Securities and Exchange Commission v. Trudy R. Gilmond, U.S. District Court for Western District of North Carolina (Civil Action No. 3:15-CV-00591)

SEC Charges ZeekRewards Pyramid-Ponzi Scheme Promoter

Recently, the Securities and Exchange Commission (SEC) filed suit in the United States District Court for the Western District of North Carolina against Trudy R. Gilmond for her participation in 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.

The Complaint alleges that Gilmond 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 company 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, Gilmond 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 alleges that Gilmond was one of the most successful and prolific promoters of ZeekRewards. From at least September 2011 until ZeekRewards was shut down in August 2012, Gilmond worked closely with the company founders and served as a senior “field liaison” to promote the scheme, persuading scores of unsophisticated retail investors to buy ZeekRewards securities upon the promise of profit sharing. Gilmond also helped conceal from investors and regulators the true nature of the ZeekRewards scheme. She policed affiliate advertisements and communications to ensure they did not use investment-related terms that otherwise may have triggered regulatory scrutiny. Gilmond reaped more than $1.7 million in transaction-based commissions and bogus profit-sharing for her recruiting efforts.

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At the Boca Raton 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 Recently Announces Charges for Spoofing and Order Mismarking

The Securities and Exchange Commission today announced fraud charges against three Chicago-based traders accused of circumventing market structure rules in a pair of options trading schemes.

The SEC Enforcement Division alleges that twin brothers Behruz Afshar and Shahryar Afshar and their friend and former broker Richard Kenny mismarked option orders to obtain execution priority and lower fees, and engaged in manipulative trading known as “spoofing” to generate liquidity rebates from an options exchange.

“We allege that the Afshar brothers and Kenny fraudulently mismarked their orders to obtain benefits that they were not entitled to receive, and engaged in spoofing to collect liquidity rebates. This alleged scheme deceived the options exchanges, disadvantaged other market participants, and undermined the fair operation of the U.S. securities markets,” said Andrew Ceresney, Director of the SEC Enforcement Division.

Robert A. Cohen, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit, added, “We allege that these individuals tricked the exchanges into giving them benefits not meant for professional traders, and fooled other market participants by spoofing the market with non-bona fide orders.”

In an order instituting an administrative proceeding, the SEC Enforcement Division alleges:

Mismarking of Options Orders

• Options exchange rules provide that a non-broker-dealer that places more than 390 orders in options per day (on average) – whether executed or not – during any calendar month in a quarter will be designated as a “professional” for the next quarter.
• Conversely, a “customer” is a non-broker-dealer that does not exceed the 390-order threshold for each calendar month in a quarter.
• Despite far exceeding the 390-order threshold for every quarter from October 2010 to December 2012, the Afshars’ accounts (in the names of Fineline Trading Group LLC and Makino Capital LLC) were able to continually place “customer” orders throughout this time period by alternating their trading on a quarterly basis between accounts.
• When one account was “professional” for an upcoming quarter, they switched their trading to the other account, which was designated as “customer.” They then switched back the following quarter.
• The “customer” and “professional” designations are supposed to apply to all accounts beneficially owned by the trader. However, the Afshars and Kenny accomplished this back-and-forth scheme through false representations that Behruz solely owned Fineline and that Shahryar solely owned Makino, despite the fact that Behruz had an ownership interest in both companies.

Spoofing

• From May 2011 to December 2012, the spoofing scheme was designed to take advantage of the “maker-taker” program offered by an options exchange.
• Under the maker-taker program, an order that is sent to an exchange and executes against a subsequently received order generates a “maker” rebate from the exchange. In contrast, an order that immediately executes against a pre-existing order is charged a “take” fee.
• The Afshars and Kenny carried out the scheme by using All-Or-None (AON) options orders – hidden orders that must be executed in their entirety or not at all – and placing smaller, non-bona fide displayed orders in the same option series and price as the AON orders, but on the opposite side of the market.
• The smaller orders were not intended to be executed but instead were placed to alter the option’s best bid or offer in order to induce, or spoof, other market participants into placing orders at the same price.
• Those orders from other market participants executed against the Afshars’ hidden AON orders, and any open displayed orders were then canceled.
• Because the executed AON orders existed before the orders sent by the spoofed counterparties, they were deemed to have added liquidity and generated rebates for the accounts of Fineline and Makino.

The SEC Enforcement Division alleges that Behruz, Shahryar, Kenny, Fineline, and Makino violated Section 17(a) of the Securities Act as well as Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5. The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 Suspends Public Accountants for Bad Auditing

The Securities and Exchange Commission today suspended five accountants and two audit firms from practicing or appearing before the SEC after they violated key rules that are designed to preserve the integrity of the financial reporting system.

According to the SEC’s orders instituting settled administrative proceedings, the accountants and firms at various times performed deficient audits of public companies, jeopardized the independence of other audits, and falsified and backdated audit documents among other misconduct.

“Auditors must follow the professional standards and avoid conflicts of interest when they opine on the financial information reported by public companies,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office. “These accountants and their firms showed complete disregard for the basic rules of their profession. As a result, they are now barred from working on any SEC-related matters.”

According to the SEC’s orders finding violations by Peter Messineo and his firm Messineo & Co., Charles Klein and his firm DKM Certified Public Accountants, Robin Bigalke, Joseph Mohr, and Richard Confessore:

• Messineo and his firm, which had more than 70 corporate clients, skipped mandatory quality reviews for their own audits and performed deficient quality reviews for audits by another audit firm.
• To cover up these violations, Bigalke falsified and backdated audit documents in her role as Messineo & Co.’s senior accountant. She also arranged with Mohr, the firm’s quality reviewer, the backdating of quality review documents.
• Mohr falsely identified himself as a certified public accountant during a time when was not licensed as a CPA.
• Messineo served as the CFO of two public companies being audited by Klein and DKM. Messineo falsely certified the companies’ public filings despite knowing that auditor independence rules were being violated as Confessore was improperly serving conflicting roles as a member of the DKM audit team and an employee of Messineo & Co.
• After Messineo resigned from his CFO positions at both public companies, he merged his audit firm into DKM and exacerbated DKM’s independence issues because he retained ownership interests in the two companies while DKM continued to audit them.

The SEC’s orders find that the accountants and firms violated or caused violations of Sections 13(a), 13(d), 15(d), and 16(a) of the Securities Exchange Act of 1934 and Rules 13a-1, 13a-13, 13a-14, 13d-1, 13d-2, 15d-1, and 16a-3 as well as Rule 2-02 of Regulation S-X. The order also finds they engaged in improper professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1). They consented to the orders without admitting or denying the findings.

Messineo and his firm Messineo & Co. are permanently barred from practicing as accountants on behalf of any publicly traded company or other entity regulated by the SEC. Klein, Confessore, and DKM are suspended from appearing or practicing before the SEC as accountants for at least two years. Mohr is suspended for at least four years and Bigalke is suspended for at least three years. They are collectively paying penalties and disgorgement totaling more than $100,000 to settle the SEC’s charges.

Securities and Exchange Commission v. Jehu Hand and Antonio Katz, Civil Action No. 1:15-cv-14109 (D. Mass. Dec. 10, 2015)

SEC Charges California Lawyer and Stock Promoter Behind Market Manipulation Scheme

The Securities and Exchange Commission (SEC) has charged a California-licensed attorney and a stock promoter behind a pump-and-dump scheme that defrauded investors in Greenway Technology, a Las Vegas, Nevada-based company purporting to operate resorts for gay and lesbian travelers.

The SEC alleges that Jehu Hand and Antonio Katz and three additional participants carried out the scheme by, among other things, using one or more backdated debt assignments, or convertible promissory notes, to cause the issuance of millions of unrestricted shares of Greenway stock to entities and individuals under their control. Hand (or an attorney associated with him) then wrote and sent false legal opinion letters to brokerage and other firms transacting in Greenway stock to facilitate the issuance, depositing, and, ultimately, sale of the stock. These opinions represented, among other things, that Greenway was not a shell company. According to the complaint, all of the false opinion letters that Hand authored were designed to clear the way for Greenway stock held by the scheme participants to be sold, without restriction, to unsuspecting investors in the market.

The complaint also alleges that the defendants and their co-schemers secretly planned and orchestrated the sale of Greenway stock to the public at artificially inflated prices and without proper securities registration statements in effect by, among other things, generating news releases, promotional materials, or blast e-mails containing false, exaggerated or misleading information, and engaging in undisclosed coordinated trading of the stock. These steps in the overall scheme were designed to generate the appearance of demand for the stock and to increase its price, even though Greenway had no operations or assets at the time. Between August 2012 and January 2013, after the stock price had been pumped, the participants in the scheme sold more than twelve million net shares of Greenway stock, causing losses to the investing public of more than $850,000.

In a parallel case, the U.S. Attorney’s Office for the District of Massachusetts announced that a federal grand jury returned a criminal indictment against Hand for the same conduct alleged in the SEC’s complaint.

The SEC’s complaint charges Hand and Katz with violating the antifraud provisions of the federal securities laws in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 (Securities Act). Hand and Katz also are charged with violating (and, in the case of Hand, aiding and abetting violations of) the securities registration provisions in Section 5(a) and 5(c) of the Securities Act. The SEC is seeking disgorgement of ill-gotten gains from the scheme plus interest and penalties as well as penny stock bars and permanent injunctions against further violations of the securities laws.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 fraud charges and a court-ordered asset freeze obtained against a Florida-based penny stock company falsely touting itself as “the largest publicly traded diversified portfolio of professional sports teams in the world.”

The SEC alleges that Thomas Anthony Guerriero as CEO of Oxford City Football Club Inc. used pressure tactics and a boiler room of salespeople to raise more than $6.5 million from primarily inexperienced investors who were misled to believe that the company was a thriving conglomerate of sports teams, academic institutions, and real estate holdings. But in reality the company was losing millions of dollars each year and turning zero profit from its two lower-division soccer teams in the U.K.

“As alleged in our complaint, Guerriero portrayed himself as one of the most powerful and influential CEOs in the history of Wall Street when he’s really a penny stock fraudster mixing lies and verbal threats to line his own pocket with money from unsuspecting investors,” said Scott Friestad, Associate Director of the SEC Enforcement Division.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida:

• Since at least August 2013, Guerriero has operated a classic boiler room scheme under the guise of nominal legitimate businesses through which millions of unregistered shares of stock were sold to investors who were deceived about the stock value and potential profits.
• Guerriero’s salespeople sold Oxford City stock to the public based on leads lists he purchased from third parties. Guerriero crafted scripts for the salespeople, who used aliases to mask their true identities.
• Prospective investors were told they were being offered a limited-time deal to purchase Oxford City shares at a deep discount from the publicly quoted price. Unbeknownst to the victims, the stock price was controlled by Guerriero.
• Guerriero claimed to record phone conversations with potential investors using a “verbal verification system” that supposedly tied the stock “transaction” to their social security number and birthday. In reality, Guerriero and his associates simply pressed any button on their phone to make a sound signaling the fake start of a recording. If investors later refused to pay, Guerriero would threaten them with lawsuits based on their “recorded” verbal commitment.
• Investors were falsely told that Oxford City would pay a 50-cents-per-share dividend within a year. In reality, the company was losing millions of dollars a year and was legally prohibited from paying a dividend.
• Oxford City purportedly had real estate holdings worth approximately $100 million and owned a radio broadcast network that projected profits of almost $20 million. Oxford City actually had assets of approximately $1 million and never owned a radio station – it simply purchased one hour of air time per week.
• Oxford City claimed to own an online university with students already enrolled and projected profits of $495 million for the upcoming five-year period. In reality, there was no such university that ever enrolled a student or had revenue.
• Oxford City purported it would earn more than $238 million over five years from existing and new sports-related facilities. The truth was that Oxford City owned a minority interest in a lower division English soccer club, which generated a small amount of revenue but never turned a profit.

The SEC’s complaint charges Guerriero and Oxford City with violations of Sections 10(b) and 20(b) of Securities Exchange Act of 1934 and Rule 10b-5 as well as Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Homero Joshua Garza, Civil Action No. 3:15-cv-01760 (D. Conn., Complaint filed Dec. 1, 2015)

SEC Charges Bitcoin Mining Companies

The Securities and Exchange Commission recently charged two Bitcoin mining companies and their founder with conducting a Ponzi scheme that used the lure of quick riches from virtual currency to defraud investors.

According to the SEC’s complaint filed in federal court in Connecticut, “mining” for Bitcoin or other virtual currencies means applying computer power to try to solve complex equations that verify a group of transactions in that virtual currency. The first computer or collection of computers to solve an equation is awarded new units of that virtual currency.

The SEC alleges that Homero Joshua Garza perpetrated the fraud through his Connecticut-based companies GAW Miners and ZenMiner by purporting to offer shares of a digital Bitcoin mining operation. In reality, GAW Miners and ZenMiner did not own enough computing power for the mining it promised to conduct, so most investors paid for a share of computing power that never existed. Returns paid to some investors came from proceeds generated from sales to other investors.

According to the SEC’s complaint:

• From August 2014 to December 2014, Garza and his companies sold $20 million worth of purported shares in a digital mining contract they called a Hashlet.
• More than 10,000 investors purchased Hashlets, which were touted as always profitable and never obsolete.
• Although Hashlets were depicted in GAW Miners’ marketing materials as a physical product or piece of mining hardware, the promised contract purportedly entitled the investor to control a share of computing power that GAW Miners claimed to own and operate.
• Investors were misled to believe they would share in returns earned by the Bitcoin mining activities when in reality GAW Miners directed little or no computing power toward any mining activity.
• Because Garza and his companies sold far more computing power than they owned, they owed investors a daily return that was larger than any actual return they were making on their limited mining operations.
• Therefore, investors were simply paid back gradually over time under the mantra of “returns” out of funds that Garza and his companies collected from other investors.
• Most Hashlet investors never recovered the full amount of their investments, and few made a profit.

The SEC’s complaint charges Garza, GAW Miners, and ZenMiner with violating Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act); GAW Miners and Garza with violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; and ZenMiner with violating Sections 17(a)(1) and (3) of the Securities Act, Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The SEC’s complaint seeks permanent injunctive relief as well as 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 elder abuse, exploitation 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 Boca Raton 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. James A. Torchia et al., Civil Action No. 1:15-cv-03904-WSD (N.D. Ga., filed November 10, 2015)

SEC Announces Emergency Action to Halt Ongoing Investment Fraud Involving Promissory Notes and Life Settlement Contracts

The Securities and Exchange Commission (“SEC”) recently announced the entry of a Consent Order (“Order”) halting an alleged ongoing investment fraud by James Torchia and various related entities involving the sale of promissory notes and life settlement contracts.

On November 10, 2015, the SEC filed an emergency civil action in federal court in Atlanta against Torchia, a resident of Canton, Georgia, and the following entities that he operates and controls: (i) Credit Nation Capital, LLC (formerly known as Credit Nation Lending, LLC) (“CN Capital”), a Georgia limited liability company in Woodstock Georgia; (ii) Credit Nation Acceptance, LLC (“CN Acceptance”), a Texas limited liability company in Midland, Texas; (iii) Credit Nation Auto Sales, LLC, a Georgia limited liability company in Woodstock, Georgia; (iv) American Motor Credit, LLC, a Georgia limited liability company in Woodstock, Georgia; and (v) Spaghetti Junction, LLC, a Nevada limited liability company.

The SEC’s complaint alleges that since 2009, Torchia, through CN Capital, has raised tens of millions of dollars from investors who purchased unregistered promissory notes, most of which promised a 9% return. The complaint further alleges that CN Capital touts the safety of the promissory notes, describing them to investors as “100% asset backed” and “backed by hard assets dollar for dollar.” In reality, according to the complaint, CN Capital has generated substantial losses each year since at least 2011 and is insolvent. The SEC contends that contrary to representations made to investors portraying the notes as a secure investment capable of generating reliable investment returns, CN Capital basically operates as an ongoing Ponzi scheme through which the promised investment returns are paid using new investor money. The complaint alleges that neither CN Capital’s multi-million dollar per year operating losses nor its massive insolvency has ever been disclosed to investors.

The complaint also alleges that CN Acceptance sells unregistered fractional interests in life settlement contracts (“LS Interests”) to investors and that CN Acceptance promises to pay the policy premiums using a portion of the purchase price. But in practice, according to the complaint, Torchia disregards corporate formalities and commingles CN Acceptance’s funds with those of CN Capital, such that the LS Interests are now threatened by CN Capital’s Insolvency. The complaint further alleges that Torchia has transferred millions of dollars to entities he controls to support his and his family’s other businesses and to pay his personal expenses. According to the complaint, CN Capital and CN Acceptance, on average, have raised in excess of $2 million per month through the sale of notes and LS Interests in the first six months of 2015.

The complaint alleges that the defendants violated and/or aided and abetted or caused violations of the antifraud provisions of the securities laws in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. The complaint also alleges that Torchia, CN Capital and CN Acceptance violated the registration provisions of the securities laws in Section 5 of the Securities Act.

On November 20, 2015, the Court approved an Order by which the defendants agreed, among other things, not to offer or sell any additional promissory notes or to advertise investment opportunities via general solicitations. The Order also restricts the defendants’ ability to transfer assets and funds and to sell fractional interests in life settlements. A related evidentiary hearing will be held on January 7, 2016.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Bobby M. Collins, Civil Action No. 3:15-cv-3620-D (N.D. Tex. November 10, 2015)

SEC Charges Texas Man with Orchestrating Fraud Scheme Targeting Senior Investors

The Securities and Exchange Commission announced today that it has charged a Texas-based insurance agent with operating a multi-year offering fraud out of his insurance and retirement planning business.

According to the SEC’s complaint, filed in the Northern District of Texas, Bobby M. Collins (“Collins”), a resident of Wichita Falls, TX, orchestrated a scheme targeting elderly investors through his unincorporated retirement planning business, Collins Insurance Companies a/k/a BMC Retirement Planning dating back to at least 2010. Collins lured at least 36 investors, most of whom are older than 65 years of age, to invest more than $4.6 million by offering high-yield, unsecured notes. Collins assured investors that he would use their funds to grow his business, and in turn pay significant returns to investors from new business generation and revenue growth.

The SEC’s complaint alleges that Collins’s promises were false and that he rarely used investor funds to expand his business, spending less than 2% of investors’ funds for this purpose. Instead, he used investor funds on a number of personal expenditures, including mortgage and luxury car payments, and to make principal and interest payments to earlier investors. Collins kept the scheme alive for several years by relying on a stream of new and repeat investors, as well as two “personal loans” from a friend to avoid missing monthly payments to investors.

Collins has agreed to settle the SEC’s action against him by consenting to an injunction against violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and agreeing pay disgorgement and prejudgment interest of $573,234.16, and a $160,000 civil penalty. The settlement is subject to court approval by the United States District Court for the Northern District of Texas.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 fraud charges against several alleged perpetrators behind a $78 million pump-and-dump scheme involving the stock of Jammin’ Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.

The SEC alleges that Jammin Java’s former CEO Shane Whittle orchestrated the scheme with three others who live abroad and operate entities offshore. Whittle utilized a reverse merger to secretly gain control of millions of Jammin Java shares, and he spread the stock to the offshore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and René Berlinger of Switzerland. The shares were later dumped on the unsuspecting public after the stock price soared following fraudulent promotional campaigns.

Charged with fraudulently promoting Jammin’ Java stock to investors are British twin brothers Alexander Hunter and Thomas Hunter, who were previously charged in a separate SEC case for touting multiple penny stocks using a fake stock picking robot. Others charged in the SEC’s complaint with facilitating the illegal offering through their offshore entities are UK citizens Stephen Wheatley and Kevin Miller and Oman resident Mohammed Al-Barwani.

According to the SEC’s complaint filed in U.S. District Court for the Central District of California:

• Whittle, a stock promoter, befriended the son of Bob Marley in Los Angeles. After learning of Marley’s purchase of a small Jamaican coffee farm, Whittle proposed the creation of a large-scale coffee distribution business built on the Marley name.
• To raise capital for the Marley venture, Whittle identified publicly-traded shell company Global Electronic Recovery Corp. (GERC), which was a purported waste management business in Los Angeles. He executed a reverse merger between GERC and Marley Coffee, which later became Jammin’ Java and trades under the ticker symbol JAMN.
• In connection with the reverse merger, Whittle secretly gained control of millions of shares that previously had been issued to foreign nominees.
• Using his access and control of Jammin’ Java and its stock, Whittle and others coordinated an illegal offering and the fraudulent promotion of Jammin’ Java’s stock in a pump-and-dump scheme that culminated in the middle of 2011.
• In anticipation of the promotion, Whittle distributed some of the nominee stock to offshore entities controlled by Weaver, Sun, and Berlinger.
• To boost the stock price and provide cash to Jammin’ Java, Whittle, Weaver, Sun, and Berlinger orchestrated a sham financing arrangement designed to create the false appearance of legitimate third-party interest and investment in the company.
• Jammin’ Java’s announcement of the financing agreement and other company announcements – together with coordinated trading by entities connected to the scheme – caused the stock price to rise.
• To conceal his control of the stock and other aspects of the scheme, Whittle made material misstatements and misleading omissions in beneficial ownership reports filed with the SEC.
• Whittle distributed another large block of stock to offshore entities, including those controlled or owned by Weaver, Sun, Berlinger, Wheatley, Miller, and Al-Barwani. To conceal their interest, Whittle, Weaver, Sun, and Berlinger failed to disclose their beneficial ownership of Jammin’ Java stock.
• The Hunters published false stock newsletters and took other steps to hype the stock and send the share price sharply upward.
• With Jammin’ Java’s stock value artificially inflated, the defendants and others coordinating with them dumped 45 million shares on the public market without registering the transactions, making at least $78 million in illicit profits in the process.
• Weaver, Sun, and Berlinger funneled $2.5 million in profits to Jammin’ Java under the guise of the sham financing arrangement that launched the promotion.
• Jammin’ Java’s share price and volume began to collapse a few days after the company disclosed on May 9, 2011, that it became aware of an unauthorized and unaffiliated online stock promotion. The stock fell further after the company released disappointing financial results in its annual report.

The SEC’s complaint charges Jammin’ Java, Whittle, Weaver, Sun, Berlinger, Wheatley, Miller, and Al-Barwani with conducting an illegal offering in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. The complaint further alleges that Whittle, Weaver, Sun, Berlinger, and the Hunters violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Whittle, Weaver, Sun, and Berlinger violated Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2. Whittle is additionally charged with violating Section 16(a) of the Exchange Act and Rule 16a-3, and the Hunters are charged with violations of Sections 17(b) of the Securities Act, which prohibits fraudulent touting of stock.

The SEC is seeking injunctions, disgorgement, prejudgment interest, and penalties as well as penny stock bars against all of the individuals and an officer-and-director bar against Whittle.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. EB5 Asset Manager, LLC, et al., Civil Action No. 0:15-CV-62323 (S.D. Fla., filed November 3, 2015)

Assets Frozen in Alleged Immigration Scam:

The Securities and Exchange Commission recently announced it has obtained a court order freezing the assets of a South Florida woman and her company accused of purchasing a boat and luxury cars with money she raised from investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program.

Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers. The SEC alleges that Lin Zhong and her company EB5 Asset Manager LLC raised at least $8.5 million for use by U.S. EB-5 Investments LLC in job-creating real estate development projects, but they diverted nearly $1 million to purchase a boat, a BMW, and a Mercedes among other improper personal uses of investor funds.

The SEC also obtained a court order appointing a receiver to administer and manage the business affairs and assets of the company and its subsidiaries for the protection of investors.

According to the SEC’s complaint filed earlier this month in U.S. District Court for the Southern District of Florida against Lin Zhong, who also goes by the name Lily Zhong:

• Investors were told that money they invested in U.S. EB-5 Investments LLC would be used for real estate development including a mixed-use commercial project planned for the City Center in Port St. Lucie, Fla.
• Zhong and EB5 Asset Manager diverted approximately $900,000 of those funds for unrelated personal uses that also included her own real estate taxes as well as education expenses for her family members.
• Zhong and EB5 Asset Manager also made misrepresentations to investors about the use of U.S. EB-5 Investments’ funds and failed to disclose Zhong’s past failed real estate venture.
• Investors were falsely told that U.S. EB-5 Investments would prepare and provide unaudited financial reports to investors.
• Zhong and EB5 Asset Manager falsely claimed that certain investors’ funds would be held in escrow until the form filed by potential EB-5 investors to petition the U.S. Citizenship and Immigration Services (USCIS) for immigration status received that agency’s approval.
• Zhong and EB5 Asset Manager also made material omissions and false statements about conflicts of interest, and made false statements about the location of real estate development projects.

The SEC’s complaint alleges that Zhong and EB5 Asset Manager 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. Zhong has agreed to stipulate to the asset freeze and receiver following a lengthy hearing on the SEC’s motions when the court issued a separate order granting expedited discovery, prohibiting the destruction of documents, and requiring Zhong, EB5 Asset Manager, and relief defendants to provide the SEC and the court with a sworn accounting of their assets.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 fraud charges and an emergency asset freeze obtained against an Atlanta-based businessman accused of misusing investor funds raised to purchase and renovate senior living facilities.

The SEC alleges that Christopher F. Brogdon amassed nearly $190 million through dozens of municipal bond and private placement offerings in which investors supposedly earn interest from revenues generated by the nursing home, assisted living facility, or other retirement community project supported by their investment. But Brogdon secretly commingled investor funds instead of using the money to finance the project described to investors in the disclosure documents for each offering. From the commingled accounts, he has diverted investor money to other business ventures and personal expenses.

According to the SEC’s complaint filed in federal court in Newark, N.J., Brogdon has been making payments to investors by borrowing money from third parties, using proceeds from other offerings, and drawing down on personal lines of credit, all of which are improper sources under the offering disclosures made to investors.

The SEC complaint charges Brogdon with violations of the antifraud provisions of the securities laws and related SEC rules, and seeks the return of ill-gotten gains with interest and penalties. The complaint also seeks permanent injunctions against further violations of the securities laws, and a bar prohibiting Brogdon from serving as an officer or director of a public company. The complaint also names Brogdon’s wife and son and a number of his other business entities as relief defendants for the purpose of recovering ill-gotten gains plus interest for investors.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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.

Jose G. Ramirez Jr. – Boca Raton, Florida Closed-End Mutual Fund Breach of Fiduciary Duty and Unsuitability FINRA Arbitration and Litigation Attorney

Securities and Exchange Commission v. Jose G. Ramirez Jr., Civil Action No. 15-cv-02365 (USDC District of Puerto Rico, filed September 29, 2015)

The Securities and Exchange Commission recently charged Jose G. Ramirez, Jr., a former top broker at UBS Financial Services Incorporated of Puerto Rico (“UBSPR”), who made material misrepresentations and omissions and orchestrated a fraudulent scheme involving the use of credit line proceeds from a UBSPR-affiliated bank to purchase shares in UBSPR affiliated closed-end mutual funds.

The complaint filed in federal court in Puerto Rico against Jose Ramirez, Jr., a former registered representative in UBSPR’s Guaynabo branch office alleges that Ramirez increased his compensation by at least $2.8 million by having certain customers use proceeds from lines of credit with UBS Bank USA to purchase additional shares in UBSPR closed-end mutual funds. To evade detection, Ramirez allegedly instructed the customers to transfer money from their line of credit to an outside bank account before depositing the funds into their UBSPR brokerage account and purchasing the closed-end funds. The funds invested heavily in Puerto Rico municipal bonds and lost value as the Puerto Rico bond market declined, requiring the customers to pay down a portion of the loans or risk having their investments liquidated.

According to the SEC’s complaint, Ramirez misled customers about the safety of the closed-end funds and the risks of investing in them with borrowed money. He also is alleged to have lied to his branch manager when questioned about suspicious transactions in the closed-end mutual funds. Ramirez was terminated by UBSPR in January 2014. As a result of this conduct, the SEC’s complaint alleges Ramirez 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.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 Fund Manager With Securities Fraud

The Securities and Exchange Commission recently charged a New Jersey fund manager and his firm with defrauding investors by lying about his credentials, concealing trading losses, and using investor funds to make Ponzi-like payments to other investors.

The SEC’s complaint filed in federal court in Manhattan alleges that William J. Wells, of River Vale, New Jersey, falsely told some investors that he was a registered investment adviser and would invest their money in specific stocks. Instead, Wells and his firm, Promitor Capital Management LLC, are alleged to have invested mainly in high-risk options with poor results that Wells concealed with phony investor account statements that grossly inflated performance. Wells further attempted to hide the losses by using funds from new investors to make Ponzi-like payments to earlier investors, the complaint alleges. Wells allegedly raised more than $1.1 million from dozens of investors since 2009, but by late summer, the Promitor fund brokerage accounts held less than $35, with the rest dissipated by trading losses and Ponzi-like payments, or diverted into Wells’s personal bank account, the complaint alleges.

According to the complaint, when one investor was unable to get Wells to return a portion of his investment, he asked Wells by text, “You running Ponzi scheme? Why the heck is this going down like this.” Wells later responded by text saying, “My explanation is that I’m an idiot and was trying to get some big trades to. . . make you more money.”

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

The SEC’s complaint alleges that Wells and Promitor violated antifraud provisions of the federal securities laws and SEC antifraud rules. Wells also was charged with aiding and abetting liability and control person liability for Promitor’s alleged violations. The SEC is seeking permanent injunctions and financial penalties against Wells and Promitor, and return of allegedly ill-gotten gains with prejudgment interest.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Commodore Financial Corp., et al., Civil Action No. 15-CV-01567 (C.D. Cal., filed September 30, 2015)

SEC Charges Orange County Oil and Gas Company, CEO, and Arizona Boiler Room Operator with Defrauding Investors

The Securities and Exchange Commission recently announced fraud charges against an Orange County, Calif. oil and gas company, its CEO, and an Arizona-based boiler room operator.

The SEC alleges Commodore Financial Corporation, CEO Christopher Schlegel, M&G Cap Services, and Andres Calvo raised approximately $7.5 million from at least 84 investors through their fraudulent offer and sale of fractional interests in oil and gas wells. According to the SEC’s complaint, filed on September 30, 2015 in the U.S. District Court for the Central District of California, Commodore and Schlegel engaged in a scheme to defraud investors by misappropriating almost half of investor funds to pay exorbitant commissions to Calvo and his boiler room operation as well as for Schlegel’s own personal use, which included private jet charters and Las Vegas casino expenses.

The complaint alleges Commodore and Schlegel compounded their fraud by falsely telling investors that the vast majority of their money-80% to 90%-would be used to fund oil and gas operations, and that Commodore was an experienced, Texas-based oil and gas company with a proven track record of profitability. The complaint further alleges that only about half of investor funds went toward oil and gas operations. In addition, the complaint alleges that Commodore had no real Texas presence, and neither Commodore nor Schlegel had any actual oil and gas experience, let alone a proven track record of profitability. Further, Commodore and Schlegel allegedly falsely represented to existing investors that Commodore was almost finished preparing checks to pay returns on their current investment in order to solicit investments for a new project. According the complaint, however, the current investment had not yet generated any revenue. M&G and Calvo also lied about the exorbitant commissions they actually received.

The Commission alleges that defendants violated Section 5 of the Securities Act of 1933 and the antifraud provisions of the securities laws in Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. Finally, the complaint alleges that M&G and Calvo violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers. The SEC’s complaint seeks permanent injunctions, civil penalties, disgorgement plus prejudgment interest, and other relief against all of the defendants.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 Firm and Owner With Manipulative Trading

The Securities and Exchange Commission recently charged a New York-based proprietary trading firm and one of its co-founders with engaging in a manipulative trading strategy known as “spoofing.”

An SEC investigation found that Briargate Trading LLP and co-founder Eric Oscher orchestrated a scheme in which they placed sham orders – spoofs – to create the false appearance of interest in stocks and manipulate their prices. After entering spoof orders, Oscher placed bona fide orders on the opposite side of the market for the same stocks and took advantage of the artificially inflated or depressed prices. Immediately after the bona fide orders were executed, Oscher canceled the spoof orders.

Briargate and Oscher agreed to pay more than $1 million to settle the SEC’s charges.

“Spoofing is an illegal tactic where traders place fake orders to trick others into trading at inflated or depressed prices,” said Andrew M. Calamari, Regional Director of the SEC’s New York office. “Today’s action shows our ongoing resolve to prevent all forms of market manipulation.”

According to the SEC’s order instituting settled proceedings:

• Oscher and Briargate’s spoofing scheme ran from October 2011 through September 2012 and focused on securities listed on the New York Stock Exchange.
• Oscher, a former NYSE specialist, used his Briargate account to place multiple, large, non-bona fide orders on the NYSE before the exchange opened for trading at 9:30 a.m. Briargate’s non-bona fide orders impacted the market’s perception of demand for the stocks it spoofed and often the prices of the stocks.
• Oscher took advantage of the price movement in the spoofed securities by sending orders for them on the opposite side of the market to exchanges that opened before the NYSE. Oscher cancelled the non-bona fide NYSE orders before the NYSE opened and unwound the positions he had established on other exchanges. Through this conduct, the Oscher and Briargate reaped approximately $525,000 in profits.

“Oscher took advantage of our interconnected markets by placing non bona fide orders on one exchange, and then buying or selling the spoofed securities at artificial prices on other exchanges,” said Joseph G. Sansone, Co-Chief of the SEC’s Market Abuse Unit. “Notwithstanding these deceptive tactics, the SEC was able to uncover Oscher’s fraudulent scheme and hold him accountable for his actions.”

The order found that Oscher and Briargate’s conduct violated the antifraud provisions of the federal securities laws and a related SEC antifraud rule. Without admitting or denying the findings, Oscher and Briargate agreed to disgorge $525,000 of ill-gotten gains plus prejudgment interest of $37,842.32. Briargate also agreed to pay a civil penalty of $350,000 and Oscher agreed to pay a civil penalty of $150,000. The order also requires Briargate and Oscher to cease and desist from committing or causing any future violations of the securities laws.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Steve Chen, et al., Civil Action No. CV 15-07425 (C.D. Cal., filed September 22, 2015)

Securities and Exchange Commission v. Steve Chen, et al.

Recently, the Securities and Exchange Commission filed, under seal, fraud charges and, on September 28, obtained asset freezes against the operator of a worldwide pyramid scheme that falsely promised investors would profit from a venture purportedly backed by the company’s massive amber holdings.

The SEC alleges that defendants Steve Chen, USFIA Inc. and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since at least April 2013. The SEC’s complaint alleges that Chen and his companies misled investors about a lucrative initial public offering for USFIA that never happened and about claims to own or control amber deposits worth billions of dollars.

The Hon. R. Gary Klausner of the U.S. District Court for the Central District of California on September 28 granted the SEC’s request for an asset freeze and the appointment of Thomas Seaman as the temporary receiver over USFIA and the other entities. In addition to the temporary relief, the SEC is seeking preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties in its complaint, which alleges that the defendants violated the registration and antifraud provisions of the federal securities laws and SEC antifraud rules.

According to the SEC’s complaint, Chen falsely promoted USFIA as a legitimate multi-level marketing company that owns several large and valuable amber mines in Argentina and the Dominican Republic. Investors were told that they could profit by investing in amounts ranging from $1,000 to $30,000, and earn larger returns based on the number of investors they brought into the program. The SEC further alleges that beginning in September 2014, the defendants claimed to have converted existing investors’ holdings into “Gemcoins,” which they said was a virtual currency secured by the company’s amber holdings. In reality, the SEC complaint alleges that Gemcoins are worthless.

The SEC’s complaint charges the defendants with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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 Florida Investment Adviser and His Company With Defrauding Investors

The Securities and Exchange Commission recently announced fraud charges against Florida-based investment adviser Arthur F. Jacob and his company, Innovative Business Solutions LLC, for allegedly deceiving clients over a period of at least five years.

In an order instituting administrative proceedings the SEC Enforcement Division alleges that from at least mid-2009 through July 2014:

• Jacob and IBS misrepresented the risks and profitability of investments he purchased for investment advisory clients. Jacob was informed of investment risks of certain exchange traded funds but failed to disclose these risks to clients and told them that the investment strategy he used was safe, carried low or no risk, and would produce predictable profits.
• Jacob concealed from clients his disciplinary history, which included being disbarred as a lawyer for misappropriating client funds and other professional misconduct.
• Jacob and IBS were not registered with the SEC or any state as investment advisers and Jacob falsely told clients that he and IBS were not required to register as an investment adviser.
• Jacob gave false information to a brokerage firm about the advisory services he and IBS provided so that he could retain trading authorization over clients’ accounts and continue to receive advisory fees for managing the accounts.

“Investment advisers owe their clients a duty of full and fair disclosure of all material facts,” said Antonia Chion, an Associate Director in the SEC’s Division of Enforcement. “Advisers who conceal their disciplinary history and mislead clients about their investment strategy and the risks associated with it, as we allege Jacob did, are in breach of that duty.”

The SEC’s order alleges that Jacob and IBS willfully violated the antifraud provisions of federal securities laws and an SEC antifraud rule. The matter will be scheduled for a public hearing before an administrative law judge to adjudicate and determine what if any remedial actions are appropriate.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Jason W. Galanis, Civil Action No. 1:15-cv-07547 (Southern District of New York, Complaint filed Sept. 24, 2015)

SEC Charges Six in Stock Fraud Scheme

The Securities and Exchange Commission recently charged six men, including a father and three sons, with defrauding investors in Gerova Financial Group Ltd., whose shares once traded on the New York Stock Exchange.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against the six: Jason Galanis, his father John Galanis, brothers Derek Galanis and Jared Galanis, along with Gerova president and chairman Gary T. Hirst and investment adviser Gavin Hamels. Jason Galanis is a securities fraud recidivist who was charged by the SEC in 2007 and his father John Galanis has been a defendant in numerous SEC enforcement actions dating back to the early 1970s.

In a complaint filed in U.S. District Court in Manhattan, the SEC alleges that in early 2010, Jason Galanis and Hirst orchestrated a scheme to secretly issue $72 million of unrestricted Gerova shares to a Galanis family friend in Kosovo. According to the complaint, Jason Galanis, his father, and his brothers directed sales of the shares from the Kosovo friend’s brokerage accounts and had the proceeds wired to them and their associates who collectively realized at least $16 million in illicit profits.

In addition, the complaint names Gavin Hamels, an investment adviser that Jason Galanis allegedly bribed to purchase Gerova stock to help stabilize Gerova’s stock price as the shares were liquidated. The complaint alleges that many of the purchases were coordinated in matched trades with the Kosovo friend’s sales. Hamels is alleged to have purchased Gerova stock for clients based on arrangements with Jared Galanis regarding the times, prices, and amounts of stock to purchase, and is alleged to have failed to inform his clients of the bribe from Jason Galanis.

The complaint charges Jason Galanis, Jared Galanis, Derek Galanis and Hirst with violations of Sections 5(a) and (c) of the Securities Act of 1933 (“Securities Act”); Jason Galanis, Jared Galanis and Derek Galanis with violations of Section 17(a)(1) of the Securities Act; Jason Galanis, Jared Galanis, Derek Galanis and Hamels with violations of Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5(a) and (c) thereunder; John Galanis and Hirst with violations of Section 20(e) of the Exchange Act for aiding and abetting violations of Section 10(b) of the Exchange Act, and Rules 10b-5(a) and (c) thereunder; Jared Galanis with violations of Section 20(e) of the Exchange Act for aiding and abetting violations of Section 9(a)(1) of the Exchange Act; and Hamels with violations of Section 9(a)(1) of the Exchange Act, and Sections 206(1) and (2) of the Investment Advisers Act of 1940 (“Advisers Act”). In addition, the Commission alleges, in the alternative, that Derek Galanis violated Section 15(b) of the Securities Act by aiding and abetting violations of Section 17(a)(1); Jared Galanis and Derek Galanis violated Section 20(e) of the Exchange Act by aiding and abetting violations of Section 10(b) of the Exchange Act, and Rules 10b-5(a) and (c) thereunder; and Hamels violated Section 209(f) of the Advisers Act by aiding and abetting violations of Sections 206(1) and (2) of the Advisers Act.

The complaint seeks a final judgment permanently enjoining the defendants from committing future violations of these provisions, ordering them to disgorge their ill-gotten gains plus prejudgment interest, imposing financial penalties and barring Jason Galanis and Hirst from acting as officers or directors of a public company.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. iShopNoMarkup.com, Inc., Civil Action No. 04-CV-4057 (E.D.N.Y.)

Court Imposes Over $5 Million in Monetary Relief, an Officer and Director Bar, and Permanent Injunctions Against Former Chairman of a Failed Internet Startup Who Committed Securities Fraud and IIIegally Sold Unregistered Securities

On Thursday, September 3, 2015, United States District Court Judge Denis R. Hurley of the United States District Court for the Eastern District of New York issued an order and judgment imposing relief against Defendant Anthony Knight, the former Chairman of failed Long Island-based internet startup, iShopNoMarkup.com, Inc. The Commission’s complaint alleged that from the fall of 1999 until the summer of 2000, iShop, Knight and others conducted an unregistered offering of securities and fraudulent scheme that defrauded over 350 investors who invested approximately $2.3 million. On October 14, 2014, a federal jury found Knight liable for violating Sections 5 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.

Judge Hurley ordered Knight to pay $2.3 million in disgorgement, over $2.5 million of prejudgment interest, and a $330,000 civil penalty. Pursuant to Section 21(d) of the Exchange Act, the Court also barred Knight from serving as an officer or director of a public company, and enjoined Knight from committing any further violations of Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Anthony Knight, a/k/a Ali Haghighi, age 49, was at the time of the conduct a resident of Great Neck, New York, and is currently a resident of San Diego, California.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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. Manny J. Shulman and David K. Hirschman, Civil Action No. 0:15-cv-61861-WJZ (U.S. District Court for the Southern District of Florida, Sept. 3, 2015)

On September 3, 2015, the Securities and Exchange Commission (“Commission”) charged Manny J. Shulman and David K. Hirschman for their involvement in the fraudulent, unregistered sale of securities of Caribbean Pacific Marketing, Inc. (“Caribbean Pacific”), a now-defunct Florida corporation that purported to be a sun-care and skin-care products start-up company. The Commission also charged Shulman for making misstatements and omissions in Caribbean Pacific’s registration statement.

According to the Commission’s complaint, filed in U.S. District Court for the Southern District of Florida, Caribbean Pacific’s Form S-1 registration statement filed with the Commission, which was declared effective in August 2012, failed to disclose that Shulman, a securities fraud recidivist, controlled the company’s day-to-day operations. Nor did the registration statement disclose the managerial role in the company of another individual, William J. Reilly, who is also a securities fraud recidivist and a disbarred attorney. Although two other individuals were listed in the registration statement as the corporate officers and directors of Caribbean Pacific, Shulman and Reilly actually controlled the company and ran in on a day-to-day basis. The Commission subsequently suspended the effectiveness of Caribbean Pacific’s registration statement pursuant to a settled stop order administrative proceeding based on findings that it was materially misleading and deficient. See In the Matter of the Registration Statement of Caribbean Pacific Marketing, Inc., Admin. Proc. File No. 3-15083 (Dec. 3, 2012).

In addition, the complaint alleges that from June 2012 through October 2012, Shulman and Hirschman engaged in a private, unregistered offering of Caribbean Pacific stock, raising $271,500 from 18 investors located in various states. The complaint also alleges that Shulman and Hirschman told investors that Caribbean Pacific would serve as a public shell that would later engage in a reverse merger with another Florida-based company called Dreamscapes International Properties, Inc. (“Dreamscapes”). Instead of using investors’ money for expenses related to Caribbean Pacific’s IPO and the business development of Dreamscapes, the complaint alleges that Shulman and Hirschman misappropriated most of their money.

The Commission’s complaint alleges that Shulman of Boca Raton, Florida and Hirschman of Plantation, Florida, both violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder and that Hirschman also violated Section 15(a) of the Exchange Act. The Commission is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctions against both Shulman and Hirschman and a penny stock bar against Hirschman. Shulman has consented, without admitting or denying the allegations of the complaint, to the entry of judgment ordering permanent injunctive relief against him and requiring him to pay disgorgement and a civil penalty, in amounts to be determined by the Court at a later date.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation 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 Boca Raton 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.