Misrepresentations

September 29, 2017

The Securities and Exchange Commission today charged Leonard Vincent Lombardo, The Leonard Vincent Group (TLVG), and Brian Hudlin  in an alleged real estate investment scheme utilizing high-pressure sales tactics to pilfer $6 million from retirees and other investors while using the proceeds to fund the broker’s lavish lifestyle and start e-cigarette businesses. The SEC alleges that Lombardo, who once worked at Stratton Oakmont and has long since been barred from the brokerage industry by the Financial Industry Regulatory Authority for multiple violations, operated the scheme from behind the scenes at his Long Island-based company TLVG with assistance from the CFO, Hudlin. According to the SEC’s complaint, more than 100 investors were defrauded with false claims that their money would be invested in distressed real estate, and some were told their investments had increased by more than 50 percent in a matter of months when in fact there were no actual earnings on their investments.  Lombardo allegedly invested only a small fraction of investor money in real estate and used the bulk of it for separate business ventures into the cigarette industry and personal expenses such as car payments on his BMW and Mercedes, marina fees on his boat, and visits to tanning salons. SEC

September 22, 2017

The Securities and Exchange Commission today filed fraud charges against Aegerion Pharmaceuticals for exaggerating how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue. Aegerion, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013.  The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions ultimately purchased the drug.  The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases. SEC

September 22, 2017

The Securities and Exchange Commission today suspended trading in Grupo Resilient International  amid questions surrounding its statements about sending response teams and equipment to help with Hurricane Harvey disaster recovery efforts in Houston and surrounding areas. The SEC’s trading suspension order says that a recent press release issued by Texas-based Grupo Resilient claimed that the company added a “FEMA approved contractor” to the board of its subsidiary and was deploying workers and preparing to deploy a network of mobile broadband trailers to assist in relief efforts. The SEC’s order also says there are questions regarding the adequacy and accuracy of statements made by the company on other matters in prior press releases.  Grupo was previously known as Paradise Ridge Hydrocarbons and trades under the ticker symbol GRUI. SEC

September 7, 2017

The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities. An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets. SEC

September 6, 2017

The Securities and Exchange Commission today charged Craig Carton and Joseph Meli with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets. In a complaint filed in federal district court in Manhattan, the SEC alleges that Carton and Meli falsely claimed they had access to large blocks of face value tickets to popular concert performances.  According to the SEC’s complaint, investors were falsely promised high returns from the price markups in ticket resales.  But instead of purchasing tickets for resale, Carton and Meli allegedly misappropriated at least $3.6 million to repay earlier investors and cover such other expenses as Carton’s gambling debts. SEC

September 6, 2017

The Securities and Exchange Commission today charged Scott Newsholme with stealing more than $1 million from clients to support his gambling habit and other personal expenditures.  The SEC alleges that Newsholme of Farmingdale, New Jersey, fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice to give him their money to invest in various securities.  Instead of investing clients’ money, Newsholme allegedly cashed their investment checks at a check-cashing store and pocketed the funds while assuring clients that their assets were safe and flourishing. SEC

August 23, 2017

The Securities and Exchange Commission today announced that the Beaumont Financing Authority, and its then-executive director have agreed to settle charges that they made false statements about prior compliance with continuing disclosure obligations in five bond offerings. Also settling charges are O’Connor & Company Securities Inc., the underwriting firm behind those offerings and its co-founder for failing to conduct reasonable due diligence on the continuing disclosure representations. The SEC’s Enforcement Division uncovered the violations as part of a review of municipal issuers and underwriters that did not voluntarily self-report under the agency’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.  The Beaumont Financing Authority and O’Connor & Company  would have been eligible for more lenient remedies had they self-reported during the MCDC Initiative. SEC

August 22, 2017

The Securities and Exchange Commission today charged investment adviser Jeremy Drake with defrauding two clients, a high profile professional athlete and the athlete’s wife, by deceiving them about the investment advisory fees they were paying.  The SEC alleges that Drake went to elaborate lengths to conceal his fraud, including creating and sending false documents and masquerading as another person to corroborate his lies. The SEC alleges that Drake, then with Los Angeles-based HCR Wealth Advisors, deceived the clients for more than three years, telling them that they paid a special “VIP” annual rate of 0.15 to 0.20 percent of their assets under management when in fact they paid 1 percent.  Drake’s deception led the clients to pay $1.2 million more in management fees than Drake represented.  Drake personally received approximately $900,000 of incentive-based compensation based on the fees paid by the clients during the course of his deception. SEC

August 11, 2017

The Securities and Exchange Commission today charged David R. Greenlee, David A. Stewart Jr., and Richard “Ric.” P. Underwood in Fort Lauderdale with allegedly defrauding investors they lured by false promises of high returns from an oil drilling investment opportunity. The SEC alleges that Greenlee and Stewart weren’t registered to sell investments and used fake names like “Dave Johnson” when speaking to investors in order to hide their past criminal records, and they diverted nearly two-thirds of the money raised from investors to pay themselves and their salesmen as well as advertise for new investors. The SEC’s complaint further alleges that Underwood helped Greenlee and Stewart draft false offering brochures, and he oversaw a boiler room sales team of telemarketers in Florida as they solicited investors nationwide. SEC

August 2, 2017

The Securities and Exchange Commission today announced that Joe Yiu Cheung has agreed to pay nearly $800,000 and be permanently barred from involvement in penny stocks after hiding his significant stake in a small oil & gas company while secretly funding a fraudulent promotional campaign that artificially boosted the company’s stock price before he dumped his shares. SEC enforcement investigators uncovered the fraud by peeling back layer upon layer of shell companies and nominee owners to reveal that Joe Yiu Cheung controlled United American Petroleum Corp. (UAPC).  According to the SEC’s order, Cheung utilized an elaborate network of overseas bank and brokerage accounts mostly in bank secrecy jurisdictions to conceal his UAPC ownership.  In addition, he did not file required reports that would have publicly disclosed his burgeoning ownership of UAPC stock.  Cheung paid for the issuance of promotional materials to 2.2 million U.S. residents, inducing investors with rosy falsehoods about UAPC’s operations and prospects. SEC