Why is the Case Against TBW's Farkas Filed in Virginia?
Don't miss the January 2009 Ocala Magazine interview
with TBW's Lee Farkas. They went down in August.
TBW shows an example of defining the point at which fraud occurs by where the transaction took place via Compliance Week:
Notably, both the criminal case and the related SEC action are filed in the Eastern District of Virginia despite the lack of any obvious connection between Farkas or TBW and Virginia. Why, then, Virginia? As previously discussed here, jurisdiction over securities fraud cases is technically proper in the the Eastern District based on the physical location of the SEC’s EDGAR database. Indeed, the SEC’s complaint against Farkas states:
The fraudulent conduct of Defendant Farkas directly caused BancGroup to transmit and to file multiple false and misleading Forms 10-K, 10-Q and 8-K to the Commission’s electronic data gathering, analysis and retrieval system (“EDGAR”), the servers of which are physically located within the Eastern District of Virginia.
[Note: Colonial BancGroup, Inc. is Colonial Bank's publicly traded parent company]
Moreover, Neil H. MacBride, the U.S. attorney for the Eastern District, said that the criminal case was brought there because at least some victims of the scheme live in Northern Virginia, and because TBW and Colonial did business with Freddie Mac, which is based in McLean, Virginia. MacBride has also previously asserted that the Eastern District may have jurisdiction in cases involving wire transfers because the Federal Reserve Bank in Richmond is one of the primary hubs for such transfers, and in cases involving alleged misuse of bank-bailout funds as the Federal Deposit Insurance Corp. is also based in Arlington.
TBW was based in Ocala, FL.