Justin Anand, 40, Deputy Chief of Economic Crimes at the U.S. Attorney’s Office in the Northern District of Georgia, is leaving that office in June to become the newest U.S. Magistrate Judge in that district. Justin distinguished himself during his 8 year tenure at the U.S. Attorney’s Office in Atlanta with his hard work and professionalism.
Justin graduated from Harvard Law School in 1998, clerked for a district court judge in the Southern District of New York and then spent four years working as a litigation associate at a large corporate firm in New York City.
Justin has been at the forefront of many of the major prosecutions conducted by the Atlanta USAO over the last few years and is well regarded by colleagues, defense counsel and of course, the judiciary. His efforts in the U.S. Attorney’s Office in Atlanta will be missed.
As reported by ESPN (and virtually every other media outlet), United States District Judge Reggie Walton of the U.S. District Court for the District of Columbia granted former New York Yankees pitcher Roger Clemens' request for a mistrial in his prosecution on three counts of making false statements, two counts of perjury, and one count of obstruction for his testimony relating to steroid use before the House Committee on Oversight and Government Reform in February of 2008.
The defense request for a mistrial came after prosecutors showed the jury alleged video evidence of Maryland Representative and Committee member Elijah Cummings referencing statements by former Yankees pitcher and Clemens' friend Andy Pettitte that he had told his wife, Laura Pettitte, that Clements had allegedly confessed in 1999 or 2000 to using human growth hormone. The Court had ruled before trial that this evidence was to be excluded from the trial on the ground that Pettitte's wife's statement did not involve direct knowledge of what Clemens had said.
In granting the mistrial, Judge Walton opined that Clemens could not get a fair trial as a result of the introduction of the alleged statements, and apologized to the jury for the waste of their time. The Judge had earlier criticized the prosecution for stating, during opening statements, that Pettitte and former Yankee second baseman, Chuck Knoblauch, and relief pitcher, Mike Stanton, had also allegedly used human growth hormone.
Judge Walton has scheduled a hearing on September 2nd to determine if there will be a new trial of Clemens. It appears, however, that a second trial of Clemens will not be barred by double jeopardy. As the United States Court of Appeals for the District of Columbia Circuit and other courts have held, "when a mistrial is declared with the consent of the defendant or upon his motion, it is 'ordinarily assumed to remove any barrier to reprosecution, even if the defendant's motion is necessitated by prosecutorial or judicial error.'” Lee-Thomas v. U.S., 921 A.2d 773, 775-76 (D.C. Cir. 2007) (quoting Carter v. U.S., 497 A.2d 438, 441 n. 4 (D.C. 1985); citing Anderson v. U.S., 481 A.2d 1299, 1300 (D.C. 1984)); U.S. v. Jorn, 400 U.S. 470, 485, 91 S.Ct. 547 (1971)).
Salvatore J. Piemonte, a former prosecutor for the Onondage County District Attorney's Office in Syracuse, New York, for seven years, and former a local judge, was indicted last November in the U.S. District Court for the Northern District of New York for allegedly aiding and abetting the sale of marijuana, according to Syracuse.com. The government charged that Mr. Piemonte allegedly accepted a large sum of money from drug dealers in exchange for providing them with false documentation. The documentation allegedly falsely represented that a courier for the drug dealers had been arrested, and the drug dealers purportedly intended to show the documentation to their supplier in Canada in a scheme to pocket the proceeds from their drug sales.
Happily, yesterday, a jury acquitted Mr. Piemonte on the charges following trial. His defense centered on a frequent theme in such prosecutions--that the drug dealer witnesses for the government had fabricated the allegations in order to get their sentences reduced. The Blog congratulates Mr. Piemonte and his counsel on the victory.
Two years ago, Western Titanium was indicted in the U.S. District Court for the Southern District of California on 19 counts, including mail fraud and conspiracy, for allegedly selling substandard titanium to the government to use in aerospace equipment and engine mounts for military jets and allegedly falsely certifying that the metal met technical specifications, according to an article on San Diego Signon. Also indicted were Western Titanium's CEO, Daniel Schroder, and three other current and former executives. The "titanic" prosecution involved some 900 docket entries, extensive pretrial hearings and finally an 11 week trial.
However, the trial terminated last week with Western Titanium pleading guilty to a single count of mail fraud for causing an alleged loss of $51,350 and the charges against the executives being dismissed under deferred prosecution agreements. The reason for the abrupt end was the defense's accusations that the prosecution had withheld thousands of pages of documents favorable to the defense showing that the titanium was not substandard. Counsel for the defendants claimed that the government did not disclose the materials until approximately six weeks into the trial in an act of intentional prosecutorial misconduct.
The U.S. Attorney's Office has denied that the prosecution acted in bad faith.
A Judge in Oshawa, Ontario, a suburb of Toronto, acquitted six former executive of Royal Group Technologies on Friday, according to the Toronto Star. Royal Group is a manufacturer of plastic materials for the housing construction industry. The company is a subsidiary of Georgia Gulf Corporation, an Atlanta-based, manufacturer and marketer of chlorovinyls and aromatics, which purchased Royal Group in 2006 for $1.7 billion.
The executives, including Royal Group's founder, Vic De Zen, president Doug Dunsmuir, former chief financial officers Ron Goegan and Gary Brown, ex vice-president Luciano (Lu) Galasso and accounting director Gordon Brocklehurst, were charged with fraud in 2006 relating to a purchase of a property in Vaughan, Ontario, in 1998 for $20.5 million by a company tied to the defendants, which was then re-sold on the same day to Royal Group for $27.4 million. The defendants were also charged over their receipt of more than $2 million in bonuses for the sale of a subsidiary of Royal Group in 2002. The defendants were charged following an investigation by the Royal Canadian Mounted Police's Market Enforcement Team, designed to combat white collar crime.
The defendants' counsel argued that the defendants satisfied all disclosure requirements, and that the bonuses appeared in Royal Group's annual circular. Mr. Justice Richard Blouin acquitted the defendants immediately after hearing final oral arguments. The trial ran a total of 49 days, beginning last April. Canada's Federal Public Prosecution Service will determine whether or not to appeal the Judge's decision.
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.
The Federal government has massively ramped up enforcement against domestic and foreign corporations for violation of the Foreign Corrupt Practices Act (FCPA), essentially an anti-bribery or kickback statute applicable to overseas transactions. The latest target to fall to FCPA allegations, according to an SEC press release, is German automotive giant Daimler AG. The Securities and Exchange Commission had alleged that Daimler allegedly paid bribes to foreign government officials to secure business in Eastern Europe, Africa and Asia. Last Thursday, the SEC announced that Daimler had entered into a settlement agreement with the SEC in which Daimler agreed to pay $91.4 million in disgorgement. Daimler also agreed to pay $93.6 million in fines to settle alleged criminal charges which were announced by the Department of Justice last week.
The SEC complaint, filed on March 22, charges that Daimler allegedly paid $56 million in improper payments, involving more than 200 transactions in 22 countries, over a period of 10 years. The government contends that Daimler allegedly earned $1.9 billion in revenue and at least $90 million in illegal profits as a result of the payments. Included in the government's allegations are allegations that Daimler paid kickbacks to Iraqi officials in relation to sales of vehicles and spare parts to Iraq under the United Nations Oil for Food Program. The complaint also alleges that Daimler kept ledger accounts of credit balances for the benefit of foreign government officials.
Daimler allegedly made bribes or kickbacks through several methods. Amounts of alleged discounts or rebates on sales contracts were allegedly kicked back to foreign officials. Daimler also alleged used false sales intermediaries, corrupt business partners and cash desks to funnel bribes to officials. The government alleges that Daimler's management sanctioned the practices.
Daimler has issued a press release relating to the settlement. The company notes that it cooperated with SEC and DOJ during their investigations, entering into a consent agreement with the SEC and a deferred prosecution agreement with DOJ. The release also notes that Daimler North East Asia Ltd., also entered into a deferred prosecution agreement with DOJ and Mercedes-Benz Russia SAO and Daimler Export und Trade Finance GmbH pled guilty to charges of violations of the FCPA in the U.S. District Court for the District of Columbia.
Daimler also states that it has taken steps to ensure that its future conduct will comply with all applicable laws and Daimler's "Integrity Code." Daimler states that under its deferred prosecution agreements, it must maintain a comprehensive compliance program and not commit any further violations of the FCPA for two years. If Daimler successfully complies with these terms, the charges against the corporation and its subsidiaries will be dismissed.
As reported by the Wall Street Journal, the U.S. Department of Justice and Wachovia Bank have entered into a $160 million settlement and deferred prosecution agreement to settle the DOJ's allegations that Wachovia enabled drug traffickers to launder drug money through transfers of money from Mexican currency exchange houses to the bank. The bank has agreed to forfeit $110 million to the government and to pay an additional $50 million in fines.
The government alleges that Wachovia failed to use proper money laundering detection and allegedly processed billions in transactions. Currency exchange houses, or casas de cambio, are primarily used as a legitimate means for immigrants to send money to relatives abroad, but authorities have stated that the houses are also used by drug traffickers to launder drug money. The government alleged that Wachovia laundered at least $110 million in drug proceeds, some of which was used to purchase aircraft for use in drug trafficking.
Wachovia released a statement in which the company stated that it had made significant enhancements to its anti-money laundering and Bank Secrecy Act compliance program and its mechanisms for detecting wrongdoing. The bank has spent $42 million to improve its compliance program. On the other hand, the U.S. Attorney's Office for the Southern District of Florida has stated that Wachovia "blatantly" disregarded banking laws.
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 the Wall Street Journal and DOJ, UTStarcom Inc., a California-based global communications corporation which designs, manufactures and sells network equipment and handsets has agreed to pay $1.5 million in penalties to the government for alleged acts of bribery in the People’s Republic of China in violation of the Foreign Corrupt Practices Act (FCPA). The company simultaneously reached a settlement with the Securities and Exchange Commission over the same conduct in which it agreed to pay an additional $1.5 million.
UTStarcom entered an agreement with the government--in which UTStarcom neither admitted nor denied the allegations--which states that, between 2002 and 2007, the company's employees and agents allegedly arranged and paid for employees of Chinese state-owned telecommunications companies and UTStarcom customers to travel to popular tourist destinations in the U.S., including New York City, Las Vegas and Hawaii, purportedly to participate in training at UTStarcom facilities. However, UTStarcom purportedly had no facilities in the locations and conducted no training. UTStarcom recorded the trips as alleged "training" expenses. The government charged that the trips were for the alleged purpose of securing telecommunications contracts in China. The value of the trips and other gifts to foreign employees was alleged to be approximately $7 million.
The SEC has also alleged that UTStarcom obtained work visas for employees of its foreign customers to work in the U.S. and paid the individuals salaries and benefits although the individuals allegedly did no work. It claims that UTStarcom allegedly falsely accounted for payments to the individuals as employee compensation and created false annual performance reviews for personnel files of the individuals.
In addition to paying penalties, the agreement requires UTStarcom to implement various internal controls and to cooperate fully with the Department of Justice. The agreement also recognizes UTStarcom's voluntary disclosures to, and cooperation with, the government, and the company's efforts to correct the conduct. DOJ has agreed not to prosecute UTStarcom or its subsidiaries in exchange for its cooperation and its compliance with the agreement.
UTStarcom's focus has been Asian markets, in particular China. The company does business in China through UTStarcom China Co. Ltd., a wholly-owned subsidiary.
The Federal government is building criminal cases against more than 150 U.S. citizens holding overseas bank accounts with Union Bank of Switzerland (UBS), as reported by Reutersand the Banking Times. The criminal investigations are part of a Federal crackdown on tax evasion by means of overseas accounts and were facilitated by a settlement between U.S. and Swiss authorities earlier this month in which Switzerland agreed to disclose the identities of some 5,000 U.S. citizen account holders, contrary to Switzerland's longstanding tradition of banking secrecy. UBS has already settled charges that it assisted U.S. customers in evading taxes for $780 million.
As the IRS states on its website, under the agreement, the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts. UBS will give account holders notice if information relating to the acocunt holders is included in the IRS treaty request. "Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations." "The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action."
Four U.S. clients of UBS, three in Florida and one in California, are already being prosecuted based on the information provided by UBS. And the number of investigations and prosecutions are expected to grow. In a press release,Tax Commissioner Doug Shulman claimed that the U.S./Swiss agreement "puts in place an apparatus for the IRS to obtain information on thousands of offshore accounts. Further the Swiss government is prepared to work with us regarding similar U.S. requests, if any, involving other financial institutions." U.S. and Swiss authorities are reportedly negotiating for the disclosure of thousands of additional names of U.S. account holders. Commissioner Shulman stated that international tax evasion is a "top priority."
Commissioner Shulman stated that the IRS has set a "voluntary disclosure" deadline of September 23, 2009, for UBS customers with unreported, offshore income, and advised persons to contact a tax professional. Customers receiving notification from the bank may come forward under the voluntary disclosure program--however "once the Swiss government sends [the IRS] the name, all bets are off." UBS customers with any reason for concern should strongly consider promptly contacting tax and legal professionals.
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.
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