While United States Attorneys across the country are accustomed to prosecuting complex financial crimes, most local District Attorneys do not have the knowledge or the resources to handle such cases. The prosecution of securities fraud, Ponzi cases, and the like, typically involve hundreds of thousands (if not millions) of documents and months of investigation. Local District Attorneys are more equipped to handle day long Robbery jury trials, or week long capital murder cases as opposed to fraud cases, which can last a month or longer.
This is why the Alabama Securities Commission typically is the prosecuting agency for complex financial fraud cases prosecuted by the State. If such a case is not picked up by “the Feds”, prosecutors within the Alabama Securities Commission, which is a division of the Attorney General’s Office, step in. Such cases generally are indicted by local county grand juries that are presided over by assistant attorney general’s whopresent evidence and question witnesses. The two most common charges from such an investigation are Sale of Unregistered Securities and Sale by an Unlicensed Broker.
The charges of Sale of Unregistered Securities usually imply that money exchanged hands in return for a “security”. These cases typically involve an investor being convinced to either invest money, or lend money, with promises of some return on their money. Often, the incentive to invest or lend the money turns out to be fraudulent. One common scheme is to offer unusually high returns or interest on the investor’s money.
Alabama blue sky laws require that any security (with a few exceptions such as securities only offered to accredited investors, etc.) be registered with the Alabama securities commission. If a security is sold that is not registered with the State, this likely constitutes a crime. Because fraudulent intent is not necessary to be convicted, defendants often argue either that the instrument was not a “security”, or that they didn’t “sell” anything.
The same defenses often apply to the second charge that typically accompanies a “Sale of Unregistered Securities” charge – “Sale by an Unlicensed Broker Dealer.” In Alabama, as in other states, in order to sell securities, you typically have to be a licensed broker dealer. This is usually easy to determine. You either have a valid securities license, or you don’t. Therefore, as with the defense of unregistered securities cases, the case will usually rise or fall with whether the instrument in question is a security, or whether the Defendant “sold” it.