Hang in there, American BlackBerry fans — your wait for a new device is nearly over. Engadget reports that the Federal Communications Commission has granted approval to what looks like RIM’s (RIMM) BlackBerry Z10 smartphone for use on AT&T’s (T) LTE and HSPA networks. The Z10, which will be the first device released with the new BlackBerry 10 operating system, is rumored to include a Qualcomm Snapdragon MSM8960 1.5GHz dual core processor, a 4.2-inch display with a resolution of 1,280 x 768 pixels, 2GB of RAM, up to 32GB expandable of storage and an 8-megapixel camera. RIM plans to unveil the BlackBerry Z10 along with the finished version of the BlackBerry 10 OS on January 30th.
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China official factory PMI points to steady growth revival
Label: Business China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, as growth in new orders was unchanged and the pace of output softened marginally.
With the main index above 50 for three straight months, the survey indicates that China's vast factory sector is expanding. The official PMI was released a day after a similar survey by HSBC suggested manufacturing activity at its strongest since May 2011.
Together the surveys support a growing consensus that economic activity in China revved up during October to December, after GDP growth had slowed for seven consecutive quarters to 7.4 percent in the third quarter. That provides a welcome sign for a global economy where both the euro area and Japan are in recession and the United States is struggling for significant growth.
"Output has stayed above the 50-mark, showing that the manufacturing industry appears to maintain growth expectations, but the rate of growth has weakened," the National Bureau of Statistics, which released the data, said in a note.
The official PMI reading was slightly below expectations in a poll of economists by Reuters last week that predicted a rise in the PMI to 51.0.
The survey showed output in oil processing, quarrying and tobacco industries slipped while food processing, auto manufacturing, textiles, steel and electronics all expanded, the bureau said.
A new export orders sub-index fell to 50 from 50.2 in November. A PMI reading below 50 suggests growth slowed, while a number above 50 indicates accelerating growth.
HSBC said its China PMI, which gathers more data from smaller, privately held firms with a strong export focus, rose in December to 51.5, its highest since May 2011.
The HSBC survey showed strong output despite a retreat in a sub-index tracking new export orders. China's export sector, a major source of growth for the economy, must combat slowing demand in its biggest markets and rising wages and costs at home.
China's official PMI generally paints a rosier picture of the factory sector than the HSBC PMI because it focuses on big, state-owned firms. The HSBC PMI targets smaller, private firms. There are also differing approaches to seasonal adjustment between the two surveys.
INVESTMENT
Some analysts caution that the pickup in economic activity in recent months may reflect renewed investment spending, rather than the consumer activity that policymakers acknowledge is needed to rebalance the economy.
"It's pretty clear that it's more driven by infrastructure and increasingly housing, that's driving heavy industry," said Zhang Zhiwei of Nomura International, speaking on Monday.
Rising land prices have prompted widespread expectations that the real estate market will be revived by an investment-driven recovery that would offset weak export markets, even though the central government had pledged to maintain investment and purchasing restrictions to try to control prices.
Railway spending delayed from earlier in 2012 was being rushed out before the end of the year, and rising prices for land purchased by state-owned developers could point to a relaxation in property market curbs that has yet to be made official, Zhang argued.
Steel futures recently hit a five-month high, after a dismal year in which lackluster demand contributed to overcapacity at debt-ridden mills and traders.
China was expected to achieve economic growth of 7.7 percent in 2012, forecasts in a benchmark Reuters poll show. That would mark the slowest full-year expansion since 1999.
While that is way above the world's other major economies, it is below the roughly 10 percent annual growth in China seen for most of the last 30 years.
The government has relied on fine-tuning its policy settings to try to combat the worst downturn China has faced since the 2008-2009 global financial crisis, studiously avoiding any hint of repeating a 4 trillion yuan ($640 billion) stimulus package it launched back then, which led to a debt-fuelled spending binge by local governments.
Measures to boost growth included reducing bank reserve levels and interest rates. More lately, they included injecting liquidity into the financial system through money market operations and accelerating approval of infrastructure projects.
The head of the influential Development Research Centre called for appropriate base money growth in 2013, including more cuts in banks' reserve requirement ratios (RRR), and a wider floating range for the yuan to make it more flexible, in comments published on Monday.
The central bank reiterated on Monday that China would stick with a prudent monetary policy in 2013, the latest sign that Beijing will not change policy direction when the new government takes over this year.
Read More..
With the main index above 50 for three straight months, the survey indicates that China's vast factory sector is expanding. The official PMI was released a day after a similar survey by HSBC suggested manufacturing activity at its strongest since May 2011.
Together the surveys support a growing consensus that economic activity in China revved up during October to December, after GDP growth had slowed for seven consecutive quarters to 7.4 percent in the third quarter. That provides a welcome sign for a global economy where both the euro area and Japan are in recession and the United States is struggling for significant growth.
"Output has stayed above the 50-mark, showing that the manufacturing industry appears to maintain growth expectations, but the rate of growth has weakened," the National Bureau of Statistics, which released the data, said in a note.
The official PMI reading was slightly below expectations in a poll of economists by Reuters last week that predicted a rise in the PMI to 51.0.
The survey showed output in oil processing, quarrying and tobacco industries slipped while food processing, auto manufacturing, textiles, steel and electronics all expanded, the bureau said.
A new export orders sub-index fell to 50 from 50.2 in November. A PMI reading below 50 suggests growth slowed, while a number above 50 indicates accelerating growth.
HSBC said its China PMI, which gathers more data from smaller, privately held firms with a strong export focus, rose in December to 51.5, its highest since May 2011.
The HSBC survey showed strong output despite a retreat in a sub-index tracking new export orders. China's export sector, a major source of growth for the economy, must combat slowing demand in its biggest markets and rising wages and costs at home.
China's official PMI generally paints a rosier picture of the factory sector than the HSBC PMI because it focuses on big, state-owned firms. The HSBC PMI targets smaller, private firms. There are also differing approaches to seasonal adjustment between the two surveys.
INVESTMENT
Some analysts caution that the pickup in economic activity in recent months may reflect renewed investment spending, rather than the consumer activity that policymakers acknowledge is needed to rebalance the economy.
"It's pretty clear that it's more driven by infrastructure and increasingly housing, that's driving heavy industry," said Zhang Zhiwei of Nomura International, speaking on Monday.
Rising land prices have prompted widespread expectations that the real estate market will be revived by an investment-driven recovery that would offset weak export markets, even though the central government had pledged to maintain investment and purchasing restrictions to try to control prices.
Railway spending delayed from earlier in 2012 was being rushed out before the end of the year, and rising prices for land purchased by state-owned developers could point to a relaxation in property market curbs that has yet to be made official, Zhang argued.
Steel futures recently hit a five-month high, after a dismal year in which lackluster demand contributed to overcapacity at debt-ridden mills and traders.
China was expected to achieve economic growth of 7.7 percent in 2012, forecasts in a benchmark Reuters poll show. That would mark the slowest full-year expansion since 1999.
While that is way above the world's other major economies, it is below the roughly 10 percent annual growth in China seen for most of the last 30 years.
The government has relied on fine-tuning its policy settings to try to combat the worst downturn China has faced since the 2008-2009 global financial crisis, studiously avoiding any hint of repeating a 4 trillion yuan ($640 billion) stimulus package it launched back then, which led to a debt-fuelled spending binge by local governments.
Measures to boost growth included reducing bank reserve levels and interest rates. More lately, they included injecting liquidity into the financial system through money market operations and accelerating approval of infrastructure projects.
The head of the influential Development Research Centre called for appropriate base money growth in 2013, including more cuts in banks' reserve requirement ratios (RRR), and a wider floating range for the yuan to make it more flexible, in comments published on Monday.
The central bank reiterated on Monday that China would stick with a prudent monetary policy in 2013, the latest sign that Beijing will not change policy direction when the new government takes over this year.
FDA approves 1st new tuberculosis drug in 40 years
Label: BusinessThe Food and Drug Administration on Monday approved a Johnson & Johnson tuberculosis drug that is the first new medicine to fight the deadly infection in more than four decades.
The agency approved J&J's pill, Sirturo, for use with older drugs to fight a hard-to-treat strain of tuberculosis that has not responded to other medications. However, the agency cautioned that the drug carries risks of potentially deadly heart problems and should be prescribed carefully by doctors.
Roughly one-third of the world's population is estimated to be infected with the bacteria causing tuberculosis. The disease is rare in the U.S., but kills about 1.4 million people a year worldwide. Of those, about 150,000 succumb to the increasingly common drug-resistant forms of the disease. About 60 percent of all cases are concentrated in China, India, Russia and Eastern Europe.
Sirturo, known chemically as bedaquiline, is the first medicine specifically designed for treating multidrug-resistant tuberculosis. That's a form of the disease that cannot be treated with at least two of the four primary antibiotics used for tuberculosis.
The standard drugs used to fight the disease were developed in the 1950s and 1960s.
"The antibiotics used to treat it have been around for at least 40 years and so the bacterium has become more and more resistant to what we have," said Chrispin Kambili, global medical affairs leader for J&J's Janssen division.
The drug carries a boxed warning indicating that it can interfere with the heart's electrical activity, potentially leading to fatal heart rhythms.
"Sirturo provides much-needed treatment for patients who have don't have other therapeutic options available," said Edward Cox, director of the FDA's antibacterial drugs office. "However, because the drug also carries some significant risks, doctors should make sure they use it appropriately and only in patients who don't have other treatment options."
Nine patients taking Sirturo died in company testing compared with two patients taking a placebo. Five of the deaths in the Sirturo group seemed to be related to tuberculosis, but no explanation was apparent for the remaining four.
Despite the deaths, the FDA approved the drug under its accelerated approval program, which allows the agency to clear innovative drugs based on promising preliminary results.
Last week, the consumer advocacy group Public Citizen criticized that approach, noting the drug's outstanding safety issues.
"The fact that bedaquiline is part of a new class of drug means that an increased level of scrutiny should be required for its approval," the group states. "But the FDA had not yet answered concerns related to unexplained increases in toxicity and death in patients getting the drug."
The FDA said it approved the drug based on two mid-stage studies enrolling 440 patients taking Sirturo. Both studies were designed to measure how long it takes patients to be free of tuberculosis.
Results from the first trial showed most patients taking Sirturo plus older drugs were cured after 83 days, compared with 125 days for those taking a placebo plus older drugs. The second study showed most Sirturo patients were cured after 57 days.
Read More..
The agency approved J&J's pill, Sirturo, for use with older drugs to fight a hard-to-treat strain of tuberculosis that has not responded to other medications. However, the agency cautioned that the drug carries risks of potentially deadly heart problems and should be prescribed carefully by doctors.
Roughly one-third of the world's population is estimated to be infected with the bacteria causing tuberculosis. The disease is rare in the U.S., but kills about 1.4 million people a year worldwide. Of those, about 150,000 succumb to the increasingly common drug-resistant forms of the disease. About 60 percent of all cases are concentrated in China, India, Russia and Eastern Europe.
Sirturo, known chemically as bedaquiline, is the first medicine specifically designed for treating multidrug-resistant tuberculosis. That's a form of the disease that cannot be treated with at least two of the four primary antibiotics used for tuberculosis.
The standard drugs used to fight the disease were developed in the 1950s and 1960s.
"The antibiotics used to treat it have been around for at least 40 years and so the bacterium has become more and more resistant to what we have," said Chrispin Kambili, global medical affairs leader for J&J's Janssen division.
The drug carries a boxed warning indicating that it can interfere with the heart's electrical activity, potentially leading to fatal heart rhythms.
"Sirturo provides much-needed treatment for patients who have don't have other therapeutic options available," said Edward Cox, director of the FDA's antibacterial drugs office. "However, because the drug also carries some significant risks, doctors should make sure they use it appropriately and only in patients who don't have other treatment options."
Nine patients taking Sirturo died in company testing compared with two patients taking a placebo. Five of the deaths in the Sirturo group seemed to be related to tuberculosis, but no explanation was apparent for the remaining four.
Despite the deaths, the FDA approved the drug under its accelerated approval program, which allows the agency to clear innovative drugs based on promising preliminary results.
Last week, the consumer advocacy group Public Citizen criticized that approach, noting the drug's outstanding safety issues.
"The fact that bedaquiline is part of a new class of drug means that an increased level of scrutiny should be required for its approval," the group states. "But the FDA had not yet answered concerns related to unexplained increases in toxicity and death in patients getting the drug."
The FDA said it approved the drug based on two mid-stage studies enrolling 440 patients taking Sirturo. Both studies were designed to measure how long it takes patients to be free of tuberculosis.
Results from the first trial showed most patients taking Sirturo plus older drugs were cured after 83 days, compared with 125 days for those taking a placebo plus older drugs. The second study showed most Sirturo patients were cured after 57 days.
US hits borrowing limit, moves to avoid default
Label: BusinessThe U.S. government is running up against its $16.4 trillion borrowing limit and is taking steps to avoid default.
Reaching the limit Monday sets up another dispute between the White House and Congress over taxes and spending in the new year.
Treasury Secretary Timothy Geithner says the government will take a series of accounting measures to avoid defaulting on its debt. On Monday, it suspended the issuance of new debt for two government retirement funds. That step won't impact current retirees.
Last week, Geithner said the measures would save about $200 billion. That would typically avoid default for about two months. But Geithner said it is difficult to predict how long default can be avoided this time because of ongoing budget talks.
Read More..
Reaching the limit Monday sets up another dispute between the White House and Congress over taxes and spending in the new year.
Treasury Secretary Timothy Geithner says the government will take a series of accounting measures to avoid defaulting on its debt. On Monday, it suspended the issuance of new debt for two government retirement funds. That step won't impact current retirees.
Last week, Geithner said the measures would save about $200 billion. That would typically avoid default for about two months. But Geithner said it is difficult to predict how long default can be avoided this time because of ongoing budget talks.
Deal will prevent spike in milk prices
Label: BusinessA potential doubling of milk prices will be averted as part of the compromise that White House and congressional bargainers reached on wide-ranging legislation to avert the "fiscal cliff," a leading senator said late Monday.
Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., told reporters that negotiators had agreed to extend portions of the expired 2008 farm bill through September. She said that includes language keeping milk prices from rising, but excludes other provisions like energy and disaster aid for farmers.
Stabenow said she considers the slimmed-down extension to be "Mitch McConnell's version of a farm bill." She was referring to the Senate Republican leader from Kentucky, who she said forced bargainers to accept the version of the farm bill that appeared in the deal.
McConnell spokesman Michael Brumas responded: "Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime."
Just a day earlier, Stabenow said leaders from both parties on the House and Senate agriculture committees had agreed to extend the entire farm bill.
Stabenow and House Agriculture Chairman Frank Lucas, R-Okla., announced Sunday that they had agreed on a last-minute move that would extend the entire farm bill and replace dairy programs that expire at midnight Tuesday. Expiration of those dairy programs could mean higher milk prices at the grocery store within just a few weeks.
But the House GOP had not endorsed the committees' extension agreement.
The nonpartisan Congressional Budget Office estimated Sunday that extending the entire bill through September, including disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.
House Speaker John Boehner, R-Ohio, has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version of a farm bill in June. The bill, generally passed every five years, includes food stamps, farm subsidies and other help for rural areas.
But the prospect of higher milk prices prompted some action. Agriculture Secretary Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.
Extending the entire agriculture bill would have included an overhaul of dairy programs that was included in both the Senate and House committee bills. The new dairy programs include a voluntary insurance program for dairy producers, and those who choose that new program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices — an idea that hasn't gone over well with Boehner.
In July, he called the current dairy program "Soviet-style" and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.
One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill's cost over five years. Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.
Read More..
Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., told reporters that negotiators had agreed to extend portions of the expired 2008 farm bill through September. She said that includes language keeping milk prices from rising, but excludes other provisions like energy and disaster aid for farmers.
Stabenow said she considers the slimmed-down extension to be "Mitch McConnell's version of a farm bill." She was referring to the Senate Republican leader from Kentucky, who she said forced bargainers to accept the version of the farm bill that appeared in the deal.
McConnell spokesman Michael Brumas responded: "Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime."
Just a day earlier, Stabenow said leaders from both parties on the House and Senate agriculture committees had agreed to extend the entire farm bill.
Stabenow and House Agriculture Chairman Frank Lucas, R-Okla., announced Sunday that they had agreed on a last-minute move that would extend the entire farm bill and replace dairy programs that expire at midnight Tuesday. Expiration of those dairy programs could mean higher milk prices at the grocery store within just a few weeks.
But the House GOP had not endorsed the committees' extension agreement.
The nonpartisan Congressional Budget Office estimated Sunday that extending the entire bill through September, including disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.
House Speaker John Boehner, R-Ohio, has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version of a farm bill in June. The bill, generally passed every five years, includes food stamps, farm subsidies and other help for rural areas.
But the prospect of higher milk prices prompted some action. Agriculture Secretary Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.
Extending the entire agriculture bill would have included an overhaul of dairy programs that was included in both the Senate and House committee bills. The new dairy programs include a voluntary insurance program for dairy producers, and those who choose that new program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices — an idea that hasn't gone over well with Boehner.
In July, he called the current dairy program "Soviet-style" and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.
One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill's cost over five years. Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.
Insight: How Colombian drug traffickers used HSBC to launder money
Label: Business When several Colombian men were indicted in January 2010 on money-laundering charges, the case in Brooklyn federal court drew little attention.
It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.
One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children's clothing in Colombia.
But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $1.9 billion settlement on December 11.
Chaparro was "basically putting the orchestra together" and investigators saw "him as a major player in terms of cleaning a lot of money," said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe.
The Colombian's lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client's role, saying he was the "page turner of sheet music for the conductor."
Chaparro, who was arrested in Colombia in 2010 and extradited to the United States in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.
An HSBC spokesman declined comment.
Much about the trail that drug traffickers used to move U.S. dollars - the proceeds from drug sales - through HSBC and other banks remains unclear. By design, the process is layered to evade detection.
But a review of confidential investigative records that originate from two U.S. Attorney office probes and federal court filings in New York and California, as well as interviews with senior law-enforcement officials, shows how investigators tracing the activities of people who allegedly worked with Chaparro were able to expose large-scale money laundering at one of the world's biggest banks.
The federal law-enforcement task force - named after El Dorado, the mythical city of gold in South America - used wire taps, email and computer searches, information from at least one inside source, and old-fashioned surveillance, to piece together the ring's operations.
SMUGGLED ACROSS BORDER
Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC's Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.
In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit "drug dollars and then wire those funds to ... businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean' cash."
In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.
Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses "stunning failures of oversight."
The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC's Mexican operations was told by Mexican regulators that a local drug lord described the bank as "the place to launder money."
The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations - led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney - resulting in this month's settlement with HSBC.
HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.
Today, Chaparro sits in a federal detention center in Brooklyn, reading the Bible and awaiting sentencing, said Savitt, a former U.S. prosecutor in Brooklyn, who submitted a list of questions to Chaparro for Reuters.
"He is contrite, regretful and ashamed about his crimes," Savitt said. "He wants to serve his time and rejoin his family. He understands that a prison term could prevent that from happening for many years."
Under federal guidelines, he could face 15 to 18 years in prison.
ON CHAPARRO'S TRAIL
The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.
One of the task-force supervisors is Lieutenant Frank DiGregorio, a former New York detective who spent years tracking the so-called Black Market Peso Exchange, which is used to convert dollars to Colombian pesos through trading in goods. DiGregorio along with two younger investigators - Graham Klein and Carmelo Lana - led the HSBC case.
The overall probe began in 2007 when investigators analyzed how courier companies ferried cash through airports in Miami and Houston, a person familiar with the case said. They ultimately tracked that to HSBC's operations in Mexico and then connected it to funds moving through New York.
A tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro's network.
Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case.
According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.
Sanclemente first met with a person for about "30 seconds" on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin' Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.
The El Dorado team followed Sanclemente to Laurel Hollow, New York, some 40 minutes away, where the investigators stopped and searched him, finding about $153,000 in the two bags. At Sanclemente's apartment, investigators said they found ledgers and documents consistent with money laundering.
With the arrest, investigators gained insight into Chaparro's alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro's network to wire proceeds that could be traced back to HSBC's Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case.
Federal agents would ultimately home in on $500 million that had moved from HSBC Mexico to HSBC's operations in the United States, according to the confidential investigative records.
Between October 6, 2008 and April 13, 2009, Chaparro and others conducted money laundering transactions totaling $1.1 million tied to narcotics trafficking, the indictment against Chaparro alleged.
Read More..
It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.
One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children's clothing in Colombia.
But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $1.9 billion settlement on December 11.
Chaparro was "basically putting the orchestra together" and investigators saw "him as a major player in terms of cleaning a lot of money," said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe.
The Colombian's lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client's role, saying he was the "page turner of sheet music for the conductor."
Chaparro, who was arrested in Colombia in 2010 and extradited to the United States in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.
An HSBC spokesman declined comment.
Much about the trail that drug traffickers used to move U.S. dollars - the proceeds from drug sales - through HSBC and other banks remains unclear. By design, the process is layered to evade detection.
But a review of confidential investigative records that originate from two U.S. Attorney office probes and federal court filings in New York and California, as well as interviews with senior law-enforcement officials, shows how investigators tracing the activities of people who allegedly worked with Chaparro were able to expose large-scale money laundering at one of the world's biggest banks.
The federal law-enforcement task force - named after El Dorado, the mythical city of gold in South America - used wire taps, email and computer searches, information from at least one inside source, and old-fashioned surveillance, to piece together the ring's operations.
SMUGGLED ACROSS BORDER
Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC's Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.
In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit "drug dollars and then wire those funds to ... businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean' cash."
In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.
Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses "stunning failures of oversight."
The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC's Mexican operations was told by Mexican regulators that a local drug lord described the bank as "the place to launder money."
The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations - led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney - resulting in this month's settlement with HSBC.
HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.
Today, Chaparro sits in a federal detention center in Brooklyn, reading the Bible and awaiting sentencing, said Savitt, a former U.S. prosecutor in Brooklyn, who submitted a list of questions to Chaparro for Reuters.
"He is contrite, regretful and ashamed about his crimes," Savitt said. "He wants to serve his time and rejoin his family. He understands that a prison term could prevent that from happening for many years."
Under federal guidelines, he could face 15 to 18 years in prison.
ON CHAPARRO'S TRAIL
The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.
One of the task-force supervisors is Lieutenant Frank DiGregorio, a former New York detective who spent years tracking the so-called Black Market Peso Exchange, which is used to convert dollars to Colombian pesos through trading in goods. DiGregorio along with two younger investigators - Graham Klein and Carmelo Lana - led the HSBC case.
The overall probe began in 2007 when investigators analyzed how courier companies ferried cash through airports in Miami and Houston, a person familiar with the case said. They ultimately tracked that to HSBC's operations in Mexico and then connected it to funds moving through New York.
A tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro's network.
Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case.
According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.
Sanclemente first met with a person for about "30 seconds" on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin' Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.
The El Dorado team followed Sanclemente to Laurel Hollow, New York, some 40 minutes away, where the investigators stopped and searched him, finding about $153,000 in the two bags. At Sanclemente's apartment, investigators said they found ledgers and documents consistent with money laundering.
With the arrest, investigators gained insight into Chaparro's alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro's network to wire proceeds that could be traced back to HSBC's Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case.
Federal agents would ultimately home in on $500 million that had moved from HSBC Mexico to HSBC's operations in the United States, according to the confidential investigative records.
Between October 6, 2008 and April 13, 2009, Chaparro and others conducted money laundering transactions totaling $1.1 million tied to narcotics trafficking, the indictment against Chaparro alleged.
RIM shares fall at the open after earnings
Label: Tech Research In Motion Ltd fell in early trading on Friday following the BlackBerry maker's Thursday earnings announcement, when the company outlined plans to change the way it charges for services.
RIM, pushing to revive its fortunes with the launch of its new BlackBerry 10 devices next month, surprised investors when it said it plans to alter its service revenue model, a move that could put the high-margin business under pressure.
Shares fell 16.0 percent to $11.86 in early trading on the Nasdaq. Toronto-listed shares fell 15.8 percent to C$11.74.
Read More..
RIM, pushing to revive its fortunes with the launch of its new BlackBerry 10 devices next month, surprised investors when it said it plans to alter its service revenue model, a move that could put the high-margin business under pressure.
Shares fell 16.0 percent to $11.86 in early trading on the Nasdaq. Toronto-listed shares fell 15.8 percent to C$11.74.
Investors shed shares of Blackberry maker
Label: TechShares of Blackberry maker Research in Motion slumped more than 16 percent Friday with future revenue coming into question and a declining number of subscribers.
RIM's stock jumped initially Thursday when the Canadian company released better-than-expected third-quarter results and a stronger cash position.
Shares reversed course during a conference call later, when executives said that the company won't generate as much revenue from telecommunications carriers once it releases the new BlackBerry 10.
RIM's stock had been on a three-month rally in which the stock more than doubled from levels not previously seen since 2003.
"Despite a solid quarter, the stock is trading down due to the introduction of a lower enterprise service tier and fears that RIM will not receive monthly services revenues for consumer BB10 subscribers," said Jefferies analyst Peter Misek. He thinks RIM has offered carriers a lower-priced option in exchange for a bigger purchase commitment for the new device. He kept his "Hold" rating.
Sterne Agee analyst Shaw Wu kept maintained a "Neutral" rating on the stock, but lowered his earnings estimates, saying he continued to be concerned about RIM's ability to compete with Apple and Google.
Shares of Research in Motion Ltd. fell $2.29 to $11.83 in morning trading.
Read More..
RIM's stock jumped initially Thursday when the Canadian company released better-than-expected third-quarter results and a stronger cash position.
Shares reversed course during a conference call later, when executives said that the company won't generate as much revenue from telecommunications carriers once it releases the new BlackBerry 10.
RIM's stock had been on a three-month rally in which the stock more than doubled from levels not previously seen since 2003.
"Despite a solid quarter, the stock is trading down due to the introduction of a lower enterprise service tier and fears that RIM will not receive monthly services revenues for consumer BB10 subscribers," said Jefferies analyst Peter Misek. He thinks RIM has offered carriers a lower-priced option in exchange for a bigger purchase commitment for the new device. He kept his "Hold" rating.
Sterne Agee analyst Shaw Wu kept maintained a "Neutral" rating on the stock, but lowered his earnings estimates, saying he continued to be concerned about RIM's ability to compete with Apple and Google.
Shares of Research in Motion Ltd. fell $2.29 to $11.83 in morning trading.
RIM’s biggest problem: It’s still scrambling to catch yesterday’s hottest mobile app
Label: TechThe moment I first realized that RIM (RIMM) was truly in enormous trouble was back in 2010 when I heard then co-CEO Jim Balsillie downplay the importance of apps. Yes, you read that correctly. Balsillie actually told attendees at a Web 2.0 summit in 2010 that the Internet itself was the most important “app” for mobile devices and contended that the “Web needs a platform that allows you to use your existing Web content, not apps.” My feelings on this matter were only solidified when I attended the BlackBerry World conference in May 2011 and watched RIM executives proudly announce that the Playbook tablet would soon get its own version of Angry Birds sometime in the near future. In reality, Angry Birds didn’t release for BlackBerry until late December of that year, or two full years after it was originally released for iOS.
[More from BGR: WhatsApp goes free for iPhone for a limited time]
All of which brings me back to RIM’s current state: Despite the great looking hardware and user interface pictures we’ve seen from new BlackBerry 10 smartphones so far, the company still has an app problem. I was reminded of this when I read a post over at CrackBerry titled, “There’s still a chance for WhatsApp on BlackBerry 10.” The issue here isn’t whether RIM eventually does or doesn’t get WhatsApp on its platform — the issue is that RIM always seems to be one step behind when it comes to getting the hottest apps of the day on its devices.
[More from BGR: BlackBerry 10 browser smokes iOS 6 and Windows Phone 8 in comparison test [video]]
The most absurd example of this, of course, is Instagram. Yes, it’s very likely that BlackBerry 10 will support the popular photo-sharing app right out of the gate given the company’s partnership with Instagram owner Facebook (FB). But we still have no official confirmation that Instagram will be a BlackBerry 10 app just over a month before the new platform launches, and this is symbolic of the fact that RIM is always stuck at the back of line when it comes to app developers’ priorities.
Simply put, RIM can’t possibly hope to compete with Android, iOS or even Windows Phone 8 if its users will always wonder if they’ll be able to do all the cool things with their phones that their friends can do. In the unpredictable Wild West of today’s app market, where new apps seemingly go viral overnight to become global powerhouses, platform developers need to make sure they have quick and simple ways for app developers to port over their software. And until RIM figures out a way to get this done, it still has no shot in the long term.
Read More..
[More from BGR: WhatsApp goes free for iPhone for a limited time]
All of which brings me back to RIM’s current state: Despite the great looking hardware and user interface pictures we’ve seen from new BlackBerry 10 smartphones so far, the company still has an app problem. I was reminded of this when I read a post over at CrackBerry titled, “There’s still a chance for WhatsApp on BlackBerry 10.” The issue here isn’t whether RIM eventually does or doesn’t get WhatsApp on its platform — the issue is that RIM always seems to be one step behind when it comes to getting the hottest apps of the day on its devices.
[More from BGR: BlackBerry 10 browser smokes iOS 6 and Windows Phone 8 in comparison test [video]]
The most absurd example of this, of course, is Instagram. Yes, it’s very likely that BlackBerry 10 will support the popular photo-sharing app right out of the gate given the company’s partnership with Instagram owner Facebook (FB). But we still have no official confirmation that Instagram will be a BlackBerry 10 app just over a month before the new platform launches, and this is symbolic of the fact that RIM is always stuck at the back of line when it comes to app developers’ priorities.
Simply put, RIM can’t possibly hope to compete with Android, iOS or even Windows Phone 8 if its users will always wonder if they’ll be able to do all the cool things with their phones that their friends can do. In the unpredictable Wild West of today’s app market, where new apps seemingly go viral overnight to become global powerhouses, platform developers need to make sure they have quick and simple ways for app developers to port over their software. And until RIM figures out a way to get this done, it still has no shot in the long term.
Without an ‘iTV,’ Apple’s growth could shrink to the single digits by 2015
Label: TechAnother analyst believes that Apple is losing its shine. Toni Sacconaghi of Bernstein Research on Thursday trimmed his price target for the company, citing concerns that growth may be slowing. The analyst believes that iPhone sales will remain strong for at least the next two years, however Apple (AAPL) is expected to lose overall market share “if it does not bring out a lower-price device” in the wake of a changing industry. Sacconaghi notes that the iPad should continue to see success in a tablet market that is “a rocket…an absolute juggernaut,” with tablet PC shipments estimated to more than triple over the next five years. It is believed, however, that Apple will likely become a single digit growth company by 2015, unless it releases a new major product such as an HDTV.
[More from BGR: RIM’s biggest problem: It’s still scrambling to catch yesterday’s hottest mobile app]
“That said, it will have a pristine balance sheet, and be generating a mind-boggling $49 billion in free cash flow a year after paying its current dividend,” Sacconaghi wrote in a note to investors, according to Forbes. “More importantly, we believe that Apple’s innovation offers significant option value, which is not in our forecast. Three years ago, the iPad did not exist. Today it generates $32 billon in annual revenues, and as a standalone business would be the 11th biggest U.S. tech company. Potential ‘options’ for Apple investors include a lower-end iPhone, a television ‘solution,’ a larger iPad or converged device and monetizing advertising, e-commerce and search from its iOS platform (and credit card database) of 435 million users.”
[More from BGR: WhatsApp goes free for iPhone for a limited time]
The analyst kept his Outperform rating on shares of Apple, although he trimmed his price target from $800 to $750 and lowered his 2013 fiscal year EPS forecast to $49.41 per share, from $50.57.
Read More..
[More from BGR: RIM’s biggest problem: It’s still scrambling to catch yesterday’s hottest mobile app]
“That said, it will have a pristine balance sheet, and be generating a mind-boggling $49 billion in free cash flow a year after paying its current dividend,” Sacconaghi wrote in a note to investors, according to Forbes. “More importantly, we believe that Apple’s innovation offers significant option value, which is not in our forecast. Three years ago, the iPad did not exist. Today it generates $32 billon in annual revenues, and as a standalone business would be the 11th biggest U.S. tech company. Potential ‘options’ for Apple investors include a lower-end iPhone, a television ‘solution,’ a larger iPad or converged device and monetizing advertising, e-commerce and search from its iOS platform (and credit card database) of 435 million users.”
[More from BGR: WhatsApp goes free for iPhone for a limited time]
The analyst kept his Outperform rating on shares of Apple, although he trimmed his price target from $800 to $750 and lowered his 2013 fiscal year EPS forecast to $49.41 per share, from $50.57.
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