fraud crime money laundering

A federal indictment unsealed earlier this month in a U.S. District Court charged nine defendants with insider trading and money laundering surrounding the leaking of confidential information about upcoming corporate mergers and acquisitions, including the merger of shipping companies K-Sea and Kirby Corp.

The indictment alleges that the criminal conspiracy, led by John Femenia, a 2003 graduate of the US Merchant Marine Academy, netted over $11 million in illegal proceeds as a result of the insider trading activities.

The indictment charges Femenia, 31; Shawn C. Hegedus, 32; and Danielle C. Laurenti, 31, all of New York, with conspiracy to commit insider trading, conspiracy to commit wire fraud, securities fraud, and money laundering. Femenia and Hegedus are also charged with bank fraud. Femenia was arrested on 13 December in New York, while Hegedus and Laurenti are currently listed as fugitives.

The remaining six defendants named in the indictment include Femenia’s former Merchant Marine Academy roommate Aaron Wens, as well as Matthew J. Musante, of Miami; Roger A. Williams, of Georgetown, South Carolina; Kenneth M. Raby, of Greer, South Carolina; Frank M. Burgess, Jr., of Charlotte, North Carolina; and James A. Hayes, also of Charlotte. The defendants have agreed to plead guilty to conspiracy to commit insider trading.

According to allegations contained in the indictment, Femenia, an investment banker who lived in Charlotte and New York, stole material, including non-public information from his employer, Wells Fargo, and its clients about potential and upcoming mergers and acquisitions. The indictment alleges that Femenia provided the inside information to co-conspirators who traded on the information. These co-conspirators then passed the confidential inside information to other co-conspirators who also traded on that information, the indictment alleges.

The indictment further alleges that Femenia was paid kickbacks for the stolen information in several forms. For example, according to the indictment, Hegedus, who was a stockbroker and Femenia’s high school friend, bought 550 gold bars with proceeds of the insider trading. Femenia then sold four of the gold bars for $70,877 to a precious metals dealer in Oklahoma. According to allegations contained in the indictment, Femenia also received kickbacks in cash, including by co-conspirators making cash deposits by ATM into an account in the name of Femenia’s girlfriend. The indictment also alleges that co-conspirators Hegedus and Laurenti laundered proceeds of the insider trading through a casino in Las Vegas. The indictment further alleges that Femenia and Hegedus engaged in mortgage fraud through the fraudulent purchase of a luxury home in Waxhaw, North Carolina.

The conspiracy to commit insider trading charge carries a maximum term of five years in prison and a $250,000 fine. The conspiracy to commit wire fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The securities fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The bank fraud charge carries a maximum term of 30 years in prison and a $1,000,000 fine. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $250,000 fine, or a fine of twice the amount of criminally derived proceeds.

An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law. In addition, the agreement to plead guilty by any other person is not relevant to the guilt of any indicted person.

In announcing the insider trading indictment, U.S. Attorney Tompkins praised the investigative work of the FBI in Charlotte and thanked the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and Wells Fargo for their assistance.

Image (c) Shutterstock/alexskopje

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    • Merchant mariner

      Yet another old man looking at his generation through a rose colored lense.

      All ages have their criminals.

      Please read the article again. Even though this man graduated from the Merchant Marine Academy he chose not to sail. Yet you lump all of us in with this accused (still innocent) individual.

      As for the ‘progress’ part, if you sailed prior to the electronic age it was on vessels half the size transporting a quarter of the cargo that today’s ships are capable of carrying. All the while not dealing with daily communication (nagging) or just-in-time requirements from the office.

      Not to be forgotten is the fact that the certification and schooling fees to become a deck officer have trippled due to the errors of the mariners of previous generations.

      The progress is for the industry not for the mariner. It’s a job not a vacation.

      It’s unfortunate that the long port calls and partying have been robbed from my generation. However, this is not our fault but in fact on your generation yet again. You abused that privilege and proved in the public eye that this was a luxury that a mariner couldn’t handle. Therefore it was stolen from all future mariners. (How does it feel to be lumped in with a few inconsiderate souls?)

      I have been shipping out my entire adult life and listened to this tiresome complaint for almost two decades. There are strengths and weaknesses to every generation yours and mine included. However, to say one is better or worse is childish. You come off as a bitter old man who realizes that his days are numbered.

      I would have rather read your tale on your visit to a foreign academy than your assumption on one individual and his comparison to an entire generation.

      • Narog

        Blame blame blame others. If you have nothing to say why not just keep quiet,

  • Will Parker

    So, why exactly is this on gCaptain? The only thing that seems remotely relevant to maritime news is that some of the money laundering had to do with the Kirby/K-Sea merger. Other than that, it seems to be mainly focused on the fact that the main perpetrator is a graduate of Kings Point, who happens to work in what seems to be a distinctly non-maritime field. So, out of the thousands of graduates who have accomplished great and respectable things, gCaptain decides to profile (in detail) one grad who does something despicable? Interesting. Seems like the only purpose of the article would be to discredit Kings Point and it’s graduates.

    Although, that’s really not terribly shocking, given past history.

    • Rob Almeida

      Will, this otherwise would not have been a particularly relevant article for gCaptain had it not been for the fact there were Kings Point grads involved and the insider trading deals involved the Kirby/K-Sea merger. Kings Point grads are a significant demographic within the gCaptain audience and given this article has so far been read almost 4,000 times in 55 different countries, people were clearly interested in hearing the news.

      No disrespect or ill will intended toward Kings Point, but the news is the news.

    • SWO Scott

      I totally agree this is no more than mud slinging. One needs look back only a few years at the indictment and guilty finding of one Marketing VP, who just happened to graduate from the School Across the Way (SUNY), on charges of price fixing within our own maritime industry.

      Greed is a terrible thing. More interesting is the factuality of Kirby’s aggressive acquisition strategy.

  • Tom O’Hara
  • Bobby

    Thus would be my defense in court. Why can’t I do what my Congressman does? If it is legal for him, then why not me? Oh, I get it, they are “special” people. They are so smart and honest they would never use their position of power or influence to do such a thing. After all they are in public service. They serve the people. Yes, they serve us for breakfast, lunch and dinner. They should get a real job and quit exploiting us. Why did Martha Stewart have to go to jail when Congressmen do this all the time? Shame on them!

    Sent from my iPad

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