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Frequently Asked Questions

Criminal Law

What happens if I am arrested?
If you are arrested for breaking a criminal law, the case is taken before a magistrate who may issue a warrant if necessary and set bond for appearance in court. If the defendant cannot post the bond he may be incarcerated pending appearance in court. If bond is posted, he will remain free pending appearance at an arraignment. An arraignment usually occurs within 24 hours of the arrest or the first date available if on a weekend or holiday. The arraignment is held before a judge of the courts. During the arraignment the defendant is formally told what offense he is charged with, told their constitutional rights, and of the possible penalties. The defendant will enter a plea of guilty or not guilty, bond may be reviewed, and a date for the next hearing will be scheduled.

Can they use force to arrest me?
A police officer may use as much force as is necessary to arrest you. Unreasonable force is assault. After arrest, a police officer may handcuff you if you attempt to escape or the officer considers it necessary to prevent you from escaping. If you claim that force was used to arrest you, a judge will decide whether or not the force used was reasonable in the circumstances.

What is a search warrant?
A search warrant is an order issued by a judge that authorizes police officers to conduct a search of a specific location. Before a search warrant may be issued, there must be a showing of probable cause.

What is probable cause?
This is a difficult one. There is not a bright-line rule establishing precisely what is and what isn`t probable cause. However, what has become apparent is that a finding of probable cause requires objective facts indicating a likelihood of criminal activity. A police officers hunch, with nothing more, will not satisfy the requirements.

    Example: Officer Doright observes Tom and Dick walking down the street. Officer Doright has a hunch that Tom and Dick are up to no good. Armed with nothing more, Officer Doright goes to the local judge and attempts to get a search warrant for the boy`s home. Should a judge grant the warrant?

    No. A police officer`s hunch, with nothing more, will not satisfy the probable cause requirement. However, if Officer Doright observed Tom and Dick conduct a drug deal, then probable cause would likely exist for a warrant to search their home.

If a police officer knocks on my door and asks to search my home, do I have to let the officer in?
Unless the officer has a warrant, you are under no legal obligation to let the officer search your residence.

What if I agree to the search?
If you voluntarily consent to a search of your home, automobile, or person, than the officer can conduct a full search without a warrant. Anything that the officer finds can later be used against you in court.

What is the Plain View doctrine?
Police officers do not need a warrant to seize contraband that is in plain view if the officer is in a place that he or she has a right to be.

    EXAMPLE: Officer Doright is standing in your doorway talking to you about the weather. While talking, Officer Doright notices a bag of cocaine and a sawed-off shotgun on your couch. Officer Doright can legally seize these items without a search warrant because they are in plain view.

If I am arrested, can the officer search me?
Yes. Police officers do not need a warrant to conduct a search after making an arrest. After making an arrest, the officer can legally search the person being arrested and the area in the immediate control of the person.

What is bail?
Bail is money or other property that is deposited with the court to ensure that the person accused will return to court when he or she is required to do so. If the defendant returns to court as required, the bail will be returned at the end of the case, even if the defendant is ultimately convicted. However, if the defendant does not come to court when required or violates his or her bail conditions, the bail will be forfeited to the court and will not be returned.

What happens at a bail hearing?
The accused is brought before a magistrate or judge when an arrest happens for a violation of a criminal law. The magistrate or judge will conduct a pre-trial bail hearing resulting in four possible results. A judge holds an official arraignment later.

There are four possible results from the bail hearing:

  • Recognizance - This is the defendantĘs written promise to appear in court on the date set and abide by the terms set by the magistrate or judge. No monetary pledge, cash deposit or security by property or professional bondsman is required.

  • Unsecured Bond - This release pending court appearance is based on the defendantĘs written agreement to appear in court on the date set and abide by the conditions set by the magistrate or judge. It is backed by an agreement by the defendant to forfeit money to the court if she or he does not appear in court on the date set.

  • Secured Bond - This is secured by either a cash deposit, a pledge of real or personal property, or a pledge by a third party that the defendant will appear in court on the date set and abide by the conditions of the release. The judge may forfeit any type of security in the event the defendant does not appear in court on the date set.

  • Ineligible for Bail - The defendant is denied a release pending court appearance.

The bail decision may be appealed to a judge who will re-examine the evidence. A violation of any agreement of release pending court appearance could result in the issuance of an Order to Show Cause why the release should not be revoked. A show cause hearing may also be issued by a judge for not appearing in court as agreed.

What happens at an arraignment?
You have the right to be arraigned without unnecessary delay - usually within two court days - after being arrested. You will appear before a judge who will tell you officially of the charges against you at your first arraignment. At the arraignment, an attorney may be appointed for you if you cannot afford one, and bail can be raised or lowered. You also can ask to be released on personal recognizance, even if bail was previously set.

If you are charged with a misdemeanor, you can plead guilty or not guilty at the arraignment. Or, if the court approves, you can plead nolo contendere, meaning that you will not contest the charges. Legally, this is the same as a guilty plea, but it cannot be used against you in a non-criminal case.

Before pleading guilty to some first time offenses, such as drug possession in small amounts for personal use, you may want to find out if your county has any drug diversion programs. Under these programs, instead of fining you or sending you to jail, the court may order you to get counseling which can result in dismissal of the charges if you complete the counseling.

If misdemeanor charges are not dropped, a trial will be held later in county court of law. If you are charged with a felony, however, and the charges are not dismissed, the next step is a preliminary hearing.

What will happen at a preliminary hearing?
Every person who is charged by warrant is entitled to a preliminary hearing. If a person remains in jail, he or she is entitled to a preliminary hearing usually within 10 days of arrest. If a person is released from jail on bond, he or she is entitled to a preliminary hearing usually within 30 days of arrest.

A preliminary hearing is an examination of the charge against the accused. The prosecutor must present evidence and witnesses that prove that it appears that an offense has been committed that there is probable cause to believe that the person accused committed it. The accused may cross-examine witnesses and may present evidence if he or she wishes.

If the judge makes a finding of probable cause after hearing the evidence, the charge is sent to the grand jury. If the judge does not find that it appears that an offense has been committed or that the accused is likely the person who committed an offense, the accused is discharged and the charge is dismissed. If the accused is discharged and the charge dismissed after a preliminary hearing, the prosecutor may still present evidence to the grand jury to see if they will find probable cause.

Securities Law

Affinity Fraud

What is Affinity Fraud?
Many people are aware that identity theft is a crime that is growing at an alarming rate. But they are not aware of another crime that's growing at an even faster rate: affinity fraud. Affinity fraud targets members of identifiable groups, including religious, ethnic, senior, professional and other groups that have members with common interests, background or other factors in common. Affinity fraudsters take advantage of the familiarity among group members to entice them into putting their money into investment scams. Typically, the fraudsters who promote affinity scams are group members, claim to be group members, or enlist respected leaders within a group to spread the word about an investment "opportunity." Fraudsters are also using the Internet as a convenient vehicle to target groups with email spams.

What is Employed in Affinity Fraud Scams?
Many times "Ponzi" or pyramid schemes are employed in affinity fraud scams where money invested by new investors is used to make payments to earlier investors, which gives the earlier investors the false impression that their investments are successful. This illusion of success tricks new investors into investing in the scheme, and lulls earlier investors into a false sense of security about their investments while the fraudster is actually stealing the money. Both types of schemes depend on a steady stream of new investors. Then, the inevitable occurs the supply of investors dries up, the pyramid collapses and investors lose most, if not all, of their money.

Because of the tight-knit structure of many groups, regulators and law enforcement officials find it very difficult to detect an affinity scam. Victims of these scams often do not notify the authorities or assert their legal rights, because they are uncomfortable with the idea of getting "one of their own" in trouble with the police. Instead, they try to deal with the wrongdoer within the group, which keeps the information from getting out and helping other people avoid being scammed.

How Can I Avoid Being a Victim?
Be very cautious if someone you know tells you they made a lot of money quickly from an investment. Many times the fraudster has paid this person a lot of money, so he or she will tell a lot of other people about the "opportunity" and get them to invest. Your friend or associate may not even know he or she is involved in a scam.

Be very suspicious if someone tells you that an investment "has no risk." All investments have risks, so ask for a business plan, prospectus or other document that outlines the risks and instructs you on how to get your money out. If the person can't produce anything like that, don't invest.

Contact your local Attorney General's Office or your state securities agency and ask them questions about the investment you planning to make. Ask about the salesperson who is promoting this "investment opportunity" and about the company he or she is representing, including whether or not the company is licensed to sell in your state and whether or not the investment is properly registered to be sold to consumers in your state. If the investment company and/or sales person are not registered, don't invest.

Don't be pressured into investing before you have a chance to investigate the "opportunity." Just because someone you know made money, or claims to have made money, doesn't mean you will too.

Watch out for investments that are heralded as "once-in-a-lifetime opportunities," especially when the person promoting it says the recommendation is based on "inside" or "confidential" information.

Contact the North American Securities Administrators Association (NASAA), the oldest organization devoted to investor protection, toll-free at 1-888-84-NASAA. They will give you more information about investments and advise you on how to protect yourself from scams.

What If I Suspect Affinity Fraud?
Print out a complaint form (http://www.sec.gov/complaint/selectconduct.shtml) or write a letter to the U.S. Securities and Exchange Commission (SEC) at: SEC Complaint Center 450 Fifth Street, NW Washington, D.C. 20549-0213 Fax: 202-942-9634.

Or, fill out their online complaint form at http://www.sec.gov/complaint/selectconduct.shtml.

Complaints are best handled if the information provided is as accurate and complete as possible. Your complaint should include:

  • Your name, mail and email addresses, and telephone numbers.

  • The name, mail and email addresses, telephone numbers, and website address of any individual or company you mention in the complaint.

  • Specific details of how, why, and when you were defrauded or encountered problems with investments or your broker or adviser.

  • Each complaint is thoroughly reviewed and passed to the appropriate SEC office. The Office of Investor Education and Assistance will handle certain general questions about the securities laws and complaints relating to financial professionals or a complainant's personal financial matters. Attorneys in the Division of Enforcement evaluate complaints implicating violations of the federal securities laws. It is the general policy of the SEC to conduct its investigations on a confidential basis to preserve the integrity of its investigative process as well as to protect persons against whom unfounded charges may be made or where the SEC determines that enforcement action is not necessary or appropriate.

This is general information about affinity fraud and steps you can take to minimize your chances of being enticed into fraudulent investment schemes, but it is not a substitute for qualified legal counsel. Consult with a qualified securities attorney if you need legal information about affinity fraud or any other securities-related issue.

Broker-Dealer Ethics, Illegal Actions, Securities Fraud, and What Your Options Are

What is fraud?
Fraud is an intentional falsification of truth or a false misrepresentation of a matter of fact, which encourages another person to part with something valuable or to surrender a legal right.

Many federal and state regulatory laws have specific rules that must be followed where a failure to do so may also result in fraud. The federal and state securities laws deal with many types of fraud, the most common being insider trading.

What is insider trading?
Insider trading generally refers to the purchasing or selling of securities of a company while in possession of material information that has not been generally disclosed in the marketplace.

Is insider trading illegal?
Under various Federal Securities Laws insider trading is prohibit. Insiders in possession of such news from trading or causing others to trade on such news before it is generally released to the marketplace. The SEC first identified insider trading as a type of securities fraud coming within its broad rules defining and prohibiting manipulative and deceptive acts in 1961. Those on the "inside" have a fiduciary duty to their company and any failure to do so may also result in a liability on the company as well as the individual involved.

What should I do if I think my broker committed a violation?
If you think that your broker has misrepresented you or is in violation of SEC regulations, you should consult an attorney that is experienced in securities law. Securities law can be very complex and an attorney can help you sort through you concerns. The attorney can help you during arbitration or in court and in dealing with the statutes of limitations.

What if I am being defrauded by my broker?
If a broker is defrauding you, under securities laws you have the right to recover from the broker and the broker's firm. The SEC and state regulators will accept a complaint from you, but their main focus is on disciplining the broker and the firm to prevent future misconduct, not on returning your investment.

If you believe you were harmed financially by a fraudulent act by a broker, you should seek an attorney for advice on the possibilities of a claim.

What if it is a company that defrauded me?
Under Securities laws and state laws, you have considerable rights. Most likely if you were defrauded many others dealing with the same company may have also been defrauded. If this is the case the group or class of people may be able to file a "Class Action" lawsuit.

If the price of my stock has dropped considerable amount, does that mean I can recover my loss from the company and or broker?
Generally no. Just because a stocks price drops does not mean that there was any wrongdoing. If a stock price drops dramatically sue to some type of misconduct then you may be able to recover through a class action.

When can I recover from my broker?
Normally, an investor can recover when a stockbroker commits a sales practice violation. Churning, suitability, unauthorized trading and misrepresentation are the most common violations.

What are statutes of limitation?
Statutes of limitation are the rules of law governing the period of time during which a claim must be filed. Statutes of limitation are different for each type of complaint or cause of action. Statutes of limitation also may differ between federal law and from state to state depending on the issue. Since securities fraud may be very difficult to discover and years may pass after the initial investment before the customer realizes that he has been defrauded, statutes of limitations are often very important in stockbroker/customer disputes. An experienced attorney should be consulted in order to evaluate statute of limitation issues.

What is churning?
Churning occurs when a broker engages in excessive trading in your account. Brokers do this because they often only generate money as commissions on trades are executed for their clients.

Class Actions

What is a class action?
Class actions are representative lawsuits on behalf of groups of similarly situated persons. Class action law suits are a nontraditional litigation procedure that allows a representative with typical claims to sue or defend on behalf of, and stand in judgment for, a class or group of people when the issues or questions are of common interest to persons so numerous as to make it impracticable to bring them all before a court.

How are individuals benefited by class actions?
The major advantage of bringing a class action is the more powerful litigation posture for the class representative. Because of the greatly expanded exposure to liability for class damages (damages to potentially hundreds or thousands of individuals), as opposed to the damages suffered by a single litigant, a defendant is much more likely to treat the litigation seriously from the standpoint of defense or settlement than would likely be the case in an individual litigation.

What types of claims are brought in securities class actions?
Claims brought in securities class actions generally challenge allegedly material false and misleading statements made by publicly traded companies and/or their officers, directors, other employees, accountants or underwriters made in publicly distributed communications such as press releases, annual reports, prospectuses, annual and quarterly filings or in other such documents. Such actions also often challenge insider trading by individuals associated with such public companies. Securities class actions generally are brought under the anti-fraud provisions of the federal securities laws.

Who brings class actions?
Anyone who has been harmed or injured by a particular person or entity in violation of a law and who generally has claims which are typical of other similarly situated people, has no conflicts of interest with others in the class action.

Do I have to own stock in the company to benefit from a class action?
Under federal or state securities laws you would have had to purchase stock within a specified period of time. This does not mean that would have to own the stock at the time of the class action, just during the specified class period.

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