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Trials of the Century : Corporate Executives and the "Perp Walk"

Trials of the Century : Corporate Executives and the "Perp Walk". Securities Fraud , 15 U.S. Code— . Sec. 77e. Fraudulent interstate transactions

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Trials of the Century : Corporate Executives and the "Perp Walk"

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  1. Trials of the Century: Corporate Executives and the "Perp Walk"

  2. Securities Fraud, 15 U.S. Code— • Sec. 77e. Fraudulent interstate transactions • (a) Use of interstate commerce for purpose of fraud or deceit. It shall be unlawful for any person in the offer or sale of any securities by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly -- • (1) To employ any device; scheme, or artifice to defraud, or • (2) To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or • (3) To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

  3. 17 C.F.R. section 240.10b-5 Employment of Manipulative and Deceptive Devices (Rule 10b-5)(a) Scope of Rule. This section shall apply to any violation of Section 10(b) of the Act (15 U.S.C. 78j(b)) and § 240.10b-5 thereunder that is based on the purchase or sale of securities on the basis of, or the communication of, material nonpublic information misappropriated in breach of a duty of trust or confidence.(b) Enumerated "duties of trust or confidence." For purposes of this section, a "duty of trust or confidence" exists in the following circumstances, among others:(1) Whenever a person agrees to maintain information in confidence;(2) Whenever the person communicating the material nonpublic information and the person to whom it is communicated have a history, pattern, or practice of sharing confidences, such that the recipient of the information knows or reasonably should know that the person communicating the material nonpublic information expects that the recipient will maintain its confidentiality; or

  4. Section 240.10b-5 (cont.) (3) Whenever a person receives or obtains material nonpublic information from his or her spouse, parent, child, or sibling; provided, however, that the person receiving or obtaining the information may demonstrate that no duty of trust or confidence existed with respect to the information, by establishing that he or she neither knew nor reasonably should have known that the person who was the source of the information expected that the person would keep the information confidential, because of the parties' history, pattern, or practice of sharing and maintaining confidences, and because there was no agreement or understanding to maintain the confidentiality of the information.

  5. Defendant Fastow

  6. Defendant Rigas

  7. Defendant Kozlowski

  8. Non-defendant Lay!

  9. Sec. 1341. Frauds and swindles. Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, … shall be fined under this title or imprisoned not more than five years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

  10. Sec. 1343. Fraud by wire, radio, or television. Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than five years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. Sec. 1346. Definition of “scheme or artifice to defraud.” For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.

  11. Extortion: The Hobbs Act, 18 U.S.C.— Sec. 1951. Interference with commerce by threats or violence (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, … shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section - (2) The term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.

  12. Money Laundering, 18 U.S. Code-- Sec. 1956. Laundering of monetary instruments.(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity -(A)(i) With the intent to promote the carrying on of specified unlawful activity; or***(B) Knowing that the transaction is designed in whole or in part -(i)To conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or(ii) To avoid a transaction reporting requirement under State or Federal law, shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

  13. Racketeer Influenced and Corrupt Organization Act (RICO ), 18 U.S. Code— • Sec. 1961. Definitions. • (1)“racketeering activity” means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance … which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code:](relating to bribery [(sports bribery, counterfeiting, theft from interstate shipment, embezzlement from pension and welfare funds, extortionate credit transactions, fraud and related activity in connection with identification documents, fraud in connection with access devices, transmission of gambling information, mail fraud, wire fraud, financial institution fraud, procurement of citizenship or nationalization unlawfully, obscene matter, obstruction of justice, peonage and slavery, robbery, or extortion, interstate transportation of wagering paraphernalia, unlawful welfare fund payments…]

  14. THE CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY OF 2002“SARBANES-OXLEY” • Sec. 1519. Destruction, alteration, or falsification of records in Federal investigations and bankruptcy. • Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

  15. Sec. 1348. Securities fraud. • Whoever knowingly executes, or attempts to execute, a scheme or artifice— • (1) to defraud any person in connection with any [publicly traded] security of … • (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any [publicly traded] shall be fined under this title, or imprisoned not more than 25 years, or both..

  16. Sec. 1106. Increased criminal penalties under Securities Exchange Act of 1934. • Section 32(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78ff(a)) is amended— • (1) by striking ‘‘$1,000,000, or imprisoned not more than 10 years’’ and inserting ‘‘$5,000,000, or imprisoned not more than 20 years’’; and • (2) by striking ‘‘$2,500,000’’ and inserting ‘‘$25,000,000’’.

  17. Reason to worry?

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