Financial and Investment Fraud

February 21, 2019

Precious metals dealer Hannes Tulving, Jr. and The Tulving Company, Inc., have been ordered to pay a civil monetary penalty of $15.7 million, having been charged with fraudulent solicitation and misappropriation in 2015.  Between 2013 and 201, defendants fraudulently held themselves out as a reputable dealer in gold, silver, platinum, and palladium bullion and coins, soliciting more than $150 million in funds from 381 people.  Tulving then misappropriated funds for unauthorized uses and failed to purchase or deliver the metals to customers.  In 2016, Tulving was sentenced to 30 months in prison.  CFTC

February 20, 2019

Following charges in 2017, two individuals have been sentenced for their roles in an insider trading scheme that used information from co-conspirator Daniel Rivas, who was employed by an investment bank. Robert Rodriguez was sentenced to one year in prison and Michael Siva was sentenced to 18 months.  Rivas supplied his co-conspirators with information from the investment bank's deal tracking system about upcoming mergers and acquisitions before they were publicly announced.  Rodriguez, Siva, and others in their tipping chains then traded on the information, earning more than $5 million in illicit profits on more than two dozen securities.  USAO SDNY; USAO SDNY

February 15, 2019

Following his conviction at trial for securities fraud and related charges, attorney James M. Schneider of Boca Raton, Florida, was sentenced to seven years in prison and ordered to pay restitution of $19.7 million to over 2,000 investors.  From 2008 to 2013, Schneider and his co-conspirators created approximately 20 shell companies, falsely representing their ownership and control in SEC filings before offering their securities for sale.  The conspirators would then use the shell company shares in pump-and-dump and other manipulation schemes.  USAO SD FL

February 12, 2019

In connection with a pump-and-dump scheme for the stock of Interactive Multi-Media, Jason McDiarmid and Kenneth George Cedric Telford, who promoted the microcap shares, have each been ordered to pay over $4.6 million in penalties, disgorgement, and interest.  SEC

February 7, 2019

The founder and president of an online gaming company has been arrested and charged with securities fraud for allegedly defrauding more than 50 investors of about $9 million in a scheme that ran from 2013 to 2017. To execute the fraud, Robert Alexander allegedly lied to investors about his professional background, Kizzang LLC's financial condition, and the expected returns on investment. He then allegedly appropriated $1.3 million for his own use. If convicted, he faces a maximum sentence of 40 years in prison and millions in fines. SEC; USAO SDNY

February 5, 2019

The former chairman and CEO of a pharmaceutical manufacturing company has been convicted of engineering an elaborate fraud on two banks that eventually led one to collapse and the other to suffer $1 million in losses. According to the DOJ, Jack Kachkar of Inyx Inc entered into a series of loan agreements with Westernbank of Puerto Rico—at the time one of the largest banks in Puerto Rico—that were backed by Inyx's assets, including accounts receivable. He then caused his employees to present tens of millions of dollars of fake invoices and misrepresented the worth of his personal collateral in order to induce $142 million in loans. When the bank finally declared the loans in default two years later, in June 2007, it suffered $100 million in losses, which led directly to its collapse. In a separate scheme, Kachkar deposited a fraudulent $3 million check at Mellon United National Bank of Miami, purportedly from the sale of a private jet (which he'd bought with money diverted from the Westernbank loan). Once the provisional credit cleared, he wired it all out and then refused to reverse the wire, causing the bank to suffer $1 million in losses. He now faces a federal judge for sentencing in April. DOJ; USAO SDFL

January 31, 2019

A North Carolina jury found Robert Leslie Stencil and Michael Allen Duke guilty of money laundering and mail and wire fraud for their roles in a five-year multi-million dollar high-yield investment fraud. According to the prosecution, Stencil, Duke and their co-conspirators sold millions of dollars of worthless stock in a sham company named Niyato Industries Inc. (Niyato). Stencil, Duke and their co-conspirators sold approximately $2.8 million in stock to around 140 victims, many of whom were elderly. DOJ

January 31, 2019

The CFTC suspended Chicago trader Kevin Crepeau and ordered him to pay a $120,000 for engaging in spoofing in the Chicago Mercantile Exchange (CME) soybeans futures market. According to the CFTC, Crepeau placed orders to buy or sell futures contracts on soybeans, soybean meal, and soybean oil with the intent to cancel to induce other market participants to fill his other orders on the opposite side of the market.  Then, he cancelled the fake orders after his genuine orders had been filled. CFTC