Running a business in the United States is complicated. Business owners have to follow laws and regulations set not only by state officials but ones enforced by federal agencies as well. These can be confusing to follow for even the savviest business owner, and in some instances the business decisions can even lead to accusations that a white collar crime has occurred.
Take the complicated nature of running a business under U.S. law alone and add to it conducting business with investors and other interested parties in foreign countries where a whole new set of laws are added. With the connected status of the current era, conducting business with or in a foreign country is more common than one might think. For one New Jersey-based consultant, this complicated relationship led to federal fraud charges.
According to the Securities and Exchange Commission, the consultant and his firm conducted something called reverse mergers that they say violate federal securities laws. The agency claims that the consultant used his position to obtain access into U.S. capital markets for 20 privately owned companies in China.
With these companies, the consultant than allegedly failed to disclose specific holdings as required by the SEC. Other violations were not specifically listed in the report but were called "outright fraud" by the SEC. U.S. investors allegedly lost a large amount of money while the consultant and his firm retained the consulting fees measuring into the millions.
Source: Insurance Journal, "U.S. SEC Charges N.J.-based Consultant with Fraud in Chinese Reverse Mergers," Sarah N. Lynch, Dec. 12, 2012
If reverse mergers sounds like a confusing term, you are not alone. White collar crimes are often some of the most confusing both prior to accusations and after. Our New Jersey law firm has extensive experience handling these types of cases.