Financial and Investment Fraud

March 30, 2023

Siblings John and Jonatina Barksdale offered unregistered crypto asset “Ormeus Coin” securities through their multilevel marketing scheme called Ormeus Global. The pair produced social media posts, YouTube videos, and other promotional materials, while John held roadshows around the world to promote the securities. Defendants claimed Ormeus Coin had a quarter-billion-dollar mining operation, mining $5.4 to $8 million per month, but the mining operation generated less than $3 million in total revenue, and mining operations ceased. The Barksdales were ordered to pay over $46 million in disgorgement, prejudgment interest of $10 million, and a civil penalty of $23 million each. SEC

March 28, 2023

One of the largest iron ore producers in the world, Brazilian mining company Vale S.A., has agreed to pay $55.9 million to settle charges of making false and misleading disclosures concerning the stability of its dams.  One of the dams in particular, Brumadinho, failed to meet international safety standards and subsequently collapsed in January 2019, killing 270 people.  The settlement consists of $25 million in civil penalties and disgorgement, and $30.9 million in pre-judgment interest.  SEC

March 28, 2023

James K. Couture, a Massachusetts-based investment adviser, defrauded his clients of nearly $3 million from 2009 to December 2019, convincing them to sell portions of their securities to fund large money transfers to an entity Couture controlled—a detail not shared with his clients. Couture consented to a final judgment enjoining him from future violations of the securities laws’ antifraud provisions. Couture will spend 100 months in prison and was ordered to pay approximately $4.7 million in restitution and forfeiture for his deceptive, Ponzi-like scheme. SEC

March 24, 2023

Michael Alan Stollery, the CEO and founder of purported cryptocurrency investment platform Titanium Blockchain Infrastructure Services Inc. (“TBIS”), has been sentenced to over 4 years in prison.  According to the DOJ, Stollery failed to register TBIS’s ICO with the SEC and falsified information on TBIS’s website and white papers, including information about TBIS’s prospects for profitability, client testimonials, and business relationships.  Additionally, he misappropriated client funds to pay off personal expenses.  DOJ

March 23, 2023

The co-founder of formerly registered investment adviser International Investment Group (IIG), Martin Silver, has been ordered to pay over $2.3 million in disgorgement and over $240,000 in prejudgment interest, which will be deemed satisfied upon the payment of restitution and forfeit of assets ordered in a parallel criminal proceeding against him in the Southern District of New York.  Silver was found to have grossly overvalued the assets in IIG’s flagship hedge fund, and falsely reported that certain loan assets were legitimate and fairly valued when in fact they were not.  SEC

March 23, 2023

A Maryland man named John Erasmus Frimpong has been sentenced to 9.5 years in prison and, along with his co-defendants, ordered to pay almost $17.5 million in restitution for operating a $28 million Ponzi scheme through a purported wealth management company called 1st Million LLC.  As part of his plea agreement, Frimpong admitted to making false and misleading statements to investors, including statements regarding the experience, training, and licensure of the company’s principals, the existence of a “trust” through which investors’ principles would be protected and returned in full, the investment’s rates of return, and the source of payments to investors.  USAO MD

March 22, 2023

The owner of a Florida-based insurance company has been sentenced to 14 years in prison for defrauding customers of $4.8 million.  For over seven years, John Thomas of Thomas Insurance, LLC diverted customer insurance premiums to his personal accounts but failed to actually open insurance policies for customers.  He then regularly produced fraudulent documents to customers, referencing their nonexistent policies, in order to conceal his actions.  USAO NDFL

March 17, 2023

A man in New York who laundered millions of dollars of criminal proceeds from a panoply of illegal schemes—including computer hacking, healthcare fraud, loan fraud involving Small Business Administration (SBA) funds, and operating an unlicensed international money transmitting business—has been sentenced to 10 years in prison.  According to the DOJ, Djonibek Rahmankulov worked with computer hackers to gain control of U.S. bank accounts, then executed millions of dollars of fraudulent wire transfers into accounts controlled by him and his associates.  He also worked with pharmacies to launder millions of dollars of Medicare and Medicaid reimbursements for HIV medications that were not actually dispensed or legally obtained.  During the pandemic, Rahmankulov submitted fraudulent applications to the SBA for his companies, laundered the proceeds, and made false statements to financial institutions regarding his activities.  Finally during his trial, he repeatedly sought to obstruct justice by threatening a witness and producing fraudulent letters of support from the community.  USAO SDNY

February 23, 2023

Back to Green Mining, LLC and its two managing members, José Jiménez Cruz and Manuel Portalatin, have been ordered to pay about $2 million in disgorgement, $411,000 in prejudgment interest, and $1 million and $207,000 in civil penalties respectively, after the SEC charged them with offering and selling unregistered securities for a so-called “green” mining venture in Colombia.  While soliciting investors, Jiménez and Portalatin allegedly advertised exorbitant returns and falsely represented that permits necessary to mine gold had already been procured.  SEC

March 8, 2023

A registered introducing broker, Coquest Inc., its owners Dennis Weinmann and John Vassallo, and trading firms Buttonwood LLC and Weva Properties Ltd. have been ordered to pay almost $3 million for using block trade order information from Coquest’s brokerage customers to obtain profits for Buttonwood and Weva accounts in which Weinmann had a financial interest.  The misconduct ran between 2015 and 2019 and involved more than 2,000 instances where Weinmann traded against his own customers’ interests.  CFTC