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Criminal Penalties for Securities Fraud (DOJ)
The Department of Justice prosecutes securities fraud under 18 U.S.C. Section 1348, which encompasses two specific statutory violations related to fraudulent schemes involving registered securities or those requiring SEC reporting.
Both statutes carry identical penalties: a fine of not more than $5,000,000, or imprisonment of not more than 20 years, or both.
However, actual exposure depends on several factors:
- Number of Counts Involved — Multiple counts arising from a single scheme increase potential fines and imprisonment proportionally.
- Alternative Fines Act Application — The DOJ may seek fines up to double the defendant’s gross gain or loss to third parties.
- Sophisticated Means Enhancement — Under Federal Sentencing Guidelines Section 2B1.1, complex fraudulent conduct can add 8, 10, or 12 offense levels.
| Charge | Statute | Max Prison | Max Fine | Statute of Limitations |
|---|---|---|---|---|
| Securities Fraud | 15 USC 78j(b) | 20 years | $5,000,000 | 5 years |
| Wire Fraud | 18 USC 1343 | 20 years | $250,000 | 5 years |
| Mail Fraud | 18 USC 1341 | 20 years | $250,000 | 5 years |
| Money Laundering | 18 USC 1956 | 20 years | $500,000 | 5 years |
| Conspiracy | 18 USC 371 | 5 years | $250,000 | 5 years |
The base offense level for securities fraud is generally six. The Federal Sentencing Guidelines employ a loss table that increases this base level:
- Loss exceeding $15,000: base level increases to 8
- Loss exceeding $250,000: base level increases to 14
- Loss exceeding $3,500,000: base level increases to 20
- Loss exceeding $65,000,000: base level increases to 26
Civil Penalties for Securities Fraud (SEC)
The SEC pursues civil enforcement under Securities Exchange Act provisions including Section 10(b), Rule 10b-5, Section 17(a), and Section 206 of the Investment Advisers Act of 1940.
Civil enforcement carries no imprisonment risk, but penalties remain substantial. The SEC imposes disgorgement, requiring defendants to surrender all ill-gotten gains including traceable profits and accrued interest.
Additional SEC remedies include cease-and-desist orders, industry bars, and corporate reform requirements.
What To Do When Facing Securities Fraud Allegations
Immediately engaging experienced federal defense counsel is critical. Defense strategy depends on available evidence and may focus on proving innocence or minimizing penalties through loss table arguments or other mitigating factors.
Reduction in pretrial jail population since NJ bail reform implementation.
Source: NJ Judiciary Annual ReportApproval rate for properly filed expungement petitions in NJ.
Source: NJ Courts Statistical ReportCommon Mistakes to Avoid
Actually Stay Silent
Most people know they have the right to remain silent but still talk to police. Anything you say can and will be used against you. Politely decline to answer questions until your attorney is present.
Bail Conditions Are Enforceable
Violating bail conditions, even minor ones, can result in immediate re-arrest and make it much harder to obtain bail again. Follow every condition to the letter.
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Frequently Asked Questions
New Jersey reformed its bail system in 2017. Instead of a cash-based system, judges now use a Public Safety Assessment (PSA) to determine whether a defendant should be released pretrial. Most defendants are released with conditions, while those deemed high-risk may be detained. An experienced attorney can argue for favorable release conditions at your detention hearing.
No. You have the constitutional right to remain silent and to have an attorney present during questioning. Anything you say to police can be used against you in court. Politely invoke your rights by saying "I want to speak with my attorney before answering any questions." This cannot be held against you.
Attorney fees vary based on the complexity of the case, the charges involved, and whether the case goes to trial. At Spodek Law Group, we offer transparent pricing and flexible payment plans. We provide a free initial consultation to discuss your case and give you an honest assessment of costs. Investing in quality representation often saves far more in the long run than choosing the cheapest option.
An arraignment is your first court appearance after being charged with a crime. The judge will read the charges against you, and you'll enter a plea (usually not guilty at this stage). The judge will also set bail or release conditions. Having an attorney at your arraignment is critical, as they can advocate for favorable bail terms and begin building your defense strategy from day one.
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