Friday, September 13, 2013

SEC Litigation Releases: Week in Review

SEC Charges Atlanta-Based Investment Adviser Representative with Securities Fraud, September 12, 2013, (Litigation Release No. 22797)

Earlier this week, the SEC charged Paul Marshall, Bridge Securities, LLC, Bridge Equity, Inc. and FOGFuels, Inc. with misappropriation of client funds as well as violations of Securities Exchange Act of 1934, the Securities Act of 1933 and the Investment Advisers Act of 1940.  The SEC alleges that over the past two years, Marshall has misappropriated "at least $2 million from advisory clients" through the companies he controlled.  Rather than using client funds for investment purposes, Marshall used the funds for vacations and "private school tuition for his children."  The SEC is seeking a "permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties."

Final Judgments Entered Against CFO and Real Estate Finance Company, September 11, 2013, (Litigation Release No. 22796)

Final judgments were entered by consent against Owen Mark Williams and True North Finance Corporation, f/k/a CS Financing Corporation. The SEC's original complaint charged the defendants with overstating "revenue in True North's filings with the Commission in 2008 and 2009." The final judgment permanently enjoins the defendants from violating sections of the Securities Act and Exchange Act and orders Williams to pay a $40,000 civil penalty.

SEC Defendant Indicted in $30 Million Ponzi Scheme and Affinity Fraud Targeting Haitian-American Investors, September 10, 2013, (Litigation Release No. 22795)

Criminal charges have been filed against George Louis Theodule based on charges in "a now settled SEC action." The 40-count "indictment charges Theodule with securities fraud, wire fraud, and money laundering." The SEC's original complaint charged Theodule's with perpetrating a $30 million Ponzi scheme through Creative Capital Consortium, LLC and Creative Capital Concept$, LLC that targeted Haitian-American investors. In 2009 and 2010, judgments were entered against Theodule that enjoined him from future violations of various provisions of the securities laws and ordered him to pay over $5.5 million in disgorgement, prejudgment interest, and a civil penalty.

SEC Files Civil Injunctive Action Against Alleged Perpetrator and Unregistered Broker in Fraudulent Promissory Note Offering, September 9, 2013, (Litigation Release No. 22794)

According to the complaint (PDF), Brian G. Elrod allegedly conducted "a fraudulent offering of promissory notes for which Nova Dean Pack acted as an unregistered broker." The pair allegedly raised almost $2 million from investors "who invested in high-yield promissory notes issued by CFS Holding Company LLC, a Colorado company owned and managed by Elrod." Rather "than use investor money for legitimate business purposes," Elrod allegedly "used most of the investor funds to make substantial payments to himself and family members and to pay for personal expenses, to pay Pack significant commissions for referring investors, and to make interest payments back to investors." The defendants have agreed to settle the charges by consenting to a final judgment that enjoins them from future violations of the Securities Act and Exchange Act and orders them to pay over $3.9 million in disgorgement, prejudgment interest, and civil penalties. However, Pack's ordered payment has been waived based upon his financial condition.

SEC Charges Projaris Management LLC and Victory Partners Financial with Fraud, September 9, 2013, (Litigation Release No. 22793)

According to the complaint (PDF), Projaris Management, LLC, Victory Partners Financial , Joe G. Lawler, Brandt A. Lawler, Michael S. Lawler, Ryan G. Lawler, Timothy J. Lawler, and Pamela Hass were all involved in "an offering fraud that raised approximately $1.4 million." Allegedly, "the primary function of the defendants’ scheme was to convince investors to participate in a fraudulent pooled investment that purportedly invested in metals, commodities, real estate, and a fund that, among other things, invested overseas." The defendants "then siphoned off the invested funds for their own purposes and to continue to perpetuate the fraud." The SEC has charged the defendants with violating various provisions of the securities laws and seeks permanent injunctive relief, disgorgement, prejudgment interest, and civil penalties.

SEC Halts Florida-Based Prime Bank Investment Scheme, September 9, 2013, (Litigation Release No. 22792)

The SEC obtained an emergency court order to "halt a prime bank investment scheme by a Miami attorney and others who have promised investors exorbitant returns to be derived from a program based on the trading of bank instruments." According to the complaint (PDF), "Bernard H. Butts, Jr.; Fotios Geievelis, Jr., a/k/a Frank Anastasio; Worldwide Funding III Limited LLC; Douglas J. Anisky; Sidney Banner, Express Commercial Capital LLC; and James Baggs raised over $3.5 million" from investors both in the United States and abroad. The SEC claims in reality "no funds were used to acquire bank instruments and that Geivelis used investor funds to travel and gamble." According to the SEC, "Anisky, Banner, Express Commercial Capital, and Baggs all sold interests in the fraudulent scheme." The complaint charges all of the defendants with violating the Securities Act and Exchange Act and seeks permanent injunctions, disgorgement, and financial penalties. The complaint also names  Bernard H. Butts, Jr. PA; Butts Holding Corporation; Margaret A. Hering; Global Worldwide Funding Ventures, Inc.; and PW Consulting Group, LLC as relief defendants.

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