Archive

July 31, 2014

Virginia-based broker Donna Jessee Tucker agreed to disgorge $730,000 in ill-gotten gains to settle charges of defrauding elderly customers, including some who are legally blind, by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.  SEC

July 31, 2014

LA-based broker Michael A. Horowitz agreed to pay more than $850,000 to settle charges he participated in a variable annuities scheme designed to profit from the imminent deaths of the terminally ill.  As part of his scheme, he deceived his own brokerage firm to obtain the approvals he needed to sell the annuities and generate hefty sales commissions.  He also falsified various broker-dealer forms used by firms to conduct investment suitability reviews, causing some insurance companies to unwittingly issue variable annuities they may not have sold otherwise.  SEC

July 30, 2014

The SEC charged CEO Marc Sherman and former CFO Edward L. Cummings of Florida-based computer equipment company QSGI Inc. with violating the Sarbanes-Oxley Act by misrepresenting to external auditors and the investing public the state of the company’s internal controls over financial reporting.  SEC

July 29, 2014

The SEC charged penny stock company MSGI Technology Solutions and its CEO J. Jeremy Barbera with defrauding investors by touting a joint venture to develop and manage solar energy farms across the country on land purportedly owned by an electricity provider operated by Christopher Plummer.  Barbera and Plummer co-authored press releases falsely portraying MSGI as a successful renewable energy company on the brink of profitable solar energy projects.  However, MSGI had no operations, customers, or revenue at the time, and Plummer’s company did not actually possess any of the assets or financing needed to develop the purported solar energy farms.  SEC

July 28, 2014

Peter A. Jensen, former chief operating officer at Harbinger Capital Partners, agreed to pay $200,000 to settle charges he assisted a scheme by the firm and its owner Philip A. Falcone to misappropriate millions of dollars from a hedge fund they managed to pay Falcone’s personal taxes.  Falcone and Harbinger consented to a settlement last year in which they agreed to pay more than $18M and admit wrongdoing.  SEC

July 25, 2014

Citigroup business unit LavaFlow, Inc., which operates an alternative trading system (ATS), agreed to pay $5M to settle charges of failing to protect the confidential trading data of its subscribers.  The payment includes a $2.85M penalty which is the SEC’s largest to date against an ATS.  SEC

July 24, 2014

Morgan Stanley agreed to pay $275M to settle charges of misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations it underwrote, sponsored, and issued.  In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral.  Morgan Stanley allegedly misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market.  SEC

July 18, 2014

The SEC charged Christopher Plummer, a serial con artist and Lex M. Cowsert, the CEO of penny stock company CytoGenix, with misleading investors in a supposed vaccine development company by issuing false press releases portraying it as a successful venture when it was in fact a failing enterprise.  Specifically, the government alleged that Plummer and Cowsert teamed up to defraud investors with extravagant claims about the company’s revenues flowing from a “shared revenue agreement” with Franklin Power & Light, an electricity provider supposedly operated by Plummer.  However, Plummer’s entity was a complete sham and CytoGenix had actually lost all its vaccine patents and other intellectual property in a lawsuit.  SEC

July 17, 2014

The SEC charged the CEO and president of a supposed merchant banking firm, braxas “A.J.” Discala and Marc E. Wexler, with teaming up with brokers and the CEO of the medical education company CodeSmart, Ira Shapiro, to inflate the price of the company’s stock and profit at the expense of the brokers’ customers.  According to the SEC, they acquired 3 million restricted shares of CodeSmart stock following its reverse merger into a public shell company in May 2013, and improperly flooded the market with the shares as though they were unrestricted.  CodeSmart’s stock price crashed from a peak of nearly $7 per share to where it is currently trading at below 10 cents.  SEC

July 17, 2014

The SEC charged Dennis H. Daugs Jr., owner of Seattle-based investment advisory firm Lakeside Capital Management, with fraudulently misusing millions of dollars in client assets to make loans to himself to buy a luxury vacation home and refinance a rare vintage automobile.  SEC