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honest services fraud

PostPosted: Mon Aug 03, 2009 10:42 am
by admin
McCarty case: What is honest services fraud?

Palm Beach Post Staff Report

Thursday, January 08, 2009

County Commissioner Mary McCarty said in her resignation letter that she would plead guilty to "committing an honest services fraud."

What is the honest services law? A 28-word addendum to the federal mail and wire fraud law enacted in 1988 that has become a popular tool for federal prosecutors in public corruption and white-collar crimes cases.

McCarty scandal
PB County commissioner is the fifth local political leader in the past three years to head to prison for abusing public office.

Who has been convicted with it? Media tycoon Conrad Black, Enron Corp. Chief Executive Officer Jeffrey Skilling lobbyist Jack Abramoff, U.S. Reps. Randy "Duke" Cunningham and Bob Ney, and Palm Beach County Commissioners Masilotti and Warren Newell.

What does it say? In short it defines as illegal a "scheme or artifice to deprive another of the intangible right of honest services."

Any complaints about it? Defense lawyers say it is unconstitutionally vague. It has not been struck down, but the 2nd Circuit Court of Appeals in New York wrote that "the plain meaning of 'honest services' ... simply provides no clue to the public or the courts as to what conduct is prohibited under the statute."

(advocate comments.........sure wish we had a Securities Crime Unit. They would probably be versed in this type of crime and be able to apply consequences to politicians and regulators who sell out the public interest for money or political gain.)

Re: Securities Industry Crime Unit

PostPosted: Sat Jul 25, 2009 9:29 am
by admin
By the way, I "imagine" that the cost of such a unit could be totally funded by a fraction of the "proceeds of crime" collected from the crooks who would fuel this unit.

Imagine, a fully functioning police unit, with little or no cost to anyone except the crooks. Kind of like Miami vice without the babes, the boats, the ferarris, and the good looking investigators........although I have been called "Tubbs" at times.

Re: Securities Industry Crime Unit

PostPosted: Sat Jul 25, 2009 9:26 am
by admin
Jones case brings calls for national 'securities crime' unit

Financial analyst Urquhart; 'Only police can administer criminal code'


At the Holiday Inn in Pointe Claire on Friday, former clients of missing money manager Earl Jones were given advice on how to proceed.
Photograph by: DAVE SIDAWAY, THE GAZETTE, The Gazette
The carnage left by fugitive (and unlicensed) money manager Earl Jones underscores again the need for a specialized federal-provincial "securities crime" unit in Canada to investigate and act on clients' criminal complaints, financial commentator Diane Urquhart says.
It's too much to expect regulatory agencies like Quebec's Autorité des marchés financiers to ferret out suspected fraud, a criminal-code offence, said Urquhart, a former managing director of research for Scotia Capital who now works as an independent financial analyst in Mississauga, Ont. "Only police can administer the criminal code."
The RCMP actually has a capital-markets unit called the Integrated Market Enforcement Team, but Urquhart isn't impressed. "There seems to be a lack of public accountability there, with few securities cases investigated and prosecution taking over 10 years to complete."
The national "securities crime" unit she envisions would designate and involve local police in the investigations.
Although she favours a national securities commission, which Quebec opposes, Urquhart said that's a separate issue. The AMF actually stacks up well nationally in terms of regulatory enforcement, she said. "They got (Vincent) Lacroix (the former head of insolvent mutual-fund company Norbourg) in jail."
While additional police resources might help curtail future financial exploitation, investors also have a role to play.
"You're your first line of defence," said Taylor Train, chief operating officer of the Financial Advisors Association of Canada.
"Folks have to be proactive. They've got to research, verify and question. When you think of investing your money with an individual rather than an organization per se, make sure they're licensed. Do they have the appropriate designations and errors-and-omissions insurance? The consumer's got to take some sort of accountability."
A simple verification with the AMF won't guarantee you aren't dealing with a rogue, but at least you'll know they're one of the 40,000 financial professionals in Quebec accredited to do specific tasks, and you could be eligible for compensation if funds disappear.
Incredibly for somebody entrusted with millions of other people's dollars, Jones had no official credentials.
Being unable to produce his AMF permit should have been a warning sign, if only he'd been asked, said AMF spokesman Sylvain Théberge.
Jones also should also have been challenged on guaranteed returns significantly higher than what banks were offering.
"If it's higher," Urquhart said, "there's risk. And it may not be real at all."
Daniel Thompson, president of Montreal-based investment firm MacDougall, MacDougall & MacTier Inc., said protecting yourself from fraud or criminal activity is never easy, "but there are rules of common sense which apply. Never give your financial adviser power of attorney or the ability to act alone in making withdrawals from your account without proof of adequate supervision or your own written approval. Don't make your financial adviser the sole signing officer of your investment holding company or the sole trustee of your trust. Make sure two independent people are required to authorize disbursements.
"Check your statements carefully and, if in doubt, ask questions."

Securities Industry Crime Unit

PostPosted: Sat Jul 25, 2009 9:25 am
by admin
It must be child's play, to imagine "best practices". That is the only reason I can come up with as to why I think I can imagine some of them. It is just too easy to know that one should not let foxes guard our financial henhouses. But actually getting grown (but not grown up) men to follow best practices against their instincts run wild, instincts that shout "ME, MINE, MORE", is another matter. This might be the most difficult of tasks, and should only be left to the best of minds.

Diane Urquhart has such a mind. Not only trained and professional, but mature beyond a self seeking, self serving sandbox level of maturity. She (and others) are proposing a specialized securites crime investigation unit, and it deserves it's own category in this flogg. Although it is part of the topic on RCMP, and SOLUTIONS, BEST PRACTICES, it is of such value to stand on it's own.

Imagine if Canada had a specialized crime unit that was able to operate at the same speed and understanding as the best white collar crooks. What would that be like. Just for the record, and to state my conflicts up front (part of best practices), I would love to be a part of such a unit. I myself have just grown up slightly beyond the ME, MINE, MORE mentality of the financial playground, but not grown up enough to have forgotten, nor to have lost my imagination for best practices.