The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
September 15, 2020
SEC Charges Motion Picture Financier with Fraud (SEC Release)SEC Charges Charter School Operator and its Former President With Fraudulent Municipal Bond Offering (SEC Release)SEC Obtains $15 Million Judgment Against Mastermind of Market Manipulation and Unlawful Stock Distribution Scheme (SEC Release)
International Fugitive And Disbarred Attorney Charged In Over $5 Million Cryptocurrency Fraud (DOJ Release)
https://www.justice.gov/usao-sdny/pr/international-fugitive-and-disbarred-attorney-charged-over-5-million-cryptocurrency
https://www.justice.gov/usao-sdny/pr/international-fugitive-and-disbarred-attorney-charged-over-5-million-cryptocurrency
In a criminal Complaint filed in the United States District Court for the Southern District of New York
https://www.justice.gov/usao-sdny/press-release/file/1316431/download, Randy Craig Levine a/k/a "Viktor Lapin," a/k/a "Andre Santiago Santos Galindo," a/k/a "Alexander Martinez Lavrov," a/k/a "Alexander Kozlov," a/k/a "Hristo Danielov Marinov," and Philip Reichenthal were charged with one count of conspiring to commit wire fraud; two counts of commodities fraud; two counts of wire fraud; and one count of money laundering. As alleged in part in the DOJ Release:
https://www.justice.gov/usao-sdny/press-release/file/1316431/download, Randy Craig Levine a/k/a "Viktor Lapin," a/k/a "Andre Santiago Santos Galindo," a/k/a "Alexander Martinez Lavrov," a/k/a "Alexander Kozlov," a/k/a "Hristo Danielov Marinov," and Philip Reichenthal were charged with one count of conspiring to commit wire fraud; two counts of commodities fraud; two counts of wire fraud; and one count of money laundering. As alleged in part in the DOJ Release:
The charges against LEVINE and REICHENTHAL involve two fraudulent schemes. In the first fraudulent scheme, in approximately June and July 2018, LEVINE induced another individual, the principal of a purported cryptocurrency escrow firm ("Individual-1"), to wire to REICHENTHAL over $3 million of funds from an over-the-counter cryptocurrency broker ("Company-1") to fund the purchase of Bitcoin after falsely telling Individual-1 that LEVINE would sell thousands of Bitcoin, when in truth and in fact, LEVINE never intended to sell Bitcoin. After receiving the $3 million, REICHENTHAL, in turn, wired over $2 million to bank accounts in Guatemala held in the name of one of LEVINE's aliases. LEVINE then lied to Individual-1 for days about why the deal had not worked out, the status of the purported Bitcoin, and the location of Company-1's money, which was never returned.In the second fraudulent scheme, from approximately February 2019 to May 2019, LEVINE induced a Florida resident involved in brokering Bitcoin transactions ("Individual-2") to cause investors to send to REICHENTHAL over $2 million of the investors' money to fund the purchase of Bitcoin. Again, LEVINE told Individual-2 that LEVINE would sell Bitcoin, when in truth and in fact, LEVINE never had any intention of selling Bitcoin to the investors. After receiving the funds from the investors, REICHENTHAL, in turn, sent over $1.9 million to bank accounts in Mexico controlled by LEVINE; the money was then wired to a bank account in Russia held in the name of one of LEVINE's aliases. LEVINE then lied to Individual-2 and an investor ("Investor-1") about the status of the investors' funds, which were never returned. After Individual-2 sought the return of the funds, LEVINE sent one electronic message threatening to "bring [Individual-2] into all My Legal Problems here in Guatemala including Money Laundering as I have open investigation a d [sic] I will alert the American Authorities you were involved in my operations before just to stick it up your a**."In connection with the above transactions, LEVINE used, among other things, various false aliases to communicate with the individuals sending funds to REICHENTHAL and foreign bank accounts held in his false names. REICHENTHAL used bank accounts held in the name of his law firm and an attorney trust account to receive the funds and the pass them to LEVINE, before he or investors received the Bitcoin, contrary to REICHENTHAL's and LEVINE's promises.On or about October 31, 2019, the Supreme Court of the State of Florida granted REICHENTHAL's own petition for voluntary disciplinary revocation of his bar license after approximately 12 attorney disciplinary charges were filed against him related to his "receipt of approximately $2,125,000.00 in escrow funds and subsequent failure to disburse in accordance with the escrow agreement," as stated in the court documents.
https://www.sec.gov/litigation/litreleases/2020/lr24895.htm
In a Complaint filed in the United States District Court for the Central District of California
https://www.sec.gov/litigation/complaints/2020/comp24895.pdf, the SEC alleged that Remington Chase had violated the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rules 10b-5(a) and (c) thereunder and Sections 17(a)(1) and (3) of the Securities Act and the registration provisions of Section 5 of the Securities Act. Without admitting or denying the SEC's allegations, Chase has consented to a permanent injunction barring him from violating the charged provisions; and he agreed to pay $8,906,000 in disgorgement plus $1,022,010 in prejudgment interest and a civil penalty of $192,768. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2020/comp24895.pdf, the SEC alleged that Remington Chase had violated the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rules 10b-5(a) and (c) thereunder and Sections 17(a)(1) and (3) of the Securities Act and the registration provisions of Section 5 of the Securities Act. Without admitting or denying the SEC's allegations, Chase has consented to a permanent injunction barring him from violating the charged provisions; and he agreed to pay $8,906,000 in disgorgement plus $1,022,010 in prejudgment interest and a civil penalty of $192,768. As alleged in part in the SEC Release:
[C]hase, through his company Knightsbridge Entertainment, Inc., sold over $62 million in high-yield, short-term promissory notes to approximately 100 investors. According to the complaint, Chase, then a California resident, told investors that their funds would be allocated to provide short-term, post-production financing to motion picture companies. However, as alleged in the complaint, Chase used the majority of the funds for purposes unrelated to movie financing. Chase is alleged to have spent almost $9 million on personal expenses, including making donations to a university and purchasing several Tesla automobiles.
https://www.sec.gov/news/press-release/2020-208
In a Complaint filed in the United States District Court for the District of Arizona
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-208.pdf, the SEC alleged that Park View School, Inc., a state-funded, nonprofit charter school operator based in Prescott Valley, Arizona, and its former President, Debra Kay Slagle violated antifraud provisions of the federal securities laws. Without admitting or denying the allegations in the Complaint, Slagle and Park View agreed to settle with the SEC and to be enjoined from future violations of the charged securities laws; and Slagle agreed to pay a $30,000 penalty and to be enjoined from participating in future municipal securities offerings. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-208.pdf, the SEC alleged that Park View School, Inc., a state-funded, nonprofit charter school operator based in Prescott Valley, Arizona, and its former President, Debra Kay Slagle violated antifraud provisions of the federal securities laws. Without admitting or denying the allegations in the Complaint, Slagle and Park View agreed to settle with the SEC and to be enjoined from future violations of the charged securities laws; and Slagle agreed to pay a $30,000 penalty and to be enjoined from participating in future municipal securities offerings. As alleged in part in the SEC Release:
[P]ark View and Slagle made false and misleading statements about Park View's financial condition. As alleged, in the years and months leading up to the bond offering, Park View experienced significant operating losses and repeatedly made unauthorized withdrawals from two reserve accounts to cover routine operating expenses, to pay other debts, and to transfer money to affiliated entities. Park View allegedly provided investors an offering document that included misleading statements about profit and expense projections and showed that Park View would be profitable in the upcoming fiscal year and able to repay the bondholders. According to the complaint, investors purchased $7.6 million in bonds in the April 2016 offering. Although the bonds were nominally offered by the Industrial Development Authority of the County of Pima, Arizona, Park View, as conduit borrower, received the bond proceeds and was responsible for repaying them. Park View allegedly defaulted one year later by reducing the interest payments that it made on the bonds.
SEC Obtains $15 Million Judgment Against Mastermind of Market Manipulation and Unlawful Stock Distribution Scheme (SEC Release)
https://www.sec.gov/litigation/litreleases/2020/lr24896.htm
https://www.sec.gov/litigation/litreleases/2020/lr24896.htm
In response to a Complaint filed in the United States District Court for the Southern District of New York against Francisco Abellan Villena, a default judgment was entered against him whereby he was permanently enjoined from violations of the antifraud provisions of the federal securities laws and he was ordered to pay a $15 million civil penalty. As alleged in part in the SEC Release:
[A]bellan masterminded a scheme where he and his co-defendants hid their ownership and sales of microcap issuer Biozoom, Inc. shares by using sham purchase agreements, a network of nominees, anonymizing techniques, and other deceptive practices. Abellan also allegedly employed sophisticated manipulative trading techniques to artificially inflate Biozoom's share price, and executed an extensive promotional campaign to coincide with the trading. The alleged scheme culminated in the defendants' illegal sales of Biozoom, which netted them over $33 million in unlawful proceeds.
https://www.sec.gov/news/press-release/2020-209
The SEC awarded over $10 million to a whistleblower whose information and assistance were of crucial importance to a successful SEC enforcement action. As set forth in part in In the Matter of the Claim for an Award in connection with Redacted (SEC Order Determining Whistleblower Award Claim; '34 Act Rel. No. 89850; Whistleblower Award Proc. File No.. 2020-30 / September 14, 2020)
https://www.sec.gov/rules/other/2020/34-89850.pdf:
[C]laimant provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and Claimant made persistent efforts to remedy the issues, while suffering hardships.
Wells Fargo Sues Over Transitional and Production Bonuses And Rep Fights Back (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5436/wells-fargo-bonus/
Wall Street is about nothing if not money. In today's featured dispute, we got a transitional bonus. We got production bonuses. We got promissory notes. We got a FINRA arbitration about Wells Fargo's efforts to collect $1.6 million in balances due. We got a federal court trying to figure out what was a bonus, what was a loan, and whether the arbitrators got the facts right. And now we got a Motion to Reconsider.