Securities and Exchange Commission v. Patrick G. Rooney and Solaris Management, LLC, Civil Action No. 11-8264 (N.D. IL)

SEC Obtains Order of Permanent Injunctions Against Chicago-Area Investment Adviser and Its Owners for Fraud

The Securities and Exchange Commission (Commission) recently announced that on December 19, 2013, Judge Charles P. Kocoras of the U.S. District Court for the Northern District of Illinois entered an order of permanent injunctions against Oakbrook, Illinois resident Patrick G. Rooney (Rooney) and his company Solaris Management, LLC (Solaris).

According to the SEC’s complaint filed on November 16, 2011, Rooney and Solaris radically changed the investment strategy of the Solaris Opportunity Fund LP (the Fund), contrary to the Fund’s offering documents and marketing materials, by becoming wholly invested in Positron Corp. (Positron), a financially troubled microcap company. The SEC alleges that Rooney, who has been Chairman of Positron since 2004 and received salary and stock options from Positron since September 2005, misused the Fund’s money by investing more than $3.6 million in Positron through both private transactions and market purchases. Many of the private transactions were undocumented while other investments were interest-free loans to Positron. Rooney and Solaris hid the Positron investments and Rooney’s relationship with the company from the Fund’s investors for over four years. Although Rooney finally told investors about the Positron investments in a March 2009 newsletter, the SEC’s complaint alleges he falsely told them he became Chairman to safeguard the Fund’s investments. These investments benefited Positron and Rooney while providing the Fund with a concentrated, undiversified, and illiquid position in a cash-poor company with a lengthy track record of losses.

Without admitting or denying the Commission’s allegations, Rooney and Solaris consented to the entry of permanent injunctions which enjoin them from violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-8(a)(1) and (a)(2) thereunder; Section 17(a) of the Securities Act of 1933; and Sections 10(b) and 13(d)(1) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13d-1 thereunder. Rooney and Solaris Management further agreed that the court would determine whether to impose penalties and disgorgement against them and whether Rooney should be prohibited from acting as an officer or director of a public company.

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Securities and Exchange Commission v. Dawn Wright-Olivares and Daniel Olivares, Civil Action No. 3:13-CV-700

SEC Charges Woman and Stepson for Involvment in Zeekrewards Pyramid and Ponzi Scheme; Parallel Criminal Charges and Plea Agreements Also Announced:

Recently, the Securities and Exchange Commission filed suit in the United States District Court for the Western District of North Carolina against Dawn Wright-Olivares and Daniel Olivares for their roles in perpetrating the fraudulent unregistered offer and sale of securities through Rex Venture Group LLC d/b/a ZeekRewards.com, an internet-based combined Ponzi and pyramid scheme. According to the Complaint, from approximately January 2011 until August 2012 when the ZeekRewards website was shut down, Rex Venture Group raised more than $850 million from approximately one million internet customers nationwide and overseas through the website. Both defendants have agreed to settle the Commission’s allegations against them, and their settlement papers were submitted to the Court for its consideration.

The Complaint alleged that defendants solicited investors through the internet and other means to participate in the ZeekRewards program, a self-described “affiliate advertising division” for the companion website, Zeekler.com, through which the defendants operated penny auctions. The ZeekRewards program offered customers several ways to earn money, two of which – the “Retail Profit Pool” and the “Matrix” – involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.

According to the Complaint, Wright-Olivares and others lured investors to ZeekRewards by promising investors a share of the company’s daily net profits in the form of daily profit share awards. The company’s purported calculations consistently resulted in daily award averaging approximately 1.5 percent per day, fraudulently conveying the false impression that the company was extremely profitable. In fact, the daily award percentage was fabricated and investor payouts bore no relation to the company’s net profits. Approximately 98% of ZeekRewards’ total revenues and the “net profits” paid to investors were comprised of funds received from new investors in classic Ponzi scheme fashion. When the company was shut down in August 2012, it was teetering on collapse.

The Complaint further alleged that Wright-Olivares conceived of the idea for operating penny auctions, helped develop the technical specifications for the Zeekler.com program and its key features, marketed ZeekRewards to investors, managed some of RVG’s operations, and helped design and implement features that concealed the fraud. She was a principal spokesperson for ZeekRewards, and she also served as chief operating officer from September 2011 to June 2012. For the duration of the company’s existence, Olivares was the chief architect of the company’s computer databases that tracked all investments (including subscription and bid purchases), managed the electronic operations, and perpetuated the illusion of a successful retail business.

The Commission alleged that Wright-Olivares offered and sold securities in violation of the registration provisions of Section 5 of the Securities Act, and both defendants violated the antifraud provisions of the Section 17 of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. The Complaint requested permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against the defendants. Without denying the allegations-and while also admitting the facts set forth in the Factual Summary filed contemporaneously with their respective plea agreements in the parallel criminal case – both defendants have agreed to settle the Commission’s charges against them, and their settlement papers were submitted to the Court for its consideration. In particular, both consented to permanent injunctions against future violations of the respective registration and antifraud provisions with which they were each charged. Wright-Olivares also agreed to disgorge at least $8,184,064.94 and Olivares agreed to disgorge at least $3,272,934.58 – amounts that represent the entirety of their ill-gotten gains plus prejudgment interest. In light of their anticipated incarceration, no civil penalty will be imposed. The settlements are subject to approval by the court. In a parallel action, the U.S. Attorney’s Office for the Western District of North Carolina simultaneously announced criminal charges against, and plea agreements by, the pair.

The SEC acknowledges the assistance of the United States Attorney’s Office for the Western District of North Carolina and the United States Secret

The Securities and Exchange Commission recently announced fraud charges against three brokerage subsidiaries and two former employees of a global trading services provider that caused many institutional clients to pay substantially higher amounts than disclosed for the execution of trading orders.

These subsidiaries of ConvergEx Group agreed to pay more than $107 million and admit wrongdoing to settle the SEC’s charges. The former employees, Jonathan Daspin and Thomas Lekargeren, also agreed to admit and settle the charges against them.

In a parallel action, the Department of Justice announced criminal charges against ConvergEx Group, a brokerage subsidiary, and the two former employees. To resolve those charges, ConvergEx Group has agreed to pay $43.8 million in criminal penalties and restitution.

Customers with large orders typically rely on their brokers to execute orders on their behalf at the most favorable terms reasonably available. Monitoring the execution quality and costs of these orders can be difficult even for the most sophisticated investors given the complex nature of the markets where brokers must choose from a variety of order types, routing strategies, and trading venues.

“Customers have a right to expect honesty from their brokers and accurate information in response to their inquiries,” said Andrew Ceresney, co-director of the SEC’s Division of Enforcement. “These ConvergEx brokers misled their customers and failed to provide complete information about the costs they were charging.”

According to the SEC’s order instituting settled administrative proceedings, the ConvergEx brokerage firms represented to customers that they charge explicit commissions to execute equity trading orders. However, they routinely routed orders, including orders for U.S. equities, to an offshore affiliate in Bermuda that executed them on a riskless basis and opportunistically boosted their profits by adding a mark-up or mark-down on the price of a security. The offshore affiliate often consulted with the client-facing brokers to assess the risk of customer detection before taking the extra money on top of the disclosed commissions. The mark-ups and mark-downs caused many customers to unknowingly pay more than double what they understood they were paying to have their orders executed.

“ConvergEx brokerages sent customer trades on an unnecessary journey through its offshore affiliate so they could take extra fees behind customers’ backs,” said Stephen L. Cohen, associate director of the SEC’s Division of Enforcement. “Brokers who seek to enhance their bottom lines through deception about their compensation are violating the law and the trust of their customers.”

According to the SEC’s order, the ConvergEx brokerages involved in the scheme were G-Trade Services LLC, ConvergEx Global Markets Limited, and ConvergEx Execution Solutions LLC. Their customers included funds managed on behalf of charities, religious organizations, retirement plans, universities, and governments. The ConvergEx brokerages believed they would lose business if customers became aware of their mark-ups and mark-downs, so they engaged in specific acts to hide the scheme. Typically, they only took mark-ups and mark-downs on top of the disclosed commissions in situations where they believed that the risk of detection was low. They also made false and misleading statements to customers who inquired about their overall compensation, even providing certain customers with falsified trading data to cover up the fact that the offshore affiliate had taken mark-ups or mark-downs on their orders. The practice of executing orders through the offshore affiliate was not adequately disclosed to customers and was inconsistent with ConvergEx’s advertised conflict-free agency model. Using this practice, the ConvergEx brokers failed to seek best execution for their customers’ orders.

The SEC’s order finds that the ConvergEx brokerages violated Sections 10(b) and 15(c) of the Securities Exchange Act of 1934. The ConvergEx brokerages admitted to the facts underlying the SEC’s charges and acknowledged that their conduct violated the federal securities laws. The firms agreed to pay disgorgement and prejudgment interest totaling $87,424,429 and a penalty of $20 million. In determining the penalty amount, the SEC considered ConvergEx’s substantial cooperation after the agency commenced its investigation. The SEC also considered the company’s significant remedial measures, including the closure of the Bermuda affiliate and the discharge of a number of employees in management and other positions as it ended the practice of routing U.S. securities offshore for order handling.

Daspin and Lekargeren, who are providing cooperation in the SEC’s investigation, admitted to taking steps to conceal the practice of taking trading profits from customers. Daspin agreed to pay a total of $1,111,550 in disgorgement and prejudgment interest, and Lekargeren agreed to pay a total of $117,042 in disgorgement and prejudgment interest. The SEC considered their cooperation in determining the appropriate terms of settlement.

The SEC seeks to return the money collected in these settlements to harmed customers through a Fair Fund distribution.

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At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently charged the managing partners of a Charlotte, N.C.-based investment advisory firm for compromising their independent judgment and allowing a third party with its own interests to influence the portfolio selection process of a collateralized debt obligation (CDO) being offered to investors.

The investment managers have agreed to collectively pay more than $472,000 and exit the securities industry to settle the SEC’s charges.

According to the SEC’s order instituting settled administrative proceedings, disclosures to investors indicated that NIR Capital Management LLC was solely selecting the assets for Norma CDO I Ltd. as the designated collateral manager. However, NIR’s Scott H. Shannon accepted assets chosen by hedge fund firm Magnetar Capital LLC for the Norma CDO’s portfolio, and Joseph G. Parish III allowed Magnetar to influence the selection of some other assets. Shannon himself called at least one of the residential mortgage-backed securities (RMBS) ultimately included in the portfolio a “real stinker.” Magnetar bought the equity in the CDO but also placed short bets on collateral in the CDO and therefore had an interest not necessarily aligned with potential long-term debt investors that relied on the CDO and its collateral to perform well.

According to the SEC’s order, NIR initially was unaware when Magnatar purchased $472.5 million in long exposure to RMBS for the Norma CDO in August and September 2006 based on information that NIR provided to Magnetar that was preliminary and not intended as a basis for actual collateral selection. By the time it learned about the purchases in November 2006, NIR already had purchased a substantial portion of the RMBS collateral. Nevertheless, NIR used its own internal credit metrics to analyze the collateral that Magnetar purchased, and Shannon then sought to exclude some of the RMBS collateral that Magnetar had acquired and selected. NIR, however, ultimately incorporated the collateral that Magnetar purchased in the closing portfolio. Shannon explained to an NIR credit analyst that the final portfolio included a number of trades that NIR did not execute, and “this leaves us with several names we probably would not want…”

According to the SEC’s order, Parish allowed Magnetar to exercise so-called approval rights by permitting the firm to be involved in the process of selecting CDO assets acquired for the portfolio. As a result, Parish knew that Magnetar was the short counterparty for much of the Norma CDO’s synthetic exposure to CDO securities. NIR attested in the collateral management agreement with the Norma CDO that it would act in good faith and exercise reasonable care in selecting the portfolio. However, the CDO and its debt investors knew nothing about NIR’s compromised decision-making with Magnetar involved in the collateral selection process.

Shannon and Parish consented to the SEC’s order finding that Shannon violated Sections 206(1) and (2) of the Investment Advisers Act of 1940 and Parish violated Section 206(2). Shannon agreed to be barred from the securities industry for at least two years and must pay disgorgement and prejudgment interest of $140,662 and a penalty of $116,553. Parish agreed to be suspended from the securities industry for at least 12 months and must pay disgorgement and prejudgment interest of $140,662 and a penalty of $75,000. Without admitting or denying the SEC’s findings, Shannon and Parish consented to cease and desist from violating respective Sections of 206 of the Advisers Act. They have agreed to dissolve the NIR business.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. Michael H. Taber, CPA, Civil Action No. 13-mc-0282 (S.D.N.Y. filed Aug. 8, 2013)

SEC Awarded $400,000 in Disgorgement from Certified Public Accountant for His Violations of Commission Suspension Order

The Securities and Exchange Commission recently announced a court ruling that requires certified public accountant Michael H. Taber to pay the government $400,000 in compensation he received while suspended from appearing or practicing before the Commission as an accountant.

According to the SEC’s application filed in U.S. District Court for the Southern District of New York, Taber violated a 2004 Commission Order suspending him. The 2004 Order was based on a fraud injunction obtained against Taber, in SEC v. Del Global Techs. Corp., 04 CV 4092 (S.D.N.Y. filed June 1, 2004), for his participation in a fraudulent scheme as the chief financial officer of a New York-based company. While suspended, Taber repeatedly drafted, compiled, and edited information and data that was incorporated into requisite periodic reports that public companies filed with the SEC.

On October 3, 2013, the district court entered an order enforcing compliance by Taber with the 2004 Commission Order and directing the parties to submit their positions regarding disgorgement. On December 5, 2013, U.S. District Judge Katherine B. Forrest entered an order awarding the Commission $400,000 in disgorgement from Taber, who is licensed as a certified public accountant in New York and is currently a Florida resident.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. Malom Group AG, Martin U. Schläpfer, Hans-Jürg Lips, et al., Civil Action No. 2:13-cv-2280 (D. Nev. Dec. 16, 2013)

SEC Charges Perpetrators of Prime Bank Schemes in Las Vegas and Switzerland

The Securities and Exchange Commission recently filed fraud charges against a company named with an acronym for “Make A Lot Of Money” that is behind a pair of advance fee schemes guaranteeing astronomical returns to investors in purported prime bank transactions and overseas debt instruments.

The SEC alleges that Swiss-based Malom Group AG and several individuals conducted the schemes from Las Vegas and Zurich. They raised $11 million from U.S. investors by using a series of lies and forged documents to steer them into seemingly successful foreign trading programs that were nothing more than vehicles to steal money. Advance fee frauds solicit investors to make upfront payments before purported deals can go through, and perpetrators fool investors with official-sounding terminology to add an air of legitimacy to the investment programs. Many transactions offered by Malom bore the hallmarks of prime bank frauds, which tout the supposed use of well-known overseas banks to attract investors.

The SEC alleges that Malom charged investors fees for bogus services, and the individuals pulling the strings distributed investor funds among themselves for personal use. They further lied to investors who later inquired about the progress of the transactions, lulling them with excuses about why they have yet to receive investment returns or refunds.

In a parallel action, the U.S. Department of Justice today announced criminal charges against the same six individuals charged in the SEC’s complaint:

• Martin U. Schläpfer of Switzerland, who has been described as Malom’s chief executive officer, managing director, and legal counsel.
• Hans-Jürg Lips of Switzerland, who has been described as the Malom’s president or chairman of the board of directors.
• James C. Warras of Waterford, Wisc., who has been described as Malom’s executive vice president.
• Joseph N. Micelli of Las Vegas, who has been described as Malom’s compliance officer.
• Anthony B. Brandel of Las Vegas, who served as Malom’s main point of contact with U.S. investors – explaining the investments, collecting investor funds, and lulling investors about the status of the transactions. His Las Vegas company, M.Y. Consultants, also is charged in the SEC’s complaint.
• Sean P. Finn of Whitefish, Mont., who recruited U.S. investors through his Wyoming-based company M. Dwyer LLC, which also is charged in the SEC’s complaint.

According to the SEC’s complaint, filed in U.S. District Court for the District of Nevada, the schemes occurred from 2009 to 2011, and lulling of investors continued through 2013. None of the transactions in securities offered or sold were registered with the SEC or eligible for an exemption. In the first scheme, they offered “joint venture” agreements that purportedly allowed investors to “use” Malom’s financial resources in exchange for an upfront fee. The agreements required the investors to propose investment transactions for Malom to enter into with third parties in order to generate returns for the company and the investor. Malom supplied investors with forged bank statements and “proof of funds” letters to give the false impression that the company had the millions of dollars needed for the transactions. Before investors paid their upfront fees, the Malom executives and promoters typically knew at least the basic details of the proposed trading programs, in some cases actually providing the trading program for investors to propose. But after receiving the upfront fees from investors, Malom proceeded to reject every proposed transaction and misappropriate investor funds to further the scheme and line the perpetrators’ pockets.

According to the SEC’s complaint, the second scheme falsely promised investors that Malom would generate funding by creating structured notes that would be listed on “Western European” exchanges. After inducing investors to pay an “underwriting fee” and making personal and corporate guarantees of repayment, Malom reneged on the guarantees of repayment and failed to issue any structured notes. Again the perpetrators behind the scheme quickly distributed investor funds among themselves.

The SEC’s complaint alleges that Malom, its principals and agents Martin U. Schläpfer, Hans-Jurg Lips, James C. Warras, and Joseph N. Micelli violated the antifraud and securities registration provisions of the federal securities laws, specifically, Section 17(a) and Section 5 of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and, except as to Malom Group, they aided and abetted violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Further, the SEC’s complaint alleges that M.Y. Consultants, Inc., Anthony B. Brandel, M. Dwyer LLC, and Sean P. Finn violated the antifraud and securities and broker-dealer registration provisions of the federal securities laws. Specifically, the complaint alleges that these defendants violated Sections 17(a) and 5 of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 15(a) of the Exchange Act; and that they aided and abetted violations of Section 17(a) of the Securities Act Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest thereon, and civil penalties against each defendant.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. Arcturus Corporation, et al., Civil Action No. Civ. Action No. 3:13-cv-04861-K (N.D. Tex., Dallas Division, filed December 12, 2013)

SEC Charges Texas Oil and Gas Promoters for Securities Fraud

Recently, the Securities and Exchange Commission charged Leon Ali Parvizian and his two companies, Arcturus Corporation and Aschere Energy LLC, with the fraudulent offer and sale of securities in the form of interests in oil and gas joint ventures. The Commission also charged promoters Alfredo Gonzalez, AMG Energy, LLC , Robert Balunas, and R. Thomas & Co., LLC with violations of the securities offering and broker-dealer registration provisions of the federal securities laws.

Filed in the United States District Court for the Northern District of Texas, the Commission’s complaint alleges that the Parvizian, through Arcturus and Aschere, raised nearly $22 million from at least 380 investors between 2007 and December 2011.The complaint alleges that Parvizian prepared and disseminated to prospective investors offering materials that included material misrepresentations and omissions regarding, among other things, material litigation involving Arcturus and Aschere. According to the complaint, Parvizian, Arcturus and Aschere systematically, and without disclosure to investors, used the offering proceeds to pay the costs of defending and settling the litigation. The complaint further alleges that, among other things, Parvizian prematurely called for completion funds on at least two projects before he had finished drilling and testing the wells because he had already spent the offering proceeds for non-JV related expenses, including legal fees. According to the complaint, Parvizian, Arcturus, and Aschere spent only $7.9 million, or 36 percent, of the money raised to drill oil and gas wells.

The complaint also alleges that the defendants offered and sold the joint venture interests in unregistered securities offerings that were not exempt from the registration requirements of the federal securities laws. In addition, the complaint alleges that Parvizian, Gonzalez, AMG, Balunas, and R. Thomas & Co. acted as unregistered broker-dealers. According to the complaint, Parvizian, Gonzalez, Balunas, AMG Energy, and R. Thomas received transaction-based compensation in the form of sales commissions based upon a percentage of the amount of investor funds raised.

The complaint alleges that Parvizian, Arcturus, and Aschere violated Sections 5(a) and 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”)and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 10b-5 thereunder and that Parvizian also violated Section 15(a) of the Exchange Act. Gonzalez, AMG, Balunas, and R. Thomas are charged with violating Section 5(a) and 5(c) of the Securities Act and with Section 15(a) of the Exchange Act. The Commission is seeking permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against each of the defendants.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced charges and an emergency asset freeze against the perpetrators of a Texas-based Ponzi scheme involving purported investments in oil and gas projects.

The SEC alleges that Robert A. Helms and Janniece S. Kaelin, who work out of an office in Austin, misled investors about their experience in the oil and gas industry while raising nearly $18 million for supposed purchases of oil and gas royalty interests. Despite representations that nearly all of the money they raised would be used to make oil and gas investments, Helms and Kaelin actually used only a fraction of the offering proceeds for that purpose. Instead, the vast majority of investor funds were used to make Ponzi payments and cover various personal and business expenses.

“Helms and Kaelin pretended to be in the oil and gas business when they were really in the business of fattening their own wallets,” said David R. Woodcock, director of the SEC’s Fort Worth Regional Office. “They lied to investors about the use of offering proceeds, spent investor funds on personal expenses, and made Ponzi payments to give investors the false impression that they were earning returns in a profitable venture.”

The SEC’s complaint unsealed late yesterday in U.S. District Court for the Western District of Texas also charges Deven Sellers of Arvada, Colo., and Roland Barrera of Costa Mesa, Calif., with illegally selling investments for Helms and Kaelin without being registered with the SEC. They also allegedly misled investors about the sales commissions and referral fees they were receiving.

According to the SEC’s complaint, Helms and Kaelin began offering investments in 2011 through Vendetta Royalty Partners, a limited partnership that they control. They have since attracted at least 80 investors in more than a dozen states while promising in offering documents that they would use more than 99 percent of the investment proceeds to acquire a lucrative portfolio of oil and gas royalty interests. The offering documents were fraudulent as Helms and Kaelin invested only 10 percent of the proceeds, and the oil and gas projects in which they actually did invest generated only minuscule returns.

The SEC alleges that Helms and Kaelin directed Vendetta Royalty Partners to make approximately $5.9 million in so-called partnership income distributions to investors. They used money from newer investors to make the distributions to earlier investors. Helms and Kaelin created the illusion that Vendetta Royalty Partners was a profitable enterprise when, in fact, it was a fraudulent Ponzi scheme. Some offering documents touted Helms to have extensive oil-and-gas experience, misrepresenting that he had “worked with various mineral companies over the last 10 years advising management on issues involving the acquisition and management of royalty interests, mineral properties and related legal and financial issues.” In fact, Helms’s oil-and-gas experience came almost entirely from operating Vendetta Royalty Partners and its affiliated or predecessor companies.

The SEC alleges that Helms and Kaelin misled investors about other important matters besides their business background and industry reputation. They failed to disclose the existence of litigation against them and companies they control. They misrepresented the performance of the limited oil-and-gas royalty investments actually under their management. And they failed to inform investors that Vendetta Royalty Partners was behind on its line of credit. The company ultimately defaulted.

According to the SEC’s complaint, Helms and Kaelin along with Sellers and Barrera told potential investors that any commissions or finder’s fees would be small. However, Sellers and Barrera each received more than $200,000 in such fees on one investment alone. Sellers and Barrera regularly solicited investments without being registered as brokers.

At the SEC’s request, the court entered an order temporarily restraining the defendants from further violations of the federal securities laws, freezing their assets, prohibiting the destruction of documents, requiring them to provide an accounting, and authorizing expedited discovery.

The SEC’s complaint alleges that the defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint further alleges that Sellers and Barrera acted as unregistered brokers in violation of Section 15(a) of the Exchange Act. The complaint requests permanent injunctions and the disgorgement of ill-gotten gains plus prejudgment interest and penalties.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Curt Kramer and his firms Mazuma Corporation, Mazuma Funding Corporation, and Mazuma Holding Corporation agreed to disgorge those profits in paying a total of $1.4 million to settle the SEC’s charges.

An SEC investigation found that Kramer and his firms obtained unregistered shares in penny stock issuers Laidlaw Energy Group and Bederra Corporation. For the Laidlaw transactions, they claimed to rely on an exemption in Rule 504 of Regulation D that permits certain companies to offer and sell up to $1 million in unregistered shares. However, the Mazuma firms’ purchases of Laidlaw shares exceeded Rule 504’s $1 million limit, so the shares were restricted and not exempt from the registration requirements of the securities laws when they were re-sold. Mazuma Holding Corporation’s acquisition and sale of more than one billion unregistered shares of Bederra that had been misappropriated from the issuer by its transfer agent also were not exempt from registration.

According to the SEC’s order instituting settled administrative proceedings, Kramer and his firms purchased two billion Laidlaw shares, which amounted to 80 percent of Laidlaw’s outstanding shares at the time. They purchased these shares at a significant discount from prevailing market prices, making it highly likely they could immediately re-sell them publicly for a short-term profit. Kramer and his firms purchased the shares in 35 tranches with no six-month gaps, thus quantifying the transactions as a single, integrated offering through which Laidlaw exceeded the $1 million limit under Rule 504 by raising a total of $1,259,550. No registration statement was filed for any shares that Laidlaw offered and sold to Kramer and his firms, nor was any registration statement filed for any shares that Kramer and his firms subsequently re-sold into the public market. Despite exceeding the $1 million limit, Kramer and his firms continued to acquire and sell additional Laidlaw shares and profited by $126,963 from these transactions.

According to the SEC’s order, Kramer and Mazuma Holding Corporation acquired more than one billion shares of Bederra in 2009 and 2010 through 21 separate transactions from the principal of Bederra’s transfer agent, who had misappropriated the Bederra share certificates. Again they purchased the shares at a significant discount from prevailing market prices. Kramer and Mazuma Holding Corporation re-sold the misappropriated Bederra shares to the public without any registration statement for a profit of $934,404.

In the settlement, Kramer and his Great Neck, N.Y.-based Mazuma firms agreed to pay disgorgement totaling $1,061,367 plus prejudgment interest of $128,611 and penalties totaling $273,000. Without admitting or denying the SEC’s findings, Kramer and Mazuma consented to the entry of an order finding that they violated Sections 5(a) and 5(c) of the Securities Act of 1933. The order requires them to cease and desist from committing violations of Sections 5(a) and 5(c) and not participate in any Rule 504 offerings. Entry of the order will constitute a disqualifying event for Kramer and the Mazuma firms under the recently enacted bad actor disqualification provisions of Rule 506.

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At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Charges Alabama Based Defendants with Securities Fraud and Reporting Violations

Recently, the Securities and Exchange Commission filed an action in federal court in the Northern District of Georgia, charging Charles H. Merchant, Sr. (Merchant), an Anniston, Alabama resident, and his company Southern USA Resources, Inc. (Southern USA), a Delaware corporation based in Ashland, Alabama, with violations of the antifraud provisions and various reporting violation of the federal securities laws.

The complaint alleges that in 2012, Southern USA, a company purportedly focused on the exploitation of gold mining rights in Alabama, and Merchant, the company’s CEO, CFO, president, secretary, treasurer and director, filed materially false reports with the Commission that misrepresented the value of the company’s land. During 2012, Merchant also filed with the Commission certifications that contained false statements about the company’s internal controls and his understanding of those controls. Southern USA is currently delinquent with respect to its 2012 Form 10-K and its two most recent Forms 10-Q. Defendant Merchant has resigned his CEO and CFO positions with no successors named, and the company’s outside auditor also has resigned – none of which has been disclosed by Southern USA in a Form 8-K.

The complaint alleges that Merchant by virtue of his conduct, directly or indirectly, has engaged in and unless enjoined, will engage in violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14 and 13b2-1 thereunder. Further, Merchant also aided and abetted defendant Southern USA’s violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder; and is liable as a “control person” under Section 20(a) of the Exchange Act for defendant Southern USA’s violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.

The complaint further alleges that Southern USA by virtue of its conduct, directly or indirectly, has engaged in and unless enjoined, will engage in violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.

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At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (SEC) recently charged a self-described institutional trader in Colorado with defrauding elderly investors into making purported investments in government-secured bonds as he used their money to pay his mortgage.

The SEC alleges that Gary C. Snisky of Longmont, Colo., primarily targeted retired annuity holders by using insurance agents to sell interests in his company Arete LLC, which posed as a safe and more profitable alternative to an annuity. Investors were told their funds would be used to purchase government-backed agency bonds at a discount, and Snisky as an institutional trader would use the bonds to engage in overnight banking sweeps. However, Snisky did not purchase bonds or conduct any such trading, and he misappropriated approximately $2.8 million of investor funds to pay commissions to his salespeople and make personal mortgage payments.

In a parallel action, the U.S. Attorney’s Office for the District of Colorado today announced criminal charges against Snisky.

According to the SEC’s complaint filed in federal court in Denver, Snisky raised at least $3.8 million from more than 40 investors in Colorado and several other states. Beginning in August 2011, Snisky recruited veteran insurance salespeople who could sell the Arete investment to their established client bases that owned annuities. The majority of investors in Arete used funds from IRAs or other retirement accounts.

The SEC alleges that Snisky described Arete as an “annuity-plus” investment in which, unlike typical annuities, investors could withdraw principal and earned interest with no penalty after 10 years while still enjoying annuity-like guaranteed annual returns of 6 to 7 percent. Snisky emphasized the safety of the investment, calling himself an institutional trader who could secure government-backed agency bonds at a discount and save middleman fees. Snisky’s sales pitch was so convincing that even one of his salespeople personally invested retirement funds in Arete.

The SEC alleges that Snisky created and provided all of the written documents that the hired salespeople used as offering materials to solicit investors. Snisky also showed salespeople fraudulent investor account statements purporting to show earnings from Arete’s investment activity. Following an initial influx of investors, Snisky organized at least two seminars where he met with investors and salespeople. He introduced himself as the institutional trader behind Arete’s success, and encouraged investors to spread the word. Snisky hand-delivered fraudulent account statements to investors attending the seminars to mislead them into believing their investments were performing as promised.

The SEC’s complaint against Snisky seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and a financial penalty.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of insurance and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (Commission) Obtains Final Judgment against Defendants Charged with Perpetrating $35 Million International Boiler Room Scheme

Recnetly, the Commission announced that the United States District Court for the Central District of California entered a final, settled judgment against defendants Nicholas Louis Geranio, The Good One, Inc., and Kaleidoscope Real Estate, Inc. for their roles in a $35 million scheme to manipulate the market and to profit from the issuance and sale of certain U.S. companies’ stock through offshore boiler rooms.

Pursuant to the judgment issued on November 1, 2013, the court ordered Geranio, The Good One and Kaleidoscope jointly and severally to pay disgorgement of $2,135,000, prejudgment interest thereon of $427,270, and a civil penalty of $500,000, barred them from participating in any offering of penny stock, and permanently enjoined them from violations of the antifraud provisions of the federal securities laws. The judgment also barred Geranio from acting as an officer or director of any public company and ordered him to pay an additional $279,000 in disgorgement plus prejudgment interest thereon of $55,835, representing monies received by another defendant, Keith Field, provided that the SEC shall not obtain double recovery from Geranio and Field. Finally, the judgment ordered relief defendant BWRE Hawaii, LLC to pay, jointly and severally with Geranio, The Good One, and Kaleidoscope, an additional $240,000 in disgorgement plus prejudgment interest thereon of $55,295.

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At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (SEC) recently announced that the United States District Court for the District of Columbia granted the SEC’s motion for summary judgment against all primary defendants and certain relief defendants in a civil action arising from a prime bank investment scheme that defrauded at least 13 investors out of more than $2 million from August 2010 to November 2011. Pursuant to the court’s ruling and judgment issued on August 26, 2013, the court permanently enjoined Washington D.C. attorney Brynee K. Baylor, her law firm Baylor & Jackson, P.L.L.C., and their former “client” The Milan Group, Inc. from violations of the antifraud and other securities law provisions, and from engaging in similar investment schemes. The court also required these defendants to pay disgorgement and penalties, required the Estate of Frank L. Pavlico to pay disgorgement, and barred Baylor from acting as an officer or director of any public company. The court required relief defendants Patrick T. Lewis and The Julian Estate to disgorge illegally obtained investor funds. The court granted in part or denied summary judgment against two other relief defendants, but declined in September 2013 to reconsider that ruling.

The SEC’s complaint, filed on November 30, 2011, alleged that Pavlico and Baylor operated a prime bank scheme, offering investors risk-free returns of up to 20 times the original investment within as few as 45 days through the purported “lease” and “trading” of foreign bank instruments, including “standby letters of credit” and “bank guarantees,” in highly complex transactions with unidentified parties and secretive international “trading platforms.” However, the bank instruments and trading programs were entirely fictitious. As the complaint alleged, Pavlico and Baylor provided investors with phony contracts and legal documents, digitally-created computer screen shots, and copies of fictitious foreign bank instruments as purported proof of the ongoing success of the transactions. Baylor and her law firm acted as “counsel” for Pavlico’s company Milan, vouching for Pavlico and acting as an escrow agent that in reality was merely receiving and diverting the majority of investor funds.

In furtherance of the scheme, the complaint alleged that Baylor provided investors with “attorney attestation” letters that assured them the investments were legitimate, and investor contracts that promised investment profits would be shared among investors, Milan, and Baylor & Jackson. Meanwhile, Pavlico was using a fake name of “Frank Lorenzo” to conceal his 2008 money laundering conviction from investors. The complaint also alleged that Pavlico and Baylor used investor funds to pay Baylor & Jackson business expenses as well as personal expenditures.

The court held in its summary judgment ruling that Baylor, an experienced lawyer, “acted with extreme recklessness” in the scheme, carrying out Pavlico’s bidding while failing to exercise even a “modicum of lawyerly interest in the legal implications of” Pavlico’s and Milan’s activities. The court found that Baylor “encouraged others to invest in unregistered securities, aided and abetted Milan’s fraud, and knowingly allowed investors’ monies-placed for safekeeping in her firm’s IOLTA account-to be dispersed to Milan and then back to her”, with 71% of investor funds paid out to Baylor and Pavlico and no funds being used in any investment. Finding the record clear despite Baylor’s claimed ignorance of the fraud, the court ruled that she made “extensive material misrepresentations and omissions…. Ms. Baylor knew that she omitted telling investors about the disbursements from her IOLTA account without any investment; she knew that she told investors that Milan was just closing a deal and/or that all would be well with multiple investments when, in fact, no profits were ever returned to an investor; she knew that she told investors that investments through Milan were outside federal oversight when, at best, she had not researched the question; and she knew that she was assuring investors that she had ‘validated’ aspects of the transactions, as an attorney, when, in fact, she had not.” The court found that “Baylor’s attempt to use her role as an attorney as a shield is particularly pernicious because, as an attorney, she was in the position to lead investors to believe that their money was safe.”

The court granted the SEC’s motion for summary judgment against all of the principal defendants-Baylor, Baylor & Jackson, The Milan Group, and Frank Pavlico, as substituted by his Estate following his death in December 2012 during the litigation-that they violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Pavlico, Baylor, and Baylor & Jackson aided and abetted violations of these provisions; that they violated Sections 5(a) and 5(c) of the Securities Act and that Baylor and Baylor & Jackson aided and abetted such violations; and that Baylor and Pavlico violated Section 15(a) of the Exchange Act.

The judgment permanently enjoins Baylor, Baylor & Jackson, and Milan from violating and aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5, and from violating Section 5 of the Securities Act and Section 15(a) of the Exchange Act. The judgment also prohibits Baylor, Baylor & Jackson, and Milan from soliciting or accepting funds from investors in investment programs relating to bank instruments or bank instrument trading programs, or in any other investment program. The judgment holds the Estate of Frank Pavlico, Milan, Baylor & Jackson, and Baylor jointly and severally liable for disgorgement of their ill-gotten gains of $2,665,000, together with prejudgment interest thereon of $157,414, for a total of $2,822,414. The judgment orders Baylor to pay the remaining obligation of $2,752,758 and directed the Estate of Pavlico to make payments as directed in the future by the court as the Estate collects estate assets and pays estate costs. The judgment also orders Milan to pay a civil penalty of $1,318,734 and orders Baylor and Baylor & Jackson to pay, jointly and severally, a civil penalty of $746,266. The judgment permanently bars Baylor from acting as an officer or director of any public company.

The court also granted summary judgment against two relief defendants, Patrick Lewis and The Julian Estate, an entity Pavlico formed to purchase a residence using investor funds. The judgment orders Lewis to pay $375,000 and orders The Julian Estate to pay $437,250, with the amount to be satisfied by the sale of the property it purchased with investor funds.

The court also granted in part the SEC’s motion for summary judgment against relief defendant Mia Baldassari with respect to $13,156 she received from Milan, but denied further relief against her. The court also denied summary judgment against relief defendant Brett Cooper, whom the SEC alleged received investor funds from Milan through his company Global Funding Systems, LLC. In September 2013, the court denied the SEC’s request to reconsider its summary judgment rulings as to Cooper and Mia Baldassari and, therefore, the litigation as to them is pending.

The court previously entered default judgments against two other relief defendants: on November 14, 2012 the court ordered Patrick Lewis’ company GPH Holdings, LLC to pay a total of $399,743, consisting of $375,000 it received in investor funds plus $24,743 in prejudgment interest; and on January 23, 2013, the court ordered Brett Cooper’s company Global Funding Systems, LLC to pay a total of $238,253, consisting of $225,000 it received in investor funds plus $13,253 in prejudgment interest.

In addition, the SEC previously settled with relief defendant Dawn Jackson, Baylor’s law partner, and the court entered a final judgment against her on March 21, 2013. Without admitting or denying the allegations in the SEC’s complaint, Jackson agreed to the final judgment that held her liable for disgorgement of $153,000 and $9,410 in prejudgment interest, for a total of $162,410, the payment of which is to be made from the sale, if any, of a Bahamian property but is otherwise waived based on Jackson’s sworn statement of financial condition.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The SEC alleges that Christopher A.T. Pedras, who has residences in Turlock, Calif., and New Zealand, misled his initial investors into believing they were investing in a profitable trading platform in which his company served as an intermediary between global banks. When Pedras and his companies encountered difficulty paying the promised 4 to 8 percent monthly returns, they began steering investors to a different investment program to purportedly increase the value of their investment by 80 percent by funding kidney dialysis clinics in New Zealand. Pedras’s business partner Sylvester M. Gray II and lead sales representative Alicia Bryan helped him solicit investors for both programs, and the money was never invested as promised. Earlier investors were paid supposed returns with funds received from newer investors, and Pedras stole more than $2 million and spent another $1.2 million on sales agents.

According to the SEC’s complaint unsealed late Friday in U.S. District Court for the Central District of California, Pedras raised more than $5.6 million from at least 50 investors in the U.S. since July 2010 by selling securities in two phases. Pedras, Gray, and Bryan first solicited investors for their Maxum Gold Small Cap Trade Program in which Pedras’s company Maxum Gold purportedly serves as the intermediary between banks that can’t legally trade with each other directly, so they use Maxum Gold’s trade platform to do so indirectly. Maxum Gold purports to share portions of the trading profits with investors.

The SEC alleges that the Ponzi scheme shifted gears earlier this year when Pedras and others began promoting the FMP Renal Program to Maxum Gold investors. They characterized it as an investment in a New Zealand company called FMP Medical Services Limited that would be publicly traded and operate kidney dialysis clinics in New Zealand. Investors were told if they converted their Maxum Gold investments into the FMP Renal Program, they would instantly realize an 80 percent increase in the value of their investment.

According to the SEC’s complaint, Pedras and Bryan routinely communicate with investors via email and also conduct investor conference calls. Pedras has falsely claimed that Maxum Gold has been doing business for 15 to 20 years with more than 6,000 clients and has been making regular payments to investors. Pedras conducted at least one in-person seminar at Paramount Studios in Los Angeles. Investments were falsely touted as risk-free and investor funds were not maintained safely in escrow accounts as described to investors.

The SEC alleges that the Ponzi scheme paid investors more than $2.4 million in “returns” using new investor money. Pedras stole more than $2 million from investors in the form of cash withdrawals, car and retail purchases, and transfers of investor funds to his various companies. Approximately $1.2 million in sales commissions were paid to a small network of sales agents who sold the investments to U.S. investors.

According to the SEC’s complaint, during at least one conference call, Pedras advised investors not to respond if contacted by the SEC. He characterized SEC investor questionnaires as “fake” and stated that the SEC’s investigation was motivated by a “personal vendetta” against him.

The SEC’s complaint charges Pedras, Gray, Bryan and the Maxum Gold and FMP entities with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Pedras and Bryan also are charged with violations of Section 15(a) of the Exchange Act, and they and Pedras’s companies are charged with violations of Sections 5(a) and 5(c) of the Securities Act. The Honorable Gary Feess granted the SEC’s request for a temporary asset freeze against Maxum Gold, FMP, and Pedras. Judge Feess’s order prohibits the destruction of documents and requires the defendants to provide accountings. A court hearing has been scheduled for November 8, 2013.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to OX Trading, LLC and optionsXpress, Inc. (OX Order). The OX Order finds that OX Trading, LLC (OX Trading) willfully violated Sections 15(a) and 15(b)(8) of the Securities Exchange Act of 1934 by operating as an unregistered dealer from October 2009 to November 2010 and transacting in securities while not a member of a national securities association or a national exchange from March 2009 to November 2010, respectively. The OX Order also finds that optionsXpress, Inc. caused OX Trading’s violations. The OX Order ordered OX Trading and optionsXpress to cease and desist and ordered OX Trading to pay $2,750,000 in disgorgement, prejudgment interest of $253,094.39, and a civil money penalty of $750,000. (Rel. 34-70739).

The Commission also issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 9(b) of the Investment Company Act of 1940 as to Thomas E. Stern (Stern Order). The Stern Order finds that Thomas E. Stern (Stern), OX Trading’s Chief Financial Officer and Chief Compliance Officer during the relevant time period, willfully aided and abetted and caused OX Trading’s violations of Sections 15(a) and 15(b)(8) of the Exchange Act. The Stern Order ordered Stern to cease and desist and to pay a civil money penalty of $50,000. (Rel. 34-70740) Respondents consented to the issuance of the Orders. These proceedings were instituted on April 19, 2012. (Rel. 34-66831).

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against John Micciola (Micciola), a resident of Freehold, New Jersey. The Order finds that, on August 8, 2011, Micciola was convicted in the Supreme Court of the State of New York in People of the State of New York v. Joseph Stevens & Co., Inc., et al., Case Number 02394-2009 of two counts of securities fraud, one count of grand larceny in the second degree, and one count of grand larceny in the third degree. The Order further finds that Micciola participated in firm-wide schemes that resulted in excessive and undisclosed commissions on stocks.

Based on the above, the Order bars Micciola from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization and from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. Micciola consented to the issuance of the Order.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Halts $20 Million Pyramid Scheme Targeting Asian-American Community

The Securities and Exchange Commission recently announced charges and asset freezes against the operators and promoters of a worldwide pyramid scheme targeting members of the Asian-American community. The perpetrators of the scheme falsely promised exponential, risk-free returns to investors in a venture that purportedly sold Internet-based children’s educational courses.

The SEC’s complaint, filed under seal on October 9, 2013 and unsealed October 16, 2013 in the Eastern District of New York, alleges that since mid-2011, the defendants have solicited investments in an entity operating under the business name “CKB” or “CKB168,” which they claim is a rapidly growing and legitimate multi-level marketing company that purportedly sells web-based children’s educational courses. Defendants solicit investors through a variety of tactics, including in-person sales pitches, videotaped presentations posted on the Internet, websites, written brochures, and email and telephone communications. They attract investors by claiming that the investors will earn exponential, risk-free returns with little or no effort. Defendants claim that investors can earn money when “Profit Reward Points” (Prpts) they are granted at the time of their initial investments increase in value or pay dividends, and can earn even larger returns by converting their Prpts into shares of CKB168 stock when the company conducts a promised IPO on the Hong Kong stock exchange. Investors have also been told that they will be able to make even greater returns in the forms of commissions and bonuses by recruiting new investors. CKB promoters have raised more than $20 million from U.S. investors, and millions of dollars more from investors in Canada, Taiwan, Hong Kong, and other countries in Asia.

The complaint alleges that in reality, CKB168 is nothing more than a fraudulent pyramid scheme. CKB has little or no real-world retail consumer sales to generate the promised returns and has no apparent source of revenue other than money received from new investors. Defendants promote recruitment of new investors instead of retail sales. Most of the money raised has been paid out to accounts controlled by CKB entities and as commissions to promoters, with the bulk of the payouts going to those at or near the top of the investment pyramids, including the Defendants. The company has taken no steps to prepare for the promised IPO. The Prpts granted investors are essentially worthless.

The Honorable Roslynn Mauskopf granted the SEC’s request for a temporary restraining order, asset freeze, and other emergency relief against the 16 defendants as well as seven entities controlled by the U.S. promoters that are named as relief defendants in the complaint. A court hearing has been set for October 21, 2013 on the SEC’s motion for a preliminary injunction.

The corporate defendants are five entities based in Hong Kong, Canada, and the British Virgin Islands that collectively operate under the business name “CKB168” or “CKB.” (WIN168 Biz Solutions Ltd., CKB168 Ltd., CKB168 Holdings, Ltd., CKB168 Biz Solution Inc., and Cyber Kids Best Education Limited.) The individual defendants are three foreign nationals – Rayla Melchor Santos, Hung Wai (Howard) Shern, and Rui Ling (Florence) Leung (aka Kwai Chee Leung) – who control the CKB entities, and eight “senior promoters” in the United States – Daliang (David) Guo, Yao Lin, Chih Hsuan (Kiki) Lin, Wen Chen Hwang (aka Wendy Lee), Toni Tong Chen, Cheongwha (Heywood) Chang, Joan Congyi (JC) Ma, and Heidi Mao Liu (aka Heidi Mao.) The SEC’s complaint alleges that all sixteen Defendants violated Sections 5(a), 5(c), 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5(a) and (c) thereunder. WIN168, Howard Shern, and the senior promoters are also charged with violating Securities Act Section 17(a)(2) and Exchange Act Rule 10b-5(b). Shern and the senior promoters are charged with violating the broker-dealer registration provisions under Section 15(a)(1) of the Exchange Act. The SEC seeks disgorgement of ill-gotten gains, financial penalties, permanent injunctions, and other relief. The SEC also seeks disgorgement from Relief Defendants USA Trade Group, Inc., Ouni International Trading Inc., E-Stock Club Corp., EZ Stock Club Corp., HTC Consulting LLC, and Arcadia Business Consulting, Inc.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Charges New Jersey Resident in Prime Bank Investment Scheme and Files Settled Charges Against California Attorney Escrow Agent

Recently, the Securities and Exchange Commission filed an enforcement action in the U.S. District Court for the District of New Jersey against New Jersey resident Brett A. Cooper and his companies Global Funding Systems LLC, Dream Holdings, LLC, Fortitude Investing, LLC, Peninsula Waterfront Development, LP and REOP Group Inc., who from at least November 2008 through about April 2012 perpetrated three fraudulent schemes and engaged in various fraudulent and deceitful acts, practices and courses of business in furtherance of those schemes.

The SEC’s complaint alleges that, in the first scheme, commonly referred to as a “Prime Bank Fraud”, Cooper raised approximately $1.4 million from investors by claiming to have special access to programs that through pooling of funds allowed individual investors to participate in this investment opportunity generally available only to Wall Street insiders. Cooper misrepresented to investors that the financial instruments are issued by the world’s largest and most financially sound banks; used vague, complex, and meaningless legal and financial terms designed to deceive the investors into believing that he offered legitimate investments; misrepresented that extraordinary returns of up to 1,000 percent within as little as 60 days were possible with little risk to principal; lied to investors that their principal would be collateralized with cash or semi-precious gemstones; and lied that their money would remain safe in escrow with attorneys pending the completion of certain steps in the transaction.

In the second scheme, also purportedly involving investment in prime bank paper, Cooper offered to participate as an investor in the purchase and trade of a $100 million bank guarantee on the condition that all investor funds were pooled in an attorney client trust account. Cooper sent a forged escrow agreement, purportedly from an attorney, containing wiring instructions for the attorney client trust account. The wire instructions, however, were for an account controlled by Cooper, not an attorney acting as escrow agent. The four investors unwittingly deposited a total of $925,000 in the phony escrow account which was, in fact, for Cooper’s company Dream Holdings, after which Cooper misappropriated the funds.

In March 2012 Cooper and his company REOP participated in a third scheme involving the sale of a purported Brazilian sovereign bond. Cooper claimed that, in exchange for a $50,000 “fee”, he would locate a buyer for the bond and open an account at a registered broker-dealer, which Cooper claimed was necessary to sell the bond. Cooper forged a letter that purported to be from the broker-dealer indicating that the bond had been “accepted” by the broker-dealer. Based upon this letter, the deceived investor paid Cooper’s $50,000 “fee”.

According to the SEC’s complaint, Cooper used the investor money to pay personal expenses, buy cars, pay associates in the scheme, and fund frequent gambling junkets to casinos in Las Vegas and Atlantic City.

The SEC’s complaint alleges that, despite his offering and selling of securities, Cooper has never been registered with the SEC to sell securities.

The SEC’s complaint alleges that Cooper and his companies violated the antifraud and broker-dealer registration provisions of the federal securities laws. Specifically, the complaint alleges that they each violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; that Cooper aided and abetted violations of Securities Act, Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5; and that Cooper also violated Exchange Act Section 15(a). The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest thereon, and civil penalties against each defendant.

Also on September 27, 2013, the SEC charged California attorney David H. Frederickson, a sole practitioner, and his law firm The Law Offices of David H. Frederickson, with aiding and abetting Cooper’s prime bank scheme in two transactions in 2010 and 2011.

According to the SEC’s complaint filed separately in the U.S. District Court for the District of New Jersey, Frederickson served as escrow agent for two of Cooper’s prime bank transactions, and provided letters to investors stating that their investments were secured by collateral owned by Cooper’s company Global Funding Systems LLC. Frederickson did nothing to verify the value, authenticity, or ownership of the collateral, which Cooper claimed to be seven sapphires valued at $376 million. The SEC’s complaint also alleges that by the time Frederickson served as escrow agent for the second of these investors, Frederickson had learned facts indicating that Cooper had affixed Frederickson’s electronic signature to a forged escrow agreement that caused investor funds to be diverted to another Cooper company instead of being sent to Frederickson’s escrow account. Moreover, Frederickson told this second investor that he had served as escrow agent for Cooper in numerous other successful bank instrument trading transactions. In fact, none of the bank instrument trading transactions had been successful.

Frederickson earned a total of $6,790 in escrow fees for these transactions and for a transaction involving an escrow agreement Cooper forged, for which Frederickson provided no escrow services. These fees were paid from the funds of the defrauded investors.

Without admitting or denying the SEC’s allegations, Frederickson and his firm agreed to settle the case against them. The settlement is pending final approval by the court. Specifically, Frederickson and his firm consented to the entry of a final judgment that (1) permanently enjoins each of them from violating or aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; (2) permanently enjoins each of them from providing professional legal or escrow services in connection with, or from participating directly or indirectly in, the issuance, offer, or sale of securities involving bank guarantees, medium term notes, standby letters of credit, structured notes, and similar instruments, provided, however, that such injunction shall not prevent Frederickson from purchasing or selling securities listed on a national securities exchange; and (3) orders them to pay, jointly and severally, disgorgement and prejudgment interest totaling $7,257, and a civil penalty in the amount of $25,000, for a total of $32,257.

As part of the settlement, and following the entry of the proposed final judgment, Frederickson, without admitting or denying the Commission’s findings, has consented to the entry of a Commission order pursuant to Rule 102(e)(3) of the Commission’s rules of practice permanently suspending him from appearing or practicing before the Commission as an attorney.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced fraud charges against a husband and wife in Texas for stealing funds from foreign investors under the guise of an investment opportunity to create U.S. jobs and a path to U.S. residency.

The SEC alleges that Marco and Bebe Ramirez and three companies they own have fraudulently raised at least $5 million from investors by falsely promising that their money would be invested as part of the EB-5 Immigrant Investor Pilot Program. Through the program, foreign investors can earn conditional visas and eventually green cards by making investments in U.S. economic development projects that will create or preserve a minimum number of jobs for U.S. workers. Instead of investing the money as promised, the Ramirezes routinely diverted investor funds to other undisclosed businesses and for their personal use. In at least one instance, they used new investor funds to make Ponzi-like payments to an existing investor.

According to the SEC’s complaint unsealed recently in U.S. District Court for the Southern District of Texas, the Ramirezes initially targeted investors in Mexico, but more recently have solicited investors in Egypt and Nigeria. The court has granted the SEC’s request to freeze the assets and accounts of the Ramirezes and their three companies: USA Now LLC, USA Now Energy Capital Group LP, and Now Co. Loan Services. This effectively halts their ability to raise further money from investors or spend any remaining funds in the scheme.

The SEC and U.S. Citizenship and Immigration Services (USCIS) recently issued a joint investor alert that provides additional information about the EB-5 program and cautions investors about fraudulent EB-5 schemes. USCIS offered substantial assistance in the SEC’s investigation of the Ramirezes. The EB-5 program is administered by USCIS and enables foreign investors to make their investments either directly in a business or through EB-5 “regional centers” that are private entities organized to promote economic development in specific geographic areas and industries.

According to the SEC’ s complaint, beginning in 2010, the Ramirezes sought approval from USCIS to register USA Now as an EB-5 regional center that would accept and direct investments from foreign investors into investment opportunities that would purportedly satisfy the EB-5 visa requirements. But even before USCIS decided, the Ramirezes and other USA Now employees already had started soliciting investors with false promises about how their money would be invested.

The SEC alleges that the Ramirezes told investors that USA Now would hold their investments in escrow until they received USCIS approval. And once the funds were released from escrow, they would be used for specific business purposes. However, the Ramriezes failed to hold the funds in escrow as required, and instead routinely diverted the funds for other uses not described in offering materials, often on the same day the funds were received. Among their misappropriations, the Ramirezes appear to have opened a Cajun-themed restaurant with investor funds and settled an unrelated lawsuit. Meanwhile, none of the at least 10 investors identified by the SEC as victims of the scheme have received visas from USCIS, and none of their funds seem to remain in escrow.

The SEC’s complaint alleges that the Ramirezes and their companies violated and aided and abetted violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint seeks various relief including preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently charged a woman living in South Florida with defrauding investors in a Ponzi scheme and affinity fraud that targeted the local Colombian-American community and involved purported investments in immigration bail bonds.

The SEC alleges that Jenny E. Coplan told investors that her company Immigration General Services operated through an investment broker that would invest the funds she raised in immigration bail bonds and turn a profit. Coplan promised interest payments ranging from 60 to 108 percent annually. She also assured investors that their money was safe because it was insured by the Federal Deposit Insurance Corporation (FDIC). However, Coplan never placed investor funds with any investment broker, and their money was never FDIC insured. Instead, she paid supposed profits to earlier investors using funds from newer investors in classic Ponzi fashion, and she stole approximately $878,000 of investor money for her own personal use.

In a parallel action, the U.S. Attorney’s Office for the Southern District of Florida today announced criminal charges against Coplan.

According to the SEC’s complaint filed in federal court in Miami, Coplan solicited investors through personal conversations over the phone and in person, and many of her targets were Colombian-Americans and Colombians living in Florida. She raised approximately $4 million from more than 90 investors in Florida, California, Georgia, Texas, Canada, and Colombia.

The SEC alleges that Coplan created fictitious investor statements that she disseminated to hide her misuse of the money and lead investors to believe their investments were growing. Furthermore, Coplan e-mailed one investor two purported FDIC statements reflecting insured balances of $107,000 and $250,000, lulling the investor to think the investment was particularly safe. When her scheme began to unravel in 2011, Coplan blamed the purported investment broker for the delay in interest payments to investors, telling them the broker held the investors’ funds to cover deficiencies because Coplan had failed to meet certain monthly investment quotas. Even though Immigration General Services had virtually no funds in its bank accounts and was unable to honor investors’ increasing redemption requests, Coplan tried in late 2011 to create a false appearance that the company was back to business as usual. She issued non-sufficient fund checks to investors purporting to be their monthly profits. Through her continued misstatements, Coplan was able to raise another $578,000 from new investors before the scheme collapsed entirely.

The SEC’s complaint against Coplan, who lives in Tamarac, Fla., seeks disgorgement of ill-gotten gains, financial penalties, and permanent injunctions.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.