''Operation Broken Trust'', the largest
investment fraud
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
sweep by the
Federal government of the United States
The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fede ...
, was conducted between August 16 and December 1, 2010.
The stated purpose of the operation was to "root out and expose" investment scams within the U.S. and to educate the public.
[ It was announced that the operation involved 343 criminal cases with damages of $8.3 billion and 189 civil cases with damages of $2.1 billion; more than 120,000 victims were affected.]
Financial Fraud Enforcement Task Force
The inter-agency task force was set up by President Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
in November 2009 to supersede President George W Bush
George may refer to:
People
* George (given name)
* George (surname)
* George (singer), American-Canadian singer George Nozuka, known by the mononym George
* George Washington, First President of the United States
* George W. Bush, 43rd President ...
's Corporate Fraud Task Force.[ At the December 6, 2010, press conference, participating agencies were represented by ]Attorney General
In most common law jurisdictions, the attorney general or attorney-general (sometimes abbreviated AG or Atty.-Gen) is the main legal advisor to the government. The plural is attorneys general.
In some jurisdictions, attorneys general also have exec ...
Eric Holder
Eric Himpton Holder Jr. (born January 21, 1951) is an American lawyer who served as the 82nd Attorney General of the United States from 2009 to 2015. Holder, serving in the administration of President Barack Obama, was the first African America ...
for the United States Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
, Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
(FBI) Executive Assistant Director Shawn Henry, U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC) Director of Enforcement Robert Khuzami
Robert S. Khuzami (; born August 2, 1956) was the Deputy U.S. Attorney for the United States Attorney's Office for the Southern District of New York until March 22, 2019. He previously was a United States federal prosecutor and Assistant United ...
, U.S. Postal Inspection Service
The United States Postal Inspection Service (USPIS), or the Postal Inspectors, is the law enforcement arm of the United States Postal Service. It supports and protects the U.S. Postal Service, its employees, infrastructure, and customers by enfor ...
(USPIS) Chief Postal Inspector Guy Cottrell, Deputy Chief Rick Raven of the Internal Revenue Service
The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
Criminal Investigation (IRS-CI), and Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
The Commodity Exchange Ac ...
(CFTC).[ Other participating agencies included the ]U.S. Secret Service
The United States Secret Service (USSS or Secret Service) is a federal law enforcement agency under the Department of Homeland Security charged with conducting criminal investigations and protecting U.S. political leaders, their families, and ...
and the National Association of Attorneys General
The National Association of Attorneys General (NAAG) is a 501(c)(3) nonprofit organization of state and territory attorneys general in the United States.
NAAG is governed by member attorneys general, with a president and executive committee se ...
.
Scope of the investigation
On December 6, 2010, the Task Force went public announcing that it had examined scams targeting individual investors, not complex corporate fraud issues. In each case individual investors entrusted their money to individuals who presented "investment opportunities" promising superior returns. These investments were either fictitious or different from those claimed, and often involved Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are comin ...
s. Affinity fraud
Affinity fraud is a form of investment fraud in which the fraudster preys upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity ...
was directed at the savings of trusting but often uninformed people. Scams included fraud in commodities, real estate, foreign exchanges, business opportunities, and market manipulation
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
(such as pump and dump
Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operat ...
).[ Khuzami explained that "fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees", and stressed that law enforcement will "pursue fraud in whatever form."][
''Operation Broken Trust'' included cases that were investigated already during the Bush administration or before the formation of the task force, and many were well on the way to completion before the sweep began.][
]
Reaction
Reactions to Holder's announcement about ''Operation Broken Trust'' were framed by the apparent lack of governmental efforts of prosecuting individuals who may bear responsibility for the 2008 financial crisis
8 (eight) is the natural number following 7 and preceding 9.
In mathematics
8 is:
* a composite number, its proper divisors being , , and . It is twice 4 or four times 2.
* a power of two, being 2 (two cubed), and is the first number of t ...
, specifically since nobody at Lehman, Merrill Lynch
Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment bank ...
, Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
, and Goldman Sachs
Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
(other than Fabrice Tourre
Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
) has been charged criminally.sideshow
In North America, a sideshow is an extra, secondary production associated with a circus, carnival, fair, or other such attraction.
Types
There are four main types of classic sideshow attractions:
*The Ten-in-One offers a program of ten seq ...
",[ and going for the "little fish".][ It was opined that rather than focusing on small-time operators, the government should prosecute individuals for their role in the 2008 financial crisis even if guilty verdicts were not assured; court proceedings would allow for transparency, serve as a deterrent, and provide lessons on how to prevent future grand scale fraud.]
Results
At the time of the announcement on December 6, 2012 eighty-seven defendants had received prison sentences that in some cases exceeded 20 years.[ Particular prosecutions include Palm Polo Holdings Ltd, which was found not guilty after being charged with violations of the ]Clean Water Act
The Clean Water Act (CWA) is the primary federal law in the United States governing water pollution. Its objective is to restore and maintain the chemical, physical, and biological integrity of the nation's waters; recognizing the responsibiliti ...
[
]
References
{{Reflist
External links
StopFraud.gov
a US Government resource
Judge Edmund F. Brennan: Photo and Biography
U.S. Attorney Benjamin B. Wagner and the F.B.I. Field Office for Sacramento announce the arrest of local community members in relation to the Operation Broken Trust Investigation, Sacramento B Metro News Article from December 2010
2010 in economics
Pyramid and Ponzi schemes
Finance fraud
Crime in the United States
Corruption in the United States