Fourth Defendant, Bassam Yacoub Salman, Charged in an Alleged Insider Trading Scheme Involving Former Citigroup Investment Banker

September 20, 2011

The Federal Bureau of Investigation (FBI) on September 19, 2011 released the following:

“SAN FRANCISCO—A federal grand jury in San Francisco charged Bassam Yacoub Salman, 52, of Orland Park, Ill., with conspiracy and securities fraud relating to an insider trading scheme in which he made profits in excess of $1.1 million, United States Attorney Melinda Haag announced.

The indictment, which was unsealed today, stems from the insider trading scheme first charged in 2009 against Maher Fayez Kara, of San Carlos, Calif., a former investment banker at Citigroup Global Markets Inc. in New York; Maher Kara’s brother, Mounir Fayez Kara, also known as Michael F. Kara, of Walnut Creek, Calif.; and Emile Youssef Jilwan, of Pleasanton, Calif.

According to the indictment, Maher Kara misappropriated material, non-public information about confidential corporate acquisitions, financings and other transactions in New York, in violation of his fiduciary duty and duty of trust and confidence to Citigroup and its clients. He then tipped his brother, Mounir Kara, about the confidential transactions. Mounir Kara then tipped Salman, who is charged with trading on the material, non-public information in the securities four publicly traded biotechnology companies from 2005 through 2007.

Citigroup was one of the victims of the charged criminal conduct and has cooperated in the investigation conducted by the United States Attorney’s Office and the Federal Bureau of Investigation.

Salman was arrested by the FBI on Sept. 9, 2011, in Illinois and ordered to appear before Magistrate Judge Jacqueline Scott Corley in San Francisco today. After his court appearance, he was released on a $250,000 unsecured bond and ordered to surrender his passports. The defendant’s next court appearance is scheduled for Oct. 5, 2011.

The maximum statutory penalty for each count of securities fraud in violation of 15 U.S.C. § 78ff is 20 years and a fine of $5 million, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant United States Attorney Adam A. Reeves is prosecuting the case with the assistance of Christine Tian and Rayneisha Booth. The prosecution is the result of a long-term investigation by the FBI. The United States Attorney’s Office wishes to recognize the assistance of the Division of Enforcement of the SEC’s San Francisco Regional Office.

Please note, an indictment contains only allegations against an individual and, as with the defendants, Bassam Salman must be presumed innocent unless and until proven guilty.

Further Information:

Case Numbers CR 11-0625 CRB and CR 09-0417 EMC”

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.

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Federal Asset Forfeiture – US Loses This One

August 30, 2011

The Wall Street Journal on August 29, 2011 released the following:

“Ex-Taiwan President Scores a Victory in Legal Fight Over Manhattan Condo

By Joe Palazzolo

A magistrate judge on Friday set back the Justice Department’s efforts to seize a Manhattan condominium prosecutors say is the fruit of a bribery scheme involving the former president of Taiwan.

Magistrate Judge Frank Maas in Manhattan said in a report to a U.S. district judge that the government’s forfeiture complaint against the $1.6 million condo should be dismissed because prosecutors failed to show it was purchased with the proceeds of bribery as defined under Taiwanese law.

U.S. District Court Judge George B. Daniels will ultimately decide whether to dismiss the complaint.

Prosecutors allege that the family of jailed former president Chen Shui-bian bought the $1.6 million condo with bribes from Taiwanese businessmen seeking favorable treatment in a bank merger.

Chen and his wife, Wu Shu-jen, were convicted of corruption during his time in office ending in 2008, but a Taipei court acquitted Chen last year of the bribery charges in connection with the bank merger.

According to the complaint, executives at Yuanta Securities Co. LLC delivered five or six fruit boxes stuffed with $6 million in cash to the first couple’s residence. Wu Shu-jen, who accepted the money, told investigators it was a legitimate political contribution rather than a bribe to bless a proposed bank merger.

At Wu’s direction, prosecutors allege, the cash was laundered through a labyrinth of shell companies and used to purchase a $550,000 property in Keswick, Va., and the Manhattan condo at 261 West 28th St.

Maas said the Justice Department fell short of showing that it would be able to prove at trial that the payments to the former first lady amounted to “bribery of a public official” under Taiwanese law.

“Significantly, the complaint in this action is devoid of any allegation that the President was aware that Yuanta had delivered NTD200 million to the First Lady, let alone that he had any direct involvement in the bribery scheme,” Maas wrote.

A lawyer for Chen family, Jonathan Harris of Harris, Cutler & Houghteling LLP, declined to comment on the ruling. A Justice Department spokeswoman did not immediately respond to a request for comment.

Maas’s ruling was at odds with that of a judge in Charlottesville, Va., who allowed the department’s forfeiture complaint against another house owned by the Chen family to proceed. In that case, U.S. District Judge Norman Moon said in June he was not bound by the Taipei court’s decision.

Moon plans to hear arguments and testimony on the Taiwanese law and will determine himself whether the allegations in the department’s complaints constituted an offense against a foreign nation.

Meanwhile, Taiwanese authorities are appealing the Taipei district court’s decision to toss out the bribery charges. If the acquittals are reversed on appeal, Maas said the government would be able to refile its claims against the properties.”

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 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.

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Chunlai Yang Charged in Chicago by a Criminal Complaint with Theft of Trade Secrets

July 5, 2011

The Federal Bureau of Investigation (FBI) Chicago on July 2, 2011 released the following:

“A 49-year-old Libertyville resident, who was employed as a senior software engineer with the Chicago based CME Group, was arrested yesterday after being charged with theft of trade secrets. The arrest was announced today by Robert D. Grant, Special Agent in Charge of the Chicago Field Office of the Federal Bureau of Investigation (FBI).

CHUNLAI YANG, who is a naturalized United States citizen, was taken into custody yesterday morning at his CME office, located at 550 West Washington Street in Chicago, without incident, by FBI special agents. YANG was charged in a criminal complaint filed yesterday in U.S. District Court in Chicago with one count of theft of trade secrets, which is a felony offense.

According to the complaint, YANG has been employed at the CME since 2000, and is responsible for writing computer code. Beginning in May of this year, CME security personnel began monitoring YANG’s computer activity. They discovered that thousands of files had been downloaded to his computer, and some were then copied to removable storage devices, such as thumb drives. Many of the downloaded files were critical to the operation of the CME group and are considered proprietary in nature and contain protected source code.

Subsequent investigation by the FBI determined that YANG had also been in e-mail contact with the assistant director of the Logistics and Trade Bureau for the Zhangiagang Free Trade Zone. One of the e-mails sent by YANG contained an attachment, which was a CME document containing protected source code and proprietary information.

It was also determined that YANG had booked travel to China on a commercial airline flight, scheduled to depart from O’Hare International Airport on July 7th.

YANG appeared before Magistrate Judge Michael T. Mason in Chicago, late yesterday, at which time he was formally charged. YANG was ordered held without bond, pending his next court appearance, which is scheduled for Wednesday, July 6th. Until then, YANG will be housed at the Metropolitan Correctional Center in Chicago. If convicted of the charge pending against him, YANG faces a possible sentence of up to 10 years’ incarceration, a $250,000 fine, and three years of supervised release.

The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.”

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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Magistrate Judges: “Indispensable Resource” for Federal Courts

June 21, 2011

The U.S. Courts – The Third Branch in June 2011 released the following:

“U.S. magistrate judges have been essential to federal court operations for decades, but in fiscal year 2010, their contributions reached new heights as they handled more than 1 million matters.

“Magistrate judges are an indispensable resource,” said Judge George King (C.D. Calif.), who chairs the Judicial Conference’s Committee on the Administration of the Magistrate Judges System. “Quite simply, the federal trial courts would not be able to function without the magistrate judges who conduct all the important preliminary proceedings in criminal cases and perform a wide range of duties in civil cases.”

One of King’s predecessors as the Committee chair, Judge Philip Pro (D. Nev.) agrees. “I would characterize the role of a magistrate judge as fundamentally important,” he said. “The unprecedented growth of caseloads in federal court over the past half century, together with the complexity of many of those cases and the litigation process itself, has spurred reliance on magistrate judges to undertake substantially greater responsibilities.”

The nation’s 94 federal judicial districts are served by 528 full-time and 44 part-time magistrate judges. Full-time judges are appointed to eight-year terms, and part-time judges to four-year terms, by district judges in their district. The terms can be renewed.

Magistrate judges preside over federal misdemeanor cases, handle preliminary matters in felony cases, and are usually the first judicial officer a criminal defendant sees after arrest or indictment. In most districts, magistrate judges also handle pretrial motions and hearings in civil cases and felony criminal cases, which are eventually turned over to district judges for final disposition.

However, at least 27 district courts include magistrate judges on the civil case assignment wheel for direct, random assignment of a portion of cases to them as the presiding judge, subject to the parties’ consent or request for reassignment to a district judge.

In FY 2010, magistrate judges (the job title was changed from magistrates in 1990) disposed of 12,470 civil cases with the consent of the parties and 116,983 misdemeanor and petty offense cases, took on 192,531 additional duties in criminal cases and 260,796 additional duties in civil cases, drew 21,878 prisoner litigation assignments, handled 368,157 preliminary proceedings and another 54,376 miscellaneous tasks—a record 1,027,191 matters in all, a 4.5 percent increase over the previous fiscal year.

“Although magistrate judges cannot fully compensate for an insufficient number of district judges,” said King, “magistrate judges perform critical duties to ensure the timely adjudication of both civil and criminal cases.”

His court, based in Los Angeles, recently renewed its Magistrate Judge Civil Consent Pilot Project for an additional two years. Established in 2008, the pilot assigns full-time magistrate judges with at least three years on the bench two civil cases each month. If all parties timely consent in writing to the magistrate judge’s exercise of civil jurisdiction, the case remains with that judge for all purposes—including trial and entry of a final judgment. (The district has 24 authorized full-time and one part-time magistrate judge positions.)

In a statement announcing the pilot’s extension, the district court said: “The project furthers the court’s core mission of the timely administration and just adjudication of all matters before the court.”

Worth noting is one phenomenon regarding magistrate judges: they often are appointed to lifetime jobs as Article III judges, nominated by the President and confirmed by the Senate. As of June 1, a total of 143 magistrate judges have been appointed as Article III judges. That total includes Judges King and Pro.

Pro explained those numbers as “consistent with the evolution of the magistrate judges system over the past 40 years.”

“The varied duties of magistrate judges and their flexible utilization throughout the country well qualify them to undertake Article III responsibilities,” he said. “Equally important, the system provides an arena in which magistrate judges routinely demonstrate their ability to do so in a manner which makes them credible candidates for nomination to district and circuit judgeships.”

King added that magistrate judges, through their service, offer “a reliable yardstick by which to measure the candidates’ qualifications . . . a proven track record as judicial officers.”

“They carry a judicial footprint from their body of work, their commitment to the rule of law, their temperament and demeanor on the bench, and their dedication to the public service,” he said.”

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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ICE Arrests Ricardo Del Valle-Diaz for Producing Child Pornography and Sexually Enticing a Minor

June 17, 2011

U.S. Immigration and Customs Enforcement’s (ICE) on June 16, 2011 released the following press release:

“SAN JUAN, Puerto Rico – A local school bus driver was arrested on Wednesday by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) for producing child pornography and sexually enticing a minor.

Ricardo Del Valle-Diaz, 33, of Caguas, Puerto Rico, is a school bus driver for special education students.

“The increase in the number of cases involving child pornography and sexual enticement in our jurisdiction is alarming,” said Roberto Escobar Vargas, special agent in charge of ICE HSI in San Juan. “Those involved in this despicable crime should know that ICE HSI will pursue them, and we will not rest until they are brought to justice.”

On June 10, an ICE HSI special agent received a complaint from the Puerto Rico Police Department’s Sexual Crimes Division in Caguas stating that Del Valle-Díaz had video and audio recording of a special education student engaged in a sexually explicit conduct while on the school bus.

Del Valle-Díaz was charged in a criminal complaint for using, persuading, enticing, and coercing a girl to engage in sexually explicit conduct, specifically lascivious exhibition of the genital areas and performing sexual acts. Valle-Díaz allegedly promoted this behavior so he could produce a video image using the camera of his computer which had been mailed, shipped or transported in interstate commerce.

“Our children, who are the most vulnerable and innocent victims in our society, deserve every measure of protection we can give them,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “A child sexual predator will be held accountable for the unspeakable crimes he committed.” Project Safe Childhood is an initiative of the Department of Justice aimed at preventing the abuse and exploitation of children by use of the Internet and other mediums.

If convicted, Del Valle-Diaz faces a minimum 10 years and a maximum of life in prison. He had his initial hearing June 16 before Magistrate Judge Marcos Lopez. He was then transferred to the Metropolitan Detention Center in Guaynabo, Puerto Rico, awaiting the outcome of his case.

This investigation is part of Operation Predator, an ICE-led initiative to protect children from sexual predators, including those who travel overseas for sex with minors, Internet child pornographers, criminal alien sex offenders, and child sex traffickers.”

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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