The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer, Esq
November 7, 2017
FINRA Schrodinger Cat Is Dead, Alive, And A Zombie (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/3658/turbeville-finra-/
http://www.brokeandbroker.com/3658/turbeville-finra-/
The IRS has concluded that when FINRA is acting in a regulatory capacity it is "serving as an agency or instrumentality of the government of the United States."
The 11Cir Turbeville Order takes things along a similar glide path and deems FINRA to be a Deputy of the federal government.
In the 2Cir Solomon Opinion, a self-regulatory-organization is deemed a "private body" immune from the mandate of the Fifth Amendment.
Is it possible for FINRA to be both a private body and "a corporation serving as an agency or instrumentality of the government of the United States" at the same time?
Is FINRA a governmental actor or a private organization?
Is that Schrodinger's Cat purring?
Federal prosecutors alleged that in the Chiicago area, Jowhar Soultanali, 62, and his son, Kabir Kassam, 38, offered on-site school tutoring through their Brilliance Academy, Inc.,while that company's wholly owned subsidiary Babbage Net School, Inc., provided online training. The two men purportedly targeted schools that were recipients of federal funding for tutoring that also had large numbers of low-income students. Instead of providing promised customized tutoring, Soultanali and Kassam provided what the FBI News Release characterizes as "generic tutoring programs configured at or below students' grade levels, partial or missing pre-test and post-test assessments that did little to help students, and fraudulent progress reports that, in some cases, were automatically generated by a computer program." In furtherance of their scheme, the pair submitted inflated bills. As asserted in the FBI New Release, the two men:
bribed school officials and others to ensure that the fraud remained hidden. Bribes included a Caribbean cruise for an assistant principal in Texas and a trip to a gentlemen's club for a state education official in New Mexico.
All told, the two companies received about $33 million from school districts around the U.S. Investigative activity revealed that Soultanali and Kassam fraudulently obtained at least $11 million of that for themselves during the 2009-2010 school year, using it to buy lavish properties, luxury vehicles, and expensive jewelry.
Following the April 2014 indictment of Soultanali, Kassam, and the two companies, both men pled guilty to one count each of mail fraud and ordered them to pay $11,393,762 in restitution. Soultanali was sentenced to six years in prison, and Kassam to five years and ten months in prison.