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Page 16 of 176

July 15, 2022

An anonymous whistleblower was awarded $3 million based on SEC findings that the individual, who was solicited to invest in a product, expeditiously contacted the SEC to report misrepresentations regarding the product.  That report prompted the Commission to open an investigation, during which the individual provided additional assistance.  SEC

Tagged in: Financial and Investment Fraud, SEC Whistleblower Reward Program, Securities Fraud,

July 15, 2022

A number of California- and Colorado-based people and their affiliated entities have been ordered to pay over $29 million in total in order to resolve multiple charges of violating CFTC regulations.  A federal judge had found California-based John D. Black, his associates Christopher Mancuso and Joseph Tufo, and his entities Financial Tree, Financial Solution Group, and New Money Advisors—as well as Colorado-based John P. Glenn and his law firm—liable for solicitation fraud in connection with binary options and forex transactions, registration violations, and other charges.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

July 14, 2022

Jesus Jose Mendez, co-owner of J&J Drywall, Inc., was sentenced to 3 years probation and ordered to pay $2.8 million to the IRS, and $62,730 to the MA DOL for evading income and employment taxes, and not making the requisite state unemployment contributions. From 2013 to 2017, defendants cashed over $16 million in business checks at check-cashing businesses and would leave cash-filled backpacks at their worksites from which to pay their employees. Meanwhile, deposits into the J&J bank account during this same timeframe equaled only $4 million, and deposits were frequently structured in amounts less than $10k, evading reporting requirements. Federal tax losses are estimated at just over $2.8 million, and the loss to MA DOL equaled nearly $63,000. Jamie Zambrano, Mendez’s business partner, is currently a fugitive. USAO RI

Tagged in: Accounting Fraud, Employment Tax Fraud, Tax Fraud,

July 11, 2022

Attorney Shimon Rosenfeld was ordered to pay over $7 million in disgorgement and prejudgment interest and will spend 6 months in prison for defrauding real estate investors. For a period of nearly four years, from May 2014 to March 2018, Rosenfeld solicited investors for a pooled real estate investment fund whose profits would be split with the investors. Instead, Rosenfeld misappropriated the funds to trade securities in his personal brokerage account, resulting in a $6 million loss of investor funds. SEC

Tagged in: Financial and Investment Fraud, Ponzi Schemes, Securities Fraud,

June 30, 2022

Interactive Brokers LLC has been ordered to pay over $1 million in disgorgement and civil monetary penalty for its failure to supervise employees’ handling of exchange fees charged to customers.  By failing to ensure that its employees accurately assessed fees, Interactive Brokers overcharged its customers over $710,000.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

June 29, 2022

UBS Financial Services Inc. has agreed to pay $25 million in connection with a complex investment strategy that it ran from 2016 to 2017.  Though it marketed and sold YES, or Yield Enhancement Strategy, to some 600 investors, UBS did not adequately inform those investors about possible risks, nor provide its financial advisors with enough training and oversight to counteract those risks.  SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations, Securities Fraud,

June 28, 2022

In response to SEC charges, audit firm Ernst & Young LLP admitted that its employees cheated on CPA exams and in continuing professional education courses, and that the firm withheld evidence of this misconduct during the SEC’s investigation.  EY agreed to pay a $100 million penalty and undertake extensive remedial measures.  The cheating took place on the ethics component of CPA exams and in courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.  SEC

Tagged in: Accounting Fraud, Financial and Investment Fraud, Regulatory Violations,

June 28, 2022

Paulette Carpoff will spend over 11 years in prison for her role in DC Solar’s billion-dollar Ponzi scheme. Between 2011 and 2018, DCS manufactured and sold trailer-mounted mobile solar generators, using the available federal solar tax credit to lure investors. In a leaseback arrangement, investors paid a percentage of the cost and financed the rest via DCS. Instead, DCS paid early investors with new investors’ money. Carpoff controlled the Ponzi-like payments, generated fake engineering reports for nonexistent MSGs, and lied to investors about DCS’ success. Carpoff enjoyed the spoils of the fraud, which included over 150 luxury and collector vehicles, lavish jewelry, and a private subscription jet service. USAO EDCA

Tagged in: Accounting Fraud, Financial and Investment Fraud, Money Laundering, Ponzi Schemes,

June 24, 2022

Starberry Limited will pay over $1.3 million in a civil monetary penalty for acting as an unregistered futures commission merchant and will disgorge the same amount in unlawfully-earned commission and fees. Starberry accepted more than $400 million from a foreign customer, invested it in crude oil futures contracts through more than 12,500 NYMEX WTI trades, and earned over $86 million in profits for the investor. CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Regulatory Violations,

June 14, 2022

Energy Capital Partners Management LP will pay a $1 million penalty and has paid back more than $3.3 million to a private equity fund it advises, for allocating a disproportionate share of expenses to the fund, a violation of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-7 and 206(4)-8. ECPM should have either disclosed the disproportionate allocation or not have allocated them in this manner. SEC

Tagged in: Securities Fraud,

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