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November 22, 2021

Seven financial institutions – Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, NatWest Markets Securities Inc., and Washington Mutual Mortgage Securities Corp. – have agreed to collectively pay $32.5 million to resolve claims by New Mexico that the banks did not adequately disclose the characteristics of certain mortgage-backed securities sold to New Mexico pension funds and a state-run investment council between 2003 and 2010.  The settlement resolves a qui tam action under the New Mexico Fraud Against Taxpayers Act brought by Integra REC, LLC.  NM

Tagged in: FCA State, Financial Institution Fraud, Housing and Mortgage Fraud, Whistleblower Case,

November 22, 2021

Two whistleblowers received awards totaling approximately $1 million, with the CFTC finding that the first claimant voluntarily provided specific, credible, and timely information that led the CFTC to open an investigation, and the second claimant voluntarily provided information that significantly contributed to the success of the covered action.  In support of a larger award for the first claimant, the CFTC cited their submission of documents and sharing of knowledge during the earliest stages of the CFTC’s investigation, which focused investigative efforts and conserved government time and resources.  CFTC

Tagged in: CFTC Whistleblower Reward Program, Fraud in CFTC-Regulated Markets, Whistleblower Rewards,

November 17, 2021

In relation to CFTC charges against Digital Platinum, Inc. and related entities arising from the dissemination of fraudulent solicitations promising free access to purportedly successful automated trading systems that traded on behalf of clients in binary options involving commodity interests and digital assets, a court has ordered Daniel Fingerhut, Itay Barak, Tal Valariola and Digital Platinum Limited to pay a combined $7 million in disgorgement and civil monetary penalties for violations of the Commodity Exchange Act (CEA) and CFTC regulations.  CFTC

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

November 16, 2021

Richard Ayvazyan was sentence to 17 years in prison, his wife Marietta Terabelian to six years, and his brother Artur Ayvazyan to five years, following their convictions at trial on charges related to their scheme to fraudulently obtain more than $20 million in Paycheck Protection Program and Economic Injury Disaster Loan COVID-19 relief funds.  The defendants used dozens of false identities to submit fraudulent applications for approximately 150 PPP and EIDL loans, supporting applications with false and fictitious documents including fake identity documents, tax documents and payroll records. DOJ; USAO CD Cal

Tagged in: COVID-19, Criminal Proceedings, Financial and Investment Fraud, Government Loan Programs,

November 9, 2021

The owner of California-based DC Solar, Jeff Carpoff, has been sentenced to 30 years in prison for his role in a billion-dollar Ponzi scheme, the largest criminal fraud scheme ever prosecuted in the Eastern District of California.  Together with his wife Paulette and five other co-conspirators, Carpoff lied to investors about market demand for his company’s mobile solar generator (MSG) units, using false lease contracts and financial statements to back up the lie.  In addition to selling thousands of MSGs that didn’t even exist, the defendants paid prior investors using funds from newer investors, then laundered their ill-gotten gains.  USAO EDCA; Add'l defendant sentencing at USAO EDCA

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Ponzi Schemes,

November 8, 2021

United States Commodity Funds LLC, a registered commodity pool operator , and United States Oil Fund LP, an exchange-traded product whose general partner is United States Commodity Funds LLC, will pay a total of $2.5 million to resolve charges by the SEC and CFTC.  USO’s stated investment objective was to track changes in the spot price of oil; however, during oil market turmoil in early 2020, USO’s sole futures commission merchant told USO it would not execute any new oil futures positions for USO. As a result of this limitation, USO was restricted from investing the proceeds generated by the future sale of newly created shares in oil future contracts, creating the risk that USO would not be able to meet its stated investment objective. The SEC and CFTC alleged that the defendants failed to fully disclose these limitations to commodity pool participants.  CFTC; SEC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Misrepresentations, Securities Fraud,

October 29, 2021

Following amendments on types of actions that may be considered “related” under whistleblower rules, the SEC has awarded more than $2 million to an individual who was previously awarded for contributing to a successful enforcement action.  According to the agency, the whistleblower’s information sparked investigations by both the SEC and DOJ.  SEC

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

October 27, 2021

A Court has approved a $38.8 million settlement between the SEC and Akazoo, S.A., which went public in 2019 by way of a SPAC merger and claimed to offer music streaming services.  While the company told investors, both before and after the merger, that it had millions of paying subscribers and was increasing its subscriber base, earning hundreds of millions of dollars, the company in fact had no paying subscribers and negligible revenue.  The company raised nearly $55 million in the SPAC transaction and burned through more than $20 million before the SEC filed its complaint in 2020 and secured an asset freeze.  The $38.8 million disgorgement settlement will be deemed satisfied by the company’s payment of $35 million to investor victims in connection with several private class action lawsuits.  SEC

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

October 21, 2021

The CFTC has issued a final award of nearly $200 million to a whistleblower whose information significantly contributed to government investigations resulting in successful enforcement actions by the CFTC, another U.S. federal regulator, and a foreign regulator.  In making the award, the CFTC noted that the information provided by the whistleblower was specific and credible, leading to important, direct evidence of wrongdoing, as well as voluntarily provided and timely, even though the CFTC already had an open investigation at the time of the whistleblower’s report.  The CFTC had first issued a preliminary order denying the individual’s application; the whistleblower requested reconsideration and provided information about how his information was utilized, including in the parallel investigations.  CFTC

Tagged in: CFTC Whistleblower Reward Program, Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations, Whistleblower Rewards,

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