Securities Fraud: Ex-Gerova Financial Head is Sentenced to Six Years, Black Elk Claims Reinsurer Aided Platinum Fund Scam, and Bank of Tokyo-Mitsubishi Is Accused of Spoofing
Ex-Gerova Financial Group Head is Sentenced in $72M Fraud
Gary Hirst, the former president of Gerova Financial Group who was convicted of securities fraud and wire fraud last year, has been sentenced to six years behind bars. Hirst defrauded Gerova shareholders when he secretly gave away almost $72M of company stock to co-conspirators and himself.
He and his co-conspirators are accused of issuing huge quantities of stock and bilking stockholders and the investing public in order to earn millions of dollars in ill-gotten gains. Hirst and one of the co-conspirators, Jason Galanis, had gained enough control of Gerova that they could engage in transactions to enrich themselves and others even as they worked to conceal the scam.
Their securities fraud garnered almost $20M in profits. $2.6M of those profits benefitted Hirst personally. Now, in addition to his prison term, he must forfeit more than $19M and pay restitution.
Black Elk Trustee Claims Beechwood Enabled $1B Platinum Partners Fraud
Black Elk Energy Offshore Operations, LLC, an oil and gas producer that is now defunct, has filed a lawsuit against the subsidiaries and executives of the reinsurer Beechwood claiming that the defendant helped Platinum Partners commit an alleged $1B hedge fund fraud. Platinum’s founder Mark Nordlicht and several others already have been charged with securities fraud in a purported Ponzi Scam. The Platinum executives pleaded not guilty to the criminal charges.
The securities lawsuit accuses Beechwood and Platinum of taking part in a “criminal enterprise” that involved fraudulently moving almost “$100M of proceeds from Black Elk’s prime oil and gas assets to Platinum.” Now, the oil and gas company is seeking three times that in damages and other costs, which could be almost $300M.
David Levy, a former Platinum co-chief investment officer who was among those charged in the $1B Ponzi scam, left the hedge fund for a short time in 2016 and went to work at Beechwood. It was during his time there that Beechwood bought Black Elk bonds and there was a vote on the securities. This vote may have aided Platinum in profiting. Not long after that, Levy went back to work at the hedge fund.
CFTC Accuses Bank of Tokyo of Spoofing
The Bank of Tokyo-Mitsubishi UFJ, Ltd. has settled charges brought by the Commodity Futures Trading Commission accusing the bank of spoofing in futures contracts on the Chicago Board of Exchange and the Chicago Mercantile Exchange. The spoofing allegedly was committed by one of its traders. To settle, the Bank of Tokyo-Mitsubishi must pay a $600K penalty. It also has agreed to cease and desist from violating the Commodity Exchange Act, which does not allow spoofing.
According to the CFTC’s order, from at least 7/2009 through 12/2014, the trader placed a number of futures contracts orders with the intention of canceling them before they were executed. Upon becoming aware of the trader’s actions, the bank suspended the employee and notified the CFTC’s enforcement division.
Gary Hirst, Former President And Chairman Of The Board Of Gerova Financial Group, Sentenced To Over Six Years In Prison For Defrauding Shareholders Of $72 Million In Stock, Justice.gov, August 3, 2017