U.S. Attorney for the Central District of California Announces a New Corporate and Securities Fraud Strike Force to Ramp up Efforts Targeting White-Collar Crime

On October 4, 2023, Martin Estrada, U.S. Attorney for the Central District of California (CDCA), announced the formation of a Corporate and Securities Fraud Strike Force (the “Strike Force”), a new CDCA section designed to “expand and prioritize complex corporate and securities fraud investigations” in Southern California. 

According to Estrada, the Strike Force will prioritize investigations and prosecutions of criminal abuses by company insiders, corporate executives, and traders, and matters that impact the U.S. financial system and trading markets. Central to these efforts, the Strike Force will focus on accounting fraud, insider trading, and criminal violations of the Bank Secrecy Act designed to combat money laundering and tax evasion. Estrada noted that the Strike Force’s main goal will be “uncovering and punishing corporate malfeasance” in order to send a signal to corporate criminals that their crimes will not be tolerated by his office.

This new CDCA section appears to be modeled on the Northern District of California Strike Force formed in 2019. Much like the Northern District Strike Force, the new Strike Force appears likely to implement additional tools to prosecute white-collar crimes more swiftly and aggressively, which could result in an uptick in those cases brought in the CDCA, as well as white-collar cases moving more quickly to resolution or trial. If the Strike Force follows the path of its Northern District counterpart, it is likely to utilize resources and tools frequently used in organized crime and drug prosecutions, which is not surprising given Estrada’s past success in prosecuting these types of cases when he was a line federal prosecutor in the CDCA.

Long-time CDCA Assistant U.S. Attorney Brett Sagel will lead the Strike Force, which will be comprised of other experienced prosecutors. The Strike Force will also include agents from IRS Criminal Investigations and the Federal Bureau of Investigation. Given the Strike Force’s mission to combat securities fraud, future partnership seems likely with the Securities and Exchange Commission as well.

The Strike Force will supplement the existing Major Frauds Section in the CDCA, which has long been tasked with prosecuting fraud, embezzlement, stock manipulation, and insider trading cases.

Perhaps countering perceptions that the CDCA has historically not been as aggressive or swift-moving in combatting white-collar crime, as compared to its counterparts up north or back east, the creation of the Strike Force clearly signals a future of increased focus on criminal investigations and even more robust enforcement against corporate fraud in the Central District of California.