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Financial and Investment Fraud

This archive displays posts tagged as relevant to financial and investment fraud. You may also be interested in the following pages:

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June 19, 2019

The former CEO of Quintillion, a telecommunications company in Alaska, has been sentenced to 5 years in prison and ordered to forfeit $896,698 for defrauding investors of more than $270 million.  In order to secure funding to build a high-speed fiber optic cable system, Elizabeth Pierce had presented two New York investment companies with contracts that made it appear as if Quintillion was guaranteed revenue of nearly $1 billion.  Unbeknownst to investors and her own staff, however, the contracts were allegedly forged and the actual contracts she’d negotiated would generate only a fraction of that amount.  Quintillion eventually reported her to the DOJ.  USAO SDNY

June 14, 2019

In the SEC’s largest recovery from a broker for improper ADR practices, Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) has agreed to pay more than $42 million for improperly handling pre-released American Depository Receipts (ADRs).  Because ADRs represent foreign shares of a foreign company, they usually require a deposit of a corresponding number of foreign shares, but can be pre-released if certain conditions are met.  ICBCFS allegedly facilitated the early issuance of ADRs in order to allow certain tax-advantaged borrowers to collect dividends without taxes.  This left the door open for abusive practices such as the inflation of securities held by foreign issuers, short selling, and dividend arbitrage.  SEC

June 7, 2019

A New York cold-caller and executive at My Street Research has been sentenced to 2 years in prison and ordered to pay $86,168 for his role in a stock fraud scheme that cost investors $147 million over three years.  Along with 15 co-defendants, Emin Cohen lured elderly and vulnerable investors to a “pump and dump” scheme where the accused artificially inflated the prices and volumes of publicly traded companies that they controlled.  When the stock eventually plummeted, investors lost millions of dollars.  Ten of the co-defendants have since pleaded guilty and await sentencing, while the other five are scheduled to go on trial.  USAO EDNY

SEC Gives First Ever Whistleblower Award Under Rule That Incentivizes Internal Reporting

Posted  05/31/19
hand pointing to virtual compliance text
On May 24, the Securities & Exchange Commission announced that it awarded over $4.5 million to a whistleblower who both reported allegations of securities fraud at a company internally and shared this information with the SEC. This is the first time since the creation of its whistleblower rewards program that the SEC awards a claimant under Rule 21-F4(c)(3) of the Exchange Act, a provision designed to encourage...

Legal Sports Betting Is Leading to Serious Fraud Risks

Posted  05/31/19
man holding cell phone to place sports bet
With the NBA finals upon us, you may be thinking putting down some cash on one team or the other. Thanks to a Supreme Court decision last year, your state may even allow such bets. And no wonder. Illegal sports betting is a gigantic industry—estimated at $150 billion a year, it eclipses the $5 billion legally gambled in Nevada. Much of that money goes into the hands of mafia interests, who increasingly use online...

May 28, 2019

John K. Morrow, former owner of Louisiana company UVC Technologies, LLC, was sentenced to over seven years in prison for defrauding investors out of more than $2 million dollars. Instead of using the funds for business expenses, Morrow spent the money on personal living and travel expenses. In addition to time in prison, Morrow was also sentenced to three years of supervised release, and he must pay $2,066,923 in restitution. DOJ

May 10, 2019

Broker-dealer Banca IMI Securities Corp. pleaded guilty to criminal antitrust charges arising from a conspiracy to rig bids to borrow pre-release American Depository Receipts (ADRs) from one of the depository banks permitted to create ADRs.  The depository bank instituted an auction process for pre-release ADRs, and Banca IMI conspired with others to submit artificially low, sometimes identical, bids, to the bank.  Banca IMI will pay a criminal fine of $2 millionDOJ

May 7, 2019

The SEC has tentatively settled insider trading charges with a Nevada man who allegedly engaged in prohibited insider trading after he peeked at confidential details of a possible acquisition by Cintas Corporation while at the home of Cintas’s general counsel, a lifelong friend. Armed with information about the company’s plan to acquire G&K Services, Brian Fettner purchased G&K stock through his ex-wife and ex-girlfriend’s brokerage accounts, then persuaded both a third love interest and his father to purchase G&K stock on their own. When the merger was publicly announced in August 2016, accounts associated with Fettner netted profits exceeding $250,000. Fettner is expected to pay a penalty of $252,995, and his ex-wife and ex-girlfriend is expected to disgorge of their illicit gains. SEC

May 3, 2019

The CFTC has filed a civil enforcement action against two men and their company, Berkley Capital Management, LLC (BCM), which operates two binary options trading pools, BBOT 1, LP and Berkley II, LP.  In order to open pool accounts with the North American Derivatives Exchange (NADEX), defendants Arie Bos of the Netherlands and William Caniff of the U.S. submitted false statements to conceal Caniff’s criminal background, then misappropriated at least $2.3 million from more than $4.8 million that was fraudulently solicited from the pools’ 62 participants.  CFTC

The Latest on Cryptocurrency, Offshore Tax Avoidance and Money-Laundering, and Whistleblowing: A Report from OffshoreAlert Miami 2019

Posted  05/3/19
Hanging Hundred Dollar Bills on Clothes Line
“A diverse collection of the hunters and the hunted.” That’s how the Wall Street Journal described the OffshoreAlert Conference in 2009. The 2019 conference was no different, bringing together those who work in the offshore industry, the government enforcers who try to stop the unscrupulous among them, and the asset recovery professionals who pursue lost funds. Alongside them were whistleblowers and their...
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