Final Judgment Entered in “Prime Bank” Fraud – By: Brenda Hamilton
On January 13, 2017, the U.S. District Court for the District of Minnesota entered a final judgment against Minnesota resident James M. Louks and his company, FiberPoP Solutions, Inc. Louks and FiberPoP are defendants in an SEC civil enforcement action who were charged with raising money from investors under false pretenses while failing to produce the promised returns until the SEC’s emergency action stopped them from doing so.
In September 2015, the SEC announced fraud charges and an emergency order to halt Louks and FiberPop from continuing to raise money from investors. In its complaint, the SEC alleged that Louks and FiberPoP, since 2003, defrauded approximately 100 investors by promising them massive returns, while actually spending the investors’ funds on various schemes, which the SEC alleged typically bore the hallmarks of “prime bank schemes.” Prime bank schemes lure investors to participate in a sham international investing opportunity with phony promises of exclusivity and enormous profits.
On September 2, 2015, the court entered a temporary restraining order barring Louks and FiberPoP from, among other things, soliciting or accepting any monies from actual or prospective investors. On November 4, 2015, the court permanently enjoined Louks and FiberPoP from violating Section 17(a) of the Exchange Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and from soliciting or accepting any monies from actual or prospective investors. Since that time, Louks and FiberPoP were held in civil contempt on three separate occasions for violating the Court’s orders. In March 2016, Louks and FiberPoP were held in contempt for soliciting and accepting at least $590,000 from investors after the Court’s September 2015 restraining order. In June 2016, Louks and FiberPoP were again found in contempt for soliciting and accepting another $42,000 from investors after the Court’s November 2015 permanent injunction. In September 2016, Louks was held in contempt for violating a court order which required him to submit a sworn affidavit regarding his compliance with the June 2016 order. Louks was incarcerated for eleven days before curing the contempt.
The final judgment orders Louks and FiberPoP to pay, jointly and severally, $7,679,578.72 in disgorgement and prejudgment interest.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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