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Fraud Fraud Everywhere – White Collar Criminals and Congress

June 4, 2010

Great idea to investigate fraud and corruption in the Financial Markets. However this obscures the real problem and blames businesses for behavior that could not exist except for government participation.

It would be far-far more productive to investigate State and Federal executives, legislators and judges. THAT is where the REAL corruption and danger is at.

Federal authorities on Friday announced the creation of a task force in Virginia to fight financial crimes across the country, giving the country’s leader in financial fraud prosecutions, New York City, a run for its money.

“Corporate fraud scandals have eroded public confidence in the nation’s financial markets,” Neil MacBride, the U.S. Attorney for the Eastern District  of Virginia, told reporters gathered in Richmond. “White collar criminals have looted the pocketbooks and retirement accounts of working Americans. Crimes committed on Wall Street are felt on Main Streets everywhere.”

For years, major crimes committed on Wall Street or elsewhere by financial companies doing business there have been prosecuted by the U.S. Attorney’s Office for the Southern District of New York — or “SDNY.” In fact, SDNY has become such a leader in prosecuting white collar and other such cases that New York University’s law school offers a “prosecution clinic” with SDNY for its students, noting that SDNY “handles an unusually large number” of such cases because it is “the financial capital of the world.”

But now the Eastern District of Virginia — or “EDVA” — is hoping to become the “SDNY of the South,” as one Justice Department official put it to Fox News.

According to a press release, the new Virginia Financial and Securities Fraud Task Force is an “unprecedented partnership” between civil regulators and criminal investigators from state and federal agencies, including the Securities and Exchange Commission, the FBI, the U.S. Postal Inspection Service and the IRS.

“We have the legal authority to prosecute cases of national significance in the Eastern District of Virginia, regardless of where the fraud occurs,” MacBride said.

In particular, he said, every publicly traded company must file financial statements with an SEC system that is located in the Eastern District of Virginia. That gives the task force juridictional authority to investigate fraud at any public company, according to MacBride.

“In addition, the Federal Reserve Bank in Richmond is one of the primary hubs for US wire transfers, which is an additional basis for venue in many fraud cases,” he said.

At Friday’s announcement, MacBride was joined by, among others, Robert Khuzami, the SEC’s director of enforcement. Khuzami’s presence at the announcement shows the extent to which the SEC is fully supporting EDVA’s efforts to increase its financial fraud work, one Justice Department official said.

“Opportunities to coordinate civil and criminal law enforcement efforts, such as those provided by this task force, are vital to combating financial fraud,” Khuzami said on Friday.

A few months ago, EDVA had 14 prosecutors working full-time on such cases. By end of summer, EDVA is planning to bring that number up to 21, fillings its ranks with experienced prosecutors from Justice Department headquarters in Washington and elsewhere, according to one Justice Department official.

While 21 full-time prosecutors would still mean that EDVA’s team is less than half the size of SDNY’s, the Obama administration’s increased enforcement of financial fraud laws has created a swell of new cases — perhaps too many for SDNY to tackle alone.

“The pie is getting a lot bigger,” the official said.

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