White Collar Crime Prosecution

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White Collar Crime Prosecution

Ladies and gentlemen of the court, I draw your attention to this serious case of corporate fraud, bribery, provision of false statement, and material misrepresentation before the Securities and Exchange Commission’s Rule 10b-5. The world is very well familiar with the implications of corporate fraud, as numerous small and medium enterprises have lost their wealth to fraudulent individuals. The case before you might entail the falsification of one business transaction and the misrepresentation of facts during a public offering, but the implications extend beyond the company. One of the claimants has lost a substantial chunk of its inventory to the defendant. The loss of wealth could have resulted in the further loss of employment for innocent individuals while the country would have faced a significant image problem as the swindled entities are foreign. Therefore, I am going to reiterate that this is no simple matter and that appropriate legal action should be taken against the defendant.

Violations of Anti-Bribery Provisions

In March 1, 2002, the American government formed the Foreign Corrupt Practices Act (FCPA), which was an outright legal attempt to stop the use of bribes to acquire and secure contracts from multinational companies abroad. Bribes are too often used as means to move ahead in bids to getting business abroad, However, the distinct aspects of the FCPA is that it enables the prosecution of American businesses if they are found liable for bribery, even if the vice is acceptable in the foreign territories where the business is being conducted. The practice might not be perceived as unethical or illegal, but it will be subject to FCPA liability. So far, the legislation has been effective in curtailing bribery and corruption in American businesses. Small and medium enterprises have benefited from the change as the bidding process to international contracts is now fairer and more open. Therefore, I see no reason why the FCPA should not be equally as effective today.

According to the court proceedings, the defendant, Jamie Jameson, engaged in the outright attempt to bribe Master Construction to secure a $10 million tender for TBC’s solar panels. The case highlights that Jameson attempted to hire Valentina Vale’s daughter. Vale is the current CEO of Master Construction. Vale’s daughter had been discreetly included in TBC’s selection process for the Sales Manager in New York. The case indicates that the defendant had not informed his team the reason for including the name of Vale’s daughter in the selection process. The defendant did not clarify the source of the candidate’s resume or her merits. Despite the candidate being highly educated in Engineering, she had no prior experiences with sales, which was the primary prerequisite for the marketed position. The skill gap did not prevent Jameson from giving the position to Vale’s daughter at the expense of more qualified individual.

Exhibit A is further proof that the defendant intended to use bribery as means to secure a tender from the Brazilian construction company. While Jameson had already finalized the employment of Vale’s daughter, she declined because of receiving a more suitable engineering offer from another company. Disappointed with this development, Jameson opted to write a letter to Valentina Vale informing her how the company was excited about working with her daughter. The digital communication highlighted in Exhibit A is an attempt to sway Vale into favouring The Brandan Company (TBC). The FCPA outlines that the provision of anything of value, such as employment, constitutes a bribe. Jameson should be prosecuted for this violation to ensure the protection of people that are qualified and suited for such positions. Jameson’s bribery skews the proper distribution of income in the labour industry, contributing the continuity of household poverty.

Wire Fraud Violations

The case proceedings also indicate that TBC, via Brendan, engaged in wire fraud. The company had sourced steel frames from SSI for its Ohio-based manufacturing plant. However, SSI was facing some production and delivery issues at the time. The delay resulted in the Ohio plant closing down due to the lack of parts. Nevertheless, SSI was able to acquire parts from a third-party, which it sent to TBC’s Beijing based manufacturing plant. Despite the Beijing offices being unaware of the shipment, the company accepted the delivery. Beijing acquired the parts, but the Ohio plant remained closed. The mix up associated with the delay provided the defendant with an opportunity to defraud the steel supplier. Since the Ohio-plant had been closed, Brendan had taken a photo and sent to SSI’s CEO, Ryan Bryan, requesting for the cancellation of the contract. Therefore, the defendant is liable for creating information devised to defraud.

The court should consider Exhibit C, which is proof that the defendant was successful in defrauding SSI of the delayed steel supply. The piece of communication involves Ryan apologizing for the failed shipment and cancelling the transaction, meaning they voided their payment. The letter also informs SSI was terminating its partnership with Trucking Co., the third party that made the delivery to the Beijing offices. Brandan knowingly used an image of an empty Ohio-plant to swindle SSI despite knowing the shipment had been made to its Beijing offices. Instead of clarifying the flawed delivery, the defendant saw the opportunity to evade a $1 million invoice. The fact that the swindling was done using emails make the case liable for wire fraud. As per the elements of 18 U.S. Code § 1343, the crime requires the use of interstate telephones or any form of electronic communication done to further a particular scheme.

 

The case highlights that Brendan was angry about the delayed delivery, and how it had resulted in a halt in production in the Ohio plant. Since the delivery was taken to the incorrect factory, Brendan was even more disappointed with SSI. Therefore, it can be concluded that the wire fraud was a deliberate move to punish the steel supplier for the fault in their supply chain. The anger and disappointment should be perceived as the intention to defraud. In addition, since TBC’s plant is in Ohio and the steel supplier, Trucking Co., is not, the case meets the minimal requirements for wire fraud because there is interstate communication.  

The Making of False Statements

The prosecution of popular TV celebrity Martha Stewart should have been a lesson for many businesspersons on the perils of making false statements in commercial dealings. The character was engaged in the promotion of failing stock, resulting in the swindling of many investors. There is reason to believe that Brendan and Jamie were engaging in the same malicious business practice. According to the provisions in 18 U.S.C 1001, it is criminal to produce untrue statements to government officials. The statute also criminalizes any attempt to conceal the truth from federal officials. For example, if an individual was interviewing with the FBI and SEC are producers falsified information, they become liable for criminal prosecution. There is sufficient room to show that the leaders of TBC engaged in the production of false statement and the concealing of the truth from the SEC.

According to the case presented before the court, the defendants, Brendan and Jameson collaborated in the production of the prospectus. The document is supposed to provide information on the financial performance and state of the company to potential investors and authorities. However, the prospectus did not include information concerning the pending bribery case in Brazil. A closer look at Exhibit B shows no information related to the Brazilian risk. Omission is considered one of the types of federal false statements.  

The defendants did not inform the SEC about the legal threat to improve their odds of approval to sell their shares publicly. The fact that the document was filed with the SEC makes the defendants liable for presenting false statements to government officials. In another scenario, the prospectus was released before the company went public. The document was released on July 27, but the company went public on August 1. The difference in dates confirms the deliberate falsification of information.  

Material Misrepresentation in Violations of SEC’s Rule 10b-5

Despite Rule 10b-5 of the Securities and Exchange Commission (SEC) being present to curtail the misrepresentation of company information, the vice is still rampant in companies seeking to go public to expand. TBC has enjoyed three years of impressive and consistent growth, resulting in the company opening overseas plants and selling in different foreign markets. After the third-year, the company sought to go public. The SEC requires company undergoing such a process to release particular information, including risks to potential investors. Accurate information is required for individuals and companies to assess whether a company’s performance or state of operations present a suitable investment opportunity. TBC, through Brandan and Jameson, engaged in the development of a prospectus that falsifies the company’s position with regard to the Brazilian market.

The court should pay special attention to how the defendants structured their financial reports to misrepresent information. The case informs that TBC is facing potential bribery allegations in its Brazil operations that pose a threat to its public offerings. TBC has sold over 500000 shares via the NYSE since availing its public offerings. Therefore, any negative news regarding the company could dissuade potential investors from purchasing TBC’s shares and stock. As a result, the prospectus did not include information on the pending bribery case. TBC submitted the falsified document with the SEC and even proceeded to release it via its corporate website.

As per the rules of SEC’s Rule 10b-5, there is the prohibition of financial misrepresentation and omission. Any individual, group, company, or entity engaged in the purchasing and selling of securities is prohibited from engaging in general fraud or conveying untrue statements of material fact. Suggesting the company has no impending risks is to be considered to be the same as the misrepresentation of material fact. The SEC describes the term ‘material’ as any risk associated with an investment and that the transaction concerns corporate stock. TBC was falsifying its prospectus to increase the appeal of its share offerings, which constitutes material fraud.

Conclusion

As I conclude, the defendants, Brendan and Jameson, are liable for all four counts of white collar crime. The court should see that TBC is liable for bribery as it sought to offer an employment position in return for a $10 million tender. TBC produced and disseminated a prospectus that did not include information on the pending Brazilian bribery case. The omission of the business risk makes the company liable for material misrepresentation. The omission also makes the company liable for making false statements in breach of 18 U.S.C 1001. The fact that the prospectus was filed with the SEC makes the defendants liable for cheating federal officials, a further reason for prosecution under material misrepresentation. The defendants are also liable for engaging in wire fraud as they used electronic communication to swindle Master Construction. Four counts of white collar crime should be sufficient to provide an example (deterrent) to future criminals. The prosecution asks the court to levy the near maximum allowable ruling against the defendants.