Villalobos Case Summary

An executive named Victor Villalobos received $2 million in kickbacks from Maxim Silinsky, a local subcontractor. In return, Villalobos agreed not to interfere with Silinsky’s business dealings with the federal prime contractors. In addition, Villalobos manipulated tax returns to conceal the kickbacks by creating new accounts. Commissioner Robert Rowland and his board utilized $1,000 to improve passing legislation to raise property taxes. Since it was forbidden to utilize community funds to campaign legislation, Rowland was found guilty and fined $1,000. Senator Ron Calderon accepted over $100,000 in bribes in exchange for his assistance in getting legislation passed that benefited his benefactor. His benefactor was a hospital who was …show more content…
He decided not to pursue a bank loan since he refused to use personal assets as collateral. Instead he made the decision to borrow funds from the Harbinger Capital Partners Special Situations Fund, LP, which a fund that enabled the firm to suspend investor redemptions. Peter Jenson was the Chief Operating Officer who assisted Falcone with the funds transfer. Neither parties sought approval for the funds transfer, so investors were unaware of the situation. The loan was paid back during the Securities and Exchange Commission’s investigation. Falcone was found guilty of asset misappropriation when he used the firm’s fund assets to cover his taxes. Therefore, asset misappropriation is the utilization of company-owned equipment to accommodate personal needs. Cash misappropriation is more popular due to the asset’s tangibility, but Falcone participated in inventory and all other assets misappropriation, which led to larceny. By not telling investors of the misappropriation, he eliminated warning signs (Wells 2001) (Philip A. Falcone and Harbinger Charged with Securities Fraud 2012) (Neubauer 2012) (Roche 2013). (See Exhibit B for more information on