Securities Industry Commentator by Bill Singer Esq

July 5, 2018

SEC Obtains Asset Freeze, Shuts Down $5 Million Ponzi Scheme (SEC Litigation Release No. 24184)
The Securities and Exchange Commission filed a Complaint in the United States District Court for the Eastern District of Virginia charging Edward Lee Moody and his wholly-owned investment adviser firm CM Capital Management, LLC with violations of the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act. The Court issued a temporary restraining order freezing assets in over 30 brokerage/bank accounts purportedly controlled by the Defendants, The SEC also seeks disgorgement from relief defendant, G.E. Holdings, a company that the SEC alleges is wholly controlled by Moody and was used to receive and transfer victim funds.a nearly $5 million Ponzi scheme. 

SEC Charges Real Estate Investment Funds and Executives for Misleading Investors (SEC Litigation Release No. 24184)
Without admitting or denying the SEC's allegations in a Complaint filed in the United States District Court for the Northern District of Texas,  Hollis M. Greenlaw, Benjamin L. Wissink, Theodore F. Etter, Cara D. Obert, and David A. Hanson agreed to pay $8.2 million in disgorgement, prejudgment interest, and civil penalties. Hanson agreed to pay a $75,000 civil penalty. The defendants consented to the entry of final judgments that order them to be permanently enjoined from violating Sections 17(a)(2) and (3) of the Securities Act of 1933, and the disclosure, books and records and internal accounting control provisions of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. Greenlaw and Obert consented to also be enjoined from violating the certification provisions of Exchange Act Rule 13a-14. The SEC had alleged that United Development Funding (UDF) funds UDF III and UDF IV and four executives misled investors by failing to disclose that UDF could not pay its distributions and was using money from a newer fund to pay distributions to investors in the older fund. READ FULL TEXT Complaint

SEC Seeks To Reform Its Whistleblower Process ( Blog)
Those of us who represent whistleblowers frequently practice regulatory law and are often former regulators. We fully appreciate that there are certain response that would be improper (and at times illegal) for OWB to provide. That being said, it is frustrating and insulting to be treated as if we are representing criminal defendants or regulatory respondents when asking OWB for an update -- and we are incensed when the response is that "we are not permitted to share that with you." Both OWB staff and whistleblowers are victimized by the lack of deadlines on many steps  from the filing of a WB-APP, to being considered for an award, to being notified of the granting or denial of an award, and the calculation of the percentage of the award. 

Disbarred Attorney Admits Defrauding Former Clients and Law Firm Investors (DOJ Press Release)
Clayton Marlow Anderson, Jr., disbarred from the practice of law in 2015, pled guilty in the United States District Court for the Southern District of California to defrauding investors and clients of over a million dollars; and to money laundering. Clayton created the "Clayton M. Anderson Monthly Income Plan", "Anderson Plan", or "A-Plan."to solicit loans from six individuals to finance the costs and fees related to construction defect lawsuits brought by his law firm. In 2010, owners of the Jefferson Pointe Professional Corporation ("JPPC") hired Anderson to represent them in a construction defect lawsuit, which he settled in October 2012 for $1.82 million Instead of paying his clients their rightful share of the legal settlement, however, Anderson sent them a letter on behalf of "A-Plan Investment Services, Inc." promising JPPC a 13% annual return on their  $800,0000 "investment."  Anderson fraudulently represented that A-Plan was the beneficiary of a $4.4 million insurance policy on his life. Anderson's fraud produced over $600,000 for the JPPC clients over $700,000 in losses for other A-Plan participants. As a part of his plea agreement, Anderson agreed to pay over $1.5 million in restitution to the victims of his crimes.  Anderson faces up to 30 years in federal prison and a fine of up to $2,974,515.00