Fraud in the News  


“What were you thinking when you were driving around in a Bentley?”

— U.S. District Judge James D. Whittemore to Russell B. Simmons Jr., 42, owner of Simmons Auto Sales in Tampa, Fla., who filed more than 600 false tax returns and ended up with $1.8 million in refunds. Simmons claimed he filed the returns to get money to help his family, but that didn’t fly with the judge, who sentenced him to 15 years in prison

 

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Definition of recidivism  


Craig Berkman, who ran for governor of Oregon, was arrested for allegedly selling shares of various companies, including Facebook, LinkedIn and Groupon, before their initial public offerings. He gathered more than $8 million in the Ponzi scheme that ultimately collapsed, as they all do. U.S. Attorney Preet Bharara’s office in Manhattan filed criminal charges against Berkman, with two counts each of securities fraud and wire fraud. (Read our interview with Bharara.)

This isn’t the first time he’s been charged with a crime. According to the Securities and Exchange Commission, his checkered past includes:

  • A cease-and-desist order and a $50,000 fine in 2001 for offering and selling convertible promissory notes without a brokerage license.
  • Breach of fiduciary duty, conversion of investor funds and misrepresentation to investors related to his involvement with a purported venture capital firm in 2008.
  • A settlement with Synectic Ventures after it filed an involuntary Chapter 7 bankruptcy petition against him in 2009 for debts he didn’t pay related to an earlier judgment against him for $28 million.

 


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