[H]AGER was the CEO of Border State Bank ("Border") and served as a director of the bank's holding company, Border Bancshares, Inc. HAGER also held various executive positions in banks that Border Bancshares, Inc. acquired, including the former First State Bank of Clearbrook and the former First Advantage Bank. In late 2015 and early 2016, HAGER loaned money to a bank customer to invest in a diamond and gold venture in Liberia, Ghana, and Kenya that promised a quick return. After he depleted his own personal funds on the investment and maxed out the amount he could borrow from the bank, HAGER asked other individuals, including bank customers, shareholders, and directors of the bank to lend him money, which would enable HAGER to recover his personal funds.According to the defendant's guilty plea and documents filed with the court, between 2016 and 2017, HAGER requested a series of loans by having Border bank customers take out loans in their own names, or draw from loans they already had, and then transfer the funds to HAGER. In May 2016, HAGER issued three unauthorized Standby Letters of Credit (SBLCs) worth $1.6 million to facilitate the purchase and delivery of diamonds and gold from Africa. In each instance, Hager issued the SBLC on the letterhead of First Advantage Bank and signed the letter as CEO of First Advantage. Letters of Credit are considered obligations of a bank, and they can impact a bank's financial standing. Such obligations must be entered into the bank's general ledger so that they can be accounted for and tracked by regulators. In order to conceal his actions, HAGER failed to report the SBLCs to bank personnel so that they could be logged into the bank's system.
From April to August 2017, Ahn, a long-time senior corporate executive and board director for biotech companies, worked as a consultant for a New York firm, and advised it during its efforts to acquire Dimension Therapeutics, Inc., a biotech firm formerly headquartered in Cambridge, Mass. In the course of his work for the New York firm, Ahn learned Dimension's intention to be acquired by another biotech firm, the details and the timing of his employer's proposals to acquire Dimension and gained access to confidential information about Dimension's business. Ahn thereafter bought Dimension stock while in possession of that nonpublic information. When Dimension announced that it would be acquired in August 2017, its stock increased 262% in one day.
[K]alistratos "Kelly" Kabilafkas secretly purchased essentially all the outstanding stock of the shell company now known as Airborne, then distributed millions of shares among himself and his associates, including defendants Timoleon "Tim" Kabilafkas, Panagiotis Bolovis, Eric Scheffey, Chrysilios Chrysiliou, and Moshe Rabin. As alleged, Kelly Kabilafkas and his associates deceived Airborne's transfer agent and broker dealers in order to have the shares transferred into their names, deposited in brokerage accounts, and cleared for sale to the public. The complaint alleges that Kelly Kabilafkas, through defendant Jack Edward Daniels, Airborne, and other third parties, spent millions of dollars on advertisements that concealed that Airborne was a vehicle for Kabilafkas's fraudulent scheme. The complaint further alleges that, while the promotional campaign was underway, Kelly Kabilafkas and his associates sold approximately 11.8 million Airborne shares for proceeds of more than $22 million, much of which was kicked back to benefit the Kabilafkas family. As alleged, Airborne raised another approximately $22.8 million dollars from unsuspecting investors through public and private offerings while materially false and misleading statements about the company were publicly available. In total, the complaint alleges, the scheme raised nearly $45 million.
The Securities and Exchange Commission charged New York residents Jason M. Wendt and Armando Costabile with the fraudulent offer and sale of at least $4.7 million of securities to approximately 234 investors through their companies, EarthSource Minerals International, LLC and Abundant Resource Development, LLLP between September 2014 and December 2019. The SEC also charged Florida resident Michael J. Palermo, EarthSource's Chief Investment Officer, with the fraudulent offer and sale of an additional $501,906 of securities to 22 investors through Palermo's company, Premier Minerals International, LLC, and the misappropriation of the majority of the investors' money raised.According to the SEC's complaint, Wendt and Costabile falsely claimed EarthSource could pay investors returns of 10% per month by engaging in "diamond flipping" - purchasing diamonds in Liberia and exporting them for resale in the United States at significantly higher prices. As alleged, contrary to their representations, EarthSource actually lost money on the diamond flipping transactions, and Wendt and Costabile siphoned money from the program to pay for EarthSource's unsuccessful mining operations. The complaint alleges that Wendt falsely claimed, in January 2016, that EarthSource had generated $200,000 per month from gold mining, when EarthSource's total annual gold production in 2015 was less than $100,000.The complaint also alleges that Palermo, in offering investments through Premier, promised investors quarterly profits of 20%, and falsely claimed investors' funds would be used to purchase diamonds in Liberia for export and resale in Florida. According to the complaint, Palermo also induced purchases in a joint venture by falsely claiming that EarthSource had obtained financing that would allow mining production to commence at one of its sites when in fact no such financing existed. The complaint further alleges that Palermo misappropriated over $340,000 - most of the Premier investors' funds - and used it for personal expenses and to make Ponzi-like payments to prior investors.
[M]iller and the three companies falsely claimed that Renew Forestry had about 1.9 million acres under its control, including timber and mineral rights. Contrary to these representations, Renew Forestry allegedly had approval to harvest timber on only 36,000 acres and had no mineral rights. The complaint also alleges that the defendants falsely projected investor profits ranging from 91% to 172% within one year, knowing those returns were not possible because Renew Forestry did not have the required permits and lacked the infrastructure and equipment necessary to even begin operations within the promised timeframe.