WATCH LAWYERS FOR PONZI SCHEMERS BEFORE SENTENCING

Nevin Shapiro

Actions taken by a criminal defence lawyer for one of Miami's more flamboyant Ponzi schemers serve as a reminder that, in their zealous efforts to obtain a lower sentence for their clients, one way or the other, these attorneys may step on toes, including yours. Whilst certain activities may be strictly legal, and ethical, or in the grey area, third parties could be adversely affected. You need to be alert to such potential issues.

The client was Nevin Shapiro, whose $900m Ponzi scheme resulted in a twenty-year sentence imposed in Federal Court. His attorney reportedly used the ability to take discovery in the bankruptcy of the failed investment company to obtain testimony that was shared with a non-governmental regulatory body who had other targets, but could not subpoena them. When the circumstances of the scheme to obtain answers to non-financial questions, by employing the bankruptcy, surfaced, the regulatory agency announced that it would decline to use the information obtained, asserting that the method was inappropriate.

Note well that criminal defence lawyers who are seeking a §5k1.1 departure at sentencing, to allow the Court to go below the Guidelines, or a subsequent Rule 35(b) Sentence Reduction, for their clients, have been known to locate fugitives, find missing funds, have their clients wear concealed wire recorders to obtain incriminating evidence, hire private investigators, and many other proactive activities, solely to gain a reduced sentence. Anything goes ? Not quite, but close.

In their zeal to obtain something that will benefits their clients at sentencing, or to get a reduction within a year thereafter (the Rule 35 time frame), third parties are often targeted. I had the dubious experience once of having a cocaine trafficker, who had been arrested and was working with DEA, call me up, and ask for money that I was holding for an absentee client. He then disappeared for an extended period, and I returned the funds to the client. When he contacted me weeks later, I could no longer disburse to him. I learnt all this years later, when I heard the tape-recorded conversations, including the DEA agent's coaching. Had I distributed the money to him, I probably would have been arrested for
conspiracy.

Let me suggest that, whenever a bank client is charged with a Federal crime, or an individual who has been doing business with a bank client is arrested, that you be extremely careful in your dealings with all such individuals, or those who work for them. If any lucrative opportunities, or untoward suggestions, are made to you, decline forcefully and in the presence of witnesses, to establish that you wanted no part of it, and that you did not acquiesce to any offer to participate in criminal conduct; be careful out there. Seek the advice of a competent criminal defence attorney; he may suggest that you disclose the details of the meeting to law enforcement.

There are also other dangers: there were statements to the effect that Shapiro was laundering drug money for the PKK, the designated Kurdish terrorist group. Ponzi schemers sometimes take money from people that you would not want to be in the same room with, and who would not be permitted to open accounts at your bank. That's one more reason to avoid anyone whose financial activities could possibly be a Ponzi scheme.

Sentence reduction activities for clients rarely see the light of day; you do not want to be the unwitting solution to some convicted felon's sentencing problem, which will be at your expense.