Disc 1

1. Jennifer Rush - The Power Of Love
2. Westlife - Flying Without Wings
3. Dee C. Lee - See The Day
4. Backstreet Boys - Shape Of My Heart
5. Savage Garden - To The Moon & Back
6. Sophie B. Hawkins - Right Beside You
7. Gloria Estefan - Can't Stay Away From You
8. Simply Red - For Your Babies
9. Michael Bolton - Time, Love And Tenderness
10. East 17 - Deep
11. The Brand New Heavies - Back To Love
12. Finley Quaye - Your Love Gets Sweeter
13. Martika - Love...Thy Will Be Done
14. Beverley Craven - Promise Me
15. Chicago - Hard Habit To Break
16. Curtis Stigers - You're All That Matters To Me
17. Paul Young - Everytime You Go Away
18. Peter Cetera - Glory Of Love
19. Tina Arena - Chains
20. Johnny Logan - Hold Me Now

Disc 2

1. The Corrs - Dreams
2. The Cars - Drive
3. Foreigner - I Want To Know What Love Is
4. The Pretenders - I'll Stand By You
5. Bangles - If She Knew What She Wants
6. Aztec Camera - How Men Are
7. Everything But The Girl - I Don't Want To Talk About It
8. Shawn Mullins - Lullaby
9. Catatonia - Strange Glue
10. Fairground Attraction - Find My Love
11. Jimmy Nail - Cowboy Dreams
12. Linda Ronstadt Featuring Aaron Neville - Don't Know Much
13. Chris Rea - Fool (If You Think It's Over)
14. Judie Tzuke - Stay With Me `Till Dawn
15. Spandau Ballet - Through The Barricades
16. Simply Red - Angel
17. Luther Vandross - Love The One You're With
18. The Pointer Sisters - Slow Hand
19. Aretha Franklin - (You Make Me Feel Like) A Natural Woman
20. Rose Royce - Wishing On A Star

Disc 3

1. Anita Baker - Sweet Love
2. En Vogue - Don't Let Go (Love)
3. TLC - Red Light Special
4. R. Kelly - Bump `N' Grind
5. Toni Braxton - Un-Break My Heart
6. Another Level - Freak Me
7. Lisa Stansfield - Change
8. Michael McDonald - I Keep Forgettin' (Every Time You're Near)
9. Terence Trent D'Arby - Sign Your Name
10. The O'Jays - Darlin' Darlin' Baby (Sweet, Tender, Love)
11. Harold Melvin & The Blue Notes - If You Don't Know Me By Now
12. Al Green - L-O-V-E (Love)
13. Rose Royce - Love Don't Live Here Anymore
14. Earth, Wind & Fire - After The Love Has Gone
15. Otis Redding - These Arms Of Mine
16. Gene Chandler - Does She Have A Friend For Me?
17. Lou Rawls - You'll Never Find Another Love Like Mine
18. Odyssey - If You're Lookin' For A Way Out
19. Randy Crawford - One Day I'll Fly Away
20. Teddy Pendergrass - Close The Door

Disc 4

1. Elvis Presley - Love Me Tender
2. Andy Williams - Moon River
3. Bobby Vinton - Blue Velvet
4. Perry Como - Magic Moments
5. Tony Bennett - I Left My Heart In San Francisco
6. Otis Redding - My Girl
7. Percy Sledge - When A Man Loves A Woman
8. Dionne Warwick - You'll Never Get To Heaven If You Break My Heart
9. Bobby Darin - Dream Lover
10. Roy Orbison - Only The Lonely (Know The Way I Feel )
11. The Everly Brothers - Love Hurts
12. Bread - Baby I'm A Want You
13. Gladys Knight & The Pips - Best Thing That Ever Happened To Me
14. Johnny Mathis - I'm Stone In Love With You
15. Rick Astley - When I Fall In Love
16. Natalie Cole - The Very Thought Of You
17. The Manhattan Transfer - Chanson D'Amour
18. Gordon Haskell - How Wonderful You Are
19. Robson & Jerome - What Becomes Of The Broken Hearted
20. Dolly Parton - I Will Always Love You

Disc 5

1. Air Supply - All Out Of Love
2. Bread - Make It With You
3. Sad Café - Every Day Hurts
4. Christopher Cross - Arthur's Theme (Best That You Can Do)
5. Daryl Hall & John Oates - She's Gone
6. Carly Simon - The Right Thing To Do
7. Nina Simone - To Love Somebody
8. The Drifters - Save The Last Dance For Me
9. Al Green - I'm Still In Love With You
10. The Delfonics - La-La Means I Love You
11. Teddy Pendergrass - Love T.K.O.
12. Shola Ama - You Might Need Somebody
13. Phyllis Nelson - Move Closer
14. Billy Paul - Me And Mrs. Jones
15. Champaign - How `Bout Us
16. Aretha Franklin - I Say A Little Prayer
17. Mary MacGregor - Torn Between Two Lovers
18. Sonny & Cher - I Got You Babe
19. The New Seekers - I Get A Little Sentimental Over You
20. Fleetwood Mac - Need Your Love So Bad

FRAUD NEWSLETTER, September, 2007

Developer accused of stealing from clients
Indictment alleges he used funds to pay fees
By Susan Diesenhouse | Tribune staff reporter

September 20, 2007

Real estate investors like Scott K. Toberman, who once proposed building the world's tallest skyscraper downtown, walk a fine line.

They must dream big to bring to life complex, costly projects such as the 112-story tower Toberman wanted to build at 7 S. Dearborn St. At the same time, they need to take care that their fantasies don't outstrip their finances.

Toberman could face as many as 20 years in prison and a hefty fine if convicted, according to the indictment.

Undertaking the development of a trophy tower in Chicago's world-class skyline is daunting, said John Murphy, a principal at Ricker Murphy Development LLC, a Chicago-based residential developer.

While he declined to discuss Toberman, his indictment, or projects, Murphy talked about the pitfalls of attempting mega-projects.

"Big projects are very capital intensive," Murphy said. "As you plan, you pay fees to lawyers, architects, builders and engineers. You pedal down the road, then all of a sudden you're staring into the barrel of millions in expenses that can go to waste if you aren't successful."

The indictment alleges Toberman used the funds to pay fees to an architect, engineer, construction consultant and others he hired to help plan 7 S. Dearborn, slated as a mix of residences and offices. He also used the money to support a lavish lifestyle that included buying a boat and expensive wine, the indictment alleges.

And the timing for such a grandiose plan was disastrous. In 1999 and 2000, when he tried to launch the tower designed by Skidmore Owings & Merrill LLP, the real estate industry went through a lurching downturn. Many technology firms that were paying record rents to fill offices throughout the Chicago region floundered, sending vacancy rates soaring and rents tumbling.

According to the indictment, Toberman's firm managed commercial properties at 11 S. LaSalle St., 250 S. Wacker Drive and 18-28 S. Michigan Ave. in Chicago, as well as several office buildings in Georgia, Virginia and Ohio.

The firm collected tenant rents and other funds for landlords, but instead of depositing the money into the building owners' accounts, Toberman knowingly "divert[ed] a substantial portion of the funds for his own personal benefit," the indictment alleges.

Toberman, who lives in the Atlanta area, plans to appear in federal court in Chicago "for an arraignment in the next seven to 10 days," said John L. Sullivan, his Winnetka-based criminal-defense attorney.

Sullivan declined to comment further on the charges Toberman faces.

sdiesenhouse@tribune.com
Chicago Tribune

Hsu ordered held without bail

Norman Hsu appears in a San Mateo County Courtroom.
Democratic fundraiser faces a judge in California concerning a 1991 case in which he pleaded no contest to fraud charges.

By Dan Morain, Los Angeles Times Staff Writer
September 21, 2007

REDWOOD CITY - Former fugitive Norman Hsu, whose efforts to raise money for Democratic candidates propelled him into the limelight, this morning was ordered held without bail here in the jurisdiction he had recently fled.

Hsu was ordered held in connection with a 1991 case in which he pleaded no contest to fraud charges. Hsu's attorney, James Brosnahan, today urged Superior Court Judge Robert D. Foils to expunge that plea, which would have led to a three-year prison term.

Today's action comes a day after Hsu, who raised hundreds of thousands of dollars for Democratic candidates, was named in a federal complaint that alleged he was the mastermind of a Ponzi scheme that defrauded investors from New York to California out of more than $60 million.

Investors in the New York area said they lost at least $40 million. Hsu reportedly took in millions more from about 60 investors in Orange County.

Hsu had pleaded no contest to California theft charges in connection with a fraudulent import business. He surrendered last month but fled again after being released on $2 million bail. He was apprehended in Colorado and returned to California on Thursday.

Brosnahan today asked that the $2 million bail be returned. Judge Foils told the lawyer to put the request in writing.

Hsu was unknown on the national political scene before 2003, but his ability to provide campaign donations whenever he was asked earned him invitations to exclusive events with Bill and Hillary Clinton and their friends.

Hsu was flying high with the Clintons and with his investors until a few weeks ago, when the Wall Street Journal and then The Times reported details about his activities.

After The Times revealed that Hsu was a fugitive from the grand theft case, he agreed to appear at a San Mateo County court hearing. Instead of showing up, he fled again. He was removed from an eastbound train in Grand Junction after falling ill. Passengers reported that he was behaving strangely and was in apparent distress.

Before boarding the train, Hsu had sent letters appearing to indicate that he planned to commit suicide. The letters turned up in the offices of charities and political campaigns he had supported.

FBI agents said that after Hsu was arrested this month in Colorado, he asked to talk with them -- without his attorneys present -- and waived his right to counsel. During the conversation, the complaint said, he confessed that the deals into which his network of investors had poured millions "did not actually exist."

Brosnahan today criticized the questioning by the FBI, calling it "wrong, absolutely wrong."

U.S. Atty. Michael J. Garcia of the Southern District of New York unsealed a 16-page complaint charging Hsu with mail fraud, wire fraud and violating the Federal Election Campaign Act by reimbursing some associates for their political donations. If convicted, he could face up to 45 years in prison.

"This case is about greed," the New York prosecutor said at a news conference. Hsu sought financial gain, he said, and contrived "to purchase a place on the celebrity campaign circuit."

Last week, after The Times reported that some Hsu investors had complained of being pressed to make contributions, Clinton's campaign said it would return $850,000 from about 260 donors associated with him.

S.F. lawmaker pleads not guilty to fraud

By Marcus Wohlsen
ASSOCIATED PRESS
09/22/2007

SAN FRANCISCO -- A rookie San Francisco lawmaker accused of attempting to extort $80,000 from a group of fast-food business owners pleaded not guilty Friday.

Supervisor Ed Jew, charged Thursday with one federal count of mail fraud, appeared briefly in U.S. District Court, then was released on $1 million bond.

The charge came after an FBI sting in which prosecutors say the operators of a group of tapioca drink shops gave Jew $40,000 in cash and said they would paid him another $40,000 later.

Jew, 47, has acknowledged taking the money but said he did so at the businessmen's insistence and on behalf of a consultant he recommended they hire to help with their permit problem.
Jew's attorney, Steven Gruel, said the federal government's case was weak, calling the mail fraud charge a "throwaway charge because you can't get something else" and questioning what kind of influence Jew could have had over the issuing of city permits.

"He doesn't control the planning commission," Gruel said. "And he certainly doesn't control what types of permits are necessary for retailers."

Jew faces as many as 20 years in prison if convicted on the federal fraud charge.
The supervisor is already facing felony charges of perjury and election code violations on suspicion of lying about where he lived so he could run for office in San Francisco. Jew has pleaded not guilty to those charges.

Mayor Gavin Newsom issued a statement Thursday calling on Jew to resign.

Newsom has requested a one-on-one sit-down with Jew, but the supervisor would meet with the mayor only with lawyers present, Gruel said. He said Jew had no plan to resign.

Jew would automatically lose his seat if convicted of any felonies, but only after his appeals are exhausted. City Attorney Dennis Herrera is seeking approval from the state attorney general to sue for Jew's ouster over the assertions the supervisor doesn't meet city residency requirements.
Jew's trial on the perjury and election code allegations is set to begin late next month. Gruel questioned the timing of the U.S. government's filing of the "media-friendly" complaint, saying the wide publicity surrounding the federal charge would taint the jury pool in the other case.

"I have grave concerns whether or not the supervisor can get a fair trial in San Francisco on those state charges," Gruel said.

Finance employees charged with stock-loan fraud

Kira Bindrim
September 20. 2007

Former employees of Morgan Stanley Group Inc. and Janney Montgomery Scott were arrested and charged with securities fraud on Thursday as part of a two-year federal probe into stock-loan desk workers who allegedly took millions of dollars in illegal kickbacks.

Former Morgan Stanley trader Peter Sherlock and the former manager of the Janney Montgomery stock-loan desk, Andrew Caccioppoli, were among the five people indicted. Brooklyn U.S. Attorney Roslynn Mauskopf said Thursday that ten others have already pleaded guilty to taking part in federal kickback and bribery schemes in the stock-loan industry.

In a stock-loan transaction, one financial firm generally borrows shares from another in exchange for cash collateral. Stock loan “finders” can assist securities firms by locating inventories of a given security and matching borrowers and lenders in transactions, and receive “finders’ fees” for their services.

Mr. Sherlock was charged with conspiracy to commit securities fraud and wire fraud, money laundering, conspiracy and making false statements to federal agents. While at Manhattan-based Morgan Stanley, he allegedly directed the company’s stock-loan business to specific finders in exchange for cash kickbacks, as well as hundreds of thousands of dollars paid directly to his brother-in-law.

Mr. Caccioppoli allegedly caused Philadelphia-based Janney Montgomery to pay $350,000 in false finders’ fees to his sister and her husband. He was charged with conspiracy to commit securities fraud and mail fraud.

The arrests are part of a probe initiated by the FBI and the Securities and Exchange Commission, focused specifically on allegations that so-called finders take fraudulent fees in exchange for cash bribes, often when no services have been rendered.

“Wall Street professionals who line their own pockets by fraud breach the fundamental duties owed to their employers and the investing public,” Ms. Mauskopf said in a statement. “Such conduct undermines the public’s confidence in the nation’s securities markets and will be vigorously investigated and prosecuted.”

Steelers' Ward, associate accused of taking money

By Bobby Kerlik
TRIBUNE-REVIEW
Wednesday, September 19, 2007

A business associate of Hines Ward has accused the Steelers receiver and another associate, who together own a South Side bar, of removing money from the business and insurance fraud.
Ward owns the Locker Room Bar & Grille, which opened in December 2005 on East Carson Street, along with Kimberly Pitts and Nicholas Lettieri.

Court documents reveal an ugly legal battle over the bar's bank accounts, accounting books and insurance claims between the owners.

Specifically, Lettieri leveled accusations in court documents that Pitts, her husband, Korry Pitts, and Ward failed to deposit cash receipts into the company accounts and have diverted the funds to their own personal bank accounts. Lettieri states that despite profits of more than $1 million and insurance money of $500,000, the company's bank accounts totaled less than $19,000 as of last week.
He also claims that Pitts, her husband, and Ward created false invoices to defraud the business of insurance proceeds of $300,000.

"We don't know where the money went," said Lettieri's attorney, Bruce Fox. "There's been a lot of money drained from the business."

Attorney Thomas Castello, who represents the business, called the allegations, "baseless, ridiculous and unfounded."
Attorney David Slomski, who was hired to represent Kimberly Pitts and Ward, could not be reached for comment.

Ward and several Steelers are known to frequent the bar, and some have tended bar on occasion.
Castello said profits from the bar never came anywhere close to those totals and that Lettieri was a part of the process to submit insurance claims after a February incident in which a boiler malfunctioned and flooded the bar. He also said the bar was closed until June, while repairs were made.
Castello said the insurance company also inspected the premises. The carrier, RCA Insurance, could not be reached for comment.

The court battle began last week when Castello filed a lawsuit on behalf of the company against Lettieri. In that complaint, the company accused Lettieri of withdrawing all of the company's funds -- about $19,000 -- on Sept. 11, causing the business to bounce checks, and miss payroll and tax payments.
Fox said the business owes Lettieri more than $100,000 from profits and that Lettieri withdrew the money because it's part of what he's owed.

Allegheny County Common Pleas Judge Christine Ward on Monday ordered Lettieri to return the $19,000. She also ordered that the Locker Room open its business records to Lettieri, something his attorney said was being denied.
A hearing on the case is set for Thursday.

Fox said he does not know to what extent Ward was involved in the financial mess. He said he believes Korry Pitts, whom he described as a business associate of Ward, deposited the money into a personal account.
Court records show Korry Pitts was sentenced to 30 months in prison in 1997 after pleading guilty to a federal charge of conspiracy to distribute narcotics. County court records show Korry and Kimberly Pitts recently bought a $360,000 Franklin Park home in April.

From 63 Different Trenches
(Sept. 18, 2007)

Forensic accounting is hot for a number of reasons. The most obvious is that as a specialty it has become very lucrative. So much so, I know of firms that have stopped during traditional tax and accounting work. Also, accounting and auditing standards are increasingly delineating new obligations with regard to practitioners’ duty to protect against fraud.

Firms can institute processes and procedures to discover fraud and study lists of best practices, but there is only one real way to learn, and that is by actual experience. Personally, I like to learn from other people’s experiences first so I know basically what I should be watching out for.

Primers on forensic accounting are good, but they generally talk in the theoretical sense. That’s why I like a new book entitled, Fraud Casebook: Lessons from the Bad Side of Business (published by John Wiley & Sons). It describes 62 different fraudulent schemes directly dealt with by members of the Association of Certified Fraud Examiners (ACFE), and is edited by Joseph Wells, ACFE founder and chair (the 63rd individual in the trenches).

With each of the 62, you get a unique view of the steps that were followed by the forensic accountants as asset misappropriation, corruption, financial statement irregularities, and other frauds were discovered. Just as important is that each forensic accountant details with Wells' help the lessons they learned and what preemptive steps could have been taken to preclude that fraud from occurring. You get a real insider’s view. In reading a few, I was amazed not so much at the fraud being committed but at how third parties, such as investment bankers and employees at the company where the fraud was being committed, actually furthered the fraud unwittingly, purposely, or by looking the other way because of fear of losing their job or a financial benefit.

For example, in one situation, the forensic accountant reports, “The demeanor of the staff was unsophisticated, yet as compared to all other banks, this institution’s published financial information would strongly support an argument that its employees were financial geniuses.”

The real benefit of the book is you get to feel exactly what it is like in the forensic accounting trenches, which is where most practitioners are going to be working.
By Howard Wolosky, Editor-in-Chief, Practical Accountant

FRAUD INFO

Lehman Collapse Probed by 3 Federal Grand Juries

By Linda Sandler and Christopher Scinta

Oct. 17 (Bloomberg) -- Lehman Brothers Holdings Inc., which last month filed the largest bankruptcy in history, is the subject of three federal criminal probes and at least 12 subpoenas, according to a lawyer for the failed bank.

Lead Lehman bankruptcy lawyer Harvey Miller said yesterday in Manhattan federal court that the investigations were launched by New York U.S. attorneys in Brooklyn and Manhattan as well as in Newark, New Jersey. They are focusing in part on Lehman's role in the $330 billion auction rate securities market and possible crimes associated with its $6 billion June stock issue, according to a person familiar with the case.

'`It's clear they have given it some urgency and priority,'' said Robert Plotkin, a former Justice Department attorney, now a white collar criminal defense lawyer at Richmond, Virginia-based McGuireWooods. ``Given the notoriety and the headlines, this would be one of the ones that would be on a faster track.''

The demise of Lehman, which sought court protection Sept. 15, accelerated a global credit crisis that has wiped out $30 trillion of equity value in the past year. The U.S. has begun investigations of mortgage lending, securitization and failed banks including New York-based Lehman. The FBI is looking into 26 firms, including American International Group Inc., a senior law- enforcement official said.

`An Outcry'

``There's been an outcry from people in the streets, and that puts pressure on prosecutors to do something,'' said Todd Harrison, a former New York federal prosecutor now with Washington-based Patton Boggs. ``They're going to be looking at all aspects of the credit crisis, including the rating agencies and the mortgage lenders who packaged and sold securities.''

The New York Post reported today that Lehman Chief Executive Officer Richard Fuld is among the 12 subpoenaed, without saying where it got the information. CNBC reported former Lehman Chief Financial Officer Erin Callan, 42, now Credit Suisse's global hedge fund chief, was subpoenaed, without saying where it got the information. She didn't immediately return calls seeking comment.

``It could be an early notice to him not to destroy any documents, obstruct the investigation or talk to witnesses out of school,'' said Plotkin of the reported subpoena of Fuld, 62. ``They also might want to get him in there and nail down his story before he has a chance to talk to advisers.''

June Stock Sale

Investigators have subpoenaed Ernst & Young LLP, Lehman's auditor; U.K.-based bank Barclays Plc, which bought Lehman's North American brokerage; and the New Jersey Division of Investments, which runs a pension fund that lost $115.6 million on a $180 million investment in the June stock sale, according to people familiar with the case.
It's not clear whether these subpoenas are part of the 12 noted by Miller, 75, of New York-based Weil, Gotshal & Manges. In court yesterday, he said a state attorney general is also probing Lehman, without elaborating.

Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in Manhattan, Robert Nardoza, a spokesman for Brooklyn U.S. Attorney Benton Campbell, and Fuld's lawyer, Patricia Hynes of London-based Allen & Overy, declined to comment.

Garcia, 47, Campbell, 42, and Newark, New Jersey U.S. Attorney Christopher Christie have increased their resources to prepare for possible prosecutions associated with the credit crisis and bank failures.

Christie, 46, has subpoenaed documents to determine whether Lehman failed to fully disclose its eroding financial condition at the time of the $6 billion stock offering, according to people familiar with the matter.

Opened Inquiries

Campbell has opened inquiries into whether Lehman executives misled investors about the firm's financial health and whether Zurich-based UBS AG lied to investors about securities backed by subprime mortgages, according to a person familiar with the case.

Also subpoenaed by federal prosecutors were Putnam Investments LLC, the Boston-based mutual fund firm that oversees about $163 billion and bought Lehman bonds and shares; New York- based fund manager BlackRock Inc., a Lehman creditor; AIG, once the world's largest insurer; and New York-based C.V. Starr & Co., run by ex-AIG CEO Maurice Greenberg, according to the people.

The grand jury probes follow not only the implosion of Lehman, but the collapse of New York-based Bear Stearns Cos. earlier this year, the U.S. government takeover of Fannie Mae and Freddie Mac and the rescue of New York-based AIG.

Auction Rate Securities

On the issue of auction rate securities, the grand juries may be exploring whether Lehman misled investors about the viability of the securities. The market collapsed in February after demand for the debt dried up. Banks paid to manage bidding on the debt abandoned the market and stopped acting as buyers of last resort. That caused rates to rise to as high as 20 percent.

Last month, Brooklyn prosecutors charged two former Credit Suisse Group Inc. traders with fraudulently selling corporate clients more than $1 billion of auction-rate securities linked to subprime mortgages, which they claimed were backed by U.S. guaranteed student loans.

A challenge for U.S. attorneys considering prosecutions based on the collapse of the subprime or auction rate markets will be to distinguish normal business activities from fraud.

Prosecutors may rely on e-mails obtained through subpoenas, interviews of employees and forensic accounting to build a case. The U.S. House of Representatives Committee on Oversight and Government Reform recently released several e-mails it obtained from the bank as part of a hearing Oct. 6 in Washington.

Bear Stearns

Campbell, who obtained indictments of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin in June, cited e-mails showing their disparagement of the securities they were touting to clients. The defendants, who pleaded not guilty, face fraud charges for cheating investors out of $1.6 billion.

``E-mails are a great tool,'' said Christie. ``People seem freer to say things in e-mails that they might not say otherwise.''

Prosecutors may seek to bring a securities fraud prosecution if they can show that Lehman officials sought to mislead investors as to the financial health of the firm.

``They'll be looking for any misrepresentation by the heads of the divisions or anyone working for them,'' said Patton Boggs lawyer Todd Harrison. ``For an indictment, the misrepresentation has to be material and you need to show that investors relied on it to invest more money or keep money in.''

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

F.B.I. Struggles to Handle Financial Fraud Cases

By ERIC LICHTBLAU, DAVID JOHNSTON and RON NIXON

WASHINGTON — The Federal Bureau of Investigation is struggling to find enough agents
and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

The pressure on the F.B.I. has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars.

Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

According to previously undisclosed internal F.B.I. data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.

Over all, the number of criminal cases that the F.B.I. has brought to federal prosecutors — including a wide range of crimes like drug trafficking and violent crime — dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.

“Clearly, we have felt the effects of moving resources from criminal investigations to national security,” said John Miller, an assistant director at the F.B.I. “In white-collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims.”

But Justice Department data, which include cases from other agencies, like the Secret Service and Postal Service, illustrate the impact. Prosecutions of frauds against financial institutions dropped 48 percent from 2000 to 2007, insurance fraud cases plummeted 75 percent, and securities fraud cases dropped 17 percent.

Statistics from a research group at Syracuse University, the Transactional Records Access Clearinghouse, using somewhat different methodology and looking only at the F.B.I., show an even steeper decline of nearly 50 percent in overall white-collar crime prosecutions in the same period.

In addition to the investigations into Fannie Mae and Freddie Mac, the F.B.I. is carrying out investigations of American International Group and Lehman Brothers, and it has opened more than 1,500 other mortgage-related investigations. Some F.B.I. officials worry privately that the trillion-dollar federal bailout of the financial industry may itself become a problem because it contains inadequate controls to deter fraud.

No one has suggested that a quicker response would have averted the mortgage meltdown, but some officials said a faster reaction might have deterred more of the early schemes that seized on loose federal lending regulations.

“They were very late to the game,” Representative Zoe Lofgren, a California Democrat who has quarreled with the F.B.I. over its financing priorities, said of the bureau’s response to the mortgage crisis. “They were not on top of this, and they’re just now starting to really do something.”

Republicans and Democrats in Congress are pushing for a more aggressive response by the F.B.I. Representatives Mark S. Kirk, an Illinois Republican who sits on the House appropriations committee, and Chris P. Carney, a Pennsylvania Democrat, called on Congress to triple the F.B.I.’s financing for financial crimes investigations.

“To fix our system and prevent a repeat of the events we now see,” they wrote in a letter this month to Robert S. Mueller III, the F.B.I. director, “we have got to set an example by bringing the full might of federal law enforcement against the people who illegally profited or destroyed companies at the expense of our country.”

In public, Mr. Mueller has said that the bureau is doing more with less, when it comes to criminal prosecutions. And Justice Department officials have repeatedly asserted the administration’s commitment to fight violent and white-collar crime even as they have not provided the bureau additional resources.

But current and former officials say Mr. Mueller has lost a behind-the-scenes battle with the Justice Department and the Office of Management and Budget to replenish the criminal ranks.

Interviews and internal records show that F.B.I. officials realized the growing danger posed by financial fraud in the housing market beginning in 2003 and 2004 but were rebuffed by the Justice Department and the budget office in their efforts to acquire more resources.

“The administration’s top priority since the 9/11 attacks has been counterterrorism,” Peter Carr, a Justice Department spokesman, said. “In part, that’s reflected by a significant investment of resources at the F.B.I. to answer the call from Congress and the American public to become a domestic intelligence agency in addition to a law enforcement agency.”
From 2001 to 2007, the F.B.I. sought an increase of more than 1,100 agents for criminal investigations apart from national security. Instead, it suffered a decrease of 132 agents, according to internal F.B.I. figures obtained by The New York Times. During these years, the bureau asked for an increase of $800 million, but received only $50 million more. In the 2007 budget cycle, the F.B.I. obtained money for a total of one new agent for criminal investigations.

In 2004, one senior F.B.I. official, Chris Swecker, warned publicly that a flood of fraudulent mortgage deals had the potential to become “an epidemic.” Yet the next year, as public warnings about fraud in the subprime lending markets began to approach their height, the F.B.I. had the equivalent of only 15 full-time agents devoted to mortgage fraud out of a total of some 13,000 agents in the bureau.

That number has grown to 177 agents, who have opened 1,522 cases. But the staffing level is still hundreds of agents below the levels seen in the 1980s during the savings and loan crisis.

F.B.I. officials said they had had no choice but to make the cuts in the criminal division, which they said were necessary to expand the bureau’s national security effort, particularly in the wake of criticism of the bureau’s performance in failing to detect the Sept. 11 plot.
In white-collar crime, they said the bureau has given up only lower-level cases of marginal significance that might have never been prosecuted anyway. They say they have focused the available criminal resources on public corruption and other difficult crime issues in which the F.B.I. can make a unique contribution.

“We only had a finite number of white-collar crime agents available to address the threat
that mortgage fraud posed,” said Joseph Ford, who retired from the F.B.I. this year and once served as its chief financial officer.

The Justice Department is relying more than ever on the state and local authorities to pick up the slack through joint task forces. And private investigators say that companies victimized by fraud are turning to them in increasing numbers because they are unable to attract much attention from the F.B.I. anymore.

In some instances, private investigative and accounting firms are now collecting evidence, taking witness statements and even testifying before grand juries, in effect preparing courtroom-ready prosecutions they can take to the F.B.I. or local authorities.

“Anytime you bring to the F.B.I. a case that is thoroughly investigated and reduce the amount of work for investigators, the likelihood is that they will take the case and present it for prosecution,” said Alton Sizemore, a former F.B.I. agent who is a fraud examiner for Forensic Strategic Solutions in Birmingham, Ala.

One American company facing extortion demands last year from a computer hacker used private investigators from the Kroll firm to do much of the legwork in the case as the F.B.I. monitored and directed the situation behind the scenes, said Daniel Karson, executive managing director for Kroll. The private investigators even went undercover and set up a sting operation that led them to Germany, where the authorities made an arrest.

Mr. Karson said the F.B.I. no longer had the resources to take on such lower-level cases by itself. “When you come in with a garden variety, plain vanilla crime, you may have to stand in the queue,” he said.

Some critics question whether the shift indicates not just a lack of resources, but a lack of interest by the Bush administration.

After the collapse of Enron in 2002, the Justice Department moved aggressively against corporate fraud — too aggressively, in the view of some people within the administration. It set up a national task force to tackle the problem, garnered hundreds of convictions at companies like WorldCom, Adelphia and Enron, and forced the closure of Arthur Andersen, the accounting firm, for its role in the Enron collapse.

But several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.

Justice Department officials said political pressures had never influenced the way prosecutors approached corporate cases. But the department’s approach has become noticeably more tempered in the last several years.

This spring and summer, as public concerns about the subprime mortgage crisis were growing, Attorney General Michael B. Mukasey rejected repeated calls for the creation of a national task force like the one used after the Enron collapse. The attorney general likened the problem to “white-collar street-crime” that could best be handled by individual United States attorneys’ offices.

In the last four years, the Justice Department has scored fewer of the big-name prosecutions that marked President Bush’s first term in office. Even when investigations have pointed to corporate wrongdoing, the Justice Department has agreed, in dozens of cases in the last four years, to “deferred prosecutions" that allowed companies to pay fines in order to avoid criminal prosecution.

Paul J. McNulty, who served as deputy attorney general under Alberto R. Gonzales, said the complexity of white-collar investigations and the shortage of investigators had driven a decline in high-profile cases.

“There’s no question that the department has been stretched thin when it comes to resources generally, and that has affected white-collar enforcement in a variety of areas,” Mr. McNulty said in an interview.

“What happened is that the first years after the Enron collapse, there were some very high profile, noticeable cases — the low-hanging fruit — that gave Justice the opportunity to rack up some very big wins,” he said. “Those cases played themselves out and it became tougher to find those big cases.”

Citigroup Wins Parmalat Case, $364 Million Jury Award (Update3)

By David Voreacos Oct. 20 (Bloomberg)

-- Citigroup Inc. beat a lawsuit seeking $1.92 billion in damages when a New Jersey state court jury ruled it didn't help corrupt executives at Parmalat SA loot the Italian dairy before the company collapsed in 2003.

Lawyers for Parmalat Chief Executive Officer Enrico Bondi failed to prove that the New York-based bank aided in thefts that helped bankrupt the company, jurors ruled today in Hackensack, New Jersey. Jurors ordered Parmalat to pay $364.2 million in damages to Citigroup after finding the dairy committed fraud, negligent misrepresentation and conversion, also known as theft.

Bondi's lawyers argued that Citigroup was willfully blind to looting by ex-CEO Calisto Tanzi and former Chief Financial Officer Fausto Tonna, who are on trial in Parma, Italy, on fraudulent-bankruptcy charges. Lawyers for Citigroup, a banker for Parmalat from 1994 to 2003, said its employees didn't know about the looting and its reasonable safeguards were thwarted.

``Tonna and Tanzi committed a massive fraud not just on Citi, they committed it on all sorts of people, and they got away with it,'' Citigroup attorney Theodore Wells said in closing arguments last week. ``They got away with it because what they did was brazen and unprecedented.''

Parmalat went bankrupt after revealing that a 3.95 billion- euro ($5.34 billion) account at Bank of America Corp. didn't exist and stating that documents certifying the account were falsified. Parmalat emerged from bankruptcy and returned to the Italian stock market in 2005 after a two-year reorganization under Bondi.

`Convincing Arguments'

``The fact that neither Citi nor its employees did anything wrong was the most convincing argument,'' Wells said today in an interview after the verdict. ``Not one single fact witness testified that Citi or its employees did anything wrong.''

Bondi intends to appeal, attorney Kenneth Chiate said.

``The jury did what they're supposed to do,'' Chiate said. ``Citi probably believes that the jury came to the right verdict. Parmalat does not believe it was the right verdict.''
Citigroup must present the judgment to a bankruptcy court in Parma, Italy, a Parmalat spokeswoman said. If the judgment is authorized in that court, Citigroup would likely receive about 18.8 million Parmalat shares, the spokeswoman said.

Jurors deliberated for three days before returning a verdict in a trial that began May 15.
The jury found by a 6-1 margin Citigroup didn't aid and abet a breach of fiduciary duty. It agreed by the same margin on Citigroup's counterclaims that Parmalat engaged in fraud, negligent misrepresentation and conversion.

4th-Biggest 2008 Award

Jurors awarded $364.2 million each of the first two claims and $210.2 million on the conversion claim. The judgment was capped at $364.2 million. It's the fifth-largest verdict in the U.S. so far in 2008, according to data compiled by Bloomberg.

The juror who voted against Citigroup, Lisa Mansolillo Dalie, said that while she disagreed with the other six, all took the job seriously and reached honest conclusions.

``I obviously absorbed the evidence in a completely different way than the majority of others,'' said Dalie, 48, a graphic artist. ``I did believe that Citigroup was involved.''
Bondi's lawyers, she said, ``had a strong circumstantial case. The e-mails and some of the testimony led me to certain opinions that were bolstered by plaintiffs' experts.''
Jurors ``all really gave it careful consideration,'' said Dalie, who broke her foot during the trial.

`Thought Things Through'

``I don't think anybody rushed to judgment here,'' she said. ``Nobody made their decision based on just wanting to get out of the jury room or ending this case. Everybody really thought things through and came to the verdict they truly believed in.''
Parmalat has negotiated settlements with banks and auditors that worked for the company during the time of the fraud.

At the trial, Bondi attorney Steven Madison argued that Citigroup ``turned a blind eye to a massive fraud and looting. Without the assistance of Citibank providing that cash and assistance on false financial statements, the whole house of cards would have come down much sooner.''

In his summation, Wells said, ``Citi was mugged. It's like somebody robbed you, put a gun, took your money and then somebody later on criticized you. `Oh, you should have done some jujitsu and beat the robber up. It's your fault you got robbed.' It's an insanity.''
Citigroup succeeded in limiting the scope of the case before the trial began. Superior Court Judge Jonathan Harris agreed in April to dismiss Bondi's claims of fraud, conspiracy, racketeering and unjust enrichment.

Enron Comparison

At the trial, Citigroup lawyer John Baughman said Bondi's lawyers repeatedly strained during 50 days of trial testimony to tie the Parmalat fraud to the collapse of Enron Corp. in 2001.

``They don't give you evidence, they just give you buzzwords over and over and over again,'' Baughman told the jury. ``They're treating you like children. They think you're not going to use your critical thinking.''

Citigroup is ``delighted the jury has vindicated our position,'' said Andrea Hurst, a spokeswoman.

``We have said from the beginning of this case that we have done nothing wrong. Citi was the largest victim of the Parmalat fraud and not part of it,'' the company said in a statement.

The case is Bondi v. Citigroup, BER-L-10902-04, New Jersey Superior Court (Hackensack).
To contact the reporter on this story: David Voreacos in Hackensack, New Jersey, at dvoreacos@bloomberg.net.

Online global fraud racket busted

LONDON: FBI officers recently busted a secret international website that helped fraudsters buy and sell stolen credit card details.

The site has been shut down and nearly 60 people, including 11 in Britain, have been arrested in connection with the fraud, said FBI officers.

The operations of the site was exposed after undercover FBI officers infiltrated it and spent nearly two years identifying the key users worldwide and then conducted a series of raids in UK, US, Germany and Turkey.

It was the Serious Organised Crime Agency (SOCA), which led the UK arm of the global operation to expose the shady deals of DarkMarket.

Officials said on Friday that the fraudsters had been carrying on this business for the last three years. It had a membership base of around 2500 people.

The site that provide access only on invitation, used to sell personal data such as online banking details and also allowed criminals to exchange information about how to commit fraud.

SOCA termed it as "one of the most pernicious online criminal forums in the world", which helped many criminals to commit online fraud worth millions.

According to FBI estimates the scale of potential fraud and loss from the site's activities is to the tune of more than £40m. A man was recently convicted of buying £250,000 of personal data on the site in only six weeks, it said, estimating that the information could have been used to commit £10m of identity fraud.

The FBI estimated the site had 2,500 registered members at its peak

Identity fraud 'fastest-growing crime'

With identity fraud becoming the nation's fastest-growing crime, Crime Stoppers has urged Australians to stop throwing personal information into rubbish bins.

Identity fraud has claimed half-a-million victims in the last 12 months at an estimated cost of $1 billion to the national economy, says the Australian Bureau of Statistics (ABS).
And professional women in their 20s and 30s are most at risk.

Despite the danger, a Newspoll survey shows nearly 70 per cent of people throw away bank and credit card statements, social security and tax file number details, utility bills and other personal information.

Ahead of national identity fraud awareness week, Crime Stoppers has urged Australians to shred their statements and personal information, as well as digital information held on CDs, before throwing it away.

"This is the only safe way to ensure that your personal information is secure from dumpster divers," said Crime Stoppers chairman Peter Price.

Over the past year, 383,300 people experienced at least one unauthorised, fraudulent transaction using their credit card or account details, the ABS said.

Another 124,000 fell victim to identity fraud, with unauthorised people using their driver's licence, tax file number or passport to conduct business, open accounts or take out loans illegally in their name.

National identity fraud awareness week runs next week from Monday to Friday.
© 2008 AAP

Death records plan to curb identity fraud

Each week, vetted organisations including credit reference agencies will be sent encrypted files containing details of everyone who has died in the UK.

The move is aimed at reducing fraud by criminals who use obituaries and other information to build up an identity to open bank accounts, commit benefit fraud or aid illegal immigration.

In one case that came to court last month, a 39-year-old Edinburgh man admitted to stealing the identity of a dead child to open a bank account and obtain credit cards. Over three years more than Ł200,000 passed through the account.

This type of crime can be devastating for relatives of the deceased who have to deal with the consequences, as well as having a knock-on affect on legitimate borrowers as banks raise costs to recoup their losses.

Around 12,000 records a week will be made available by the General Register Office for England & Wales, and its Scottish and Northern Irish counterparts.

They will go to credit checking firms who have applied to receive the information under the initiative.

Figures suggest that the cost of the crime to the UK is in the region of £1.7bn every year. The UK's Fraud Prevention Service, Cifas, said that last year alone its members had identified 65,043 victims.

"Identity fraud continues to be a serious problem which we know helps enable other criminal activity such as benefit fraud, illegal immigration, illegal working, drug trafficking and terrorism," said Meg Hillier, the Home Office minister with responsibility for identity fraud.

Peter Hurst, chief executive of Cifas, said there were still far too many people falling victim to ID fraud.

"Identity fraud is serious, and no-one should be complacent about it," he said. "Quite apart from financial losses, the effect on victims can be very distressing. Where a victim's identity has been seriously compromised it can be an extremely time-consuming and frustrating process to untangle the threads of deception.

Israeli hacker 'The Analyzer' accused of masterminding global fraud

The United States is seeking the extradition from Canada of an Israeli hacker known as "The Analyzer" over charges of masterminding a multimillion-dollar worldwide online fraud.

Ehud Tenenbaum, 29, was arrested in late August over charges relating to a $1.8-million theft from a Calgary financial institution. While he was granted bail last week, he was arrested again on a provisional warrant under the Extradition Act before he could post the required $30,000 bail.

Canwest News Service reported on Friday that Court of Queen's Bench Justice Bryan Mahoney denied Tenenbaum bail on the U.S. charges.

The court heard on Friday that the allegations against Tenenbaum involved potentially hundreds of financial institutions in Russia, Turkey, the Netherlands, Sweden, Belgium, Germany and other countries.

"Mr. Tenenbaum is alleged by the government of the U.S. to be one of the principal hackers, if not the mastermind, of their entire global operation," Canwest quoted federal Crown prosecutor David Gates as arguing.

"Mr. Tenenbaum and others did the actual hacking into financial institutions to obtain [debit and credit] card PIN numbers, and then sold them to others in their operation."

The U.S. government now has 60 days to submit an extradition order to have him taken back to face the charges, according to Canwest.

Canada's justice minister then has 30 days to decide whether or not an extradition hearing can take place.

Tenenbaum is renowned for his computer prowess and hacking abilities, and was sentenced to 15 months in jail in Israel in 1998 for hacking into the Pentagon computer system in the U.S.

Canwest reported that Gates could not say exactly how much money has been stolen as a result of the alleged hacking by Tenenbaum over the past year, but said it is in the millions of dollars, and the investigation is ongoing.

FRAUD NEWS November, 2008

Seven are accused of identity theft and mortage fraud

by Joe Ryan/The Star-Ledger
Monday November 24, 2008,

Seven people have been arrested in connection with an international identity-theft scheme that targeted home equity lines of credit and siphoned at least $2.5 million away from dozens of banks, including more than 10 in New Jersey, according to documents unsealed today.
The suspects operated in at least seven countries and targeted large and small financial institutions, including Citibank, JP Morgan Chase and credit unions in Basking Ridge, Bridgewater and Toms River, according to the complaints. They attempted to steal more than $ 4 million, authorities said.
The accused used stolen personal information - including social security numbers, birthdates and mothers' maiden names - to pose as homeowners and trick bank employees into transferring funds from home equity lines of credit to overseas and domestic accounts, according to the complaints.
Three of the men were arrested today in New York: two in Brooklyn and a third near the Canadian border. The other suspects were arrested in recent days in New York City and California, authorities said. Two of the suspects are scheduled to appear today in federal court in Newark.
Reports of suspected mortgage fraud have increased nearly six-fold in the United States since 2003, according to an FBI report on mortgage fraud published in April. But the victims are changing as the housing market implodes, according to the report.
In the days of easy mortgages, identity thieves targeted people with shaky credit, using their personal information to take out illegal loans from subprime lenders who required little documentation, according to the report.

But the credit crisis killed that scheme, and the FBI report found identity thieves have turned to homeowners with good credit and deep equity in their homes.
The problem is vexing in New Jersey, where home values and incomes are high. The Garden State ranked in the top 20 last year in incidents of mortgage fraud, according to the report. New York was in the top 10.

Fraud detected more often at bankrupt companies

Mon Nov 24, 2008
By Emily Chasan

NEW YORK (Reuters) - Bankrupt companies are three times more likely to have been cited for fraud by U.S. regulators, according to a study released on Monday.
The study from Deloitte Financial Advisory Services LLP also showed that fraud incidents were much more likely to land a company in bankruptcy court.
"Many of the companies that commit financial statement fraud are dealing with adverse performance issues and committing fraud to cover those up," said Toby Bishop, director of the Deloitte Forensic Center. "A significant proportion of them -- 20 percent -- will end up filing for Chapter 11 (bankruptcy protection)."
Fraud-linked bankruptcies like Enron, WorldCom and Adelphia have kept U.S. courts busy for years, and the study revealed that companies that are cited for financial-statement fraud were twice as likely to file for bankruptcy as those that were not cited.
The study tracked companies with annual revenues of more than $100 million, comparing 519 bankrupt companies to a group of 2,919 non-bankrupt companies from about 2000 through 2007.
About 9 percent of the bankrupt companies were the subject of enforcement actions reported by the U.S. Securities and Exchange Commission, compared with 3 percent of the nonbankrupt companies.
"There are two distinct groups of people who are engaging in these frauds -- people who are attempting to prop up the company in the hopes that the bank gives them more liquidity ... and those that are doing it more for their own personal benefit," said Sheila Smith, head of reorganization services at Deloitte.
Smith said it was not clear whether employees at bankrupt companies are more likely to commit fraud or whether the microscope of bankruptcy makes it easier for regulators to detect it.
The most common type of fraud detected at both bankrupt and nonbankrupt companies was improper revenue recognition.
"Generally revenue is monitored closely by analysts and investors," Bishop said, "and achieving expectations in that area is a high priority to management."
Improper disclosures and manipulation of expenses also showed up frequently in both groups.
In the study, consumer companies received the most SEC enforcement actions, at about 30 percent, followed by telecommunications, media and technology at about 27 percent.
Of those companies that received enforcement actions, about 50 percent of the consumer group filed for Chapter 11 bankruptcy protection, compared with about 30 percent of those in the telecommunications, media and technology sector.

HISTORY OF FRAUD
A long history of fraud at a company also had a strong link with bankruptcy, according to the study. Bankrupt companies were twice as likely as nonbankrupt ones to have more than 10 fraud schemes in their corporate history.
That was particularly true for bigger companies. Bankrupt companies with annual revenues of more than $10 billion had about 10.8 fraud schemes on average, while those with annual revenues between $100 million and $10 billion averaged 4.3, the study showed.
In fact, WorldCom and Enron, where top company executives were convicted of fraud, are among the five largest U.S. bankruptcy cases ever filed in the United States, according to tracking firm Bankruptcydata.com. WorldCom held more than $100 billion in assets when it filed for bankruptcy in 2002, while Enron held more than $65 billion in assets at the time of its filing in 2001.
While it may be tempting for companies to cut back on support staff during tough economic times, Bishop said the link between fraud and bankruptcy showed that they could risk their whole business by loosening their focus on fraud detection efforts.
"This is the time when those efforts are more important than ever because of the heightened risk of people giving into the economic pressures and committing fraud," Bishop said. "Companies have to devote extra effort to that risk."
(Editing by Lisa Von Ahn)
Reuters

Chinatrust's Former Vice Chairman Probed for Fraud, Corruption
By Janet Ong

Nov. 24 (Bloomberg) -- Chinatrust Financial Holding Co.'s former Vice Chairman Jeffrey Koo Jr., who was placed on the wanted list by Taiwanese prosecutors in 2006, was probed for fraud and corruption on his return to the island.
Koo returned to Taiwan this morning and was taken away by prosecutors for questioning, Daniel Wu, chief investment officer at Chinatrust Financial, said by telephone today.
Koo, the son of the head of the Koos Group, had been hiding in Japan since 2006 to evade a warrant arrest, cable television TVBS said earlier today. The cable TV showed Koo being taken away in handcuffs on his arrival at Taipei's international airport.
Taiwanese prosecutors in December 2006 placed Koo on the wanted list after he failed to answer a subpoena to appear in court over allegations of irregularities involving Chinatrust's bid for rival Mega Financial Holding Co.
Wu also confirmed Koo is being questioned over allegations the former vice chairman and his father Jeffrey Koo Senior were involved in a money-laundering probe against former Taiwanese President Chen Shui-bian. Koo Senior, who is the chairman of Chinatrust, was summoned as a witness on Oct. 25 after a raid on the company a week earlier.
Chen Yun-Nan, a spokesman for the supreme prosecutor's office, didn't answer calls to his mobile phone.

Exiled Hotel Executive Makes Plea Deal
November 22, 2008

By MARTIN ESPINOZA

After years of trying to avoid prison time in the United States, a multimillionaire hotel executive has won his freedom, in exchange for payments totaling more than $100 million.
The executive, Stanley S. Tollman, 78, pleaded guilty — via video link between London and a federal courtroom in Manhattan — to one count of tax evasion, and will pay more than $60 million in back taxes, interest and fraud penalties. He has also agreed to pay $44.7 million to settle a civil forfeiture suit related to allegations in a 2002 indictment charging him and six others with various fraud offenses.
As part of the plea deal, Mr. Tollman, who left the country in 2002 just before being indicted on tax evasion and fraud charges, and who has been fighting extradition ever since, will serve a one-day term of probation, the United States attorney’s office said.
Mr. Tollman, an American citizen, was an executive with the New York-based company Tollman-Hundley Hotels, which owned and managed various Days Inn hotels throughout the United States. He also held management positions with the Travel Corporation, the parent organization, based in the British Virgin Islands, of several travel and tourism companies, including Trafalgar Tours International, Trafalgar USA and the Red Carnation Group of hotels.
The United States attorney’s office says that during the late 1980s and early 1990s, Mr. Tollman and his wife, Beatrice Nina Tollman, opened a series of bank accounts on the island of Guernsey, in the English Channel. According to court documents, two of the accounts “were opened and maintained in the names of corporations, to wit, Buffalo Holdings and New York Investments, and virtually all of the income received through these accounts was not reported to the I.R.S.”
The records say that from 1994 to 1999, the Tollmans received, through the Guernsey corporate bank accounts, more than $18 million in income from or paid through the Travel Corporation or one of its subsidiaries and that they did not pay taxes on that money.
In the plea agreement, which he and his lawyer, Viet D. Dinh, signed on Friday, Mr. Tollman agreed to pay $25 million immediately and to pay $16,018,728, plus any accrued interest on the outstanding debt, each year for the next five years. The total amount Mr. Tollman owes the federal government, not counting interest, is $105,093,638.
The United States attorney’s office declined to comment on the case beyond the details laid out in a statement released on Friday. Mr. Dinh could not be reached for comment at his office at Bancroft Associates in Washington, D.C.
Monty D. Hundley, Mr. Tollman’s business partner at Tollman-Hundley and a former owner of Days Inn of America; James Cutler, Tollman-Hundley’s chief financial officer; and Howard Zukerman, Tollman-Hundley’s vice president of finance, were all convicted in 2004 after a two-month jury trial before Judge Loretta A Preska in Federal District Court in Manhattan. Mr. Tollman’s son, Brett, pleaded guilty of tax evasion in 2003.
The federal government had also sought to extradite Mrs. Tollman, 77, who in 2003 was charged separately with tax fraud. In the plea agreement, bank fraud and other remaining counts against Mr. Tollman, as well as the pending complaint against Mrs. Tollman, were dismissed.

Source: The New York Times

China's richest man 'under investigation'

BEIJING, China (CNN) -- Trading in a Chinese electrical appliances company was halted Monday after reports that its chairman -- the richest man in mainland China -- is under investigation on charges of stock market manipulation, the company said.
The Stock Exchange of Hong Kong indefinitely halted trading in Gome Electrical Appliances Holding Ltd. amid reports of a police investigation of Wong Kwong Yu, the company's chairman, executive director and controlling shareholder, the company said in a statement.
The company said it was looking into whether the allegations were true.
The 39-year-old Wong is the richest person in mainland China, worth an estimated $6.3 billion, according to the 2008 China Rich List, which is compiled by the Hurun Institute.
He topped the list for the third time in five years; the China Rich List was first compiled in 1999.
The Beijing News reported that Wong is under police investigation for stock market manipulation, according to the state-run China Daily newspaper. Police declined to comment on the report, China Daily said.
Gome Electrical Appliances said it "is not in a position to confirm the accuracy of the information set out in the newspaper articles."
It also said it "has not received any notice or legal documents in connection with the allegations from any regulatory, governmental or judicial authority in the People's Republic of China."
The company said trading was suspended Monday "to avoid any disorderly market and volatility in the securities of the company that may result from further release of unverified allegations in the media." It said it is "making necessary inquiries for the purpose of verifying the allegations."
Established in 1987, Gome said it had 587 stores last year in 160 Chinese cities -- 572 traditional stores, 13 digital stores and two flagship stores. The company was incorporated in Bermuda, according to Gome's Web site.

U.S. Army Colonel and Lt. Colonel Convicted of Conspiracy for Role in Fraud Scheme in Al-Hillah, Iraq

Nov. 7, 2008

Whiteford and Wheeler were charged in a 25-count indictment unsealed on Feb. 7, 2007, along with U.S. Army Lt. Col. Debra M. Harrison and civilians William Driver and Michael Morris with various crimes related to a scheme to defraud the CPA -- South Central Region (CPA-SC). Whiteford was the second-most senior official and highest ranking military officer at CPA-SC in al-Hillah, Iraq, and Wheeler was an adviser and project officer for CPA reconstruction projects. Whiteford and Wheeler were acquitted of the other charges against them, including bribery and wire fraud. Driver will be tried separately on a yet-to-be-determined date in the District of New Jersey.
According to testimony at trial before U.S. District Court Judge Mary L. Cooper, Whiteford and Wheeler conspired from December 2003 to December 2005 with at least three others -- Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and U.S. Army Lt. Col. Bruce D. Hopfengardner -- to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received more than $8.6 million in rigged contracts. Testimony revealed that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.
Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies. Some of the stolen money was used to purchase things of value, such as weapons including a machine gun that was seized from Wheeler's home.
Morris was acquitted today of the charges against him for his alleged role in the scheme.
Harrison, at one time the acting comptroller at CPA-SC who oversaw the expenditure of CPA-SC funds for reconstruction projects, pleaded guilty on July 28, 2008, to honest services wire fraud in connection with her role in the scheme. Harrison admitted that she took more than $300,000 from the CPA-SC while deployed there and that she used some of the stolen money to make improvements at her home. Harrison also admitted that in August 2004 she received a Cadillac Escalade from Bloom that was financed through a series of wire transfer payments and that in July 2004 she helped to move unregistered firearms from a hotel in North Carolina to Stein's home. At sentencing, scheduled for Nov. 19, 2008, Harrison faces a maximum penalty of 20 years in prison, a three year term of supervised release and a fine of $250,000.
Stein was sentenced on Jan. 29, 2007, to nine years in prison. He previously pleaded guilty to conspiracy, bribery, money laundering, possession of machine guns and being a felon in possession of a firearm for his role in the scheme to defraud the CPA-SC.
On March 10, 2006, Bloom pleaded guilty to related charges of conspiracy, bribery and money laundering in connection with the scheme. Bloom was sentenced on Feb. 16, 2007, to 46 months in prison and ordered to forfeit $3.6 million.
On Aug. 25, 2006, Hopfengardner pleaded guilty in U.S. District Court for the District of Columbia to charges of conspiracy to commit wire fraud and money laundering in connection with the scheme. Hopfengardner was sentenced on July 2, 2007, to 21 months in prison, followed by three years of supervised release, and ordered to forfeit all property constituting or derived from proceeds he obtained directly or indirectly from his role in the scheme.
These cases are being prosecuted by Trial Attorneys Ann C. Brickley and John P. Pearson of the Criminal Division's Public Integrity Section, headed by Section Chief William M. Welch II. The cases are being investigated by the Internal Revenue Service-Criminal Investigation, SIGIR, U.S. Army Criminal Investigation Division, U.S. Immigration and Customs Enforcement at the Department of Homeland Security and the FBI-Washington Field Office.

SOURCE U.S. Department of Justice

Serious Fraud Office looks for clues in America as it sheds the Clouseau image

From The Times
November 10, 2008
Suzy Jagger

It takes a special kind of criminal to try to steal from the head of the Serious Fraud Office. Yet Richard Alderman, who has just been appointed to run the government agency that fights fraud in cases involving more than £1million, has been duped twice.
On the first occasion, the 55-year-old barrister found that a fraudster had used his bank details, which showed up as an odd item on his monthly statement. The second time, he received a letter in the post, supposedly handwritten by an African girl pleading for a small amount of money to help her to start secondary school.
“It was very, very convincing and it really made me pause,” Mr Alderman said. “She had written that she only wanted a modest sum and that she was desperate to carry on her education after primary school. The whole thing was convincing and it was only with a moment's pause that I thought: 'Hang on a minute. If I send a donation, I'm sending a cheque, and then they have my bank details.' I still don't know for sure that it was fraud, but in all probability it was.”
Mr Alderman's experience sits at the core of his strategy for tackling the vast amount of fraud in Britain that is left uninvestigated. “Boiler-room scams and mass-marketing fraud claim thousands and thousands of victims,” he said. “It is estimated that fraud costs us about £14 billion to £16 billion a year, and there are far more cases out there that we are not looking at.”
Mr Alderman, who was appointed director of the Serious Fraud Office (SFO) in April, has his work cut out. Apart from the legions of fraudsters devising ever more sneaky ways of tapping into our bank accounts and scamming us over the phone, the SFO is seeking to put the most turbulent period of its 20-year history behind it.
Mr Alderman took over in a storm at the SFO. His predecessor Robert Wardle had quit after the Government forced the SFO to drop its investigation into whether BAE Systems, the defence group, had bribed Saudi officials in order to secure an arms deal. Tony Blair had compelled the SFO to drop the case for fear of damaging relations with Saudi Arabia, Britain's most important and powerful ally in the Middle East.
The controversy got worse. A judicial review was launched and by April this year the High Court had issued one of its most damning attacks on a government action, condemning the way in which ministers had buckled after blatant threats that Saudi co-operation in the fight against terror would end unless the investigation was dropped. The High Court ruled that the SFO had acted unlawfully in dropping the case, a judgment that was overturned in July. BAE is now being chased by authorities in the United States.
As if the BAE debacle were not bad enough, the SFO has also been at pains to lay to rest its old reputation of incompetence, built up in the 1980s and early 1990s. Successive flops in fraud cases against Roger Levitt, George Walker and the Maxwell brothers led to the SFO being dubbed “the Seriously Flawed Office”. Others, in reference to its address in Central London, called it “the Nightmare on Elm Street”.
Even though the SFO has done much in recent years to shake off its image as the bumbling Inspector Clouseau of agencies, boasting, rightfully, that it tends to win convictions in more than 70 per cent of cases, Mr Alderman has set to work changing the agency's culture, which had stagnated for 20 years. “It used to take us six months just to decide whether to take a case on,” the former tax barrister said. “We've already managed to cut that down to just a month.”
Furthermore, he is building a new, closer relationship with American regulators. Last week, in Washington and New York, he met officials from the Securities and Exchange Commission, the FBI and the Department of Justice (DoJ) and, crucially, Andrew Cuomo, the New York attorney-general. Indeed, he plans to model the SFO on the American regulatory system, in which companies agree to settlement talks with regulators, agree to change their ways under supervision and pay fines.
Traditionally, the SFO has spent months working out whether to investigate a company and then whether to prosecute, a process that, by Mr Alderman's admission, “can take years”. “I just cannot understand why we did that,” he said. “The DoJ model seems to be the right one.
“The DoJ has been very successful at encouraging corporates to tell the DoJ what they have been doing and, once they do that, to agree appropriate penalties.”
The proposal is neither as naive nor as civilised as it sounds. In some cases, companies discover fraud in newly acquired subsidiaries that pre-dated their takeover and they panic at the prospect of a long and public trial and the effect of such uncertainty on their share price.
Mr Alderman said: “I want them to ring us up, say they have discovered a problem, say they have cleared out the guilty people and then talk to us about restitution. In the US, where this approach is widely used, the time taken to investigate is less and the conviction rate much higher. It is not due to different systems; it is due to having a different focus. I don't think we use our people well. We have very laborious processes and I do not believe we are as effective as we should be.”
The American way of doing things must seem very attractive to the mild-mannered Mr Alderman, whose agency's annual budget runs to about £40 million. This summer, Mr Cuomo managed to extract agreements from the world's biggest banks to settle allegations that they had missold auction rate securities to individuals and local authorities. In total they agreed to buy back at least $55 billion of the assets and pay $165 million in fines.
Yet although Mr Alderman is trying to shake up the SFO and make it faster and more effective at chasing more fraudsters, it may be that the credit crisis will be the making of him. The SFO and the American authorities are working on co-ordinated investigations into fraud believed to have been committed during the credit crisis over the past year.
“During times of market turmoil, lots of things are uncovered that would not be seen in much better times,” Mr Alderman said. “If credit dries up, some companies may be tempted to resort to fraud, and if cash dries up, accounts that have been flattered in the past come under sharp focus.”
Although Mr Alderman declined to name companies that were being investigated, he said that “it is not just the banks” that he was looking at. “We have not gone public on this because the market is so fragile,” he said.
“You have to be careful. Something like this would have the capacity to move markets so we are keeping a low profile, but we are making our inquiries.”
Q&A
If you could change one thing in the financial and commercial environment, what would it be?
More financial education for people
Who is your mentor?
A lot of people have influenced me in different ways
Does money motivate you?
No
What was the most important event in your working life?
Becoming Director of the Serious Fraud Office
What gadget must you have?
A BlackBerry
What does leadership mean to you?
Getting the best out of people
Which person do you most admire?
Jeremy Bentham (the liberal English philosopher and legal and social reformer of the 18th and 19th centuries, known as a leading advocate of utilitarianism)
How do you relax?
Walking

Italy trains gourmet police officers to sniff out olive oil fraud

Italy has trained a special squad of gourmet police officers to sniff out fraud in the multi-million pound olive oil trade.

By Nick Squires in Rome

Italian police have stepped up their battle against olive oil fraud Photo: GETTY IMAGES
The 20 officers have just graduated from a course in which they were taught to distinguish fake extra-virgin oil from the real thing.
While customers pay a premium for Italian extra-virgin olive oil, often it is neither Italian nor extra-virgin, but lower quality oil brought in by tanker truck and ship from Spain, Greece or Tunisia.
During an intensive training course arranged by the National Olive Oil Association, the police officers were schooled in how to detect an oil's provenance just by taste.
"This initiative will strengthen the defence of the quality of one of the symbols of the Mediterranean diet," said Massimo Gargano, the head of the association.
It would send "an unequivocal signal" that the olive oil industry was determined to ensure quality and clamp down on fraudulent practises, he said.
Italian police have recently stepped up their battle against unscrupulous growers and producers, amid fears that adulterated or wrongly labelled oil will harm Italy's image.
In March, in an operation called Golden Oil, police arrested 23 people and confiscated 85 farms after a investigation into suspect producers.
A month later another racket was busted, with police closing down seven olive oil plants and arresting 40 people in an investigation spanning nine provinces. Officers seized more than 25,000 litres of suspect oil. Those arrested were accused of adding sunflower and soybean oil to the genuine product and selling it as extra-virgin oil in Italy and abroad.
Police said they intercepted large shipments of the fraudulent oil just as they were about to be exported to Germany, Switzerland and the US.
Flavouring and other chemicals had been added to the blended vegetable oil to give it the distinctive golden lustre of high-quality olive oil.
Although Italy is Europe's second-biggest olive oil producer after Spain, its production was down 15 per cent last year and the country fails to produce enough to satisfy even domestic demand.
The temptation for growers and producers is to buy in cheap oil from other Mediterranean countries and pass it off as Italian.
Last year the amount of oil imported from Greece, Spain and Tunisia jumped 12 per cent.
"You find bottles with Italian flags all over them and yet the oil is from Spain or Morocco or Turkey or wherever," said Johnny Madge, a British olive oil expert who has lived in Italy for 26 years, producing and selling oil in the Sabine Hills north of Rome.
"But it is possible to taste where different oils come from. There's a Spanish olive, for instance, that has a very distinctive coriander taste, which makes it instantly recognisable even if it has been blended with other oils."

Fraud trial could drive cases from London
From The Times
October 27, 2008
Alex Spence

One of the biggest fraud trials in British history is set to begin in the High Court today amid fears that it could harm London's reputation as a forum for commercial disputes.
The case, which arose from a fight for control of an aluminium smelter in Tajikistan, one of central Asia's poorest countries, is expected to cost almost £90 million in legal fees. Only two commercial cases in the UK are believed to have cost more.
The dispute has already led to proceedings in several countries and has entangled two of the world's most powerful aluminium producers: Rusal, the Russian company controlled by Oleg Deripaska, and Norsk Hydro, the Norwegian industrial giant.
The final legal bill is likely to reignite debate over the cost of litigation in London at a time when hourly rates for the City's top lawyers have reached £750 — only slightly less than Tajikistan's annual GDP per capita.
The case centres on allegations of bribery and corruption made by Talco, a state-owned Tajik aluminium smelter, against its former business partner, Azar Nazarov, a Tajik businessman now based in the UK. The smelter is the third largest in the world and the country's most important industrial asset, accounting for more than half of its export revenue.
Talco, formerly TadAz, claims that Mr Nazarov and Ansol, his Guernsey holding company, siphoned more than $500 million (£315 million) in profits from the smelter between 1996 and 2004 through a corrupt relationship with the plant's former manager. It alleges that lavish bribes were paid including the gift of a £300,000 flat in Marylebone for use by the manager's son. It has also, in a separate action in the British Virgin Islands, accused Rusal, Ansol's former joint venture partner, of involvement in the fraud, although it failed in a bid to include the Russian company as a defendant in the case in London.
Mr Nazarov denies the allegations and has brought his own claim against Talco, claiming that he is owed more than $130 million since Talco severed its dealings with Ansol in December 2004. His lawyers will argue that he rescued the smelter at a time when it was running at less than half of its capacity and the country was in the grip of civil war. According to Mr Nazarov, he turned the plant around by brokering crucial supplies of raw alumina and securing buyers for the refined product, first in partnership with a wealthy Greek shipping family and later through barter agreements with Rusal and Hydro. Under his direction, Mr Nazarov claims, the plant channelled millions of dollars into community projects, building schools, roads and hospitals.
“The Tajik Government has desperately sought to discredit me personally, and my company, by making a number of ludicrous allegations, which are resolutely denied,” Mr Nazarov said.
According to disclosures made in court this year, Herbert Smith, the City law firm acting for Talco, expects to spend about £55 million by the end of the trial. Clyde & Co, representing Mr Nazarov, has projected costs of £22 million. Other law firms could add a further £10 million to the total. Lawyers fear that the case could encourage companies to fight legal battles in less expensive jurisdictions.
Herbert Smith declined to discuss its fees.

Nie chce miec niczyich wlosow na sumieniu wiec z tej okazji zapodam nastepna czesc

THE FOLLOWING TAKES PLACE BETWEEN THE HOURS OP
2 A.M. AND 3 A.M. EASTERN DAYLIGHT TIME

2:02:03 A.M. EDT
CTU Headquarters, Los Angeles
Jamey Farrell divided her attention between the latest Domestic Security Alert on her main screen—now more than two hours old—and a data window on the upper right-hand side of the HDTV monitor, where Dante Arete's movements on the East Coast were tracked by a GPS program that detected the signal from the microchip embedded under the gang-banger's skin.
Evaluating the daily Security Alert was an important part of Jamey's job. The highly classified watch list was compiled by Richard Walsh's staff in Washington, D.C., and issued electronically every evening at midnight, Eastern Daylight Time. The DSA cited every event occurring inside the continental United States, Alaska, and Hawaii within the next twenty-four-hour cycle that might pose a security threat, or attract the attention of terrorists. Every division of the CIA—including CTU—and all field agents posted in foreign capitals or the embassies of the world also received the DSA "hot list."
There were numerous events cited in the current Domestic Security Alert. In the next twenty-four hours a United States Navy Carrier Group would be docking in San Diego; the President of the United States would fly Air Force One on a courtesy call to a Colorado Springs congressman's district for a fund-raiser; and the Pennsylvania National Guard would conduct maneuvers in the hills of Central Pennsylvania.
Also listed on the DSA was a scheduled movement of spent nuclear fuel rods from the reactor at Three Mile Island, Pennsylvania; a charter flight from the Centers for Disease Control transporting dangerous biological specimens to New York City; and the First Lady's motorcade visit to a kindergarten in Falls Church, Virginia, to push the President's education agenda.
Jamey was about to catalog each item as "requiring no further action/CTULA" when she saw the red warning blip blinking inside the GPS data window. Dante Arete's signal had vanished.
"Oh, damn."

Heart racing, Jamey reversed the tracking mode camera and retraced the path of the GPS blip back to the second it vanished. The signal ceased transmitting thirty-five seconds before she'd looked up—more than a minute ago when accounting for the East Coast/West Coast signal delay. It took another minute for Jamey to switch from terrain mode, and to overlay the map grid of New York City on the GPS path. As the images were forming on her main screen, it first appeared to Jamey that Dante Arete's signal vanished over the East River. Finally, the three-dimensional image of the Fifty-ninth Street Bridge appeared. The blip had vanished in the middle of the span.
Jamey activated a subsystem that could immediately interface with emergency services departments in dozens of major American metropolitan areas. She keyed in the EMS code for New York City, and ten seconds later a massive log of 911 calls appeared on her monitor.
Before Jamey could even begin to scan the contents a new call appeared on top of the 911 roster—one that alerted the New York Police Department and Fire Department about an accident in the middle of the Fifty-ninth Street Bridge. According to the frantic 911 call, a white, late-model SUV was engulfed in flames—or possibly an explosion. A subsequent caller reported multiple fatalities.
Jamey stared at the screen in disbelief. The phone beeped and she hit the intercom. "Yes?"
"It's Nina."
"God, Nina I just lost—"
Nina interrupted her. "Listen, Jamey, we don't have much time. I have Jack on the line. He's just dumped new intelligence in our lap, including the possible identity of the men with the missile launcher. Now Jack needs an update on Dante Arete's position."

2:14:10 A.M. EDT Tatiana's Tavern
Jack took the news about Arete's death hard. Their best lead—gone. He ended the call with Jamey Farrell and contacted Ryan Chappelle.
Diplomatically, Georgi Timko chose that moment to "get more tea." Cups in hand, the Ukrainian mobster left Jack alone in his office to speak to his superior in private, though Jack already assumed Timko had bugged the place.
"You heard about Arete?" Jack began.
"Nina just told me," Chappelle replied, "but I didn't have time for a thorough briefing—"
"Listen, I don't know if I mentioned the fact that the Lynch brothers slipped Dante an attache case when they met up with him—"
"The Lynch brothers?"
"The men in the Mercedes. The ones who drove away with the missile launcher in their trunk," Jack explained, impatient that Chappelle had not bothered to keep up with the events he'd already relayed to the command center.
"What about these Lynch brothers, Jack?"
"I think they placed a bomb in that case to take Arete out."
"That doesn't make any sense. Weren't they the guys who shot the FBI airplane down to help Arete
escape?"
"Maybe Arete's outlived his usefulness now that CTU's exposed his activities," said Jack. "Or maybe it had something to do with the deal Dante Arete made with Special Agent Hensley."
Jack heard a deep sigh on the other end. "What's wrong?"
"Special Agent Hensley is talking to his bosses, Jack. He fingered you for the murder of the two Federal marshals, for shooting the pilot, and for helping Dante Arete escape."
"That's crazy. I told you Frank Hensley's the traitor." "Naturally the FBI is having a little trouble buying that. Hensley is a highly decorated field agent. He's been on the job for close to five years. That's longer than CTU's been around." "So what are you telling me?" "We're doing everything on our end to get to the bottom of things, but I've got to tell you some of the other agencies are shutting CTU out, and the FBI is not cooperating. The bad news is the FBI has issued a warrant for your arrest."
A long moment of silence followed. Then Chappelle spoke. "As it stands right now, you're on your own, Jack."
The line went dead and Jack lowered the cell phone. As if on cue, Georgi Timko returned with two mugs of sweet, steaming tea. He set one in front of Jack. Then he sat behind his desk and took a sip from his own cup.
"Bad news?"
jack did not answer the question. Instead he leaned across Timko's battered metal desk. "The Lynch boys and Arete's punks tried to kill you, Georgi. Don't you want revenge?"
The Ukrainian chuckled. "Of course. And I will get my pound of flesh from those Irish punks and the Mexicans, too—but in my time, Mr. Jack Bauer. Not on your timetable, or your government's."
Jack frowned, rubbed his chin. The first signs of stubble were sprouting.
"But. . . since you saved my life, I feel I owe you something," Timko added. He pulled a Queens phone book out from under his desk, paged through it. He circled something on the Yellow Pages section, then tore a page out.
"Griffin and Shamus Lynch run a Green Dragon store in Forest Hills. It's part of a franchise. Computer sales and repair." He handed the page to Jack. "Here's the address and phone number. But they do most of their real work out of an Irish pub under an elevated subway train on Roosevelt Avenue. The pub is called The Last Celt. It's owned by a retired Westie gangster named Donnie Murphy, who is connected to the right people, even though he took himself out of the game a long time ago. Murphy has protected the Lynch boys ever since they arrived on the scene." "Protected?"
"In this town, everyone needs protection, Mr. Jack Bauer. Even a remarkably resourceful man such as yourself."
"No. Right now, all I need is my weapon."
Timko folded his hands, held Jack's eyes.
Jack shrugged. "Okay, I guess I could also use directions to this pub, a car, and extra ammunition. Maybe a backup weapon, too, but nothing as flashy as an AK-47—if that's all right with you and Yuri."
Timko smiled, nodded, picked up the phone, and began to punch in numbers. "It's very late, Mr. Jack Bauer, but let us see what I can do."

2:27:56 A.M. EDT
CTU Headquarters, Los Angeles
Doris hit the delete key, then waited for the results. After five or six seconds, the cache registered zero percent memory and she moved on to the next bundle. After noting this data bundle's size, she pressed delete once again. This time the system seemed to stall, and Doris tapped her heel impatiently waiting for the program to obey her command.
After Captain Schneider had collected the memory stick for a physical analysis, Doris made a copy of the data downloaded from the device, then stored the original in CTU's main database. With a specimen safely preserved for the archives, Doris set to work "dissecting" the copy. First she isolated the different data streams, using a variety of self-invented techniques she created to hack programs for her uncle to replicate—and produce cheap knockoffs—in his Oakland, California, toy factory. With the data streams isolated, Doris began to delete them, one at a time. Her goal was to annihilate the program—eradicate it completely—in an effort to discover its architecture, to pick at its bones.
There were amazing things buried in the simplest programs, information of all kinds. Sometimes the creators of a subprogram inadvertently buried information, or hid it on purpose. Watermarks, access, security protocols, and slicing codes—sometimes complete software engineering documentation or embedded schematics were waiting to be discovered and decoded by just the right application of an outside program.
In the past Doris had tested the various reverse-engineering programs floating around in cyberspace or available commercially, but she never much cared for any of them. Instead she dismantled each program she'd come across and used the best pieces to create her personal reverse-engineering monster. She called it Frankie, short for Frankenstein, because her creation was a monstrosity cobbled together from bits and pieces just like the monster. And like the monster, Frankie was also a being that was much more than the sum of its parts. Using Frankie's phenomenal capabilities, Doris had dismantled the memory stick's software piece by piece, while mapping its secrets.
Frankie was nearly a decade old now, the first bones put in place back when Doris started working for her uncle. In those days, she never thought much of her hacking skills—not until she went to a conference sponsored by the Working Forum on Reverse Engineering to "pick up a few tips." The WFORE board members were so impressed by the young woman's innovative methodology for recovering buried information and systems artifacts from software, they invited her to join their organization. Doris had just
turned sixteen.
An urgent beep shocked Doris awake. She blinked and rubbed her eyes, not sure she'd read the screen correctly.
"System failed to execute command!?"
That had never happened before. Never.
She sighed. "If at first you don't succeed ..."
Doris called up the bundle again, checked the cache size—the same as before. But before she pressed delete she kick-started the dumping process by opening another bundle for the data to flow into. Sometimes that trick worked for stubborn programs that refused to go away.
Again there was a long lag time before she got a response.
"Failed again!"
Doris called up the cache—but found that all but approximately five percent of the program had indeed been eradicated. A stubborn subset of data remained in the cache, however. Doris suspected it was some remnant of an interfacing program, something that allowed the data she'd erased to be used in another program. Setting the problem aside for the moment, Doris moved on to the next bundle of data.
But five cache deletes later it happened again—a stubborn five percent of the memory cache refused to be deleted no matter what she tried.
Doris issued a tiny squeal of frustration.

2:36:19 A.M. EDT Tatiana's Tavern
Yuri appeared at the office door, jerked his head. Georgi rose and roused Jack Bauer, who had fallen asleep in his chair after a long phone conversation with someone named Almeida. "Your car has arrived, Mr. Bauer."
Jack rubbed sleep out of his eyes. "What time is it?" He blinked when he saw the weapons and ammunition on Georgi Timko's desk.
Jack ignored the shotgun, but lifted the Heckler & Koch Mark 23 USP, the .45-caliber self-loading version of the smaller, fighter USP Tactical, which Jack had used during his stint at Delta Force. The standard Mark 23 lacked the bells and whistles of the Tactical model—including the O-ring barrel that allowed the use of a KAC suppressor, and the rear target sight adjustment. But more important to Jack, the Mark 23 had the same ambidextrous magazine release just behind the trigger guard as the high-end Tactical. This allowed ejection of the spent magazine using the thumb or index finger without having to readjust one's grip on the weapon—an essential feature for quick reloading and accurate fire.
"The best I could do in such short notice," Georgi said apologetically.
Jack checked the pistol's extractor, which doubled as a loaded chamber indicator. The magazine was full, but to satisfy himself the readout was accurate, Jack pulled the slide back slightly and looked inside. There were additional magazines on the desk— twelve of them—each loaded with a dozen .45-caliber slugs.
Jack was accustomed to using 9mm rounds, not the bigger .45-caliber slugs. But with the Mark 23's recoil-reduction system, which featured a spring within a spring, Jack knew the felt recoil would be dampened enough for him to switch to the harder-hitting ammunition without difficulty.
Offering sincere thanks to Timko, Jack engaged the safety and slipped the weapon into his shoulder holster. Then he pocketed the extra ammunition in his pants, shirt, and jacket pockets.
"Take the shotgun as well, Mr. Jack Bauer," Georgi insisted. "You never know when you might have to shoot something bigger than a man."
Jack snapped up the double-barreled, sawed-off weapon and rested it on his shoulders. Then he followed Georgi outside. They avoided the bar area, where the sounds of construction continued, to exit through a back door hidden between the tavern's outdoor Dumpsters.
"My escape hatch," Georgi explained.
Emerging from behind the smelly garbage bins, Jack found himself in Tatiana's parking lot. Outside the night had cooled somewhat, but the humidity level remained high, much higher than LA. The sky was clear and cloudless, the parking lot nearly empty. Yuri was waiting for them, leaning against a 1998 cherry-red Ford Mustang Cobra convertible. He tossed the keys to Jack.
"I've given you directions to The Last Celt. Sadly I could not provide the proper paperwork for the automobile, so I advise you not to get stopped by the New York Police. They may ask some embarrassing questions ..."
Jack slid behind the wheel. "I'll try to get the car back to you as soon as I can," he said.
"Do not worry about it," Timko replied with a dismissive wave. "The car is not mine."
Jack inserted the key into the ignition and the 305-horsepower V8 engine roared to life. A moment later Georgi Timko and Yuri watched as Jack sped into the night. When Jack was gone, Georgi shook his head. "I certainly hope the real owner of that superb automobile has taken out plenty of insurance. With Mr. Jack Bauer behind the wheel, he'll need it."

2:45:13 A.M. EDT
CTU Headquarters, Los Angeles
"The serial number on the bus port of the memory stick matches one manufactured in Shanghai and imported by a Swiss firm called Abraxsus-Gelder LLC," Captain Jessica Schneider began. "The shipment it came in passed through United States customs in May of last year and this particular component was purchased by a Green Dragon Computers store in Little Tokyo, right here in Los Angeles."
While she spoke, Captain Schneider tapped the blue folder that lay closed on the conference room table. She'd compiled the data herself, so she didn't have to refer to her notes to know what they said. Her update to the Crisis Management Team was concise and informative.
"Who owns this Green Dragon outfit?" asked Tony.
The woman turned to face Special Agent Tony Almeida. "A conglomerate out of Taiwan, with Abraxsus-Gelder as a partner. But a man named Wen Chou Lee holds controlling interest in the computer store franchise. They've been giving chains like Computer Hut and Cyber-Store a run for their money."
"Does this Wen Chou Lee have any ties to international terrorism? The Chinese Nationalist Movement, perhaps?" Nina asked.
"No," said Captain Schneider, still facing Tony. "But a 1995 report compiled by Interpol claims Wen Chou Lee was formerly the leader of a triad in Hong Kong. He was forced to move his business interests to Taiwan just before the Communist Chinese government regained control of the island."
"I doubt a triad would have much interest in shooting down U.S. cargo planes," said Tony. He swiveled his chair to face Jamey Farrell. "Any luck tracing those license plates?"
"The Mercedes is registered to Griffin Lynch, which we knew already. The SUV was licensed to a company in Manhattan ..." Her voice trailed off as Jamey searched the file in her hand for the printout. Jamey nearly groaned out loud when she realized she didn't have the information and must have left it at her workstation. She continued to fumble through the file even after she felt Tony's eyes on her, heard Nina's impatient sigh.
A knock interrupted them. The door opened before Nina could warn the visitor away. The conference room was off limits to everyone except members of the Crisis Team and unless the caller was Ryan Chappelle—who wouldn't bother to knock—he shouldn't have been there.
Doris stuck her head through the door. "Oh, there you are," she said, pushing up her oversized glasses. "I've been looking all over for you guys."
If Nina was impatient, she didn't let on. "Come in," she said. "And close the door behind you."
Suddenly shy, Doris stepped through the door. Milo wondered if he was the only one to notice the young woman wasn't wearing any shoes.
"Excuse me. I found something I think is important." Doris stepped forward and handed a printout to Nina, who glanced at it, then passed it to Milo and Jamey.
"There's a second layer of inscription that was buried inside the memory stick software."
Milo tapped a pen to his nose. "A watermark? Maybe a manufacturer's protocol?"
Doris shook her head. "This is a real program, and a big one. It's buried deeper and guarded better than the primary program data, which makes me think the whole first layer was a ruse, that the real important information is encrypted somewhere inside this buried code."
"Encrypted?" said Nina. "You mean you haven't cracked it yet?"
Doris brimmed with confidence. "Not yet, but Frankie's working on it, so it's only a matter of time."
Milo blinked. "Who's Frankie?"

2:55:30 A.M. EDT Woodside, Queens
Liam stood on the raised platform, four stories over Roosevelt Avenue. A cool, humid breeze wafted in from the ocean, cutting the heat of the day. With a groan of impatience, he glanced at the cheap plastic watch on his arm.
It was nearly 3 A.M. He'd been waiting close to an hour for a subway. He knew service was bad late at night, especially on a weekday. But this was ridiculous. Only three trains had come in the time he'd been waiting. Two local trains going in the opposite direc-non, and a maintenance train that rolled right through the station without stopping.
He decided to wait another ten minutes. If it didn't come, he'd call it quits and hike the ten blocks over to Northern Boulevard, where he could pick up an R train.
Liam peered down the tracks to the next station in the distance. Lights had appeared—another train at last. He set the attache case down and rubbed the sweat off his hands. Lifting the silver case again, he wondered only briefly what was inside. Whatever it was, it didn't weigh very much. The most important thing, to Liam's way of thinking, was that taking this case to Brooklyn meant three hundred in cash.
Liam leaned over the edge of the open platform and peered down the track. The lights were approaching. Liam could clearly make out the purple circle with a seven emblazoned in the middle. In less than a minute he could sit down and rest as the train carried him to Times Square station.
When Liam finally boarded the Number 7 train, a cherry-red Mustang rolled directly beneath him. Behind the wheel, Jack Bauer cased the stretch of Roosevelt Avenue that ran under the elevated platform, then pulled into a parking spot directly in front of The Last Celt