Securities Industry Commentator by Bill Singer Esq

February 9, 2018

Bobby Willis Sentenced to Two Years in Federal Prison for Wire Fraud Conviction Arising Out of Million Dollar Fraud Scheme (DOJ Press Release) After raising $1 million from victims pursuant to a real estate investment company fraud, on July 12, 2017, Bobby Willis pled guilty in the United States District Court for the District of New Mexico to a two-count indictment alleging that he caused $995,000.00 to be wire transferred from the bank account of a real estate investment company he created to his and his wife's bank account. In his plea agreement, Willis admitted that he did not invest the victims' funds but that he and his wife spent the money. Willis was sentenced to 24 months in prison followed by three years of supervised release.

Santa Barbara County Man Arrested on Federal Charges that Allege Investment Fraud Schemes, One of Which Promised Twitter Stock (DOJ Press Release)
Efstratios "Elias" Argyropoulos pleaded not guilty to a  21-count federal indictment alleging that he operated investment services firms Prima Capital and Prima Ventures, and had engaged in two fraudulent schemes by soliciting investments in companies such as Facebook and Twitter, as well as investments in a fictitious estate settlement. As set forth in part in the DOJ Press Release:

In the first alleged scheme, Argyropoulos faces six fraud charges related to false promises to use investor funds to purchase securities, including pre-IPO shares of Facebook and Twitter. Instead of purchasing the stocks, Argyropoulos allegedly diverted the investor funds for other uses, such as day-trading in stocks unrelated to the promised investments and personal expenses, such as his mortgage, car payments and casino debts. According to the indictment, from October 2010 through October 2015, Argyropoulos solicited $4,947,360 from investors victimized in this scheme.

In the second scheme, Argyropoulos faces seven fraud charges for allegedly marketing shares in an investment known as the "Laurence Miles Giant Estate Settlement," which was also called the "Laurence Miles Trust." According to the indictment, Argyropoulos falsely told investors that the beneficiary of the Trust was a very ill woman who needed medical treatments and was the heir to a large estate, which was worth more than $1 billion. According to the bogus story, the estate was tied up in probate proceedings, and money was needed to cover the heir's medical expenses. Once the probate proceedings were finished, Argyropoulos allegedly told victims, the assets would become available for transfer, at which point, investors would receive a large return - as much as 1,000 percent. In truth, there was no estate to be settled and no "ill woman" with large medical bills. According to the indictment, Argyropoulos' investors lost over $760,000 in the scam. 

The final eight counts of the indictment charge Argyropoulos with criminal contempt. These counts allege that Argyropoulos' solicitation of investments in the Laurence Miles Trust violated the terms of an injunction that Argyropoulos consented to in a suit brought by the Securities and Exchange Commission, which was based on the fraudulent Facebook and Twitter scheme. The injunction prohibited Argyropoulos from selling fraudulent investments and acting as an unlicensed broker.      

Sterne Agee Broker's IPO Trading In Away Account Earns FINRA Sanctions ( Blog)
Word has it that there's been a surge in initial public offerings. I'm not going to swear by that but I have heard some Wall Street types tell me that there are still companies looking to go public these days. Of course that was before those two 1,000 point drops in the Dow Jones but, who knows, another day, another 1,000 point move higher or lower and Bitcoin will triple in value and then halve. Be that as it may, today's Blog analyzes a recent Financial Industry Regulatory Authority settlement involving a stockbroker, his away account, and his so-so results in buying and selling IPOs.

In the Matter of Thomas Osmonde Russell, III Esq., Respondent (Order of Forthwith Suspension, '34 Act Rel. No. 82651; Admin. Proc. File No. 3-18363 / February 7, 2018) Thomas Osmonde Russell, III was licensed to practice law in California, and his practice involved securities law matters, including authoring opinion letters regarding whether a company's securities could be sold
without being registered with the Commission. Having deemed Russell an "attorney who has been suspended or disbarred by a court . . ." pursuant to SEC Rule 102(e)(2), the SEC suspended him from appearing or practicing before it as an attorney. As set forth in part in the SEC Order:

2. On January 10, 2017, the State Bar Court of California ("Bar") suspended Russell from the practice of law based on its finding that Russell: willfully failed to maintain client funds in a trust account; misappropriated client funds in a trust account on multiple occasions; and, breached his fiduciary duty by paying his personal expenses from his client trust fund. The Bar Court found Russell's violations to be aggravated because: he engaged in multiple acts of misconduct; his violations caused significant harm to his client; he lacked candor during his testimony; and, he did not show remorse for his unethical behavior.

3. On June 23, 2017, the California Supreme Court entered an Order disbarring Russell from the practice of law effective July 23, 2017. The Court also ordered Russell to make restitution to his former client in the amount of $31,500 plus 10% interest per  year from June 17, 2015. The Court also awarded costs to the California Bar.