Archive

July 20, 2017

The U.S. Commodity Futures Trading Commission (CFTC) announced today the settling of charges against Respondents Arthur Toole IIIof Atlanta, Georgia, and his companies, Billionaire Investor Group (BIG), a Texas limited liability company, The Toole Group Inc. (Toole Group), a Texas corporation, and Catalyst Traders LLC (Catalyst), a Georgia limited liability company, for misappropriating commodity pool funds, fraudulent misrepresentations, commingling pool funds, and acting as an unregistered commodity pool operator. The CFTC Order finds that from in or about February 2011 through at least January 2016, Toole incorporated his companies in Texas and Georgia, all of which operated as separate, consecutive commodity pools and which primarily traded Chicago Mercantile Exchange Euro FX futures and E-Mini Dow futures contracts. The Order further finds that Toole solicited over $375,000 from pool participants for the three commodity pools and misappropriated over $244,000 from the pools for personal and non-trading expenses. Pool participants suffered net losses amounting to $293,141, according to the Order. The Order also finds that Toole misrepresented trading results and the pools’ assets under management and commingled funds from all three pools with non-pool property. CFTC

June 28, 2017

The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Loretta C. Biggs of the U.S. District Court for the Middle District of North Carolina entered an Order of Final Judgment by Default (Order) against Defendants Tracy Lee Thomas (a/k/a Treyton L. Thomas, a/k/a Trayton L. Thomas, a/k/a Trey Thomas, a/k/a Tray Thomas, a/k/a T.L. Thomas), formerly of Naples, Florida, and Marbury Advisors Inc. (Marbury), a Cayman Islands corporation. The Court’s Order finds that the Defendants had fraudulently solicited over $ 1.1 million from customers, lost those funds trading, and provided customers with false reports or statements indicating their investments were profitable. The Court’s Order, entered on April 11, 2017 and stemming from a CFTC complaint filed March 22, 2016 (see CFTC Complaint and Press Release 7348-16), requires Thomas and Marbury, jointly and severally, to pay restitution of $1,110,413 and a civil monetary penalty of $3,331,239, which represents triple the monetary gain to Defendants. The Order also imposes permanent trading and registration bans and prohibits Defendants from further violations of the Commodity Exchange Act, as charged. CFTC

June 14, 2017

Michael Gluk, former chief financial officer of ArthroCare, pleaded guilty to conspiring with others to falsely inflate ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving ArthroCare’s distributors. He further admitted that he and other co-conspirators caused ArthroCare to file a Form 10-K for 2007 and Form 10-Q for the first quarter of 2008 with the SEC that materially misrepresented ArthroCare’s quarterly and annual sales, revenues, expenses and earnings. DOJ

May 15, 2017

The Securities and Exchange Commission today charged James Im and Kee Chan a pair of former head traders who ran the commercial mortgage-backed securities (CMBS) desk at Nomura Securities International Inc. with deliberately lying to customers in order to inflate the profits of the CMBS desk and line their own pockets as a result. The SEC alleges that Im and Chan each misrepresented price information while acting as intermediaries on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market.  In certain instances, Im and Chan allegedly pretended they were still negotiating bond purchases with a third-party seller at higher prices when Nomura had already acquired the bonds at a lower price. The SEC alleges that in one instance, Im bragged about his purposeful deception of a customer, and Chan once altered an email to a customer to prop up his lie about the bid price for a bond.  According to the SEC’s complaints, Chan and Im fraudulently generated more than $750,000 in extra trading profits for the CMBS desk, and they received substantial bonuses based largely on the desk’s performance. SEC

April 5, 2017

The Securities and Exchange Commission today announced that Lawson Financial Corporation an Arizona-based brokerage firm, its CEO, Robert Lawson and its former underwriter’s counsel John T. Lynch Jr. have agreed to settle charges related to municipal bond offerings they were underwriting that turned out to be fraudulent. The SEC’s order finds that Lawson Financial Corporation failed in its role as a gatekeeper to conduct reasonable due diligence when underwriting bond offerings to purchase and renovate nursing homes and senior living facilities.  The offerings were managed by Atlanta-based businessman Christopher F. Brogdon, who was later charged by the SEC with fraud and faces a court order to repay $85 million to investors.  Lawson Financial failed to ensure Brogdon and his related borrowers were in compliance with their continuing disclosure undertakings as required by Rule 15c2-12, which generally prohibits underwriters from purchasing or selling municipal securities unless the issuer or obligated person has committed to providing continuing disclosure information, such as annual financial materials and operating data. Lawson Financial’s founder and CEO Lawson and then-underwriter’s counsel Lynch Jr. are charged with failing to conduct reasonable due diligence, and Lynch also failed to disclose that he was not actually authorized to practice law at the time as represented to investors in the bond offering documents. SEC

May 22, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Bruce S. Jenkins in the U.S. District Court for the District of Utah entered a Consent Order against Defendants Kimball Parker of Lehi, Utah, and his Utah company, MakeYourFuture, LLC (MYF), who were charged with fraud and other violations in connection with the offering and sale of a futures trading system marketed under the names “MakeYourFuture” and "Changes Trading." The Consent Order, entered on May 19, 2017, requires Parker and MYF, jointly and severally, to pay restitution to defrauded customers totaling $853,294.98, plus a $354,000 civil monetary penalty. CFTC

May 3, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the District of Arizona against Cory Williams of Gilbert, Arizona, and his company, Williams Advisory Group (WAG) (collectively, Defendants), charging them with defrauding 40 investors out of at least $13 million in connection with a commodity pool they operated. The CFTC Complaint charges Defendants Williams and WAG with commodity futures fraud and Williams with commodity pool fraud and failure to register as a commodity pool operator. The Complaint also charges Williams with engaging in activities prohibited for a commodity pool operator, including commingling pool participant funds with Williams’ personal funds. The Complaint alleges that Williams’ victims included family members, friends, neighbors and members of his church and other related churches in and around Phoenix, Arizona. CFTC

May 2, 2017

The U.S. Commodity Futures Trading Commission (CFTC) filed an enforcement action in the U.S. District Court, Northern District of Illinois, charging Defendant, William H. Powderly IV (Powderly) of New Hope, Pennsylvania, with fraudulently soliciting at least $825,000 from at least four customers for purposes of trading commodity futures on their behalf in an account in Powderly’s name. The Complaint also charges Powderly with making and providing false and misleading account statements to his customers. In particular, the Complaint alleges that from at least January 2016 through October 2016, Powderly solicited customers and prospective customers by claiming that he and a university professor had developed a commodity futures trading program that generated exceptional hypothetical trading results and that “beta” testing of this system generated consistent gains without a single day of loss. The Complaint further alleges that when soliciting customers and prospective customers, Powderly failed to tell them that the actual commodity trading he conducted for his commodity account during that 10-month period was consistently unprofitable, sustaining losses every month during that time. Additionally, the Complaint alleges that Powderly created false account statements for his trading account and sent them to his customers in order to conceal his trading losses. CFTC

April 26, 2017

New York announced felony charges against Anthony Nyame, 59, of the Bronx, for allegedly stealing $800,000 from multiple victims by fraudulently inducing them to believe his Wall Street based company, General Capital Corporation, had the ability to secure millions of dollars in loans. If convicted, Nyame faces up to 20 years in prison. According to the indictment and statements made by the prosecutor at arraignment, Nyame allegedly solicited unwitting victims into believing that his company could arrange for tens of millions of dollars in loans provided they pay hundreds of thousands of dollars to collateralize the loans. In one case, Nyame allegedly promised to obtain a $30 million loan for a Church located in the Bronx that was seeking to build a multi-family dwelling on its property. Instead of using the deposits to secure the promised loans, Nyame allegedly diverted monies from the Church and other investors for his own personal use – including $71,000 in cash withdrawals and transfers to his personal bank account, $47,000 to pay for his Wall Street apartment and an additional $26,000 for assorted personal items. Nyame also transferred hundreds of thousands of dollars to multiple companies and people around the world. NY

March 27, 2017

The SEC announced fraud charges and an emergency asset freeze against LottoNet Operating Corp, its CEO David Gray, and its top sales agent Joseph A. Vitale.  The SEC’s complaint alleges that the defendants misrepresented to investors that their money would be used to develop and market LottoNet and that sales agents did not receive commissions.  In fact, at least 35 percent of investor proceeds were allegedly paid to boiler room sales agents in the form of commissions, and LottoNet allegedly siphoned investor funds for personal spending on clothing, wedding-related expenses, and strip clubs.  The SEC complaint further alleges that Vitale, who personally raised at least $1.4 million from investors, used the alias Donovan Kelly in an apparent attempt to hide form investors that he is permanently barred by FINRA. SEC