Securities Industry Commentator by Bill Singer Esq

[B]eginning in or about March 2016, Alhassan and his unindicted co-conspirators operated a romance scheme based, in part, in Ghana and in Charlotte.  The indictment alleges that Alhassan and his co-conspirators, using fake identities, used online dating websites and other methods to target potential fraud victims, who were frequently elderly, with false promises of a romantic relationship.  As part of the scheme and in addition to developing fake romantic relationships with the victims, Alhassan and others falsely claimed to own large quantities of gold located in Ghana and falsely told victims that the victims needed to send funds via wire transfer services, money orders, and in cash to Alhassan and his co-conspirators to help ship the gold from Ghana to the United States, or to another foreign country, where the gold could be sold.  The indictment further alleges that Alhassan and his co-conspirators falsely told the victims that they would receive a share of the profits when the gold was sold or brought into the United States.

According to the indictment, Alhassan and his co-conspirators further induced victims to send funds under the guise of securing travel documents for the person with whom the victim believed to be in a romantic relationship. To induce the victims to send even more money, Alhassand and his co-conspirators used fictitious problems, including problems with travel visas, customs related issues, etc.  The indictment alleges that Alhassan and his co-conspirators continued to call, text, and e-mail the victims and insist that additional payments be made for new fees, until the victims either ran out of money or discovered the fraudulent nature of the scheme. The indictment alleges that the total loss associated with the scheme is more than $1,000,000.

From January 2011 through November 2017, Garvin and others engineered fraudulent short sale "flips" of various New Jersey properties with mortgages that were in default, and also fraudulently obtained numerous home equity lines of credit, or "HELOC" loans, using fraudulent documents and information.

The conspirators allegedly arranged simultaneous fraudulent transactions on the same target property. In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy.

In the second transaction, the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy. The second transaction frequently closed for significantly more or even double the price of the first transaction.

Garvin and others allegedly rigged the short sale process at each step to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud. The conspirators used various kinds of phony documents and misrepresentations, including generating false pre-approval letters from a New Jersey corporation controlled by a conspirator and generating phony deeds that backdated the closing date of the first transactions.

To obtain HELOC loans, the conspirators allegedly submitted loan applications in the name of straw borrowers, who did not in fact reside at the subject properties, and used false and fraudulent information - including false pay stubs and tax information - to make it appear as though the straw borrowers made more money than they actually did. The conspirators frequently applied for multiple HELOC loans on the same property nearly contemporaneously, withholding from each lender the existence of other applications.

The conspirators then disbursed the funds received from financial institutions - which totaled millions of dollars - into various accounts they controlled to conceal their illegal activities and split the profits. . . .

[F]rom February 2015 to April 2017, Texas E&P raised $6.1 million from retail investors by offering and selling interests in joint ventures formed to drill and operate two separate oil well projects. Contrary to representations made to investors, Plummer allegedly spent nearly $400,000 of these investor funds improperly for personal or improper business expenses, including entertainment, travel, retail expenses, and income taxes.

Between January and April 2018, Respondent, while associated with the Firm, altered five documents pertaining to four customers by adding and changing information on those documents after the customers signed them. The information included responses to questions on tax forms, an account number on a Letter of Authorization ("LOA") to transfer funds between the customer's accounts, and customer information on a retirement plan account application. Respondent made the alterations to expedite the Firm's processing of the documents and no customers were harmed.

However, Respondent did not obtain permission from the customers to alter the signed documents, and shortly before Respondent altered the first of the five documents at issue, the Firm had specifically warned her about the importance of entering accurate information into the Firm's systems in connection with an inquiry involving a customer wire transaction. 

When Respondent's supervisor inquired about the alterations to the LOA, Respondent attempted to conceal her conduct by falsely claiming that she sought and received permission from the customer to alter the LOA via emails with the customer. When Respondent's supervisor asked the Respondent to provide those emails, Respondent fabricated two emails. First, Respondent created a fictitious email to create the misimpression that she had sent the customer the altered LOA and asked the customer to sign it. Respondent then created a second fictitious email to create the misimpression that the customer had sent a reply email that attached a signed version of the altered LOA. Respondent subsequently provided the fictitious emails to her supervisor even though they were not actual communications with the customer. 

By altering customer documents and then subsequently fabricating emails with a customer in an attempt to conceal her misconduct, Respondent engaged in unethical conduct in violation of FINRA Rule 2010. In addition, Respondent violated FINRA Rules 4511 and 2010 by causing her Firm to maintain inaccurate books and records in violation of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder.  

• Securities Industry Commentator
• Bill Singer