$34M Illegal Stock Scam Leads to New Charges
The US Securities and Exchange Commission has filed charges in an alleged nearly $34M illegal stock sale involving Biozoom Inc. stock that caused serious financial losses for retail investors. Biozoom was previously called Entertainment Art Inc..
It was in 2013 that the regulator was able to get a court order freezing proceeds made from the allegedly illegal stock sales. The SEC contends that from March to June 2013, ten people received over 20 million Entertainment Art shares. A number of these individuals then sold over 14 million of these shares in a month-long period. This resulted in around $34M in sales.
In 2015, a US district court entered a default judgment against eight Argentine citizens, ordering them to disgorge over $33M and pay $160K in penalties each. Consent judgments were entered against the two non-selling defendants in which they gave up any claims to nearly 4.5M shares that were in brokerage accounts under their names. The SEC set up a fair fund that to date has given back $14M to investors who were harmed.
Last year, the Commission barred David Lubin, a NY-based lawyer, over allegedly false and misleading statements he issued in corporate filings while serving as corporate counsel and director of Entertainment Art. The regulator’s order stated that he was the one that negotiated the Entertainment Art stock sales.
Now, according to this latest SEC complaint, defendants Francisco Abellan Villena, James B. Panther Jr., Guillermo Ciupiak, and Faiyaz Dean manipulated the market for the Biozoom stock and they sold the shares illegally. Meantime, they hid that they had ownership stakes in the company while using fake legal documents, offshore bank accounts, nominees, and other deceptive practices, including “sophisticated, manipulative trading techniques to artificially inflate Biozoom’s share price.”In a separate SEC complaint, brokerage firm Legend Securities and its registered representative Mark Karow are facing related charges. Karow is accused of illegally distributing Biozoom securities for four Argentine customers. He allegedly offered and sold about 6 million shares, making nearly $70K in commissions as a result.
Borland Capital Group Owner Faces Investor Fraud Charges
Brent Borland, the owner of Borland Capital Group, LLC, is facing SEC charges accusing him of misappropriating nearly $6M in investor money that was supposed to go toward building an international airport in Belize. Borland, who was arrested this week, is also facing parallel criminal charges.
According to the regulator, between 2014 and 2017, Borland sold over $21M of promissory notes to investors. They thought their money would go toward bridge financing to build the Placencia-based airport and the real estate pledges were collateral that would protect their money. The promissory notes were sold through Borland Capital and the Belize Infrastructure Fund I, LLC.
Instead, claims the Commission, Borland spent millions of dollars in investor monies on his own expenses, including his Florida mansion, luxury cars, private school tuition for his kids, a $36K family beach club membership, nearly $2M in credit card debts, as well as on business costs that were unrelated to the investment venture. He also allegedly promised the same collateral to different investors.
Now, the SEC wants assets frozen, disgorgement, and civil penalties.
California Investment Advisers Settles SEC Charges in $71M Fraud
William Jordan, a California investment adviser, has settled SEC charges accusing him of defrauding about 100 advisory clients of over $71M. The regulator is accusing Jordan of lying to investors about their investments and his disciplinary past.
According to the SEC’s complaint, the alleged investor fraud took place between 2011 and 2016. Jordan is accused of overstating the value of assets in 16 private investment funds and then using those exaggerated figures, as well as “unrealized ‘profits’” from other investments, to overpay himself and his entities in bonuses and management fees.
The funds filed for bankruptcy protection last year. Now, Jordan is settling the SEC’s case alleging violations of the Securities Act of 1933, the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and the Investment Advisory Act of 1940 but without denying or admitting to the charges. A federal district court will determine how much he must pay in disgorgement, prejudgment interest, and penalties.