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July 13, 2021

Special purpose acquisition corporation Stable Road Acquisition Company, its CEO Brian Kabot, and the SPAC’s proposed merger target Momentus Inc. will collectively pay penalties of $8 million to resolve charges that Momentus, a space transportation company, and its CEO Mikhael Kokorich, misrepresented the company's technology and ability to secure required governmental licenses, and that Stable Road repeated those misleading statements in public filings associated with its proposed merger with Momentus.  Stable Road claimed to have conducted extensive due diligence of Momentus, but it never reviewed the results of Momentus’s in-space test or received sufficient documents relevant to government licensing issues and, in particular, national security risks associated with Kokorich. SEC

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

July 13, 2021

A subsidiary of Teachers Insurance and Annuity Association of America (TIAA) has agreed to pay $97 million in restitution and make significant reforms to settle charges for making misleading statements and failing to disclose conflicts of interests to tens of thousands of customers.  Between 2012 and 2018, advisors with TIAA-CREF Individual & Institutional Services LLC (TC Services) pressured customers—many of them teachers and public sector employees—to move their investments from low-cost employer-sponsored retirement plans to higher-cost individually-managed accounts, which generated hundreds of millions of dollars in fees for TIAA.  NY AG; SEC

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

July 12, 2021

A non-bank institution in Georgia called GreenSky, LLC has been ordered to refund or cancel up to $9 million in fraudulent loans, pay a $2.5 million civil penalty, and implement new procedures to prevent future financial abuse.  According to the CFTC, GreenSky’s inappropriate and ineffective controls enabled third-party merchants to take out loans on behalf of thousands of consumers without their knowledge or authorization.  In addition to the financial resolution, GreenSky is now required to verify consumer identities and confirm authorizations before activating or disbursing loans, implement a consumer complaint management program, and properly oversee third-party merchant partners.  CFTC

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

July 2, 2021

Roger Nils-Jonas Karlsson of Sweden has been sentenced to 15 years in prison and ordered to forfeit more than $16 million, including several properties and a resort in Thailand, in one of the largest cryptocurrency Ponzi schemes ever prosecuted in the United States.  Starting in 2011 until his arrest in Thailand in 2019, Karlsson induced thousands of investors from around the country and over 45 countries around the world to use cryptocurrency to purchase shares in an entity he called Eastern Metal Securities, by falsely claiming that it was run by award-winning economists and had zero risk of loss.  He then misappropriated at least $1.5 million to fund a lavish lifestyle for himself.  USAO NDCA; DOJ; SEC

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

June 30, 2021

Following its 2020 SEC penalty, Robinhood Financial LLC was ordered to pay $70 million by FINRA -- a $57 million penalty and $12.6 million in restitution and interest to harmed customers -- to resolve charges that the firm provided false and misleading information, improperly authorized customers for options trading without appropriate due diligence, and failed to reasonably supervise the technology it used to provide core broker-dealer services including for the acceptance and execution of customer orders.  FINRA

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations, Regulatory Violations,

June 30, 2021

Investment advisor Securities America, Inc. will pay a $1.75 million civil penalty to resolve charges that it failed to implement policies and procedures that were reasonably designed to protect client assets from misappropriation.  While affiliated entities to whom SAA had delegated responsibility for surveillance of advisory accounts had received automated alerts about potentially suspicious withdrawals from client accounts, those alerts were ignored and approximately $8 million was misappropriated from SAA advisory accounts.  SEC

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

June 29, 2021

Accountant Steven Brown, who operated a financial consulting and investment company called Alpha Trade Analytics, Inc., has been sentenced to over 4 years in prison and ordered to pay over $3.3 million in restitution for running a Ponzi scheme that affected 48 victims, many of whom were connected to a nonprofit that provided dance and theater arts education to children.  Through his role as an accountant for the nonprofit, Brown received access to high-net-worth individuals, whom he encouraged to invest with Alpha Trade through false promises.  When it came time to pay out investors, Brown used funds from new investors, as well as funds embezzled from the nonprofit.  USAO CDCA

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

June 29, 2021

A man in Minnesota who allegedly defrauded two dozen investor clients out of $2.3 million has been sentenced to 7 years in prison.  Isaiah Leslie Goodman, a registered investment advisor and owner of Becoming Financial Group, Inc., Becoming Financial Advisory Services L.L.C., and MoneyVerbs, allegedly lied to prospective and existing clients while misappropriating their funds for his own use.  As part of his sentence, Goodman will forfeit some of his ill-gotten gains.  USAO MN

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

June 29, 2021

Neovest Inc., a JPMorgan Chase & Co. subsidiary that provides an order and execution management system (OEMS) that facilitates electronic trading, will pay $2.75 million for its failure to register as a broker-dealer. Neovest's OEMS allows customers to route orders for stocks and options to more than 360 customer-selected destination brokers who entered into agreements with Neovest for execution. In exchange for its OEMS services, Neovest received transaction-based compensation, which were sent to J.P. Morgan Securities LLC, a registered broker-dealer, and then transferred to Neovest. SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations, Securities Fraud,

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