Securities Industry Commentator by Bill Singer Esq WEEK IN REVIEW

August 25, 2018

In re: Pending Administrative Proceedings (Order, Securities and Exchange Commission; '33 Act Rel. No. 10536; '34 Act Rel. No. 83907; Invest. Adv. Act. Rel. No. 4993; Invest. Co. Act Rel. No.33211 / August 22, 2018) In light of the Supreme Court's decision in Lucia v. SEC, the SEC had stayed any pending administrative proceeding initiated by an order instituting proceedings that commenced the proceeding and set it for hearing before an ALJ, including any such proceeding currently pending before the Commission. Effective August 22, 2018, the SEC allowed the stay to expire and reiterates its ratification of the appointments of Chief Administrative Law Judge Brenda Murray and Administrative Law Judges Carol Fox Foelak, Cameron Elliot, James E. Grimes, and Jason S. Patil. READ THE FULL TEXT ORDER

Nietzsche, BeeGees, Kierkegaard, Syndergaard, And Jive Talkin' On Wall Street ( Blog) According to the customer's allegations and the arbitrator's decision, we have a situation wherein an unnamed financial advisor apparently advised the customer to sell her "Merrill Lynch Investor Choice Annuity." Why did that specific conversation occur? We don't know because the FINRA Arbitration Decision doesn't provide that background. I would have been interested to learn whether Claimant Fluharty had decided to close a Merrill Lynch account, which held her annuity, or whether she needed to raise cash, or whether the Edward Jones advisor recommended the liquidation of the annuity in order to generate proceeds to purchase some house product or other investment. Whatever prompted the Edward Jones advisor's recommendation to sell the annuity, it would appear that the advice did not include a warning that the ensuing sale would trigger a taxable event. 

In the Matter of the FINRA Arbitration Between Wells Fargo Advisors. LLC, Claimant, vs. Kevin Mercer, Respondent (FINRA Arbitration 12-02131, January 28, 2014), the sole FINRA Arbitrator found Respondent Mercer liable and ordered him to pay to Claimant Wells Fargo $103,389.82 in compensatory damages plus $17,363.01 interest. On appeal from SDNY, in Wells Fargo Advisors, LLC, Petitioner/Appellee, v. Kevin Mercer, Respondent/Appellant (Summary Order, United States Court of Appeals for the Second Circuit, 16-1458), 2Cir affirmed, in part, denying Mercer's argument that Wells Fargo had issued a Form 1099-C, which purportedly demonstrated that most of the promissory note debt was discharged. 

Operator of bogus charity sentenced for defrauding multiple companies (DOJ Release) Kai Brockington, the operator of the purported non-profit "Our Genesis Project," pled guilty in the United States District Court for the Northern District of Georgia to charges of mail fraud and willfully filing a false federal income tax return; and was sentenced to three years and five months in prison plus three years of supervised release, and ordered to pay restitution. Brockington caused employees of several large companies to falsely tell their employers that they had donated money to Our Genesis Project, which triggered the employers' matching donation programs to pay some $668,000. Those funds were spent on Brockington and his family members, including purchases of jewelry and expensive clothing and shoes, trips to Italy and Disney World, as well as updates to the family home and other living expenses.

Florida Man Arrested and Charged with Extensive Cyberstalking and Threats Campaign (DOJ Release) Byron A. Cardozo was indicted in the United States District Court for the District of Massachusetts with one count of cyberstalking and one count of making interstate threats as a result of his alleged 18/month cyberstalking campaign that targeted his former schoolmate, a 30-year-old Massachusetts woman.  READ the FULL TEXT INDICTMENT 

Court Bars Recidivist from Serving in Senior Positions in Public Companies (SEC Litigation Release No. 24244 ) The United States District Court for the Southern District of Indiana permanently prohibits Gary S. Williky, a former investor relations consultant for Imperial Petroleum, Inc., from violating antifraud , anti-manipulation, and the beneficial owner provisions of various federal securities laws; and, additionally, ordered Williky to pay civil penalties of $1,746,434 and disgorgement plus interest of $1,037,811. The SEC Litigation Release characterizes Williky as a "repeat securities law violator," who had perpetrated "an illegal market manipulation and insider trading scheme" involving a purported renewable fuel production business.

UBS Securities LLC, Plaintiff/Appellee, v. Gregory M. Leitner, Defendant/Appellant (Summary Order, United States Court of Appeals for the Second Circuit, 17-2763)  In April 2015, Gregory M. Leitner invested over $750,000 the ETRACS 2x Leveraged Long Alerian MLP Infrastructure Index ("MLPL"), which had been issued by non-party UBS AG in July 2010. When the securities were redeemed pursuant to an acceleration provision in the offering documents, Leitner lost about $500,000. On February 8, 2017, Leitner filed a FINRA arbitration statement of claim against UBS Securities, which moved in the United States District Court for the Southern District of New York ("SDNY") to enjoin Leitner from proceeding with the arbitration. SDNY granted UBS Securities' motion, entered final judgment permanently enjoining Leitner from proceeding with the arbitration. On appeal, 2Cir found no abuse of discretion by SDNY and affirmed. In part, 2Cir affirmed the lower court's finding that Leitner and UBS Securities did not enter into an arbitration agreement in connection with Leitner's purchase of MLPL. Pointedly, citing FINRA Rule 12200's requirement that a member firm must arbitrate disputes as required by a written agreement or as requested by a customer, 2Cir affirmed that the parties had not entered into a written arbitration agreement and declined to characterize Leitner as a "customer." In not deeming Leitner a customer, 2Cir noted that he had failed to demonstrate that he had purchased a good or service from UBS Securities, and the court underscored that Leitner did not have a brokerage account with the firm.

Manager and Employee of Long Island Boiler Room Plead Guilty in $147 Million Stock Manipulation Scheme / The Defendants Induced Elderly Investors to Purchase Artificially Inflated Stock in Publicly Traded Companies (DOJ Release) In connection with their roles in a $147 million scheme to defraud investors in publicly traded companies, two defendants pled guilty in the United States District Court for the Eastern District of New York:
Ronald Hardy, a manager at My Street Research and its predecessors: to conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering and five counts of securities fraud; and
McArthur Jean, a cold-caller at the boiler room: one count of conspiracy to commit securities fraud and agreed to forfeit more than $110,000.  
Hardy and Jean are among 16 defendants charged in this case, and the ninth and tenth defendants, who have already pled guilty. Previously, guilty pleas were entered by Erik Matz, a manager at the Boiler Room; and Boiler Room cold-callers Brian Heepke, Dennis Verderosa, Emin L. Cohen, Paul Ewer, Ashley Antos and Sergio Ramirez; and Robert Gilbert, a cold-caller operating from his own company. Federal prosecutors alleged, in part, that  Hardy and Jean, together with their 14 co-defendants and others, engaged in a scheme to defraud investors and potential investors in publicly traded companies by (a) artificially generating price movements and trading volume in the shares, (b) causing material misrepresentations and omissions in their communications with victim investors about the advisability of purchasing the shares and (c) fraudulently concealing their control of shares of the manipulated public companies that were held in brokerage accounts in the names of other individuals or entities.  In addition, Hardy and other defendants conspired to launder approximately $14,714,493 in proceeds of the stock manipulation scheme.

GUEST BLOG: Of Trust, Lattes and Blockchains by Aegis Frumento Esq ( Blog) It may be some time coming, but don't underestimate what blockchain technology might do to the securities industry.  In our example, a self-validating blockchain allowed one coin exchange to replace all of the brokers, clearing firms, the stock exchange, DTC and the transfer agent that we otherwise would have had to trust with accomplishing our simple stock sale.  That's pretty revolutionary, and I think that's just the start.

(DOJ Release) Former Swiss bank managing director and vice chairman Matthias Krull pled guilty in the United States District Court for the Southern District of Florida to one count of conspiracy to commit money laundering. Among private clients that Krull brought to the bank was Francisco Convit Guruceaga, who was indicted on money laundering charges, and also three unnamed conspirators. The alleged conspiracy involved a a currency exchange scheme that was designed to embezzle around $600 million from Venezuelan state-owned oil company Petroleos de Venezuela, S.A. (PDVSA), which is that nation's primary source of income and foreign currency. Krull joined the conspiracy to launder $1.2 billion of embezzled funds through Miami, Florida real estate and other schemes.

Two Nigerian Men Sentenced For Spearphishing Email Scheme (DOJ Release) Eneye Dania and Osariemen Isibor were sentenced in the United States District Court for the District respectively to 17-months and 14-months in prison and are expected to be removed from the United States and returned to Nigeria. The defendants conspired to transmit "spearphishing" emails designed to look like human resources department communications to employees of local governments, colleges, and universities, When a given link was clicked, the employee was sent to a page operated by members of the conspiracy, where usernames and passwords were captured. Upon obtaining the confidential information, the conspirators attempted to file fake tax returns on behalf of the employee, with the hope of receiving a fraudulent tax refund.   The IRS detected most of the fraudulent tax filings before refunds issued. 

Michael Cohen Pleads Guilty In Manhattan Federal Court To Eight Counts, Including Criminal Tax Evasion And Campaign Finance Violations / Plea Follows Filing of Eight Count Criminal Information Alleging Concealment of More Than $4 Million in Unreported Income, $280,000 in Unlawful Campaign Contributions (DOJ Release) Michael Cohen pled guilty in the United States District Court for the Southern District of New York to an eight-count Information charging him with tax evasion, making false statements to a federally-insured bank, and campaign finance violations. Cohen had concealed over $4 million in personal income from the IRS, made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election. READ the FULL TEXT INFORMATION.

Will Shareholders Lose the Right to Sue Over Corporate Fraud? (The Intercept by Susan Antilla in partnership with the Investigative Fund) Veteran reporter Susan Antilla pens another provocative article in which she considers the consequences of the current wave of deregulation. Antilla notes that Securities and Exchange Commissioner Hester Peirce  "absolutely" thinks that public companies should have the option to require arbitration; and former Commissioner Michael Piwowar would "encourage" companies to come talk to the SEC about putting mandatory arbitration clauses in their charters. 

GUEST BLOG: Big Changes Coming for Small Firms by John Busacca ( Blog) Chief Executive Officer of the Broker Dealer Exchange John Busacca warns the FINRA member firm community about the ramifications of  the recent requirement to designate a Chief Operations Officer (COO). As Busacca notes, most small firms utilize a part time or Rent-a-FINOP to handle their monthly or quarterly FOCUS reports; and, as is often dictated by the economics of small broker-dealer life, those part time FINOPS often act as the firm's CFO or COO. An interesting read for those in the trenches of Small FINRA broker-dealers.

California Man Claiming to Be a Billionaire Financier Sentenced to More Than Five Years in Prison in Multimillion-Dollar Fraud Scheme (DOJ Release) Following his jury conviction on one count each of conspiracy to commit mail and wire fraudm mail fraud, conspiracy to commit money laundering, and laundering monetary instruments; two counts of engaging in monetary transactions in property derived from specified unlawful activity; and five counts of wire fraud, Kenneth Brewington was sentenced in the United States District Court for the District of Colorado to five years in prison, three years supervised release, and ordered to pay $563,526.78 in restitution. Brewington falsely told investors that he was a billionaire who, in exchange for up-front fees, could access certain financing, including hundreds of millions in cash in an overseas bank account. Brewington and his co-conspirators sold promissory notes to victims, including through a financial-services marketing company based in Denver called Compass Financial Solutions (CFS).  The conspirators converted the fees towards Ponzi-like payments to other investors and for personal expenses. Former CFS CEO Brian G. Elrod and former Corporate Counsel William E. Dawn pled guilty for their roles, and Elrod was sentenced to 41 months in prison, three years of supervised release, and ordered to pay $2,440,051.29 restitution; and Dawn was sentenced to time served and ordered to pay $366,752.01 restitution.

SEC Charges Former Online Marketing Company Executives With Inflating Operating Metrics (SEC Release 2018-161) Endurance International Group Holdings Inc.former chief executive Hari Ravichandran and former chief financial officer Waruna Ellawala agreed to settle SEC charges without admitting or denying them and pay $1.38 million and $34,000 respectively in disgorgement, interest, and penalties.  They also agreed to cease and desist from further violations of various antifraud, reporting, books and records, and internal controls provisions of the federal securities laws. In a Complaint filed in the United States District Court for the District of Massachusetts, the SEC alleged that former Constant Contact (which became an Endurance subsidiary in 2016) CFO Harpreet Grewal hid the company's slowing customer growth from investors and inflated its publicly reported subscriber numbers.  READ the FULL TEXT Complaint and Orders.

Court Enters $1.8 Million Judgment Against Microcap Movie Studio (SEC Litigation Release No. 24238) The United States. District Court for the Southern District of Georgia entered a default judgment against now-defunct microcap issuer and former movie studio Medient Studios, Inc., also known as Moon River Studios, Inc.that enjoins the company from future violations of antifraud, reporting, registration, and proxy statement provisions of the federal securities laws. The default judgment orders Medient to pay $885,000 in disgorgement, $54,368 in prejudgment interest, and a an $885,000 civil penalty. Further, the court entered a final judgment by consent against Joel A. "Jake" Shapiro, a former CEO and director of Medient and its successor company, Fonu2, Inc. In that earlier judgment by consent, Shapiro agreed to settle with the SEC, and without admitting or denying the allegations in the complaint, consented to the entry of a final judgment that enjoins him from future violations of antifraud, reporting, registration, and disclosure provisions of the federal securities laws. The consent judgment prohibits Shapiro from acting as an officer or director of a public company or participating in an offering of penny stock for five years and orders him to pay disgorgement of $21,456, prejudgment interest thereon of $2,385, and a $75,000 civil penalty. The SEC's Complaint alleged in part that Shapiro, along with Medient's founder and former chairman, Manu Kumaran, had schemed to make an assortment of false and misleading statements in Medient's press releases and corporate filings, and that Shapiro, Kumaran, and others backdated and falsified promissory notes as part of a scheme to issue Medient's and Fonu2's common stock in exchange for financing.The SEC's litigation is ongoing with respect to Kumaran/ and to the amount of monetary relief owed by Fonu2 and its former CEO, Roger Miguel. READ THE FULL TEXT Complaints

Westchester Attorney Indicted For Fraud And False Statement Charges Arising From His Attempt To Embezzle From A Decedent's Estate For Which He Was Court-Appointed Administrator (DOJ Press Release)  Attorney Guy Parisi was indicted in the United States District Court for the Southern District of New York on conspiracy, mail fraud and false statements arising from his alleged attempt to embezzle funds from a decedent's estate for which he served as a court-appointed administrator. As alleged in part in the Indictment, on behalf of the estate, Parisiretained Stokes Asset Recovery Services  as the estate's abandoned property location service in exchange for a 15% fee on the value of the estate's assets held by the NYS Comptroller. Allegedly not disclosed and actively concealed was that that Stokes was owned a relative of Parisi's with whom he had formed the asset recovery business less than two weeks before he notified the Comptroller of his retention of the company. READ the FULL TEXT INDICTMENT

Greenville Man Sentenced to 46 Months for $700,000 Fraud Scheme (DOJ Press Release) Pursuant to his guilty plea to conspiracy to commit wire fraud, Calvert J. Drummond, Jr. was sentenced in the United States District Court for the District of South Carolina to 46 months in prison and ordered o pay $742,000 in restitution. Drummond represented that he could obtain alternative financing for various projects, and in exchange for a fee of several hundred thousand dollars, promised to secure bank guarantees worth millions.In  fact his promises of alternative financing were pure fiction and he converted the fees for personal expenses, travel, jewelry, and other items. Sadly, this is a well-worn scam that never seems to get old or fall out of use. If it's too good to be true, it's too good to be true. I can't tell you how many victims have come to me over the decades with tales about the same fraud, and, trust me, the results of these scams are often devastating.

File this one under a DOJ press release headline you don't see everyday (thankfully): Ohio Man Pleads Guilty, Sentenced For Ruckus At Peace Bridge Port Of Entry (DOJ Press Release) WARNING!!! In the United States District Court for the Western District of New York it is now a federal crime to create a "ruckus." And "no," I am not providing any details about this idiocy of a case because if the Department of Justice actually thinks that it's okay to publish a press release that asserts that there is some crime in the federal criminal code that prohibits ruckusing then I will invite my readers to click on the link and satisfy their curiosity as to just what the hell constitutes the time-honored jurisprudence of the crime of ruckus. I do not consider a "failure to obey a lawful order by a U.S. Customs and Border Protection officer" to be a  "ruckus."  Such a characterization makes light of what was, in fact, a more serious scenario as presented in the press release. 

Merrill Lynch Settles SEC Charges of Undisclosed Conflict in Advisory Decision (SEC Release 2018-159) Without admitting or denying the findings, Merrill Lynch, Pierce, Fenner & Smith consented to an SEC Order, which finds that the firm was negligent in violating the antifraud and policies and procedures provisions of the Investment Advisers Act of 1940 when the firm failed to disclose a conflict of interest. Merrill agreed to pay over $4 million in disgorgement, $806,981 in prejudgment interest, and a more than $4 million penalty, and to be censured and to cease and desist from further violations..  READ the FULL TEXT SEC Order 

In the Matter of Interactive Brokers LLC, Respondent (AWC 2014042022401, August  17, 2018). 
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Interactive Brokers LLC submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed upon Interactive Brokers LLC a Censure and $5.5 million fine. The AWC asserts in part that Interactive failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with the requirements of Regulation SHO.  READ the FULL TEXT AWC.

Disparaging A FINRA Disparagement Arbitration ( Blog) A famous criminal defense lawyer told me about the homicide case he handled in which a gun shot was heard coming from a room that had no windows and only one door. When the police opened the door, they found a victim shot dead and one man sitting in the corner holding a gun. The gunman said "I did it." The police arrested the gunman. The coroner ruled out suicide and the evidence proved that the gunman had fired the shot. At trial, the gunman offered an amazing defense that stunned the courtroom. It was the most incredible story anyone had ever heard and prompted the jury to find "not guilty." Unfortunately, that's all I was told about the case. I don't know what happened in the sealed room. I don't know what the amazing defense was. I was told, however, that the defendant offered an incredible story that won his freedom. Why did I just jerk you around with that infuriating story? Read today's Blog.

In re: Arctic Glacier International, Inc., et al. (Debtors in a Foreign Proceeding) (Opinion, United States Court of Appeals for the Third Circuit, 17-2522 / August 20, 2018) 3Cir rejected argument that shareholders on notice of a company's bankruptcy proceedings are not subject to the Plan's releases of liability because they are not transferees. 

SEC Charges Unregistered Brokers Who Sold Woodbridge Securities to Main Street Investors (SEC Press Release 2018-157) In a Complaint filed in the United States District Court for the Southern District of Florida, the SEC charged Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager, Costa Financial Insurance Services, Corp., Atlantic Insurance & Financial Services, Inc., and Knowles Systems, Inc. for unlawfully selling securities of the now bankrupt Woodbridge Group of Companies LLC to retail investors.  Previously, the SEC had charged the Woodbridge Group, its owner, and others with operating a $1.2 billion Ponzi scheme. In the instant SEC Complaints, the defendants allegedly reaped millions of commission dollars on their sales of Woodbridge securities even though they were not registered as broker-dealers and were not permitted to sell securities. Allegedly, Barry Kornfeld also violated a prior SEC order which barred him from acting as a broker.  Robbins and her company, Knowles Systems Inc., agreed to settle the SEC's charges in a separate action without admitting or denying the allegations and return more than $1 million of allegedly ill-gotten gains plus interest; and she agreed to pay a $100,000 civil penalty and to an industry and penny-stock bar. READ the FULL TEXT Complaints.

Without admitting or denying the allegations , Michael B. Rothenberg and his advisory firm Rothenberg Ventures LLC agreed to settle charges in an SEC Complaint filed in the United States District Court for the Northern District of California. In part, Rothenberg agreed to be barred from the brokerage and investment advisory business with a right to reapply after five years. The Complaint alleged that Rothenberg's funds had nearly 200 investors and more than $64 million in assets, and over a three-year period, Rothenberg and his firm misappropriated millions of dollars from the funds, including an estimated $7 million of excess fees, which Rothenberg used to support personal business ventures he claimed were self-funded and to pay for private parties and events at high-end resorts and sporting arenas.READ the FULL TEXT Complaint 

SEC Charges Failing Real Estate Investment Companies with Operating a $135 Million Fraud Scheme (SEC Litigation Release No. 24237) In a Complaint filed in the United States District Court for the Northern District of Illinois, the SEC filed an emergency action against Jerome H. Cohen and Shaun D. Cohen and their companies, Equitybuild, Inc. and Equitybuild Finance, LLC, with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b)(5) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC's Complaint also seeks injunctions against future securities laws violations, disgorgement of the defendants' ill-gotten gains, and civil penalties. READ the FULL TEXT Complaint. The SEC obtained a temporary restraining order enjoining the defendants from raising any additional funds from investors, and an order appointing a receiver to secure the real estate and other assets obtained with investor proceeds for the benefit of the defrauded investors. Defendants sold promissory notes to at least 900 investors throughout the country through false promises of safe investments fully secured by income-producing real estate. 

Man Sentenced for Defrauding Elderly Victims in Magazine Scam (DOJ Press Release) Raheem Oliver  pleaded guilty to conspiracy to commit mail and wire fraud and was sentenced in the United States District Court for the Eastern District of Virginia to 14 years in prison for his role in a conspiracy that defrauded elderly victims out of over $640,000. Oliver operated a magazine subscription renewal fraud scam that double or triple-bill victims, who primarily included the elderly. Oliver engaged in phone calls threatening arrest or legal action if the victims didn't pay thousands of dollars for purported renewal fees, past-due balances, fines, attorneys' fees and other legal fees, and court costs. 

Bitcoin Dealer Indicted on Money Laundering Charges; Held without Bond (DOJ Press Release) Bitcoin dealer Jacob Burrell Campos is being held without bail in connection with a 31-count Indictment in the United States District Court for the Southern District of California charging him with one count each of conducting an unlicensed money transmitting business, failing to maintain an anti-money laundering program, and conspiracy to structure international instrument transactions; and 28 counts of international money laundering. Allegedly, Burrell Campos sold approximately $750,000 worth of Bitcoin through 971 transactions with over 900 individual buyers throughout the United States. Deemed by federal prosecutors to be a Bitcoin "exchanger," Burrell Campos' activities allegedly constituted a "money transmitting business,"  for which he was purportedly required to register with the Department of Treasury, and comply with all anti-money laundering requirements, including reporting suspicious cash transactions. Also, Burrell is charged with the alleged transmission of 28 wire transfers totaling over $900,000 from his US bank a Taiwan bank account in the name of Bitfinex, a crypto-currency exchange located in Hong Kong.  Finally, Burrell was involved with allegedly smuggling over$1 million in U.S. dollars purportedly into the United States from Mexico, in amounts slightly less than $10,000, in order to avoid the currency reporting requirements.  

Chancery Court Denies TRO After Alleged Defamation To SEC And FINRA ( Blog) Whatever the reason, you leave your broker-dealer for another firm. It may be amicable. It may not. According to industry lore as related around the office water cooler, regardless of how warm and fuzzy the parting is, your former employer will launch a multi-pronged offensive aimed at jamming you up, stealing your clients, and having a court issue a TRO against you and your new employer. Setting aside the dubious wisdom dispensed around the water cooler, TROs can, in fact, be devastating -- which is why courts are not so quick to grant them. In today's featured lawsuit, we got a Complaint filed in the Delaware Court of Chancery, and the Plaintiffs are seeking a TRO because they say that they've been libeled and slandered before the Securities and Exchange Commission, and FINRA got roped into the mess, and there's no end in sight for the defamation and it has to be stopped before the trial begins. 

Dutch National Sentenced to 17 Years for Multiple Fraudulent Investment Schemes (DOJ Press Release) After a three-day bench trail in the United States District Court for the Southern District of Illinois, Pieter Roor a/k/a Pedro Dispenza was convicted on two counts of wire fraud and one count of conspiracy to commit wire fraud and sentenced to 17 years in federal prison, ordered to pay in excess of $900,000 in restitution to his known victims and to forfeit his Dutch home and $3.2 million in fraudulent proceeds. From 1998 to 2010, Roor and his then-wife, Heleen Potman, operated a series of internet-based Ponzi schemes in the form of high-yield investment opportunities through the likes of Oxford Savings Club, AceInvest, MiAmigo Services, Dollar Dazzler, X-Wire, Private Clearing Brokers, the Happy Society, and We Let Your Money Grow. Roor and Potman routed investor's money globally through multiple PayPal accounts, on-line currency accounts such as eGold and eBullion, and bank accounts in Latvia, Germany, The Netherlands, Great Britain, the United States, Belize, and Egypt. In 2015, Potman pled guilty to her role in the conspiracy and was sentenced to five years in prison. After serving  approximately one year in federal custody awaiting the resolution of her case, Potman was transported back to the Netherlands to serve the remainder of her sentence.

New York Attorney Sentenced to 18 Months' Imprisonment for Securities Fraud and Wire Fraud Conspiracies, and Ordered to Pay More Than $10 Million in Restitution / Evan Greebel Conspired with Martin Shkreli to Steal Millions of Dollars from a Biopharmaceutical Company and Conceal the Scheme (DOJ Press Release) Following  an 11-week jury trial, former Katten Muchin Rosenman LLP partner and outside counsel to biopharmaceutical company  Retrophin Inc. Evan Greebel was convicted for his role in two interrelated fraud schemes with Retrophin CEO Martin Shkreli and others, in which Greebel, Shkreli and others stole millions of dollars in cash and stock from Retrophin and manipulated the price and trading volume of Retrophin stock. Specifically, Greebel was found to have negotiated and prepared so-called settlement agreements with various of the defrauded investors  in Shkreli's hedge funds, MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare), which caused Retrophin to reimburse them more than $2 million in cash and stock.  Greebel also arranged for other defrauded investors to enter into sham consulting agreements with Retrophin as a means to settle liabilities owed by Shkreli and the hedge funds. Further, Greebel and Shkreli defrauded Retrophin investors by attempting to control illegally the price and trading volume of Retrophin's stock and by coneealing Shkreli's beneficial ownership and control of most of Retrophin's free-trading shares. Greebel was sentenced in the United States District Court for the Eastern District of New York to 18 months' imprisonment for conspiracy to commit wire fraud and conspiracy to commit securities fraud, to be followed by three years' supervised release; and ordered to pay $116,462.03 in forfeiture and $10,447,979 in restitution. 

Two Sentenced To Federal Prison For Investment Fraud (DOJ Press Release) Leone Alfano La Cava pled guilty to and Viktoriya Johnson was found guilty by a Jury in the United States District Court for the Middle District of Florida to wire fraud and conspiracy to commit wire fraud. La Cava was sentenced to 8 years and 1 month in prison, Johnson to 3 years and 10 months in prison, and both were ordered to forfeit four properties and two luxury vehicles. The pair had defrauded at least 85 Italian investors out of over $5 million in a scam in which La Cava solicited individuals, in Italy, to purchase real estate in Orange County that he claimed would generate guaranteed rental income. In fact, those properties either did not exist, were never owned by La Cava, Johnson, or a firm that they referenced, or had already been sold to another investor. La Cava and Johnson used portions of the funds for their own personal use.