‘Operation broken trust’: Feds hit hundreds with $8.3B in fraud charges

A nationwide law enforcement crackdown targeting financial fraud has led to cases against 343 criminal defendants involving $8.3 billion in estimated losses, Attorney General Eric Holder announced Monday.

A nationwide law enforcement crackdown targeting financial fraud has led to cases against 343 criminal defendants involving $8.3 billion in estimated losses, Attorney General Eric Holder announced Monday.

“Operation Broken Trust” is the first national effort of its kind aimed at a broad array of investment fraud schemes and the 3 1/2-month campaign was organized by the Obama administration’s Financial Fraud Enforcement Task Force.

The schemes that were uncovered highlight “the pervasiveness of the threat,” Shawn Henry, the FBI’s executive assistant director, told a news conference.

In one case in Texas, an oil and gas investment Ponzi scheme defrauded 7,700 investors of more than $485 million. In another case, in Chicago, the operator of a Ponzi scheme victimized elderly Italian immigrants and hundreds of others after promising them annual returns of 10 to 15 percent.

Seventy-five investors lost $89 million to a Ponzi scheme operator in Florida who used some of the money to pay illegal sports gambling debts, to buy floor seats at Miami Heat basketball games and to make payments on his yacht and his residence in Miami Beach.

The law enforcement operation is a warning that cheating investors out of their earnings and savings “is no longer a safe business plan,” said Holder.

In addition to the criminal cases arising from the probe, civil cases involved estimated losses of more than $2.1 billion.

In all, the schemes harmed more than 120,000 victims. Eighty-seven defendants have been sentenced to prison. There were 231 criminal cases and 60 civil enforcement actions.