Securities Fraud Archives - Constantine Cannon

SEC Whistleblower Program 2022 Annual Report Shows Continued Strength of Program

Posted 11/28/22

Securities and Exchange Commission seal on building

Last week the SEC Whistleblower Office released its 2022 Annual Report, with office chief Creola Kelly saying that the SEC Whistleblower Program is “effectively incentivizing whistleblowers to make the often difficult decision to come forward with information about potential securities-law violations.” The data confirms that whistleblowers are making a big difference in protecting the markets and investing...

Tagged in: Financial and Investment Fraud, SEC Whistleblower Reward Program, Securities Fraud, Statistics,

October 31, 2022

The SEC has awarded more than $10 million to a whistleblower who provided critical information and assistance that contributed significantly to a successful enforcement action. In addition to providing important documents, the whistleblower also met twice with agency staff, resulting in charges that closely mirrored the whistleblower’s allegations, as well as significant funds being returned to harmed investors. SEC

Tagged in: SEC Whistleblower Reward Program, Securities Fraud, Whistleblower Rewards,

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

Tagged in: Cryptocurrency, Misrepresentations, Securities Fraud,

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

Tagged in: Financial and Investment Fraud, Misrepresentations, Ponzi Schemes, Securities Fraud,

September 2, 2022

Swapnil Rege, SwapStar Capital LLC, and Reema Rege have been ordered to pay $5 million in disgorgement and pre-judgment interest for engaging in fraudulent solicitation and misappropriation, including on Swapnil’s part, engaging in trading despite an existing bar for prior violations, and on Reema’s part, receiving illegally-obtained profits she was not entitled to. The orders resulted from parallel but separate enforcement actions by the CFTC and SEC, and included a permanent trading and registration ban against Swapnil. CFTC; SEC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations, Securities Fraud,

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

Tagged in: Accounting Fraud, Financial and Investment Fraud, Misrepresentations, Securities Fraud,

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

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

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

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations, Regulatory Violations, Securities Fraud,

August 9, 2022

The SEC has awarded two whistleblowers more than $16 million for their assistance in a successful enforcement action. The first whistleblower, who received about $13 million, submitted information that sparked the investigation and later provided key witnesses and other critical information that helped move the investigation forward. The second whistleblower, who received more than $3 million, later submitted new information that also aided the investigation. SEC

Tagged in: SEC Whistleblower Reward Program, Securities Fraud, Whistleblower Rewards,

August 2, 2022

Crown Bridge Partners, Soheil Ahdoot, and Sepas Ahdoot, will pay more than $9 million for operating as unregistered securities dealers, and are required to surrender all conversion rights, unexercised warrants, and cancel any shares acquired by converting notes or exercising related warrants resulting from their fraud. Over a 5-year period, from 2016 to 2020, the defendants bought convertible notes, converted them into billions of newly issued shares of heavily-discounted stock, and sold the new shares at significant profit, all while not being registered as dealers with the SEC, skirting regulatory oversight. Defendants are subject to a 5-year penny stock bar in addition to the monetary penalties. SEC

Tagged in: Financial and Investment Fraud, Regulatory Violations, Securities Fraud,

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