Business Crimes Hotline

CALIFORNIA

Man Sentenced for Bank Fraud Scheme

Carlos Serrano was sentenced for his role in a scheme to defraud the First International Bank of Connecticut (“FIB”) and the Export-Import Bank of the United States (“Ex-Im Bank”) of $1.3 million. Serrano is the eighth individual convicted in connection with the ongoing investigation into an $80 million Ex-Im Bank fraud; four others have been indicted. Serrano was sentenced to 18 months in a community correctional facility, five years of probation, and ordered to pay $924,569 in restitution.

CONNECTICUT

AIG Vice President Sentenced for Fraudulent Manipulation

Christian Milton was sentenced to four years in prison, two years of supervised release, and ordered to pay a $200,000 fine as a result of his conviction on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud. According to the Associated Press, Milton may be deported to England when he completes his sentence.

The former vice president of reinsurance of American International Group, Inc. (“AIG”) from 1982 to 2005, Milton was alleged to have participated in a scheme to manipulate AIG's financial statements to inflate the company's reported loss reserves by $500 million. The inflation was achieved through two fraudulent reinsurance transactions between subsidiaries of AIG and the General Reinsurance Corporation, which were alleged to have been bolstered by a sham paper trail. U.S. District Judge Christopher F. Droney found that AIG shareholders lost more than $500 million as a result of the scheme. Milton, together with four General Reinsurance executives, was convicted after trial on all 16 counts of the government's indictment.

FLORIDA

Shipping Executive to Serve a Record 48 Months for Antitrust Conspiracy

A former Sea Star Line Senior Vice President for Yield Management was sentenced to 48 months in jail and a $20,000 criminal fine for his role in a six-year conspiracy related to water-based freight transportation services between the continental United States and Puerto Rico. Peter Baci allegedly participated in an anti-competitive conspiracy that included agreements to allocate customers, rig bids, and fix prices. This is the longest jail sentence ever imposed for a single antitrust charge. Charges are still pending in Jacksonville against three other executives: R. Kevin Gill, Gregory Glova, and Gabriel Serra, all of Horizon Lines. An obstruction of justice charge is also pending against a fifth shipping executive, Alexander Chisholm, of Sea Star. All are scheduled to be sentenced on April 27, 2009.

NEW YORK

Brooklyn AttorneyConvicted of Fraud

Alexander Kaplan was convicted on 18 counts. including bank, mail, and wire fraud. for his role in a conspiracy that the government alleged defrauded lenders of millions. Kaplan was indicted with 26 other individuals, all but one of whom have pleaded guilty. The alleged scheme included two parts. First, the conspirators allegedly duped struggling homeowners into selling their homes to “straw buyers” who would assist the homeowners but promised to return their deeds. Kaplan and his co-conspirators then took out large loans on the property, defaulted, and left banks and buyers to foot the bill. Second, Kaplan allegedly participated in a scheme to take out millions of dollars in subprime mortgage loans using fake papers, costing lenders more than $4.5 million. Kaplan is scheduled to be sentenced on May 1.

WASHINGTON, DC

President of Peanut Corporation of America Takes Fifth

After being subpoenaed to testify before Congress, Stewart Parnell repeatedly refused to answer questions from members of Congress about his role in the salmonella contamination at his company's plant. According to the Washington Post, the e-mails and records obtained by Congress show that Parnell had samples positive for salmonella retested and, after a negative test, pushed to sell that product to the public. The salmonella found in these peanuts has claimed nine lives and stricken 600 people. Parnell, who served until recently on a peanut advisory board to the Agriculture Department, repeatedly responded to questions with invocation of his Fifth Amendment rights.

CALIFORNIA

Man Sentenced for Bank Fraud Scheme

Carlos Serrano was sentenced for his role in a scheme to defraud the First International Bank of Connecticut (“FIB”) and the Export-Import Bank of the United States (“Ex-Im Bank”) of $1.3 million. Serrano is the eighth individual convicted in connection with the ongoing investigation into an $80 million Ex-Im Bank fraud; four others have been indicted. Serrano was sentenced to 18 months in a community correctional facility, five years of probation, and ordered to pay $924,569 in restitution.

CONNECTICUT

AIG Vice President Sentenced for Fraudulent Manipulation

Christian Milton was sentenced to four years in prison, two years of supervised release, and ordered to pay a $200,000 fine as a result of his conviction on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud. According to the Associated Press, Milton may be deported to England when he completes his sentence.

The former vice president of reinsurance of American International Group, Inc. (“AIG”) from 1982 to 2005, Milton was alleged to have participated in a scheme to manipulate AIG's financial statements to inflate the company's reported loss reserves by $500 million. The inflation was achieved through two fraudulent reinsurance transactions between subsidiaries of AIG and the General Reinsurance Corporation, which were alleged to have been bolstered by a sham paper trail. U.S. District Judge Christopher F. Droney found that AIG shareholders lost more than $500 million as a result of the scheme. Milton, together with four General Reinsurance executives, was convicted after trial on all 16 counts of the government's indictment.

FLORIDA

Shipping Executive to Serve a Record 48 Months for Antitrust Conspiracy

A former Sea Star Line Senior Vice President for Yield Management was sentenced to 48 months in jail and a $20,000 criminal fine for his role in a six-year conspiracy related to water-based freight transportation services between the continental United States and Puerto Rico. Peter Baci allegedly participated in an anti-competitive conspiracy that included agreements to allocate customers, rig bids, and fix prices. This is the longest jail sentence ever imposed for a single antitrust charge. Charges are still pending in Jacksonville against three other executives: R. Kevin Gill, Gregory Glova, and Gabriel Serra, all of Horizon Lines. An obstruction of justice charge is also pending against a fifth shipping executive, Alexander Chisholm, of Sea Star. All are scheduled to be sentenced on April 27, 2009.

NEW YORK

Brooklyn AttorneyConvicted of Fraud

Alexander Kaplan was convicted on 18 counts. including bank, mail, and wire fraud. for his role in a conspiracy that the government alleged defrauded lenders of millions. Kaplan was indicted with 26 other individuals, all but one of whom have pleaded guilty. The alleged scheme included two parts. First, the conspirators allegedly duped struggling homeowners into selling their homes to “straw buyers” who would assist the homeowners but promised to return their deeds. Kaplan and his co-conspirators then took out large loans on the property, defaulted, and left banks and buyers to foot the bill. Second, Kaplan allegedly participated in a scheme to take out millions of dollars in subprime mortgage loans using fake papers, costing lenders more than $4.5 million. Kaplan is scheduled to be sentenced on May 1.

WASHINGTON, DC

President of Peanut Corporation of America Takes Fifth

After being subpoenaed to testify before Congress, Stewart Parnell repeatedly refused to answer questions from members of Congress about his role in the salmonella contamination at his company's plant. According to the Washington Post, the e-mails and records obtained by Congress show that Parnell had samples positive for salmonella retested and, after a negative test, pushed to sell that product to the public. The salmonella found in these peanuts has claimed nine lives and stricken 600 people. Parnell, who served until recently on a peanut advisory board to the Agriculture Department, repeatedly responded to questions with invocation of his Fifth Amendment rights.