Earlier this week, federal authorities announced a 23-count criminal case against a high-profile Miami businessman. The suit claims that the businessman and his accountant lied to investors and used their funds to finance a luxurious lifestyle.

Like many federal white collar crime cases, this prosecution involves two parts. A federal prosecutor is pursuing a criminal case while the Securities and Exchange Commission is seeking additional penalties in a civil complaint. This means that the businessman will have to defend himself on two separate fronts based on the same allegations. 

The possible penalties of a fraud conviction can include lengthy prison sentences, restitution and a damaging criminal record. Civil cases can be just as dangerous. The SEC’s complaint against this businessman is an example of the possible consequences. In this case, the agency seeks to force the businessman to repay the money that he allegedly acquired and pay additional financial penalties to the SEC itself.

On top of these enormous financial punishments, the SEC also wants an order from the court prohibiting the businessman and a co-defendant from ever serving as an officer or director of a publicly traded company. Since this businessman was once named Ernst & Young’s “Entrepreneur of the Year,” this penalty could have an even longer-lasting impact on his future career.

This is just another aspect of the high-stakes consequences of federal fraud cases.

Source: U.S. Securities and Exchange Commission, “SEC Charges Prominent Entrepreneur in Miami-Based Scheme,” Dec. 7, 2012

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