Any activity that uses fraud to separate investors from their money falls under state and federal financial fraud laws. Financial crimes are increasingly a top priority for prosecutors set to appease public demand for justice for high-cost crimes.
It is critical to contact an attorney as soon as you suspect you are under investigation for investment fraud. These cases are complex and typically take months or years to investigate. Waiting until charges are filed can put your defense months behind. The Blanch Law Firm provides comprehensive defense that includes wading through financial documents while protecting your rights during pending investigations.
Courts are handing out long prison sentences and demanding restitution in the millions. Can you afford to wait? Our attorneys have decades of experience successfully defending all manner of financial professionals in investment fraud trials. Our track record includes cases involving financial planners, hedge fund managers, brokerage firms, financial planners, analysts, investment banks and corporations.
Financial crimes fall under numerous state and federal laws, including the Securities Act of 1933, Securities Act of 1934, Investment Company Act of 1940, Sarbanes-Oxley Act of 2002 and New York’s Martin Act.
Investment fraud schemes can include myriad allegations and generally accuse the alleged perpetrator of pocketing clients’ money for their personal use. Some schemes are:
- Accounting fraud
- Affinity fraud
- Blind pools
- Breach of contract
- Breach of fiduciary duty
- Capital raising schemes
- Estate financing fraud
- Factoring schemes
- Failure to execute
- Failure to supervise
- Insider trading compliance
- Mutual fund fraud
- Nigerian schemes/419 letters
- Ponzi schemes
- Prime bank fraud
- Real estate fraud
- Share pushing/boiler rooms
- Shareholder fraud
- Shares scams
- Suitability / unsuitability
- Telemarketing fraud
- Timeshare fraud
- Unauthorized trading
A host of related white-collar crimes are charged in financial fraud cases, including securities fraud, mail fraud, wire fraud, investment adviser fraud, and conspiracy.
Depending on the specific charges and the value of the fraudulent scheme, prison time can reach 20 years or more. Additionally, defendants face stiff fines, costly restitution, loss of their professional license and lengthy probation.
The relatively new Financial Fraud Enforcement Task Force is a coalition of more than 20 federal agencies, along with state authorities, charged with tracking down and prosecuting investment and other types of fraud. This is a clear indication that the government is putting its top investigators and prosecutors to work on these cases. You deserve the same caliber of an attorney working on your defense. The Blanch Law Firm has the capacity to sift through the details of these sophisticated cases in order to establish the best defenses. We have been through these trials, so we fully understand the law and can anticipate prosecutor strategies.
Investment fraud often involves millions, and sometimes billions of dollars, so it is no surprise that numerous high-profile cases exist. A 2014 federal case in Brooklyn resulted in a 63-month sentence for Frederick Douglas Scott, the 29-year-old CEO of ACI Capital Group, LLC. He also was ordered to pay $1.3 million in restitution to investors that he fleeced. The investments he purported to participate in either did not exist, or he never invested in them. He kept his clients’ money for his personal use.
Web-Based Currency Exchange Criminal Defense Attorneys
The United States has shifted much more heavily towards web–based currency and citizens have begun to more heavily rely upon electronic transfer of funds, electronic banking.
In recent years, we have found ourselves defending clients facing charges and investigations related to fraud in financial transfers and transactions.
What is One of Your Recent Cases Involving Financial Fraud in SDNY?
Most of us are familiar with PayPal, CashApp, Western Union and our online bank transfer systems. However there has long been a system for electronically transferring funds from the United States to Russia that many people are not aware of – WebMoney.
What is “WebMoney?”
I first came familiar with WebMoney about 10 years ago when we had a client who was charged in the Southern District of New York with double counts of money laundering, tax evasion, and other related crimes as part of a scheme where over $5,000,000 had been stolen by a group of nationals who had been able to obtain Chase Bank members credit card, debit card, and pin numbers. The allegations were that our client would take hundreds of thousands of dollars of cash from the theft group and convert it on the WebMoney system.
What was the Client Accused of Doing?
Our client was the WebMoney exchanger, kind of like any other currency exchanger. However, their specialty was the electronic transfer and conversion of US dollars to Russian currency. The money would ultimately be deposited into a Russian bank account. Once in the Russian bank account (after having been filtered through the WebMoney system), the money will become legitimate.
In this particular case, at the time that it occurred, the case was covered by the media because identity theft had recently started to be a major concern. As always with the number of individuals who lost money through the thefts it was newsworthy enough interest to the public.
Our client, along with two others, were ultimately indicted in the United States District Court for the Southern District of New York. During the pendency of the case, our client was offered eight years as part of a plea deal. In the alternative, if our client was convicted after a trial on all of the counts charged, he faced a minimum of 40 years.
The client was adamant that he had no knowledge that the source of funds was in fact stolen. He was also adamant that he would not plead guilty and that he wanted to proceed to trial.
As proof against our client, the government offered the testimony of two co–conspirators – specifically the two individuals stealing funds from Chase Bank members.
The government also was attempting to offer into evidence:
- recorded phone conversations between our client and the two alleged co-conspirators;
- the payment from our client’s WebMoney account showing that on particular dates and times he had converted and transmitted sums well above $10,000 to Russian bank accounts through his web–money exchange business.
The government was also willing to offer proof at a trial that during all of these transactions (which each exceeded $10,000) that our client had failed to file a “cash transaction report.”
What is a “Cash Transaction Report?”
A “cash transaction report” – which is also commonly called a CTR – is a form with roots in the Bank Secrecy Act that requires any business who receive $10,000 or more from any individual to file a CTR are within 15 days of receiving the cash. Generally, the CTR is mailed to the Internal Revenue Service and filed.
Our client’s case was ultimately right before the jury in the Southern District of New York. Once there, the government did in fact offer the previous referenced evidence as well as a number of documents related to our client’s WebMoney exchange business.
What Was the Prosecutions Position Regarding the Case?
According to the perpetrators of the bank fraud (who had become cooperating witnesses for the government), they had told our client about the source of funds and they had coordinated pickups and drop-offs with our client based upon their schedule from Chase bank and Chase bank clients.
What was the Defense Position Regarding the Case?
Our position was that alkaline had no knowledge that these individuals were in fact stealing from Chase bank and had obtained client pin numbers and credit card and debit card information unlawfully.
Our defense further addressed the fact that when dealing with WebMoney, the individual’s financial account (called a “purse”) may be connected to a business entity. In that case, these types of purses are usually accessible from multiple individuals within the senior level management of the business. More importantly, the source of the funds is not documented in the purse.
Example: For example, usually if you’re using PayPal, Zelle, or CashApp there’s some notation regarding the recipient of the funds and source. In other cases, being that WebMoney is a money exchange based out of Russia used solely for the purpose of converting U.S. dollars into Russian currency, the program itself is not subject to high monitoring and/or regulation.
If I am a Russian national working for a WebMoney exchanger and I am using the purse to also send money to my family members love ones and just to return money back home to a Russian bank account that I may have, it is very hard to separate the source of funds and ultimate recipients.
Lastly, one of the portions are defense was that the cooperators – who were both non-U.S. citizens – would not only face deportation based upon the crimes charged, but would also be facing a substantial period of time in prison, and thus, decided to collude to make false allegations against our client.
What Happened at Trial?
The trial lasted for an estimated three 1/2 weeks. At the conclusion of the trial, our client was acquitted of all charges except one – the count of failing to file a cash transaction report.
Our team was well aware that the failure to file the cash transaction reports would be one of the charges that we would not be able to successfully persuade the jury not to convict our client of because the transactions could be clearly attributed to our client and in instances which our client did clearly make the transactions there had been no CTR on file with the IRS. The client accepted that as one of the biggest hurdles that we faced before preceding the trial.
What Happened After Trial?
After the client was convicted on the count regarding his filing of the CTR we did prepare a substantive pre–sentence submission argument to the judge.
What is a “Pre-Sentence Submission Argument?”
Our “pre-sentence submission argument” stated that our client should not receive the 24-month maximum sentence that he faced based upon the crime that he was convicted.
We were able to persuade the judge that, just as the evidence had shown at trial, the government had not submitted evidence that would permit the court to used acquitted conduct to factor into a sentence for our client.
What Was the Client Ultimately Sentenced to?
Based upon our pre-sentence submission and the work that we had completed during the trial, our client was ultimately sentenced to 15 months incarceration – of which they would do 85%.
This sentence can be compared to the eight years that the government had been offering him if he had pled guilty price row and for years that he had faced had he been convicted of all counts after a trial.
As part of our sentencing request, we also requested that the judge designate our client to serve his term of incarceration at the Otisville Correctional Facility – which was also granted.
Today, our client has served his prison term and is currently out operating a successful business.
What is the Takeaway?
In short, having the right team to represent you when you are under investigation or facing criminal charges can make the difference between someone pleading guilty to an 8-year prison term and someone going to trial and only receiving a year after his conviction, sentence, and order to surrender.