Welcome to Inner City Press’ Bank Beat.  We aim to scrutinize the industry, from high to low. Our other Reporters cover Community Reinvestment, the Federal Reserve, and other beats.   ICP has published a (double) book about the Bank Beat-relevant topic of predatory lending - click here for sample chapters, an interactive map, and ordering information. The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters." See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," by Matt Pacenza, City Limits, Sept.-Oct. 2004. The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site. Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere, which include bank-related topics.

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere. Click here for a recent BBC piece on Inner City Press' reporting from the United Nations. New: Follow us on TWITTER   BloggingHeads.tv  Click for March 1, 2011 BloggingHeads.tv re Libya, Sri Lanka, UN Corruption by Inner City Press.  Until next time, for or with more information, contact us.

August 8, 2022

Charged With Crypto Fraud Alexandre Trial Is March 27 As Receiver Details Foreclosure Deals

By Matthew Russell Lee, Patreon Maxwell Book
Vlog - Guardian - Honduras - ESPN NY Mag

COURTROOM EXCLUSIVE, August 5 – Eddy Alexandre, charged with commodities fraud in connection with a purported cryptocurrency and forex trading platform named EminiFX, was ordered released on $3 million bond on May 12.

He would be required to hire his own guard for home incarceration in Valley Stream, NY - and not pay the guard with the crypto funds.

  The bail decision was reached by U.S. District Court for the Southern District of New York Magistrate Judge Katharine H. Parker in an hour-long proceeding on the afternoon of May 12. Inner City Press was the only media there, and live tweeted it here and below.

Then was June 14, when Alexandre was arraigned. Inner City Press again went. The court room was full (of supporters), but little to no media. Inner City Press live tweeted here
and below.

On August 3, with two overflow courtrooms, more Alexandre and EminiFX supporters / investors, a Curcio hearing and March 27 trial date. Inner City Press exclusively live tweeted here and below.

On August 5, in the parallel CFTC case, Judge Valerie E. Caproni approved the receivers request for nearly $1 million, a request which included: "Long Island Real Estate Portfolio. Soon after the start of the receivership, the Receiver discovered that EminiFX had entered into 46 separate contracts to purchase residential properties in Long Island out of foreclosure, each in a separate New York state court action with a separate court-appointed referee overseeing the sale. EminiFX also entered into two separate real estate contracts outside of foreclosure. In addition, Alexandre entered into a separate contract for a property using $535,000 in funds traceable to EminiFX customers as a deposit. The total deposits on all properties totaled over $3 million, and the Receiver and his team at Raines Feldman and FDT have been working to recover as much as possible. The total amount recovered to date on the EminiFX contracts for purchase is $575,200. This amount plus the court-ordered turnover of the $535,000 deposit for the Alexandre contract for purchase brings the total recovery to over $1.1 million. The Receiver and FDT are working to recover the remaining deposits." Full letter on Patreon here.

From August 3: OK- US v Alexandre, now in jammed courtroom, former SDNY prosecutor Emil Bove speaks of seized phone.  Bove criticizes his former office coordinating with CFTC. Alexandre wants all CFTC communications outside of Enforcement Division.

 AUSA Folly (also on #OneCoin) says no objection to motion cycle starting Aug 29. Former AUSA Bove: Alexandre's 6th Amendment rights are being constrained. 2d round of motions. Oct 31.

 AUSA Folly: This is standard, freezing assets. Judge Cronan: US must update on Aug 24 on responsiveness review. [Up in the overflow courtroom many have on Alexandre T-shirts. It appears some COVID masks have his image on them]

 Alexandre wants trial in January. AUSA Folly says March. Alexandre supporter next to me shskes his head vehemently. Judge Cronan: Trial March 27.

 AUSA Folly: Exclude Speedy Trial Act time go March 27, 2023. Bove: Only to Aug 24. Judge Cronan: To Aug 24 for now. Now the Curcio hearing....

Alexsandre: I am 50, with a masters from Phoenix U. I have business acumen and was in charge of cyber security for Warner - CNN, HBO, etc. I don't drink. Judge: I find you competent to proceed.

 Judge: Who pays your counsel? Alexandre: Family and friends. Judge: That may be a conflict or risk. Do you understand? Alexandre (still standing up) Yes

[Alexandre supporter passes by me on way out - yes, photo of Alexandre and EminiFX orinted on COVID mask. Also an EminiFX ID card around neck. Is it still a going concern?] Alexandre waives all conflicts.

From June 14: Now at arraignment of Eddy Alexandre, out on $3M bail with former SDNY prosecutor Emil Bove as his lawyer.

 Judge Cronan: I was Mr Bove's supervisor. [Gives 2 weeks to object. Courtroom jammed; there's a T-shirt "We Support Our CEO"]

Alexandre: Not guilty.

Judge Cronan: Mr Bove, are there any conditions I should loosen?

Bove: I'll deal with Pre-Trial Services

AUSA Folly: Defendant ran EminiFX -  a Ponzi. We have video.

Judge Cronan: What about the CFTC case? AUSA Folly: Let Mr Bove answer.

Bove: There's a consent preliminary injunction pending...

August 1, 2022

By Matthew Russell Lee, Patreon Maxwell Book
BBC - Honduras - CIA Trial Book - NY Mag

SDNY COURTHOUSE, July 28 – Former Goldman Sachs investment banker Brijesh Goel was arraigned on insider trading charges on the morning of July 28, 2022. Inner City Press there - although the arraignment had not be listed in the docket, nor announced by prosecutors.

 Goel's case is assigned to U.S. District Court for the Southern District of New York Judge P. Kevin Castel, who held the arraignment.  

 Even afterward, the docket did not contain any notice of the arraignment - in contrast to the July 27 arraignment for insider trading of former Indian Congressman Steve Buyer, Inner City Press story here, video here.

  Goel, represented by defense lawyer Brodsky who was still not listed on the docket - no notice of appearance? - after the proceeding, pleaded not guilty.

Assistant US Attorney Joshua Naftalis said his office agreed to release on $1 million bond, and no contact with "CC-1."

   Brodsky, too, was concerned about CC-1. He specifically asked that all information about debriefing sessions with CC-1 be provided in two or three weeks, so that he or successor counsel can decide by the September 14 next conference whether to file motion.

This was incorporated into Judge Castel's Rule 5(f) order.

  Goel is accused of feeding inside information to his graduate school friend and squash partner Akshay Niranjan, at Barclays. 

 Brodsky said Goel "could not consent" to excluding time under the Speedy Trial Act. But then after conferring, he did not oppose. Time was excluded. 

July 25, 2022

BitMEX Hayes Got 6 Months at Home as Delo Back to HK Moves For Redactions As To Why

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, July 18 – Four executives of the Bitcoin Mercantile Exchange or BitMEX were criminal defendants for violations of the Bank Secrecy Act.   On February 24, with no notice, a guilty plea - each to a single count.

      Back on October 13, 2021 U.S. District Court for the Southern District of New York  Judge John G. Koeltlt held a proceeding. Inner City Press covered it, below.

On May 20, after Hayes pleaded guilty, he was sentenced - to two years probation, the first six months of which are home confinement with location monitoring. Inner City Press live tweeted it here and below.

That sent a precedent - now co-defendant Samuel Reed has asked for time served, while Gregory Dwyer is still negotiating while an October 24 trial still on the schedule...

When co defendant Benjamin Delo came up for sentencing on June 15, Delo's lawyer urged no home confinement at all, just travel back to Hong Kong. And he got it - with thirty months probation the administration of which is unclear. Inner City Press live tweeted it here:

Delo's lawyer: Even home confinement is unnecessary. He is a British citizen, here on a tourist visa. He cooperated with the CFTC.

Defense: Ben was living in Hong Kong. He gave money to Oxford.  [There are more than a dozen suited persons here in the gallery]

Judge: Didn't he know there were US persons im the platform?

Defense: He didn't encourage it

Delo: This case hurts my philanthropy.  AUSA: Yes most messages we used were from Mr Hayes. But many were to Mr Delo. He knew.

Judge Koeltl: Guideline is 6 to 12 months. The US chose not to go for money laundering or fraud. The co-defenfant [Hayes], I sentenced to 6 months home confinement. But Delo has lived in Bermuda. So I sentence Delo to 30 months probation, no home confinement.

On July 13, Delo's counsel filed notice that he will submit a letter motion on or before August 1 to redact portions of the transcript.

On July 18, Delo's counsel emailed Judge Koetlt proposed redactions, the scope of which the public and press cannot see, arguing in a cover letter that the information "should be treated with caution." If so, why did his counsel say it in open court seeking a time served sentence?

Then this: "MEMO ENDORSEMENT as to Benjamin Delo (2) granting [376] MOTION to Redact [367] Transcript. ENDORSEMENT: APPLICATION GRANTED. SO ORDERED. (Signed by Judge John G. Koeltl on 7/19/2022)." Of course, it doesn't change what was said in open court.

Docketed on June 29, this: "CASH BAIL RETURNED as to Benjamin Delo as per [357] Order, Terminate Motions, dated 06/22/2022, from Judge John G. Koeltl, in the amount of $2,000,000.00, No. 03046969, Check Dated 06/28/2022, payable to SMITH VILLAZOR LLP."

On July 5, Delo's counsel wrote to Judge Koeltl asking that the judgment be amended to allow Delo to speak with Hayes and Reed.

And he got it: "MEMO ENDORSED granting [364] LETTER MOTION Request to Amend Judgment (to reflect that Standard Condition of Supervision Number 8 not apply to contact with Messrs, Hayes and Reed) as to Benjamin Delo (2)... ENDORSEMENT: APPLICATION GRANTED. SO ORDERED. (Signed by Judge John G. Koeltl on 7/5/22)."

Hayes on May 20, 2022: OK - sentencing of BitMEX's Arthur Hayes begins  @SDNYLIVE . He wants probation; US wants more than a year. Inner City Press has been covering the case (& much else crypto)   and, after scoping out Hayes' crowd, will live tweet

Judge Koeltl: What's the nature of the fine? Hayes' lawyer: We've paid $10 million to the CFPB. So Paragraph 62 should include that. Assistant US Attorney: That's correct, your Honor.

Hayes' lawyer Benjamin: Probation rejected some of our suggestions. But we're OK with it - no objections at this time. Judge Koeltl: OK, I'll listen to your argument. Hayes' lawyer: It is a privilege for us to serve Arthur Hayes. His mother from Buffalo is here.

Hayes' lawyer: The plea agreement is for 6 to 12 months. We are asking for probation with no home confinement and for Mr. Hayes to return to his home in Asia. We disagree with the government. Mr. Hayes has already suffered collateral consequences.

 Hayes' lawyer: The government agreed to six to twelve months - but now they are asking for more. They argue that the law is too lenient, in applying the Bank Secrecy Act to crypto-currency... There was a lack of regulatory guidance.

 Judge Koeltl: The defendant pleaded guilty to willfully having violated the Bank Secrecy Act.  He knew he was serving US residents. Go ahead. Hayes' lawyer: The point is, the violation is not having an AML program. Mr. Hayes is a charismatic leader.

 Hayes' lawyer: Let me tell you about Mr. Hayes' love for his mother, some of it cannot be spoken of here. Mr. Hayes went to China and feel in love with Asia.  He worked at Deutsche Bank and Citi then into crypto currency. He was a pioneer.

Hayes' lawyer: We have a letter from the Jackie Robinson Foundation. Let me read from it: "Arthur is open minded." The government seeks to belittle this. Mr. Hayes accepts responsibility - he wishes he had had better controls and keep US persons off the platform

 Hayes's lawyer: He left Singapore to turn himself in. He lost his immigration status there. He's suffered significant reduction in the value of the BitMEX business. It was a classic start-up. He slept on a couch in Hong Kong. He focused on retail traders in China

 Hayes' lawyer: He moved to Shanghai and the business caught fire. He got a lawyer from BNP Paribas. He hired Sullivan & Cromwell and PriceWaterhouseCoopers on whether the company should have a KYC program.

Hayes' lawyer: Yes, customers could lie to BitMEX and use a VPN to conceal where they were located. But we blocked many - we have the customer support tickets. The controls were not a meaningless scam.

Hayes' lawyer: By London, the CTFC investigation was in the early stage. And BitMEX had no idea of the criminal investigation. Still BitMEX hired a former FBI agent.  Judge Koeltl: Let me remind people in the gallery to keep their masks up. COVID number are up

 Hayes' lawyer: Anti-money laundering programs to do not prevent money laundering.  This is not Silk Road. This is very different. Mr. Hayes wrote thoughtfully about Facebook's Libra. He wasn't promoting law breaking

 Hayes' lawyer: DOJ is coming perilously close to illegal viewpoint discrimination. Judge Koeltl: I doubt that's the point the government was making.  Hayes' lawyer: OK, on to my last section. [We're one hour into this sentencing].

Hayes' lawyer: The best is yet to come. He can do great things. He should get probation, and return to Asia. Thank you.

Judge Koeltl: It's never necessary to thank the  Court. Mr. Hayes?  Hayes: As Mr. Benjamin said, I take responsibility. Let me return home.

Judge Koeltl: US? AUSA Raymond: Probation would be insufficient. Here Mr Hayes has the same guideline as a check cashing store that didn't have an AML program. This was bigger. There were real consequences. We're saying people like Jeremy Spence were his customers

 AUSA Raymond: It is difficult to obtain court orders in the Seychelles. Even his statement "We block all US I.P. addresses was false - you could trade from the US, as long as the account was first set up with a non US IP. He knew, in Sept 2015.

 AUSA Raymond: He mocked his customers as degenerate gamblers. He wants to continue to work in crypto industry. If no jail, the message is that paying a fine is the cost of violation. This case is being closely watched - Judge Koeltl: I'm more about the individual

 AUSA Raymond: We suggest above 6 to 12 months. Thank you. Judge Koeltl: The offense is very serious. He caused his company to violate the Bank Secrecy Act. On the other hand, the US chose not to accuse the defendant of fraud. There are no identifiable victims

Judge Koeltl: There must be a penalty more than monetary. The court intends to impose a sentence of probation of two years, with home detention for six months with location monitoring.

 Now Hayes' lawyer says he wants to serve the home confinement in Asia, not Miami. Judge Koeltl: He bought an apartment there. Hayes' lawyer: Give us time to submit something. He'd like to go to Singapore today. Then see how the location of confinement is decided

 Judge Koeltl: The interview with probation will be Monday. It's a not a big burden to stay in the US until then. Hayes' lawyer: OK. He wants to travel.

Judge Koeltl: I'll put in, Defendant is permitted to travel internationally - AFTER the home detention.Hayes' lawyer: Mr. Hayes' two co-founders are now felons too. He wants to communicate with them despite standard condition 8.

Judge Koeltl: Fine, I'll add that. What about Mr. Dwyer? Hayes' lawyer: He has not pleaded guilty. I don't know where that is going.Judge Koeltl: Anything further? No? Good afternoon, all. Adjourned.

On February 24, with no prior notice and not included in the day's Calendar on PACER, this: "Damian Williams, the United States Attorney for the Southern District of New York, announced that ARTHUR HAYES and BENJAMIN DELO, founders and executives of purportedly “off-shore” cryptocurrency derivatives exchange the Bitcoin Mercantile Exchange or “BitMEX,” pled guilty today to violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX.  Under the terms of their respective plea agreements, HAYES and DELO each agreed to separately pay a $10 million criminal fine representing pecuniary gain derived from the offense.  HAYES and DELO pled guilty today before U.S. District Judge John G. Koeltl."

  On May 4 Hayes put in his sentencing submission, asking for probation in a redacted letter. The argument includes that "in this first of its kind prosecution the government has achieved a notable success by establishing the principle that cryptocurrency derivatives trading platforms much comply with the Bank Secrecy Act if they provide services to US customers." Who knew? Hayes lost his immigration status in Singapore - then, a redaction.

Back on March 9, SAMUEL REED, one of three co-founders and a high-ranking executive of purportedly “off-shore” cryptocurrency derivatives exchange the Bitcoin Mercantile Exchange or “BitMEX,” pled guilty today to violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX.  Under the terms of his plea agreement, REED agreed to separately pay a $10 million criminal fine representing pecuniary gain derived from the offense.  REED pled guilty today before Chief U.S. District Judge Laura T. Swain, and will be sentenced by U.S. District Judge John G. Koeltl.  The other two founders of BitMEX, Arthur Hayes and Benjamin Delo, previously pled guilty to the same offense in February 2022.

For those wondering why not, even in the absence of Judge Koeltl, plead guilty before a Magistrate Judge, that would require a second step of Judge Koeltl approving the Magistrate's decision. So the plea was before Chief Judge Swain as Part I Judge; the sentencing is set for July 13 before Judge Koeltl.

  We'll have more on this.

  Earlier: The complaint says the defendants "deliberately failed to implement BSA-Compliant AML and KYC programs at BitMEX."

They have demanded a bill of particulars, and the government has opposed it.  Judge Koeltl on October 13 gave the defendants until October 22 to reply to DOJ's opposition.

On October 20, after initially being stopped from entering the SDNY Magistrates Court (even while the overflow room 15A was locked), Inner City Press managed to enter and witness the telephone presentment of defendant Gregory Dwyer, by phone - from JFK airport, as it happened.

Dwyer's lawyers had written in request the airport phone presentment so as to avoid a night of incarceration (to which others on October 20 were confined, in non white collar cases).

Magistrate Judge Robert W. Lehrburger could be heard speaking into the phone, but the other side's responses could not be, even in the courtroom. But the conditions of release were announced by Judge Lehrburger, including ultimately freedom to travel to Bermuda.

 On January 20, 2022 Judge Koeltl ruled, among other things, that Hayes' quote about bribing officials in the Seychelles with a coconut will not come into evidence, as too inflammatory. From the January 20 rulings, the prosecution may be in trouble. For more, in the run-up to the trial that Inner City Press will cover along with many other now unblocked trials, see Bloomberg by Chris Dolmetsch, here, and Law360 by Pete Brush (paywall/7 day trial), here. Here's the video from Taipei, Hayes v. Nouriel Roubini, here (from Minute 10: Andrew Neil asks, How much are you paying to bribe the Seychelles authorities? Hayes says, "A coconut.")

  Soon after the January 20 conference, the defendants submitted for signature a revised subpoena to the CFTC, about the March 1, 2016 CFTC letter about ICBIT and a June 26, 2018 meeting with Hayes and Sullivan & Cromwell.

The trial is set for March 30: "ORDER as to Arthur Hayes, Benjamin Delo, Samuel Reed. Trial in this matter is adjourned to Wednesday, March 30, 2022, at 9:00am (Jury Trial set for 3/30/2022 at 09:00 AM before Judge John G. Koeltl.) (Signed by Judge John G. Koeltl on 12/7/21)."

The case is overall case is US v. Hayes, et al., 20-cr-500 (Koeltl)

***

July 18, 2022

Standard Chartered Bank Is Sued Under Anti Terrorism Act For Role in Afghan Bombs

By Matthew Russell Lee, Patreon Maxwell Book
BBC-Guardian UK - Honduras - NY Mag

SDNY COURTHOUSE, July 14 – Standard Chartered Bank has been sued under the Anti-Terrorism Act, for its role in producing bombs that killed Americans in Afghanistan. 

  On July 13, 2022 U.S. District Court for the Southern District of New York Judge Edgardo Ramos held a proceeding. Inner City Press covered it. 

 Judge Ramos inquired into a line from the complaint, that US officials met with Standard Charged at its New York office and told it that its client Fatima was a primary supplier of precursors used by Al-Qaeda - but that Standard Chartered kept doing it.

Judge Ramos asked, Was Standard Chartered told what it was done was illegal? Plaintiff counsel replied he didn't know, or couldn't say in this public forum (Inner City Press was the only media present).

 Judge Ramos gave StanChart until August 3 to file a motion to dismiss.

July 11, 2022

In Deep Implant ATM Card Skimmer Trial Santander Says It Began in Richmond Hill

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, June 28 – A dozen men in shackles charged with ATM skimming came into  the U.S. District Court for the Southern District of New York courtroom of Judge Laura Taylor Swain on January 9, 2020. They had interpreters in French and Romanian, and now a coordinating discovery attorney, Emma G. Greenwood.

  But on Monday, March 16, amid the Coronavirus crisis when two more defendant in the case extradited from Romania on Friday were presented before SDNY Magistrate Judge Stewart D. Aaron, their lawyers were not physically present. They appeared by telephone. One asked that his business card be given to his client. For the other, the defendant asked who he was.

   Both asked that their appointments be back dated to March 9. It was granted, and the defendants were detained on consent.

On February 24, docketed in the case was an order of judicial removal for David Georgescu, stating that on February 27, 2020 he was paroled into the US at JFK airport for criminal prosecution. He was set to be removed to Romania.

 In June 2022 a trial approaches: "Minute Entry for proceedings held before Judge Sidney H. Stein: Final Pretrial Conference as to Mircea Constantinescu, Nikolaos Limberatos, Alexandru Radulescu held on 6/15/2022. Defendant Mircea Constantinescu present with attorney Meredith Heller; defendant Nikolaos Limberatos present with attorney Jeffrey Einhorn and Alan Seidler; defendant Alexandru Radulescu present with attorney James Branden; for the government Elizabeth Hanft, Margaret Lynaugh present, Samuel Rothschild by telephone; court reporter George Malinowski. The trial of this matter remains at June 27 at 9:30 a.m. in Courtroom 23B. Defendant Limberatos and Radulescu remain in custody."

On June 23 Inner City Press was in the Magistrates Court when Radulescu was brought in by Marshals and pled guilty to Counts 1, 2 and 6 - while still heading to trial on Count 3 on Monday. Some of the allocution was done two times - better safe that sorry, the parties said - and what the defendant said can and probably will be used against him at trial. From the docket: "CONSENT TO PROCEED BEFORE US MAGISTRATE JUDGE ON A FELONY PLEA ALLOCUTION by Alexandru Radulescu... Minute Entry for proceedings held before Magistrate Judge Valerie Figueredo: Change of Plea Hearing as to Alexandru Radulescu held on 6/23/2022. Defendant present with counsel James Branden. A.U.S.A. Samuel Rothschild present for the Government. Defendant enters a plea of Guilty to Count # 1, 2 and 6. Court reporter present. Detention continued. Trial date: 6-27-2022."

 But a co-defendant wanted severance from the trial, because of the guilty plea. It's been denied (Order below) and the trial begun.

July 4, 2022

In OneCoin Case FBI Puts Ruja On 10 Most Wanted List Inner City Press Asks of Schneider