The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
August 22, 2018
Michael Cohen Pleads Guilty In Manhattan Federal Court To Eight Counts, Including Criminal Tax Evasion And Campaign Finance Violations / Plea Follows Filing of Eight Count Criminal Information Alleging Concealment of More Than $4 Million in Unreported Income, $280,000 in Unlawful Campaign Contributions (DOJ Release)
https://www.justice.gov/usao-sdny/pr/michael-cohen-pleads-guilty-manhattan-federal-court-eight-counts-including-criminal-tax
Michael Cohen pled guilty in the United States District Court for the Southern District of New York to an eight-count Information charging him with tax evasion, making false statements to a federally-insured bank, and campaign finance violations. Cohen had concealed over $4 million in personal income from the IRS, made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election. READ the FULL TEXT Michael Cohen INFORMATION: https://www.justice.gov/usao-sdny/press-release/file/1088966/download
https://www.justice.gov/usao-sdny/pr/michael-cohen-pleads-guilty-manhattan-federal-court-eight-counts-including-criminal-tax
Michael Cohen pled guilty in the United States District Court for the Southern District of New York to an eight-count Information charging him with tax evasion, making false statements to a federally-insured bank, and campaign finance violations. Cohen had concealed over $4 million in personal income from the IRS, made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election. READ the FULL TEXT Michael Cohen INFORMATION: https://www.justice.gov/usao-sdny/press-release/file/1088966/download
Will Shareholders Lose the Right to Sue Over Corporate Fraud? (The Intercept by Susan Antilla in partnership with the Investigative Fund)
https://theintercept.com/2018/08/21/sec-mandatory-arbitration-shareholders/
https://theintercept.com/2018/08/21/sec-mandatory-arbitration-shareholders/
Veteran reporter Susan Antilla pens another provocative article in which she considers the consequences of the current wave of deregulation. As Antilla notes:
[E]arlier this month, Securities and Exchange Commissioner Hester Peirce told Politico that she "absolutely" thinks that public companies should have the option to require arbitration, which would strip shareholders of their right to bring lawsuits like the one Kacouris filed. The comments by Peirce, a Donald Trump nominee who took office in January, amplified previous remarks by other SEC officials. Commissioner Michael Piwowar, for example, who departed his post in July, told an audience at the conservative Heritage Foundation last year that he would "encourage" companies to come talk to the SEC about putting mandatory arbitration clauses in their charters.
GUEST BLOG: Big Changes Coming for Small Firms by John Busacca (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4148/busacca-finra-coo/
Chief Executive Officer of the Broker Dealer Exchange John Busacca warns the FINRA member firm community about the ramifications of the recent requirement to designate a Chief Operations Officer (COO). As Busacca notes, most small firms utilize a part time or Rent-a-FINOP to handle their monthly or quarterly FOCUS reports; and, as is often dictated by the economics of small broker-dealer life, those part time FINOPS often act as the firm's CFO or COO. An interesting read for those in the trenches of Small FINRA broker-dealers.
California Man Claiming to Be a Billionaire Financier Sentenced to More Than Five Years in Prison in Multimillion-Dollar Fraud Scheme (DOJ Release)
https://www.justice.gov/opa/pr/california-man-claiming-be-billionaire-financier-sentenced-more-five-years-prison
https://www.justice.gov/opa/pr/california-man-claiming-be-billionaire-financier-sentenced-more-five-years-prison
Following his jury conviction on one count each of conspiracy to commit mail and wire fraudm mail fraud, conspiracy to commit money laundering, and laundering monetary instruments; two counts of engaging in monetary transactions in property derived from specified unlawful activity; and five counts of wire fraud, Kenneth Brewington was sentenced in the United States District Court for the District of Colorado to five years in prison, three years supervised release, and ordered to pay $563,526.78 in restitution. Brewington falsely told investors that he was a billionaire who, in exchange for up-front fees, could access certain financing, including hundreds of millions in cash in an overseas bank account. Brewington and his co-conspirators sold promissory notes to victims, including through a financial-services marketing company based in Denver called Compass Financial Solutions (CFS). The conspirators converted the fees towards Ponzi-like payments to other investors and for personal expenses. Former CFS CEO Brian G. Elrod and former Corporate Counsel William E. Dawn pled guilty for their roles, and Elrod was sentenced to 41 months in prison, three years of supervised release, and ordered to pay $2,440,051.29 restitution; and Dawn was sentenced to time served and ordered to pay $366,752.01 restitution.
SEC Charges Former Online Marketing Company Executives With Inflating Operating Metrics (SEC Release 2018-161)
https://www.sec.gov/news/press-release/2018-161
https://www.sec.gov/news/press-release/2018-161
Endurance International Group Holdings Inc.former chief executive Hari Ravichandran and former chief financial officer Waruna Ellawala agreed to settle SEC charges without admitting or denying them and pay $1.38 million and $34,000 respectively in disgorgement, interest, and penalties. They also agreed to cease and desist from further violations of various antifraud, reporting, books and records, and internal controls provisions of the federal securities laws. In a Complaint filed in the United States District Court for the District of Massachusetts, the SEC alleged that former Constant Contact (which became an Endurance subsidiary in 2016) CFO Harpreet Grewal hid the company's slowing customer growth from investors and inflated its publicly reported subscriber numbers. READ the FULL TEXT:
Grewal SEC Complaint https://www.sec.gov/litigation/admin/2018/33-10534.pdf
Ellawala SEC Order https://www.sec.gov/litigation/admin/2018/33-10534.pdf
Ravichandran SEC Order https://www.sec.gov/litigation/admin/2018/33-10533.pdf
Westchester Attorney Indicted For Fraud And False Statement Charges Arising From His Attempt To Embezzle From A Decedent's Estate For Which He Was Court-Appointed Administrator (DOJ Press Release)
https://www.justice.gov/usao-sdny/pr/westchester-attorney-indicted-fraud-and-false-statement-charges-arising-his-attempt
https://www.justice.gov/usao-sdny/pr/westchester-attorney-indicted-fraud-and-false-statement-charges-arising-his-attempt
Attorney Guy Parisi was indicted in the United States District Court for the Southern District of New York on conspiracy, mail fraud and false statements arising from his alleged attempt to embezzle funds from a decedent's estate for which he served as a court-appointed administrator. As alleged in part in the Indictment, on behalf of the estate, Parisiretained Stokes Asset Recovery Services as the estate's abandoned property location service in exchange for a 15% fee on the value of the estate's assets held by the NYS Comptroller. Allegedly not disclosed and actively concealed was that that Stokes was owned a relative of Parisi's with whom he had formed the asset recovery business less than two weeks before he notified the Comptroller of his retention of the company. READ the FULL TEXT INDICTMENT https://www.justice.gov/usao-sdny/press-release/file/1088626/download
Greenville Man Sentenced to 46 Months for $700,000 Fraud Scheme (DOJ Press Release)
https://www.justice.gov/usao-sc/pr/greenville-man-sentenced-46-months-700000-fraud-scheme
https://www.justice.gov/usao-sc/pr/greenville-man-sentenced-46-months-700000-fraud-scheme
Pursuant to his guilty plea to conspiracy to commit wire fraud, Calvert J. Drummond, Jr. was sentenced in the United States District Court for the District of South Carolina to 46 months in prison and ordered o pay $742,000 in restitution. Drummond represented that he could obtain alternative financing for various projects, and in exchange for a fee of several hundred thousand dollars, promised to secure bank guarantees worth millions.In fact his promises of alternative financing were pure fiction and he converted the fees for personal expenses, travel, jewelry, and other items. Sadly, this is a well-worn scam that never seems to get old or fall out of use. If it's too good to be true, it's too good to be true. I can't tell you how many victims have come to me over the decades with tales about the same fraud, and, trust me, the results of these scams are often devastating.