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

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SEC v. Gaylen D. Rust and Rust Rare Coin, Inc. (D. Utah Nov. 15, 2018, Contested) and CFTC and Utah Division of Securities v. Rust Rare Coin Inc. and Gaylen Dean Rust (D. Utah Nov. 13, 2018, Contested)

Actions against Defendants, a trader and a rare coin company, for an alleged fraudulent investment scheme. According to the SEC and CFTC, Defendants misled investors by making false statements about a silver trading program. The SEC and CFTC allege that Defendants used investor funds to make Ponzi-like payments to earlier investors and to pay for Defendant trader’s personal and business expenses.

SEC Litigation Release

SEC Complaint 

CFTC Press Release 

CFTC Complaint
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SEC v. SeeThruEquity, LLC, et al. (S.D.N.Y. Nov. 8, 2018, Contested)

Action against Defendants, a stock research firm and its co-founders, for alleged fraud against investors. According to the SEC, Defendants published reports on issuers while falsely claiming that they had not been compensated by the issuers and did not trade in the issuers’ stocks. The SEC alleges that Defendants did in fact trade in the issuers’ stocks and had been paid by the issuers to publish the reports.

SEC Litigation Release 

SEC Complaint
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SEC v. Ricardo H. Goldman (S.D. Fla. Nov. 7, 2018, Settled)

Action against Defendant, a trader, for alleged operation of a fraudulent, unregistered brokerage. According to the SEC, Defendant informed investors that he would use their funds to open individual day trading accounts but instead commingled the funds in a single concealed account. The SEC also alleges that Defendant charged investors trading commissions and misrepresented his background and disciplinary history. Defendant has agreed to pay disgorgement of $470,000, prejudgment interest of $53,497, and a civil penalty
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SEC v. Douglas P. Simanski (W.D. Pa. Nov. 2, 2018, Settled)

Action against Defendant, a former investment adviser, for alleged offering fraud. According to the SEC, Defendant operated a Ponzi scheme, raising over $3.9 million from his customers. Instead of investing the funds, Defendant used the money to reimburse other investors and for personal use. Defendant has agreed to pay disgorgement and interest and to a lifetime securities industry bar. Defendant has pleaded guilty in a parallel criminal action.

SEC Litigation Release

SEC Press Release
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SEC v. Brian Weber and Bebida Beverage Co. (E.D.N.Y. Oct. 31, 2018, Partially Settled, Partially Contested)

Action against Defendants, a beverage company and its CEO and president, for an alleged fraudulent offering of Defendant company’s shares. According to the SEC, Defendants sold restricted shares derived from a fictitious convertible note, inflated the number of outstanding shares to avoid certain limitations, and issued press releases falsely claiming that the company was buying back shares in order to inflate the share price. Defendant CEO has agreed to pay $208,000 in disgorgement, $23,436 in
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SEC v. Sean Kelly, et al. (N.D. Ga. Oct. 26, 2018, Contested)

Action against Defendants, a stockbroker and his associated entities, for alleged investment fraud. According to the SEC, Defendant stockbroker solicited investments from consumers, including many elderly individuals, stating that the money would be invested in various products. The SEC alleges that Defendant stockbroker instead used the funds for personal expenses. Parallel criminal charges have been announced against Defendant stockholder.

SEC Litigation Release
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SEC v. Mark E. Fisher and Joseph F. Capuozzo (S.D. Fla. Oct. 22, 2018, Settled)

Action against Defendants, an attorney and a businessman, for their alleged participation in a “pump and dump” scheme. The SEC alleges that Defendants acquired penny stock shares, launched a marketing campaign to boost the stock’s liquidity and price, and then sold the shares.  Defendants have agreed to lifetime bars from participating in penny stock offerings and will pay disgorgement, interest, and civil penalties in amounts to be determined by the court. Parallel criminal charges have
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SEC v. Jean Danhong Chen, et al. (N.D. Cal. Oct. 18, 2018, Contested)

Action against Defendants, an immigration attorney, her husband, her law firm, a family friend, a family employee, and two of the couple’s owned entities, for alleged facilitation of an EB-5 visa offering fraud.  According to the SEC, Defendants received over $10 million in undisclosed commissions from sales of securities to Defendant attorney’s clients. The SEC also alleges that Defendant attorney and Defendant husband advised clients to invest in an EB-5 immigrant investor regional center that
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SEC v. Alexander C. Burns and Andrew B. Scherr (S.D.N.Y. Oct. 16, 2018, Partially Settled, Partially Contested)

Action against Defendants, owners of a defunct private equity fund, for alleged schemes to defraud advisory clients and misappropriation of client assets. According to the SEC, Defendants acquired five insurance companies and seven reinsurance trusts and caused the companies and trusts to enter into investment management agreements with registered investment advisers owned by Defendants. The SEC alleges that Defendants then caused the companies and trusts to transfer money in exchange for securities that Defendants knew
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SEC v. Bruce J. Fixelle, et al. (D.N.J. Oct. 16, 2018, Contested)

Action against Defendants, an investment adviser, his investment fund, and the fund’s unregistered investment adviser, for alleged fraud on investors. According to the SEC, Defendant investment adviser solicited funds from friends with the understanding that he would use the money to day trade. The SEC alleges that Defendant investment adviser instead misappropriated the funds for personal use.

SEC Litigation Release

SEC Press Release
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SEC v. Mitchell J. Stein (9th Cir. Oct. 11, 2018, Contested)

Action against Defendant, outside counsel to a medical device company, for allegedly engaging in a series of frauds designed to inflate the company’s stock price for his benefit.  The SEC alleges that Defendant falsified purchase orders with fictitious companies in order to increase sale numbers in SEC filings and press releases.  The Ninth Circuit affirmed the district court’s grant of summary judgment in favor of the SEC, finding that Defendant’s conviction in a parallel criminal
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SEC v. Todd Elliott Hitt, et al. (E.D. Va. Oct. 5, 2018, Settled)

Action against Defendants, a real estate developer and his asset management firms, for alleged fraud on investors. According to the SEC, Defendants misrepresented that investor money would be used for real estate projects. The SEC alleges that Defendants instead misappropriated and commingled the funds by spending the money on Ponzi-like payments to earlier investors and personal expenses. Defendants have agreed to pay civil penalties and disgorgement to be determined by the court. Parallel criminal charges
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SEC v. Eric. J. “EJ” Dalius, et al. (C.D. Ca. Oct. 3, 2018, Contested)

Action against Defendants, seven corporate entities and their owner, for an alleged Ponzi and pyramid scheme. According to the SEC, Defendants fraudulently sold securities that they purported would return 20 percent cash back on shopping purchases. The SEC alleges that Defendants paid the promised returns with funds received from other investors and used investor funds for personal expenses. The SEC further alleges that Defendants marketed their scheme by employing a pyramidal structure of affiliates.

SEC
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SEC v. Susan Werth, a.k.a. Susan Worth, et al. (C.D. Cal. Oct. 1, 2018, Contested)

Action against Defendants, a CEO, sole owner, and operator and three of her corporations, for alleged operation of an offering fraud.  According to the SEC, Defendants promised to put investor funds toward short-term, high-interest loans related to real estate projects but instead used those funds for personal expenses and to make Ponzi-like payments to earlier investors.  The SEC further alleges that Defendant CEO falsified bank statements and hid her criminal record and history of civil
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SEC v. Thomas Carter Ronk (S.D.N.Y. Sept. 28, 2018, Contested)

SEC v. Thomas Carter Ronk (S.D.N.Y. Sept. 28, 2018, Contested) – Action against Defendant individual for alleged market manipulation schemes in connection with unregistered offerings of securities in two microcap companies.  According to the SEC, Defendant made false statements about the companies’ business prospects and potential revenue projections as part of a scheme to increase the companies’ share prices and induce investors to purchase shares.  The SEC also alleges that Defendant misled investors about trading
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SEC v. Russell Craig and OneStep Financial Services, LLC (N.D. Ga. Sept. 28, 2018, Contested)

Action against Defendants, a financial planning company and its president, for alleged fraud on investors and misappropriation of investor funds.  The SEC has additionally named two corporations and their presidents as relief defendants.  According to the SEC, Defendants promised investors that money deposited in escrow accounts would be used for real estate investments but instead misappropriated these funds.

SEC Litigation Release
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CFTC v. Lucrative Pips Corporation and Kevin Perry (N.D. Ga. Sept. 28, 2018, Contested)

Action against Defendants, a company and its founder and CEO, for alleged commodity fraud and misappropriation related to a scheme in certain off-exchange forex contracts.  According to the CFTC, Defendants falsely represented their trading strategy and returns while soliciting customers and lost or misappropriated the funds obtained from investors.

CFTC Press Release
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CFTC v. TFS-ICAP, LLC, et al. (S.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, an interdealer broker joint venture, its Global Head of Emerging Markets FX Options, and its CEO, in connection with alleged deception of clients through the use of fake bids, offers, and trades in the forex options market.  The CFTC alleges that senior managers encouraged or knowingly allowed the misconduct to continue and that Defendant CEO knew or had reason to know of the practices but failed to take steps to prevent them.
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CFTC v. John Doe 1 a/k/a Morgan Hunt dba Diamonds Trading Investment House and John Doe 2 aka Kim Hecroft dba First Options Trading (N.D. Tex. Sept. 28, 2018, Contested)

Action against Defendants for alleged fraudulent scheme to solicit Bitcoin.  According to the CFTC, Defendants misappropriated customer funds after making false or misleading representations or omissions about their planned investment of funds in forex contracts, binary options, and diamonds. The CFTC further alleges that Defendants forged account statements and documents and impersonated a CFTC investigator.

CFTC Press Release
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In re Michael Leibowitz (A.P. Sept. 28, 2018, Settled)

Action against Respondent, Chairman of the Board of an interdealer foreign exchange options broker, for alleged failure to diligently supervise forex options trades by the emerging options desk.   According to the CFTC, brokers engaged in fake bids, offers, and trades to misrepresent the level of liquidity and encourage customers to trade.  The CFTC further alleges that senior managers had reason to know that this practice was ongoing and that Respondent failed to implement any policies
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CFTC v. EOX Holdings LLC and Andrew Gizienski (S.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, an introducing broker and one of its associated persons, for alleged misuse of material nonpublic information related to their customers.  According to the CFTC, Defendant associated person provided a friend with confidential customer information and executed trades for his friend’s account while in possession of that information.  The CFTC also alleges that Defendant broker failed to maintain certain required records, diligently supervise its employees, and institute policies and procedures to monitor trading
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SEC v. Carlos I. Uresti and Stanley P. Bates (W.D. Tex. Sept. 28, 2018, Partially Settled and Partially Contested)

Action against Defendants, a former CEO and former state senator who served as counsel, broker, and escrow agent to the CEO’s company, in connection with alleged securities fraud.  According to the SEC, Defendant CEO founded a company to buy and sell sand for hydraulic fracking.  The SEC alleges that Defendants misrepresented to investors the potential profits and security of investments in the  company and showed investors an altered and inflated bank statement.  The SEC further
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SEC v. Robert A. Ferrante and Marilyn R. Thomassen (C.D. Cal. Sep. 27, 2018, Partially Settled, Partially Contested)

Action against Defendants, a real estate developer and an attorney, for alleged EB-5 visa offering fraud. According to the SEC, Defendants solicited funds from foreign citizens seeking to obtain EB-5 investor visas. The SEC alleges that Defendants stole $9.5 million of investor funds and improperly diverted $19.2 million to their partners, who are defendants in a related case. Defendant attorney has agreed to pay a $187,767 civil penalty. Defendant developer is contesting the allegations.
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In re Davis Ramsey (A.P. Sept. 27, 2018, Settled)

Action against Respondent, a futures trader, for alleged scheme to influence the prices of futures contracts on two exchanges.  According to the CFTC, Respondent engaged in futures market transactions to improve binary contracts positions he held that were traded on Nadex.  Respondent has agreed to pay disgorgement of $250,636.25 and a civil penalty of $325,000.

CFTC Press Release 

CFTC Order
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