Criminal Securities Fraud: Ex- CEO Extradited From Namibia is Sentenced to 30-Months, Long Island “Mini Madoff’s Associate Goes to Prison Over $400M Scheme, and the Trial of Two Ex-Barclays Traders is Underway in the UK

Libor Trial Of Two-Ex Barclays Traders Begins
Ryan Reich and Stylianos Contogoulas are on trial in London on criminal charges accusing them of rigging the US dollar Libor. According to prosecutors, from ’05-’07, the two ex-Barclays Plc (BARC) traders conspired to manipulate the interest-rate benchmark in order to profit illegally.

Contogoulas and Reich have pleaded not guilty to the criminal charges. Two other ex-Barclays employees, Jonathan Mathew and Peter Johnson, were previously convicted for rigging Libor. They were tasked with submitting Libor rates.

16 banks are responsible for determining the Libor dollar rate every day. They do this by estimating how much it would cost to borrow from one another over different periods. The Libor dollar rate is linked to mortgages and loans and other financial products. Already, a number of big banks have collectively paid several billion dollars for their role in Libor manipulation.

Associate of Long Island “Mini-Madoff” Gets 18-Month Sentence
Anthony Massaro will serve 18 months in prison for his involvement in a $400M Ponzi scam. Massaro personally made over $6M from the fraud that bilked over 400 investors including Long Island civil servants and blue collar workers.

Massaro was involved in a scheme involving Nicholas Cosmo, whom he met in federal prison when he was serving time for importing heroine. Cosmo, who was dubbed Long Island’s “mini Madoff “(as in, multi-billion dollar mastermind Bernie Madoff), was in jail for an earlier fraud scam at the time. However, unlike Madoff, who targeted celebrities, institutional investors, and charities, Cosmo primarily bilked blue-collar workers. It was his company that promised huge investment returns and touted that the investments would only be used to either fund certain short-term secured bridge loans to commercial borrowers or make-short term small business loans. Investors were offered a fake insurance policy.

Massaro pleaded guilty to conspiracy to commit mail and wire fraud. In addition to his prison term, he must serve three years of supervised release and pay $179M in restitution to victims. He also has to surrender the over $6M that he made in the Ponzi scam.

Ex-CEO Who Fled Away to Africa Is Sentenced for Securities Fraud in NYC
Jacob “Kobi” Alexander, an Israeli citizen, has been sentenced to 30 months in prison in New York City. Alexander, a wealthy former CEO, escaped for ten years to Africa with $50M to avoid securities fraud charges in the US.

Alexander grew very rich while heading up Comverse, a former voicemail software firm, in New York. He disappeared in 2006 as his attorneys were negotiating a possible surrender over a probe into the alleged backdating of stock options.

Alexander is accused of exercising and options and selling stocks valued at around $150M while making $13M as a result. About $6.4M is allegedly from backdating options. He also is accused of awarding stock options to fake employees and then moving the awards to a secret fund so that he could grant those options to actual employees whom he favored, as well as to himself, without needing board approval.

The US Justice Department, in its statement about Alexander’s sentencing, noted that backdating options allowed the defendant and his coconspirators to violate accounting rules while Comverse was able to overstate its profits.

The prison term that Alexander received is the longest issued related to an options backdating scam. He made about $30M in paper profits from the scheme.

Alexander agreed to pay $60M in civil settlements and forfeiture as restitution and compensation to shareholders and Comverse.

The SSEK Partners Group is a securities fraud law firm.

Barclays Libor Duo Cheated Way to Profits, Prosecutor Says, Bloomberg, February 28, 2017

Ponzi schemer sentenced to 18 months for role in $400M fraud, Newsday, February 17, 2017

Jacob “Kobi” Alexander Sentenced To 30 Months In Prison For Securities Fraud, Justice.gov, February 23, 2017