White-collar cases inch toward justice
By Helen Huntley, Times Personal Finance Editor
Published June 17, 2007
To frustrated investors, last week's arrest of Orlando music producer Lou Pearlman seemed to be a terribly long time coming.
It was four months from the time the state filed civil fraud charges against him until the FBI picked him up in Indonesia on a criminal charge of bank fraud.
"He owes me $145, 000 and one way or another, I'm going to get that bum yet, even if I have to go to Europe myself to find him, " Arthur Barone of Wimauma fumed only a day before Pearlman's arrest.
Frustrating though it may have been, the Pearlman arrest actually came pretty fast for a white-collar crime case. In fact, the criminal complaint against him was filed and sealed so we didn't know about it only a month after the state's action. The big delay was finding Pearlman to make the arrest.
It isn't unusual for a fraud case to take far longer to produce criminal charges, and many never do. Some end up as purely civil cases producing a fine, a bar from the securities industry and a promise never to do it again.
"White-collar cases are notoriously slow; they can take years, " said Ellen Podgor, a former federal prosecutor who teaches criminal law at the Stetson University College of Law in St. Petersburg. She says there are lots of reasons for that, starting with piles of paperwork that have to be organized, then explained to a grand jury to obtain an indictment.
"Proving a white-collar case is very difficult, " she said. "And they (prosecutors) are not usually exclusively on one case; they have many cases."
The Pearlman case was more complicated than most because he was overseas and prosecutors had to worry about how they were going to get him back. Had an extradition fight occurred, it might have set the case back for years. With no extradition treaty to honor, Indonesia could have let Pearlman stay, but instead chose to expel him as an undesirable visitor.
Tampa lawyer John Fitzgibbons, also a former prosecutor, blames a lack of resources for delays in many white-collar prosecutions.
He said white-collar crime is taking a back seat to terrorism, immigration issues and even pornography and drug offenses that Congress has turned into federal crimes.
"It's probably a good time to be a white-collar criminal in Florida, " he said.
Sometimes a delay in filing charges is part of a deliberate strategy.
"They may first want to get the other individuals first, then move up the ladder, " Podgor said. In other cases, they start at the top and work their way down.
We don't know if or how many of Pearlman's former associates and sales agents will become targets for prosecutors.
Would it be better to leave these cases in the hands of local law enforcement and state attorneys?
Fitzgibbons says state prosecutors also don't have a lot of resources to devote to white-collar crime. In addition, it is more difficult for them to compile a case when evidence is in other states or countries.
After my recent column on unclaimed property, I heard from readers who wondered why they had to pay to get their money back. The answer is that they don't if they deal directly with the state holding their money. Apparently some readers got waylaid by clicking on ads when searching for their money.
If Florida's got your money, go to www.fltreasurehunt.org. If it's some other state, check in at www.unclaimed.org or www.missingmoney.org and find the direct link to the other state. And be careful where you click.
Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, write firstname.lastname@example.org or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731. Read more questions and answers at blogs.tampabay.com/money.
[Last modified June 15, 2007, 20:44:25]
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