MINE SAFETY DISCLOSURES COVERED UNDER DODD-FRANK ACT

DODD-FRANK ON MINE SAFETY

The following excerpt is from the SEC website:

“Washington, D.C., December 21, 2011 – The Securities and Exchange Commission has adopted new rules outlining how mining companies must disclose the mine safety information required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under Section 1503 of the Dodd-Frank Act, mining companies are required to include information about mine safety and health in the quarterly and annual reports they file with the SEC. The Dodd-Frank Act disclosure requirements are based on the safety and health requirements that apply to mines under the Federal Mine Safety and Health Act of 1977, which is administered by the Mine Safety and Health Administration (MSHA).
The new SEC rules, which take effect 30 days after publication in the Federal Register, specifically require those companies to provide mine-by-mine totals for the following:
Significant and substantial violations of mandatory health or safety standards under section 104 of the Mine Act for which the operator received a citation from MSHA

Orders under section 104(b) of the Mine Act

Citations and orders for unwarrantable failure of the mine operator to comply with section 104(d) of the Mine Act

Flagrant violations under section 110(b)(2) of the Mine Act

Imminent danger orders issued under section 107(a) of the Mine Act

The dollar value of proposed assessments from MSHA

Notices from MSHA of a pattern of violations or potential to have a pattern of violations under section 104(e) of the Mine Act

Pending legal actions before the Federal Mine Safety and Health Review Commission

Mining-related fatalities
The accompanying instructions specify that a mining company must report the total penalties assessed in the reporting period, even if the company is contesting an assessment. For legal actions, mining companies are instructed to report the number instituted and resolved during the reporting period, report the number pending on the last day of the reporting period, and categorize the actions based on the type of proceeding.
In addition, the Dodd-Frank Act added a requirement for U.S. companies to file a Form 8-K when they receive notice from MSHA of an imminent danger order under section 107(a) of the Mine Act; notice of a pattern of violations under section 104(e) of the Mine Act, or notice of the potential to have a pattern of such violations. The new SEC rules specify that the Form 8-K must be filed within four business days and include the type of notice received, the date it was received, and the name and location of the mine involved. The new rules specify that a late filing of the Form 8-K will not affect a company's eligibility to use Form S-3 short-form registration.”

DOJ WILL REQUIRE EXELON CORP. AND CONSTELLATION ENERGY TO DIVEST 3 ELECTRIC PLANTS BEFORE MERGER

The following excerpt is from the Department of Justice Website:

“WASHINGTON — The Department of Justice announced that it will require Exelon Corporation and Constellation Energy Group Inc. to divest three electricity generating plants in Maryland in order to proceed with their $7.9 billion merger.  The department said that the transaction, as originally proposed, would substantially lessen competition for wholesale electricity, ultimately increasing electricity prices for millions of consumers in the mid-Atlantic region.

The department’s Antitrust Division filed a civil lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns and the lawsuit.
 “Competition in wholesale electricity markets is vital to the economic well-being of consumers and businesses,” said Sharis A. Pozen, Acting Assistant Attorney General for the Antitrust Division.  “These divestitures will preserve that critical competition for the benefit of electricity customers throughout the mid-Atlantic.”

According to the complaint, the merger would create one of the largest electricity companies in the United States with total assets of $72 billion and annual revenues of $33 billion, and would combine the assets of two large competitors in the mid-Atlantic region.  Together, the companies would own between 22 and 28 percent of the generating capacity in the densely populated mid-Atlantic area encompassing Delaware, the District of Columbia, New Jersey, eastern Pennsylvania, and parts of Maryland and Virginia.  The department said that the combination of the assets would enhance the incentive and ability of the merged firm to raise wholesale electricity prices and reduce output.

Under the terms of the proposed settlement, the merged firm must divest three electricity plants, which in total provide more than 2,600 megawatts of generating capacity.  The plants to be divested are Brandon Shores and H.A. Wagner in Anne Arundel County, Md., and C.P. Crane in Baltimore County, Md.
Exelon is incorporated in Pennsylvania and has its headquarters in Chicago.  Exelon owns the PECO utility of Philadelphia and the Commonwealth Edison utility of Chicago.  Exelon had $18.6 billion of revenues in 2010.

Constellation is incorporated in Maryland and has its headquarters in Baltimore.  Constellation owns the BG&E utility of Baltimore.  Constellation had $14.3 billion of revenues in 2010.”

4 HITACH LG DATA STORAGE INC. EXECS AGREE TO SERVE JAIL TIME FOR BID RIGGING CONSPIRACY

The following excerpt is from the Department of Justice website:

December 13, 2011
“WASHINGTON — Three Korean Hitachi-LG Data Storage Inc. (HLDS) executives have agreed to plead guilty and to serve prison time in the United States for their participation in a series of conspiracies to rig bids and fix prices for the sale of optical disk drives, the Department of Justice announced today.

According to the felony charges filed today in U.S. District Court in San Francisco, Young Keun Park, Sang Hun Kim and Sik Hur, aka Daniel Hur, conspired with co-conspirators to suppress and eliminate competition by rigging bids for optical disk drives sold to Dell Inc. and Hewlett-Packard Company (HP) and/or fixing prices for optical disk drives sold to Microsoft Corporation.  The three HLDS executives participated in the conspiracies at various times between approximately November 2005 and September 2009.  Under the plea agreement, Park and Kim each have agreed to serve eight months in prison and Hur has agreed to serve seven months in prison.  Each has also agreed to pay a $25,000 criminal fine.  HLDS is a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.

“Today’s plea agreements demonstrate the Antitrust Division’s continued commitment to protect competition in the high tech industry,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division will continue to pursue and prosecute those who participate in bid-rigging and price-fixing conspiracies that harm businesses and consumers in the optical disk drive industry.”

Optical disk drives are devices such as CD-ROM, CD-RW (ReWritable), DVD-ROM and DVD-RW (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
Under the plea agreements, which are subject to court approval, Park, Kim and Hur have also agreed to assist the government in its ongoing investigation into the optical disk drive industry.

According to the charges, from approximately November 2005 until September 2009, Park participated in the conspiracies as HLDS’s vice president and chief marketing officer in charge of optical disk drive sales.  The department said that Park had supervisory responsibility for HLDS’s Dell, Microsoft and HP accounts.  The department said that Kim participated in the conspiracies at various times as HLDS’s team leader in charge of the HP and Dell accounts and deputy chief marketing officer from approximately November 2005 until September 2009.  According to the charges, Hur participated in HP-related conspiracies at various times as HLDS’s team leader, account leader and account manager in charge of the HP account from approximately November 2005 until June 2009.

According to the court documents, Dell hosted optical disk drive procurement events in which bidders would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked.  From approximately February 2009 to September 2009, Park and Kim participated in a series of conspiracies involving meetings and conversations with co-conspirators to discuss bidding strategies and prices of optical disk drives.  As part of the conspiracies, Park, Kim and co-conspirators submitted bids at collusive and noncompetitive prices and exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
The department said that from approximately June 2007 to March 2008, Park and co-conspirators participated in a conspiracy involving meetings and conversations in Taiwan and the Republic of Korea to discuss and to fix the prices of optical disk drives sold to Microsoft.  As part of the conspiracy, Park and co-conspirators also exchanged information on the sales of optical disk drives to monitor and enforce adherence to the agreed-upon prices.

According to the court documents, HP also hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked.  From approximately November 2005 to June 2009, Kim, Park, Hur and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events.  Kim, Par, Hur and co-conspirators also exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements

This is the department’s second round of charges resulting from its ongoing investigation into the optical disk drive industry.  On Nov. 8, 2011, HLDS pleaded guilty in U.S. District Court in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009.  HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event.  On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and has agreed to assist the department in its ongoing investigation into the optical disk drive industry.
Park, Kim and Hur are charged with multiple violations of the Sherman Act.  Each count carries a maximum fine of $1 million and up to 10 years in prison.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing joint investigation of the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston.”

HEART TRONICS, INC CHARGED WITH GETTING PUMPED UP

The following excerpt is from the SEC website:

December 20, 2011
“The Securities and Exchange Commission filed a lawsuit today in federal court in Los Angeles charging seven defendants, including California lawyer Mitchell J. Stein, in a series of brazen fraudulent schemes designed to artificially inflate the securities of Heart Tronics, Inc., f/k/a Signalife, Inc. (Heart Tronics), while Stein secretly made millions of dollars from selling the stock.  The seven defendants charged are:
Heart Tronics (known during the relevant period as Signalife), a company headquartered in California that purports to sell a heart monitoring device.  Heart Tronics common stock was formerly listed on the American Stock Exchange but is now quoted on the OTC Link under the symbol “HRTT.PK”;
Mitchell J. Stein of Hidden Hills, CA, a California attorney who was the architect and principal beneficiary of the fraud schemes.  Stein controlled many of Heart Tronics’ business activities and public disclosures;
Willie J. Gault of Encino, CA, a former professional football player and one of Heart Tronics’ co-CEOs from October 2008 through June 2011;
J. Rowland Perkins of Beverly Hills, CA, a former Hollywood executive and the other of Heart Tronics’ co-CEOs since June 2008;
Martin B. Carter of Boca Raton, FL, an unlicensed electrician who worked as Stein’s chauffer and handyman while carrying out the fraud with Stein;
Mark C. Nevdahl  of Spokane, WA, the trustee and stock broker for a number of nominee accounts Stein used to unlawfully sell Heart Tronics stock; and
Ryan A. Rauch of San Clemente, CA, a stock promoter paid to tout Heart Tronics stock to investors.
In a parallel criminal investigation, the U.S. Department of Justice and U.S. Postal Inspection Service announced today the arrest of Stein.
The SEC’s complaint alleges that Heart Tronics fraudulently and repeatedly announced millions of dollars in sales orders for its product between 2006 and 2008.   In fact, according to the complaint, Heart Tronics never had viable sales orders from actual customers, but Stein and Carter fabricated numerous documents to support the false disclosures to the public.  As alleged in the complaint, Stein profited by causing Heart Tronics to unlawfully pay Carter approximately $2 million in cash and Heart Tronics stock pursuant to a sham consulting agreement.  Carter kicked-back substantially all the proceeds to Stein.
The complaint also alleges that in 2008 Heart Tronics installed Gault, a celebrity athlete, and Perkins, a founder of a well-known talent agency, as figurehead CEOs to generate publicity for Heart Tronics and foster investor confidence.  However, the SEC alleges that Gault and Perkins rarely questioned Stein’s fraudulent agenda and abdicated their fiduciary responsibilities to shareholders by signing, or authorizing to be signed, false SEC filings and false certifications under the Sarbanes-Oxley Act of 2002.  In addition, the complaint alleges that Stein and Gault together defrauded an individual investor into making a substantial investment in Heart Tronics based on false representations that his capital would fund the company’s operations.  Instead, Stein and Gault diverted the investor’s proceeds for their personal use, including purchasing Heart Tronics stock in Gault’s personal brokerage account to create the appearance of volume and demand for the stock.
Stein also hired promoters to tout Heart Tronics stock on the Internet.  According to the complaint, one such promoter, Rauch, solicited numerous investment advisers, retail and institutional brokers, and other investors to buy Heart Tronics stock, but failed to disclose he was being paid by Heart Tronics in exchange for his promotion.
While Stein was orchestrating his campaign of misinformation and other schemes designed to inflate Heart Tronics’ stock price, the complaint alleges that he and his wife, Tracey Hampton-Stein (Hampton-Stein), the company’s majority shareholder, directed the sale of more than $5.8 million worth of Heart Tronics stock, while failing to disclose the sales as required under the federal securities laws.  Stein enlisted Nevdahl, a stock broker, to act as trustee for a number of purportedly blind trusts to create the façade that the shares were under the control of an independent trustee.  The trusts were blind in name only; according to the complaint, Nevdahl met the Steins’ regular demands for cash by continually selling Heart Tronics stock though the trusts.
The SEC’s complaint charges the following defendants committed the following violations of the federal securities laws:
Heart Tronics violated Sections 5(a) and (c), and Section 17(a) of the Securities Act of 1933 (“Securities Act”); Securities Act Regulation S-T, Rule 302(b); Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”); and Exchange Act Rules 10b-5(b), 12b-11, 12b-20, 13a-1, 13a-11, and 13a-13.
Stein violated Sections 5(a) and (c), and Section 17(a) of the Securities Act; Sections 10(b), 13(b)(5), 13(d), and 16(a) of the Exchange Act; and Exchange Act Rules 10b-5, 13b2-1, 13d-1, and 16a-3; and he aided and abetted violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13.
Gault violated Section 17(a) of the Securities Act; Sections 10(b) and 13(b)(5) of the Exchange Act; and Exchange Act Rules 10b-5 and 13a-14; and he aided and abetted violations of Sections 10(b) of the Exchange Act and Exchange Act Rules 10b-5(a) and (c).
Perkins violated Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5(b) and 13a-14; and he aided and abetted violations of Section 13(b)(2)(B) of the Exchange Act.
Carter violated Sections 5(a) and (c), and Sections 17(a)(1) and (3) of the Securities Act; Sections 10(b) and 13(b)(5) of the Exchange Act; and Exchange Act Rules 10b-5(a) and (c), and 13b2-1; and he aided and abetted violations of Sections 10(b), 13(a), 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 10b-5(a) and (c), 12b-20, 13a-1, 13a-11, and 13a-13.Nevdahl violated Sections 17(a)(1) and (3) of the Securities Act; Section 10(b) of the Exchange Act; and Exchange Act Rules 10b-5(a) and (c); and he aided and abetted violations of Sections 10(b) of the Exchange Act and Exchange Act Rules 10b-5(a) and (c).
Rauch violated Section 17(b) of the Securities Act.
The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil monetary penalties from all defendants.  With respect to Stein, Gault and Perkins, the complaint seeks the imposition of permanent officer-and-director bars; with respect to Stein, Gault, Perkins, Carter and Rauch, the complaint seeks the impositions of permanent penny stock bars.   The complaint also seeks the return of ill-gotten gains from nine relief defendants, including Hampton-Stein and her company, ARC Finance Group LLC, Heart Tronics’ majority shareholder.
The SEC’s investigation was conducted by Adam Eisner and Rachel Nonaka under the supervision of Charles Cain.  The SEC’s litigation will be headed by Mark Lanpher.  The Commission acknowledges the assistance of the U.S. Department of Justice’s Fraud Section and the U.S. Postal Inspection Service.”

FORMER EXECUTIVES CHARGED BY SEC WITH MISLEADING INVESTORS IN COAL GASIFICATION COMPANY

The following excerpt is from the SEC website:

“Washington, D.C., Dec. 21, 2011 — The Securities and Exchange Commission today charged the former CEO and CFO at a Minnesota-based clean coal technology company for making false and misleading statements to investors, and separately charged a network of brokers who sold the company’s securities without being registered with the SEC to do so.

According to the SEC’s complaints filed in U.S. District Court for the District of Minnesota, Bixby Energy Systems raised at least $43 million from more than 1,800 investors during a nine-year period through a series of purported private placement offerings of stocks, warrants, and promissory notes. The company used this capital raising activity to help fund operations, pay salaries, and pay commissions to brokers that sold Bixby securities.

The SEC alleges that Bixby’s former CEO Robert Walker and former CFO Dennis DeSender made repeated misstatements both verbally and in writing to investors about the company’s core product – a machine that supposedly produced synthetic natural gas through a proprietary clean coal technology. They told investors that Bixby’s coal gasification machine was proven and operating when in fact it had substantial technological defects, did not function properly, and was at risk of self-destruction. Walker and DeSender never disclosed these problems to investors.

“Investors were falsely informed that Bixby’s coal gasification technology was proven, fully functional, and ready for market,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “Investors who purchased Bixby shares through the unregistered brokers were deprived of the protections afforded under the federal securities laws requiring the registration of broker-dealers and securities offerings like these.”
According to the SEC’s complaint, among the other false and misleading statements or omissions to investors in offering materials or solicitations:

Investors were told that company officers would not be compensated for their sale of Bixby securities. However, Bixby actually paid DeSender at least $3.6 million in cash and warrants related to his sale of Bixby securities. DeSender kicked back more than $600,000 to Walker in an undisclosed and fraudulent commission-sharing scheme.

DeSender was convicted for bank fraud in 1998. However, this was never disclosed to investors in offering materials, which instead touted DeSender’s “25 years of financial consulting and operations management experience” and “extensive background in management and operations.”

Walker and DeSender induced investors to purchase Bixby securities by telling them that Bixby was going to conduct an initial public offering of its shares in the near term, even though they knew that Bixby could not do so.
The SEC further alleges that DeSender and his corporation DLD Financial Ltd. acted as unregistered brokers and that Walker aided and abetted the violations. Walker and DeSender are charged with violations of the securities offering provisions of the Securities Act of 1933.

According to the SEC’s separate complaint against the unregistered brokers, they and DeSender sold more than $21.7 million in Bixby securities to at least 560 investors. As compensation for their sale of Bixby securities, the unregistered brokers and DeSender were paid a total of at least $4.9 million in transaction-based cash commissions. They also received warrants to purchase more than 900,000 shares of Bixby common stock. The SEC alleges that these brokers induced the purchase or sale of securities when they were not registered with the SEC as a broker or dealer or associated with an entity registered with the SEC as a broker or dealer.
:
The unregistered brokers are charged with violations of Section 15(a) of the Securities Exchange Act of 1934.”

SEC ALLEGES THAT THE SECURITIES INVESTOR PROTECTION CORPORATION IS NOT DOING IT'S JOB

The following excerpt is from the SEC website:

December 15, 2011
“On December 12, 2011, the Securities and Exchange Commission filed an application with the federal district court in the District of Columbia to compel the Securities Investor Protection Corporation (SIPC) to file an application to begin a liquidation proceeding with regard to Stanford Group Company (SGC), a broker-dealer registered with the Commission and a SIPC-member brokerage firm.
In February 2009, the Commission brought a civil enforcement action against Robert Allen Stanford, SGC, and others, alleging that they operated a multi-billion dollar Ponzi scheme. As a result of that enforcement action, a federal district court in Texas ordered that SGC be placed into receivership.
On June 15, 2011, the Commission directed SIPC to take steps to initiate a liquidation proceeding with regard to SGC because there were customers in need of the protections of the Securities Investor Protection Act of 1970 (SIPA). Among other things, SIPA provides for coverage of up to $500,000 to customers of a defunct brokerage firm in the event that funds available at the firm are insufficient to satisfy claims covered by the statute. This coverage is provided from a fund maintained by SIPC.
Despite the Commission's directive, SIPC has failed to take steps to initiate a liquidation proceeding as to SGC.”

FDA WARNS FLEX MASSAGER MAY HAVE A STRANGLEHOLD ON CUSTOMERS

The following excerpt is from an FDA e-mail:


December 21, 2011

ISSUE: FDA is warning consumers again not to use the ShoulderFlex Massager, imported by King International and sold by various companies, due to serious potential health risks. Hair, clothing or jewelry can become entangled in the ShoulderFlex Massager and cause serious injury or even death from strangulation. There have been reports of one death and one near death, due to strangulation, associated with the use of this device.

BACKGROUND: The ShoulderFlex Massager is a personal massage device sold in retail stores, catalogs and over the Internet. It is intended to provide users with a deep tissue massage to the neck, shoulders and back area while lying down.

King International recalled the ShoulderFlex Massager on Aug. 31, 2011; however, during a recent compliance audit, the FDA found that the company has gone out of business. King International has not followed through with recall procedures; the 800 number established by the firm for this recall is no longer in service; and many of the companies that sell this device are not aware of the recall or did not properly notify customers who purchased the massager.

RECOMMENDATIONS: The ShoulderFlex Massager poses serious risks. Consumers should stop using this device, health care providers should not recommend it to their patients and businesses should stop distributing and selling the device," said Steve Silverman, director of the Office of Compliance in the FDA's Center for Devices and Radiological Health.

The FDA recommends that customers and consignees safely dispose of the ShoulderFlex Massagers so that the device cannot be used. The massage fingers should be removed and disposed of separately from the device; the power supply should be disposed of separately, as well."

FUSE MAKER OF BUNKER BUSTER BOMBS TO PAY $4.75 MILLION IN DOJ SETTLEMENT

December 21, 2011
“WASHINGTON - Kaman Precision Products Inc., an Orlando, Fla., defense contractor, will pay the United States $4.75 million to resolve allegations that the company   submitted false claims for non-conforming fuzes sold to the U.S. Army for use in “bunkerbuster” bombs, the Justice Department announced today.  In addition, the settlement requires Kaman to adhere to a compliance program and to dismiss administrative claims that it had made against the Army after the termination of its contract.

The lawsuit, filed in the Middle District of Florida by the United States under the False Claims Act for breach of contract, alleged that the company knowingly substituted a component in four lots of fuzes that made them unsafe for use in military operations.  Specifically, the United States’ allegations relate to FMU-143 fuzes for use in hard target penetration warheads, colloquially referred to as “bunkerbuster” bombs.
         
The government alleged that Kaman knowingly substituted non-conforming bellows motors for the specified motors in four lots of fuzes supplied to the military, and that the non-conforming parts could cause the fuzes to fire prematurely, creating a hazard for military personnel and causing misfires of the warheads.   The military discovered the parts substitution and quarantined the defective fuzes.
         
Today’s settlement resolved those claims, as well as other administrative claims that the Army brought after it terminated Kaman’s contract for the company’s violation of its contractual obligations.

“The Department has zero tolerance for defense contractors who put the lives of our military personnel in danger,” said Tony West, Assistant Attorney General for the Civil Division.  “When this type of misconduct is alleged, we will actively pursue legal remedies to reclaim taxpayer dollars as well as ensure the safety of our men and women in uniform.”

“Integrity in the procurement process is fundamental to our nation’s security and the safety of our military personnel,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida.  “This settlement represents a significant achievement in our long standing commitment to the enforcement of civil laws in the area of defense contracting.”

This settlement resulted from the efforts of the U.S. Attorney’s Office for the Middle District of Florida; the Commercial Litigation Branch of the Justice Department’s Civil Division; the Defense Criminal Investigative Service; the Army Criminal Investigation Command; and the U.S. Army Legal Services Agency Contract and Fiscal Law Division.”

INSURANCE GIANT AON CORPORATION WILL PAY OVER $16 MILLION TO SETTLE ALLEGED BRIBERY CHARGES

The following excerpt is from the SEC website:

December 20, 2011
The Securities and Exchange Commission today filed a settled enforcement action in the U.S. District Court for the District of Columbia against Aon Corporation (Aon), an Illinois-based global provider of risk management services, insurance and reinsurance brokerage, alleging violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA). Aon will pay a total of approximately $14.5 million in disgorgement and prejudgment interest to the SEC. In a related action, Aon will pay a $1.764 million criminal fine to the U.S. Department of Justice (DOJ).

The Commission’s complaint alleges that Aon’s subsidiaries made over $3.6 million in improper payments to various parties between 1983 and 2007 as a means of obtaining or retaining insurance business in those countries. The complaint alleges that some of the improper payments were made directly or indirectly to foreign government officials who could award business directly to Aon subsidiaries, who were in position to influence others who could award business to Aon subsidiaries, or who could otherwise provide favorable business treatment for the company’s interests. The complaint alleges that these payments were not accurately reflected in Aon’s books and records, and that Aon failed to maintain an adequate internal control system reasonably designed to detect and prevent the improper payments.

According to the Commission’s complaint, the improper payments made by Aon’s subsidiaries fall into two general categories: (i) training, travel, and entertainment provided to employees of foreign government-owned clients and third parties; and (ii) payments made to third-party facilitators. Aon subsidiaries made these payments in various countries around the world, including Costa Rica, Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar, and Bangladesh. The complaint alleges that Aon realized over $11.4 million in profits from these improper payments.

Without admitting or denying the allegations in the Commission’s complaint, Aon consented to the entry of a final judgment permanently enjoining it from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and ordering the company to pay disgorgement of $11,416,814 in profits, together with prejudgment interest thereon of $3,128,206, for a total of $14,545,020. Aon’s proposed settlement offer has been submitted to the court for its consideration. In a related criminal proceeding, DOJ announced today that Aon has entered into a non-prosecution agreement under which the company will pay a $1.764 million criminal fine for the misconduct. Aon cooperated with the Commission’s and DOJ’s investigations and implemented remedial measures during the course of the investigations.

The Commission acknowledges the assistance of the Fraud Section of DOJ’s Criminal Division, the Federal Bureau of Investigation, and the Financial Services Authority of the U.K. in this matter.'

DISCRIMINATION CASE AT CONTRYWIDE FINANCIAL IS SETTLED FOR $335 MILLION

COUNTRYWIDE FINANCIAL DISCRIMINATION CASE SETTLED FOR $335 MILLION

The following excerpt is from the Department of Justice website:

“Wednesday, December 21, 2011Justice Department Reaches $335 Million Settlement to Resolve Allegations of Lending Discrimination by Countrywide Financial CorporationMore than 200,000 African-American and Hispanic Borrowers who Qualified for Loans were Charged Higher Fees or Placed into Subprime Loans
The Department of Justice today filed its largest residential fair lending settlement in history to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008.

The settlement provides $335 million in compensation for victims of Countrywide’s discrimination during a period when Countrywide originated millions of residential mortgage loans as one of the nation’s largest single-family mortgage lenders.

The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Central District of California in conjunction with the department’s complaint which alleges that Countrywide discriminated by charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending.   The complaint alleges that these borrowers were charged higher fees and interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.

The United States also alleges that Countrywide discriminated by steering thousands of African-American and Hispanic borrowers into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.   All the borrowers who were discriminated against were qualified for Countrywide mortgage loans according to Countrywide’s own underwriting criteria.

“The department’s action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for lending discrimination,” said Attorney General Eric Holder. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin. With today’s settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”

The settlement resolves the United States’ pricing and steering claims against Countrywide for its discrimination against African Americans and Hispanics.

The United States’ complaint alleges that African-American and Hispanic borrowers paid more than non-Hispanic white borrowers, not based on borrower risk, but because of their race or national origin.   Countrywide’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors .   This subjective and unguided pricing discretion resulted in African American and Hispanic borrowers paying more.   The complaint further alleges that Countrywide was aware the fees and interest rates it was charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it.
“Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “We are using every tool in our law enforcement arsenal, including some that were dormant for years, to go after institutions of all sizes that discriminated against families solely because of their race or national origin.”
The United States’ complaint also alleges that, as a result of Countrywide’s policies and practices, qualified African-American and Hispanic borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans.   The discriminatory placement of borrowers in subprime loans, also known as “steering,” occurred because it was Countrywide’s business practice to allow mortgage brokers and employees to place a loan applicant in a subprime loan even when the applicant qualified for a prime loan .   In addition, Countrywide gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Countrywide’s employees had discretion to grant these exceptions.        

This is the first time that the Justice Department has alleged and obtained relief for borrowers who were steered into loans based on race or national origin, a practice that systematically placed borrowers of color into subprime mortgage loan products while placing non-Hispanic white borrowers with similar creditworthiness in prime loans.   By steering borrowers into subprime loans from 2004 to 2007, the complaint alleges, Countrywide harmed those qualified African-American and Hispanic borrowers.   Subprime loans generally carried higher-cost terms, such as prepayment penalties and exploding adjustable interest rates that increased suddenly after two or three years, making the payments unaffordable and leaving the borrowers at a much higher risk of foreclosure.

The settlement also resolves the department’s claim that Countrywide violated the Equal Credit Opportunity Act by discriminating on the basis of marital status against non-applicant spouses of borrowers by encouraging them to sign away their home ownership rights .   The law allows married individuals to apply for credit either in their own name or jointly with their spouse, even when the property is owned by both spouses.   For applications made by married individuals applying solely in their own name between 2004 and 2008, Countrywide encouraged non-applicant spouses to sign quitclaim deeds or other documents transferring their legal rights and interests in jointly-held property to the borrowing spouse.   Non-applicant spouses who execute a quitclaim deed risk substantial uncertainty and financial loss by losing all their rights and interests in the property securing the loan.

In addition, the settlement requires Countrywide to implement policies and practices to prevent discrimination if it returns to the lending business during the next four years.   Countrywide currently operates as a subsidiary of Bank of America but does not originate new loans.  

The department’s investigation into Countrywide’s lending practices began after referrals by the Board of Governors of the Federal Reserve and the Office of Thrift Supervision to the Justice Department’s Civil Rights Division in 2007 and 2008 for potential patterns or practices of discrimination by Countrywide.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF 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.    For more information on the task force, visit www.StopFraud.gov .

A copy of the complaint and proposed settlement order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing .

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Countrywide’s discrimination.   The department will make a public announcement and post contact information on its website once an administrator is chosen.  Borrowers who are eligible for compensation from the settlement will then be contacted by the administrator.  Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department atcountrywide.settlement@usdoj.gov .”

JUSTICE DEPARTMENT ISSUES STTEMENT ON AT&T GIVING UP ON T-MOBILE ACQUSIITION


The following excerpt is from the Department of Justice website:

December 19, 2011
Deputy Attorney General Cole:

“This result is a victory for the millions of Americans who use mobile wireless telecommunications services.  A significant competitor remains in the marketplace and consumers will benefit from a quick resolution of this matter without the unnecessary expense of taxpayer money and government resources.”
Acting Assistant Attorney General Pozen: “Consumers won today.  Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation.  We sued to protect consumers who rely on competition in this important industry.  With the parties’ abandonment, we achieved that result.”

On Aug. 31, 2011, the department filed a lawsuit in U.S. District Court for the District of Columbia, to block the transaction, which would have combined two of the only four wireless carriers with nationwide networks.  State attorneys general from California, Illinois, Massachusetts, New York, Ohio, Pennsylvania, Puerto Rico and Washington joined the United States as co-plaintiffs.  The department coordinated its review of the proposed transaction with the Federal Communications Commission."

GREEK SHIPPER PLEADS GUILTY TO VILATING THE ACT TO PREVENT POLLUTION FROM SHIPS

The following excerpt is from the Department of Justice website:
Tuesday, December 13, 2011
“Greek Shipping Company, Master and Chief Engineer of M/V Agios Emilianos Convicted for Intentional Cover-Up of Oil Pollution and Obstruction of Justice
WASHINGTON – Ilios Shipping Company S.A., pleaded guilty in federal court in New Orleans for violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice, announced Assistant Attorney General Ignacia S. Moreno and U.S. Attorney Jim Letten.
Ilios operated the M/V Agios Emilianos, a 738 foot, 36,573 ton bulk carrier cargo ship that hauled grain from New Orleans to various ports around the world. According to the plea agreement, from April 2009 until April 2011, oily bilge waste and sludge was routinely discharged from the vessel directly into the sea without the use of required pollution prevention equipment. During that time, the crew intentionally covered up the illegal discharges of oil waste by falsifying the vessel’s oil record book.
The master of the vessel, Valentino Mislang, previously pleaded guilty to conspiracy to obstruct justice for his role in destroying evidence and instructing crewmembers to lie to the Coast Guard during an inspection of the vessel in April 2011. According to Mislang, a senior manager of Ilios directed the destruction of computer records and ordered Mislang to tell crewmembers to lie to the Coast Guard.
The chief engineer of the vessel, Romulo Esperas, previously pleaded guilty to conspiracy to obstruct justice for his role in falsifying the vessel’s oil record book and directing the discharge of oily bilge waste and sludge directly into the sea. According to Esperas, a senior manager of Ilios directed him to discharge the vessel’s oily waste into the sea and refused to provide funding for the proper discharge of the oily waste to shore-side facilities.
All discharges of sludge or oily bilge waste from a vessel are required to be recorded in the vessel’s oil record book. However, none of the illegal discharges were recorded in the oil record book for the M/V Agios Emilianos.
According to Mislang and Esperas, the company directed them to use a complex system to create the impression that the vessel was consuming the maximum amount of fuel under its charter agreements when in fact it was not. The result was that charterers would overpay Ilios for fuel. Mislang would send daily fuel consumption reports: one to Ilios reporting actual fuel consumption and another to the charterer reporting maximum possible fuel consumption. When the vessel was in port, Esperas would direct that engineers install false sounding tubes into the vessel’s fuel tanks so that when the charterer measured the quantity of fuel in the tank, the soundings would show the tank emptier than it actually was.
If the court accepts the terms of the plea agreement, Ilios will pay an overall criminal penalty of $2 million, $250,000 of which will be in the form of an organizational community service payment to the National Fish and Wildlife Foundation and used to fund projects aimed at the restoration of marine and aquatic resources in the Eastern District of Louisiana. Ilios will also be required to implement an environmental compliance plan, which will ensure that any ship operated by Ilios complies with all maritime environmental requirements established under applicable international, flag state, and port state laws. The plan ensures that Ilios’s employees and the crew of any vessel operated by Ilios are properly trained in preventing maritime pollution. An independent monitor will report to the court about Ilios’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard Investigative Service and the Environmental Protection Agency-Criminal Investigation Division. The case was prosecuted by Emily Greenfield from the U.S. Attorney's Office of the Eastern District of Louisiana and by Ken Nelson of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.”

DOJ GETS BIG BANK TO PAY

The following is an excerpt from the Department of Justice website:         

WACHOVIA BANK N.A. ADMITS TO ANTICOMPETITIVE CONDUCT BY FORMER EMPLOYEES IN THE MUNICIPAL BOND INVESTMENTS MARKET AND AGREES
TO PAY $148 MILLION TO FEDERAL AND STATE AGENCIES

WASHINGTON — Wachovia Bank N.A., which is now known as Wells Fargo Bank N.A., has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $148 million in restitution, penalties and disgorgement to federal and state agencies, the Department of Justice announced today.
As part of its agreement with the department, Wachovia admits, acknowledges and accepts responsibility for illegal, anticompetitive conduct by its former employees.  According to the non-prosecution agreement, from 1998 through 2004, certain former Wachovia employees at its municipal derivatives desk entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment and related contracts.  These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.
“The illegal conduct at Wachovia Bank corrupted the bidding practices for investment contracts and deprived municipalities of the competitive process to which they were entitled,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Today’s resolution achieves restitution for the victims harmed by Wachovia’s anticompetitive conduct and ensures that Wachovia disgorges its ill-gotten gains and pays penalties for its illegal conduct.  We are committed to ensuring competition in the financial markets and our investigation into anticompetitive conduct in the municipal bond derivatives industry continues.”
Under the terms of the agreement, Wachovia agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry.  To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation.  Nine of the 18 executives charged have pleaded guilty.    
The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and 26 state attorneys general also entered into agreements with Wachovia requiring the payment of penalties, disgorgement of profits from the illegal conduct and payment of restitution to the victims harmed by the manipulation and bid rigging by Wachovia employees, as well as other remedial measures.
As a result of Wachovia’s admission of conduct; its cooperation with the Department of Justice and other enforcement and regulatory agencies; its monetary and non-monetary commitments to the SEC, IRS, OCC and state attorneys general; and its remedial efforts to address the anticompetitive conduct, the department agreed not to prosecute Wachovia for the manipulation and bid rigging of municipal investment and related contracts, provided that Wachovia satisfies its ongoing obligations under the agreement.
Earlier this year, JPMorgan Chase & Co. and UBS AG also entered into agreements with the Department of Justice and other federal and state agencies to resolve anticompetitive conduct in the municipal bond derivatives market.  In July 2011, JPMorgan agreed to pay a total of $228 million in restitution, penalties and disgorgement to federal and state agencies for its role in the conduct.  In May 2011, UBS AG agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies for its participation in the anticompetitive conduct. 
The department’s ongoing investigation into the municipal bonds industry is being conducted by the Antitrust Division, the FBI and the IRS-Criminal Investigation.  The department is coordinating its investigation with the SEC, the OCC and the Federal Reserve Bank of New York.  The department thanks the SEC, IRS, OCC and state attorneys general for their cooperation and assistance in this matter.
The Antitrust Division, SEC, IRS, FBI, state attorneys general and OCC are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency 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." 

CORPORATION ET. AL. PAY MILLIONS IN FINES AND DISGORGEMENT MONEY

The following is an excerpt from the SEC web site:
November 15, 2011
“The Securities and Exchange Commission announced today that on November 8, 2011, the U.S. District Court for the Northern District of Texas ruled that Timothy Page, of Malibu, California, and his company Testre LP are liable for violating the registration provisions of the federal securities laws. The Court ordered Page to pay $2.49 million in disgorgement and $400,284 in prejudgment interest. The Court also ordered three relief defendants - Reagan Rowland and Rodney Rowland, of Los Angeles, California, and John Coutris, of Irving, Texas - to pay back their ill-gotten gains.
The Commission's complaint alleged that Page and Testre violated the registration provisions of the federal securities laws when they engaged in an unregistered public offering of ConnectAJet.com, Inc., a reverse-merger company that claimed it would "revolutionize the aviation industry" by creating a real-time, online booking system for private jet travel. The Commission alleged that Page and his collaborators purchased tens of millions of shares directly from ConnectAJet.com, Inc. for pennies per share, under a purported registration exemption under the Securities Exchange Act of 1933, Regulation D, Rule 504. The Commission alleged that Page then touted the stock to investors through a national marketing campaign and dumped his shares into the public market when no registration statement was filed or in effect.
The Court ruled that Page and Testre violated Section 5 of the Securities Act of 1933. In addition to the monetary relief granted by the Court, the Commission continues to seek the following additional relief against Page and Testre: civil penalties, penny stock bars, and injunctions from future violations of Section 5 of the Securities Act of 1933. Reagan Rowland and Rodney Rowland were ordered to pay $138,219 and John Coutris was ordered to pay $281,840 in ill-gotten gains they received from Ryan Reynolds, one of Page's collaborators.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.”