SEC Charges Massachusetts Company, CEO and Promoters With $9 Million Securities Fraud, December 14, 2012, (Litigation Release No. 22572)
According to the complaint (opens to PDF), BioChemics, Inc., its CEO, John Masiz, and two individuals paid to solicit investors, Craig Medoff and Gregory Kroning, "made false statements to investors about collaborations with major pharmaceutical companies and the status and results of drug trials of [BioChemic's] main product." Additionally, the SEC claims "that they created fraudulent valuations of the company’s stock in order to raise" at least $9 million from investors. The SEC alleges that while Masiz claimed investor funds would be used "to fund clinical trials and [to pay] for operating expenses," he actually used some of the funds for personal expenses including "meals, massages, clothes, and sporting goods and to make interest-free loans of over $200,000 to Kroning in addition to paying for his personal expenses including a leased BMW." Masiz and Medoff had previously been sued by the SEC and Medoff had been barred from associating with brokers, dealers, and investment advisers. The current complaint charges all defendants with violating sections of the Securities Act and the Exchange Act and seeks injunctive relief, disgorgement, and civil penalties, as well as an officer and director bar against Masiz.
Defendant in SEC Enforcement Action Sentenced and Ordered to Pay Restitution, December 14, 2012, (Litigation Release No. 22571)
Stephen B. Blankenship was sentenced to forty-one months imprisonment plus three years of supervised release as well as ordered to pay over $615,000 in fines and restitution based on his "his guilty plea to one count of Mail Fraud and one count of Securities Fraud." Blankenship was charged by the SEC for allegedly operating a scheme through Deer Hill Financial Group, LLC, where he falsely "represented to numerous investors that he had investment opportunities that were safe and would pay a consistent return to investors."
Court Enters Final Judgment Against Massachusetts Investment
Adviser and its Principal, Orders Payment of Over $1.7 Million in
Illicit Gains and Penalties, December 14, 2012, (Litigation Release No. 22570)
A final judgment was entered against investment adviser EagleEye Asset Management, LLC and its principal, Jeffrey A. Liskov. According to the SEC, Liskov "made material misrepresentations to several advisory clients to induce them to liquidate investments in securities and instead invest the proceeds in forex trading." EagleEye and Liskov have been charged with violating sections of the Exchange Act and Investment Advisers Act, and have been ordered to pay over $1.7 million combined in disgorgement, prejudgment interest and civil penalties.
Securities and Exchange Commission v. Tiger Asia Management, LLC, et al., December 14, 2012, (Litigation Release No. 22569)
Kook "Bill" Hwang, manager of Tiger Asia Management and Tiger Asia
Partners, has been charged with insider trading. According to the SEC,
Hwang used information he received in private placement offerings for
Bank of China stock and China Construction Bank stock to short sell
stocks and make over $16.2 million in illicit profits. The head trader
of the two hedge funds involved, Raymond Y.H. Park, has also been
charged by the SEC for his alleged involvement in the trading. In
addition to the $16.2 million, Hwang and Park also collected almost
$496,000 in inflated management fees for the funds. The SEC has charged
Hwang, the firms, and Park with violating sections of the Exchange Act
and Securities Act. Additionally, Hwang and the firms have been charged
with violating sections of the Investment Advisers Act, while Park has
been charged with "aiding and abetting those violations." Hwang, Tiger
Asia Management, and Tiger Asia Partners are required to pay
approximately $44 million in disgorgement, prejudgment interest, and
penalties. Park has agreed to pay $74,000 in disgorgement, prejudgment
interest, and penalties. For more information, see our recent post on this action.
SEC Charges U.S. Based Consultants to Numerous Chinese Reverse Merger Companies with Securities Fraud, December 11, 2012, (Litigation Release No. 22568)
According to the complaint (opens to PDF), Huakang "David" Zhou and his consulting firm Warner Technology and Investment Corporation "engaged in varied misconduct from at least 2007 through 2010." Zhou's alleged misconduct includes engaging in the unregistered sale of securities, acting as an unregistered securities broker, making material misrepresentations and omissions to investors and conducting "an elaborate scheme in an apparent effort to list another client, a Chinese real estate company, on a national securities exchange." The SEC has charged Zhou and Warner Investment with violating sections of the Securities Act and the Exchange Act.
SEC Charges New York-Based Fund Manager with Two Widespread Fraudulent Trading Schemes Spanning Nearly Four Years, December 11, 2012, (Litigation Release No. 22567)
According to the complaint (opens to PDF), Steven B. Hart "used his control of Octagon Capital Partners, LP...and his position of authority at an investment fund for which he was employed as a portfolio manager to direct thirty-one matched trades between the two investment funds, benefiting Octagon at the expense [of] his employer's fund." This illegal matched trading resulted in over $580,000 in profit for Octagon. Additionally, the SEC has charged Hart with trading "on behalf of Octagon while in possession of material nonpublic information concerning the offerings" resulting in over $240,000 in illicit profit. The SEC has charged Hart with violating sections of the Securities Act, Exchange Act, and the Investment Advisers Act. Hart has consented to a judgment enjoining him from future violations and has agreed to pay over $1.3 million in disgorgement, prejudgment interest, and penalties. SLCG has conducted independent research (PDF) concerning such personal trading abuses.
SEC Charges Oil and Gas Company and Principal with Offering Fraud, December 11, 2012, (Litigation Release No. 22566)
According to the complaint (opens to PDF), from June 2001 through April 2012, Rodney Ratheal, principal of Premco Western, Inc., "raised over $4 million...through the fraudulent and unregistered sale of undivided fractional working interests in two oil and gas wells located along the Utah/Arizona border." Ratheal has been charged by the SEC with making false and misleading statements including telling investors that the company's purported geologist " had discovered a 'Super Giant' oil and gas field under Premco's 1,000 acres of federal mineral leases," and that drilling was successful when in fact " neither of the two wells drilled with investor funds produced any oil." Furthermore, Ratheal told investors that "only 10% of the investment proceeds would [go] to cover his living expenses. In reality, approximately nearly $3 million (or 70%) of investor funds were used to support Ratheal's lavish lifestyle." Premco and Ratheal have consented to a judgment enjoining them from violating sections of the Securities Act and Exchange Act and have consented to pay over $7.3 million in disgorgement and prejudgment interest.
Court Enters Final Judgements Ordering Dwight Flatt and David Della Sciucca, Jr. to Pay Disgorgement, Prejudgment Interest and Civil Penalties, December 11, 2012, (Litigation Release No. 22565)
Final judgments have been entered against Dwight Flatt and David Della Sciucca, Jr. for their alleged involvement in a kickback scheme involving the stock of Magnum d'or Resources, Inc. Flatt has been ordered to pay over $4.6 million in disgorgement, prejudgment interest, and penalties. Sciucca has been ordered to pay over $1.3 million in disgorgement, prejudgment interest, and penalties.
Securities and Exchange Commission v. InnoVida Holdings LLC, Claudio Osorio and Craig Toll, December 7, 2012, (Litigation Release No. 22563)
According to the complaint (opens to PDF), InnoVida Holdings LLC, its former CEO, Claudio Osorio, and its former CFO, Craig Toll, "perpetrated an offering fraud that raised at least $16.8 million mainly from investors located in Miami, Florida." InnoVida, "a manufacturer of alternative housing structures," allegedly claimed "that its product was fire and hurricane proof and could be produced at economically advantageous prices." According to the SEC, Osorio used "fraudulent pro forma financial statements to persuade investors to fund InnoVida's alternative housing business." Toll allegedly prepared the pro formas, "which falsely reflected that InnoVida had more than $35 million in cash
and cash equivalents in its bank accounts, and more than $100 million in
equity." Additionally, the SEC claims that Osorio "diverted at least $8.1 million of investor monies to fund his lavish lifestyle."
SEC Charges Florida-Based Lawyer with Forging Attorney Opinion Letters for Microcap Stocks, December 7, 2012, (Litigation Release No. 22562)
According to the complaint (opens to PDF), Guy M. Jean-Pierre wrote and issued attorney opinion letters "in the name of his niece by applying her signature without her consent" after he was banned in April 2010 from issuing attorney opinion letters. This ban resulted from the "'repeated missing information and inconsistencies' about the issuers and his lack of due diligence in his past letters." Jean-Pierre (also known as Marcelo Dominguez de Guerra) tried to "evade the ban by forming a new company called Complete Legal Solutions and misrepresenting that his niece was conducting the legal work that was allegedly performed." His plan was allegedly formed within two weeks after the original ban had been placed on him. The SEC has charged Jean-Pierre with violating sections of the Securities Act and the Exchange Act and seeks disgorgement, prejudgment interest, financial penalties, a permanent injunction, and a penny stock bar against him.
- Expert Testimony
- Valuation Services
- Structured Products
- Free Tools