Rochdale Securities Trader Admits Role in Fraudulent Scheme Involving Nearly $1 Billion Purchase of Apple Stock

David B. Fein, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that David Miller, 40, of Rockville Centre, New York, waived his right to indictment and pleaded guilty today before United States Magistrate Judge Donna F. Martinez in Hartford to conspiracy and fraud offenses related to his role in a fraudulent scheme to make large purchases of stock in Apple Inc. as an institutional sales trader for Rochdale Securities LLC of Stamford.
“This defendant participated in a fraudulent scheme in which he would either reap huge profits through the unauthorized purchase of approximately $1 billion of Apple stock or, if he faced huge losses, explain it away as simple human error,” stated U.S. Attorney Fein. “This scheme caused catastrophic losses for his former employer and was unraveled promptly by the FBI. The U.S. Attorney’s Office and our many partners on the Connecticut Securities, Commodities, and Investor Fraud Task Force are committed to protecting investors and the integrity of American capital markets. This investigation is ongoing.”
“Risk is inherent in the investment world, but that risk should never be borne from the actions of investment professionals who choose to serve their own financial agendas rather than those of their clients,” stated FBI Special Agent in Charge Mertz. “As this guilty plea demonstrates, the FBI and its partners on the Connecticut Securities, Commodities, and Investor Fraud Task Force will act swiftly to investigate and bring to justice those who violate securities laws.”
According to court documents and statements made in court, Miller, while working as an institutional sales trader at Rochdale Securities LLC (“Rochdale”) in Stamford, conspired with another individual to execute a trade to buy 1,625,000 shares of stock in Apple Inc. (“Apple”) on behalf of a Rochdale customer whose account Miller handled. As part of the scheme, Miller and his co-conspirator had agreed that the co-conspirator would submit an order for Apple stock on October 25, 2012, the day Apple was scheduled to announce its earnings for the quarter and would write the order in such a way that Miller could later claim he misinterpreted it. Miller would then execute a trade for 1,000 times the number of shares written in the order. If the trade proved profitable, Miller and his co-conspirator would share in the profits. If the trade proved unprofitable, Miller would claim human error, leaving Rochdale holding the losing position.
At approximately 9:31 a.m. on October 25, 2012, Miller’s co-conspirator submitted an order for Apple that read: “b 125 ok (per 1/2 hr).” Miller then began executing orders to buy 125,000 shares of Apple stock, purportedly on behalf of the Rochdale customer. Over the course of the day, Miller entered multiple, separate orders in Rochdale’s order management system in the amount of 125,000 shares. After Apple announced its earnings later that day, the stock price began dropping, and it became clear that the trade would not be profitable. When confronted, Miller falsely claimed that he had made a mistake in ordering many multiples of what was written in a client’s order.
As a result of this scheme, Rochdale was left holding approximately 1,623,375 shares of Apple. It promptly traded out of the position but suffered a loss $5,292,202.50.
While he was executing the scheme at Rochdale, Miller also defrauded another broker-dealer into taking on a significant short position in Apple stock. Through a series of misrepresentations made over the course of several weeks, Miller convinced the broker-dealer to sell 500,000 shares of Apple stock, falsely claiming that he was trading for the account of a company, which he had no relationship with and for which he was not authorized to trade. Miller engaged in this part of the scheme to hedge against the large purchase of Apple stock he was executing at Rochdale. As a result of the scheme, Miller placed the broker-dealer at risk of sustaining substantial losses. In the end, the broker was able to trade out of the position at a profit.
Miller pleaded guilty to one count of conspiracy to commit wire fraud and securities fraud and one count of wire fraud. He is scheduled to be sentenced by United States District Judge Robert N. Chatigny on July 8, 2013, at which time Miller faces a maximum term of imprisonment of 25 years.
Miller has been released on a $300,000 bond since his arrest on December 4, 2012.
This matter is being investigated by the Federal Bureau of Investigation.
U.S. Attorney Fein acknowledged the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) for their substantial assistance and cooperation during the investigation.
The case is being prosecuted by Assistant United States Attorney Paul A. Murphy.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities, and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section, and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department; and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll-free, 855-236-9740, or by sending an e-mail to ctsecuritiesfraud@ic.fbi.gov.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

Foreign Bribery Charges Unsealed Against Current and Former Executives of French Power Company

WASHINGTON—Charges have been unsealed against one current and one former executive of the U.S. subsidiary of a French power and transportation company for their alleged participation in a scheme to pay bribes to foreign government officials, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the District of Connecticut David Fein, and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office announced today.
Frederic Pierucci, 45, a current company executive who previously held the position of vice president of global sales for the Connecticut-based U.S. subsidiary, was charged in an indictment unsealed yesterday in the District of Connecticut with conspiring to violate the Foreign Corrupt Practices Act (FCPA) and to launder money, as well as substantive charges of violating the FCPA and money laundering. Pierucci, a French national, was arrested Sunday night at John F. Kennedy International Airport.
David Rothschild, 67, of Massachusetts, a former vice president of sales for the Connecticut-based U.S. subsidiary, pleaded guilty on November 2, 2012, to a criminal information charging one count of conspiracy to violate the FCPA. The charges against Rothschild and his guilty plea were unsealed today.
“Frederic Pierucci and David Rothschild allegedly used outside consultants to bribe foreign officials in Indonesia in exchange for lucrative power contracts,” said Acting Assistant Attorney General Raman. “Stamping out foreign bribery is a Justice Department priority, and we are determined to continue our vigorous enforcement of the Foreign Corrupt Practices Act.”
“As alleged, this investigation has revealed a corrupt scheme to secure valuable contracts by bribing government officials in Indonesia,” said U.S. Attorney Fein. “Corrupt payments to government officials erode public confidence in the global marketplace, and these charges demonstrate our commitment to hold people responsible for violating the FCPA.”
“Anyone who still believes that foreign bribery is an acceptable business practice should take a hard look at the charges against these executives. There is no place for bribery in any business model or corporate culture,” said Assistant Director in Charge Parlave. “Along with the Department of Justice, international law enforcement partners, and other U.S. federal agencies, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.”
According to the charges, Pierucci and Rothschild, together with others, paid bribes to officials in Indonesia, including a member of Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia, in exchange for those officials’ assistance in securing a contract for the company to provide power-related services for the citizens of Indonesia, known as the Tarahan project. The charges allege that, in order to conceal the bribes, the defendants retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. In reality, however, the primary purpose for hiring the consultants was allegedly to use the consultants to pay bribes to Indonesian officials.
The first consultant retained by the defendants allegedly received hundreds of thousands of dollars into his Maryland bank account to be used to bribe the member of Parliament, according to the charges. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official. According to court documents, e-mails between Pierucci, Rothschild, and their co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project. However, when Pierucci and others determined that the first consultant was not effectively bribing key officials at PLN, they allegedly retained the second consultant to accomplish that purpose. The charges allege that the power company deviated from its usual practice of paying consultants on a pro-rata basis in order to make a much larger up-front payment to the second consultant so that the consultant could “get the right influence.” An employee at the power company’s subsidiary in Indonesia sent an e-mail to Pierucci and others asking them to finalize the consultancy agreement with the front-loaded payments but stated that in the meantime the employee would give his word to a high-level official at PLN, according to the charges.
The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The substantive FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The substantive money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut. The case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Connecticut Resident Agency of the FBI. Significant assistance was provided by the Criminal Division’s Office of International Affairs, and the department has also worked closely with its law enforcement counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission) and deeply appreciates KPK’s assistance in this matter.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Georgia Man Admits Mailing Additional Threatening Letters to ESPN Employees

David B. Fein, United States Attorney for the District of Connecticut, announced that Evan P. Chaggaris, 42, of Atlanta, Georgia, waived his right to indictment and pleaded guilty today before United States District Judge Robert N. Chatigny in Hartford to mailing numerous threatening communications to ESPN in Bristol, Connecticut.
According to court documents and statements made in court, between September 2011 and June 2012, Chaggaris mailed approximately 24 handwritten letters to ESPN. All the letters contained threats to injure or kill certain ESPN personalities.
Chaggaris was previously prosecuted in the District of Connecticut for the same offense. In 2004, he mailed 31 threatening letters to ESPN in which he threatened to injure and kill ESPN personalities and also made six threatening phone calls to one ESPN personality. Chaggaris pleaded guilty and, on May 8, 2006, he was sentenced to five years of probation. His term of probation concluded on May 8, 2011.
Chaggaris was arrested on a criminal complaint on September 21, 2012, in Atlanta.
Judge Chatigny has scheduled sentencing for July 10, 2013, at which time Chaggaris faces a maximum term of imprisonment of five years.
This matter has been investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Paul H. McConnell and Sarala V. Nagala.

Federal Grand Jury Indicts Maverick County Solid Waste Authority General Manager in Embezzlement Scheme

In Del Rio this morning, former Maverick County Solid Waste Authority general manager and chief executive officer of the Maverick County landfill Hector Chavez, Jr. surrendered to the Texas Rangers in connection with an alleged embezzlement scheme, announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez.
A federal grand jury indictment, returned yesterday and unsealed today, charges the 42-year-old Chavez with one count each of possessing forged securities and theft concerning programs receiving federal funds. According to the indictment, from March 9, 2012 to December 28, 2012, Chavez possessed forged Maverick County checks, which he drafted himself, totaling $62,179.18 made out to Chavez and others. The indictment further alleges that all the checks were subsequently cashed and that Chavez collected all of the proceeds.
Upon conviction, Chavez faces up to 10 years in federal prison per charge.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety Texas Rangers Division. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741. Assistant United States Attorney Michael Galdo is prosecuting this case on behalf of the government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.

Boise Jury Convicts Eagle Man of 17 Counts of Wire Fraud

BOISE—A federal jury in Boise late yesterday convicted Matthew D. Hutcheson, 41, of Eagle, Idaho, of 17 counts of wire fraud, U.S. Attorney Wendy J. Olson announced. Hutcheson is a former trustee and fiduciary for a number of multiple employer pension plans, including the G Fiduciary Retirement Income Security Plan (the “G Fid Plan”), National Retirement Security Plan 401(k) (the “NRSP”), and the Retirement Security Plan & Trust (the “RSPT”). During the eight-day trial, the government presented evidence that beginning in 2010, Hutcheson perpetrated schemes to defraud the G Fid and RSPT plans and misappropriated over $5 million of plan assets.
The jury heard evidence that from January 2010 through December 2010, Hutcheson misappropriated just over $2 million of G Fid Plan assets for his personal use. On 12 occasions, Hutcheson directed the G Fid Plan record keeper to wire transfer plan assets from the G Fid Plan account at Charles Schwab to bank accounts he controlled and to other bank accounts for his personal benefit. Hutcheson used these assets to extensively renovate his personal residence, including adding a pool, to repay personal loans, to purchase luxury automobiles, motorcycles, all-terrain vehicles, a tractor, and for other personal expenses. When G Fid Plan clients, plan record keepers, and others requested information about the location and status of the plan assets, Hutcheson misrepresented that they were safely invested.
The jury also heard evidence that in December 2010, Hutcheson misappropriated approximately $3,276,000 of RSPT Plan assets to pursue the purchase of the Tamarack Resort in Donnelly, Idaho, on behalf of a limited liability corporation he controlled, called Green Valley Holdings LLC. In December 2010, Hutcheson directed the RSPT Plan record keeper to wire transfer approximately $3 million from the RSPT Plan to an escrow account for the benefit of Green Valley Holdings LLC. Hutcheson directed the RSPT Plan record keeper to describe the transaction in plan records as an investment in a fixed income bank note. In reality, Hutcheson used the $3 million to purchase a bank note secured by a majority interest in the Osprey Meadows Golf Course and Lodge at the Tamarack Resort in the name of Green Valley Holdings, not the RSPT Plan. Hutcheson later obtained a $425,000 cash loan from a private lender in Virginia using the same bank note as collateral and placing the lender above other creditors in case of default. When the RSPT Plan auditor questioned Hutcheson about the investment, Hutcheson told the auditor there was no plan investment in a fixed income bank note and that he had “loaned” the money from the RSPT Plan to Green Valley Holdings. Hutcheson produced purported loan documents to the auditor, but they were fraudulent and forged. In addition, in December 2010, Hutcheson directed the RSPT Plan record keeper to wire transfer $275,000 from the RSPT Plan to a bank account he controlled. Hutcheson transferred $250,000 of this money to an escrow account at U.S. Bank to demonstrate to the Tamarack Corporation’s creditors that Green Valley Holding had the financial means to purchase the resort. Later, he spent the money for personal purposes.
Each count of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000 or twice the gain or loss from the offense, and up to three years of supervised release. The government is seeking forfeiture of approximately $5,307,688, or substitute assets, including property, valued at this amount.
Hutcheson is scheduled to be sentenced on July 23, 2013, before U.S. District Judge William Fremming Nielsen at the federal courthouse in Boise.
“This jury verdict sends the strong message that those who defraud the very employee benefit pension plans they are supposed to protect will be held accountable,” said Olson. “Matthew Hutcheson placed his own personal interests and greed above the clients’ whose retirement interests he pledged to safeguard. This office will continue to take pension fraud very seriously. I commend the federal law enforcement officers who conducted the deliberate and detailed investigation in this case, and I commend Assistant United States Attorney Ray Patricco for his outstanding job of presenting the complex evidence to the jury.”
The case was investigated by the United States Department of Labor, Employee Benefits Security Administration, and the Federal Bureau of Investigation.

Richmond Man Sentenced to Seven Years for Stealing Truck with White House Audio and Visual Equipment

RICHMOND, VA—Eric Brown, 49, of Richmond, Virginia, was sentenced today to seven years in prison for stealing a truck that contained audio and visual equipment belonging to the Office of the President of the United States.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; David E. Beach, Special Agent in Charge of the United States Secret Service’s Washington Field Office; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; D.A. Middleton, Chief of Police for the Henrico County Police Division; and Col. Thierry G. Dupuis, Chief of Police for Chesterfield County, made the announcement after sentencing by United States District Judge John A. Gibney.
Court documents show that on October 16, 2011, a truck containing audio equipment utilized by the president of the United States during public appearances was reported stolen in Henrico County. The theft occurred at a hotel a few days prior to a speaking engagement that the president was attending in Central Virginia. Video surveillance from the hotel depicted a dark-colored SUV driving into the hotel lot. Shortly thereafter, the truck containing the president’s equipment was driven off of the lot. Immediately thereafter, a dark-colored SUV followed the truck containing the president’s equipment off of the hotel lot. This truck contained a laptop computer and other audio visual equipment bearing the presidential seal, all of which had a value of approximately $200,000.
As a part of the plea, Brown admitted to telling others about his role in the theft, selling the laptop, and possessing audio visual equipment that still bore the presidential seal. Additional facts in support of Brown’s guilty plea included cell tower data obtained by investigators that showed Brown was in the vicinity of the truck at the time it was stolen. Some of the equipment was recovered from pawn shops in Prince George’s County, Maryland and in Montgomery County, Maryland.
The investigation was conducted by the U.S. Secret Service, the FBI’s Richmond Field Office, the Henrico County Police Department, and the Chesterfield Police Department. Assistant United States Attorney Roderick C. Young prosecuted the case on behalf of the United States.

Mosinee Man Sentenced for Making False Statement to Bank

MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Jeffrey L. Tiffany, 67, of Mosinee, Wisconsin, was sentenced today by U.S. District Judge William M. Conley to 30 days in jail, a $25,000 fine, 200 hours of community service, and a two-year period of supervised release for making a false statement to a financial institution.
The evidence showed that while employed at River Valley Bank in Wausau, as a senior vice president, Tiffany was responsible for the handling of the insurance premium financing program with Manson Insurance, which included approving all insurance premium financing notes received from Manson Insurance for sale to River Valley Bank.
Further, the evidence showed that Tiffany caused a false statement to be made to River Valley Bank in connection with an insurance premium financing note which, on its face was represented to be a legitimate insurance premium financing note signed by a maker of the note, Hardwoods Corporation. The defendant well knew this note was not a legitimate insurance premium financing note and that it had not been signed by a representative of Hardwoods Corporation.
The charge against Jeffrey L. Tiffany was the result of an investigation conducted by Wausau Resident Agency of the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Grant C. Johnson.