Securities Fraud Cases: Ex-Head of MICG Investment Management Firm Faces 13 New Charges, SEC Accuses Unregistered Brokers of Bilking Investors in $6M Scam, and $250M Pump-And-Dump Case Leads to Guilty Plea

Government Charges Convicted Broker with More Fraud Charges
Jeffrey Martinovich is charged with 13 new counts of fraud. He is is ex-head of MICG Investment Management and was convicted of 17 fraud charges three years ago.

Martinovich is accused of improperly moving over $700K from a company hedge fund in 2010. According to prosecutors, he spent $170K of the funds for his legal defense fees and at least $59K on his personal expenses. He also purportedly took out over $147K more from the hedge fund account.

It was in 2011 that the Financial Industry Regulatory Authority expelled Martinovich and his firm for securities fraud, improperly using client money, and causing false statements to be sent to investors related to the MICG Venture Strategies LLC, a proprietary hedge fund. The self-regulatory organization said that Martinovich and MICG improperly assigned asset values that were excessive to two non-public securities.

FINRA said that the assets’ value were inflated so that incentive and management fee could be increased.

Offshore Broker Pleads Guilty in $250M Pump-and-Dump Scam
Gregg Mulholland has pleaded guilty to conspiracy for operating a pump-and-dump-scam that manipulated shares of over 40 companies in the U.S. One company, Cynk Technology, saw its share price increase by 24,000%.

According to federal prosecutors, the secret scheme resulted in over $250M in fraudulent profits. This money was then laundered through law firms that were allegedly corrupt. The government called the scam an “elaborate offshore shell game.”

Mulholland, who has both Canadian and U.S. citizenship, is the secret owner of a brokerage firm and investment management firm in Panama and Belize. From 2010 and 2014 Mulholland worked with others to come up with related scams.

Unregistered Brokers Accused of Defrauding Investors in $6M Securities Scam
The U.S. Securities and Exchange Commission is charging two men with fraud. James Trolice and Lee Vaccaro are accused of raising about $6M from over 100 investors. They allegedly did this by generating a bogus sense of urgency and exclusivity around the supposedly limited amount of warrants available for buying common stock in a technology start-up company. The warrants belonged to limited liability companies that the two of them controlled and owned. Investors were persuaded that the warrants could be exercised at a price that was profitable.

Instead, claim the regulators, Trolice allegedly used the money given to him by investors to pay for his personal expenses, including at least $250K at casinos.

The SEC says that Vaccaro and Trolice are not registered with the Commission or any state regulator.

Shepherd Smith Edwards and Kantas, LTD LLP, helps investors recoup their losses from stockbroker fraud, adviser fraud, and other negligence/wrongdoing committed by industry members and nonregistered parties.

Former Newport News financial broker faces new charges in fraud case, Daily Press, May 13, 2016

‘Pump and dump’ mastermind Greg Mulholland pleads guilty, MarketWatch, May 9, 2016

Read the SEC Complaint (PDF)