Misrepresentations

March 28, 2016

The SEC charged New York-based securities professional Andrew W.W. Caspersen with soliciting approximately $95 million from two institutional investors by offering promissory notes issued by Irving Place III SPV LLC.  The SEC alleges that Irving Place III SPV LLC is a shell entity formed and controlled by Caspersen with no legitimate business operations, unlike the similarly named Irving Place Capital Partners III SPV which is not associated with Caspersen in any way.  Caspersen obtained a $25 million investment in November 2015 from an institutional investor by falsely representing that the investment would be secured by approximately $900 million of assets of Irving Place Capital Partners III SPV.  SEC

March 25, 2016

The SEC brought fraud charges and obtained asset freezes against New Jersey fund manager John Bivona and his firms Saddle River Advisors and SRA Management Associates for marketing shares in promising pre-IPO tech companies in the Bay Area while stealing $5.7 million and diverting millions more to other improper and undisclosed uses.  The SEC alleges that Bivona used money raised through his firms to pay off earlier investors, prop up other funds, and pay family-related expenses.  He secretly steered the lion’s share of misappropriated funds to his nephew Frank Mazzola who was barred from the securities industry in a prior SEC enforcement action.  The SEC alleges that while Bivona raised more than $53 million from investors, the money he siphoned away for undisclosed uses left his firms continuously short of the cash needed to buy the shares promised to investors.  SEC

March 14, 2016

The SEC charged microcap company RVPlus Inc. and its CEO, Lee Peterson, with making bogus claims in the company’s public filings and in statements to private investors and with unlawfully distributing RVPlus’ stock.  The SEC alleges that starting in 2012, Peterson filed periodic reports with the SEC claiming that RVPlus had a lucrative relationship with the United Nations and clean energy agreements with governmental bodies in Nigeria, Haiti, and Liberia worth $2.8 billion.  RVPlus had no relationship with the U.N. and the contracts were fictitious.  In addition, the SEC alleges that RVPlus and Peterson gained control of more than 90 percent of RVPlus’ free trading shares and gave them individuals who unlawfully sold them into the market.  SEC

March 10, 2016

The SEC charged Oregon-based investment group Aequitas Management LLC and four affiliates, along with three top executives, with raising more than $350 million from investors while hiding the group’s rapidly deteriorating financial condition.  Aequitas allegedly defrauded more than 1,500 investors nationwide into believing they were making health care, education, and transportation-related investments when their money was really being used in a last-ditch effort to save the firm, including using some new money to pay earlier investors.  SEC

March 9, 2016

Uni-Pixel Inc., a developer of technologies for touchscreen devices, has agreed to pay $750,000 to settle charges it misled investors about the production status and sales agreements for a key product.  The SEC alleged that Uni-Pixel began publicly touting sales of a touchscreen sensor product  supposedly in speedy high-volume commercial production when in fact only a few samples had been manually completed.  The misrepresentations caused Uni-Pixel’s stock price to more than double, enabling then-CEO Reed Killion and then-CFO Jeffrey Tomz to make more than $2 million in personal profits from selling their own shares of company stock.  Uni-Pixel also announced multi-million dollar sales agreements in 2012 and 2013 that highlighted potential revenues but omitted material conditions the company had to meet to actually receive those revenues.  The SEC also filed charges against Killion and Tomz and entered into a deferred prosecution agreement with Uni-Pixel’s former chairman of the board.  SEC

March 8, 2016

The SEC charged fund manager Steven Zoernack and his firm EquityStar Capital Management with operating without registration, providing false and misleading data to investors, and actively hiding Zoernack’s checkered past, including two felony fraud convictions and a bankruptcy filing.  SEC

March 7, 2016

The SEC charged the Rhode Island state agency now known as the Rhode Island Commerce Corporation and its bond underwriter Wells Fargo Securities with defrauding investors in connection with a municipal bond offering to finance a start-up video game company called 38 Studios.  The Rhode Island agency loaned $50 million in bond proceeds to 38 Studios.  However, the bond offering documents produced by the agency and Wells Fargo failed to disclose that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.  Therefore, investors were not fully informed that 38 Studios faced a funding shortfall even with the loan proceeds.  When 38 Studios was unable to obtain additional financing, the company defaulted on the loan.  The SEC also charged Wells Fargo’s lead banker on the deal and two Rhode Island agency executives with aiding and abetting the fraud.  The SEC’s complaint further alleges that Wells Fargo and the lead banker on the 38 Studios deal failed to disclose that Wells Fargo had a side deal with 38 Studios which enabled it to receive nearly double the amount of compensation disclosed in offering documents.  SEC

March 23, 2016

Gilbert G. Lundstrom, the former CEO of TierOne Bank -- a $3 billion publicly-traded commercial bank formerly headquartered in Lincoln, Nebraska -- was sentenced to 132 months in prison and to pay a $1.2 million fine for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.  DOJ

March 22, 2016

The CFTC has ordered payment of penalties of $665,000 by Credit Suisse International for violating speculative position limits for wheat futures and by Credit Suisse Securities LLC for submitting false or misleading information to the CFTC.  CFTC

March 9, 2016

The CFTC ordered CHS, Inc. and CHS Hedging, LLC  to pay $1 million for inaccurately reporting positions in corn and soybeans.  CFTC