The former CEO of a Wisconsin mortgage company was indicted on three counts of fraud after federal regulators discovered an alleged scheme to distribute the proceeds from the sale of subprime mortgages to himself, his ex-wife, the former CFO and an investor. All four were charged with fraud and obstruction for lying to the FBI.
The FBI received warrants to seize assets from three of the four people who were allegedly involved. Among the assets were college savings accounts that were set up for the former CEO's grandchildren and brokerage accounts belonging to all three defendants.
According to the federal indictment, the former CEO and others were running an investment pool that the company's board of directors was not aware existed. When the market began to collapse in 2008, the group allegedly liquidated the pool and split millions of dollars. Though the alleged crimes occurred in 2008, the federal statue of limitation for crimes against financial institutions is 10 years. The company filed a $15 million lawsuit against several employees in 2008, alleging racketeering crimes. The company went into receivership in 2009, and the suit was dropped.
Federal crimes often carry severe mandatory prison sentences. An attorney who has experience defending clients who are charged in federal courts could protect the rights of someone who is unfamiliar with the system. The criminal defense attorney may read the prosecution's documents and perform their own investigation into the events that led up to the indictment. When a defense attorney is hired before formal charges are filed, they may be able to negotiate with investigators to reduce the charges before the case goes to the grand jury.
Source: Journal Sentinel, "Former Central States CEO Jungen, three others indicted in subprime mortgage scheme ", Cary Spivak, October 04, 2013