Securities Industry Commentator by Bill Singer Esq

Federal Court Denies J.P. Morgan Securities Expedited Discovery in Solicitation Case (BrokeAndBroker.com Blog)

CFTC Orders North Carolina Man and His Company to Pay $2.6 Million for Fraudulent Solicitation, Pool Fraud, and Failure to Register (CFTC Release)

Evans City Fiduciary Indicted for Misappropriating Funds from a Disabled Veteran's Account (DOJ Release)

Nigerian National Pleads Guilty To Participating In Scheme To Conduct Cyber Intrusions To Steal Payroll Deposits (DOJ Release)

U.S. Attorney Seeking Investors Defrauded by United Development Funding (DOJ Release)

Queens Man Admits Orchestrating $653 Million Money Laundering Conspiracy, Operating Unlicensed Money Transmitting Business, and Bribing Bank Employees

SEC Charges Health Care Co. and Two Former Employees for Accounting Improprieties (SEC Release)

SEC Charges Former Director of Investor Relations with Insider Trading (SEC Release)

SEC Awards Over $600,000 To Whistleblower Claimant

Order Determining Whistleblower Award Claims (SEC Whistleblower Award)

Cynical FINRA Press Release Lacks Urgency in Response to Arbitration Fiasco (BrokeAndBroker.com Blog)

[F]rom approximately October 2016 through at least November 2021, Neal and Golden Signals LLC engaged in binary options solicitation and trading fraud through the operation of two webpages and related social media channels on YouTube, Facebook, and Instagram.

In soliciting for their CTA and CPO business, Neal and Golden Signals LLC made numerous false statements, including falsely stating that Neal had "been consistently winning with one of the highest profit percentage ratings in the world" and that customers could "go to the Products page and pick up one of his strategies that earn him on average $500-$1,000 a day." The solicitations promised that "as long as traders follow the Golden Signals their money will grow." Contrary to the advertised claims, Neal had an overall losing trading record and was not a successful trader. The solicitations also provided client testimonials and depicted training videos created using "demo" trading accounts without being accompanied by the disclosures required under CFTC regulations.

The order further finds that 10 pool participants lost approximately $410,000 in a managed account trading pool, while approximately 1,600 customers were cheated out of at least $896,673 through the fraudulent solicitations for binary options signals, trainings, and strategy course offerings.

[F]rom in and around March 2017 to in and around March 2018, Ralston, who was the appointed fiduciary for a disabled veteran, caused approximately 44 unauthorized withdrawals by check from the disabled veteran's beneficiary account and transferred the money from these checks to himself, totaling approximately $34,411.77. The defendant used the disabled veteran's beneficiary funds to engage in transactions for the defendant's own personal benefit, including paying for his own phone bills, medical bills and mortgage payments, all in violation of the defendant's role and responsibilities as a fiduciary.

From at least in or about July 2017 through at least in or about 2018, ONUS participated in a scheme to conduct cyber intrusions of multiple user accounts maintained by a company that provides human resources and payroll services to employers across the United States (the "Company"), in order to steal payroll deposits processed by the Company.

During the course of the scheme, unauthorized access was obtained to over 5,500 Company user accounts through a cyber intrusion technique referred to as "credential stuffing."  During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches of other companies.  The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers, to compromise accounts where the user has maintained the same password.

After a Company user account was compromised, the bank account information designated by the user of the account was changed so that ONUS would receive the user's payroll to a prepaid debit card that was under ONUS's control. 

From at least in or about July 2017 through at least in or about 2018, at least approximately 5,500 Company user accounts were compromised and more than approximately $800,000 in payroll funds were fraudulently diverted to prepaid debit cards, including those under the control of ONUS.  The compromised Company user accounts were associated with employers whose payroll was processed by the Company, including employers located in the Southern District of New York.

ONUS was arrested on April 14, 2021 at San Francisco International Airport after arriving on a flight from Abuja, Nigeria.  According to statements ONUS made to U.S. Customs and Border Protection at the airport, ONUS was traveling to the United States for a two-week vacation in Las Vegas.

The United States Attorney's Office for the Northern District of Texas is searching for investors who may be victims of the conduct committed by United Development Funding (UDF) executives Hollis Morrison Greenlaw, Benjamin Lee Wissink, Cara Delin Obert, and Jeffrey Brandon Jester, announced U.S. Attorney Chad E. Meacham.

On Jan. 21, 2021, following a five day trial, a jury convicted the defendants of conspiracy to commit wire fraud, conspiracy to commit securities fraud, and eight substantive counts of securities fraud.

At trial, prosecutors proved beyond a reasonable doubt that between January 2011 and December 2015, Mr. Greenlaw and his coconspirators engaged in a scheme to defraud using investment fund entities UDF III, UDF IV, and UDF V.  

According to the Crime Victims' Rights Act, victims - in this case, the roughly 30,000 individuals who invested in UDF III, IV, and V  -  may be entitled to restitution.

In order to be kept apprised of developments in the case, victims should visit justice.gov/usao-ndtx/united-states-v-greenlaw-et-al-udf for up-to-date information on sentencing hearings (currently scheduled for May 20, 2022 at 9 a.m. in Fort Worth, Texas before U.S. District Judge Reed O'Connor) and for instructions on how to submit victim impact statements, which may be emailed to USATXN.UDFVictims@usdoj.gov.

Prosecutors are requesting that broker-dealers and financial advisors who offered UDF III, IV, and V to their clients notify investors of this information as well.

The Federal Bureau of Investigation's Dallas Field Office conducted the investigation. Assistant U.S. Attorneys Tiffany H. Eggers (NDTX Criminal Chief), Rachael Jones, Elyse Lyons, and Errin Martin prosecuted the case. U.S. District Judge Reed C. O'Connor presided over the trial.

From 2016 through 2021, Sze laundered more than $653.3 million in cash, consisting of narcotics and other illicit proceeds, utilizing a variety of financial institutions and methods. Sze routinely accepted illicit proceeds in cash and deposited the cash into financial institutions in New York, New Jersey, Pennsylvania, and elsewhere, utilizing bank accounts in the names of shell companies and conspirators. Sze then further obfuscated the source of the illegal cash by purchasing official bank checks, writing personal and business checks, and making international and domestic wires to transfer the illegal cash to thousands of individuals and entities in the United States, China, Hong Kong, and elsewhere. For his services, Sze received a fee of approximately 1 to 2 percent of the cash laundered.

From 2020 through 2021, Sze routinely provided gift cards and other things of value to employees of at least one financial institution in connection with financial transactions, seeking to corruptly influence financial institution employees to provide Sze with special benefits and to avoid suspicion and reporting of his unusual financial transactions. In 2020 and 2021, Sze provided at least $57,000 in gifts to financial institution employees in connection with financial transactions, and made millions of dollars of profits in connection with such financial transactions.

The SEC's order against Baxter finds that the company violated the negligence-based anti-fraud, reporting, books and records, and internal accounting controls provisions of the federal securities laws. From at least 1995 to 2019, Baxter used a convention to convert non-U.S. dollar denominated transactions and assets and liabilities on its financial statements that was not in accordance with U.S. GAAP or generally accepted accounting principles. Beginning in at least 2009, Baxter exploited the convention to enter into intra-company foreign exchange transactions for the sole purpose of generating foreign exchange accounting gains or avoiding foreign exchange accounting losses.  

. . .

The SEC's orders against Bohaboy and Schaible find that they violated the negligence-based anti-fraud provisions of the federal securities laws and caused Baxter's reporting and books and records violations. According to the order against Schaible he, along with others working at his direction, was primarily responsible for executing the transactions. The SEC's order against Bohaboy finds that he did not take any steps to investigate how Baxter's treasury department generated consistent gains or whether the transactions that generated the gains were permissible.

[T]hree days before the April 9, 2020 earnings release, Havrilla, then Director of Investor Relations for PAVmed, received a draft copy of the company's earnings results for the fourth quarter and full year of 2019. The following day, in breach of his duties to PAVmed and its shareholders, Havrilla allegedly purchased 227,500 shares of PAVmed stock. As alleged in the complaint, Havrilla sold these shares after the earnings release, generating profits of $80,115.

[C]laimant provided new information that significantly contributed to the success of the Covered Action; Claimant provided substantial, ongoing assistance, including participating in an interview with Commission staff and providing helpful documents on multiple occasions; and the charges in the Covered Action were based, in part, on Claimant's information.

• Securities Industry Commentator
• Bill Singer