Securities Industry Commentator by Bill Singer Esq

February 12, 2018

Six Individuals Charged in $7 Million International Investment Scam (DOJ Press Release)

Uju Okigbo, Chioma Okafor, Marita Ranalan Underwood, John Christian Rutledge, and Osa May Martin were charged in an Indictment in  the United States District Court for the Southern District of Texas with one count of conspiracy to commit wire fraud.  Okigbo and Okafor were also charged with one count of conspiracy to launder monetary instruments,  two counts each of wire fraud, and two counts each of concealment money laundering.  Okigbo is also charged with three counts of engaging in transactions with proceeds of specified unlawful activity, and one count of aggravated identity theft for impersonating a U.S. banking executive.  Underwood, Rutledge and Martin are also charged with one count of conspiracy to wrongfully use government seals. Tiffany Sourjohn, was charged by an Information with one count of conspiracy to commit wire fraud and wrongful use of government seals. The charges are in connection with the six defendants' alleged impersonation of Branch Banking & Trust (BB&T) and JPMorgan Chase (Chase) executives, the fabrication of U.S. government documents, the creation of fraudulent investment agreements in the name of BB&T and Chase, and the purchase of luxury vehicles to launder the proceeds of the scheme. As set forth in part in the DOJ Press Release:

[T[he scheme involved fraudulent offers of investment funding by perpetrators primarily living in Nigeria who impersonated U.S. bank officials and financial consultants over the Internet and over the phone. Victims in various countries were deceived into believing they would receive millions of dollars of investment funding as part of joint ventures with U.S. banks, usually BB&T or Chase.  The perpetrators utilized false domain names to make it appear that senders of emails were actually affiliated with BB&T or Chase.  To convince victims that the opportunities were authentic, the perpetrators recruited U.S. citizens to pose as bank "representatives" at in-person meetings with victims around the world, and, if occurring abroad, utilized sham visits to the local U.S. embassy or consulate and fabricated U.S. government documents to make the victims believe the U.S. government was sponsoring the investment agreements.  The victims were then allegedly induced to pay tens of thousands, and often hundreds of thousands, of dollars to U.S.-based bank accounts on the belief that such payments were necessary to effectuate their investment agreements. 

According to the charging documents, to ensure the proceeds made it back to Nigeria, after victims wired in funds, money movers who controlled the U.S. bank accounts liquidated the proceeds through outgoing wire transfers to exporters, cash withdrawals and purchases of vehicles, including luxury brands such as Land Rover and Mercedes Benz, which were then shipped to Nigeria.  According to the charging documents, Okigbo and Okafor were primarily money movers in the scheme, while Underwood, Rutledge, Martin and Sourjohn were representatives.

The scheme allegedly resulted in losses of more than $7 million from victims in more than 20 countries.  To date, a house in Richmond, a 2014 Land Rover Range Rover, and approximately $200,000 in cash, all directly traceable to victims' payments, have been seized.

Emergency Surgery Fails To Remove Margin Call ( Blog) With the roller-coaster of a stock market lately, I suspect that a lot of public customers are going to get hit with margin calls. The complaints often explain that the brokerage firm sold 5,000 shares of XYZ at $12, which the customer had purchased at $11; and that sale was to cover the diminished account value caused by the ABC shares which were purchased at $3 and dropped to 35 cents. The problem is that the next day, XYZ announced that it had developed the cure for cancer and the stock is now worth $1,000 per share but for the fact that the margin sell-out left the unhappy customer with no shares. Okay, that's all a bit over-the-top but if you talk to enough public customers about what happened to them when they got hit with a margin sell-out, their version of events sure as hell sounds pretty similar to my hypothetical. Read a recent FINRA arbitration in which a public customer relates his tale of margin-call woe. 

Minnesota Man Sentenced to 65 Months in Federal Prison for Bank Fraud Conspiracy and Aggravated Identity Theft (DOJ Press Release)
After pleading guilty to conspiracy to commit bank fraud and aggravated identity theft, Jason Maurice Fagin was sentenced to 65 months of custody and 3 years of supervised release, ordered to forfeit personal property and contraband, and to pay restitution and $200 to the Federal Crime Victims Fund. Angelica Marie Hatch-Pequin also pled guilty to the same charges,As set forth in part the DOJ Press Release: 

[B]etween September 2016 and November 16, 2016, Fagin engaged in a scheme to defraud financial institutions while using the personal identifying information of other individuals. Fagin would use the proceeds of the fraud scheme to purchase methamphetamine for his use and to distribute to others for money.

More specifically, on November 16, 2016, Defendants Angelica Marie Hatch-Pequin ("Hatch") and Jason Maurice Fagin were arrested at the Royal River Casino in Flandreau, South Dakota, for attempting to negotiate counterfeit checks. While trying to negotiate the check, Hatch presented a driver's license belonging to another individual. Hatch, aided and abetted by Fagin, used the identification of that individual without lawful authority.

Hatch and Fagin would steal mail from mailboxes located in affluent neighbors of Minneapolis, Minnesota. Hatch and Fagin would target mail that appeared to contain bills and checks. Fagin would then use the personal, business, and banking information contained in those mail matters to create fraudulent checks. After Fagin created the fraudulent checks, Hatch would usually cash the counterfeit checks at convenience stores and casinos located throughout the Minnesota, Iowa, and South Dakota region. Hatch and Fagin created and passed fraudulent checks for approximately two months leading up to their arrests in November.

Two types of checks were created: payroll and personal checks. Payroll checks would be drafted in amounts ranging from $450 to $2,000; the check presented to the Royal River Casino was for $1,500. Personal checks were made in amounts from $100 to $800. The effected banks were insured by the FDIC at the time of the offenses. The stipulated loss amount relating to Fagin's and Hatch-Pequin's criminal conduct was between $40,000 and $95,000.