The Securities and Exchange Commission (SEC) announced that on March 23, 2016, Gilbert Lundstrom, the former chairman of the board and CEO of TierOne Bank, based in Nebraska, was sentenced to 11 years in federal prison and ordered to pay a $1.2 million criminal fine.
Lundstrom, along with TierOne’s former chief operating officer James Laphen and former chief credit officer Don Langford, was criminally charged for orchestrating a scheme to defraud TierOne’s shareholders and misleading regulators by concealing more than $100 million in losses on loans and declining real estate. Laphen and Langford both pled guilty and agreed to cooperate in the criminal case against Lundstrom. At Lundstrom’s trial, the government presented evidence that Lundstrom was the architect of an aggressive strategy to expand the bank’s portfolio beyond traditional lending in Nebraska to riskier areas like commercial real estate in Las Vegas. Read More
The Securities and Exchange Commission (SEC) announced on March 24, 2016 that it had entered into settlement agreements, subject to court approval, with defendants David Amaryan, Copperstone Alpha Fund, Copperstone Capital, Intertrade Pacific SA, Ocean Prime Inc., Guibor S.A., and Omega 26 Investments Ltd. in a case alleging a scheme to trade on hacked news releases. In August 2015, the SEC filed a civil action and an amended complaint in federal court in New Jersey, and the court entered an asset freeze and other emergency relief against these defendants, among others. Read More
The Securities and Exchange Commission (SEC) announced on March 24, 2016 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.
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, by email at firstname.lastname@example.org or visit www.securitieslawyer101.com. 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 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.
On March 23, 2016, the Securities and Exchange Commission (SEC) charged Guy Gentile, a resident of Putnam Valley, New York, with perpetrating penny stock manipulation schemes.
The SEC alleges that Gentile, who at the time operated as a registered broker-dealer, 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. 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. Read More
On March 23, 2016, the Securities and Exchange Commission (SEC) announced that the federal court in Boston, Massachusetts entered judgments by consent against Andrew Affa, Michael Affa, Mitchell Brown, Christopher Putnam, and Christopher Nix in a fraud action that was filed in July 2014. The fraud involved an attempt to manipulate shares of Boston, Massachusetts-based Amogear Inc. that was caught by an FBI undercover operation.
All five defendants were permanently enjoined from violating the securities antifraud statutes and barred from participating in offerings of penny stock.
The SEC’s complaint alleged that defendants knew that Amogear was a shell company without any real operations, but schemed from at least August 2012 to February 2014 to boost the price of its securities and profit by selling their own shares. The planned scheme involved artificially inflating the price of Amogear stock by, among other things:
- issuing news releases and/or promotional materials containing false or exaggerated information,
- generating mass emails containing false or exaggerated information; and
- engaging in undisclosed coordinated trading of the stock, all designed to generate the appearance of demand for the stock and to increase the price of the stock.
The Securities and Exchange Commission (SEC) announced on March 23, 2016 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 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. Read More
The Securities and Exchange Commission (SEC) announced on March 21, 2016 that on March 15, 2016, the Honorable Leigh Martin May of the United States District Court for the Northern District of Georgia entered a final judgment against defendant Bruce Strebinger. The final judgment imposes on Strebinger a permanent injunction against future violations of certain antifraud and reporting provisions of the federal securities laws, imposes a penny stock bar and orders that he pay disgorgement in the amount of $1,515,640.
In its Complaint, the SEC alleged that after Strebinger facilitated a reverse merger between shell company Americas Energy Company and a private start-up company in Knoxville, Tennessee, he and Brent Chapman each acquired substantial positions of over 5% of the common stock without publicly disclosing their beneficial ownership stake as required under the federal securities laws. Read More
The Securities and Exchange Commission (SEC) announced on March 18, 2016 that former Microsoft Corporation senior manager, John Hardy III has agreed to pay nearly $380,000 to settle charges that he traded on material nonpublic information about Microsoft’s acquisition of Nokia Corporation’s mobile phone business and Microsoft’s year-end 2013 earnings release.
In its insider trading complaint filed in federal district court in Seattle, the SEC alleges that Hardy, who worked in Microsoft’s corporate financial planning and analysis group, purchased Microsoft put options after learning from highly confidential internal Microsoft documents, including a draft presentation to Microsoft’s board of directors, that the company’s fiscal-year 2013 financial results would not meet Wall Street analysts’ expectations. Read More
On March 16, 2016, the Court for the Southern District of New York entered a final judgment against defendant Yue Han, based on insider trading charges filed by the Securities and Exchange Commission (SEC) against Han on November 24, 2015.
The SEC’s Complaint alleges that Han, who worked as an associate in Goldman Sachs’ compliance department, traded on confidential information contained in e-mails sent and received by Goldman Sachs’ employees who advised investment banking clients on impending merger and acquisition transactions. According to the SEC’s Complaint, Han gained access to the e-mails as part of his work developing surveillance software to monitor other employees for potential misconduct, including insider trading, and used this access to generate over $460,000 in illicit earnings. Read More