Bank of America accused of a ‘brazen’ mortgage fraud

Federal prosecutors in New York took aim at Bank of America Oct. 25, accusing the financial giant of carrying out a scheme, started by its Countrywide Financial unit, that defrauded government-backed mortgage agencies by approving loans at a fast pace without proper controls.

According to a report in the New York Times, prosecutors want to collect at least $1 billion in penalties from the bank, in a civil suit, as compensation for the actions that they say forced taxpayers to guarantee billions in bad loans.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Preet Bharara, the United States attorney in Manhattan, said in a statement. “This lawsuit should send another clear message that reckless lending practices will not be tolerated.” Read more >>

Almost Half of Insider Trading Defendants Avoid Prison

Image via WikipediaAlmost half of the 43 defendants who were sentenced in Manhattan federal court in the past eight years for insider trading avoided a prison term, with many never seeing the inside of a jail cell because they cooperated with prosecutors.

Nineteen who were sentenced since 2003, or 44 percent, weren’t incarcerated, an analysis of court cases by Bloomberg showed. Of the remainder, the average defendant got a prison term of 18.4 months. The greater the profit made on illegal trades, the longer the sentence. The longest term was 10 years. Danielle Chiesi, who pleaded guilty yesterday for her role in the Galleon Group LLC hedge fund insider-trading scandal, faces between 37 and 46 months in prison.

Since 2009, U.S. Attorney Preet Bharara in Manhattan has stepped up insider-trading prosecutions, charging more than 30 people in three overlapping rings. Of the three defendants sentenced so far in the Galleon ring, the average sentence has been 17 months. The nationwide investigation has implicated hedge funds, technology companies and so-called expert- networking firms. Read more...