WHITE PLAINS WEEK THE FRIDAY APRIL 29 REPORT WITH JOHN BAILEY AND GUEST ANCHOR, JOHN MORINO SEE THEM NOW ON www.wpcommunity media.org
COUNTY EXECUTIVE SIGNS GAS SALES TAX CAP INTO LAW AND MAKES BEELINE BUSES FARE FREE.
WPCNR COUNTY CLARION LEDGER. From the Westchester County Department of Communications. april 29, 2022:
Following his introduction of this legislation, Westchester County Executive George Latimer has signed into law a cap on the County’s collection of sales tax on gas purchases to $.12 per gallon, equal to the cost of the tax with gas at $3.00 per gallon.
In addition to this, Latimer has taken executive action to suspend the collection of Bee-Line Bus fees through the summer.
The gas tax cap will run from June 1, 2022 to August 31, 2022. Latimer’s directive on the County’s Bee-Line Bus fares did not require legislation. This suspension of fares will run during the Summer until a later date.
Latimer said: “These two actions, both the capping of our gas tax and suspension of Bee-Line Bus fees, are simple measures that can really add up for Westchester residents. No matter how you commute, saving money on your trips each day can make a big difference. I thank the Board of Legislators for their partnership on this important, and timely, legislation.”
(Editor’s Note: City of White Plains has not responded on whether they anticipate enacting the cap at Monday’s Common Council meeting or later in May.)
Financial Advisor Charged With Embezzlement From Client
WPCNR FBI WIRE. From the Federal Bureau of Investigation. April 28, 2022:
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in White Plains federal court charging ADAM BELARDINO, the Chief Executive Officer of the Maddox Group, a financial advisory firm in New York City and elsewhere, with wire fraud in connection with his embezzlement of more than $313,000 from a Maddox client, a 64 year old New Rochelle resident.
U.S. Attorney Damian Williams said: “Adam Belardino abused the trust his client placed in him by stealing more than $313,000 the client gave him to be invested. Clients like the victim in this case need to be able to entrust their money to financial advisors with confidence that the money will be invested in a manner that is appropriate for them. This Office will aggressively pursue financial advisors and others who steal money entrusted to them by clients.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “Belardino is charged today for allegedly stealing several hundred thousand dollars from a client in an illegal investment fraud scheme. Financial crimes of this nature can cause significant disruptions to the lives of those who are victimized. We urge everyone to exercise their due diligence when investing their money and to report suspicious activity to authorities as soon as possible.”
According to the Indictment unsealed today in White Plains federal court[1]:
BELARDINO had managed the victim’s investments at another firm before he founded Maddox in July 2019. In August 2019, BELARDINO convinced the victim to liquidate some of her portfolio and to transfer the liquidated funds to Maddox for investment. The victim then transferred more than $313,000 to Maddox in eight separate transactions between August 2019 and October 2020. Instead of investing the victim’s money as he had promised, BELARDINO used the victim’s money to pay the operating expenses of Maddox, including payroll and office rent; to pay down prior debt; to pay credit card charges, which consisted primarily of personal items; and to pay for personal travel.
In September 2021, the victim directed BELARDINO to transfer her portfolio at Maddox to her brokerage account at another firm. From September 2021 to February 2022, BELARDINO sent the victim and members of her family emails and texts in which he said he was liquidating the portfolio and would return the funds shortly. BELARDINO also provided the victim’s family with documents suggesting that a wire transfer of the funds to the victim’s bank account was imminent or pending. BELARDINO also deposited checks drawn on a checking account held by Maddox into the victim’s bank account for what he claimed was the full value of the victim’s portfolio.
The victim never received any funds by wire and the checks BELARDINO deposited into her bank account were returned because the Maddox account did not have sufficient funds to cover the checks. BELARDINO sent members of the victim’s family emails and texts in which he said in substance and in part that he was working with bank officials to resolve the problem and that his family would repay the victim if he was unable to do so. BELARDINO also sent members of the victim’s family a document that falsely stated that the Maddox bank account had sufficient funds to repay the victim.
BELARDINO, 37, of New York City, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
4 CHARGED IN CONNECTION W/MULTI BILLION COLLAPSE OF ARCHEGOS CAPITAL MANAGEMENT
Sung Kook (Bill) Hwang – the Founder and Head of Archegos – and Three Others Charged with Racketeering and Fraud Offenses Related to Market Manipulation Scheme
WPCNR FBI WIRE. From the Federal Bureau of Investigation. April 28, 2022:
Damian Williams, the United States Attorney for the Southern District of New York, Deputy United States Attorney General Lisa O. Monaco, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an indictment charging SUNG KOOK (BILL) HWANG, the founder and head of a private investment firm known as Archegos, and PATRICK HALLIGAN, Archegos’s Chief Financial Officer, with racketeering conspiracy, securities fraud, and wire fraud offenses in connection with interrelated schemes to unlawfully manipulate the prices of publicly traded securities in Archegos’s portfolio and to defraud many leading global investment banks and brokerages.
Also unsealed are the guilty pleas of SCOTT BECKER and WILLIAM TOMITA in connection with their participation in the conspiracy. BECKER pled guilty pursuant to an Information before U.S. District Judge Laura Taylor Swain on April 21, 2022. TOMITA pled guilty pursuant to an Information before Judge Swain on April 21, 2022. Both are cooperating with the Government.
U.S. Attorney Damian Williams said:
“We allege that these defendants and their co-conspirators lied to banks to obtain billions of dollars that they then used to inflate the stock price of a number of publicly-traded companies. The lies fed the inflation, and the inflation led to more lies. Round and round it went. In one year, Hwang allegedly turned a $1.5 billion portfolio and pumped it up into a $35 billion portfolio. But last year, the music stopped. The bubble burst. The prices dropped. And when they did, billions of dollars of capital evaporated nearly overnight.”
Deputy Attorney General Lisa O. Monaco said: “Today’s announcement demonstrates the department’s unwavering commitment to hold accountable individuals who distort and defraud our financial markets, including those who occupy the C-Suite. That is especially true for this kind of crime—the kind that leaves a financial crater in its wake.”
FBI Assistant Director-in-Charge Michael J. Driscoll said:
“As alleged, Hwang and his co-conspirators convinced major financial institutions to enter into agreements with them based on lies, the result of which ultimately led to a massive market manipulation scheme. We allege the defendants caused harm to U.S. financial markets and ordinary investors alike, causing significant losses to banks, market participants, and Archegos employees. Today’s charges highlight our commitment to making sure the investment arena remains free from fraudulent activity of all kinds.”
According to the allegations in the Indictment unsealed today in Manhattan federal court:[1]
SUNG KOOK (BILL) HWANG is the founder and owner of Archegos Capital Management and its related business entities, which are collectively known as Archegos. As alleged, HWANG, along with PATRICK HALLIGAN, SCOTT BECKER, and WILLIAM TOMITA lied to banks to obtain billions of dollars that they then used to artificially inflate the stock price of a number of publicly traded companies.
HWANG and his co-conspirators invested in stocks mostly through special contracts with banks and brokers called “swaps.”
As alleged, these swaps allowed HWANG to cause massive buying of certain stocks, including at carefully selected days and times, to artificially pump up stock prices. HWANG, HALLIGAN, and their co-conspirators lied to banks and used a series of manipulative trading techniques to keep those prices high and prevent them from falling.
The lies fed the inflation, and the inflation led to more lies. The scale of this alleged fraud was stunning. In one year, Hwang turned a $1.5 billion portfolio and fraudulently pumped it up into a $35 billion portfolio.
Last year, the music stopped. The prices dropped and HWANG was unable to keep the prices propped up. When the prices fell, HWANG’s positions were sold off and he could no longer manipulate the prices, and billions of dollars of capital evaporated nearly overnight.
As alleged, the defendants committed this fraud in secret.
Since 2014, HWANG has run Archegos as a private hedge fund or “family office,” meaning that Archegos, unlike other large hedge funds, was not required to tell regulators information about its holdings and debt that might have shined a light on the fraud and allowed the crisis to be averted.
And because HWANG traded mostly through swaps, he was able to do the massive buying alleged in the Indictment without anyone knowing that Archegos was actually behind all the trading.
Regular market participants, and even the companies themselves, were duped into thinking the price increases were caused by the normal interplay of supply and demand when, instead, as alleged, they were the artificial result of HWANG’s manipulative trading.
To take just one example, as alleged, by March 24, 2021, HWANG effectively controlled more than 50% of the freely trading shares of Viacom – and no one outside of Archegos knew about it—not investors purchasing Viacom in the market, or the executives at Viacom itself, or even the banks and brokerages who held the stock as part of the swaps.
Because, as alleged, by using various banks and brokerages for his swaps, HWANG made sure that no single institution would have any idea that he was behind all of this trading.
The Indictment further alleges that in order to get the billions of dollars Archegos needed to sustain this massive market manipulation scheme, HWANG and his co-conspirators lied to and misled some of Wall Street’s leading banks.
They lied about how big Archegos’s investments had become. They lied about how much cash Archegos had on hand. They lied about the nature of the stocks that Archegos held.
And, as alleged, they told those lies for a purpose: so that the banks would have no idea what Archegos was really up to, how risky the portfolio was, and what would happen if the bubble burst one day.
As alleged, that day ultimately came.
Just over a year ago, the market turned and the stock prices HWANG and his co-conspirators had artificially inflated crashed, causing immense damage to U.S. financial markets and ordinary investors.
In a matter of days, the companies at the center of Archegos’s trading scheme lost more than $100 billion in market capitalization, Archegos owed billions of dollars more than it had on hand, and Archegos collapsed.
Market participants who purchased the relevant stocks at artificial prices lost the value they believed their investments held, the banks lost billions of dollars, and Archegos employees, many of whom were required to invest 25% or more of their bonuses with Archegos as deferred compensation, lost millions of dollars.
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