Financial Enforcement Actions | Week of January 18 to January 24

Enforcement Report Jan 18-24

Enforcement Report Jan 18-24

FTC

4 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Par Petroleum/Mid Pac Petroleum
Violation: Par’s $107 million acquisition of Koko’oha Investments, Inc.’s wholly-owned subsidiary Mid Pac Petroleum, LLC would likely be anticompetitive... Read More

Penalties: N/A
Respondent: Complete Merchant Solutions, LLC
Violation: CMS produced no responsive emails. Over the next few months, FTC counsel, including counsel in the FTC’s Office of General Counsel, engaged in a series of discussions with CMS to cure the company’s deficient production. These discussions uncovered unexpected obstacles, including that CMS had not properly run the FTC search terms, omitting some and using incorrect versions for others, further delaying CMS’s production. Ultimately, CMS did not substantially complete its production of documents and interrogatory responses to the 2017 CID until August 2018, a year after receiving the 2017 CID. CMS never provided the certification of compliance required by the CID and FTC Act. CMS did not file a petition to limit or quash the 2017 CID... Read More

Penalties: N/A
Respondent: James D. Noland, Jr., a/k/a Jay Noland and J.D. Noland, individually and as an officer of Success By Media Holdings Inc. and Success By Media LLC; Lina Noland, individually and as an officer of Success by Media Holdings Inc. and Success By Media LLC; Scott A. Harris, individually and as an officer of Success By Media LLC; Thomas G. Sacca, individually and as an officer of Success By Media LLC; Success By Media Holdings Inc., a corporation, also d/b/a Success By Health and Success By Media; and Success By Media LLC, a limited liability company, also d/b/a Success By Health and Success By Media,
Violation: "Defendants claim that Affiliates likely can replace their job income in six months and become financially free (and never have to work again) in 18 months by working hard and following Defendants' instructions. These claims are false, and, in reality, Defendants have been operating a pyramid scheme since SBH's inception in or about July 2017. Most SBH Affiliates have lost money in the program. SBH' s commission plan emphasizes and incentivizes recruiting new Affiliates over selling products to ultimate users or consumers outside of the organization. SBH's business practices also make it unlikely that Affiliates can meaningfully earn money by selling products to outside customers. Defendants fail to timely ship products to Affiliates and other consumers who place product orders. When those consumers complain to the company, seek a refund from the company, or seek a chargeback through their credit card company, Defendants respond with threats and lawsuits.... Read More

FINRA

11 Enforcement Documents

$78,047.00 in Fines

Penalties: $23,047.00
Respondent: Robert F. Spielgel
Violation: Between October 2016 and December 2017 (the "Relevant Period"), Spiegel excessively traded a customer's account in violation of FINRA Rules 2111 and 2010... Read More

Penalties: $10,000.00
Respondent: Howard Davis
Violation: From December 2014 through February 2016, Davis failed to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable FINRA rules and failed to reasonably enforce the Firm's written supervisory procedures, which required the review of organization and offering expenses and underwriters' compensation of the initial public offering of a Real Estate Investment Trust ("REIT") in which the Firm participated. In so doing, Davis violated FINRA Rules 3110(a) and (b) and 2010... Read More

Penalties: $20,000.00
Respondent: Craig M. Gould
Violation: From August 2012 through December 2014, Gould failed to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable FINRA rules and failed to reasonably enforce the Firm's written supervisory procedures, which required the review of organization and offering expenses and underwriters' compensation of the initial public offering of a Real Estate Investment Trust ("REIT") in which the Firm participated. In so doing, Gould violated NASD Rules 3010(a) and (b) and FINRA Rules 3110(a) and (b) and 2010... Read More

Penalties: $5,000.00
Respondent: Thomas J. Crossett
Violation: Crossett forged his estranged wife's signature on a loan application. As a result, Crossett violated FINRA Rule 2010... Read More

Penalties: $5,000.00
Respondent: Wesley K. Omoto
Violation: Omoto, while associated with Ameritas, falsified records by cutting and pasting signatures of two customers on forms as part of variable annuity transactions, in violation of FINRA Rule 2010. In addition, through his conduct, Omoto caused Ameritas to make and preserve inaccurate books and records in violation of FINRA Rules 4511 and 2010... Read More

Penalties: N/A
Respondent: Christopher R. Barone
Violation: Between December 2016 and July 2017 (the Relevant Period), Barone made misrepresentations to FINRA about the frequency of his supervision of his firm's trade reporting responsibilities, and altered documents that he produced to FINRA. Through this conduct, Barone violated FINRA Rules 8210 and 2010... Read More

Penalties: N/A
Respondent: Kari M. Bracy
Violation: Bracy failed to appear for on-the-record testimony requested pursuant to FINRA Rule 8210. By virtue of this misconduct, Bracy violated FINRA Rules 8210 and 2010... Read More

Penalties: N/A
Respondent: Charles Jonathan Evan
Violation: Evan refused to provide documents and information requested pursuant to FINRA Rule 8210. By virtue of this misconduct, Respondent violated FINRA Rules 8210 and 2010.... Read More

Penalties: $5,000.00
Respondent: Michael Leahy
Violation: From September 18, 2019 through October 8, 2019 (the "Relevant Period"), Leahy failed to reasonably supervise PS, a former registered representative, who, while registered through First Standard, engaged in a pattern of unauthorized trading, using margin without authorization, recommending excessive and otherwise unsuitable transactions, and charging excessive commissions in dozens of customer accounts... Read More

Penalties: $10,000.00
Respondent: Sean P. Waggoner
Violation: Between March 2010 and May 2016, Waggoner participated in eight private securities transactions without providing prior written notice to his firm, in violation of NASD Rule 3040 and F1NRA Rules 3280 and 2010. In addition, between June 2014 and January 2017, Waggoner failed to provide prior written notice to his firm about eight personal brokerage accounts, in violation of NASD Rule 3050(c) and FINRA Rule 2010. ... Read More

Penalties: N/A
Respondent: Zachary Scott Wagner
Violation: In October 2019, Respondent violated FINRA Rules 8210 and 2010 by failing to provide testimony as requested pursuant to FINRA Rule 8210, in connection with an investigation concerning potential misuse of customer funds and involvement in a potential undisclosed outside business activity... Read More

UK-FCA

1 Enforcement Document

£91,000.00 in Fines

Penalties: £91,000.00
Respondent: Hall and Hanley Limited, "HHL"
Violation: After considering representations made to it by HHL, the CMR on 5 March 2019 and acting under regulation 52 of the 2006 Regulations... Read More

CFTC

1 Enforcement Document

$464,300.00 in Fines

Penalties: $434,300.00
Respondent: Propex Derivatives Pty Ltd
Violation: During the Relevant Period, Propex, by and through a Propex trader ("Trader A"),· engaged in thousands of instances of the disruptive trading practice known as "spoofing" (bidding or offering with the intent to cancel the bid or offer before execution) in the E-mini S&P 500 futures contracts traded on the Chicago Mercantile Exchange ("CME"), a futures exchange and designated contract market which is owned and operated by CME Group Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018). ... Read More

SEC

11 Enforcement Documents

$6,492,290.48 in Fines

Penalties: N/A
Respondent: Sergii "Sergey" Grybniak, Opporty International, Inc., and Clever Solution Inc.,
Violation: The SEC's complaint charges Grybniak and Opporty with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Sections 5(a) and (c) of the Securities Act, and also charges Grybniak with aiding and abetting Opporty's violations. The SEC seeks permanent injunctions, conduct-based injunctions prohibiting the offering of digital or other securities, disgorgement plus interest, and civil penalties against Grybniak and Opporty, as well as an officer and-director bar against Grybniak. The complaint also names Clever Solution Inc., another entity controlled by Grybniak, as a relief defendant... Read More

Penalties: $2,049.84
Respondent: Benjamin L. Bunker, Esq.
Violation: The Nominee and the Colleague engaged in unregistered offers and sales of Greenway shares, which were not exempt because, with the exception of one note conversion, they had not held the shares for at least one year, and tacking was not available because the sellers of the shares were affiliates. As a result of the conduct above, Bunker willfully and indirectly violated Section 5(a) and 5(c) of the Securities Act. Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) prohibit any person from employing “any device, scheme, or artifice to defraud” or engaging in any “act, practice, or course of business” which operates as a fraud or deceit, in connection with the purchase or sale of a security. Similarly, Sections 17(a)(1) and (a)(3) of the Securities Act prohibit any person from, in the offer or sale of a security, employing “any device, scheme, or artifice to defraud” or engaging in any “transaction, practice, or course of business” which operates as a fraud or deceit. As a result of the conduct described above, Bunker willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder... Read More

Penalties: N/A
Respondent: Jerey P. Carpo and Paulette Carpoff
Violation: "The Carpoffs allegedly promised investors tax credits, lease payments, and profits from the operation of mobile solar generators. In reality, the complaint alleges, most of the generators were never manufactured, and the vast majority of the purported lease revenue paid to investors in fact came from new investor funds. As part of the scheme, the Carpoffs arranged for investors to receive false documents, including financial statements, lease arrangements, and generator certifications. Throughout the scheme, the Carpoffs allegedly siphoned off investor funds and used at least $140 million of investor money to fund their lavish lifestyle, which included 150 luxury and sports cars, dozens of properties, and a share in a private jet service."... Read More

Penalties: N/A
Respondent: Jay Zola Scoratow
Violation: The Commission’s complaint alleged that, in connection with the offer and sale of securities, Respondent, among other things and acting through his various business entities, engaged in a fraudulent scheme. Respondent also, acting through his various business entities and using the mails or other means or instrumentalities of interstate commerce, knowingly provided substantial assistance to others who effected transactions in, or induced or attempted to induce the purchase and sale of, securities while neither he nor those he assisted were registered with the Commission as a broker or dealer or associated with an entity registered with the Commission as a broker or dealer... Read More

Penalties: $6,490,240.64
Respondent: Leonardo Cornide and Jorge Falcon
Violation: Cornide and Falcon owed a fiduciary duty to their client, PSPC, including the duty to disclose all material facts. The existence of a conflict of interest is a material fact that must be fully and fairly disclosed so the client can understand the conflict and have a basis to consent to the conflict or reject it. Cornide and Falcon could not effectively consent on behalf of PSPC to the undisclosed conflicts presented by either PSPC investing in the note with Silverback or Silverback making loans to Cornide and Falcon because they stood to benefit from these transactions. PSPC did not have an independent board or managers to consent to transactions that involved conflicts of interest. As a result of the conduct described above, Cornide and Falcon violated Section 206(2) of the Advisers Act... Read More

Penalties: N/A
Respondent: Jeffrey P. Carpoff and Paulette Carpoff
Violation: The Defendant Carpoffs were the architects and the chief beneficiaries of this fraudulent scheme. Jeff and Paulette Carpoff each knowingly hid, and oversaw others in hiding, from investors that DC Solutions had not manufactured their Generators and that DC Distribution generated minimal amounts of legitimate lease revenue. They did so by committing and/or overseeing a variety of deceptive acts including making false statements in investment contracts with investors, funneling investor funds through DC Solutions to DC Distribution to pay earlier investors, causing the creation of bogus commissioning reports for the Generators, directing that false financial statements be prepared for DC Solutions and DC Distribution, and creating and touting fraudulent leasing arrangements with end-users of the Generators. Defendants have violated the antifraud provisions of the Securities Act and the Exchange Act... Read More

Penalties: N/A
Respondent: Scott Charles Messier
Violation: The Commission’s complaint alleged that, in connection with the offer and sale of securities, Respondent, among other things and acting through his various business entities, engaged in a fraudulent scheme. Respondent also, acting through his various business entities and using the mails or other means or instrumentalities of interstate commerce, effected transactions in, or induced or attempted to induce the purchase and sale of, securities while he was neither registered with the Commission as a broker or dealer nor while he was associated with an entity registered with the Commission as a broker or dealer... Read More

Penalties: N/A
Respondent: Medigreen Holdings Corporation (a/k/a Rapid Fire Marketing, Inc.),
Violation: Respondent is delinquent in its periodic filings with the Commission, has repeatedly failed to meet its obligation to file timely periodic reports, and failed to heed a delinquency letter sent to it by the Division of Corporation Finance requesting compliance with its periodic filing obligations or, through its failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letter. As a result of the foregoing, the Respondent failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder... Read More

OCC

3 Enforcement Documents

$55,000,000.00 in Fines

Penalties: $37,500,000.00
Respondent: Carrie Tolstedt Former Head of the Community Bank; Claudia Russ Anderson Former Community Bank Group Risk Officer; James Strother Former General Counsel; David Julian Former Chief Auditor; Paul McLinko Former Executive Audit Director; Wells Fargo Bank, N.A. Sioux Falls, South Dakota
Violation: Violated laws and regulations, including: 18 U.S.C. §§ 656, 1005, 1028(a)(7), 1344(2); 15 U.S.C. § 45(a); 12 C.F.R. § 1030.4(a) (Regulation DD/Truth in Savings) and 12 C.F.R. § 1026.12(a) (Regulation Z/Truth in Lending); engaged in unsafe or unsound practices in conducting the affairs of the Bank; and breached her fiduciary duties to the Bank... Read More

Penalties: $17,500,000.00
Respondent: John Stumpf Former Chairman and Chief Executive Officer Wells Fargo Bank, N.A. Sioux Falls, South Dakota
Violation: Respondent failed to adequately supervise the Head of the Community Bank with respect to the Community Bank’s sales practices, which allowed the Community Bank’s systemic sales practices misconduct problem to continue for many years. Respondent failed to sufficiently challenge the business model of the Community Bank during his tenure as Chairman and Chief Executive Officer. Respondent neglected to adequately inform himself about the reasonableness of the sales goals and pressure in the Community Bank, the impact of those goals, and the adequacy of controls to detect and prevent sales practices misconduct. By reason of the foregoing conduct, Respondent’s oversight failed to prevent the Bank from recklessly engaging in unsafe or unsound practices, and grounds exist for the OCC to initiate these actions pursuant to 12 U.S.C. § 1818(e) and (i)... Read More

Penalties: N/A
Respondent: Hope Hardison Former Chief Administrative Officer and Human Resources Director Wells Fargo Bank, N.A. Sioux Falls, South Dakota
Violation: From 2012 to October 2016, Respondent had oversight responsibilities for the EthicsLine program—a confidential hotline for Bank employees to report improper behavior— which was one of the Bank’s primary controls for detecting sales practices misconduct. Respondent failed to adequately oversee this critical control. With respect to Community Bank employee complaints supplied to Respondent regarding sales practices misconduct and related matters, under the Bank’s decentralized model, Respondent forwarded them to the Human Resources organization of the Community Bank and did not follow up on their disposition... Read More

X