Securities Industry Commentator by Bill Singer Esq

November 22, 2021

Chicago Businessman Indicted on Federal Fraud Charges for Allegedly Swindling Customers and Investors Out of $350,000 (DOJ Release)
There are times when you read something and you think it says something. Then you re-read that same document and realize that you inferred quite a bit that was not stated or implied. Then your re-read that document, yet again, and realize that it doesn't actually say anything and, in truth, is pointless. All of which brings us to today's featured FINRA Arbitration Award.

In a Complaint filed in the United States District Court for the Western District of Washington, Sabrina Taylor was charged with four counts of wire fraud. As alleged in part in the DOJ Release:

[B]etween November 2016, and July 2019, Taylor convinced various people to provide her with large amounts of money by claiming she needed the money to purchase medicine for multiple sclerosis, or to pay her tuition for college.  She also claimed to need the funds to bail her brother out of jail.  In fact, Taylor was not ill with multiple sclerosis, was not paying tuition to the University of Washington as claimed, and her brother was not in jail.  Taylor told other stories about how she planned to repay the loans, lying about her employment, a litigation settlement with a local bank, and funds she expected to receive from her parents.

Some of the people she defrauded she met online through shared interests such as Japanese anime, comic books, or video games. 

Chicago Businessman Indicted on Federal Fraud Charges for Allegedly Swindling Customers and Investors Out of $350,000 (DOJ Release), Brian Blolock was charged with nine counts of wire fraud. As alleged in part in the DOJ Release:

Blalock operated three Chicago-based businesses - PWC Holdings LLC, Brian Blalock LLC, and Parkwood Companies LLC - through which he purported to buy and sell trucks, trailers, road construction machines, oil field equipment, and generators.  Blalock solicited and obtained money from individual victims by falsely representing that he could either directly sell equipment to them or use their funds to purchase and sell equipment to others and then share in the substantial profits, the charges allege.In reality, Blalock did not intend to deliver any equipment to the victim buyers, nor did he intend to use their investment funds to purchase and sell equipment, the indictment states.  Blalock instead used a substantial portion of the victims' funds for his own personal benefit, including his rent payments, utility bills, meals at restaurants, and retail purchases, the charges allege. 

As a result of the scheme, Blalock from 2018 to 2021 caused the victims to suffer at least $350,000 in losses, the indictment states., the SEC charged David O'Brien with violating the antifraud provisions of Sections 17(a)(1) and (a)(3) of the Securities Act and Sections 9(a)(2) and 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. As alleged in part in the SEC Release:

[B]etween 2015 and 2020, O'Brien coordinated trading in at least two different accounts in order to create the false appearance of trading interest and activity in particular stocks to enable him to purchase stocks at artificially low prices and then quickly sell them at artificially high prices. Specifically, the complaint alleges that O'Brien accumulated larger stock positions in one or more "winner" accounts at one brokerage firm, while at or around the same time placing smaller orders in the same securities on the opposite side of the market in one or more "helper" accounts at a different brokerage firm. O'Brien allegedly used helper account trades to decrease the price of the security before he acquired it in the winner accounts, and/or to increase the price of the security after he acquired it in the winner accounts, seeking to generate a net profit across all of the involved accounts. According to the complaint, O'Brien engaged in more than 18,000 of these coordinated trading events, with approximately 75% of the events resulting in net profits across the involved accounts. O'Brien allegedly obtained more than $9.6 million in net profits from his successful coordinated trading events.