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U.S. Attorney’s Office Launches New Task Force to Fight Financial Fraud

U.S. Attorney’s Office May 21, 2010
  • Eastern District of Virginia (804) 819-5400

RICHMOND—Federal and state officials today announced the creation of the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia.

Neil H. MacBride, U.S.Attorney for the Eastern District of Virginia; Robert Khuzami, Director of the Division of Enforcement for the U.S. Securities and Exchange Commission (SEC); Stephen Obie, Acting Director of Enforcement for the Commodity Futures Trading Commission (CFTC); Ken Cuccinelli, Attorney General of Virginia; Michael Morehart, Special Agent in Charge of the FBI Richmond Field Office; Steven F. Hadra, U.S. Postal Inspector/Team Leader of the U.S. Postal Inspection Service - Charlotte Division - Richmond, Va., Field Office; C. André Martin, Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation’s Washington, D.C., Field Office; and Philip de Haas, Deputy General Counsel - Financial Services for the Virginia State Corporation Commission (SCC), made the announcement at a press conference this morning.

“It has become all too clear that the complex financial crimes we confront are national in scope,” said U.S. Attorney Neil H. MacBride. “They require criminal and civil authorities across the country to utilize every tool at their disposal to ensure that the guilty are held accountable. The Eastern District of Virginia has the legal authority to bring cases here with national significance, regardless of where the fraud occurs.”

“Financial fraud schemes can be sophisticated, difficult to detect, and span multiple jurisdictions,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Opportunities to coordinate civil and criminal law enforcement efforts, such as those provided by this task force, are vital to combating financial fraud.”

“Financial fraud is a threat to economic integrity and can harm individual investors,” said CFTC Acting Director of Enforcement Stephen Obie. “The CFTC has devoted substantial resources to combating fraudulent financial schemes and appreciates the opportunity to work with the U.S. Attorney’s Office for the Eastern District of Virginia and the other Task Force members to root out unscrupulous financial activity and protect market participants.”

“This partnership presents a tremendous opportunity to share information and resources among the experts in order to prosecute and deter fraud perpetrated against our citizens,” said Attorney General Cuccinelli. “The efficiencies of state and federal cooperation and of law enforcement working together should not only prove more helpful in protecting consumers, but it should also save the taxpayers money.”

“Large scale financial crimes are on the rise and as such law enforcement agencies are working together to become force-multipliers in investigative and prosecutorial efforts,” said FBI Special Agent in Charge Michael Morehart. “The Richmond Division of the FBI welcomes the opportunity to work with our partners on this task force to demonstrate a commitment of aggressive investigative efforts and discourage criminal activity.”

“The Postal Inspection Service embraces the formation of the Virginia Financial and Securities Fraud Task Force,” said Postal Inspector in Charge Keith Fixel of the Charlotte Division. “This partnership with other state and federal agencies will enhance our ability to thoroughly investigate mail fraud and other financial related crimes that involve the nation’s mail system and ensure public trust in the mail.”

“Financial fraud crimes create huge losses of tax revenue. This type of fraud threatens the integrity of our tax system and erodes the financial health of our communities,” said IRS-CID Special Agent in Charge C. Andre' Martin. “IRS-Criminal Investigation is proud to be part of a formidable law enforcement team that is focused on investigating these fraud schemes and we will continue our efforts to investigate the tax evasion and money laundering aspects of these types of crimes.”

“The State Corporation Commission looks forward to working with our state and federal partners to enhance our ability to enforce the provisions of Virginia law governing the financial services industry, assist investors who have lost their money, and enhance the integrity of markets by targeting and eliminating financial and securities fraud,” said SCC Deputy General Counsel - Financial Services Philip R. “Duke” de Haas.

The task force announced today builds on an existing working group consisting of the FBI, U.S. Postal Inspection Service, and the Internal Revenue Service Criminal Investigation Division that has had success developing significant, national corporate fraud cases, including the recent prosecution of Edward Okun, who was sentenced to 100 years in prison for a $132 million fraud scheme. These three investigative agencies have expanded their commitment—both in agents and funds—to more aggressively pursue corporate and securities fraud cases.

In addition, the task force has been expanded to include civil regulators from the SEC, CFTC and SCC, as well as state prosecutors from the Virginia Attorney General’s Office. Each of these agencies has different tools, expertise, and resources at their disposal that will be leveraged to assist each other—when permissible—in their investigations of large, complex cases.

Designed to be operational, the task force is focused on facilitating the exchange of information on specific investigations. The independent legal responsibilities of each task member may limit the ability to share information; however, the task force members are committed to conduct parallel investigations and share as much information as they are allowed so every member may benefit from the different tools and resources each agency can provide.

The Virginia Financial and Securities Fraud Task Force is also intended to be an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force created to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.

The President’s task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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