On November 17, 2015 the Securities and Exchange Commission charged Steven Watson with insider trading fraud, claiming he illegally profited from news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.
Earlier this year, the SEC charged two long-time friends, Amit Kanodia and Iftikar Ahmed, with insider trading fraud and alleged that another close friend of Kanodia also profited by trading on the confidential information provided by Kanodia. In a separate complaint filed November 12, 2015, the SEC filed fraud charges against Watson, another close friend of Kanodia. Read More
The Securities and Exchange Commission (SEC) announced that it has obtained final judgments against a former Los Angeles-based immigration attorney, his wife, his former law firm partner and five entities he controlled for conducting an investment scheme to defraud foreign investors seeking to come to the U.S. through the EB-5 Immigrant Investor Program.
On October 29, 2015, the United States District Court for the Central District of California entered a final judgment against Defendant Justin Moongyu Lee, formerly an immigration attorney with an office in Los Angeles, and five entity defendants he controlled, after granting the SEC’s motion for entry of a final judgment by default. In addition to permanently enjoining the defendants from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the judgment orders that the defendants are jointly and severally liable for disgorgement of $7,210,000, together with interest of $1,052,403.73, for a total of $8,262,403.73, and further orders Justin Lee to pay a civil penalty of $150,000. Read More
On November 12, 2015 the Securities and Exchange Commission (SEC) announced that the Court awarded summary judgment and entered a final judgment in favor of the SEC against defendants Brett Cooper, Global Funding Systems LLC, Dream Holdings, LLC, Fortitude Investing, LLC, Peninsula Waterfront Development, LP, and REOP Group Inc. The Court found that Cooper conned investors out of more than $2 million through various frauds, including advance fee schemes guaranteeing astronomical returns to investors in purported prime bank transactions and overseas debt instruments, by luring them into false “Prime Bank” or “High-Yield” investment contracts. These contracts promised exceptional returns on their investments in a matter of weeks, with little to no risk. The final judgment requires Cooper and his companies to pay more than $7.3 million as the outcome of a civil enforcement action originally filed in September, 2013.
In its pleadings and other court papers, the SEC claimed that the defendants, from at least November 2008 through about April 2012, perpetrated three fraudulent schemes and engaged in various fraudulent and deceitful acts, practices and courses of business in furtherance of those schemes. Read More
The Securities and Exchange Commission (SEC) announced that on November 5, 2015 an emergency enforcement action was filed in federal district court against Earl Miller (Miller) and two private investment vehicles that he controlled, 5 Star Commercial, LLC (5 Star Commercial) and 5 Star Capital Fund, LLC (5 Star Capital), alleging that he made material misrepresentations to investors and perpetrated a fraudulent scheme in raising investor funds for the 5 Star entities.
On November 6, 2015 the court issued a temporary restraining order (TRO) freezing the assets of Miller and the 5 Star entities, and prohibiting each of the defendants from soliciting, accepting or depositing any monies from actual or prospective investors while the TRO is in effect. The SEC’s complaint alleges that starting in 2008, Miller recruited investors for a number of private investment entities that he created. Miller recruited investors for 5 Star Commercial, 5 Star Capital and his other real estate entities from a network of predominantly novice investors, including members of the local Amish community. From July 29, 2014 to the present, he raised at least $3.9 million from more than 70 investors for his 5 Star Commercial and 5 Star Capital entities. Read More
On December 7, 2015 the Securities and Exchange Commission (SEC) announced a series of enforcement actions against lawyers across the country charged with offering EB-5 investments while not registered to act as brokers. In one case, a lawyer and his firm were charged with defrauding foreign investors in the government’s EB-5 Immigrant Investor Program, through which they seek a path to U.S. residency by investing in a specific project that creates or preserves at least 10 jobs for U.S. workers.
“Individuals and entities performing certain services and receiving commissions must be registered to legally operate as securities brokers if they’re raising money for EB-5 projects,” said Andrew Ceresney, Director of the SEC Enforcement Division. “The lawyers in these cases allegedly received commissions for selling, recommending, and facilitating EB-5 investments, and they are being held accountable for disregarding the relevant securities laws and regulations.” Read More
On November 10, 2015 the Securities and Exchange Commission (SEC) announced insider trading charges and an emergency asset freeze against cousins Zhichen Zhou and Yannan Liu. The SEC alleged that the Defendants traded in advance of the acquisition of two healthcare companies, MedAssets, Inc. and Chindex International Inc. The SEC also alleges that Zhou used funds provided by his cousin to trade illegally, resulting in profits of approximately $300,000. The SEC claimed that Liu, who was formerly employed by a private equity firm that was a bidder in both the MedAssets and Chindex International acquisitions, provided Zhou with the non-public information about the acquisitions. On November 2, 2015 when the acquisition of MedAssets was announced, the stock rose more than 30%. Similarly, Chindex International’s stock rose more than 13% on February 17, 2014, the date of the announcement. Read More
On November 9, 2015, the Securities and Exchange Commission (SEC) announced that on November 4, 2015 the Court entered a partial judgment against James Louks and FiberPop Solutions, Inc. (FiberPop). FiberPop and Louks, founder, President, CEO, Director, and Chairman of the Board of FiberPoP, both consented to the entry of the partial judgment, which imposes a permanent injunction against future violations of certain antifraud provisions of the federal securities laws. The Defendants are prohibited from raising investor capital while the SEC’s case is ongoing. They neither admitted nor denied the SEC’s allegations against them.On September 1, 2015 the SEC filed the Complaint charging Louks and FiberPop with fraud. The Complaint claimed that Louks and FiberPop had defrauded nearly 100 investors by convincing them to invest in notes that would theoretically help fund the company’s operations. The SEC alleged that Louks continued to solicit investors while knowing that none of the purported financing opportunities offered by FiberPoP during a 12-year period ever produced funding for the company or returns for investors. Read More
On November 6, 2015, the SEC announced that it charged James Alan Craig (Craig) with a market manipulation scheme. The SEC filed criminal securities fraud charges against Craig, a Scottish trader whose phony tweets caused sharp drops in the stock prices of two companies and triggered a trading halt in one of them. According to the SEC’s complaint, Craig created false accounts that looked just like the accounts of two well-known securities research firms claiming that they were both under investigation. Craig’s first false tweets caused one company’s share price to fall 28% before Nasdaq temporarily halted trading. The next day, Craig’s false tweets about a different company caused a 16% decline in that company’s share price. Both occasions, Craig bought and sold shares of the target companies in a very unsuccessful effort to profit from the sharp price swings. Read More
On November 4, 2015, the Securities and Exchange Commission (SEC) announced it has identified three more individuals to charge in a penny stock manipulation case that the agency filed last year against alleged corrupt brokers and others.
The SEC filed a request to lift the stay in its civil action so that it could file an amended penny stock complaint alleging that two additional brokers, Michael Morris and Ronald Heineman, assisted in the scheme through their brokerage firm while a third man, attorney Darren Ofsink, made illicit gains by selling unregistered shares that had no registration exemption applied.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced criminal charges against Morris and Ofsink. Read More
On September 30, 2015 the Court approved final distribution that concluded the receivership in the SEC’s litigation against Provident Capital Indemnity, Ltd. The litigation was ended by the Court’s order and was settled with the last remaining defendant, Minor Vargas Calvo, PCI’s former president, following his conviction in a parallel case. The receiver that was appointed by the Court has distributed about $2.3 million to approximately 2,000 victims of life settlement offerings supposedly bonded by PCI. Any amount that remains after payment of fees and expenses will be paid to the US Marshall for the payment of PCI’s asset forfeiture obligation in the parallel criminal case.
The SEC’s case was initiated on January 19, 2011, when the SEC charged PCI, Vargas, and PCI’s purported outside auditor Jorge Castillo (Castillo) with operating a massive life settlement bonding fraud. The complaint states that PCI provided financial guarantee bonds on life insurance policies, which intermediaries then packaged and sold as bonded life settlement investments across the U.S. and abroad. Read More