Securities Industry Commentator by Bill Singer Esq

Tito's Handmade Vodka Says It's No Good for Corona Virus Sanitizer

Founder of Russian Bank Charged with Tax Fraud / Allegedly Concealed $1 Billion in Assets and Income when Renouncing U.S. Citizenship (DOJ Release)

Part-owner and chief financial officer of Ayudando Guardians sentenced to 20 years in prison for $11 million financial fraud scheme / Law enforcement searching for two fugitive co-defendants who did not appear for sentencing (DOJ Release)

SEC Charges Three Woodbridge Sales Agents Who Sold and Assisted in Selling Approximately $444 Million in Woodbridge Securities to Retail Investors (SEC Release)

FINRA Arbitrators Award Damages To Customer But Offset With Award to Stockbroker (BrokeAndBroker.com Blog)

FINRA Arbitrators Award Punitive Damages to Customer. In the Matter of the Arbitration Between Cynthiua A. Burch, Claimant, v. Huntleigh Securities Corporation, Respondent (FINRA Arbitration Decision)

According to the indictment, Oleg Tinkov was the indirect majority shareholder of a branchless online bank that provided its customers with financial and bank services.  The indictment alleges as a result of an initial public offering (IPO) on the London Stock Exchange in 2013, Tinkov beneficially owned more than $1 billion worth of the bank's shares.  The indictment further alleges that three days after the IPO, Tinkov renounced his U.S. citizenship - a taxable event requiring Tinkov to report to the IRS the constructive sale of his worldwide assets, report the gain on the constructive sale of those assets to the IRS, and pay tax on such gain to the IRS.  Although Tinkov allegedly beneficially owned more than $1 billion of TCS shares at the time of his expatriation through a British Virgin Island structure, the indictment charges that Tinkov filed a false 2013 tax return with the IRS that reported income of less than $206,000, and a false 2013 Initial and Annual Expatriation Statement reporting that his net worth was $300,000.

Moore pleaded guilty on July 9, 2019, and Susan Harris pleaded guilty on July 11, 2019.  In their plea agreements, Harris and Moore admitted to conspiracy, mail fraud, aggravated identity theft, money laundering, and conspiracy to commit money laundering.  Susan Harris was the 95% owner of Ayudando and acted as president; Moore was a 5% owner and acted as chief financial officer of Ayudando.  They engaged in a decade-long pattern of sophisticated criminal conduct from November 2006 to July 2017.  This included unlawfully transferring money from client accounts to a comingled account without any client-based justification as part of the fraud scheme and money laundering conspiracy.  Susan Harris and Sharon Moore wrote and endorsed numerous checks, often of more than $10,000, from these comingled accounts to themselves, family members, cash, and other parties where payment would benefit their families. The stolen funds were used to fund a luxury lifestyle and were used to purchase homes, vehicles, luxury RVs and cruises, as well as a private box at "the Pit" at the University of New Mexico. The stolen funds were also utilized to pay off more than $4.4 million in American Express charges incurred by the defendants and their families.

In order to conceal the fraud scheme, Moore created and sent forged and fraudulent reports to the Veterans Administration for fiduciary clients.  She falsified bank statements and annual reports to disguise the theft of money from client accounts. Susan Harris also took acts to maintain Ayudando's appearance of legitimacy, including submitting a proposal to the New Mexico Office of Guardianship which contained numerous false representations, including a false claim that another defendant was a nationally certified guardian at the time of the submission.  

William Harris pleaded guilty on June 25, 2019.  In his plea agreement, he admitted to acting in concert with his co-defendants to cheat the United States government out of money and property.  William Harris admitted that he knew that Moore was siphoning payments to clients from the Department of Veterans Affairs and Social Security Administration and using the money to benefit herself, Susan Harris, and their co-conspirators.  William Harris specifically admitted receiving, endorsing, and depositing dozens of checks drawn on Ayudando accounts for his own personal benefit. 

William Harris also admitted to his involvement in a money laundering scheme.  He acknowledged using an Ayudando corporate credit card for personal expenses, knowing that it would be paid for with client money.  He admitted his role in a loan application for the stated purpose of expanding the Ayudando business with the actual intent of using the money to "pay back" clients whose money they took without authorization.

The Complex Assets Unit of the U.S. Marshals Service is continuing to work to locate assets and funds that can be seized and returned to victims through the forfeiture and restitution process. Additionally, the VA and SSA are working to provide reimbursement of stolen government benefits to those Ayudando clients that received benefits from those agencies, consistent with federal law and regulations.

. . .

A fourth defendant, Craig M. Young, who is the son of Susan and William Harris, pleaded guilty on November 12, 2019, to conspiracy and conspiracy to commit money laundering.  He is currently out of custody awaiting sentencing at a future date.  In light of Susan and William Harris' fugitive status, Judge Vázquez added electronic monitoring to Craig Young's conditions of release.

According to the SEC's complaint, from approximately June 2014 to December 2017, Church-Koegel, Goldman, and Walker sold and assisted others in selling approximately $444 million in Woodbridge securities in unregistered transactions to thousands of predominantly elderly investors. The complaint alleges that Church-Koegel, Goldman, and Walker were among Woodbridge's largest revenue-producing internal sales agents, and Church-Koegel and Goldman eventually became "team leaders," who assisted sales agents throughout the United States. As alleged, the defendants reaped significant transaction-based compensation from these unlawful sales, with Church-Koegel and Goldman receiving more than $1 million each, and Walker receiving more than $750,000. The SEC's complaint, filed in the Southern District of Florida, charges Church-Koegel, Goldman, and Walker with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934 and seeks disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against each of them.

• Securities Industry Commentator
• Bill Singer