Weekly Enforcement Action Tracker (Apr 1 – Apr 6)

Financial Enforcement Action Summary

FTC

1 Enforcement Document

$355,000 in Fines

Penalties: $355,000
Respondent: Nathaniel Frazier & Jeffrey Garrison
Violation: Making false and misleading claims that CogniPrin would reverse memory loss and help improve memory… Read More

SEC

36 Enforcement Documents

$24,662,054.99 in Fines

Penalties: N/A
Respondent: SEC Complaint – Sohrab (“Sam”) Sharma and Robert Farkas
Violation: From approximately July 30, 2017, through October 5, 2017, Defendants raised at least $32 million from thousands of investors through the sale of unregistered securities issued by Centra Tech., Inc. (“Centra”), an entity controlled primarily by Defendants… Read More

Penalties: TBD
Respondent: Sohrab (“Sam”) Sharma and Robert Farkas
Violation: masterminded a fraudulent ICO in which Centra offered and sold unregistered investments through a “CTR Token.” Sharma and Farkas allegedly claimed that funds raised in the ICO would help build a suite of financial products. They claimed, for example, to offer a debit card backed by Visa and MasterCard that would allow users to instantly convert hard-to-spend cryptocurrencies into U.S. dollars or other legal tenders… Read More

Penalties: N/A
Respondent: James Moodhe
Violation: Moodhe engaged in fraud in connection with the purchase and sale of securities and fraud in connection with tender offers by trading and causing others to trade on inside information, that Moodhe conspired to commit securities fraud, tender offer fraud, and wire fraud, and that Moodhe made false statements to Special Agents of the Federal Bureau of Investigation…. Read More

Penalties: N/A
Respondent: NextGlass Technologies Corporation
Violation: NextGlass has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended June 30, 2016… Read More

Penalties: N/A
Respondent: SEC Complaint – Shane P. Fleming et al.
Violation: Life Time employee Shane Fleming and were passed from one defendant to the next, the traders who participated in this scheme collectively bought 2,099 out-of-the-money Life Time call options and 250 Life Time shares in the weeks leading up to the announcement. Defendants sold the options and shares they had acquired after news of Life Time’s acquisition became public, realizing total illegal profits of approximately $866,629… Read More

Penalties: N/A
Respondent: Michael Scronic
Violation: Michael Scronic began to raise money from at least 42 friends and acquaintances, many of whom were from his suburban community, in order to invest in a risky options trading strategy. He allegedly lured investors by informing them that he had a long and impressive track record of proven returns… Read More

Penalties: N/A
Respondent: SEC Complaint – Michael A. Liberty, et al.
Violation: Michael Liberty and his accomplices engaged in a long-running fraudulent scheme using multiple fraudulent securities offerings. They tricked investors into believing that they were funding fast-growing startup companies. They were not… Read More

Penalties: N/A
Respondent: Shane P. Fleming et al.
Violation: Beshey tipped his friends Christopher M. Bonvissuto and Peter A. Kourtis with the understanding that both men would kick back a portion of their trading proceeds to Beshey. According to the SEC’s complaint, Kourtis tipped his friends Alexander T. Carlucci, Dimitri A. Kandalepas, Austin C. Mansur, and Eric L. Weller, and asked Carlucci, Mansur, and Weller to give him a portion of any profits they made from trading on the information, which they agreed to do… Read More

Penalties: $435,809.50
Respondent: Christopher James Lollar
Violation: Christopher J. Lollar traded on nonpublic information while working in the company’s San Antonio office that was performing the geologic and geophysical work to explore and develop the newly-discovered resource play called Alpine High… Read More

Penalties: N/A
Respondent: SEC Complaint – Gregory M. Bercowy
Violation: A scheme by Gregory M. Bercowy, who, during the relevant period, was affiliated with a registered investment adviser, to manipulate a penny stock security. In August 2016, Bercowy attempted to manipulate the stock of Aureus in the brokerage accounts of his relative through his online access of his relative’s accounts… Read More

Penalties: TBD
Respondent: Michael A. Liberty, et al.
Violation: The founder of the fintech startup now known as Mozido, Inc., with a fraudulent scheme to trick hundreds of investors into investing in his shell companies instead of Mozido. Michael Liberty and his accomplices then stole most of the more than $48 million raised to fund a lavish lifestyle that included private jet flights, multimillion-dollar residences, expensive cars, and movie production ventures… Read More

Penalties: TBD
Respondent: Mohammed Ali Rashid
Violation: Defrauding his fund clients by secretly billing them for approximately $290,000 in personal expenditures, including his family vacations, visits to a hair salon, and purchases of designer clothing and high-end electronics… Read More

Penalties: N/A
Respondent: SEC Complaint – DaRayl D. Davis & Affluent Advisory Group, LLC
Violation: A fraudulent securities offerings and a Ponzi-like scheme conducted by DaRayl D. Davis, a former securities industry professional who has held himself out to be an investment adviser and life coach… Read More

Penalties: TBD
Respondent: Gregory M. Bercowy
Violation: Between August 4 and August 15, 2016, Bercowy, who is associated with a state-registered investment adviser, sold shares of certain Fortune 500 companies, including Abbott and Apple, in his relative’s brokerage account in order to buy over three million shares of Aureus at a total cost of more than $2.8 million… Read More

Penalties: $750,000.00
Respondent: Aegis Capital Corporation
Violation: From at least late 2012 through early 2014, Aegis, a registered broker-dealer, failed to file Suspicious Activity Reports (“SARs”) on hundreds of transactions when it knew, suspected, or had reason to suspect that the transactions involved the use of the broker-dealer to facilitate fraudulent activity or had no business or apparent lawful purpose… Read More

Penalties: N/A
Respondent: SEC Complaint – Michael Scronic
Violation: Scronic engaged in a Ponzi-like scheme and made material misrepresentations to investors and potential investors in his fictitious hedge fund. Despite sustaining over $15 million in investment losses and using their money for personal expenses, Scronic represented to investors that their investments had seen substantial gains… Read More

Penalties: N/A
Respondent: Gregory John Tuthill
Violation: Tuthill, acted as an unregistered broker by soliciting investors, providing them with sales materials, closing sales, and discussing the merits of the proposed investments with investors. Additionally, Tuthill offered and sold securities in transactions that were not registered with the Commission and not subject to an applicable exemption from registration… Read More

Penalties: N/A
Respondent: SEC Complaint – Mohammed Ali Rashid
Violation: From at least January 2010 to June 2013, Rashid, an experienced and highly compensated investment adviser for a well-known advisory firm, intentionally misappropriated approximately $290,000 from private equity funds that he advised. While acting as an investment adviser, Rashid defrauded his fund clients by using their money for his personal expenses, including paying for elaborate vacations, frequent trips to an expensive hair salon, spa services, and luxury retail items… Read More

Penalties: N/A
Respondent: SEC Complaint – Christopher James Lollar
Violation: This is an insider-trading case involving Defendant Christopher James Lollar—a former petroleum engineer at Apache Corporation (“Apache”), a Texas-based energy exploration and development company. Lollar illegally used information learned in the course of his employment to enrich himself by trading ahead of the company’s September 7, 2016 announcement… Read More

Penalties: TBD
Respondent: Charlie Jinan Chen and Shui Foon Mok
Violation: Charlie Jinan Chen used nonpublic information obtained directly or indirectly from a VistaPrint insider to place illegal trades in advance of eight VistaPrint quarterly earnings announcements over a two-year period. Each time, Chen’s trades were consistent with the news-whether good or bad-in VistaPrint’s pending earnings announcements… Read More

Penalties: $20,000.00
Respondent: Clayborne Group, LLC and Dean A. Heinemann
Violation: Clayborne’s improper registration with the Commission as an investment adviser, as well as its violation of a Commission rule concerning the custody of advisory client assets (known as the “Custody Rule”) and recordkeeping rules that apply to investment advisers… Read More

Penalties: N/A
Respondent: SEC Complaint – AriseBank, Jared Rick Sr., and Stanley Ford
Violation: Rice, Ford, and AriseBank are alleged to have offered and sold investments in their purported “AriseCoin” cryptocurrency to investors in the United States and elsewhere. The SEC alleges that since November 2017, AriseBank has failed to register the ICO and enticed investment through a celebrity endorsement from Evander Holyfield and demonstrably false claims… Read More

Penalties: N/A
Respondent: SEC Complaint – Peter H. Pocklington, Lantson E. Eldred, Terrence J. Walton, Yolanda C. Velazquez a/k/a Lana Velazquez a/k/a Lana Puleo, Vanessa Puleo, Robert A. Vanetten, Nova Oculus Partners, LLC f/k/a The Eye Machine, LLC, and AMC Holdings, LLC
Violation: From 2014 to at least 2017, the defendants raised over $14 million from more than 260 investors. But while doing so, they concealed the true identity of the person at the helm of the company, misappropriated investor funds to pay personal expenses, and funneled undisclosed and excessive commissions to their sales agents… Read More

Penalties: N/A
Respondent: SEC Complaint – Charlie Jinan Chen and Shui Foon Mok
Violation: This is an insider trading case involving Chen’s illegal and extraordinarily profitable trading over a two-year period in the securities of VistaPrint N.V. (“VistaPrint”), a company formerly based in Lexington, Massachusetts… Read More

Penalties: $620,594.00
Respondent: William R. Schantz III and Verto Capital Management LLC
Violation: Correct the amount of interest owed to some investors on certain notes… Read More

Penalties: $289,650.72
Respondent: Saverio J. Barbera
Violation: Tipping his brother and father with material nonpublic information about an upcoming corporate acquisition… Read More

Penalties: TBD
Respondent: Peter H. Pocklington, Lantson E. Eldred, Terrence J. Walton, Yolanda C. Velazquez a/k/a Lana Velazquez a/k/a Lana Puleo, Vanessa Puleo, Robert A. Vanetten, Nova Oculus Partners, LLC f/k/a The Eye Machine, LLC, and AMC Holdings, LLC
Violation: Pocklington and his attorney, Lantson E. Eldred, structured the ownership of The Eye Machine to conceal Pocklington’s role with the company and held Eldred out as the company’s “visual front.”… Read More

Penalties: $8,000,000.00
Respondent: Merril Robertson, Jr., et al.
Violation: Sherman C. Vaughn Jr., and the company they co-owned, Cavalier Union Investments LLC, promised to invest in diversified holdings but stole nearly $6 million of the more than $10 million they raised from investors… Read More

Penalties: TBD
Respondent: Joseph Meli, et al., Craig H. Carton, et al.
Violation: Connection with a multi-million dollar Ponzi scheme involving purported resales of tickets to popular concerts and Broadway shows… Read More

Penalties: N/A
Respondent: Tobias J. Preston
Violation: Respondent defrauded investors in a pooled investment fund known as Alaska Financial Company III LLC (“AFC III”), which was created by Respondent and his affiliated investment advisory entity, MMC-FL, the manager of AFC III… Read More

Penalties: $1,808,062.13
Respondent: Geneos Wealth Management, Inc.
Violation: These proceedings arise from a series of failures by Geneos, a registered investment adviser and broker-dealer, in connection with its mutual fund share class selection practices and its receipt of revenue sharing payments… Read More

Penalties: $7,307,770.00
Respondent: PNC Investments LLC
Violation: PNCI invested advisory clients in mutual fund share classes with 12b-1 fees instead of available lower-cost share classes of the same funds without 12b-1 fees. PNCI financially benefitted from investing advisory clients in mutual fund share classes with 12b1 fees, which created a conflict of interest that PNCI failed adequately to disclose in its Forms ADV or otherwise… Read More

Penalties: N/A
Respondent: Charles G. Preston
Violation: Respondent, together with his brother Tobias Preston, nephew Caleb Preston, and their affiliated investment advisory entity, MMC-FL, defrauded investors in a pooled investment fund known as Alaska Financial Company III LLC (“AFC III”)… Read More

Penalties: $5,828,448.64
Respondent: Securities America Advisors, Inc.
Violation: SAA’s disclosures failed to adequately inform its clients of the conflict of interest presented by its IARs’ share class selection practices. In particular, SAA failed to disclose that its IARs had a conflict of interest as a result of the additional compensation an IAR received for investing advisory clients in a fund’s 12b-1 fee-paying share class when a less expensive share class was available for the same fund… Read More

Penalties: $30,742.00
Respondent: CSIR Group, LLC, et al.
Violation: For their roles in a fraudulent stock promotion scheme. According to the SEC’s complaint, CSIR hired writers to publish more than a dozen bullish articles on its clients, which appeared to be independent research pieces, but, in fact, were paid advertisements… Read More

Penalties: N/A
Respondent: Joshua D. Mosshart
Violation: Consistently failed to successfully commercialize its technology, and the company raised funds through misleading financial projections and other misrepresentations about the status of its commercialization efforts. The complaint also alleged that beginning in May 2011, Mosshart referred at least 18 individuals to Enviro Board, who purchased nearly $5 million of the company’s securities… Read More

Penalties: $320,978.00
Respondent: Ikenna Ikokwu, et al.
Violation: Ikokwu and his companies further alleged that in exchange for persuading clients to invest in FutureGen, Ikokwu received undisclosed “kickbacks” of over $100,000 from FutureGen. He also allegedly told investors that he conducted extensive due diligence into FutureGen prior to making his recommendation, when, in reality, he did little or no research on the company… Read More

Penalties: N/A
Respondent: Caleb J. Preston
Violation: Respondent, together with his father Tobias Preston, uncle Charles Preston, and their affiliated investment advisory entity, MMC-FL, defrauded investors in a pooled investment fund known as Alaska Financial Company III LLC (“AFC III”)… Read More

FINRA

10 Enforcement Documents

$178,473.70 in Fines

Penalties: N/A
Respondent: Frederick David Holloway
Violation: Holloway failed to conduct a meaningful comparative analysis of the costs, features, and benefits of the surrendered and newly acquired VAs. In addition, Holloway placed clients whose VA exchanges incurred a surrender charge into a more expensive Transamerica VA with a “bonus feature” without considering whether the VA with the bonus feature was in fact suitable. By virtue of this conduct, Holloway violated FINRA Rules 2330 and 2010…Read More

Penalties: $10,000.00
Respondent: Lombard Securities Incorporated
Violation: “Between December 2015 and March 2016, Lombard executed five municipal securities transactions without having a Municipal Securities Principal at the Firm. In addition, between January 2014 and March 2016, Lombard failed to establish and maintain a supervisory system and written procedures reasonably designed to supervise municipal securities transactions.”… Read More

Penalties: $20,000.00
Respondent: Jeffery Allen Fanning
Violation: Between January 2014 and September 2015 Respondent Jeffery Allen Fanning failed to reasonably supervise the equity trading of registered representatives at his firm, Liberty Partners Financial Services, LLC (“Liberty”), for potentially excessive trading, and, even where his reviews identified potentially excessive trading, Fanning failed to reasonably address that activity… Read More

Penalties: $5,000.00
Respondent: Richard Hunt Crockett
Violation: While serving as the CCO of Osprey between June 2016 and May 2017 (the “Relevant Period”), Crockett failed to reasonably supervise the private securities transactions of Osprey’s registered representatives in violation of FINRA Rules 3280, 3110(a) and 2010… Read More

Penalties: $5,000.00
Respondent: Bret Lee Niemuth
Violation: Niemuth failed to amend his Form U4 to disclose that he was charged with and then pled guilty to a felony involving the operation of a motor vehicle while intoxicated. He failed to disclose his two felony charges and one conviction during the time he was associated with Voya between June 2011 and November 2012, and again during the time he reassociated with Voya between July 2014 through October 2016—a total of approximately three years and eight months. As a result, he was associated with Voya while he was subject to statutory disqualification… Read More

Penalties: N/A
Respondent: Laura Ortega Shean
Violation: Between March 2017 and October 2017, Shean converted approximately $124,000 in customer funds, thereby violating FINRA Rules 2150(a) and 2010… Read More

Penalties: N/A
Respondent: Thomas W. Hinson
Violation: Hinson willfully failed to disclose on his Form U4 two state regulatory actions against him. As a result, he violated Article V, Section 2(c) of the FINRA ByLaws, and FINRA Rules 1122 and 2010… Read More

Penalties: $23,473.70
Respondent: Gerard Chandler Gremillion
Violation: Respondent willfully failed to update his Form U4 to disclose two tax liens, a bankruptcy filing, and a civil monetary judgment, and provided a false answer in an amendment to his Form U4… Read More

Penalties: N/A
Respondent: William G. Brunner
Violation: FINRA requested that Brunner appear for on-the-record testimony (OTR”) pursuant to FINRA Rule 8210 in connection with an ongoing FINRA examination. Brunner declined to appear for testimony and indicated he will not participate in the investigation, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $115,000.00
Respondent: Merrill Lynch, Pierce, Fenner, & Smith Inc.
Violation: The firm failed to establish, maintain, and enforce written policies and procedures that were reasonably designed to prevent trade-throughs of protected quotations in NMS stocks that do not fall within any applicable exception, and if relying on an exception, are reasonably designed to assure compliance with the terms of the exception… Read More

X