The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
August 1, 2022
https://www.brokeandbroker.com/6588/finra-equity-justice/
In a recent FINRA Arbitration Award, an arbitrator mounts Rocinante and grabs a lance. Even though we are merely Sancho Pancho (who went along for the ride), still, we get to smile at the spectacle of Don Quixote tilting at windmills. Equity, due process, and justice vanquish the heartless, amoral application of the law. In these plague days, that's a nice change of pace. Also, it's one hell of a wonderful FINRA Arbitration Award penned with eloquence.
SEC Charges Eleven Individuals in $300 Million Crypto Pyramid Scheme / Alleged Fraudulent Blockchain Scheme Spanned Multiple Countries Including U.S., Russia (SEC Release)
https://www.sec.gov/news/press-release/2022-134
https://www.sec.gov/news/press-release/2022-134, the named as Defendants: Vladimir Okhotnikov; Jane Doe a/k/a Lola Ferrari; Mikhail Sergeev; Sergey Maslakov; Samuel D. Ellis, Mark F. Hamlin, Sarah L. Thiessen; Carlos L. Martinez; Ronald R. Deering; Cheri Beth Bowen; and Alisha R. Shepperd.
Without admitting or denying the allegations, two of the defendants, Ellis and Theissen, agreed to settle the charges and to be permanently enjoined from future violations of the charged provisions and certain other activity. Additionally, Ellis agreed to pay disgorgement and civil penalties, and Theissen will be required to pay disgorgement and civil penalties as determined by the court. As alleged in part in the SEC Release:
[I]n January 2020, Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov launched Forsage.io, a website that allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains. However, Forsage allegedly has operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme. Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure.
Despite cease-and-desist actions against Forsage for operating as a fraud in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.
Suburban Chicago Man Sentenced to Three Years in Federal Prison for Laundering Proceeds from Telemarketing Scheme That Defrauded Elderly Victims (DOJ Release)
https://www.justice.gov/usao-ndil/pr/suburban-chicago-man-sentenced-three-years-federal-prison-laundering-proceeds
Hirenkumar P. Chaudhari, 29, pled guilty in the United States District Court for the Northern District of Illinois to money laundering, and he was sentenced to three years in prison and ordered to pay $6,500 in restitution. The DOJ Release alleges in part that Chaudhari:
used a phony Indian passport, false name, and false address to open multiple bank accounts in the United States to receive money from victims of the telemarketing scheme. The scheme involved phone calls from people falsely claiming to be associated with, among other agencies, the Social Security Administration and U.S. Department of Justice, stating that a victim's identity had been stolen and that it was necessary to transfer money to various bank accounts, including the accounts opened by Chaudhari.One of the victims was a retired nurse from Massachusetts who transferred a total of more than $900,000 from her bank and retirement accounts to accounts controlled by Chaudhari or others. On April 19, 2018 - one day after Chaudhari opened an account and received a $7,000 transfer from the Massachusetts victim - Chaudhari entered a bank branch in Chicago and withdrew $6,500. Chaudhari engaged in this financial transaction knowing that the money represented proceeds of unlawful activity.
https://www.justice.gov/usao-edla/pr/dallas-based-financial-manager-pleads-guilty-embezzling-over-200000-client-0
Katie Laroche pled guilty in the United States District Court for the Eastern District of Louisiana to an Information charging her with wire fraud. As alleged in part in the DOJ Release:
LAROCHE created, owned, and operated a business, Capital City Consulting Firm, that purported to provide financial management services. Victim 1 was a client of LAROCHE's, and LAROCHE was responsible for performing bookkeeping, accounting, and other financial services for Victim 1 and Victim 1's businesses. LAROCHE had signatory authority and access to Victim 1's bank accounts.From about February 2015 through March 2021, LAROCHE engaged in a scheme to defraud Victim 1 and Victim 1's businesses by withdrawing funds from Victim 1's accounts under false pretenses and using the funds for her own benefit. Specifically, LAROCHE falsely represented that the funds were being used to pay federal income taxes. When Victim 1 asked LAROCHE about the status of Victim 1's tax obligations, LAROCHE lied to Victim 1 as a means of hiding her scheme. LAROCHE also arranged for monthly payments to pay for an automobile insurance policy benefitting someone other than Victim 1 to be automatically withdrawn from Victim 1's account without Victim 1's knowledge or consent. In total, LAROCHE embezzled $233,363.53 from Victim 1.
https://www.finra.org/sites/default/files/aao_documents/20-04056.pdf
In a FINRA Arbitration Statement of Claim filed in December 2020, associated person Claimant Dixon asserted breach of contract, defamation, and violation of FINRA Rule 2020 in connection with the termination of her employment by FINRA member firm Respondent LPL. LPL generally denied the allegations, asserted affirmative defenses, and filed a Counterclaim asserting Claimant had failed to repay two promissory notes. At the hearing, Respondent LPL requested: $447,805.00 in compensatory damages; $12,327.27 in attorneys' fees; $62,552.45 in interest through May 24, 2022; and $6,150.00 in costs.
The FINRA Arbitration Panel found LPL liable and ordered it to pay to Dixon $80,000 in compensatory damages plus interest. The Panel found Dixon liable and ordered her to pay to LPL $372,805 in compensatory damages plus interest on the Promissory Note; and $75,000 in compensatory damages plus interest on the Term Commitment Note. As to the requested expungement, the Panel recommended that the "Reason for Termination" be deleted and that reference to two Occurrence Numbers be expunged.
FINRA Small Firms Face Existential Crisis. VOTE Stephen Kohn for Small Firm Governor (BrokeAndBroker.com Blog)
https://www.brokeandbroker.com/6579/stephen-kohn-finra/
If you are a FINRA Small Firm you don't need me to tell you how dire things have become in 2022. Year after year, the numbers of small firms have dwindled to the point where there are now more FINRA employees than FINRA member firms. In response to that changing landscape, the FINRA Large Firms have consolidated their grip on FINRA and continue to socially engineer their small competitors out of business. Each year, candidates for one of the three FINRA Small Firm seats seek your vote and promise to speak out and speak up on your behalf. Once elected, however, your purported champions become complacent -- some might even say compliant. I have known Stephen Kohn for many years. Stephen has owned his own small firm. He has been in our biz for decades. Stephen sees the crisis that is upon us, and he knows that it's now or never. He will take his seat at the FINRA Board, but he will not be told to sit down and shut up. VOTE FOR STEPHEN KOHN!