Lawsuits accuse Tesla's Musk of fraud over tweets, going-private proposal

Tesla Inc and Chief Executive Elon Musk were sued twice on Friday by investors who said they fraudulently engineered a scheme to squeeze short-sellers, including through Musk's proposal to take the electric car company private.

The lawsuits were filed three days after Musk stunned investors by announcing on Twitter that he might take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that "funding" had been "secured."

In one of the lawsuits, the plaintiff Kalman Isaacs said Musk's tweets were false and misleading, and together with Tesla's failure to correct them amounted to a "nuclear attack" designed to "completely decimate" short-sellers.

The lawsuits filed by Isaacs and William Chamberlain said Musk's and Tesla's conduct artificially inflated Tesla's stock price and violated federal securities laws.

Tesla did not respond to a request for comment on the proposed class-action complaints filed in the federal court in San Francisco. The company is based in nearby Palo Alto, California.

Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be a lower price to make a profit.

Such investors have long been an irritant for Musk, who has sometimes used Twitter to criticize them.

Musk's Aug. 7 tweets helped push Tesla's stock price more than 13 percent above the prior day's close.

The stock has since given back more than two-thirds of that gain, in part following reports that the US Securities and Exchange Commission had begun inquiring about Musk's activity.

Musk has not offered evidence that he has lined up the necessary funding to take Tesla private, and the complaints did not offer proof to the contrary.

But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.

Tesla's market value exceeds $60 billion, and its shares closed Friday up $3.04 at $355.49.

According to his complaint, Isaacs bought 3,000 Tesla shares on Aug. 8 to cover his short position.

The proposed class period in Isaacs' lawsuit runs from the afternoon of Aug. 7 through the next day, and in Chamberlain's lawsuit runs from Aug. 7 to Aug. 10. — Reuters

Cryptocurrency fraud scheme prosecuted in HCM City

HCM CITY, Vietnam — The investigation unit of public security ministry has begun investigating a massive cryptocurrency fraud scheme perpetrated by HCM City-based companies who lured in investors with promises of high returns.

The masterminds of the fraud were identified as Nguyen Huu Tien, 34, and Pham Viet Son, 60, chairman and director-general of VNCOIN Co Ltd in HCM City and Nguyen Hong Quan, 41, the company’s IT technician.

Public security officials said they were “surprised” with the sophisticated means the suspects used to draw in investment from gullible people.


MLM scheme to cryptocurrency

In May, 2015, Tien opened Thien Rong Viet Co Ltd and hired Quan to hold multiple positions in the company.

A year later, Tien set up another company, OTCMAX, and hired Son as its director-general and Quan as IT technician.


Tien continued to hold various conferences and meetings to hook in investors, vowing they would receive daily interest as high as 2.5 per cent.

Initially, the conversion rate was set as $0.9 for one VNCOIN.

To avoid suspicion, Tien told the IT department to manipulate VNCOIN – varyingly raising and reducing its price – to create the impression of a real cryptocurrency market similar to bitcoin.

At the moment arrest orders against the accused were made, each VNCOIN was worth $10.

Trade of cryptocurrency, despite not being officially recognized as legitimate under Vietnamese law, has still been traded in growingly diverse but shady markets and attracted many investors.

The Skymining case in HCM City is also being investigated, after the virtual currency company’s owners fled after collecting billions of dong in investment from hundreds of investors across the country. Similar to other fraud schemes, investors were also promised interest as high as 300 per cent in 12-15 months.

source: business.inquirer.net

France probing Apple’s secret slowdown of old iPhones

PARIS, France — French authorities have opened an investigation into Apple over revelations it secretly slowed down older versions of its iPhones, the Paris prosecutor’s office said Tuesday.

The preliminary probe was opened last week over alleged “deception and planned obsolescence” of some Apple products, the office said. It is led by the French body in charge of fraud control, which is part of the finance ministry.

It follows a legal complaint filed in December by a French consumer rights group whose aim is to stop the intentional obsolescence of goods by companies.

In France it is illegal to intentionally shorten the lifespan of a product in order to encourage customers replace it. A 2015 law makes that a crime, with penalties of up to two years in prison and fines of up to 5 percent of the company’s annual turnover.

Apple apologized in December for secretly slowing down older iPhones, a move it said was necessary to avoid unexpected shutdowns related to battery fatigue. As part of its contrition, Apple is now offering to replace the batteries on older iPhones for $29, a $50 discount from the usual price.

But Apple also has denied the slowdown of the older phones is a ploy designed to spur sales of newer models. “We have never — and would never — do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades,” the company said on its website.

Apple France didn’t respond to email and phone requests for comment on the latest legal developments in France from The Associated Press.

Lawsuits against the company have also been filed in the U.S. and Israel.

Creative Strategies analyst Carolina Milanesi believes Apple’s throttling of older iPhones is helping to extend the devices’ lives by enabling to take advantage of the new features in the company’s free software updates each year.

The company’s choice boiled down to “let the phone just run at full speed and kill the prematurely aged batteries or slow down the phone so the battery would last longer,” Milanesi wrote in a recent analysis.

The French consumer rights group, called HOP, filed a lawsuit on Dec. 27. Its statement claims Apple slowed down older smartphones in order to make clients buy the new iPhone 8, which was launched on the market around the same time.

Benchmark tests have suggested the slowdown isn’t huge, but noticeable. Although Apple has said that’s done to prevent iPhones from unexpectedly shutting down because of weak batteries, lawsuits filed against Apple say that its failure to disclose that right away could have led some people to wrongly conclude they needed a newer, faster phone rather than just a new battery.

Laetitia Vasseur, the director of HOP, said studies have showed that peaks in speed reductions match the releases of new phones on the market.

“We can see that there is an intention to have people buy new phones because of the speed reduction,” she told the AP.

Vasseur said her group launched a survey following its complaint so that users can report problems they have faced. In 10 days, HOP has received more than 3,000 reports that will be handed over to the DGCCRF, the government fraud watchdog in charge of the investigation, she said.

Vasseur said she hopes that the consequences globally could be to go toward more sustainable and durable products “for all manufacturers that won’t want to face the same kind of scandal.”

A similar investigation targeting Japanese printer-maker Epson was opened in November, also following a complaint by HOP.

The Epson probe, was launched by another prosecutor’s office, in Nanterre outside Paris, is related to some of its ink cartridges and printers’ spare parts. It was the first legal action ever for planned obsolescence and deception in France, HOP said in a statement.

Epson has denied any wrongdoing, saying that planned obsolescence is not part of the company’s policy.

In the French legal system, preliminary investigations are launched and led by prosecutors’ offices. Such probes can last weeks or months. When they’re over, prosecutors can either decide to drop the cases or to send them to investigating judges for full investigations. Judges, in turn, can also dismiss the cases, due to lack of evidence for instance, or send them to courts for trial. In these cases, the whole process may last months or even years.

Since Epson and Apple cases are the first legal actions for planned obsolescence in France, there hasn’t been case law yet on possible penalties, fines or damages awarded by courts under this particular offense.

Any fine imposed on Apple would probably hurt its pride more than its pocketbook. The company has accumulated nearly $270 billion in cash from its sales of iPhones and other products. /cbb

source: technology.inquirer.net

Makers of fraudulent breast implants go on trial in France

MARSEILLE, France - Five French executives went on trial on Wednesday to jeers from victims for supplying women with hundreds of thousands of substandard breast implants and triggering a global health scare.

More than 300,000 women around the world were fitted over a decade with implants from the French company Poly Implant Prothese (PIP), and the trial includes 5,000 civil plaintiffs and 300 lawyers.

PIP's founder and chief executive, 73-year-old Jean-Claude Mas, has admitted filling the implants with an unapproved homemade recipe made of industrial-grade silicone gel.

Mas and four PIP executives, including the chief financial officer, are charged with aggravated fraud and risk maximum prison terms of five years each, plus fines, for selling the implants around the world from 2001 to 2010, when they were ordered off the market.

A vast exhibition building close to PIP's former premises has been set up as a makeshift courtroom to accommodate the huge crowds expected for the trial, due to last until May 14.

Mas arrived at court under police escort and faced a crush of cameras as the trial began in the southern city of Marseille.

"Bastard!" shouted someone in the audience of some 300 victims as Mas appeared live on a giant video screen.

Of the more than 5,000 individual lawsuits filed against PIP - once the world's third-largest supplier of breast implants - and its executives, 220 have come from women outside France.

A French woman who alleges that one of her PIP implants began to leak four years after its insertion said outside the courtroom that victims were both scared and angry.

"We had foreign bodies put inside us that were flawed ... we could have maybe died from it. The anger is because we were tricked," said Tomassine Catalano. "It's frightening."

Rush for removal

The scandal - revealed after inspectors pursuing a tip-off discovered vats of industrial-grade silicone outside the PIP factory in 2010 - sparked worldwide panic when the government recommended removal of the implants due to an abnormally high rupture rate.

Health experts say no link has been established between PIP implants and breast cancer, but in the months after the scandal broke, plastic surgeons around the world reported a flood of removal requests from worried patients.

Half the French women with PIP implants, or nearly 15,000, have already opted for removal, whether because of rupture or as a precaution, according to the government.

Mas was released in October from eight months in detention following a failure to post bail. He told police that 75 percent of PIP's implants had contained the homemade gel, which was never been approved by regulators, although he denies it was unsafe. He and the other executives deny the charges.

Investigators estimate that Mas's formula allowed PIP to save nearly 1.2 million euros ($1.6 million) in one year alone.

On Wednesday, hoots erupted in court when Mas said he lived on a modest monthly retirement income of 1,800 euros, prompting the judge to warn that the next person to disrupt proceedings would be thrown out.

Minutes before the trial began, a court in Paris rejected a defense request to have the case thrown out.


Mas and CFO Claude Couty are separately implicated in a civil case over fiscal fraud that has yet to reach trial. Mas is also under investigation for manslaughter following a complaint from the mother of a French woman with PIP implants who died of cancer in 2010. — Reuters

source: gmanetwork.com