Securities Industry Commentator by Bill Singer Esq

Burke pleaded guilty to contempt for violating the court order prohibiting him from making misrepresentations to consumers.  That charge stemmed from Burke running a mass-mailing operation that misled consumers into believing that they had won large cash prizes, often millions of dollars. Burke specifically mailed consumers solicitations that used fake names and, in many cases, looked like they came from law firms or financial institutions, advising consumers to pay a fee - usually $20 to $30 -to claim their promised winnings.  Once consumers paid, however, Burke never sent any consumer a promised prize. 

Burke, along with Rossi, also pleaded guilty to conspiracy to commit mail and wire fraud for running a fraudulent telemarketing operation.  Telemarketers working for Burke and Rossi falsely told victims that they had won one of five valuable prizes, typically: a Chevy Camaro; a Boston Whaler boat; a diamond-and-sapphire bracelet; $3,000 cash; or a cruise that could be exchanged for $2,300.  To claim the prize, consumers were told to pay hundreds, or in some cases thousands, of dollars.  Once they paid, victims received a nearly worthless piece of costume jewelry or nothing at all. 

The indictment alleges that between 2011 and 2014, DiMaria and his co-conspirators carried out a complex scheme to manipulate Bankrate's financial statements and artificially inflate Bankrate's earnings.  According to the indictment, DiMaria and his co-conspirators allegedly engaged in so-called "cookie jar" or "cushion" accounting where over a million dollars in unsupported expense accruals were left on Bankrate's books and then selectively reversed in later quarters to meet earnings goals.  In addition, DiMaria and his co-conspirators allegedly misrepresented certain company expenses as "deal costs" in order to artificially inflate publicly reported adjusted earnings metrics, and made materially false statements to conceal the improper accounting entries from Bankrate's auditors, shareholders and the investing public.  The indictment further alleges that while Mr. DiMaria was misleading Bankrate's auditors and the public about the company's financial condition he realized millions of dollars from selling his own shares of Bankrate stock. 

The Consent Orders find that Mintco's customers did not qualify as Eligible Contract Participants (ECPs) and that Mintco did not itself acquire and store any financed metal on behalf of its customers. The Court further found that Mintco never delivered precious metals to any customers with respect to the leveraged metals transactions made on behalf of Mintco's customers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), transactions of this nature are unlawful unless they result in actual delivery of metals within 28 days of the purchase or sale or the customers have sufficient net worth to be considered ECPs. As a result, the Orders find that that the Defendants' precious metals transactions constituted unlawful off-exchange retail commodity transactions. The Mintco Consent Order also finds that Mintco was not registered as a Futures Commission Merchant, as required under the Commodity Exchange Act to offer those transactions.

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The Consent Orders further find that Mintco and Rubin defrauded retail customers by misrepresenting or omitting to disclose material facts to potential or existing retail customers, which included: 1) misrepresenting the nature of the relationship between Mintco and retail customers by stating that Mintco would act in their best interest and as customer's agent or representative; (2) not adequately disclosing the break-even price of investments in precious metal in financed transactions; and (3) omitting to inform customers that in excess of 80% of the retail customers' investments in financed and fully paid stored precious metal failed to appreciate enough during the relevant period to cover the costs associated with the investment and earn a profit.

According to the order, USI-Tech is telling potential investors they can make more money by convincing other individuals to invest in the company's bitcoin platform. Investors can earn "up to 35% commissions" through its "unique referral marketing plan."

USI-Tech is not informing investors of the danger in being paid commissions from referrals. Individuals paid these commissions must either be registered with the State Securities Board or qualify for an exemption from registration.

• Securities Industry Commentator
• Bill Singer
• RRBDLaw
• BrokeAndBroker