Feds, State Team Up In Virginia To Short-Circuit White-Collar Crime Wave; ‘All Too Clear’ Problem National In Scope, Top Federal Prosecutor Says

Neil H. MacBride

Calling it an “unprecedented partnership” brought about by a financial-fraud problem that is national in scope, federal and state officials today announced the creation of the Virginia Financial and Securities Fraud Task Force.

The Virginia Task Force, which is part of President Obama’s interagency Financial Fraud Enforcement Task Force, brings together criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia.

“It has become all too clear that the complex financial crimes we confront are national in scope,” said U.S. Attorney Neil H. MacBride of the Eastern District of Virginia. “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.”

Virginia’s Eastern District encompasses nearly 5 million residents in cities such as Alexandria, Richmond, Norfolk, Newport News and other communities.

Financial crime is jumping across local and state borders, a top SEC official said.

“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.”

America’s economic future must be safeguarded, a veteran investigator said.

“Financial fraud is a threat to economic integrity and can harm individual investors,” said Stephen Obie, acting director of enforcement for the CFTC.

A centerpiece of the strategy is “to root out unscrupulous financial activity and protect market participants,” Obie said.

Virginia’s attorney general agreed.

“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 Ken 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.”

Another part of the strategy is to create a force-multiplier to weed out fraudsters and send a message that they’ll get caught, a veteran FBI agent said.

“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 top postal official in North Carolina’s largest city said he’s on board the effort.

“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.”

Tax criminals and money-launderers also will be targeted, said the chief tax-fraud investigator in the District of Columbia.

“Financial-fraud crimes create huge losses of tax revenue,” said C. Andre’ Martin, special agent in charge of the IRS Criminal Investigations Division. “This type of fraud threatens the integrity of our tax system and erodes the financial health of our communities. 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.”

State securities regulators have a key role on the Task Force.

“The State Corporation Commission [SCC] 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 Philip R. “Duke” de Haas, SCC deputy general counsel—Financial Services.

Officials said the Task Force will build on successes such as the prosecution of Edward Okun, sentenced to 100 years in prison for a $132 million fraud scheme.

In cases in which it is appropriate for civil regulators to share information with criminal investigators, such information will be shared, officials said.

The task force “is focused on facilitating the exchange of information on specific investigations,” officials said. “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.

President Obama formed the interagency Financial Fraud Task Force in November.