Friday, February 28, 2014

SEC Litigation Releases: Week in Review

SEC Settles Claims Against Attorney Retained by Funds Involved in Fraudulent Investment Scheme, February 27, 2014, (Litigation Release No. 22934)

A final judgment was entered against attorney Robert Custis for his involvement in a Ponzi scheme orchestrated by Yusaf Jawed through companies Grifphon Asset Management, LLC and Grifphon Holdings, LLC. Custis agreed to the final judgment which permanently enjoins him from future violations of the securities laws and prohibits him from appearing or practicing before the SEC as an attorney.

Jeremy Fisher Indicted for Fraud, February 25, 2014, (Litigation Release No. 22933)

On February 5, a grand jury charged Jeremy S. Fisher with four counts of wire fraud. The indictment "seeks forfeiture of property obtained as a result of the alleged criminal violations." The charges are based on "the same conduct underlying the Commission's September 30, 2013 Complaint against Fisher" which alleges that he raised $1.04 million from investors and then misappropriated funds for personal use. Additionally, Fisher allegedly "provided quarterly statements to investors which falsely represented that investors were earning money on their investments."

Previously, the SEC charged Fisher and his two companies with violating the Exchange Act and Securities Act and permanently enjoined them from future violations as well as ordered them to pay over $1 million in disgorgement, prejudgment interest, and civil penalties.

Court Enters Final Judgment by Default Against SEC Defendant Zheng Cheng, February 25, 2014, (Litigation Release No. 22932)

A final judgment was entered against Zheng Cheng, Chairman and CEO of China MediaExpress Holdings, Inc., for his alleged involvement in "a scheme to mislead and defraud investors by, among other things, grossly overstating China Media's cash balances." The final judgment permanently enjoins Cheng from future violations of the securities laws, imposes a permanent officer and director bar against him, and orders him to pay over $19.2 million in disgorgement, prejudgment interest, and penalties.

A previous final judgment was entered against China Media which enjoins it from future violations of the securities laws and orders it to pay over $49 million in disgorgement, prejudgment interest, and penalties.

SEC Charges Former Registered Representative with Fraud, February 24, 2014, (Litigation Release No. 22931)

Kevin O'Brien, a former registered representative, has been charged with fraud "in connection with the misappropriation of over $298,000 from the account of a customer between 1998 and 2008." O'Brien has consented to the entry of a final judgment that permanently enjoins him from future violations of the Securities Act and Exchange Act and orders him to pay over $350,000 in disgorgement and prejudgment interest. The payment of this amount has been waived based upon O'Brien's financial condition.

SEC Settles Claims Against Two Former Employees of Hansen Medical, Inc. Relating to Fraudulent Sales Scheme, February 21, 2014, (Litigation Release No. 22930)

Final judgments have been entered against Christopher Sells, Hansen Medical Inc's former Vice President of Commercial Operations, and Timothy Murawski, a former Vice President of Sales, for their alleged involvement in a scheme "to provide false information to Hansen Medical's finance department, resulting in publicly-disclosed financial statements that reported overstated revenue and sales numbers." The defendants have been permanently enjoined from future violations of the securities laws and ordered to pay $120,000 combined in civil penalties. A five-year officer and director bar has also been placed against Mr. Sells.

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