Trump pardons provide leniency in cases involving investor harm

Trump pardons provide leniency in cases involving investor harm
Such pardons don’t sit well with securities attorneys, who say they contradict the mission of regulators and send the wrong message to perpetrators.
JAN 21, 2021

A few of the people to whom President Donald Trump granted pardons and reduced prison sentences just before he left office on Wednesday committed crimes related to harming investors, a move that sends the wrong message, securities lawyers said.

Among those who received leniency from Trump were David Tamman, a lawyer who was convicted of obstructing investigations into a $22 million Ponzi scheme; Sholam Weiss, who was convicted in the 1994 collapse of a life insurance company; Greg Reyes, the former chief executive of Brocade Communications, who was convicted of securities fraud; Eliyahu Weinstein, who was convicted of real estate investment fraud; and William Walters, James Austin Hayes and Drew Brownstein, who were all convicted of insider trading.

Tamman was found guilty of 10 counts that included obstruction of justice, altering records in a federal investigation, and being an accessory after the fact to the fraud scheme, according to a September 2013 statement from the U.S. Attorney for the Central District of California announcing his seven-year sentence. Tamman and the operator of the $22 million Ponzi scheme, John Farahi, conspired to undermine an SEC investigation.

Tamman completed his jail term in 2019 and emerged a better man, the Trump White House said in announcing the pardon list.

“Mr. Tamman accepts full responsibility for his actions and numerous friends and colleagues have attested that he is a decent man who experienced a terrible lapse in judgment for which he has already paid a significant price,” the announcement states.

Weiss had already repaid his debt to society, the Trump White House said.

“Mr. Weiss was convicted of racketeering, wire fraud, money laundering, and obstruction of justice, for which he has already served over 18 years and paid substantial restitution. He is 66 years old and suffers from chronic health conditions,” the pardon statement says.

But pardons don’t sit well with a former SEC attorney who says they contradict the mission of regulators and the Department of Justice.

“The goals of justice and deterrence are effectively denied by a pardon,” said David Chase, who was a senior counsel in the SEC Division of Enforcement and now owns an eponymous law firm in Ft. Lauderdale, Florida.

Andrew Stoltmann, a Chicago securities attorney who represents investors in arbitration cases against brokerages, said a pardon can be a legitimate use of discretionary power by a president. But the habit of issuing pardons from the White House has gone off the rails in the last few administrations.

“Trump has followed in a long line of Democrats and Republicans who have abused pardon power,” Stoltmann said.

Pardons perpetuate the problem of white-collar crime being treated more gently than other kinds of crime, Stoltmann said. Leniency involving schemes that harm investors looks particularly bad at a time when surging markets may be camouflaging future fraud cases.

“It sends precisely the wrong message at precisely the wrong time,” Stoltmann said.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.