Blog Posts Tagged With Ponzi Schemes, Offering Frauds, and Other Scams

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SEC v. Robert F.X. Sillerman (S.D.N.Y. June 28, 2019, Settled)

Action against Defendant, the former CEO of an online media company, for alleged offering fraud.  According to the SEC, Defendant misappropriated funds raised during his company’s public securities offering.  The SEC also alleges that Defendant misled investors by, among other things, falsely representing that two celebrities were among the investors in the company.  Defendant agreed to pay a civil penalty of $179,000 and to an officer-and-director bar.

SEC Complaint

SEC Litigation Release
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SEC v. Johnny R. Thomas, et al. (D. Nev. June 28, 2019, Contested); In re R. Gordon Jones, CPA (A.P. June 28, 2019, Settled); In re S. Jeffrey Jones, CPA (A.P. June 28, 2019, Settled)

Actions against Defendants, four former executives of an energy services company, and Respondents, two accountants, for alleged fraud and professional misconduct.  According to the SEC, Defendants misled investors by, among other misrepresentations, inflating the number of power plants that the company was building.  The SEC alleges that one Respondent accountant aided Defendants in perpetrating the fraud, and that the other Respondent accountant failed to audit the company in accordance with PCAOB standards.  Respondents have agreed
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In re Eagle Market Makers, Inc. (A.P. June 28, 2019, Settled)

Action against Respondent, a commodities trading firm, for alleged noncompetitive wash sales.  According to the CFTC, Respondent circumvented the “lockdown” period before market open, during which pre-open orders cannot be modified or cancelled.  The CFTC alleges that Respondent improperly placed additional, offsetting orders to cancel its pre-open orders, which resulted in noncompetitive wash sales upon market open.  Respondent has agreed to pay a civil penalty of $350,000.

CFTC Order

CFTC Press Release
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SEC v. Henry Sargent, et al. (D. Mass. June 27, 2019, Contested)

Action against Defendants, four attorneys and a real estate agent, for alleged microcap fraud.  According to the SEC, Defendants formed a microcap company and issued shares to friends, family, and co-workers.  The SEC alleges that Defendants then filed a Form S-1 that falsely stated that the shareholders had acquired the shares for investment purposes and that Defendants did not control the shares.  According to the SEC, Defendants subsequently sold shares of the microcap firm to
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SEC v. Mark Allen Plumber (N.D. Tex. June 26, 2019, Settled)

Action against Defendant, the principal of an oil company, for alleged misappropriation.  According to the SEC, Defendant solicited investor funds to be used in oil well projects and then used a portion of the funds to pay personal expenses.  Defendant has agreed to pay disgorgement of $399,011, prejudgment interest of $33,008, and a civil penalty of $75,000.

SEC Complaint

SEC Litigation Release
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SEC v. Jason Sugarman, et al. (S.D.N.Y. June 26, 2019, Contested)

Action against Defendant, a former director of a broker-dealer and investment adviser, for alleged fraud.  According to the SEC, Defendant and his associate perpetrated a complex fraudulent scheme in which they gained control of certain investment advisers, used the funds managed by the advisers to buy Native American tribal bonds, and misappropriated the proceeds of the bond sales from the tribe.  The SEC also alleges that Defendant and his associate acquired and misappropriated funds from
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SEC v. Worldwide Markets, Ltd., et al. (D.N.J. June 25, 2019, Contested)

Action against Defendants, a broker, its CEO, and its affiliate, for alleged offering fraud.  According to the SEC, Defendants offered foreign investors the opportunity to trade in U.S. stocks but instead provided the investors with singe-security contracts for difference, misappropriated investor funds, and failed to fulfill any withdrawal requests from customers.  The SEC also alleges that Defendants failed to transact on a registered national exchange and register as a broker.

SEC Complaint

SEC Litigation Release
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In re Merrill Lynch Commodities, Inc. (A.P. June 25, 2019, Settled)

Action against Respondent, a provisionally registered swap dealer, for alleged spoofing.  According to the CFTC, Respondent placed orders for futures contracts with the intent to cancel the orders before execution in order to manipulate prices.  Respondent has agreed to pay restitution of $2,364,585, disgorgement of $11,100,000, and a civil penalty of $11,500,000.

CFTC Order

CFTC Press Release
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SEC v. Donald S. LaGuardia, Jr. (S.D.N.Y. June 24, 2019, Contested)

Action against Defendant, the principal of an investment adviser, for alleged fraud.  According to the SEC, Defendant misappropriated money from funds managed by the investment adviser  and then falsified entries in the funds’ books, statements, and other documents to conceal the misappropriation and inflate the funds’ values.

SEC Complaint

SEC Litigation Release
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The Kane Capital Investment Group, LLC, and Amrit Jaswant Singh Chahal (E.D.V.A. June 20, 2019, Settled)

Action against Defendants, a commodity pool operator and its principal, for alleged fraud.  According to the CFTC, Defendants solicited investor funds based on false claims about the pool’s trading profits and size, among other misrepresentations.  The CFTC further alleges that Defendants misappropriated investor funds and made Ponzi-like payments to earlier investors.  Defendants have agreed to pay restitution of $1,232,510.41. Defendant principal has pleaded guilty to fraud charges in a parallel criminal action and has been
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SEC v. Anatoly Hurgin, et al. (S.D.N.Y. June 18, 2019, Contested); In re Benjamin H. Gordon (A.P. June 20, 2019, Settled)

Action against Defendants, an intelligence communications company, its subsidiary, its CEO, and its CTO, and Respondent, former CEO of a Special Purpose Acquisition Company (SPAC), for alleged fraud in connection with an acquisition.  According to the SEC, Respondent formed a SPAC to acquire Defendant company.  The SEC alleges that Defendants misled the SPAC’s shareholders about Defendant company’s new products and customer orders and that Respondent negligently failed to verify the information that shareholders received.  Respondent
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SEC v. Equal Earth, Inc., et al. (S.D. Cal. June 17, 2019, Settled)

Action against Defendants, an energy company and two of its executives, for alleged offering fraud.  According to the SEC, Defendants solicited investor funds based on misrepresentations about the company’s finances and contracts.  The SEC also alleges that one Defendant executive sold his stock in the company at the time of the misrepresentations and misappropriated investor funds.  Defendant company has agreed to pay disgorgement and prejudgment interest of $6.8 million and a civil penalty of $855,000. 
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CFTC v. Control-Finance Limited and Benjamin Reynolds (S.D.N.Y. June 17, 2019, Contested)

Action against Defendants, a U.K-based Bitcoin trading and investment company and its principal, for an alleged $147 million Ponzi and pyramid scheme.  According to the CFTC, Defendants made false guarantees of daily trading profits and other misrepresentations to induce investors to purchase Bitcoin and transfer the Bitcoin to Defendants.  The CFTC alleges that Defendants made no trades on investors’ behalf and instead misappropriated investor funds to, for example, make Ponzi-like payments to earlier investors.  The
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In re David Vogel, CPA (A.P. June 14, 2019, Settled)

Action against Respondent, a former senior vice president of finance at a software company, for alleged accounting fraud.  According to the SEC, Respondent improperly recognized revenue, resulting in an understatement of the company’s liabilities and an overstatement of stockholder equity.  Respondent has agreed to pay a civil penalty of $15,000.

SEC Order
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SEC v. David Wagner, et al. (S.D.N.Y. June 14, 2019, Contested)

Action against Defendants, an investment adviser, his partner, and their three companies, for an alleged fraudulent investment scheme.  According to the SEC, Defendants operated funds that purportedly invested in healthcare and healthcare technology companies and provided false information regarding available fund reserves to solicit new investors.  The SEC also alleges that Defendant investment adviser caused the fund to pay him undisclosed management fees.  A parallel criminal case has been brought against Defendant investment adviser and
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SEC v. Richard Vu Nguyen, et al. (C.D. Cal. June 13, 2019, Contested)

Action against Defendants, an investment firm and its principal, and Relief Defendant, the principal’s girlfriend, for alleged fraud.  According to the SEC, Defendant principal solicited investor funds by misrepresenting his investing experience, concealing his criminal record, and falsely promising high returns.  The SEC also alleges that Defendant misappropriated investor funds to pay personal expenses.

SEC Complaint

SEC Litigation Release
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SEC v. Alton Perkins, et al. (E.D.N.C. June 13, 2019, Contested)

Action against Defendants, an owner of export companies and two of those companies, for alleged fraud.  According to the SEC, Defendant exporter misappropriated investor funds and misrepresented the intended use of those funds to investors.  The SEC also alleges that Defendants hid Defendant exporter’s criminal background, violated securities registration requirements, and made false representations in public filings.

SEC Complaint

SEC Litigation Release
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SEC v. Peter Baker, et al. (N.D. Ga. June 4, 2019, Partially Settled, Partially Contested)

Action against Defendants, two individuals and corporations under their control, for an alleged fraudulent investment scheme.  According to the SEC, Defendants sold investors “prime bank instruments” that they promised would generate large returns.  In reality, the SEC alleges, the instruments were fictitious, and Defendants misappropriated investors’ funds for personal expenses.  One individual Defendant and two Defendant corporations have agreed to pay amounts to be determined by the court.

SEC Complaint

SEC Litigation Release
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In re Anthony Savino (A.P. June 3, 2019, Settled); In re Joseph Palermo (A.P. June 3, 2019, Settled)

Actions against Respondents, a day trader and his friend, for an alleged manipulative trading scheme.  According to the SEC, Respondent trader used his friend’s brokerage account to place orders for securities to artificially inflate the price, which Respondent trader then sold at the higher price.  The SEC alleges that Respondents misrepresented the identity of the trader to the firm that held the brokerage account when the firm raised concerns about trading patterns.  Respondent trader has
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SEC v. Syed Arham Arbab, et al. (M.D. Ga. May 31, 2019, Contested)

Action against Defendants, a recent college graduate and his companies, for an alleged Ponzi scheme.  According to the SEC, Defendants offered investments in a hedge fund primarily to students and recent graduates of his college, promising large returns.  The SEC alleges that no such hedge fund existed, and Defendants instead used investor funds to make Ponzi-like payments to earlier investors and pay personal expenses.

SEC Complaint

SEC Litigation Release

SEC Press Release
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SEC v. George Slowinski (N.D. Ill. May 29, 2019, Contested)

Action against Defendant, principal and owner of a real estate investment company, for alleged offering fraud. According to the SEC, Defendant informed investors that they would receive high returns on investments pooled to develop and resell real estate. The SEC alleges that Defendant instead used investor funds to pay hidden fees and commissions and misappropriated the funds for other projects.

SEC Complaint

SEC Litigation Release
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SEC v. Donald A. Milne III and Instaprin Pharmaceuticals, Inc. (D.N.J May 29, 2019, Settled)

Action against Defendants, a pharmaceutical company and its CEO, and Relief Defendant, a defunct company owned by Defendant CEO, for alleged fraud on investors. According to the SEC, Defendant CEO misrepresented that investor funds would be used for Defendant company’s operating expenses. The SEC alleges that Defendant CEO misappropriated these funds. Defendants have agreed to pay $3,628,325 in disgorgement and prejudgment interest. Defendant company has agreed to pay a civil penalty of $2,771,493. Defendant individual
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In re Stephen Brandon Anderson (A.P. May 28, 2019, Settled)

Action against Respondent, an investment adviser, for allegedly overcharging customer advisory fees.  According to the SEC, Respondent falsely informed clients about the reason for transfers of their assets and made material misstatements in SEC filings.  The SEC also alleges that Respondent failed to implement required policies and procedures.  Respondent has agreed to a three-year supervisory and compliance bar and to pay disgorgement of $367,176, prejudgment interest of $38,205, and a civil penalty of $100,000.

SEC
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