> without admitting or denying the SEC’s findings
I’ve never understood why this loophole of “non admission of guilt” exists in our legal systems.
I’ve never understood why this loophole of “non admission of guilt” exists in our legal systems.
Given the overlap between torts and crimes, it would be much longer and more painful to resolve tort cases if the settling part might have to admit an act that was also a crime.
In the concrete case, they settle with the SEC, but if anybody wants to sue them claiming their shilling induced them to make bad crypto investments, the settlement doesn't serve as an admission of guilt to use as evidence in that follow up lawsuit.
often times they are announced but under separate headlines on separate websites, you have to check. Other times there is not a criminal case at all.
SEC proceedings are civil; criminal violations are referred to the Department of Justice for prosecution, often in parallel to civil enforcement action.
> You can plead no contest to criminal charges
You cannot generally plead “no contest” (nolo contendere) to federal criminal charges; the court may allow it, but “before accepting a plea of nolo contendere, the court must consider the parties’ views and the public interest in the effective administration of justice.” [Federal Rules of Criminal Procedute, Rule 11]
I was curious, so I checked Jake Paul:
> Respondent shall, within 20 days of the entry of this Order, pay disgorgement of $25,019, prejudgment interest of $1,811, and a civil money penalty in the amount of $75,057 to the Securities and Exchange Commission
Jake Paul was paid $25k for a tweet and was ordered to pay back a bit over $100k. Only other restriction is he can't be paid for anything related to crypto in the next 3 years. Paying back the original money + 3x as fine seems reasonable I guess.
It might be different if anybody believed these celebrities were actively trying to defraud and harm people.
The reality is more likely that these people are effectively human billboards. People pay them to read a script, and they read it. Each week a different product, different script, same deal.
So they got suckered into reading an illegal script. They get penalized (rightly) but it doesn’t necessarily need to be extreme.
And now the SEC gets to show off their win using the same billboards.
> Hey, I'm Jake Paul and you should buy crypto X because it's great and I have it
vs
> Hey, I'm Jake Paul and you should buy crypto X because it's great and I was paid for this advertisement.
That said, I don’t know who Jake Paul is. If he’s a special case, fine. I was going off the other names I do recognize. I just don’t see Lohan hustling securities fraud between ads for clothing and apple jacks.
And yeah, Logan was a special case because he shilled quite a few coins including a few he was "involved" with.
Superrich people have agents and lawyers who should advise better. The near homeless guy I saw at the bus stop touting "crypto" I'd call a sucker. Not Logan Paul.
How many other high-paying tweets that look like fraud did he keep all the cash? Do we know? Was it none?
"Dang, turns out that one is a loser - they got me on that one." Can be a business expense in a profitable operation.
I see this kind of thing as fraud and there /needs/ to be conviction and jail, even a week in minimum security. There has to be consequences that aren't a business expense for getting in on fraud.
The "I'm a dumb celebrity so I didn't know" defence is just garbage, they should be terrified of accepting such "gigs". Utterly crapping themselves about how bad it could go.
that’s very different than a civil charge with a prescribed fine that can be paid to avoid the civil trial.
the SEC occasionally refers cases to the DOJ for a criminal trial. but tbh, they kind of don't want crypto defendants sweating because the SEC’s logic will get challenged, potentially leaving the nation with no regulator at all. they need civil settlements as much as you need justice for bagholding something a celebrity shilled.
A 3x fine is no deterrent if your action is easily concealed but promoting services to a public audience, by definition, is not concealed
E.g. Rose McGowan unable to testify against Weinstein because he setlled with her for $100k. Surely in a criminal trial you can be called, take the oath and tell the truth? I don't want to follow anything in hollywood if I can avoid it so I don't care to know the details of weinstein and mcgowan at all. Just it was being reported like that and my jaw dropped. You can pay off witnesses so they can't testify now? Wow.
McGowan was not able to testify because the particular offense against her was not charged and the judge didn’t allow testimony about prior acts before a certain date, not because of the settlement.
Pay a small fine that represents a tiny portion of your ill-gotten gains and move on without any repercussions.
Hardly.
The SEC cannot say you are guilty without proving it within the bounds of the legal system. This "non admission of guilt" is a way to sidestep a lengthy, costly legal process and get a result for the impacted parties sooner rather than much much later.
Pretty much ends there. The SEC can say you are civilly liable, and they can assess fines in some situations and initiate civil litigation in others based on that.
But if they think you are guilty, that’s an issue they hand off to the Justice Department.
If the SEC says you are liable or guilty in any way for anything, you can contest it via the legal system. That's what the legal system is for...
Again, this "non admission of guilt" sidesteps everything and cuts straight to the end result.
In this specific case, it literally means the SEC either felt their case wasn't strong enough to guarantee an outcome, or litigating the case would become exceedingly costly and unproductive - again without a guarantee of an outcome.
"Non admission of guilt" payments guarantee a speedy outcome. That is the entire point.
It’s a settlement agreement, and, yes, that’s the whole point – they resolve a situation subject to civil litigation without litigation, but leaving the settling party no worse off than if they had fought and had the agreement contents instead imposed as a remedy. Requiring admissions as part of a settlement would not do that, settling would then in many cases be worse than losing.
"I didn't do it, but I'd rather pay the fine than go to court" is a perfectly reasonable outcome.
its miscarriage of justice
So every civil suit filed should be forced to go through trial even if the parties arrive at a mutually acceptable resolution that both sides prefer to trial?
I doubt it
Do we need that flexibility? The flexibility to extract a settlement from guilty people without an acknowledgement of guilt seems to be a worthless prize unless we're enforcing legislation for revenue's sake. I wouldn't complain about that just because it seems venal, I really find it silly because the amount of revenue is minuscule irt the budget.
Yes.
> The flexibility to extract a settlement from guilty people without an acknowledgement of guilt seems to be a worthless prize unless we’re enforcing legislation for revenue’s sake.
Civil charges are about liability, not guilt, and have a different standard of proof than criminal guilt. However, in a criminal trial, and admission of facts necessary for civil liability is admissible evidence. No one benefits from a system in which it is impossible for a party to accept civil liability without admitting to facts that could be used against them in other, including criminal, litigation when the civil verdict itself could not be.
And, while in this case all of the consequences may have been monetary, in civil litigation especially involving the government, there are often other consequences (such as legally binding commitments to heightened monitoring and behavioral controls) that are attained in settlements (often, in the form of “consent decrees”) of civil litigation. Making those more expensive for all sides because the defense was incentivized to go through a kabuki-dance trial even if they fully expect to lose on the civil burden of proof just to avoid making an admission to settle does not benefit anyone. Except lawyers, lawyers would love it.