Financial and Investment Fraud

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

June 20, 2023

Insight Venture Management LLC has agreed to pay $1.5 million in penalties and over $800,000 in disgorgement and prejudgment interest to the SEC to settle charges that it charged excess management fees and failed to disclose a conflict of interest to investors.  As a result of these failures, investors were unaware that Insight was able to manipulate the calculation of its management fees.  SEC

June 16, 2023

Pacific Investment Management Company LLC (PIMCO) has agreed to pay $9 million to settle two SEC enforcement actions.  In the first action, PIMCO was found to have failed to disclose material information to investors concerning the use of interest rate swaps by one of its funds, and the impact those swaps had on the funds’ dividend.  In the second action, PIMCO was found to have failed to comply with a fund’s agreement to waive approximately $27 million in advisory fees between 2011 and 2017, and maintain adequate policies and procedures concerning advisory fee calculations and waivers until 2018.  SEC

June 16, 2023

Convertible note dealer, BHP Capital NY, Inc., and its managing member, Bryan Pantofel, have agreed to pay more than $2.5 million and surrender unregistered securities for cancellation in order to settle charges of failing to register with the SEC as securities dealers.  The defendants allegedly operated as an unregistered dealer—including purchasing notes from microcap issuers, converting the notes into four billion shares of stock, and selling the stocks—from 2017 to 2022.  SEC

June 15, 2023

Wisconsin woman Kay Yang and her companies AK Equity Group LLC and Xapphire LLC have agreed to pay almost $13.7 million in restitution and over $10.4 million in civil monetary penalty in connection with a fraudulent scheme targeting the Hmong community.  Yang’s husband, Chao Yang, was also ordered to pay $1.42 million in disgorgement.  From 2017 until the pandemic hit in March 2020, the defendants solicited and received at least $15.7 million from 67 victim individuals or entities, many from the Hmong community.  The funds were intended for retail forex transactions, but the defendants misappropriated at least $4.8 million.  Under the settlement order, there is a permanent injunction against Kay Yang and her companies from participating in commodity exchange.  CFTC

May 30, 2023

The former head of Wells Fargo’s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to settle charges of misleading investors about its financial success.  Over a two-year period, Tolstedt publicly and repeatedly touted a metric used by Wells Fargo to measure financial success, even though she knew it did not accurately track accounts or products used or needed by customers.  In addition to the penalty, Tolstedt will pay almost $1.5 million in disgorgement and over $400,000 in pre-judgment interest.  The funds will be combined with prior payments of $500 million by Wells Fargo and $2.5 million by its former CEO and Chairman, John Stumpf, and will be distributed to harmed investors.  SEC

May 30, 2023

Former Coinbase manager, Ishan Wahi, and his brother, Nikhil Wahi, have been sentenced to 2 years and 10 months in prison respectively and ordered to forfeit cryptocurrency and cash in order to resolve civil and criminal charges of insider trading.  As part of his position at Coinbase, Ishan helped coordinate public listing announcements for crypto assets, at least nine of which were crypto securities.  In violation of Coinbase’s rules as well as federal law, Ishan tipped his brother Nikhil and friend Sameer Ramani off to the assets’ release, allowing them to purchase them and sell them for a profit.  SEC

April 21, 2023

Michael Zeto, in coordination with foreign telemarketers, used elderly American consumers’ banking information to create fraudulent checks payable to companies he controlled. The multimillion-dollar scheme will net him up to 20 years in prison. DOJ

April 17, 2023

Jonah Engler and Barbara Desiderio, already enjoined from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, will pay over $5 million in disgorgement, interest, and civil penalties for illegally trading in retail customer accounts as their company, Global Arena Capital Corp., was going out of business. Engler, Desiderio, and two others caused customer losses of over $4 million, while generating over $2.4 million in unlawful markups, markdowns, and commissions for Global Arena. SEC