Securities Industry Commentator by Bill Singer Esq

December 1, 2017

The Securities and Exchange Commission filed a Complaint in the United States District Court for the Southern District of Florida charging Joseph A. Rubbo and Angela Beckcom Rubbo Monaco, both of Coral Springs, Florida, with defrauding elderly investors through offerings by their companies VIP TV LLC, VIP Television Inc., and The Spongebuddy LLC. The SEC Press Release characterizes Rubbo and Monaco as repeat offenders who were previously convicted of criminal charges and the subject of SEC injunctions. The U.S. Attorney's Office for the District of Colorado has filed parallel criminal charges against Rubbo, Monaco, Steven J. Dykes, and others relating to the scheme. READ the FULL TEXT Complaint

The SEC Press Release asserts that Rubbo and Monaco had raised at least $5.4 million for 11 primarily elderly investors through a scheme to fund the growth of their entertainment business and develop the Spongebuddy, a sponge-like glove purportedly to be sold in stores. As more pointedly alleged in the SEC Press Release:

The SEC's complaint alleges that Rubbo and Monaco controlled the companies and hired Dykes to cold call investors and pitch investments in VIP.  For example, Dykes allegedly told an investor that the Starz cable channel and Pandora Radio were both interested in buying VIP and would "roll-up" VIP into these entities.  The investor also was allegedly told that the Spongebuddy would be featured on the television show "Shark Tank" and marketed on QVC.  Contrary to alleged representations that investor money would be used to benefit the VIP companies, Rubbo and Monaco misappropriated more than $2.6 million in investor funds to pay themselves and their relatives as well as undisclosed sales commissions to Dykes.  The complaint also alleges they paid for personal expenses such as the down payment on a luxury vehicle, credit card bills, unrelated construction work and to finance a business operation for a Monaco family member.

In Re Pending Administrative Proceedings (Order, Securities and Exchange Commission, '33 Act Rel. No. 10440; '34 Act Rel. No. 82178; Invest. Adv. Act Rel. No.  4816; Invest. Co. Act Rel. No. 32929 / November 30, 2017).
As set forth in pertinent part in the SEC Order:

On November 29, 2017, the Solicitor General on behalf of the United States submitted a brief in Raymond J. Lucia and Raymond J. Lucia Companies, Inc. v. Securities and Exchange Commission (No. 17-130) in which the Solicitor General agreed with the petitioners that the U.S. Supreme Court should decide whether administrative law judges of the Commission are inferior officers under the Appointments Clause, U.S. Const. Art. II, § 2, cl. 2. The Solicitor General took the position that Commission administrative law judges are inferior officers for purposes of the Appointments Clause but recommended that the Supreme Court appoint an amicus curiae to defend the contrary judgment of the Court of Appeals for the District of Columbia Circuit. 

To put to rest any claim that administrative proceedings pending before, or presided over by, Commission administrative law judges violate the Appointments Clause, the Commission -- in its capacity as head of a department -- hereby ratifies the agency's prior appointment of Chief Administrative Law Judge Brenda Murray and Administrative Law Judges Carol Fox Foelak,Cameron Elliot, James E. Grimes, and Jason S. Patil. . .

For Background on the SEC's Appointment Clause issue, READ:

Two Real Estate Investors Sentenced For Rigging Bids at Northern California Public Foreclosure Auctions (DOJ Press Release) After trial on Jun3 2, 2017, Gregory Casorso and Javier Sanchez were convicted of conspiring to rig bids at foreclosure auctions in Alameda County, California; and Sanchez was also convicted of bid rigging in Contra Costa County, California.  Casorso was sentenced to serve 18 months in prison and ordered to pay a criminal fine of $20,000.  Sanchez was sentenced to serve 21 months in prison and ordered to pay a criminal fine of $88,140.

Not Fade Away Tops FINRA Regulatory Chart ( Blog In a recent FINRA regulatory settlement, one unlucky registered rep hit the trifecta when he was sanctioned for maintaining an away account, for trading away from his firm, and for landlording (I think that's a word but if it isn't, well, you know what, it is now).  If you're planning on joining a new firm next year, make sure to carefully consider the ramifications of maintaining or opening a new brokerage account that will not be housed at your next firm. Similarly, if you're thinking of buying some rental property, take note of the need to notify your firm of that outside business activity. READ