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 Securities and Exchange Commission  (“SEC”) charged Tycoon Energy, Inc. and its president, Matthew Dee Nerbonne, with orchestrating an oil and gas fraud.

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

The Securities and Exchange Commission (“SEC”) charged Alabama attorney Donald Watkins and companies he controls with defrauding professional athletes and other investors out of millions of dollars, much of which he spent on his girlfriend and to cover personal expenses like alimony, past due taxes and credit card bills.

The SEC’s complaint, filed in federal district court in Atlanta, alleges that Watkins and his companies, Watkins Pencor LLC and Masada Resource Group LLC falsely told investors that their funds would be used to support waste-to-energy ventures.

The complaint further alleges that the defendants falsely claimed that Waste Management Inc., a large, international waste treatment company, was seriously considering acquiring Watkins Pencor, Masada, and its affiliated companies in a multi-billion-dollar transaction. Read More

On August 31, 2016, a federal court in Boston, Massachusetts, entered final judgments by default against five 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 on August 31, 2016 were against the three company officers and two of the promoters of the scheme. Final judgments were entered against Sergio Henrique Tanaka, Carlos Luis da Silveira Barbosa, Claudio de Oliveira Pereira Campos, Viviane Amaral Rodrigues, and Wesley Brandao Rodrigues. Read More

On February 5, 2016, the SEC filed a complaint charging Dennis Wayne Hamilton with insider trading in the company’s stock and making more than $130,000 in illegal profits by trading on nonpublic information he learned on the job in advance of Harman’s release of its fiscal year 2014 first quarter earnings. Read More

On August 26, 2016 the Securities and Exchange Commission (“SEC”) charged Enviro Board Corporation and two of its executives with using baseless financial projections and other misleading statements to defraud investors in a venture to manufacture environmentally-friendly building materials.

The SEC alleges that Enviro Board and its co-chairmen/CEOs Glenn Camp and William Peiffer raised approximately $6 million from investors during a two-year period by using documents predicting company earnings ranging from $18 million to $95 million per year. They allegedly lacked any reasonable basis for such estimates amid persistent manufacturing problems plaguing the company since its inception. Enviro Board claimed its green materials had already been used in residential and commercial construction projects, yet the company has never developed a commercially viable mill to manufacture its products. Read More

On August 25, 2016 the Securities and Exchange Commission (“SEC”) announced that it filed a subpoena enforcement action in the U.S. District Court for the District of Columbia against Edward Panos and his wife, Allison Panos, and various entities controlled by them.

According to the SEC’s application and supporting papers, the SEC is investigating potential violations of the federal securities laws in connection with numerous microcap and penny stock companies. The application alleges that Panos incorporated private companies with little or no operations or assets, orchestrated sham private offerings, and arranged for the companies to go public through the filing of false registration statements with the SEC. Read More

The Securities and Exchange Commission (“SEC”) filed fraud charges against Secured Income Reserve, Inc. and three of its former officers alleging that Income Reserve, Ilona Mandelbaum of Palm Beach Gardens, Fla., David Zimmerman of Boca Raton, Fla., and Matthew Sage of West Palm Beach, Fla. defrauded investors when they raised $1.45 million in offerings of Income Reserve shares.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that Income Reserve and Mandelbaum, Income Reserve’s former President and CEO, made material misrepresentations and omitted material facts in Income Reserve’s Private Placement Memorandum (PPM) concerning the use of investor proceeds, the SEC-related disciplinary histories of the former officers, and Zimmerman’s retention and compensation. Mandelbaum, Zimmerman and Sage each previously consented to judgments in SEC cases charging them with securities laws violations. The complaint alleges that Sage, Income Reserve’s former Secretary, Treasurer and COO, aided and abetted Income Reserve’s and Mandelbaum’s misrepresentations and omissions concerning the officers’ backgrounds by drafting that portion of the PPM. The complaint also alleges that Income Reserve and Mandelbaum engaged in a scheme to defraud investors through the misuse of Income Reserve investor proceeds, including by funneling $131,000 of investor proceeds to Mandelbaum’s daughter, Jennifer Austin of Palm Beach Gardens, FL, towards the purchase of a home. Read More

The Securities and Exchange Commission (“SEC”) obtained a default judgment against a former high-ranking executive at Madrid-based Banco Santander, S.A. (“Santander”) for trading based on material, nonpublic information about a proposed acquisition for which the Spanish investment bank was acting as an advisor and underwriter.

On August 20, 2016, the SEC obtained a final judgment against Cedric Cañas Maillard (“Cañas”), a Spanish citizen and former executive advisor to Santander’s CEO. The SEC’s complaint alleges that Cañas learned confidentially that the investment bank had been asked by one of the world’s largest mining companies, BHP Billiton (“BHP”), to advise and help underwrite its proposed acquisition of Potash Corporation of Saskatchewan (“Potash”), one of the world’s largest producers of fertilizer minerals. Read More

On August 22, 2016 the Securities and Exchange Commission (“SEC”) announced that it has charged John Ragsdale of South Carolina with aiding and abetting a penny stock fraud involving now-defunct U.S. public company Global Earth Energy, Inc. (Global Earth), formerly based in Wilmington, North Carolina.

The SEC’s complaint, filed in the U.S. District Court for the District of South Carolina, Charleston Division, alleges that from August 2013 through mid-2014, Global Earth made materially false and misleading statements in press releases to the public and in public filings with the SEC. Most of the false and misleading statements involved Global Earth’s alleged partner, Hawk Manufacturing Corporation (Hawk), a now-defunct private company based in South Carolina. Ragsdale was Hawk’s Chief Executive Officer and Hawk’s principal decision-maker. Read More

On August 22, 2016 the Securities and Exchange Commission (“SEC”) announced that, on August 19, 2016, the SEC filed a settled civil action in U.S. District Court for the District of Columbia against Michael Andre Jones, alleging that he conducted a fraudulent offering and sales of unregistered securities.

The SEC’s complaint alleges that, from April of 2010 through July of 2013, Jones sold more than $700,000 worth of convertible promissory notes of Green Bash LLC to twenty investors in twelve states. Jones formed Green Bash and was its sole shareholder and director. Jones told investors that Green Bash arranged and promoted “event after-parties” by utilizing a “viral e-commerce platform.” In reality, the company never generated any revenue from operations. According to the complaint, in connection with the offer and sales of the notes, Jones knowingly or recklessly made multiple fraudulent statements and otherwise engaged in a scheme and practices to defraud investors. In fact, Jones lived off the proceeds of the note sales. The complaint further alleges that the Green Bash promissory notes were not registered with the SEC and were not subject to any exemption from registration and that Jones acted as an unregistered broker in conducting the offering. Finally, the complaint alleges that Jones separately defrauded two investors by selling his restricted stock in a small unrelated biotechnology company: when Jones was unable to obtain an opinion letter lifting the restrictions on the stock, he conveniently kept both the restricted stock and the funds the investors had paid him for the stock. Read More

On August 18, 2016, the federal district court in Massachusetts entered a final judgment against a senior vice president at Eastern Bank Corporation, Patrick O’Neill,  to settle allegations that he engaged in insider trading in the stock of Wainwright Bank & Trust Company.

On August 18, 2014, the SEC filed a complaint alleging that O’Neill learned through his job responsibilities that his employer was planning to acquire Wainwright, and he then tipped Watertown, Massachusetts real-estate developer Robert Bray, his friend and fellow golfer with whom he socialized at a local country club. Read More

On August 17, 2016, a jury in federal court in Manhattan returned a guilty verdict on all nine counts against former investment banker Sean Stewart in a criminal trial prosecuted by the U.S. Attorney’s Office for the Southern District of New York. The jury convicted Sean Stewart of insider trading and related charges. He is presently scheduled to be sentenced on February 17, 2017.

On May 14, 2015, the SEC charged Sean Stewart with insider trading, and the criminal case is based on similar conduct underlying the SEC’s action. The SEC’s complaint alleges that, in a scheme spanning at least four years, Stewart illegally tipped his father, Robert Stewart, about future mergers and acquisitions involving clients of two investment banks where Sean worked. Read More

On August 11, 2016 the Securities and Exchange Commission (“SEC”) charged stockbroker Paul Rampoldi and his friend with participating in an insider trading scheme to profit in advance of two major announcements out of a pharmaceutical company.

The SEC alleges that Rampoldi coordinated the insider trading with two other brokers at his firm as well as a then-IT executive at Ardea Biosciences. The Ardea employee tipped one of the brokers ahead of the company’s announcement of an agreement to license a cancer drug and later tipped him in advance of its acquisition by AstraZeneca PLC. The SEC charged the other two brokers and the Ardea employee last year. Read More

On August 12, 2016 the Securities and Exchange Commission (“SEC”) charged West Palm Beach-based Global Digital Solutions, former chairman and CEO Richard Sullivan, and former CFO David Loppert with defrauding investors by issuing false and misleading press releases purporting that the company was a budding leader in cyber arms manufacturing and security technology solutions.

According to the SEC’s complaint, Sullivan and Loppert were behind the press releases and corporate filings that falsified Global Digital’s operations and revenue projections when in reality it had no customers, never manufactured any cyber arms, and never provided any security technology services or solutions.

The SEC’s complaint alleges:

• Global Digital publicly announced in several press releases in October 2013 that one of its merger targets had become the exclusive original manufacturer of sophisticated grenade launchers for a major international client under a private label agreement with a first stage value of approximately $95 million.
• In November 2013, Global Digital issued a press release projecting future annual revenue of $60 million to $75 million during the first quarter of calendar year 2014.
• In March 2014, Global Digital announced in filings and press releases that it had made an unsolicited letter of intent to acquire one of the country’s largest arms manufacturers for $1.082 billion.

Read More

On August 9, 2016, a federal court in Texas entered contempt orders against Sameer Sethi, Praveen Sethi, and John Weber after they violated the court’s May 26, 2015 preliminary injunction restraining Sameer Sethi and Sethi Petroleum, LLC from participating in oil and gas securities offerings. The Honorable Amos L. Mazzant, U.S. District Judge for the Eastern District of Texas, entered the order after finding that the defendants had created Cambrian Resources, LLC in order to evade the Court’s injunction and continue to raise investor funds.

The SEC’s complaint against Sameer Sethi and Sethi Petroleum, filed in May 2015, alleged that they raised approximately $4 million through the fraudulent offer and sale of securities in the Sethi-North Dakota Drilling Fund-LVIII Joint Venture beginning in approximately January 2014. According to the complaint, the offering materials represented that 70 percent of investor funds would be used to acquire working interests in, to drill, and to complete 20 oil and gas wells in the Bakken Shale formation in North Dakota. Read More

On August 10, 2016, the Securities and Exchange Commission (“SEC”) filed fraud charges against an individual, Edwin Ruh Jr., and his firm, Pan Asia China Commerce Corp. Inc. (“PAC-3”), in connection with the fraudulent offering of an investment fund called PAC-3 Film Fund LLC (“PAC-3 Film Fund”).

The SEC’s complaint alleges that Ruh established the PAC-3 Film Fund to make investments in a film financing deal between a well-known film studio (“Film Studio A”) and a film financing firm (“Financing Firm A”). Pursuant to its deal with Film Studio A, Financing Firm A agreed to provide Film Studio A with 25 percent of Film Studio A’s motion picture financing for the next five years (the “Film Deal”). As part of the fund raising effort, Financing Firm A invited PAC-3 Film Fund to assist in raising money for the deal, but subject to a number of specific limitations that Financing Firm A communicated to Ruh. Notwithstanding specific contrary instructions from Financing Firm A, beginning in approximately July 2013, either directly or through intermediaries, Ruh and PAC-3 created and caused to be distributed to potential investors various versions of an offering document titled “confidential executive summary” (collectively, the “Offering Document”). Read More

On August 8, 2016 the Securities and Exchange Commission (“SEC”) charged three individuals and the now-defunct firms Global Transition Solutions, Inc. and Global Transition Solutions, LLC (collectively “Global Transition”) with fraud for misleading their current and prospective customers about the fees they charged in connection with securities transactions.

According to the SEC’s complaint, filed in federal court in Philadelphia, Pennsylvania, John Place, Global Transition’s Chief Executive Officer, John Kirk, Global Transition’s President, and his brother, Paul Kirk, Global Transition’s General Counsel and Chief Operating Officer, operated the two Global Transition firms as a “transition management” brokerage consulting business. The complaint alleges that Global Transition assisted its customers – largely public pension funds – in handling large orders to buy and sell securities when transitioning a large portfolio from one investment manager or strategy to another, or liquidating it. Read More

On August 4, 2016, Patrick Churchville, a defendant in an ongoing SEC litigation, pled guilty to an information charging him with five counts of wire fraud and one count of tax evasion in connection with orchestrating a $21 million Ponzi scheme and additional misappropriation from funds he advised. The court accepted Churchville’s plea and scheduled sentencing for October 25, 2016 at 9:30 a.m.

The SEC previously charged Churchville, the owner and president of ClearPath Wealth Management, LLC, an investment adviser formerly located in Providence, Rhode Island, and ClearPath in a civil action filed on May 7, 2015. According to the SEC’s complaint, from at least December 2010, ClearPath and Churchville diverted deposits from investors to pay other investors, used proceeds from selling particular investments to pay unrelated investors, used investors’ funds as collateral for loans to make investments for their own benefit then used other investors’ money to repay the loans, and converted investor funds into investments for ClearPath’s own benefit. Read More

On August 10, 2016 the Securities and Exchange Commission (“SEC”) charged Merrill Robertson Jr., a former player for the Philadelphia Eagles, with defrauding investors, including former coaches he knew from his time playing football for the Fork Union Military Academy and the University of Virginia.

The SEC’s complaint, filed in federal court in Richmond, Virginia, charges Robertson, Sherman Vaughn, Jr. and the company they co-owned, Cavalier Union Investments LLC. According to the complaint, the defendants promised to invest in diversified holdings but diverted nearly $6 million of the more than $10 million they raised from investors to pay for personal expenses and used other funds to repay earlier investors.

Robertson and Vaughn, both of Chesterfield, Virginia, are alleged to have lied about the unregistered debt securities they sold, saying they would yield as much as 20 percent “while providing safety and security for our investors.” According to the complaint, the defendants claimed that Cavalier had investment funds operated by experienced investment advisers, when it did not have any funds or investment advisers and was functionally insolvent shortly after it was formed. Read More

On August 4, 2016 the Securities and Exchange Commission (“SEC”) charged a cardiologist with insider trading on confidential developments as he worked on a clinical drug trial.

The SEC alleges that Dr. Edward Kosinski of Weston, Connecticut, traded in advance of two negative news announcements by Regado Biosciences, which was pursuing a drug called REG-1 to regulate clotting in patients undergoing coronary angioplasty. Kosinski, who served as principal investigator of the drug trial, got advance notice that patient enrollment in the trial was being suspended because patients had experienced severe allergic reactions. He allegedly sold all 40,000 shares of his Regado stock the following day to avoid approximately $160,000 in losses when the news became public and the stock price dropped. Read More

Posted by Brenda Hamilton. On August 17, 2016, Penny Stock Fraudster, Sandy Winick, a  Canadian, was sentenced To 78 Months In prison for masterminding the international fraud scheme.  Winick was sentenced to 78 months in prison following his July 2015 guilty plea to conspiring to commit wire fraud for running an international advance fee scheme. As part of the sentence, Winick was ordered to pay   $2,431,038.32 in restitution and $5,000,000 in forfeiture.    Read More