Weekly Enforcement Action Tracker (July 01 – July 06)

Financial Enforcement Action Summary

NYSE

Penalties: TBD
Respondent: Kevin Kean Lodewick Jr.
Violation: Lodewick received dozens of undisclosed cash kickbacks from an employee of a third-party broker-dealer (the “BD”) in return for routing millions of dollars of orders to that same employee (the “BD Employee”) while employed at Quattro… Read More

CA-DBO

8 Enforcement Documents

$3,400.00 in Fines

Penalties: N/A
Respondent: Michelle Denise Robinson
Violation: The Commissioner asserts that she is justified under Financial Code section 22109.1 to deny the issuance of an MLO license to Robinson… Read More

Penalties: $3,400.00
Respondent: Sentra Funding, LLC
Violation: It is the intention and desire of the Commissioner and Sentra Funding (collectively, the Parties) to resolve this matter without the necessity of a hearing or other litigation for the purpose of judicial economy and experience, and to avoid the expense of a hearing, and possible further court proceedings… Read More

Penalties: N/A
Respondent: Ory Ramirez
Violation: The Commissioner of Business Oversight (Commissioner) proposes to issue an order denying the Mortgage Loan Originator (MLO) application of Respondent Ory Ramirez… Read More

Penalties: N/A
Respondent: Sentra Funding, LLC
Violation: Under section 22712 of the Financial Code, Sentra Funding, LLC is hereby ordered to desist and refrain from acting as a broker in the state of California without first obtaining a license from the Commissioner of Business Oversight, or otherwise being exempt… Read More

Penalties: N/A
Respondent: Angelita Arpilleda Ramos
Violation: Ramos has engaged in the business of a finance lender and/or broker without having first obtained a license from the Commissioner in violation of Financial Code section 22100… Read More

Penalties: N/A
Respondent: Platinum Capital Services, Platinum Capital Financial, Platinum Capital Accounting and Tax Services, David Gene Neugart
Violation: Doing business as Platinum Capital Financial, and also doing business as Platinum Capital Accounting and Tax Services, conducted business as an investment adviser in this state without first securing from the Commissioner a certificate, authorizing them to do so, in violation of section 25230 of the CSL… Read More

Penalties: N/A
Respondent: LoanMe, Inc.
Violation: The April 2015 Regulatory Exam disclosed that from at least 2013 through 2015, LoanMe compensated unlicensed persons or companies who were not employees regularly employed at LoanMe’s licensed place of business for soliciting or accepting applications for loans… Read More

Penalties: N/A
Respondent: Vanguard Equities Group, Sean O’Neal
Violation: “The Commissioner is of the opinion that the promissory note convertible to stock issued by a solar company and offered by Sean O’Neal, also known as Sean Ryan, and Vanguard Equities Group are securities subject to qualification under the Corporate Securities Law of 1968 (Corp. Code, § 25000 et seq.) that have been offered or sold without first being qualified in violation of Corporations Code section 25110.”… Read More

FINRA

12 Enforcement Documents

$198,276.60 in Fines

Penalties: N/A
Respondent: Bradley Joseph Tennison
Violation: In June 2018, after initially cooperating with FINRA’s investigation, Respondent refused to appear and provide on-the-record testimony in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Abraham Biderman
Violation: In connection with its investigation into Biderman’s potential participation in a private securities transaction, on April 30, 2018, FINRA staff sent Biderman a request for information pursuant to FINRA Rule 8210. Biderman did not provide to staff the information requested. On May 30, 2018, Biderman’s counsel informed FINRA staff that Biderman would not respond to staff’s request. By virtue of the foregoing, Biderman violated FINRA Rules 8210 and 2010… Read More

Penalties: $95,000.00
Respondent: The Leaders Group, Inc.
Violation: During the period of May 2012 through September 2014 and pertained to consolidated reports, internal inspections, heightened supervision, outside business activities, email, variable annuities, and communications with the public… Read More

Penalties: N/A
Respondent: Shakela Carter
Violation: Respondent refused to appear for on-the-record testimony after several requests by the Department of Enforcement, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $25,000.00
Respondent: Mizuho Securities USA LLC
Violation: The firm had incorrectly reported as short exempt riskless principal transactions when facilitating customer buy orders, had supervisory deficiencies, and had deficiencies in its policies, procedures, and supervision related to Rule 201(b) of Regulation SHO… Read More

Penalties: $5,000.00
Respondent: Jeffrey Robert Conklin
Violation: Conklin engaged in a pattern of check kiting over a two and a half month period, thereby violating FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Junying Yan
Violation: From 2013 to 2015, Yan engaged in work as a career coach through an online career coaching company for approximately $600-800 in compensation, without disclosing this activity to her employing FINRA-regulated broker-dealer, in violation of FINRA Rules 3270 and 2010… Read More

Penalties: $5,000.00
Respondent: Daniel P. Capeless
Violation: On 30 occasions between August 2012 and March 2016, Capeless falsified expense reports to obtain reimbursement for legitimate business expenses for which he lost or did not obtain receipts. As a result, Capeless falsified firm records in violation of FINRA Rule 2010… Read More

Penalties: $60,391.44
Respondent: Robert R. Tweed
Violation: Tweed negligently made false and misleading statements to customers to induce them to invest in his hedge fund. He misled the investors about the fees and costs they would have to pay and the persons and entities who would control the fund and its trading… Read More

Penalties: TBD
Respondent: Craig Scott Hartman
Violation: During the period of June 22, 2012 through July 27, 2015, Hartman willfully failed to disclose four unsatisfied federal tax liens filed against him in the total amount of $206,409.54 via the filing of an amended Uniform Application for Securities Industry Registration or Transfer (“Form U4”), in violation of Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010… Read More

Penalties: TBD
Respondent: Craig Scott Hartman
Violation: During the period of June 22, 2012 through July 27, 2015, Hartman willfully failed to disclose four unsatisfied federal tax liens filed against him in the total amount of $206,409.54 via the filing of an amended Uniform Application for Securities Industry Registration… Read More

Penalties: $2,885.16
Respondent: John Anthony Vedovino
Violation: Converting funds and failing to provide testimony and documents… Read More

FTC

Penalties: $214,000.00
Respondent: Cedarcide
Violation: The company didn’t have evidence to support its claim that its products “Cedarcide Original” and “Best Yet” could stop and prevent bed bug infestations using cedar oil… Read More

Penalties: TBD
Respondent: Triangle Media Corporation
Violation: Deceptively advertising free trial offers and not only charging consumers full-price for the trial product but also enrolling them inexpensive, ongoing continuity plans without their knowledge or consent… Read More

SEC

20 Enforcement Documents

$53,201,657.00 in Fines

Penalties: $75,000.00
Respondent: Axesstel, Inc., et al.
Violation: Aided and abetted by Director of Contract Fulfillment and Sales Operations Steven R. Sabin, inflated the company’s revenues by prematurely recognizing revenue on sales and by improperly recognizing revenue despite entering into undisclosed side agreements that relieved customers of payment obligations… Read More

Penalties: N/A
Respondent: SEC Complaint – Axesstel, Inc., et al.
Violation: From at least the fourth quarter of 2012 through the first quarter of 2013, three executives, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of Axesstel, Inc. (“Axesstel”) – a Southern California company that sold mobile telecommunications devices and security systems to customers in Europe, the Middle East, and Africa – engaged in fraudulent accounting practices that materially inflated Axesstel’s revenue by $10.5 million (or 66%) in the fourth quarter of 2012 and $3.9 million (or 38%) in the first quarter of 2013… Read More

Penalties: TBD
Respondent: Sudhakar Reddy Bonthu
Violation: Equifax software engineering manager Sudhakar Reddy Bonthu traded on confidential information he received while creating a website for consumers impacted by a data breach… Read More

Penalties: $8,181,838.00
Respondent: Beam Inc., n/k/a Beam Suntory Inc.
Violation: Senior executives at Beam India directed schemes using its third-party sales promoters, distributors and other third parties in connection with sales, promotions, distribution, and other commercial activities… Read More

Penalties: $110,858.00
Respondent: Malachi Financial Products, Inc., et al.
Violation: Defrauding the City of Rolling Fork, Mississippi and failing to disclose certain related-party payments in connection with a municipal bond offering… Read More

Penalties: $2,500,000.00
Respondent: KBR, Inc.
Violation: On May 30, 2014, KBR filed a Form 10-K/A that: (a) restated and amended earnings in its consolidated financial statements for the fiscal year ended December 31, 2013, and its unaudited consolidated financial statements for the third quarter of 2013; (b) reduced its disclosed backlog as of the fiscal year ended December 31, 2013; and (c) identified a material weakness in its internal control over financial reporting… Read More

Penalties: TBD
Respondent: SEC Complaint – Sudhakar Reddy Bonthu
Violation: Defendant Sudhakar Reddy Bonthu (“Bonthu”) committed securities fraud by engaging in illegal insider trading in the securities of Equifax Inc. (“Equifax” or “the company”). Bonthu was an Equifax employee from September 2003 until March 2018… Read More

Penalties: $1,750,000.00
Respondent: The Dow Chemical Company
Violation: From 2011 through 2015, and in proxy statements reporting on those years, Dow did not ensure that approximately $3 million in executive perquisites were adequately evaluated and disclosed as “other compensation” in the Compensation Discussion & Analysis (“CD&A”) section of the annual proxy statements… Read More

Penalties: N/A
Respondent: SEC Complaint – United Development Funding III, LP, United Development Funding IV, Hollis M. Greenlaw, Benjamin L. Wissink, Theodore F. Etter, Cara D. Obert, and David A. Hanson
Violation: From at least January 2011 through December 2015 (the “Relevant Period”), UDF used money from a newer fund to pay distributions to investors in an older fund, without adequately disclosing the use of funds and the nature and status of loans made to developers… Read More

Penalties: TBD
Respondent: Edward Lee Moody Jr., et. al.
Violation: Moody invested none of the $4.95 million, but instead, he used the investor funds to pay off earlier investors, to fund his own speculative trading, and for personal expenses… Read More

Penalties: $8,275,000.00
Respondent: United Development Funding III, LP, United Development Funding IV, Hollis M. Greenlaw, Benjamin L. Wissink, Theodore F. Etter, Cara D. Obert, and David A. Hanson
Violation: Misleading investors by failing to disclose that it could not pay its distributions and was using money from a newer fund to pay distributions to investors in the older fund. The SEC also charged a fifth executive for allegedly signing false SEC filings… Read More

Penalties: TBD
Respondent: SEC Complaint – Molina
Violation: Between October 25th and October 31st, 2016, Molina violated the federal securities laws by trading in the securities of his employer, ClubCorp Holdings Inc. (“ClubCorp” or the “Company”) based on material, non-public information… Read More

Penalties: $29,823,804.00
Respondent: Credit Suisse Group AG
Violation: Between at least 2007 and 2013, Credit Suisse provided valuable employment to the relatives and friends of certain foreign government officials in the Asia-Pacific region (“APAC”) as a personal benefit to the requesting officials in order to obtain or retain investment banking business or other benefits for the bank… Read More

Penalties: $117,690.00
Respondent: Molina
Violation: Despite having signed ClubCorp’s securities trading policies, which prohibited him from buying or selling ClubCorp securities at any time he had “material non-public information concerning the [c]ompany,” Molina subsequently purchased shares of the company’s publicly-traded stock… Read More

Penalties: TBD
Respondent: SEC Complaint – The Owings Group, LLC, et al.
Violation: This is a civil enforcement action involving an offering fraud orchestrated by Defendant Mark Johnson, a convicted felon and recidivist violator of the federal securities laws. Johnson, acting through entities that he controlled… Read More

Penalties: TBD
Respondent: The Owings Group, LLC, et al.
Violation: From 2013 until at least 2014, Mark Johnson, a convicted felon, orchestrated and operated a fraudulent investment scheme with the assistance of three salesmen, Kevin Drost, Brian Koslow and David Waltzer, who were paid substantial sales commissions from the principal invested… Read More

Penalties: $248,000.00
Respondent: Daniel Burgess
Violation: Burgess and Tucker Financial entered into an agreement with a shareholder of a company called Respect Your Universe, Inc. (a/k/ an RYU Apparel, Inc.) to sell 520,000 shares of her stock in that company using best efforts to obtain the highest price… Read More

Penalties: $1,915,348.00
Respondent: Roger S. Zullo
Violation: While acting as a broker-dealer agent and investment adviser representative of LPL, Zullo used false suitability information on annuity and account applications and documentation in selling unsuitable and disproportionately large variable annuities to his clients… Read More

Penalties: $184,119.00
Respondent: Michael Johnson
Violation: In October and November of 2015, Johnson misappropriated material nonpublic information about the proposed acquisition from his relative (“Individual A”), a certified public accountant who was providing personal tax accounting services to a senior officer at Airgas with access to material nonpublic information (the “Senior Officer”) during the time of the merger negotiations… Read More

Penalties: $20,000.00
Respondent: Eugene Terracciano
Violation: This matter involves anti-money laundering (“AML”) compliance failures at Aegis Capital Corporation (“Aegis” or “the firm”) by Terracciano, who served as the firm’s AML Compliance Officer (“AML CO”) from September 2013 to approximately September 2015… Read More

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