Court Enters Final Judgment Against Daniel Thibeault for $15 Million Fraud

Daniel Thibeault - Investment FraudOn September 26, 2016, the Honorable Nathaniel M. Gorton of the United States District Court for the District of Massachusetts entered a final judgment against Daniel Thibeault, of Framingham, Massachusetts.

Thibeault is a defendant in an SEC enforcement action filed in January 2015 alleging that he misappropriated money from an investment fund that he was managing. The final judgment imposes on Thibeault permanent injunctions against future violations of certain antifraud provisions of the federal securities laws and orders him to pay disgorgement of $15.3 million, which will be deemed satisfied by the restitution order in the parallel federal criminal case against him. Thibeault was also recently sentenced to nine years in prison in the criminal case.

In its complaint, filed on January 9, 2015, the SEC alleged that Thibeault, GL Capital Partners, LLC, and other related entities engaged in securities fraud and fraud by an investment adviser. Specifically, the SEC alleged that GL Capital Partners, LLC and its principal, Thibeault, were the investment advisers to a fund called the GL Beyond Income Fund, and that they misappropriated at least $15 million of the money that belonged to this fund. The GL Beyond Income Fund’s assets consisted primarily of individual variable rate consumer loans. Read More

Owners of North Star Finance LLC Charged with Fraud

North Star Finance LLC - FraudOn September 21, 2016, North Star Finance LLC, G. Thomas Ellis, and Yasuo Oda entered consents to settle the SEC’s charges against them.

Without admitting or denying the allegations in the SEC’s complaint, North Star, Ellis, and Oda consented to a judgment permanently enjoining them from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, with the amounts of any disgorgement, prejudgment interest, and civil penalties to be determined by the court on the SEC’s motion. The settlement remains subject to court approval.

On May 11, 2015, the SEC charged North Star, Ellis, and Oda, together with several other individuals and entities, for defrauding dozens of investors in an advance fee loan scam involving bogus prime bank instruments. Many of these investors were solicited from the National Association of Home Builders (“NAHB”). Read More

Sheren Tsai and Colin Whelehan Charged with Insider Trading in Home Security Company

Sheren Tsai, Colin Whelehan - Insider TradingThe Securities and Exchange Commission (“SEC”) announced charges on September 22, 2016 against Sheren Tsai and Colin Whelehan for insider trading in advance of the acquisition of a home security company based on confidential information tipped to the trader by her live-in boyfriend. Both individuals, who were securities professionals during the relevant period, have agreed to settle the SEC’s charges.

In a complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleges that Tsai, who then worked at an investment advisory firm, traded in the securities of ADT Corp. on the basis of tips of material nonpublic information that she received from her romantic partner, Whelehan. The complaint alleges that Whelehan, who was then a Senior Associate at a different investment advisory firm, provided Tsai with inside information that he obtained in the course of his employment regarding an impending acquisition of ADT by funds managed by affiliates of Apollo Global Management, LLC. Read More

Court Enters Final Judgment Against Lee Vacaro in Fraud Case

Lee Vaccaro On September 16, 2016, the Honorable William J. Martini of the United States District Court for the District of New Jersey entered a judgment against defendant Lee Vaccaro that imposed permanent injunctions and an officer and director bar.

The SEC’s complaint, filed on May 4, 2016, alleged that Vaccaro and James Trolice pocketed the approximately $6 million they raised from more than 100 investors for limited liability companies they owned and controlled that purportedly held warrants to purchase the common stock of a technology startup company. Vaccaro and Trolice created a false sense of urgency and exclusivity around the offering, claiming that only a limited amount of warrants were available and that they eventually could be exercised at a very profitable price. The complaint alleged that Vaccaro spent at least a quarter-million dollars in investor funds at Las Vegas casinos. Read More

Court Enters Final Judgment Against Saleem Khan and Roshanlal Chaganlal for Insider Trading Scheme

Khan and Chaganlal - Insider Trading SchemeThe Securities and Exchange Commission (“SEC”) announced on September 21, 2016 that the Honorable Haywood S. Gilliam of the U.S. District Court for the Northern District of California entered a final judgment against defendants Saleem Khan and Roshanlal Chaganlal ordering the payment of more than $16 million in disgorgement, penalties, and prejudgment interest. The SEC’s action charged Khan and Chaganlal with insider trading in Ross Stores securities based on nonpublic sales information leaked by Chaganlal while he was a Ross employee. Two other defendants who were Khan’s work colleagues settled the SEC’s charges against them in September 2015 without admitting or denying the SEC’s allegations. Read More

Court Enters Final Judgment in Wings Network Pyramid Scheme Case

Wings Network IncA federal court in Boston, Massachusetts, recently entered final judgments by consent against six defendants in an ongoing enforcement action filed by the Securities and Exchange Commission (“SEC”) in February 2015. The SEC charged two Portuguese companies operating under the name Wings Network, along with three company officers and 12 promoters behind an international pyramid scheme targeting Latino communities in the U.S.

The judgments obtained by the SEC were against six promoters of the scheme. Final judgments were entered against Vinicius Romulo Aguiar and Thais Utino Aguiar, formerly of Marlborough, Massachusetts on September 8, 2016; and against Geovani Nascimento Bento and Priscilla Bento of Auburn, Massachusetts, and Dennis Arthur Somaio and Elaine Amaral Somaio of Marlborough, Massachusetts on September 16, 2016. Read More

Steven Metro Sentenced to 46 Months in Prison for Insider Trading Scheme

Steven Metro - Insider Trading SchemeOn September 14, 2016 Steven Metro, a former Simpson Thacher & Bartlett employee, was sentenced to 46 months in federal prison. Metro previously pleaded guilty to criminal charges arising from his role in a long running insider trading scheme that involved trading in advance of more than a dozen pending corporate transactions. As part of this scheme, Metro provided material, nonpublic information relating to these transactions to a friend, Frank Tamayo, via napkins or post-it notes at Grand Central Terminal. Tamayo then passed the information to his stockbroker, Vladimir Eydelman. The illegal trading resulted in approximately $5.6 million in profits. Read More

Stock-Trading Whiz Kid and Company Wealthpire Inc. Charged with Fraud

Wealthpire Inc - Jesus ManuelOn September 13, 2016 he Securities and Exchange Commission (“SEC”) announced that self-proclaimed “stock trading whiz kid” Manuel Jesus and his stock newsletter company in Los Angeles have agreed to pay nearly $1.5 million to settle charges that they defrauded subscribers through false statements and misrepresentations.

According to the SEC’s complaint, Jesus and his newsletter company Wealthpire Inc. used advertising materials and websites touting him as “the untutored prodigy of stock investing” under the alias Manny Backus. A self-purported “math whiz” who boasted a “skyscraping” IQ and training as a professional chess player, Backus claimed to be actively trading in the stock market with “real money” by age 19. The SEC’s complaint also states that Wealthpire materials claimed that Backus made millions of dollars before “deciding to help other investors” by starting an alert service that let traders copy his every trading move. Read More

SEC Charges Movie Exec Manu Kumaran

Manu Kumaran

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.

According to the SEC complaint, Manu Kumaran, the founder and former chairman and CEO of a startup movie production company called Medient Studios and later Moon River Studios, schemed with his successor CEO Jake Shapiro to make an assortment of false and misleading statements in press releases and corporate filings.  They allegedly claimed that construction was underway and projected dates by which the studio would be operational while knowing full well they did not have anywhere near sufficient funding to begin building the touted “Studioplex.”  In addition, Kumaran, Shapiro, and Roger Miguel – the CEO of a separate successor public company called Fonu2 that also operated under the name Moon River Studios – are alleged to have backdated and falsified promissory notes as part of a scheme to issue common stock in exchange for financing.  We will be blogging about Fonu2 in the future. Read More

Court Enters Injunction Against Safety Technologies LLC and Its Owner

Safety Technologies LLC - Thomas Connerton FraudOn 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