Blog Posts Tagged With Fraud

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CFTC v. Omega Knight 2, LLC, et al. (S.D. Fla. June 13, 2018, Contested)

Action against Defendants, a purported precious metals retailer and its employees, in connection with an alleged scheme to defraud retail customers.  The CFTC alleges that Defendants fraudulently induced customers into investing at least $5.5 million in precious metals transactions, but failed to use all the funds they collected in support of such transactions.  The CFTC further alleges that Defendants wired the proceeds of these transactions to the employees’ accounts for personal use.

CFTC Complaint

CFTC
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CFTC v. Mark Olsen Mining Co., et al. (S.D. Fla. June 12, 2018, Contested)

Action against Defendants, a purported precious metals retailer and its employee, in connection with an alleged scheme to defraud retail customers.  The CFTC alleges that Defendants received payments amounting to at least $870,000 for precious metals, but never delivered the underlying assets.  The CFTC further alleges that Defendants wired the proceeds of these transactions to employees’ accounts for personal use.

CFTC Complaint

CFTC Press Release
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SEC v. Elizabeth Holmes and Theranos, Inc. (N.D. Cal. Mar. 14, 2018, Settled); SEC v. Ramesh “Sunny” Balwani (N.D. Cal. Mar. 14, 2018, Contested)

Action against Defendants, a medical device manufacturer, its founder and CEO, and its former President, for allegedly raising more than $700 million from investors on the basis of false or misleading claims.  The SEC alleges that Defendants misrepresented the effectiveness of their key product, a portable blood analyzer, and made misrepresentations to potential investors regarding a contract with the Department of Defense.  Defendant Holmes has agreed to pay a $500,000 penalty, to be barred from
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SEC v. Alan Weinberg, et al. (D.D.C. Feb. 16, 2018, Settled)

Action against Defendants, an accountant and his firm, for alleged issuance of misleading audit reports in connection with a fraudulent scheme to create and sell shell companies.  According to the SEC, Defendants issued audit reports falsely asserting that audits of shell companies had been performed according to PCAOB standards, despite audit failures and red flags that they were enabling a fraud.  Defendants agreed to pay, jointly and severally, disgorgement and prejudgment interest in the amount
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SEC v. Jonathan Strum (D.D.C. Feb. 16, 2018, Settled)

Action against Defendant, an attorney, for alleged assistance in aiding and abetting a fraudulent scheme to create and sell fraudulent shell companies.  According to the SEC, Defendant drafted false and misleading registration statements and periodic reports and signed fraudulent opinion letters.  Defendant has agreed to pay disgorgement and prejudgment interest totaling $33,010.89 and to a permanent bar.

SEC Litigation Release

SEC v. Perlstein, Linked Case
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SEC v. Nicholas J. Genovese, et al. (S.D.N.Y. Feb. 2, 2018, Contested)

Action against Defendants, a purported hedge fund manager and related entities, for alleged misrepresentations made in connection with raising more than $5.3 million from investors.  According to the SEC, Defendant Genovese made various inaccurate statements regarding his trading experience and professional qualifications to potential investors, failed to disclose his criminal history and prior bankruptcy, and misappropriated investors’ funds to trade in his personal brokerage account and for personal expenses.  Parallel criminal charges have been filed.
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SEC v. AriseBank, et al. (N.D. Tex. Jan. 25, 2018, Contested)

Action against Defendants, a company, its co-founder and CEO, and its co-founder and COO, in connection with an alleged fraudulent initial coin offering (“ICO”). According to the SEC, Defendants offered and sold unregistered investments in their cryptocurrency by depicting Defendant AriseBank as a “decentralized bank” offering consumer products and services for which its cryptocurrency could be used. In addition, the SEC alleges that Defendant company falsely stated that it had purchased an FDIC-insured bank which
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SEC. v. The End of the Rainbow Partners, L.L.C., et al. (D. Colo. Nov. 8, 2017, Contested)

Action against Defendants, a company and the estate of its deceased principal, for allegedly defrauding investors out of millions of dollars. Defendant principal raised approximately $5.3 million from investors who were told that he was a retired hedge fund manager who intended to day trade their funds using a proprietary algorithm. In addition, Defendant allegedly told investors that he would fund a charitable organization for abused women and children with up to 20% of his
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SEC v. Osiris Therapeutics Inc., et al. (D. Mary. Nov. 2, 2017, Settled and Contested)

Action against a biotech company and four former executives for allegedly falsifying accounting data and issuing fraudulent financial statements. According to the SEC, Defendants overstated the issuer’s financial performance, including through improper revenue recognition and backdating. Defendant has agreed to pay a $1.5 million penalty, and the SEC’s action against the four Defendant executives continues.

SEC Litigation Release
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CFTC v. Scott Allensworth, et al. (C.D. Cal. Oct. 2, 2017, Contested)

CFTC v. Scott Allensworth, et al. (C.D. Cal. Oct. 2, 2017, Contested) – Action against Scott Allensworth, a self-described investment, tax, options, and retirement adviser, his company, and two commodity futures traders for allegedly orchestrating a fraudulent futures trading scheme. According to the CFTC, Defendants fraudulently solicited certain tax and retirement-planning clients to invest in two commodity pools, representing that they were successful traders and sometimes reporting false returns as high as 20% a month.
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In re Alere Inc. (A.P. Sept. 28, 2017, Settled)

Action against Respondent, a public company that manufactures and sells diagnostic tests for infectious disease, cardiometabolic disease, and toxicology, for allegedly engaging in improper premature recognition of revenue in its financial statements. The SEC further alleges that Respondent’s subsidiary in Colombia improperly characterized payments made to a Colombian government official and Respondent’s subsidiary in India failed to properly record certain payments made by a distributor. The SEC also alleges that Respondent failed to devise or
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SEC v. Eric Pulier (C.D. Cal. Sept. 27, 2017, Contested)

Action against Defendant, a former IT executive at Computer Sciences Corporation (“CSC”) and co-founder of ServiceMesh, Inc. (“SMI”), a cloud-computing company, for allegedly masterminding a scheme to defraud CSC of $98 million in connection with the company’s 2013 acquisition of SMI. The SEC alleges that Defendant bribed the former Executive Vice President of Information Technology at the Commonwealth Bank of Australia (“CBA”) and another CBA executive to persuade CBA to enter into contracts with CSC
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SEC v. Aegerion Pharmaceuticals, Inc. (D. Mass. Sept. 22, 2017, Settled)

Action against Defendant, a biopharmaceutical company, alleging that Defendant misrepresented to investors how many new patients filled prescriptions for a drug, Juxtapid, that was its sole source of revenue. Defendant allegedly told investors that the “vast majority” of patients receiving prescriptions purchased the drug, while its records showed that only slightly more than 50% of patients did so. Defendant agreed to pay a $4.1 million civil penalty.

SEC Litigation Release

SEC Press Release
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In re State Street Global Markets, LLC, et al. (A.P. Sept. 7, 2017, Settled)

Action against three subsidiaries of State Street Corporation for allegedly charging six transition management customers approximately $20 million in hidden and unauthorized markups and commissions. According to the SEC, Respondents and their employees generated false statements and reports and made other material misstatements and omissions to customers to perpetuate and conceal this scheme. Respondents have agreed to pay a civil penalty of $32.3 million and engage an independent ethics and compliance consultant to review and
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CFTC v. Monex Deposit Company, et al. (E.D. Ill. Sept. 6, 2017, Contested)

CFTC v. Monex Deposit Company, et al. (E.D. Ill. Sept. 6, 2017, Contested) – Action against three affiliated companies and their principals for allegedly engaging in a large precious metals fraud scheme executed through illegal, off-exchange retail commodity transactions. Respondents allegedly employed high-pressure sales tactics, downplayed risks, misrepresented the massive and pervasive losses suffered by their customers, and made false assurances regarding their fiduciary obligations to attract customers for their leveraged precious metals trading program. 
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In re Arthur Toole III (A.P. July 20, 2017, Settled)

Action against individual and three companies he owns for alleged fraud in connection with three commodity pools.  Respondent Toole allegedly solicited funds for three pools and then proceeded to misappropriate a portion of the funds, misrepresent trading results to pool participants, and commingle funds.  Toole was also allegedly acting as an unregistered Commodity Pool Operator.  Respondents have agreed to be jointly and severally liable for $293,141 in restitution and a $200,000 civil penalty.

CFTC Press
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CFTC v. Daniel Winston LaMarco and GDLogix Inc. (E.D.N.Y. July 10, 2017, Contested)

Action against Defendant LaMarco and his company GDLogix Inc. for allegedly engaging in off-exchange foreign currency derivatives (forex) fraud, commodity pool fraud, and failure to register with the CFTC as required.  The CFTC alleges that Defendant LaMarco fraudulently solicited and accepted over $1 million from individuals to trade off-exchange leveraged or margined retail derivatives forex contracts in a commodity pool operated by the Defendants.  The CFTC further alleges that these pool participants were solicited through
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SEC v. Hui Feng et al. (C.D. Ca. June 29, 2017)

The SEC was granted summary judgment on its claims against attorney Hui Feng and the Law Offices of Feng & Associates PC for allegedly operating as unregistered broker-dealers and defrauding Chinese nationals attempting to obtain visas. The ruling stems from a suit filed by the SEC against Feng in December 2015 which alleged that Defendant Feng and his firm sold EB-5 investments to over 100 foreign investors, who were also their legal clients, and directly
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SEC v. Christopher J. Hall (S.D. Fla. June 28, 2017)

On reconsideration, the District Court for the Southern District of Florida ordered a horse racetrack executive to pay $4.7 million in disgorgement and prejudgment interest for alleged fraud in obtaining loans from a brokerage firm. The SEC alleged that Defendant fraudulently obtained millions of dollars in margin loans from the brokerage company February 22, 2017, a jury returned a verdict against Hall. On April 13, 2017, the court imposed a $225,000 civil penalty but found
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Various Actions Involving Officers and Directors (A.P. June 29, 2017, Settled)

Actions against the officers and directors of six Florida corporations (Christopher A. Conley, Matthew L. Egna, Andrew S. Keck, Sarah E. Keck, Nigel G. Lindsay, and Marilyn Stark) for allegedly misrepresenting the companies’ business plans in public offerings. According to the SEC, the Respondents represented that their firms were developing marketable technologies; however, the firms existed solely to engage in mergers or acquisitions with unidentified entities. The SEC alleges that, accordingly, the firms were undisclosed
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CFTC v. Tracy Lee Thomas and Marbury Advisors Inc. (M.D.N.C. June 28, 2017, Default Order)

Action against a Cayman Island corporation and its Managing Director for allegedly engaging in a fraudulent scheme by soliciting approximately $1,189,000 from customers by misrepresenting their prior investment and trading success, that they would invest in Treasury bills on behalf of their customers, and that Defendant Thomas would invest in a conservative manner. The CFTC further alleges that Defendants failed to disclose the use of customers’ funds to trade CME E-mini S&P 500 futures contracts,
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CFTC v. Michael S. Wright and Wright Time Capital Group LLC (d/b/a Global FX Club) (S.D.N.Y. June 22, 2017, Contested)

Action against Defendant Michael S. Wright and his firm Wright Time Capital Group LLC for allegedly engaging in a fraudulent scheme to solicit over $400,000 from at least 10 members of the public by promising to pool participant funds for forex trading. The CFTC alleges that Defendants misappropriated a majority of these funds for unauthorized personal or business expenses. The CFTC further alleges that Defendants concealed this scheme by making and issuing false account statements
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