On February 10, 2011, the Commission amended its complaint in SEC v. Greenstone Holdings, Inc., et al., 10 civ. 1302 (S.D.N.Y.), to add as a defendant Virginia K. Sourlis, a securities lawyer. According to the amended complaint, in early 2006, Sourlis intentionally authored a materially false and misleading legal opinion, which Greenstone used to illegally issue millions of shares of stock in unregistered transactions. Among other things, Sourlis falsely described promissory notes, note holders, and communications with those holders, none of which actually existed. The SEC alleges that, contrary to Sourlis’ fraudulent opinion letter, the stock issuance did not qualify for an exemption from registration under the federal securities laws.
The amended complaint alleges that Sourlis violated Sections 5 of the Securities Act of 1933 (the “Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder and aided and abetted defendant Greenstone’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks injunctive relief and financial penalties, disgorgement, and a penny stock bar from Sourlis.
Wednesday, February 23, 2011
Saturday, February 19, 2011
SEC Charges Filed in $7 Million Pump and Dump Scheme
Today, the Commission filed a complaint against
Jonathan R. Curshen, 46, a Sarasota, Florida resident who allegedly founded and led Red Sea Management Ltd., (“Red Sea”), a Costa Rican asset protection company that, according to the complaint, effected pump-and-dump schemes on behalf of its clients and laundered millions of dollars in trading proceeds out of the United States to its clients;
David C. Ricci, 39, and Ronny Morales Salazar, 39, of San Jose, Costa Rica, whom the complaint describes as Red Sea stock traders;
Ariav “Eric” Weinbaum, 37, and Yitzchak (or Izhack) Zigdon, 47, of Israel, allegedly two of Red Sea’s clients;
Robert L. Weidenbaum, 44, of Coral Gables, Florida, allegedly a stock promoter who operates a company called CLX & Associates, Inc.; and
Michael S. Krome, 49, a Lake Grove, New York lawyer, who allegedly wrote a fraudulent opinion letter for their respective roles in a fraudulent pump-and-dump scheme in the common stock of CO2 Tech Ltd. that was carried out from late 2006 through April 2007.
According to the complaint, the defendants’ coordinated misconduct enabled them to sell CO2 Tech stock at artificially inflated prices, resulting in profits of over $7 million. Defendant Ricci simultaneously offered to settle with the Commission in a consent submitted for the Court’s consideration.
Jonathan R. Curshen, 46, a Sarasota, Florida resident who allegedly founded and led Red Sea Management Ltd., (“Red Sea”), a Costa Rican asset protection company that, according to the complaint, effected pump-and-dump schemes on behalf of its clients and laundered millions of dollars in trading proceeds out of the United States to its clients;
David C. Ricci, 39, and Ronny Morales Salazar, 39, of San Jose, Costa Rica, whom the complaint describes as Red Sea stock traders;
Ariav “Eric” Weinbaum, 37, and Yitzchak (or Izhack) Zigdon, 47, of Israel, allegedly two of Red Sea’s clients;
Robert L. Weidenbaum, 44, of Coral Gables, Florida, allegedly a stock promoter who operates a company called CLX & Associates, Inc.; and
Michael S. Krome, 49, a Lake Grove, New York lawyer, who allegedly wrote a fraudulent opinion letter for their respective roles in a fraudulent pump-and-dump scheme in the common stock of CO2 Tech Ltd. that was carried out from late 2006 through April 2007.
According to the complaint, the defendants’ coordinated misconduct enabled them to sell CO2 Tech stock at artificially inflated prices, resulting in profits of over $7 million. Defendant Ricci simultaneously offered to settle with the Commission in a consent submitted for the Court’s consideration.
Thursday, February 17, 2011
Barrington man charged in $105M Ponzi scheme
Daniel Spitzer promised his investors a good deal: low risk and sizeable returns if they agreed to put their money into a fund he told them he invested primarily in foreign currency trading, authorities announced today.
But instead of investing, Spitzer took most the money he obtained from about 400 people and used it to pay off other investors in what amounted to a $105 million Ponzi scheme, according to an indictment filed Thursday against Spitzer.
Spitzer, 51, who currently lives in Barrington, allegedly controlled 12 investment funds, known as “the Kenzie Funds,” which he told potential investors had never lost money and had achieved historical returns.
In reality, federal authorities said that Spitzer only invested about one third of the money raised from investors, which yielded a total net return of less than 1 percent. As of June 30, 2009, the Kenzie Funds only had about $4 million in bank accounts, though Spitzer had told investors it was worth about $250 million, according to the indictment.
“Daniel Spitzer made Ponzi-type payments to investors, made and caused to be made misrepresentations about the status of investments, and took other steps to lull investors into false sense of security that their investments were safe and profitable,” the indictment stated.
Spitzer now faces eight counts of mail fraud, which each carry a maximum penalty of 20 years in prison and a $250,000 fine.
But instead of investing, Spitzer took most the money he obtained from about 400 people and used it to pay off other investors in what amounted to a $105 million Ponzi scheme, according to an indictment filed Thursday against Spitzer.
Spitzer, 51, who currently lives in Barrington, allegedly controlled 12 investment funds, known as “the Kenzie Funds,” which he told potential investors had never lost money and had achieved historical returns.
In reality, federal authorities said that Spitzer only invested about one third of the money raised from investors, which yielded a total net return of less than 1 percent. As of June 30, 2009, the Kenzie Funds only had about $4 million in bank accounts, though Spitzer had told investors it was worth about $250 million, according to the indictment.
“Daniel Spitzer made Ponzi-type payments to investors, made and caused to be made misrepresentations about the status of investments, and took other steps to lull investors into false sense of security that their investments were safe and profitable,” the indictment stated.
Spitzer now faces eight counts of mail fraud, which each carry a maximum penalty of 20 years in prison and a $250,000 fine.
Wednesday, February 16, 2011
Florida Man Sentenced 17 Years for Investment Fraud
A man has been sentenced to 17 years in prison for his role in a Ponzi scheme that scammed more than $14 million from hundreds of Haitian-American investors in South Florida and New Jersey.
U.S. District Court Judge Kenneth Marra sentenced 37-year-old Ronnie Bass Jr. of Delray Beach on Friday and ordered him to pay nearly $4 million in restitution. Victims of the scam who invested with the Homepals Investment Club fear they may never see their money.
The attorney for Bass had aruged in court that his client should be sentenced to 10 years in prison since two others involved in the scheme received 5-year sentences.
Prosecutors argued that the others had cooperated with investigators and asked for a lenghty sentence.
U.S. District Court Judge Kenneth Marra sentenced 37-year-old Ronnie Bass Jr. of Delray Beach on Friday and ordered him to pay nearly $4 million in restitution. Victims of the scam who invested with the Homepals Investment Club fear they may never see their money.
The attorney for Bass had aruged in court that his client should be sentenced to 10 years in prison since two others involved in the scheme received 5-year sentences.
Prosecutors argued that the others had cooperated with investigators and asked for a lenghty sentence.
Monday, February 14, 2011
Downey man who ran a Ponzi scheme for 15 years faces sentencing
Prosecutors are expected to ask a judge today to send a man to prison for 15 years for running a Ponzi scheme that took in about $30 million as well as a scam that preyed on homeowners facing foreclosure.
Juan Rangel of Downey, who is already behind bars awaiting sentencing for a 2009 conviction for bribing a Bank of America branch manager, pleaded guilty last October before U.S. District Judge S. James Otero to one count each of mail fraud and money laundering.
Rangel, 47, was indicted last year in Los Angeles federal court on charges that he and his Commerce-based company, Financial Plus Investments, recruited investors through Spanish-language newspapers, magazines, radio spots and infomercials.
Prosecutors said investors were promised guaranteed returns of 60 percent each year out of the profits from Rangel's real estate investments and his lending business.
Instead, Rangel used the victims' cash to make monthly mortgage payments on his $3 million home, to lease a Lamborghini and a limousine, and to buy cocaine, prosecutors said.
Rangel participated in "a scheme to defraud investors" and used the U.S. mail to do so, Otero said at a 2010 hearing.
In the related mortgage fraud scheme, Rangel and others targeted Spanish-speaking homeowners who were at risk of losing their homes and offered to help them avoid foreclosure, Assistant U.S. Attorney James A. Bowman said.
Rather than assist them, however, Rangel took titles to their homes and drained the remaining equity out of the properties, the prosecutor said.
Juan Rangel of Downey, who is already behind bars awaiting sentencing for a 2009 conviction for bribing a Bank of America branch manager, pleaded guilty last October before U.S. District Judge S. James Otero to one count each of mail fraud and money laundering.
Rangel, 47, was indicted last year in Los Angeles federal court on charges that he and his Commerce-based company, Financial Plus Investments, recruited investors through Spanish-language newspapers, magazines, radio spots and infomercials.
Prosecutors said investors were promised guaranteed returns of 60 percent each year out of the profits from Rangel's real estate investments and his lending business.
Instead, Rangel used the victims' cash to make monthly mortgage payments on his $3 million home, to lease a Lamborghini and a limousine, and to buy cocaine, prosecutors said.
Rangel participated in "a scheme to defraud investors" and used the U.S. mail to do so, Otero said at a 2010 hearing.
In the related mortgage fraud scheme, Rangel and others targeted Spanish-speaking homeowners who were at risk of losing their homes and offered to help them avoid foreclosure, Assistant U.S. Attorney James A. Bowman said.
Rather than assist them, however, Rangel took titles to their homes and drained the remaining equity out of the properties, the prosecutor said.
Tuesday, February 8, 2011
Enough Transparency in the Municipal Bond Market?
The municipal bond market, already under a dark cloud due to rising risk levels, apparently has a pattern of lax financial reporting practices that could further elevate concerns about the market.
A new study from DPC Data Inc. found that bond-issuing municipalities in general are delaying or ignoring their annual financial disclosure reporting requirements.
In a sample analysis of 17,056 muni bonds, DPC found that 40% failed to meet self-reporting of financial disclosure requirements in 2009, the most recent fiscal year studied.
That is up from 36% in 2008 and 33% during the period from 2005 through 2007.
Of those municipalities that are submitting financial reports to the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system, many are filing more than 180 days late.
In fact, nearly three quarters of the studied bond offers either did not file required financial statements or filed so late that they were useless for credit analysis, according to DPC chief executive Peter Schmitt.
A new study from DPC Data Inc. found that bond-issuing municipalities in general are delaying or ignoring their annual financial disclosure reporting requirements.
In a sample analysis of 17,056 muni bonds, DPC found that 40% failed to meet self-reporting of financial disclosure requirements in 2009, the most recent fiscal year studied.
That is up from 36% in 2008 and 33% during the period from 2005 through 2007.
Of those municipalities that are submitting financial reports to the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system, many are filing more than 180 days late.
In fact, nearly three quarters of the studied bond offers either did not file required financial statements or filed so late that they were useless for credit analysis, according to DPC chief executive Peter Schmitt.
Monday, February 7, 2011
Studio City Man Faces Securities Fraud Charges In Alabama
Authorities say three men are facing securities fraud charges involving what officials call a multimillion-dollar investment scam.
Jail records show 37-year-old Paul Liggett of Fenton, Mo., was booked into the Baldwin County Corrections Center on Thursday and was released on $35,000 bail. On Jan. 28, 33-year-old Michael David Judd of Studio City, Calif., was booked and later released on $100,000 bail.
Both men are scheduled to be arraigned March 18 in Baldwin County Circuit Court.
Charges for both men stem from an alleged scheme involving 38-year-old Richard Tucker of Robertsdale, and his company, Synergy Finance Group. Tucker is due in court next week.
Officials say agents persuaded investors to wire money to Synergy accounts with the promise of multimillion-dollar returns.
Jail records show 37-year-old Paul Liggett of Fenton, Mo., was booked into the Baldwin County Corrections Center on Thursday and was released on $35,000 bail. On Jan. 28, 33-year-old Michael David Judd of Studio City, Calif., was booked and later released on $100,000 bail.
Both men are scheduled to be arraigned March 18 in Baldwin County Circuit Court.
Charges for both men stem from an alleged scheme involving 38-year-old Richard Tucker of Robertsdale, and his company, Synergy Finance Group. Tucker is due in court next week.
Officials say agents persuaded investors to wire money to Synergy accounts with the promise of multimillion-dollar returns.
Wednesday, February 2, 2011
SEC Approves FINRA Proposal to Give Investors Permanent Option of All Public Arbitration Panels
The Financial Industry Regulatory Authority (FINRA) today announced that the Securities and Exchange Commission (SEC) has approved its proposed rule change to provide customers in all FINRA arbitrations the option of having an all public panel. Historically, in cases with three arbitrators, the panels have been comprised of two public arbitrators and one arbitrator with a nexus to the securities industry. The amended rules will apply to all customer cases in which a list of potential arbitrators has not yet been sent to the parties.
"This change will give investors an additional choice in selecting their arbitrators when they file claims,” said Richard Ketchum, FINRA Chairman and Chief Executive Officer. “We believe that giving investors the ability to have an all-public panel will increase public confidence in the fairness of our dispute resolution process.”
FINRA sought the SEC’s approval for the rule change in October after results of a 27-month pilot program showed that investors presented with this option chose the new method of arbitrator selection nearly 60 percent of the time. Investors regularly accepted a non-public arbitrator, but the ability to choose the circumstances improved their perception of the process. Participation in FINRA’s Public Arbitrator Pilot Program was voluntary and ultimately included the participation of 14 firms.
“There was strong support from investor and consumer groups for giving arbitration customers the right to decide whether their panel should include a non-public member,” said Ketchum.
"This change will give investors an additional choice in selecting their arbitrators when they file claims,” said Richard Ketchum, FINRA Chairman and Chief Executive Officer. “We believe that giving investors the ability to have an all-public panel will increase public confidence in the fairness of our dispute resolution process.”
FINRA sought the SEC’s approval for the rule change in October after results of a 27-month pilot program showed that investors presented with this option chose the new method of arbitrator selection nearly 60 percent of the time. Investors regularly accepted a non-public arbitrator, but the ability to choose the circumstances improved their perception of the process. Participation in FINRA’s Public Arbitrator Pilot Program was voluntary and ultimately included the participation of 14 firms.
“There was strong support from investor and consumer groups for giving arbitration customers the right to decide whether their panel should include a non-public member,” said Ketchum.
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