Tag Archives: securities fraud

Man Sentenced in First Bitcoin Securities-Fraud Case

NEW YORK?A Texas man who carried out what authorities said was the first federal bitcoin securities fraud to be prosecuted was sentenced on Thursday to 18 months in prison.

Trendon Shavers, 33 years old, was sentenced in Manhattan federal court by Judge Lewis A. Kaplan, who said Mr. Shavers committed a serious crime but had earned leniency through the honest work he has done since his 2014 arrest. Federal sentencing guidelines had called for a prison term of nearly three years.

The judge also ordered $1.2 million, the amount lost by 48 investors, to be forfeited and an equal amount of restitution.

He said Mr. Shavers, of Prosper, Texas, carried out a “classic Ponzi scheme” after offering potential investors high interest rates to turn over bitcoins, a virtual currency that operates outside government regulation. Authorities say that at the peak of the scheme Mr. Shavers possessed about 7% of all bitcoins in public circulation.

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Ocwen ex-CEO facing US investment fraud suit is Malta’s newest citizen

One of the multi-millionaires lining up for a Maltese passport has run into trouble back in the United States, having to face a securities fraud lawsuit.

William Charles Erbey was a billionaire worth $2.5 billion and a regular in Forbes’ list of the global rich, but his worth was drastically reduced to ‘just’ over $400 million when his mortgage giant Ocwen Financial was found responsible for serious conflicts in the way it carried out its business.

But far from the ‘talent’ that Prime Minister Joseph Muscat shills for in his international roadshows with Henley & Partners flogging off Malta’s golden €650,000 passport, William Erbey is accused by critics of having built an empire on mortgage misery, and who saves tax by sheltering his companies in the Virgin Islands, Luxembourg and the Caymans.

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SEC charges Wells Fargo, Rhode Island agency with securities fraud

The question of the day: Is Wells Fargo’s execs going to jail?

(Reuters) – The U.S. Securities and Exchange Commission on Monday charged a Wells Fargo & Co unit and a Rhode Island agency with civil fraud stemming from a bond deal for a now-bankrupt video-game company founded by former Boston Red Sox pitcher Curt Schilling.

Wells Fargo Securities and Rhode Island’s economic development agency defrauded investors to finance the company, called 38 Studios, the SEC said. The company was named after Schilling’s Major League jersey number.

The charge stems from a $75 million bond offering in 2010 that was part of a Rhode Island program intended to spur economic development, the SEC said.

Wells Fargo disputes the SEC’s allegations and will respond to them in court, a spokesman said.

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BREAKING: ‘Stalker’ Wall Street CEO Arrested Over Securities Fraud

Law360, New York (September 10, 2015, 11:31 AM ET) — Private equity CEO Benjamin Wey, who recently was found liable for harassing and defaming an intern at his New York Global Group concern, was arrested for allegedly manipulating shares tied to China-based “reverse merger” transactions, federal prosecutors said Thursday.

Benjamin Wey, right, has been charged with offenses including conspiracy, securities fraud and wire fraud. (Credit: AP) Wey, 43, was charged with offenses including conspiracy, securities fraud and wire fraud, along with a Geneva, Switzerland-based banker named Seref Dogan Erbek, 53, who remains at large, Manhattan U.S….

Source: Law360

Texas AG Re-Indicted In Securities Fraud Case

Law360, Los Angeles (August 18, 2015, 7:24 PM ET) — Texas Attorney General Ken Paxton was re-indicted Tuesday in state court, three weeks after the Lone Star State’s top attorney was charged with three violations of state securities laws, including two first-degree felony counts alleging omissions to investors, according to the county district court site.

The case is split into three, one for each charge, and the new indictments appear in the two securities fraud cases, according to Collin County records. The third charge, for failing to register as an investment adviser representative, was unchanged Tuesday…

Source: Law360

Hacking Case Raises Question on Securities Fraud

“Securities fraud in violation of Section 10(b) of the Securities Exchange Act requires proving a “manipulative or deceptive device” was used “in connection with” the purchase or sale of a security.”

The elaborate scheme described by the Justice Department and theSecurities and Exchange Commission last week, which involved breaking into computer servers to obtain confidential information about impending corporate announcements, certainly looks like a classic case of insider trading. The defendants are accused of making millions of dollars in profits by using information to trade profitably.

But insider trading law as currently interpreted by the courts would not cover this case because the hackers are accused of being thieves, not insiders who breached a duty owed to the source of the information. Indeed, they are as far from a fiduciary as one could find — an important requirement for an insider trading violation. The question is whether trading on stolen information is also a type of securities fraud.

The Justice Department filed indictments in Brooklyn and in New Jerseycharging nine defendants with securities fraud, wire fraud, conspiracy and computer-related violations. Two defendants operating out of Ukraine are accused of breaking into the servers of three companies — Business Wire, PR Newswire and Marketwired — to obtain news releases about publicly traded companies before they were issued. They provided the information to the other defendants who traded on it in exchange for a cut of the trading profits.

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Ex-Wells Fargo compliance officer spared penalty in U.S. SEC case

A former Wells Fargo & Co compliance officer accused of altering a document sought by U.S. securities regulators for an insider trading investigation won the dismissal of her case Wednesday after a judge ruled against sanctioning her.

Judy Wolf, the compliance officer, was found by an U.S. Securities and Exchange Commission administrative law judge to have willfully aided and abetted and caused securities law violations by Wells Fargo.

But SEC Administrative Law Judge Cameron Elliot, who presided over a trial before the agency’s in-house court, ruled that sanctioning Wolf would create the “misperception” in the industry that she alone was responsible for the violation.

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FirstBank Financial Services : Former Patriots Player and Former Bank Executive Charged with Securities Fraud

A former New England Patriots player and a former Regions Bank executive were arrested this morning on securities fraud charges in connection with an alleged Ponzi scheme involving fraudulent loans to professional athletes.

Will Allen, 36, of Davie, Fla., and Susan Daub, 55, of Coral Springs, Fla., were charged in a criminal complaint with one count of securities fraud. Allen played for the New York Giants from 2001 to 2005, the Miami Dolphins from 2006 to 2011, and the New England Patriots in 2012. Daub was previously employed as a vice president and private banker byRegions Bank in Florida. Allen and Daub were arrested this morning and had their initial appearances today before a magistrate judge in U.S. District Court in Fort Lauderdale, Fla.

As alleged in the complaint, Allen and Daub were partners in Capital Financial Partners (CFP), a Massachusetts company whose website advertised “private lending to unique individuals.” According to the website, CFP “specialize[d] in issuing short-term loans to professional athletes.” To fund the loans, Allen and Daub allegedly solicited money from investors, telling them that their money would be loaned to the athletes, and that they would be repaid with interest according to a predefined schedule.

While CFP did make some loans to athletes, the complaint alleges that Allen and Daub diverted millions of investor dollars to themselves and other business ventures. To keep investors from discovering their fraud, Allen and Daub allegedly used newly invested money to make payments to existing investors, which they falsely characterized as interest and principal payments from the loan recipients. To generate additional money, Allen and Daub allegedly oversubscribed loans, falsely telling investors that the loans were larger than they actually were and collecting more money from investors than they were actually lending to athletes. In other instances, Allen and Daub allegedly collected money for loans that CFP never made at all.

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Ex-Arthrocare CEO Gets 20 Years In $756M Fraud Case

Law360, Los Angeles (August 29, 2014, 9:48 PM ET) — A Texas federal judge on Friday sentenced the former CEO of Arthrocare Corp. to 20 years in prison and the company’s ex-CFO to 10 years after they were convicted of perpetrating a securities fraud that is now estimated at about $756 million, according to authorities.

Former Arthrocare CEO Michael Baker and former CFO Michael Gluk were sentenced by U.S. District Judge Sam Sparks in the Western District of Texas. The U.S. Department of Justice had sought a 30-year sentence for Baker and a 20-year sentence for..

Source: Law360

Kansas Settles SEC Charges It Understated Muni Bond Risks

Law360, New York (August 11, 2014, 2:04 PM ET) — The state of Kansas has agreed to settle allegations by the U.S. Securities and Exchange Commission that its municipal bond offering documents failed to disclose that the state’s pension system was significantly underfunded, thereby creating a repayment risk for investors, the SEC said Monday.

The fraud charges are the latest to come down in the SEC’s nationwide review of bond offering documents, which has already resulted in enforcement actions against Illinois and New Jersey.

According to the SEC, Kansas neither admitted to nor denied the SEC’s…

Source: Law360