Securities Industry Commentator by Bill Singer Esq

January 12, 2018

SEC Charges Connecticut Insurance Executive and Two Companies with Securities Offering Fraud (SEC Litigation Release No. 24028)
In Securities and Exchange SEC v. David S. Haddad, et al., (Complaint, United States District Court for Connecticut, 18-CV-00055), the SEC  alleges that Haddad operated Trafalgar Square Risk Management, LLC and New England RE, LLC and that he raised at least $2.5 million from 29 investors through the offer and sale of unregistered securities in each company. READ the FULL TEXT SEC Complaint.
The SEC Complaint alleges that Haddad led investors to believe that their funds would be used to build and grow the companies but that he diverted a significant portion of the funds for Ponzi-ike payments to other investors and for such personal use as the purchase of multiple homes, art and antiques, entertainment, and expenses of a dog rescue charity founded by Haddad. In settling the charges, Haddad, Trafalgar, and New England RE consented to the entry of final judgments permanently enjoining them. Haddad and Trafalgar also have agreed to pay, jointly and severally, a total of $619,382.43 in disgorgement plus prejudgment interest of $25,131.83. Haddad and New England Re have agreed to pay, jointly and severally, a total of $269,080 in disgorgement, plus prejudgment interest $2,592.66. In addition, Haddad has agreed to pay a civil monetary penalty of $181,071 and has consented to the imposition of a permanent bar prohibiting him from acting as an officer or director of a publicly-traded company. 

A Hard Rainmaker Gonna Fall At FINRA ( Blog)
Paperwork. On Wall Street when it comes to compliance and regulation, it often comes down to paperwork -- or whatever passes for that now-quaint term in this digital age. You got to collect information. You got to review information. You got to store information. You got to produce information when a regulator wants to see that you collected, reviewed, and stored. Sometimes you just never got around to writing stuff down; and sometimes, well, just between us, you figured it was a waste of time and who the hell is ever going to need to see this crap anyway -- which, as such logic goes, doesn't quite help you out of the fix you're now in because someone from FINRA or the SEC is sitting in the conference room going through boxes of paperwork and that one damn thing that you didn't collect, review, and store is what those regulators are now asking to see. READ

Melanie Williams-Bethea Engaged In Kickback Scheme With Students, Three Of Whom Are Also Charged (DOJ Press Release)
A federal criminal Complaint was filed in the United States District Court for the Southern District of New York charging Melanie Williams-Bethea, former Director of Financial Aid of a graduate schoand students Annie Kpana, Carmen Canty, and Kyla Thomas a/k/a/ "Kyla Britt" with one count each of;
  • conspiracy to commit bribery and fraud in connection with federal student aid;
  • conspiracy to commit wire fraud; and
  • bribery, 
Additionally, Williams-Bethea, Canty, and Thomas are also charged with one count of fraud in connection with federal student aid. READ the FULL TEXT Criminal Complaint As set forth in part in the DOJ Press Release:

From 2008 through 2017, WILLIAMS-BETHEA, KPANA, CANTY, and THOMAS engaged in fraud and bribery schemes resulting in the loss of hundreds of thousands of dollars from the Graduate School.  WILLIAMS-BETHEA, who was employed by the Graduate School as the Director of Financial Aid during the relevant time period, perpetrated the scheme by approving aid payments to KPANA, CANTY, and THOMAS (collectively, the "Students") well in excess of their need, and then obtaining kickback payments from the students of portions of the unjustified aid.  

Specifically, WILLIAMS-BETHEA approved excessive "cost of attendance" figures for the Students that did not comport with their actual needs or costs of living, which had the effect of increasing the amount of financial aid they were eligible to receive, and by then approving stipends for the Students up to - and at times exceeding - these inflated amounts.  To facilitate some of the stipends, WILLIAMS-BETHEA created fraudulent stipend request forms for financial awards to the Students, which gave the appearance that professors or other administrators had requested stipends for KPANA, CANTY, and THOMAS, when in fact they had not, and then approved the fraudulently requested stipends herself. 

After WILLIAMS-BETHEA facilitated these awards of unjustified financial aid, KPANA, CANTY, and THOMAS paid WILIAMS-BETHEA more than $350,000 in kickbacks.