Headlines that Matter for Companies and Executives in Regulated Industries
FTX Founder’s Fraud Trial Continues in Manhattan Court
The criminal trial of Sam Bankman-Fried continued this week in Manhattan where the FTX founder faces several charges, including fraud, conspiracy, and money laundering, for his alleged participation in a multi-billion dollar fraud scheme involving his crypto-currency trading platform and hedge fund.
Federal prosecutors have alleged that Bankman-Fried conspired to “secretly funnel billions of dollars in customer deposits from FTX to his privately held crypto hedge fund, Alameda Research, and used the money for investments, lavish purchases and political donations.” So far, at trial, prosecutors have elicited testimony from two former top executives who testified to Bankman-Fried’s misuse of customer money.
At trial, Bankman-Fried’s attorneys have relied on lack of intent, arguing that Bankman Fried did not steal any money and made business decisions that he believed were right at the time. However, the start of the trial has proved difficult for Bankman-Fried’s defense team as US District Judge Lewis A. Kaplan barred Bankman-Fried’s attorneys from raising an “advice-of-counsel” defense during opening statements, rejected the defense team’s proposed expert witnesses, and previously revoked Bankman-Fried’s bail.
Adding to their difficulty is the recent testimony of Bankman-Fried’s former girlfriend and colleague, Caroline Ellison, who pled guilty to financial conspiracy charges with Bankman-Fried and is cooperating with the US Attorney’s Office. Ellison testified that Bankman-Fried “directed [her] to commit these crimes” and instructed her to use FTX money to fund his hedge fund, Alameda, where she worked. The trial is expected to last up to six more weeks.
Read more about the Bankman-Fried trial here and here.
Germany Advances New Money Laundering Law
Germany’s cabinet recently agreed to a new law, the Financial Crimes Combating Act (FCCA), to address how the country combats financial crimes and money laundering. In a news release, Germany’s Finance Ministry reported that under the FCCA, different functions will be combined into a new Federal Office to Combat Financial Crime, which will be set up next year and begin operations the following year. Within the office, there will be a money laundering investigation center where law enforcement will have full power to investigate international cases of money laundering connected to Germany.
The office will have the freedom to focus on complex global money laundering cases, whereas before, existing law enforcement agencies had to regularly deprioritize complex money laundering investigations in favor of other crimes. The law will also establish a real estate transaction register in order to decrease the abuse of such transactions.
Read more about the new law here.
Florida Man Convicted of Defrauding Medicare of Over $67 Million
Jose Goyos was convicted of conspiracy to commit wire fraud and conspiracy to commit money laundering for his role in defrauding Medicare of over $67 million. Goyos and his co-conspirators managed a call center where they oversaw deceptive telemarketing calls that targeted thousands of Medicare beneficiaries and their physicians. Goyos and his co-conspirators tricked physicians into ordering and authorizing medically unnecessary genetic tests based on fake medical paperwork and fake Medicare beneficiary requests.
Goyos and his co-conspirators submitted over $67 million in false claims to Medicare for expensive and unnecessary genetic tests, which were conducted by labs for a fraction of the price that Goyos charged Medicare. The tests were then rarely sent to the beneficiaries’ primary care physicians and were not used for the treatment of any Medicare beneficiary. Medicare paid over $52 million for the claims.
Goyos faces a maximum penalty of 20 years in prison for conspiracy to commit wire fraud and 10 years in prison for conspiracy to commit money laundering. Twenty other defendants charged with participating in the scheme have pleaded guilty, and a number are scheduled to be sentenced in December.
Read the DOJ press release here.
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