Whatever surge of activity that followed Section 225’s enactment has petered out. We have found no Section 225 cases charged in any district court within the Second Circuit in the last decade, until this year. But two notable exceptions have occurred in recent months: the First Brands indictment, and an indictment a few weeks before it, in United States v. Chu and Goodgame. The Chu indictment alleges that two executives at a company defrauded lenders through double-pledging collateral and other schemes. Like the First Brands indictment, Chu was also brought by the Securities and Commodities Fraud Unit of the SDNY.
SDNY’s use of Section 225 in the First Brands case was not an aberration or an exception rediscovered for only the largest of frauds. Rather, these two indictments signal the return of Section 225. This Administration’s charging policy requires prosecutors to charge the most serious, readily provable offense. Section 225 will often be the most serious offense available in major fraud cases, and SDNY—and other components of DOJ—can be expected to charge it when it is readily provable. When that
happens, Section 225 will change the calculus for lawyers and white-collar defendants alike.
Source: Financial Crime’s Forgotten Statute: SDNY Rediscovers a Powerful Tool | Law.com