Consumer Protection

FTC Settles with Company Claiming Appliances Can Cure Illness

The US Federal Trade Commission (FTC) has announced that Oreck Corporation (Oreck) has agreed to “stop making allegedly false and unproven claims that two of its appliances can reduce the risk of flu and other illnesses, and eliminate virtually all common germs and allergens”, and will pay US$750,000 to the FTC as per the settlement (undated). The FTC also alleged that Oreck provided its franchised stores with misleading advertisement to be used to market the two products, the Oreck Halo vacuum and the Oreck ProShield Plus air cleaner, thereby allowing distributors to deceive consumers.
FTC’s media release (7 April 2011)
(Source: FTC)

Wells Fargo Agrees to US$11 Million to Settle Allegations of Securities Laws Violations

The US Securities and Exchange Commission (SEC) has announced that Wells Fargo Securities LLC (Wells Fargo) will pay more than US$11 million in disgorgement and penalties to settle charges that Wachovia Capital Markets (Wachovia), acquired by Wells Fargo, “engaged in misconduct in the sale of two collateralized debt obligations (CDOs) tied to the performance of residential mortgage-backed securities”. The SEC alleged that Wachovia sold CDOs to the Zuni Indian Tribe and another investor at an inflated price, and in relation to another COD misrepresented to investors that it obtained assets at a genuine market price, when this was not the case.
SEC’s media release (5 April 2011)
Reuters: Wells Fargo settles SEC charges over Wachovia CDOs (5 April 2011)
(Source: SEC; Reuters))

Director Jailed in “Largest Ponzi Scheme”
Asia Pacific

The Australian Securities and Investments Commission (ASIC) has announced that former Chartwell Enterprises Pty Ltd director Graeme Hoy has been sentenced to 13 years and nine months imprisonment for perpetrating “one of Australia’s largest Ponzi schemes” involving 44 deception charges amounting to almost A$22 million. Additionally, Mr Hoy was convicted of dishonestly using his position as a director, carrying on a financial service without possessing a license and misleading clients as to the performance of their investments. According to ASIC, investors are owed more than US$82 million.
ASIC’s media release (23 March 2011)
(Source: ASIC)

Company Founder Convicted for Fraud

The US Department of Justice (DoJ) has announced that A&O co-founder and vice president Christian Allmendinger has been convicted for his role in a US$100 million fraud scheme involving more than 800 victims across the US and Canada. Mr Allmendinger, along with others, made misrepresentations about the company’s “prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds”.
DoJ’s media release (23 March 2011)
(Source: DoJ)

Money Manager Who Claimed Ties to Royalty Admits to Ponzi Scheme

Reuters reports that money manager Guy Albert de Chimay has been sentenced to three to nine years jail after he pleaded guilty to running a US$7 million Ponzi scheme in which he “solicited people to invest in a funding vehicle for real estate projects, but never followed through on the promised investments”. The defendant faked that he had ties with the Chimay royal family of Belgium in order to win clients’ confidence, falsely telling them he had a US$100 million share in the family money, reports Reuters.
Reuters: Money manager gets 3-9 years prison in Ponzi case (23 March 2011)
(Source: Reuters)