Securities Industry Commentator by Bill Singer Esq

Ex-CEO of Irvine Financial Services Firm Sentenced to over 10 Years in Prison for Stealing $3.5 Million from Mostly Elderly Investors (DOJ Release)

Easton-Area Attorney Pleads Guilty to Defrauding Estate Out of Hundreds of Thousands of Dollars (DOJ Release)

Houston, Texas Pastor Pleads Guilty to His Role in a Multimillion-Dollar Investment Scheme (DOJ Release)

Youngsville Man Pleads Guilty to Running a Million Dollar Investment Fraud and Ponzi Scheme / Defendant bilked investors out of $1,215,530 (DOJ Release)

[In]Securities Guest Blog: Not Going Back to My Old School by Aegis Frumento Esq (BrokeAndBroker.com Blog)

Additional Key South Florida-Based Microcap Fraudsters Settle with SEC in Multi-Defendant Litigation (SEC Release)

SEC Settles False Edgar Filing Case Against Trading Entities and Obtains Default Judgment Against Individual (SEC Release)

SEC Obtains Final Judgment Against Former Investment Adviser Charged with Defrauding Clients (SEC Release)

SEC Adopts Investor Disclosure Improvements for Variable Annuities and Variable Life Insurance Contracts / Amendments would streamline and simplify critical disclosures for investors in variable annuity and life insurance products (SEC Release)

[F]rom 2014 through 2016, he solicited more than $4 million from investors, many of whom were elderly, retired or financially unsophisticated. Biyikoglu falsely told investors that their money would be placed in a Chase Bank certificate of deposit (CD), where it would earn 9 to 13 percent interest with little risk to the investors' principle.

In reality, the Chase Bank CD did not exist and Biyikoglu stole the investors' money. Biyikoglu used the pilfered funds to finance his own lavish lifestyle, including the purchase of a Rolls Royce and other luxury automobiles. By comparison, Five Star investors lost nearly everything, including one 70-year-old victim who lost nearly all of his $1.6 million investment.

To cover up his scheme, Biyikoglu created fraudulent account statements - which included the Chase Bank logo - to deceive investors into believing their money was held in a segregated account at Chase Bank and was earning interest as promised.

During the course of the scheme, 11 investors transferred just over $4 million into Five Star. These victims suffered losses of approximately $3.45 million. Another victim lost just over $100,000 to Biyikoglu.      

The defendant is an attorney licensed to practice law in New Jersey and Pennsylvania. In 2015, he was contacted by his former neighbor to provide end-of-life legal services for her ill father. Following the father's death in early 2016, Perrucci filed a motion in court seeking to be appointed as the administrator of the estate. The court granted the motion, and the defendant opened a bank account in the name of the estate. Within two weeks of opening the estate account, Perrucci withdrew more than $36,000 for his own personal use. He continued this fraud for over three years. Between March 2016 and May 2019, Perrucci fraudulently issued more than 80 checks to himself, stealing more than $300,000 and depleting the estate account.

[C]aldwell and Smith conspired to use their influence and status to persuade multiple victims to "invest" approximately $3.5 million with them. The victims' investments were purportedly in historical Chinese bonds, which are bonds issued by the former Republic of China prior to losing power to the Communist government in 1949. These bonds are not recognized by China's current government and, accordingly, have no investment value.

Smith began approaching existing clients and acquaintances in the spring of 2013 about what he described as an opportunity to invest in historical Chinese bonds. His usual sales pitch to investors was that Caldwell was (1) putting the bond deal together on behalf of investors, (2) had the bonds in his possession or was obtaining them, and (3) was brokering a deal to sell the bonds. Smith also promised that by investing money with him and Caldwell, the victims would obtain a partial ownership of the bonds and would quickly receive exponential returns on their investments. The victims were not told of the true nature of the bonds nor were they informed that no previous investor had ever obtained the promised return on an investment. The victims were encouraged to cash out any other investments they might have if they could not otherwise afford to participate.

After Smith made the fraudulent pitch, the victims were instructed to wire funds to various bank accounts under Caldwell's control. In 2013 and 2014, approximately $3.5 million was "invested." The funds were divided between Caldwell, Smith, and others. Caldwell used the approximately $900,000 that he received to pay down personal loans, mortgages, and credit cards, and maintain his lifestyle. Smith received $1.08 million. He used this money to pay down loans, purchase two luxury sport utility vehicles, place a down payment on a vacation property, and maintain his lifestyle. After time passed and investors began to question why they had not received the promised returns, Caldwell and Smith offered excuses, defended the legitimacy of the deals, and assured victim-investors that they would receive the promised returns.

According to court documents, from April 2018 through November 2018, Laing operated a Ponzi scheme through Capital, a company that he used to set up a business bank account and solicit money from the victims of his scheme. Laing represented himself to be the owner of a legitimate business, Capital, that purchased and rented out oil and gas equipment - promising investors high rates of return on their investments. Investors believed that Capital would use their money to invest in oil and gas equipment, and then lease such equipment to companies engaged in oil and gas exploration activities for a profit.  Instead, Laing used the victims' investments for his own purposes.

Throughout the scheme, Laing submitted false proposals and contracts to his victims to persuade them to invest their money with Capital. He also used funds from new investors to make payments to previous investors under the guise that the payments represented legitimate profits and returns on the victims' investments. These payments allowed the defendant to avoid detection and obtain additional funds from his victims. Laing also used his relationship with a former business associate living in northeast Louisiana to solicit money from investors.  Throughout the course of the scheme, Laing defrauded multiple investors and received nine investor payments during the period from April 25, 2018 to October 29, 2018, totaling $1,215,530.

The court entered consent judgments enjoining Brauser, Stetson, O'Rourke, Grander, ATG, SCI and HSCI from violating 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, as well as the reporting provisions of Section 13(d) of the Exchange Act and Rule 13d-1(a) thereunder. In addition, the judgments enjoin Brauser and Grander from violating the securities registration provisions of Sections 5(a) and (c) of the Securities Act, and enjoin O'Rourke and ATG from violating the anti-manipulation provisions of Sections 9(a)(1) and 9(a)(2) of the Exchange Act. Further, the judgments include permanent penny stock bars and conduct-based injunctions for Brauser, Grander, O'Rourke and ATG and 10-year penny stock bars and conduct-based injunctions for Stetson, SCI and HSCI. Finally, the judgments order Brauser, O'Rourke and Stetson to pay disgorgement, prejudgment interest and civil penalties totaling $1,175,176, $1,153,326, and $1,154,669, respectively. Monetary remedies against HSCI will be determined by the court at a later date upon motion of the SEC. The defendants neither admitted nor denied the SEC's allegations.

[T]his case involved defendants' coordinated attempts to fraudulently manipulate the securities in three issuers, Avon Products, Inc., Tower Group International, Ltd., and Rocky Mountain Chocolate Factory, Inc., through filing false tender offers on the SEC's EDGAR database and issuing a fraudulent press release. According to the complaint, defendants held securities in these companies and manipulated the companies' stock prices in an attempt to benefit their positions, thereby profiting from the resulting price increase as to each.

Final Judgment as to Defendant Strategic Capital Partners Muster Limited

https://www.sec.gov/litigation/litreleases/2020/lr24766-judgment-strategic-capital-partners.pdf

Final Judgment as to Defendant Strategic Wealth Investments, Inc.

https://www.sec.gov/litigation/litreleases/2020/lr24766-judgment-strategic-wealth-investments.pdf

Default Judgment of Defendant Nedko Nedev

https://www.sec.gov/litigation/litreleases/2020/lr24766-judgment-nedko-nedev.pdf

The Court entered a final judgment against Hafen based upon his consent to resolve all claims. The final judgment enjoins Hafen from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission has also entered an order barring Hafen from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.

• Securities Industry Commentator
• Bill Singer