Las Vegas Federal Securities Fraud Defense Attorney
Securities fraud is a serious federal crime that involves deceptive practices in the stock or commodities markets, with the aim of manipulating investors for financial gain. Prosecuted under 15 U.S.C. § 78j, securities fraud can include insider trading, Ponzi schemes, and making false statements to investors. The Securities and Exchange Commission (SEC) and other federal authorities aggressively pursue securities fraud cases, and a conviction can result in severe penalties, including large fines, prison sentences, and a permanent ban from the financial industry.
At Hofland & Tomsheck, attorney Josh Tomsheck is a Nationally Board Certified Criminal Lawyer with years of experience defending individuals and companies against complex securities fraud charges. If you are under investigation or facing charges, Josh Tomsheck has the knowledge and skills to provide the high-level defense necessary to protect your reputation and future.
What Is Securities Fraud?
Securities fraud, as defined under 15 U.S.C. § 78j, encompasses a broad range of fraudulent activities related to stocks, bonds, commodities, and other investment instruments. The essence of securities fraud is the misrepresentation of material facts or the failure to disclose important information that influences investors' decisions.
To secure a conviction for securities fraud, federal prosecutors must prove the following elements:
Misrepresentation or Omission: The defendant made false statements or failed to disclose material information about the investment, with the intent to deceive or manipulate investors.
Reliance: The investors relied on the false or misleading information when making their investment decisions.
Financial Loss: The fraudulent scheme caused financial loss to the investors.
Securities fraud can take many forms, including:
Insider Trading: The illegal buying or selling of securities based on material, non-public information.
Ponzi Schemes: Investment fraud that pays returns to earlier investors using the capital from new investors, rather than profits from legitimate business activities.
Market Manipulation: Practices such as "pump and dump" schemes, where stocks are artificially inflated in price before being sold off at a profit.
Case Law and Legal Precedents for Securities Fraud
Several key cases have shaped how securities fraud is prosecuted in federal court. In United States v. O'Hagan, 521 U.S. 642 (1997), the Supreme Court upheld the misappropriation theory of insider trading, which holds that individuals who misuse confidential information to trade securities, even if they are not directly connected to the company, can be prosecuted for securities fraud. This ruling expanded the scope of insider trading prosecutions.
In SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), the court established the "materiality" standard, ruling that information is considered material if it would likely affect an investor's decision to buy, sell, or hold a security. This case is significant for its interpretation of what constitutes fraud in the context of securities markets.
Another important case is United States v. Newman, 773 F.3d 438 (2d Cir. 2014), where the court clarified the standards for proving insider trading. The court held that to convict someone of insider trading, the government must prove that the defendant knew the information came from an insider and that the insider received a personal benefit in exchange for the disclosure.
Penalties for Securities Fraud
Securities fraud is a felony offense that carries severe penalties, especially when the fraud involves significant financial losses or affects a large number of investors. The penalties for securities fraud under 15 U.S.C. § 78j include:
Fines: Individuals convicted of securities fraud can face substantial fines, often ranging from hundreds of thousands to millions of dollars. Corporations involved in securities fraud may face even larger fines.
Imprisonment: The statutory maximum penalty for securities fraud is up to 20 years in federal prison. Insider trading convictions, in particular, often result in lengthy prison sentences.
Restitution: Defendants convicted of securities fraud are typically ordered to pay restitution to the victims, reimbursing investors for their financial losses.
In addition to these penalties, the Securities and Exchange Commission (SEC) can impose civil penalties, such as permanent bans from the securities industry, forfeiture of illicit profits, and disgorgement of ill-gotten gains. The U.S. Sentencing Guidelines provide an advisory range for sentencing in securities fraud cases, considering factors such as the amount of financial loss, the number of victims, and the sophistication of the fraud.
Federal Investigations and Securities Fraud Charges
Securities fraud cases are often investigated by federal agencies such as the Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI), and the Department of Justice (DOJ). These investigations frequently involve the review of financial records, electronic communications, trading histories, and witness interviews. Investigations can be lengthy and complex, sometimes taking years before charges are filed.
The SEC often initiates investigations into suspicious trading activity or market manipulation and may refer cases to the DOJ for criminal prosecution. If you are under investigation for securities fraud, early legal intervention is critical. The government has vast resources at its disposal to build a case, and having an experienced attorney by your side can help mitigate the impact of the investigation and protect your rights.
Defenses Against Securities Fraud Charges
At Hofland & Tomsheck, we take an aggressive approach to defending clients against securities fraud charges, examining every detail of the case to identify weaknesses in the government's arguments. Common defenses against securities fraud charges include:
Lack of Intent: To secure a conviction for securities fraud, the prosecution must prove that the defendant acted with intent to deceive or manipulate investors. If the defendant acted in good faith or without knowledge of the false information, this can serve as a defense.
No Material Misrepresentation: Securities fraud requires a misrepresentation or omission of material facts. If the information in question was not material—that is, it would not have influenced a reasonable investor's decision—the charges may not hold.
Reliance on Professional Advice: In some cases, defendants may have relied on the advice of financial professionals, such as accountants or attorneys, when making statements or decisions. If the defendant reasonably relied on this advice, it can serve as a defense.
Challenging Evidence: Securities fraud cases often involve complex financial transactions and digital communications. We thoroughly review the evidence to challenge the government's interpretation of the records, raise doubts about the accuracy of the data, and question the credibility of key witnesses.
Sentencing Guidelines for Securities Fraud
The U.S. Sentencing Guidelines provide an advisory sentencing range for securities fraud cases, considering several factors:
Amount of financial loss: Larger financial losses generally result in harsher penalties.
Number of victims: Securities fraud cases involving numerous investors or widespread harm may result in enhanced penalties.
Use of sophisticated means: Defendants who used advanced or complex methods to carry out the fraud, such as creating shell companies or using insider information, may face harsher sentences.
Federal judges generally follow the advisory sentencing range but have discretion in applying the guidelines based on the specifics of the case. In cases involving large-scale fraud or significant financial harm, sentences may be enhanced under the guidelines.
Why Choose Josh Tomsheck for Your Securities Fraud Defense
Securities fraud cases are highly complex, requiring an attorney with a deep understanding of federal securities laws and the investigative tactics used by the SEC and DOJ. Josh Tomsheck is a Nationally Board Certified Criminal Lawyer with extensive experience defending clients against securities fraud and other financial crimes.
As a former prosecutor, Josh has insider knowledge of how the government builds its case and can develop strategies to challenge the prosecution's evidence, negotiate favorable outcomes, and defend your rights in court. At Hofland & Tomsheck, we take a personalized approach to every case, ensuring that you receive the best possible defense.
Schedule Your Free, Confidential Consultation Today
If you are facing securities fraud charges or are under investigation by the SEC, contact Hofland & Tomsheck today to schedule a free, confidential consultation with Josh Tomsheck. We offer flexible consultation options, including in-person meetings, phone consultations, and Zoom sessions.
Call us at (702) 895-6760, or visit our office at 228 S. 4th Street, First Floor, Las Vegas, NV 89101. Let us help you protect your rights and build a strong defense against federal securities fraud charges.
