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December 26, 2023

A temporary restraining order was issued on December 21 against ArciTerra Companies LLC and its CEO Jonathan M. Larmore, along with Cole Capital Funds LLC, an entity formed by Larmore. Larmore and other charged entities misappropriated more than $35 million from private real estate funds and other investment vehicles to fund his family's lavish lifestyle. In another scheme, Larmore issued a press release from Cole Capital Funds, announcing they were buying 51% of WeWork's minority ownership shares at nine times the current trading price. Not disclosed was that Larmore had purchased more than 72,000 call options in the days prior to the press release. Larmore's intent was to earn a windfall on the options; instead, the press release was delayed so most of the call options expired before he could exercise them. SEC

Tagged in: Financial and Investment Fraud, Market Manipulation and Trading Violations, Misrepresentations, Regulatory Violations, Securities Fraud,

December 22, 2023

Brooge Energy Limited, former CEO Nicolaas Lammert Paardenkooper, and former Chief Strategy Officer and interim CEO Lina Saheb settled SEC fraud charges for misstating Brooge's revenues from 2018 to 2021 connected to a $500 million securities sale. Brooge fabricated invoices to support the inflated revenues and provided them to auditors to hide the fraud. Brooge will pay a $5 million penalty for violating the antifraud, proxy statement, reporting, and books and records provisions of the federal securities laws. Paardenkooper and Saheb will each pay $100,000 and are subject to permanent officer and director bars. SEC

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

November 21, 2023

Rio Tinto plc, Rio Tinto Limited, and Rio Tinto's former CEO Thomas Albanese have agreed to entry of a final judgment, ordering it to pay $28 million and permanently restraining Rio Tinto from violating Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-16 thereunder. The judgment stems from the SEC's 2017 complaint which alleged that Rio Tinto's public filings contained misleading statements about the value of its Mozambican coal assets. Rio Tinto has agreed to retain an independent consultant to review its compliance with accounting standards. Albanese will pay a $50,000 civil penalty and is required to cooperate in the SEC's continuing investigation into Rio Tinto's former CFO Guy Elliott. SEC

Tagged in: Accounting Fraud, Misrepresentations, Regulatory Violations, Securities Fraud,

September 18, 2023

Lyft Inc. will pay a $10 million civil penalty for its failure to disclose a board director's role in the sale of $424 million worth of private shares prior to Lyft's initial public offering. The director arranged for a shareholder to sell their shares to a special purpose vehicle, and then arranged for another investor to purchase the shares through the SPV. Lyft failed to disclose this information in its 2019 Form 10-K, depriving investors of critical information. SEC

Tagged in: Regulatory Violations, Securities Fraud,

September 12, 2023

Canadian resident George Stubos will pay disgorgement of $5,367,926 and prejudgment interest of $806,108 for his microcap stock investment scheme. Stubos gained control of several thinly traded microcap companies and then lied to investors, brokers, and transfer agents, and convinced them his stock shares were eligible to be publicly traded. In addition to not registering his sales with the SEC and failing to disclose his control over the entities, Stubos also engaged in market manipulation to create demand for his stock. In addition to the disgorgement and interest, Stubos is subject to a penny stock bar and is prohibited from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. SEC

Tagged in: Financial and Investment Fraud, Market Manipulation and Trading Violations, Misrepresentations, Regulatory Violations, Securities Fraud,

September 6, 2023

Ameritrust Corporation and relief defendant Beespoke Capital, Inc. will pay more than $20 million in disgorgement, civil penalties, and prejudgment interest for lying to investors primarily located in the Republic of Korea, telling them their investments would be used to purchase shares of a publicly traded company in the U.S. Ameritrust's CEO, Seong Yeol Lee, through a network of recruiters, solicited and received funds from investors, which he then deposited in his corporate and personal bank accounts, as well as bank accounts for three of his adult children. Lee in fact never applied for Ameritrust's exchange listing. In addition to paying the $20 million, Ameritrust is prohibited from violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act. SEC

Tagged in: Financial and Investment Fraud, Misrepresentations, Regulatory Violations, Securities Fraud,

August 28, 2023

Impact Theory, LLC will pay more than $6.1 million in disgorgement, prejudgment interest, and a civil penalty, for offering and selling crypto asset securities to the public in an unregistered offering. Impact Theory sold three tiers of non-fungible tokens (NFTs)--"Legendary," "Heroic," and "Relentless," which were ostensibly an investment into their business in which Impact was "trying to build the next Disney" which would provide "tremendous value" to investors. In addition to the $6.1 million, the order establishes a Fair Fund to return monies paid by injured investors, and Impact Theory will destroy all Founder's Keys in its possession or control and will eliminate any royalty Impact might otherwise receive from secondary market transactions. SEC

Tagged in: Cryptocurrency, Financial and Investment Fraud, Regulatory Violations, Securities Fraud,

July 28, 2023

Thomas D. Renison and Timothy J. Allcott, co-founders of ARO Equity, LLC, were sentenced to 48 months and 30 months in prison, respectively, for lying to current and prospective investors about ARO's performance and for using new investors' funds to pay interest to older investors. For at least 3 years, and despite Renison being barred in 2014 by the SEC from associating with any investment adviser or broker-dealer, Renison and Allcott deceptively convinced investors to cash out their retirement accounts and invest instead with ARO, touting double-digit returns and zero downside, ultimately raising nearly $6 million from investors. ARO's investments began failing almost immediately, but Renison and Allcott continued to tell investors their investments were as safe with ARO as they were with a bank. In addition to their prison sentences, Renison was ordered to pay restitution of $6,098,198.30 and Allcott will pay restitution of $6,249,983.30. SEC

Tagged in: Misrepresentations, Ponzi Schemes, Regulatory Violations, Securities Fraud,

July 28, 2023

Summitcrest Capital, Inc., and its principals, Johnny Tseng and Kevin Zhang, raised approximately $19.8 million from Chinese-speaking investors in the United States and China, misleading them to believe the funds would be used to make real estate-related loans "to the general public" and the income from these loans would be used to make interest payments and return of capital to investors. Tseng and Zhang, through their entity SC Development Fund, instead used investor funds for loans to Zhang's many real estate development and contracting businesses. Summitcrest, Tseng, and Zhang are on the hook jointly and severally for $16.6 million in disgorgement and over $4.3 million in prejudgment interest. Summitcrest and Zhang are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act. Additionally, Tseng is barred from acting as an officer or director and will pay disgorgement of $60,000, plus $15,721 in prejudgment interest and a $414,366 penalty. SEC

Tagged in: Financial and Investment Fraud, Misrepresentations, Ponzi Schemes, Regulatory Violations, Securities Fraud,

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