Specifics on Guilty Plea of SAC Capital Management Companies Accepted

Preet Bharara, the United States Attorney for the Southern District of New York, announced that S.A.C. CAPITAL ADVISORS L.P. (SAC Capital LP), S.A.C. CAPITAL ADVISORS, LLC (SAC Capital LLC), CR INTRINSIC INVESTORS LLC (CR Intrinsic), and SIGMA CAPITAL MANAGEMENT LLC (Sigma Capital) (collectively, the SAC Companies), which are responsible for the management of a group of affiliated hedge funds (collectively the SAC hedge fund or SAC), were sentenced by U.S. District Judge Laura T. Swain. The District Court accepted the guilty plea entered by the defendants on November 8, 2013, and approved the parties’ plea agreement. The court imposed a sentence that included a criminal fine of $900 million (which is not tax-deductible), a statutory maximum five-year term of probation for each of the SAC Companies, the condition that the SAC hedge fund terminate its investment advisory business, effectively closing the hedge fund to outside investors; and a requirement that the defendants, and any successor entities, employ the compliance procedures necessary to identify and prevent insider trading; and that the defendants retain an independent compliance consultant, who will review, revise, and report to the government on those compliance procedures. Together with the settlement of the civil forfeiture action, which was approved by U.S. District Judge Richard J. Sullivan on November 6, 2013, the SAC hedge fund is required to pay an additional $1.184 billion financial penalty on top of the $616 million the SAC Companies have already agreed to pay to the U.S. Securities & Exchange Commission (SEC).

Manhattan U.S. Attorney Preet Bharara said, “After due consideration, the court has accepted the guilty plea and imposed sentence on SAC, including the payment of $1.184 billion in financial penalties. Today marks the day of reckoning for a fund that was riddled with criminal conduct. SAC fostered pervasive insider trading and failed, as a company, to question or prevent it. So far, this office has successfully convicted eight SAC employees of insider trading, and when so much criminal conduct takes place within one institution, it is appropriate to impose criminal liability on the institution itself. Today’s sentence affirms that when institutions flout the law in such a colossal way, they will pay a heavy price.”

As alleged in the Indictment, the forfeiture complaint filed against the funds, other court documents filed in the case, and statements made during the guilty plea and sentencing proceedings:

From 1999 through at least 2010, numerous employees of the SAC Companies obtained and traded on material, non-public information that they were not permitted to have (inside information) or recommended trades based on such information to SAC portfolio managers (SAC PMs) or the SAC owner. Specifically, the Indictment charges the SAC Companies with insider trading offenses committed by numerous employees, occurring over the span of more than a decade and involving the securities of more than 20 publicly traded companies across multiple sectors of the economy. As charged in the Indictment, the systematic insider trading engaged in by SAC PMs and Research Analysts was the predictable and foreseeable result of multiple institutional failures. The failures alleged included hiring practices heavily focused on recruiting employees with networks of public company insiders, the failure of SAC management to question employees about trades that appeared to be based on Inside Information, and ineffective compliance measures that failed to prevent or detect such trading, particularly prior to late 2009.

At the guilty plea hearing on November 8, 2013, the SAC Companies pled guilty to all five counts in the indictment and admitted that the six employees who had previously pled guilty to insider trading engaged in that criminal conduct while acting within the scope of their employment of the SAC Companies and for the benefit of the firm. The plea agreement does not provide immunity from prosecution for any individual and does not restrict the government from charging any individual for any criminal offense and seeking the maximum term of imprisonment applicable to any such violation of criminal law. In fact, since the time of the guilty plea and prior to the sentencing, two additional SAC portfolio managers, Michael Steinberg and Matthew Martoma, were convicted of insider trading after separate jury trials.

Indeed, the total criminal fine imposed by the Court exceeded a Sentencing Guidelines range that was, in turn, based on all of the illicit profits gained and losses avoided resulting from all of the insider trading alleged in the Indictment. Neither the criminal fine nor the forfeiture amount to be paid in the civil forfeiture case can be claimed as a tax deduction or credit by the SAC Companies or their owner.

The court further imposed a series of non-financial penalties on the SAC Companies that include the following:

• The SAC Companies will no longer accept third party investor funds and will terminate operations as an investment adviser.
• The SAC Companies were each sentenced to a five-year term of probation—the maximum allowed by law—with a provision to end probation earlier if the SAC Companies cease operating entirely. The terms of probation require, among other conditions, that the SAC Companies employ appropriate compliance measures to identify and prevent insider trading. Additionally, the insider trading compliance measures of the SAC Companies and any related entities trading securities will be reviewed by an independent compliance expert who will direct the SAC Companies to correct identified deficiencies and who will report to the United States Attorney’s Office as to the progress of the corrective measures undertaken.

Tweet

Full Details on Jesus Vicente Zambada-Niebla, of the #SinaloaCartel, Guilty Plea and Cooperation with US Feds

A high-level member of the Sinaloa Cartel in Mexico pleaded guilty a year ago to participating in a vast narcotics trafficking conspiracy and is cooperating with the United States, federal law enforcement officials announced. A written plea agreement with the defendant, Jesus Vicente Zambada-Niebla, was made public in U.S. District Court for the Northern District of Illinois.

Zambada-Niebla, 39, pleaded guilty on April 3, 2013, before U.S. District Chief Judge Ruben Castillo. Zambada-Niebla was arrested in Mexico in 2009, and he was extradited to the United States in February 2010.

Zambada-Niebla remains in U.S. custody and no sentencing date has been set. Under the plea agreement, he faces a maximum sentence of life in prison¸ a mandatory minimum sentence of 10 years, and a maximum fine of $4 million. If the government determines at the time of sentencing that Zambada-Niebla has continued to provide full and truthful cooperation, as required by the plea agreement, the government will move to depart below the anticipated advisory federal sentencing guideline of life imprisonment. In addition, Zambada-Niebla agreed not to contest a forfeiture judgment of more than $1.37 billion.

“This guilty plea is a testament to the tireless determination of the leadership and special agents of DEA’s Chicago office to hold accountable those individuals at the highest levels of the drug trafficking cartels who are responsible for flooding Chicago with cocaine and heroin and reaping the profits,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. Mr. Fardon announced the guilty plea with Jack Riley, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration.

Zambada-Niebla pleaded guilty to one count of conspiracy to possess with intent to distribute multiple kilograms of cocaine and heroin between 2005 and 2008. More specifically, the plea agreement describes the distribution of multiple tons of cocaine, often involving hundreds of kilograms at a time on a monthly, if not weekly, basis between 2005 and 2008. The guilty plea means that there will be no trial for Zambada-Niebla, whose case was severed from that of his co-defendants. Among his co-defendants are his father, Ismael Zambada-Garcia, also known as “El Mayo,” and Joaquin Guzman-Loera, also known as “El Chapo,” both alleged leaders of the Sinaloa Cartel.  Zambada-Garcia is a fugitive believed to be in Mexico, and Guzman-Loera is in Mexican custody after being arrested this past February.

Zambada-Niebla admitted that between May 2005 and December 2008, he was a high-level member of the Sinaloa Cartel and was responsible for many aspects of its drug trafficking operations, “both independently and as a trusted lieutenant for his father,” for whom he acted as a surrogate and logistical coordinator, the plea agreement states. Zambada-Niebla admitted he was aware that his father was among the leaders of the Sinaloa Cartel since the 1970s and their principal livelihood was derived from their sale of narcotics in the United States.

Zambada-Niebla admitted that he participated in coordinating the importation of multi-ton quantities of cocaine from Central and South American countries, including Colombia and Panama, into the interior of Mexico, and facilitated the transportation and storage of these shipments within Mexico. The cartel used various means of transportation, including private aircraft, submarines and other submersible and semi-submersible vessels, container ships, go-fast boats, fishing vessels, buses, rail cars, tractor-trailers, and automobiles.

Zambada-Niebla “subsequently assisted in coordinating the delivery of cocaine to wholesale distributors in Mexico, knowing that these distributors would in turn smuggle multi-ton quantities of cocaine, generally in shipments of hundreds of kilograms at a time, as well as on at least one occasion, multi-kilogram quantities of heroin, from Mexico across the United States border, and then into and throughout the United States, including Chicago,” according to the plea agreement.

On most occasions, the Sinaloa Cartel supplied this cocaine and heroin to wholesalers on consignment, including to cooperating co-defendants Pedro and Margarito Flores, whom Zambada-Niebla knew distributed multi-ton quantities of cocaine and multi-kilogram quantities of heroin in Chicago, and in turn sent payment to Zambada-Niebla and other cartel leaders.  Zambada-Niebla also admitted being aware of, and directly participating in, transporting large quantities of narcotics cash proceeds from the U.S. to Mexico.

Zambada-Niebla also admitted that he and his father, as well as other members of the Sinaloa Cartel, “were protected by the ubiquitous presence of weapons,” and that he had “constant bodyguards who possessed numerous military-caliber weapons.” Zambada-Niebla also admitted that he was aware that the cartel used violence and made credible threats of violence to rival cartels and to law enforcement in Mexico to facilitate its business.

Tweet

Could William Bradford Bishop Jr, Newest Member of FBI's Most Wanted List, Be Hiding in Plain Sight?

Although William Bradford Bishop, Jr. traveled extensively overseas through his job with the U.S. Department of State and spoke several foreign languages, investigators believe he may have assumed a new identity and be hiding in plain sight in the United States.



Even an experienced traveler might find it difficult to maintain a new identity in a foreign country, said Steve Vogt, special agent in charge of our Baltimore Division. “If you’re a U.S. citizen it’s usually easier to hide in this country,” he explained. “Americans overseas tend to stand out.”

“The reality is, he could be anywhere,” Vogt added. “But we don’t want people to assume that he’s out of the country and overlook the fact that he might be living in their community. People might see someone who looks like him and think, ‘It couldn’t be him.’ Well, it could be him,” Vogt said. “That’s why we need the public’s help.”

Vogt doesn’t dismiss the possibility that Bishop died years ago, but currently there is no proof either way. “If he’s dead, so be it,” Vogt said, “but until we know for certain, we will not stop searching for him.”

Tweet

William Bradford Bishop Added to FBI Top Ten List

William Bradford Bishop, Jr., wanted for the brutal murders of his wife, mother, and three sons in Maryland nearly four decades ago, has been named to the Ten Most Wanted Fugitives list.

A reward of up to $100,000 is being offered for information leading directly to the arrest of Bishop, a highly intelligent former U.S. Department of State employee who investigators believe may be hiding in plain sight.



On March 1, 1976, Bishop used a hammer to bludgeon his family, including his three boys, ages 5, 10, and 14. Investigators believe he then drove to North Carolina with the bodies in the family station wagon, buried them in a shallow grave and set them on fire. The last confirmed sighting of Bishop was one day after the murders at a sporting goods store in Jacksonville, North Carolina, where he bought a pair of sneakers.

“Nothing has changed since March 2, 1976 when Bishop was last seen except the passage of time,” said Steve Vogt, special agent in charge of our Baltimore Division. Vogt has teamed with local Maryland law enforcement officials to apprehend Bishop, a man described by investigators as a “family annihilator.”

“There is no indication that Bishop is dead,” Vogt said, explaining that the area where the bodies were discovered was searched extensively, and hundreds of individuals were interviewed at the park where the abandoned station wagon was later discovered, and there was no trace of Bishop.

The FBI, along with the Montgomery County Police Department, Montgomery County Sheriff’s Office, and the Department of State formed a task force last year to take another look at the Bishop case and to engage the public in locating him. As part of that effort, a forensic artist created a three-dimensional, age-enhanced bust of what the fugitive may look like now, at the age of 77.

Naming Bishop to the Top Ten list is expected to bring national and international attention to the case in a way that was impossible decades ago. “When Bishop took off in 1976, there was no social media, no 24-hour news cycle,” Vogt said. “There was no sustained way to get his face out there like there is today. And the only way to catch this guy is through the public.”

“If Bishop is alive—and there is every chance that he could be,” said Tom Manger, chief of the Montgomery County Police Department and a member of the task force, “we are hopeful someone will call with the tip we need to catch him.” Manger added, “When you have a crime of this magnitude, no matter how long ago it occurred, the police department and the community never stop trying to bring the person responsible to justice.”

“No lead or tip is insignificant,” Vogt explained. “If Bishop is living with a new identity, he’s got to be somebody’s next-door neighbor.” Vogt, a Maryland native who remembers when the murders happened 38 years ago, echoed Manger’s sentiments about never giving up trying to locate the fugitive. “Don’t forget that five people were murdered,” he said. “Bishop needs to be held accountable for that.”

We need your help: If you have any information concerning William Bradford Bishop, Jr., contact your local FBI office, the nearest law enforcement agency, or the appropriate U.S. Embassy or Consulate. You can also submit a tip online.

Tweet

Chicago Transportation Department Clerk Antionette Chenier Arrested for Allegedly Embezzling More Than $741,000 from City Permit Fees

A clerk for the City of Chicago’s Department of Transportation (CDOT) was arrested for allegedly embezzling more than $741,000 from fees that were paid for certain city permits. The defendant, Antionette Chenier, a city clerk since 1990, allegedly diverted the funds from checks that were written by companies that applied for and received city permits to block public ways with dumpsters or moving vans. Chenier, 50, of Homewood, was charged with embezzlement in a criminal complaint that was unsealed following her arrest.

The arrest and charge follow an investigation by the Chicago Office of the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation Division, and the City of Chicago Office of Inspector General.

From 1993 through 2005, Chenier was assigned to CDOT, and from 2006 through 2008, she was assigned to the city’s Office of Emergency Management and Communication (OEMC) before being transferred back to CDOT. As a clerk working in CDOT’s City Hall permitting office, she was involved in processing the moving van and dumpster permit fees.

The city charges a $25 daily fee for a residential moving van and between $50 and $200 (or higher) per dumpster, depending on the size, location, and length of time the dumpster will be on a city street. For several years, companies have been able to apply for permits through a website operated by CDOT. Although CDOT issues the permits and collects payment, the checks are often made payable to OEMC, which previously administered the permit process.

According to the complaint affidavit, bank records show that Chenier opened a personal bank account in August 2008 and a business account at the same bank in March 2009 under the name “OEMC Chenier,” and she was the sole signatory on both accounts. Between August 2008 and January 2014, she allegedly deposited several hundred checks, totaling $741,299 and payable to OEMC and other city departments into her personal and business accounts.

In January this year, bank officials noticed Chenier’s unusual banking activity and froze her business account, according to the affidavit.

Tweet