SEC Enforcement Actions 2016 - Russell L. Forkey

Stifel, Nicolaus & Co., Inc. and David Noack – South Florida Unsuitable Investment and Breach of Fiduciary Duty Litigation and Arbitration Attorney

Russell L. Forkey — Fri, 16 Dec 2016 21:12:57 GMT

Stifel, Nicolaus & Co., Inc. and David Noack – South Florida, including Fort Lauderdale, Deerfield Beach, Pompano Beach and Boca Raton, Unsuitable Investment and Breach of Fiduciary Duty Litigation and Arbitration Attorney

Securities and Exchange Commission v. Stifel, Nicolaus & Co., Inc., et al., Civil Action No. :11-cv-755 (E.D. Wis. filed Aug. 10, 2011)

Stifel, Nicolaus and Former Stifel Executive Pay Over $24.5 Million and Admit Wrongdoing in Connection with the Sale of Synthetic CDOs to Wisconsin School Districts

The SEC recently announced that St. Louis, Missouri-based broker-dealer, Stifel, Nicolaus & Co., Inc. and its former Senior Vice President David W. Noack agreed to admit wrongdoing and pay over $24.5 million to resolve an SEC enforcement action involving the sale of synthetic collateralized debt obligations (CDOs) to five Wisconsin school districts.

The SEC’s complaint, filed on August 10, 2011 in the U.S. District Court for the Eastern District of Wisconsin, alleged that Stifel and Noack harmed five Wisconsin school districts by selling them $200 million in unsuitably risky and complex synthetic CDOs funded largely with borrowed money. Ultimately, the synthetic CDOs failed and the five Wisconsin school districts suffered a complete loss of their cash investment.

On December 6, 2016, the Honorable Charles N. Clevert, Jr. entered a final judgment permanently enjoining Stifel and Noack from violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, and ordering Stifel and Noack to jointly pay disgorgement and prejudgment interest of $2.44 million and to each pay civil penalties of $22.5 million and $100,000, respectively. The judgment also requires Stifel to distribute $12.5 million of the ordered disgorgement and penalties to the injured school districts. This distribution, along with the prior Fair Fund distribution of $30.4 million in a related case instituted in September 2011 and settlements obtained in the school districts’ private lawsuit, will fully compensate the five Wisconsin school districts for their losses.

In addition, the final judgment also recites Stifel’s and Noack’s admissions to misconduct that harmed the five Wisconsin school districts. Section VI of the final judgment reflects that Stifel and Noack admitted, among other things, that they made certain material misstatements to the school districts that overstated the safety and downplayed the risks of investing in CDOs, and failed to disclose certain material facts, and did not independently perform any meaningful suitability analysis with respect to the CDO investments.

The court’s entry of the final judgment resolves this litigation in its entirety.

Noack also has consented to the entry of an SEC order, based on the court’s entry of judgment, which imposes industry and penny stock bars, with the right to reapply after five years.

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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.

Richard G. Cody – Boca Raton, Florida Elder Financial Abuse and Breach of Fiduciary Duty Litigation and Arbitration Attorney

Russell L. Forkey — Fri, 16 Dec 2016 21:01:49 GMT

Richard G. Cody – South Florida, including Boca Raton, Boynton Beach, Lake Worth and West Palm Beach, Elder Financial Abuse and Breach of Fiduciary Duty Litigation and Arbitration Attorney Russell L. Forkey, Esq.

Securities and Exchange Commission v. Richard G. Cody, et al., Civil Action No. 16-cv-12510-FDS (D. Mass., filed Dec. 12, 2016)

SEC Charges Investment Adviser with Defrauding Massachusetts Retirees

The Securities and Exchange Commission recently announced that it filed a complaint in federal court in Boston charging investment adviser and broker representative Richard G. Cody, a former resident of Massachusetts and current resident of New Jersey, with defrauding his retired clients. The Commission has asked the court to consider whether to impose certain preliminary relief against Cody and his company, Boston Investment Partners, LLC, including an asset freeze.

The SEC’s complaint alleges that Cody defrauded at least three of his retired clients over a twelve-year period by concealing the fact that their retirement accounts had suffered extensive losses. According to the SEC’s complaint, the clients did not know that their accounts had lost substantial value and were being rapidly depleted. Cody concealed these losses by leading the clients to believe that their investments were maintaining steady value and that the clients were living off income from their investments. By 2014, two of the retirees’ accounts had essentially run out of funds. Cody allegedly continued to hide that the retirees’ money was gone by making wire transfers of monthly deposits to the retirees’ bank accounts and sending the clients fabricated tax forms. The SEC alleges that these deceptive acts caused Cody’s clients to believe that their retirement savings were secure when, in fact, they were not.

The SEC’s complaint alleges that Cody violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and seeks disgorgement of ill-gotten gains plus interest and penalties as well as permanent injunctive relief. The SEC also seeks a court-ordered asset freeze against Cody and Boston Investment Partners, which was named as a relief defendant, a temporary restraining order, and a detailed accounting of Cody’s assets.

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Rafael Antonio Calleja, Jr. – South Florida Sale of Unregistered Securities Attorney

Russell L. Forkey — Mon, 05 Dec 2016 15:35:05 GMT

South Florida Sale of Unregistered Securities Litigation Attorney.

Securities and Exchange Commission v. Rafael Antonio Calleja, Jr., Civil Action No. 16-CV-24872-KMW (S.D. Fla. filed November 22, 2016)

SEC Charges Naples, Florida Resident with Misappropriating Investor Funds

Recently, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Southern District of Florida against Rafael Antonio Calleja, Jr, a resident of Naples, Florida.

According to the SEC’s complaint, from approximately March through July 2014, Calleja, through his Miami-based company Tower Trade Group USA LLC, solicited and received investment funds totaling approximately $2.7 million from ten mostly elderly or retired investors as part of an unregistered securities offering. Calleja misappropriated some of the funds for his own personal enjoyment and failed to invest the remaining funds as promised. Calleja also did not disclose to investors that their funds would be sent offshore to be invested by a foreign company (“Foreign Affiliate”) affiliated with TTG USA.

After discovering Calleja’s misuse of investor funds, the Foreign Affiliate re-paid all of the investors in full.

Simultaneously with the filing of the complaint, Calleja consented, without admitting or denying the allegations, to the entry of a final judgment permanently restraining and enjoining him from violating Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Sections 15(a)(1) and 10(b) of the Securities and Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.

Based on Calleja’s sworn representations in his Statement of Financial Condition and other documents submitted to the Commission, the Commission waived payment of disgorgement and prejudgment interest and did not seek the imposition of a civil monetary penalty.

Trading Program Fraud – South Florida Trading Program Fraud and Misrepresentation Litigation Attorney

Russell L. Forkey — Wed, 01 Jun 2016 01:31:58 GMT

Trading Program Fraud – South Florida Trading Program Fraud and Misrepresentation Litigation Attorney

Securities and Exchange Commission v. David B. Kaplan, Esq., et al., Civil Action No. 3:16-cv-00270 (D. Nevada-Reno filed May 19, 2016)

SEC Obtains Asset Freeze Against Attorney Accused of Misrepresenting Investments and Misappropriating Investor Funds

The Securities and Exchange Commission recently announced that it filed fraud charges and obtained an asset freeze against an attorney and Nevada resident David B. Kaplan and three entities that he controls based on an allegedly fraudulent scheme that raised $15.8 million from 26 investors in eight states.

The SEC’s complaint, unsealed yesterday, was filed on May 19, 2016, in the U.S. District Court for the District of Nevada-Reno, and charges Kaplan and the three entities, Synchronized Organizational Solutions International Ltd. (SOSI), Synchronized Organizational Solutions LLC (SOS), and Manna International Enterprises Ltd. According to the complaint, Kaplan repeatedly lied to prospective investors by stating that their funds would be invested in a low-risk, private off-shore trading program that would be provide estimated monthly profits of 10 percent. The complaint alleges that Kaplan did not use investor funds as promised but instead:

Used at least $2.3 million for his personal benefit, including $592,000 to buy and re-model a condominium in Nevada, and $79,394 wired to a St. Kitts law firm to obtain St. Kitts and Nevis passports and/or citizenship for Kaplan and his wife;
Sent $1.1 million to his wife, Lisa Kaplan, a purported charitable foundation, and a corporation that Kaplan controlled;
Invested at least $360,000 in an investment program offered by WMA Enterprises LLC, an allegedly fraudulent scheme at the center of a federal criminal indictment in Ohio; and
Made approximately $1.8 million in Ponzi-like payments to other investors.

On May 20, 2016, the court issued a temporary restraining order freezing the assets of Kaplan, SOSI, and the other defendant entities, and prohibiting them from soliciting, accepting or depositing any monies from actual or prospective investors while the order is in effect. The order further requires Kaplan and the defendants to repatriate foreign assets within seven days. In addition, the court issued an asset freeze against Lisa M. Kaplan, the Water-Walking Foundation Inc., and Manna Investments LLC, the relief defendants who are alleged to have received investor funds to which they have no legitimate claim.

The SEC brought its emergency enforcement action to ensure that no further securities law violations are committed, to secure assets from potential dissipation, and to safeguard investors from further harm. The SEC’s complaint seeks to have Kaplan, his firms, and the relief defendants return their allegedly ill-gotten gains so that any remaining funds can be returned to victims of the alleged scheme. The SEC also is seeking permanent injunctions against Kaplan, SOSI, SOS and Manna International, and to have them pay a civil penalty.

The SEC’s complaint charges that Kaplan, SOSI, SOS and Manna International 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, and charges Kaplan with violating Section 15(a) of the Exchange Act.

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Pre-IPO Stock Fraud – Boca Raton, Florida Penny Stock Fraud Litigation and Arbitration Attorney

Russell L. Forkey — Wed, 01 Jun 2016 01:19:35 GMT

Pre-IPO Stock Fraud – Boca Raton, Florida Penny Stock Fraud Litigation and Arbitration Attorney

Securities and Exchange Commission v. JSG Capital Investments, LLC, et al., Civil Action No. 3:16-cv-02814 (N.D. Ca.)

SEC Halts Ponzi Scheme Aimed At Middle Class

The Securities and Exchange Commission has charged two California men and their investment firm with operating a Ponzi scheme as they purported to specialize in serving middle-class investors and securing exorbitant returns by investing in hot pre-IPO stocks. The agency also obtained a court-ordered asset freeze against them.

The SEC alleges that instead of using the firm’s purported proprietary trading models and investing in pre-IPO shares of well-known tech companies like Uber, Alibaba, and Airbnb as promised to investors, Jaswant “Jason” Gill and Javier Rios personally pocketed at least $2.8 million in investor funds, using some of that money to pay for excursions to high-end restaurants and luxury retail stores as well as jaunts to Las Vegas casinos, gentlemen’s clubs, and professional sporting events. They never actually invested in any pre-IPO shares, and have been using money from new investors to pay supposed returns to earlier investors. They have raised approximately $10 million through their firm, JSG Capital Investments, and related entities, by catering to average retail investors and promising them exclusive investment opportunities “previously only available to the one-percenters,” with guaranteed annual returns of up to 60 percent.

According to the SEC’s complaint filed in federal court in San Francisco, Gill in particular has brandished phony credentials, telling investors he founded his firm after serving as a managing director at Morgan Stanley. He also boasted partnerships with several Silicon Valley venture capital firms. Gill, Rios, and JSG Capital Investments are not registered with the SEC or any state regulator. Rios’s background is in food service.

Investors can quickly and easily check the credentials of people selling investments and determine whether they are registered by using the SEC’s investor.gov website.

In a parallel action, the U.S. Attorney’s Office for the Northern District of California today announced criminal charges against Gill and Rios.

The SEC’s complaint charges Gill, Rios, JSG Capital Investments, LLC, JSG Capital LLC, JSG Capital, LLC and JSG Enterprises LLC with violations of 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 thereunder, and charges Gill and JSG Capital Investments, LLC with violations of Section 206(1) and (2) of the Investment Advisers Act of 1940. The complaint also names JSG Management Group, LLC as a relief defendant for the purpose of recovering ill-gotten gains from the scheme.

The SEC’s complaint seeks permanent injunctions plus disgorgement and monetary penalties from Gill, Rios, JSG Capital Investments and related entities. The SEC has obtained a court order to freeze the assets of Gill, Rios, and the JSG entities and preliminarily enjoin them from violating the antifraud provisions of the federal securities laws and raising money from investors.

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Professional Athletes Beware Of Placing Too Much Trust In Your Financial Advisors – South Florida Financial Advisor Litigation and Arbitration Attorney

Russell L. Forkey — Thu, 19 May 2016 01:32:41 GMT

Professional Athletes Beware Of Placing Too Much Trust In Your Financial Advisors – South Florida Financial Advisor Litigation and Arbitration Attorney

SEC: Financial Adviser Defrauded Pro Athletes and Lied to SEC Examiners

The Securities and Exchange Commission recently announced fraud charges against a Pittsburgh, Pa.-based financial adviser accused of taking money without permission from the accounts of several professional athletes in order to invest in movie projects and make Ponzi-like payments.

According to the SEC’s complaint filed today in federal court in Manhattan, when SEC examiners uncovered the unauthorized withdrawals that Louis Martin Blazer III made from his clients’ accounts and asked him to explain the transactions, he lied and produced false deal documents that he created after the fact in a failed attempt to hide his misconduct.

The SEC alleges that Blazer, who founded Blazer Capital Management as a “concierge” firm targeting professional athletes and other high-net worth individuals as clients, took approximately $2.35 million from five clients without their authorization so he could invest in two movie projects. Blazer had a personal financial interest in the development of both films, one called “Mafia the Movie” and the other called “Sibling.” In one instance, Blazer actually pitched the movie project to an athlete as an investment opportunity, but that client expressly refused to make the investment. Blazer allegedly took $550,000 from the client’s account anyway and invested the money in the film projects.

The SEC further alleges that the client later learned about Blazer making the unauthorized investment in the movies and demanded repayment, even threatening a lawsuit. Blazer then took money out of a different athlete’s account to make the repayment in Ponzi-like fashion.

Blazer has agreed to settle the charges without admitting or denying the allegations. The settlement is subject to court approval with determination of disgorgement and financial penalties to be decided by the court at a later date. The SEC’s complaint charges Blazer with violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 206(1) and 206(2) of the Investment Advisers Act of 1940.

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Common Stock Buyers Beware – Boca Raton, Florida Securities Litigation and Arbitration Attorney

Russell L. Forkey — Thu, 19 May 2016 01:16:20 GMT

Common Stock Buyers Beware – Boca Raton, Florida Securities Litigation and Arbitration Attorney

SEC Charges Shell Factory Operators With Fraud

The Securities and Exchange Commission (SEC) recently announced fraud charges against a California stock promoter and a New Jersey lawyer who allegedly were creating sham companies and selling them until the SEC stopped them in their tracks.

The SEC alleges that Imran Husain and Gregg Evan Jaclin essentially operated a shell factory enterprise by filing registration statements to form various startup companies and misleading potential investors to believe each company would be operating and profitable. The agency further alleges that their secret objective all along was merely to make money for themselves by selling the companies as empty shells rather than actually implementing business plans and following through on their representations to investors.

Moving quickly to protect investors based on evidence collected even before its investigation was complete, the SEC issued stop orders and suspended the registration statements of the last two created companies – Counseling International and Comp Services – before investors could be harmed and the companies could be sold.

According to the SEC’s complaint filed in federal court in Los Angeles:

Husain and Jaclin created nine shell companies and sold seven using essentially the same pattern.
Husain created a business plan for each company that would not be implemented beyond a few initial steps, and then convinced a friend, relative, or acquaintance to become a puppet CEO who approved and signed corporate documents at Husain’s direction.
Jaclin supplied bogus legal documents that Husain used to conduct sham private sales of a company’s shares of stock to “straw shareholders” who were recruited and given cash to pay for the stock they purchased plus a commission. Some of the recorded shareholders were not even real people.
Husain and Jaclin filed registration statements for initial public offerings and falsely claimed that a particular business plan would be implemented. Deliberately omitted from the registration statements were any mention of Husain starting and controlling the company.
Husain and Jaclin filed misleading quarterly and annual reports once a company became registered publicly, providing much of the same false information depicted in the registration statements.
Husain obtained about $2.25 million in total proceeds when the empty shell companies were sold, and Jaclin and his firm received nearly $225,000 for their legal services.

The SEC’s complaint charges Husain and Jaclin with violating or aiding and abetting violations of the antifraud, reporting, and securities registration provisions of the federal securities laws. The SEC seeks disgorgement of ill-gotten gains plus interest and penalties, permanent injunctions, and penny stock bars. The SEC also seeks an officer-and-director bar against Husain.

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Ross McLellan – South Florida Unauthorized and Fraudulent Mark-Up FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Thu, 19 May 2016 00:49:19 GMT

Ross McLellan – South Florida Unauthorized and Fraudulent Mark-Up FINRA Arbitration and Litigation Attorney

Securities and Exchange Commission v. Ross McLellan, Civil Action No. 16-cv-10874 (D. Mass. filed May 13, 2016)

SEC Charges Former Executive of Massachusetts-Based State Street Corporation with Defrauding Investors

The Securities and Exchange Commission recently announced fraud charges against Ross McLellan, a former executive of Massachusetts-based State Street Corporation, for engaging in a scheme to defraud investors who were customers of State Street’s Transition Management line of business.

According to the SEC’s complaint filed in federal court in Boston, Massachusetts, State Street Corporation, a publicly-traded financial holding company based in Boston, and its affiliates provide transition management services, which are offered to large investment clients such as pension funds or endowments who need to buy and sell large quantities of securities when the client may be changing fund managers or investment strategies. The SEC alleges that McLellan defrauded State Street Transition Management customers by charging hidden and unauthorized mark-ups (or amounts added to the cost of the service) on trading in U.S. and European securities.

According to the SEC’s complaint:

McLellan, along with co-schemers, developed and orchestrated a deliberate strategy to charge Transition Management customers hidden mark-ups on certain transactions. Among other things, State Street employees, under the supervision of McLellan, made misrepresentations concerning pricing in connection with certain transition engagements. These misrepresentations were made in a variety of communications to customers, including false trading statements, pre-trade estimates, and post-trade reporting.
When McLellan and co-schemers were ultimately confronted by a customer that had detected some of the hidden mark-ups, McLellan aided and abetted others at State Street who made materially false and misleading statements to that customer to conceal the scheme. Among other things, in or about August 2011, McLellan directed others at State Street to misleadingly characterize the hidden mark-ups as a “fat finger error” and as “inadvertent commissions.”
In addition to identifying customers to overcharge, McLellan oversaw the practice of taking hidden mark-ups, and directed others at State Street to engage in fraudulent acts and practices in furtherance of the scheme.
By engaging in the misconduct directly, and by directing subordinates to mislead customers and/or conceal mark-ups as part of this scheme to defraud, McLellan and co-schemers generated approximately $20 million in additional revenue for State Street.

The SEC’s complaint charges McLellan with violating 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. The complaint also charges McLellan with aiding and abetting violations by others at State Street of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s Complaint seeks as relief a permanent injunction prohibiting future violations of these statutes, disgorgement of ill-gotten gains plus prejudgment interest, and civil monetary penalties.

On April 5, 2016, the U.S. Attorney’s Office for the District of Massachusetts announced parallel criminal charges against McLellan and another individual not charged in the SEC’s complaint. The United Kingdom’s Financial Conduct Authority, on January 31, 2014, found that State Street deliberately overcharged six customers a total of $20,169,603 and imposed a financial penalty of £22,885,000.

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Boca Raton Florida Penny Stock Fraud and Misrepresentation Litigation and Arbitration Attorney

Russell L. Forkey — Mon, 25 Apr 2016 00:56:49 GMT

Boca Raton Florida Penny Stock Fraud and Misrepresentation Litigation and Arbitration Attorney

Securities and Exchange Commission v. Fortitude Group, Inc., et al., Civil Action No. 1:16-cv-00050-SPB (W.D. Pa. filed Feb. 29, 2016)

Securities and Exchange Commission v. Strategic Global Investments, Inc., et al., Civil Action No. 3:16-cv-00514-H-JLB (S.D. Ca. filed Feb. 29, 2016).

SEC Charges Penny Stock Issuers and Their Principals with Fraud in Connection with Marijuana-Related Investments

The Securities and Exchange Commission recently charged two penny stock issuers and their principals with fraud for disseminating false and misleading press releases and other related documents about purported involvement in the marijuana industry.

The SEC’s complaint against Fortitude Group, Inc. and its CEO, Thomas Parilla, filed in federal court in Pennsylvania on February 29, 2016, alleges that:

Between February and March 2014, Fortitude and Parilla made materially false and misleading statements in various publicly-disseminated press releases and a financial report concerning Fortitude’s purported efforts to enter into the rapidly growing legal marijuana business industry.
The press releases falsely described Fortitude as having successful marijuana-related partnerships and operations, including claims about itsissuance of a Discover-branded debit card and distribution of vaporizers to marijuana dispensaries.
Fortitude and Parilla falsely represented in a company financial report that Fortitude was earning revenue from the purported marijuana business.

The SEC’s complaint against Strategic Global Investments, Inc., and its CEO, Andrew T. Fellner, filed in federal court in California on February 29, 2016, alleges that:

Several press releases Strategic publicly disseminated in February 2014 falsely portrayed that Strategic owned a revenue-generating marijuana cultivation facility in Teller County, Colorado.
At no time did Strategic have the ability to operate in the marijuana business space or legally generate revenue from the sale of marijuana generated from its purported cultivation facility in Teller County, Colorado.
Strategic also lacked the requisite licensure and other corporate infrastructure to run a successful marijuana-related business.
These defendants made material misrepresentations and omissions in a January 2014 securities offering by failing to disclose in offering documents filed with the SEC that Strategic had used investor proceeds to enter the marijuana business and that Strategic had later decided to exit that business.

Both of the SEC’s complaints allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5(b) thereunder. The complaints also allege that each of Parilla and Fellner aided and abetted his respective issuer’s violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The complaint against Strategic and Fellner further alleges that both defendants violated Section 17(a)(2) of the Securities Act of 1933, and that Fellner also aided and abetted Strategic’s violations of Section 17(a)(2). The Commission’s complaints seek permanent injunctions and civil penalties against the defendants, and officer-and-director and penny stock bars, respectively, against Parilla and Fellner.

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Nathanial Ponn – South Florida Common and Preferred Stock Fraud and Misrepresentation Litigation and Arbitration Attorney

Russell L. Forkey — Mon, 04 Apr 2016 20:18:17 GMT

Nathanial Ponn – South Florida Common and Preferred Stock Fraud and Misrepresentation Litigation and Arbitration Attorney

Securities and Exchange Commission v. Nathanial D. Ponn, Civil Action No. 16-10624-GAO (D. Mass. filed March 31, 2016)

The Securities and Exchange Commission recently announced fraud charges against Massachusetts resident Nathanial D. Ponn for engaging in a scheme to defraud numerous broker-dealers over more than seven years.

According to the SEC complaint filed in federal court in Boston, Ponn defrauded numerous brokerage firms through bogus bank transfers to newly opened brokerage accounts. These bogus transfers created the false appearance that the brokerage accounts would have cash available upon the settlement of Ponn’s purchases of stocks and mutual fund shares. Ponn used temporary credits from the bogus transfers to purchase stock and mutual fund shares, which he repeatedly attempted to cash out or transfer to other financial institutions before the brokerages discovered that Ponn did not have actual money to fund the bank transfers.

In a parallel action, the U.S. Attorney’s Office for District of Massachusetts also announced criminal charges against Ponn.

The SEC’s complaint also alleges that:

Brokers commonly permit customers to begin purchasing securities immediately after the brokers receive notice of a transfer of funds, subject to later verification, which takes approximately two to three days.
Ponn exploited the two-to-three-day delay in the broker-dealers’ verification process by repeatedly making securities purchases based on bogus cash transfers from bank accounts with insufficient funds.
Beginning as early as 2007, but escalating in 2014 and continuing into at least April 2015, Ponn opened up approximately 600 brokerage accounts at various firms and purported to fund these brokerage accounts with bank transfers totalling at least $8.7 million from various bank accounts. All of the purported money transfers were from bank accounts that were underfunded or fake.
After Ponn made the false money transfers, but before the brokerage firms discovered Ponn’s activity, he purchased nearly $2.9 million worth of securities and attempted to withdraw cash from some of the accounts.
Once the brokerages discovered that Ponn’s initial deposits were fraudulent, they locked the associated brokerage accounts and sold the securities held within the accounts. The brokerage firms suffered losses of approximately $26,000 from Ponn’s scheme.

The SEC’s complaint alleges that Ponn violated Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and a civil penalty.

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Joseph Andrew Paul, John Ellis, James Quay and Donald Ellison – Boca Raton, Florida Senior and Retirement Investment Fraud Attorney

Russell L. Forkey — Mon, 04 Apr 2016 19:59:28 GMT

Joseph Andrew Paul, John Ellis, James Quay and Donald Ellison – Boca Raton, Florida Elder, Senior and Retirement Investment Fraud Litigation and Arbitration Attorney

The Securities and Exchange Commission recently announced that it has charged four individuals in a fraud whose victims included seniors who were solicited at “free dinner” investment seminars in Florida.

The SEC alleges that Philadelphia residents Joseph Andrew Paul and John D. Ellis, Jr. lied about the track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Florida, to lure potential victims with promises of lofty returns.

According to the SEC’s complaint, Paul and Ellis created fraudulent marketing materials including some with performance numbers that were “cut and pasted” from another firm’s website. The complaint further alleges that Quay and Ellison used these materials to mislead seniors who responded to their mass-mailing offer of a free dinner at a Tampa restaurant.

According to the SEC’s complaint filed in the U.S District Court for the Eastern District of Pennsylvania, Quay used an alias, “Stephen Jameson,” to conceal his true identity from potential victims. Quay was previously convicted of tax fraud in 2005 and found liable for securities fraud in a 2012 SEC enforcement action.

“Jameson” was not registered as an investment professional during the relevant period of fraudulent conduct, and Ellison also was not registered for the majority of that period. Investors can easily and quickly check the registration status and disciplinary history of investment professionals by using the SEC searchable data base Investor.gov.

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Gregory Jones – South Florida Fraudulent Offering Documents Litigation and Arbitration Attorney

Russell L. Forkey — Thu, 24 Mar 2016 23:50:50 GMT

Gregory Jones – South Florida Fraudulent Offering Documents Litigation and Arbitration Attorney

Securities and Exchange Commission v. Gregory G. Jones., Civil Action No. 4:15-CV-438-A (NDTX)

Court Orders Nearly $2 Million Judgment from Attorney Who Defrauded Investors

The Securities and Exchange Commission recently announced that a federal court has ordered a nearly $2 million judgment from an attorney who admitted to defrauding investors in two fraudulent schemes. The Honorable John McBryde, District Judge of the United States District Court for the Northern District of Texas, entered a final judgment on March 22, 2016 against Southlake, Texas attorney Gregory G. Jones. The final judgment orders Jones to disgorge $1,125,000, plus prejudgment interest of $51,534, and to pay a civil penalty of $600,000.

Jones admitted in 2015 to raising approximately $645,000 by selling securities issued by Aquaphex Total Water Solutions, LLC, a company he controlled that purported to recycle fracking water through a filtration process. Jones provided investors with fraudulent offering documents stating that Aquaphex’s principals had invested $2 million in the company when they had not put any cash into the company. Jones’s offering documents also misrepresented that Aquaphex was expected “to be acquired by an oil services company within five years at a projected value of $21B,” that projected investment returns would exceed 115 percent per year, and that investors were guaranteed to at least double their investment within five years. None of these claims had a reasonable basis in fact, since Aquaphex had no customers, no contracts to provide water-filtration services, and no revenues. Separately, in 2009, Jones represented a small group of investors that invested approximately $6 million in an entity called Edwards Exploration. Jones failed to disclose to the investors that Edwards Exploration paid Jones approximately $480,000 from the principal amount invested.

In its latest order, the court determined that Jones’s violations in the Aquaphex scheme involved “fraud, deceit, manipulation” and that he “acted intentionally” in duping investors. The court specifically observed that Jones’s testimony or presentation was not “credible,” and that the court was not “impressed with Jones’s demeanor for truthfulness while he was on the stand.”

The court previously enjoined Jones and Aquaphex from violating anti-fraud provisions of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and Section 17(a) of the Securities Act of 1933, and from violating registration provisions of Sections 5(a) and (c) of the Securities Act.

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Guy Gentile – Boca Raton, Florida Common Penny Stock Fraud Litigation and Arbitration Attorney

Russell L. Forkey — Thu, 24 Mar 2016 23:38:02 GMT

Guy Gentile – Boca Raton, Florida Penny Common Stock Fraud Litigation and Arbitration Attorney

Securities and Exchange Commission v. Guy Gentile, Civil Action No. 16-CV-1619 (JLL) (D.N.J.)

SEC Charges New York Man with Conducting Penny Stock Manipulation Schemes

On March 23, 2016, the Securities and Exchange Commission charged Guy Gentile, a resident of Putnam Valley, New York, with perpetrating penny stock manipulation schemes.

The SEC alleges that Gentile, who at the relevant time owned and operated a registered broker-dealer based in Carmel, New York, engaged in manipulative trading, provided illegal kick-backs, and distributed promotional mailings of glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch,” in order to tout the stocks of purported gold and silver exploration company Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS). The newsletters misled investors with purportedly positive – but fake – price and volume trends for these stocks and other false information about the promoters’ identity, compensation, and control of the stock. In reality, most of the touted market activity was generated by Gentile and his associates who controlled large blocks of the companies’ stocks. Last year, the SEC charged attorney Adam Gottbetter for his role in the KYUS scheme, as well as Canadian stock promoters Mike Taxon and Itamar Cohen for their roles in the RVNG and KYUS schemes.

The SEC’s complaint filed in federal court in New Jersey alleges that Gentile violated Sections 5(a), 5(c), 17(a) and 17(b) of the Securities Act of 1933, and violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC seeks disgorgement of ill-gotten gains, civil money penalties, injunctions against future violations, and a bar against participation in penny stock offerings.

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Arcturus Corporation, et. al. – Boca Raton Fraudulent Oil and Gas Investment Litigation and Arbitration Attorney

Russell L. Forkey — Thu, 24 Mar 2016 22:42:14 GMT

Arcturus Corporation, et. al. – Boca Raton, Florida Fraudulent Oil and Gas Investment Litigation and Arbitration Attorney

Securities and Exchange Commission v. Arcturus Corporation, et al., Civil Action No. 3:13-cv-04861-K (N.D. Tex.)

Promoters of Fraudulent Oil and Gas Investments Found Liable On All Claims

The Securities and Exchange Commission recently announced that a federal court in Texas found promoters of fraudulent oil and gas investments liable all counts. The Honorable Ed Kinkeade of the United States District Judge for the Northern District of Texas granted summary judgment on March 22 for the SEC on all claims against promoters Leon Ali Parvizian and his two Dallas-based companies, Arcturus Corporation and Aschere Energy, LLC. The court also found for the SEC on its claims against Alfredo Gonzalez and AMG Energy, LLC, also of Dallas, and Florida-based Robert Balunas and R. Thomas & Co. LLC, who sold the investments.

The SEC’s charges filed in December 2013, alleged that the defendants raised nearly $22 million from at least 380 investors nationwide through illegal securities sales. In its 50-page summary judgment order, the court found that Parvizian and his companies committed securities fraud by offering and selling interests in a drilling project in which they had no rights to participate or share profits. The court also found that all defendants had illegally offered and sold unregistered securities and that Parvizian, Gonzalez, AMG Energy, Balunas, and R. Thomas & Co. acted as unregistered broker-dealers.

The court rejected defense arguments that the investments were exempt from the federal securities laws because they were structured as “joint ventures.” The court instead found that the investors had little real power and were inexperienced in the oil and gas industry, leaving them dependent on Parvizian and his companies to control the ventures. This dependency made the joint venture interests “investment contracts,” which are subject to securities laws.

The court found Parvizian and his companies liable for securities fraud under 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, concluding that they “acted with severe recklessness” in failing to disclose material information about the investments to investors. The court also found that all defendants violated the registration requirement of Sections 5(a) and 5(c) of the Securities Act, and that Parvizian, Gonzalez, AMG Energy, Balunas, and R. Thomas & Co. violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers.

The court directed the SEC to submit briefs by April 22, 2016, on the proper remedies to impose on the defendants. The SEC’s complaint seeks permanent injunctions, financial penalties, and disgorgement with prejudgment interest of the nearly $22 million in ill-gotten gains from the illegal offerings.

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Gregory Ruehle – Boca Raton, Florida Unregistered Broker and Securities Fraud Attorney

Russell L. Forkey — Sat, 13 Feb 2016 17:08:11 GMT

Gregory Ruehle – Boca Raton, Florida Unregistered Broker and Securities Fraud Attorney

SEC Charges Oceanside Man with Defrauding Investors and Acting as an Unregistered Broker-Dealer

Securities and Exchange Commission v. Gregory Ruehle, Civil Action No. 3:16-cv-00366-AJB-MDD (S.D. Cal., filed February 11, 2016)

The Securities and Exchange Commission (SEC) recently charged an unregistered broker in Oceanside, Calif., with fraudulently selling purported stock in a medical device company and pocketing investors’ money.

The SEC alleges that Gregory Ruehle raised approximately $1.9 million from more than 100 investors but never delivered or transferred the securities as promised while using the money to pay gambling debts among other personal expenditures.

In a parallel action, the U.S. Attorney’s Office for the Southern District of California yesterday announced criminal charges against Ruehle.

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

Ruehle began his scheme as early as 2012, misrepresenting to investors in California and Minnesota that he would sell them his personally-owned securities in a La Jolla, Calif.-based medical device company called ICB International, Inc. He was a former consultant for the company.
Ruehle, however, sold investors far more securities than he actually owned, and those he did own were not transferable. Ruehle never disclosed these facts to investors.
Ruehle compounded his fraud by creating fabricated documents that he told investors were from the company.
He disseminated fake company stock certificates purportedly informing the investor of the number of shares they owned in ICB.
He transmitted the fake stock certificates with a letter falsely stating that the certificates had been transferred from Ruehle to the investor.
Ruehle also fabricated and sent investors an additional document that served as a phony confirmation that his shares had been transferred to the investor. The document falsely appeared to be on ICB letterhead and signed by the company’s CEO.

The SEC alleges that Ruehle violated 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 of 1933. Finally, the SEC alleges that Ruehle also violated Section 15(a) of the Exchange Act by acting as an unregistered broker-dealer. The SEC’s complaint seeks a permanent injunction, civil penalties, disgorgement plus prejudgment interest, and other relief against Ruehle.

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