Patent Fraud Doesn't Void Attorney-Client Privilege

A federal judge in Philadelphia has preserved the attorney-client privilege for a pharmaceutical company that had been found to have defrauded the patent office.

Patent Fraud Doesn't Void Attorney-Client Privilege

A federal judge in Philadelphia has preserved the attorney-client privilege for a pharmaceutical company that had been found to have defrauded the patent office.

Patent Fraud Doesn't Void Attorney-Client Privilege

A federal judge in Philadelphia has preserved the attorney-client privilege for a pharmaceutical company that had been found to have defrauded the patent office.

High & Low Finance: After a Fraud, Regulators Go After a Bank

In such a scheme, money that is supposed to be invested is really used to line the pockets of the Ponzi promoter or to pay previous investors. A lot of money has to flow through bank accounts, and it flows in ways that differ from what the promoter tells investors is happening. Banks are in a unique position to notice what is going on before the money is all gone.

But it is extremely rare for a bank to face sanctions for not noticing.

The typical judicial attitude was expressed last year when the United States Court of Appeals for the 11th Circuit upheld the dismissal — before a trial or any discovery of evidence — of a class-action suit against Bank of America by investors who had lost money in a pyramid scheme run by a promoter named Beau Diamond.

Even assuming that the plaintiffs could prove that Mr. Diamond “engaged in atypical business transactions, such as numerous wire transfers unrelated to any legitimate business activity,” the appellate court ruled, that would not be enough. The allegations in the suit were insufficient to render “plausible” a conclusion that the bank had “actual knowledge” of what Mr. Diamond was doing, so there was no need for a trial.

See no evil, face no liability.

That is why a joint regulatory action filed last week by the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network, a part of the Treasury Department, seems so noteworthy. TD Bank, an American subsidiary of Canada’s large Toronto-Dominion Bank, agreed to pay $52.5 million to settle accusations that it had helped a Florida lawyer named Scott W. Rothstein commit one of the more brazen Ponzi schemes of recent years.

It is not clear, however, whether this represents a new attitude on the part of regulators to try to force banks to pay attention to possible Ponzi schemes — just as the Patriot Act requires them to monitor possible terrorist financing — or whether it is an isolated response to a particularly egregious case. Certainly the regulators had evidence, much of it provided by Mr. Rothstein in an effort to minimize his sentence, suggesting that one or more bank employees knew they were helping him deceive investors.

If regulators do not go after banks, the banks are usually home free. Some bankruptcy trustees for collapsed Ponzi schemes have tried to sue banks to recover money for defrauded investors only to have judges rule that because the trustee is standing in the shoes of the fraudster, such suits are not permitted. But when investors try to sue the banks, they can run up against rules limiting class-action suits and a Supreme Court decision saying that only the government — not victims — can bring suits contending that a bank, or anyone else, aided and abetted a fraud.

The Rothstein Ponzi scheme was created by a lawyer who had burst onto the Fort Lauderdale scene, living large and making highly publicized charitable donations. His firm, Rothstein, Rosenfeldt & Adler, employed 70 lawyers. He was vice chairman of a Florida Bar Association grievance committee that heard ethics complaints against lawyers. He was named to a committee to advise on state judicial appointments.

And he put together a $1.2 billion Ponzi scheme, according to the federal charges to which he pleaded guilty.

His scheme involved persuading investors to put money into “structured settlements.” Supposedly, these were settlements of cases that involved complaints like sexual harassment. The companies, he explained, had agreed to pay money over time to his clients in return for their silence. Those clients would sell the right to the payments in return for an upfront payment from the investor. He assured the investor that all the money had in fact been paid into escrow accounts he administered.

He spread the profits of the Ponzi scheme around, according to the federal charges, using money to “provide gratuities to high-ranking members of police agencies in order to curry favors with such police personnel and to deflect law enforcement scrutiny.” Political contributions were made with the money “in a manner designed to conceal the true source of such funds and to circumvent state and federal laws governing the limitations and contribution of such funds.” He sponsored fund-raisers for, among others, Gov. Charlie Crist, Senator John McCain and President George W. Bush.

For their first wedding anniversary, in 2009, he and his wife, Kimberly, attended an Eagles concert, where Don Henley dedicated a song, “Life in the Fast Lane,” to them. That cost him a $100,000 charitable contribution.

Floyd Norris comments on finance and the economy at nytimes.com/economix

S.&P. Calls Federal Fraud Suit Payback for Credit Downgrade

Standard & Poor’s on Tuesday denounced a $5 billion fraud lawsuit by the United States government as retaliation for its 2011 decision to strip the country of its AAA credit rating.

The McGraw Hill Financial unit of S.& P. was the only major credit rating agency to remove the United States’ top rating, and the only one the Justice Department sued over claims of misleading banks and credit unions about the credibility of its ratings before the 2008 financial crisis.

In a filing on Tuesday in Federal District Court in Santa Ana, Calif., S.& P. said that the lawsuit was an effort to punish it for exercising its First Amendment rights and that the suit seeks “excessive fines” in violation of the Eighth Amendment.

It said the government’s “impermissibly selective, punitive and meritless” lawsuit was brought “in retaliation for defendants’ exercise of their free-speech rights with respect to the creditworthiness of the United States of America.”

A Justice Department spokesman declined to comment.

S.& P. seeks the dismissal of the lawsuit, which in July, Judge David Carter of Federal District Court allowed to go forward, with prejudice, meaning that it cannot be brought again. The August 2011 downgrade of the United States’ credit rating to AA-plus from AAA reflected concern about the federal government’s ability to address the nation’s swelling debt.

The government’s Feb. 4 lawsuit accused S.& P. of inflating ratings to win more fees from issuers, and failing to downgrade ratings for collateralized debt obligations despite knowing they were backed by deteriorating residential mortgage-backed securities.

In Tuesday’s filing, S.& P. estimated that more than $4.6 billion of the losses it claims might have resulted from collateralized debt obligations that were structured, marketed or sold by Bank of America or Citigroup. It also said more than $1 billion came from debt that had never been issued.

S.& P. also said the government lacked authority to sue under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, because no federally insured financial institutions had been affected by violations.

The government has in recent months made more use of that act, which was passed after the 1980s savings and loan crisis, in part because it has a lower burden of proof and a longer statute of limitations than other laws.

Business Briefing | Legal News: Swiss Lawyer Pleads Guilty to Conspiracy in Tax Fraud

Room for Debate asks why some people are drawn to scientific stories, and others to religious ones.

An overdue standard from the Food and Drug Administration is good news for consumers with food allergies.

DealBook: Former Trader Is Found Liable in Fraud Case

Why 'Tone at the Top' is Essential in Preventing Employee Fraud

I was recently involved in a fraud investigation of the CFO of a privately held company that spent years following the directives of the majority shareholder to run the majority shareholder?s personal and/or nonexistent expenses through the company.

Two Philly Firms Sued Over Former Partner's Alleged Fraud

The law firms of Blank Rome and Cozen O'Connor are under fire from real estate investors who say that a former partner who worked at both firms cheated them out of millions of dollars on a phony development project, according to media reports. The investors filed a suit in the Southern District of New York this week, according to a report from Reuters.

DealBook: Britain’s Top Fraud Office Aims to Add Bite to Its Bark

Andrew Testa for The New York TimesDavid Green, the director of Britain’s Serious Fraud Office.

David Green, the director of Britain’s Serious Fraud Office, is in a combative mood.

On his desk at his office, a stone’s throw from Trafalgar Square in London, sits a souvenir plaque commemorating the signal that Admiral Horatio Nelson sent to his fleet on the eve of the Battle of Trafalgar in 1805. It says, “England expects that every man will do his duty.”

Mr. Green says his duty is to revive confidence in his office as a top-tier prosecutor of serious fraud and corruption. And he plans to do that with the help of one of the biggest cases the organization has ever taken on: the investigation into the rigging of the London interbank offered rate, or Libor.

His office plans to bring criminal fraud charges against Thomas Hayes, a former trader at UBS and Citigroup, as early as Tuesday, according to a person briefed on the case. Mr. Hayes, who was charged with fraud late last year by the United States Justice Department, is seen as a central character in the rate-rigging scheme. His role figured prominently in the case against UBS, which under a settlement pleaded guilty to one count of felony wire fraud and paid about $1.5 billion in fines. The criminal charges against Mr. Hayes would be the first brought by British prosecutors for suspected manipulation of Libor.

“What people look to is success in the very big headline cases, and inevitably Libor comes to mind,” Mr. Green, 59, said in an interview this month. “I am in the business of doing justice and restoring public confidence in the rule of law. The public need to have confidence that white-collar criminals are dealt with as criminals, that they are not given some special rosy path with a cop-out sentence at the end of the day.”

When Mr. Green took over as director of the fraud office in April last year after 25 years as a prosecutor and defense lawyer, he found an agency whose reputation was in shambles and whose staff morale had hit rock bottom. Two London businessmen, the Tchenguiz brothers, Robert and Vincent, had dragged the office to court over a botched investigation into their connections with failed banks in Iceland. The fraud office apologized and started an internal investigation but also ran up huge legal costs that might continue to grow.

Additional embarrassment came in 2011, when the office decided against investigating Libor and shifted responsibility instead to the Financial Services Authority. While the Justice Department started to delve into the Libor case from abroad, the fraud office said it would only be a further drag on its already stretched resources.

Despite an increase of publicity-friendly dawn raids on suspected wrongdoers and some saber-rattling speeches, the fraud office had built an image of a prosecutor that barked but would not bite. So bad was its reputation that when the government started to change the way it regulated the financial industry after the financial crisis, it seriously considered abolishing the office.

Mr. Green is well aware of these problems. One of the first things he did when he arrived was to clearly define the mission of the organization, he said. Unlike his predecessor, Richard Alderman, he is not in the business of giving guidance and striking deals with defendants. “The sentence is a matter for the judge,” he said. “I am here to prosecute.”

“There was a general perception in this country and abroad that the S.F.O. lacked somehow the stomach to prosecute and preferred the easier route of civil settlement,” he said. “There was a perception that the S.F.O. had dumbed down and has taken easier, less-complex cases.”

But those times are over, he said, and his message to criminals is clear: “If your conduct is criminal and comes within the purview of the S.F.O., we will go after you.”

When he took over, Mr. Green simplified the office’s structure by setting up two divisions for fraud and two divisions for bribery and hired new senior staff members, including Geoffrey Rivlin, a retired judge feared and respected for being a stickler for detail, to help prepare cases for court.

John Fingleton, chief executive of Fingleton Associates, which advises clients on regulatory issues, said Mr. Green “hired some good people and tries to tidy up the place.” But the job is not easy, Mr. Fingleton said.

“The S.F.O. has been heavily starved of resources, and crime enforcement in Britain is generally far more difficult than in the U.S.,” where there are fewer burdens on the prosecution and plea bargains are commonplace, he said.

Mr. Green takes particular issue with the suggestion that the fraud office would refuse to open an investigation because it was too expensive. “Absurd,” he said, before adding, “disgraceful.”

“I will not stay in this job and do that,” he emphasized.

The Libor inquiry is the largest of the fraud office’s 67 active cases and a vast undertaking that required Mr. Green to double the investigation team to 60 this year. Another handful of investigators are on loan from the tax authority, and there is some staff from large accounting firms and foreign regulators. A deal to swap staff with the Justice Department is in its final stages, he said.

As determined to prosecute and passionate about his work as Mr. Green is, he is reluctant to talk about his private life or even his earlier legal cases. His father worked for a bank while his mother brought up the children. After studying history at Cambridge University, Mr. Green took an interest in criminal law and worked for a while for his brother-in-law, a lawyer.

He then worked as a prosecutor and defense lawyer on cases that included financial crime and murder. He said he defended financial organizations for regulatory and criminal offenses in the past but would not give any names.

His main prosecution work included cases involving the importation of heroin from places like Afghanistan, organized crime and fraud, but he declined to give any detail. In 2005, he was named director of revenue and customs prosecutions, successfully prosecuting money-laundering groups and cigarette smugglers. More than 90 percent of the cases secured a conviction.

Alison Graham-Wells, a lawyer who worked under Mr. Green in the 1990s, said he stood out in court for his ability to explain complex cases of financial fraud in simple terms to a jury. “He has a very good court presence,” she said.

Whether Mr. Green, now at the fraud office, is successful will depend on the outcome of the Libor investigation. Some analysts said he was taking a risk by focusing on Libor and pointed out that with a prominent international case like this, the likelihood of prosecution could be taken out of his hands.

But Mr. Green is defiant. “A risk-averse person should not be doing this job,” he said. “I’ve been a trial lawyer all my life. The whole process is about assessing and managing risk. Do I ask this question? Do I raise this point? What is the clearest way of presenting this to a jury?”

Next to the Nelson quote plaque on his desk, Mr. Green keeps another one, which he picked up during a trip to Washington and the Smithsonian National Air and Space Museum. It is closely associated with the Apollo 13 mission and reflects what Mr. Green really thinks about his mission at the fraud office: “Failure is not an option.”

Ex-Oregon Governor Candidate Charged in Facebook IPO Fraud

Craig Berkman, 71, falsely told investors he had access to scarce pre-IPO shares of Facebook and other social media companies such as LinkedIn Corp, Groupon Inc and Zynga Inc, the U.S. Securities and Exchange Commission said in a statement.

But instead of buying shares for investors as promised, Berkman made "Ponzi-like" payments to earlier investors and funded personal expenses, including costs in a bankruptcy case, according to the SEC, which filed a civil case.

The defendant received at least $8 million from various schemes, according to U.S. Attorney Preet Bharara in Manhattan, which filed criminal charges against Berkman.

"Berkman blatantly capitalized on the market fervor preceding highly anticipated IPOs of Facebook and other social media companies to fleece investors whose cash flow he treated like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds," said Andrew Calamari, director of the SEC's New York office.

Berkman was arrested at his home in Odessa, Florida, and was expected to appear in a Tampa, Florida federal court on Tuesday.

The Manhattan U.S. Attorney's Office charged Berkman with two counts of securities fraud and two counts of wire fraud. Each count carries a maximum of 20 years in prison.

In one allegation, more than 50 investors sent $4.6 million into a bank account controlled by a Berkman entity called Ventures Trust II, according to the complaint filed by the Manhattan U.S. Attorney's Office.

Berkman told investors the funds would be used to buy pre-IPO shares of Facebook, but instead the "vast majority" was transferred to other accounts Berkman controlled for his own personal benefit, according to the complaint.

Berkman has long been active in Oregon politics and served for a time as the head of the state's Republican Party, according to press accounts. He lost in the Republican primary for governor in 1994, and he explored a bid for governor in the 2002 race, according to The Oregonian.

The SEC's order details what the agency called a "recidivist history" for Berkman.

The Oregon Division of Finance and Securities issued a cease-and-desist order and a $50,000 fine against Berkman in 2001 for offering and selling convertible promissory notes without a brokerage license, according to the SEC statement.

In 2008, an Oregon jury found Berkman liable in a private action for breach of fiduciary duty, conversion of investor funds and misrepresentation to investors related to his involvement with a purported venture capital firm, according to the SEC.

Berkman reached a settlement with the firm, called Synectic Ventures, after it filed an involuntary Chapter 7 bankruptcy petition against him in 2009 for debts he didn't pay related an earlier judgment against him for $28 million, according to the SEC.

Rather than use his own money to pay the claims, Berkman spent more than $5.4 million from investors in his pre-IPO offerings to make payments in the bankruptcy settlement, according to the SEC.

The SEC brought a separate case against John Kern of Charleston, South Carolina, whom it said took part in the fraud as legal counsel to some of Berkman's companies.

Marc Blackman, a lawyer for Berkman, was not immediately available for comment.

It was not immediately clear whether Kern has hired a lawyer for his defense. Kern was not immediately available for comment.

The criminal case is U.S. v. Berkman, U.S. District Court, Southern District of New York, No. 13-mg-00732.

(Editing by Bernadette Baum and Richard Chang)

DealBook: Former Calpers Chief Indicted Over Fraud

Linda Spillers for The New York TimesFederico R. Buenrostro was the top official at Calpers from 2002 to 2008.

As head of the country’s largest pension fund, Federico R. Buenrostro wielded vast influence in the money management world.

From 2002 to 2008, Mr. Buenrostro served as chief executive of the California Public Employees’ Retirement System, or Calpers, which allocates more than $200 billion to investment firms across the globe.

Federal prosecutors say that Mr. Buenrostro abused that position. In an indictment filed in Federal District Court in San Francisco on Monday, the United States attorney charged Mr. Buenrostro and his friend, Alfred J. Villalobos, with defrauding the private equity firm Apollo Global Management.

The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how their state pension funds were invested.

The scandals focused on the role of middlemen, or placement agents, who charged lucrative fees to help money managers win business from state pension funds. In some cases, placement agents proved to be unlicensed fixers who received illegal kickbacks from pension officials. A number of pension officials and middlemen have served prison time, including Alan G. Hevesi, the former head of New York’s state pension fund.

The government claims that Mr. Buenrostro and Mr. Villalobos invented a crude scheme that tricked Apollo, one of the world’s largest private equity firms, into paying Mr. Villalobos at least $14 million in fees for his help in securing an investment from Calpers.

“We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,” Rob Feckner, the board president of Calpers, said in a statement.

A lawyer for Mr. Buenrostro, William H. Kimball, declined to comment. Mr. Villalobos, who filed for personal bankruptcy in 2010, could not be reached for comment.

In the insular world of private equity, the charges struck many executives as unusual given Apollo and Calpers deep and lucrative ties. The California fund has invested at least $3 billion with Apollo, including a 2007 transaction in which it paid $600 million for a 9 percent stake in the firm.

For years, Apollo had retained Mr. Villalobos — a former Calpers board member — as a placement agent, agreeing to pay him for his help in securing investments from state pensions. Apollo paid at least $48 million in fees to Mr. Villalobos for his help in arranging for Calpers and other pensions to invest in its firm.

But to comply with securities laws and avoid perceived conflicts of interest, Apollo asked that Mr. Villalobos disclose to Calpers that he would receive payments related to the pension fund’s investments.

Prosecutors said that Mr. Buenrostro, 64, and Mr. Villalobos, 69, worked together, and fabricated letters from Calpers that purportedly signed off on the payments from Apollo to Mr. Villalobos.

“The allegations in the indictment unsealed today by the United States Department of Justice, if true, are troubling,” Charles V. Zehren, an Apollo spokesman, said Monday. “Apollo has always followed best practices in handling its placement agent relationships, and was not aware of any misconduct engaged in by Mr. Villalobos during the time that he worked with Apollo.”

The charges come after a civil lawsuit brought last year against Mr. Buenrostro and Mr. Villalobos by the Securities and Exchange Commission. And in 2011, a Calpers internal investigation concluded that Mr. Villalobos had turned Mr. Buenrostro into “a puppet” who directed Calpers investments to his clients. The firm’s report said that Mr. Villalobos lavished bribes on Mr. Buenrostro, including trips on private jets and gambling junkets at Nevada casinos.

When Mr. Buenrostro left Calpers in 2008, he took a job working with Mr. Villalobos as a placement agent.

Why 'Tone at the Top' is Essential in Preventing Employee Fraud

I was recently involved in a fraud investigation of the CFO of a privately held company that spent years following the directives of the majority shareholder to run the majority shareholder?s personal and/or nonexistent expenses through the company.

Two Philly Firms Sued Over Former Partner's Alleged Fraud

The law firms of Blank Rome and Cozen O'Connor are under fire from real estate investors who say that a former partner who worked at both firms cheated them out of millions of dollars on a phony development project, according to media reports. The investors filed a suit in the Southern District of New York this week, according to a report from Reuters.

Why 'Tone at the Top' is Essential in Preventing Employee Fraud

I was recently involved in a fraud investigation of the CFO of a privately held company that spent years following the directives of the majority shareholder to run the majority shareholder?s personal and/or nonexistent expenses through the company.

Why 'Tone at the Top' is Essential in Preventing Employee Fraud

I was recently involved in a fraud investigation of the CFO of a privately held company that spent years following the directives of the majority shareholder to run the majority shareholder?s personal and/or nonexistent expenses through the company.

Two Philly Firms Sued Over Former Partner's Alleged Fraud

The law firms of Blank Rome and Cozen O'Connor are under fire from real estate investors who say that a former partner who worked at both firms cheated them out of millions of dollars on a phony development project, according to media reports. The investors filed a suit in the Southern District of New York this week, according to a report from Reuters.

Purchasing Department Fraud - A Major Threat and Hard to Detect

One of the greatest fraud risks that you and your clients face is within the purchasing function, as a tremendous amount of funds flow through most companies? cash disbursement and purchasing departments.

Why 'Tone at the Top' is Essential in Preventing Employee Fraud

I was recently involved in a fraud investigation of the CFO of a privately held company that spent years following the directives of the majority shareholder to run the majority shareholder?s personal and/or nonexistent expenses through the company.

Common Sense: Another Fumble by the S.E.C. on Fraud

With public anger at Wall Street still at fever pitch, the pressure was enormous on Mr. Steffelin, whose reputation until then was unblemished. JPMorgan Chase, the giant bank responsible for the exotic mortgage security, known as a collateralized debt obligation, or C.D.O., at the center of the case, had already caved in, agreeing to settle and pay $153.6 million.

“Do you really want your client to be the poster child of the JPMorgan C.D.O. fraud?” an S.E.C. lawyer had told Mr. Lipman, as the lawyer later told the judge in the case.

Mr. Steffelin was angry and incredulous that it had come to this, and his first impulse was to blame his lawyer. He yelled at Mr. Lipman over the phone.

 Mr. Steffelin, who worked for a financial firm that advised JPMorgan on the deal, was formally charged on June 21, 2011. But on Friday, in a rare public about-face, the S.E.C. asked Judge Miriam Goldman Cedarbaum of Federal District Court in New York to dismiss the charges against Mr. Steffelin with prejudice, meaning the case can’t be refiled.

Now, if Mr. Steffelin is going to emerge as a “poster child” for anything, it will be as a victim of regulatory overreach.

 “It’s very unusual and unusually embarrassing for the S.E.C.,” said John C. Coffee Jr., a professor at Columbia Law School and an expert in securities law.

An S.E.C. spokesman, John Nester, said: “Our duty in all cases is to achieve a just and appropriate outcome. Our decision here appropriately reflects information that came to light as the litigation progressed.”

Coming on the heels of a jury’s acquittal of a midlevel Citigroup executive, Brian Stoker, this summer on charges in another mortgage-backed securities deal, the S.E.C.’s campaign to hold someone accountable for the huge losses in mortgages at the heart of the financial crisis is in shambles.

Of the three individual defendants in these cases, only Fabrice Tourre, the self-described Fabulous Fab, who is currently on leave from Goldman Sachs, still faces trial, now scheduled for July 2013.

The failure to go after high-ranking officials at the big banks responsible for the mortgage crisis has been a recurring issue for the government in its pursuit of individual fraud cases.

As the foreman of the jury that acquitted Mr. Stoker this summer told my Times colleague Peter Lattman, “Stoker structured a deal that his bosses told him to structure, so why didn’t they go after the higher-ups rather than a fall guy?”

Professor Coffee pointed out: “Very few high-ranking individuals at any institution have been charged. Take the Goldman Sachs case. It was strong. But the highest-ranking individual charged was the Fabulous Fab, and he was the equivalent of a trainee sergeant. This is part of a pattern.”

The S.E.C. points to more than a hundred cases related to the financial crisis that have brought in about $2.2 billion in penalties. They include Angelo Mozilo, the co-founder of the mortgage lender Countrywide Financial, who paid $67.5 million to settle S.E.C. fraud charges, and senior officers of Fannie Mae and Freddie Mac, the government-backed mortgage companies. But otherwise, few if any of the individual defendants would qualify as boldface names.

When I met the square-jawed, 43-year-old Mr. Steffelin, he expressed a mix of relief that he was on the brink of vindication, bewilderment that he was ever singled out for blame and anger that he was subjected to a long, painful and unjust ordeal to satisfy a public lust for someone to hold responsible for the mortgage debacle.

As his lawyer Mr. Lipman told the judge in October 2011, “This case was about getting on the front page of The Wall Street Journal.”

Mr. Steffelin said he came under intense pressure to settle. But “I looked at this, and realized that if I settled, this would be with me for the rest of my life. It would effectively end my career,” he said. More important, he was steadfast in his belief that he hadn’t committed a fraud, acted negligently or done anything else wrong.

“I kept saying there was nothing there, and I kept thinking the S.E.C. would realize that, and the case would go away, but it didn’t,” he told me.