US Financial Crimes expert, Alexander M. Vasilescu, Esq., the Supervisory Trial Counsel for the United States Securities and Exchange Commission’s (SEC) New York Regional Office, is this week meeting with Belize’s financial authorities.
According to the United States Embassy in Belize, Vasilescu is here to make presentations on prevention, investigation and enforcement issues facing regulatory, law enforcement, and risk management officials in the area of financial crimes.
Amandala met with Mr. Vasilescu at the Radisson on Tuesday morning, and he shared some insights into the policing of financial crimes. However, Vasilescu declined to comment on the recent developments in Belize whereby the Government had reported that it was no longer pursing criminal charges against two Belize City banks, following threats from US banks that corresponding bank ties would be severed.
Vasilescu told us that his job with the US SEC entails investigating and prosecuting financial fraud and other forms of financial misconduct, and for the last three years he has overseen the trial unit for the NY office, the second largest office of the SEC.
The greatest challenges in policing financial crimes is, “The fraudsters are very creative and take advantage,” he told Amandala.
“Ultimately, in a lot of our cases following the money is the most powerful thing, you know, because it’s hard to hide money and so if you can follow the money trail it usually leads to the culprits,” Vasilescu explained.
He told us that in the United States, they are often confronted with cases where corporations argue for leniency, because if a company is criminally prosecuted it could be devastating, but companies even try to argue against civil relief, citing possible economic harm to them.
“We take that into account, but it’s not the only fact. We have to balance leniency with law enforcement efforts,” he added.
He cited the example of Computer Associates of Long Island, New York, a major player in that part of the state.
“In the end though, 7 executives were criminally prosecuted for obstruction and securities fraud, including lying to [the SEC],” Vasilescu informed.
However, no suit, according to Vasilescu, is levied without the consent of the five political appointees who head the Commission – three for the ruling party and two for the party out of power.
“We look at a number of things. We look at the scope of the misconduct, the harm that it caused to investors or to people. We look at what remedial steps they’ve taken since the conduct came to light. Have they on their own cleaned house? Have they on their own reformed the entity so that it’s not going to happen again? Have they undertaken compliance correction? But we also look at, in cleaning up, did they fire the people who were responsible for this,” the financial expert elaborated.
In some cases, the SEC issues a simple “cease and desist” order; in other cases, large financial penalties are imposed.
“Some companies are so egregious, you can’t give them a free pass…” he underscored. “We look at other recent settlements. We look to see if it is recurring conduct. Do they have no compliance in place? Because if they have none, it’s hard to argue for leniency when they were on notice that they should have had some procedures and compliance and they’ve just flouted the law.”
There are times when the evidence may be strong against the company, but not against a particular individual of a company, but there are times when the evidence is there to hold individuals accountable.
“If we settle more leniently with the company, can we send a message to the public by punishing individuals who are responsible for it?” he reasoned.
Loss of money to innocent investors is also a big factor, he highlighted.
“That goes into the scope of the harm,” he noted, adding that greater harm means harsher penalties, and broader and more serious relief, the more the Justice Department would be interested in bringing criminal proceedings.
Following our interview, Mr. Vasilescu went over to the Central Bank of Belize to meet officials there. His four-day visit to Belize also entails meetings with Belize’s Financial Intelligence Unit (FIU), as well as government officials, banking executives, lawyers, and crimes investigators/prosecutors.
Vasilescu told us that back in New York he oversees a team of people who go into court and fight civil cases against companies and individuals believed to be involved in financial crimes.
One intriguing case he cited was that of a Cole Bartiromo, who, Vasilescu said, was busted at the age of 17 for carrying on a Ponzi scheme on the Internet – Invest Better 2001 – netting himself a million dollars by convincing gullible people he is a no-miss sports gambler, able to yield investors 1,000 percent return on their investment in a month. The young man used a credit card his friend had borrowed from his mom in Southern California to run the Internet scam – all this even while he was negotiating a settlement with SEC authorities in Miami for a lesser fraud. By the time he was 18, he found himself facing criminal charges and prison time for attempting to commit bank fraud. As the story goes, Bartiromo had asked a friend if he could secretly borrow money from people’s accounts over weekends to do sports gambling.
Vasilescu said that in late 90’s, Internet became a big area for financial fraud and even though most of the ventures online are deemed to be legitimate and some fantastically successful, “fraudsters go where the action is.”
“We constantly have to be vigilant and look to new areas and try to get there at the same time that the fraudsters do,” he said, adding that it’s a combination of using the tools available and capitalizing on the mistakes and the ultimate greed of fraudsters—often their own downfall.