On September 23, 2016, the Securities and Exchange Commission (“SEC”) charged Manu Kumaran in connection with Medient Studios and later Moon River Studios. According to the SEC, Kumaran defrauded investors in a purported project to construct the largest movie studio in North America at a suburban location outside Savannah, Georgia.
On September 12, 2016, the Honorable Alvin W. Thompson, a federal judge in the U.S. District Court for the District of Connecticut, entered a preliminary injunction and continued asset freeze by consent against Thomas Connerton and his company, Safety Technologies LLC.
The preliminary injunction restrains Connerton and Safety Technologies from violating certain antifraud provisions of the federal securities laws and orders the defendants’ assets to remain frozen until further notice. The preliminary injunction order continues the relief originally obtained on June 9, 2016, in response to the SEC’s emergency civil injunctive action. Read More
The SEC’s complaint, filed on September 9, 2016, in the U.S. District Court for the Eastern District of Texas, alleges that, from 2010 through 2013, Tycoon, a Texas oil and gas company, raised more than $5.6 million from approximately 232 investors nationwide in four unregistered offerings of joint-venture securities in oil and gas projects. Nerbonne drafted and disseminated materially false and misleading offering documents and investment brochures containing baseless projections that four oil-well prospects would produce up to 400 barrels of oil per day. Read More
The Securities and Exchange Commission (“SEC”) announced on September 12, 2016 that it has charged Atlanta-based investment adviser Charles Augustus Banks, IV with defrauding a former professional basketball player by inducing him to invest in a sports team apparel and merchandise company based on a series of misrepresentations about the investment.
The SEC alleges that Banks persuaded his client to invest $7.5 million in Gameday Entertainment LLC and falsely told him that another investor was investing the same amount. The SEC further alleges that Banks told the client that $5 million of the purported $15 million offering would be used for Gameday’s ongoing operations, the remaining balance would pay off existing bank debt, and the client would then have a first lien position on Gameday’s assets. But Banks allegedly knew there was no other investor, the full $15 million would not be raised, and the bank debt would not be paid off, leaving the client without the first lien position he was promised. Read More
On September 6, 2016, the Securities and Exchange Commission (“SEC”) obtained a final judgment against Mark Evan Bloom and his advisory firm, North Hills Management, LLC, for securities fraud in a civil enforcement action filed on February 25, 2009. The judgment orders more than $30 million in disgorgement, which is deemed satisfied by an order to pay restitution of the same amount in a parallel criminal action, in which Bloom was sentenced to three years of imprisonment.
The SEC’s complaint alleges that Bloom, through North Hills, raised approximately $30 million from 40 to 50 investors between 2001 and 2007, telling them he would invest their money in North Hills, L.P. (the Fund), the assets of which would be allocated across multiple funds and fund managers to ensure diversification and moderate risk. Instead, Bloom misappropriated more than $13.2 million of investor funds to furnish a lavish lifestyle for himself and his wife that included the purchase of luxury homes, cars and boats. The remaining investor funds were invested, contrary to the Fund’s stated investment strategy, in a single fund known as the Philadelphia Alternative Asset Fund (PAAF). Bloom received undisclosed commissions from PAAF in excess of $355,000 over a 16-month period. PAAF itself was uncovered as a fraudulent scheme in June 2005. Read More
On September 9, 2016 the Securities and Exchange Commission (“SEC”) charged Ohio-based chemical company RPM International Inc. and its General Counsel, Edward Moore, with failing to disclose a material loss contingency, or record an accrual for, a government investigation when required to do so under governing accounting principles and securities laws.
The SEC alleges that, from 2011 through 2013, RPM and one of its subsidiaries were under investigation by the U.S. Department of Justice (DOJ) for overcharging the government on certain contracts. Moore, RPM’s General Counsel and Chief Compliance Officer, oversaw RPM’s response to the DOJ investigation. According to the SEC’s complaint, however, Moore did not inform RPM’s CEO, CFO, Audit Committee, and independent auditors, of material facts about the investigation. For example, Moore knew but failed to inform them that: RPM sent DOJ estimates showing RPM’s subsidiary overcharged the government on the contracts under investigation by a material amount; RPM agreed to submit a settlement offer by a specific date to resolve the DOJ investigation; and, prior to submitting the settlement offer to DOJ, RPM’s overcharge estimates increased substantially to at least $28 million. Read More
The Securities and Exchange Commission (“SEC”) charged Gordon Jenkins, Theodore Sweeten, Francis Kreais and Craig Parkinson with orchestrating an offering fraud involving the sale of interests in a purported mining company, Arco Hills Silica Company.
The SEC’s complaint, filed in federal court in Idaho, alleges that, beginning in January 2011, and continuing through August 2014, Jenkins, Sweeten and Kreais offered and sold $504,436.26 in promissory notes to approximately 12 investors located throughout the country. Investors were allegedly told their money would only be used to acquire financing for Jenkins’ mining company, Arco Hills, and were guaranteed a return on their investment ranging from 53% to 120% within 30 to 90 days of purchasing their notes. Instead, Jenkins, Sweeten and Kreais used approximately $422,536.58 of investor money to pay for their daily expenses, entertainment, house payments, legal expenses and medical bills. Additionally, old investors received $25,394.68 from new investors. Read More
Stockbroker Guy Gentile was flying high as 2012 began. In January, he gave an interview to the Nassau Guardian in which he predicted wild success for his new Bahamas brokerage, SureTrader, a division of Swiss America Securities, Ltd., a firm regulated by the Securities Commission of the Bahamas. Gentile told the paper he expected SureTrader to become the “largest trader” in the country within six months, explaining that looser offshore regulations would attract penny stock players from all over the world. Guy Gentile offered cheap commissions, generous leverage, and an exemption from the pattern day trader rule that limits holders of accounts worth less than $25,000 to only three day trades in any five-day rolling period. As a businessman familiar with the world of over-the-counter securities trading, Guy Gentile believed he could generate healthy profits by focusing on the volume of transactions rather than on their size. He was certain SureTrader would soon outstrip the success of its U.S.-based sister company, SpeedTrader, which he’d founded in 1999.
Gentile’s plans were abruptly and permanently altered six months later, when he was arrested by Customs and Border Patrol while sitting on a plane awaiting takeoff from the Westchester, New York airport. The customs agents transferred him to the custody of the FBI, who escorted him to Newark, New Jersey for a weekend stay in jail. There he was informed he’d been named in a sealed complaint for alleged crimes committed in connection with two pump and dump operations from years earlier. Read More
On August 26, 2016, Judge Susan Richard Nelson of the District of Minnesota issued an order requiring Anthony Buzaneli to surrender his passports and prohibiting him from leaving the United States until further order of the Court. The order also freezes his assets, requires Buzaneli to provide an accounting, and requires Buzaneli to repatriate all of his assets to the United States.
The Court issued this order as a result of papers filed under seal by the Securities and Exchange Commission (“SEC”) seeking emergency relief against Buzaneli and naming him as an additional defendant in the SEC’s previously filed action against Providence Financial Investments, Inc. (“Providence Financial”), Providence Fixed Income Fund, LLC (“Providence Fund”) and others. The order and the SEC’s papers were unsealed by the court on August 30, 2016.
In the Amended Complaint, the SEC alleges that Buzaneli engaged in a scheme that defrauded investors in Providence Financial and the Providence Fund. The Amended Complaint also alleges that Buzaneli is liable for the violations of Providence Financial and the Providence Fund as a control person for those entities and that he is liable for aiding and abetting violations committed by Providence Financial and the Providence Fund. The original complaint was filed on June 7, 2016. Read More
On August 26, 2016, the U.S. District Court for the Central District of California entered a final judgment against Jilbert Tahmazian, an attorney licensed in California, ordering him to pay $196,524 to settle an antifraud action filed by the SEC.
The SEC’s complaint alleged that, from at least mid-2009 through at least December 2010, Tahmazian and two of his clients engaged in a fraudulent, “prime bank” scheme and obtained approximately $6 million from four investors who invested in fictitious investment contracts. According to the complaint, investors were promised that they would receive a return of 15% to 30% per week from their investment and that if the funds were not invested within 15 to 30 days, they would receive a refund of their investment plus a 2% penalty. To the contrary, investors’ funds were neither invested nor returned as promised. Instead, after keeping a 2% fee for himself, Tahmazian transferred the money to his clients and others, who in turn spent it at Las Vegas casinos and high-end retail stores. Read More