Archive

September 12, 2023

Canadian resident George Stubos will pay disgorgement of $5,367,926 and prejudgment interest of $806,108 for his microcap stock investment scheme. Stubos gained control of several thinly traded microcap companies and then lied to investors, brokers, and transfer agents, and convinced them his stock shares were eligible to be publicly traded. In addition to not registering his sales with the SEC and failing to disclose his control over the entities, Stubos also engaged in market manipulation to create demand for his stock. In addition to the disgorgement and interest, Stubos is subject to a penny stock bar and is prohibited from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. SEC

September 11, 2023

Tempoe, LLC has agreed to pay $35 million to 41 states, the District of Columbia, and the CFPB, after an investigation found the Ohio-based consumer finance company misled customers who sought financing at major retailers into believing they were signing up for an installment plan, when in fact they were being locked into expensive leasing agreements with unreasonable return policies.  Tempoe ultimately caused many customers to pay double or triple the original purchase price.  In addition to the monetary penalty, the company has been ordered to release customers from existing lease agreements and be banned from engaging in future leasing activities.  CFPB; DE AG; GA AG; VA AG

September 11, 2023

Background report providers Truthfinder and Instant Checkmate have been ordered to pay $5.8 million to settle charges of violating the Fair Credit Reporting Act by failing to ensure the maximum possible accuracy of their reports.  The companies were found to falsely describe certain records as criminal when in fact they were traffic tickets.  When consumers flagged information as inaccurate, the companies never investigated the information flagged, modified the reports, nor noted in reports that information had been flagged by others.  FTC

September 6, 2023

Ameritrust Corporation and relief defendant Beespoke Capital, Inc. will pay more than $20 million in disgorgement, civil penalties, and prejudgment interest for lying to investors primarily located in the Republic of Korea, telling them their investments would be used to purchase shares of a publicly traded company in the U.S. Ameritrust's CEO, Seong Yeol Lee, through a network of recruiters, solicited and received funds from investors, which he then deposited in his corporate and personal bank accounts, as well as bank accounts for three of his adult children. Lee in fact never applied for Ameritrust's exchange listing. In addition to paying the $20 million, Ameritrust is prohibited from violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act. SEC

August 28, 2023

Roomster and owners John Shriber and Roman Zaks have been ordered to pay $36.2 million in monetary judgment and $10.9 million in civil penalties to resolve allegations of charging consumers for access to fake listings for available housing.  Additionally, Roomster was found to have bought tens of thousands of fake reviews which it used to populate the listings.  Per settlement terms, the required payments are suspended upon payment of $1.6 million to New York, California, Colorado, Florida, Illinois, and Massachusetts, which led the investigation along with the FTC.  FTC

July 31, 2023

The distributors of a product marked as a quick and easy way to quit smoking has been ordered to pay over $7 million in restitution as well as a $500,000 civil penalty.  Michael Connors and his companies ProTouch Marketing LLC (d/b/a Smart Day Supplements), Woodford Hills LLC, Oakhill Research LLC, Evergreen Marketing LLC, Sterling Health LLC, and Clara Vista Media LLC allegedly repeatedly violated the Federal Trade Commission (FTC) Act and the Opioid Addiction Recovery Fraud Prevention Act of 2018 by making misleading claims about their Smoke Away tablets, pellets, and homeopathic sprays, which were said to eliminate nicotine cravings and withdrawal symptoms.  DOJ

July 28, 2023

Thomas D. Renison and Timothy J. Allcott, co-founders of ARO Equity, LLC, were sentenced to 48 months and 30 months in prison, respectively, for lying to current and prospective investors about ARO's performance and for using new investors' funds to pay interest to older investors. For at least 3 years, and despite Renison being barred in 2014 by the SEC from associating with any investment adviser or broker-dealer, Renison and Allcott deceptively convinced investors to cash out their retirement accounts and invest instead with ARO, touting double-digit returns and zero downside, ultimately raising nearly $6 million from investors. ARO's investments began failing almost immediately, but Renison and Allcott continued to tell investors their investments were as safe with ARO as they were with a bank. In addition to their prison sentences, Renison was ordered to pay restitution of $6,098,198.30 and Allcott will pay restitution of $6,249,983.30. SEC

July 28, 2023

Summitcrest Capital, Inc., and its principals, Johnny Tseng and Kevin Zhang, raised approximately $19.8 million from Chinese-speaking investors in the United States and China, misleading them to believe the funds would be used to make real estate-related loans "to the general public" and the income from these loans would be used to make interest payments and return of capital to investors. Tseng and Zhang, through their entity SC Development Fund, instead used investor funds for loans to Zhang's many real estate development and contracting businesses. Summitcrest, Tseng, and Zhang are on the hook jointly and severally for $16.6 million in disgorgement and over $4.3 million in prejudgment interest. Summitcrest and Zhang are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act. Additionally, Tseng is barred from acting as an officer or director and will pay disgorgement of $60,000, plus $15,721 in prejudgment interest and a $414,366 penalty. SEC

July 19, 2023

Amazon.com Inc. and its wholly-owned subsidiary Amazon.com Services LLC have agreed to pay a $25 million civil penalty to resolve allegations that its voice assistant service Alexa violated the Federal Trade Commission Act, Children’s Online Privacy Protection Act, and Children’s Online Privacy Protection Rule.  Since at least May 2018, Amazon has retained indefinitely and by default voice recordings of children interacting with Alexa. The company also falsely represented that such recordings, including transcriptions and geolocation information, could be deleted by Alexa users, when in fact user deletion requests were not always honored.  As part of the settlement, Amazon will have to identify and delete inactive child profiles and notify users about its retention and deletion practices.  DOJ

July 6, 2023

Emerson Sousa Pires and Flavio Mendes Goncalves, who together operated a purported hedge fund called EmpiresX, has been ordered to pay over $32 million in disgorgement, over $2 million in prejudgment interest, and civil penalties of $6 million and $5 million, respectively.  The two men sold investments by assuring investors that a trading “bot,” or skilled manual trading, guaranteed daily profits of 1%.  In reality, the bot was fake, the profits were losses, and the defendants were using investor funds to fund personal expenses.  SEC