Archive

March 28, 2023

One of the largest iron ore producers in the world, Brazilian mining company Vale S.A., has agreed to pay $55.9 million to settle charges of making false and misleading disclosures concerning the stability of its dams.  One of the dams in particular, Brumadinho, failed to meet international safety standards and subsequently collapsed in January 2019, killing 270 people.  The settlement consists of $25 million in civil penalties and disgorgement, and $30.9 million in pre-judgment interest.  SEC

March 24, 2023

Michael Alan Stollery, the CEO and founder of purported cryptocurrency investment platform Titanium Blockchain Infrastructure Services Inc. (“TBIS”), has been sentenced to over 4 years in prison.  According to the DOJ, Stollery failed to register TBIS’s ICO with the SEC and falsified information on TBIS’s website and white papers, including information about TBIS’s prospects for profitability, client testimonials, and business relationships.  Additionally, he misappropriated client funds to pay off personal expenses.  DOJ

March 24, 2023

Tony and Charles Gonzalez, two brothers behind a telemarketing scam operating under the companies American Vehicle Protection Corp. (“AVP”), CG3 Solutions, Inc., and Tony Gonzalez Consulting Group, have been banned for life from participating in the extended automobile warranty industry and all outbound telemarketing, and ordered to pay a suspended $6.6 million in monetary judgment.  An order found the companies violated the FTC Act and Telemarketing Sales Rule by making unsolicited calls to hundreds of thousands of customers on the FTC’s Do Not Call List, then tricking them into paying thousands of dollars for “bumper to bumper” warranty protection.  FTC

March 23, 2023

The co-founder of formerly registered investment adviser International Investment Group (IIG), Martin Silver, has been ordered to pay over $2.3 million in disgorgement and over $240,000 in prejudgment interest, which will be deemed satisfied upon the payment of restitution and forfeit of assets ordered in a parallel criminal proceeding against him in the Southern District of New York.  Silver was found to have grossly overvalued the assets in IIG’s flagship hedge fund, and falsely reported that certain loan assets were legitimate and fairly valued when in fact they were not.  SEC

March 23, 2023

A Maryland man named John Erasmus Frimpong has been sentenced to 9.5 years in prison and, along with his co-defendants, ordered to pay almost $17.5 million in restitution for operating a $28 million Ponzi scheme through a purported wealth management company called 1st Million LLC.  As part of his plea agreement, Frimpong admitted to making false and misleading statements to investors, including statements regarding the experience, training, and licensure of the company’s principals, the existence of a “trust” through which investors’ principles would be protected and returned in full, the investment’s rates of return, and the source of payments to investors.  USAO MD

March 22, 2023

The owner of a Florida-based insurance company has been sentenced to 14 years in prison for defrauding customers of $4.8 million.  For over seven years, John Thomas of Thomas Insurance, LLC diverted customer insurance premiums to his personal accounts but failed to actually open insurance policies for customers.  He then regularly produced fraudulent documents to customers, referencing their nonexistent policies, in order to conceal his actions.  USAO NDFL

March 17, 2023

A man in New York who laundered millions of dollars of criminal proceeds from a panoply of illegal schemes—including computer hacking, healthcare fraud, loan fraud involving Small Business Administration (SBA) funds, and operating an unlicensed international money transmitting business—has been sentenced to 10 years in prison.  According to the DOJ, Djonibek Rahmankulov worked with computer hackers to gain control of U.S. bank accounts, then executed millions of dollars of fraudulent wire transfers into accounts controlled by him and his associates.  He also worked with pharmacies to launder millions of dollars of Medicare and Medicaid reimbursements for HIV medications that were not actually dispensed or legally obtained.  During the pandemic, Rahmankulov submitted fraudulent applications to the SBA for his companies, laundered the proceeds, and made false statements to financial institutions regarding his activities.  Finally during his trial, he repeatedly sought to obstruct justice by threatening a witness and producing fraudulent letters of support from the community.  USAO SDNY

February 23, 2023

Back to Green Mining, LLC and its two managing members, José Jiménez Cruz and Manuel Portalatin, have been ordered to pay about $2 million in disgorgement, $411,000 in prejudgment interest, and $1 million and $207,000 in civil penalties respectively, after the SEC charged them with offering and selling unregistered securities for a so-called “green” mining venture in Colombia.  While soliciting investors, Jiménez and Portalatin allegedly advertised exorbitant returns and falsely represented that permits necessary to mine gold had already been procured.  SEC

March 8, 2023

A registered introducing broker, Coquest Inc., its owners Dennis Weinmann and John Vassallo, and trading firms Buttonwood LLC and Weva Properties Ltd. have been ordered to pay almost $3 million for using block trade order information from Coquest’s brokerage customers to obtain profits for Buttonwood and Weva accounts in which Weinmann had a financial interest.  The misconduct ran between 2015 and 2019 and involved more than 2,000 instances where Weinmann traded against his own customers’ interests.  CFTC

March 15, 2023

Ohio-based LCA-Vision, doing business as LasikPlus and Joffe MediCenter, have been ordered to pay $1.25 million for using deceptive bait-and-switch advertising to lure customers into getting laser eye surgery.  LCA-Vision allegedly ran ads that led customers to believe they could get both eyes corrected for less than $300, when in fact, only 6.5% were eligible for that price, and for many, the price was for one eye only.  Once customers came in for their consultation, LCA-Vision would then quote them rates of between $1,800 and $2,295.  FTC