Newscast Media WASHINGTON—The Securities and Exchange Commission today
announced an emergency enforcement action to stop a fraudulent pyramid scheme by
phony companies masquerading as a legitimate international investment firm.
The SEC has obtained a federal court order to freeze accounts holding money stolen
from U.S. investors by Fleet Mutual Wealth Limited and MWF Financial – collectively
known as Mutual Wealth. The SEC alleges that Mutual Wealth has been exploiting
investors through a website and social media accounts on Facebook and Twitter,
falsely promising extraordinary returns of 2 to 3 percent per week for investors who
open accounts with the firm. CONTINUE TO FULL STORY>>
Newscast Media WASHINGTON—The Securities and Exchange Commission today announced charges against two Houston-based investment advisory firms and three executives for engineering thousands of principal transactions through their affiliated brokerage firm without informing their clients.
One of the firms — along with its chief compliance officer — also is charged with violations of the “custody rule” that requires firms to meet certain standards when maintaining custody of client funds or securities.
In a principal transaction, an investment adviser acting for its own account or through an affiliated broker-dealer buys a security from a client account or sells a security to it. Principal transactions can pose potential conflicts between the interests of the adviser and the client, and therefore advisers are required to disclose in writing any financial interest or conflicted role when advising a client on the other side of the trade. They must also obtain the client’s consent.
“By failing to disclose principal transactions and obtain consent, Parallax and Tri-Star Advisors deprived their clients of knowing in advance that their advisers stood to benefit substantially by running the trades through an affiliated account,” said Marshall S. Sprung, co-chief of the SEC Enforcement Division’s Asset Management Unit.
According to the SEC’s orders instituting administrative proceedings, Bott initiated and executed at least 2,000 undisclosed principal transactions from 2009 to 2011 without the consent of Parallax clients. In each transaction, Parallax’s affiliated brokerage firm Tri-Star Financial used its inventory account to purchase mortgage-backed bonds for Parallax clients and then transferred the bonds to the applicable client accounts. Bott received nearly half of the $1.9 million in sales credits collected by Tri-Star Financial on these transactions.
The SEC’s investigation was conducted by R. Joann Harris and Asset Management Unit member Barbara L. Gunn of the Fort Worth Regional Office. The SEC’s litigation will be led by Jennifer Brandt.
Newscast Media WASHINGTON—The Securities and Exchange Commission today announced an award of more than $14 million to a whistleblower whose information led to an SEC enforcement action that recovered substantial investor funds. Payments to whistleblowers are made from a separate fund previously established by the Dodd-Frank Act and do not come from the agency’s annual appropriations or reduce amounts paid to harmed investors.
The award is the largest made by the SEC’s whistleblower program to date.
The SEC’s Office of the Whistleblower was established in 2011 as authorized by the Dodd-Frank Act. The whistleblower program rewards high-quality original information that results in an SEC enforcement action with sanctions exceeding $1 million, and awards can range from 10 percent to 30 percent of the money collected in a case.
“Our whistleblower program already has had a big impact on our investigations by providing us with high quality, meaningful tips,” said SEC Chair Mary Jo White. “We hope an award like this encourages more individuals with information to come forward.”
The whistleblower, who does not wish to be identified, provided original information and assistance that allowed the SEC to investigate an enforcement matter more quickly than otherwise would have been possible. Less than six months after receiving the whistleblower’s tip, the SEC was able to bring an enforcement action against the perpetrators and secure investor funds.
By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.
Categories: News Tags: asset backed securities, collateralized debt obligations, credit default swaps, mortgage backed securities, mortgage fraud, mortgage modification, SEC, securities and exchange commission
The Securities and Exchange Commission has charged the longtime accountant for many of Bernard Madoff’s oldest and wealthiest clients for his role in the creation of false books and records used in the massive Ponzi scheme.
The SEC alleges that Paul Konigsberg’s assistance resulted in the formation of
inaccurate trade confirmations each month as well as the development of phony data
and records documenting the fabricated trades that were, in turn, falsely reflected in
the ledgers and related books and records at Bernard L. Madoff Investment Securities
LLC (BMIS). CONTINUE TO FULL STORY>>
Newscast Media WASHINGTON—The Securities and Exchange Commission today announced charges against a San Diego-based investment advisory firm and its president for allegedly steering winning trades to favored clients and lying about how certain money was being spent. The SEC has also been aggressively pursuing lawyers who defraud and short-change their clients, by lying about the actual settlement amounts that were disbursed, while keeping the bulk of the money.
The SEC’s Enforcement Division alleges that Ian O. Mausner and J.S. Oliver misused soft dollars, which are credits or rebates from a brokerage firm on commissions paid by clients for trades executed in the investment adviser’s client accounts.
Mausner and J.S. Oliver misappropriated more than $1.1 million in soft dollars for undisclosed purposes that in no way benefited clients, such as a payment to Mausner’s ex-wife related to their divorce.
“Mausner’s fraudulent schemes were a one-two punch that betrayed his clients and cost them millions of dollars,” said Marshall S. Sprung, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Investment advisers must allocate trades and use soft dollars consistent with their fiduciary duty to put client interests first.”
The SEC also charged Douglas F. Drennan, a portfolio manager at J.S. Oliver, for his role in the soft dollar scheme.
According to the SEC, Drennan participated in the soft dollar scheme by submitting false information to support the misuse of money belonging to his clients, and approving some of the soft dollar payments to his own company.
The SEC’s investigation, which is continuing, has been conducted by Ronnie Lasky and C. Dabney O’Riordan of the Enforcement Division’s Asset Management Unit in the Los Angeles Regional Office. The SEC’s litigation will be led by David Van Havermaat, John Bulgozdy, and Ms. Lasky. The examination of J.S. Oliver was conducted by Ashish Ward, Eric Lee, and Pristine Chan of the Los Angeles office’s investment
adviser/investment company examination program.
Newscast Media WASHINGTON—The Securities and Exchange Commission today sanctioned a former portfolio manager at a Boulder, Colo.-based investment adviser for forging documents and misleading the firm’s chief compliance officer to conceal his failure to report personal trades.
An SEC investigation found that Carl Johns of Louisville, Colo., failed to pre-clear or report several hundred securities trades in his personal accounts as required under the federal securities laws and the code of ethics at Boulder Investment Advisers (BIA). Johns concealed the trades in quarterly and annual trading reports that he submitted to BIA by altering brokerage statements and other documents that he attached to those reports. Johns later tried to conceal his misconduct by creating false documents that purported to be pre-trade approvals, and misled the firm’s chief compliance officer in her investigation into his improper trading.
To settle the SEC’s charges – which are the agency’s first under Rule 38a-1(c) of the Investment Company Act for misleading and obstructing a chief compliance officer (CCO) – Johns agreed to pay more than $350,000 and be barred from the securities industry for at least five years.
“Securities industry professionals have an obligation to adhere to compliance policies, and they certainly must not interfere with the chief compliance officers who enforce those policies,” said Julie Lutz, Acting Co-Director of the SEC’s Denver Regional Office. “Johns set out to cover up his compliance failures by creating false documents and misleading his firm’s CCO.”
In settling the SEC’s charges, Johns has agreed to pay disgorgement of $231,169, prejudgment interest of $23,889, and a penalty of $100,000. Without admitting or denying the SEC’s findings, Johns consented to a five-year bar and a cease-and-desist order.
The SEC’s investigation was conducted by Michael Cates and Ian Karpel of the Denver Regional Office following an examination conducted by Craig Ellis, Bruce Ketter, and Thomas Piccone of the Denver office’s investment adviser/investment company examination program.
Newscast Media WASHINGTON—The Securities and Exchange Commission today charged a Texas man and his company with defrauding investors in a Ponzi scheme involving Bitcoin, a virtual currency traded on online exchanges for conventional currencies like the U.S. dollar or used to purchase goods or services online.
The SEC alleges that Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.” Shavers raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments
were offered and sold. Today the value of 700,000 Bitcoin exceeds $60 million.
The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities. In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments. Shavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay his personal expenses.
The SEC issued an investor alert today warning investors about the dangers of potential investment scams involving virtual currencies promoted through the Internet.
“Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.”
According to the SEC’s complaint filed in U.S. District Court for the Eastern District of Texas, Shavers sold BTCST investments over the Internet to investors in such states as Connecticut, Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania. Shavers posted general solicitations on a website dedicated to Bitcoin discussions, and he misled investors with such false assurances about his investment opportunity as “It’s growing, it’s growing!” and “I have yet to come close to taking a loss on any deal,” and “risk is almost zero.”
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission today
announced the second-largest trading suspension in agency history as it continues its
“Operation Shell Expel” crackdown against the manipulation of microcap shell
companies that are ripe for fraud as they lay dormant in the over-the-counter
market. FULL STORY>>
Newscast Media DALLAS—The Securities and Exchange Commission today announced fraud charges and an asset freeze against a trader at a Dallas-based investment advisory firm who improperly profited by placing his own trades before executing large block trades for firm clients that had strong potential to increase the stock’s price.
The SEC alleges that Daniel Bergin, a senior equity trader at Cushing MLP Asset Management, secretly executed hundreds of trades through his wife’s accounts in a practice known as front running. Bergin illicitly profited by at least $520,000 by routinely purchasing securities in his wife’s accounts earlier the same day he placed much larger orders for the same securities on behalf of firm clients. Bergin concealed is lucrative trading by failing to disclose his wife’s accounts to the firm and avoiding pre-clearance of his trades in those accounts. Bergin also attempted to hide his wife’s accounts from SEC examiners.
“Bergin betrayed the trust of his clients by secretly using information about their trades to gain an unfair trading advantage and reap massive profits for himself,” said Marshall S. Sprung, Deputy Chief of the SEC Enforcement Division’s Asset Management Unit.
According to the SEC’s complaint filed yesterday in federal court in Dallas, many investment advisers to institutions employ traders to manage their exposure to market price risks and place these large client orders in advantageous market centers with sufficient trading quantities that minimize unfavorable price movements against client interests. Bergin is the trader primarily responsible for managing price exposures related to client orders for equity trades.
“Bergin’s misconduct is particularly egregious because his firm depended on him to manage market exposure and risk for its investments. Instead, he pitted his clients’ financial interests against his own,” said David R. Woodcock, Director of the SEC’s Fort Worth Regional Office.
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of Texas and the Federal Bureau of Investigation.
Newscast Media WASHINGTON—The Securities and Exchange Commission has charged the gatekeepers of a pair of mutual fund trusts with causing untrue or misleading disclosures about the factors they considered when approving or renewing investment advisory contracts on behalf of shareholders.
The five trustees named in the SEC enforcement action are: Michael Miola of Arizona, Lester M. Bryan of Utah, Anthony J. Hertl of Florida, Gary W. Lanzen of Nevada, and Mark H. Taylor of Ohio.
Some trusts are created as turnkey mutual fund operations that launch numerous funds to be managed by different unaffiliated advisers and overseen by a single board of trustees. The federal securities laws require all mutual fund directors to evaluate and approve a fund’s contract with its investment adviser, and the funds must report back to shareholders about the material factors considered by the directors in making these decisions. The SEC Enforcement Division’s Asset Management Unit has been fee arrangements in the fund industry.
An SEC investigation that arose from an examination of the Northern Lights Fund Trust and the Northern Lights Variable Trust found that some of the trusts’ shareholder reports either misrepresented material information considered by the trustees or omitted material information about how they evaluated certain factors in reaching their decisions on behalf of the funds and their shareholders. The trustees and the trusts’ chief compliance officer Northern Lights Compliance Services (NLCS) were responsible for causing violations of the SEC’s compliance rule, and the trusts’ fund administrator Gemini Fund Services (GFS) caused violations of the Investment Company Act recordkeeping and reporting provisions.
The firms and the trustees have agreed to settle the SEC’s charges.
“Determining the terms of the investment advisory contract, especially compensation of the adviser, is one of the most critical duties of a mutual fund board,” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. “We will aggressively enforce investors’ rights to accurate and complete information about the board’s process and decision-making.”
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission today charged a former employee at a Connecticut-based brokerage firm with scheming to personally profit from placing unauthorized orders to buy Apple stock. When the scheme backfired, it ultimately caused the firm to cease operations. David Miller, an institutional sales trader who lives in Rockville Centre, N.Y., has agreed to a partial settlement of the SEC’s charges. He also pleaded guilty today in a parallel criminal case.
The SEC alleges that Miller misrepresented to Rochdale Securities LLC that a customer had authorized the Apple orders and assumed the risk of loss on any resulting trades. The customer order was to purchase just 1,625 shares of Apple stock, but Miller instead entered a series of orders totaling 1.625 million shares at a cost of almost $1 billion. Miller planned to share in the customer’s profit if Apple’s stock profited, and if the stock decreased he would claim that he erred on the size of the order. The stock wound up decreasing after an earnings announcement later that day, and Rochdale was forced to cease operations in the wake of covering the losses suffered from the rogue trades.
“Miller’s scheme was deliberate, brazen, and ultimately ill-conceived,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit. “This is a wake-up call to the brokerage industry that the unchecked conduct of even a single individual in a position of trust can pose grave risks to a firm and potentially to the markets and investors.”
According to the SEC’s complaint filed in federal court in Connecticut, Miller entered purchase orders for 1.625 million shares of Apple stock on Oct. 25, 2012, with the company’s earnings announcement expected later that day. His plan was to share in the customer’s profit from selling the shares if Apple’s stock price increased.
Alternatively, if Apple’s stock price decreased, Miller planned to claim that he inadvertently misinterpreted the size of the customer’s order, and Rochdale would then take responsibility for the unauthorized purchase and suffer the losses.
Newscast Media WASHINGTON— The Securities and Exchange Commission today charged a California-based lawyer who has been fraudulently churning out baseless legal opinion letters for penny stocks through his website without researching and evaluating the individual stock offerings.
Legal opinion letters are issued to transfer agents on behalf of holders of restricted stock seeking to sell the stock freely in the public markets. Transfer agents typically require a lawyer’s opinion explaining the legal basis for lifting the restriction on the stock and allowing it to be freely traded.
The SEC alleges that Brian Reiss of Huntington Beach, Calif., set up 144letters.com to promote his legal opinion letter business and advertise “volume discount” rates while noting “penny stocks not a problem.” Reiss steered potential customers to his website by making bids on search terms through Google’s AdWords, and then relied on a computer-generated template to draft his opinion letters within minutes absent any true analysis of the facts behind each stock offering. The letters from Reiss ultimately made false and misleading statements and facilitated the sale of securities in violation of the registration provisions of the federal securities laws.
“Reiss flouted his responsibilities as a gatekeeper in the issuance of stock, and churned out opinion letters to make a quick buck,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Attorneys who act as gatekeepers in our markets have a solemn responsibility to ensure that they provide accurate information to the marketplace.”
The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).
Newscast Media WASHINGTON, DC—The Securities and Exchange Commission announced charges and an asset freeze against an individual living in Illinois and two companies behind an investment scheme defrauding foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.
The SEC alleges that Anshoo R. Sethi created A Chicago Convention Center (ACCC) and Intercontinental Regional Center Trust of Chicago (IRCTC) and fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China.
“Sethi orchestrated an elaborate scheme and exploited these investors’ dream of earning legal U.S. residence along with a positive return on their investment in a project that was not nearly the done deal that he portrayed,” said Stephen L. Cohen, Associate Director in the SEC’s Division of Enforcement. “The good news is that working closely with USCIS, we intervened early and stopped him from getting very
far, and the asset freeze preserves nearly all of the money invested.”
The SEC alleges that Sethi and his companies falsely boasted to investors that they had acquired all the necessary building permits and that several major hotel chains had signed onto the project. They also provided falsified documents to U.S. Citizenship and Immigration Services (USCIS) — the federal agency that administers the EB-5 program — in an attempt to secure the agency’s preliminary approval of the
project and investors’ provisional visas.
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission charged a former executive at New York-based broker-dealer Jefferies & Co. with defrauding investors while selling mortgage-backed securities (MBS) in the wake of the financial crisis so he could generate additional revenue for his firm.
According to the SEC’s complaint filed in federal court in Connecticut, Jesse Litvak arranged trades for customers as part of his job as a managing director on the MBS desk at Jefferies. Litvak would buy a MBS from one customer and sell it to another customer, but on many occasions he lied about the price at which his firm had bought the MBS so he could re-sell it to the other customer at a higher price and
keep more money for the firm. On other occasions, Litvak misled purchasers by creating a fictional seller to purport that he was arranging a MBS trade between customers when in reality he was just selling MBS out of his firm’s inventory at a higher price. Because MBS are generally illiquid and difficult to price, it is particularly important for brokers to provide honest and accurate information.
The SEC alleges that Litvak generated more than $2.7 million in additional revenue for Jefferies through his deceit. His misconduct helped him improve his own standing at the firm, as his bonuses were determined in part by the amount of revenue he generated for the firm.
“Brokers must always tell their customers the truth, particularly in complex securities transactions in which it is difficult for investors to determine market prices on their own,” said George Canellos, Deputy Director of the SEC’s Division of Enforcement.
“Litvak repeatedly lied to his customers and invented facts to bring additional profits into his firm and ultimately his own pocket at their expense.”
The SEC’s complaint charges Litvak with violating the antifraud provisions of the federal securities laws, particularly Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5, and Section 17(a) of the Securities Act of 1933.
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission today charged four securities industry professionals with conducting a fraudulent penny stock scheme in which they illegally acquired more than one billion unregistered shares in microcap companies at deep discounts and then dumped them on the market for approximately $17 million in illicit profits while claiming bogus exemptions from the federal securities laws.
The SEC alleges that Danny Garber, Michael Manis, Kenneth Yellin, and Jordan Feinstein acquired shares at about 30 to 60 percent off the market price by misrepresenting to the penny stock companies that they intended to hold the shares for investment purposes rather than immediately re-selling them. Instead, they immediately sold the shares without registering them by purporting to rely on an exemption for transactions that are in compliance with certain types of state law exemptions.
However, no such state law exemptions were applicable to their transactions. To create the appearance that the claimed exemption was valid, they created virtual corporate presences in Minnesota, Texas, and Delaware. The SEC also charged 12 entities that they operated in connection with the scheme.
The SEC’s complaint alleges that Garber, Manis, Yellin, Feinstein and the named entities violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC’s complaint seeks a final judgment, among other things, ordering all of the defendants to pay disgorgement, prejudgment interest and financial penalties; permanently enjoining all the defendants from future violations of the securities laws; and permanently enjoining all the defendants from participating in penny stock offerings.
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission announced insider trading charges against a Brazilian ex-banker for his role in a scheme to illegally trade Burger King securities. The SEC alleges that Igor Cornelsen and his firm through which he made trades – Bainbridge Group – reaped illicit profits of more than $1.68 million by trading Burger King options based on confidential information ahead of the company’s September 2010 announcement that it was being acquired by a New York private equity firm.
Cornelsen is now a resident of the Bahamas with a home in South Florida after holding high-ranking positions at several banks in Brazil before his retirement. He sought inside information from his broker Waldyr Da Silva Prado Neto by sending him e-mails with such masked references as, “Is the sandwich deal going to happen?” Prado was stealing the inside information from another Wells Fargo brokerage customer involved in the Burger King deal.
Cornelsen and Bainbridge Group agreed to pay more than $5.1 million to settle the SEC’s charges. The settlement is subject to court approval. The litigation continues against Prado, whose assets have been frozen by the court.
“Cornelsen shamelessly prodded Prado for details on ‘the sandwich deal’ and Prado happily obliged to satisfy his customer’s appetite for inside information,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit and Director of the Philadelphia Regional Office.
Sanjay Wadhwa, Deputy Chief of the Market Abuse Unit and Associate Director of the New York Regional Office, added, “Foreign investors who access the U.S. capital markets must play by the rules and not rig the market in their favor, otherwise they face getting caught by the SEC and paying a hefty price as Cornelsen is here.”
Newscast Media HOUSTON, Texas—Before I conclude this series, I would like to explain what a forensic audit is. A true forensic audit on any property will tell you if the underlying debt obligation was securitized and who the “holder in due course” or holder of the debt obligation is. If a property was purchased in cash, a forensic audit can still be done, because banks are known to seize properties that were paid in cash due to a broken chain of assignments, that led to a broken chain of title. It is important therefore even with a paid off property to make sure you have what is referred to as a clear title. Read this story about how a court authorized the house sale of a man in Florida who had paid cash and had no mortgage.
A clear title has no encumbrance on it, because prior to the sale of the property, the lien was perfected, or there were absolutely no clouds on the title. A perfected lien is one where the person who holds the deed of trust, also holds the note. If by any chance the person who holds or held the deed of trust is or was different from the one who holds or held the note, then you have a defect in title that can never be cured, because both instruments traveled on divergent paths. Even if you paid cash for it, someone five or ten years down the road who knows about the Law of Mortgages and trust law, can come back and sue for a “fraudulent conveyance.” For now, I will just stick to the topic of the Department of Justice and the SEC, including what I discovered during a forensic audit on some property.
After my investigative research was complete, I demonstrated using charts, that several SEC violations happened and trust laws were broken, and that the true owner of the securitized debt obligation was the Depository Trust Company the nominee of whom is CEDE & Company. The judge got scared and immediately sealed the case. In the end the bank walked away from the property out of fear of being charged with fraud by the SEC under Section 17(a)(2) of the Securities Act of 1933 that states:
“It shall be unlawful for any person in the offer or sale of any securities or security-based swap agreement to obtain money or property by means of any untrue statement of a material fact.”
The untrue statements in this case were the ones the bank’s attorneys uttered in the court record, claiming the bank owned the debt obligation, and using those statements to unlawfully obtain a piece a property, and legal fees (money) as a result of representing the banks.
Also 17 C.F.R section 240.10b-5 states: “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
Because the Justice Department and the Securities and Exchange Commission know that military agents ultimately have the last word in these cases, and because such cases are very sophisticated even for experienced judges, who last went to school in the 70s or 80s before the creation of the Collateralized Debt Obligations in form of mortgage-backed securities, the SEC and DOJ are laying out the fraud and violations before these multi-national corporations, and are succeeding in settling out of court.
You probably are thinking how these military Judge Advocate Generals can control the outcome of a case if it is a trial by jury. Before a case goes to trial, the judge will determine whether it is frivolous, whether you have standing, whether there is enough evidence, and if he or she dismisses it, and it never goes to trial, hasn’t the judge controlled the outcome? We see criminal charges being dropped everyday because there was a mishandling in the chain of evidence or a witness disappeared, and such criminal cases remain unsolved and untried. We also see civil cases being dismissed for failure to state a claim under which relief may be granted, or lack of subject matter or jurisdiction. Isn’t the judge controlling the outcome?
Even when it does finally go to trial, we always hear about “mistrials” happening because of a “procedural” defect, technicality or one side files a “voluntary withdrawal” because the evidence is questionable. It only takes one stubborn juror to create a hung jury even when there is clear and convincing evidence that a crime was committed. If conviction requires a 10-2 vote and it is 9-2, that one juror can make the case go one way or the other, resulting in a mistrial or conviction.
In his farewell speech in January 1961 President Eisenhower warned us of the military industrial complex because of the potential of misplaced powers. Watch:
In the very last sentence, Eisenhower was talking about the military that secretly controls the outcome of every case: “The total influence, economic, political, even spiritual, is felt in every city, every state house, every office of the federal government. We must never let the weight of this combination
(Military Industrial Complex) endanger our liberties or democratic processes.”
Obama knows what is going on in the courts, being a lawyer himself. He knows the military flag is in every courtroom and church for a reason. He, together with the SEC are not taking any chances so they are winning cases outside court, before they even enter the courts. I believe the only reason John G. Roberts flipped and voted for Obamacare was maybe Obama had some dirt on him, like a tape or photos.
Secondly, companies are willing to settle outside court because they know that the shareholders and investors might start filing class action lawsuits and the prolonged litigation would definitely damage the company’s bottom line. The third and perhaps most important reason is the corporations do not want the IRS breathing down their necks. It would be hard to succeed against these federal alphabet agencies namely: the DOJ, SEC, IRS and risk also having the FBI join the party and start investigating criminal behavior of corporate executives. Right there you are going into RICO territory, and who wants that?
Above all, Obama’s Department of Justice and the SEC have succeeded in winning outside the courts, by getting off-the-record confessions after doing internal investigations with the help of whistleblowers, and offering immunity to corporations and executives who acknowledge that violations were made, but don’t have to admit to any wrongdoing.
How come you never hear the media tell people that every court is a profit-making business whose primary function is to sell securites in form of bundled up surety bonds on the secondary market? Because the corporate media is owned by the very corporations that trade the bonds and securities.
Newscast Media ATLANTA, Ga—The Securities and Exchange Commission announced charges against a private fund manager and his Atlanta-based investment advisory firm for defrauding investors in a purported “fund-of-funds” and then trying to hide trading losses by creating new private funds to make money to pay back the original fund investors in Ponzi-like fashion.
The SEC is seeking an emergency court order to freeze the assets of Angelo A. Alleca and Summit Wealth Management Inc. and prevent further investor losses, which are estimated to be $17 million among approximately 200 clients.
“Alleca told Summit Wealth clients that he was investing their money in funds, but instead he was rolling the dice in the stock market without success,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit. “Rather than fess up about his trading losses, Alleca tried a cover up by creating new funds. Instead of winning back the money, he just compounded his fraud by suffering further losses.”
After receiving a tip, the SEC initiated an examination of Summit Wealth. As SEC examiners noticed something was amiss at the firm, they immediately coordinated with SEC enforcement attorneys to gather and assess evidence.
“SEC examiners and attorneys acted swiftly after receiving a tip about possible wrongdoing at the firm, and have mounted an aggressive effort to put a stop to Alleca’s fraud before more investors are harmed,” said William P. Hicks, Associate Director of the SEC’s Atlanta Regional Office.
According to the SEC’s complaint filed late yesterday in federal court in Atlanta, Alleca and Summit Wealth Management offered and sold interests in Summit Fund, which they told their clients was operating as a fund-of-funds – meaning they were investing their money in other funds and investment products rather than directly in stocks and other securities.
The SEC’s complaint charges Alleca, Summit Wealth Management, and the three funds with violations of the antifraud provisions of the federal securities laws.
Newscast Media WASHINGTON, D.C.—A whistleblower who helped the Securities and Exchange Commission stop a multi-million dollar fraud will receive nearly $50,000 — the first payout from a new SEC program to reward people who provide evidence of securities fraud.
The award represents 30 percent of the amount collected in an SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law.
“The whistleblower program is already becoming a success,” said SEC Chairman Mary L. Schapiro, who advocated for the program. “We’re seeing high-quality tips that are saving our investigators substantial time and resources.”
The award recipient, who does not wish to be identified, provided documents and other significant information that allowed the SEC’s investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims. The whistleblower’s assistance led to a court ordering more than $1 million in sanctions, of which approximately $150,000 has been collected thus far. The court is considering whether to issue a final judgment against other defendants in the matter. Any increase in the sanctions ordered and collected will increase payments to the whistleblower.
“This whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.”
The SEC did not approve a claim from a second individual seeking an award in this matter because the information provided did not lead to or significantly contribute to the SEC’s enforcement action, as required for an award.
The 2010 Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Awards can range from 10 percent to 30 percent of the money collected.
The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.
Newscast Media WASHINGTON, D.C.—The Securities and Exchange Commission has charged 14 sales agents who misled investors and illegally sold securities for a Long Island-based investment firm at the center of a $415 million Ponzi scheme.
The SEC alleges that the sales agents — which include four sets of siblings — falsely promised investor returns as high as 12 to 14 percent in several weeks when they sold investments offered by Agape World Inc. They also misled investors to believe that only 1 percent of their principal was at risk. The Agape securities they peddled were actually non-existent, and investors were merely lured into a Ponzi scheme
where earlier investors were paid with new investor funds.
The sales agents turned a blind eye to red flags of fraud and sold the investments without hesitation, receiving more than $52 million in commissions and payments out of investor funds. None of these sales agents were registered with the SEC to sell securities, nor were they associated with a registered broker or dealer. Agape also was not registered with the SEC.
“This Ponzi scheme spread like wildfire through Long Island’s middle-class communities because this small group of individuals blindly promoted the offerings as particularly safe and profitable,” said Andrew M. Calamari, Acting Regional Director for the SEC’s New York Regional Office. “These sales agents raked in commissions without regard for investors or any apparent concern for Agape’s financial distress and inability to meet investor redemptions.”
According to the SEC’s complaint filed in the U.S. District Court for the Eastern District of New York, more than 5,000 investors nationwide were impacted by the scheme that lasted from 2005 to January 2009, when Agape’s president and organizer of the scheme Nicholas J. Cosmo was arrested. He was later sentenced to
300 months in prison and ordered to pay more than $179 million in restitution. The SEC alleges that the sales agents misrepresented to investors that their money would be used to make high-interest bridge loans to commercial borrowers or businesses that accepted credit cards. Little, if any, investor money actually went
toward this purpose. Investor funds were instead used for Ponzi scheme payments and the agents’ sales commissions, and Cosmo lost $80 million while trading futures in personal accounts.
The SEC’s complaint charges the following sales agents:
* Brothers Bryan Arias and Hugo A. Arias of Maspeth, N.Y., who offered and
sold Agape securities to at least 195 and 1,419 investors respectively. They
received more than $9.5 million combined in commissions and payments.
* Brothers Anthony C. Ciccone of Locust Valley, N.Y. and Salvatore Ciccone
of Maspeth, N.Y., who offered and sold Agape securities to at least 535 and
348 investors respectively. They received more than $17 million combined in
commissions and payments.
* Brothers Jason A. Keryc of Wantagh, N.Y. and Michael D. Keryc of Baldwin,
N.Y. Jason Keryc offered and sold Agape securities to at least 1,617 investors
and received at least $16 million in commissions and payments. He also paid
sub-brokers, including his brother, at least $7.4 million to sell Agape securities
for him. Michael Keryc offered and sold Agape securities to at least 177
investors and received more than $1 million in commissions and payments.
* Siblings Martin C. Hartmann III of Massapequa, N.Y. and Laura Ann Tordy of
Wantagh, N.Y. Hartmann enlisted his sister in his sales effort while he worked
as a sub-broker for Jason Keryc. Hartmann and Tordy offered and sold Agape
securities to at least 441 investors and received more than $3.5 million in
commissions and payments.
* Christopher E. Curran of Amityville, N.Y., who worked as a sub-broker for
Keryc. Curran offered and sold Agape securities to at least 132 investors and
received at least $531,890 in commissions and payments.
* Ryan K. Dunaske of Ronkonkoma, N.Y., who worked as a sub-broker for Keryc.
Dunaske offered and sold Agape securities to at least 70 investors and
received more than $700,000 in commissions and payments.
* Michael P. Dunne of Massapequa, N.Y., who worked as a sub-broker for
Keryc. Dunne offered and sold Agape securities to at least 99 investors and
received more than $1.5 million in commissions and payments.
* Diane Kaylor of Bethpage, N.Y., who offered and sold Agape securities to at
least 249 investors and received at least $3.7 million in commissions and
* Anthony Massaro of Boynton Beach, Fla., who offered and sold Agape
securities to at least 826 investors and received more than $5.9 million in
commissions and payments.
* Ronald R. Roaldsen, Jr. of Wantagh, N.Y., who worked as a sub-broker for
Keryc. Roaldsen offered and sold Agape securities to at least 159 investors and
received more than $600,000 in commissions and payments.
The SEC’s complaint charges Bryan and Hugo Arias, Anthony and Salvatore Ciccone, Jason and Michael Keryc, Dunne, Hartmann, Kaylor, Massaro, and Tordy with violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint charges all 14 defendants with violations of Section 15(a) of the Exchange Act, and Sections 5(a) and 5(c) of the Securities Act.