Securities Industry Commentator by Bill Singer Esq

May 21, 2018

Former Mobile Phone Industry Manager Sentenced In Manhattan Federal Court To 30 Months In Prison For Role In Multimillion-Dollar Consumer Fraud Scheme (DOJ Press Release)
https://www.justice.gov/usao-sdny/pr/former-mobile-phone-industry-manager-sentenced-manhattan-federal-court-30-months-prison
Federal prosecutors had alleged that between 2011 and 2013, Christopher Goff, an account manager for Mobile Messenger, a U.S. aggregation company in the mobile phone industry, engaged in an auto-subscribing scheme that placed unauthorized text-messaging charges on their cell phone bills.  In or about 2010, Lin Miao, CEO of Tatto, and others built a computer program that could spoof the required consumer authorizations for premium text messaging services. In 2011, Miao met with Goff and asked him to provide large batches of phone numbers from Mobile Messenger's databases in exchange for payment. In total, Miao and Tatto took more than $50 million from consumers via the scheme, of which Goff received over $350,000. Goff pled guilty in the United States District Court for the Southern District of New York to one count of participating in a conspiracy to commit wire fraud, and he was sentenced to 30-months in prison plus two years of supervised released and ordered to forfeit $352,799.56. To date, Andrew Bachman, Miao, Michael Pajaczkowski, Erdolo Eromo, Jonathan Murad, Francis Assifuah, and Jason Lee have pled guilty in connection with their participation in the fraud.  Two additional defendants, Fraser Thompson and Darcy Wedd, were convicted following three-week jury trials. 

Rabobank NA Sentenced for Conspiring to Impair, Impede, and Obstruct Its Primary Regulator (DOJ Press Release)
https://www.justice.gov/opa/pr/rabobank-na-sentenced-conspiring-impair-impede-and-obstruct-its-primary-regulator
Federal prosecutors alleged that Rabobank National Association (Rabobank),a California subsidiary of the Netherlands-based Cooperatieve Rabobank U.A., operated branches in Imperial County, California that were heavily dependent on cash sourced from Mexico. Prosecutors asserted that the bank knew this Mexican cash was likely tied to narcotics trafficking and organized crime. Rabobank allegedly continued soliciting cash-intensive customers from Mexico, while failing to employ appropriate BSA/AML policies and procedures to address the heightened risk, until approximately May 2013, when Rabobank placed a moratorium on originating new account relationships for Mexico-based businesses entities. Rabobank, through at least three executives, knowingly obstructed the Department of the Treasury's Office of the Comptroller of the Currency's (OCC's") 2012 examination by responding to the OCC's February 2013 initial report of examination with false and misleading information about the state of Rabobank's BSA/AML program and by making false and misleading statements to the OCC regarding the existence of reports developed by a third-party consultant that described the deficiencies and resulting ineffectiveness of Rabobank's BSA/AML program.  In furtherance of the scheme to defraud the OCC, Rabobank also demoted or terminated two RNA employees who provided information to the OCC regarding Rabobank's BSA/AML deficiencies. Rabobank plead guilty to conspiracy to defraud the United States and to corruptly obstruct an examination of a financial institution, and the bank was sentenced in the United States District Court for the Southern District of California 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 was sentenced to a two-year term of probation, and ordered to pay the statutory maximum fine of $500,000.  Additionally, as part of its guilty plea, Rabobank forfeited $368,701,259 to the United States as a result of allowing illicit funds to be processed through the bank. 

Post Mortem Auto-Pilot Trading Sends Stockbroker's Career Into Head-On Regulatory Crash (BrokeAndBroker.com Blog) 
http://www.brokeandbroker.com/3985/finra-awc-deceased/
Regardless of the business that you're in, if you have clients, they can and do die. Sometimes you are prepared for a customer's demise because they have been in failing health. Sometimes it's an unexpected accident or medical event. When a customer dies, businesses servicing such deceased parties typically have many policies and procedures that kick in -- some designed to protect the business and others to protect the interest of the deceased. Despite the best of plans and intentions, the protocols in place to address a customer's death don't always stand up to the demands of the customer's heirs (purported or otherwise) or the best-intentions of those with whom the deceased had business dealings. In a recent FINRA regulatory settlement, we come across the post-mortem conduct of a stockbroker who didn't yet know that his customer had died.

https://www.sec.gov/litigation/litreleases/2018/lr24145.htm
Without admitting or denying the allegations, Todd David Alpert consented to the entry of a judgment in the United States District Court for the Southern District of New York that permanently enjoins him from future violations of the Securities Exchange Act, and orders him to pay disgorgement of his profits of $43,873 disgorgement plus $1,627 interest and to pay a $43,873 civil penalty. The SEC had alleged in a Complaint that Alpert, who worked as a security guard at the home of an H.J. Heinz Company board member, misappropriated material nonpublic information concerning Berkshire Hathaway, Inc. and 3G Capital Partners Ltd. pending acquisition of Heinz. Alpert purportedly purchased 1,000 shares and 30 call options in Heinz and reaped about a $44,000 profit.