Securities Industry Commentator by Bill Singer Esq

October 3, 2018

Former Auditor Sentenced For Submitting Fraudulently Backdated Documents To The Securities And Exchange Commission (DOJ Release)
https://www.justice.gov/usao-sdny/pr/former-auditor-sentenced-submitting-fraudulently-backdated-documents-securities-and
Former auditor and owner of a registered public accounting firm, Terry Johnson, pled guilty to submitting falsely backdated documents to the United States Securities and Exchange Commission ("SEC") during that federal regulator's  investigation into his auditing practices. Johnson sent unsigned versions of the documents at issue to two of the companies he had audited and obtained backdated signatures on them, which he then submitted to the SEC. Purportedly, the documents were supposed to have been those generated or obtained in the course of producing audit reports but they did not exist and rather than so disclose that fact, Johnson, created certain of the requested  and had his clients enaged in the cited backdating and submission. During sworn testimony before the SEC, Johnson lied under oath concerning his submission of the backdated documents. An SEC Order sanctioned him for committing securities fraud and improper professional conduct for which he was assessed financial penalties and barred from appearing or practicing before the SEC as an accountant.  In the criminal case, Johnson was sentenced to five months in prison plus two years of supervised release. 

In the Matter of Patrick Lanier, Respondent. (SEC Order of Forthwith Suspension; '34 Act Release No. 84342; Admin. Proc. File No. 3-18861) https://www.sec.gov/litigation/admin/2018/34-84342.pdf
The SEC found that 69-year-old Patrick Lanier has been suspended from the practice of law by the State of Texas and convicted of felonies involving moral turpitude. Accordingly, the SEC suspended Lanier from appearing or practicing before the SEC pursuant to SEC Rule of Practicve 102(e)(2). How Lanier got to this sad state of affairs is a tale that is fabulously told in the SEC's Order. Try as I might, I can't even remotely do justice to the spellbinding fact-pattern spun by an uncredited SEC wordsmith. As such, I have taken the unusual step of reprinting a substantial portion of the Order below. We pick things up at Paragraph 2:

2. In 2003 fugitive Harris Dempsey Ballow ("Ballow") pleaded guilty to a single count of money laundering and was released on bond until his sentencing date of December 16, 2004. Ballow did not appear for sentencing; instead, he fled to Mexico. Lanier represented Ballow in the criminal matter and in the Commission's parallel civil action against Ballow based on the same fraud involved in Ballow's criminal conviction.2 In 2005, Lanier withdrew from representing Ballow in the SEC's civil action. In his notice of withdrawal filed with the court, Lanier stated falsely that he was "unable to locate and/or contact defendant since 2nd of December 2004." In fact, Lanier was aware of where Ballow was hiding in Mexico and helped Ballow avoid capture by updating him on the government's attempts to locate him. Lanier never informed the criminal authorities of Ballow's whereabouts even though he knew Ballow was a fugitive. 

3. Between 2006 and 2010, while Ballow remained a fugitive, Lanier traveled to Mexico to assist Ballow in perpetrating a securities fraud scheme. Lanier assisted Ballow in assuming control of four publicly-traded corporations -- E-SOL, Medra Corporation, Aztec Technology Partners, Inc. and Deep Earth Resources -- by using aliases to hide Ballow's true identity as a fugitive and money launderer. Lanier also aided Ballow in making public offerings of the securities of these companies to unsuspecting investors by disseminating false and misleading information that resulted in inflating the market value of the securities of the four publicly-traded companies. Lanier was also aware that the securities of the four companies Ballow controlled contained restrictive legends that prevented public offerings of the stocks. Lanier's actions contributed to the loss of $37,544,944 by more than 500 investors. 

4. On February 27, 2014, a jury of the U.S. District Court for the Southern District of Texas found Lanier guilty on wire fraud, conspiracy to commit wire fraud, harboring and concealing a person from arrest, and assisting a federal offender. On March 28, 2016, the court sentenced Lanier to 204 months of imprisonment and ordered that he pay a $1,600 assessment and restitution of $37,544,944.16.3 The United States Court of Appeals, Fifth Circuit ("Fifth Circuit") affirmed all but two counts on which Lanier was convicted. In addition, on July 26, 2016 the Board of Disciplinary Appeals appointed by the Supreme Court of Texas (the "Board") suspended Lanier from the practice of law based on his criminal convictions.4 
. . .
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Footnotes to SEC Order:

2 The SEC filed an enforcement action against Ballow in 2004. See Securities and Exchange Commission v. Harris D. Ballow, Case No. 4:04-cv-02799 (S.D. Tex. Jul. 9, 2004). 

3 Judgment, United States v. Patrick Lanier, Case No. 4:10CR00258-004 (Mar. 28, 2016). 

4 The Board entered an interlocutory order of suspension against Lanier, by consent, based on his convictions by the United States District Court for the Southern District of Texas. This temporary suspension was to remain in effect pending Lanier's appeal of his convictions. On January 2, 2018, the Fifth Circuit vacated Lanier's convictions for harboring and assisting a federal offender, but otherwise affirmed the district court's judgment. Lanier did not petition the Supreme Court for a writ of certiorari. The matter was remanded to the district court for entry of a judgment reflecting the Fifth Circuit's decision. The judgment has not yet been entered.  See https://www.texasbar.com/

http://www.brokeandbroker.com/4221/zipper-awc-sec-finra/
This is an update of the drama of Bruce Zipper's appeals from a FINRA decision denying an MC-400 Membership Continuance Application filed by his firm Dakota Securities International as a consequence of Zipper entering into a FINRA AWC that found he had willfully failed to timely amend his Form U4 to disclose three judgments and, as such, he was rendered statutorily disqualified. 

Treyton Thomas Pleads Guilty to Multi-Million Dollar Investment Fraud Scheme and Income Tax Evasion (DOJ Release)
https://www.justice.gov/usao-ednc/pr/treyton-thomas-pleads-guilty-multi-million-dollar-investment-fraud-scheme-and-income
In an Indictment filed in the United States District Court for the Eastern District of North Carolina, Treyton Lee Thomas was charged with 21 counts of wire fraud, bank fraud and money laundering.  The Indictment alleged that Thomas defrauded NC&VA Warranty (his father's used car warranty company),several of the company's customers, his wife, and his father-in-law when he claimed he was conservatively investing their money in U.S. Treasury Bills. Allegedly, Thomas engaged in risky commodities and futures trades, and also defrauded financial institutions out of approximately $1.9 million dollars in loan proceeds.  The Indictment alleges Thomas spent over $1.6 million on personal expenses. Previously, he was Indicted on six counts of income tax evasions and two counts of failing to disclose his interest in and authority over foreign bank accounts.  Thomas pled guilty to wire fraud, affecting a financial institution, and income tax evasion, and agreed to pay restitution and forfeit several million dollars. 

Seven Charged in Telemarketing Sweepstakes Scheme that Victimized People in the United States, Including the Elderly (DOJ Release)
https://www.justice.gov/opa/pr/seven-charged-telemarketing-sweepstakes-scheme-victimized-people-united-states-including
Roger Roger, Paul Andy Stiep, Manuel Mauro Chavez, David Michael Nigh, Mark Raymond Oman, Cole Anthony Parks, and Nicholas Richer were charged with one count of conspiracy to commit wire and mail fraud, nine counts of wire fraud, one count of conspiracy to commit money laundering and nine counts of international money laundering. The Indictment alleges that the defendants worked for a telemarketing sweepstakes call center located in Costa Rica, which was supervised by Roger. Allegedly, telemarketers contacted victims and informed them that they had won a substantial sweepstakes prize, but first needed to send funds, such as insurance or customs fees or taxes -- and if a victim sent money, the telemarketers called back seeking further payments for various bogus reasons. The telemarketers concealed their identities through the use of alias "phone names,"  Voice over Internet Protocol (VoIP) technology that displayed false origins for their calls, and often misrepresented that they were government agents or representatives, including from the IRS, Treasury Department or Federal Trade Commission. READ the FULL TEXT Indictment https://www.justice.gov/opa/press-release/file/1097966/download