retained such vitality? A few days ago Bart Chilton, chair of the CFTC, coined the word "ponzimonium." I offer further evidence of the onset of this phenomenon:

The SEC's Office of Compliance and Inspections is conducting ponzi-detection training.

This is my favorite: the IRS has issued a revenue ruling with ponzi-scheme loss guidance!

EFAR God

This morning, the Senate Judiciary Committee spent some time discussing the Fraud Enforcement and Recovery Act of 2009: S 386 - known as "FERA". FERA, in addition to being a anagram of fear (and efar) adds a few teeth to the US criminal law.

It extends many provisions of the criminal law to mortgage lenders by adding "Mortgage Lending Business" to the definition of "Financial Institution" in 18 USCA 20. It incorporates TARP fraud into the definition of government contracting fraud in 18 USCA 1031 and it expands the definition of securities fraud (18 USCA 1348) to include fraud involving commodity derivatives.

It also gives the Department of Justice $155 million to ensure that these new criminal provisions are enforced.

Cuomo Letter on Merrill Investigation

New York Attorney General Andrew Cuomo has publicly released a letter, dated February 10th, to Barney Frank. The letter updates Rep. Frank on the progress of the New York AG's investigation of 2008 bonus grants at Merrill Lynch & Co. It is pretty shocking - in October the New York AG sent Merrill a letter asking for details of the company's 2008 bonus program. Cuomo says Merrill gave him boilerplate assurances and then "secretly" and "prematurely" handed out over three billion dollars in bonuses. Most of the money went to 700 employees (out of 39,000). Four employees got $121 million each and four others got $62 million each.

Coumo suggests that this could not have been done without the conniavance of Bank of America. He also wants to investigate whether the bonus grants were "timed to force taxpayers to pay for them."

"Was That Michael Padfield?"

Today brought yet another legal entanglement for the lawyer also know as Marc Dreier, sole partner of the Olsen-twin-representing firm Dreier LLP. Dreier just made bail in Toronto. He's alleged to have impersonated Michael Padfield, Senior Investment Counsel for the Ontario Teachers Pension Plan, for the purpose of snookering Fortress Investment Group out of $50 million. Dreier will return to New York to face an unrelated SEC complaint alleging he's been selling phony securities.

Dreier continues the tradition, pioneered by Thomas Haythe, of Manhattan lawyers embarrassing themselves in Canada.

Suggestions & Subpoenas

Two debates ago, neither candidate seemed to have given any thought to who they'd hire to be Secretary of the Treasury. A couple of blogs are offering guidance: Joe Nocera suggests Paul Volcker and Dale Oesterle likes John Thain.

Bloomberg News is reporting that the US Atty's offices in the Eastern District of New York, the Southern District of New York and the District of New Jersey have empanelled grand juries to investigate Lehman Brothers.