Federal law enforcement authorities announced late Thursday that they have formed a task force with state and local officials in South Texas designed to tackle fraud schemes targeting victims of Hurricane Harvey.
At the same time, the U.S. Securities and Exchange Commission’s lead official in Texas said that the federal agency is closely watching the impact that Hurricane Harvey and the subsequent flooding is having – and potentially could have – on the corporations and financial advisers that it regulates.
The task force, which includes the U.S. Attorneys in Houston and New Orleans, the SEC’s Fort Worth Regional Office, FBI, IRS, U.S. Customs and Harris County District Attorney’s office, say they have formed a joint working group designed to target illegal activity related to the devastating storms from Corpus Christi to New Orleans.
SEC Regional Director Shamoil Shipchandler, in an exclusive interview with The Texas Lawbook, says the federal agency is concerned scam artists are already targeting Texans with fraudulent financial and investment schemes related to the South Texas weather crisis.
Shipchandler, who leads the financial regulator’s operations in Texas, says that brokers, dealers and financial advisers in the Houston area should contact the SEC’s Fort Worth Regional office if they have any questions or issues raised by Hurricane Harvey.
“This is a once in a lifetime event that we realize has an impact on everyone, including investors and those registered with the SEC,” he says. “We are trying to get in front of things to make sure that the victims in South Texas are not victimized a second time by fraudulent schemes.”
Abe Martinez, the acting U.S. Attorney for the Southern District of Texas in Houston, said Thursday that tragedies, such as South Texas is currently experiencing, becomes an opportunity for criminal activity.
“This disaster has brought and will continue to bring unprecedented human and financial loss to our communities, and victims of this event have already suffered staggering devastation,” Martinez said. “Under the lessons learned from Hurricane Katrina, we bring a comprehensive law enforcement focus to combat any criminal activity arising from the tragedy of Hurricane Harvey and the rebuilding efforts underway.”
FBI Special Agent in Charge Perrye Turner says shysters prey on those who want to help and thus become victims themselves.
“As we all work to rebuild the Houston/Gulf Coast region and look for ways to help, it’s important to perform due diligence before giving contributions to anyone soliciting donations or individuals offering to provide assistance to those affected by Harvey, whether the solicitations are in person, via email or telephone,” Turner said.
Shipchandler is personally familiar with illegal financial schemes that occur during natural disasters.
As an assistant U.S. Attorney in the Eastern District of Texas, Shipchandler prosecuted several white-collar financial abuse cases in the months following Hurricane Katrina in 2005.
For example, he prosecuted business contractors and building construction operators for making false commitments and for filing fraudulent claims against federal agencies, including the Federal Emergency Management Agency.
Shipchandler says the SEC is vigilantly watching for “Hurricane Harvey-related securities scams and will vigorously prosecute those who attempt to take advantage of this tragedy by defrauding victims of the storm.
“People should not suspend their skepticism in the wake of disasters like this,” he says.
The SEC asks investors to report any suspicious solicitations at www.sec.gov/complaint/tipscomplaint.shtml.
Shipchandler says that the SEC has heard from scores of brokers, dealers and advisers operating in South Texas who have implemented their business continuity plans.
In a written statement, SEC Chairman Jay Clayton said Wednesday that the agency has mobilized resources to assist affected investors and market participants.
“Agency officials have been and will remain in close communication with market participants and key market infrastructure providers, as well as the Financial Industry Regulatory Authority and other regulators concerning the storm and its aftermath,” Clayton said. “We are also actively working with firms in affected areas to ensure that investors continue to have access to their securities accounts.”
Clayton said the SEC will evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm.