Financial and Investment Fraud

July 28, 2023

Summitcrest Capital, Inc., and its principals, Johnny Tseng and Kevin Zhang, raised approximately $19.8 million from Chinese-speaking investors in the United States and China, misleading them to believe the funds would be used to make real estate-related loans "to the general public" and the income from these loans would be used to make interest payments and return of capital to investors. Tseng and Zhang, through their entity SC Development Fund, instead used investor funds for loans to Zhang's many real estate development and contracting businesses. Summitcrest, Tseng, and Zhang are on the hook jointly and severally for $16.6 million in disgorgement and over $4.3 million in prejudgment interest. Summitcrest and Zhang are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act. Additionally, Tseng is barred from acting as an officer or director and will pay disgorgement of $60,000, plus $15,721 in prejudgment interest and a $414,366 penalty. SEC

July 14, 2023

The former CEO of SPAC African Gold Acquisition Corp., Cooper J. Morgenthau, has been ordered to pay over $5 million in disgorgement with prejudgment interest to the SEC for stealing more than $5 million from the company and investors via unauthorized withdrawals, which he disguised through falsified documents to auditors and accountants.  In a related criminal action, Morganthau was sentenced to 3 years in prison, ordered to forfeit over $5 million, and pay over $5 million in restitution.  SEC

July 12, 2023

The SEC has awarded a whistleblower more than $9 million for sparking an investigation and providing significant information and assistance.  According to the SEC, the whistleblower first reported concerns i­nternally, but after gaining no headway from multiple internal reports, made a report to the agency.  SEC

July 12, 2023

An attorney formerly employed at the SEC for over 14 years has been sentenced to 6 years in prison and ordered to pay almost $1.4 million in restitution for defrauding over 1,000 investors while on supervised release for an earlier offense. In 2010, after leaving the SEC, Phillip Offill of Texas was sentenced to 8 years in prison and 3 years of supervised release for participating in multimillion dollar pump-and-dump stock manipulation schemes.  In 2011, following a civil case brought by the SEC, he was permanently barred from participating in penny stock offerings.  In 2012, following another case by the SEC, he was permanently barred again.  Despite these obstacles, Offill still managed to conspire with others to misappropriate millions of shares of a publicly traded company and fraudulently market and pump up demand for the shares through false statements and documents.  DOJ

July 6, 2023

Emerson Sousa Pires and Flavio Mendes Goncalves, who together operated a purported hedge fund called EmpiresX, has been ordered to pay over $32 million in disgorgement, over $2 million in prejudgment interest, and civil penalties of $6 million and $5 million, respectively.  The two men sold investments by assuring investors that a trading “bot,” or skilled manual trading, guaranteed daily profits of 1%.  In reality, the bot was fake, the profits were losses, and the defendants were using investor funds to fund personal expenses.  SEC

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 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

June 26, 2023

U.S.-based citizens Ronald Flynn and Richard Marchitto, their U.S.-based company Vuuzle Media Corp., and UAE-based company Vuuzle Media Corp Limited have been ordered to pay over $26 million in civil monetary penalties, and another $26 million in disgorgement and prejudgment interest, after they were found to have fraudulently raised over $25 million through high pressure sales tactics.  Using a boiler room of salespeople based largely in the Philippines, the defendants misled victims into believing Vuuzle was a legitimate and profitable company, when in fact, it was not, and investor funds were instead used on Flynn and Marchitto’s personal and business expenses.  SEC