Friday, April 20, 2007
Former student Hakan Yalincak received a 42-month prison term for his role in a bank and securities fraud scheme that involved soliciting over $8 million in investments for a bogus hedge fund and an attempted check kite involving a counterfeit $25 million check. At the time of his arrest, Yalincak was a senior at New York University, and his parents had made a multi-million pledge to the school. It turned out that they were also involved in at least part of the scheme. According to a press release (here) issued by the U.S. Attorney's Office for the District of Connecticut:
[O]n March 14, 2005, YALINCAK sent two counterfeit checks totaling $17,748,000, purportedly from his business account at Bank of New York, to his account in a bank in Switzerland, UBS Zurich AG. The checks, which appeared to be official Bank of New York checks, were marked “certified funds.” On March 23, 2005, YALINCAK deposited a counterfeit J.P. Morgan Chase check in the amount of $25,000,000 into that same business account at the Greenwich branch of Bank of New York. The day before depositing the counterfeit $25,000,000 check, YALINCAK instructed UBS Zurich AG to transfer $2,500,000 to a second business account at Bank of New York that he controlled. UBS Zurich AG transferred the funds as instructed. On March 24, 2005, YALINCAK attempted to withdraw $1,700,000 from the business account into which the $2,500,000 had been deposited by UBS Zurich AG. By that time, however, Bank of New York had determined that the $25,000,000 check was counterfeit and froze all accounts on which YALINCAK was a signatory.
YALINCAK also solicited approximately $8.8 million from several investors by falsely representing that the money would be invested in hedge funds, under YALINCAK’s management, in various financial markets. YALINCAK knew that a substantial sum of money solicited from investors would be used for purposes other than investments, including his own enrichment and the enrichment of others, and concealed his fraudulent conduct from some or all of the investors by falsely representing to them the value of the investments being managed, the share of certain investors in those investments, and returns on their investments.
Yalincak spent twenty months in jail after his arrest until the guilty plea in January 2007, so he will only have to serve approximately another 16 months before he is released. The sentence also included a restitution order of $4 million. According to a Hartford Courant story (here), in sentencing Yalincak, U.S. District Judge Janet Arterton said that his moral compass was "either not present or not functioning," and that "the majority of his life has been spent engaged in fraud. Whether at the behest of others or not, leading a lawful life has not been part of his past life." I suspect he didn't take an Ehtics course as part of his core curriculum. (ph)