Convicted Burglar Exposed - Texas and Washington Stop Criminal Promoting Fraudulent Cryptocurrency Software Scam (TSSB Release)Four Alleged Stock Defrauders from Georgia, New York and Texas Indicted for "Pump and Dump" Scheme Involving Three Public Companies (DOJ Release)SEC Charges Four Individuals in a Fraudulent Manipulation and Kickback Scheme (SEC Release)Northampton County Man Charged with Defrauding Family and Friends Out of Over $1 Million by Selling Them Worthless Stock / The defendant allegedly swindled more than 50 victims, including former fraternity brothers (DOJ Release)SEC Charges Purported Hedge Fund Manager with Fraud (SEC Release)SEC Charges Orchestrator of Cryptocurrency Offering Fraud (SEC Release)SEC Charges Unregistered Broker with Selling Securities in Ponzi Scheme (SEC Release)Commission Charges South Carolina Resident in Pump-And-Dump Scheme (SEC Release)SEC Charges Louisiana Man with Defrauding Investors in Foreign Currency Trading Scheme (SEC Release)SEC Charges Texas-Based Company and Founders with Defrauding Dozens of Investors (SEC Release)Morgan Stanley Agrees to Pay $5 Million for Reg SHO Violations in Prime Brokerage Swaps Business (SEC Release)
Although Shigaki may come across as the head of a high-tech company dealing in a cutting-edge, sophisticated cryptocurrency operation, the Texas order alleges he is actually a criminal. In 2008, Shigaki allegedly pleaded guilty to felony burglary and was sentenced to confinement in jail. The charges arose after he was accused of burglarizing a shopping mall, causing damages to businesses and stealing merchandise from a retail store. According to the Texas order, in 2009, he pleaded to a second felony burglary and was sentenced to serve four months in prison.It doesn't stop there. In 2015, Shigaki and his co-defendants were allegedly sued for sabotaging a medicinal cannabis business by hacking into social media accounts and usurping trademark rights. Shigaki and his co-defendants were ordered to pay the Plaintiff over $3 million in damages and attorney fees, according to the Texas order. Also, in 2015, Shigaki was allegedly sued by a former business partner and found liable for failing to honor his professional commitments to a company involved in the resale of gift cards.According to the Texas order, less than one year after the conclusion of the civil lawsuit, Shigaki was charged with manufacturing THC and conspiracy to unlawfully manufacture DMT. He pleaded guilty to a felony and began serving a two-year probated sentence in December 2017.The federal government has also filed two tax liens relating to Shigaki, according to the Texas order. Shiganki is also allegedly subject to three state tax liens due to his failure to pay child support.Nevertheless, Shigaki has been marketing a high-tech investment program to Texas residents through social media, Craigslist and the website https://trademining.io. He has been directing investors to open and fund a bitcoin account and then interface with the "Trade Engine" - software that supposedly uses API to interface with cryptocurrencies. The Trade Engine thereafter employs complex metrics to identify and trade the cryptocurrencies, according to the Texas order. Shigaki is allegedly telling investors the Trade Engine is highly successfully - generating daily gains that average from 0.5 percent up to 2.73 percent and 3700 percent during the latest bull run.According to the Texas order, the high-tech scheme is a ruse. Shigaki is accused of concealing his checkered past from potential clients. He also allegedly claims to now work with a "partner" who maintains the Trade Engine in the Netherlands, but is not identifying the "partner" or the location of the Trade Engine. According to the order, other aspects of the program are shrouded in mystery.Still, Shigaki is accused of attempting to add legitimacy to the scheme and satisfy the concerns of potential investors by suggesting he is working with a licensed investment advisor and licensed fiduciary. It's misleading information, according to the Texas order - although the person was previously registered, he only held his license from around October 2015 to around October 2016.Shigaki and TradeMining are not registered to sell securities in Texas. The investments tied to the Trade Engine have not been registered for sale in Texas. They are also illegally recruiting resellers - salespersons to market the investments tied to the Trade Engine - claiming the resale program is the perfect business for risk-averse and budget-conscious entrepreneurs.Shigaki and TradeMining have the right to challenge the Texas and Washington orders.
[T]he defendants and others sought to generate illegal proceeds by manipulating the stock of three public companies: AI Document Services, Inc. (ticker symbol AIDC), Creative Edge Nutrition, Inc. (ticker symbol FITX), and Interactive Health Network (ticker symbol IGRW). This manipulative activity was designed to make it falsely appear that trading in those stocks was the result of free and fair market forces, and to conceal the activity from the U.S. Securities and Exchange Commission (the "SEC").The Indictment further alleges that, among other things, the defendants planned and took various fraudulent actions, including disguising their share ownership in these companies, paying large bribes to stockbrokers for prearranged purchases of AIDC, FITX, and IGRW stock on behalf of the brokers' unknowing customers, hiring promoters to distribute misleading email newsletters regarding these companies to numerous potential investors throughout the United States, and causing the public companies to issue nationwide press releases to conceal the manipulative activity. The schemers intended to generate at least $15 million in proceeds from this scheme, which was implemented from mid-2014 through approximately February 2016, when the SEC suspended trading in these stocks.Court documents also reveal that the defendants and their co-schemers had worked together on previous stock deals, and each performed different roles in the scheme. Watkins himself explained that he was on the stock side of the deals, and Richardson much of the negotiating. Wolff and Heil, in turn, supplied the public companies that the schemers used in the manipulations and assisted with some of the paperwork. As alleged, all of the defendants owned or controlled a substantial number of shares of AIDC, FITX, and IGRW stock and were prepared to sell them at a large profit into the manipulated markets to unsuspecting investors.
[F]om at least November 2014 through February 2016, the defendants sought to manipulate the volume and price of the common stock of three microcap issuers, AI Document Services, Inc. (AIDC), Creative Edge Nutrition, Inc. (FITX), and Interactive Health Network (IGRW). The complaint alleges that the defendants entered into an agreement to pay kickbacks to a stock promoter who they believed was aligned with a network of corrupt registered representatives willing to purchase large volumes of the companies' stock through pre-arranged matched orders in order to create an illusion of genuine investor demand. According to the complaint, the stock promoter was actually an undercover agent with the Federal Bureau of Investigation. The complaint further alleges the defendants shared nonpublic corporate press releases with the undercover FBI agent to coordinate the release of news with the illegal matched orders. The SEC previously suspended trading in the securities of the three companies.
[B]etween September 2010 and July 2020, the defendant stole more than $1,000,000 from more than 50 family members and friends, including former fraternity brothers, by claiming that his company, McCabe Properties, Inc., owned close to two million shares of something he called "founders shares" of a well-known pharmaceutical company. He offered those "shares" to his victims by selling them a corresponding number of shares of McCabe Properties, Inc.As alleged, McCabe sold this investment to his victims at a price of between $2.60 and $2.70 per share, which would have represented a significant discount over the actual share price for shares of the pharmaceutical company. In reality, however, McCabe Properties, Inc. had no assets whatsoever. The defendant spent the more than $1 million he took in from his victims, leaving them with nothing but worthless shares of McCabe Properties, Inc.McCabe was able to deceive his victims over the span of the scheme by allegedly: (a) preparing and shipping to them shares of McCabe Properties, Inc. that purported to correspond to the number of shares of the pharmaceutical company; (b) falsely informing victim investors that their "founders shares" could only be sold once the pharmaceutical company was acquired by another company; (c) forwarding press releases, financial analysis reports, and news stories on the status of the pharmaceutical company to the victim investors; (d) falsely representing to clients that the nonexistent "founders shares" owned by McCabe Properties, Inc. had been purchased from a private venture capital firm that had ties to a known securities fraudster, making selling the "founders shares" problematic; and (e) communicating with clients by email and telephone and providing them with false reasons for an inability to sell the "founders shares."
[F]rom 2010 through 2020, McCabe raised approximately $1 million from investors, including friends and family members, through fraudulent sales of investments in McCabe Properties. As alleged in the complaint, McCabe falsely represented to investors that McCabe Properties held stock in an unaffiliated pharmaceutical company, and that investors would reap significant profits as a result of this ownership. The complaint alleges that McCabe sent investors stock certificates to document their purchase of shares in McCabe Properties and misrepresented to certain investors that there was limited availability of shares for purchase. McCabe allegedly spent investor funds on personal expenses.
[T]he Commission, in February 2018, suspended trading in the three microcap companies, Cherubim Interests, Inc., PDX Partners, Inc., and Victura Construction Group, Inc., because of concerns about the adequacy and accuracy of information in the marketplace resulting from false and misleading statements made in one of the schemes.The SEC's complaint alleges that between November 2017 and February 2018, Patrick Jevon Johnson, CEO of Cherubim and Victura Construction, and board member Charles Everett fabricated debts owed by the companies. According to the complaint, a third party acquired the bogus debt, extinguished it in exchange for Cheribum and Victura shares and quickly sold them into the public market without registering the sales with the SEC or an exemption from registration. According to the SEC's complaint, Everett received kickbacks for his role in the scheme.The SEC's complaint further alleges that soon after these fraudulent debt exchanges, Johnson and Frank Ekejija, the principal of purported private equity fund NVC Fund, LLC, also "pumped" the prices of the stock of Cherubim, PDX Partners and Victura Construction. The complaint alleges that Ekejija worked with Johnson to prepare and issue false and misleading public statements about the value and integrity of assets NVC Fund would be selling to the companies, which caused the stock prices of the companies to rise.
Eaton was a certified financial planner, doing business under the name Heritage Financial Group, with an office in Acton. In that capacity, Eaton invested his clients' funds in securities and various insurance products, including life insurance policies and annuities. From at least 1999 through October 2019, Eaton stole millions of dollars from clients' accounts. He did so primarily by selling securities, insurance policies and annuities in clients' accounts, and causing the proceeds to be sent to accounts he owned or controlled.As part of his scheme, Eaton forged clients' signatures on checks and documents, or caused clients to sign documents by falsely representing that the proceeds of transactions would be used for the clients' benefit. Eaton also falsely represented to the brokerage firm with which he was affiliated, and to insurance companies, that the transactions he requested on his clients' behalf were for the benefit of those clients. In fact, Eaton caused proceeds to be sent to his own credit card accounts to pay his personal and family expenses, and to his home equity line of credit. In order to avoid detection, Eaton defrauded clients he knew were unlikely to notice what he had done, either because they were elderly or in poor mental or physical condition.
[S]ince at least 2015, Rand Heckler, a former broker who was barred by FINRA in 2019, solicited over $700,000 in investments from an elderly investor and the investor's son by claiming to manage a successful hedge fund through his company, Rand Heckler, Inc. The complaint alleges that, in reality, Heckler and Rand Heckler, Inc. never managed a hedge fund and never invested the funds he received. Instead, Heckler allegedly misappropriated most of these funds to pay for his personal expenses, including mortgage payments, car payments and a country club membership. Further, Heckler allegedly sought to conceal his scheme by, among other things, sending allegedly phony account statements and trade confirmations to the investor and his son. According to the complaint, when the investor's son sought to redeem part of his father's investments, Heckler solicited a new $100,000 investment from a different investor and persuaded the new investor to transfer the money to a bank account that she believed belonged to an investment firm, but in fact belonged to the first investor.
[T]homas J. Gity, a convicted felon with no professional financial industry experience, received at least $6.8 million from at least 18 investors by misrepresenting that he was a highly-profitable digital asset trader who never lost money during a trading day. As alleged in the complaint, Gity provided fake account statements to investors to create the illusion that he managed as much as $100 million in assets and generated extremely high returns, including providing one statement that purported to show returns in excess of 46% in a week. As alleged, while Gity promised investors that he would use their funds to trade digital assets and that their capital was not at risk, Gity transferred only $970,000 of the $6.8 million he received from investors into trading accounts. Gity allegedly transferred over $1.8 million of investor funds to his son and spent the remaining funds to make Ponzi-like payments to investors and on personal expenses and gambling.
convicted Ponzi-schemer Kevin Merrill raise approximately $75 million for investments in purported debt portfolios offered by Global Credit Recovery. In September 2018, the SEC charged Merrill, Global Credit Recovery, and others with operating the $345 million Ponzi-like scheme, and obtained permanent injunctions against Merrill and two individuals in September 2019. Merrill and the two other individuals pleaded guilty in a parallel criminal case to charges arising from the same misconduct.
[C]iccarelli was hired by a shareholder group that secretly controlled Rarus to promote and increase demand for Rarus stock in order for the shareholder group to sell its shares at inflated prices. According to the complaint, Ciccarelli used intermediaries he controlled to pass funds from the shareholder group to the promoters. The complaint alleges that, by using the intermediary companies, Ciccarelli concealed the shareholder group's sponsorship of the promotional campaign. According to the complaint, in exchange for arranging the stock promotion, the shareholder group paid Ciccarelli $150,000.
[T]odd W. Mixon, a Baton Rouge resident with no known financial industry experience, raised at least $576,000 by misrepresenting to investors that he had learned how to successfully trade foreign currencies and by promising investors that he would use their funds to trade foreign currencies. The SEC's complaint further alleges that Mixon provided investors with forged brokerage statements to create the illusion that Mixon's trading was extraordinarily profitable, achieving consistent monthly profits as high as 160%. In reality, as alleged, Mixon did not use investor funds to trade foreign currencies as he had promised to do, but rather spent those funds on personal travel and other expenses and to make Ponzi-like payments to investors.
[K]ranenberg and Silea falsely held themselves out to prospective investors as highly qualified business and industry professionals with a history of successful trading. According to the complaint, KS Cartel, Kranenberg, and Silea falsely guaranteed that investors would lose no more than 50 percent of their initial investment, and claimed, without any reasonable basis, that investors should expect monthly returns of 20-30 percent. The complaint alleges that they provided investors phony account statements depicting profitable trading. The complaint further alleges that Kranenberg, Silea, and KS Cartel used only a fraction of investor funds for trading and instead used most of the funds on personal expenditures and for payments of purported profits to investors.
[T]he structure of Morgan Stanley's prime brokerage swaps business resulted in violations of Reg SHO. As set forth in the order, Morgan Stanley hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps, and it separated its hedges into two aggregation units - one holding only long positions, and the other holding only short positions. According to the order, Morgan Stanley was able to sell its hedges on the long swaps and mark them as "long" sales without concern for Reg SHO's short sale requirements.The order finds that Morgan Stanley's "long" and "short" units failed to qualify for a Reg SHO exception permitting broker-dealers to establish aggregation units because they were not independent and did not have separate trading strategies. The order finds that the units had identical management structures, locations, and business purposes as well as the same strategy or objective. The order further finds that, as a result, Morgan Stanley should have netted the long and short positions of both units together or across the entire broker-dealer and marked the orders as long or short based on that netting. The order finds that the failure to do so resulted in Morgan Stanley improperly marking certain sell orders in violation of Reg SHO.
[F]rom early 2015 through the middle of 2016, in an effort to meet quarterly sales targets, regional managers at HP used a variety of incentives to accelerate, or "pull-in" to the current quarter, sales of printing supplies that they otherwise expected to materialize in later quarters. The order further finds that, in an effort to meet revenue and earnings targets, managers in one HP region sold printing supplies at substantial discounts to resellers known to sell HP products outside of the resellers' designated territories, in violation of HP policy and distributor agreements. The order finds that HP failed to disclose known trends and uncertainties associated with these sales practices. The order further finds that HP failed to disclose that its internal channel inventory ranges, which it described in quarterly earnings calls, included only channel inventory held by channel partners to which HP sold directly and not by channel partners further down the distribution chain, thereby disclosing only a partial and incomplete picture of HP's channel health.
[H]ilton failed to disclose approximately $1.7 million worth of travel-related perquisites and personal benefits it provided to executive officers from 2015 through 2018. The perquisites included the CEO's personal use of Hilton's corporate aircraft and executive officers' hotel stays. The order finds that Hilton failed to appropriately apply the SEC's compensation disclosure rules to its system for identifying, tracking and calculating perquisites.
almost $30 million to two insider whistleblowers whose tips led SEC staff to open an investigation. The first whistleblower, who was the first to alert SEC staff of potential wrongdoing and provided substantial, ongoing assistance, received an award of approximately $22 million. The second whistleblower provided additional valuable information, and received an award of approximately $7 million.
In reaching that determination, we positively assessed the following facts: (1) Claimant 1 was the first to alert Enforcement staff to the potential wrongdoing, and Claimant 1's information, coupled with Claimant 2's information, prompted the opening of the investigation; (2) Claimant 1 provided substantial ongoing assistance to Enforcement staff during the investigation that saved Commission time and resources; and, (3) Claimant 1 persistently internally reported and elevated Claimant 1's concerns in an effort to remedy the conduct. The record further demonstrates that while Claimant 2 provided certain new, valuable information to the Commission that, together with Claimant 1's information, prompted the opening of the investigation, much of Claimant 2's information was duplicative of Claimant 1's information. Further, Claimant 2 provided more limited assistance as compared to Claimant 1. As to both Claimant 1 and Claimant 2, there are high law enforcement interests here as tens of millions of dollars were returned to harmed retail investors.
In the first order, a whistleblower was awarded nearly $2.9 million for alerting the Commission to hard-to-detect violations. The whistleblower provided critical information and supporting evidence that conserved SEC time and resources.In the second order, a whistleblower, a former company insider, was awarded more than $1.7 million. This whistleblower provided extensive and ongoing assistance to the investigative team over the course of the investigation.In the third order, two whistleblowers were awarded nearly $400,000 for jointly providing a tip and giving continuing assistance during the course of the investigation, including meeting with staff and providing detailed information that helped them understand key documents and identify witnesses. The whistleblowers also internally reported their concerns and suffered personal hardships as a result of the reporting.