Archive

July 5, 2023

The operators of four feeder funds who failed to register with the CFTC and violated commodity pool regulations have been ordered to pay over $10 million cumulatively.  Hemraj Singh and King Royalty, LLC were ordered to pay about $7 million in restitution and civil monetary penalties, while Surujpal Sahdeo and SR&B Investment Enterprises, Inc., Randy Rosseau and Bull Run Advantage, LLC, and Daniel Cologero and Green Knight Investments, LLC were each ordered to pay under $1 million.  In addition to registration violations, the individuals and their companies collected almost $58 million from investors but used less than $2.5 million for their intended purpose of forex trading, while issuing false statements to investors showing only profits and no losses.  CFTC

July 3, 2023

Argent Asset Group LLC, First State Depository Company, LLC, and owner Robert Higgins have been ordered to pay a total of $146 million for making false representations to prospective precious metals investors and misappropriating tens of millions of dollars.  Through a fraudulent silver leasing program called the Maximus Program that promised guaranteed monthly lease payments, the defendants convinced some 200 unsuspecting customers into storing their assets with Argent.  Unbeknownst to customers, however, the defendants failed to adequately insure those assets despite making representations about coverage, and misappropriated client assets.  CFTC

June 30, 2023

Robert Christensen and Anthony Matic, both of Oregon, have been ordered to pay almost $5.4 million for their roles in a multi-year Ponzi scheme that defrauded retail investors of more than $10 million.  Using their companies—Foresee Inc., The Commission PDX LLC, The Policy PDX LLC, and Innings 150 LLC—Christensen and Matic offered and sold unregistered promissory notes to investors by leading them to believe the raised funds would be used to invest in real estate, and all funds raised would be returned in full within a few months with 9-15% interest.  In reality, however, Christensen and Matic used the funds on personal, unauthorized purposes.  SEC

June 28, 2023

Michael Ackerman of Ohio has been banned from participating in CFTC-regulated markets and ordered to pay $27 million in restitution as well as $27 million in civil monetary penalties for operating a digital asset fraud scheme.  He was also ordered to pay $31 million in restitution and serve 5 years of probation and 1 year of home confinement in a related criminal proceeding.  According to the CFTC, Ackerman solicited funds from more than 150 individuals and entities under the guise of using the funds to invest in digital commodity assets.  He was ultimately able to raise at least $33 million, but misappropriated all but $10 million for his personal use.  CFTC

June 27, 2023

Publishers Clearing House has been ordered to pay $18.5 million and overhaul its sweepstakes entry and sales processes.  The FTC had charged the company with misleading consumers through “dark patterns”—including misleading email subject lines and manipulative website design—to convince consumers to make unnecessary purchases, and to disguise hidden shipping and handling costs on so-called “risk free” purchases.  FTC

June 26, 2023

Sanjay Singh, of Broward County, Florida, and his company, Royal Bengal Logistics Inc., have been charged by the SEC for fraudulently raising $112 million through a 5-year, Ponzi-like scheme, which targeted as many as 1,500 primarily Haitian-American investors through an unregistered securities offering. Singh promised investors guaranteed returns of 12.5 to 325 percent, and that the investors’ funds would be used to expand operations and increase its fleet of semi-trucks and trailers. Despite telling investors Royal Bengal generated up to $1 million in revenue per month, RB instead was operating at a loss and used approximately $70 million of new investor funds to make payments to other investors. Singh misappropriated at least $14 million of investor funds, and diverted more than $19 million into two brokerage accounts he controlled, engaged in highly speculative equities trading on margin in those accounts, and as a result lost more than $1 million of investor money. SEC

June 26, 2023

U.S.-based citizens Ronald Flynn and Richard Marchitto, their U.S.-based company Vuuzle Media Corp., and UAE-based company Vuuzle Media Corp Limited have been ordered to pay over $26 million in civil monetary penalties, and another $26 million in disgorgement and prejudgment interest, after they were found to have fraudulently raised over $25 million through high pressure sales tactics.  Using a boiler room of salespeople based largely in the Philippines, the defendants misled victims into believing Vuuzle was a legitimate and profitable company, when in fact, it was not, and investor funds were instead used on Flynn and Marchitto’s personal and business expenses.  SEC

June 15, 2023

Online intimate apparel retailer AdoreMe, Inc. has agreed to pay $2.35 million to settle allegations by 31 states and the District of Columbia that it deceptively marketed a discount membership program and made it difficult for consumers who bought it to cancel it.  Consumers were charged about $40 a month to be in the program, but Adore Me failed to properly disclose the amount of the monthly charge, that discounts were limited time only, and that the accrued value would be eliminated upon cancellation of the membership.  NC AG; PA AG

May 30, 2023

The former head of Wells Fargo’s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to settle charges of misleading investors about its financial success.  Over a two-year period, Tolstedt publicly and repeatedly touted a metric used by Wells Fargo to measure financial success, even though she knew it did not accurately track accounts or products used or needed by customers.  In addition to the penalty, Tolstedt will pay almost $1.5 million in disgorgement and over $400,000 in pre-judgment interest.  The funds will be combined with prior payments of $500 million by Wells Fargo and $2.5 million by its former CEO and Chairman, John Stumpf, and will be distributed to harmed investors.  SEC

April 11, 2023

Rishi Shah, Shradha Agarwal, and Brad Purdy, all former executives of Outcome Health, were convicted in a $1 billion scheme to fraudulently obtain funds from their clients, lenders, and investors. Outcome installed tv screens and tablets in physicians’ offices around the US, and then sold non-existent advertising inventory to be shown on the installed screens. Outcome billed clients in full, despite under-delivering on the contract, and inflated metrics to lie about the frequency in which patients accessed the tablets. Using inflated engagement data and revenue numbers, they raised $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017. The trio faces decades in prison because of their fraud. DOJ