Weekly Enforcement Action Tracker (July 15 – July 20)

Financial Enforcement Action Summary

Weekly Enforcement Action Tracker

FINRA

11 Enforcement Documents

$1,660,195.59 in Fines

Penalties: N/A
Respondent: Steven F. Coffey
Violation: In June 2018, Coffey failed to respond to FINRA’s request for documents and information, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Clarence L. McGill
Violation: McGill acknowledges that he received FINRA’s requests and will not produce the information requested at any time. By refusing to produce information as requested pursuant to FINRA Rule 8210, McGill violates FINRA Rules 8210 and 2010… Read More

Penalties: $6,247.25
Respondent: Kris Lynn Lewis
Violation: Providing false information to FINRA, and providing false information on a firm compliance questionnaire… Read More

Penalties: N/A
Respondent: Michael Gilhooly
Violation: During the course of an ongoing examination, Gilhooly refused to appear for on-the-record testimony requested by FINRA pursuant to FINRA Rule 8210. As a result, Gilhooly violated FINRA Rules 8210 and 2010… Read More

Penalties: $10,000.00
Respondent: Leslie George Markus, Jr.
Violation: Respondent entered a series of 11 unauthorized mutual fund purchases in the account of one customer, misled his firm about the trades, and included inaccurate information in response to a FINRA request for information… Read More

Penalties: N/A
Respondent: Charles Lewis Bloom
Violation: Bloom refused to appear for testimony as requested by F1NRA staff pursuant to FINRA Rule 8210. As a result, Bloom violated FINRA Rules 8210 and 2010… Read More

Penalties: $10,000.00
Respondent: KCD Financial, Inc.
Violation: Between July 15, 2011 and April 3, 2017, KCD Financial failed to timely inspect six of its registered branch offices and two of its non-registered branch office locations, in violation of FINRA Rules 3110(c)(1)(B), 3110(c)(1)(C) and 2010… Read More

Penalties: N/A
Respondent: Christopher Matthew Parr
Violation: In December 2014 and August 2016, while associated with KCD Financial, Parr borrowed money via written promissory notes from T & DC, a married couple who were customers of the Firm. Parr did not provide notice of the loans to the Firm. In January 2017, Parr and T & DC agreed to exchange the debt — at that time $850,000 — for shares in an entity, Parr controlled. Parr participated in this securities transaction also without approval from or notice to his Firm. By virtue of the foregoing, Parr violated FINRA Rules 3240, 3280 and 2010… Read More

Penalties: N/A
Respondent: Sebastian Jimenez
Violation: From November 2013 to April 2014 (the “Relevant Period”), Jimenez knowingly provided inaccurate answers to the Bank’s compliance department regarding certain deposits made by his Firm customer into his Bank accounts, preventing further review of the customer’s potentially suspicious account activity. In doing so, Jimenez violated FINRA Rule 2010… Read More

Penalties: $1,627,701.09
Respondent: Darrel Michael Cruz, Timothy Brian DiBlasi, John Joseph Hurry and Scottsdale Capital Advisors Corporation
Violation: Scottsdale Capital Advisors sold unregistered and nonexempt microcap securities, failed to establish and maintain supervisory systems, including written supervisory procedures, that were reasonably designed to prevent the sale of unregistered microcap securities, and failed to supervise, and adequately respond to red flags indicative of, the unlawful sale and distribution of microcap securities… Read More

Penalties: $6,247.25
Respondent: Kris Lynn Lewis
Violation: (1) Willfully failing to timely amend her Form U4, (2) Providing false information to FINRA; and (3) Providing false information on a firm compliance questionnaire. Respondent is ordered to pay costs and is subject to a statutory disqualification… Read More

FTC

3 Enforcement Documents

$19,700,000.00 in Fines

Penalties: $19,700,000.00
Respondent: Uber
Violation: Uber exaggerated the yearly and hourly income drivers could make in certain cities and states and misled prospective drivers about the terms of its vehicle financing options… Read More

Penalties: TBD
Respondent: Veterans of America
Violation: Since at least 2012, Defendant Travis Deloy Peterson (“Peterson”) has created and used a series of corporate entities and fictitious business names that sound like veterans’ charities (collectively, “fake charities”) to operate a telemarketing scheme that uses robocalls to trick generous Americans into giving their vehicles or other valuable property to him… Read More

Penalties: TBD
Respondent: Help the Vets, Inc.
Violation: Sham charity Help the Vets, Inc., promised potential donors that their contributions would assist wounded and disabled military veterans. Generous Americans responded to the call, donating more than $11 million in cash from 2014 through 2016. The vast majority of these funds- more than 95%-were not used to help veterans. Instead, donations almost entirely benefitted the founder and president of Help the Vets, Inc., Defendant Neil G. Paulson, Sr., and the for-profit fundraisers he hired. Any benefit to veterans was merely incidental… Read More

CFPB

2 Enforcement Documents

$32,022,298.00 in Fines

Penalties: $2,022,298.00
Respondent: Triton Management Group, Inc.
Violation: Triton deceived Mississippi consumers in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and violated the disclosure requirements of the Truth in Lending Act by failing to disclose thousands of dollars in finance charges associated with their auto title loans. The Bureau also found that Triton used advertisements that failed to disclose the annual percentage rate and other information required by the Truth in Lending Act… Read More

Penalties: $30,000,000.00
Respondent: TCF National Bank
Violation: When attempting to obtain this consent, TCF obscured the fees it charged and made consenting to overdraft fees seem mandatory for new customers to open an account… Read More

SEC

40 Enforcement Documents

$89,750,874.84 in Fines

Penalties: $73,284,828.21
Respondent: Deutsche Bank Trust Company Americas
Violation: Contrary to how pre-release transactions were supposed to work, DBTCA at times pre-released ADRs to Pre-Release Brokers in circumstances where DBTCA was negligent with respect to whether the Pre-Release Brokers, or the parties on whose behalf the pre-released ADRs were being obtained, actually beneficially owned the corresponding number of ordinary shares, as they represented to DBTCA in their Pre-Release Agreements. The result of this conduct was the issuance of ADRs that in many instances were not backed by ordinary shares as required by the ADR facility. This conduct violated Section 17(a)(3) of the Securities Act… Read More

Penalties: TBD
Respondent: Ross McLellan
Violation: Engaging in a scheme to defraud customers of State Street’s Transition Management line of business. McLellan was found guilty of applying secret commissions to billions of dollars of securities trades executed on behalf of these customers… Read More

Penalties: $8,357,695.00
Respondent: Joseph Meli, 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: $572,500.00
Respondent: Houston American Energy Corp., et al.
Violation: In the orders, the Commission found that the Respondents violated the federal security laws… Read More

Penalties: TBD
Respondent: SEC Complaint – Gannon Giguiere et al.
Violation: This case concerns a series of fraudulent schemes conducted by the Defendants in the common stock of three penny-stock issuers, that netted more than $10 million in illicit proceeds… Read More

Penalties: $260,000.00
Respondent: Norman M.K. Louie and Mount Kellett Capital Management LP
Violation: Louie caused EXXI’s misleading and inaccurate Form 8-K disclosure. Louie also failed to disclose the loan to Mount Kellett, causing the firm’s failure to disclose to its clients the conflict of interest arising from the loan… Read More

Penalties: TBD
Respondent: Gannon Giguiere et al.
Violation: An alleged series of microcap fraud schemes that were foiled by FBI undercover work and an SEC trading suspension… Read More

Penalties: TBD
Respondent: SEC Complaint – Moddha Interactive, Inc., Marianne Veronika Sandor, Edward Michael Porrazzo, and Spar Street
Violation: An ongoing offering fraud, where the defendants have promoted a fake technology and illusory prospects for its commercial success to enrich themselves with investors’ funds… Read More

Penalties: TBD
Respondent: Mark E. Burns, Robert W. Murray
Violation: Fraud charges against a second defendant in connection with a scheme to manipulate the price of Fitbit securities through false regulatory filings… Read More

Penalties: TBD
Respondent: Cornelius Peterson
Violation: Respondent pled guilty to one count of investment adviser fraud in violation of 15 U.S.C. §§ 80(b)-6 & 10b-17, one count of conspiracy in violation of 18 U.S.C. § 371, and three counts of bank fraud in violation of 18 U.S.C. §1344 before the United States District Court for the District of Massachusetts… Read More

Penalties: TBD
Respondent: Joseph Pinkney Davis III
Violation: Davis, acting on behalf of himself and DWM, engaged in conduct in violation of the South Carolina Uniform Securities Act of 2005 when he recommended to one or more South Carolina clients private placements not suitable or appropriate for the clients given the clients’ investment objectives and risk profiles… Read More

Penalties: $75,000.00
Respondent: New Silk Route Advisors, L.P.
Violation: Since NSR registered with the Commission in 2012, it has failed to timely distribute annual audited financial statements to the investors in the NSR Funds in violation of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “custody rule.”… Read More

Penalties: TBD
Respondent: SEC Complaint – John Geraci
Violation: From approximately June 2015 through September 2016, Geraci engaged in a scheme to defraud prospective investors and his clients through a new fund he created in March 2015, the Meridian Matrix Long Short Equity Fund, LP… Read More

Penalties: $37,120.71
Respondent: Jay C. Lake, CPA
Violation: Lake failed to comply with PCAOB requirements relating to (1) client acceptance and continuance; (2) obtaining a sufficient understanding of the issuer; (3) performing sufficient procedures to identify the existence of related party transactions that should have been disclosed in the financial statements; and (4) maintaining sufficient audit documentation… Read More

Penalties: $1,250,000.00
Respondent: BGC Financial, L.P.
Violation: These proceedings arise out of BGC’s violations of the books and records provisions of the Exchange Act. First, in June of 2014, BGC deleted audio files for the recorded lines of eight registered representatives that were responsive to requests from the Commission staff for these records… Read More

Penalties: TBD
Respondent: John Geraci
Violation: Perpetuating lies about his portfolio manager’s investment performance and assets under management, and for stealing approximately $1 million of client funds… Read More

Penalties: N/A
Respondent: Koorosh “Danny” Rahimi
Violation: From approximately March 2016 until approximately February 2017, and violated Section 5(c) of the Securities Act and Section 15(a) of the Exchange Act by offering to sell unregistered bonds issued by the Alta Vista Companies… Read More

Penalties: TBD
Respondent: SEC Complaint – Mark E. Burns, Robert W. Murray
Violation: This matter involves defendant Mark E. Burns’ scheme to fraudulently manipulate the price of Fitbit, Inc. securities by filing false information on the Commission’s public database and to profit from the resulting market impact of this false filing by trading the company’s securities before and after the false filing… Read More

Penalties: N/A
Respondent: James M. Unger
Violation: Unger embezzled funds from [the broker-dealer customer’s] accounts without her knowledge and consent, in addition to soliciting loans from [the broker-dealer customer]. Which Unger never intended to repay and did not repay, to enrich himself and pay for his own personal expenses… Read More

Penalties: TBD
Respondent: SEC Complaint – Temenos Advisory, Inc., and George L. Taylor
Violation: From 2014 through 2017, Temenos and Taylor defrauded their advisory clients and prospective clients by steering the clients into unsuitable investments and by hiding commissions and other financial incentives that Temenos and Taylor were pocketing, on top of the advisory fees that the clients were paying for supposedly unbiased financial advice. Temenos and Taylor repeatedly downplayed or concealed risks, and overstated potential gains, associated with a series of illiquid private placements that they advised their clients and prospective clients to invest in… Read More

Penalties: TBD
Respondent: Temenos Advisory, Inc., and George L. Taylor
Violation: While Temenos and Taylor charged advisory fees for unbiased financial advice, they allegedly concealed from their clients the high commissions they were pocketing from these risky and unsuitable investment recommendations, including cash and ownership stakes in the private companies they recommended, and fraudulently misled clients about the risks and prospects of the investments… Read More

Penalties: N/A
Respondent: Middlecove Capital, LLC and Noah L. Myers – Distribution Plan
Violation: From approximately October 2008 through February 2011 (the “relevant period”), Myers engaged in fraudulent trade allocation – “cherrypicking” – at MiddleCove… Read More

Penalties: $1,250,140.00
Respondent: Middlecove Capital, LLC and Noah L. Myers
Violation: From approximately October 2008 through February 2011 (the “relevant period”), Myers engaged in fraudulent trade allocation – “cherry-Picking” – at MiddleCove… Read More

Penalties: TBD
Respondent: Moddha Interactive, Inc., Marianne Veronika Sandor, Edward Michael Porrazzo, and Spar Street
Violation: Sandor and Porrazzo told investors that Moddha Interactive had a valuable portfolio of patents for a supposed 3-D technology that can be used with tablet devices. This was false because Moddha Interactive’s patents had expired and were worthless, and the technology they promoted either did not exist or was developed by other, unrelated companies… Read More

Penalties: $440,000.00
Respondent: John D. Schiller, Jr.
Violation: Hiding more than $10 million in personal loans that he obtained from company vendors and a candidate for Energy XXI’s board… Read More

Penalties: N/A
Respondent: SEC Complaint – John D. Schiller, Jr.
Violation: Schiller obtained $7.5 million in undisclosed loans from several outside vendors of EXXI in exchange for awarding these vendors with EXXI business. Schiller failed to disclose these loans in connection with EXXI’s October 10, 2014, definitive proxy statement that did not disclose EXXI’s business with those vendors as related-party transactions… Read More

Penalties: TBD
Respondent: Kimberly Pine Kitts
Violation: Defrauding multiple clients by stealing over three million dollars from their investment and retirement accounts… Read More

Penalties: $31,028.00
Respondent: Centor Energy Inc. and Frederick DaSilva
Violation: Made numerous false and misleading statements about the amount of oil that Centor could expect to recover from certain land leases, about the relationship to Centor that certain individuals who sold Centor its land leases had, and about a secret agreement by DaSilva to purchase a large amount of Centor shares from prior management… Read More

Penalties: $50,000.00
Respondent: Steven J. Barber and Larry Lee Arrowood
Violation: Misrepresented that Oakridge had received $250,000 in “immediate booked orders” and more than $20 million in “follow-on commitments” for its “state-of-the-art” lithium golf cart batteries, and had “existing pipeline orders” of $24 million for its batteries… Read More

Penalties: $80,000.00
Respondent: Michael Devlin
Violation: These proceedings concern Devlin’s failure to disclose a material conflict of interest and obtain client approval of a transaction in which he had a conflict of interest… Read More

Penalties: TBD
Respondent: SEC Complaint – Steven J. Barber and Larry Lee Arrowood
Violation: From at least September 2015 through at least March 2016m Defendants Stephan J. Barber and Larry Lee Arrowood (collectively “Defendants”) made material misstatements and omissions in at least six press releases issued by Oakridge Global Energy Solutions, Inc. which was a Palm Bay, Florida based company that purported to develop and manufacture lithium batteries… Read More

Penalties: TBD
Respondent: SEC Complaint – Kimberly Pine Kitts
Violation: Over the course of several years she engaged in various schemes to defraud her clients. These schemes included: (1) forging withdrawal requests and misappropriating clients’ variable annuity funds; (2) forging wire and check requests and misappropriating clients’ brokerage account funds; and (3) misleading a client to withdraw funds from a retirement account and secretly directing those funds to the Defendant’s bank account… Read More

Penalties: TBD
Respondent: SEC Complaint – Centor Energy Inc. and Frederick DaSilva
Violation: From late 2013 through early 2014, DaSilva, the CFO and later CEO and President of Centor, made numerous materially false and misleading statements, and omitted certain material facts, about Centor’s oil reserves, revenue prospects, and business dealings… Read More

Penalties: TBD
Respondent: SEC Complaint – Edward A. Young and Guardians Trustee, LLC
Violation: From approximately November 2016 through February 2018, Defendants promised potential investors, who were members of an online ministry, 400% returns through the operation of a supposed “Private Banking Facility” (“PBF”). Defendants raised at least $170,000 from ten investors, many of them elderly, for the PBF program using a website (www.PerfectLight.us), in-person information sessions, and other offering materials… Read More

Penalties: $2,085,044.00
Respondent: Bhushan Dandawate
Violation: Dandawate aided and abetted a fraud perpetrated by Quadrant 4 System Corp. (“QFOR”), Nandu Thondavadi, and Dhru Desai by falsely claiming in bank documents that he controlled ten entities that were, in reality, controlled by QFOR, Thondavadi, and Desai, and by allowing QFOR to use those bank accounts for various fraudulent purposes… Read More

Penalties: $179,253.00
Respondent: Edward A. Young and Guardians Trustee, LLC
Violation: Between November 2016 and February 2018, Edward A. Young and his wholly-owned entity, Guardians Trustee, LLC, fraudulently raised money from members of an online ministry by promising returns of 400% through operation of a purported private banking facility, but actually misappropriated investor funds to pay for Young’s personal expenses, another individual’s child support, and start-up costs for an unrelated entity… Read More

Penalties: TBD
Respondent: SEC Complaint – Bhushan Dandawate
Violation: From 2012 through 2016, Thondavadi and Desai deliberately misreported QFOR’s financial performance by, directly or indirectly, making false accounting entries in QFOR’s books, creating phony supporting documentation as back-up for such false entries, and providing fraudulent documents to QFOR’s outside auditors in connection with their reviews and audits of QFOR’s financial statements… Read More

Penalties: $1,648,265.92
Respondent: Deutsche Bank Securities Inc.
Violation: Since at least April 2012 until approximately June 2015, DBSI received from PreRelease Brokers pre-released ADRs that had been issued by Depositaries where neither the PreRelease Brokers nor DBSI had taken reasonable steps to satisfy the Pre-Release Brokers’ obligations under the Pre-Release Agreements… Read More

Penalties: $150,000.00
Respondent: Beverly Hills Wealth Management, LLC and Margaret Mulligan Black (Aka Margaret Mulligan Scott)
Violation: In April 2016, BHWM and Black withheld prepaid, unearned advisory fees totaling $131,000 from 63 departing clients who requested terminating their advisory relationship with BHWM despite representations made in its Form ADV brochures and advisory agreements… Read More

Penalties: N/A
Respondent: Jefferey A. Gordon
Violation: Respondent, while neither registered as a broker nor associated with a registered broker-dealer, solicited many investors, made valuations as the merits of the securities, handled the investors’ funds, and hired and trained TCEC’s salespeople… Read More

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