In other Federal law enforcement news, the Houston Chronicle reports that the FBI has assembled a new team to investigate corruption among judges and legislators in Georgia. Brian Lamkin, Special Agent in Charge of the FBI's Atlanta Office, told reporters that the team was formed in response to a string of recent corruption charges in Georgia, and will utilize approximately 40 percent of the Office's white-collar crimes unit staff. The article also notes that State agencies, including the Georgia Judicial Qualifications Commission and the Georgia Ethics Commission have run into funding difficulties.
For your serious criminal and civil legal needs, please visit us online at gwllaw.com, or call (912) 447-8400 (Savannah) and 404-842-9700 (Atlanta).
Last Thursday, Federal Bureau of Investigation agents searched the dormitory room of Georgia Tech freshman student Zhiwei Chen as part of "Operation Payback," an investigation into cyber attacks launched on companies which cut off sponsorship to the website Wikileaks, including PayPal, Mastercard, Visa and Bank of America, according to Midtown Patch. A group called "Anonymous" has claimed responsibility for the attacks. Agents seized many electronic devices from Chen's dormitory. Chen denied any involvement in the attacks in statements to the media.
Operation Payback has resulted in the issuance of more than 40 search warrants.
It is college football season, and appropriately the most notable news in an otherwise slow Federal criminal news day appears to be that the Federal Bureau of Investigation has interviewed John Bond, a former quarterback for the Mississippi State Bulldogs, regarding Auburn quarterback Cam Newton, according to the Atlanta Journal and Constitution.
Bond told Mississippi State officials in January that a former teammate had asked him for $180,000 in order to secure Newton's commitment to the Bulldogs. The teammate was subsequently revealed to be Kenny Rogers, another former player for the Bulldogs and owner of a company called Elite Football Preparation, which holds camps in Alabama, Chicago and Mississippi, and matches football prospects with colleges. Rogers, in turn, has publicly stated that he met with Newton's father, Cecil Newton, as well as assistant coaches for MSU, on November 27, 2009, in Starkville, Mississippi, and that Newton demanded between $100,000 and $180,000 in order to ensure that his son signed with the Bulldogs.
Newton originally signed a letter of intent with the University of Florida, where he spent the 2007-2008 season as a back-up quarterback to Heisman Trophy winner Tim Tebow. He subsequently transferred to Blinn College in Texas, where he led the Blinn Buccaneers to the NJCAA National Championship before signing with Auburn. According to ESPN, Cecil Newton told Rogers at the meeting that his son's transfer to Auburn was not going to be "free." Rogers was referred to Mississippi State booster and former Bulldogs offensive lineman Bill Bell. Bell confirmed to ESPN that Rogers did contact him to ask for money in exchange for Newton signing with Mississippi State. Rogers has stated that he doesn't know if Cam Newton knew about his father's demand for money. However, ESPN reported that recruiting sources for Mississippi State had disclosed that they had had telephone conversations with Cam Newton, as well as his father, that Newton's college choice would be based on a pay-for-play plan.
The allegations are further not limited to Newton's dealings with Mississippi State. One recruiter has reported that Cam Newton telephoned him after committing to Auburn and informed him that he had chosen Auburn over Mississippi State because "the money was too much."
Mississippi State compliance officials reported the allegations to Southeastern Conference compliance officials in January. The NCAA and the FBI are both conducting investigations into these allegations. The news has cast a shadow over Auburn's so-far undefeated season, and Newton himself, the current leading contender for the Heisman Trophy. Newton's reputation was already previously marred by charges of burglary, larceny and obstruction relating to an alleged stolen laptop while he was at the University of Florida.
The Federal investigation could result in criminal proceedings for conspiracy, fraud, bribery and other offenses. In a case which college football fans will have some familiarity with, U.S. v. Young, NO. 03-20400 BV, (W.D.Tenn. 2004), Tennessee businessman and University of Alabama booster Logan Young was indicted for structuring, in violation of 31 U.S.C. § 5324; Travel Act violations under 18 U.S.C. § 1952; and conspiracy, in violation of 18 U.S.C. § 371, for paying $150,000 to Lynn Lang, coach of Trezvant High School in Memphis, to ensure that high school defensive player Albert Means signed a letter of intent with Alabama. Young, Lang and Trezvant Assistant Coach Milton Kirk were subsequently convicted. Alabama was placed on probation for five years by the NCAA as a result of the conduct, and given a two year bowl ban. The University of Kentucky was given a one year bowl ban for a $6,000 payment by a booster to Lang in order to have Means visit the school. Similar misconduct was alleged against the University of Georgia, the University of Arkansas and the University of Memphis, however those schools were not sanctioned. An old Sports Illustrated article has more on the Means scandal.
Two years ago, Deputy Sheriff David Swanson and Sheriff's Captain Raul DeLeon of the Stanislaus County Sheriff's Department in California were indicted in the U.S. District Court for the Eastern District of California for making alleged false statements to federal investigators regarding leaks during a federal investigation of Road Dog Cycle in Denair, California. The owners of Road Dog Cycle, Robert and Brent Holloway, were also indicted for heading a racketeering enterprise, which involved members of the East Bay Dragons outlaw motorcycle club of California; the Merced, California, chapter of the Hell's Angels; and the Red Devils outlaw motorcycle club of Sweden. The defendants were charged with acts of trafficking in stolen motor vehicle parts, robbery, making extortionate extensions of credit and collecting extensions of credit by extortionate means.
Swanson was charged with allegedly leaking confidential law enforcement information to an associate of Robert Holloway who informed Holloway of search warrants which were to be executed at Road Dog Cycle. DeLeon was similarly charged with allegedly concealing his relationship with Robert Holloway and having contact with Holloway during the execution of a State search warrant at the residence of one of Holloway's employees in order to enable the employee to conceal evidence. Swanson and DeLeon faced a maximum of 15 years imprisonment.
Well, as reported by the Modesto Bee, the prosecution of Swanson and DeLeon turned out to be a case of prosecutorial overreaching when a jury acquitted Swanson and DeLeon on all charges earlier this month. Following the verdict, one juror told reporters that Swanson and DeLeon had been "railroaded." The problems in the government's case caused it at one point to offer Swanson the chance to plead to one felony count with no jail time and not even any probation. Even courthouse employees told the defense that they did not believe that he could have conspired to impede the federal investigation into the Holloways' activities.
Ashby Jones of the Wall Street Journal Law Blog writes today that Firearms manufacturer Smith & Wesson is being investigated by the U.S. Department of Justice for alleged violations of the Foreign Corrupt Practices Act (FCPA). The company disclosed the investigation and potential future criminal indictments of the company and its officers and employees to investors in filings with the U.S. Securities and Exchange Commission. Smith & Wesson also acknowledged that it could face debarment by the U.S. State Department. The investigation is related to an FCPA sting operation which resulted in the indictment of 22 individuals in the arms industry.
According to Law.com, Stuart Rosenfeldt, of Rothstein Rosenfeldt Adler--as in Scott Rothstein, the convicted $1.2 billion Ponzi schemer--was deposed last week by the law firm's bankruptcy trustee concerning his law firm's finances and political contributions. Rosenfeldt repeatedly invoked his Fifth Amendment privilege against self-incrimination in response to many of the questions. Rosenfeldt stated that he never looked at the firm's books. Also, when asked about groups which he made donations to, such as Common Sense Coalition and Broward Coalition for Truth, Rosenfeldt denied being familiar with the groups or what they stood for. Rosenfeldt's attorney has stated the U.S. Attorney's Office for the Southern District of Florida is investigating Rosenfeldt's contributions.
In response to the massive oil spill (over 19,000 square miles in area--or larger than the state of Maryland) in the Gulf of Mexico, on June 18, 2010, U.S. Department of the Interior Secretary Ken Salazar issued an order renaming the Minerals Management Service (MMS) the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). MMS/BOEMRE manages the nation's natural gas, oil and other mineral resources on the outer continental shelf. On June 15, President Barack Obama appointed Michael Bromwich to head the reorganized MMS and overhaul regulations governing offshore oil drilling.
The appointment of Bromwich--a former prosecutor--as Director of BOEMRE reflects the no-nonsense response of the Administration to the environmental disaster and growing public dissatisfaction. Bromwich was an Inspector General for the U.S. Department of Justice. Prior to that, he was an Assistant U.S. Attorney for the U.S. Attorney's Office for the Southern District of New York. Bromwich was an Associate Counsel for the Office of the Independent Counsel for Iran-Contra, and headed an Investigation into the Federal Bureau of Investigation Laboratory. He has been appointed as an independent monitor to investigate the Metropolitan Police Department for the District of Columbia, and the crime lab for the Houston Police Department. Prior to his appointment as head of BOEMRE, Bromwich was a partner with Fried Frank in New York and Washington. Bromwich has developed a reputation for helping to turn around troubled federal agencies.
Director Bromwich has written a column today in Newsweek which confirms the Adminstration's tough approach. In the column, Bromwich discusses his acceptance of the appointment by President Obama and Secretary Salazar. He emphasizes that his career has been defined by law enforcement, and that his experience in monitoring agencies will guide his reform of BOEMRE. Bromwich cites the alleged "coziness" of MMS with oil companies. On the subject of the Deepwater Horizon oil leak, he comments that the evidence suggests that British Petroleum (BP) and other companies "cut corners or made grave errors that led to the explosion."
Bromwich cites a need for "aggressive" investigators and states that BOEMRE has announced an "Investigations and Review Unit" (IRU), composed of prosecutors, investigators, scientists and other experts, to investigate allegations of misconduct by companies regulated by BOEMRE. The column states that companies that fail to cooperate may have their drilling permits suspended. "Serious wrongdoing" will be referred to the Department of Justice for prosecution.
Bromwich further states that BOEMRE and the IRU will investigate potential conflicts of interest, will conduct more thorough reviews of applications for drilling permits and more thorough environmental analyses, and will increase research of spill control. Bromwich concludes with the caveat that his efforts "while potentially aggressive, will not be hasty."
Bromwich's statements are certainly not comforting to BP, TransOcean or the other companies with ties to the Deepwater Horizon disaster. However, only time will tell if Bromwich's and BOEMRE's efforts are successful in bringing about any reform to the offshore drilling industry, especially in the face of a risk of increased energy prices. On June 30, 2010, Secretary Salazar issued a press release announcing that the Department of the Interior is postponing public scope meetings on the Environmental Impact Statement (EIS) for the 2012–2017 Outer Continental Shelf (OCS) Oil and Gas Leasing Program until later this year. The release states that, while the Department is committed to "strong" reforms in the oil and gas industry, "[o]ffshore oil and gas production will remain an important component of our nation’s energy portfolio as we transition to a clean energy economy." With a "clean energy economy" being a distant dream at this point, it is uncertain how much increased regulation the Adminstration is willing to heap upon the industry.
As the oil spill from the Deepwater Horizon well in the Gulf of Mexico turns two months old, an article in Digital Journal details how the government considered bringing criminal charges against British Petroleum and its executives during the Bush Administration. The article quotes Scott West, a former Special Agent in Charge for the Environmental Protection Agency. West was in charge of investigating the rupture of a pipeline at Prudhoe Bay, Alaska, which occurred in March 2006. The rupture went undetected for nearly a week due to malfunctions in monitoring equipment, and spilled more than a quarter of a million gallons of crude oil. The rupture was reportedly the size of a pencil eraser and was caused by corrosion. BP shut down five oil processing centers for nearly two weeks, causing a rise in gas prices.
EPA's criminal division, the Federal Bureau of Investigation and the Department of Justice spent thousands of hours investigating the rupture, and supposedly was considering criminal charges against BP and certain of its executives for ignoring warnings from employees about the condition of pipeline and the monitoring equipment.
However, the article claims that the DOJ allegedly "killed" the investigation in August of 2007. BP pled guilty to a misdemeanor violation of the Clean Water Act and paid a $20 million fine. BP also entered into a deferred prosecution agreement with the government in relation to an explosion at a refinery in Texas City which resulted in 15 deaths.
As reported in the Wall Street Journal and virtually everywhere else, Morgan Stanley has joined Goldman Sachs as the latest target of the federal government's criminal investigation of financial firms relating to the financial crisis which began in 2007, under the government's theory of criminality of failing to disclose to investors that the firms were "betting" on the failure of certain collateralized debt obligations, or CDOs. According to Federal prosecutors, Morgan Stanley designed CDOs, while at the same time Morgan Stanley's trading desk allegedly placed bets that their value would decrease. Similar to the government's investigation of Goldman Sachs, the investigation, headed by the U.S. Attorney's Office for the Southern District of New York, is focusing on whether Morgan Stanley made proper representations to investors about its role.
The investigation has focused in particular on two investments created in 2006, named after former U.S. Presidents James Buchanan and Andrew Jackson, known as the "Dead Presidents" deals by traders. Each deal issued approximately $200 million in bonds. Morgan Stanley did not market the deals to customers--the Jackson deal was underwritten and marketed by Citigroup and the Buchanan deal was underwritten and marketed by UBS AG. Citigroup has stated that it is cooperating with the government in the investigation.
However, as in the investigation of Goldman, prosecutors face an uphill climb against numerous obstacles and defenses. Morgan Stanley did make money on its "Dead Presidents" deals, however it lost $9 billion overall on mortgage-backed securities in 2007. Morgan Stanley has informed the media that it did not mislead investors, and that it has examined the "Dead Presidents" transactions and that it does not believe that the investigation has any substance. The allegations are based on documents which Morgan Stanley voluntarily provided to the U.S. Securities and Exchange Commission in response to a subpoena.
Both the Goldman and Morgan Stanley criminal investigations were the result of a civil fraud investigation of a dozen Wall Street firms begun by the SEC in 2009. Analysts have stated that all Wall Street investment banks have been receiving subpoenas about CDOs and CDO marketing. The SEC has been inquiring with firms regarding whether any of their clients were betting against CDOs.
Today's National Law Journal has another article relating to electronically stored information in criminal investigations. For large organizations, subpoenas or requests for information by the government in a criminal investigation are always an unwelcome development, frequently as much because of the potential massive expenditures of time, money and resources they entail as because of their criminal nature. They must, however, be taken with the utmost seriousness, with extreme care to safeguard the rights of the corporation and individuals, and to guard against possible criminal exposure from the very act of responding itself.
The author advises corporations, on becoming aware of a criminal investigation, to issue a notice regarding preservation of evidence to every employee in the corporation, or in relevant offices or departments. Ideally, corporations should already have a comprehensive and thorough document and electronic information retention policy in preparation for any possible demands for information in not only criminal, but civil matters as well. Companies are also advised to take affirmative steps to gather and preserve evidence which might be relevant to a criminal probe upon learning of an investigation or inquiry.
The article also points out the fact that preservation of potential evidence is critical given the danger of obstruction of justice charges by the government. In numerous instances, the government has indicted on charges of obstructing an investigation alone, and not for any alleged underlying crime. The author also notes possible use by the government of any improper handling of evidence as evidence of the corporation's or employees' "consciousness of guilt."
The article recommends forensic management of the hard drives of relevant officers and employees.However, corporations must take care to carefully review the material on the hard drives for any privileged material, at the risk of possible waiver of privileges through disclosure to the government. The author stresses that, even after conducting their own review of the information on hard drives, companies should negotiate an agreement with the government as to a protocol which will ensure that the government's forensic review does not include reviewing privileged information before counsel for the corporation has an opportunity to review and identify the information as privileged. The government and the corporation may enter into a confidentiality agreement under Federal Rule of Evidence 502(e) to guard against possible waiver.
The Securities and Exchange Commission announced this week a new initiative to encourage private individuals and corporations to cooperate in SEC investigations and enforcement. The SEC will revise its Enforcement Division's enforcement manual to add a new section entitled "Fostering Cooperation." The section will allow SEC investigators to use the following "tools":
Cooperation Agreements — Formal written agreements in which the Enforcement Division agrees to recommend to the Commission that a cooperator receive credit for cooperating in investigations or related enforcement actions if the cooperator provides substantial assistance such as full and truthful information and testimony.
Deferred Prosecution Agreements — Formal written agreements in which the Commission agrees to forego an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and to comply with express prohibitions and undertakings during a period of deferred prosecution.
Non-prosecution Agreements — Formal written agreements, entered into under limited and appropriate circumstances, in which the Commission agrees not to pursue an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and comply with express undertakings.
The proposed changes also streamline the process for requesting immunity from the Justice Department for witnesses assisting in SEC investigations and enforcement actions. They futhermore set forth considerations for evaluating cooperation by individuals, including:
The assistance provided by the cooperating individual.
The importance of the underlying matter in which the individual cooperated.
The societal interest in ensuring the individual is held accountable for his or her misconduct.
The appropriateness of cooperation credit based upon the risk profile of the cooperating individual.
As the announcement recognizes, the "tools" are tools which the Department of Justice has long employed to secure cooperation and obtain information. Professor Ellen S. Podgor of Stetson University College of Law and the White Collar Crime Prof Blog has listed concerns regarding the SEC's new cooperation criteria.
As reported by Law.com, Bruce Karatz, Chief Executive Officers of KB Home, a home construction corporation based in Los Angeles, California, was indicted in the action of U.S. v. Nicholas, 2:09-cr-00203-ODW (C.D.Ca. 2009), on 20 counts of fraud for defrauding the company and its shareholders of millions of dollars in undisclosed backdated stock option over a period of seven years, and concealing the fraud from KB Home's directors, compensation committee and shareholders. Karatz's trial in the U.S. District Court for the Central District of California is scheduled to begin on February 23.
Karatz's attorneys have requested a hearing regarding whether prosecutorial misconduct has tainted the government's case against Karatz. Karatz contends that two witnesses for the government--James Johnson, former Chairman of the Board of Directors' Compensation Committee for KB Home, and Gary Ray, former Vice President of Human Resources--initially believed that the stock options grant practice was lawful, but changed their position following contacts with the prosecution. Karatz's lawyers want to examine Johnson regarding why he denied allegedly defending KB Home's option granting process during an internal investigation by the company's outside counsel in his statements to prosecutors.
The defense also wants to question Ray, who has pled guilty to obstruction of justice and is cooperating with the government, regarding why he had allegedly previously maintained that the process was "lawful and proper." Following is a link to
Karatz's motion is based on an order in December by U.S. District Judge Cormac Carney in the action of U.S. v. Nicholas, SACR 08-00139 CJC (C.D.Ca. 2008), another backdating case, in which the Court dismissed the government's indictment against co-founder of Broadcom Corp., Henry Nicholas, and former Broadcom Chief Financial Officer William Ruehle, blasting the prosecution for "distorting the truth-finding process" by intimidating and improperly influencing key witnesses. Karatz also relies on the Ninth Circuit Court of Appeals' overturning last August of the conviction of former Chief Executive Officer for Brocade Communication Systems, Inc., Gregory Reyes, for backdating based on false statements by the prosecution in closing arguments that Brocade's finance department didn't know about backdating. A hearing on Karatz's motion has been scheduled for February 8.
The Federal Government is spending billions on bailouts and stimulus in order to resuscitate the economy. This money, however, does not come without strings, both in the non-criminal and the criminal sphere. Following is a survey of the potential criminal consequences of misuse of monies issued by the Government under the Troubled Asset Relief Program (TARP) , 12 U.S.C. § 5201 et seq., part of the Emergency Economic Stabilization Act (EESA) of 2008.
President Georgia W. Bush signed the EESA and TARP into law on October 3, 2008. As of the end of March, the Treasury Department has disbursed $303.4 billion out of $700 billion in TARP funds, according to a Government Accountability Office (GAO) status report. Most of the monies—$198 billion—have gone to TARP’s Capital Purchase Program (CPP), the preferred stock and warrant purchase program. About $40 billion has been given to failing institutions, and approximately the same amount has been used for targeted investment programs. $24.5 billion has been given to the auto industry.
The central TARP provision, 12 U.S.C. § 5211, governing purchases of troubled assets, authorizes the Secretary of the of Treasury “to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary…” 12 U.S.C. § 5211(a)(1). Section 5211 further directs the Secretary to prevent unjust enrichment of financial institutions in making purchases. 12 U.S.C. § 5211(e).
The Comptroller General is responsible for oversight of TARP. 12 U.S.C. § 5226(a). The Comptroller General, through the GAO, is also charged with auditing programs, activities, receipts, expenditures and financial transactions under TARP. 12 U.S.C. § 5226(b).
12 U.S.C. § 5234 provides that “Any Federal financial regulatory agency shall cooperate with the Federal Bureau of Investigation and other law enforcement agencies investigating fraud, misrepresentation, and malfeasance with respect to development, advertising, and sale of financial products.” 12 U.S.C. § 5234.
As related by an article at NewGeography.com, TARP creates three monitoring entities, one of which has the authority to prosecute crimes relating to TARP, the Special Inspector General (SIGTARP). SIGTARP is headed by Special Inspector General in charge, Neil Barofsky, dubbed the "TARP Cop." SIGTARP has set up a hotline for citizens to report fraud or “evidence of violations of criminal and civil laws in connection with TARP” and had received 200 tips and launched 20 criminal investigations by the end of April. SIGTARP has released a 250-page report on TARP to educate the public http://sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf.
In February, SIGTARP began issuing all financial insititutions receiving TARP funds audit letters requesting, within 30 days:
A narrative of (a) the recipient's anticipated use of TARPfunds; (b) whether the TARP funds were segregated from other institutionalfunds; (c) the recipient's actual use of TARP funds to date; and (d) the recipient's expected use of unspent TARP funds.
The recipient’s specific plans for addressing executive compensation, and the status of implementation of any plans.
The audit letters further request supporting documentation and requires that the response be:
[B]e signed by a duly authorized senior executive officer of your company, including a statement certifying the accuracy of all statements, representations, and supporting information provided, subject to the requirements and penalties set forth in Title 18, United States Code, Section 1001 [the Federal false statement criminal provision].
SIGTARP subsequently issued a Frequently Asked Questions (FAQ) sheet to TARP fund recipients. Earlier this year Barofsky testified before the Senate Finance Committee that the massive amounts of TARP money "will inevitably attract those seeking to profit criminally" and that SIGTARP was "looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud." Among SIGTARP's current investigations is insurance giant AIG.
On March 11, 2009, FBI Director Robert Muller stated before the the Senate Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies:
With the passage of recent legislation that includes billions of dollars being infused into the U.S. economy, including the Housing and Economic Recovery Act (HERA), the Emergency Economic Stabilization Act of 2008, the Troubled Asset Relief Program (TARP), and other asset relief programs, we anticipate an increase in fraud. In addition to the agents that are currently on board, the FBI’s 2010 budget includes 143 new positions (50 special agents and 93 professional staff) and $25.5 million to assist the FBI in combating mortgage and corporate fraud.
Only one investigation has resulted in charges relating to abuse of TARP funds so far. In April, a felony information was filed in the U.S. District Court for the Middle District of Tennessee, charging Gordon B. Grigg, a financial advisor in Franklin, Tennessee, with four counts of mail fraud and four counts of wire fraud. Grigg is charged with having allegedly embezzled more than $10,922,000 in client investment funds in a Ponzi-type scheme. He is alleged to have conducted a scheme since 1996 to defraud investors by inducing them to invest in pooled-client purchases of fixed-term certificates of deposit, private placements, corporate notes and debentures in the name of Grigg’s company, ProTrust. Grigg allegedly falsely told investors that he personally managed the accounts, that he had negotiated partnerships and special business relationships with several of the nation’s most successful investment firms, and that the investments were safe and would generate and sustain high rates of annualized returns. He is also charged with allegedly falsely representing that he had already committed more than $5,000,000 in Pro Trust pooled client funds towards purchase of TARP guaranteed debt as part of private placement partnership. The Government alleges that Grigg never invested the investors’ monies, but instead used the monies to disburse false “earnings” and “returns of deposit” to clients who cashed out their ProTrust investment accounts, and for his own personal benefit and expenses.
In order to conceal the scheme, Grigg fabricated documents, including correspondence, invoices and account statements, and used counterfeit corporate letterhead and the forged signatures of national investment firm executives. From 1990 to 2009, Grigg solicited approximately sixty investors to invest approximately $10,922,661, of which, approximately $6.6 million was returned to investors who either cashed out or closed their Pro Trust investment accounts.
Special Inspector General Barofsky announced in the press release by the U.S. Attorney’s Office for the Middle District of Tennessee on the charges against Grigg:
“The filing of charges today against Gordon Grigg, the first criminal charges brought in connection with a SIGTARP investigation, marks a significant milestone in the evolution of SIGTARP and of TARP oversight generally.”
“Today, SIGTARP, the U.S. Attorney’s Office for the Middle District of Tennessee, the SEC, and the FBI, along with our state and local partners, serve notice on all who might try to profit criminally from the current national crisis that the United States Government stands ready to detect, investigate and punish any and all who use the TARP program to commit fraud. This is true irrespective of whether the victim is the United States Government itself, unsuspecting investors, or struggling home owners.”
With hundreds of billions in TARP funds already disbursed and hundreds of billions remaining to be disbursed, and great public concern over how such staggering amounts of money are being spent and used, TARP-related criminal investigations and prosecutions can only increase. Recipients of TARP funds must be especially careful in using the funds for their intended purposes and in scrupulously accounting for all uses of the funds. It is furthermore of utmost importance that recipients exercise extreme caution and thoroughness in responding to audit inquiries from SIGTARP, including through the retention of competent and proactive legal counsel.
