European Central Bank May Get an Enforcement Role

The following is an excerpt from an article in:


The New York Times
Thursday, September 13, 2012

European Central Bank May Get an Enforcement Role

By JACK EWING

FRANKFURT — To the European Central Bank’s existing duties — bulwark against inflation, lender of last resort, ultimate guardian of the euro — add another task: top cop for the euro zone’s banking system.

If the European Parliament and euro zone member states approve a plan presented on Wednesday by the European Commission, at the beginning of next year the central bank will become chief regulator of all banks in the euro zone, with the power to impose fines, remove top executives and even revoke banking licenses.

The central bank would supersede national regulators, which have been accused of being overly protective of the banks they oversee and reluctant to require the lenders to grapple with their problems.

But before the central bank can begin to tackle the task of regulating the more than 6,000 credit institutions in the euro zone, new staff members must be hired, money must be allocated and a clear structure must be developed to coordinate its work with the national regulators that will continue to handle most of the day-to-day tasks. No one yet has even rough estimates of how many people or how much money the central bank will need to perform the new role.

Even though the European Commission’s proposal for a banking union is a big leap, it does not grant the central bank powers on a par with those of United States banking authorities like the Federal Deposit Insurance Corporation. Under the current plan, the central bank would not have the resources needed to prevent bank runs or the authority to arrange a decent burial for a terminally ill institution.

The plan for a banking union is a work in progress, assembled in the midst of a fast-moving crisis. It is doubtful whether the central bank’s supervision of banks will do much to ease tension in the euro zone, though it might help in the future.

“They need to develop their specific operational expertise,” said Jörg Rocholl, president of the European School of Management and Technology in Berlin. “I think of this as a long-term project that can prevent the next crisis from happening, to break this nexus between banks and states.”

The plan outlined by the European Commission would, if ratified, give the central bank new supervisory powers on Jan. 1. But it is likely to take six months from that date for the central bank to build up the capacity to regulate just the biggest, cross-border banks in the euro zone. It could be a year before it is able to supervise all the banks.

For more, visit www.nytimes.com.

Neither Admit Nor Deny

Excerpt from an article in The New York Times
Saturday, February 25, 2012

‘Neither Admit Nor Deny’ Settlements Draw Judges’ Scrutiny 

By EDWARD WYATT

WASHINGTON — The entrenched practice of allowing companies and individuals to settle federal regulatory charges without admitting that they actually did anything wrong is coming under growing scrutiny by the courts.

Two federal judges have questioned such settlements proposed by the Securities and Exchange Commission and this week a third judge held up a settlement offered by the Federal Trade Commission.

Judge Renee Marie Bumb of United States District Court in Camden, N.J., blocked a proposed settlement on Wednesday between the Federal Trade Commission and a marketing company based in New Jersey on charges that the company and its chief executive made false and unsubstantiated claims that the use of açaí berry-based products, which they promoted, would result in rapid and substantial weight loss.

Judge Bumb ordered both the commission and the company to justify why she should approve the proposed $11.5 million settlement when the lack of an admission by the company and the executive of any wrongdoing left her with no facts with which to judge whether the negotiated deal was fair, adequate and in the public interest.

In doing so, she cited a much-discussed case involving the S.E.C. and Citigroup. Last November, Judge Jed S. Rakoff of Federal District Court in New York rejected a proposed $285 million settlement of securities fraud charges for the same reason: without an admission of guilt or agreed-upon facts there was no basis for an approval.

And on Friday, an S.E.C. commissioner, Luis A. Aguilar, told a group of securities lawyers that a recent attempt to tighten the agency’s policy of allowing a company to settle a fraud case while neither admitting nor denying any wrongdoing “applies in so few situations, it needs to be revised to be more useful and effective.”

While another S.E.C. case in Wisconsin, where a federal district judge in December challenged an S.E.C. settlement, was subsequently approved, the cases demonstrate that Judge Rakoff’s challenge of the “neither admit nor deny” settlement is reverberating beyond Wall Street and New York.

That is not what securities law experts expected last November, when Judge Rakoff issued the ruling.

At the time, the consensus was that the decision was unlikely to affect cases involving other regulatory agencies or in other jurisdictions.

Because the proposed settlements included a permanent injunction against further wrongdoing by the defendants, they are subject to approval from a federal judge. But Judge Rakoff argued that the judiciary should not be considered a rubber stamp to approve executive-branch enforcement cases.

Lawyers both inside and outside the S.E.C. argued that the “neither admit nor deny” settlements were perhaps the only way to get companies to settle fraud cases, because to admit wrongdoing would open them to civil damages. (Emphasis added by me.)

An appeal of Judge Rakoff’s decision by the S.E.C. is pending at the Second Circuit Court of Appeals in New York.

Union Pacific to Pay $1.5 Million for Clean Water Act Violations

News release from EPA Region 8:

Union Pacific Railroad Company to pay $1.5 million for Clean Water Act violations in Colorado, Utah and Wyoming

Company cited for oil and coal spills, inadequate prevention and planning
Contact Information: Donna Inman (303) 312-6201; Matthew Allen, (303) 312-6085
(Denver, Colo—February 9th, 2012) The U.S. Environmental Protection Agency today announced a settlement with Union Pacific Railroad Company regarding alleged violations of the Clean Water Act and the Oil Pollution Act.

This settlement resolves a Clean Water Act enforcement action against Union Pacific that involves continuing operations at 20 rail yards in Colorado, Utah, and Wyoming, as well as spills of oil and coal in 2003 and 2004 along railroad lines in all three states.

For the railyards, EPA alleges Union Pacific violated EPA’s Spill Prevention, Control, and Countermeasure (SPCC) and Facility Response Plan (FRP) regulations. These regulations are the first line of defense for preventing oil spills and providing immediate containment measures when an oil spill does occur.

“Today we have secured a settlement that will help prevent spills, protect water quality, and improve the safety of Union Pacific’s operations in 20 communities across Colorado, Utah, and Wyoming,” said Jim Martin, EPA regional administrator. “Union Pacific has already begun putting necessary measures in place and we will ensure they continue to do so.”

As part of the settlement, Union Pacific will pay a civil penalty of $1.5 million of which approximately $1.4 million will be deposited into the Oil Spill Liability Trust Fund, a fund used by federal agencies to respond to oil spills. The remaining $100,000 will be deposited in the U.S. Treasury for the coal spills and stormwater violations. In addition, the settlement requires the company to develop a management and reporting system to ensure compliance with SPCC regulations, FRP regulations, and storm water requirements at 20 rail yards in Colorado, Utah and Wyoming. Union Pacific must take further actions to control stormwater runoff at the Burnham Rail Yard in Denver, which are anticipated to prevent the discharge of approximately 2,500 pounds of chemical oxygen demand, 50 pounds of nitrate, 11,000 pounds of total suspended solids, and 30 pounds of zinc annually to waters in the Denver area.

This settlement will benefit many communities in Colorado, Utah, and Wyoming, many of which are disadvantaged, by requiring Union Pacific to install secondary containment to safely store oil and prevent oil spills from leaving its properties. Further, it will require the company to designate an environmental vice-president responsible for complying with oil spill prevention and stormwater control requirements at the 20 railyards. The majority of the 20 locations cited in the settlement are in disadvantaged areas with significant low-income and/ or minority populations.

The complaint alleges the following violations:

• ·         Six oil spills in Colorado, Utah, and Wyoming
• ·         Three coal spills in Colorado
• ·         Inadequate SPCC plans and/or inadequate SPCC plan implementation (e.g., inadequate secondary containment) at the following 20 rail yards:
  • o   Denver 36^th Street, Burnham, Denver North, East Portal Moffatt Tunnel, Grand Junction, Kremmling, Pueblo, and Rifle, all in Colorado
  • o   Helper, Ogden, Provo, Roper, Salt Lake City North, and Summit, all in Utah
    • §  Also for six rail yards in Utah, failure to provide certifications and reports for storm water pollution prevention plans (SWPPPs) as required by the Utah Multi-Sector General Permit.
• o   Bill, Buford, Cheyenne, Green River, Laramie, and Rawlins, all in Wyoming
  • §  Also for the Rawlins, Wyoming rail yard, an inadequate FRP and a failed Government Initiated Unannounced Exercise

For more information on the Clean Water Act, visit EPA's compliance web page: http://www.epa.gov/compliance/civil/cwa/index.html

For more information on Environmental Justice within EPA Region 8 please visit: http://www.epa.gov/region8/ej/index.html

Help EPA protect our nation's land, air and water by reporting violations: http://www.epa.gov/tips/

Man Sentenced for Ponzi Scheme

News release from the FBI:

Atlanta Man Sentenced for Operating Ponzi Scheme
Vaughn Received Over $10 Million from Victims

U.S. Attorney’s Office February 07, 2012

Northern District of Georgia (404) 581-6000

— filed under: Breaking News, Press Release, White-Collar Crime

ATLANTA—CHARLES MICHAEL VAUGHN, 43, of Atlanta, Georgia, was sentenced to federal prison today by United States District Judge Richard W. Story on wire fraud charges in connection with a $10 million Ponzi scheme.

United States Attorney Sally Quillian Yates said, “Despite the fact that Ponzi schemes are one of the oldest types of fraud schemes, they continue to be quite successful because of the creativity of the con artist, the slick presentations, and the promises of lucrative investment returns. Fraudsters with a computer and printer can come up with phony spreadsheets and paperwork that make their investments look golden when really the returns are an illusion. Potential investors should carefully scrutinize every aspect of a salesperson’s pitch before parting with their hard-earned money.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, said, “While Mr. Vaughn will now be held accountable for his elaborate fraud scheme, the many victims harmed in this matter are forced to rebuild their lives as best they can. Because of the victim impact often seen in such cases, the FBI will continue to aggressively pursue those individuals who engage in this type of high dollar investment fraud activity.”
United States Postal Inspector in Charge Keith Morris said, “Our Postal Inspectors are trained to follow the money, even if the paper trail is difficult to find. Innocent victims hand over their hard-earned savings, and criminals often only invest it in themselves. No matter how complex the case, our Inspectors will make every effort to help those victims, by bringing the fraudsters to justice.”

VAUGHN was sentenced to eight years and four months in prison to be followed by three years of supervised release, and was ordered to pay restitution in the amount of $8,833,686. VAUGHN pleaded guilty to the charges on October 24, 2011.

According to United States Attorney Yates, the charges, and the evidence presented in court: VAUGHN founded and operated “CM Vaughn, LLC,” a tax and financial consulting firm based in Atlanta, Georgia. From July 2004 through March 2008, VAUGHN sold investments in a pooled investment fund or “hedge fund” called “CM Vaughn Emerging Ventures Fund.” Over 50 individuals sent money to VAUGHN for purposes of investing in the fund.

VAUGHN falsely represented to investors that his fund earned from 15 percent to as much as 50 percent per year, and stated that their investments would be “insured” and could not decrease below a certain amount. He also prepared client statements that falsely indicated the current value of each investor’s accounts. While the statements generally showed substantial investment gains, the numbers included in the statements were false, as none of the investors’ monies had actually been invested in any fund. Instead, VAUGHN had used the investments to finance a lavish lifestyle and to make payments to earlier investors. VAUGHN obtained over $10 million from his victims.

This case is being prosecuted through President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case was investigated by special agents of the Federal Bureau of Investigation and inspectors of the United States Postal Inspection Service.

Assistant United States Attorney Shanya J. Dingle prosecuted the case.

Dover Chemical Corp. to Pay $1.4 Million in Penalties

From EPA:

Dover Chemical Corporation in Ohio to Pay $1.4 Million for Unauthorized Production of Chemical Substances

WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced that Dover Chemical Corporation has agreed to pay $1.4 million in civil penalties for the unauthorized manufacture of chemical substances at facilities in Dover, Ohio and Hammond, Ind. The settlement resolves violations of the Toxic Substances Control Act (TSCA) premanufacture notice obligations for its production of various chlorinated paraffins. Dover Chemical produces the vast majority of the chlorinated products sold in the United States. As part of the settlement, Dover Chemical has ceased manufacturing short-chain chlorinated paraffins, which have persistent, bioaccumulative and toxic (PBT) characteristics. PBTs pose a number of health risks, particularly for children, including genetic impacts, effects on the nervous system, and cancer. Dover Chemical will also submit premanufacture notices to EPA for various medium-chain and long-chain chlorinated paraffin products.
“Assuring the safety of chemicals is one of EPA’s top priorities,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s action reinforces the need for chemical manufacturers to follow the law and protects Americans from chemicals that could be harmful to their health.”
“This settlement will require Dover to participate in an EPA review of all types of chlorinated paraffin products sold by the company and bring Dover into compliance with the Toxic Substances Control Act,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “By halting production of short-chain chlorinated paraffins, this settlement will reduce undue risks to human health and the environment.”
Chlorinated paraffins are a family of chemical substances with different properties depending on their carbon chain lengths and are generally identified as short, medium, or long-chain. Chlorinated paraffins are used as a component of lubricants and coolants in metal cutting and metal forming operations, as a secondary plasticizer and flame retardant in plastics, and as an additive in paints. Short-chain chlorinated paraffins, however, have been found to be bioaccumulative in wildlife and humans, persistent and transported globally in the environment, and toxic to aquatic animals at low concentrations. EPA has developed an action plan for these chemicals based on the potential for significant impacts on the environment. The environmental and health concerns relating to medium-chain chlorinated paraffins and long-chain chlorinated paraffins may be similar to those associated with short-chain chlorinated paraffins. Those chemicals may also be persistent and bioaccumulative based on their physical-chemical properties, bioaccumulation modeling, and because they are also found in the environment.
In 1978, EPA compiled the initial TSCA Inventory of chemical substances from industry submissions and those substances were grandfathered onto the TSCA Inventory without additional human health or environmental review. Chemical substances not on the TSCA Inventory constitute “new chemical substances” for which a premanufacture notice (PMN) must be submitted to EPA at least 90 days before a company begins producing the substance. A PMN includes information such as the specific chemical identity, use, anticipated production volume, exposure and release information, and existing available test data. EPA identifies risks associated with new chemicals through the PMN process. In the PMN process, EPA can require additional testing or issue orders prohibiting or limiting the production or commercial use of such substances.
The proposed settlement agreement, lodged in the U.S. District Court for the Northern District of Ohio, is subject to a 30-day public comment period and approval by the federal court.
More information on the settlement: http://www.epa.gov/compliance/resources/cases/civil/tsca/doverchemical.html