California man who falsely claimed ties to Moroccan Royal Family pleads guilty to $10 million dollar advance fee fraud scheme (DOJ Release)Chicago Investment Manager Indicted on Fraud Charges for Allegedly Swindling Money From Women He Met Online (DOJ Release)Two People Indicted For $30 Million Dollar Fraud Scheme Involving Blockchain Technology Company (DOJ Release)What exactly to make of the Barron's article about Orion being listed for sale by Raymond James for $1.8 billion -- and how it boils down to 'when', not if (RIABiz.com by Oisin Breen)SEC Charges Construction Management Consulting Company and Former Employees with Accounting Fraud (SEC Release)Former Congressman Christopher Collins Sentenced For Insider Trading Scheme And Lying To Federal Law Enforcement Agents (DOJ Release)In the Matter of the Application of TMR Bayhead Securities, LLC For Review of Disciplinary Action Taken by FINRA (Opinion, SEC, '34 Act Release 88006; Admin. Proc. File No. 3-18869)
[H]assan Ra El operated a scheme to defraud business owners across the country who were seeking loans. El claimed that he was a wealthy investor and a member of the Moroccan Royal Family. El fraudulently claimed that he had access to Moroccan Royal Family funds that would be used to fund business loans. El created fraudulent documentation showing that insurance companies were offering default insurance policies on the loans. El convinced prospective loan applicants that they had to pay default insurance fees, typically 10% of the loan amount, before the loans would fund. When the loans failed to fund, El used fees from later loan applicants to partially refund fees from previous loan applicants.In furtherance of the scheme, El created fraudulent bank statements purportedly showing that he, or companies that he controlled, had millions in bank accounts. El also created fraudulent email accounts and correspondence purportedly from insurance executives stating that loans had been approved. El used fees from loan applicants to fund his lifestyle, pay his living expenses, and to rent high-end automobiles - including a Ferrari, Range Rover and Lamborghini. El fraudulently induced victims to pay over $10 million dollars in advance fees. Neither El, nor his companies, funded any of the promised loans and loan applicants lost over $5 million dollars in the fraud scheme.Hassan Ra El, a/k/a Rasheem Harrson Crockett, 45, of Chino Hills, California was previously charged with forgery, theft by conversion, and false statements in Douglas County, Georgia, for defrauding loan clients. After his convictions in Douglas County, El formerly changed his name from Rasheem Harrson Crockett to Hassan Ra El and continued to defraud prospective business owners seeking capital.
MARCUS BEAM, who owned and controlled various companies in Chicago and the suburbs, exaggerated his financial success and the expected return on investments to fraudulently obtain money from women he met online and other investors, including a family member and a former employee, according to an indictment returned Thursday in U.S. District Court in Chicago. Beam falsely claimed that their funds would be invested in popular stocks such as Uber and Lyft, and other investment products such as gold, art, and real estate, the indictment states. In reality, Beam spent the money for his own personal benefit, including rent, auto loans, and purchases at retail stores such as Walmart and Ikea, the indictment states. The fraud scheme began in 2015 and continued until October of last year, resulting in a loss to investors of at least $500,000, the indictment states.. . .[B]eam held himself out as the owner of a Chicago investment company called Chase Private Equity LLC, which was also known as New World Capital LLC. Beam also owned and operated other companies, including a Naperville-based virtual reality company called VR 360 LLC, and Imex Energy Inc., a Bolingbrook-based brokerage firm that claimed to sell retail electricity for third parties, the indictment states.The charges allege that Beam attempted to conceal his fraud scheme by furnishing victims with account statements that misrepresented the value of their funds. Beam also made false lulling statements to investors for why their money could not be paid back as requested, the indictment states. Some of the money allegedly misappropriated by Beam came from investors' retirement accounts.
In 2003, Manor co-founded and managed a hedge fund based in Toronto, Canada. In connection with his work at that hedge fund, Manor pleaded guilty in Canada to one count of transferring monies in breach of trust and one count of disobeying a court order. He was sentenced to four years in prison.Following his release from prison, Manor founded a business, CG Blockchain Inc., and began creating a product called ComplianceGuard, which was purportedly designed provide hedge funds with a blockchain-based auditing tool. While raising money for CG Blockchain, Manor hid his true identity and criminal past from investors and others by using a variety of aliases, including "Shaun MacDonald." He also changed his appearance by darkening his hair and growing a beard.Manor secured a significant portion, if not all, of the initial seed money in CG Blockchain from a close family member. In order to conceal the source of this money, Manor recruited Pardo to act as a conduit for the money. The defendants misrepresented to potential CG Blockchain investors that Pardo was an independently wealthy investor who provided millions of dollars in seed money to CG Blockchain.The defendants also misrepresented that 20 hedge funds were using ComplianceGuard and were each paying CG Blockchain a $1 million yearly fee. In reality, none of the 20 hedge funds paid fees to CG Blockchain, and many of the hedge funds did not receive or use ComplianceGuard at all.In 2017, CG Blockchain launched an "Initial Coin Offering" (ICO), and began marketing its new product - "Blockchain Terminal" - to potential investors. CG Blockchain described Blockchain Terminal as a computer terminal that allowed hedge funds and financial institutions to trade and manage cryptocurrency. Manor actively marketed the token to investors, while failing to disclose his true identity or his role at CG Blockchain. The defendants also misrepresented to ICO investors that the Blockchain Terminal had "Actual Clients" and was "installed at 20 hedge funds."In 2018, CG Blockchain publicly announced that it had raised $30 million from its ICO. Following the ICO, CG Blockchain investors learned of Manor's true identity and criminal past. When confronted by an investor, Manor admitted that he had hidden his real identity and criminal past because disclosure of that information would have resulted in "the company being destroyed."
[B]etween August 2017 and September 2018, the defendants marketed and sold digital asset securities in a purported effort to develop technologies for hedge funds and other investors in digital assets. As alleged, Manor, a resident of Toronto, Canada, darkened his hair, grew a beard, and used aliases to hide his identity and conceal the fact that he had served a year in prison after pleading guilty to criminal charges arising from the collapse of a large Canadian hedge fund. According to the complaint, Manor portrayed his New Jersey-based associate Edith Pardo as the owner of the businesses, and presented himself as an employee of hers named "Shaun MacDonald." Manor allegedly admitted to certain investors that he concealed his identity because its disclosure would result in "the company being destroyed." The complaint alleges that the defendants claimed to have 20 hedge funds testing technology to record transactions on a distributed ledger or blockchain. In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it.
[I]n or about June 2017, CHRISTOPHER COLLINS, who, in addition to serving on Innate's Board of Directors, was also one of Innate's largest shareholders, participated in a scheme to commit insider trading. Specifically, on or about June 22, 2017, CHRISTOPHER COLLINS learned that MIS416 - a multiple sclerosis drug that Innate was developing - had failed a critical drug trial that was meant to determine the drug's clinical efficacy (the "Drug Trial"). The negative Drug Trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, CHRISTOPHER COLLINS was obligated to keep the Drug Trial results secret until Innate publicly released them. Instead, in breach of those duties, CHRISTOPHER COLLINS tipped his son, Cameron Collins, who was also a substantial Innate shareholder, so that Cameron Collins could make timely trades and tip others before Innate publicly released the Drug Trial results. Cameron Collins traded on the inside information and passed it to the father of his fiancee, Stephen Zarsky, as well as to three individuals not named in the Superseding Indictment ("Individual-1," "Individual-2," and "Individual-6"), so that they could utilize the information for the same purpose. Zarsky, in turn, traded on the information and used it to tip three more individuals not named in the Superseding Indictment ("Individual-3," "Individual-4," and "Individual-5,") so that they too could engage in timely trades in Innate stock. All of the trades preceded the public release of the negative Drug Trial results.In total, these trades allowed Cameron Collins and Zarsky, and Individual-1 through Individual-6, to avoid over $768,000 in losses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public.The Drug Trial ResultsIn or about October 2014, Innate initiated a Phase 2B clinical trial of its primary drug, MIS416. Successful completion of the Drug Trial was a necessary prerequisite to the commercialization of MIS416. Because Innate had no other significant products in development, its stock price was tied to the success of MIS416.The Drug Trial was widely expected to be completed around the summer of 2017. For example, on or about June 9, 2017, Innate's chief executive officer ("CEO") sent various individuals, including CHRISTOPHER COLLINS, an email stating that "the delivery date for [the] review and 'verdict' " of the Drug Trial "will  occur at COB on US Thursday June 22nd." As the summer progressed, individuals within Innate remained optimistic that MIS416's Drug Trial results would be positive. The initial Drug Trial results were made available by trial administrators to Innate's CEO on June 22, 2017. These results established that MIS416 lacked therapeutic value in the treatment of multiple sclerosis. The results were not publicly released at that time. Instead, they were released publicly on June 26, 2017, after the U.S. markets had closed (the "Public Announcement"). Innate's stock price subsequently crashed, dropping 92% on the first trading day following the Public Announcement.Dissemination of the Drug Trial ResultsOn or about June 22, 2017, at approximately 6:55 p.m., Innate's CEO sent an email describing the Drug Trial results to the company's Board of Directors, including CHRISTOPHER COLLINS. The email explained to Innate's Board of Directors for the first time that the Drug Trial had been a failure. The email began, in part, "I have bad news to report," and continued to explain that "the top line analysis of the 'intent to treat' patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] 'clinical failure.' " The email continued, "Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo," and concluded by stating, "No doubt we will want to consider this extremely bad news. . . ."At the time CHRISTOPHER COLLINS received this email, he was attending the Congressional Picnic at the White House. At 7:10 p.m., CHRISTOPHER COLLINS replied to the email, stating, in part, "Wow. Makes no sense. How are these results even possible???" After responding to the Innate CEO's email, CHRISTOPHER COLLINS called his son, Cameron Collins. They traded six missed calls between 7:11 p.m. and 7:15 p.m.. At 7:16 p.m., CHRISTOPHER COLLINS and Cameron Collins spoke for more than six minutes. During that six-minute phone call, CHRISTOPHER COLLINS told Cameron Collins, in sum and substance, that MIS416 had failed the Drug Trial.Trading and Tipping by Cameron Collins and ZarskyCameron Collins began placing orders to sell his Innate shares the morning after he received inside information from CHRISTOPHER COLLINS. Between the morning of Friday, June 23, 2017 and the close of the market on Monday, June 26, 2017, Cameron Collins sold approximately 1,391,500 shares of Innate stock. These sales allowed Cameron Collins to avoid approximately $570,900 in losses.Furthermore, after learning the Drug Trial results from CHRISTOPHER COLLINS, on or about the night of June 22, 2017, Cameron Collins provided the Drug Trial results to at least the following three sets of individuals so that they could trade in advance of the Public Announcement: (1) his fiancee, Individual-1; (2) Zarsky and Zarsky's wife, Individual-2; and (3) Cameron Collins's friend, Individual-6. Collectively, these individuals avoided approximately $186,620 in losses as a result of their trading on inside information.On or about the morning of June 23, 2017, Zarsky provided the negative Drug Trial results that he had learned from Cameron Collins and Individual-1 to at least the following individuals, among others, or otherwise caused them to trade or attempt to trade in advance of the Public Announcement: (1) his brother, Individual-3; (2) his sister, Individual-4; and (3) his longstanding friend, Individual-5. Collectively, these individuals avoided approximately $10,900 in losses as a result of their trading on inside information.False Statements to the FBIOn or about April 25, 2018, Special Agents from the FBI separately interviewed CHRISTOPHER COLLINS, Cameron Collins, and Zarsky. During these interviews, and as detailed in the Superseding Indictment, CHRISTOPHER COLLINS, Cameron Collins, and Zarsky made false statements to the FBI to cover up their participation in the insider trading scheme.
As the Hearing Panel recognized, Roberts's claim that TMR Bayhead solicitedsubscriptions for the securities of a single issuer was inconsistent with his prior representations to FINRA. Roberts represented to FINRA repeatedly in 2014 that he was seeking business opportunities with multiple entities. Although Roberts claimed at the hearing that PDA Verticals, Fountainhead, and Medical Wizards were actually a single issuer, the Hearing Panel "did not find this credible, particularly in light of Roberts' failure to substantiate his claim with any supporting documentation." In any case, Roberts's representations to FINRA discussed business opportunities with other entities as well. And in a 2016 email, Roberts described TMR Bayhead as "an advisory business." We also agree with the Hearing Panel that, despite "numerous opportunities" to "gather and obtain documentation to support Respondent's claimedsingle issuer exemption," Roberts "failed to provide a single document to demonstrate the purported limited nature of Respondent's business operations" during the relevant period.The only evidence Roberts produced to support his contention that TMR Bayhead's business was limited to soliciting subscriptions for the securities of a single issue was a letter from Roberts's brother asserting that TMR Bayhead was PDA Verticals's broker and an undated and unsigned form engagement agreement between the two entities. However, these documents do not show that TMR Bayhead's business was limited to a relationship with PDA Verticals.
[I]n Sharemaster, we ordered FINRA to remit a $1,000 fine that had been imposed on a firm for its failure to file annual reports that complied with Exchange Act Section 17(e) and Rule 17a-5 because the "Hearing Panel did not explain why it was appropriate to fine Sharemaster for filing its 2009 annual report late under the circumstances." Although the fine had been imposed in the Notice of Suspension, the Hearing Panel "did not mention the late fee at all despite Sharemaster's argument that the $1,000 late fee assessed in the Notice of Suspension should be withdrawn." We ordered FINRA to remit the $1,000 because Exchange Act Section 15A(h)(1)(C) requires that FINRA's determination to impose a disciplinary sanction " 'be supported by a statement setting forth . . . the sanction imposed and the reasons therefor,'" and the Hearing Panel "did not comply with Exchange Act Section 15A(h)(1)(C)." As in Sharemaster, the Notice of Suspension sent to TMR Bayhead assessed a fine of $3,000 ($1,000 for each fiscal year), but the Hearing Panel did not mention the fine in its decision. We order FINRA to remit the $3,000 fine to TMR Bayhead for the same reasons as in Sharemaster.Sharemaster, however, does not support overturning the suspension. In Sharemaster, the firm was also suspended until it filed compliant annual reports. FINRA lifted the suspension after the firm filed annual reports that complied with Rule 17a-5. TMR Bayhead is subject to the same suspension as was the firm in Sharemaster. Accordingly, Sharemaster provides no support for TMR Bayhead's argument that the suspension here is excessive or oppressive.
Hopper joined FINRA in 2004 as an Enforcement Attorney, and was Director in the Washington D.C. office from 2005 until 2011, when she was promoted to Vice President in charge of the Regional Enforcement program. In 2016, she was named Senior Vice President and Deputy Head of Enforcement before being named Acting Head of Enforcement in September 2019.Prior to joining FINRA, from 2000 to 2004, Hopper worked at Legg Mason Wood Walker, Inc. on legal and compliance matters. She began her career as a litigation attorney in private practice. Hopper holds a Juris Doctorate from the University of Toledo College of Law and earned a B.A. from Hillsdale College.