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Corporate Fraud Cases In 2011 Increased, FBI Says

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In China, the former president of the state-owned Shanghai Pharmaceutical Group was recently sentenced to death for taking almost $2 million in bribes and embezzling $5 million.

Over here, the authorities are a little less aggressive. The FBI insists it is on the case.

In its latest financial crimes report, the bureau said corporate fraud remains one of its "highest priorities" and that its agents in 2011 pursued about 726 such cases that include false accounting, fraudulently inflated assets, insider trading and kickbacks, a 10 percent increase from 2010. Those cases resulted in 242 indictments and 241 convictions of corporate criminals, with the FBI securing $2.4 billion in restitution orders and $16.1 million in fines.

Due to the volatility of the stock market, the FBI "witnessed a steady rise in securities and commodities frauds" -- such as securities market manipulation, Ponzi schemes and "foreign-based reverse merger market manipulation schemes," the report said. Such fraud investigations have increased 52 percent from 2008 and the FBI has more than 1,800 pending probes, requiring it to add 91 agents.

In addition, mortgage fraud seems to be on the rise, with suspicious activity reports jumping by a third from the previous year to 93,508, though the average fraud was smaller, since the total resulted in a slightly smaller dollar loss.

The number of pending fraud cases involving financial institutions declined in 2011, sure to anger critics who claim the FBI and the Justice Department have not been assiduous enough in prosecuting and jailing financial fraudsters.

Industry Ahead of Regulators In Recognizing Harm of Silica

More than 2 million workers are exposed to potentially hazardous levels of silica dust, common in construction and sandblasting, according to Public Citizen, the watchdog group. But a proposal to update the current exposure standard, adopted in 1971 and considered inadequate by health professionals, has languished at the White House Office of Management and Budget for a year.

While the regulators and analysts consider whether silica is a hazard, some employers have already made up their minds. An industrial hygienist at a Coast Guard ship repair yard told the Baltimore Sun that "many workplaces had shifted years ago to coal and copper slag for blasting, after it became clear that blasting with sand was exposing workers to harmful silica, which can also cause serious lung disease if inhaled." That quote was noted by National COSH, a federation of non-profit coalitions of labor unions, health and technical professionals.

You Think Our Regulations Are Bad?

The business lobby often complains that U.S. regulations are burdensome, but they should be happy they don't live in Greece. Economist Megan Greene tells the tale of the bookstore/cafe in Athens that neither sells books nor makes coffee:

A friend and I met up at a new bookstore and café in the centre of town, which has only been open for a month. The establishment is in the center of an area filled with bars, and the owner decided the neighborhood could use a place for people to convene and talk without having to drink alcohol and listen to loud music. After we sat down, we asked the waitress for a coffee. She thanked us for our order and immediately turned and walked out the front door. My friend explained that the owner of the bookstore/café couldn’t get a license to provide coffee. She had tried to just buy a coffee machine and give the coffee away for free, thinking that lingering patrons would boost book sales. However, giving away coffee was illegal as well. Instead, the owner had to strike a deal with a bar across the street, whereby they make the coffee and the waitress spends all day shuttling between the bar and the bookstore/café. My friend also explained to me that books could not be purchased at the bookstore, as it was after 18h and it is illegal to sell books in Greece beyond that hour. I was in a bookstore/café that could neither sell books nor make coffee.

Quick Hits

* The Securities and Exchange Commission released its second risk alert so far this year on unauthorized trading, which includes "rogue trades in customer, client, or proprietary accounts or trades that exceed firm limits on position exposures, risk tolerances, and losses."

* After a 20-month probe, the West Virginia Office of Miners' Health, Safety and Training released its report on the fatal explosion at the Upper Big Branch mine almost two years ago.

* Bloomberg News joins the class war, tweets, "Rich people are more likely to lie, steal and cheat"

Around the Web

Why Corporate Fraud Is On The Rise - Forbes.com

Corporate fraud | Economist - World News, Politics, Economics ...

Corporate Fraud - CNBC

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FBI Fraud Probes Increase as Insider Trading 'Widespread'

Wells Fargo Bank Gives Scammer Three Tries