Investor Lawyers Blog

SEC Files Charges in Alleged Prime Bank Fraud

Published on: July 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has brought fraud charges against two men and their company, United Business Alliance, LLC, for allegedly running a prime bank investment scam. The regulator is seeking permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

According to the regulator’s complaint, between 10/2013 and 7/2015, George Frank Polera and Anthony Joseph Marino, through United Business Alliance, took part in a fraudulent prime bank scam, raising over $615k from 10 investors. The two men lacked the registration required to sell investments.

The two men, who are based in Las Vegas, and their company allegedly promised investors huge return rates, including 90% every two weeks for 40 weeks on one investment and 84% per year on one note. Investors were sold securities that were either promissory notes or investment contracts.

SEC Cases: NY Lawyer Accused of Shell Company Stock Fraud, Research Scientist is Charged with Insider Trading, Officer in Pyramid Scam That Targeted Latinos Must Pay Disgorgement, and Two Men Are Accused of Price Rigging

Published on: July 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Lawyer Barred Over Fraud Allegations
The US Securities and Exchange Commission has barred David Lubin, a New York-based lawyer, from practicing or appearing before the regulator and acting as any company’s director or officer. The regulator is accusing him of making misleading and false statements in corporate filings and committing fraud while he was the attorney and director of Entertainment Art. He was also the public company’s biggest shareholder.

According to the SEC’s securities order, not only did Lubin draft and sign misleading public filings, but also, he concealed their “true ownership” as well as that the fact that a significant chunk of the shares were of a “restricted nature.”

As a result, after Entertainment Art’s name was changed to Biozoom, over 14 million shares were resold illegally in an unregistered distribution, rendering $34M of illicit profits. At the time, the shares had belonged to a shell investor.

Expanded Texas Securities Case Indicts Six in Multimillion Dollar Pump-and-Dump Scam

Published on: July 21, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In a second superseding indictment to an ongoing Texas securities fraud probe, the US Attorney’s Office for the Southern District of Texas has brought criminal charges again against several people accused in an alleged multimillion dollar pump-and-dump scam. This latest indictment expands on the original criminal charges, which involved Chimera Energy Corp. stock and an alleged $6M scam.

With this latest indictment, investors of 12 stocks were allegedly defrauded of more than $25M. Prosecutors said that the scam bilked investors in different companies through the use of fraudulent trading practices, the publication of misleading and false information via ads and press releases, and the circumvention of Securities and Exchange Commission reporting requirements.

Those charged in this latest Texas securities indictment include Andrew Ian Farmer, Charles Earl Grob, Carolyn Price Austin and Eddie Douglas Austin of Houston, John David Brotherton of League City, and Scott Russel Sieck of Florida for the parts they played in the alleged conspiracy fraud involving a dozen stocks, including Chimera Energy Corp. stock. The latter was the stock involved in the initial criminal indictment that brought charges against both Farmer and Thomas Galen Massey, also a Houston resident.

Ex-NY Man Who Fled as a Fugitive to Vietnam Pleads Guilty in $10M Fraud

Published on: July 21, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Michael Wilson has pleaded guilty to wire fraud. The 30-year-old former New York businessman bilked investors of over $10M in just two years through fake investment companies.

Wilson was indicted of 47 criminal counts, including money laundering, conspiracy, and wire fraud, in 2010. He was accused of trying to bilk investors between June 2008 and July 2010. Through the fraudulent investment companies, he persuaded other companies and individuals to invest in financial instruments that supposedly guaranteed returns and high-yield earnings.

In court this week, Wilson admitted to targeting rich, sophisticated investors. Some of his clients invested up to $250K as part of their initial investments.

Hedge Funds Sue The U.S. Government Over Puerto Rico Bonds

Published on: July 20, 2017 | by Shepherd Smith Edwards & Kantas, LLP

A group of hedge funds, including Oaktree Capital Management LP and Glendon Capital Management LP, has filed a lawsuit against the federal government in the U.S. Court of Federal Claims. The hedge fund group are Puerto Rico bondholders who could suffer losses from bonds that were issued in 2008 to help the island’s retirement system, the Puerto Rico Employment Retirement System (ERS), stay afloat. Unfortunately, beginning in 2013, the ERS investments faltered, leading the pension system toward bankruptcy.

The hedge funds’ complaint comes after PROMESA, the federal oversight board that was appointed to help the island of Puerto Rico address its $73 billion of debt, placed the Commonwealth’s biggest public retirement fund under bankruptcy protection to help restructure $3 billion in pension obligation bonds (commonly called POBs).

The ERS’s bonds can be paid for by pension contributions that public employers make toward the retirements of their employees. The hedge fund plaintiffs thought that these payments would go to them first. However, in June, the federal oversight board approved legislation to transfer these employer contributions beyond the pension system and away from these creditors. Now, the hedge funds want a court order determining that the move was illegal. They are seeking $3.1 billion in principal plus interest on the ERS bonds.

Two More Texans Plead Guilty in $6.5M Diamond Investment Scam

Published on: July 17, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Jay Bruce Heimburger, a Dallas man, has pleaded guilty to mail fraud over his involvement in a $6.4M investment scam that allegedly took place from about March 2011 to November 2013. He faces up to more than 20 years in prison, has to pay a $250K fine, and could be ordered to pay restitution.

Heimburger is the second man to plead guilty in the investment scam, which defrauded investors of $6.4M. In plea documents, Heimburger admitted to seeking to bilk investors while using false pretenses and promises, as well as by making misrepresentations.

Another man, Houston resident Christopher Arnold Jiongo, pleaded guilty earlier this year to wire fraud related to the scam. Both men will be sentenced later this year. A third Texan, Craig Allen Otteson from McKinney, is scheduled to plead guilty on July 18.

Three Ex-Traders Who Worked for Barclays, JPMorgan, and Citigroup Plead Not Guilty to Forex Rigging Charges While BNP Paribas is Fined $246M

Published on: July 17, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In the US, former London traders Rohan Ramchandani, Chris Ashton, and Richard Usher have pleaded not guilty to criminal charges accusing them of conspiring to manipulate prices in the foreign exchange market. Ashton previously worked at Barclays (BARC) as the bank’s global head of spot currency trading. Ramchandani used to be Citigroup’s (C) G-10 spot currency trading head. Usher served a similar role at JPMorgan & Chase (JPM).

Prosecutors are accusing them of conspiring with other traders in a Forex rigging scheme to share sensitive client information through an electronic chat room referred to as the “Cartel,” as well as via phone, in order to quash competitors.

The criminal charges are related to a global probe into currency market rigging. To date, seven banks have paid approximately $10B fines over this type of manipulation, including Citigroup, Barclays (BARC), JPMorgan, and Royal Bank of Scotland (RBS).

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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