December 10, 2022

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BitConnect Founder Indicted in Global $2.4 Billion Cryptocurrency Scheme

18 min read
A federal grand jury in San Diego returned an indictment today charging the founder of BitConnect with orchestrating a global Ponzi scheme.  BitConnect is an alleged fraudulent cryptocurrency investment platform that reached a peak market capitalization of $3.4 billion.

More from: February 25, 2022

  • Justice Department Releases Report On Modernizing The Administrative Procedure Act
    In Crime News
    WASHINGTON – The Justice Department released a report today on the need for Congress to update and improve the Administrative Procedure Act (APA), the 74-year-old statute setting forth the procedures agencies must follow when regulating individuals, businesses, non-profits, and state and local government entities. The report, entitled Modernizing the Administrative Procedure Act, discusses how the administrative state has developed in ways not foreseen by the APA in 1946, how the APA might be legislatively improved, and how this Administration’s improvements to agencies’ regulatory processes could inform modernizing the APA. The Justice Department, which significantly shaped the original APA, hopes that the ideas and insights discussed in the report will encourage and inform much needed action by Congress to modernize the APA.

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  • COVID-19: Selected States Modified Meal Provision and Other Older Americans Act Services to Prioritize Safety
    In U.S GAO News
    What GAO Found States spent most of their supplemental COVID-19 funding from the Older Americans Act of 1965 (OAA) to provide meals, and reported using certain pandemic-related flexibilities to waive some related requirements. In fiscal year 2020, states overall provided about 24 million more meals—using COVID-19 and other funds—compared to 2019, according to national data from the Department of Health and Human Services’ Administration for Community Living (ACL). Compared to meals, states spent much less of the supplemental funding on other OAA services, such as providing in-home care. In addition, officials from four selected states reported using CARES Act flexibilities to help address pandemic-related challenges. For example, officials from most of the selected localities in these states said waiving nutrition requirements for OAA-provided meals helped them meet demand by providing frozen meals, shelf-stable meals, or groceries. Officials GAO interviewed from the four selected states and eight localities reported adapting to safety concerns during the pandemic by modifying meal services or temporarily suspending other OAA services, although in-person services in most localities resumed by September 2021. For example, some localities reported converting from meals served in group settings to meals that could be taken home (see photos). In addition, most localities reported holding wellness classes or other activities online. Some localities reported reducing or temporarily suspending in-home care services due to safety concerns. Officials from most of the localities reported leveraging new or existing partnerships with public health and emergency agencies, and most localities reported assisting with COVID-19 vaccinations. Selected Localities Found Alternative Methods for Providing Meals to Older Adults during the Pandemic ACL modified state reporting processes to oversee COVID-19 spending and supported states by providing guidance and information. For fiscal year 2020, ACL asked states to report their use of COVID-19 supplemental funds in narrative form. Due to the flexible format, ACL received varying levels of detail that ACL said required considerable follow-up with states. For fiscal year 2021, ACL developed a template for state reporting, which officials said will help them efficiently collect more consistent information on the use of COVID-19 funds. ACL supported states by providing frequent guidance, sharing information on the use of funds, and suggesting ways to modify services. Why GAO Did This Study COVID-19 relief funding in 2020 and 2021 totaled over $2.7 billion to support OAA services during the pandemic. OAA provides services, such as home-delivered meals, in-home personal care, and caregiver support services, to help older adults age in place in their homes and communities. As part of GAO’s CARES Act oversight responsibilities, this report examines (1) states’ use of OAA COVID-19 funds and related flexibilities, (2) strategies selected states and localities used to serve older adults during the pandemic, and (3) ACL’s efforts to oversee COVID-19 funds and support states. GAO reviewed national data from ACL on OAA service expenditures from fiscal years 2019 and 2020 (the most recent available), related ACL guidance, and relevant federal laws and regulations. Additionally, GAO interviewed officials from four state units on aging (Georgia, New Mexico, New York, and South Dakota), selected based on their percentages of older adults, and demographic and geographic diversity. In these states, GAO interviewed officials from eight localities that deliver OAA services in both rural and urban areas. GAO also interviewed ACL headquarters and regional officials and representatives from six national aging organizations. For more information, contact at (202) 512-7215 or larink@gao.gov.

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  • Secretary Blinken’s Meeting with Indian External Affairs Minister Jaishankar
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  • Military Training: DOD’s Report on the Sustainability of Training Ranges Addresses Most of the Congressional Reporting Requirements and Continues to Improve with Each Annual Update
    In U.S GAO News
    A fundamental principle of military readiness is that the military must train as it intends to fight. Military training ranges provide the primary means to accomplish this goal. The Department of Defense’s (DOD) training ranges vary in size from a few acres, for small arms training, to over a million acres for large maneuver exercises and weapons testing, and include broad open ocean areas for offshore training and testing. New advances in military technology, coupled with the complexity of recent military operations in Iraq, Afghanistan, and other locations around the world, generate the need to continually update and maintain DOD’s training ranges. Senior DOD and military service officials have reported for some time that they face increasing difficulties in carrying out realistic training at military installations due to outside influences. DOD has defined a number of factors–including competition for broadcast frequencies or airspace, air pollution, noise pollution, endangered species, critical habitats and other protected resources, unexploded ordinance and munitions, urban growth around installations, and civilian access–that it says encroach upon its training ranges and capabilities. Because the military faces obstacles in acquiring new training lands, the preservation and sustainment of its current lands is a priority. Sustainable training range management focuses on practices that allow the military to manage its ranges in a way that ensures their usefulness well into the future. As required by section 366(a) of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (as amended), DOD was to submit a comprehensive plan for using existing authorities available to the department to address training constraints caused by limitations on the use of worldwide military lands, marine areas, and airspace to Congress in fiscal year 2004 with annual progress reports beginning in fiscal year 2005 and extending through 2013. As part of the preparation of this plan, the Secretary of Defense was to conduct an assessment of current and future training range requirements and an evaluation of the adequacy of DOD’s current range resources to meet those requirements. The plan was also to include: proposals to enhance training range capabilities and address any shortfalls in resources identified pursuant to that assessment and evaluation; goals and milestones for tracking planned actions and measuring progress; projected funding requirements to implement planned actions; and a designation of an office in the Office of the Secretary of Defense and in each of the military departments responsible for overseeing implementation of the plan. Section 366(a)(5) requires that DOD’s annual reports describe the department’s progress in implementing its comprehensive plan and any actions taken or to be taken to address training constraints caused by limitations on the use of military lands, marine areas, and airspace. This report discusses (1) DOD’s progress to date to address the elements of section 366 and (2) improvements incorporated in DOD’s 2009 annual sustainable ranges report as well as DOD’s plans for its 2010 report submission. In accordance with the mandate, we are submitting this report to you within 90 days after having received DOD’s 2009 sustainable ranges report on August 3, 2009.Since 2004, DOD has shown progress in addressing the elements included in section 366 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003, including the development of an inventory of military training ranges. DOD’s 2009 sustainable ranges report and inventory are responsive to the element of 366 that requires DOD to describe the progress made in implementing its sustainable ranges plan and any additional action taken, or to be taken, to address training constraints caused by limitations on the use of military lands, marine areas, and airspace. DOD has also made progress in addressing elements of section 366 that were required as part of DOD’s 2004 reporting requirements. For example, DOD has made strides to measure and report the impact that training constraints may have on readiness by developing approaches to incorporate ranges into DOD’s readiness reporting system. As part of its comprehensive plan to address training constraints caused by limitations on its ranges, DOD has also developed and included in the 2009 report broad goals for this effort and has begun to include annual estimates of the funding required to meet these goals. However, while DOD has formulated some goals and milestones for tracking planned actions and measuring progress, as it was required to do as part of its 2004 comprehensive plan, it has yet to develop quantifiable goals, which we have previously recommended to better track planned actions and measure progress for implementing planned actions. Without quantifiable goals and time frames associated with achieving milestones, it is difficult to measure and track the extent of progress actually made over time. In addition, while DOD has included some projected funding data, as it was required to do as part of its 2004 comprehensive plan, DOD has not yet included projected funding requirements that will be needed to implement its planned actions, as we also recommended previously, so that decision makers have better information available to make budget decisions. In order to better track its progress to address training constraints caused by limitations on its ranges, we reiterate our prior recommendation that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness to provide a more complete plan to Congress that includes (l) quantifiable goals and milestones for tracking planned actions and measuring progress and (2) projected funding requirements to more fully address identified training constraints. DOD has made several improvements to its most recent 2009 report and plans “revolutionary changes” for 2010. For example, DOD has included detailed capability and encroachment data provided and used by the military services when making their capability assessments for each training range surveyed. DOD officials told us that they expect these data to provide improved information for more precise planning in the future. DOD also added a special interest section to highlight key issues affecting range capability and some of the actions taken to mitigate negative impacts, which should provide congressional decision makers and other users with a better understanding of the approaches being used to improve the capabilities of DOD’s ranges. Moreover, DOD has already begun to develop its 2010 report, which DOD officials told us they expect to issue in early 2010. DOD officials have stated that they intend to introduce “revolutionary changes” in that upcoming report, including revamping their goals and increasing the focus on specific encroachment issues such as mitigating frequency spectrum competition, managing increased military demand for range space, and meeting military airspace challenges.

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  • North Carolina Surgeon and Wife Sentenced to Prison for Tax Crimes
    In Crime News
    A North Carolina surgeon and his wife were sentenced today to five years in prison for federal employment and individual income tax crimes.

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  • Secretary Pompeo’s Meeting with Islamic Republic of Afghanistan’s Negotiating Team
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  • Dutch National Faces Charges for Participation in Terror Financing Ring
    In Crime News
    After more than seven years of extradition proceedings in the Netherlands, a Dutch woman brought by the FBI to the United States yesterday made her initial appearance today in the U.S. District Court for the Eastern District of Virginia to face charges stemming from her alleged participation in a terrorist financing ring in support of the Somalia-based terrorist group al-Shabaab.

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  • Housing Finance System: Future Reforms Should Consider Past Plans and Vulnerabilities Highlighted by Pandemic
    In U.S GAO News
    What GAO Found The COVID-19 pandemic highlighted three vulnerabilities in the housing finance system—although thus far mitigated by federal actions and market conditions—that remain relevant to the debate about future system reforms. Federal fiscal exposure. Exposure to potential mortgage credit losses during an economic crisis is substantial. The government directly or indirectly backs $8 trillion in single-family mortgages, in part due to the ongoing federal conservatorships of Fannie Mae and Freddie Mac (enterprises). Nonbank liquidity risks. Nonbanks, which service more than 50 percent of federally backed mortgages, faced significant liquidity risk—that they would be unable to meet their financial obligations—at the onset of the pandemic because they were not receiving loan payments but had to continue paying mortgage investors. Failures of nonbanks could constrain mortgage credit. Market instability. In March 2020, the pandemic’s economic shock temporarily disrupted the mortgage-backed securities (MBS) market by causing many investors to sell assets. This overwhelmed market intermediaries and created conditions where MBS could not be sold. Continued market dysfunction could have limited mortgage availability and caused other credit markets to freeze. GAO analysis of the 2019 housing finance reform plans issued by the Department of the Treasury and Department of Housing and Urban Development (HUD) identified recommendations that align with these vulnerabilities and GAO’s 2014 housing finance reform framework. The plans made 81 administrative recommendations to agencies and 35 legislative recommendations to Congress. The plans contained 34 recommendations focused on federal fiscal exposure, three related to nonbank liquidity risks, and one related to MBS market stability. Regarding fiscal exposure, the recommendations included steps to help ensure the enterprises and the Federal Housing Administration’s (FHA) mortgage insurance programs are financially sound. Some steps, such as strengthening the enterprises’ capital framework, were implemented. Others, including certain recommendations to improve the financial viability of FHA’s program for reverse mortgages (a loan against home equity), were not. Each of the plans’ recommendations aligned with an element of GAO’s framework, and the recommendations collectively addressed all the elements to some degree (see figure below). The elements include control of fiscal exposure, alignment of policies with goals, capacity to manage risks, and borrower protections and access to mortgages. As of January 2021—the latest point at which Treasury and HUD systematically tracked implementation—agencies implemented or took partial action on 57 of 81 administrative recommendations, focusing primarily on framework elements for control of fiscal exposure and capacity to manage risks. For example, FHA substantially implemented a recommendation to develop and integrate automated tools for managing mortgage origination risks. As of September 2021, Congress had not enacted legislation to implement any of the 35 legislative recommendations. Alignment and Status of Recommendations in 2019 Housing Finance Reform Plans, by GAO Framework Element (Administrative Actions as of January 20, 2021, and Legislative Actions as of September 30, 2021) While the current administration has stated its interest in helping shape future reforms, it has not issued its own plans, or performed an analysis similar to GAO’s. GAO’s analysis showed that the 2019 reform plans are relevant to future planning efforts. Although the plans were issued shortly before the pandemic, they contain implemented and unimplemented recommendations relevant to vulnerabilities the pandemic highlighted. While mitigated by federal actions and market conditions thus far, the vulnerabilities remain relevant for risk assessments that may support future Treasury and HUD planning efforts. Considering recommendations from the 2019 plans could help agencies identify options for mitigating the vulnerabilities and aid assessment of steps already taken. The plans also contain recommendations related to each element of GAO’s framework. Attention to each framework element is important for establishing an effective housing finance system. While future housing reforms may emphasize different policy goals, considering the prior plans in the context of the framework could help identify actions that would cover all the framework elements. As Treasury and HUD develop future reform plans, considering the recommendations in the 2019 plans and addressing all GAO framework elements could help ensure the plans address key risks, are comprehensive, and account for prior actions that complement or diverge from current policy priorities. Why GAO Did This Study Since 2013, GAO has designated the federal role in housing finance as a high-risk area because of the significant risks the current role poses. In September 2019, Treasury and HUD began implementing housing finance reform plans, which included steps to transition the enterprises from federal conservatorship. But pandemic-related strains on the housing finance system and the transition to a new administration have increased uncertainty about the future of reform. The CARES Act includes a provision for GAO to monitor federal efforts related to COVID-19. Congress also included a provision in statute for GAO to annually review financial services regulations. This report examines (1) vulnerabilities in the housing finance system highlighted by the pandemic, and (2) the nature and status of recommendations in the 2019 reform plans and the extent to which they align with system vulnerabilities and GAO’s housing finance reform framework (GAO-15-131). GAO reviewed housing finance system research and regulations and agency documents on system reforms and pandemic responses. GAO aligned recommendations in the 2019 plans with system vulnerabilities and its 2014 framework elements. GAO also analyzed information on the status of the plan recommendations and interviewed agency and industry representatives.

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  • Secretary Antony J. Blinken Virtual Remarks at the UN Security Council Open Debate on Multilateralism
    In Crime Control and Security News
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  • Tax Preparer Pleads Guilty to Conspiring to Defraud the IRS
    In Crime News
    A Maryland tax return preparer pleaded guilty today to conspiracy to defraud the United States and aiding in the preparation of a false tax return. According to court documents and statements made in court, Anita Fortune, 56, of Upper Marlboro, provided return preparation services under multiple business names, including Tax Terminatorz Inc. Fortune prepared and filed returns using co-conspirators’ electronic filing identification numbers and identifiers, which they provided in exchange for fees and office space. For the tax years 2011 to 2018, Fortune and her associates fraudulently reduced their clients’ tax liabilities and increased their refunds by adding fictitious or inflated itemized deductions and business losses to the clients’ returns. In total, Fortune caused a tax loss to the IRS of $189,748.

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  • Secretary Antony J. Blinken at a Press Availability at the NATO Ministerial
    In Crime Control and Security News
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  • Attorney General William P. Barr Announces the Appointment of Gregg N. Sofer as the U.S. Attorney for the Western District of Texas
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  • Justice Department Secures Surrender of Over 500 Dogs from Iowa Dog Breeder and a Permanent Prohibition on Dealing in Animals
    In Crime News
    In a consent decree entered on Nov. 2 by the U.S. District Court for the Southern District of Iowa, Daniel Gingerich, an Iowa dog breeder, has agreed to revocation of his Animal Welfare Act (AWA) dealer license, a permanent prohibition on engaging in any activity that requires an AWA license, and the surrender of more than 500 dogs and puppies to the Animal Rescue League of Iowa.

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  • Secretary Antony J. Blinken and Palestinian Authority President Mahmoud Abbas Statements to the Press
    In Crime Control and Security News
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  • State Department: Implementation of Grants Policies Needs Better Oversight
    In U.S GAO News
    What GAO Found The Department of State (State) has established policies and guidance that provide a supportive environment for managing grants and cooperative agreements (grants). In addition, State provides its grants officials mandatory training on these policies and guidance, and routinely identifies and shares best practices. State’s policies are based on federal regulations, reflect internal control standards, and cover topics such as risk assessment and monitoring procedures. State’s policies also delineate specific internal control activities that grants officials are required to both implement and document in the grant files as a way of promoting accountability (see fig.). Key Internal Control Activities Required through a Grant’s Life Cycle GAO found that inconsistent implementation of policies and guidance weakens State’s assurance that grant funds are used as intended. Inadequate risk analysis . In most of the files GAO reviewed, grants officials did not fully identify, assess, and mitigate risks, as required. For example, officials conducted a risk identification process for 45 of the 61 grants that GAO reviewed. While grants officials identified risk in 28 of those 45 grants, they mitigated risks in only 11. Poor documentation . Grants officials generally did not adhere to State policies and procedures relating to documenting internal control activities. For example, 32 of the 61 files reviewed did not contain the required monitoring plan. Considerable turnover among grants officials makes documenting internal control activities particularly important. State’s periodic management reviews of selected bureaus’ and overseas missions’ grant operations have also found that key documentation was frequently missing or incomplete and made recommendations to address the problem. However, State has not consistently followed up to ensure the implementation of these recommendations, as internal control standards require. State does not have processes for ensuring compliance with risk analysis and documentation requirements. Without the proper implementation of its internal control policies for grants management, State cannot be certain that its oversight is adequate or that it is using its limited oversight resources effectively. Why GAO Did This Study Grants are key tools that State uses to conduct foreign assistance. In fiscal year 2012, State obligated over $1.6 billion worldwide for around 14,000 grants to individuals and organizations for a variety of purposes, such as fostering cultural exchange and facilitating refugee resettlement. However, recent GAO and Inspectors General reports have identified challenges with State’s management of these funds. This report examines (1) the policies and guidance that State has established to administer and oversee grants, and (2) the extent to which the implementation of those policies and guidance provides reasonable assurance that funds are being used as intended. GAO analyzed State’s policies and guidance, and interviewed cognizant grants officials at 14 bureaus headquartered in Washington, D.C., and three overseas missions (Afghanistan, Cambodia, and Turkey). GAO also conducted file reviews for a sample of 61 grants totaling approximately $172 million. Selection criteria included total dollar value of grants in a country, geographic diversity, and balance among bureaus.

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  • Higher Education: Children’s Savings Account Programs Can Help Families Build Savings and Envision College
    In U.S GAO News
    Eighty-two Children’s Savings Account (CSA) programs operated and had collectively enrolled about 700,000 children in 2019, according to survey data from the nonprofit organization Prosperity Now. These programs—operated by states, cities, and other organizations—use a variety of strategies to enroll families, especially those with lower incomes, and help them save and prepare for college. For example, CSA programs enroll families by partnering with trusted organizations (e.g., schools) or through automatic enrollment, according to the Consumer Financial Protection Bureau (CFPB) and CSA experts. In addition, these programs help families build savings once children are enrolled by, for example, providing initial deposits or financial education. While experts GAO interviewed said savings may be modest given lower-income families’ and programs’ limited resources, CSA programs also aim to help lower-income families prepare for college, such as by increasing financial knowledge. There is evidence that CSA program strategies have positive short-term effects on families, including those with lower incomes. These effects include increased CSA program enrollment and participation, amounts saved, and educational expectations, based on research GAO reviewed (see figure). For example, strategies such as automatically enrolling families and providing financial contributions (e.g., initial deposits) may help CSA programs reach more families and encourage saving. Several studies of a CSA program that used both these strategies found increases in the number of children enrolled and the amount saved by enrolled families. One study found that families who were enrolled for 7 years saved over four times more of their own money, on average, than families who were not enrolled—$261 compared to $59. When including financial contributions from the CSA program, enrolled families had about six times more total savings ($1,851) compared to other families ($323). Enrollment and participation in CSA programs may also increase families’ educational expectations for their children. For example, a study found that parents with children enrolled in one CSA program were nearly twice as likely to expect their children to attend college. However, information on college enrollment and other long-term effects on families participating in CSA programs is limited because most of the children have not yet reached college age. Effects of CSA Program Strategies in Three Commonly Assessed Areas Rising college costs have outpaced federal grant aid and placed more of the financial burden on students and their families. CSA programs help families, especially lower-income families, save for college—and other postsecondary education—by providing financial contributions and possibly other supports. A Senate Appropriations Committee report included provisions for GAO to examine various aspects of college savings account programs and their effectiveness. This report examines (1) the number of CSA programs and how they use strategies to help families, especially lower-income families, save and prepare for college; and (2) what is known about the effects of these strategies on families, including lower-income families. GAO reviewed 2016–2019 annual CSA program survey data collected by the nonprofit Prosperity Now. GAO also analyzed CFPB documents and the findings of 33 peer-reviewed studies from 2010 through 2019—and one working paper from 2017—that met GAO’s criteria for inclusion, for example, used data from the United States. In addition, GAO interviewed officials from CFPB, the Department of Education, and four organizations that have expertise on these programs. For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.

    [Read More…]

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