/>iHeadlines that Matter for Companies and Executives in Regulated Industries
Former Portfolio Manager Convicted in Bond Fraud Trial
On Friday, August 12, 2022, Daniel Small — a former portfolio manager for Platinum Partners LP (Platinum) — was convicted of securities fraud and conspiracy to commit securities fraud for his role in connection with a scheme to defraud bondholders of Black Elk Energy (Black Elk) — an oil company and one of Platinum’s largest assets.
According to prosecutors, Small and others executed this scheme by secretly purchasing, through Platinum, $98 million of Black Elk’s $150 million of outstanding bonds. Small and others then transferred the bonds to related entities to conceal Platinum’s ownership of the bonds. As the final step in the scheme, according to the government, Small and others rigged a consent solicitation vote that ultimately amended Black Elk’s indenture to allow holders of Black Elk’s preferred equity — held by mostly Platinum affiliated entities and individuals — to receive proceeds on a priority basis.
Small and his co-conspirators (two of whom were already convicted of the same charges in July 2019) then personally took millions of dollars from the asset sale for their own uses.
The DOJ press release is here.
Former Congressman Charged with Multiple Fraud Schemes
Terrance John “TJ” Cox — former US Representative for California’s 21st congressional district — was charged with 15 counts of wire fraud, 11 counts of money laundering, one count of financial institution fraud, and one count of campaign contribution fraud.
According to the indictment, Cox allegedly perpetrated a variety of fraudulent schemes, including: creating unauthorized off-the-books bank accounts and diverting funds into those accounts through false pretenses; submitting fabricated bank statements and making false representations to a mortgage lender to receive mortgage loan funds; obtaining a $1.5 million construction loan based on false representations and fabricated documents; and orchestrating a scheme that resulted in over $25,000 in illegal straw or conduit donations to his campaign in 2017.
If convicted, Cox faces the possibility of lengthy prison sentences and hefty fines.
The DOJ press release is here, and the indictment is available here.
Man Sentenced to Prison for COVID-19 Relief Fraud
On Tuesday, August 16, the District Court for Connecticut sentenced Moustapha Diakhate to 42 months of imprisonment, followed by three years of supervised release for fraudulently receiving more than $4 million in COVID-19 relief funds under the CARES Act.
According to the government, Diakhate provided two banks with false and fraudulent information in connection with Paycheck Protection Program loan applications for various small business entities in which he had ownership or management interests. Diakhate allegedly used a portion of the more than $4 million in funds he received for a variety of personal expenses, including purchases of multiple luxury cars.
The DOJ press release is here.
