Government Enforcement Actions

June 3, 2016

The CFTC charged Haena Park and her companies Phaetra Capital GP LLC, a/k/a/ Argenta Capital GP LLC, Phaetra Capital Management LP, a/k/a Argenta Capital LLC, and Argenta Group LLC, for engaging in a $23 million scheme to fraudulently operate a commodity pool and misappropriate pool participants’ assets.  CFTC

June 3, 2016

The FTC charged a nationally advertised gold and silver marketing operation with bilking millions from consumers. According to the FTC’s complaint, the defendants marketed gold and silver as investments, but often failed to deliver the goods. Operating as Discount Gold Brokers, the defendants offered gold and silver “at discounted prices,” with “zero commissions, fees, or expenses,” and at “zero percent above dealer cost.” In response, many consumers used their retirement savings to buy the precious metals, with individual orders ranging from $1,000 to $300,000. FTC

June 2, 2016

The CFTC ordered Hong Kong-based bitcoin exchange, BFXNA Inc. d/b/a Bitfinex to pay a $75,000 penalty for offering illegal off-exchange financed retail commodity transactions in bitcoin and other cryptocurrencies, and for failing to register as a Futures Commission Merchant.  CFTC

May 27, 2016

New Jersey assessed a $2 million civil monetary penalty against a Hudson County couple and their bogus private investment fund management company for selling sham securities and using more than $500,000 of investors’ funds to buy luxury cars, expensive clothing and jewelry, and other personal items. West New York residents Alcibiades Cifuentes, his wife, Jennifer Wee Cifuentes, and Cifuentes Fund Management, LLC (“CFM”) violated the State’s Uniform Securities Law by offering investors unregistered securities in the form of investment contracts and/or purported limited partnership interests in the couple’s “investment,” according to the Bureau’s Summary Order. The Cifuenteses held themselves out as the principals of CFM, which they claimed was a private investment fund management company that invested in foreign currencies. Neither the Cifuenteses nor CFM are registered with the Bureau in any capacity. Since May 2013, the pair through CFM, raised at least $553,969 from at least 24 unsuspecting domestic and foreign investors, at least 11 of whom were offered and sold the unregistered securities to or from New Jersey. NJ

May 26, 2016

The CFPB filed a lawsuit against former Wells Fargo employee David Eghbali for orchestrating an illegal mortgage fee-shifting scheme.  Eghbali had an agreement with escrow company New Millennium Escrow, Inc. to reduce the escrow fees charged to his price-conscious customers and make up for the loss by overcharging other customers.  In return, Eghbali referred nearly all of his clients to New Millennium.  The scheme enabled Eghbali to close more loans and increase his commissions.  CFPB

May 26, 2016

New York announced that it has entered into a settlement agreement with Vascuscript, Inc., d/b/a Mobile Pharmacy Solutions, to resolve allegations that it billed Medicaid for prescriptions which were written by an excluded Medicaid Provider. The Attorney General’s investigation determined that from April 21, 2010, through January 25, 2013, Vascuscript, Inc. submitted and received payment on approximately 4,600 claims to Medicaid for prescriptions that were written by Dr. Mikhail Strutsovskiy. The Department of Health had previously excluded Dr. Strutsovskiy from the Medicaid program, rendering prescriptions written by him ineligible for Medicaid reimbursement. Before filling a prescription, pharmacies are required under Medicaid billing rules to first ascertain whether the prescriber’s services are eligible for reimbursement. Because Vascuscript did not do so, it filled and delivered the prescriptions written by Dr. Strutsovskiy that were not eligible for Medicaid reimbursement. NY

May 26, 2016

New Hampshire Transmission (NHT) will refund New England ratepayers $6.8 million to settle allegations that the company improperly included millions of dollars of development costs in its transmission rates. The settlement resolves a complaint the Massachusetts Attorney General’s Office filed with the Federal Energy Regulatory Commission (FERC) in April 2015. The AG’s office argued that New England consumers should not foot the bill for the $9.9 million that NHT spent to develop its proposed SeaLink transmission project, a project which was not selected to be built by ISO-New England, the Regional Transmission Operator. As a result of the settlement, NHT will refund $6.5 million of the costs it billed to ratepayers in 2012, 2013 and 2014 and has agreed to forgo billing customers for costs incurred for the project in 2015, which is equal to $305,000. MA

May 26, 2016

The CFTC ordered Cypress Wealth Management, Inc. and its former owners and operators, Ted L. Romeo of Pompano Beach, Florida, and Richard D. Schrutt of Tampa, Florida, to pay over $530,000 in penalties and restitution on charges that they illegally offered off-exchange financed transactions in precious metals to retail customers.  CFTC

May 25, 2016

Florida and the Federal Trade Commission announced two joint actions against alleged unlawful debt relief operations targeting student loan holders. In the first action, the enforcement agencies filed a joint action against Chasity Valdes and her companies, Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC, alleging that the defendants took illegal up-front fees in return for their purported debt relief and credit repair services that they falsely claimed would reduce consumers’ student loan debt and repair the consumers’ credit. According to the complaint, the defendants led consumers to believe they qualified for government student loan forgiveness programs that would result in a reduction of their student loan debt, even though the programs have strict requirements that the consumers were likely not to meet. The complaint also alleges defendants misrepresented that they would audit consumers’ loans for errors that would invalidate the loans or reduce the balance, when in reality, at most, defendants merely sent worthless form dispute letters. FL

May 25, 2016

David Bryant of Los Angeles was ordered to pay over $6 million in penalties and restitution on charges of fraud and misappropriation.  CFTC