July 17, 2018
Ross McLellan, a former State Street Corp. executive, was convicted by a jury in the United States District Court for the District of Massachusetts of engaging in a scheme to defraud customers of State Street's Transition Management line of business. In that criminal case, McLellan was found guilty of applying secret commissions to billions of dollars of securities trades executed on behalf of these customers. A parallel SEC civil case continues.
Let's see if you can guess where this fact pattern is going and how it will end. We got an 87 year old customer. The customer gives to his stockbroker blank checks to be drawn against his brokerage account. Those checks are to be used only in the event that the elderly customer can't write out the checks for the sole purpose of paying his caregivers. Hmmm . . . what could possibly go wrong?
In a Complaint filed in the United States District Court for the Southern District of California, the SCE alleged that stock promoter Gannon Giguiere took control of a purported medical device company, whose share price he caused to rise from zero to $1.20 per shar via a matched trading scheme. Brokerage owner, Oliver-Barret Lindsay, allegedly coordinated the matched trading through an individual who turned out to be an FBI cooperating witness. The Complaint further names Kevin Gillespie, Annetta Budhu, and Andrew Hackett for entering into a number of pump-and-dump scheme, with Hackett communicating with someone he believed to be a participant in the scheme but who was an undercover FBI agent. The U.S. Attorney's Office for the Southern District of California has announced criminal charges in the case. READ the FULL TEXT SEC Complaint
In a Complaint filed in the United States District Court for the District of Hawaii, the SEC alleged that Marianne Veronika Sandor, her husband Edward Michael Porrazzo falsely told investors that their company, Moddha Interactive, Inc.,had a valuable portfolio of patents for a supposed 3-D technology to be used with tablet devices. Allegedly, the patents had expired and were worthless, and the technology either did not exist or was developed by other, unrelated companies. In raising funding for the company, Sandor and Porrazzo allegedly lied about a share dividend buy-back program and how the use of investor proceeds. Further, Moddha Interactive allegedly paid over $200,000 in sales commissions to co-Defendant Spar Street, who purportedly READ the FULL TEXT SEC Complaint https://www.sec.gov/litigation/complaints/2018/comp24199.pdf.
SEC Obtains Final Judgments Against Defendants in Ticket Investment Scheme (SEC Litigation Release No. 24203)
The United States District Court for the Southern District of New York entered final judgments against Defendants Matthew Harriton and 875 Holdings, LLC, and relief defendants MXCU Holdings, LLC and Mash Transactions, LLC in connection with a multi-million dollar Ponzi scheme involving purported resales of tickets to popular concerts and Broadway shows. The defendants collectively agreed to pay over $8.3 million in disgorgement, prejudgment interest, and civil penalties. Harriton was permanently enjoined him from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 ("Securities Act") and ordered to pay $1,375,785, including disgorgement, prejudgment interest, and a civil penalty. was 875 Holdings permanently enjoined from violating Section 17(a) of the Securities Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and ordered it to pay a total of $6,573,542, including disgorgement, prejudgment interest, and a civil penalty. Relief Defendants MXCU Holdings and Mash Transactions were ordered to pay a total of $342,491 and $65,877, respectively, in disgorgement and prejudgment interest.
After a two-day jury trial in the United States District Court for the Central District of California, Aiman Alexander was found guilty on eight counts of mail fraud and three counts of money laundering in connection with his defrauding an individual into investing in Ataba's Innovation Validation and Design Technologies, which would allegedly use the funds to manufacture and sell a device that would be used in hospitals for stem cell research. In furtherance of his fraud, Ataba had claimed that his company was on the verge of being acquired. Ataba converted the investment to pay for his rent, living expenses, dining out, and gambling, as well as overseas wire transfers. Ataba was sentenced to 41 months in federal prison and ordered to pay $648,070 restitution.