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Financial and Investment Fraud

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CFTC Says Beware of Romance Scams

Posted  02/13/24
Three Red Heart Balloons Floating
With Valentine's Day upon us, the Commodity Futures Trading Commission (CFTC) last week (February 8) issued an Advisory Alert warning for those seeking romance to tread carefully on dating apps and social media.  Especially when it comes to strangers asking for financial support or giving investment advice. The CFTC urged particular caution with promotions for cryptocurrency investments because of the growing risk...

Top Ten SEC and CFTC Recoveries of 2023

Posted  01/24/24
Foreign Exchange Graph
It was an active year for fraud enforcement at the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC).  Though by no means was it a record year for either regulator in terms of big-ticket wins.  Aside from the CFTC's $1.7 billion recovery from South African crypto company Mirror Trading for foul play with foreign currency transactions, the balance of the Top-10 recoveries was...

December 26, 2023

A temporary restraining order was issued on December 21 against ArciTerra Companies LLC and its CEO Jonathan M. Larmore, along with Cole Capital Funds LLC, an entity formed by Larmore. Larmore and other charged entities misappropriated more than $35 million from private real estate funds and other investment vehicles to fund his family's lavish lifestyle. In another scheme, Larmore issued a press release from Cole Capital Funds, announcing they were buying 51% of WeWork's minority ownership shares at nine times the current trading price. Not disclosed was that Larmore had purchased more than 72,000 call options in the days prior to the press release. Larmore's intent was to earn a windfall on the options; instead, the press release was delayed so most of the call options expired before he could exercise them. SEC

Better Markets Heralds SEC Whistleblower Program as a Model To Follow

Posted  12/14/23
Better Markets -- a nonpartisan nonprofit promoting the public interest in financial reform and the economy -- just released (on December 7) a report on the SEC Whistleblower Program, touting it as a $6 billion success story.  In announcing its findings, Better Markets did not spare its high praise for the whistleblower program, highlighting "just how critical [it] has been as a law enforcement tool, allowing the SEC...

December 13, 2023

Credit Suisse Securities (USA) LLC and two affiliates will pay more than $10 million for providing prohibited underwriting and advising services to mutual funds, in violation of an October 2022 Superior Court of New Jersey consent order. Per the order, Credit Suisse was prohibited from serving as principal underwriter or investment adviser to mutual funds and employees' securities companies; however, Credit Suisse acted in that capacity prior to receiving a time-limited exemption to such prohibitions in June 2023. SEC

November 15, 2023

Online lender Enova International Inc. has been ordered to pay $15 million and is prohibited from offering certain consumer loans for seven years, after the CFPB found it guilty of violating a 2019 order to cease and desist from widespread illegal conduct, including withdrawing funds from consumer bank accounts without their consent, backtracking on loan extensions, failing to provide crucial information such as due dates, and failing to provide consumer copies of signed authorizations.  In addition to the new penalties, Enova has been ordered to provide redress to consumers harmed and tie executive compensation with the company’s compliance with consumer protection laws.  CFPB

October 18, 2023

The president of a California-based medical technology company has been sentenced to 8 years in prison and ordered to pay $24 million in restitution in the first COVID-related criminal securities fraud case charged by DOJ and the first COVID-related criminal healthcare fraud case brought to trial.  Among many things, Mark Schena of Arrayit Corporation was found to have taken advantage of the pandemic by claiming he and his company had developed a technology to test for just about any disease, including COVID, using a single drop of blood.  In doing so, Schena and Arrayit lied to investors to give them a false sense of credibility, paid illegal kickbacks to marketers to run deceptive plans about the accuracy of its tests, and submitted false claims to Medicare and private insurers for medically unnecessary allergy testing.  DOJ

October 13, 2023

Avtar S. Dhillon, who chaired the boards of directors of four public companies, has been ordered to pay $10 million in connection with fraud schemes that defrauded investors worldwide of hundreds of millions of dollars.  Dhillon was allegedly complicit in schemes orchestrated by Frederick Sharp and seven other defendants that involved control persons of microcap companies illegally dumping their stock in U.S. markets.  SEC

September 29, 2023

Goldman Sachs & Co. LLC has been ordered to pay $3 million to settle charges of failing to maintain adequate supervisory systems and controls, in connection with a 2017 malfunction.  Additionally, Goldman allegedly omitted material information regarding the malfunction when responding to a CFTC request for information on how customer orders were executed.  CFTC

September 29, 2023

Consumer products company Newell Brands Inc. and its CEO, Michael Polk, have agreed to pay $12.5 million and $110,000 in civil penalties, respectively, to resolve charges of misleading investors about its core sales growth.  The company allegedly engaged in accounting practices that were inconsistent with Generally Accepted Accounting Principles (GAAP), which made it appear as if it had hit its sales targets when in fact it had not.  SEC
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