INVESTOR FRAUD SUMMIT IN CONNECTICUT ARMS CONSUMERS WITH INFORMATION TO PROTECT RETIREMENT FUNDS AND LIFE SAVINGS
WASHINGTON - Attorney General Eric Holder, Connecticut U.S. Attorney David Fein, and the Department of Justice’s U.S. Attorney’s Offices, together with the department’s Criminal and Civil Divisions, representatives from the FBI, Securities and Exchange Commission (SEC), U.S. Commodity Futures Trading Commission (CFTC), U.S. Bankruptcy Trustees, the Financial Industry Regulatory Authority, the AARP and the Better Business Bureau are holding investor fraud summits across the country to help consumers protect their hard-earned money from fraud.
The first of the six summits was hosted today by District of Connecticut U.S. Attorney David Fein in Stamford, Conn., at the University of Connecticut – Stamford Campus.
“Investor fraud crimes can erode faith in our financial markets, threaten our nation’s ongoing economic recovery, and undermine the fabric of our communities,” said Attorney General Eric Holder. “That's why protecting the American people from fraud is a top priority for today's Justice Department. And through the Investor Fraud Summits we announce today, we'll take our anti-fraud efforts to a new level – by raising awareness about these devastating offenses, educating consumers on how to report suspected fraud schemes, and empowering members of the public to fight back.”
Today’s summit also featured U.S. Attorney Paul Fishman of New Jersey, U.S. Attorney Loretta Lynch for the Eastern District of New York, U.S. Attorney Carmen Ortiz of Massachusetts, and Deputy U.S. Attorney Richard Zabel for the Southern District of New York, as well as SEC Deputy Enforcement Director George Canellos and CFTC Enforcement Director David Meister. Federal, state and local law enforcement officials and consumer protection experts educated an audience of nearly 200 people on protecting their investments and identifying instances of fraud.
“The FBI has reported an unprecedented rise in investment fraud schemes involving thousands of victims and staggering losses,” said David B. Fein, U.S. Attorney for the District of Connecticut. “Behind the statistics are individual cases of betrayal that are tragic. Cases of lost savings and dreams, of bankruptcies, forced moves and foreclosures, of seniors losing their hard-earned retirement savings having to search for jobs to survive, of medical care no longer affordable. This summit has convened leaders of the enforcement and regulatory community, as well as private citizen fraud fighters, all of whom are committed to educating the public and helping prevent investor fraud before it happens.”
Since 2011, the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that more than 800 defendants have been charged, tried, pleaded or sentenced in more than 500 federal prosecutions involving investor fraud. The total reported amount swindled from victims for this time period tops more than $20 billion. This staggering number includes cases where the total amount victims lost range from tens of thousands of dollars to hundreds of millions, and, in some cases, billions.
Although the defendants in these federal prosecutions used a variety of tactics and schemes, they often took the same approach, guaranteeing high returns and, in many instances, providing falsified investment documents to victims. As a result, those victims lost retirement savings, military survivor benefits, family death settlements, and money set aside for college tuition and mortgage payments. While the Justice Department has already obtained prison sentences for many of these scammers, including one sentence of up to 50 years, for many of the more 100,000 victims the damage to their families is irreparable.
Since 2011, the SEC, an FFETF partner agency, has charged 887 individuals and entities in 359 actions involving retail investor fraud. Nearly $9.7 billion have been alleged lost by over 1.2 million investors in those cases.
“We’re constantly adapting our enforcement methods because we know fraudsters are constantly adapting their schemes,” said George S. Canellos, Deputy Director of the SEC’s Division of Enforcement, who spoke at today’s summit. “Through a new whistleblower program, our extensive investor education efforts, and our creative use of technology, we’re making it more difficult for fraudsters to launch their schemes and make a clean getaway.”
Following remarks by U.S. Attorney Fein and SEC Deputy Director Canellos, the summit featured panel discussions, including “Prosecuting Investor Fraud in the Northeast Region,” “Investor Fraud Case Studies: Regulatory, Civil and Criminal Actions,” and “Investor Vigilance: Red Flags and Warning Signs.” Summit attendees also heard remarks by Professor Daylian Cain of the Yale School of Management, whose research focuses on behavioral business ethics and judgment and decision-making, and a conversation with an investor fraud victim led by Denis McInerney, Chief of the Fraud Section for the Justice Department’s Criminal Division.
Summit participants included senior officials from the Department of Justice, the U.S. Attorney’s Offices for Connecticut, Massachusetts, New Jersey, and Eastern and Southern Districts of New York, as well as the FBI, SEC, CFTC, U.S. Bankruptcy Trustee, Better Business Bureau, AARP and FINRA Investor Education Foundation.
In addition to the investor fraud summits across the country, in the coming weeks the Victims’ Rights Committee of the Financial Fraud Enforcement Task Force will host an unprecedented event, in partnership with the Justice Department, the Certified Financial Planner Board and the Foundation for Financial Planning, to offer free financial consulting services to 8,000 victims of an investment fraud scheme that was indicted in Chicago. In this case, the defendant falsely guaranteed high rates of return in a Ponzi scheme that caused the loss of more than $300 million of investors’ funds. Many of the victims were retirees who found the promised high rates of return, coupled with other false promises, an attractive investment alternative for their individual retirement account (IRA) and other retirement-type investments.
Future summits will be held in the following cities:
October 4 Nashville, TN
October 9 San Francisco, CA
October 10 Denver, CO
October 11 Cleveland, OH
October 12 Miami, FL
If you think you may be a victim of investor fraud, please call your local FBI office for assistance. To find your local office, please visit: www.fbi.gov/contact-us/field.
For tips on how to spot investor scams and for more information on investor fraud in general, please visit: www.stopfraud.gov.
President Obama established the interagency Financial Fraud Enforcement Task Force (FFETF) to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Eric Holder, 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. For more information about the FFETF, please visit: www.stopfraud.gov .
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