(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.
Sterne Agee Broker's IPO Trading In Away Account Earns FINRA Sanctions(BrokeAndBroker.com 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 BrokeAndBroker.com 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.
(SEC Press Release 2018-12) OCIE published its 2018 examination priorities, which consist of (1) compliance and risks in critical market infrastructure; (2) matters of importance to retail investors, including seniors and those saving for retirement; (3) FINRA and MSRB; (4) cybersecurity; and (5) anti-money laundering programs. READ the FULL TEXT OCIE 2018 Exam Priorities Report
Thirty-Six Defendants Indicted for Alleged Roles in Transnational Criminal Organization Responsible for More than $530 Million in Losses from Cybercrimes / Law Enforcement Dismantles Forum Used to Victimize Millions in all 50 States and Worldwide in One of the Largest Cyberfraud Enterprises Ever Prosecuted by the Department of Justice (DOJ Press Release 18-145) In a nine-count superseding indictment, 36 individuals are charged for their alleged roles in the Infraud Organization, an Internet-based cybercriminal enterprise engaged in the large-scale acquisition, sale, and dissemination of stolen identities, compromised debit and credit cards, personally identifiable information, financial and banking information, computer malware, and other contraband. READ the FULL TEXT Superseding Indictment.
Rankles Raised In FINRA Expungement (BrokeAndBroker.com Blog) A broker-dealer's customer complains. It happens. Not all such complaints, however, allege misconduct by a stockbroker -- sometimes, customers are unhappy with the slow payment of dividends or interest, or a lousy online interface, or the firm's margin policies. In industry parlance, not every complaint is about "sales practices." In a recent FINRA expungement arbitration, a registered rep seeks to expunge from her industry record what was disclosed as something that looks a lot like a customer complaint about sales practices but for the fact that the employer broker-dealer, the customer, and an independent FINRA arbitrator all seem to agree that no such allegations were ever made.
Rabobank NA Pleads Guilty, Agrees to Pay Over $360 Million / As a Result of Rabobank's Bank Secrecy Act and Anti-Money Laundering Failures it Processed over $360 Million in Illicit Funds and then Conspired with its Executives in an Attempt to Conceal These Ongoing Failures From its Regulator (DOJ Press Release) Rabobank National Association (Rabobank) pled guilty to a felony conspiracy charge for impairing, impeding and obstructing its primary regulator, the Department of the Treasury's Office of the Comptroller of the Currency (the OCC) by concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC's examination of Rabobank. Rabobank will forfeit $368,701,259 as a result of allowing illicit funds to be processed without adequate Bank Secrecy Act (BSA) or AML review. READ the FULL TEXT Information and the Plea Agreement.
(Opinion, United States Court of Appeals for the Sixth Circuit, No. 17-3087, 15-CR-00335-2 / February 5, 2018). FINRA had investigated Harris' and others' activities involving, in part, wire transfers, which Harris and Durand told FINRA investigators, in part, were the proceeds of their sales of expensive watches. After Harris was arrested, he allegedly called and texted Durand on multiple occasions, instructing him to stick with their story: "Remember, we sold watches." Durand later admitted that the watch story was false. In September 2016, a federal jury convicted Talman Harris of one count of conspiracy to commit securities fraud or wire fraud, one count of obstruction of justice, and three counts of wire fraud, for which the district court sentenced him to 63 months' imprisonment, a five-year term of supervised release, a $500 special assessment, and $843,423.91 in restitution. As set forth in United States of America, Plaintiff/Appellee, v. Talman Harris, Defendant/Appellant (Opinion, United States Court of Appeals for the Sixth Circuit, No. 17-3087, 15-CR-00335-2 / February 5, 2018), the 6Cir reversed Harris' conviction for obstruction of justice and remanded to district court. READ FULL TEXT 6Cir Opinion. :
Testimony on Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission (Testimony before the United States Senate Committee on Banking, Housing, and Urban Affairs by SEC Chair Clayton) READ THE FULL TEXT TESTIMONY
Written Testimony of CFTC Chair Giancarlo before the Senate Banking Committee READ THE FULL TEXT TESTIMONY
He's Back!!! SEC Denies Second Stay Request By Bruce Zipper. (BrokeAndBroker.com Blog) In the Matter of the Application of Bruce Zipper for Review of Action Taken by FINRA, (Order Denying Second Motion for Stay, Securities and Exchange Commission, '34 Act Rel. No. 82633; Admin. Proc. File No. 3-17963 / February 5, 2018), Zipper has again asked for a stay pending his appeal of FINRA action denying him permission to continue to associate with a FINRA member firm despite his statutory disqualification.
Effective February 5, 2018, FINRA Rule 2165: Financial Exploitation of Specified Adults. FINRA member firms may now place temporary holds on disbursements of funds or securities when there is a reasonable belief of financial exploitation. Firms now required to make reasonable efforts to obtain contact information for a "trusted contact." READ the FINRA Notice to Members 17-11 (March 2017
SEC Bars Lawyer Involved With Brogdon Bond Offerings. In the Matter of John T. Lynch, Jr., Respondent (Order Making Findings And Imposing Remedial Sanctions) '34 Act Rel. No. 82634; Invest. Co. Act Rel. No. 33001; Admin. Proc. File No. 3-17902 / February 6, 2018). The SEC alleged that Lynch served as an investment advisor and underwiter's counsel for Lawson Financial Corporation ("LFC") in connection with underwriting of 12 fraudulent conduit municipal bond offerings for the benefit of Christopher Brogdon ("Brogdon"), which raised millions of dollars for Brogdon's healthcare-related projects. The SEC alleged that Lynch did not undertake proper due diligence and failed to obtain various disclosures. Pursuant to the terms of the SEC Order, Respondent Lynch was barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; with the right to apply for reentry after one (1) year to the appropriate self-regulatory-organization, or if there is none, to the Commission
Latvian National Pleads Guilty to "Scareware" Hacking Scheme That Targeted Minneapolis Star Tribune Website (DOJ Press Release 18-141) Peteris Sahurovs aka Piotrek and Sagade, 28, pled guilty to one count of conspiracy to commit wire fraud in connection with his "scareware" hacking scheme that targeted visitors to the Minneapolis Star Tribune's website.
In anticipation of the institution of proceedings by the SEC but without admitting or denying the findings, Andrew H. Wilson, Esq. submitted an Offer of Settlement, which the federal regulator accepted. In the Matter of Andrew H. Wilson, Esq. (Order Instituting Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions, SEC, '34 Act Rel. No. 82632; Admin. Proc. File No. 3-18358) In accordance with the Offer of Settlement, the SEC suspended Wilson from appearing or practicing before the Commission as an attorney.
DavorCoin Latest Cryptocurrency Platform Hit With Order(Texas State Securities Board Press Release) The TSSB entered an Emergency Cease and Desist Order against DavorCoin, an entity offering investments in a cryptocurrency lending program in Texas.In the Matter of Davorcoin (Emergency Cease and Desist Order, ENF-18-CDO-1757) READ the FULL TEXT ORDER.
GUEST BLOG: The Department Of Justice's Coming Out Party By Darrell Whitman(BrokeAndBroker.com Blog) In 2010, attorney Darrell Whitman became a Regional Investigator for the San Francisco Region Office of Whistleblower Protection Programs ("OWWP"), which was part of the United States Department of Labor's ("DOL's") Occupational Safety and Health Administration ("OSHA"). Beginning in 2011, Whitman and others in the San Francisco OWWP office complained that they were being hamstrung and short-circuited in their efforts to protect whistleblowers against perceived retaliation -- essentially being prevented from doing the job that they were being paid to do. In May 2015, Whitman was fired. How ironic that Whitman, an OWWP investigator charged with protecting whistleblowers from retaliation, found himself the victim of alleged retaliation by OWWP. In response to his termination, Whitman sued. READ the UPDATE of his saga.
(DOJ Press Release 18-134) Isaac Choi aka Yi Suk Choi, Yisuk Choi, Yi Suk Chae and Isaac Chae, the founder and chief executive officer of WrkRiot, a now-defunct Silicon Valley technology company start-up, pleaded guilty to defrauding several of his company's former employees by luring them to join his company based on false and misleading statements.
(Board of Governors of the Federal Reserve System Press Release, February 02, 2018 In the Matter of Wells Fargo & Company (Federal Reserve Docket No. 18-007-B-HC): ) READ the FULL TEXT press release and supporting orders and letters in which the Fed restricted the growth of Wells Fargo and required reforms to the firm's corporate governance. (BrokeAndBroker.com Blog)
SEC Halts Ongoing Fraud by Purported Hedge Fund Manager (SEC Press Release 2018-11) The SEC filed a Complaint in the United States District Court for the Southern District of New charging Nicholas Joseph Genovese and his hedge fund Willow Creek Investments LP with engaging in an ongoing fraud that has allegedly raised over $5.3 million from at least six investors. In part, Genovese allegedly falsely stated that he managed $4 billion of the Genovese Drug Store family's assets and that hedge fund's investment adviser had $30-39 billion of assets under management. READ the FULL TEXT SEC COMPLAINT.
Alleged Operator of Kelihos Botnet Extradited From Spain (DOJ Press Release 18-130) Russian national Peter Yuryevich Levashov a/k/a Petr Levashov, Peter Severa, Petr Severa and Sergey Astakhov, of St. Petersburg, Russia, has been extradited to the United States from Spain and will be arraigned on charges stemming from his alleged operation of the Kelihos botnet. READ the FULL TEXT INDICTMENT.
Former Virginia Attorney Sentenced to 7 Years in Prison for Laundering and Attempting to Launder Over $2 Million (DOJ Press Release 18-129) Raymond Juiwen Ho pled guilty to one count of conspiracy to commit money laundering and one count of money laundering, surrendered his bar licenses from Georgia and the District of Columbia, and was sentenced to 84 in prison. Ho participated in a conspiracy in which co-conspirators sent emails duping victims into transferring money to accounts controlled by Ho and others. Ho then laundered these stolen funds, moving them through and to accounts located in the United States and abroad. Ho, who recruited others to aid his laundering activities, laundered over $2 million in unlawfully obtained funds.