Friday, December 20, 2013

SEC Litigation Releases: Week in Review

SEC Charges Detroit Area Man and His Company with Conducting a Pump and Dump Scheme, December 18, 2013, (Litigation Release No. 22892)

According to the complaint (PDF), "Randy A. Hamdan and a related entity, Oracle Consultants LLC,...carr[ied] out a pump-and-dump scheme in the securities of CompuSonics Video Corporation" that resulted in illicit proceeds of almost $30,000. The SEC has charged the defendants with violating the Securities Act and Exchange Act and seeks permanent injunctions, disgorgement, prejudgment interest, penalties, and a penny stock bar.

SEC Charges Texas Oil and Gas Promoters for Securities Fraud, December 16, 2013, (Litigation Release No. 22891)

According to the complaint (PDF), Leon Ali Parvizian and his two companies, Arcturus Corporation and Aschere Energy LLC, fraudulently offered and sold securities "in the form of interests in oil and gas joint ventures."Additionally, promoters Alfredo Gonzalez, AMG Energy, LLC , Robert Balunas, and R. Thomas & Co., LLC have been charged "with violations of the securities offering and broker-dealer registration provisions of the federal securities laws" by acting as unregistered broker-dealers and selling unregistered securities. Although the defendants raised nearly $22 million from investors, "only $7.9 million, or 36 percent, of the money raised" was used to drill oil and gas wells. The rest was used on "non-JV related expenses, including legal fees." The SEC has charged the defendants with violating various provisions of the securities laws and seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties.

SEC Charges Perpetrators of Prime Bank Schemes in Las Vegas and Switzerland, December 16, 2013, (Litigation Release No. 22890)

According to the complaint (PDF), Malom Group AG, along with Martin U. Schläpfer (Malom's Chief Executive Officer), Hans-Jürg Lips (Malom's President), James C. Warras (Malom's Vice President), Joseph N. Micelli (Malom's Compliance Officer), Anthony B. Brandel (Malom's main point of contact for U.S. Investors), and Sean P. Finn (Malom's investment recruiter) "raised $11 million from U.S. investors by using a series of lies and forged documents to steer [investors] into seemingly successful foreign trading programs that were nothing more than vehicles to steal money." Finn's company, M. Dwyer LLC, has also been named as a defendant. The defendants allegedly used the stolen money for personal use. The SEC has charged the defendants with violating various provisions of the securities laws and seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties.

In a parallel action, the U.S. Department of Justice "announced criminal charges against the same six individuals charged in the SEC's complaint."

SEC Charges Seven Individuals and Six Entities Involved in Prime Bank Fraud, December 13, 2013, (Litigation Release No. 22889)

According to the complaint (PDF), Daniel D. Coddington, his company Golden Summit Investors Group, Ltd,  Jesse W. Erwin, Merlyn C. “Curt” Geisler, Marshall D. Gunn, Lewis P. Malouf, Golden Summit, Extreme Capital Ltd, Fidelity Asset Service Corp., Geisco FNF, LLC, and SouthCom Management, LLC "carried out a Prime Bank Fraud that raised more than $31 million." The complaint also charges Seth A. Leyton, Michael B. Columbia and Stonerock Capital Group LLC with "aid[ing] and abett[ing] the fraud." The SEC has charged the defendants with violating various provisions of the securities laws and seeks "permanent injunctions, disgorgement plus prejudgment interest, third-tier penalties, and other relief against all of the defendants." Additionally, "the complaint seeks disgorgement plus prejudgment interest from relief defendants Daniel S. 'Scott' Coddington, Coddington Family Trust, Joanna I. Columbia, Vincent G. Farris, and Vincent G. Farris Co., L.P.A."

Massachusetts Investment Adviser Sentenced to 36 Months in Jail for Defrauding Investors, December 13, 2013, (Litigation Release No. 22888)

Last week, Jeffrey A. Liskov was sentenced "to serve a prison term of 36 months, followed by a supervised probationary period of 3 years, and [ordered] to pay $3,003,147 in restitution" in connection with his guilty plea "to a one-count criminal Information charging him with willfully violating Section 206 of the Investment Advisers Act of 1940." The allegations made in the criminal case were similar to allegations made by the SEC that "Liskov and his former advisory firm, EagleEye Asset Management, LLC,...defraud[ed] their clients in connection with foreign currency exchange (forex) investments." Based on the SEC's charges, a  final judgment was entered last December against the defendants ordering them to be permanently enjoined from future violations of the securities laws and to pay over $1 million in disgorgement, prejudgment interest, and civil penalties. Additionally, EagleEye's registration as an investment advisor was revoked and Liskov was barred from associating with any investment adviser.

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