SEC Enforcement Actions 2013

Fraudulent Promissory Note Offering – South Florida Securities and Investment Fraud FINRA Arbitration and Litigation Attorney

Published on: September 10, 2013 | By Russell L. Forkey, P.A.

SEC Files Civil Injunctive Action Against Alleged Perpetrator and Unregistered Broker in Fraudulent Promissory Note Offering

Recently, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the District of Colorado against Brian G. Elrod for allegedly conducting a fraudulent offering of promissory notes for which Nova Dean Pack acted as an unregistered broker. Elrod and Pack reside in Buffalo Creek, Colorado and Highland, California, respectively.

The Complaint alleges that, from at least March 2009 through November 2009, Elrod and Pack raised approximately $2 million from 12 investors who invested in high-yield promissory notes issued by CFS Holding Company LLC (“CFS”), a Colorado company owned and managed by Elrod. According to the Complaint, Elrod told investors that their investments were secured and guaranteed and would generate annual returns ranging from 12% to 24%. According to the Complaint, Elrod further represented to investors that the proceeds from their promissory notes would be used to expand a group of financial services companies owned and managed by Elrod. The Complaint alleges that the foregoing representations, among others, were false and misleading when made, and that Elrod, rather than use investor money for legitimate business purposes, improperly used most of the investor funds to make substantial payments to himself and family members and to pay for personal expenses, to pay Pack significant commissions for referring investors, and to make interest payments back to investors. According to the Complaint, the CFS note offering was not registered with the Commission, and Pack was not an associated person of a registered broker or dealer at the time he participated in the CFS note offering.

Anthony John Johnson – Florida Civil Conspiracy and Investment Fraud FINRA Arbitration and Litigation Attorney

Published on: September 10, 2013 | By Russell L. Forkey, P.A.

SEC Enforcement Proceedings:

Anthony John Johnson Sanctioned:

The Securities and Exchange Commission recently announced that Anthony John Johnson (Johnson) has been barred from the securities industry. The sanction was ordered in an administrative proceeding before an administrative law judge, following an August 2011 conviction for conspiracy to commit securities, mail, and wire fraud and an August 2012 conviction for mail fraud. Some of his wrongdoing occurred between March 2002 and March 2003, while associated with Park Capital Securities, LLC, where he engaged in manipulative trading and where brokers under his direction engaged in misrepresentations and material omissions to induce customers to purchase and refrain from selling certain stock. From approximately August 2010 to April 2011, Johnson operated a Ponzi scheme while associated with RAHFCO Management Group LLC, an unregistered investment adviser.

Prime Bank Investment Fraud – South Florida Securities and Investment Fraud Litigation and FINRA Arbitration Attorney

Published on: September 9, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Bernard H. Butts, Jr., Fotios Geivelis, Jr., also known as Frank Anastasio, Worldwide Funding III Limited LLC, Douglas J. Anisky, Sidney Banner, Express Commercial Capital LLC, James Baggs (Defendants), Bernard H. Butts, Jr. PA, Butts Holding Corporation, Margaret A. Hering, Global Worldwide Funding Ventures, Inc., and PW Consulting Group LLC (Relief Defendants), Civil Action No. 13-23115-CIV-MARTINEZ-MCALILEY (Southern District of Florida)

SEC Halts Florida-Based Prime Bank Investment Scheme

The Securities and Exchange Commission recently announced that it has obtained an emergency court order to halt a prime bank investment scheme by a Miami attorney and others who have promised investors exorbitant returns to be derived from a program based on the trading of bank instruments.

Ronald Feldstein, Mara Capital Management and Vita Health of America – Florida Free-Riding Investment Fraud FINRA Arbitration Attorney

Published on: September 6, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Ronald Feldstein, Civil Action No. 13 Civ. 6168 (S.D.N.Y.)

SEC Charges Perpetrator of Fraudulent Free-Riding and Securities Offering Schemes

The Securities and Exchange Commission (“Commission”) recently filed a complaint in the United States District Court for the Southern District of New York charging Ronald Feldstein, Mara Capital Management LLC (“Mara Capital”), and Vita Health of America LLC (“Vita Health”), with orchestrating an illegal “free-riding” scheme resulting in over $2 million in losses to three broker-dealers, and charging Feldstein with bilking individual investors out of more than $450,000.

Registration and Regulation D – Florida Investment and Securities Fraud Litigation and FINRA Arbitration Attorney

Published on: August 28, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Jonathan C. Gilchrist, Civil Action No. 4:13-cv-00163 (S.D.Tex.)

SEC Obtains Final Judgment Against Jonathan C. Gilchrist for Fraud and Registration Violations

The Securities and Exchange Commission recently announced that on August 15, 2013, the Honorable Lynn N. Hughes of the United States District Court for the Southern District of Texas entered summary judgment in favor of the Commission and against Jonathan C. Gilchrist finding that Gilchrist had violated the antifraud and registration provisions of the federal securities laws. On August 16, 2013, Judge Hughes entered a final judgment imposing monetary and other relief.

Retirement Fraud, Mismanagement and Breach of Fiduciary Duty Litigation and FINRA Arbitration Attorney

Published on: August 28, 2013 | By Russell L. Forkey, P.A.

Senior and Retirement Fraud, Misrepresentation and Breach of Fiduciary Duty Litigation and FINRA Arbitration Attorney:

Commission Charges Indiana Resident with Conducting Ponzi Scheme Targeting Retirement Savings of Investors

The Securities and Exchange Commission (“Commission”) recently charged a Noblesville, Ind., resident and his company with defrauding investors in a Ponzi scheme that targeted retirement savings.

Philip Falcone and Harbinger Capital Partners – Florida Investment and Securities Mismanagement and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: August 21, 2013 | By Russell L. Forkey, P.A.

Philip Falcone and Harbinger Capital Agree to Settlement:

The Securities and Exchange Commission (“Commission”) recently announced that New York-based hedge fund adviser Philip A. Falcone and his advisory firm Harbinger Capital Partners have agreed to a settlement in which they must pay more than $18 million and admit wrongdoing. Falcone also agreed to be barred from the securities industry for at least five years.

The SEC filed enforcement actions in June 2012 alleging that Falcone improperly used $113 million in fund assets to pay his personal taxes, secretly favored certain customer redemption requests at the expense of other investors, and conducted an improper “short squeeze” in bonds issued by a Canadian manufacturing company. In the settlement papers filed in court today, Falcone and Harbinger admit to multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets.

Blake Richards – South Florida Retirement Funds Misappropriation and Theft FINRA Arbitration and Litigation Attorney

Published on: August 21, 2013 | By Russell L. Forkey, P.A.

South Florida Retirement and Elder Care Misappropriation and Theft FINRA Arbitration and Litigation Attorney:

Securities and Exchange Commission v. Blake Richards, Civil Action No. 1:13-CV-1729 (N.D. Ga.)

Federal Court Permanently Enjoins Atlanta-Area Registered Representative Blake Richards from Securities Fraud Violations

Florida Microcap and Penny Stock Fraud and Investment Loss FINRA Arbitration and Litigation Attorney

Published on: August 15, 2013 | By Russell L. Forkey, P.A.

South Florida Microcap and Penny Stock Fraud and Investment Loss FINRA Arbitration and Litigation Attorney:

The Securities and Exchange Commission (“Commission”) recently announced that it charged two microcap companies, their CEOs, and one penny stock promoter for spearheading illegal kickback schemes. The Commission also charged two other microcap companies, their CEOs, and four other promoters with arranging the payment of bribes to hype the companies in which they had a stake in order to create a false sense of market activity and illegally generate stock sales.

The Commission’s complaints recently filed in U.S. District Court for the Southern District of Florida charged the following penny stock companies and officers:

Javier Martin-Artajo and Julien Grout – Florida Securities and Investment Loss FINRA Arbitration and Litigation Attorney

Published on: August 15, 2013 | By Russell L. Forkey, P.A.

The Securities and Exchange Commission Charges Two J.P. Morgan Traders with Fraudulently Overvaluing Investments To Conceal Losses

The Securities and Exchange Commission (“Commission”) recently charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.

The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio’s investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan’s internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan’s reported first quarter income before income tax expense to be overstated by $660 million.