The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
May 1, 2018
SEC Charges Lawyer and Two Others in Microcap Fraud Schemes (SEC Litigation Release No. 24122)
https://www.sec.gov/litigation/litreleases/2018/lr24122.htm
https://www.sec.gov/litigation/litreleases/2018/lr24122.htm
The filed a Complaint alleging that attorney Diane J. Harrison, Esq. and her husband, Michael J. Daniels manufactured at least five microcap issuers as part of a scheme to resale shares to the public. The Complaint asserts that the companies falsely appeared to be pursuing bona fide business with independent management and shareholders, among which were Harrison and Daniels' friends and family (including defendant Catherine A. Bradaick-Zolla). The Complaint further alleges that Daniels and Harrison sold four of the five companies to Andy Z. Fan of Las Vegas, Nevada and, along with Bradaick-Zolla, continued to provide support to Fan, in part, by preparing false SEC filings.The SEC's complaint also alleges that Harrison participated in a separate fraudulent scheme involving at least 11 undisclosed blank check companies secretly controlled by Alvin S. Mirman and Sheldon R. Rose, against whom the SEC previously filed enforcement actions and who were convicted of criminal charges and sentenced to prison. Separately, the SEC had settled with Fan, AF Ocean Investment Management Company, and ChinAmerica Andy Movie Entertainment Media Company. (The Fan, AF Ocean, ChinAmerica matters reported at http://www.rrbdlaw.com/3946/securities-industry-commentator/)
Court Enters Final Judgment Against Microcap Executive and Co-Defendant Involved in Fraudulent Scheme (SEC Litigation Release No. 24123))
https://www.sec.gov/litigation/litreleases/2018/lr24123.htmThe United States District Court for the District of Massachusetts entered a default judgment against Christopher R. Esposito, the owner and Managing Director of Lionshare Ventures, LLC. The SEC's Complaint alleged Esposito, Lionshare, and several co-defendants were involved in raising over $550,000 through an unregistered offering of Lionshare securities and then misappropriated $375,000 of which $75,000 was used to acquire control of Cannabiz Mobile, Inc.Thereafter, Esposito and Lionshare, and co-defendant Anthony Jay Pignatello allegedly concealed Esposito and Lionshare's de facto control of Cannabiz and a large percentage of Cannabiz's securities in order to evade SEC Rule 144 through such purported subterfuge as installing co-defendant James Gondolfe as the sole officer and director of Cannabiz.
https://www.sec.gov/litigation/litreleases/2018/lr24123.htmThe United States District Court for the District of Massachusetts entered a default judgment against Christopher R. Esposito, the owner and Managing Director of Lionshare Ventures, LLC. The SEC's Complaint alleged Esposito, Lionshare, and several co-defendants were involved in raising over $550,000 through an unregistered offering of Lionshare securities and then misappropriated $375,000 of which $75,000 was used to acquire control of Cannabiz Mobile, Inc.Thereafter, Esposito and Lionshare, and co-defendant Anthony Jay Pignatello allegedly concealed Esposito and Lionshare's de facto control of Cannabiz and a large percentage of Cannabiz's securities in order to evade SEC Rule 144 through such purported subterfuge as installing co-defendant James Gondolfe as the sole officer and director of Cannabiz.
The final default judgment, entered against Esposito enjoins Esposito him from future violations of the Securities Act and the Securities Exchange Act; orders jointly and severally that Esposito and Lionshare pay disgorgement and pre-judgment interest in the total amount of $1,107,413 and a civil penalty of $160,000. Additionally, Esposito is barred fom acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, and permanently bars him from participating in an offering of a penny stock. On December 11, 2017, the Court entered a final judgment by consent against Galizio. That judgment enjoined Galizio from future violations of the Securities Act and ordered her to pay disgorgement of $22,500 and a civil penalty of $7,500. The judgment also barred Galizio from participating in an offering of a penny stock.The court previously entered final default judgments against Gondolfe and Cannabiz on January 27, 2017 and against Lionshare on April 14, 2017. The SEC's litigation in this matter continues against Pignatello.
UPDATE: Medical Marijuana Biz Goes Up In SEC Smoke (BrokeAndBroker.com Blog) http://www.brokeandbroker.com/3952/cannabiz-sec/
WARNING! Today's BrokeAndBroker.com Blog updates its earlier report about a Securities and Exchange Commission case against a medical marijuana company. This story includes discussion of drugs and drug use,depictions of drug use and drug users, and contains obscene language . If you are easily offended, please do not read beyond this point. Readers of today's article may experience dizziness, nausea, projectile vomiting, constipation, and a four-hour erection.
CFTC Charges Charles H. McAllister of Alabama with Engaging in a Fraudulent Precious Metals Scheme / McAllister Charged with Two Counts of Wire Fraud and One Count of Money Laundering in a Related Criminal Action (CFTC Release 7720-18)
https://www.cftc.gov/PressRoom/PressReleases/7720-18?utm_source=govdelivery
CFTC filed a Complaint in the United States District Court for the Western District of Texas against Charles H. McAllister,charging him with fraud and misappropriation in connection with contracts of sale of precious metals through his company, BullionDirect, Inc. that purportedly resulted in over $16 million in customer losses.. CFTC alleges that McAllister has never been registered with the CFTC in any capacity. CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, trading bans, a civil monetary penalty, and a permanent injunction against future violations of federal commodities laws. READ the FULL TEXT CFTC Complaint https://www.cftc.gov/sites/default/files/2018-04/enfmcallistercomplaint04302018.pdf In a parallel criminal proceeding, the United States Attorney's Office for the Western District of Texas charged McAllister with two counts of wire fraud and one count of money laundering.
Panasonic Charged With FCPA and Accounting Fraud Violations (SEC Release 2018-73)
https://www.sec.gov/news/press-release/2018-73
https://www.sec.gov/news/press-release/2018-73
Panasonic Corp. consented to an SEC Order finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the Securities Exchange Act of 1934, and ordering it to pay approximately $143 million in disgorgement and pre-judgement interest. In pertinent part, the SEC Order According to the SEC's order found that the company's U.S. subsidiary, Panasonic Avionics Corp. (PAC), offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC obtain and retain business..PAC ultimately retained the official and paid approximately $875,000 for a position that required little to no work, using an unrelated third-party vendor to conceal the payments. In a related criminal matter, DOJ announced that PAC would pay a $137 million as part of a deferred prosecution agreement. READ the FULL TEXT SEC ORDER https://www.sec.gov/litigation/admin/2018/34-83128.pdf. PANASONIC AVIONICS CORPORATION AGREES TO PAY $137 MILLION TO RESOLVE FOREIGN CORRUPT PRACTICES ACT CHARGES (DOJ Press Release 18-551) https://www.justice.gov/usao-cdca/pr/panasonic-avionics-corporation-agrees-pay-137-million-resolve-foreign-corrupt-practices Additionally, PAC agreed to continue to cooperate with the department's investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for at least two years.
Cotton Trading by Glencore Agriculture B.V. and Glencore Ltd. Was under Common Control by Head of Glencore Cotton Trading (CFTC Release 7721-18)
https://www.cftc.gov/PressRoom/PressReleases/7721-18?utm_source=govdelivery
https://www.cftc.gov/PressRoom/PressReleases/7721-18?utm_source=govdelivery
The CFTC issued an order filing and settling charges against Glencore Agriculture B.V., f/k/a Glencore Grain B.V. (Glencore B.V.), and Glencore Ltd., finding that during May 2013, June 2013, May 2014, and June 2014, Glencore B.V. and Glencore Ltd. held net positions in the ICE Futures Cotton No. 2 contracts that when aggregated exceeded speculative position limits. The CFTC Order found that on twenty-four occasions between January 2013 and November 2015, Glencore B.V. and Glencore Ltd. executed wash trades when they exchanged futures for physical transactions opposite each other's cotton futures trading accounts, even though their accounts were not independently controlled. Finally, on at least two occasions in 2013 and 2014, Glencore B.V. submitted to the CFTC a Form 304 that failed to represent accurately all required information. The CFTC Order requires Glencore B.V. and Glencore Ltd., jointly and severally, to pay a $2 million civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC Regulations, as charged. READ the FULL TEXT CFTC Order. https://www.cftc.gov/sites/default/files/2018-04/enfglencoreorder04302018.pdf