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Page 25 of 212

April 15, 2022

Damon Elliott, and his entity Piptastic Limited will pay almost $6.5 million in disgorgement and interest, and a civil penalty of nearly $100,000 for his promotion of a Ponzi scheme in violation of the antifraud provisions of the Securities Act and the Securities Exchange Act. Elliott, through Piptastic, misused investor assets, lied about the status of their investments, provided fabricated account statements, and lied about investors’ funds being safely held in trading accounts. In addition to the disgorgement and interest levied against Elliott, Piptastic is enjoined from further violations of the Securities Act and the Securities Exchange Act.  SEC

Tagged in: Financial and Investment Fraud, Ponzi Schemes,

April 14, 2022

Andrew J. Chapin, former CEO of Benja Inc. will pay $2.8 million to settle  charges that he violated the antifraud provisions of the Securities Act and the Securities Exchange Act. Chapin touted Benja’s online advertising platform as successful, claiming it generated millions in revenue from popular consumer brands. He enlisted the help of associates who impersonated actual Benja representatives, as well as a person who posed as the “founder” of a venture capital fund who had invested heavily in Benja. Chapin is enjoined from further SEC violations and is barred from serving as an officer or director of a public company. SEC

Tagged in: Financial and Investment Fraud, Misrepresentations,

April 12, 2022

Robert A. Karmann, a CPA and former CFO of DC Solar, was sentenced to 6 years in prison and ordered to pay $624 million for his role in perpetrating a Ponzi-style scheme, by taking new investor money to pay older investors, and deploying circular transactions to cover up their illicit behavior. DC Solar manufactured trailer-mounted solar generators and marketed them as having extensive third-party lease demand. Karmann and his co-conspirators offered falsified financial statements and operation reports and provided fabricated revenue summaries to victims of the scheme. Karmann oversaw the hidden transfers of funds, gave false information to investor representatives, and instructed a subordinate to “make it up” when asked by a customer for reports on the location of their solar generators. USAO EDCA

Tagged in: Accounting Fraud, Financial and Investment Fraud, Misrepresentations, Ponzi Schemes,

April 11, 2022

The former managing partner and chief investment officer of Manhattan-based International Investment Group (IIG) has been sentenced to 12 years in prison after being found guilty of defrauding IIG clients and investors of over $120 million.  David Hu had pled guilty in January 2021 to overvaluing distressed loans, creating fake loans to hide losses, selling overvalued and fake loans to a collateralized loan obligation trust, and using proceeds to pay earlier investors.  In addition to the prison sentence, he was also ordered to serve 3 years of supervised release, with a restitution order to be imposed at a later date.  USAO SDNY

Tagged in: Financial and Investment Fraud,

April 8, 2022

Danish resident Casper Mikkelsen, also known as Carsten Nielsen, Brian Thomson, Thomas Jensen, and Casper Muller, has been ordered to pay $1.2 million in restitution and $3.6 million in penalties after he was found to have misappropriated client funds for his personal use, used earlier investor funds to pay later investors, and failed to register as a commodity trading advisor.  Mikkelsen’s victims had believed they were investing their funds to trade in forex.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Ponzi Schemes,

April 7, 2022

Alan Friedland, Fintech Investment Group, Inc., and Compcoin LLC will pay $1.8 million to settle allegations of Commodities Exchange Act violations. Friedland, through his companies, fraudulently solicited customers to invest in a nonexistent proprietary forex trading algorithm, ART, which promised highly successful prediction of forex rates for its users. The defendants solicited customers over a 2-year period, knowing that the required approval from National Futures Association had not been obtained. The approval never materialized, and the investors were saddled with a worthless digital asset. The Court entered an order for permanent injunction, monetary sanctions, and equitable relief against the defendants. CFTC

Tagged in: Financial and Investment Fraud, Foreign Exchange, Misrepresentations, Regulatory Violations,

March 31, 2022

Seth Levine, Norse Holdings’ founder, received a 97-month sentence for his decade-long, $60 million refinancing- and securities-related real estate fraud. Levine, through his 70-plus companies, directed the scheme, submitting falsified documents which inflated the value of the subject properties. The overvaluation of properties led to shortfalls, which Levine covered with cash-out refinances, leaving victim lenders with at least $47 million in losses. Levine defrauded securities investors of at least $13 million by inducing them to invest in multifamily properties. Levine overstated his personal investment in the properties via forged documents provided to investors, sold portions of his properties without investor consent, and brought on additional investors without investor consent—all contrary to representations made during the solicitation. USAO NJ

Tagged in: Financial and Investment Fraud, Housing and Mortgage Fraud, Securities Fraud,

March 24, 2022

A New York woman who defrauded the state out of millions of dollars has been sentenced to 3 to 9 years in prison and ordered to pay more than $4 million in restitution.  According to the Attorney General’s Office, Leslie Montgomery lured low-income New Yorkers to Health Living Community Center under the guise of helping them find housing, then used their information to submit false claims to a Medicaid-funded managed care organization.  The claims for custom-molded back braces were medically unnecessary and not requested by or provided to the intended recipients.  Montgomery then hid the illegal proceeds through multiple shell companies, including LCM Livery P/U, Inc.  NY AG

Tagged in: Healthcare Fraud, Lack of Medical Necessity, Medicaid, Medical Devices and DME, Money Laundering,

March 24, 2022

Michael Gastauer of Germany has been ordered to pay $17 million in disgorgement, prejudgment interest, and civil penalty after he and his six U.S.-based entities were found to have aided and abetted a $165 million microcap fraud scheme.  Gastauer and his entities had allegedly disbursed of illegal stock sales orchestrated by Roger Knox of the U.K. via a Swiss entity called Wintercap SA.  Knox is awaiting sentencing in a parallel criminal action brought by the U.S. Attorney for the District of Massachusetts.  SEC

Tagged in: Financial and Investment Fraud, Securities Fraud,

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