SEC Files Subpoena Enforcement in Possible Market Manipulation Scheme

The SEC filed a subpoena enforcement action against NVC Fund LLC and its principal, Frank Ekejija, seeking an order directing them to comply with an investigative subpoena for documents and testimony.

The SEC filed a subpoena enforcement action against NVC Fund LLC and its principal, Frank Ekejija, seeking an order directing them to comply with an investigative subpoena for documents and testimony.

According to the SEC’s application, filed on November 30, 2018 in U.S. District Court for the Central District of California, the SEC is investigating whether certain individuals or entities engaged in a potential pump-and-dump scheme in the stock of three penny-stock companies, Cherubim Interests, Inc., PDX Partners, Inc., and Victura Construction Group, Inc. Because the SEC was concerned about the accuracy of the companies’ disclosures, the SEC suspended trading in their securities on February 15, 2018 for ten business days. Based on its ongoing investigation, the SEC has reason to believe that each company issued false public statements in January 2018 to “pump” their stock price, claiming that NVC Fund owns “trillions” of dollars in “AAA-rated” assets, and that each company acquired hundreds of millions of dollars of these assets from NVC Fund. After the stock price and trading volume for each company increased as a result of the news, an entity associated with the companies may have “dumped” their overvalued shares for significant profits. Read More

The SEC Declared A Cease and Desist Proceedings with CoinAlpha Advisors LLC.

CoinAlpha Advisors LLC has submitted an Offer of Settlement, which the SEC has determined to accept. CoinAlpha Advisors LLC consented to the Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order.On December 7, 2018, CoinAlpha Advisors LLC  submitted an Offer of Settlement, which the SEC has determined to accept. CoinAlpha Advisors LLC consented to the Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order.

CoinAlpha Advisors LLC is a Delaware limited liability company with its principal place of business in Sunnyvale, California. CoinAlpha Advisors LLC was formed in July 2017 to act as the managing member of and manager to CoinAlpha Falcon LP. They has never been registered with the SEC in any capacity.

CoinAlpha Falcon LP is a Delaware limited partnership with its principal place of business in Sunnyvale, California.They has never been registered with the SEC in any capacity. A total of 22 investors invested a total of $608,491 in CoinAlpha Falcon. In October 2018, after being contacted by the SEC, CoinAlpha Advisors LLC unwound the CoinAlpha Falcon, pursuant to the authority granted in CoinAlpha Falcon’s Limited Partnership Agreement. Read More

SEC Voluntary Dismisses All Claims Against Jesse Litvak

On December 6, 2018, the U.S. District Court for the District of Connecticut entered an order dismissing, with prejudice, the U.S. Securities and Exchange Commission's complaint against Jesse Litvak. The court's order was based on the SEC's motion to dismiss its claims against Jesse Litvak.On December 6, 2018, the U.S. District Court for the District of Connecticut entered an order dismissing, with prejudice, the U.S. Securities and Exchange Commission’s complaint against Jesse Litvak. The court’s order was based on the SEC’s motion to dismiss its claims against Jesse Litvak.

Jesse Litvak was also criminally charged by the U.S. Attorney for the District of Connecticut based on the same facts underlying the SEC’s action.  Jesse Litvak was twice convicted, in jury trials in March 2014 and January 2017, but those convictions were both overturned by the U.S. Court of Appeals for the Second Circuit, most recently in May 2018.  In July 2018 the U.S. Attorney moved to dismiss its criminal case against Jesse Litvak and the court granted the motion to dismiss on August 1, 2018. Read More

SEC Charges Technology Fund Adviser, Founder in Fraudulent Scheme

The SEC charged Michael Rothenberg, the founder of San Francisco-based venture capital funds and his investment advisory firm with overcharging investors to fund personal projects, including sending millions of dollars to his own virtual reality production company.The SEC charged Michael Rothenberg, the founder of San Francisco-based venture capital funds and his investment advisory firm with overcharging investors to fund personal projects, including sending millions of dollars to his own virtual reality production company.

The SEC’s complaint alleges that Michael Rothenberg, 34, marketed his advisory firm, Rothenberg Ventures LLC, as uniquely positioned to identify millennial entrepreneurs and invest in “frontier technology” companies. According to SEC filings, Rothenberg’s funds had nearly 200 investors and more than $64 million in assets. The SEC’s complaint alleges that over a three-year period, Rothenberg and his firm misappropriated millions of dollars from the funds, including an estimated $7 million of excess fees, which Michael Rothenberg used to support personal business ventures he claimed were self-funded and to pay for private parties and events at high-end resorts and Bay Area sporting arenas. Read More

Court Enters Final Judgments in Eb-5 Scheme, Ordering Return of $25.8 Million to Defrauded Chinese Investors

Richard Cody - FraudOn November 19, 2018, a U.S. District Court for the Central District of California entered final judgments on consent against defendants Edward and Jean Chen, husband and wife, and five entity defendants who had been charged with defrauding Chinese investors in connection with the EB-5 Immigrant Investor Program.

On September 20, 2017, the SEC filed a complaint against Edward and Jean Chen, Home Paradise Investment Center LLC, GH Investment LP, GH Design Group LLC, Golden Galaxy LP, and Mega Home LLC, alleging that the Chens, through the entities they controlled, raised more than $22.5 million from 45 investors in China for the development of an interior design center and an 80-unit condominium building. The complaint alleged that the Chens misappropriated and misused more than $12 million of investors’ funds by purchasing residential real estate unrelated to the two EB-5 projects. The SEC’s complaint further alleged that the Chens and their companies provided investors a fake lease for the interior design center that replaced the name of the true lessor with a Chen-controlled entity and overstated the true size of the leased space five-fold.  Read More

Owner of Options Trading Website, Mark Suleymanoy Charged for Defrauding Retail Investors

On December 3,2018 the SEC charged Mark Suleymanov of Glen Cove, New York with engaging in an online binary options scheme that defrauded retail investors out of approximately $4 million. The SEC's complaint alleges that from at least 2012 to 2016, Mark Suleymanov engaged in the unregistered offer and sale of binary options, which are securities that pay out depending on the outcome of a "yes/no" proposition, such as whether a specific equity security will close at or above a specified price on a given trading day. Mark Suleymanov promoted and sold the options on the SpotFN website and other related websites he controlled, and misrepresented the profitability of investing in the binary options, as well as investors' ability to access their funds. Mark Suleymanov allegedly used software to manipulate investors' trading results to increase investor losses, and prevented many investors from withdrawing their funds. As alleged in the complaint, the SpotFN website also falsely stated that an investor's funds would be held in a separate account and used only for trading options, not for SpotFN's business expenses. In fact, Mark Suleymanov commingled investor funds in his bank accounts and misused certain of the funds for business and personal expenses.On December 3,2018 the SEC charged Mark Suleymanov of Glen Cove, New York with engaging in an online binary options scheme that defrauded retail investors out of approximately $4 million.

The SEC’s complaint alleges that from at least 2012 to 2016, Mark Suleymanov engaged in the unregistered offer and sale of binary options, which are securities that pay out depending on the outcome of a “yes/no” proposition, such as whether a specific equity security will close at or above a specified price on a given trading day. Mark Suleymanov promoted and sold the options on the SpotFN website and other related websites he controlled, and misrepresented the profitability of investing in the binary options, as well as investors’ ability to access their funds. Mark Suleymanov allegedly used software to manipulate investors’ trading results to increase investor losses, and prevented many investors from withdrawing their funds. As alleged in the complaint, the SpotFN website also falsely stated that an investor’s funds would be held in a separate account and used only for trading options, not for SpotFN’s business expenses. In fact, Mark Suleymanov commingled investor funds in his bank accounts and misused certain of the funds for business and personal expenses. Read More

Three Florida Residents charged with Orchestrating a Fraudulent Public Shell Company Scheme

The SEC announced on December 3,2018 fraud charges against a Florida-based CPA, a former broker, and his spouse, for their roles in a fraudulent scheme involving the creation and sale of a public shell company and false regulatory filings to facilitate the sale.The SEC announced on December 3,2018 fraud charges against a Florida-based CPA, a former broker, and his spouse, for their roles in a fraudulent scheme involving the creation and sale of a public shell company and false regulatory filings to facilitate the sale.

According to the SEC, David Dreslin and Michael Toups created a shell company, Anglesea Enterprises, Inc., by filing false and misleading registration statements and periodic reports with the SEC, creating a phony business plan, and appointing nominal officers and directors to conceal their control over the company. The goal of the alleged scheme was to sell Anglesea in a reverse merger for profit. The SEC also alleges that Leslie Toups served as Anglesea’s majority shareholder and director and signed filings and other documents that contained materially false and misleading statements and omissions over a multiyear period. Read More

A Kentucky Man, Jared Forrester charged for Role in Nationwide Oil Investment Scheme

Kentucky Man, Jared Forrester charged for Role in Nationwide Oil Investment SchemeThe Securities and Exchange Commission charged a 35-year-old Jared Forrester for his role in a scheme that resulted in the fraudulent offering and sale of at least $15 million of securities to more than 150 investors.

The SEC’s complaint alleges that Jared Gabriel Forrester was installed as a figurehead to run Tennessee-based Tennstar Energy Group, Inc., formerly known as Black Gold Resources, Inc. He misled investors by failing to disclose that two convicted felons actually were running the company. Despite having no background in oil drilling or production efforts, Tennstar’s website allegedly described Jared Forrester as having “an immense knowledgebase in oil and gas development and how to effectively maximize profits.” Tennstar offering materials also allegedly claimed that Jared Forrester “had a multitude of roles within the petroleum industry over the years.” The complaint further alleges that Jared Forrester even told one Tennstar investor that he had “worked his way up through the oil fields” and had been in the industry during his “whole adult life.” However, Jared Forrester’s work history mainly consisted of jobs in hotels and retail furniture sales, as well as a stint as a stock broker trainee. Read More

SEC Charges Network Marketer with Masterminding a Multimillion Dollar Ponzi and Pyramid Scheme

The SEC has charged Eric "EJ" Dalius and seven corporate entities that he controlled with defrauding investors through the promotion and operation of a multimillion dollar Ponzi and pyramid scheme. The SEC alleges that Eric "EJ" Dalius, who pled guilty in 2001 to criminal charges in connection with a long distance phone card scam, and the companies he controlled under the umbrella name "Saivian," sold securities that entitled holders to receive 20% cash back on their shopping purchases in exchange for paying a fee of $125 every 28 days, and submission of receipts. EJ Dalius and the Saivian companies falsely claimed that Saivian funded its cash back payments to members by monetizing the point-of-sale receipt data submitted by its members. Instead, they satisfied promised returns to some investors through the investments of others rather than through legitimate business activity. EJ Dalius and his companies also allegedly promised a daily residual income stream for affiliates who sold Saivian memberships to downline recruits. The SEC also alleges that EJ Dalius hid his creation and ownership of the Saivian scheme and failed to disclose his 2001 criminal conviction in connection with the earlier multi-level marketing fraud.The SEC has charged Eric “EJ” Dalius and seven corporate entities that he controlled with defrauding investors through the promotion and operation of a multimillion dollar Ponzi and pyramid scheme.

The SEC alleges that Eric “EJ” Dalius, who pled guilty in 2001 to criminal charges in connection with a long distance phone card scam, and the companies he controlled under the umbrella name “Saivian,” sold securities that entitled holders to receive 20% cash back on their shopping purchases in exchange for paying a fee of $125 every 28 days, and submission of receipts. EJ Dalius and the Saivian companies falsely claimed that Saivian funded its cash back payments to members by monetizing the point-of-sale receipt data submitted by its members. Instead, they satisfied promised returns to some investors through the investments of others rather than through legitimate business activity. EJ Dalius and his companies also allegedly promised a daily residual income stream for affiliates who sold Saivian memberships to downline recruits. The SEC also alleges that EJ Dalius hid his creation and ownership of the Saivian scheme and failed to disclose his 2001 criminal conviction in connection with the earlier multi-level marketing fraud.

According to the SEC, EJ Dalius stole a large portion of the more than $165 million generated by the scheme through investor contributions and the accumulation in value of Bitcoin that investors paid EJ Dalius to purchase memberships. The SEC alleges that EJ Dalius used Saivian investor contributions to fund personal investment accounts with tens of millions of dollars and to purchase private jet travel, luxury vacations, sports and entertainment tickets, multimillion dollar properties in Miami Beach and New York City, and an exotic sports car.

The SEC’s complaint, filed under seal in federal court in California on October 3, 2018 and unsealed on October 17, 2018 in connection with the court’s denial of the SEC’s motion for ex part emergency relief, charges EJ Dalius, Professional Realty Enterprises, Inc., Saivian LLC, Savings Network App LLC, Saving Network App Limited, Saivian International Limited, Saivian INT Limited, and Realty Share Network LLC with violating the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act, Section10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint alleges that EJ Dalius is liable for the conduct of the Saivian corporate entities as their control person and seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The complaint also names several relief defendants for the purpose of recovering funds that were unlawfully obtained.

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.

Hamilton & Associates Law Group, P.A provides ongoing corporate and securities counsel to private companies and public companies listed and publicly traded on the Frankfurt Stock Exchange, London Stock Exchange, NASDAQ Stock Market, the NYSE MKT and OTC Markets. For two decades the Firm has served private and public companies and other market participants in SEC reporting requirements, corporate law matters, securities law and going public matters. The firm’s practice areas include, but are not limited to, forensic law and investigations, SEC investigations and SEC defense, corporate law matters, compliance with the Securities Act of 1933 securities offer and sale and registration statement requirements, including Regulation A/ Regulation A+ , private placement offerings under Regulation D including Rule 504 and Rule 506 and Regulation S and PIPE Transactions as well as registration statements on Forms S-1, Form F-1, Form S-8 and Form S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including Form 8-A and Form 10 registration statements, reporting on Forms 10-Q, Form 10-K and Form 8-K, Form 6-K and SEC Schedule 14C Information and SEC Schedule 14A Proxy Statements; Regulation A / Regulation A+ offerings; all forms of going public transactions; mergers and acquisitions; applications to and compliance with the corporate governance requirements of national securities exchanges including NASDAQ and NYSE MKT and foreign listings; crowdfunding; corporate; and general contract and business transactions. The firm provides preparation of corporate documents and other transaction documents such as share purchase and exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The firm prepares the necessary documentation and assists in completing the requirements of federal and state securities laws such as FINRA and DTC for Rule 15c2-11 / Form 211 trading applications, corporate name changes, reverse and forward splits, changes of domicile and other transactions. The firm represents clients in London, Dubai, India, Germany, India, France, Israel,

SEC Charges Self-Described Promoter with Microcap Market Manipulation Scheme

The SEC charged on November 29, 2018, a self-described penny stock promoter and an entity he controlled with orchestrating a scheme to manipulate trading in at least 97 microcap stocks.On November 29, 2018, the SEC charged Eric Landis, a self-described penny stock promoter and an entity he controlled with orchestrating a scheme to manipulate trading in at least 97 microcap stocks.

According to the SEC’s complaint, Eric Landis falsely claimed to third-party media buyers for microcap companies that he would distribute promotional materials for the stocks via email lists with tens of thousands of subscribers. Yet, in reality, his distribution lists were a sham. To generate trading volume and create the false impression that he was drumming up investor interest, the SEC alleges that Eric Landis traded thousands of microcap shares himself using brokerage accounts in his own name, in the name of an entity he controlled, Ridgeview Capital Partners LLC, and in the names of several third parties. Altogether, the SEC alleges that Eric Landis placed thousands of manipulative trades over three years, including approximately 1,300 “matched trades,” which involved simultaneously selling and buying stocks in the microcap companies he was paid to promote. Read More