Securities Industry Commentator by Bill Singer Esq

June 9, 2021
The Wall Street career of Gopi Krishna Vungarala is a smoldering train wreck. Without question, Vungarala and his family had their personal struggles, which makes this story more poignant and tragic. That backstory notwithstanding, it's hard to argue against FINRA's imposition on Vungarala of a Bar and the SEC's ratification of same; and it's equally difficult to dispute a FINRA arbitration panel's imposition of compensatory and punitive damages against him.

Nun Who Ran Catholic School in Torrance Will Plead Guilty to Federal Charges after Embezzling $835,000 to Finance Gambling Habit (DOJ Release)
Omigod, what an amazing headline! I mean how could you not want to read about this case!!
Retired-nun Mary Margaret Kreuper, 79, was charged in an Information filed in the United States District Court for the Central District of California with one count of wire fraud and one count of money laundering; and she pled guilty to the charges. As alleged in part in the DOJ Release:

For a period of 10 years ending in September 2018, Kreuper embezzled money from St. James Catholic School. As principal - a position she held for 28 years - Kreuper was responsible for the money the school received to pay for tuition and fees, as well as for charitable donations. Kreuper controlled accounts at a credit union, including a savings account for the school and one established to pay the living expenses of the nuns employed by the school.

Kreuper, who as a nun had taken a vow of poverty, diverted school funds into the St. James Convent Account and the St. James Savings Account and then, as she admitted in her plea agreement, used the diverted funds "to pay for expenses that the order would not have approved, much less paid for, including large gambling expenses incurred at casinos and certain credit card charges."

Kreuper further admitted in her plea agreement that she falsified monthly and annual reports to the school administration to cover up her fraudulent conduct and "lulled St. James School and the Administration into believing that the school's finances were being properly accounted for and its financial assets properly safeguarded, which, in turn, allowed defendant Kreuper to maintain her access and control of the school's finances and accounts and, thus, continue operating the fraudulent scheme." The criminal information also alleges that Kreuper directed St. James School employees to alter and destroy financial records during a school audit.

Kreuper admitted that, over the course of the scheme, she caused losses to St. James Catholic School totaling $835,339.
In a Complaint filed in the United States District Court for the Southern District of New York, Hall was charged with wire fraud and aggravated identity theft. As alleged in part in the DOJ Release:

HALL defrauded hundreds of victims by making false representations in the course of raising funds for a purported political affinity organization ("the Fictitious Political Organization"), for the ostensible purpose of supporting the reelection of the individual who was at that time serving as President of the United States ("the President").  However, the Fictitious Political Organization did not exist and HALL used the funds for his own personal living expenses.

Central to the scheme was the impersonation by HALL of members of the President's family, including the President's minor child, among others, through his creation and use of social media accounts bearing those family members' names and photographs.  HALL used those accounts to amass more than 100,000 followers on social media and obtain media coverage, a public platform he then exploited to confer on himself and the Fictitious Political Organization a false imprimatur of close ties with the President's family and to encourage victims to make monetary contributions to the Fictitious Political Organization.

In total, the scheme devised and executed by HALL yielded thousands of dollars from hundreds of victims located throughout the United States, including in the Southern District of New York. 

FBI Targets Encrypted Platforms Used by Criminal Groups / Global Partners Announce Results of Innovative Operation Trojan Shield (FBI Release)
The FBI, the Drug Enforcement Administration, Australian Federal Police, Europol, and law enforcement partners in more than a dozen countries announced the results of that covert effort, known as Operation Trojan Shield, under which authorities carried out hundreds of arrests in Australia and across Europe as a result of intelligence gathered during the operation. In an ironic twist, the authorities had launched their own encrypted communications platform and supplied more than 12,000 devices to hundreds of criminal organizations that operate around the globe. An amazing sting!
Richard Gregory Tilford was indicted in 2018 Tilford was
 sentenced in the State of Texas to concurrent prison terms of:
  • 40 years engaging in a fraudulent digital marketing investment scheme; 
  • 10 years for each of six counts of selling unregistered securities; and 
  • 10 years for each of six counts of acting as an unregistered dealer.  
As alleged in part in the Texas State Securities Board Release:

StaMedia was an internet advertising company.  Investors were told the investments in StaMedia were backed by a digital media patent supposedly valued at up to $85 million.  They were promised a guaranteed nine percent return on their investments, but StaMedia never generated any revenue and investor funds were to pay for personal expenses. 

Tilford was indicted in Collin County in 2018.  Former pastor Timothy Lloyd Booth, a co-defendant, was previously indicted and convicted of theft and securities fraud in connection with the StaMedia scheme.  He was sentenced to serve 68 years in state prison. 

Bobby Guess, a co-defendant, is currently serving a 12-year prison sentence for his role in the scheme.  Guess was a local radio personality and author of "Robbed With a Pen Again," a book that purported to provide advice to investors to help protect assets from fraud.
In a recent FINRA regulatory settlement, we got two friends, one of whom is a stock broker. The stockbroker may well have thought that he was doing his friend a favor by trading options. In fact, the friend may also have appreciated the gesture. That is until the friend/customer didn't quite appreciate the stockbroker's trading; and we're talking about lots of trading.
You're unhappy at your present employer. You negotiate a deal with another employer. Apparently you're really wonderful at what you do because you're offered a nice compensation package. Further, you did such a fabulous job selling yourself that your likely-new-employer requests a million bucks in liquidated damages in the event you don't start working for them by a mutually agreed-to date. So . . . like what could go wrong with all of that? Apparently, a lot because we got a 17-page FINRA Arbitration Award and decisions from two federal courts!