Articles Posted in SEC Enforcement

Investors in Alleged $2.3M Prime Bank Fraud Were Promised Huge Profits

In the US Securities and Exchange Commission’s (SEC) prime bank investment fraud case against Elizabeth Oharriz of Florida and Peter Baker of Georgia, the regulator is accusing the two of them and their companies of stealing more than $2.2M from investors. The Commission contends that Oharriz and Baker sold fake prime bank instruments from supposedly known banks while promising investors “astronomical profits.” The regulator’s complaint said that they also were also told that if these instruments could not be obtained, then their advance payments would be returned to them.

Instead, claims the SEC, Oharriz and Baker allegedly used investors’ money for their own personal spending or sent the funds to third parties. Meantime, investors were given bogus bank instruments along with accompanying documents.

A federal jury has found Leon Vaccarelli guilty of 21 counts of fraud and money laundering. Vaccarelli, a former registered The Investment Center broker, an ex-IC Advisory Services-associated investment adviser, and the owner of LWLVACC who conducted business through Lux Financial Services, is accused of defrauding investors, including elderly clients, of $1.5M.

Vaccarelli gave investment advice and sold securities and investments to families in Connecticut. According to Justice.gov, from about 2011 and 2017, the ex-former investment adviser and broker defrauded about 15 victims. He falsely represented that their money would be invested in IRA rollover accounts, certificates of deposit, money market accounts, and other investments that would earn interest.

Instead, Vaccarelli put investors’ money into his own business and personal accounts, commingling their funds with his, and used the money to help cover his own mortgage and other personal expenses, as well as certain business costs. Some customers’ monies were used to pay “interest” to other investors whom he was also defrauding.

The US Securities and Exchange Commission (SEC) is accusing a recent college graduate of running a Ponzi fraud that targeted young investors, including college students and other recent graduates. The regulator announced its emergency action against Syed Arham Arbab, Artis Proficio Capital Management, LLC, and Artis Proficio Capital Investments, LLC this week. It wants an asset freeze, emergency relief, civil penalties, and the repayment of allegedly ill-gotten earnings along with prejudgment interest.

At least eight college students, recent college graduates, or their relatives invested over $269K in the alleged hedge fund fraud. According to the regulator’s complaint, Arbab ran his scam out of a fraternity house close to the University of Georgia campus. He is a recent alumni and is accused of using his college connections to perpetuate his alleged scam.

According to the SEC’s complaint, Arbab sold investments in Artis Proficio Capital, a supposed hedge fund, that he touted as making up to 56% returns the year before, and he supposedly guaranteed up to $15K of investor money. Investors who purchased bond agreements were told that their money would be returned with a fixed return rate.


Investment Advisor Allegedly Overcharged Clients $367K in Advisory Fees

The US Securities and Exchange Commission (SEC) has filed investor fraud charges against investment adviser Stephen Brandon Anderson, accusing him of defrauding clients and overcharging them at least $367K in advisory fees. Anderson ran River Source Wealth Management, LLC. The formerly registered investment advisory firm (RIA) is no longer in operation.

However, while in business, said the SEC, the RIA’s main income source was customer advisory fees. The fees were determined according to the assets under management of each customer.

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.

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