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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:

Page 1 of 44

May 13, 2021

Financial services company State Street Corporation will pay a $115 million criminal penalty and enter into a deferred prosecution agreement following its voluntary disclosure to authorities that, over the course of 17 years, the bank defrauded its clients out of $290 million.  State Street  admitted that it secretly marked up “out-of-pocket” (OOP) expenses charged to clients, despite telling clients that OOP expenses were passed through without markups. State Street executives took steps to conceal the mark-ups from clients, including by misleading clients when they inquired about what they were being charged for OOP expenses. As part of the settlement, defendant agreed to cooperate with ongoing investigations, to enhance its compliance program, and to retain an independent corporate compliance monitor for a period of two years. DOJ

April 27, 2021

A man who defrauded his clients out of more than $4 million has been sentenced to 7 years in prison.  In a scheme running from 2013 to 2020, Edgardo Zeta Montalban convinced his clients to invest cash in a fake federal grant program that he called “Suppressed IRS Accounts” by claiming to be an accountant and tax preparer.  However, no such program existed, and he did not hold any of those positions.  Montalban was originally recommended to serve 10 years, but due to significant health issues, the 70-year-old’s sentence was reduced.  USAO CDCA

April 27, 2021

Indivior plc and Indivior Inc., will pay $300 million to settle claims from all 50 states, the District of Columbia, and Puerto Rico, alleging they caused the misuse of state Medicaid funds by falsely marketing the drug Suboxone.  Suboxone is used by recovering opioid addicts to reduce withdrawal symptoms.  According to the governments, Indivior promoted the sale and use of Suboxone for unsafe, ineffective, and medically unnecessary purposes, including by claiming it was less susceptible to abuse even though the active ingredient, buprenorphine, is a powerful opioid itself.  Additionally, the company took steps to fraudulently delay the entry of generic alternatives in order to control pricing.  The settlement resolves six whistleblower suits pending in New Jersey and Virginia.  Indivior previously paid $600 million to resolve federal claims, and former parent company Reckitt Benckiser previously paid $1.4 billion to resolve the same.  CA AG; FL AG; MI AG

March 26, 2021

British citizen Benjamin Reynolds, who did business as Control-Finance Limited, has been ordered to pay a total of $571 million – $143 million in restitution and $429 million as a civil penalty – by default judgment in an enforcement action brought by the CFTC.  Reynolds solicited customers on the internet and by e-mail, falsely representing that Control-Finance would engage in virtual currency trades on their behalf, with a guaranteed profit.  Reynolds also created an affiliate marketing network, falsely claiming that he would pay referral bonuses to customers.  In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid no referral rewards or bonuses. Over the course of six months in 2017, Reynolds secured at least 22,191 bitcoin, worth $143 million at the time, from more than 1,000 customers worldwide, including at least 169 residing in the U.S.  CFTC

March 19, 2021

The CFTC has ordered digital asset exchange operator Coinbase Inc. to pay a civil monetary penalty of $6.5 million to settle charges of reporting false, misleading, or inaccurate information on the company’s GDAX electronic trading platform, which is published by various reporting firms and used by market participants to gauge the volume and liquidity of digital assets.  The CFTC also found Coinbase vicariously liable for a former employee who placed deceptive orders in Litecoin in order to artificially generate market interest.  CFTC

February 24, 2021

William Taylor, the former chief operating officer of publicly-traded biopharmaceutical company MiMedx Group, Inc., was sentenced to one year in prison and ordered to pay a fine or $250,000 following his jury trial conviction on charges arising from accounting fraud.  The government presented evidence at trial that Taylor authorized the false recognition of revenue upon the shipment of MiMedx products to distributors despite knowing that the GAAP criteria for such revenue recognition had not been met.  Instead, MiMedx had promised the distributors that they could return the product or did not need to pay for it, in some cases knowing that the distributors were unable to pay for the product.  As a result, MiMedx reported materially inflated revenue in 2015.  USAO SDNY

COVID Fraud a Year on from the Onset of the Pandemic

Posted  02/19/21
coronavirus-map
The COVID-19 pandemic has raged across the world over the last year, causing widespread harm both to humanity and the economy. Even in these trying times, fraudsters have not let up and have found ways to exploit the pandemic for personal gain. As we move into the one-year anniversary of the pandemic starting with the United States we look back on the ways programs intended for relief have been exploited, and a few of...

February 12, 2021

General Motors (GM) has agreed to a $5.75 million settlement with the State of California to resolve allegations of making false and misleading statements to investors, including the state’s largest pension system, California Public Employees’ Retirement System (CalPERS).  According to Attorney General Xavier Becerra, GM cheated California twice—first by failing to disclose a faulty ignition-switch issue to the National Highway and Traffic Safety Administration (NHTSA) that it had been aware of for almost ten years, and which ultimately led to 124 fatalities and 274 injuries, and second by concealing the problem from investors and failing to build reserves for losses it knew was coming.  The company’s actions artificially inflated its stock price, causing CalPERS to lose millions of dollars.  CA AG

February 5, 2021

Private equity fund ACP X, LP, its manager Laurence Allen, and other corporate entities owned and controlled by Allen including NYPPEX Holdings, LLC, have been ordered to pay nearly $7 million.  Allen allegedly used investor funds to pay himself and others exorbitant salaries and cover the expenses of Allen’s affiliated entities, contrary to representations to investors.  A receiver was appointed to wind down the fund.  NY

February 2, 2021

Premier Holding Corp., a microcap issuer which described itself as a green energy services provider, and its former CEO, Randall Letcavage, have been ordered to pay a total of $10.5 million in disgorgement, penalties, and interest in connection with judgment finding that defendants materially mislead investors about the value of Premier’s assets and perks paid to Letcavage.  SEC
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