Friday, February 3, 2006

It Just Never Ends

Sometimes, it's just too much to keep up with all the happenings in the white collar crime world.  Thankfully, there are terrific blogs (and bloggers) who pay attention in this area, and below are three worth checking out:

  • David Giacalone on the f/k/a . . . blog discusses the sentences of lawyers who ran a debt counseling agency with offices in New York and Vermont, and the widely disparate sentences they received (here and here).  One defendant, who cooperated in the investigation, received a one-month sentence given by U.S. District Judge Murtha in Vermont.  The second defendant, who went to trial, received a 188-month sentence.  A bit of a gap there?  The cost to the clients was enormous, and  David asks whether the one-month sentence was a type of "professional courtesy" in which the judge showed greater sympathy for the defendant than for the numerous victims who placed their trust in a fiduciary required to put their interests first.  For the first defendant, the court noted that he suffered from a drug addiction, but the fraud spanned numerous locations and involved many victims who suffered substantially. 
  • Tom Kirkendall on the Houston's Clear Thinkers blog (here) has a post about Edwin T. McBirney from the old Sunbelt Savings, one of the many S&Ls that flamed-out spectacularly in the late 1980s and early 1990s.  In those rather quaint days, McBirney received the then-unheard of sentence of 15 years, and he testified against a number of his cronies from Sunbelt and got the sentenced dropped to five years, with five years probation.  As Tom recounts in his post,  "Alas, it seems as if McBirney had a difficult time reconciling his taste for living with his $7.5 million restitution obligation. While in prison, McBirney set up a trust to mask his post-prison earnings, so -- upon his release from prison -- McBirney was able to get by on as little as $50,000 a year despite the fact that he continued to enjoy a chauffeur-driven limousine, a $600,000 home in North Dallas and expensive meals in trendy restaurants. In short, McBirney never met an expense that couldn't be written off as a cost of doing trust business." McBirney was convicted on multiple counts of fraud, money laundering, and lying to the federal government.  Does anyone remember a time when the S&L Crisis was the biggest thing to ever hit corporate America?  Where will the next scandal come from?  Needless to say, it may be difficult for McBirney to argue that his conduct was an aberration.
  • Bruce Carton on the Securities Litigation Watch blog has a post (here) about the settlement of an SEC insider trading case in which the defendant made an anonymous posting on a company's stock bulletin board signalling a takeover the next day of a company.  The post states, "by: auntbetty1234 [. . .] Happy Valentine’s Day to my Nephew Smitmie. He’ll be 12 ½ on thursday. When I take him shopping, he just wants to buy-out everything in the store. He’s so cute and much smarter than most.  Love, Aunt Betty."  Bruce translates the posting by William Day, who settled the case: "The SEC says that on February 13, 2002, approximately twenty-four hours before the acquisition was publicly announced, Day made the anonymous posting above using the online alias 'auntbetty1234' on an internet message board dedicated to Oratec, the contents of which revealed that he possessed material, nonpublic information regarding the tender offer, including: the name of the acquiring company ('Nephew Smitmie'); the price per share ('He’ll be 12 ½'); the tender offer structure ('buy-out'); and the offer announcement date ('Happy Valentine’s Day)."  As they used to say on Get Smart: "Genius, Max, genius."  Unfortunately, Mr. Day got caught, so he's not that smart.


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