Friday, April 18, 2014

Enforcement Actions: Week in Review


Federal Prosecutors Charge Massachusetts Resident with Criminal Contempt Based On Violations of Court Orders Obtained by the SEC
, April 16, 2014, (Litigation Release No. 22973)

Last week, Steven Palladino was charged with 25 counts of criminal contempt "based on his repeated violations of Court orders obtained by the Commission in its civil action against Palladino and, Viking Financial Group, Inc." The SEC's 2011 complaint alleged that the defendants "were operating a fraudulent Ponzi scheme." The United States Attorney's office has charged the defendants with "'knowingly and wilfully disobey[ing]' Court orders in the Commission's action that froze all of Defendants' assets, required that Defendants deposit all funds in their possession into a court-ordered escrow account, and required Palladino to purge himself of a prior order of civil contempt." Palladino, "who is currently serving a prison sentence based on convictions in state court for the same Ponzi scheme activity, could face additional incarceration" if convicted of these charges.

SEC Charges Indiana Man for Defrauding Investors in "Credit Union" Ponzi Scheme, April 11, 2014, (Litigation Release No. 22972)

According to the complaint (PDF), Timothy J. Coughlin "and two entities that did business as 'Oxford International Credit Union' or 'Oxford International Cooperative Union'...conduct[ed] an Internet offering fraud in which investors lost millions of dollars by investing funds in a fictitious credit union. " The SEC alleges that "Coughlin misappropriated investor money to pay personal expenses, fund unrelated business expenses, and make distributions to other investors in a classic Ponzi-scheme fashion." The complaint charges the defendants with violating various provisions of the Securities Act and the Exchange Act and seeks disgorgement, prejudgment interest, civil penalties, conduct-based injunctions, "and an officer-and-director bar against Coughlin." Additionally, the SEC "seeks disgorgement and prejudgment interest from relief defendants American Quality Cleaning Services, Inc. (d/b/a 'Oxford Privacy Group') and Avocalon LLC." A criminal complaint has been unsealed against Coughlin in a parallel action.

SEC Obtains Final Judgment Against Defendant in Fictitious Investment Scheme, April 11, 2014, (Litigation Release No. 22971)

A final judgment was entered by consent against Robert C. Rice, who allegedly with other defendants "defrauded investors of more than $1.8 million" by supposedly offering "direct investments in fraudulent trading programs involving 'bank guarantees,' [and] promising sky-high returns with guarantees against loss." The final judgment permanently enjoins Rice from future violations of the securities laws, and orders him to pay over $525,000 in disgorgement, prejudgment interest, and a civil penalty. Previously, the court entered final judgments against "211 Ventures, LLC, and Robert S. Anderson, imposing judgments totaling more than $2.3 million in disgorgement, prejudgment interest and civil penalties, and permanently enjoining both defendants from future violations of the antifraud and other provisions of the federal securities laws." The SEC's cases against "Diane Glatfelter and K2 Unlimited, Inc. continues."

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