Securities Industry Commentator by Bill Singer Esq

July 16, 2018
Luke Zouvas was indicted in the United States District Court for the Southern District of California for laundering money he believed to be proceeds of stock fraud schemes. Separately, Gannon Giguiere was charged with manipulating the market for the stock of Eco Science Solutions, Inc. and Kelvin Medical, Inc.; and Oliver Lindsay was charged with participating in the scheme.In yet another indictment,  Andrew Hackett, Vikram Khanna, Kuldeep Sidhu, Annetta Budhu and Kevin Gillespie were charged with manipulating the market for the stock of Arias Intel, Corp.  

Florida Man Sentenced to 7 Years in Prison for Role in Stock "Pump and Dump" Scheme (DOJ Press Release)
After pleading guilty to one count of conspiracy to commit mail and wire fraud, and one count of tax evasion, William Lieberman was sentenced in the United States District Court for the District of Connecticut to 84 months in prison and three years of supervised release. Federal prosecutors had alleged that between about 2010 and July 2016, Lieberman had engaged in a  "pump and dump" scheme whereby he and his co-conspirators induced investors to purchase securities included Terra Energy Resources Ltd. (stock symbol "TRRE"); Mammoth Energy Group, Inc. (stock symbol "MMTE"), a company that later became Strategic Asset Leasing Inc. (stock symbol "LEAS"); Trilliant Exploration Corporation (stock symbol "TTXP"); Hermes Jets, Inc. (stock symbol "HRMJ"), which later became Continental Beverage Brands Corporation (stock symbol "CBBB"); Dolat Ventures, Inc. (stock symbol "DOLV"), and Fox Petroleum, Inc. (stock symbol "FXPT"). At various times, Lieberman was the Chief Executive Officer, Chairman of the Board, President, Secretary, and Treasurer of Mammoth Energy Group, Inc.; the President, Chief Executive officer, and Chairman of the Board of Strategic Asset Leasing Inc.; the President, Chief Accounting Officer, Chief Executive Officer, Chief Financial Officer, Secretary, and Treasurer of Fox Petroleum, Inc.; and the Chief Executive Officer, President, Treasurer, Secretary, and Chief Financial Officer of Trilliant Exploration Corporation.  As part of the scheme, Lieberman purportedly arranged for attorneys to sign false and misleading opinion letters that were designed to provide assurances to securities transfer agents and prospective investors.  After selling their own shares at a profit, the conspirators allowed the price of the securities to fall, leaving investors with worthless and unsalable stock.  As a result, more than 12,000 victim investors collectively lost nearly $19 million. Between 2011 and 2015, Lieberman allegedly earned about $1.2 million through this scheme, which  he failed to report to the Internal Revenue Service, evading $436,235 in federal income taxes for the 2011 through 2015 tax years. As part of his sentencing, Lieberman was ordered to $5,301,694 in restitution and $436,235 to the IRS. Co-conspirators Christian Meissenn, Corey Brinson, Diane Dalmy and three other individuals also pleaded guilty to various offenses stemming from this scheme.  Brinson and Dalmy were each sentenced to 36 months of imprisonment; Damian Delgado a/k/a "Michael Neumann" was sentenced to 84 months of imprisonment.  Brian Ferraioli and Thomas Heaphy, Jr., were each sentenced to 72 months of imprisonment.  Meissenn awaits sentencing.

Crowdfunding Portal StartEngine Loses Customer Arbitration ( Blog)
Another day, another FINRA arbitration, and another complaint from Blog's publisher Bill Singer, Esq about the lack of quality control over FINRA's arbitration decisions. Pointedly, Bill cites the lack of content and context sufficient to render a decision intelligible. On top of all of that, today's featured arbitration involves two interesting quirks: the Claimant is a FINRA funding portal member and the arbitration forum waived the firm's member surcharge and fees. 

Woman Sentenced For Defrauding Donors Of Over $50,000 By Misrepresenting That She Had Terminal Cancer (DOJ Press Release)
Vdoutie Hoobraj  a/k/a "Shivonie Deokaran" pled guilty in the United States District Court for the Southern District of New York to an information alleging wire fraud in connection with defrauding donors by falsely claiming that she had been diagnosed with terminal cancer and needed money to pay for her treatments.  She was sentenced to 24 months in prison, three years of supervised release, and ordered to pay a $51,938 forfeiture and $47,741.20 restitution. As set forth in part in the DOJ Press Release:

From 2014 through 2016 in Westchester County, New York, and elsewhere, HOOBRAJ, then a resident of Dobbs Ferry, New York, solicited donations by falsely stating that she had been diagnosed with terminal stage leukemia, had been given only 18 months left to live, and needed money for medical care and other expenses.  HOOBRAJ obtained donations through two GoFundMe fundraising websites, direct giving, and a fundraising event hosted by parents and students of Ardsley High School, the high school attended by both of her sons.  HOOBRAJ publicized her fundraisers in press interviews, online postings, and emails, among other means.  HOOBRAJ received in excess of $50,000 in donations from over 400 individuals in Ardsley, New York, and elsewhere based her misrepresentations. 

When questioned by the Ardsley Police Department on or about January 20, 2016, HOOBRAJ falsely stated, among other things, that she had been diagnosed with terminal cancer by a specific oncologist who she claimed died in an earthquake in Nepal in April 2015.  Subsequently, HOOBRAJ checked herself into Jacobi Medical Center in the Bronx, New York, ("Jacobi") for an examination.  HOOBRAJ then provided donors forged lab work from that examination, indicating that her hemoglobin, platelet counts, and red blood cell counts were supposedly consistent with a cancer patient's.  In fact, the actual medical record provided by Jacobi to HOOBRAJ stated, "Your labs turned out to show no abnormalities."  

Indiana, Pa. Bank Employee Sentenced for Embezzling Funds from Customers' Accounts (DOJ Press Release)
Former First Commonwealth Bank Assistant Manager Madeline Isenberg was sentenced in the United States District Court for the Western District of Pennsylvania to one day in prison, six months of community confinement, and six months of home confinement following her conviction of embezzling about $88,000 from customers' accounts. The Bank reimbursed the customers.

Seven Nigerian nationals indicted for operating online romance fraud scheme that cost victims nationwide over $1.5 million in losses (DOJ Press Release)
In two indictments filed in the United States District court for the Northern District of Georgia, Olu Victor Alonge, a/k/a Serge Damessi, a/k/a Didier Baraze, a/k/a Mobo Marcus Adeh, a/k/a Ayo Baraze, a/k/a Nicolas Soglo; Ugochukwu Lazarus Onebunne, a/k/a Policap Tizhe, a/k/a Saheed Ademoha; Olajide Olalekan Adara, a/k/a Kelvin Mensah; Joshua Adedeji Ipoade;and Oladunni Temitope Oladipupo were charged with a total of 60 counts of wire fraud, money laundering, identity theft, and use of false passports. Two other defendants are fugitives. The indictments allege that the defendants created phony dating profiles on popular online dating websites and used their fake online personas to frequently target vulnerable individuals who were persuaded to send money to the conspirators.