The scheme, according to the SEC, involved an outlandish promise:

... that the Magnum Program offered guaranteed profits through a process that involved leasing and monetizing bank instruments. Although the timing and amount of the promised payouts varied, many of the contracts that the Defendants entered into with the investors stated that an investment of $44,000 would yield a return of $2 million after 10-12 banking days.

Shocking as it may seem, said investors did not recoup said profits. Rather, one Geoffrey H. Lunn, a defendant in the government's case, is alleged to have withdrawn more than $1 million in cash, which he claims to have given to "a one-eyed man who used the alias Robert Perello," the purported mastermind of the scheme. Mr. Lunn also allegedly lavished $845,000 on a trio of "Las Vegas call girls," and paid out hundreds of thousands more to co-conspirators who marketed the investment idea.

And while investors believed that the "Magnum Program" was so named because of the sum of initial investment, Mr. Lunn testified to SEC staff that Mr. Perello said the name of the fund had another meaning:

According to Lunn, Perello told Lunn in the fall of 2010 that he named Dresdner’s program the Magnum Program because “when people found out they’d been ripped off, they would buy a .44 Magnum and shoot themselves in the head.”

Well, there's moral complexity (who's ultimately responsible?), there's procedural complexity (how do you explain financial concepts to a jury?) and then there's the somnial complexity, the daunting task of keeping a jury awake.

It's that latter that's may pose the biggest challenge in the government's case against two former brokers at LinkBrokers Derivatives. As Peter Henning points out in today's Times, defendants Marek Lezczynski and Benjamin Chouchane are charged with amassing $18.7 million in ill-gotten gains by overcharging customers on more than 36,000 transactions.

In some cases, the brokers simply executed trades at one price, and reported trades at another, like so (from the complaint):

On April 10, 2007 at 3:06 p.m., a customer sent Chouchane an email placing an order to buy shares of Dow Chemical Co. (“DOW”). Interdealer Broker executed the trade, purchasing 39,600 shares of DOW on the customer’s behalf at $45.4335 per share. The trade blotter reflects an execution price of $45.4335, a gross price of $45.4535, and a net price of $45.4635. At 4:11 p.m., Chouchane emailed the customer a trade recap confirming the trade at the false execution price of $45.4535 per share. The commission for this transaction was $0.01 per share, resulting in a total commission of $396 for this trade, which Interdealer Broker charged the customer. However, Chouchane failed to disclose the additional fraudulent markup of $792.

In other cases, the defendants sought to take a portion of their customers' profits by first buying shares for the client, then selling some of the client's shares at a higher price, and capturing the difference. Like so:

On April 26, 2007 from 2:48 p.m. until 2:49 p.m., Interdealer Broker executed a customer’s order to sell 22,576 shares of Qualcomm, Inc. (“QCOM”) at an average price of $45.7500. At 3:41 p.m., Interdealer Broker bought back 3,000 shares—shares that should have been allocated to the customer—for an average price of $45.3500. At 4:30 p.m. Leszczynski falsely reported to the customer that Interdealer Broker was only able to sell 19,576 shares for the customer and was not able to fill the remaining shares ordered by the customer. Specifically, Leszczynski stated: “Remaining balance cancelled as stock didn’t trade @ the limit.” At 4:40 p.m., despite having sold 22,576 shares, Interdealer Broker allocated sell executions representing only 19,576 shares of QCOM to its customer for a gross execution price of $45.7500 per share. Interdealer Broker recognized an additional secret profit of approximately $1,200 on the purchase of the 3,000 shares. In total, Interdealer Broker recognized approximately $1,335 in profits from the transaction while only disclosing a commission of $135.07 to the customer.

Mr. Henning notes that with 36,000 transactions to be entered into evidence, proving the case won't be easy: "Imagine trying to put together a puzzle with that many pieces." Our sympathies in this instance are less with the prosecutors and more with the jurors tasked with keeping their eyes open should the case go to trial.

In Greece, meanwhile, 7,000 plainclothes police officers will be on duty when German Chancellor Angela Merkel visits Athens.

The Securities and Exchange Commission turned to a high-frequency trading firm to help build a system that will help the bank monitor high-frequency trading.

The market for municipal bonds is stuck in the dark ages, writes The Times' Gretchen Morgenstern.

Yoga-practicing, Bruce Springstein lover Barry Rosenstein, the founder of Jana Partners, is the activist investor you can bring home to mama in this profile.

Lehman Brothers' defunct brokerage is getting closer to paying creditors, four years after the firm went under.

Wall Street is anticipating lower corporate profits when companies begin reporting third quarter earnings, but that's not necessarily going to slow the stock market.

HSBC received a court order to bar Occupy protestors from entering its Hong Kong headquarters. The company evicted demonstrators in September after an 11-month occupation.

If only T. Boone Pickens had died ... Bloomberg Businessweek looks at Oklahoma State University's scheme to fund its athletic department by investing in life insurance policies on the program's boosters.

Would you work for Dominique Strauss-Kahn? Female executives are split on the question, according to Bloomberg.

A caddy at East Hamptons Golf Club, where memberships start at $400,000 and Goldman Sachs CEO Lloyd Blankfein is a member, has self-published a book about looping for the rich.

The European Stability Mechanism may guarantee the first 20 to 30 percent of potential losses on new Spanish debt, according to Reuters. The plan would be aimed at saving Spain without depleting Europe's rescue funds.Wall Street has been pricing in a Democratic victory, according to LPL Financial (via Washington Post). Interesting to see if/how that changes after the presidential debate last night.

Ocwen Financial does $750 million mortgage-servicing deal in preparation for ResCap bid.

Time for the members of the French private equity industry to start apartment shopping in London?

Blackstone co-founder Peter G. Peterson .... unmasked!

The Office of the Comptroller of the Currency looks to remake its reputation.

CNBC asks, which California city will go bust next?

The Securities and Exchange Commission urges investors to read carefully all secret documents containing fraud.

Dan Loeb likes Greece, Murphy Oil. Also: Tupac, Boyz II Men.

It's still a good time to buy a private jet.

In North Dakota's oil-rush boom towns, it's hard to tell the "average Joe farmer from the average Joe millionaire."

Former Massachusetts treasurer Timothy P. Cahill

Putting a new spin on an old sobriquet, the Securities and Exchange Commission announced charges against Goldman Sachs and a former vice president at the firm for making undisclosed contributions to the gubernatorial campaign of a former Massachusetts state treasurer.

Goldman—sometimes referred to as "Government Sachs" because former executives (Bob Rubin, Josh Bolten, Hank Paulson ... it goes back to Sidney Weinberg, doesn't it?) have a habit of going to work in Washington—found itself in the SEC's sights after a former Goldman vice president named Neil M.M. Morrison lent a hand to then Massachusetts Treasurer Timothy P. Cahill, who was running for governor.

According to the agency, Mr. Morrison was "substantially involved" in Mr. Cahill's campaign from November 2008 to October 2010, during which period Goldman was involved in underwriting 30 debt offerings for the state:

Morrison at times conducted campaign activities from the Goldman Sachs office during work hours and using the firm’s phones and e-mail. Morrison’s use of Goldman Sachs work time and resources for campaign activities constituted valuable in-kind campaign contributions to Cahill that were attributable to Goldman Sachs and disqualified the firm from engaging in municipal underwriting business with certain Massachusetts municipal issuers for two years after the contributions. Nevertheless, Goldman Sachs subsequently participated in 30 prohibited underwritings with Massachusetts issuers and earned more than $7.5 million in underwriting fees.

Which would all seem a little more innocuous—it would have to be pretty good campaign advice to be worth rewarding with underwriting business, wouldn't it?— if not for emails like this, from Mr. Morrison to a deputy treasurer in Mr. Cahill's office:

“From my standpoint as an advisor/consultant/friend I am saying, PLEASE don’t give these [underwriter] slots away willy-nilly. You are in the fight of your lives and need to reward loyalty and encourage friendship. If people aren’t willing to be creative with their support then they shouldn’t expect business. This has to be a political decision.”

And this one, from Mr. Morrison to a campaign official:

“I am staying in banking and don’t want a story that says that I am helping Cahill, who is giving me banking business. If that came out, I’m sure I wouldn’t get any more business.”

Goldman agreed to pay more than $11 million in fines and disgorgement of fees earned from Massachusetts without admitting to or denying the SEC's finding. The government's case against Mr. Morrison is ongoing, according to the statement.

Somewhere, an algorithm read the coverage of yesterday's Senate Banking Committee hearing on high-frequency trading, and figured it will take years for the government to hammer out reforms to fix market structure issues.

Stephen Morse, the Barclays executive who ignored employees' warnings that the bank was manipulating its Libor submissions, has been sitting out the ensuing scandal from his post as head of compliance at TD Bank.

The Federal Energy Regulatory Commission said it may suspend JPMorgan's energy trading business for failing to comply with requests for information about the firm's trading profits, Bloomberg reports.

The Securities and Exchange Commission is scrutinizing whether private equity firms are taking more profits than they should, or taking profits too soon. The agency received increased authority over private money managers under Dodd-Frank.

The federal government's mortgage task force, co-headed by New York Attorney General Eric Schneiderman, is getting ready to do ... something?

More than 100 lawmakers have lobbied federal authorities on the implementation of Dodd-Frank, according to The New York Times.

Madoff trustee Irving Picard put checks in the mail yesterday—$2.5 billion in payments to thousands of investors duped by the Ponzi schemer.

Does anyone want to bail out Greece (again)?

Youth unemployment is also on the rise in prosperous northern Europe.

A Brazilian official said that the Federal Reserve's new bond-buying program would set off currency wars—Business Insider explains.

Nomura is eliminating four of 12 investment banking jobs in Dubai, according to Bloomberg, on the heels of the decision to dump a London-based prop trading team.

Britain is considering whether it really wants to be known as the "divorce capital of the world." That means, the Ministry of Justice is reviewing court standards that favor the less-wealthy spouse in split-ups.

Are you reading this from Jeffrey Gundlach's Porsche Carrera 4S? Would you like to make a deal?

Kweku Adoboli, the former UBS trader charged with amassing a $2.3 billion loss in unauthorized trading positions, goes on trial in London today. He faces up to 10 years in prison if convicted, according to CNBC.

The U.S. Treasury is selling an $18 billion stake in AIG, in a move that would decrease the government's stake in the insurer to less than 50 percent for the first time since 2008.

Investors betting on a U.S. housing recovery are beginning to cash in holdings in shovel-ready residential land. Firms such as BlackRock, hedge fund Angelo Gordon & Co and real estate investment firm Starwood Capital, snapped up property in bankruptcy proceedings, from struggling developers and banks in foreclosure sales, according to Reuters. Now some of those firms are unloading property, often for gains of 20 percent or more.

Commodities giant Glencore has made its final offer for mining company Xstrata, apparently.

SEC Chairman Mary Schapiro would like to complete rule-making on a uniform fiduciary standard, "but Congress handed us a lot of important things to do,” she told Bloomberg.

A U.S. judge barred former Credit Suisse and UBS banker Christos Bagios from leaving Florida to visit family in Switzerland and Greece, according to Bloomberg. Mr. Bagios, who is charged with helping 150 American clients hide as much as $500 million from tax authorities, is currently free on $650,000 bail.

A day after French President Francois Hollande promised to press ahead with a plan to tax on the country's highest earners at 75 percent, LVMH chief executive Bernard Arnault, France's richest man, said he had applied for Belgian nationality. According to Reuters, Mr. Arnault said he would still pay taxes in France.

George Soros says Germany should lead Europe out of the ongoing sovereign debt crisis, or exit the euro zone itself.

In the latter decision, the Second Circuit breathed new life into insider trading charges first brought in 2001, in which the SEC alleged that hedge fund Wynnefield Capital earned $1.3 million trading on privileged information about a company called SunSource. According to The Times, which wrote at length about the case last year, the government alleged that Wynnefield president Nelson Obus received a tip that SunSource was in play. Mr. Obus increased his holdings in SunSource, and when the company was sold, the share price doubled.

A trial court judge ruled that Wynnefield's source was not a corporate insider, thus hadn't breached his duty to protect SunSource's information. The Second Circuit disagreed, ruling that "the SEC had established genuine questions."

Would you invest with this man?

Songwriter, novelist and erstwhile investment adviser Gary Marks—also the author of investing guide Rocking Wall Street—agreed to pay $421,000 to settle Securities and Exchange Commission charges that he negligently misrepresented the correlation and diversification among some of the funds he managed.

The nitty-gritty, according to the SEC: Between 2005 and 2007, Mr. Marks managed several funds-of-funds and told investors that the funds weren't correlated, when in fact a) they were and b) he "did not even know how to properly perform such an analysis."

There are other charges: That Mr. Marks proffered unsuitable investment advice, made inadequate disclosures and misled investors regarding the liquidity of one of his funds.

Our point in this case has less to do with the charges, which appear to be relatively minor (about $321,000 of the settlement amount is a disgorgement of ill-gotten gains), but rather the fact that the man shown above—a Kihei, Hawaii, resident who has apparently recorded with John Schofield and self-published 11 novels (sample description, Wow: "Who is Zolar, and why should you be listening to him right now? ... Two kids start an Internet scam only to find out they were telling the truth all along."), such a man was, at the end of 2007, managing approximately $152 million.

Which is to say, maybe it was or maybe it wasn't a boneheaded idea to invest with Mr. Marks, but when a guy lists his influence in the San Francisco-area songwriting scene near the top of his résumé, you probably shouldn't be too surprised that he can't calculate correlation.

(H/t: FINalternatives)

Last week, Citigroup chief executive officer went around telling everyone (read: The Financial Times and an audience in Singapore) that Citigroup didn't need to be broken up, as former Citi CEO Sandy Weill had argued last month. Mr. Pandit's media tour continued yesterday: Regulators telling banks which products they can sell undermines financial stability, somehow, he told Australian Broadcasting Corp.

Occupy Central protesters in Hong Kong face a legal deadline to leave HSBC headquarters, where the group has been protesting for 10 months, according to Bloomberg.

London-based investment bankers would rather work in Singapore than London or New York, according to a survey conducted by recruitment firm Astbury Marsden; 60 percent of those surveyed expect the Asia-Pacific region to be the world's largest financial center in 10 years.

Some European bankers are being asked to watch what they say at the bar.

Spain is expected to tap about $75 billion in rescue funding, about 60 percent of the facility approved by European finance ministers last month, The New York Times reports.

Blackstone adds another name to its succession plan; CEO Steve Schwarzman still expected to "die at his desk."

The Times takes a closer look at Luis A. Aguilar, the SEC commission who scuttled the agency's attempts to impose new rules on money market funds.

Nomura is getting ready to slash jobs in equities and investment banking, according to Reuters.

Deutsche Bank introduced rules that allow it to claw back shares bestowed on employees in return for unvested stock awarded by their previous employer, the Financial Times reports. Other banks may follow suit.

A producer for The Wolf of Wall Street, which stars Leonard DiCaprio as a crooked stockbroker, is suing the film's production company for reducing her role behind the scenes, The New York Post reports.

Chinese investors are buying up Bordeaux vineyards.