The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
August 27, 2018
Entertainment Industry Business Manager Convicted of Defrauding Celebrity Clients, Bankruptcy Fraud and Tax Charges (DOJ Release)
https://www.justice.gov/opa/pr/entertainment-industry-business-manager-convicted-defrauding-celebrity-clients-bankruptcy
https://www.justice.gov/opa/pr/entertainment-industry-business-manager-convicted-defrauding-celebrity-clients-bankruptcy
Kevin R. Foster was convicted after a jury trial in the United States District Court for the Southern District of Ohio on 16 charges of wire fraud, money laundering, bankruptcy fraud, tax evasion and filing a false tax return, Foster, as the principal of his management/accounting firm, Foster & Firm, Inc., and as business manager for Shaffer Smith, a/k/a Ne-Yo, induced Smith to invest $2 million into OXYwater under false representations. Without his client's knowledge, Foster invested an additional $1.5 million of Smith's money into the product without his consent and fraudulently took out $1.4 million in lines of credit under Smith's name by forging his signature. Foster also defrauded a second celebrity client, Brian McKnight, as a way to secure money to help keep Imperial solvent. Foster also stole millions of dollars from Smith and McKnight's bank accounts in order to fund the operations of OXYwater as well as his own lavish lifestyle, including multiple luxury vehicles, a personal driver, designer watches, and season tickets to the New York Giants and New York Knicks. Smith and McKnight agreed to invest in the company, not knowing that Foster was receiving a substantial commission based on their investments, that he served as an officer/controller of Imperial and that he controlled an Imperial bank account. In addition, Foster failed to report on his 2012 and 2013 tax returns the millions of dollars that he stole from Smith and McKnight. He also claimed millions of dollars in bogus deductions in order to further reduce his tax liability.
Chicago Financial Advisor Guilty of Fraud for Swindling Investors and Family out of More Than $2 Million (DOJ Release)
https://www.justice.gov/usao-ndil/pr/chicago-financial-advisor-guilty-fraud-swindling-investors-and-family-out-more-2
https://www.justice.gov/usao-ndil/pr/chicago-financial-advisor-guilty-fraud-swindling-investors-and-family-out-more-2
Vishal Savla, who operated the VCAP LLC investment fund, pled guilty in the United States District Court for the Northern District of Illinois to one count of wire fraud. After raising about $2.3 million from investors, VCAP lost about 96% of its investors' funds in 2014 and over 99% in the first eleven months of 2016, While continuing to solicit and accept investment cash, Savla hid the losses, in part, by representing to clients that he accidentally committed a "fat finger trade, which cause a one-day loss of about 90%; in fact, no such error occurred. Further, Savla spent about $260,000 of investor funds for his own personal benefit, including living expenses. READ FULL TEXT Plea Agreement https://www.justice.gov/usao-ndil/press-release/file/1089811/download
Ya Hear The One About The Stockbroker Who Listened to Idiots and Never Got His Record Expunged? (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4137/finra-expungement/So . . . this guy calls me a few weeks ago and tells me this story about how he's been in the biz for a few decades and when the markets crashed for the Great Recession, he got two customer complaints, one was bull shit and his firm told the customer to shove it, the other case, well, you know, he hadn't done anything wrong but the firm settled it for peanuts, nuisance value they told him, and he was pissed off because he hadn't done anything wrong, and he was all set to fight it to the bloody end, when his employer said just go with the flow and move on, but he said no way, and refused to pay one penny towards the few thousand in cash handed over in this extortion racket to the customer. We spent a couple of hours on the phone over a few calls and I got the details, which pretty much supported the guy's version of events -- plus, being the circumspect kind of fellow that I am, I poked around on my own and confirmed his whole tale of woe about how "I really, really, really didn't do anything wrong but they settled one of the complaints anyway." I set out the costs for undertaking the filing of two expungement claims, detailed all the what-ifs, and gave my opinion that this unhappy stockbroker had a damn good shot at expunging the unsettled matter and a very good shot at clearing out the settled one too. Perhaps the most challenging aspect of the battle-plan was whether to file an expungement for the unsettled matter first (at least get that mark quickly removed) and then, using the momentum so to speak, seek an expungement of the second matter without having to deal with a "Yes" answer for the first matter (which, at that point, would have been expunged). I also presented the option of simply filing a two-for-one FINRA arbitration expungement claim and saving some time and money. My preference was to opt for the two expungements in one application. A couple of weeks later, the stockbroker telephones me and says that he spoke to some guys in the office and they told him that you can't get a settled customer complaint expunged. No way that FINRA will ever do that, those geniuses opined. On top of that, if you have two -- count 'em -- two complaints, FINRA will never, ever expunge the settled one under such circumstances. In response, I summoned up my 36 years of savvy and experience on Wall Street and told the potential client that the idiots who told him that he couldn't get an expungement of a settled matter were, just that, idiots. Well, he said, they seemed to know what they were talking about. Are any of them lawyers, I asked. No but, again, they were positive that I would only be wasting my money. Sensing that this potential client had fallen asleep next to an idiot pod near the office water cooler that had been planted by one of the idiots giving him wrong advice, I wished him well and simply got on with my life, having lost two hours of time that I will never recapture. Oh, and just for the hell of it, I hope that he reads today's BrokeAndBroker.com Blog about another stockbroker who didn't pay attention to the legal advice dispensed around the office water-cooler and he now has two "YES" answers on their way to two "NO" answers.
http://www.brokeandbroker.com/4137/finra-expungement/So . . . this guy calls me a few weeks ago and tells me this story about how he's been in the biz for a few decades and when the markets crashed for the Great Recession, he got two customer complaints, one was bull shit and his firm told the customer to shove it, the other case, well, you know, he hadn't done anything wrong but the firm settled it for peanuts, nuisance value they told him, and he was pissed off because he hadn't done anything wrong, and he was all set to fight it to the bloody end, when his employer said just go with the flow and move on, but he said no way, and refused to pay one penny towards the few thousand in cash handed over in this extortion racket to the customer. We spent a couple of hours on the phone over a few calls and I got the details, which pretty much supported the guy's version of events -- plus, being the circumspect kind of fellow that I am, I poked around on my own and confirmed his whole tale of woe about how "I really, really, really didn't do anything wrong but they settled one of the complaints anyway." I set out the costs for undertaking the filing of two expungement claims, detailed all the what-ifs, and gave my opinion that this unhappy stockbroker had a damn good shot at expunging the unsettled matter and a very good shot at clearing out the settled one too. Perhaps the most challenging aspect of the battle-plan was whether to file an expungement for the unsettled matter first (at least get that mark quickly removed) and then, using the momentum so to speak, seek an expungement of the second matter without having to deal with a "Yes" answer for the first matter (which, at that point, would have been expunged). I also presented the option of simply filing a two-for-one FINRA arbitration expungement claim and saving some time and money. My preference was to opt for the two expungements in one application. A couple of weeks later, the stockbroker telephones me and says that he spoke to some guys in the office and they told him that you can't get a settled customer complaint expunged. No way that FINRA will ever do that, those geniuses opined. On top of that, if you have two -- count 'em -- two complaints, FINRA will never, ever expunge the settled one under such circumstances. In response, I summoned up my 36 years of savvy and experience on Wall Street and told the potential client that the idiots who told him that he couldn't get an expungement of a settled matter were, just that, idiots. Well, he said, they seemed to know what they were talking about. Are any of them lawyers, I asked. No but, again, they were positive that I would only be wasting my money. Sensing that this potential client had fallen asleep next to an idiot pod near the office water cooler that had been planted by one of the idiots giving him wrong advice, I wished him well and simply got on with my life, having lost two hours of time that I will never recapture. Oh, and just for the hell of it, I hope that he reads today's BrokeAndBroker.com Blog about another stockbroker who didn't pay attention to the legal advice dispensed around the office water-cooler and he now has two "YES" answers on their way to two "NO" answers.
CFTC Wins Trial against Virtual Currency Fraudster / Court Orders Defendants to Pay over $1.1 Million in Penalties and Restitution in Connection with the "Vicious Defrauding of Customers" (CFTC Release 7774-18)
https://www.cftc.gov/PressRoom/PressReleases/7774-18
After a four-day bench trial, the United States District Court for the Easter District of New York entered final judgment ordering Patrick K. McDonnell and his company CabbageTech, Corp. d/b/a Coin Drop Markets. The CFTC had alleged that the defendants engaged in a virtual currency scheme to induce customers to send money and virtual currencies to CDM, purportedly in exchange for real-time expert virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under McDonnell's direction. On a joint and several basis, the Defendants were ordered to pay $290,429.29 in restitution and a $871,287.87 civil monetary penalty; and they were permanently enjoined them from further violations of the Commodity Exchange Act and CFTC Regulations, as charged. READ the FULL TEXT:
Memorandum https://www.cftc.gov/PressRoom/PressReleases/7774-18
Final Judgment/Order https://www.cftc.gov/sites/default/files/2018-08/enfdropmarketsorder082318.pdf
https://www.justice.gov/opa/pr/ukrainian-sentenced-trafficking-hacked-financial-information
Ruslan Yeliseyev sold stolen financial information on underground Russian-speaking criminal websites. The information, which had been stolen from about 40,000 hacked computers, included over 62,000 credit card numbers as well as usernames and passwords to victims' online banking accounts. Following his extradition to the United States,Yeliseyev was sentenced today to six years in prison for trafficking stolen financial information obtained through computer hacking.