Archive

November 13, 2017

The Commodity Futures Trading Commission (CFTC) today announced that Judge David G. Campbell of U.S. District Court for the District of Arizona entered a Consent Order against Defendants Derek Springfield and his company, Draven, LLC (Draven), both of Mesa, Arizona finding that they fraudulently solicited and received at least $1.8 million from approximately 112 commodity pool participants in connection with pooled investments in commodity futures and foreign currency exchange (forex). The Order, entered on November 13, 2017, also finds that the Defendants engaged in fraudulent sales practices, misappropriated pool participant funds, and provided false account statements to pool participants. The Order requires the Defendants to pay, jointly and severally, $1,487,964.45 in restitution to defrauded customers and an $800,000 civil monetary penalty. The Order also imposes permanent trading and registration bans against Defendants, among other things, and prohibits them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged. CFTC

October 11, 2017

– The Commodity Futures Trading Commission (CFTC) today announced the filing of a Complaint on October 2, 2017, in the U.S. District Court for the Central District of California. The CFTC Complaint, filed under seal, charges Defendants Scott Allensworth (d/b/a Capital Growth Group Associates and Cobra Development Group LLP), of Newhall, California; his California company E-Slate, Inc. (d/b/a Cobra Development Group LLP); Robert J. Fusco, of Henderson, Nevada; and David Weddle, of Somerset, Kentucky, with fraudulent solicitation, providing fabricated statements to pool participants, and misappropriation in connection with investments in two separate commodity pools. The Complaint also charges Defendants with registration violations. On October 3, 2017, U.S. District Court Judge Consuelo Marshall signed a Statutory Restraining Order freezing the assets of Allensworth, Fusco, and E-Slate and prohibiting the destruction of their books and records. The district court scheduled a hearing for October 17, 2017 on the CFTC’s motion seeking a preliminary injunction against Allensworth, Fusco, and E-Slate. CFTC

October 10, 2017

The Commodity Futures Trading Commission (CFTC) today announced that the Honorable Joan B. Gottschall of the U.S. District Court for the Northern District of Illinois entered a Final Judgment and Order against Grace Elizabeth Reisinger of Grand Island, Nebraska and her company ROF Consulting, LLC (ROF) for operating a fraudulent commodity pool scheme. The Order, entered on October 4, 2017, requires Reisinger to pay restitution of $497,893.88 to defrauded pool participants and to disgorge $153,355.04. The Order requires ROF to disgorge $344,108.30. The Order also imposes a total of $1,105,917.02 in civil monetary penalties against Reisinger and ROF and permanently bars Reisinger from registering with the CFTC, and from trading in any commodity interest. Furthermore, the Order enters an award of prejudgment interest and holds Reisinger liable for ROF’s violations of the Commodity Exchange Act and liable for the disgorgement and civil monetary penalty amounts as the controlling person of ROF. CFTC

September 29, 2017

The Commodity Futures Trading Commission (CFTC) on September 28, 2017, filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Hasan Sarwar a/k/a Alexander Sarwar (d/b/a Profit Management Int) of Rancho Cucamonga, California, and his spouse Rachida Elfrimi (d/b/a Profit Management). The CFTC Complaint charges the Defendants with defrauding commodity pool participants, making Ponzi-style payments to pool participants from other participants’ funds, comingling of pool funds, and failing to register with the CFTC as Commodity Pool Operators, as required. CFTC

September 21, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Nicholas Gelfman, of Brooklyn, New York, and Gelfman Blueprint, Inc. (GBI), a New York corporation, charging them with fraud, misappropriation, and issuing false account statements in connection with solicited investments in Bitcoin, a virtual currency. The CFTC Complaint alleges that from approximately January 2014 through approximately January 2016, GBI and Gelfman, company Chief Executive Officer and Head Trader, operated a Bitcoin Ponzi scheme in which they fraudulently solicited more than $600,000 from approximately 80 persons, supposedly for placement in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by Defendants’ computer trading program called “Jigsaw.” In fact, as charged in the CFTC Complaint, the strategy was fake, the purported performance reports were false, and — as in all Ponzi schemes — payouts of supposed profits to GBI Customers in actuality consisted of other customers’ misappropriated funds. CFTC

September 6, 2017

– The U.S. Commodity Futures Trading Commission (CFTC) announced that on September 6, 2017, it filed a civil injunctive enforcement action in the U.S. District Court for the Northern District of Illinois against three affiliated companies located in Newport Beach, California, Monex Deposit Company, Monex Credit Company, and Newport Services Corporation(collectively, Monex), and Monex’s principals Louis Carabini and Michael Carabini. The CFTC Complaint charges the Defendants, among other claims, with defrauding thousands of retail customers nationwide out of hundreds of millions of dollars, while executing thousands of illegal, off-exchange leveraged commodity transactions. CFTC

July 31, 2017

The Securities and Exchange Commission today filed charges against Patrick Muraca to stop an alleged ongoing fraud involving misusing investments intended for the development of cancer diagnostic tests to instead pay personal expenses and fund his fiancée’s restaurant businesses. According to the SEC’s complaint, Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases.  The SEC has traced the flow of investor funds into Muraca’s personal bank account and alleges that at least $400,000 has been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop.  The SEC alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as “Serving Food; Restaurant” in separate documents he has filed with the Commonwealth of Massachusetts to do business in the state. SEC

July 12, 2017

The Securities and Exchange Commission today brought fraud charges against 13 individuals allegedly involved in two Long Island-based cold calling scams that bilked more than one hundred victims out of more than $10 million through high-pressure sales tactics and lies about penny stocks. The SEC alleges that the orchestrators of the scheme used boiler room-style call centers to make hundreds of thousands of cold calls that included the use of threatening and deceitful sales techniques to pressure victims – many of whom were senior citizens – into purchasing penny stocks.  For example, as part of one such scam, a boiler room salesman allegedly claimed that the Walt Disney Company was buying into a purported media and internet company and that would cause the penny stock’s price to increase substantially. SEC

June 30, 2017

The Securities and Exchange Commission today filed fraud charges against the clandestine founder of a purported Bitcoin platform and a chain of co-working spaces located in former bars and restaurants, alleging that he bilked investors in both companies while hiding his connection given his checkered past with regulators in the U.K.  The SEC alleges that Renwick Haddow, a U.K. citizen living in New York, created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws.  Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc. According to the SEC’s complaint, offering materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist.  The materials also misrepresented other key facts about both companies’ operations.  Haddow allegedly diverted more than 80 percent of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco. SEC

June 28, 2017

The Securities and Exchange Commission today charged a Canadian-based oil and gas company and three of its former top finance executives for their roles in an extensive, multi-year accounting fraud. The SEC's complaint alleges that Penn West Petroleum Ltd., which has since been renamed Obsidian Energy Ltd., fraudulently moved hundreds of millions of dollars in expenses from operating expense accounts to capital expenditure accounts. This alleged fraudulent movement caused Penn West to artificially reduce its operating costs by as much as 20 percent in certain periods, which falsely improved reported metrics for oil extraction efficiency and profitability. Penn West was one of Canada's largest oil producers at the time. According to the SEC's complaint, the fraud was orchestrated by the company's former CFO Todd Takeyasu, former vice president of accounting and reporting Jeffery Curran, and former operations controller Waldemar Grab. The SEC alleges that they manipulated the company's operating expenses in order to lower a key publicly reported metric concerning the cost of oil extraction and processing needed to sell a barrel of oil. Penn West allegedly created an internal budget target representing the amount it would improperly move in its publicly-reported financial statements and gave the illusion that it was spending less money to get oil of out the ground. In fact, the SEC alleges, the company historically struggled to keep its operating costs under control, and Takeyasu, Curran, and Grab managed operating expenses to meet the budget target. According to the SEC's complaint, they frequently met this target to the dollar by having the company record large, round number, and unsupported adjusting journal entries. Within the company, this practice was referred to as "reclass to capital." SEC