SEC investigations uncovered scenarios in which public companies hired promoters or communications firms to generate publicity for their stocks, and the firms subsequently hired writers to publish articles that did not publicly disclose the payments from the companies. The writers allegedly posted bullish articles about the companies on the internet under the guise of impartiality when in reality they were nothing more than paid advertisements. More than 250 articles specifically included false statements that the writers had not been compensated by the companies they were writing about, the SEC alleges.
SEC Charges Lucita Zamoras with Operating a Fraudulent Promissory Note Scheme
The SEC’s complaint, filed in federal court in the Northern District of Illinois, alleges that Lucita Zamoras solicited investors for a promissory note program and subsequently misappropriated the investors’ funds. From at least October 2009 through December 2013, Zamoras engaged in a fraudulent scheme in which she raised approximately $727,049 from at least six investors by encouraging them to transfer their retirement accounts to self-directed individual retirement accounts and purchase promissory notes issued by her. Lucita Zamoras, originally from the Philippines, preyed on other Filipino investors by convincing the investors to purchase the notes, which offered them 3.5% to 5% annual interest. The SEC complaint alleges that Zamoras never invested her clients’ funds; instead she used the money to support her gambling habit and pay other personal expenses. Read More
SEC Charges Michael Shumway with Securities Fraud
On April 8, 2017, the Securities and Exchange Commission (SEC) announced securities fraud charges against Michael Shumway, a former corporate secretary and treasurer of two Utah water companies for misappropriating and fraudulently selling corporate shares.
The SEC’s complaint, filed in federal court in the District of Utah, alleges that Michael D. Shumway misappropriated unauthorized shares of stock in American Fork Irrigation Company (AFIC) and Lehi Irrigation Company (LIC) and sold them to unwitting investors for at least $435,500. Michael Shumway also allegedly misappropriated at least $633,396 from AFIC and LIC. From at least 2003 through May 2015, Shumway allegedly engaged in a fraudulent scheme of falsifying AFIC and LIC books and records and issuing unauthorized shares in those companies and fraudulently selling the shares to investors. The complaint alleges that shares in AFIC and LIC convey the right to an appropriation of water from each company. The allegedly unauthorized shares Shumway sold did not have such water rights. Shumway also allegedly established secret bank accounts that he used to misappropriate AFIC and LIC funds for his personal use. Michael Shumway allegedly misled the companies’ officers and directors in carrying out his fraud. The total value of Shumway’s alleged misappropriation of shares and funds from AFIC and LIC is at least $1,068,896. Read More
SEC Obtains Injunction and Asset Freeze Against Daniel Glick
On April 13, 2017, the Securities and Exchange Commission (SEC) announced a preliminary injunction against Daniel Glick and his unregistered investment advisory firm Financial Management Strategies (FMS), continued the asset freeze in the name of the Defendants, and repeated its order that the Defendants repatriate foreign assets. The court also continued the freeze of assets held in the name of relief defendant Glick Accounting Services, Daniel Glicks company. The preliminary injunction order extended the terms of a temporary restraining order and asset freeze order that the court entered on March 23, 2017.
In the complaint filed on March 23, 2017, the Commission alleged that Daniel Glick and FMS raised more than $6 million from investors, and that Glick and FMS misappropriated a significant portion of the investor funds to, among other things, pay personal expenses, purchase a Mercedes-Benz, pay other investors, and pay off loans and debts. The complaint further alleged that Glick and FMS provided investors with false account statements to conceal the misappropriation. The complaint also named Glick’s business partner David B. Slagter, and Glick’s business acquaintance, Edward H. Forte, as relief defendants for the purposes of recovering client funds that Daniel Glick transferred or paid them in the form of advances or loans. Read More
SEC Charges Ryan Gilbertson for $30 Million Stock Manipulation Scheme
On March 22, 2017, Ryan Gilbertson, a Minnesota man previously accused by the SEC of orchestrating an elaborate scheme to siphon millions of dollars from Dakota Plains Holdings, Inc., was indicted on 13 counts of wire fraud. Also charged in the indictment were Douglas Hoskins and Nick Shermeta.
The charges in the indictment arise from the same conduct alleged by the SEC. According to the SEC’s complaint, filed in federal court in Minnesota on October 31, 2016, Ryan Gilbertson and another company co-founder, installed their fathers as figurehead executives in order to secretly wield control of the company and issue millions of shares of stock to themselves, family, and friends. They allegedly later hired one of their friends as CEO. They allegedly caused the company to enter into an agreement to borrow money from them under generous terms that included extra bonus payments to Gilbertson, and other lenders based on the price of Dakota Plains stock after 20 days of trading following a reverse merger into a company with publicly-traded shares. Read More
SEC Charges Lawyers Mustafa Sayid, Norman Reynolds and Paralegal Kevin Jasper in a Stock Manipulation Scheme
On April 12, 2017, the Securities and Exchange Commission (SEC) filed fraud charges against, Mustafa Sayid, a New York City-based securities lawyer for orchestrating taking control of two publicly traded shell companies and rigging them and their securities for use in market manipulation schemes for his personal profit. Another lawyer and a paralegal are also charged for their roles in furthering the schemes.
According to the SEC’s complaint, filed in federal court in New York City, Mustafa Sayid used his position as a securities lawyer to gain control of two microcap companies, Nouveau Holdings, Ltd. and Striper Energy, Inc. According to the SEC’s complaint, from 2012 to 2015, Sayid caused the two companies to issue convertible debt to him that could be redeemed for company stock for purported legal fees owed to him. The complaint charges that Mustafa Sayid profited by selling the convertible debt to a pair of stock manipulators, setting them up to dump large blocks of the company’s stock in the over-the-counter markets. Mustafa Sayid allegedly made multiple false statements to investors and other third parties, while he coordinated with the pump-and-dump operators who were responsible for pumping each company’s share price and then dumping the stock. Read More
SEC Acquires Asset Freeze Over 4D Circle
On April 14, 2017, the Securities and Exchange Commission announced charges against two Fort Worth residents and their company, 4D Circle, for defrauding investors in a commercial real estate investment scheme. At the SEC’s request, U.S. District Judge Terry R. Means has entered an asset freeze and appointed a receiver over the company.
The SEC’s complaint, filed on April 13, 2017 in Fort Worth federal court, alleges that, since early 2014, Mantford C. Hawkins and David E. Bell – the CEO and COO, respectively, of 4D Circle LLC – raised at least $9 million from 50 investors in seven states and Canada. The complaint alleges that 4D Circle purported to be “a wealth creation company” focused on acquiring apartment and office buildings, to which it would then apply supposedly proprietary technology and managerial practices to generate “greater profitability [with] less risk for our investors.” The company’s website and written offering materials allegedly elaborated on these claims, asserting for instance that investors could earn returns of 30% within a 9-month time frame; investments were “bonded”; and investor funds were protected through the use of escrow accounts and third-party oversight. The offering materials also allegedly included “case studies” of particular properties the company had acquired, which purported to demonstrate the profitability of its model. Read More
SEC Case Against Lionshare Faud Enters Final Default Judgement
On April 14, 2017, a federal court in Boston, Massachusetts, entered a final default judgment in an ongoing SEC enforcement action against Lionshare Ventures, LLC, a Massachusetts-based privately-held corporation that the SEC alleges was a business incubator for microcap companies and involved in fraudulent scheme.
The SEC’s complaint, filed in federal court in Boston, Massachusetts on May 26, 2016, charges Lionshare and its owner, Christopher Esposito, of Topsfield, Massachusetts, with allegedly raising more than $550,000 in investor funds in an unregistered offering of Lionshare securities and misappropriating $375,000 for his personal benefit. According to the SEC’s complaint, Esposito and Lionshare raised the funds from investors between June 2011 and June 2012, spending almost $300,000 of investor funds for personal expenses, and using $75,000 of investor funds to acquire control of a Massachusetts-based publicly-traded company, Cannabiz Mobile, Inc., by purchasing all of its convertible debt. The SEC’s complaint further alleged that, between May 2012 and August 2015, Esposito and Lionshare, together with Anthony Jay Pignatello of Manhattan Beach, California, concealed Esposito and Lionshare’s de facto control of Cannabiz and a large percentage of Cannabiz’s securities in order to profit by evading SEC Rule 144, which limits securities sales by affiliates, such as control persons. Esposito and Lionshare allegedly did this by, among other things, installing James Gondolfe as the sole officer and director of Cannabiz – even though Esposito secretly controlled the company – to make false statements in Cannabiz’s public filings and other documents. Esposito paid third-party stock promoters to tout Cannabiz stock in order to increase its stock price and trading volume; he sold significant amounts of Cannabiz convertible debt to others for almost $304,000; and with Pignatello and Renee Galizio of Loxahatchee, Florida, sold millions of shares of Cannabiz stock directly into the public market. Read More
SEC Files for Stock Promotion Schemes Against 27 Individuals & Entities
On April 10, 2017, the SEC announced enforcement actions against 27 individuals and entities behind various alleged stock promotion schemes that left investors with the impression they were reading independent, unbiased analyses on investing websites while writers were being secretly compensated for touting company stocks.
SEC Charges Traders For Insider Trading – Posted by Brenda Hamilton
On April 14, 2017, the Securities and Exchange Commission (“SEC”) announced an emergency court order to freeze assets for Insider Trading. According to the SEC, the assets were in two brokerage accounts used last week to reap more than $1 million in alleged insider trading profits in connection with a merger announcement by telecommunications companies.
According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, highly suspicious transactions have been detected surrounding last week’s announcement that Liberty Interactive Corp. had agreed to acquire General Communication Inc. The traders, who are currently unknown, allegedly used foreign brokerage accounts in the United Kingdom and Lebanon to purchase call option contracts through U.S.-based brokerages and on U.S.-based exchanges in the days leading up to the April 4 public announcement of the acquisition. The court’s order freezes the foreign accounts’ assets contained in the U.S. brokerages.
Judgment Entered in Safety Technologies Unregistered Securities Offering
On April 4, 2017, a final judgment was entered against Safety Technologies LLC (“Safety Technologies”) and Thomas Connerton for defrauding investors by misleading them to invest in a purported glove manufacturing company and then diverting their money for Connerton’s personal use. Connerton’s victims include several women he met through an online dating website and their friends and family.
The SEC’s complaint against Thomas Connerton and Safety Technologies, filed on June 8, 2016, alleged that Connerton told investors that his company was developing a material to make surgical gloves better resistant to cuts or punctures. Connerton claimed that several major glove manufacturers wanted the technology and Safety Technologies was on the brink of imminent deals that would result in large payouts for investors in his company. But, the SEC alleged, no deals were ever anywhere close to materializing, and Connerton emptied the company’s bank account by writing a series of checks to himself and using investor funds for his own expenses. According to court documents filed by the SEC, among Connerton’s improper spending of investor funds was $20,000 for an engagement ring for his latest online date turned investor. On June 9, 2016, the SEC obtained an asset freeze against Thomas Connerton and, on September 12, 2016, the court issued an order continuing the asset freeze and imposing a preliminary injunction. Read More
SEC Adopts T+2 Trade Settlement Rule
On March 22, 2017, the Securities and Exchange Commission (“SEC”) adopted the T+2 amendment which shortens the standard settlement cycle for most broker-dealer securities transactions. Currently, the standard settlement cycle for these transactions is three business days, known as T+3. The SEC’s amended rule shortens the settlement cycle to two business days, T+2.
T+2 is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.
“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar. “The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day we aim to increase efficiency and reduce risk for market participants.”
SEC Charges Jerry Miller in Petrotech Oil Fraud
On March 13, 2017, the Securities and Exchange Commission charged Jerry Miller in connection with Petrotech Oil and Gas, Inc.. According to the SEC allegations, Miller is the principal of a Florida-based consulting firm to several microcap issuers. Miller has been charged with fraud for falsely claiming that one of his microcap issuer clients, had obtained a marijuana license in connection with its purported marijuana business.
The SEC’s complaint, filed in federal court in Miami, Florida, alleges that on February 26, 2014, Petrotech falsely announced in a press release that it had secured a medical and recreational marijuana license from Colorado in conjunction with Petrotech’s newly-founded marijuana business. The release also included marijuana production capacity projections based, in part, on Petrotech purportedly having secured the license. In reality, as alleged in the SEC’s complaint, Petrotech had not received a license to conduct a marijuana business in Colorado. Miller allegedly wrote the press release and was responsible for publishing it. Read More
What is the Transfer Agent Direct Registration System (DRS)?
The Depository Trust Company (“DTC”) offers a service to transfer agents known as the Direct Registration System (“DRS”). DRS allows transfer agents to provide shareholders with the ability to hold their shares in book-entry form with the transfer agent instead of a physical stock certificate. A DRS Statement evidences ownership of the security and replaces the physical stock certificate. DRS shares are represented by a DRS Statement in the name of the shareholder. The shareholder has full ownership of the shares and has all rights and privileges of share ownership. The Direct Registration Statement serves as evidence of ownership of the shares as opposed to a physical certificate.
Shares held in DRS are transferred between the issuer’s Transfer Agent and holder’s broker-dealer electronically. Read More
SEC Charges Lek Securities – Posted by Brenda Hamilton
On March 10, 2013, the Securities and Exchange Commission (“SEC”) announced fraud charges against Lek Securities and Avalon FA, a Ukraine-based trading firm in connection with a layering scheme. According to the SEC, Avalon FA, Fayyer and Pustelnik manipulated the U.S. markets hundreds of thousands of times in the scheme.
The SEC’s complaint alleges that Avalon FA Ltd touted itself to traders as a destination to engage in layering, a scheme in which orders are placed but later canceled after tricking others into buying or selling stocks at artificial prices, resulting in illicit profits. Avalon allegedly made more than $21 million in the layering scheme involving U.S. stocks during a five-year period. According to the SEC’s complaint, Avalon also made more than $7 million in illicit profits through a cross-market manipulation scheme in which the firm bought and sold U.S. stocks at a loss in order to manipulate the prices of the stock and its corresponding options so that it could then profitably trade at artificial prices. Avalon allegedly used traders in Eastern Europe and Asia to conduct its trading, and the firm kept a portion of the profits and collected commissions from the traders. Read More
SEC Eases Access to Exhibits in SEC Filings
On March 1, 2017 the Securities and Exchange Commission (the “SEC”) approved amendments related to SEC filings. The new amendments make it easier for investors and other market participants to find and access exhibits in registration statements and periodic reports that were originally provided in previous filings.
The amendments will require issuers to include a hyperlink to each exhibit in the filing’s exhibit index. Currently, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant exhibit. This process can take hours if the issuer has filed SEC reports for years. “As the SEC looks for new ways to modernize financial disclosures, one of the easiest things we can do is add hyperlinks
SEC Uses Satellite Imagery to Charge Desarrolladora Homex
Anyone who thinks that the Securities and Exchange Commission (the “SEC”) is behind the times should check out the SEC’s latest action against Mexico-based home building company Desarrolladora Homex S.A.B. de C.V. The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broken ground on many of the homes for which it reported revenues. According to the SEC, Desarrolladora Homex agreed to settle charges that it reported fake sales of more than 100,000 homes to boost revenues in its financial statements during a three-year period. Read More
New SEC Approves Ease Access to Exhibits in SEC Filings
On March 1, 2017, the SEC voted to adopt rule and form amendments that impact SEC Filings. The SEC’s new rules make it easier to locate and access exhibits in registration statements such as Form S-1 and periodic reports such as Form 10-K and 10-Q that were originally provided in previous SEC filings.
The amendments will require issuers to include a hyperlink to each exhibit in the filing’s exhibit index. Currently, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant filing. This is time consuming and burdensome particularly where issuers have made filings with the SEC for years.
SEC Staff Issues Guidance and Investor Bulletin on Robo-Advisers
On February 23, 2017 the Securities and Exchange Commission (the “SEC”) published information and guidance concerning robo-advisers for investors and the financial services industry on the fast-growing use of robo-advisers, which are registered investment advisers that use computer algorithms to provide investment advisory services online with often limited human interaction.Because of the unique issues raised by robo-advisers, the Commission’s Division of Investment Management issued guidance for investment advisers with suggestions on meeting disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940.
James P. Toner Jr Settles Fraud Charges – Posted by Brenda Hamilton
The Securities and Exchange Commission (SEC) on February 14, 2017 announced that James P. Toner Jr, a purported real estate investment manager has agreed to pay more than a half-million dollars to settle charges that he pocketed investor money in an investment scheme.
The SEC alleges that James P. Toner Jr. of Scottsdale, Ariz., siphoned $51,000 from investors who were falsely told that he would personally manage some of the real estate projects in which they were purchasing interests. The stated purpose of each investor offering was to purchase a residential property in the Phoenix area, renovate that property, and then sell it for a profit. Read More
SEC Brings Cases Related to Disclosures During Battles for Corporate Control
On February 14, 2017, the Securities and Exchange Commission (the “SEC”) announced two SEC enforcement actions involving disclosure violations that deprived investors of material information during battles for corporate control of publicly traded companies.
In one case, the SEC’s order finds that Texas-based oil refinery company CVR Energy made inadequate disclosures in SEC filings about “success fee” arrangements with two investment banks retained by the company to fend off a hostile takeover bid. Shareholders were consequently unaware of potential conflicts of interest that stemmed from the fee arrangements, namely that the banks could still earn success fees even if the hostile bidder secured control of the company. CVR Energy agreed to settle the case without admitting or denying the findings in the SEC’s order, which notes that the company will not pay a penalty due to its remedial acts and extensive cooperation with the investigation.
Chinese Citizens Gain Massive Profits From Insider Trading on Comcast-Dreamworks Acquisition
On February 10, 2017 the Securities and Exchange Commission (SEC) announced that it obtained an emergency court order freezing brokerage accounts holding more than $29 million in illegal profits from insider trading in advance of the April 2016 acquisition of DreamWorks Animation SKG, Inc. by Comcast Corp.The SEC alleges that in the weeks leading up to the news of the acquisition, Shaohua (Michael) Yin amassed more than $56 million of DreamWorks stock in the U.S. brokerage accounts of five Chinese nationals, including his elderly parents. DreamWorks stock price rose 47.3% once the acquisition was announced. Read More
Financial Adviser Funds Lavish Lifestyle by Stealing from Client Accounts
The Securities and Exchange Commission (SEC) on February 3, 2017 charged Barry Connell, an investment adviser representative with stealing approximately $5 million from client accounts by initiating unauthorized wire transfers and issuing checks to third parties to cover personal expenses. According to the SEC allegations, Barry Connell, who worked in the New Jersey office of a major financial institution, conducted more than 100 unauthorized transactions by using falsified authorization forms misrepresenting that he received verbal requests from the clients. Connell allegedly used money from client accounts to rent a home in suburban Las Vegas and pay for a country club membership and private jet service. Read More
Sidoti & Company Fined For Compliance and Trading Surveillance Failures
The Securities and Exchange Commission (SEC) on February 13, 2017 announced that Sidoti & Company LLC, a New York-based brokerage firm has agreed to pay a $100,000 penalty to settle charges of compliance and trading surveillance failures.Federal securities laws require firms to enforce policies and procedures to prevent the misuse of material, nonpublic information to which their employees routinely have access.
The SEC’s order finds that Sidoti & Company had no written policies or procedures in place from November 2014 to July 2015 as it pertained to those making investment decisions for an affiliated hedge fund that invested in issuers covered by Sidoti’s research department and some other issuers for which Sidoti provided investment banking services. For example, Sidoti maintained a “daily restricted list” of securities restricting personal trading because Sidoti was involved in investment banking or marketing activities or the firm was publishing research on the security. There were 126 instances from Nov. 3, 2014 to May 5, 2015 when the hedge fund traded in a stock that appeared on the daily restricted list. Read More
SEC Sues Investment Adviser Who Turned Thief
On February 2, 2017 the Securities and Exchange Commission (the “SEC”) charged Sentinel Growth Fund Management and its founder Mark J. Varacchi with stealing money from investors to settle a private lawsuit among other things. The SEC alleges that Sentinel Growth Fund Management and Mark J. Varacchi misrepresented to investors that money they deposited with the firm would be allocated to up-and-coming hedge fund managers for investment purposes. According to the SEC’s complaint, Varacchi and Sentinel Growth Fund Management did not transfer all the money as promised, instead commingling investor assets and manipulating account activity, account balances, and investment returns as part of a scheme to siphon away investor funds. Varacchi and his firm allegedly stole at least $3.95 million from investors, including more than $1 million to settle litigation brought by Varacchi’s prior employer.
Morgan Stanley Settles Charges Related to ETF Investments
On February 14, 2017, the SEC announced that Morgan Stanley Smith Barney has agreed to pay an $8 million penalty and admit wrongdoing to settle charges related to single inverse ETF investments it recommended to advisory clients.
The SEC’s order finds that Morgan Stanley did not adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs. Among the order’s findings, Morgan Stanley failed to obtain from several hundred clients a signed client disclosure notice, which stated that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy. Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long-term, and many of the clients experienced losses.
NASAA and SEC Sign Crowdfunding Agreement
On February 17, 2017 the Securities and Exchange Commission (the “SEC”) the North American Securities Administrators Association (“NASAA”) signed a crowding funding agreement. The agreement sets forth the rules to facilitate intrastate crowdfunding offerings and regional offerings take effect. The agreement signed by the SEC and NASAA is intended to facilitate the sharing of information to ensure that the new exemptions are serving their intended purpose of facilitating access to capital for small businesses. Under the memorandum of understanding (MOU), federal and state securities regulators will be better able to monitor the effects of the new rules and also guard against fraud.
The MOU was signed by SEC Acting Chairman Michael S. Piwowar and Mike Rothman, Minnesota Commissioner of Commerce and President of NASAA, which represents state securities administrators.
“The agreement not only builds on an already productive relationship between the SEC and state regulators, it also offers additional insights and protections as we help companies grow and create jobs while providing new opportunities to investors,” said Acting Chairman Piwowar. Read More
Former Shell Company, Terminus Energy and Its Officers Charged With Securities Fraud
On February 14, 2017 the Securities and Exchange Commission (the “SEC) charged Terminus Energy, Inc and four corporate officers with securities fraud. According to the SEC, Terminus Energy and its four officers misleading investors about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.
The SEC alleges that while raising approximately $7.9 million from investors in Terminus Energy Inc., the company and its officers claimed to have a viable prototype capable of being sold and earning revenue. According to the SEC’s complaint, Terminus did not have the fuel cell technology or the funding to match their claims, and the officers were instead converting substantial amounts of investor funds to their own use.
FBI Informant Guy Gentile’s Indictment Is Tossed by the Judge
Guy Gentile Gets Good News
On January 30, 2017, brokerage firm owner Guy Gentile got the good news he’d been hoping for: Judge Jose Linares of the United States District Court for the District of New Jersey had dismissed the indictment filed against him by the Department of Justice. For Gentile, the judge’s order brings a welcome end to an involvement with the Federal Bureau of Investigation and the DOJ that had lasted nearly five years. We’ve written twice about Gentile, first in September 2016, and then in December of the same year. From our perspective, it was of interest as an example of the DOJ and FBI’s abuse of the considerable powers they possess.
The Allegations
In 2007 and 2008, Guy Gentile had participated in the promotion of two penny stocks, Raven Gold Corporation (RVNG) and Kentucky USA Energy, Inc. (KYUS). He was drawn into these schemes by Canadian promoters Mike Taxon and Itamar Cohen. The Securities and Exchange Commission eventually opened an investigation into both, suspecting pump and dump operations, and the DOJ took an interest as well. Gentile had no idea legal actions against him were being prepared, and turned to different projects after mid-2008. In 2011, he opened a new brokerage in the Bahamas that was designed to appeal to day traders. It was almost immediately successful, and he devoted his energies to it. Read More
SEC Final Judgment Entered Against Graduate Leverage
On December 23, 2016, the United States District Court for the District of Massachusetts entered final judgments against Graduate Leverage, LLC, GL Capital Partners, LLC, GL Investment Services, LLC, Taft Financial Services, LLC, and GL Advisor Solutions, Inc. These entities were controlled and manipulated by Daniel Thibeault, the individual defendant in this SEC enforcement action filed in January 2015, who misappropriated money from an investment fund that he was managing. The entities have all stopped their former business operations. The final judgments against these companies impose permanent injunctions against future violations of certain antifraud provisions of the federal securities laws and order all but one of them to pay disgorgement and interest, jointly and severally, of approximately $17.1 million. Read More
Final Judgment Entered Against Gregg Mulholland Posted by Brenda Hamilton
On January 11, 2017, the U.S. District Court for the Eastern District of New York entered a final judgment against defendant Gregg R. Mulholland, a penny stock promoter charged in an SEC action with illegally selling more than 83 million penny stock shares that he allegedly held in the names of at least 10 different offshore entities.
The SEC’s complaint, filed on June 23, 2015, alleged that Mulholland surreptitiously accumulated, through at least ten offshore front companies, at least 84% of the issued and outstanding shares of Vision Plasma Systems Inc. Once Mulholland effectively controlled the company through this majority ownership, he liquidated his shares for proceeds of at least $21 million. No registration statement was filed or in effect covering Mulholland’s sales and no exemption from registration was available. Read More
