Replies to post #4387 on NIR Group

[pdgood]

Be patient Firsk, your day's comin.

Put you question in front of those that count. No one here pulls that trigger although we load the gun.

[jurisper]

Dunno what's taking so long in this case. But things always move slowly. EG: my hedge fund scam benchmark, Lancer.

Chris Byron of the NY Post slammed it for a year before the SEC shut it down, in July 2003. It was a much simpler, more obvious scam than anything CR seems to have been doing. In the end though, I think the feds only acted when Morgan Stanley complained about having been scammed - needed a name of that size to really get things moving.

http://www.rgm.com/articles/lancer2.html

From there, it took until Sep 2008, more than five years, for the SEC to finally get a civil court decision against Lauer: http://www.sec.gov/news/press/2008/2008-225.htm

And it took almost 5 years after the July 2003 shut-down for the DoJ to lay criminal charges, in Feb 2008: http://miami.fbi.gov/dojpressrel/pressrel08/mm20080219.htm

The jury is now considering its verdict in the criminal case - ie more than 3 years after the charges were laid, and almost 8 years after the SEC first moved on it.

All this for a big, blatantly obvious scam, involving grossly inflated valuations on a handle of pinkies.

Point: these cases are risky, because even an obvious scam can be hard to explain to a lay jury, and the defence has lots of scope to muddy the waters. The prosecution has to prove criminal intent, which can be hard to do. The defense can always construct some sort of story on which the guy simply got things wrong.

Generally you can't count on a conviction unless you have insiders willing to testify, and obviously the insiders are not necessarily the most jury-credible people in these cases. The feds have to spend a lot of effort to make the case water-tight, and they are often naturally reluctant to put a lot of effort into a case unless they think they can do that.

I am actually nervous about whether the jury will return a guilty verdict in the Lauer/Lancer criminal trial - even though from a common-sense point of view it's a no-brainer. The defense just has so much scope to say that Lauer simply got things wrong; expert witnesses can easily be bought and can tend to cancel each other out; and so the main evidence for criminal intent comes from the testimony of shady insiders on plea bargains with obvious motives to lie.