Securities Industry Commentator by Bill Singer Esq

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North Suburban Man Pleads Guilty to Orchestrating $9.6 Million Fraud Scheme (DOJ Release)

Montana Broker Found Guilty In Multimillion Dollar Fraud Scheme (DOJ Release)

Financial Adviser Sentenced To 30 Months In Prison For Defrauding Clients In Fake Investment Scheme (DOJ Release)

Grundy County Businessman Charged With Operating Ponzi Scheme (DOJ Release)

Gorodetsky admitted in a plea agreement that from 2014 to 2018 he schemed to defraud an individual of approximately $9.6 million in connection with purported stock market investments and wagers on sporting events.  Gorodetsky represented himself as a successful "day trader" who would invest the individual's money in the stock market and share in the profits, the plea agreement states.  After initially obtaining approximately $953,000 from the individual, Gorodetsky invested only $215,000 of it and pocketed the rest for his personal use, the plea agreement states.

Gorodetsky later falsely told the individual that his investments had increased to $2 million, and that the purported gains should be put toward sports wagers, according to the plea agreement.  Gorodetsky induced the individual to invest approximately $8.74 million of additional funds to wager on sports.  Gorodetsky used much of this money for purposes unrelated to sports wagering, including personal expenditures such as living expenses, travel and entertainment costs, and luxury automobiles and jewelry, the plea agreement states.  In all, Gorodetsky's fraud scheme resulted in a loss to the individual of approximately $7.1 million.

The tax offense pertains to Gorodetsky's failure to report the money he received from the individual as income on his tax returns, resulting in an approximate tax loss of more than $2.65 million.

[F]inn conspired with others in the United States and Switzerland to promote investments and loan instruments that he knew to be fictitious. Finn and his co-conspirators told victims that, for an up-front payment ranging from $100,000 to $1 million, a Swiss company known as Malom Group AG (Malom), whose name stood for "Make A Lot Of Money," would provide access to lucrative investment opportunities and substantial cash loans. The evidence showed that to effectuate this scheme, the defendant and his co-conspirators provided victims with fabricated bank documents purporting to show that Malom held hundreds of millions of dollars in overseas bank accounts, as well as documents falsely stating that Malom had previously closed similar deals. The evidence showed that when victims wired their money into an escrow account controlled by the co-conspirators, the money was released and disbursed to, among others, Finn for his own personal use. The evidence further showed that shortly before he was indicted in 2013, Finn fled to Canada, where he was arrested in 2014 and ultimately extradited back to the United States in 2018. According to the evidence presented at trial, losses to the victims from the scheme totaled approximately $4 million.       

Finn was charged together with five other defendants. Two of these defendants, Anthony Brandel and James Warras, were found guilty of conspiracy and multiple counts of wire fraud and securities fraud following a jury trial in 2015. Brandel and Warras were each sentenced to 87 months in prison, followed by three years of supervised release, on Aug. 3, 2016. A third defendant, Joseph Micelli, pleaded guilty to conspiracy to commit wire fraud and securities fraud in 2015 and was sentenced to 60 months in prison, followed by three years of supervised release, on Feb. 23, 2016.  The other two defendants, Martin Schlaepfer and Hans-Jurg Lips, remain at large outside the United States. . . .

criminal Information

https://www.justice.gov/usao-sdny/press-release/file/1199496/download

SEC Complaint

https://www.sec.gov/litigation/complaints/2019/comp24586.pdf

From 2011 until 2018, HAFEN engaged in a scheme to defraud 11 of his financial advisory clients into believing that HAFEN had access to a high-yield investment fund with guaranteed returns, which was not affiliated with the investment bank at which HAFEN worked.  On HAFEN's advice, these clients transferred approximately $1.6 million directly to HAFEN's personal bank account for investment in the purported investment fund over the years that HAFEN engaged in his fraudulent scheme.  HAFEN also created fictitious "Investor's Statements" bearing the name of a non-existent investment company purporting to detail the status of his victims' investments.  In reality, however, there was no investment fund at all; HAFEN was using the victims' funds to pay for personal expenses. 

[T]oday's Growth Consultant Inc., a Minooka-based business that purported to build or acquire websites for investors.  TGC also did business through a division known as The Income Store, which had an office in Lancaster, Penn.  From at least January 2017 to October 2019, Courtright falsely promised to provide investors with a guaranteed income stream of up to 20% of their initial investment or 50% of the website revenues, whichever was higher, according to a criminal complaint filed in federal court in Chicago.  TGC backed these guarantees through fraudulent claims that the companies were financially healthy, the complaint states. 

In reality, the payment of returns to investors was primarily funded through a Ponzi scheme, with Courtright paying early investors with money raised from later investors, the charges allege.  Courtright also spent some of the investor funds to pay his mortgage and the school tuition of a family member, the complaint states.  By December 2019 the scheme had become unsustainable, and TGC notified investors of a "moratorium" on payments of returns purportedly due to unspecified "challenges and headwinds," the complaint states.

• Securities Industry Commentator
• Bill Singer