The recent news that the U.S. Department of Justice (DOJ) is disbanding its crypto unit and shifting focus from prosecuting platforms to targeting individuals who harm crypto investors or use digital assets for illegal activities may be seen as a sign of a significant sea change in the Government’s “regulation by prosecution” approach to financial crimes. Very often, criminal prosecution in the securities, health care, and cryptocurrency arenas is focused on violations of complex and often opaque regulations, which is why such prosecutions very often emerge alongside parallel civil investigations. Criminal defendants and their attorneys have decried the Government’s blunt force approach to criminalizing what are essentially regulatory violations using the incredibly broad federal statutes for mail fraud (18 U.S.C. 1341); wire fraud,18 U.S.C. 1343); healthcare fraud (18 U.S.C. 1347); securities and commodities fraud (18 U.S.C. 1348), and the Computer Fraud and Abuse Act (18 U.S.C. 1040).

Likely, this move by the DOJ does not signal a looming retreat from such prosecutions, but instead represents a more targeted effort to promote innovation in the ever-developing digital currency platforms in alignment with President Trump’s Executive Order on digital assets. The end result is that the DOJ will no longer pursue actions that impose regulatory frameworks on digital platforms, leaving this instead to President Trump’s regulators. The DOJ will prioritize cases involving misappropriation of funds, scams, and hacks with the stated goal of protecting investors and building market confidence and will continue to target crypto use by criminal organizations.

Under this new policy, prosecutors are advised against charging regulatory violations unless there is evidence of willful misconduct (criminal intent), which really seems to be restating what should have been policy all along. Importantly, the DOJ will avoid litigating whether a digital asset is a security or commodity (a retreat from the Biden era’s position), preferring charges like wire fraud, but may consider bitcoin and ether as commodities. The U.S. Commodity Futures Trading Commission (CFTC) is adopting a similar approach, as directed by Acting Chair Caroline Pham deprioritizing registration violation actions unless there is evidence of willful non-compliance.

It is important if you are being investigated or charged with fraud to hire an attorney who has vast experience with white-collar federal criminal investigations and prosecutions. Often, early intervention in a case may prevent charges from ever being filed. Given the complexity of the federal regulations applicable to many industries, from health care to securities to banking, and the incredibly broad federal statutes that can be used to transform an investigation into a criminal case, you need to make sure that the attorney you hire has a practice that is primarily federal, with an in-depth understanding of the criminal statutes, the sentencing guidelines (driven by loss amounts and enhancements that can result in draconian sentences); federal forfeiture statutes, and restitution.

At Stahl Gasiorowski, partners Laura K. Gasiorowski and Robert Stahl have over 65 combined years of experience representing federal criminal defendants in the District of New Jersey, the Southern and Eastern Districts of New York, and in other federal courts across the United States. We have represented individuals and start-up platforms involving unregulated money transfer businesses, rug pulls, NFTs, material misrepresentations, and the use of paid celebrities and sport figures in marketing.

Stahl Gasiorowski Criminal Defense Attorneys have represented hundreds of individuals and companies subpoenaed by federal and state authorities. We have the experience and skills to effectively navigate our clients through these complex issues and investigations to achieve the best possible outcome. If you are looking for a crypto fraud lawyer,wire fraud lawyer, securities fraud lawyer or healthcare fraud lawyer, contact Mr. Stahl or Ms. Gasiorowski, call 908.301.9001 for the NJ office or 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com or Ms. Gasiowski at lkg@sgdefenselaw.com.

Cryptocurrency has been at the forefront of debate between various law enforcement and regulatory efforts to impose stricter controls and regulations and those who view it as a form of currency that should not be closely regulated. Within the past two weeks, both the SEC and the Treasury Department have defended their enforcement actions and requested additional tools to combat cryptocurrency fraud and misuse.

The SEC again defended its authority to regulate crypto, despite critics claiming that cryptocurrency is a commodity not an SEC regulated security. At the SEC Speaks in 2024 event, Enforcement Chief Gurbir Grewal maintained that the SEC’s enforcement actions have been consistent and principled, tied to federal securities laws and court precedents. The SEC’s position is that if a crypto asset was offered and sold as an investment contract, it’s a security under the Howey test. The SEC rejects the argument that crypto products are currencies and beyond the reach of SEC regulation. To date, various courts have upheld the SEC’s position.

The Treasury Department has once again called on Congress for additional tools to combat cryptocurrency use by terrorist organizations who circumvent restrictions and embargoes to gain access to funds. One of the recent requests was to introduce secondary sanctions that would allow the Treasury Department to target digital asset providers, even extraterritorially. Included in the various requests was extra funding for the Office of Foreign Assets Control.

A number of Senators support strong anti-money laundering restrictions on cryptocurrency. Many in the crypto sector do not comply with know your customer, documentation of account holders, source of assets and other anti-money laundering measures. Other Senators want only a “light regulatory system” that imposes restrictions on centralized retail crypto exchanges to bring crypto out of the “Wild West”.

Clearly, cryptocurrencies will continue to be subject to increasing regulations and enforcement as Congress and regulatory agencies understand the nuances and complexities of ever developing and expanding platforms.

Stahl Gasiorowski Criminal Defense Attorneys are experienced in defending individuals charged with various crypto related offenses, including wire fraud, money laundering, unregistered currency exchange and securities fraud. To contact us call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com or Laura K. Gasiorowski at lkg@sgdefenselaw.com

Federal regulatory and law enforcement agencies have been redirecting and expanding their resources to investigate and combat frauds involving crypto and other digital platforms. The SEC recently requested $200M from Congress to hire additional 170 new employees, many to focus on crypto-related cases. These new hires will include lawyers in the Division of Enforcement’s Crypto and Cyber Unit (CACU) that focuses on violations of federal securities laws. This request is in addition to the 20 positions added in 2022.

With the recent collapse of FTX, and fraudulent conduct or hacked accounts involving Ethereum, Celsius, Nomad, Wormhole and BlockFi, to name a few, there is good reason for increased budgets, new hires and advanced technology to investigate, uncover and prosecute crypto-related frauds.

Until recently, crypto platforms, initial offerings and digital start-ups were less regulated than traditional financial offerings and investments. With the advent of so many major collapses and frauds, however, law enforcement and Congress have focused their attentions on regulating these platforms to help prevent pump and dump schemes, unregistered money transfers, know your customer requirements, and money laundering.

A major example of this increased scrutiny is the SEC’s recent Wells Notice to Coinbase, a well-established company that was publicly listed in 2021 and has repeatedly attempted to register its spot platform. The Notice listed potential claims Coinbase could face including operating as an unregistered exchange, listing unregistered securities in the form of digital assets, and offering services such as staking and wallet activity that could violate securities law. Coinbase is pushing back hard on these potential claims arguing that the SEC has not specified which digital assets potentially qualify as securities, which aspects of its stalking service are of concern and whether Coinbase’s recent updates corrected any of these potential issues. Moreover, Coinbase has argued that the SEC has dramatically changed its position from May 2021, when SEC Chair Gary Gensler told Congress that there was no framework for crypto at the SEC or at the U.S. Commodity Futures Trading Commission, and that he looked forward to working with Congress to develop one. By the end of 2022, however, Gensler said that he believed the SEC had enough authority to regulate the space. It is Coinbase’s position that these two statements are “diametrically opposed.”

The increase in regulatory and enforcement actions here in the United States, and more recently in countries traditionally sought for their lax monetary regulations, has caught many “crypto entrepreneurs” unaware. Many in this burgeoning field are young who get their “advice” from chat groups, Instagram and other platforms where influencers flaunt their apparent wealth and possessions all allegedly obtained through their skills at buying, trading and investing in crypto and NFTs. Many are completely unaware, while other intentionally ignore, the many statutes, regulations and rules that regulate digital assets and platforms.

Stahl Gasiorowski Criminal Defense Attorneys has represented a number of individuals investigated and charged with crypto-related frauds and failures to register. To contact Mr. Stahl, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

A recent high profile case highlights the federal government’s ability to seize a convicted defendant’s accounts to satisfy an Order of Restitution after a conviction at trial or a guilty plea. The Second Circuit recently held that the retirement funds of Evan Greebel, the former convicted attorney and Martin Shkreli’s codefendant, could be seized in partial satisfaction of the restitution amount owed. Greebel was convicted in a separate 2017 trial for assisting his client Shkreli’s fraudulent taking of funds from Retrophin to pay Shkreli’s hedge fund debts, and for manipulating the stock price of Shkreli’s drug company. After conviction, Greebel was sentenced to 18 months in prison and ordered to pay $10.4 million in restitution.

In its opinion, the Second Circuit upheld the trial court’s decision that Greebel’s 401(k) accounts at his former law firm were subject to garnishment in an effort to collect the restitution amount. The Second Circuit held that the Mandatory Victims Restitution Act (MVRA) gives the government full access to retirement funds, and that ERISA’s prohibition on disbursing retirement funds to third parties is trumped by the MVRA.

It is well-established that under 18 U.S.C. § 3664(m)(1)(A), the Government may enforce a restitution order in the manner provided by subchapter B of Chapter 229, or 18 U.S.C. § 3613. An order of restitution may be executed in accordance with the practices and procedures for the enforcement of a civil judgment under federal law or state law or by all other available and reasonable means. 18 U.S.C. § 3613 (a) and (f).

The MVRA broadly permits the United States to enforce a restitution order “against all property or rights to property of the person fined.” Pursuant to §3613(c), once restitution is ordered, all the defendant’s property becomes subject to a lien in favor of the United States, and for purposes of debt collection, such lien is treated like a tax lien. §3613(c). Thus, any property the IRS can reach to satisfy a tax lien, a sentencing court can also reach in a restitution order – bank accounts, retirement funds, stock accounts and even Social Security benefits. Additionally, while periodic payments (usually monthly payments through the Probation Department) in satisfaction of a restitution order are limited to 25% of the defendant’s disposable income, one time lump sums payments, such as the garnishment of a retirement or bank account, are not limited.

The only issue left unanswered by the Second Circuit in Greebel was whether the government could seize all the funds, or whether it had to leave the defendant sufficient funds to pay the 10% tax penalty for early withdrawal of retirement funds. In many instances, the amount left to a defendant to pay tax penalties and taxes on garnishment of retirement accounts can be negotiated with the government.

Stahl Gasiorowski Criminal Defense Attorneys have represented scores of clients facing restitution and forfeiture orders and garnishments. We actively and aggressively protect clients’ rights. To contact Mr. Stahl, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rstahl@stahlesq.com.

The U.S. Securities and Exchange Commission (SEC) operates from its headquarters in Washington, D.C. and has 11 regional offices. It’s Division of Enforcement investigates cases and recommends to the Commission cases to be brought against individuals and entities. Investigations can begin through whistleblowers, news articles, referrals from other agencies, complaints from the public or data derived from market surveillance.

Enforcement can open a tentative inquiry known as a matter under inquiry (MUI) or a formal investigation. With an MUI, the staff usually sends a letter requesting information to the entity or person(s) they are considering for further investigation. If a formal order of investigation is issued by a supervisory attorney, then subpoenas for the information sought can be issued.

In certain instances, the Enforcement staff attorney can refer the case to federal prosecutors. The SEC and the U.S. Attorney’s Offices around the country usually work closely together on such matters. If a referral is made, it results in a parallel criminal investigation. The subject or target of the SEC investigation may not know at first that he is the target of a parallel criminal investigation because if asked, the SEC is simply allowed to decline to answer.

The SEC is open to having counsel present evidence and arguments why their client did not violate SEC regulations, or why the matter should be settled on favorable terms to the client. Many SEC cases are settled without formal litigation. If the matter is not resolved during the investigation, the SEC seeks authority from the Commission to bring the case. Defense counsel will usually receive a call advising that the client potentially faces charges, this is known as a “Wells call”. Staff usually follows up with a confirming letter, known as a “Wells Notice”. That Notice sets forth the proposed charges and presents an opportunity to make a submission to the Commission as to why the charges should not be brought.

If there is a parallel criminal investigation, or the possibility of one, then the client and his attorney must seriously consider exercising the client’s Fifth Amendment right not to provide testimony, and in certain instances, documents. However, in the SEC civil setting, an adverse inference can be drawn against the person exercising their Fifth Amendment right that can later be used as evidence against him in the civil proceeding.

If a criminal case is brought, by way of indictment or complaint, the SEC will normally file its civil complaint at the same time. In many cases, the Department of Justice will seek a stay of the SEC action so that the defendant is not permitted to obtain wide-ranging civil discovery to aid him in defending the criminal action. While the SEC complaint is serious and can affect a licensed individuals ability to continue in the securities industry and can result in substantial monetary penalties, the criminal action exposes the client to potential time in federal prison as well as forfeiture and restitution.

While there are many similarities in defending an SEC action and a criminal investigation, experienced counsel is a must to protect the client’s rights at all stages. Discovery, cooperation potential, settlement and trial all have aspects that differ in an administrative SEC setting as opposed to an action in federal court.

Robert Stahl, and his firm, Stahl Gasiorowski Criminal Defense Lawyers aggressively defend individuals charged with complex federal and state crimes. Founder Robert G. Stahl is recognized as one of the top criminal defense attorneys in the NY/NJ area for his skills, knowledge and success. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

This post will address two of the most common investment frauds that you may see in New Jersey: the Ponzi scheme, and the pyramid scheme.

These two fraudulent schemes have some similarities: both rely on a fresh influx of new “investors” to provide the cash needed to pay earlier participants the fantastic returns they were promised. And both eventually run dry if they are not discovered and prosecuted first, leaving many hopeful investors with nothing in return for their contributions.

There are some distinctions to be aware of between these two crimes, so they should not be used interchangeably with one another.

The key element of the Ponzi scheme is that it often relies on investor trust in the scheme’s creator to do all the work in return for a one-time payment, although additional payments may also be asked for. But the contributor usually has a passive role aside from sending in money.

A pyramid scheme’s distinctive feature is that it usually requires not only an upfront payment or repeat payments, but also that the participant then recruit others to participate as well. Indeed, new participants may never interact with the pyramid scheme’s original creator, but rather with someone one level above them in the multi-layered pyramid organization.

Pyramid schemes tend to break down more quickly than Ponzi schemes, because the latter is often smaller and has stronger misplaced trust bonds between the creator and the contributor while the former requires ever larger additional layers to the pyramid to keep going and will run out of fresh contributors more rapidly.

Not all multi-layered investment or business strategies are illegal. If you are charged with running a Ponzi or a pyramid scheme when in fact your business is legitimate, such as a multi-level marketing system, a criminal defense attorney’s assistance will be essential in defending yourself legally.

Insider trading centers around the idea of “inside information;” there are two criteria that an element of information must meet to be considered inside information. First, it is information that is not public. Second, it is information that could change the price of a stock if the public found out.

Many people have access to inside information. But when someone with that information (or his or her friend, family member or relative) acts on it, securities fraud and insider trading charges may result.

Criminal charges may be filed when an employee who has access to inside information buys or sells stock. Also, some insider trading prosecutions occur after someone outside a company trades stock based on an insider tip from someone else.

In other situations, someone with inside information may recommend a trade to someone else. Even if the inside information itself is not shared with the person who makes the trade, it is still insider trading.

Securities fraud and insider trading are federal crimes that can have a tremendously negative impact on a defendant’s future career prospects. Not only are those who are found guilty subject to time in prison, they may also have to pay a hefty fine. The law provides for a fine of up to three times the amount of money earned from an illegal insider trade.

If you are accused of insider trading, it is important to speak to an experienced lawyer who is knowledgeable about insider trading defenses as well as federal plea and sentencing mitigation.

It is dangerous to allow hysteria to take the reins away from common sense and rational judgment. When that occurs, the risk is that innocent people will be accused and harmed in the process.

This hostile view towards finance executives has led to the increase in accusations, charges and prosecutions for white-collar crimes. The seriousness with which the country looks at those accused of crimes like securities fraud and insider trading is demonstrated by the number of different government agencies and departments that are dedicated to this field.

A person who is accused of these types of white-collar crimes can be investigated and prosecuted by a number of agencies at the local, state and federal level.

Our firm is made up of experienced attorneys who have dealt with fraud cases before. We are aware of the many different levels of authority and various agencies that may claim jurisdiction in a fraud case.

Being charged with a crime and having to prepare a criminal defense is a frightening proposition, but it is only made that much scarier when having to face FBI agents, Secret Service or IRS employees who are investigating your business – or even personal -activities.

It is important to remember that you do not have to face these powerful government agencies alone. If you are facing charges of fraud/ or other types of corporate crime, please visit our website to learn more about how our firm can help you

Violations of any number of federal statutes have the potential to jeopardize a business and can, in many cases, result in individuals going to prison. In addition, restitution and forfeiture may be applicable. Below, we delve into some of the most commonly encountered federal business fraud statutes.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act applies to any company that must file a report with the SEC, including companies based in the United States, their subsidiaries and those listed on the stock exchanges. This Act bars payments to foreign governments or officials to obtain a competitive advantage.

Wire Fraud and Mail Fraud

Mail fraud and wire fraud are used extensively by federal authorities. Mail fraud involves the use of the mail in a scheme to defraud another person or entity. This broad-based statute includes any mailing of a document that contains a materially false statement. “Mail” is defined as documents sent via public or private carriers. The document is not required to cross state lines to qualify as mail fraud. Wire fraud is similar to mail fraud except it includes just about all forms of media including e-mail, telephone, TV, radio, Internet, telex and facsimile.

Bankruptcy Fraud

This type of business fraud involves defrauding through a document, petition or representation tied to a bankruptcy proceeding. It includes material misrepresentations as to assets and ownership interests in assets.

Health Care Fraud

Health care fraud is the defrauding of any private or public health care benefit program. The definition encompasses the payment for/delivery of services. This a very active area of investigation for federal and state authorities. It includes paying others for patient referrals, upcoding, over billing, ordering unnecessary tests or procedures and submitting false claims. False statements made to procure payment from a federal health care program also qualifies as health care fraud.

Securities Fraud

This type of fraud refers to the sale or purchase of an investment where the return is based on the effort of a third party. An example of such an offense is the trading of stocks with insider information. The fraudulent marking of prices or material false statements in the prospectus are also forms of securities fraud.

The False Claims Act

Those who knowingly make or conspire to produce erroneous financial claims to the government can be found guilty of this type of fraud. It commonly applies to Medicaid and Medicare. False statements made on a bill can qualify as separate offenses. The operative word in this statute’s definition is “knowingly”. “Knowingly” is defined as actual knowledge, intentional ignorance or a “reckless” disregard for what is true. Examples of false claims include false affirmative certifications of compliance with federal regulations, billing and claims that stand for compliance with regulations, statutes or contract terms.

Material False Statements

An individual who makes a materially false statement to an official of the federal government or makes a false record of entry is committing a criminal offense. Though individuals certainly have the right to remain silent, they do not have the right to lie.

The Dodd-Frank Act of 2010

Passed into law as a result of the last recession, this Act is meant to spur improved transparency and accountability on Wall Street, protect investors and reform mortgages. However, its Constitutionality is currently being challenged in federal court. Stay tuned for developments.

Bank Fraud

Bank fraud is an attempt (or the actual execution) to defraud a federally insured financial institution. Bank fraud encompasses securities, funds and property owned or possessed by the institution that has been victimized. Bank fraud can still apply even if the institution does not suffer an actual loss. It also includes submitting materially false statements on loan applications, whether the loan is for a car, car lease, home mortgage, or revolving line of credit.

Uniform Fraudulent Transfer Act

Fraudulent conveyances that occur in various contexts, such as bankruptcy, have tripped up numerous individuals and businesses in the past. The language of these statutes is broad enough to include activity that is meant to defraud, delay or disrupt a creditor. Courts can go back as far as six years to uncover evidence of this style of fraud. An example in the context of the private sector is a leveraged buyout in which a company borrows against its assets and acquires stock. Such an action can be scrutinized as a fraudulent conveyance.

The Computer Fraud and Abuse Act

This Act bars the procurement of national security information, infiltrating confidential information stored on computers, password trafficking, damaging transmissions/access and any extortion involving threats to damage computing devices. It is worth noting that cell phones qualify as “computing devices”.

Immigration Fraud

Those who fraudulently use immigration documents such as border crossing cards, permits and visas can be found guilty of immigration fraud.

The Sarbanes-Oxley Act of 2002

This Act has eleven unique “Titles”, each with a section that has been written in response to corporate wrong-doings. Its purpose is to prevent future corporate scandals by requiring in-depth financial disclosures and auditor independence.

The experienced attorneys at Stahl Gasiorowski Criminal Defense Lawyers aggressively defend individuals charged with complex federal and state crimes. Founder Robert G. Stahl is recognized as one of the top criminal defense attorneys in the NY/NJ area for his skills, knowledge and success. To contact us to discuss your case, call 908.301.9001 for our NJ office and 212.755.3300 for our NYC office or email us at rgs@sgdefenselaw.com.