The Watchdog Report

By Comptroller General Richard Eckstrom

 

 

White-collar financial crimes involving securities fraud have been rampant across the United States.   Even in South Carolina we’ve seen complex million dollar criminal schemes.  Yet these losses involve much more than just money.   For the targeted victims the ordeal can be devastating, frightening and painful.

 

Some victims have lost their entire life savings in financial schemes that all too often exploit long-time relationships of trust.  The resulting loss of trust, coupled with powerful feelings of betrayal, can be overwhelming.  This is especially true when the promoter has been a close friend or a trusted community leader.  Tragically, victims can be traumatized when money is taken through fraud just as much as if forcibly snatched from them at gunpoint.

 

Unfortunately, the legal system does not always deal with white-collar crimes the way it deals with armed robbery or burglary.  In South Carolina, for example, many securities violations have previously been handled simply through administrative processes.  Settlement often came in the form of administrative orders and consent decrees, rather than in jail time or fines.  Financial swindlers often simply had to agree to stop cheating investors of their money.  This approach allowed unscrupulous business operators to avoid real punishment and move on with the next “scam of the month” to yet another group of unsuspecting victims. 

 

This unjust process is changing.  Laws have recently been passed that give our state attorney general greater power to aggressively prosecute securities fraud through our court system.

 

A recent pair of notable, multi-million dollar securities fraud cases in the Palmetto State had the public clamoring for stronger prosecution.   Tougher securities laws were urgently needed.  The legislature properly responded by giving the state grand jury the power to prosecute certain securities violations as serious crimes.  With these new powers, the state grand jury has already obtained some high-profile indictments.  

 

It is essential that law enforcement bring to justice all those who victimize law-abiding citizens.  The work of the attorney general and the state grand jury are key tools to protect ourselves against the crime of financial fraud.  However, since criminal prosecutions happen only after many long months of painstaking investigation, this drawn-out process may not adequately inform the public and protect against financial scam artists. 

 

The truth is, public outreach and education have been sorely lacking.  Many people are unaware of financial crimes until they hear of them in the news.  By then it’s often too late.  We must strive to better inform of this type of criminal activity so that the public has the information to protect itself against unscrupulous promoters of financial schemes.   As the state’s chief financial officer and a friend of law enforcement, I am committed to doing my part to help fill the void by educating citizens about these serious problems.  

 

In keeping with this goal, the next few editions of “The Watchdog Report” will expose various types of financial crimes.  We’ll examine their basic structure to better understand how they target victims.  We’ll be a Watchdog on the lookout for financial schemes, and we’ll help explain how you can protect against becoming a victim.