Thomas Coughlin, the former Vice Chairman of Wal-Mart Stores Inc. will plead guilty to federal charges of wire fraud and tax evasion. He was accused of stealing $500,000 through the improper use of gift cards and expense reimbursements. Mr. Coughlin’s compensation was millions of dollars, but was nonetheless caught having the company pay for personal items.

The guilty plea will include five counts of wire fraud and one count of tax evasion. In exchange for the guilty plea, federal prosecutors will not pursue additional charges of money laundering.

Mr. Couglin worked for Wal-Mart for 27 years, and was given a retirement package worth more than $10 million. This agreement has been rescinded and is not the subject of litigation.

Leslie John Hamilton was sentenced to 30 years in prison for masterminding a pyramid scheme that he claimed was an investment in rare coins. The scheme involved over 300 victims, who lost more than $10 million.

Hamilton was convicted by a federal jury on 28 counts of mail fraud and wire fraud, after representing himself as a master coin grader. He claimed that he bought coins below market value, and then resold them for a profit. Investors were promised returns of 8% to 150%. In reality, investors were paid “returns” on their money via collections from new investors, typical of a traditional Ponzi scheme.

The fraudster continues to claim that he is not guilty, and is the target of a government conspiracy.

Read the full story here.

The U.S. Department of Housing and Urban Development (HUD) announced today that over 28,000 home mortgages were approved and federally insured with forged underwriting approvals by lender ABN AMRO Mortgage Group of Ann Arbor, Michgan.

From 2000 to 2003, ABN AMRO pushed through thousands of loans without getting Federal Housing Administration review, as required. Employees signed the names of the company’s underwriters to the loan documents without the underwriters’ consent.

ABN AMRO completed an internal investigation. The company has agreed to a settlement of $41 million, which covers program losses from 229 foreclosures and 783 loans currently in default. The company has also agreed to remediation of the internal problems, which includes discipline and firing of executives and employees.

Last week the Wisconsin Law Journal published an article I wrote about the fraud at Milwaukee-area home builder Bielinski Brothers Inc. The company’s CEO, Robert Brownell, was the mastermind of a fraud that cost the company an estimated $12 million. There were several players charged with federal crimes, along with Brownell, and most have pleaded guilty.

While I did not investigate the case and I did not have any firsthand involvement with anyone from the company, I commented on some of the things that went wrong and what companies can learn from that. There are common mistakes made in businesses, and I highlighted some of them in the article.

Read it here: A Thief Among Us: Lessons From Bielinski Brothers

The Milwaukee office of PriceWaterhouseCoopers has settled a lawsuit over its audits of two collapsed Heartland Advisors Inc. mutual funds for $8.25 million. A judge will still have to approve the settlement, and that is not expected to happen before April.

The matter came to light in 2000 when Heartland Advisors marked down the value of the funds, the Heartland High-Yield Municipal Bond Fund and the Short Duration High-Yield Municipal Fund. The SEC has estimated that shareholders lost about $80 million.

Attorneys fees and costs will be deducted from the settlement prior to the distribution of funds to the 10,000+ former fund shareholders. The shareholders previously got settlements from Heartland Advisors ($14 million), a bond pricing company ($1 million), and liquidation of the funds’ assets ($30 million).

Officials of Heartland Advisors still face trial on a civil complaint filed by the SEC.

The unregulated broker-dealer unit of Refco Inc., Refco Capital Markets Ltd, says it owes customers about $4.16 billion. This is $486 million more than previously estimated by the parent company.

Refco Inc. has filed for bankruptcy protection, and in those filings, it showed Refco Capital Markets owing $3.68 billion to customers. Total liabilities for the unit were listed at $5.34 billion, with $5.95 billion in assets.

The bankruptcy filing occurred one week after the former CEO, Phillip Bennett, was accused of hiding $430 million of debt. Bennet has pleaded not guilty to charges of fraud and conspiracy.

The New Yorker recently printed a commentary on Sarbanes-Oxley. While the legislation was viewed by politicians as an important step toward protecting investors from fraud, corporate executives aren’t so impressed.

Corporate executives believe that the high cost of implementing the Sarbanes-Oxley regulations is not justified by the small benefits. The cost of implementation is particularly high for smaller companies, which may discourage them from going public.

Testing of airport screeners, using images of guns and banned objects during the airport X-ray of bags, had some interesting results. When using a library of 250 images, the performance of the screeners (how often they detected the items) went up over time. When the image library was changed, performance dropped dramatically.

The new images were all still the same types of banned items, but they looked different. They were different types of guns, or knives pointing in different directions.

49 people have been indicted for participating in a scheme that defrauded the Red Cross out of hundreds of thousands of dollars earmarked for Katrina victims. 17 of the people worked at a Red Cross claim center in Bakersfield, CA. This call center received calls from victims and authorized payments to them. The remaining fraudsters were friends or family members of the call center employees.

The cam was discovered when Red Cross employees noticed an unusually high number of claimants picking up funds near the call center, when they believed few Katrina evacuees were actually living in that area.

The Red Cross’s programs for Katrina evacuees paid out $1.3 billion. Because donors want to see their money put to work immediately, the Red Cross generally doles out funds fairly quickly. Further, many of the evacuees left their homes with no money, no clothing, and no access to their local banks. The call centers were set up to quickly distribute money, in lieu of the Red Cross’s usual policy of meeting face-to-face with disaster victims. Funds were dispersed in the amount of $360 for a single-person household, to a maximum of $1,565 for households with more than four people.

The cumbersome system set up to verify eligibility was full of loopholes which allowed call center employees to file fake claims. As word spread through the call center about lack of security in the payment system, workers began logging claims for themselves, friends, and family.

None of the fraudsters were employees of the Red Cross, rather they were employed by companies that contracted to handle the call center operations. Of those indicted, 6 people have already pleaded guilty. Additional indictments are expected.

Gary Linsey Slater of Harrogate, Tennesee was sentenced to nine years in prison for committing mail fraud and money laundering. Slater owned a company that leased employees to coal mining companies. He conspired to hide the number of employees employed through his company in order to reduce his workers compensation premiums.

The company employed over 100 miners, while he reported only 15 to the insurance companies. By hiding approximately 90% of the payroll, Slater reduced his insurance premiums by about $6 million.

In addition to the prison time, Slater must also repay $5 million to two insurance companies.

See how Sequence assists insurance companies with fraud investigations.