Pedro Espada Jr. seals corruption trial with a dis, scanning tomes while prosecutor throws book at him

April 25, 2012

New York Daily News on April 24, 2012 released the following:

Federal prosecutor Todd Kaminsky slams Espada as a brazen crook who treated his tax-supported health clinic as a personal ‘ATM’

BY JOHN MARZULLI

PEDRO ESPADA JR. kicked back and flipped through a couple of books while a federal prosecutor read him the riot act in closing arguments of his embezzlement trial.

As Assistant U.S. Attorney Todd Kaminsky blasted Espada as an arrogant thief who looted his taxpayer-funded Bronx health clinic, the ex-state senator thumbed through a Bible and “Black Robes White Justice,” a book by Bruce Wright, a controversial judge known for freeing felons.

Espada tuned out as the prosecutor ripped him and son Pedro Gautier Espada for stealing hundreds of thousands of dollars from their Soundview Health Network for dinners, vacations and personal gifts.

“The defendants used (the clinic) as their ATM,” Kaminsky told the jury in Brookyn Federal Court.

The disgraced pol pooh-poohed the rebukes outside court.

“He (Kaminsky) said all the same things in the grand jury,” Espada said. “He’s young and ambitious and he has a long way to go.”

Over the past six weeks, prosecutors presented credit card statements and receipts showing the Espadas billing the clinic for personal expenses.

The bills included a 95-cent biscotti cookie from Starbucks, a lavish Sunday meal of Oysters Rockefeller at a City Island restaurant and a $20,000 family trip to a resort in Puerto Rico for a health conference.

“Pedro Espada’s attitude was, ‘I own Soundview, I built Soundview, I am Soundview. If I want to take from Soundview, who’s going to stop me?'” Kaminsky said.

The clinic even picked up the tab for thousands of dollars in home improvements for his residence in Mamaroneck, Westchester County.

“It’s astounding Pedro Espada had his whole house remodeled and he didn’t know how it happened,” Kaminsky said. “He wants you to think, ‘Were we part of an Extreme Home Makeover that we didn’t know about?'””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


U.S. Expected to Charge Executive Tied to Galleon Case

October 26, 2011
Rajat K. Gupta
Douglas Healey for The New York Times
Rajat Gupta at his home in Westport, Conn., on Wednesday morning.

The New York Times on October 25, 2011 released the following:

“BY AZAM AHMED, PETER LATTMAN AND BEN PROTESS

Federal prosecutors are expected to file criminal charges on Wednesday against Rajat K. Gupta, the most prominent business executive ensnared in an aggressive insider trading investigation, according to people briefed on the case.

The case against Mr. Gupta, 62, who is expected to surrender to F.B.I. agents on Wednesday, would extend the reach of the government’s inquiry into America’s most prestigious corporate boardrooms. Most of the defendants charged with insider trading over the last two years have plied their trade exclusively on Wall Street.

The charges would also mean a stunning fall from grace of a trusted adviser to political leaders and chief executives of the world’s most celebrated companies.

A former director of Goldman Sachs and Procter & Gamble and the longtime head of McKinsey & Company, the elite consulting firm, Mr. Gupta has been under investigation over whether he leaked corporate secrets to Raj Rajaratnam, the hedge fund manager who was sentenced this month to 11 years in prison for trading on illegal stock tips.

While there has been no indication yet that Mr. Gupta profited directly from the information he passed to Mr. Rajaratnam, securities laws prohibit company insiders from divulging corporate secrets to those who then profit from them.

The case against Mr. Gupta, who lives in Westport, Conn., would tie up a major loose end in the long-running investigation of Mr. Rajaratnam’s hedge fund, the Galleon Group. Yet federal authorities continue their campaign to ferret out insider trading on multiple fronts. This month, for example, a Denver-based hedge fund manager and a chemist at the Food and Drug Administration pleaded guilty to such charges.

A spokeswoman for the United States attorney in Manhattan declined to comment.

Gary P. Naftalis, a lawyer for Mr. Gupta, said in a statement: “The facts demonstrate that Mr. Gupta is an innocent man and that he acted with honesty and integrity.”

Mr. Gupta, in his role at the helm of McKinsey, was a trusted adviser to business leaders including Jeffrey R. Immelt, of General Electric, and Henry R. Kravis, of the private equity firm Kohlberg Kravis Roberts & Company. A native of Kolkata, India, and a graduate of the Harvard Business School, Mr. Gupta has also been a philanthropist, serving as a senior adviser to the Bill & Melinda Gates Foundation. Mr. Gupta also served as a special adviser to the United Nations.

His name emerged just a week before Mr. Rajaratnam’s trial in March, when the Securities and Exchange Commission filed an administrative proceeding against him. The agency accused Mr. Gupta of passing confidential information about Goldman Sachs and Procter & Gamble to Mr. Rajaratnam, who then traded on the news.

The details were explosive. Authorities said Mr. Gupta gave Mr. Rajaratnam advanced word of Warren E. Buffett’s $5 billion investment in Goldman Sachs during the darkest days of the financial crisis in addition to other sensitive information affecting the company’s share price.

At the time, federal prosecutors named Mr. Gupta a co-conspirator of Mr. Rajaratnam, but they never charged him. Still, his presence loomed large at Mr. Rajaratnam’s trial. Lloyd C. Blankfein, the chief executive of Goldman, testified about Mr. Gupta’s role on the board and the secrets he was privy to, including earnings details and the bank’s strategic deliberations.

The legal odyssey leading to charges against Mr. Gupta could serve as a case study in law school criminal procedure class. He fought the S.E.C.’s civil action, which would have been heard before an administrative judge. Mr. Gupta argued that the proceeding denied him of his constitutional right to a jury trial and treated him differently than the other Mr. Rajaratnam-related defendants, all of whom the agency sued in federal court.

Mr. Gupta prevailed, and the S.E.C. dropped its case in August, but it maintained the right to bring an action in federal court. The agency is expected to file a new, parallel civil case against Mr. Gupta as well. It is unclear what has changed since the S.E.C. dropped its case in August.

An S.E.C. spokesman declined to comment.

The case could be a challenge for the government. Many of the defendants convicted of insider trading, including Mr. Rajaratnam, have been caught on wiretaps swapping secret information.

At Mr. Rajaratnam’s trial, the government played a recorded conversation between Mr. Gupta and Mr. Rajaratnam in July 2008. On that call, Mr. Gupta divulged that Goldman was considering a purchase of either Wachovia or American International Group.

Evidence that Mr. Rajaratnam traded on this information was never presented, however.

Two of the most incriminating calls played in court pertained to tips that the government said had come from Mr. Gupta. But those calls were conversations between Mr. Rajaratnam and his employees, which could make them inadmissible in a trial of Mr. Gupta.

In one call played for the jury, Mr. Rajaratnam told a colleague, “I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share.” In the other, Mr. Rajaratnam said to his trader, “I got a call saying something good is going to happen to Goldman.”

The S.E.C.’s original case also outlined evidence that could potentially be used at trial. That includes Mr. Gupta’s phone records of on Sept. 23, 2008. That day, the Goldman board met via telephone to consider Mr. Buffett’s $5 billion investment in Goldman.

“Immediately after disconnecting from the board call, Gupta called Rajaratnam from the same line,” the S.E.C. filing says. A minute later, Galleon funds bought more than 175,000 shares of Goldman just before the market closed, the agency says, and later netted a $900,000 profit when the deal was announced.

Though he had an enviable résumé and earned millions of dollars a year at McKinsey, Mr. Gupta became fixated on the extraordinary wealth showered on hedge fund managers and private equity chiefs, according to trial testimony. Consultants are well paid, but the compensation pales in comparison to those Wall Street titans.

Around the time of his retirement in 2007, he and Mr. Rajaratnam helped start New Silk Route, a private equity firm focused on investments in India. Though Mr. Rajaratnam never had an active role in the firm, he and Mr. Gupta were good friends, having met through their philanthropic interests.

Mr. Gupta periodically visited Mr. Rajaratnam’s hedge fund, Galleon, on Madison Avenue and 57th Street in Midtown Manhattan. The two would order Indian or Chinese takeout and kibitz in Mr. Rajaratnam’s office. Mr. Gupta became an investor in Galleon’s hedge funds.

As part of his foray into Wall Street, Mr. Gupta took a senior adviser post at K.K.R., the firm co-founded by his friend Mr. Kravis. During Mr. Rajaratnam’s trial, prosecutors played a tape of the hedge fund manager gossiping with a friend about Mr. Gupta’s ambitions.

“My analysis of the situation is he’s enamored with Kravis, and I think he wants to be in that circle,” Mr. Rajaratnam said. “That’s a billionaire circle, right?””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Attorney Sentenced to Prison for Wire Fraud and Money Laundering in a Multi-Million Dollar Mortgage Fraud Scheme

July 24, 2011

The U.S. Attorney’s Office Southern District of Texas on July 22, 2011 released the following:

“HOUSTON – Vincent Wallace Aldridge, a former fee attorney for First Southwestern Title Company, has been sentenced to 63 months imprisonment for wire fraud and money laundering arising from a scheme to defraud residential mortgage lenders of more than $3.7 million in loans in connection with home purchases in the Houston area, United States Attorney José Angel Moreno announced today, along with acting FBI Special Agent in Charge Russell D. Robinson and Internal Revenue Service-Criminal Investigations (IRS-CI) Special Agent in Charge Rodney E. Clark.

Aldridge, 46, of Fresno, Texas, was found guilty by a jury at the end of January along with his wife Tori Aldridge, a former employee of First Southwestern Title Company, of 19 counts which included conspiracy to commit wire and mail fraud, wire fraud, conspiracy to commit money laundering and money laundering charges. Gilbert Isgar, a co-owner of Waterford Homes, was found guilty of 13 counts which included conspiracy to commit wire and mail fraud, wire fraud and conspiracy to commit money laundering.

United States District Judge Sim Lake sentenced Aldridge this afternoon to the 63-month term which is to be followed by three years of supervised release. He was also ordered to pay $891,000 in restitution and a special assessment of $1900. On June 29, 2011, Isgar was sentenced to 24 months imprisonment to be followed by three years of supervised release and ordered to pay restitution. Tori Aldridge’s sentencing is set for Nov. 19, 2011 before Judge Lake.

Both of the Aldridges and Isgar were convicted of conspiring to devise a scheme which they executed during 2004 and 2005 to receive proceeds from real estate transactions based upon materially fraudulent information that was intentionally supplied to at least four lending institutions as the basis for an agreement between the lending institutions and borrowers. Vincent Aldridge lured borrowers by representing the scheme as an investment opportunity. For the use of their credit to obtain mortgage loans, the borrowers were promised $10,000 after the closing of their respective property and that the property would be sold after a year for a profit. Once a borrower agreed to the deal, Vincent Aldridge and Tori Aldridge – acting as both an escrow officer and as a loan processor – met with the borrower to obtain the necessary personal identifying information to complete the borrower’s lending package. Prior to the Aldridges submitting the lending packages to the lending institutions, they modified the lending package to enhance the borrower’s ability to qualify for the requested loan. These enhancements included fraudulently overstating the borrower’s income, misrepresenting the borrower’s principal residence as rental property and misrepresenting the purchase property as the principal residence. The mortgage loans totaled approximately $3,700,000. Each property sold in amounts between $344,000 and $360,000 and were funded to First Southwestern Title Company by wire.

As a part of the scheme, Isgar, co-owner of Waterford Custom Homes, inflated the sales price of the properties to be purchased by the aforementioned recruited borrowers. As a part of the agreement between the Aldridges and Isgar, disbursement authorizations for attorney’s fees and additional contractor fees on brand new homes for amounts of $60,000 to more than $80,000 were signed by Isgar. These documents were provided to First Southwestern Title, which was controlled by the Aldridges. These disbursement authorizations were not provided to the lender and were not listed on the HUD settlement statement. The disbursements for additional attorney’s fees were in addition to the attorney’s fees stated on the attorney fee line in HUD settlement statement.

Once the loans were funded to the title company, the Aldridges caused several checks to be drawn on the account of the title company, each totaling amounts of $60,000 to more than $80,000, to Aldridge & Associates IOLTA bank account. The checks totaled approximately $442,089 and represented a portion of the illicit proceeds obtained through the mortgage fraud scheme. On one occasion, Isgar wired approximately $81,000 back to Vincent Aldridge’s account after he received the funds from the closing. The total amount of the money laundering was more than $500,000.

Both Vincent Aldridge and Gilbert Barry Isgar were allowed to remain on bond and voluntarily surrender to the Bureau of Prisons. Tori Aldridge remains on bond conditions until her sentencing.

The investigation leading to the charges was conducted by the FBI and IRS-CI. Assistant United States Attorneys Jennifer Lowery and Andrew Leuchtman are prosecuting the case.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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