Securities Industry Commentator by Bill Singer Esq

August 31, 2018

New York Man Is Indicted For Scamming North Carolina Victims In Investment Fraud Scheme While He Was Being Prosecuted For Similar Scam In Another State (DOJ Release)
Rudolph Carryl was indicted  in the United States District Court for the Western District of North Carolina by a federal grand jury on charges of securities fraud, wire fraud, and money laundering.  Carryl, who allegedly held himself out as an investment advisor, purportedly operated Carryl Capital Management (CCM), an investment management firm with offices in New York City.  As set forth in part in the DOJ Release:

In or about February 2015, the indictment alleges that Carryl solicited victim M.G. to give Carryl money to invest in stock on M.G.'s behalf. M.G., a retired nurse who resided in North Carolina, was also Carryl's childhood friend. Over the next couple of months, M.G. wired approximately $64,000 to an account controlled by Carryl, based on Carryl's misrepresentations that M.G.'s money would be used to purchase stocks on M.G.'s behalf. The indictment alleges that rather than purchasing any stock as promised, Carryl used much of the victim's money on personal and other unrelated expenses, and withdrew a substantial amount of it in cash. M.G. invested additional amounts with Carryl throughout 2015 and 2016.

The indictment further alleges that in or about May 2015, Carryl solicited victims W.B., a retired United States Air Force veteran, and his wife A.B.,  who resided in North Carolina, to invest approximately $350,000 in a purported investment fund being managed by Carryl (the Fund). To induce the retired couple to part with their money, Carryl claimed that he was a successful investment adviser who managed investments for the country of Saudi Arabia and that he was friends with wealthy celebrities. Carryl also lied by falsely promising that the victims' money would be invested in safe investments and that they would not lose any principal.  Carryl also told the retired couple that he was going to invest his own money in the Fund, which was not true. Furthermore, Carryl falsely claimed that if W.B. and A.B. sustained any investment losses, those would come out of Carryl's investment first, which offered further "protection" to them.

After W.B. and A.B. wired their funds to Carryl, he sent an email to the couple that purported to identify the various stocks within their portfolio, which included well-known companies.  The the indictment alleges that, contrary to his representations, Carryl did not buy all of the stocks as promised.  Instead, he used much of W.B. and A.B.'s funds on personal and other unrelated expenses and to make substantial cash withdrawals. 

In the months that followed, despite repeated requests by certain victims for statements reflecting the status of their investments, Carryl never provided any statements, and instead made numerous false claims that their investments were doing well and making money. 

Carryl also never disclosed to his victims that he had been the target of a federal criminal investigation, nor that he later pleaded guilty to wire fraud charges related to a separate investment scheme in another state.  In fact, the indictment alleges that, while Carryl was falsely telling W.B. of his intention to liquidate the victim's investment so that Carryl could retire and travel the world, Carryl was awaiting sentencing in federal court.

Carryl was sentenced in New York on or about August 9, 2017, to 12 months and one day in prison.  After his sentencing but before he reported to the federal Bureau of Prisons (BOP) to carry out his sentence, Carryl continued to be in contact with W.B., assuring W.B. that his investments were doing well, all the while failing to disclose any information about his conviction or his impending report date to BOP.
In any event Norbert or Habib, or, you know, whoever -- whomever -- I'm just going to go with Norbert because I've never known anyone by that name and it has a lovely ring to it. Norbert, you truly don't need to apologize for offering me this wonderful opportunity to obtain the unclaimed millions that were abandoned at a reputable financial security institution by an unnamed deceased person. If you know the dearly departed, please send my condolences to his family -- and, sure, you have my permission to do so in a top secret fashion in keeping with the nature of your proposed transaction. As to that reputable financial security institution, excuse my hesitation, but after some 37 years working on Wall Street, I can't quite think of any financial institution that I would honestly call "reputable," but why quibble over an adjective when there's so much unclaimed money sitting around in the dead guy's account, he should only rest in peace but maybe not directly on my money. If you can, scooch him over just a bit, okay? Wash your hands afterwards.

In the Matter of Donald F. ("Jay") Lathen, Jr., Eden Arc Capital Management, LLC, and Eden Arc Capital Advisors, LLC (Initial Decision on Equal Access to Justice Act Application; Initial Decision Release No. 1259; Administrative Proceeding File No. 3-17387)
On August 16, 2017,  SEC Administrative Law Judge Jason S. dismissed the proceeding against Donald F. Lathen, Jr., Eden Arc Capital Management, LLC (EACM), and Eden Arc Capital Advisors, LLC (EACA), finding that they had committed no violations of the securities laws. On December 5, 2017, EACM and EACA filed an application under the Equal Access to Justice Act (EAJA)for the recovery of legal fees and expenses. Although the ALJ found that the Applicants meet EAJA's eligibility requirements, he also found that the Division's position in the litigation was substantially justified, and , accordingly, denied the application. READ the FULL TEXT Initial Decision.

(SEC Litigation Release No. 24251)
In a Complaint filed in the United States District Court for the Northern District of California, the SEC charged Amer Deeba, the former Chief Commercial Officer of Qualys, Inc. (a cloud security and services company) with insider trading by tipping his brothers in advance of the company's announcement of poor financial results, thus helping them avoid losses of over half a million dollars. Although Deeba made no profits from his conduct, his brothers collectively avoided $581,170 in losses. Without admitting or denying the allegations, Deeba settled the charges by agreeing to a bar from serving as an officer or director of any SEC-reporting company for two years; to the entry of a final judgment permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and to a $581,170 penalty.READ the FULL TEXT Complaint