Securities Industry Commentator by Bill Singer Esq

March 26, 2018
The SEC filed a Complaint in the United States District Court for the Eastern District of New York against Niket Shah and Spark Trading Group LLC alleging that they had defrauded over 15 investors into contributing hundreds of thousands of dollars to two funds that Shah marketed. The SEC alleged that Shah lied about his success as a trader, Spark Trading's returns, and the use of investors' money. Further, although the funds were losing money, Shah purportedly altered financial statements to make the funds appear profitable. Allegedly, Shah misused investor money for his own benefit and suffered substantial losses on the amounts actually invested. The SEC obtained a preliminary injunction and asset freeze against Niket Shah READ the FULL TEXT SEC Complaint

FINRA Humiliated In Federal Court Arbitration Appeal ( Blog)
In its self-regulatory-organization capacity, the Financial Industry Regulatory Authority is nothing but meticulous about insisting that its member firms and their associated persons follow its rules. At times, FINRA is uncompromising when it insists that a rule says what it says and you are charged with understanding the proscriptions and following the provision without fail. No ifs. No buts. Just do what you're supposed to do and don't do what you're not. Otherwise, stop your whining and pay the fine and do the time. When the screw turns and FINRA is itself on the end of the hook and dangling in a water filled with predators, well, what can I say -- let's just sit back, open another can of beer, put on some suntan lotion, and wait for that ever so gentle and pleasing tug on the line. Who's got the tartar sauce?

Former CEO of Israeli Sales and Marketing Company Charged for Role in Fraudulent Binary Options Scheme
DOJ Press Release)
Lee Elbaz, former CEO of the Israel-based company Yukom Communications, a purported sales and marketing company, was indicted in the United States District Court for the District of Maryland on one count of conspiracy to commit wire fraud and three counts of wire fraud in connection with alleged participation in a binary options scheme. READ the Full TEXT Indictment. As set forth in part in the DOJ Press Release:

[Y]ukom provided investor "retention" services for two websites, known as BinaryBook and BigOption, that were used to promote and market purported binary options, and that those binary options were fraudulently sold and marketed.  The indictment further alleges that in her role as CEO of Yukom, Elbaz, along with her co-conspirators and subordinates, misled investors using BinaryBook and BigOption by falsely claiming to represent the interests of investors but that, in fact, the owners of BinaryBook and BigOption profited when investors lost money; by misrepresenting the suitability of and expected return on investments through BinaryBook and BigOption; by providing investors with false names and qualifications and falsely claiming to be working from London; and by misrepresenting whether and how investors could withdraw funds from their accounts.  Representatives of BinaryBook and BigOption, working under Elbaz's supervision, misrepresented the terms of so-called "bonuses," "risk free trades" and "insured trades," and deceptively used these supposed benefits in a manner that in fact harmed investors, according to the indictment. 

(DOJ Press Release)
Following a guilty verdict by a federal jury in the United States District Court for the Middle District of Florida on  nine counts of aggravated identity theft, nine counts of bank fraud, seven counts of false representation of a Social Security number, and three counts of mail fraud,  Anthony Johnson was sentenced to 41 years in federal prison f and ordered to pay restitution. As set forth in part in the DOJ Press Release:

[J]ohnson falsely claimed to be a former member of the U.S. Army and used the Social Security numbers of two victims, including a lawyer from Seattle, to open a bank account and to obtain a loan and multiple credit cards from USAA in the names of his victims. After obtaining multiple credit card convenience checks, Johnson withdrew thousands of dollars from the USAA bank account for his own use. After obtaining a genuine Florida driver license using the identity of a doctor from Texas, Johnson obtained two fraudulent loans totaling over $148,000 from Bankers Healthcare Group, LLC (BHG). Johnson had the money from BHG wired to a TD Bank business account in the name of a false medical data company he incorporated in Florida. Using the same identity, Johnson then obtained additional loans from Springleaf Financial Services and had the proceeds wired to the bank account he had set up for the false medical data company. Johnson then set up a personal bank account at TD Bank in the victim's name and began funneling money from the business account to the personal account. Thereafter, Johnson began making large cash withdrawals to fund his purchase of luxury items including a $70,000 luxury car. During this time, Johnson used the identity of a fourth victim to obtain an apartment and then obtained another genuine Florida driver license using the identity of a fifth victim. 

During the summer of 2016, using proceeds from his criminal activity, Johnson left the United States in violation of his federal supervised release imposed after a previous federal conviction for fraud and identity theft-related charges. While on this trip, he stayed at the Waldorf Astoria, purchased high-end personal items, and spent more than $4,000 while visiting a club/restaurant. On July 11, 2016, U.S. Immigration and Customs Enforcement, in coordination with the U.S. Marshals Service, arrested Johnson at the Orlando International Airport for violating the terms of his supervised release.