Final Judgment Entered in “Prime Bank” Fraud – By: Brenda Hamilton

Prime Banking Scam

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. Read More

Traders Charged With Hacking Lawyers – Posted by Brenda Hamilton

 

Brenda Hamilton Lawyer Blog

On December 27, 2016, the Securities and Exchange Commission charged three Chinese traders with fraudulently trading on hacked nonpublic market-moving information stolen from two prominent New York-based law firms, racking up almost $3 million in illegal profits.  The SEC also is seeking an asset freeze that prevents the traders from cashing in on their illicit gains.  The enforcement action marks the first time the SEC has charged hacking into a law firm’s computer network.

The SEC’s complaint alleges that Iat Hong, Bo Zheng, and Hung Chin executed a deceptive scheme to hack into the networks of two law firms and steal confidential information pertaining to firm clients that were considering mergers or acquisitions.  Read More

General Cable Corporation Settles FCPA Charges – Posted by Brenda Hamilton

general-cable-brenda-hamilton-lawyer-blog

Posted by Brenda Hamilton

One December 29, 2016, the Securities and Exchange Commission announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.

According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012. Read More

Blackbird Capital Partners LLC and Owners Charged in Ponzi Scheme

Blackbird Capital Partners Ponzi SchemeOn November 28, 2016, the Securities and Exchange Commission (“SEC”) obtained a temporary restraining order and an emergency asset freeze in a $3 million offering fraud and Ponzi scheme orchestrated by Andrew Kelley, Paul Shumway and their company Blackbird Capital Partners, LLC, a former Commodity Trading Advisor located in Draper, Utah.

The SEC’s complaint, filed in federal court in Utah, alleges that since at least September 2014, Kelley and Shumway solicited several investors to invest at least $3.1 million with Blackbird, or through a separate “friends and family” account, which Kelley claimed he managed as a proprietary trading fund. Read More

Matthew and William Griffin Charged with Fraud

Matthew and William Griffin - FraudOn November 23, 2016, the Securities and Exchange Commission (“SEC”) filed a civil action charging brothers Matthew Griffin and William Griffin with fraudulently offering interests in two Texas partnerships.

The SEC alleges that, between November 2013 and July 2014, the Griffins, through their company, Payson Petroleum, Inc., conducted a fraudulent two-phase offering of interests in two Texas partnerships, raising $23 million from approximately 150 investors for the purpose of developing three oil and gas wells. The SEC further alleges that the Griffins misled investors about Payson’s promised participation in the program and about Payson’s compensation as the program’s sponsor and operator. Read More

CEO of Warrior Girl Corp. Jason Kumpf Charged with Fraud

Jason Kumpf - Warrior Girl Corp.On November 21, 2016, the Securities and Exchange Commission (“SEC”) charged Jason William Kumpf, the former CEO and president of microcap issuer Warrior Girl Corp. and a resident of San Francisco, California, with fraud based on his involvement in the issuance of false and misleading public statements concerning Warrior Girl.

According to the SEC’s complaint, filed on November 21, 2016 in the U.S. District Court for the Southern District of New York, Kumpf, along with two individuals that were previously charged by the SEC, drafted a press release that Warrior Girl issued on or about July 1, 2010. Read More

FBI Informant Guy Gentile Pushes Back

FBI informant-Guy-Gentile FBI Indictment

In September, we wrote about Guy Gentile, the owner of two successful stock brokerages, and his troubles with the U.S. Department of Justice (“DOJ”).  According to the DOJ, back in 2007-2008, Guy Gentile had become involved in the promotion of two penny stocks, Raven Gold Corporation (RVNG) and Kentucky USA Energy, Inc. (KYUS).  The Securities and Exchange Commission (“SEC”) opened an investigation into both, and the DOJ took an interest as well.  The individuals who paid for the promotions were different, but the promoters were the same:  Canadians Mike Taxon and Itamar Cohen.  Taxon and Cohen recruited Gentile because they needed a trader who could create the appearance of a market for their first play, RVNG.

The operation followed a pattern familiar to anyone who follows penny stock pump and dump operations.  The Canadians who controlled the RVNG shell gave a large block of unrestricted stock to the promoters, who would use it to get trading going, and eventually to pay for a hard mailer, other advertising, and manipulative trading.  Some friendly traders and stock touts were willing to accept free RVNG shares as kickbacks for open market purchases of the stock.  The company’s CEO began to issue press releases that would be used in the preparation of the mailer.  The mailer was distributed in mid-July 2007, and not surprisingly, it drove price and volume.  Before the promotion began, the stock price had hovered around $0.80 a share; at the promo’s height, it hit $1.73.   Read More

William Allen and Susan Daub Plead Guilty to Wire Fraud

William Allen and Susan Daub - Securities FraudOn November 14, 2016 and November 21, 2016, William Allen and Susan Daub pled guilty in federal court to criminal wire fraud and other charges in connection with an investment scheme involving fraudulent loans to professional athletes. The criminal charges arise from the same conduct alleged in a related SEC civil enforcement action.

Allen and Daub both pled guilty to two counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of charging a money transaction in proceeds of a specified unlawful activity. Allen and Daub were arrested on these charges in June 2015. As part of the fraud, Allen and Daub collected funds from investors for certain fictitious or oversubscribed loans and created the false impression that athletes were repaying certain fictitious or oversubscribed loans on schedule by making scheduled monthly payments to investors from new investor funds. Read More

Stanley Fortenberry Pleads Guilty to $900,000 Fraud

Stanley Fortenberry - FraudOn November 18, 2016, Stanley Jonathan Fortenberry (a/k/a S.J., John, or Johnny Fortenberry) of San Angelo, Texas, pleaded guilty to an indictment charging him with obstruction of justice and other charges in connection with two investment companies he ran that defrauded investors out of approximately $900,000 over a four-year period.

On April 28, 2014, the SEC instituted public administrative and cease-and-desist proceedings against Fortenberry. The Division of Enforcement alleged that Fortenberry ran an investment company called Premier Investment Fund (Premier), which raised funds from investors for social media projects run by another company with ties to the country music industry. Read More

Former KIT Digital Inc. President Gavin Campion Charged with Securities Fraud

Gavin Campion - Securities FraudThe Securities and Exchange Commission (“SEC”) charged Gavin Campion, the former president of KIT Digital Inc., with securities fraud.

The SEC’s complaint, filed in federal court in New York on November 15, alleges that over a one-year period ending in late 2011 Campion – along with Kaleil Isaza Tuzman, then KIT Digital’s CEO, and Robin Smyth, then its chief financial officer – caused KIT Digital to recognize more than $25 million in false revenue from at least a dozen sham license agreements that inflated KIT Digital’s publicly reported financial results. Read More