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June 15, 2023

Online intimate apparel retailer AdoreMe, Inc. has agreed to pay $2.35 million to settle allegations by 31 states and the District of Columbia that it deceptively marketed a discount membership program and made it difficult for consumers who bought it to cancel it.  Consumers were charged about $40 a month to be in the program, but Adore Me failed to properly disclose the amount of the monthly charge, that discounts were limited time only, and that the accrued value would be eliminated upon cancellation of the membership.  NC AG; PA AG

May 30, 2023

The former head of Wells Fargo’s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to settle charges of misleading investors about its financial success.  Over a two-year period, Tolstedt publicly and repeatedly touted a metric used by Wells Fargo to measure financial success, even though she knew it did not accurately track accounts or products used or needed by customers.  In addition to the penalty, Tolstedt will pay almost $1.5 million in disgorgement and over $400,000 in pre-judgment interest.  The funds will be combined with prior payments of $500 million by Wells Fargo and $2.5 million by its former CEO and Chairman, John Stumpf, and will be distributed to harmed investors.  SEC

April 11, 2023

Rishi Shah, Shradha Agarwal, and Brad Purdy, all former executives of Outcome Health, were convicted in a $1 billion scheme to fraudulently obtain funds from their clients, lenders, and investors. Outcome installed tv screens and tablets in physicians’ offices around the US, and then sold non-existent advertising inventory to be shown on the installed screens. Outcome billed clients in full, despite under-delivering on the contract, and inflated metrics to lie about the frequency in which patients accessed the tablets. Using inflated engagement data and revenue numbers, they raised $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017. The trio faces decades in prison because of their fraud. DOJ

March 30, 2023

Siblings John and Jonatina Barksdale offered unregistered crypto asset “Ormeus Coin” securities through their multilevel marketing scheme called Ormeus Global. The pair produced social media posts, YouTube videos, and other promotional materials, while John held roadshows around the world to promote the securities. Defendants claimed Ormeus Coin had a quarter-billion-dollar mining operation, mining $5.4 to $8 million per month, but the mining operation generated less than $3 million in total revenue, and mining operations ceased. The Barksdales were ordered to pay over $46 million in disgorgement, prejudgment interest of $10 million, and a civil penalty of $23 million each. SEC

March 28, 2023

James K. Couture, a Massachusetts-based investment adviser, defrauded his clients of nearly $3 million from 2009 to December 2019, convincing them to sell portions of their securities to fund large money transfers to an entity Couture controlled—a detail not shared with his clients. Couture consented to a final judgment enjoining him from future violations of the securities laws’ antifraud provisions. Couture will spend 100 months in prison and was ordered to pay approximately $4.7 million in restitution and forfeiture for his deceptive, Ponzi-like scheme. 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

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

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 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
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