Securities Industry Commentator by Bill Singer Esq

June 14, 2018

The Human Factor On Wall Street ( Blog)
"A Former NASD Employee" shoves our faces in the toilet bowl and makes us hold our breath as we struggle. It's not a pretty picture. We have an industry where good people often find themselves at bad firms. Some say that's part of the problem. Good folks shouldn't work at bad firms. Good folks shouldn't rationalize how they are furthering fraud. Good folks shouldn't prop up dishonest firms and low-life stockbrokers. 

Montana Man Sentenced to 36 Months in Prison for Designing Fraudulent Mail Solicitations for Use in Transnational Elder Fraud Scheme (DOJ Press Release)
Federal prosecutors had alleged that Thomas Ressler created more than 200 fraudulent sweepstakes and prize-notification letters that falsely informed recipients they could claim cash or other valuable prizes by submitting a processing or delivery fee.  Co-conspirators Ryan Young and Ercan Barka sent the solicitations to victims throughout the United States and foreign countries.  No victim who submitted a fee in response to a solicitation ever received the large cash prize or other valuable items touted in the solicitations.  At most, some victims received a report listing unrelated sweepstakes or a worthless piece of jewelry. Barka and Young pled guilty and are awaiting sentencing. Ressler pled guilty to conspiracy to commit mail fraud and was sentenced to 36 months in prison.

Former CEO Of Sunnyvale-Based Tech Company Sentenced To Two Years In Prison For Insider Trading In His Company's Securities /Defendant Traded Before Negative Earnings Announcements and an Acquisition of the Company (DOJ Press Release)
Former President, Chief Executive Officer, and Chair of the Board of Directors of Alliance Fiber Optic Products, Inc. (AFOP), Peter C. Change pled guilty in the United States District Court for the Northern District of California to having used two brokerage accounts, held in the names of his brother and his wife, to purchase and sell AFOP stock based upon material nonpublic information about the company,. Said trades allowed Chang to avoid losses in advance of earnings announcements and to generate profits in advance of the public announcement of AFOP's acquisition. Chang was sentenced to 24 months in prison  plus three years supervised release.

California Man Charged In White Plains Federal Court With Operating Multimillion-Dollar Mail Fraud Scheme Targeting Small Businesses (DOJ Press Release)
Mark Mushkin was charged in a Complaint filed in the United States District Court for the Southern District of New York with mail fraud for allegedly operating a scheme between 2011 and 2017 in which he sent false invoices to over 800 small businesses throughout the country, predominately law firms, from a IT Tech Products demanding payments for the purported shipment and sale of copier toner. Victimized businesses allegedly paid about $3.3 million in response to the invocies.  Over 800 businesses mailed over 1,900 checks to IT Tech Products based on their mistaken belief that the invoices were legitimate.  These checks totaled approximately $3.3 million and were deposited into a bank account controlled by MUSHKIN.  In the event that a business inquired about the origin of the invoice after payment had been made, MUSHKIN or a representative of IT Tech Products would send a refund, allowing him to continue operating his scheme undetected.  READ the FULL TEXT Complaint.

CFTC Charges Florida-Based Mark Olsen Mining Company and Betty Lea Grimes with Engaging in Illegal, Off-Exchange Precious Metals Transactions (CFTC Press Release 7738-18)
The CFTC filed a Complaint in the United States District Court for the Southern District of Florida charging Mark Olsen Mining Company (MOMC) and the firm's President, controlling person, and managing member Betty Lea Grimes with engaging in allegedly illegal, off-exchange transactions in precious metals with retail customers on both a fully paid as well as a leveraged, margined, or financed basis. Neither MOMC nor Grimes has ever been registered with the CFTC. READ the FULL TEXT Complaint. 
As stated in part in the CFTC Press Release, from at least April 2013 through at least February 2014:

MOMC collected more than $870,000 from three customers for the purported purpose of investing in precious metals.  Instead, as alleged, MOMC customers never received precious metals, and the Defendants misappropriated all MOMC customer funds.  The Defendants used the misappropriated funds to pay for Grimes' personal expenses, with the remaining funds wire transferred to a person purporting to be Mark Olsen in South Africa, according to the Complaint.