Financial and Investment Fraud

November 29, 2022

William Sadleir, the founder, owner, and operator of a defunct film distribution company accused of defrauding a publicly traded fund, has been ordered to spend 6 years in prison and pay $31.6 million in restitution to resolve a criminal case against him.  A separate SEC order to pay $13.8 million in disgorgement and nearly $4 million in prejudgment interest was deemed satisfied by the restitution order in the criminal case.  According to the press release, Sadleir’s Aviron Group LLC received a $75 million investment by BlackRock Multi-Sector Income Trust (BIT).  Rather than use the funds to support its film distribution activities, however, Sadleir misappropriated them for his personal use, including buying, renovating, and furnishing a mansion.  SEC

November 28, 2022

An anonymous whistleblower received a $20 million award from the SEC, with the SEC finding that the whistleblower provided significant information and continuing helpful assistance in the Commission’s investigation.  The award order notes that the individual did not have information relating to one part of the enforcement action, and delayed reporting for two years after being involved for a short period in the conduct underlying part of the enforcement action, at the direction of their supervisor.  Four other claimants were denied any award related to the covered action.  SEC

November 21, 2022

Michael and Betsy Feinberg, owners of Catharon Software Company and who lied about having developed software capable of generating large returns for investors and philanthropists, will spend 5 years in prison and pay restitution for the $5 million in victim losses. The software, called VDelta, was in fact not under development, yet over a period of 15 years, the Feinbergs lied to investors with false promises about the software’s completion, release date and capabilities. Their investors were comprised mostly of the Feinbergs’ friends and associates located in Sedona, Arizona. The stolen funds were used to pay the Feinbergs’ salaries and to pay for personal expenses. USAO AZ

November 21, 2022

Ruixue “Serena” Shi will spend 20 years in federal prison and has been ordered to pay nearly $36 million in restitution for defrauding investors out of tens of millions of dollars. Shi, convicted on one count of wire fraud, was the general manager of Global House Buyer LLC, a China-based real estate company with an office in Los Angeles. Shi inked a deal with Dakota Development, a subsidiary of SBE Entertainment, to build a real estate development in the City of Coachella consisting of luxury condos, a hotel complex, and conference facilities. Shi solicited investments from mostly Chinese investors, preying on their ignorance of English and trust in the American economy, and led them to believe their investment would help them obtain an American visa. USAO CDCA

November 21, 2022

Todd and Julie Chrisley, married television personalities and newly-convicted fraudsters, will spend 12 and 7 years in federal prison, respectively, for conspiracy to commit bank fraud, bank fraud, wire fraud, and conspiracy to commit tax evasion. The Chrisleys defrauded Atlanta-area community banks to obtain more than $36 million in personal loans by submitting false banking and personal financial statements. After funding their lavish, undeserved lifestyle with the multi-million-dollar loans, Todd Chrisley filed bankruptcy, walking away from over $20 million in loans. Both before and during the trial, the Chrisleys attempted to obstruct justice, including by submitting a fraudulent document in response to a grand jury subpoena. In addition to serving time in prison, the Chrisleys will be required to pay restitution in an amount to be determined later. USAO NDGA

November 2, 2022

CBS and former CBS President and CEO Leslie Moonves will pay $30.5 million for working with a LAPD captain to conceal sexual assault allegations against Moonves, misleading investors by concealing information about the allegations, and for insider trading based on that information. CBS executives coordinated with the LAPD captain to prevent the complaint from being leaked to the press. As part of the settlement, CBS will reform its HR practices around sexual harassment, and Moonves is prohibited from serving as an officer or a director of any public company doing business in NY, without written approval by OAG. NYAG

October 25, 2022

Ramiro Jose Sugranes and Lina Maria Garcia (Chief Compliance Officer and President of UCB Financial Advisors, Inc.), along with two relief defendants related to Sugranes, must pay $5.7 million for cherry picking investments to divert profitable trades to their family members while saddling other clients with losing trades. Defendants made $4.6 million in unlawful profits on the scheme. Garcia provided Sugranes with UCB’s trading platform login information, which Sugranes used to effectuate the fraud. SEC

October 24, 2022

Cetera Advisors, LLC and Cetera Advisor Networks, LLC were ordered to pay over $8.5 million in disgorgement, prejudgment interest, and civil penalties combined. Defendants breached their fiduciary duty to their retail advisory clients by not disclosing compensation-related conflicts of interest. SEC