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

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SEC v. Joseph Bayliss and Ronald Roach (E.D. Cal. Oct. 22, 2019, Settled)

Action against Defendants, an electrical and building contractor and an accountant, for alleged fraud. According to the SEC, Defendants solicited investments in a program to purchase and lease electric generators. The SEC alleges that Defendants never purchased the generators and instead used investor funds to make Ponzi-like payments to earlier investors.  The SEC further alleges that Defendants created false certificates of inspection and false financial statements to conceal the scheme.  Defendants have agreed to pay
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SEC v. Shuang Chen et al. (D. Mass. Oct. 15, 2019, Contested)

Action against Defendants, a Hong Kong brokerage company and 18 traders, for alleged market manipulation. According to the SEC, Defendants manipulated prices by placing small sell orders to drive down a stock’s price and then used another account to buy large amounts of the stock at a deflated price.  The SEC further alleges Defendants subsequently placed small orders to buy the stock at a higher price in a small quantity, then sold off the rest
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SEC v. Anton Senderov and Lior Babazara (E.D. Wash. Oct. 10, 2019, Contested)

Action against Defendants, individuals who controlled binary brokers, for alleged misrepresentation regarding binary options trading. According to the SEC, Defendants solicited customers to open binary option accounts based on false information regarding the Defendants’ investment experience and compensation methods.  The SEC further alleges that Defendants falsely told investors that the brokerage firms would profit only when investors profit.

SEC Complaint

SEC Litigation Release
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SEC v. Richard Andrew Mallion (S.D. Fla. Oct. 10, 2019, Settled)

Action against Defendant, a self-employed individual, for alleged fraud and registration failure. According to the SEC, Defendant solicited investment in private firms based on false claims that they would soon be taken public.  The SEC further alleges that Defendant failed to register as a broker-dealer despite earning transaction-based compensation.  Defendant has agreed to a security-solicitation bar and to pay disgorgement of $634,511, prejudgment interest of $18,606, and a civil penalty of $150,000.

SEC Complaint

SEC
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In re David Sechovicz (A.P. Oct. 7, 2019, Settled); CFTC v. Peter Szatmari (D. Haw., Oct. 7, 2019 Contested)

Actions against Respondent and Defendant, internet marketers for unregistered binary option brokers, for alleged fraud. According to the CFTC, Respondent and Defendant created fictitious websites, news stories, and testimonials to promote binary option trading brokers and were compensated with referral fees from brokers.  Respondent has agreed to pay a civil penalty of $949,918.50.

CFTC Order

CFTC Complaint

CFTC Press Release

Previous Coverage
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SEC v. Gino M. Pereira (E.D.N.Y. Oct. 4, 2019, Contested); SEC v. Jeffrey Auerbach et al. (E.D.N.Y. Oct. 4, 2019, Contested)

Actions against Defendants—the CEO of a security-technology company, two consultants, and a stockbroker—for alleged fraud. According to the SEC, Defendant CEO and Defendant consultants bribed Defendant stockbroker to buy shares of the technology company using client funds.

SEC Complaint (Pereira)

SEC Complaint (Auerbach)

SEC Litigation Release
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In re Hard Eight Futures, LLC (A.P. Sept. 30, 2019, Settled); In re Igor Chernomzav (Sept. 30, 2019, Settled)

Actions against Respondents, a trading firm and its principal, for alleged spoofing.  According to the CFTC, Respondents placed orders for E-mini futures contracts with the intent to cancel them before execution to manipulate prices.  Respondent trading firm has agreed to pay a civil penalty of $1,750,000.  Respondent principal has agreed to pay a civil penalty of $750,000 and to a nine-month trading bar.

CFTC Press Release

CFTC Order (Hard Eight)

CFTC Order (Chernomzav)
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SEC v. Dana J. Bradley, et al. (W.D.N.C. Sept. 30, 2019, Contested)

Action against Defendants, real estate development companies and their owners, for alleged fraud. The SEC alleges that Defendants solicited investments for real estate developments but instead used the proceeds to make Ponzi-like payments to earlier investors and to pay the debts of other business ventures.

SEC Complaint

SEC Litigation Release
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SEC v. James T. Booth (D. Conn. Sept. 30, 2019, Contested)

Action against Defendant, an investment adviser and broker, for alleged fraud. The SEC alleges that Defendant solicited funds for alternative investments and used the proceeds to make Ponzi-like payments to earlier investors and to pay personal expenses.  Defendant has been charged in a parallel criminal proceeding.

 SEC Complaint

SEC Litigation Release
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In re Block.one (A.P. Sept. 30, 2019, Settled)

Action against Respondent, a blockchain company, for an alleged unregistered offering.  The SEC alleges that Respondent sold electronic tokens through an initial coin offering without registering or securing an exemption from registration.  Respondent has agreed to pay a civil penalty of $24,000,000.

SEC Order
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CFTC v. Jon Barry Thompson (S.D.N.Y. Sept. 30, 2019, Contested)

Action against Defendant, the principal of a Bitcoin escrow company, for alleged fraud. According to the CFTC, Defendant induced customers to send him funds for the purchase of Bitcoin based on false representations that he already had the Bitcoin in hand.  The CFTC further alleges that Defendant misappropriated the customers’ funds and failed to deliver the promised Bitcoin.

CFTC Press Release

CFTC Complaint
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In re RBC Capital Markets (A.P. Sept. 30, 2019, Settled)

Action against Respondent, a registered futures commission merchant, for alleged failures to supervise.  According to the CFTC, Respondent’s employees were able to execute wash trades due to Respondent’s inadequate supervisory controls.  Respondent has agreed to pay a civil penalty of $5,000,000.

CFTC Order

CFTC Press Release

 
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In re BGC Financial, LP (A.P. Sept. 30, 2019, Settled); In re GFI Securities, LLC (A.P. Sept. 30, 2019, Settled)

Actions against Respondents, interdealer brokers, for alleged fraud.  According to the CFTC, Respondents made false representations to clients about whether certain prices were executable and whether certain trades had already occurred to create the perception of greater liquidity and tighter spreads in foreign exchange options.  One Respondent has agreed to pay a civil penalty of $15,000,000.  Another Respondent has agreed to pay a civil penalty of $10,000,000.

CFTC Order (BGC)

CFTC Order (GFI)

CFTC Press
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In re Classic Energy LLC and Mathew D. Webb (A.P. Sept. 30, 2019, Settled)

Action against Respondents, a trader and his employer, for alleged misuse of order information, failure to supervise, and recordkeeping violations. According to the CFTC, Respondent trader misused order information to take the other side of customer trades, rather than matching the orders to those of other market participants as the customers expected.  Respondents have agreed to pay, jointly and severally, a civil penalty of $1,500,000. Respondent trader has agreed to pay disgorgement of $413,065.

CFTC
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In re Coby Tresner (A.P. Sept. 30, 2019, Settled)

Action against Respondent, a commodities floor broker, for alleged unauthorized trading and misappropriation.  According to the CFTC, Respondent falsely represented to clients that he was a registered commodity trading adviser and associated person of a registered introducing broker.  The CFTC further alleges that Respondent misappropriated client funds to pay personal expenses.  Respondent has agreed to pay a civil penalty of $250,000, restitution of $55,000, and post-judgment interest, and to permanent trading and registration bars.

CFTC
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SEC v. Michael J. Starkweather and Andiamo Corporation (E.D.N.Y. Sept. 30, 2019, Contested); SEC v. William White (E.D.N.Y. Aug. 22, 2019, Contested)

Actions against Defendants, a technology company and two former CEOs, for allegedly aiding and abetting manipulative trading in the company’s stock and issuing a press release containing false statements. According to the SEC, Defendant former CEO received kickbacks from a stock promoter in connection with sales designed to artificially increase the price of Defendant corporation’s stock.  The SEC further alleges that the other Defendant former CEO knowingly announced the distribution and development of a smartphone
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CFTC v. David Gilbert Saffron a/k/a/ David Gilbert and Circle Society, Corp. (D. Nev. Sept. 30, 2019, Contested)

Action against Defendants, a binary options trading company and its owner, for alleged fraud.  According to the CFTC, Defendants solicited investor funds for use in forex and cryptocurrency trading based on false claims about Defendant owner’s trading expertise and false guarantees of high returns.  The CFTC further alleges that Defendants use investor funds to make Ponzi-like payments to earlier investors.

CFTC Complaint 

CFTC Press Release
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In re Morgan Stanley Capital Group, Inc. (A.P. Sept. 30, 2019, Settled); In re Belvedere Trading, LLC (A.P. Sept. 30, 2019, Settled); In re Mitsubishi International Corporation (A.P. Sept. 30, 2019, Settled)

Actions against Respondents, two trading firms and a bank, for alleged spoofing.  According to the CFTC, Respondents entered trades with the intent to cancel them before execution to manipulate prices.  Respondents have agreed to pay respective civil penalties of $1,500,000, $1,100,000, and $400,000.

CFTC Order (Morgan Stanley)

CFTC Order (Belvedere)

CFTC Order (Mitsubishi)

CFTC Press Release
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In re Liora Welles (A.P. Sept. 30, 2019, Settled); In re Yair Hadar (A.P. Sept. 30, 2019, Settled); In re Shira Uzan (A.P. Sept. 30, 2019, Settled)

Actions against Respondents, three retention agents for an Israel-based binary-options firm, for allegedly soliciting customers to enter into illegal and off-exchange binary option transactions.  According to the CFTC, Respondents misrepresented the nature of the binary option trades they offered and falsely stated that most customers’ trades were profitable when in fact most customers lost money.  Respondents have entered into cooperation agreements with the CFTC and have agreed to permanent trading and registration bars.  Respondents have
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SEC v. David Sechovicz (D. Mass. Sept. 27, 2019, Settled); SEC v. Peter Szatmari (D. Mass. Sept. 27, 2019, Contested)

Actions against Defendants, internet markets, for alleged fraud. The SEC alleges Defendants created fictitious websites, news stories, and testimonials to promote binary option trading brokers and were compensated with referral fees.  Defendant Sechovicz has agreed to pay disgorgement of $1,899,837, prejudgment interest of $83,571, and a civil penalty of $949,918.

SEC Complaint (Sechovicz) 

SEC Complaint (Szatmari)

SEC Litigation Release
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