Articles Posted in SEC Enforcement

The US Securities and Exchange Commission (SEC) has filed fraud charges against David Sims and Mario Procopio accusing them of running a $1.4M prime bank scam that defrauded 13 investors. ALC Holdings, LLC, Sims Equities, Inc., and El Cether-elyown, which are companies that they control, are also defendants in the investor fraud scam. This is not the first time that the SEC has charged Sims in relation to alleged fraud.

The regulator contends that the two men mostly found their investors through referrals given to them by associates and friends. Between 4/2014 and 5/2017, Sims and Procopio allegedly told those whom they solicited, usually by phone, that their investments would go into “prime bank” financial instruments that would make returns of 1200-40,000% percent.

Procopio and Sims falsely touted “special access” to trading platforms that they claimed also were used by rich investors, corporations, and governments to purchase huge amounts of currency, usually $500M to $1B, at a reduced rate from different banks. The notes could then supposedly be sold for an up to 30% profit.

The US Securities and Exchange Commission (SEC) has filed civil charges against Charles Nilosek for acting as an unregistered broker and illegally selling Woodbridge securities to retail investors. The regulator said that Nilosek, who is based in Massachusetts, was one of the top revenue earners when it came to selling the unregistered investments from the Woodbridge Group of Companies.

The Woodbridge investments are tied to a $1.2B Ponzi scheme that ran from 2012 to 2017. Woodbridge and its 281 related companies are accused of bilking more than 8,400 investors, many of whom were elderly investors who lost their money investing in the company’s promissory notes and private placements. The customers were promised 5-8% in yearly returns and many used their retirement money to invest.

The SEC’s complaint said that Nilosek and his Position Benefits LLC sold over $23M in Woodbridge securities to more than 200 investors in at least four states between 9/2013 and 9/2015. He was paid over $1.4M in compensation. The regulator contends that Nilosek was never a registered broker nor was he ever registered with a brokerage firm.


SEC Accuses Investment Adviser of Misappropriating Funds from Hedge Funds

The US Securities and Exchange Commission (SEC) has secured an emergency asset freeze, as well as a temporary restraining order, to stop an ongoing allegedly fraudulent securities offering that was purportedly conducted to conceal the misappropriation of about $570K from hedge fund clients. The regulator contends that investment adviser Eric D. Lyons and his investment advisory businesses, Synchronicity Capital GP, LLC, Synchronicity Capital Group, and Synchronicity Group, LLC, used the money to pay for Lyons’ personal spending, including Broadway shows, concert tickets, sailing expenses, rent, and other costs.

According to the regulator’s complaint, the allegedly fraudulent securities offering involved securing about $300K from one investor who thought other large investors would be potentially involved and that there was a $100M business valuation. The SEC alleges that, in total, the Synchronicity entities and Lyons raised about $700K through both the misappropriation of funds and the allegedly fraudulent offering.

The US Securities and Exchange Commission (SEC) has filed civil fraud charges accusing 15 people of either “acting as unregistered brokers” or “aiding-and-abetting” this kind of activity related to the solicitation of microcap issuer Intertech Solution’s “unregistered and fraudulent securities offerings.” Already, 11 of the defendants have consented to the entry of final judgments but without denying or admitting to wrongdoing.

The 15 individuals are:

    • Daniel Broyles

The US Securities and Exchange Commission (SEC) is accusing Abraaj Investment Management Ltd., a Dubai-based investment advisory firm, with misappropriating money from the Abraaj Growth Markets Health Fund. The regulator said that the fraud has resulted in losses for US investors, including charitable organizations that invested over $100M in the Fund. Also facing civil fraud charges is Abraaj founder Arif Navqi. In total, the investment adviser and Navqi are accused of misappropriating more than $230M from the fund between at least 9/2016 and 6/2018.

According to the regulator’s civil complaint, investors were told that their money would go into businesses related to healthcare in emerging markets. Instead, Abraaj Investment Management allegedly used the money to pay for cash shortfalls at the firm and at parent company Abraaj Holdings, Ltd., both of which Navqi controlled. Meantime, investors were allegedly sent financial statements and quarterly reports that were materially misleading or false.

Registered in the Cayman Islands, the Abraaj Growth Markets Health Fund’s investors had committed $850M. Additionally, the SEC stated that one of the fund’s investors was a US government entity that had committed an additional $150M debt investment.

Ex-Woodbridge Group of Companies CEO and owner Robert Shapiro and former Woodbridge directors Ivan Acevedo and Dane R. Roseman are now facing criminal charges over their alleged involvement in operating a $1.2B Ponzi scam that went on from ’12 to ’17. All three men were arrested and appeared in federal court last week.

Woodbridge and its 281 related companies are accused of defrauding over 8,400 retail investors, including many senior investors who lost retirement money as a result. According to the US Securities and Exchange Commission’s (SEC) 2017 complaint against Shapiro, Woodbridge, and the related companies, investors were promised yearly returns of up to 5 to 8%. Payments were supposedly from the interest paid to an affiliate on loans issued to third party borrowers. However, contends the SEC, there were not enough third-party borrowers to pay the thousands of investors involved, resulting in just under $14M in interest income. Newer investors’ funds were allegedly used to pay earlier investors.

Woodbridge and the companies settled the regulator’s case last year by agreeing to pay over $1B, including disgorging $892M in ill-gotten gains. Shapiro’s settlement involved a $100M penalty and disgorgement of $18.5M plus $2.1M in prejudgment interest. Now, with the criminal case, Shapiro is charged with tax evasion and conspiracy to commit money laundering.

The US Securities and Exchange Commission (SEC) has filed fraud charges against two men claiming to be pastors of a church at a strip mall in Orange County, California. Kent R.E. Whitney and David Lee Parrish are accused of targeting members of their local Vietnamese community and defrauding investors of millions of dollars. The regulator has obtained an asset freeze in what it is calling a $25M Ponzi scam.

Whitney, who has a criminal fraud record, is the founder of The Church for the Healthy Self. The Commission said that he established the church three months after getting out of federal prison where he had been serving time for a different investment scam that had defrauded 10 investors of over $600K.

The regulator contends in its complaint that The Church for the Healthy Self’s investment program, called the CHS Trust, touted:

Dennis Gibb, an investment adviser and the owner/president of Sweetwater Investments Inc., has pleaded guilty to falsification of records and wire fraud. Gibb has also settled parallel civil charges brought by the US Securities and Exchange Commission (SEC) in which part of that deal involves the liquidation of his Sweetwater Income Flood LP Fund.

Gibb set up the private fund in 2008. The year before, he started to solicit prospective investors who were looking for consistent retirement money. The SEC said that between those two years, at least 15 investors put approximately $7.3M in the Sweetwater Income Flood fund.

According to the US Attorney’s Office for the Western District of Washington, Gibb defrauded about 15 investors of over $3M. He touted a sophisticated investment approach that in part involved investing in government bonds with the intent to generate “stable returns.” Meantime, even as Gibb stole investors’ money for his own use, he was telling them that the private fund had $7.8M when, in actuality, it was holding less than $2M.

Carol Ann Pederson, an unregistered investment advisor and an ex-CPA, is facing charges accusing her of defrauding more than two dozen investors. The US Securities and Exchange Commission claims that Pederson:

  • Raised at least $29M from investors.
  • Made false promises that their money would go into “federally guaranteed securities.”

79 investment advisers have settled charges brought by the US Securities and Exchange Commission (SEC) accusing them of not properly disclosing conflicts of interests involving the sale of costlier mutual fund share classes that caused them to earn more fees. The regulator’s action is related to its Share Class Section Disclosure Initiative. Announced by the SEC’s Division of Enforcement early last year, the initiative gives firms the chance to report disclosure failures that violate the Advisers Act, while offering them more “favorable settlement terms” in return.

Here is a partial list of some of the investment advisers involved in this case:

  • AXA Advisors
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