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Federal Securities Fraud

Recently, a South Florida businessman, Alan Levan, was convicted of securities fraud, and ordered him to to pay $1.56 million in addition to $5.2 million in penalties levied against his company, BBX Capital Corp. In December, a jury found that Levan intentionally made false or misleading statements about BBX’s subsidiary BankAtlantic’s loan portfolio during a presentation to investors over the phone in 2007.

In addition to the millions of dollars in fines, the Securities and Exchange Commission, who prosecutes securities fraud cases, requested that the federal judge presiding over the case ban Levan from acting as a director or officer of a public company in the future.

Levan has appealed the fines, asking the judge to rule in his favor or hold a new trial. In opposition, the SEC filed a motion to close the case and force Levan to pay the penalties. Of the three levels of financial penalty that the SEC could have pursued, it chose the highest level because the alleged loss to investors was substantial.

The Law

Under federal law, it is a crime to knowingly execute or attempt to execute a scheme or artifice to defraud anyone in connection with any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934. In general, securities such as stocks, bonds, and options are required to be registered in order to offer a measure of protection to investors. Sellers of securities must disclose important financial information about the securities that they hold, so that investors can view them and make informed decisions about purchasing securities from a company. If a buyer (usually in conjunction with the SEC) can prove that the seller provided incomplete or inaccurate information about the securities, they are eligible to recover their losses suffered as a result of investing in the securities in question.

In addition, it is also a crime 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” security.

Insider trading is also punished under this statute. Insider trading involves a person who has material nonpublic information trading a security, violating their duty to withhold the material information or avoid trading the security.

Punishments for securities fraud under federal law can include hefty fines and imprisonment for up to 25 years, or both.

White Collar Defense

The FBI focuses on securities fraud of all types, including high-yield investment fraud, Ponzi schemes, pyramid schemes, advanced fee schemes, foreign currency fraud, broker embezzlement, hedge fund-related fraud, and late day trading. If you have come under investigation for securities fraud or other white collar crimes by the FBI, or allegations have surfaces that you or your business has violated the Securities Exchange Act or related SEC regulations, it is imperative that you contact an experienced federal criminal defense attorney immediately. Jeffrey S. Weiner, P.A. will advocate tenaciously for you and your case. Contact our South Florida law offices today for a free consultation.

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