Next hotbed for securities fraud cases? You'd be surprised

U.S. prosecutors in Virginia plan to step up pursuit of financial fraud cases, taking advantage of a court holding two years ago that their district has jurisdiction over crimes linked to federal securities filings. The Justice Department, Virginia's Attorney General, and the Securities and Exchange Commission will comprise a new Virginia Financial and Securities Fraud Task Force, seeking to bring more cases and benefit from the district's fast-moving federal docket. “There are allegations that very large companies may have taken part in fraudulent activity,” Neil MacBride, the U.S. Attorney for the Eastern District of Virginia said today at a news conference in Richmond, Virginia. “This allows us to prosecute those cases.” The 4th U.S. Circuit Court of Appeals ruled in December 2007 that since computer servers for the SEC's Electronic Data Gathering, Analysis, and Retrieval system are located in Virginia, the state could be the jurisdiction for a prosecuting a crime involving SEC reports regardless of where the accused company or individuals are based. The Southern District of New York in Manhattan, with a courthouse blocks from Wall Street, historically has been the primary jurisdiction for securities fraud cases. Prosecutions in Virginia could encroach on cases brought in New York, where the New York Stock Exchange is based, and on Washington, home of the SEC. The task force sets the stage for trials in a district chosen for high-profile terrorism cases, such as that of Zacarias Moussaoui, convicted for his role in the Sept. 11 terrorist attacks, and John Walker Lindh, who pleaded guilty to helping Taliban fighters in Afghanistan. “You have a jury pool in Virginia that can be more conservative, more pro-government, more law and order than the average jury in the District of Columbia,” said Barry Pollack, a criminal lawyer at Miller & Chevalier in Washington. “It was a factor in terrorism and also a factor with their ability to do higher-profile white-collar criminal cases there.” The courts in the Eastern District of Virginia are known for their “rocket docket” because of the speed at which they handle cases. A trial can start within months of its initial filing, while other jurisdictions can have delays of as long as two years.