Financial Enforcement Actions | Week of November 25 to 30

Weekly Enforcement Action Tracker

FTC

4 Enforcement Documents

$1,447,000.00 in Fines

Penalties: $647,000.00
Respondent: Liberty Supply
Violation: Liberty Supply, an office supply scheme, misrepresented prices and quantities, and then demanded payment, requiring consumers to pay hefty shipping and restocking fees to return the unwanted or overpriced products… Read More

Penalties: TBD
Respondent: Apex Capital Group LLC
Violation: The defendants marketed supposedly “free trial” offers for personal care products and dietary supplements online, but then charged consumers the full price of the products and enrolled them in negative option continuity plans without their consent… Read More

Penalties: $800,000.00
Respondent: Health Research Laboratories, LLC
Violation: Deceptively marketing two of their health products, NeuroPlus and BioTherapex. They claimed NeuroPlus would protect the brain against Alzheimer’s disease and dementia, reverse memory loss, and improve memory and cognitive performance. They claimed BioTherapex would treat arthritis, relieve joint and back pain, and cause significant weight loss… Read More

Penalties: N/A
Respondent: CareGroup, Inc., Lahey Health System, Inc.; Seacoast Regional Health System, Inc.; BIDCO Hospital, LLC; and BIDCO Physician, LLC.
Violation: The Commission has voted to close its investigation of a proposed transaction that would bring together general acute care hospitals, a psychiatric hospital, and physicians in eastern Massachusetts… Read More

SEC

13 Enforcement Documents

$1,770,807.50 in Fines

Penalties: N/A
Respondent: Avant Diagnostics, Inc., et al.
Violation: ROI Land failed to comply with Exchange Act Section 13(a) and Rules 13a1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended December 31, 2016. As of August 29, 2018, the company’s stock (symbol “ROII”) was quoted on OTC Link, had six market makers, and was eligible for the “piggyback” exception of Exchange Act Rule 15c2-11(f)(3)… Read More

Penalties: TBD
Respondent: Zev Saltsman, et al.
Violation: Newman and other officers and directors of Xybernaut Corp., signed registration statements for private investment in public equity transactions (PIPE transactions) that were all false and misleading because those registration statements named nominee entities and nominee directors as the control persons and concealed the identify of an investor group that controlled large blocks of Xybernaut’s shares… Read More

Penalties: TBD
Respondent: Ricardo H. Goldman
Violation: Goldman made material misrepresentations and omissions regarding the trading program and his prior disciplinary history, which included permanent antifraud and registration injunctions, and approximately $500,000 in civil penalties, interest, and disgorgement, and a broker-dealer bar… Read More

Penalties: TBD
Respondent: SEC Complaint – Morrie Tobin et al.
Violation: The defendants engaged in a deceptive scheme to sell publicly traded stock to investors. Tobin secretly controlled two public companies: Environmental Packaging Technologies Holdings, Inc. (“Environmental Packaging”) and CURE Pharmaceutical Holding Corp. (“CURE”)… Read More

Penalties: TBD
Respondent: Morrie Tobin et al.
Violation: The defendants arranged to pay a stock promoter to tout the stock of Environmental Packaging while creating the impression that the recommendation came from a neutral third party. Environmental Packaging shares more than doubled, from approximately $1.05 per share to $2.21 per share, during the promotional campaign. Patel, Ledvina, and Lacher allegedly planned to collect a percentage of the proceeds from the unlawful sales… Read More

Penalties: N/A
Respondent: ColorStars Group, et al.
Violation: Intellect Neurosciences 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 March 31, 2016… Read More

Penalties: $1,003,306.11
Respondent: Augustine Capital Management, et al.
Violation: The Respondents caused the Fund to engage in conflicted transactions without disclosure to, or the consent of, the Fund’s investors. Respondents invested in and lent money to two entities in which the ACM owners had an interest. Respondents also lent an ACM owner, Duszynski, money to fund his investment in a business venture with other ACM owners that later failed, saddling the Fund and its investors with the resulting losses… Read More

Penalties: N/A
Respondent: Jared Gabriel Forrester
Violation: Jared Gabriel Forrester was installed as a figurehead to run Tennessee-based Tennstar Energy Group, Inc., formerly known as Black Gold Resources, Inc. He misled investors by failing to disclose that two convicted felons actually were running the company… Read More

Penalties: TBD
Respondent: SEC Complaint – Jared Gabriel Forrester
Violation: Between at least December 2013 and February 2016, Defendant Jared Gabriel Forrester (“Forrester”) was directly involved in a scheme by David R. Greenlee (“Greenlee”) and David A. Stewart, Jr. (“Stewart”) that resulted in the fraudulent offering and sale of at least $15 million of securities to more than 150 investors… Read More

Penalties: $152,725.72
Respondent: Khaled Khaled
Violation: In September 2017, Khaled – a well-known celebrity music producer known as “DJ Khaled” – touted on social media a security that was being offered and sold in an Initial Coin Offering (“ICO”) without disclosing that he was being compensated for giving such security publicity by the entity offering the security. Khaled’s failure to disclose this consideration violated Section 17(b) of the Securities Act, which makes it unlawful for any person to promote a security without fully disclosing the receipt and amount of such consideration… Read More

Penalties: TBD
Respondent: Eric T. Landis et al.
Violation: Eric Landis falsely claimed to third-party media buyers for microcap companies that he would distribute promotional materials for the stocks via email lists with tens of thousands of subscribers. In reality, his distribution lists were a sham… Read More

Penalties: $614,775.67
Respondent: Floyd Mayweather Jr.
Violation: From approximately July 2017 through September 2017 (the “Relevant Period”), Mayweather – a well-known professional boxer – touted on social media three securities that were being offered and sold in Initial Coin Offerings (“ICOs”) without disclosing that he was being compensated for giving such securities publicity by the entities offering the securities. Mayweather’s failure to disclose this compensation violated Section 17(b) of the Securities Act, which makes it unlawful for any person to promote a security without fully disclosing the receipt and amount of such consideration… Read More

Penalties: TBD
Respondent: Ronald Wayne Nabors
Violation: Nabors admitted that, between February 2011 and January 2013, the Management Analyst used two Treasury-issued credit cards to make 54 separate purported purchases of office supplies and equipment from Vision Enterprise totaling approximately $123,251. Nabors further admitted that he made 55 separate payments to the Management Analyst totaling approximately $94,661 and retained the remaining approximately $28,590 for his personal use… Read More

FINRA

15 Enforcement Documents

$5,902,092.58 in Fines

Penalties: TBD
Respondent: Samuel Frederik Lek and Lek Securities Corp.
Violation: Between January 2014 and December 2016 (the “Relevant Period”), Lek Securities Corporation (the “Firm” or “LSC”), acting through Samuel Frederik Lek (“Lek”), failed to develop and implement a reasonable Anti-Money Laundering (“AML”) program and supervisory system for one of its lines of business, namely the deposit and trading of low-priced penny stocks (“microcap stocks”) by Firm customers… Read More

Penalties: TBD
Respondent: Yanique Lawrence, Patrick Emanuel Sutherland, and Innovation Partners LLC
Violation: From on or about October 28, 2016 through on or about July 31, 2017 (the Relevant Period), while Patrick Emanuel Sutherland was statutorily disqualified as a result of felony convictions and his FINRA registrations were terminated, Sutherland actively engaged in the management of FINRA member firm Innovation Partners LLC (IP), continued to associate with the firm, and engaged in activities on behalf of IP that required securities registration. As a result, Sutherland violated NASD Membership and Registration Rule 1021, FINRA Rule 2010 and Article III, Section 3(b) of FINRA’s By-Laws… Read More

Penalties: N/A
Respondent: Frank R. Dietrich
Violation: Between 2013 and 2017 (the “Relevant Period”), Dietrich engaged in undisclosed and unapproved private securities transactions totaling more than $10.8 million. Dietrich’s conduct violated NASD Rule 3040 and FINRA Rules 3280 and 2010… Read More

Penalties: $4,000.00
Respondent: Tony Alan Tolene
Violation: Violated FINRA Rules 4511 and 2010 between April and November 2015 by misrepresenting in order tickets that six trades in five different customer accounts were unsolicited, when in fact they were solicited. This caused the Firm’s books and records to be inaccurate… Read More

Penalties: N/A
Respondent: Arturo Alejandro Nunez
Violation: In 2016, FINRA commenced an investigation into whether Nunez, among other things, improperly shared commissions. On April 11, 2018, in connection with the aforementioned investigation, FINRA staff sent a request to Nunez (through his counsel) for on-the-record (“OTR”) testimony pursuant to FINRA Rule 8210. As stated in his counsel’s email and phone call with FINRA staff on June 27, 2018, Nunez acknowledged that he received FINRA’s request and would not appear for OTR testimony at any time… Read More

Penalties: N/A
Respondent: Mark Joseph Flanagan
Violation: In November 2018, Flanagan violated FINRA Rules 8210 and 2010 by refusing to provide on-the-record testimony requested pursuant to FINRA Rule 8210… Read More

Penalties: N/A
Respondent: Sean J. Waters
Violation: Between January 2013 and March 2016 (the “relevant period”), Waters engaged in churning and excessive and unsuitable trading in two accounts held by a senior customer at Financial West. As a result, Waters willfully violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”); Exchange Act Rule 10b-5 promulgated thereunder; and FINRA Rules 2020, 2111, and 2010… Read More

Penalties: $10,000.00
Respondent: Steven Albert Gotter
Violation: From July 2006 through August 2016 (the “Relevant Period”), Gotter and his two registered sales assistants used the same password to access the Finn’s systems. The two sales assistants then regularly used the common password to log into Gotter’s system “Worklist” to evidence Goner’s approval of new accounts by affixing his electronic signature when, in fact, Gotter never reviewed the account documents for the accounts that he purportedly approved… Read More

Penalties: N/A
Respondent: Sean J. Waters
Violation: Between January 2013 and March 2016 (the “relevant period”), Waters engaged in churning and excessive and unsuitable trading in two accounts held by a senior customer at Financial West. As a result, Waters willfully violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”); Exchange Act Rule 10b-5 promulgated thereunder; and FINRA Rules 2020, 2111, and 2010… Read More

Penalties: $5,000.00
Respondent: Steven Moerdyk
Violation: Between June 2004 and March 2018 (the “Relevant Period”), Moerdyk willfully failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (“Form U4”) to disclose 13 tax liens totaling $564,209.71 in violation of Article V, Section 2(c) of the NASD and FINRA By-Laws, FINRA Rule 1122, NASD IM-1000-1, FINRA Rule 2010, and NASD Rule 2110… Read More

Penalties: N/A
Respondent: Noel Carino
Violation: Carino violated FINRA Rules 8210 and 2010 by failing to provide documents and information, requested pursuant to Rule 8210, during the course of an ongoing FINRA investigation… Read More

Penalties: $98,567.00
Respondent: Michael Jason Gamez
Violation: During the period from January 1, 2013 to November 6, 2014 (the “Relevant Period”), Gamez exercised discretion in 15 customer accounts without obtaining prior written authorization from the customers and without having the accounts accepted as discretionary by his employing FINRA member firm. He also executed 4,448 trades in 74 customer accounts without a reasonable basis to believe that the recommendations were suitable for at least some investors. As a result, Gamez violated NASD Conduct Rules 2510(b) and FINRA Rules 2111 and 2010… Read More

Penalties: N/A
Respondent: Fallan E. King
Violation: King indicated that she would not appear for on-the-record testimony that was requested pursuant to FINRA Rule 8210. As a result, King violated FINRA Rules 8210 and 2010… Read More

Penalties: $5,784,525.58
Respondent: Sandlapper Securities LLC, Trevor Lee Gordon, Jack Charles Bixler
Violation: By improperly interposing an affiliate entity when selling the interests, Gordon and Bixler willfully caused the entity to act as an unregistered dealer. Sandlapper and Gordon also failed to adequately supervise sales of the investments. For their misconduct, Gordon and Bixler are barred from association with any FINRA member and Sandlapper is expelled… Read More

Penalties: N/A
Respondent: Michael Andrew Norman
Violation: Norman failed to provide documents and information requested pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

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