The SEC’s complaint, filed in federal court in New Jersey, alleges that Evan Kita, a CPA and former accountant at Celator Pharmaceuticals Inc., tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals Plc almost three months later. Celator’s stock rose more than 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator.
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Celator Pharmaceuticals Employees Charged With Insider Trading
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.
Lek Securities Motion to Dismiss Denied
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
Deerfield Management Company Agrees to Settle Charges
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.
The case relates to insider trading charges that the SEC recently filed against current and former Deerfield analysts, a political intelligence analyst who passed them information, and an employee at the Centers for Medicare and Medicaid Services (CMS).
Jeremy Drake Charged With Fraud
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.
The SEC alleges that Drake, then with Los Angeles-based HCR Wealth Advisors, deceived the clients for more than three years, telling them that they paid a special “VIP” annual rate of 0.15 to 0.20 percent of their assets under management when in fact they paid 1 percent. Jeremy Drake’s deception led the clients to pay $1.2 million more in management fees than Jeremy Drake represented. Jeremy Drake personally received approximately $900,000 of incentive-based compensation based on the fees paid by the clients during the course of his deception.
Beaumont Financing Authority Settles Charges
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.
Also settling charges are the underwriting firm behind those offerings and its co-founder for failing to conduct reasonable due diligence on the continuing disclosure representations.
Adesh Tyagi Receives Final Judgement
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
Vergeous LLC, et al. Charged with Offering Fraud
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
Banca IMI Securities to Pay $35 Million
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.
ADRs are U.S. securities that represent shares of a foreign company, and for all issued ADRs there must be a corresponding number of foreign shares held in custody at a depositary bank. Under “pre-release agreements,” brokers such as Banca IMI Securities may obtain ADRs without depositing corresponding foreign shares provided the broker owns or takes reasonable steps to determine that the customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.
Daniel Rivas Center of Insider Trading Scheme
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.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against the same seven individuals.
KPMG Charged with Audit Failures
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.
According to the SEC’s order, KPMG was hired as the outside auditor for Miller Energy Resources in 2011 and issued an unqualified audit report despite grossly overstated values for key oil and gas assets. KPMG and the engagement partner John Riordan failed to properly assess the risks associated with accepting Miller Energy as a client and did not properly staff the audit, which overlooked the overvaluation of certain oil and gas interests that the company had purchased in Alaska the previous year. Among other audit failures, KPMG and Riordan did not adequately consider and address facts known to them that should have raised serious doubts about the company’s valuation, and they failed to detect that certain fixed assets were double-counted in the company’s valuation.
DiMaria and Gamsey Receive Final Judgements
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
Final Judgement Obtained Against Louis Martin Blazer III
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
Thrift Savings Plan Used In Fraud Case
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.
The SEC’s enforcement action comes at a time when the agency has been focusing more specifically on brokers’ and advisers’ interactions with senior investors, and others investing for retirement, through the ReTIRE initiative of the agency’s national exam program and the work of the Broker-Dealer Task Force in its Enforcement Division.
Charges Announced Against John Thomas Financial
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
Final Judgement Obtained Against Andrew Farmer
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
Final Judgement Against Stephen Ferrone
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
SEC Charges Halliburton Company
On July 27, 2017, the Securities and Exchange Commission (“SEC”) charged Halliburton Company with violating the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA) while selecting and making payments to a local company in Angola in the course of winning lucrative oilfield services contracts.
Halliburton, which profited by approximately $14 million from the deals, has agreed to pay more than $29.2 million to settle the SEC’s case. The company also agreed to obtain an independent compliance consultant to oversee its anti-corruption policies and procedures in Africa. Halliburton’s former vice president Jeannot Lorenz has agreed to pay a $75,000 penalty for causing the company’s violations, circumventing internal accounting controls, and falsifying books and records.
Medicus Homecare Trading Suspension
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Medicus Homecare Inc. (MDCR) commencing at 9:30 a.m. EDT on July 28, 2017 and terminating at 11:59 p.m. EDT on August 10, 2017.
The Commission temporarily suspended trading in the securities of Medicus Homecare due to a lack of current and accurate information about the company because it has not filed certain periodic reports with the Commission. Read More
CNK Global Trading Suspension
On July 28, 2017, the U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of CNK Global, Inc. (a/k/a American Life Holding Co., Inc.) (ALFE) commencing at 9:30 a.m. EDT on July 28, 2017, and terminating at 11:59 p.m. EDT on August 10, 2017.
The Commission temporarily suspended trading in the securities of the CNK Global due to a lack of current and accurate information about the company because it has not filed certain periodic reports with the Commission. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act). Read More
Joey Dodson Charged with Fraud
On July 26, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against Joey Dodson, the founder of a collection of businesses known as Citadel Energy, which provided fluid management solutions to the oil and gas industry in North Dakota.
According to the SEC’s complaint, from approximately November 2012 through December 2014, Joey Dodson, of Porter Ranch, California, made numerous material misstatements and statements that were materially misleading as a result of omissions to investors. As described in the complaint, Joey Dodson misled investors regarding, among other things, his compensation arrangements, the intended use of investor proceeds, the status of an important land lease agreement, the ownership of certain assets or income streams, and prior litigation against himself. The SEC alleges that, most significantly, Dodson commingled funds among three ventures funded by separate investor groups and then misappropriated at least $1.7 million from investors for his personal benefit, including for large cash payments to himself and his family members, Ponzi-like payments to prior investors in unrelated projects, casino vacations, lease payments for a BMW automobile, and psychic readings and spiritual products. As a result of Dodson’s alleged misconduct, approximately 50 investors suffered substantial, and in some cases total, losses. Read More
Whistleblower Receives $2.5 Million Reward
On July 25, 2017, the Securities and Exchange Commission (“SEC”) announced an award of nearly $2.5 million to an employee of a domestic government agency whose whistleblower tip helped launch an SEC investigation and whose continued assistance enabled the SEC to address a company’s misconduct.
”Whistleblowers can provide a wealth of information and ongoing assistance that helps our agency bring enforcement actions quicker and more efficiently,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. ”This whistleblower not only helped us open the case, but also provided timely ongoing assistance along with critical documents and testimony that accelerated the pace of our enforcement action.”
Alanah, Ascenergy and Gabaldon Final Judgement
On June 12, 2017, the Securities and Exchange Commission (“SEC”) announced that it has obtained a final judgment against Ascenergy LLC, Joseph Gabaldon, and Alanah Energy, LLC.
The SEC’s complaint alleges that, since at least 2014, Ascenergy and Gabaldon engaged in a deceptive scheme on crowdfunding websites and the company’s website to solicit investors to purchase overriding royalty interests in five initial, undeveloped oil and gas wells. According to the complaint, Ascenergy raised approximately $5 million from approximately 90 investors worldwide. The complaint alleges that Ascenergy and Gabaldon made multiple, material misrepresentations about the company, the nature of the offering, and the use of investor funds. The SEC also alleges that Alanah and Pyckl LLC – both of whom have been charged as relief defendants – have received, possessed, or benefited from investor funds. Read More
SEC Files Second Subpoena Against Andrew Coldicutt
On July 21, 2017, the Securities and Exchange Commission (“SEC”) announced that it has filed a subpoena enforcement action against Andrew Coldicutt and the Law Offices of Andrew Coldicutt.
According to the SEC’s application and supporting papers, filed on July 20, 2017 in the U.S. District Court for the Central District of California, the SEC is investigating, among other things, whether Coldicutt, or others associated with Green Cures & Botanical Distribution, Inc., which is quoted on OTC Link under the ticker symbol “GRCU,” may have engaged in antifraud violations. The SEC’s court filings also state that Coldicutt and others may have prepared and filed documents, including quarterly and annual reports and attorney letters, which contain false and misleading public statements about GRCU’s management and the existence and identity of control persons. Read More
Michael Trahan Charged for Insider Trading
On June 7, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against Michael Trahan for insider trading in the securities of The Shaw Group, Inc. (Shaw), a Louisiana-based energy construction company, ahead of a public announcement that Shaw was going to be acquired by Chicago Bridge & Iron Company N.V. (CBI).
The SEC’s complaint, filed in the U.S. District Court for the Western District of Louisiana, alleges that during July 2012, while Michael Trahan was a consultant to Shaw, a Shaw employee told Trahan about the impending Shaw merger. The SEC also alleges that Trahan’s company, Petra Consultants, Inc., was bound by an agreement with Shaw that required Petra and Michael Trahan to keep information received from Shaw confidential and not to use such information for any purpose except in the context of the consulting arrangement. The SEC further alleges that the same day the Shaw employee told Trahan about the impending merger, Michael Trahan bought 5,600 shares of Shaw common stock. The SEC alleges that this purchase represented approximately 86% of the cash in Trahan’s account and approximately 73% of the total account value. The SEC further alleges that Trahan sold the stock shortly after the announcement of the acquisition for a profit of $69,735. Read More
Flowers and Nevett Charged with Fraud
On July 19, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against Flowers and Nevett, two California men, and a company behind an alleged scheme to manipulate the stock prices of two shell companies.
The SEC alleges that Troy Flowers and his partner Sean Nevett illegally concealed their control and ownership of Licont Corp. and Artec Global Media by using multiple accounts that they controlled in the names of other people and entities. They then allegedly created the false appearance of active trading by making manipulative trades from those accounts to inflate the stock prices. According to the SEC’s complaint, Flowers and Nevett subsequently dumped their own shares into the open market at the expense of innocent investors, who were left with stock that is virtually worthless. Read More
SEC Bars David Lubin
On July 19, 2017, the Securities and Exchange Commission (“SEC”) barred David Lubin, a New York-based attorney, from appearing or practicing before it and acting as an officer or director of a public company after finding that he made false and misleading statements in corporate filings.
The SEC’s order finds that David Lubin committed fraud while serving as a director and corporate counsel of Entertainment Art, a public company in which Lubin also was a large shareholder. Lubin negotiated the sale of all of the outstanding stock of Entertainment Art, including both restricted and previously registered shares that were purportedly “free trading,” to an acquaintance interested in purchasing shell companies. Absent a valid exemption, common ownership of all of the shares of a public company would require the owner to register the shares for resale to the public. According to the SEC’s order, David Lubin fraudulently misrepresented in Entertainment Art’s corporate filings that the purportedly free-trading shares had not been purchased by the acquaintance. This left the false impression that those shares remained immediately available for public resale. During the next two years and until he left the company, Lubin drafted and signed SEC filings that continued to lie about the true ownership of the company’s stock.
Default Judgement on Yu-Cheng Lin Insider Trading Charges
On June 19, 2017, the Securities and Exchange Commission (“SEC”) has obtained a default judgment against foreign defendant, Yu-Cheng Lin, charged with insider trading that orders him to pay approximately $7.3 million.
The court’s final judgment, entered on June 12, 2017 by U.S. District Judge Jose Linares, permanently enjoins Yu-Cheng Lin, also known as Believe Lin, from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment also orders Yu-Cheng Lin to pay disgorgement of approximately $1.8 million, prejudgment interest of approximately $44,000, and a civil penalty of approximately $5.4 million. The court’s entry of judgment resolves this litigation in its entirety. Read More
Steven Labriola Receives Final Judgement
On July 14, 2017, the Securities and Exchange Commission (“SEC”) announced that it has obtained a final judgment in a fraud case against Steven Labriola, the international sales director of a pyramid scheme targeting Latino communities.
The final judgment, entered on consent by a federal district court in Boston, Massachusetts, permanently enjoins Steven Labriola from violating Section 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, imposes a conduct-based injunction, and orders Steven Labriola to pay approximately $25,000 in disgorgement and prejudgment interest. As part of the settlement, Steven Labriola admitted that he was responsible for TelexFree’s relationships with its promoters, ran numerous training conferences, and that he was one of the main public faces of TelexFree, providing periodic “corporate updates” and appearing in other promotional videos that were posted on YouTube. Read More
Final Judgements Entered Against LocatePlus Holdings Officers
On June 27, 2017, the Honorable Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts entered final judgments against the former CEO and CFO of LocatePlus Holdings Corp, a Massachusetts-based information technology company.
The SEC charged Jon Latorella of Marblehead, Massachusetts and James Fields of Brookline, Massachusetts with fraud for falsifying LocatePlus Holdings Corp.’s financial reporting. The final judgments, entered on June 27, 2017 by the Honorable Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts, enjoin both Latorella and Fields from violating Sections 5 and 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and (B), and 13(b)(5) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1 and 13b2-2 and impose penny stock and officer-and-director bars. Read More
SEC Announces Fraud Charges Against Diana Lovera
On July 14, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against Diana Lovera, the former Chief Operating Officer of a Florida-based penny stock company that falsely claimed to be “the largest publicly traded diversified portfolio of professional sports teams in the world.”
The SEC’s complaint alleges that, from approximately July 2013 to July 2015, Diana Lovera and others at Oxford City used pressure tactics and a boiler room of salespeople to raise approximately $6.6 million from more than 150 investors, many of whom were unaccredited, through the sale of millions of unregistered shares of Oxford City stock. The complaint alleges that, in connection with these unregistered stock offerings, Lovera made numerous misstatements to investors about Oxford City’s assets, its business plan, its future profitability, and the composition of its management. The complaint further alleges that Lovera and others falsely told prospective investors they could “lock in” a discounted price on Oxford City stock using the company’s “voice verification system,” which they claimed linked the investor’s personal information to a filing with the SEC. In reality, the complaint alleges, there was no such voice verification system; Lovera and others merely pressed buttons on a telephone key pad to mimic a recording device. Read More
