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Misrepresentations

This archive displays posts tagged as relevant to fraudulent misrepresentations in financial transactions and financial markets. You may also be interested in the following pages:

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September 22, 2022

The Boeing Company and its former CEO, Dennis A. Muilenburg, have agreed to pay $200 million and $1 million respectively, in order to resolve SEC charges of making materially misleading statements to investors following crashes of two 737 MAX planes in 2018 and 2019.  Despite knowing the MCAS system at fault would be an ongoing safety issue, Boeing and Muilenburg repeatedly assured investors and the public otherwise.  SEC

September 19, 2022

Sparkster Ltd. and its CEO, Sajjad Daya, have agreed to pay $30 million to settle charges of offering and selling crypto asset securities called SPRK tokens that were not registered with the SEC and were not eligible for a registration exemption.  A crypto influencer, Ian Balina, was separately charged in federal court for promoting SPRK tokens on social media without disclosing that he received a 30% bonus on tokens he purchased in exchange for his posts, and for selling the tokens to an investing pool of around 50 individuals.  SEC

September 13, 2022

Uber Technologies Inc. and subsidiary Rasier LLC have paid $100 million to the New Jersey Department of Labor and Workforce Development’s Unemployment Trust Fund after the agency found that nearly 300,000 Uber drivers in the state were improperly classified as independent contractors and thus ineligible for safety net benefits.  The companies were originally assessed $523 in overdue contributions, with penalties and interest adding up to another $119 million, but contested the amount and made the payment based on a revised assessment.  NJ AG

September 12, 2022

A man who operated a Ponzi scheme that procured over $5 million from victims in Puerto Rico and the continental U.S. has been sentenced to over 11 years in prison and ordered to pay nearly $2 million in restitution to 46 victims.  Carlos Maldonado was found to have misrepresented his companies as legitimate businesses, and failed to disclose to investors that their funds would be used for his own purposes, including buying and trading stocks on his personal accounts, and paying off personal auto loans payments.  USAO PR

September 6, 2022

JUUL Labs has settled with thirty-four states and territories and agreed to pay $438.5 million and abide by strict injunctive terms in order to resolve an investigation into its marketing and sales practices.  The investigation had revealed that JUUL willfully targeted underage users, relied on age verification techniques it knew were ineffective, manipulated the chemical composition of its products to be less harsh for inexperienced users, and implied that its products contained lower concentrations of nicotine than it actually did.  DE AG; GA AG; OR AG; VA AG

August 24, 2022

Taronis Technologies, Inc. and related entities have agreed to pay a total of $5.1 million in disgorgement and interest to resolve allegations that the companies issued false and misleading statements claiming to have agreements and relationships with customers that did not exist or were exaggerated.  Taronis executives created fake and backdated orders, resulting in improper revenue recognition.  Based on these misstated financials, defendants raised approximately $30 million from investors in private placements.  SEC

August 16, 2022

Eagle Bancorp, Inc. has agreed to pay $13.35 million in penalties, disgorgement, and interest to resolve charges that it violated SEC regulations and GAAP in failing to disclose as related party transactions nearly $90 million in loans extended to trusts associated with its former CEO and chairman of the board, Ronald D. Paul, as well as tens of millions of dollars of loans to other Eagle directors and their family members.  The SEC further found that when questions about the reporting were raised publicly, the bank knowingly made false and misleading statements that the loans were not related party loans.  Paul agreed to settle related charges for a total of $431,000.  SEC

August 10, 2022

Angel Oak Capital Advisors and its portfolio manager Ashish Neghandi will pay $1.75 million and $75,000 respectively to settle charges of misleading investors via their $90 million securitization of home renovation loans. When delinquency rates on their “fix-and-flip” loans increased unexpectedly, rather than accelerating return payments to certain investors, as contractually required, defendants artificially reduced delinquency rates by diverting borrowers’ funds to pay down outstanding loan balances. SEC

August 3, 2022

Surgalign Holdings, Inc.—formerly RTI Surgical Holdings, Inc.—and its former executives Brian Hutchison and Robert Jordheim will collectively pay over $2.25 million in civil penalties and disgorgement, for accelerating revenue in contravention of GAAP principles, and in violation of the ’33 Act, the ’34 Act, and SOX. Falling short of their sales targets, RTI shipped future orders ahead of schedule to “pull forward” revenue. This practice cannibalized future revenue streams, damaged important customer relationships, and kept investors in the dark as to the true financial condition of the company. RTI restated its public financial statements from 2014 through 2019 to correct errors caused by this practice. SEC, SEC

August 3, 2022

Arthur Merson will spend 15 months in prison and will pay over $3.4 million in restitution for his scheme to defraud investors by conspiring to commit wire fraud. Merson acted as an intermediary between investors and the principal co-conspirators, representing to investors they could receive a portion of the value of multi-million-dollar Standby Letters of Credit with a minimal investment, and would reap multiples of their investment in a matter of weeks. In 2017 and 2018, Merson lied to investors, calling himself an independent consultant who would receive only a small finder’s fee for his efforts, when in reality he had significant financial interest in the investments and affirmatively misled investors when responding to their inquiries. USAO ME
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