Disbarred California Attorney Sentenced To Five And A Half Years In Prison For Long-Running Multi-Million-Dollar Investment Fraud Scheme / Defendant Sold Interests in Real Estate that He Did Not Own (DOJ Release)
El Paso Man Pleads Guilty to Operating Ponzi Scheme Disguised as Crypto Investment Firm (DOJ Release)
Calling All Unreasonable Wall Street Professionals (BrokeAndBroker.com Blog)
Maybe this year, finally, someone launches a trade group for the industry's hundreds of thousands of professionals. Yeah, I know, wishful thinking. But there are rumblings. I hear them. I feel them. The industry's grunts are getting fed up. They aspire to more than the glorified role of a teleservice operator working out of a soul-crushing call center masquerading as a branch office. The Covid pandemic showed them that they could work from home, work remote. The purported support services provided by the erstwhile wirehouses have been revealed as illusory - and not worth the hit to gross commissions or fees. In 2023, if pressed, many Wall Street professionals would admit that they now realize that they can deliver better customer service if they weren't shackled to a large industry employer by anti-consumer laws and rules enforced by co-opted industry regulators.
SEC Charges Four Individuals for Their Roles in a Prime Bank Fraud (SEC Release)
In the United States District Court for the Central District of California, the SEC filed a Complaint
https://www.sec.gov/litigation/complaints/2023/comp25618.pdf charging disbarred attorney/convicted felon Johm Mark Marino and Jason "Jai" Johnson with violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder; and. in the alternative, charges Johnson with aiding and abetting Marino's antifraud violations. Further, the SEC Complaint charges Anthony Brown and Abraham Borenstein with aiding and abetting Marino's antifraud violations under Section 15(b) of the Securities Act and Section 20(e) of the Exchange Act. As alleged in part in the SEC Release:
[M]arino and Johnson told the investors their funds would be used to pay fees for the "monetization" of a €1.5 billion medium-term note ("MTN") issued by an international bank. According to the SEC's complaint, Marino and Johnson promised exorbitant returns and made various other misrepresentations to the investors; in reality, the MTN documentation was an elaborate forgery, and Marino simply used the investor funds himself and transferred some to the other defendants. As alleged, in exchange for a $15,000 fee, Borenstein, a licensed attorney, facilitated the fraud by serving as what he called a "paymaster" and allowing the investor money to flow through his attorney trust account and dissipating it at Marino's direction. According to the complaint, Brown knowingly or recklessly assisted Marino by connecting Marino with Johnson and the investors in return for a share of the misappropriated proceeds. The SEC's complaint further alleges that after the investment, the defendants lulled the investors with promises of imminent repayment and other misrepresentations.
SEC Charges Samuel Bankman-Fried with Defrauding Investors in Crypto Asset Trading Platform FTX / Defendant Concealed His Diversion of FTX Customers' Funds to Crypto Trading Firm Alameda Research While Raising More Than $1.8 Billion from Investors (SEC Release)
Litigation Release No. 25616 / January 19, 2023
Securities and Exchange Commission v. Samuel Bankman-Fried, No. 1:22-cv-10501 (S.D.N.Y. filed Dec. 13, 2022)
In the United States District Court for the Southern District of New York, the SEC filed a Complaint charging Samuel Bankman-Fried with violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. https://www.sec.gov/litigation/complaints/2023/comp25616.pdf. As alleged in part in the SEC Release:
[S]ince at least May 2019, FTX, based in The Bahamas, raised more than $1.8 billion from equity investors, including approximately $1.1 billion from approximately 90 U.S.-based investors. In his representations to investors, Bankman-Fried promoted FTX as a safe, responsible crypto asset trading platform, specifically touting FTX's sophisticated, automated risk measures to protect customer assets. The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX's investors (1) the undisclosed diversion of FTX customers' funds to Alameda Research LLC, his privately-held crypto hedge fund; (2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited "line of credit" funded by the platform's customers and exempting Alameda from certain key FTX risk mitigation measures; and (3) undisclosed risk stemming from FTX's exposure to Alameda's significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens. The complaint further alleges that Bankman-Fried used commingled FTX customers' funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.
SEC Charges Caroline Ellison and Gary Wang with Defrauding Investors in Crypto Asset Trading Platform FTX (SEC Release)
In the United States District Court for the Southern District of New York, the SEC filed a Complaint charging Caroline Ellison (the former Chief Executive Officer of Alameda Research) and Zixiao "Gary" Wang (the former Chief Technology Officer of FTX Trading Ltd.) with violating Section 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5(a) and (c) thereunder.
https://www.sec.gov/litigation/complaints/2023/comp25617.pdf Ellison and Wang have consented to bifurcated settlements. As alleged in part in the SEC Release:
[B]etween 2019 and 2022, Ellison, at the direction of Bankman-Fried, furthered the scheme by manipulating the price of FTT, an FTX-issued exchange crypto security token, by purchasing large quantities on the open market to prop up its price. FTT served as collateral for undisclosed loans by FTX of its customers' assets to Alameda, a crypto hedge fund owned by Wang and Bankman-Fried and run by Ellison. The complaint alleges that, by manipulating the price of FTT, Bankman-Fried and Ellison caused the valuation of Alameda's FTT holdings to be inflated, which in turn caused the value of collateral on Alameda's balance sheet to be overstated, and misled investors about FTX's risk exposure.
In addition, the complaint alleges that, from at least May 2019 until November 2022, Bankman-Fried raised billions of dollars from investors by falsely touting FTX as a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and by telling investors that Alameda was just another customer with no special privileges; meanwhile, Bankman-Fried and Wang improperly diverted FTX customer assets to Alameda. The complaint alleges that Ellison and Wang knew or should have known that such statements were false and misleading.
The complaint also alleges that Ellison and Wang were active participants in the scheme to deceive FTX's investors and engaged in conduct that was critical to its success. The complaint alleges that Wang created FTX's software code that allowed Alameda to divert FTX customer funds, and Ellison used misappropriated FTX customer funds for Alameda's trading activity. The complaint further alleges that, even as it became clear that Alameda and FTX could not make customers whole, Bankman-Fried, with the knowledge of Ellison and Wang, directed hundreds of millions of dollars more in FTX customer funds to Alameda.
SEC Denies Whistleblower Award to Attorney Claimant
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-96708; Whistleblower Award Proc. File No. 2023-31)
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending denial of a Whistleblower Awards to Claimant. The Commission ordered that CRS's recommendations be approved. The Order asserts in part that [Ed: footnotes omitted]:
Because Claimant obtained the information he/she submitted to the Commission in connection with his/her legal representation of the Employer, in order to be eligible for a whistleblower award, Claimant must qualify for an exception under the Attorney Conduct Rule, or under the applicable state attorney conduct rules. The Attorney Conduct Rule provides that “[a]n attorney appearing and practicing before the Commission in the representation of an issuer may reveal to the Commission, without the issuer’s consent, confidential information related to the representation to the extent the attorney reasonably believes necessary: (i) [t]o prevent the issuer from committing a material violation that is likely to cause substantial injury to the financial interest or property of the issuer or investors….” Claimant contends that he/she meets the requirements under this rule because Claimant worked on the Limited Partnership’s REDACTED and he/she intended to prevent the Limited Partnership from committing or abetting the commission of a material violation (misappropriation) that would cause significant financial injury to its investors. However, for the exception to be applicable,the attorney must be “appearing and practicing” before the Commission which requires that legal services be provided “to an issuer with whom the attorney has an attorney-client relationship….”
[B]itzlato has marketed itself as requiring minimal identification from its users, specifying that “neither selfies nor passports [are] required.” On occasions when Bitzlato did direct users to submit identifying information, it repeatedly allowed them to provide information belonging to “straw man” registrants.
As a result of these deficient know-your-customer (KYC) procedures, Bitzlato allegedly became a haven for criminal proceeds and funds intended for use in criminal activity. Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market, an anonymous, illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services that was the largest and longest running darknet market in the world. Hydra Market users exchanged more than $700 million in cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shuttered by U.S. and German law enforcement in April 2022. Bitzlato also received more than $15 million in ransomware proceeds.
As alleged in the complaint, Bitzlato’s customers routinely used the company’s customer service portal to request support for transactions with Hydra, which Bitzlato often provided, and admitted in chats with Bitzlato personnel that they were trading under assumed identities. Moreover, Legkodymov and Bitzlato’s other managers were aware that Bitzlato’s accounts were rife with illicit activity and that many of its users were registered under others’ identities. For instance, on May 29, 2019, Legkodymov used Bitzlato’s internal chat system to write to a colleague that Bitzlato’s users were “known to be crooks,” using others’ identity documents to register their accounts. Legkodymov was repeatedly warned by colleagues that Bitzlato’s customer base consisted of “addicts who buy drugs at  Hydra” and “drug traffickers,” with one senior executive even stressing that Bitzlato should combat drug dealers only “nominally,” to avoid hurting the company’s bottom line. An internal spreadsheet saved in Bitzlato’s shared management folder encapsulated the company’s view of itself: “Positives: No KYC. . . . Negatives: Dirty money. . . .”
As alleged in the complaint, although Bitzlato claimed not to accept users from the United States, it did substantial business with U.S.-based customers, and its customer service representatives repeatedly advised users that they could transfer funds from U.S. financial institutions. Moreover, Legkodymov – who himself administered Bitzlato from Miami in 2022 and 2023 – received reports reflecting substantial traffic to Bitzlato's website from U.S.-based Internet Protocol addresses, including over 250 million such visits in July 2022.
On January 10, 2019, Moore entered into a final order of settlement with the Michigan State Department of Insurance and Financial Services that found Moore had engaged in deceptive practices and made false statements on life insurance applications. Although Moore was required to disclose this final order of settlement via filing an amended Form U4 within 30 days of the settlement agreement becoming final, Moore willfully failed to amend his Form U4 to disclose the regulatory settlement.
By failing to disclose the existence of the settlement agreement with the Michigan State Department of lnsurance and Financial Services, Moore violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.
Disbarred California Attorney Sentenced To Five And A Half Years In Prison For Long-Running Multi-Million-Dollar Investment Fraud Scheme / Defendant Sold Interests in Real Estate that He Did Not Own (DOJ Release)
In the United States District Court for the Southern District of New York, disbarred attorney Derek Jones, 48, pled guilty on one count of wire fraud; and he was sentenced to 5 1/2 years in prison plus three years of supervised released, and ordered to pay a forfeiture of $8,679,787.66, and restitution to his victims in an amount to be determined within the next 90 days. As alleged in part in the DOJ Release:
From at least 2012 through at least 2019, JONES deceived his victims into investing in various companies and investment funds that he controlled, including purported real-estate development and investment firms using variations of the names “BlueRidge,” “Living City,” and “Atiswin,” and the purported venture capital firm Realize Holdings (“Realize”).
In fraudulently inducing victims to invest in his funds, JONES routinely lied to investors, including in glossy brochures and legal documents that contained misrepresentations about real estate that JONES falsely claimed was owned or otherwise controlled by BlueRidge, Living City, and Atiswin. For example, JONES falsely told investors and prospective investors that BlueRidge was developing a “resort village” on land it controlled on Semiahmoo Spit in Washington State and, separately, that BlueRidge had purchased an existing hotel in that same location, when in fact neither BlueRidge nor JONES owned or controlled any of that property. In other cases, JONES falsely claimed that his companies were under contract to purchase a ranch in Colorado and that his companies had secured long-term leases for various pieces of property slated for development, including California properties in Santa Monica, Hermosa Beach, and Los Angeles. Instead of using investors’ money as he promised, JONES misappropriated investors’ money, using much of it to make Ponzi-style payments to other investors to whom he owed money in connection with earlier transactions and for personal and family expenses, including the private-school tuition of his children.
In executing his scheme, JONES also sent falsified and counterfeit documents to investors and others. For example, on repeated occasions, JONES provided doctored bank statements showing that he had millions of dollars in various corporate accounts, when in fact he had little or no money in such accounts. On other occasions, he provided counterfeit financial statements that falsely purported to be based on internal audits of companies that he controlled. He also sent investors and others falsified contracts with key pages removed, forged land-leases, and fictional statements of asset allocation. JONES also used the names of other individuals — without those individuals’ authorization or knowledge — to communicate via email with investors and thus foster the illusion that JONES’s businesses were viable operations with real employees.
In total, JONES defrauded investors out of more than $8.6 million.
During the commission of the fraud charged in this case, JONES was suspended from the practice of law by the State Bar Court of California for earlier fraudulent conduct. JONES was ultimately disbarred in July 2022 based on findings by the State Bar Court that he had intentionally misappropriated money belonging to a client in 2011 and that he had made misrepresentations to the client, to the court, and to others.
El Paso Man Pleads Guilty to Operating Ponzi Scheme Disguised as Crypto Investment Firm (DOJ Release)
In the United States District Court for the Western District of Texas, Abner Tinoco pled guilty to five counts of wire fraud. As alleged in part in the DOJ Release, Tinoco:
operated a Ponzi scheme through his business by soliciting millions of dollars of investments from clients and claiming he would invest their money into funds dealing with cryptocurrency and foreign exchange markets. Out of approximately $9 million worth of investments deposited into his business accounts, Tinoco spent more than half on personal expenses to include luxury cars, private jets, real estate and jewelry. Tinoco furthered the deception by providing some of the misappropriated funds as profits to his clients.
In a separate civil case stemming from the above scheme, the Commodities Futures Trading Commission (CFTC) secured a civil consent decree against Tinoco and his business, imposing a ban relating to trading activities. The Department of Justice will work to achieve restitution for any additional victims of Tinoco’s scheme.
Hawaii Couple Charged With Fraud And Money Laundering For Selling Counterfeit Art (DOJ Release)
In the United States District Court for the Middle District of Pennsylvania, an Indictment was filed charging Earl Marshawn Washington and his wife, Zsanett Nagy, with conspiracy to commit wire fraud, mail fraud, and money laundering; and additionally charging Washington with bank fraud and conspiracy to commit bank fraud. As alleged in part in the DOJ Release:
[F]rom 2018 to 2021, Washington and Nagy sold counterfeit artistic goods known as “woodblocks” or “woodcuts” to various buyers and then laundered the proceeds from the sale of those goods. According to the indictment, xylography is the art of making “woodcuts,” or engravings made from wooden blocks, especially for printing using historical techniques. In traditional xylography, an artist uses a sharpened tool to carve a design into the surface of a woodblock. The raised areas that remain after the block has been cut are inked and printed, while the recessed areas that are cut away do not retain ink and will remain blank in the final print. Woodblock images can be printed onto paper, fabrics, textiles, or other materials. The technique has been used in different geographic regions at different times. One woodblock tradition stems from Germany starting around the 14th century and continuing for several hundred years thereafter.
The indictment also alleges that Washington and Nagy sold inauthentic woodblocks and prints made from woodblocks that they advertised as being from between the 15th and early 20th centuries. The buyers included a pair of woodblock collectors residing in France, as well as a buyer of a woodblock print who then resided in Hummelstown, PA. The buyers of the woodblocks in France allegedly made $84,350.91in PayPal payments to Nagy before learning that the woodblocks they purchased were not from the 15th and 16th centuries, as advertised. According to the indictment, Nagy received these payments through PayPal, moved the proceeds to a bank account in her name, and then quickly converted the proceeds to cash through withdrawals of several thousand dollars at a time. It is alleged that Washington admitted to one of the French buyers as being the creator of the woodblocks sold to the French buyers.
Washington is also charged with defrauding a collector of woodblocks from York, PA. The indictment alleges that this collector paid Washington, who used the alias “River Seine,” and his then girlfriend, $118,810 from 2013 to 2016 in exchange for approximately 130 woodblocks, again advertised as being several centuries old. The indictment alleges that at least some of these woodblocks were, in fact, made in the second half of the twentieth century.
Texas Man Admits Role in Scamming Seniors in Rhode Island and Elsewhere in Online Romance Scams (DOJ Release)
In the United States District Court for the District of Rhode Island Fola Alabi, a/k/a Folayemi Alabi pled guilty to charges of conspiracy and money laundering. As alleged in part in the DOJ Release:
To carry out these schemes, a member of the conspiracy befriended unsuspecting seniors online, often posing as a General in the U.S. military serving overseas. The conspirator feigned a personal, and sometimes romantic, interest in his victims, and convinced them to send substantial sums of money, usually in the form of bank checks or cash, to addresses and companies in Texas that were controlled by Alabi. Alabi received the money and either deposited or directed that it be deposited into one of several bank accounts that he controlled. He then quickly withdrew or transferred the funds to other accounts.
Among Alabi’s victims is a Rhode Island widow who was contacted by a member of the conspiracy claiming to be a “General Miller,” purportedly a four-star General, who convinced the victim to provide $60,000 to finance shipment of his personal belongings to the United States. At the purported “General Miller’s” direction, a check was made payable to Full Circle Import Exports, a company created by Alabi, and mailed to Alabi’s residence in Texas. The victim was prepared to send an additional significant sum of money to the purported “General Miller,” when it was determined by her bank and the Westerly Police Department that she was likely the victim of fraud.
According to court documents, in a cellphone seized from Alabi at the time of his arrest in May 2022, federal agents discovered photographs and videos of packages containing cash and checks received by Alabi from victims of the scam.
According to a plea agreement filed in this matter, for purposes of sentencing, the loss attributed to the romance scams perpetrated by Alabi and members of the conspiracy is $1,640,421. Under the terms of the plea agreement, Alabi will forfeit assets derived from his criminal conduct, to include his Texas residence and $31,773.22 contained in a bank account.
Statement Regarding National Trust and Fiduciary Services Company, Inc., et al. by SEC Commissioner Hester M. Peirce and SEC Commissioner Mark T. Uyeda
We write separately to clarify our view that this Order should not be read to suggest that a statement that one fee is waived is not necessarily rendered misleading by the receipt of another fee. The Commission’s Order finds that National Trust and Fiduciary Services Company, Inc. (“NTFS”), a non-depository trust company, violated Sections 17(a)(2) and (3) of the Securities Act of 1933 when it stated that there were “no annual fees” for one of its product offerings, including by stating in trust instruments that the annual trustee fee was “waived.” According to the Order, these statements were misleading because NTFS failed to disclose that: (1) trust assets were invested in mutual fund share classes that charged recurring Rule 12b-1 fees, and (2) these Rule 12b-1 fees were paid to a broker-dealer subsidiary of NTFS that routed the fees to NTFS after deducting its expenses and satisfying its net capital requirements.
We are concerned that the public reading the Order will incorrectly assume that the Rule 12b-1 fee revenue received by NTFS was a substitute for payments of an annual trustee fee, resulting in violations of Sections 17(a)(2) and (3). However, the Order does not provide factual support for this theory. Instead, the facts here are consistent with the facts underlying prior Commission enforcement actions for inadequate disclosure of Rule 12b-1 fees. In particular, the Order establishes that: (1) NTFS failed to adequately disclose in its marketing materials its receipt of Rule 12b-1 fees, and (2) monthly statements available to trust beneficiaries stated only that NTFS “may” receive Rule 12b-1 fees when, in fact, NTFS in all instances did receive Rule 12b-1 fees with respect to the product at issue. NTFS’s failure to accurately disclose its receipt of Rule 12b-1 fees was itself a misrepresentation that should have formed the basis for the Section 17(a)(2) and (3) violations.
The attempt to tie these violations to NTFS’s seemingly accurate statements regarding its annual trustee fee has the potential to create confusion as to whether this enforcement action is intended to adopt a novel legal theory regarding the receipt of Rule 12b-1 fees. In our view, this Order should not be read to indicate that an entity is presumed to make a misstatement when it advertises the waiver of one type of fee but separately receives Rule 12b-1 fee revenue. Rather, we believe that this Order should be read to reaffirm the Commission’s long-standing position that – when an entity receives Rule 12b-1 fees – the receipt of those fees must be accurately disclosed. In the Matter of National Trust and Fiduciary Services Company, Inc., et al., Release No. 33-11146 (Jan. 17, 2023), at paragraphs 18-19, available at https://www.sec.gov/litigation/admin/2023/33-11146.pdf. Id. The Order also outlines other conduct that forms the basis for Section 17(a)(2) and (3) violations. This statement relates only to the findings in the Order regarding NTFS’s annual trustee fee. In the Matter of National Trust and Fiduciary Services Company, Inc., et al., supra note 1, at paragraph 20.
SEC Obtains Judgment Against Florida Man in Microcap Fraud (SEC Release)
The United States District Court for the District of Massachusetts entered a Final Consent Judgment against Todd Zinkwich
https://www.sec.gov/litigation/litreleases/2023/judg25615.pdf that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act and the market manipulation and antifraud provisions of Sections 9(a) and 10(b) of the Securities Exchange Act oand Rule 10b-5 thereunder, and from participating in any offering of penny stock; and order Zinkwich to pay over $300,000 in disgorgement and prejudgment interest, and based on Zinkwich's financial condition waives payment except $12,000. As alleged in part in the SEC Release:
[F]rom at least June 2017 to March 2018, individuals and groups who held large quantities of microcap stocks paid Zinkwich hundreds of thousands of dollars to facilitate a scheme to drive up demand for the stocks of certain issuers. As alleged in the complaint, Zinkwich arranged for his associate Eric Landis to generate an appearance of increased demand for the stocks by placing thousands of trades between numerous accounts under Landis's control, including accounts that Zinkwich controlled and gave Landis access to. The Commission separately charged and obtained a final judgment against Landis for his role in the fraud. In the complaints against Zinkwich and Landis, the SEC alleged that the manipulative trading scheme generated the false appearance of an upsurge of trading in the companies' stock and allowed Zinkwich's clients to sell millions of shares of stock into the public market at inflated prices.
SEC Denies Whistleblower Award to Claimant
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-96669; Whistleblower Award Proc. File No. 2023-29)
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending the denial of a Whistleblower Award to Claimant 1, Claimant 3, and Claimant 4. The Commission ordered that CRS's recommendations be approved. The Order asserts in part that [Ed: footnotes omitted]:
[T]he CRS stated that Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that the investigation which led to the Covered Action (the “Investigation”) was opened based upon information reported in the news media and not in response to any information provided by any of the Claimants. The CRS also preliminarily determined that none of the Claimants’ information significantly contributed to the success of the Covered Action. Enforcement staff assigned to the Investigation received Claimant 1’s information approximately four months after the Investigation was opened, and the staff was already aware of the underlying conduct alleged in Claimant 1’s complaint. In addition, while Claimant 1 provided certain information to the Commission about Claimant 1’s family experiences, none of the information advanced the Investigation or otherwise impacted the charges brought by the Commission in the Covered Action. The CRS stated that staff assigned to the Investigation did not receive or review any information from Claimant 3 or Claimant 4 and that none of their information advanced or contributed to the Investigation or the Covered Action.
FINRA Bars Rep For Providing False Information
In the Matter of Suzanne Therese Charrin, Respondent (FINRA AWC 2021071665401)
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Suzanne Therese Charrin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Suzanne Therese Charrin was first registered in 2003 and eventually became registered with Woodbury Financial Services, Inc. In accordance with the terms of the AWC, FINRA imposed upon Suzanne Therese Charrin a Bar from associating with any FINRA member in all capacities. As alleged in part in the AWC:
On July 14, 2021, in connection with its investigation that Charrin was engaged in an undisclosed outside business activity, FINRA staff issued Woodbury a request for documents and information. Among other things, FINRA staff requested the firm provide a statement from Charrin describing the activities conducted by two of her outside business activities. Charrin provided her statement for submission to FINRA on July 22, 2021. Charrin was aware at the time that her statement would be submitted to FINRA in response to a request for information issued to Woodbury. In her statement, Charrin falsely stated that her outside business activities involved the extraction of lavender oil and manufacture of lavender oil products, when in fact, both businesses were involved in the cannabidiol (CBD) oil industry. During her on-the-record testimony on December 14, 2022, Charrin admitted that she had provided false information to FINRA in response to this request.Therefore, Charrin violated FINRA Rule 2010.On November 4, 2021, in connection with its investigation, FINRA staff issued Charrin a request for documents and information pursuant to FINRA Rule 8210. Among other items, FINRA staff requested that Charrin provide details regarding the status of one of her outside business activities. On November 15, 2021, Charrin provided a false response to FINRA staff, stating that the outside business activity had not manufactured or tested any products when, in fact, the outside business activity involved the manufacturing and selling of CBD products since at least late 2020.On August 8, 2022, FINRA staff issued another request to Charrin pursuant to FINRA Rule 8210, including a request for a copy of Charrin’s 2021 income tax returns. On September 3, 2022, Charrin produced her tax returns, but falsely represented to FINRA staff that her accountant had incorrectly described the nature of one of her outside business activities on her federal tax return as involving CBD oil business, rather than lavender oil business.During her on-the-record testimony on December 14, 2022, Charrin admitted that she had provided false information to FINRA in response to these two requests.Therefore, Charrin violated FINRA Rules 8210 and 2010.