SEC Obtains Emergency Asset Freeze, Charges Actor with Operating a $690 Million Ponzi Scheme (SEC Release)Mandan, ND, Man Sentenced to 4 years in Federal Prison for Bank Fraud and Interstate Transportation of Stolen LivestockCFTC Orders New York Man to Pay More than $1 Million for Role in Fraudulent Binary Options Scheme (CFTC Release)
[O]ver the course of about five years, Horwitz solicited investors to invest in his company - 1inMM Capital LLC - which he claimed would use the funds to purchase regional distribution rights to films and then license the rights to online platforms such as Netflix and HBO. Horwitz provided promotional materials to investors that claimed 1inMM Capital offered "safe" investments because "we receive confirmation from each of our outputs indicating their desire to acquire the rights to any title we purchase PRIOR to us releasing funds for the film," according to the affidavit.However, instead of using the funds to acquire films and forge distribution deals, Horwitz allegedly operated 1inMM Capital as a Ponzi scheme, using victims' money to repay earlier investors and to fund his own lifestyle, including the purchase of his $6 million Beverlywood residence.The scheme allegedly began in 2015, when investment firms began entering into a series of 6-month or 12-month promissory notes with 1inMM Capital based on Horwitz's statements. The funds supplied under each note were supposed to provide money for 1inMM Capital to acquire the rights to a specific film. To convince investors he was legitimate, the affidavit states, Horwitz provided investors with fake license agreements, as well as fake distribution agreements with Netflix and HBO, all of which contained forged or fictional signatures. Despite Horwitz's claim of "solid relationships" with online platforms, representatives for Netflix and HBO have denied that their companies engaged in any business with Horwitz or 1inMM Capital, the affidavit states.Investors started to complain after 1inMM Capital began defaulting on notes at various times in 2019, the affidavit states. To prolong the scheme in the wake of mounting defaults, Horwitz provided excuses that were purportedly given by Netflix and HBO, forwarding to investors spoofed correspondence with Netflix and HBO in which Horwitz again fraudulently used the identities of Netflix or HBO employees.According to the affidavit, private investment firms have transferred approximately $227 million to 1inMM Capital pursuant to promissory notes since late 2018. Horwitz, through 1inMM Capital, allegedly has defaulted on all these underlying notes.
[H]orwitz falsely claimed to have a track record of successfully selling movie rights to Netflix and HBO when, in fact, neither Horwitz nor 1inMM had ever sold any movie rights to, or done any business with, HBO or Netflix. Horwitz allegedly showed investors fabricated agreements and emails regarding the purported deals with HBO and Netflix. The complaint alleges that Horwitz and 1inMM promised investors returns in excess of 35%, and for many years paid supposed returns on earlier investments using funds from new investments. The complaint further alleges that Horwitz misappropriated investor funds for his personal use, including the purchase of his multi-million dollar home, trips to Las Vegas, and to pay a celebrity interior designer.
[F]rom September 2013 through March 2014, Shkreli, who was then Retrophin's CEO and also controlled various hedge funds, fraudulently induced Retrophin to issue stock and make cash payments to certain disgruntled investors in Shkreli's hedge funds. Specifically, the complaint alleged that Shkreli had investors enter into agreements with Retrophin that misleadingly stated that the payments were for consulting services, when in fact the payments were for the release of potential claims against Shkreli. This alleged misconduct was, according to the complaint, aided and abetted by Greebel, who was Retrophin's outside counsel and served as corporate secretary. The complaint alleged that Greebel drafted sham consulting agreements and failed to disclose to Retrophin's Board of Directors the true purpose of the agreements.
On February 20, 2014, Glatt, a rancher, took out a loan from a North Dakota financial institution in the amount of $1,500,000 to purchase cattle and livestock-related supplies. The financial institution obtained a security interest in the cattle, which were left in Glatt's custody. Additionally, Glatt took custody of multiple other individuals' cattle as either cattle caretaker, cattle manager, or cattle partner. Evidence introduced at trial demonstrated, between 2014 and 2017, Glatt took affirmative steps to hide collateral from the financial institution; hid assets from the financial institution and other victims; fraudulently filed an agricultural statutory lien in another person's name with the intent to deprive the financial institution of future foreclosed funds; and finally, transported stolen cattle belonging to the financial institution and the other victims from North Dakota to South Dakota.
[F]rom approximately April 2014 through March 2018, he was affiliated with Blue Bit Banc and related entities, selling binary options to customers for Blue Bit using alias names and also supervising other sales staff at Blue Bit's Manhattan office. Olson also admitted that, as part of the scheme, he and others misrepresented the profitability of trading through Blue Bit, manipulated or fabricated purported trades in their customers' accounts to the customers' disadvantage, prevented customers from withdrawing funds, and misappropriated customer funds.The order states that Olson also admitted he knowingly made false statements, omitted statements of material fact, and took other actions to defraud customers, while receiving disbursements totaling $241,070.30. In addition, Olson was involved in the conversion of some customers' Blue Bit account holdings into ATM Coin, a worthless cryptocurrency that was represented as being worth substantial money. According to the order, at least 27 customers lost a total of $846,405 as a result of the fraudulent scheme.
During the period of June 2015 through April 2020, Dawson James charged commissions on certain transactions in equity securities that were not fair and reasonable, taking into consideration the factors set forth in Rule 2121 Supplementary Material .01, and that exceeded five percent. As a result, on a total of 236 transactions during the relevant period, the firm charged $7,083.93 in excessive commissions. The commissions charged ranged from approximately five percent to 66 percent of the transactions' principal value.
Last year, as FINRA staff looked to adjust to a new exam and risk monitoring program structure, the industry and the world was struck with an unprecedented global crisis. On this episode, the second in a two-part series, we hear how the program adapted in the face of the pandemic before looking ahead to priorities for 2021.