Securities Fraud

April 7, 2015

The SEC announced fraud charges against former professional football player William D. Allen and his business partner Susan C. Daub and others, alleging they operated a Ponzi scheme that raised more than $31 million from investors who were promised profits from loans to professional athletes.  SEC

April 6, 2015

The SEC charged 12 companies and six individuals with defrauding investors in a scheme involving applications to the Federal Communications Commission (FCC) for cellular spectrum licenses.  According to the SEC’s complaint, David Alcorn and Kent Maerki orchestrated the offering fraud through their Arizona-based company Janus Spectrum LLC. and raised more than $12.4 million, much of which they and their co-conspirators kept for personal use.  Those alleged to be involved in the scheme include Daryl G. Bank and his companies Dominion Private Client Group LLC, Janus Spectrum Group LLC, Spectrum Management LLC, Spectrum 100 LLC, Spectrum 100 Management LLC, Prime Spectrum LLC and Prime Spectrum Management LLC; Bobby D. Jones and his company Premier Spectrum Group PMA; Terry W. Johnson and Raymon G. Chadwick Jr. and their companies Innovative Group PMA, Premier Group PMA and Prosperity Group PMA.  SECv

April 2, 2015

The SEC charged two longtime friends, Amit Kanodia and Iftikar Ahmed, with insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.  The SEC also named Rakitfi Holdings LLC, a company owned by Ahmed, and Lincoln Charitable Foundation, a supposed charity operated by Kanodia, as relief defendants.  SEC

April 1, 2015

Timothy Scronce agreed to settle charges of defrauding Illinois-based telecommunications company PCTEL Inc. and its shareholders during and after its acquisition of his business TelWorx Communications LLC and his three related telecommunications companies.  According to the SEC, Scronce used false accounting entries to inflate TelWorx’s quarterly revenues and earnings in the months leading up to the purchase to inflate the price PCTEL paid for the companies.  He also allegedly falsified PCTEL’s books and records and circumvented the company’s internal controls by recording bogus transactions.  Scronce consented to the SEC’s order requiring him to return his allegedly ill-gotten gains with interest, pay a civil penalty, and be barred for 10 years from serving as a public company officer or director.  SEC

March 31, 2015

The SEC charged Andrew Miller, the former CEO of Silicon Valley-based technology firm Polycom Inc., with using nearly $200,000 in corporate funds for personal perks that were not disclosed to investors.  The SEC separately charged Polycom in an administrative order finding the company had inadequate internal controls and failed to report Miller’s perks to investors.  Polycom agreed to pay $750,000 to settle the SEC’s charges.  SEC

March 30, 2015

The SEC announced fraud charges against investment adviser Lynn Tilton and her New York-based Patriarch Partners firms accusing them of hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds they manage collectively referred to as the Zohar funds.  SEC

March 27, 2015

New York-based brokerage firm Macquarie Capital (USA) Inc., a wholly owned subsidiary of global financial services firm Macquarie Group Limited, agreed to pay $15 million to settle SEC charges for underwriting a public offering o Puda Coal despite obtaining a due diligence report indicating that the China-based company’s offering materials contained false information.  Former Macquarie Capital managing director Aaron Black and former investment banker William Fang also agreed to pay $212,711 and $35,000, respectively, to settle charges they failed to exercise appropriate care in their due diligence review.  SEC

March 26, 2015

Chicago-based trading firm Global Fixed Income LLC, its owner Charles Perlitz Kempf and nearly two dozen companies and individuals who regularly bought and sold securities on behalf of Global agreed to pay nearly $5 million in disgorgement of profits and $1 million in penalties to settle SEC charges of failing to properly register with the SEC.  The settling companies included: Florida-based AGS Capital Group, Tennessee-based Banes Capital Management, Florida-based Big Star Capital, California-based Esso Ventures, New Jersey-based Etek Investment Management, New Jersey-based Finmark Resources, Kentucky-based Parker Paschal & Company, Florida-based PMK Capital Management, and Maryland-basedRLJ Fixed Income.  SEC

March 13, 2015

The SEC charged eight officers, directors, or major shareholders for failing to update their stock ownership disclosures to reflect material changes, including steps to take the companies private.  Each of the respondents, which included Berjaya Lottery Management (H.K.) Ltd., The Ciabattoni Living Trust; SMP Investments I, LLC and Shuipan Lin, the Chairman and CEO of China-based Exceed Company Ltd. SEC

March 4, 2015

The SEC charged Texas-based brokerage firm H.D. Vest Investment Securities with violating key customer protection rules after failing to adequately supervise registered representatives who misappropriated customer funds.  The company agreed to settle the charges by paying a financial penalty and retaining an independent compliance consultant to improve its supervisory controls.  SEC