McAdams’ bipartisan bill aiding consumers hurt by investment fraud moves forward in Financial Services Committee

Congressional News 02

Congressman Ben McAdams, together with Congressman Bill Huizenga (R-MI), advanced a measure that gives federal securities officials more time to recover ill-gotten gains from white collar criminals who defraud investors.

The legislation gives more tools to investigators who work some of the most notorious and complicated investment fraud cases, such as the Bernie Madoff and Allen Stanford schemes. McAdams and Huizenga are members of the House Financial Services Committee. The Investor Protection and Capital Markets Fairness Act (H.R. 4344) was approved in committee by a bipartisan vote of 49 – 5.

“U.S. capital markets are the envy of the world. They promote job growth and economic opportunity.  But they only work to the extent that investors have faith that bad actors cannot profit off wrongdoing.  This legislation extends the time for the Securities and Exchange Commission to get back money from white collar criminals who prey on innocent investors and steal millions to enrich themselves. Those who commit fraud should not profit from their crimes and this bill helps ensure that victims recover what was stolen from them,” said McAdams.

“The latest report from the SEC found that more than $900 million in money swindled from investors through fraudulent activity is unable to be recovered because of a 2017 Supreme Court decision. White collar criminals must be held accountable for their behavior and the SEC must have the necessary tools to recover the losses suffered by Main Street investors. H.R. 4344 helps solve this problem by striking a delicate balance that allows the SEC more time to recover the money that was scammed from hardworking Americans. I am glad to see this bipartisan bill pass committee with strong support,” said Huizenga.

McAdams says the bill is a response to a 2017 Supreme Court decision, which ruled that the SEC’s authority to get convicted fraud perpetrators to return their ill-gotten gains was subject to a five-year statute of limitations.  The case stems from the federal prosecution of Charles Kokesh, who owned a firm that provided investment advice to business development companies. Over more than a decade, Charles Kokesh misappropriated tens of millions of dollars from these companies, funding a lavish lifestyle for himself while defrauding investors out of hard-earned funds. Kokesh was convicted and ordered to pay a civil penalty but due to time limitations imposed by the courts, he only had to repay $5 million of the $35 million in stolen funds. In the two years following the 2017 ruling, the SEC estimates that over $1 billion was pocketed by those who committed securities violations, due to the five-year statute of limitations.

The Chairman of the SEC and other expert witnesses have testified that a solution to the Kokesh ruling is needed to give the government a longer timeline, since certain securities violations, such as Ponzi-type schemes, are hard to detect and require extensive legal leg-work. H.R. 4344 would extend that period up to 14 years, ensuring the SEC has sufficient time to bring cases against bad actors and recoup funds for cheated investors.