Financial crimes need stiff penalties

The improving economy has started to yield results for some, while others have yet to see any benefits.

Minnesota had stopped accepting tax returns through the popular TurboTax platform due to fraudulent behavior, the Star Tribune reported earlier this month, though the ban has been reversed.

Part of a broader trend, this uptick in white-collar crime, such as tax and investment fraud, which likely became endemic during hard economic times, get uncovered as the job market recovers and the criminals begin running out of ways to hide their nefarious activities.

Many Minnesotans have fared well through the crises but have become subjects for exploitation, especially in vulnerable segments of the population such as recent graduates and retirees.

This will not be an easy problem to solve. Simply calling for new legislation or more rules in the finance industry wouldn’t likely provide much more consumer protection because fraudulent investors don’t play by those rules to begin with.

Those who invested with local investment adviser Mark Holt lost around $4 million. Holt pretended to show clients documents pertaining to be copies of their burgeoning savings accounts. In reality, Holt was putting up fronts and other fake entities to funnel money into his own private activities such as exotic dancers and club memberships.

We urge the Legislature to strengthen white-collar penalties to deter crime and to protect vulnerable investors. It’s just as important, though, for potential investors to recognize that the age of winning big in the stock market is likely over, at least for now.