Friday, January 25, 2008

Atiq Raza Pays $3m Fine, Settles Insider Trading Charges

Saiyed Atiq Raza, prominent Silicon Valley Pakistani-American and venture investor, agreed to pay $3m in fine to settle SEC charges of insider trading, according to the US Securities and Exchange Commission.
The charges against Saiyed Atiq Raza, 58 years old, a former president and chief operating officer of chip maker Advanced Micro Devices Inc., stemmed from trades he made in 2006 while serving as a director of San Francisco orthodontic device maker OrthoClear Holdings Inc. Under the terms of the agreement, Mr. Raza was also barred from serving as an officer or director of a public company for five years, and he was permanently enjoined from future violations of the federal securities laws.
The SEC alleged that Mr. Raza in September 2006 was informed by OrthoClear's chief executive Zia Chishti that the company had agreed to cease competing with rival Align Technology Inc., of Santa Clara, Calif. The agreement, which effectively put OrthoClear out of business, followed a long-running intellectual-property rights dispute between the transparent teeth-aligner market competitors.
According to the SEC, Mr. Raza within two days of learning about the settlement began making large purchases of Align call options -- which would increase in value if the company's share price rose -- before the litigation settlement agreement became public. When the OrthoClear settlement was publicly announced several days later, the price of Align stock shot up 48% and Mr. Raza netted a profit of $1,450,900, the SEC said.
Zia Chishti is a Pakistani-American founder of both Align and OrthoClear. Zia is also the founder of The Resource Group, a company with call centers in Pakistan serving clients in the United States.


Anonymous said...

Atiq's ethics have always been the talk of the town. He is an ordinary thug who with the power of his personality has separated fools from their money. AmCc acquisition of Yuni is one such example. How and why do entrpreneurs go to him for capital?

Riaz Haq said...

Anil Kumar, one of the Indian-Americans accused in the insider trading case, has pleased guilty, according to media reports:

Anil Kumar, a former director of global management consulting firm McKinsey, has pleaded guilty to fraud charges.

He says he made $2.6m (£1.6m) giving inside market information to one of America's richest men, Raj Rajaratnam.

Prosecutors allege a list of crimes, including that Mr Rajaratnam paid Kumar between $1.7-$2m for his tips.

Kumar entered the plea in a US District Court in Manhattan in a co-operation deal aimed at strengthening the government case against Mr Rajaratnam.

Secret tip-offs

The billionaire hedge-fund operator is said to have made $19m from investments after Kumar, a former senior partner and director at McKinsey & Co fed him tips between March and July 2006 about the acquisition of ATI Technologies by Advanced Micro Device.

But this week, John Dowd, Mr Rajaratnam's lawyer, said: "An analyst's prediction that AMD would acquire ATI was widely reported in the press more than seven weeks before the acquisition was announced."

The government filed papers this week in Mr Rajaratnam's case to say they planned to file additional charges against him after learning about the $19m, which prosecutors say raises the amount Mr Rajaratnam made from illegal deals to at least $36m in profits.

Riaz Haq said...

A Pakistani-American executive Kamal Ahmed has been caught in the Galleon financial scandal. Here's an excerpt from a San Francisco Chronicle report:

.. Kamal Ahmed, a Morgan Stanley managing director in Menlo Park. According to federal prosecutors, he provided inside information about Advance Micro Devices' July 2006 takeover of a Canadian firm, ATI Technologies, information that ultimately found its way to the captain of the pirate ship hedge fund, Raj Rajaratnam.

Ahmed's alleged involvement was revealed in a government court document Friday concerning Rajaratnam's trial, scheduled for Feb. 28.

The 42-year-old banker is cooperating with investigators, said his lawyer, Douglas Tween of New York's Baker & McKenzie in a statement. He is "confident that when the investigation is completed, and all the facts are gathered, it will be shown that he did nothing illegal or unethical."

According to securities filings and other sources, Ahmed works at Morgan Stanley's investment practice in Menlo Park. He was one of 241 new managing directors named by Morgan Stanley in December 2007.

On its website, OPEN Silicon Valley, a Pakistani American business organization, Ahmed, a Los Altos resident, is described as having "led a wide variety of financing transactions and has executed numerous mergers & acquisitions" for Morgan Stanley since 1999," according to information Ahmed provided to the organization.

Prior experience included stints at Merrill Lynch and Credit Suisse First Boston.

According to Institutional Investor, Ahmed was one of two Morgan Stanley managing directors advising Hewlett-Packard on its $2.7 billion takeover of 3Com last year, earning the investment bank tens of millions of dollars in fees.

He is listed on the advisory board of Folio3, a Redwood City organization with offices in Pakistan and Bulgaria, which is "focused on helping entrepreneurs and small enterprises successfully build and manage an offshore software development presence."

A Yale economics graduate and Cornell University MBA, with 383 connections according to his LinkedIn profile, Ahmed could have plenty to say if he's cooperating with the feds. Morgan Stanley advised AMD on the ATI deal, and provided a $2.5 billion loan to finance it.

Saratoga resident Anil Kumar, a McKinsey consultant since fired by the firm, pleaded guilty and was fined $2.8 million last year for providing insider information to Rajaratnam, including the planned AMD takeover of ATI.

Riaz Haq said...

Indian-Americans are being scrutinized by the IRS for tax evasion, according to a NY Times report:

Last July and September, the Justice Department mailed “target” letters to around 50 Indian-Americans with offshore bank accounts, telling them that they were under scrutiny for suspected offshore tax evasion through accounts in India, Mr. Horn said.

Credit Suisse and Swiss cantonal banks are also under scrutiny. Robert Katzberg, a white-collar criminal defense lawyer in New York, said that the pressure on HSBC showed that “the fallout of the UBS scandal, which still has far to go within Switzerland, has spread to other countries.”

The request, made in court papers filed in the Federal District Court in San Francisco, seeks to force HSBC’s main United States affiliate, HSBC Bank USA, to turn over details of accounts held by wealthy Americans from 2002 through 2010 through the bank’s affiliate in India, HSBC India. Approval from a federal judge is required before the Internal Revenue Service can issue the summons.

HSBC Bank USA operated representative offices for HSBC India under the name N.R.I. Services — N.R.I. stands for Non-Resident Indian — in New York and Fremont, Calif., according to court documents. The offshore private banking services were offered to people of Indian origin living outside of India.

In a statement, HSBC said that “while we haven’t seen the summons, HSBC does not condone tax evasion and fully supports the U.S. efforts to promote appropriate payment of taxes by U.S. taxpayers.”

It continued, “While complying with the law in all the jurisdictions in which it operates, including India, HSBC cooperates with requests from U.S. authorities.”

The statement added: “We have been engaged in a constructive dialogue with U.S. authorities. We hope any ‘I.R.S. Summons’ issues can be resolved expeditiously.” A bank spokeswoman, Juanita Gutierrez, declined to comment further.

HSBC is one of the biggest banks for clients from India, China, Hong Kong, Singapore and elsewhere in the East, according to top tax lawyers. In 2007, the bank said in a press release announcing the opening of its N.R.I. office in Fremont, Calif., that it served more than 160,000 non-resident Indians worldwide.

The release announced a “new banking solution” for nonresident Indians “that allows the N.R.I. community to conduct cross-border banking transactions.” In 2003, after the technology bubble, Merrill Lynch estimated that there were 200,000 millionaires of Indian origin in the United States alone, part of the explosion of wealth among Indians in recent years.

In January, federal prosecutors indicted a former HSBC client, Vaibhav Dahake, who was born in India and became a naturalized American citizen in 2006. Mr. Dahake, according to court papers, told prosecutors that HSBC had sought out wealthy Indian-Americans for undeclared offshore banking services through N.R.I. Services. The bank was not identified in the papers but was confirmed at the time as HSBC by people close to the matter.

Mr. Dahake, according to his indictment, told prosecutors that his banker had told him that no United States disclosure forms were required, that the account was not taxable in India and that no forms reporting the interest income would be filed with the I.R.S.

Holding a foreign or offshore account is legal, but American citizens and residents must file annual disclosures with the I.R.S. for accounts with more than $10,000.

Riaz Haq said...

Mrs. Pakistan defrauded homeowners in Silicon Valley, reports San Jose Mercury News:

With "almond-shaped eyes," "flawless skin" and ''full beautiful lips," Saman Hasnain easily took first place in the 2008 Mrs. Pakistan World beauty pageant, according to the group's president.

But the same physical assets that snared Hasnain that top title also helped her lure South Bay homeowners into a loan modification scam she and her husband Jawad operated from 2008 through October 2010, prosecutor Victor Chen contends.

"She was really pretty," said Korina Diaz, a Gilroy waitress who lost her ranch after paying the couple $11,500 to lower her mortgage payments. "She wore a skirt suit, high heels, nylons -- like a real good-looking professional lady."

Saman's striking appearance was crucial, Chen said, because the couple didn't know their victims and had to make a good first impression. They attracted homeowners by word-of-mouth and through fliers passed out at ethnic supermarkets after the housing market tanked, according to Chen.

Now the Santa Clara County deputy district attorney has charged them with ripping off 17 people -- just a fraction of the 80-100 families he says they defrauded. The Hasnains each face 19 felony counts of conspiracy to commit grand theft in the loan-modification scheme, and Jawad also has been charged with nine additional counts of felony grand theft for allegedly enticing victims from 2006 through July 2010 into investing in a fraudulent 10-unit condominium development in Fremont.

However, there is one big problem: Earlier this month, the couple fled with their two young sons to Lahore, Pakistan -- a country that has no extradition arrangement with the U.S.
Friends hurt, too

Jawad faces a maximum of 19 years and four months in prison, and Saman at least four years. But it is rare for white-collar criminals to serve that much time; often, they serve far less, especially if they pay their victims back.

Diaz, 38, said she and her husband were not behind in their payments when she picked up one of the couple's loan-modification fliers at a Mexican supermarket in Gilroy.

But they were worried that her husband's concrete business would drop off after the housing crash, making it difficult for them to keep up with the $6,000 a month mortgage on their 2.5 acre, $1 million ranch. Diaz said after she paid the Hasnains the $11,500, the couple advised her to stop making the mortgage payments, otherwise the bank wouldn't have an incentive to renegotiate the terms of the loan.

Diaz was so impressed by the couple that she invited about 30 friends to her house to listen to their pitch. About 20 also forked over thousands, she said, and most lost their homes.

Diaz didn't figure out she had been bilked for about 10 months -- too late to stop a Florida bank from taking their home. Now, she and her husband and three kids live in a cramped apartment.

Her advice to others to avoid being duped?

"Not to believe anybody," she said, "who comes knocking on your door, even if they look nice."

Riaz Haq said...

#Pakistani-American Zafar Haider "Bling King" Pleads Guilty in Scam That Affected Miami Heat Players via @nbc6 #Pakistan #America