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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:

Page 26 of 91

August 10, 2021

Five companies that operate the BitMEX cryptocurrency platform will pay a total of $100 million to resolve claims that the platform operated a facility to trade or process swaps without being approved as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF), operated as an unregistered futures commission merchant (FCM), and failed to implement anti-money laundering procedures.  HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited jointly operated BitMEX, which offered leveraged trading of cryptocurrency derivatives, including to customers in the U.S.  BitMEX acted as a counterparty in certain transactions, and accepted bitcoin to margin digital asset derivative transactions.  BitMEX allowed customers to access its platform and conduct derivative trading without verifying customer identity beyond the collection of an email address, and failed to report suspicious activity as required. As part of the settlement, BitMEX certified that it terminated its U.S. business operations, barred access to the platform by U.S. customers, and had undertaken verification procedures for existing customers.  $50 million of the $100 million penalty will be paid to the CFTC, with $30 million of the remainder paid immediately to FinCEN, and an additional $20 million to FinCEN suspended pending defendants’ undertaking of specific compliance procedures.  CFTC; FinCEN

August 9, 2021

Cryptocurrency trading platform Poloniex LLC has agreed to pay more than $10 million in disgorgement, interest, and penalties to settle charges that it operated an unregistered online digital asset exchange.  The SEC found that between 2017 and 2019 the Poloniex trading platform met the criteria of an “exchange” as defined by the securities laws but was neither registered as a national securities exchange nor subject to an exemption from registration. SEC

August 6, 2021

Blockchain Credit Partners, which did business as DeFi Money Market, and its principals, Gregory Keough and Derek Acree, have agreed to disgorge $12.85 million and cease and desist from the unregistered sale of securities using smart contracts and so-called “decentralized finance” (DeFi) technology.  The SEC found that defendants offered and sold mTokens and DMG governance tokens purporting to pay interest and profits, and told purchasers that that DeFi Money Market would pay them those amounts by using investor assets to buy “real world” income-generating assets like car loans. However, these income-generating assets did not generate enough income to cover appreciation of the investors’ principal, largely as a result of the price volatility of the digital assets used to purchase the tokens.  Rather than disclose this to investors, defendants used other funds, including personal funds, to make principal and interest payments for mToken redemptions. Keough and Acree have each also agreed to pay penalties of $125,000.  SEC

August 6, 2021

Colorado resident Wayde McKelvy was sentenced to 18 years in prison and ordered to pay $37 million in restitution following conviction on charges related to his operation of a Ponzi scheme.  McKelvy and others operated Mantria Corporation, which they claimed offered huge returns by investing in real estate and green energy projects.  Through these misrepresentations, defendants obtained more than $54 million in funds from duped investors.  USAO ED PA

August 6, 2021

The SEC has awarded more than $3.5 million to three whistleblowers whose information and assistance led to two separate enforcement actions.  In the first order, an individual received approximately $2 million for providing information that launched an investigation into an ongoing fraud.  In the second order, one whistleblower received approximately $1 million and a second whistleblower received approximately $500,000 for providing information that assisted the agency in an existing investigation.  SEC

August 4, 2021

For causing more than $100 million in losses to employers, employees, financial institutions, and financing companies and laundering more than $1 billion in stolen funds, Michael Mann, the owner of shuttered payroll service companies ValueWise and MyPayrollHR, has been sentenced to 12 years in prison.  In addition to misappropriating payroll funds and money laundering, Mann was also found to have fraudulently obtained tens of millions of dollars in loans from three financing companies, as well as fraudulently obtained lines of credit from several banks in the New York area.  NY AG; USAO NDNY

August 2, 2021

Ernst & Young LLP and three of its audit partners, along with William Stiehl, who was serving as the chief accounting officer of a public company, collectively agreed to pay more than $10 million to resolve SEC claims of wrongdoing with respect to EY’s pursuit of audit business from the public company.  EY and its partners were alleged to have solicited and received confidential competitive intelligence and confidential audit committee information from Stiehl during the issuer’s auditor’s selection process, in violation of auditor independence rules.  EY agreed to pay $10 million and comply with a detailed set of undertakings for a period of two years; the individual auditors agreed to pay civil monetary penalties between $15,000 and $50,000 and to be suspended from appearing or practicing before the Commission for times ranging from one to three years; Stiehl agreed to pay a civil monetary penalty of $51,000 and to be suspended from appearing or practicing before the Commission for two years.  SEC

August 2, 2021

The SEC has announced awards totaling more than $4 million to whistleblowers whose contributions resulted in two successful enforcement actions.  In the first order, two whistleblowers were awarded $2 million and $150,000 each, while in the second order, another two whistleblowers were awarded $1.1 million and $500,000 each.  According to the SEC, the whistleblowers’ alerts sparked investigations into previously unknown misconduct.  SEC

Federal Court Confirms That Outsiders Can Be SEC Whistleblower Too

Posted  07/30/21
SEC-building
What does it mean to be a “whistleblower”?  Often, people think of corporate or government employees with access to secret information that’s not visible from the outside.  A classic example is Daniel Ellsberg.  Working as a military analyst for the RAND Corporation, Ellsberg accessed and leaked an explosive Top Secret study of U.S. activities in the Vietnam War. But the U.S. whistleblower award programs...

July 21, 2021

Suneet Singal, First Capital Real Estate Investments, LLC, and related entities, agreed to pay fines totaling over $7 million to resolve claims that they made material misrepresentations and omissions concerning First Capital Real Estate Trust Inc., a real estate investment trust.  The SEC alleged that defendants misrepresented the REIT’s property holdings, and that Singal fraudulently directed funds to his own use.  Singal was barred from the securities industry for at least ten years.  SEC
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