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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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May 10, 2021

Two whistleblowers received a total of $22 million in awards from the SEC with respect to settled administrative proceedings against unidentified parties including a financial services firm.  The first whistleblower, whose tip initiated the SEC's investigation, was awarded $18 million.  The second whistleblower, whose tip was submitted several years later, was awarded $4 million.  Both whistleblowers challenged the SEC's preliminary determination of award, and the SEC's final order concludes that the first whistleblower, who suffered hardships while attempting to remedy the situation, was the main source of information for the Commission and provided extensive and ongoing assistance during the investigation.  While the second whistleblower provided important additional information as a percipient witness, the Commission also noted that the second whistleblower delayed reporting for several years after becoming aware of the wrongdoing.  SEC

May 4, 2021

DaRayl Davis, who owned and operated Financial Assurance Corp. and Affluent Advisory Group LLC, has been sentenced to 13 years in prison and ordered to pay restitution of $7.1 million on charges arising from his sale of fictitious financial products to investors with false promises that the investors would receive fixed annual interest payments and guaranteed protection against losses.  In fact, Davis diverted investor funds to his personal use.  USAO ND IL; SEC

May 3, 2021

Sporting goods manufacturer Under Armour Inc. agreed to pay $9 million to resolve SEC allegations that the company engaged in  accounting fraud.  The SEC alleged that in an effort to meet analyst sales forecasts, Under Armour began to "pull forward" revenue by recognizing as current revenue orders that customers had placed for delivery in future quarters, and did not disclose this practice to investors.  SEC

May 3, 2021

Vivint Smart Home Inc., which sells “smart” home security and monitoring systems through a door-to-door sales force, has agreed to settle for $20 million in the largest civil penalty ever paid to resolve violations of the Fair Credit Reporting Act (FCRA).  According to the DOJ, Vivint’s lack of an Identity Theft Prevention Program allowed its sales force to fraudulently obtain credit reports of unsuspecting consumers in order to complete sales to potential Vivint customers who failed required credit checks.  Vivint then allegedly sold debt from Vivint customers who defaulted to debt collectors who attempted to collect from the unsuspecting victims.  Vivint recently paid $3.2 million to settle charges involving a different scheme.  DOJ; FTC

April 29, 2021

Following a self-disclosure, software company SAP SE will pay penalties totaling over $8 million and disgorge over $5 million to resolve claims that it violated Export Administration Regulations and the Iranian Transactions and Sanctions Regulations. Between 2010 and 2017, SAP and its partners and subsidiaries released U.S-origin software to users located in Iran and permitted Iranian users to access U.S.-based cloud services from Iran.  In both cases, SAP executives were aware of the issues but did not take steps to remedy or stop them.  SAP also entered into a non-prosecution agreement setting forth specific compliance procedures.  DOJ; USAO Mass; OFAC; Commerce

When the Deli’s Not Just a Deli

Posted  04/28/21
By Sarah “Poppy” Alexander
share certificate
A market mystery recently caught the attention of financial journalists and the public more generally: a New Jersey deli that is seemingly never open and reports minimal profits is—on paper at least—worth $100 million after issuing public shares.  The shareholders are few, and mostly in China.  The owners are local (the revered wrestling coach) and not (a father-son investor duo with a history of shady...

April 27, 2021

A man who defrauded his clients out of more than $4 million has been sentenced to 7 years in prison.  In a scheme running from 2013 to 2020, Edgardo Zeta Montalban convinced his clients to invest cash in a fake federal grant program that he called “Suppressed IRS Accounts” by claiming to be an accountant and tax preparer.  However, no such program existed, and he did not hold any of those positions.  Montalban was originally recommended to serve 10 years, but due to significant health issues, the 70-year-old’s sentence was reduced.  USAO CDCA

April 27, 2021

The owner of BMC Worldwide, Inc., which did business as Blue Moon Coins, Aaron Michael Scott, has agreed to an order for restitution of $1.4 million to customers who sent him funds for the purpose of purchasing gold and silver based on his false representations that he and BMC were a successful precious metals firm with an inventory of precious metals.  In fact, the defendants had no such inventory, and misappropriated customer funds for their own purposes.  Scott previously pleaded guilty to wire fraud and was sentenced to four years in prison.  CFTC

April 23, 2021

The SEC has granted awards totaling more than $3 million to two whistleblowers whose information led to two separate enforcement actions.  The first whistleblower was awarded approximately $3.2 million for helping to conserve agency resources by identifying key issues to focus on and providing subject matter expertise.  The second whistleblower was awarded more than $100,000 for significant information and ongoing assistance that helped stop an ongoing fraud.  SEC
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