Securities Industry Commentator by Bill Singer Esq

June 7, 2018

BREAKING STORY: Does life as we know it change at 2 pm today? Make Mars Great Again! #MMGA
Attorney Jehu Hand was convicted in the United States District court of the District of Massachusetts on charges of securities fraud, wire fraud, and conspiracy to commit those offenses in connection with two pump-and-dump schemes that defrauded investors in Greenway Technology (company purporting to develop resorts for gay and lesbian travelers) and Crown Marketing. He will be sentenced by the court at a later date. An SEC Complaint is pending. 

Wall Street Career Cashed Out Over Identity Theft And Gift Cards ( Blog)
In today's Blog we watch a Wall Street career short-circuit, fizzle, and burn out following allegations that the registered person was charged with felonies for using gift cards procured from stolen information. As much as we would like to dismiss this as a very rare and isolated scenario, FINRA continues to publish settlements involving similar fact patterns. Enough is not always enough. An honest living is not always the goal. In the end, it's hard to understand what motivates someone to stray off the path when the consequences are so onerous and the benefits seem absurdly paltry.

Litigation Release No. 24158)
The Securities and Exchange Commission filed a Complaint in the United States District Court for the Central District of California charging equipment leasing company Essex Capital Corporation and its founder, Ralph T. Iannelli with defrauding investors in connection with sales of over $80 million in promissory notes. READ the FULL TEXT SEC Complaint
As set forth in part in the SEC Press Release:

[B]etween 2014 and 2017, Essex Capital Corporation and its founder, Ralph T. Iannelli, made a series of false and misleading statements and illusory personal guarantees to registered investment advisers to induce them to invest millions of dollars of their clients' money in Essex's failing equipment leasing business. The SEC alleges that Essex and Iannelli provided one investment adviser with fake financial statements that overstated Essex's assets by more than $20 million and falsely told another investment adviser that Essex would assign equipment leases to its clients when the same leases had already been pledged as collateral for bank loans. The SEC's complaint further alleges that as Essex's finances deteriorated, the company resorted to frequent Ponzi-like payments, paying interest and principal to existing Essex investors with funds raised from newer investors. At the same time, Iannelli allegedly paid himself millions of dollars in bonuses and siphoned millions of dollars out of Essex through interest-free loans with no maturity date. According to the SEC, Iannelli personally owes the company over $6.4 million.

The SEC's complaint, filed in the U.S. District Court for the Central District of California, charges Iannelli and Essex with violations of Section 17(a) of the Securities Act of 1933 and 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. It seeks disgorgement of allegedly ill-gotten gains along with interest, monetary penalties, and permanent injunctions against Iannelli and Essex. The SEC has also requested emergency relief against Defendants, including a preliminary injunction, an asset freeze, and the appointment of a receiver over Essex.

Utah Financial Advisor Sentenced To Prison For Tax Evasion, Securities Fraud And Wire Fraud (DOJ Press Release)
Henry Brock plead guilty to tax evasion, securities fraud and wire fraud and was sentenced in the United States District Court for the District of Utah and was sentenced to 72 months in prison plus three years of supervised release, and ordered to pay $12 million in restitution. Brock marketed and sold over $10.8 million worth  of "IRA Exit Strategy" as a way for investors to avoid paying taxes on IRA withdrawals, which would otherwise be subject to Internal Revenue Service penalties and taxes. Brock caused clients to file fraudulent income tax returns claiming a total of approximately $3.8 million in bogus business losses and resulting in a tax loss of over $1.1 million.