Government Enforcement Actions

July 6, 2023

Shipping company Clipper Shipping A.S. has been sentenced to pay $1.5 million after admitting that its ship, Motor Tanker (M/T) Clipper Saturn discharged oily bilge water directly overboard while anchored outside Togo, and omitted mention of it from its Oil Record Book, in violation of the Act to Prevent Pollution from Ships.  The ship was required to filter out hazardous elements before disposing of the water at sea.  DOJ

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 29, 2023

Three healthcare providers—Community Health Centers of the Central Coast, Cottage Health System, and Sansum Clinic—and a California public health agency, CenCal Health, have agreed to pay a total of $68 million to settle allegations of submitting false claims to the state’s Medicaid program, in violation of state and federal False Claims Acts.  The defendants allegedly took advantage of a federal expansion of Medi-Cal coverage for previously uninsured adults by submitting duplicative or unallowed claims.  CA AG; DOJ

June 29, 2023

Vantage Systems Inc. will receive $1.35 million for blowing the whistle on HX5 LLC, its owner and CEO Margarita Howard, and HX5 Sierra LLC for defrauding the SBA’s 8(a) business development program. Over a seven-year period, from 2015 through 2021, HX5 violated the False Claims Act by knowingly providing false information relating to their eligibility for federal set-aside contracts meant for small businesses owned and controlled by socially and economically disadvantaged individuals. HX5 and Howard secured 6 contracts by concealing Howard’s assets and failing to report distributions and payments to Howard’s family. DOJ

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

ACI Worldwide and its subsidiary, ACI Payments, will pay a $25 million civil penalty for improperly initiating around $2.3 billion in unlawful mortgage payment transactions, impacting nearly 500,000 homeowners with mortgages serviced by Mr. Cooper f/k/a Nationstar. ACI offers payment processing services across a wide range of industries. ACI conducted tests of its electronic payments platform on April 23, 2021. Rather than using deidentified, dummy data, ACI used client data files from Mr. Cooper instead, causing massive overdraft fees and other negative financial consequences to the unsuspecting borrowers. The CFPB found ACI in violation of the Consumer Financial Protection Act and the Electronic Fund Transfer Act, for illegally initiating withdrawals from borrower bank accounts, and improperly handling sensitive consumer data. ACI must pay the $25 million as well as adopt and enforce reasonable information security practices, and is prohibited from processing payments without obtaining proper authorization. CFPB

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