A conviction for a white-collar crime can lead to serious penalties. Some suspects will have to make restitution payments, pay large fines or will spend years behind bars for an action they may not have even realized was a crime. In order to avoid white-collar crime, most people would need an expert understanding of federal and state securities and tax laws, especially since even the smallest or most inadvertent mistake could be considered criminal.
In the aftermath of the Tom Petters case, a Minnesota businessman and the principal of Arrowhead Capital Management LLC has been arrested and charged with aiding and abetting wire fraud, aiding and abetting securities fraud, and making false statements to the Securities and Exchange Commission. In conjunction with his criminal trial, the SEC has also decided to file a lawsuit against the businessman.
The man has denied any criminal responsibility in the matter, but prosecutors have alleged that the man and his investment company earned $42 million in profit from their alleged involvement with the Petters Ponzi scheme. The businessman has said that any money the company may have earned, however, was used for normal employee salaries and the costs of running his investment company. He denies keeping any of the money for himself.
In addition to the businessman, the SEC has included a former employee of Arrowhead in its civil lawsuit. The woman was also charged with making a false statement and securities fraud, and although she has pled guilty to the charges, she has also worked closely with the Justice Department and the SEC with her criminal and civil cases, calling into question any testimony she may provide in the Minnesota businessman’s criminal trial.
Source: Bloomberg Businessweek, “SEC Sues Petters Feeder Arrowhead Capital for Aiding Fraud,” Andrew Harris, Nov. 11, 2011