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

Subscribe to Ponzi Schemes, Offering Frauds, and Other Scams RSS Feed

SEC v. Keith Borge (S.D.N.Y. Mar. 28, 2019, Contested)

Action against Defendant, a former controller of a not-for-profit college, for alleged fraud related to the state of the college’s finances. The SEC alleges that Defendant falsified financial records, failed to file certain tax submissions, and failed to determine the likelihood that pledged donations would still be received in an effort to hide the school’s worsening financial performance from municipal bond investors.

SEC Complaint

SEC Press Release
Continue Reading

SEC v. Carol Ann Pedersen (C.D. Cal Mar. 20, 2019, Contested)

Action against Defendant, a former CPA and unregistered investment adviser, for an alleged Ponzi scheme. According to the SEC, Defendant falsely represented to investors that their funds would be invested in “federally guaranteed” securities and falsified account statements. The SEC alleges that Defendant misappropriated investor funds for payments to other investors and for personal use. Defendant has pleaded guilty in a parallel criminal action.

SEC Complaint

SEC Litigation Release
Continue Reading

SEC v. Kent R.E. direct, et al. (C.D. Cal Mar. 18, 2019, Contested)

Action against Defendants, two pastors, their church, and a related asset management company, for an alleged Ponzi scheme. According to the SEC, Defendants fraudulently solicited investments through radio and television advertisements, misappropriated funds, and made Ponzi-like payments to pay returns to investors.

SEC Complaint

SEC Litigation Release
Continue Reading

SEC v. Dale M. Walker (M.D. Ga. Mar. 15, 2019, Settled)

Action against Defendant, a former county manager, for an alleged conflict of interest in connection with a public pension fund. According to the SEC, Defendant, who was involved in the pension fund’s selection of an investment adviser, gave an unfair competitive advantage to an investment adviser due to his undisclosed relationship with a person associated with the adviser. The SEC alleges that Defendant gave confidential proposals to this adviser to review and falsely represented that
Continue Reading

SEC v. Diane D. Dalmy (D. Colo. Mar. 13, 2019, Contested)

Action against Defendant, an attorney, for alleged fraud related to the preparation of opinion letters regarding microcap securities. According to the SEC, Defendant continued to draft letters after a major microcap quotation and trading system banned Defendant from providing legal opinion letters. The SEC alleges that Defendant hired another attorney to sign the letters without performing additional due diligence.

SEC Complaint 

SEC Litigation Release
Continue Reading

In re Kiarash (Kia) Jam (A.P. Mar. 12, 2019, Settled)

Action against Respondent, a film producer, for alleged offering frauds. According to the SEC, Respondent falsely informed investors that he was raising money to take an auction site private and to spin off a separate business unit from that site. The SEC alleges that Respondent misappropriated investor funds and misrepresented information, including the amount of money raised, the number of shares for sale, and the purported involvement of a broker-dealer. Respondent has agreed to pay
Continue Reading

In re Lumber Liquidators Holdings, LLC (A.P. Mar. 12, 2019, Settled)

Action against Respondent, a flooring retailer, for alleged fraud on investors. According to the SEC, Respondent falsely informed investors that its products complied with environmental regulations. Respondent has agreed to pay disgorgement of $6,037,838 and prejudgment interest of $59,660. The SEC did not impose a civil penalty due to Respondent’s agreement to pay $33 million in criminal fines and forfeiture, less disgorgement paid to the SEC, in a parallel criminal action.

SEC Order

SEC Press
Continue Reading

SEC v. River North Equity LLC, et al. (N.D. Ill. Mar. 11, 2019, Contested)

Action against Defendants, a securities trading company, two microcap entertainment companies, and six individuals, for alleged market manipulation and unlawful stock offerings. According to the SEC, Defendants operated a scheme involving falsified financial statements and fraudulent statements on social media to sell the microcap companies’ unregistered stock to the public.

SEC Complaint

SEC Litigation Release
Continue Reading

SEC v. William Neil “Doc” Gallagher, et al. (N.D. Tex. Mar. 7, 2019, Contested)

Action against Defendants, a radio host and his two companies, for an alleged Ponzi scheme. According to the SEC, Defendant host used his radio shows to solicit investors in his fund, falsely stating that he was a licensed investment adviser and falsely claiming that his fund offered certain guaranteed returns. The SEC alleges that Defendants misappropriated investor funds for personal expenses and to pay other investors and that Defendant host sent investors falsified statements.

SEC
Continue Reading

SEC v. Daniel Adams, et al. (C.D. Cal. Feb. 26, 2019, Contested)

Action against Defendants, two individuals and two movie companies under their control, for allegedly defrauding two investors in a forthcoming film.  According to the SEC, Defendants made multiple misrepresentations to the investors, falsified relevant documents that were sent to the investors, and misappropriated investor funds.

SEC Complaint

SEC Litigation Release
Continue Reading

SEC v. Joshua Sason, et al. (S.D.N.Y. Feb. 15, 2019, Contested)

Action against Defendants, four individuals and their four companies, for alleged microcap fraud and unregistered offerings.  According to the SEC, Defendants used fake promissory notes to obtain unregistered shares of microcap issuers and sold the shares to the public.  The SEC further alleges that one Defendant company bought a fake promissory note from another Defendant company and, in a fraudulent settlement agreement approved by a state court, agreed to retire the debt in exchange for
Continue Reading

SEC v. Robert Alexander and Kizzang LLC (S.D.N.Y. Feb. 7, 2019, Contested)

Action against Defendants, an online gambling company and its founder, for alleged offering fraud.  According to the SEC, Defendant founder lied to investors about his background, his personal investment in Defendant company, Defendant company’s investment prospects, and the amount of funds raised.  The SEC further alleges that Defendant founder misused invested funds for personal expenses and gambling.  Defendant founder has been charged in a parallel criminal action in the Southern District of New York.

SEC
Continue Reading

SEC v. Robert H. Shapiro, et al. (S.D. Fla. Jan. 27, 2019)

The Southern District of Florida entered a final judgment in the SEC’s fraud action against Woodbridge Group of Companies LLC, its former owner, and other Defendants.  The SEC alleged that Defendants operated a $1.2 billion Ponzi scheme.  The Court ordered Defendant former owner to pay a civil penalty of $100 million, disgorgement of $18.5 million, and prejudgment interest of $2.1 million.  The court ordered Defendant companies to pay disgorgement of $892 million.

SEC Press Release
Continue Reading

SEC v. Phillip Michael Carter, et al. (N.D. Tex. Jan. 25, 2019, Contested)

Action against Defendants and Relief Defendants—a real estate developer, two other individuals, and eight LLCs—for alleged offering fraud.  According to the SEC, Defendants misled investors to buy promissory notes from companies that, in reality, had no assets.  The SEC further alleges that the names of the issuing shell companies were deceptively similar to the names of actual real estate companies.

SEC Litigation Release

SEC Press Release

SEC Complaint
Continue Reading

SEC v. Charles D. Scoville and Traffic Monsoon, LLC (10th Cir. Jan. 24, 2019)

The Tenth Circuit upheld an extraterritorial application of U.S. securities law under the Dodd-Frank Act.  The SEC alleged that Defendants, operating from within the United States, ran a Ponzi scheme in which 90% of the fraudulent securities sales were to victims overseas.  On interlocutory appeal from an asset freeze and other preliminary relief, Defendants argued that the antifraud provisions of the Securities Act do not apply to the alleged overseas sales.  The Tenth Circuit disagreed,
Continue Reading

In re Wealthfront Advisers, LLC (f/k/a Wealthfront, Inc.) (A.P. Dec. 21, 2018, Settled)

Action against Respondent, a robo-adviser, for alleged false statements to clients.  According to the SEC, Respondent failed to monitor client accounts for transactions that would cause wash sales, despite promising to do so, improperly published client testimonials, improperly paid for client referrals, and failed to implement adequate policies, procedures, and a compliance program.  Respondent has agreed to pay a civil penalty of $250,000.

SEC Order

SEC Press Release
Continue Reading

In re Hedgeable, Inc. (A.P. Dec. 21, 2018, Settled)

Action against Respondent, a robo-adviser, for alleged misleading statements to clients regarding Respondent’s performance.  According to the SEC, Respondent’s promotional material included select data from high-performing client accounts and made false comparisons against competitors’ trading models.  The SEC also alleges that Respondent failed to maintain required records and a compliance program reasonably designed to prevent violations of the securities laws.    Respondent has agreed to pay a civil penalty of $80,000.

SEC Order

SEC Press Release
Continue Reading

SEC v. China United Insurance Service, Inc., et al. (Dec. 21, 2018, Settled)

Action against Defendants, a Taiwanese insurance company and former manager, for alleged manipulation of trading volume.  According to the SEC, Defendants used multiple brokerage accounts to fraudulently inflate trading volume in order to obtain a Nasdaq listing.  Defendant company has agreed to retain a compliance consultant.  The SEC did not impose a monetary penalty due to the Defendant company’s cooperation.   Defendant manager has agreed to pay a civil penalty of $30,000.

SEC Litigation Release 

SEC
Continue Reading

In re Mark J. Moskowitz (A.P. Dec. 20, 2018, Contested)

Action against Respondent, a former representative of a broker-dealer and investment adviser, for alleged fraud.  According to the SEC, Respondent pled guilty in a federal criminal proceeding related to the alleged operation of a Ponzi scheme, was sentenced to a 33-month prison term, and required to pay restitution and forfeiture in the amount of $694,576.71.  The SEC’s order states that Respondent was also found to have operated the scheme in a prior state court judgment
Continue Reading

SEC v. Robert S. “Lute” Davis, Jr., et al. (C.D. Cal. Dec. 18, 2018, Contested); SEC v. Jordan E. Goodman (S.D. Fla. Dec. 18, 2018, Settled); SEC v. Alan H. New, et al. (S.D. Ind. Dec. 18, 2018, Settled)

Action against Defendants, 13 individuals and 10 companies, for alleged unlawful sale of securities to retail investors.  According to the SEC, Defendants sold unregistered securities as part of a Ponzi scheme.  The SEC also alleges that one Defendant touted the securities without disclosing that he was paid to do so.  One Defendant has agreed to pay disgorgement of $2.29 million, prejudgment interest of $315,850, and a civil penalty of $100,000, and to industry and penny-stock
Continue Reading

In re Chris D. Rosenthal (A.P. Dec. 18, 2018, Settled)

Action against Respondent, a former municipal bond salesman, for alleged fraud.  According to the SEC, Respondent helped unregistered brokers pose as retail investors to gain priority in municipal bond offerings.  Respondent has agreed to pay disgorgement of $284,080, prejudgment interest of $15,128, and a civil penalty of $75,000.

SEC Order 

SEC Administrative Summary 

Related Action
Continue Reading

SEC v. Craig Arsenault, et al. (C.D. Cal. Dec. 13, 2018, Contested)

Action against Defendants, an investment adviser and his advisory firms, for alleged misrepresentations to investors and misappropriation of investor funds.  According to the SEC, Defendants falsely represented that funds would be invested in secured loans but instead put the funds towards riskier investments.  The SEC also alleges that Defendant adviser issued false account statements and misused investor funds.

SEC Litigation Release  

SEC Complaint
Continue Reading

SEC v. Hector A. May, et al. (S.D.N.Y. Dec. 13, 2018, Partially Settled, Partially Contested)

Action against Defendants, an investment adviser and his daughter, for alleged operation of a Ponzi scheme.  According to the SEC, Defendants used investor funds intended for investments in bonds for personal and business expenses and sent investors falsified account statements to conceal the scheme.  Defendant adviser has agreed to injunctive relief and monetary relief to be determined at a later date.  Parallel criminal charges have been filed against Defendant adviser.

SEC Press Release 

SEC Complaint
Continue Reading

In re America Modern Green Senior (Houston) LLC, et al. (A.P. Dec. 12, 2018, Settled)

Action against Respondents, three development companies organized to use EB-5 investor funds to finance development and construction projects, for alleged offering fraud.  According to the SEC, Respondents represented to investors that funds would be used to finance a real estate development project but instead used the funds for unrelated purposes.  Respondents have agreed to pay a total of $51,444,135.40 in disgorgement, prejudgment interest, and civil penalties.  $49.5 million of the disgorgement amount will be satisfied
Continue Reading

LexBlog