The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 9, 2021
Grand Jury Indicts Two in "Grandparent Scam" (DOJ Release)
HELD OVER FOR SECOND DAY: FINRA Suffers Stunning Rebuke by SEC in Tysk Appeal (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5738/finra-sec-tysk/Couple Pleads Guilty to $1.1 Million COVID-Relief Fraud After Falsely Claiming to Be Farmers (DOJ Release)
https://www.justice.gov/opa/pr/couple-pleads-guilty-11-million-covid-relief-fraud-after-falsely-claiming-be-farmers
Latoya Stanley and Johnny Philus pled guilty in the United States District Court for the Southern District of Florida for filing four fraudulent loan applications seeking over $1.1 million in forgivable Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As alleged in part in the DOJ Release:
In Stanley's PPP application, she claimed to employ 18 individuals from her company, Dream Gurl Beauty Supply LLC. Philus, meanwhile, stated that he employed 29 individuals at his company, Elegance Auto Boutique LLC. In actuality, Stanley and Philus did not employ anyone at their respective companies.In her EIDL application, Stanley claimed to generate over $800,000 in income and to employ five individuals from a farm based in the yard of her Miami home. In his EIDL application, Philus claimed to generate $400,000 in income and to employ 10 individuals from a farm located in the yard of a small residential home. In actuality, Stanley and Philus employed no one and the farms did not exist.Stanley and Philus worked together to effectuate the fraud and ultimately received over $1 million in fraudulent funds from the fraudulent PPP and EIDL applications before their schemes were uncovered.
https://www.justice.gov/usao-ri/pr/grand-jury-indicts-two-grandparent-scam
In an Indictment filed in the United States District Court for the District of Rhode Island
https://www.justice.gov/usao-ri/press-release/file/1374481/download, Schmitt Prado and Vidal Roquez were charged with conspiracy to commit wire fraud and aggravated identity theft attendant to an alleged "grandparent scam" that victimized at least nine elderly victims. As alleged in part in the DOJ Release:
https://www.justice.gov/usao-ri/press-release/file/1374481/download, Schmitt Prado and Vidal Roquez were charged with conspiracy to commit wire fraud and aggravated identity theft attendant to an alleged "grandparent scam" that victimized at least nine elderly victims. As alleged in part in the DOJ Release:
Pro Se Claimant Loses Options Claims Against E*TradeIt is alleged in the indictment that members of the conspiracy sometimes posed briefly on the telephone as the victims' relative, sounding upset or ill to disguise their voice, to further persuade the victim to provide the cash. It is alleged that victims were instructed by a co-conspirator posing as an attorney to provide the cash to a courier or bail bondsman that would arrive at their home to collect the cash. The victims were told that a "gag order" was in place on their relative's legal matter that prohibited the victims from sharing information about the matter.In many instances, victims reported to law enforcement that the person who arrived at their home to collect the cash did so in a white van and wore a work uniform type vest.It is alleged in the indictment that Vidal "Sandy" Roquez, 35, and Schmitt A. Prado, 26, participated in a conspiracy to defraud senior citizens in Portsmouth, Tiverton, Cranston, South Kingstown, and Warwick, Rhode Island, and in Shrewsbury, Northborough, and Weston, Massachusetts, of between $9,000 and $14,000.According to court documents, on February 18, 2020, a Little Compton, R.I. resident reported to his local police department that he received a call from a female purporting to be his granddaughter and that she had been arrested and was in need of bail money. A male voice then came on the telephone to speak with the targeted victim, he identified himself as an attorney, said that the victim's granddaughter had crashed into a police cruiser while taking a selfie and that $9,000 in cash was needed to bail his granddaughter out of jail. The money was to be paid to a bail bondsman, who would be arriving at his house.The Little Compton man contacted the Little Compton Police Department about the call. Police officers were at the man's house when Schmitt Prado allegedly arrived to collect the cash. Prado was arrested when it was determined that it was allegedly a scam.Further investigation following the arrest of Prado led law enforcement to identify the white van described by many of the victims. The van was traced to Vidal Roquez's residence.
In the Matter of the Arbitrations Between Jeffrey R. Sadur, Claimant, v. E*Trade Securities, LLC, Respondent (FINRA Arbitration Award / Consolidated Cases 20-03832 and 20-04145)
https://www.finra.org/sites/default/files/aao_documents/20-03832.pdf
Public customer Claimant Sadur appearing pro se filed an Arbitration Statement of Claim (20-03882) on November 18, 2020 and amended it thereafter; and he also filed a second, separate Arbitration Statement of Claim (20-04145) on December 22, 2020. In Claim 20-03882, Sadur alleged in part that Respondent E*Trade:
failed to comply with his requests for additional time to monitor the options in his account and not to sell off his positions to cover a margin call. Claimant further alleged that, in January 2021, Respondent sold two of his positions, despite him giving notice that he had made two day trades and only wanted to make one more to avoid being labeled as a patterned day trader. Claimant also alleged that, as a result, he was unable to sell at the price of his choice and a trading restriction was placed on his account.
Claimant Sought the difference between the alleged $1.62 execution and the $3.50 closing price plus commissions and cost, or, in the alternative $3,600. Further, as to the January 2021 events, he sougth $25,000 in damages or, in the alternative, the amount that would be required to be kept in his account and further damages for distress.
In Claim 20-04145, Sadur sought $10,000 in compensatory damages and he alleged in part that Respondent E*Trade:
failed to comply with his request for additional time to monitor his option positions and sold his positions without attempting to allow him to change his order or put in a limit order.
Respondent E*Trade generally denied the allegations and asserted various defenses. After consolidating the two claims, the sole FINRA Arbitrator dismissed all of Claimant's claims.