On October 31, 2017, Thomas Buck, former Merrill Lynch broker, has agreed to pay more than $5 million to settle SEC charges that he fraudulently schemed to increase his personal income by obtaining excessive commissions and fees from investors.

According to the SEC’s complaint, Merrill Lynch paid financial advisors a portion of the commissions, fees, or other revenue they generated in customer and client accounts. The SEC alleges that Thomas Buck represented to certain customers with commission-based accounts that the total annual commissions they paid would not exceed certain limits, and then he traded in those accounts and generated commissions that exceeded the amounts he promised. Read More

On October 11, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against JustInfo LLC, a Kentucky-based entity, a California-based tax preparer who solicited investors on behalf of the entity, and the entity’s majority owner, for lying to investors in a futures trading scheme.

According to the SEC’s complaint, JustInfo LLC pooled investor funds for the ostensible purpose of trading futures contracts. The complaint alleges that David Weddle, the majority owner of JustInfo, and Scott Allensworth, doing business as Capital Growth Group Associates, raised at least $2.84 million from at least 57 investors by selling investment contracts. The complaint further alleges that throughout the period of the offering, Weddle and Allensworth stole at least $1 million for their own use and to make payments of purported returns to prior investors in classic Ponzi-fashion. Weddle allegedly created false trading reports, which Allensworth sent to investors, to cover up JustInfo’s trading losses and maintain the appearance that the investment was profitable. Read More

On October 19, 2017, the U.S. Securities and Exchange Commission (“SEC”) charged John Rogicki, a New York-based investment adviser, with defrauding a non-profit charitable foundation out of $9 million.

The SEC alleges that John Rogicki, managing director and chief compliance officer of Train Babcock Advisors LLC, has been stealing funds from the charity for a dozen years to purchase real estate and pay for his own lavish lifestyle. According to the SEC’s complaint, the charitable foundation was established by an elderly woman to donate her estate to health and education causes. John Rogicki has served not only as investment adviser to the charitable foundation but also as its president and a trustee, and he allegedly took advantage of his roles by liquidating securities positions in the foundation’s advisory account and transferring the money for his personal benefit. Read More

On October 5, 2017, the Securities and Exchange Commission (“SEC”) announced that it filed fraud charges against an attorney Marc Celello based on his alleged participation in a Ponzi scheme.

The SEC’s complaint, filed in federal court in Atlanta on October 5, 2017, alleges that Marc Celello who, along with Canton, Ga.-resident James A. Torchia, was a partner in Credit Nation Capital LLC and served as general counsel for the underlying entities, helped orchestrate a Ponzi scheme involving unregistered promissory notes which falsely promised a 9% return. He allegedly prepared offering memoranda and directed sales and marketing representatives to lie to investors that the promissory notes were secure investments “backed by hard assets dollar for dollar.” The complaint further alleges that Marc Celello knew that Credit Nation Capital was insolvent and directed an employee to fabricate a fraudulent balance sheet that made it appear to be profitable. Marc Celello also allegedly helped transfer investor funds from CN Capital to Torchia for Torchia’s personal use. Between 2009 and November 2015, when the SEC obtained a court order stopping the alleged Ponzi scheme, Credit Nation Capital raised at least $30 million from investors. Read More

On October 5, 2017, Richard Cody, a former investment adviser and broker representative, whom the Securities and Exchange Commission (“SEC”) has charged with defrauding Massachusetts retirees, has been indicted for deceiving and manipulating his former clients concerning the management of their retirement savings as well as lying to the agency in sworn testimony.

The indictment, filed on September 26, 2017 and unsealed on September 28, 2017, charges Richard Cody, of Jacksonville, Florida, with violating the Investment Advisers Act of 1940 and making a false declaration in a court proceeding. The alleged facts underlying the charges in the indictment arise from the same conduct alleged in the SEC’s complaint against Cody, which was filed in federal court in Massachusetts on December 12, 2016. The indictment also alleges that Richard Cody lied to the SEC during a March 2017 sworn deposition in connection with the SEC’s action against Cody. Richard Cody allegedly made false declarations during the deposition when he denied that he had provided fraudulent documents to two investors. Read More

On September 28, 2017, the Securities and Exchange Commission (“SEC”) obtained a final judgment against Robert Stewart, the former chief financial officer of a technology company and certified public accountant, who was charged, along with his son, with conducting a serial insider trading scheme involving tips of key nonpublic information in coded e-mail messages disguised as discussions about golf.

The final judgment, entered on September 27, 2017 by the Honorable Analisa Torres of the U.S. District Court for the Southern District of New York, permanently enjoins Robert Stewart from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him liable for disgorgement of $153,675.65, which is the amount of illicit profits he earned as a result of the alleged illegal insider trading, plus $11,240.76 in interest, but provides that the disgorgement and interest obligation will be satisfied by the entry of a forfeiture order in the parallel criminal case. The final judgment also imposes a lifetime officer-and-director bar on Robert Stewart. Read More

On September 22, 2017, the Securities and Exchange Commission (“SEC”) filed fraud charges against Aegerion Pharmaceuticals, a Massachusetts-based bio-pharmaceutical company, that exaggerated how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue.

Aegerion Pharmaceuticals, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013. The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions went ahead and ultimately purchased the drug. The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases. Read More

On September 21, 2017, the Securities and Exchange Commission (“SEC”) obtained an order requiring the Woodbridge Group of Companies LLC, of Sherman Oaks, California, to produce the corporate documents of several company executives and employees, including the President and CEO.

According to the SEC’s application and supporting papers filed in federal court in Miami on July 17, 2017, the agency is investigating whether Woodbridge and others have violated or are violating the antifraud, broker-dealer, and securities registration provisions of the federal securities laws in connection with Woodbridge’s receipt of more than $1 billion of investor funds from thousands of investors nationwide. As part of the SEC’s ongoing investigation, on January 31, 2017, agency staff in the Miami Regional Office served Woodbridge with a subpoena seeking, among other documents, the production of electronic communications that the company maintained relating to Woodbridge’s business operations. The SEC’s application alleges that although Woodbridge was required to produce these documents to the SEC, the company has failed to produce any relevant communications in response to the subpoena, including those of three high-level Woodbridge officials. Read More

On September 20, 2017, the Securities and Exchange Commission (“SEC”) charged Peter Chang, the former CEO of a Silicon Valley-based fiber optics company, with insider trading in company stock by using secret brokerage accounts held in the names of his wife and brother.

The SEC alleges that Peter Chang, who also was the founder and chairman of the board at Alliance Fiber Optic Products, generated more than $2 million in illicit profits and losses avoided by trading on nonpublic information and tipping his brother ahead of two negative earnings announcements and the company’s merger. Read More

On September 13, 2017, the Securities and Exchange Commission (“SEC”) announced that Mayank Gupta, a former auditor, has agreed to settle charges that he tipped his relative with inside information about a client on the verge of a merger.

The SEC’s complaint alleges that, through his audit work at PricewaterhouseCoopers LLP, Mayank Gupta learned that San Jose, Calif.-based Cavium was making imminent preparations to acquire Aliso Viejo, Calif.-based QLogic Corp. According to the SEC’s complaint, before the deal was announced to the public, Gupta called his cousin-in-law Pushpendra Agrawal, and told him that Cavium was going to acquire QLogic and that QLogic was a “sure thing.” Upon arriving at work, Agrawal bought 200 QLogic call options, based on Gupta’s tip. During his lunch break, Agrawal bought an additional 50 QLogic call options, again based on Gupta’s tip. After QLogic announced that it would be acquired by Cavium through a tender offer, QLogic’s stock rose by more than 9 percent, and Agrawal profited by more than $23,785 from the illegal trades. Read More

On September 6, 2017, the Securities and Exchange Commission  (“SEC”) charged Scott Newsholme, a New Jersey-based tax preparer and investment adviser, with stealing more than $1 million from clients to support his gambling habit and other personal expenditures.

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On August 31, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against investment adviser Navellier & Associates, Inc. and its founder and chief investment officer, Louis Navellier. The SEC’s complaint, filed in federal court in Boston, Massachusetts, alleges that from 2010 to 2013, Mr. Navellier and his firm defrauded their clients and prospective clients, misleading them about the performance track record of the “Vireo AlphaSector” investment strategies that the firm offered under the “Vireo” brand name. First, Mr. Navellier and his firm allegedly breached their fiduciary duty to clients and prospective clients by ignoring and concealing red flags that should have alerted them that the investment strategies had not performed as advertised. Second, Navellier & Associates allegedly distributed materially false advertisements and client communications about the performance track record of the investment strategies. Third, as Mr. Navellier and his firm realized their misrepresentations could get them in legal trouble, they allegedly sold the Vireo line of business in August 2013 for $14 million, rather than correcting their prior misrepresentations to their clients or informing their clients about their conflicts of interest in selling the Vireo business.

Navellier & Associates’ advertisements claimed that client assets had been invested in the investment strategies from April 2001 to September 2008 and that the strategies had significantly outperformed the S&P 500 Index from April 2001 to September 2008. In fact, no client assets had tracked the strategy from April 2001 through September 2008, and even as a back-test the claimed performance was substantially overstated. Read More

On August 31, 2017, the Securities and Exchange Commission (“SEC”) charged Connecticut-based broker representative and investment adviser Leon Vaccarelli and his company with fraudulently persuading several elderly customers to invest with him and then spending their money on his own living and business expenses.

The SEC’s complaint alleges that instead of investing the customers’ money in such things as conventional brokerage accounts and so-called separately managed accounts as promised, Leon Vaccarelli deposited customer funds into his personal and business bank accounts. He allegedly commingled the funds with his own money and used them for his own purposes, and in some instances he used customer funds to pay returns to earlier investors. According to the SEC’s complaint, Leon Vaccarelli asked one customer to sign an agreement that she would not provide certain information to FINRA or the SEC. Leon Vaccarelli allegedly sold more than $450,000 in securities that were held in trust for the care and maintenance of a beneficiary and used some of the proceeds to pay business and personal expenses. Read More

On August 31, 2017, the Securities and Exchange Commission (“SEC”) charged an accountant and three others with insider trading on market-moving news about Celator Pharmaceuticals, the New Jersey-based pharmaceutical company where the accountant formerly worked.

On August 25, 2017, the Honorable Denise L. Cote of the U.S. District Court for the Southern District of New York denied a motion by Lek Securities Corporation and its Chief Executive Officer, Samuel Lek, to dismiss the SEC’s claims in an ongoing market manipulation litigation. The SEC’s complaint, filed in March 2017, alleges that Lek Securities and Samuel Lek aided and abetted manipulative trading schemes by one of Lek Securities’ customers, Ukraine-based trading firm Avalon FA Ltd, Avalon’s owner Nathan Fayyer, and its alleged undisclosed control person, Sergey Pustelnik.

The Court denied the Lek defendants’ motion to dismiss in its entirety, rejecting their arguments that the trading schemes at issue in the Complaint were not manipulative. The SEC’s complaint alleges two types of manipulative trading, layering and cross-market manipulation. Layering involves the entry of “non-bona fide” orders (orders that the trader allegedly does not intend to execute and that have no legitimate economic reason) to trick others into trading at artificial prices. The cross-market manipulation involves buying and selling stocks at a loss, allegedly for the purpose of moving the prices of corresponding options, so that Avalon could make a profit by trading those options at artificial prices. Read More

On Aug. 21, 2017, the Securities and Exchange Commission (“SEC”) announced that hedge fund advisory firm Deerfield Management Company L.P. has agreed to pay more than $4.6 million to settle charges that it failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of inside information, including information about confidential government decisions.

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On Aug. 22, 2017, the Securities and Exchange Commission (“SEC”) charged investment adviser Jeremy Drake with defrauding two clients, a high profile professional athlete and the athlete’s wife, by deceiving them about the investment advisory fees they were paying.  The SEC alleges that Jeremy Drake went to elaborate lengths to conceal his fraud, including creating and sending false documents and masquerading as another person to corroborate his lies.

On Aug. 23, 2017, the Securities and Exchange Commission (“SEC”) announced that Beaumont Financing Authority, a municipal financing authority in Beaumont, California, and its then-executive director have agreed to settle charges that they made false statements about prior compliance with continuing disclosure obligations in five bond offerings.

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On August 21, 2017, the Securities and Exchange Commission (“SEC”) has obtained a final judgment against Adesh Tyagi, the former CEO of a penny stock company charged with making false claims in press releases and engaging in manipulative trading in company stock.

The final judgment, entered by consent on August 17, 2017 by the Honorable Jeffrey S. White of the U.S. District Court for the Northern District of California, permanently enjoins Adesh Tyagi from violating Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(d) and 16(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13b-1 and 16a-3 and imposes a conduct based injunction and officer-and-director and penny stock bars. In addition, the final judgment orders Adesh Tyagi to pay approximately $294,000 in disgorgement and interest. Read More

On August 16, 2017, the Securities and Exchange Commission (“SEC”) announced that Vergeous LLC and Dream Team Partners LLC, two Florida-based video game development companies, and their principal have agreed to pay approximately $293,000 for misleading investors in video game projects.

According to the SEC’s complaint, through a series of unregistered securities offerings during a three-year period, Vergeous LLC, Dream Team Partners LLC, and Paul E. Renfroe raised about $1.2 million from approximately 33 investors in several states, many of whom were elderly clients of Renfroe’s other businesses. The SEC alleges that Vergeous and Renfroe told investors that their money would be used to develop “free-to-play” video game projects. Instead, the SEC alleges that more than $150,000 raised from investors was used to pay undisclosed company debts and back salaries to Renfroe and others. Renfroe also allegedly touted his experience as a “long time financial advisor” and told investors that he “voluntarily” gave up his securities licenses because placing customers’ investments at risk “caused a real conflict of conscience.” In reality, as alleged in the complaint, Renfroe was permanently barred from the securities industry by the NASD (now FINRA) for misusing customer funds. The SEC also alleges that Vergeous and Renfroe misled investors by failing to disclose that Dream Team held complete control over all intellectual property rights associated with any joint video game projects and that Renfroe had a 30 percent ownership stake in Dream Team, despite stating that “no conflicts of interest exist.” Read More

On Aug. 18, 2017, the Securities and Exchange Commission (“SEC”) announced that broker Banca IMI Securities Corp, an indirect, wholly-owned U.S. subsidiary of Italian bank Intesa Sanpaolo SpA, has agreed to pay more than $35 million to settle charges that it violated federal securities laws when it requested the issuance of and received American Depositary Receipts (ADRs) without possessing the underlying foreign shares.

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On August 16, 2017, the Securities and Exchange Commission (“SEC”) announced insider trading charges against seven individuals, Daniel Rivas being one, who generated millions in profits by trading on confidential information about dozens of impending mergers and acquisitions.  Data analysis allowed the SEC’s enforcement staff to uncover the illicit trading despite the traders’ alleged use of shell companies, code words, and an encrypted, self-destructing messaging application to evade detection.

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On Aug. 15, 2017, the Securities and Exchange Commission (“SEC”) announced that KPMG has agreed to pay more than $6.2 million to settle charges that it failed to properly audit the financial statements of an oil and gas company, resulting in investors being misinformed about the energy company’s value.  KPMG’s engagement partner in charge of the audit also agreed to settle charges against him.

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On August 16, 2017, the Securities and Exchange Commission (“SEC”) announced that it has obtained final judgments against DiMaria and Gamsey, two former executives of Bankrate Inc.

In September 2015, the SEC charged the two executives, Edward DiMaria and Matthew Gamsey, with fraudulently manipulating the company’s financial results to meet analyst expectations. The SEC also alleged that DiMaria sold Bankrate stock at a price that was artificially inflated because of the accounting manipulation. The final judgments, entered on August 16, 2017 by the Honorable Gregory Woods of the U.S. District Court for the Southern District of New York permanently enjoin: Read More

On August 10, 2017, the Securities and Exchange Commission (“SEC”) announced that it has obtained a final judgment against Louis Martin Blazer III,  a Pittsburgh, Pa.-based financial adviser, accused of taking money without permission from the accounts of several professional athletes in order to invest in movie projects and make Ponzi-like payments and then lying to SEC examiners who uncovered the unauthorized withdrawals.

The final judgment, entered by consent on August 4, 2017, by the Honorable J. Paul Oetken of the U.S. District Court for the Southern District of New York, permanently enjoins Louis Martin Blazer III from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(1) and 206(2) of the Investment Advisers Act of 1940 and orders him to pay approximately $1.8 million in disgorgement and prejudgment interest and a civil money penalty of $150,000. On May 18, 2016, the court entered a partial judgment by consent and Louis Martin Blazer III agreed to the entry of an SEC order, based on the partial judgment, imposing a permanent industry bar. Read More

On July 31, 2017, the Securities and Exchange Commission (“SEC”) charged four former Atlanta-area brokers with fraudulently inducing federal employees to roll over holdings from their federal Thrift Savings Plan (TSP) retirement accounts into higher-fee, variable annuity products.

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On August 2, 2017, the Securities and Exchange Commission (“SEC”) announced fraud and other charges against two individuals and John Thomas Financial, a related company, for their roles in a manipulative trading scheme involving Liberty Silver Corp., a penny stock.

The SEC’s complaint, filed on August 1, 2017 in federal district court in New York, alleges that, Robert Genovese, a Canadian citizen, his company, B.G. Capital Group, Ltd. and Abraham Mirman, the former head of investment banking at now-defunct New York broker-dealer John Thomas Financial, Inc. (JTF), were involved in a scheme concerning Liberty Silver in which Genovese sought to increase dramatically the company’s share price and volume and sell millions of shares into the market. According to the SEC’s complaint, between August and October 2012, Genovese schemed with Mirman to sell Liberty Silver shares to John Thomas Financial’s customers in part by agreeing to loan $2 million indirectly to JTF without disclosing the loan to the customers. The complaint alleges that Genovese also touted Liberty Silver in newspaper articles while failing to disclose that he had paid for the articles, that he was dumping millions of shares of Liberty Silver stock, and the financial arrangements between himself and John Thomas Financial. It further alleged that Genovese engaged in manipulative trading on a particular day, increasing Liberty Silver’s share price and creating the false appearance of liquidity and demand for Liberty Silver stock. Read More

On July 24, 2017, the U.S. Securities and Exchange Commission (“SEC”) announced that it has obtained a final judgment against Andrew Farmer, whom the SEC charged with orchestrating a pump-and-dump scheme involving a company that purportedly developed revolutionary technology to enable environmentally friendly oil and gas production.

The final judgment, entered on July 18, 2017 by the Honorable Keith P. Ellison of the U.S. District Court for the Southern District of Texas, orders Andrew Farmer to pay approximately $7.2 million in disgorgement and prejudgment interest and a civil penalty of approximately $2 million. The final judgment also permanently enjoins Andrew Farmer from violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder and imposes permanent penny stock and officer-and-director bars. Read More

On July 31, 2017, the Securities and Exchange Commission (“SEC”) announced that on July 28, 2017, an Illinois federal court entered a final judgment against Defendant Stephen Ferrone following an April 2016 jury verdict in the Commission’s favor. The final judgment prohibits Stephen Ferrone, retroactively to July 24, 2016, from serving as an officer or director of a public company for a period of three (3) years. The final judgment also requires Stephen Ferrone to pay a $120,000 civil penalty.

The Commission charged Stephen Ferrone and other defendants in August 2011, alleging, among other things, that Stephen Ferrone made materially false and misleading statements during 2007-2010 regarding the status of regulatory approvals for Immunosyn’s sole product, a drug referred to as “SF-1019.” The Commission’s complaint alleged that Stephen Ferrone falsely stated in public filings with the Commission and in other presentations that Argyll Biotechnologies, LLC, Immunosyn’s controlling shareholder, planned to commence the regulatory approval process for human clinical trials for SF-1019 in the U.S. or that the regulatory approval process was underway. The complaint alleged that these statements deceived investors because the statements failed to disclose that the U.S. Food and Drug Administration had issued clinical holds on drug applications for SF-1019, which prohibited clinical trials involving SF-1019 from occurring. Read More