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Page 21 of 57

October 23, 2019

Gary Frank was sentenced to 17.5 years in prison following a guilty plea on charges related to his fraudulent business scheme.  Frank claimed to run a multi-million dollar company, Legal Coverage, Ltd., through which employers could offer legal services as part of their employee benefits package.  Based on these misrepresentations -- in fact, the company had very little revenue -- Frank obtained over $30 million in loans from financial institutions, which he used to fund his own extravagant lifestyle.  Frank was also ordered to pay restitution of $33.7 million.  USAO EDPA

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Misrepresentations,

October 21, 2019

Devumi, LLC and owner German Calas, Jr., have agreed to a $2.5 million judgment to settle the FTC’s first ever charges against the sale of fake indicators of social media influence, such as followers, subscribers, views, and likes.  The defendants allegedly enabled customers to deceive potential clients about their social media clout by filling tens of thousands of orders for fake LinkedIn followers, Twitter followers, YouTube subscribers, and YouTube views.  Due to the defendants’ inability to pay, upon payment of $250,000, the remaining monetary judgment will be suspended.  FTC

Tagged in: Financial and Investment Fraud, Misrepresentations,

October 16, 2019

The FTC has settled with the marketers and sellers of two aloe vera-based supplements and imposed an $18.7 million judgment against them.  Defendants NatureCity, LLC and Carl and Beth Pradelli had been charged with making unsubstantiated claims to consumers about their products, TrueAloe and AloeCran, including that the products could improve cholesterol and triglyceride levels, reduce chronic pain, and treat various diseases.  FTC

Tagged in: Misrepresentations,

October 10, 2019

A Maryland-based man has been sentenced to 22 years in prison for his role in a $396 million Ponzi scheme, the largest ever charged in Maryland.  Unbeknownst to hundreds of victim investors, the consumer debt portfolios they invested in through Kevin Merrill and co-conspirators Jay Ledford and Cameron Jezierski were fake, with Merrill, Ledford, and Jezierski going to great lengths to keep up the illusion.  The trio created imposter companies and bank accounts, fake documents, and invited would-be investors to tours of their Texas “office.”  By the time they were arrested in 2018, the scheme had raked in over $396 million, with another $260 million pending.  As part of his sentence, Merrill has also been ordered to pay restitution of at least $189 million.  USAO MD; SEC

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

October 10, 2019

A billboard licensing company that manages licenses in New York, Texas, Minnesota, and Missouri has agreed to pay $2.85 million to resolve fraud allegations.  In 2009 and 2011, All Vision LLC entered into contracts with USPS to manage licenses and collect payments on land that USPS leases out to billboard companies.  As part of the contract, All Vision had agreed to forward lease payments, less fees, to USPS in a timely manner, but allegedly withheld at least $8 million in payments while misrepresenting the actual amounts collected.  All Vision has since repaid over $5.2 million; the $2.85 million settlement will resolve all remaining claims.  USAO CO

Tagged in: Government Procurement Fraud, Misrepresentations,

September 30, 2019

Longfin Corporation has been ordered to pay $6.8 million in a default judgment entered in a federal court case alleging that Longfin filed fraudulent papers to qualify for a public offering under Regulation A+, misrepresenting the business as being based in the U.S.  In addition, Longfin reported fictitious revenue from sham commodities transactions and unlawfully distributed Longfin shares, including in unregistered transactions and to insiders and affiliates.  SEC

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

September 27, 2019

Pharmaceutical manufacturer Mylan N.V. has agreed to pay $30 million to resolve SEC charges that the company failed to disclose or adequately accrue for possible losses arising from a DOJ investigation into Mylan's classification, pricing, and rebate practices regarding its EpiPen product.  In 2017, Mylan agreed to pay $465 million to resolve that DOJ investigation.  SEC

Tagged in: Accounting Fraud, Financial and Investment Fraud, Misrepresentations, Pharma Fraud, Securities Fraud,

September 27, 2019

Fiat Chrysler Automobiles N.V. and its U.S. subsidiary FCA US LLC will pay $40 million to resolve SEC allegations that the automaker provided false and misleading information in press releases and regulatory filings about its monthly new vehicle sales and vehicle sales growth rate.  The SEC found that FCA US inflated new vehicle sales by paying dealers to report fake vehicle sales, but then failing to report those sales at the time.  Instead, Fiat Chrysler kept these sales in a separate database referred to internally as the "cookie jar," which the company would then dip into to report as current sales in a slow month.  SEC

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

September 27, 2019

Herbalife Nutrition Ltd. will pay $20 million to settle charges that it made misstatements in regulatory filings about its business in China.  While Herbalife, which has a direct sales model, claimed in filings that it did not use its customary multilevel marketing compensation model in China in order to comply with Chinese law, in fact, its compensation model in China was materially identical to its compensation model in every other country.  By failing to disclose this information, Herbalife was found to have deprived investors of valuable information regarding the risks faced by the company.  SEC

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

September 24, 2019

The SEC has simultaneously charged and settled with a global information and media analytics firm, Comscore, Inc., and its former CEO, Serge Matta, for $5 million and $700,000, respectively.  Comscore had been accused of manipulating the accounting of non-monetary transactions in order to present the illusion of smooth and steady growth to investors.  Matta also agreed to reimburse Comscore $2.1 million representing profits from the sale of Comscore stock and incentive-based compensation pursuant to Section 304(a) of the Sarbanes-Oxley Act and to the entry of an order barring him from serving as an officer or director of a public company for 10 years.  SEC

Tagged in: Financial and Investment Fraud, Misrepresentations,

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