Conspiracy to commit or actually committing securities fraud as regulated by the United States Securities and Exchange Commission (SEC) is a federal offense, prosecuted by the U.S. Attorney General’s office. If you are convicted of securities fraud in Newport Beach, you face a lengthy sentence in a federal prison followed by years of supervised release. The Newport Beach fraud crimes defense attorneys at Wallin & Klarich want to share with you a decision rendered recently in the Ninth Circuit Court of Appeals. This case demonstrates what could happen to you if you commit fraud and how your sentence can be increased if you abuse your position of trust.
United States v. Laurienti (2013)
In United States v. Laurienti, 2013 U.S. App. LEXIS 19908 (9th Cir. 2013), the defendant, Bryan Laurienti, was employed as a stock broker at Hampton Porter, an investment firm in San Diego. The U.S. Attorney General alleged that the firm engaged in the practice of selling underpriced and “thinly-traded” securities. The firm obtained the securities for little or no cost from various corporations on the promise that the firm would aggressively market them by promoting them to clients and later discouraging clients from reselling. The firm, and several individuals, bought the securities in their own names at the lower price and later resold their shares at the higher, artificial price they had created.
The firm did not allow its brokers, including Laurienti, to sell a client’s securities while the firm continued promoting them unless the brokers could find another buyer to offset the sale. In addition to participating in this scheme, it was alleged that the defendant committed fraud by making unauthorized purchases of client securities and executed cross-trades between clients without informing them that they were selling to each other. This tactic is known in the industry as a securities fraud “pump-and-dump” scheme.
After the stock market crashed in 2000, the prices of the artificially inflated securities fell and clients lost money on their investments. Following the market’s overall decline, Hampton Porter went out of business. After an investigation, the government indicted several of Hampton Porter’s owners, managers and senior brokers, including Laurienti’s brother, whom he attempted to paint as the “mastermind” of the entire scheme in order to avoid prosecution.
Court of Appeal Decision
Upon his conviction, the defendant appealed the district court’s order sentencing him to serve an enhanced sentence of 36 months imprisonment and three years’ supervised release. He was also ordered to pay over $200,000 in restitution. Laurienti was found guilty of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and two counts of securities fraud by use of manipulative and deceptive devices in violation of 15 U.S.C. §§ 78j(b), 78ff and 17 C.F.R. § 240.10b-5 (also known as “Rule 10b-5”).
The Ninth Circuit concluded that “the defendant abused a position of public or private trust…in a manner that significantly facilitated the commission or concealment of the offense. Laurienti argues that he is ineligible for [the] enhancement because he did not hold a position of professional or managerial discretion. We disagree and hold that he occupied and abused a position of trust.”
Conspiracy to commit fraud could lead to a sentence in either state or federal prison. As the case referenced above demonstrates, committing fraud is a criminal offense, particularly if you abuse your position of trust. Essentially, fraud is the crime of theft. It is punishable at either the state (see California Penal Code section 484) or federal level depending on the facts of the case. If you are employed in a financial capacity in Newport Beach and you violate either state or federal law regulating fraudulent practices, you could be facing serious penal and monetary consequences.
Call Wallin & Klarich if you are Charged with Securities Fraud in Newport Beach
If you have been accused of committing fraud, you could be prosecuted for violating either state or federal law depending on the circumstances of your offense. Hiring an experienced Newport Beach fraud crimes defense attorney from Wallin & Klarich could mean the difference between your freedom and imprisonment. The attorneys at Wallin & Klarich have over 30 years of experience analyzing evidence to determine whether every element of a crime has been met. If not, we may be able to argue for a reduction or dismissal of your charges. If your case goes to trial, we will employ every available strategy to defeat the prosecution’s burden of showing proof beyond a reasonable doubt which could lead to your acquittal.
With offices in Los Angeles, Sherman Oaks, Torrance, Tustin, San Diego, Riverside, San Bernardino, Ventura, West Covina and Victorville, the fraud crimes defense attorneys at Wallin & Klarich will aggressively defend you at either the state or federal level. Our goal is to make sure you get the best possible result in your case.
Call us today at (877) 4-NO-JAIL or (877) 466-5245 for a free telephone consultation. We will get through this together.