New York Criminal Law Blog

Federal law enforcement authorities are continuing to target insider trading. Most recently, federal prosecutors in Manhattan charged seven individuals with insider trading of Dell computer stock.

According to documents filed in federal court, a stock analyst who used to work at computer giant Dell kept in close contact with his former colleagues, including one high-level executive, and often used inside information about the company's financial results in trading stocks. In addition to making these trades himself, the analyst also shared the illegal tips with six others in the industry. As a result, federal prosecutors allege that illegal trading occurred across the country, with several fund and trust managers located in California, Connecticut and New York.

In our previous blog post, we started to recap some of the more notable white-collar criminal cases seen in federal and state courts this past year.

It is interesting to note that not all the cases were slam-dunks for the prosecution.

In fact, in at least two instances, there are clear examples where overzealous prosecutors and the government didn't always follow the rules. While the facts of cases that often make the news may be humorous, it is easy to forget real people were involved - some of whom may have been wrongly accused or who may have unknowingly been the victim of prosecutorial or governmental misconduct.

It seems like you cannot pick up a newspaper without reading about an accounting scandal or insider trading rumor these days. Some of the charges are legitimate, but many others are routinely thrown out for lack of proof or other legal defenses.

With so much coverage of white-collar crime in the news, it can be easy to miss some of the headlines. Forbes magazine recently published an article highlighting some of the more notable white-collar crimes of 2011.

"As more people use the Internet to conduct everyday transactions," says the U.S. Attorney involved in the case, "we are increasing our efforts to protect consumers from fraud artists committed to taking hard-earned money from consumers who are increasingly comfortable doing business in cyberspace."

As Mark Rockwell reports for Government Security News, six people have been indicted for Internet fraud involving more than $4 million dollars.

And no, this isn't "fairness" in terms of harsh sentences for white-collar crimes; this is fairness - or the lack of fairness, the Justice Department seems to be saying - similar to the historic difference between harsher sentences for crack cocaine offenses versus lighter sentences for powder cocaine offenses.

As we relate below, all this talk of fairness in sentences might soon mean more severe consequences for those who are accused of white collar crime.

A judge with a federal court in Manhattan has accused the Securities and Exchange Commission (SEC) of misleading the court when it withheld important information about a number of settlements made in Wall Street cases.

The SEC accused Citigroup of financial and securities fraud after it misleading customers by selling over $ 1 billion in mortgage-related securities without informing investors. As a par t of the case, the SEC proposed a settlement of $285 million with Citigroup.

Late last month, the Manhattan federal district court judge rejected the SEC's proposed settlement with Citigroup to and then went on to order both sides to prepare for trial in July.

Just over a week ago, in their seventh lawsuit of 2011, Allstate Insurance Company filed a complaint against 83 New Yorkers seeking over $6.3 million in damages for alleged health insurance fraud.

According to the complaint, filed under the Racketeer Influenced and Corrupt Organizations Act (RICO), the defendants submitted fraudulent or misleading bills to the insurance company for medical supplies and equipment.

The complaint named the following parties to the fraud lawsuit:

• 30 medical retail equipment companies
• 25 individuals that own the medical equipment companies
• 18 medical wholesale companies
• 10 individuals that own the wholesale companies

As discussed in the previous post, a recent article in The Wall Street Journal outlines how prosecutors and law enforcement across the country are beginning to devote entire investigative units toward cracking down on cybercrime. The district attorney's office in Manhattan has a cybercrime unit and four prosecutors who devote 80 percent of their time on Internet crimes.

The investigators spend much of their time trolling through data from smartphones, laptops, iPads and the Internet in general looking for Internet crimes such as child pornography, computer hacking and fraud. The unit also teaches other law enforcement units how to uncover and prosecute cybercrimes.