FIRST CONTACT BY AGENTS OF THE SEC

These days, zealous thieves use all types of methods to steal your personal information. They may pose as your bank, your school, your credit card company and contact you via phone, email or even an official looking letter.

In a recent federal criminal case involving false statements to the SEC (U.S. v. Binette, Cr. No. 10-30036 (D. Mass)), the defendant asserted that he believed a caller claiming to be from the SEC was one such thief trying to pry personal financial information from him over the phone. As a result, wary of the caller’s intentions, Binette knowingly gave false information and made false claims to the caller. As it turned out, the caller was in fact an agent of the SEC investigating certain recent stock trades that Binette had made.

Binette was charged pursuant to 18 U.S.C. § 1001 which states in relevant part “whoever in any manner within the jurisdiction…[of the federal government] knowingly and willfully…makes any materially false…statement” commits a felony punishable by five years in prison. Binette was convicted following a trial, but he moved for a new trial.

Judge Posnor, who presided over the case, granted Binette’s motion, and in his memorandum of decision reviewed the case law beginning with U.S. v. Yermian (468 U.S 63 (1984)) pertaining to a defendant’s culpable state of mind (the mens rea) required for a guilty finding.

Judge Posnor allowed Binette’s motion to vacate the conviction and for a new trial. It would be a scary situation if Binette had been found guilty under 18 U.S.C. § 1001 considering that Binette lied only because he could not be sure of the caller’s true identity. Binette received no notice that he would receive a call from the SEC nor was there any other way for Binette to immediately confirm that who he was actually speaking to was an SEC agent.

Understanding of the fear of disclosing personal and financial information, Judge Posnor found that Binette did not knowingly and willfully dodge questions from an SEC agent but was being protective and, as a result, had done nothing wrong. By not knowingly or willfully lying to the SEC agent, thereby lacking the necessary mens rea of the crime, Binette could not be convicted guilty pursuant to 18 U.S.C. § 1001.

Had the SEC given Binette notice that the call would occur opposed to surprising Binette in the middle of the work day with sensitive questions, the SEC’s case would have been stronger. There was sufficient evidence for Binette to show that there was a reasonably distinct possibility that the alleged SEC agent could have been a “fraudster” and that Binette’s lying during the phone conversation was done out of necessity to protect his identity and financial information.

To protect yourself from identity theft, it is always best to be extremely cautious about transmitting sensitive information whether over the phone, by email, etc. If unexpectedly or spontaneously called by an alleged government agent, it would be wise to refuse disclosing sensitive information until you can confirm and verify the individual’s identity and that they are not a “fraudster” fishing for personal information. Independently obtaining the contact information for the government office/agent that reached out to you to confirm their interest in speaking with you and rescheduling the conversation to a timr when you have your legal counsel present is the best way to ensure that you can trust the caller’s identity.

If you have been contacted by a government agent seeking personal or business-related financial information, contact the Boston Business Lawyers at The Jacobs Law LLC immediately at 800.652.4783 or complete the form on our ContactUs page. We will respond as soon as possible, review the facts and legal issues with you, independently confirm the identity of the caller for you, schedule a meeting with the agent or department, and accompany you to the meeting as your legal counsel.

Call THE JACOBS LAW LLC today, YOUR ATTORNEYS FOR LIFE & BUSINESS®.