Investor Lawyers Blog

Financier Who Bilked Family and Friends of $23M Investment Fraud Gets Three Years in Prison

Published on: July 15, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Haena Park, the Harvard-educated financier who pleaded guilty to the commodities fraud that bilked over 40 investors of more than $23M, is sentenced to three years in prison. Park defrauded friends and family over six years, beginning in 2008, by soliciting investments in different commodities and securities, including equities, futures, and forex transactions.

Even after she lost investors’ money, Park continued to solicit new investors, claiming up to 50% yearly returns and generating false monthly statements that concealed the large losses. Among her victims were immigrants who worked multiple jobs, older investors who saw their life savings disappear, and a paraplegic who suffered $4M in investment losses.

After Park pleaded guilty early this year, then-US Attorney Preet Bharara said that Park was not just admitting to the fraud, but also acknowledging that she lied about her trading expertise, as well as return rates, to draw in investors.

Investment Fraud: Retired NBA Star’s Ex-Financial Adviser is Barred by the SEC, Former Investment Adviser Pleads Guilty in $1.1M Scam, Convicted Broker is Sentenced to 18 Months, and One-Time Pastor Must Pay Back Over $1M to Victims

Published on: July 14, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ex-Adviser of Retired NBA Player Tim Duncan is Barred from the Industry

The US Securities and Exchange Commission has gotten a judgment barring former financial adviser Charles A. Banks IV from the securities industry. Banks, who pleaded guilty to wire fraud that involved bilking ex-NBA player Tim Duncan, was sentenced to 48 months in prison in criminal court and ordered to pay $7.5M in restitution.

Now, because he committed investment fraud, Banks is also banned from the industry, as well as prohibited from serving as a director or an officer of any public company. Banks also must pay a penalty, disgorgement, and pre-judgment interest.

14 People Charged In $14.7M Stock Rigging Fraud That Bilked Senior Investors

Published on: July 13, 2017 | by Shepherd Smith Edwards & Kantas, LLP

According to prosecutors, criminal charges have been brought against 14 people over their alleged involvement in a $14.7M stock rigging investment scam that primarily targeted older investors. The US Attorney’s office alleges that between 1/2014 and 1/2017 the defendants and others sought to defraud the investors and prospective investors of certain companies by attempting to artificially manipulate the volume and price when shares were traded.

The group allegedly hid that they were behind the stock rigging fraud of these companies’ shares through a pump-and-dump boiler room scam. They are accused of manipulating share trading patterns while aggressively soliciting senior citizens by phone to try and persuade them to buy the shares.

When their targets showed a willingness to buy the stock being solicited to them, the boiler room employees would allegedly pressure them to buy, sometimes even charging them subscriptions so that they could receive future stock recommendations. Investors were not notified that the employees and others they conspired with had sold their own shares in these companies.
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Securities Fraud: Massachusetts Hedge Fund Manager Sentenced to 30 Months for Bilking Investors, Northeast Securities Ordered to Pay Customer $1.8M, and Ex-State Street Executive Pleads Guilty in Scheme Involving Secret Commissions

Published on: July 12, 2017 | by Shepherd Smith Edwards & Kantas, LLP

After Pleading Guilty, Massachusetts Money Manager Must Repay Investors
Stephen Eubanks is sentenced to 30 months behind bars for bilking investors of $437K. He also must pay restitution in that amount to his more than 20 victims.

Eubanks presented himself as a hedge fund manager at Eubiquity Capital, which he founded. He raised over $700K from investors and claimed that he was running a hedge fund that had ties with UBS (UBS), TD Ameritrade (AMTD), Fidelity, and Goldman Sachs (GS).

While Eubanks invested some of the clients’ funds for them he also spent a healthy amount of their money on his own spending. Eubanks also is accused of on occasion operating his fund as if it were a Ponzi scam.

Royal Bank of Scotland Settles FHFA’s MBS Securities Probe For $5.5B

Published on: July 12, 2017 | by Shepherd Smith Edwards & Kantas, LLP

This week, Royal Bank of Scotland Group PLC (RBS) has agreed to pay the Federal Housing Finance Agency $5.5B to resolve the latter’s investigation into the UK government-controlled bank’s sale of toxic mortgage-backed securities to mortgage giants Freddie Mac and Fannie Mae leading up to the 2008 financial crisis. RBS has come under fire for the way it packaged and sold subprime mortgages. The violations allegedly involved private-label residential mortgage-backed securities (PLS) trusts that were purchased between 2005 and 2007.

RBS will pay Freddie Mac about $4.5B and approximately $975M to Fannie Mae to resolve this RMBS fraud case. However, the bank is eligible for a $754M reimbursement according to certain indemnification agreements.

RBS had previously reached, for $1.1B, separate settlements over similar MBS fraud claims that the US National Credit Union Administration had brought in Kansas and California. It remains under investigation by the US Department of Justice and several US agencies who are conducting their own mortgage-backed securities fraud probes.

CFTC Cases Over Commodity Pool Fraud, Misappropriation, and Illegal Wash Sales Lead to Civil Penalties and Other Consequences

Published on: July 11, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Illegal Wash Sales Charges Result in $5M Penalty
The US Commodity Futures Trading Commission recently announced that it has reached a settlement with Rosenthal Collins Capital Markets LLC, now named DV Trading LLC (RCCM), for illegal wash sales that were conducted to create rebates of exchange fees determined by growing trading volumes. As part of the settlement, the trading company will pay a $5M penalty and must cease and desist from the violations charged.

According to the regulator’s order, from early 2013 through July 2015, proprietary traders at Rosenthal Collins Capital Markets took place in multiple wash trading strategies to generate rebates via the Eurodollar Pack and Bundle Market Maker Program. The Chicago Mercantile Exchange offers the program, which allows for rebates as credit fees for meeting certain quoting obligations.

However, according to the order, in early 2013, to make enough rebates, a firm trader was able to circumvent Rosenthal Collins Capital Market’s own wash blocking system so he could trade against himself and earn the rebates separate from actual market conditions. He kept doing this until he was caught. A few months later, said the CFTC, two of the firm’s traders engaged in scratch trading for extended periods, again to earn rebates. This involved buying and selling opposite one another.

Judge Rules That Aequitas Investors’ Securities Fraud Lawsuit Against TD Ameritrade and Others May Proceed

Published on: July 8, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In Oregon, a district court judge has refused to dismiss a proposed class action lawsuit accusing TD Ameritrade (AMTD), Integrity Bank & Trust, Deloitte & Touche LLP, Eisner Amper LP, and law firms Tonkon Torp and Sidley Austin of playing a part in the alleged securities fraud committed by Aequitas Management LLC, which is now defunct.

Over 1500 investors entrusted over $350M to Aequitas. They each invested amounts ranging from about $60K to over $1M in Aequitas funds, including the Aequitas Income Opportunity Fund II LLC that they now claim was a Ponzi scam.

Last year, in its civil securities case, the US Securities and Exchange Commission accused the Oregon-based investment group and three of its executives of concealing the firm’s financial woes while still raising millions of dollars. Investors thought they were backing investments involving transportation, education, and healthcare when their funds were allegedly being used to save Aequitas. Meantime, newer investors’ funds were also used to pay earlier investors in a Ponzi-like scam.
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SEC Investigates Morgan Stanley and Barclays Bankers Over Puerto Rico Bond Sales

Published on: July 7, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Barclays (BARC) and Morgan Stanley (MS) were underwriters when the island sold $3.5 billion of bonds in 2014. According to Bloomberg, brokerage firm records submitted to the Financial Industry Regulatory Authority (“FINRA”) indicate that the U.S. Securities & Exchange Commission’s (“SEC”) staff is recommending that the SEC file an enforcement case against Barclays bankers James Henn and Luis Alfaro. The two men are under investigation for allegedly violating fair dealing in selling Puerto Rico bonds. They are also under investigation for alleged violations of securities rules and municipal bond rules as they pertain to misrepresentation, deception and fraud related to the securities.

Additionally, Bloomberg reports the SEC’s staff wants to issue a sanction against Morgan Stanley Managing Director Charles Visconsi and his ex-colleague Jorge Irizarry over disclosures that Puerto Rico made in documents that were sent to investors. The staff is interested in whether the broker-dealer adequately examined representations that were made by the island’s government. Visconsi and Irizarry reportedly have not been accused of any intentional misconduct.

In other Puerto Rico bond fraud news, the Puerto Rico Electric Power Authority (“PREPA”) has joined the island in filing bankruptcy protection. PREPA is currently overburdened with $9 billion of debt.

Charitable Foundation Sues PJT Partners Over Andrew Caspersen Ponzi Fraud

Published on: July 6, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The Moore Charitable Foundation and Kendall JMAC, which are both owned by hedge fund billionaire Louise Bacon, have filed a securities fraud lawsuit against PJT Partners over the $16M loss that they claim they sustained in the Ponzi –like scam perpetuated by former investment adviser Andrew Caspersen.

The two entities want full restitution plus interest. They also filed a securities fraud lawsuit against Caspersen, who was a partner and managing director at the PJT Partners’ Park Hill Group when he defrauded investors.

Caspersen pleaded guilty in 2016 to bilking investors of $38M. He said he had a gambling addiction that compelled him to make up bogus Wall Street deals. He is serving a four-year prison term for his crimes.

SEC Cases: Real Estate Agent Accused in Ponzi Scam, Oil Company Charged in $2.4M Offering Fraud, and NY Private Equity Fund Adviser Resolves Negligence Claims

Published on: July 5, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Oil Well Company and Founders Accused In $2.4M Offering Fraud
The SEC has filed offering fraud-related charges against Kentucky-Tennessee 50 Wells/400 BBLPD Block, Limited Partnership, its founders, and three members of its sales team over a $2.4M offering fraud. According to the US Securities and Exchange Commission’s complaint, the oil well company fraudulently offered and sold unregistered securities to investors through a boiler room operation. They raised about $2.4M from 41 investors.

Carol J. Wayland and her son John C. Mueller founded K-T 50 Wells. They are accused of misappropriating investor funds for purposes not disclosed in the private placement memorandum, including taking more than $871K for their own expenses and making Ponzi payments to some investors.

Real Estate Agent Allegedly Sold Unregistered Securities as Part of Brother’s Ponzi Scam
Cheryl L. Jones is accused of defrauding investors by helping her brother, Mark Jones, recruit investors for his Ponzi scam. The Commission contends that Jones brought in associates and friends to buy unregistered promissory notes and personal guarantees that her brother was involved in.