SEC ENFORCEMENT ACTIONS
Court
Enters Final Judgments Against CEO and Executive Vice President of Company
Involved in Pump-And-Dump Scheme Involving Fictitious Buyout Offer,
September 25, 2014 (Litigation
Release No. 23092)
The
SEC announced that the US District Court for the District of Massachusetts entered
final judgments against Maximilien Arella, CEO, and Ian Morrice, the Executive
Vice President, both of Spencer Pharmaceutical Inc. (a microcap pharmaceutical
company). Permanent injunctions were imposed on Arella and Morrice, and each
are required to pay $50,000 in penalties. The SEC’s complaint, filed in
December of 2012, laid out the involvement of Spencer and its senior leadership
specifically in a pump-and-dump scheme. A marketing campaign, waged with false
information, “significantly pumped up the price of Spencer's stock - at one
point causing the price to more than double in two days - and consequently
enabled Amyot to dump tens of millions of shares into the market at
artificially inflated prices for gross proceeds in excess of $5 million.”
Court
Imposes Injunctions and Monetary Sanctions of Over $80 Million Against Marlon
Quan and His Companies Based On Fraud Verdict, September 25, 2014 (Litigation
Release No. 23093)
The SEC announced that the US District Court in
Minneapolis had, on September 19, issued an Opinion and Order imposing
permanent injunctions against Marlon Quan, Acorn Capital Group, LLC,
Stewardship Investment Advisors, LLC and ACG II, LLC. In addition, the Court
imposed more than $80 million in sanctions against Marlon Quan and the defendants
he was in charge of. According to the SEC, Quan “helped to facilitate the
massive fraud of Tom Petters by funneling several hundred million dollars of
investor money into the Petters Ponzi scheme.” Quan and his firms had promised
investors, under false pretenses, that they would be protected by multiple safeguards.
They were not.
SEC Obtains a TRO and Asset
Freeze to Stop an Ongoing Pyramid Scheme, September 23, 2014 (Litigation Release No. 23091)
The SEC
filed a civil injunctive action against Zhunrize, Inc. and Jeff Pan, Zhunrize’s
CEO. The SEC also obtained an order freezing the defendant’s assets. “The
Commission alleges that Zhunrize, an Atlanta-based multi-level marketing
company, and Pan have been operating a fraudulent pyramid scheme that has
raised over $100 million from investors worldwide.” The company’s commission
structure is based solely on continual recruitment of new individuals and is
unrelated to any tangible product sales. Since 2012, the company has defrauded
about 77,000 investors of approximately $105 million. The SEC complaint was
filed in the US District Court for the Northern District of Georgia.
Final Judgment Entered Against
Trendon T. Shavers, A/K/A/ "Pirateat40" - Operator of Bitcoin Ponzi
Scheme Ordered to Pay More Than $40 Million in Disgorgement and Penalties, September 22, 2014 (Litigation Release No. 23090)
The US
District Court in Sherman, Texas entered a final judgment against Trendon T.
Shavers and Bitcoin Savings and Trust (BTCST). Starting in 2011, Shavers
defrauded investors out of more than 700,000 bitcoins through BTCST. The Court
ordered “Shavers and BTCST to pay more than $40 million in disgorgement and
prejudgment interest, and orders each Defendant to pay a civil penalty of
$150,000.”
SEC
Charges Brooklyn Man for Facilitating Insider Trading Scheme Via Post-It Notes
At Grand Central Terminal, September 22, 2014 (Litigation
Release No. 23089)
The SEC charged Frank Tamayo with “facilitating a
$5.6 million insider trading scheme that typically involved the passing of
illegal tips via napkins or post-it notes at Grand Central Terminal. According
to the allegations, Tamayo had received nonpublic information regarding
impending corporate deals, and subsequently tipped off a stockbroker, Vladimir
Eydelman, who used the information to make illegal trades for himself, Tamayo
and others. The US Attorney’s Office for the District of New Jersey also
announced criminal charges against Tamayo.
Former Owner of a
Massachusetts-Based Trading Company Sentenced to Nine Years in Prison, September 19, 2014 (Litigation Release No. 23088)
The SEC
announced that Craig A. Karlis, the former owner of Boston Trading and Research
LLC, was sentenced to nine years in prison on September 16 “after pleading
guilty to charges that he and his business partner defrauded more than 700
investors out of more than $30 million.” Karlis’ sentence includes an
additional three years of supervised release, and requires him to pay $4,378,306
in restitution to the fraud victims. In March, Karlis had plead guilty to nine
counts of wire fraud, in addition to other charges. Ahmet Devrim Akyil, Karlis’
business partner, was also charged, but remains a fugitive, believed to be
hiding out in Turkey.