Financial Enforcement Actions | Week of September 16 to 21
FINRA
Penalties: TBD
Respondent: Marc Anthony Last
Violation: In November 2016, while registered with NYLIFE Securities LLC ("NYLIFE" or the "Firm"), a FINRA-regulated broker-dealer, Respondent Marc Anthony Last ("Last" or "Respondent") converted $5,000 from one of his customer's variable annuity accounts, in violation of FINRA Rules 2150 and 2010... Read More
Penalties: $10,000.00
Respondent: Jose Luis Leon
Violation: During the Review Period, Leon, who was responsible for supervising and reviewing the former CEO and Head Trader's trading activities, failed to do so. Instead, Leon allowed him to review his own trading activities. As a result, Leon violated NASD Rule 3010 and FINRA Rule 2010... Read More
Penalties: $100,000.00
Respondent: BAC Florida Investments Corp.
Violation: During the Review Period, the firm, acting through its former Chief Executive Officer ("CEO") and Head Trader, engaged in 61 pre-arranged, fixed-income securities transactions with Firm A, another registered broker-dealer, prior to purchasing bonds from, or selling bonds to, customers of Firm B, a registered investment advisor and manager of customer accounts held with the firm... Read More
Penalties: N/A
Respondent: Robert Todd Clark
Violation: Clark indicated that he would not appear for on-the-record testimony that was requested pursuant to FINRA Rule 8210. As a result, Clark violated FINRA Rules 8210 and 2010... Read More
Penalties: $10,000.00
Respondent: Ian Greenblatt a/k/a "Eric Green"
Violation: In March 2016, Greenblatt settled a customer complaint away from his employer member firm, in violation of FINRA Rule 2010... Read More
FTC
Penalties: TBD
Respondent: Apartment Hunters, Inc. et al. (Wetakesection8.com)
Violation: Falsely claiming that consumers can access hundreds of thousands of accurate, up-to-date, and available listings on the defendants’ websites, which also include ApartmentHunterz.com and FeaturedRentals.com... Read More
Penalties: $10,000,000.00
Respondent: NetSpend
Violation: Many NetSpend customers were unable to access their funds, either because NetSpend denied or delayed activation of their card or because NetSpend blocked them from using it... Read More
Penalties: TBD
Respondent: A&O Enterprises Inc.
Violation: For the first time, charged a marketer and seller of intravenously injected therapy products (iV Cocktails) with making a range of deceptive and unsupported health claims about their ability to treat serious diseases such as cancer, multiple sclerosis, and congestive heart failure... Read More
SEC
Penalties: $2,897,934.51
Respondent: Heidi Wivolin
Violation: During the time of her offense, Wivolin was associated with either 1st Discount or Next Financial. Wivolin was also the President and CEO of Firstrust Investments, Inc. (“Firstrust”), which offered securities and investment advisory services to its customers, but which was not registered with the Commission. In June 2014, FINRA barred 2 Wivolin from associating with any member firm due to her misuse of customer funds. Wivolin held Series 7, 24, 63, and 65 licenses... Read More
Penalties: $5,000,183.00
Respondent: SeaWorld Entertainment, Inc. and James Atchison, Frederick D. Jacobs
Violation: Misleading investors about the impact the documentary film Blackfish had on the company's reputation and business. SeaWorld's former vice president of communications also agreed to settle a fraud charge for his role in misleading SeaWorld's investors... Read More
Penalties: N/A
Respondent: First Liberty Power Corp., et al.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters.... Read More
Penalties: TBD
Respondent: SEC Complaint - Thomas J. Caufield
Violation: From at least as early as 2013 through 2017, Defendant Thomas J. Caufield convinced investors—including his advisory clients—to invest more than $6 million in his high-yield promissory notes by misrepresenting key aspects of the offering... Read More
Penalties: $133,414.64
Respondent: Abtech Holdings, Inc.
Violation: Abtech failed to disclose in its filings that Nassau County (the “County”) had neither requested nor received approval from the New York State Legislature (the “State Legislature”) to enter into a design-build contract with Abtech as required under New York law and under the contract terms... Read More
Penalties: $900,847.25
Respondent: Thomas J. Caufield
Violation: Caufield misled investors about the franchise's bleak financial condition, used new investor money to repay earlier investors, and falsely claimed that investors' notes were secured by assets... Read More
Penalties: $35,000.00
Respondent: Lane J. Castleton
Violation: Materially misleading statements and omissions that Abtech Holdings, Inc. (“Abtech” or the “Company”) made in its Form 10-Q for the third quarter of 2014 and Form 10-K for the fiscal year 2014, concerning the status of a material contract between Abtech and Nassau County, New York (the “Nassau Contract”). Castleton drafted, reviewed, edited, and signed these filings on behalf of Abtech... Read More
Penalties: $60,000.00
Respondent: Glenn R. Rink
Violation: Materially misleading statements and omissions that Abtech Holdings, Inc. (“Abtech” or the “Company”) made in its Form 10-Q for the third quarter of 2014 and Form 10-K for the fiscal year 2014, concerning the status of a material contract between Abtech and Nassau County, New York (the “Nassau Contract”). Rink reviewed, edited, and signed these filings on behalf of Abtech... Read More
Penalties: $1,148,379.10
Respondent: John L. Gathright, Jr.
Violation: Between June 2010 and September 2011, he used his position at Merrill to cause companies maintaining annuities for his clients to issue checks for the supposed benefit of his clients and mail the checks to an address Gathright controlled... Read More
Penalties: TBD
Respondent: SEC Complaint - Ernest J. Romer, III
Violation: From approximately 2014 through 2016, Romer defrauded at least 30 of his retail brokerage customers out of approximately $2.7 million. During that time period, Romer worked as a registered representative associated with CoreCap Investments, Inc., a registered broker-dealer with the SEC (“CoreCap Investments”)... Read More
Penalties: TBD
Respondent: SEC Complaint - Clovis Oncology, Inc., Patrick J. Mahaffy, and Erle T. Mast
Violation: From approximately July 8, 2015 through November 16, 2015 (the “relevant time period”), Clovis Oncology, Inc. (“Clovis” or the “company”), a biopharmaceutical company based in Boulder, Colorado and listed on NASDAQ, and its current Chief Executive Officer (“CEO”), Patrick Mahaffy (“Mahaffy”), negligently made untrue statements of material fact and/or omitted to state material facts necessary in order to make the statements they made not misleading to investors about its then flagship lung cancer drug, rociletinib (“Roci”). Clovis’ former Chief Financial Officer (“CFO”), Erle Mast (“Mast”), aided and abetted such untrue statements and/or omissions... Read More
Penalties: TBD
Respondent: SeaWorld Complaint; - SeaWorld Entertainment, Inc. and James Atchison, Frederick D. Jacobs
Violation: Between approximately December 20, 2013, and August 13, 2014 (the “Relevant Period”), in connection with the offer and sale of SeaWorld securities, SeaWorld and Atchison engaged in a course of business that—by failing to disclose the Blackfish effect to investors— they should have known would operate as a fraud or deceit upon the purchasers of SeaWorld stock... Read More
Penalties: TBD
Respondent: Application; - John Paul Waymack
Violation: Section 21(c) of the Exchange Act authorizes the Commission, in the case of any person’s refusal to obey a subpoena of the Commission, to invoke the aid of any court of the United States within the jurisdiction of which the investigation or proceeding is carried on or such person resides or carries on business... Read More
Penalties: TBD
Respondent: Jacobs Complaint - SeaWorld Entertainment, Inc. and James Atchison, Frederick D. Jacobs
Violation: This Complaint concerns an untrue or misleading statement made by Jacobs, SeaWorld Entertainment, Inc.’s (“SeaWorld”) then-vice president of communications, relating to the impact of the documentary film Blackfish on the company’s reputation and/or business (i.e., “Blackfish effect”)... Read More
Penalties: TBD
Respondent: Ernest J. Romer, III
Violation: From at least 2014 through 2016, Ernest J. Romer, III persuaded at least 30 of his customers, many of whom invested most of their life savings with Romer, to sell securities in their brokerage accounts and transfer the proceeds to either P&R Capital, LLC or CoreCap Solutions, LLC. Romer allegedly represented to his customers that upon transferring the money, he would invest it in the stock market and earn them a better return than their current investments... Read More
Penalties: TBD
Respondent: Memo - John Paul Waymack
Violation: Failed to comply with an administrative subpoena (“Subpoena”) that was validly-issued and served by the Securities and Exchange Commission (“Commission”) as part of a lawful investigation pursuant to Section 21(a)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u(a)(2)... Read More
Penalties: TBD
Respondent: Emil Botvinnik
Violation: Florida resident Emil Botvinnik and New York resident Jovannie Aquino recommended frequent, short-term trades that generated large commissions for the brokers but were almost guaranteed to lose money for their customers... Read More
Penalties: $250,000.00
Respondent: Creative Planning, Inc. and Peter A. Mallouk
Violation: Distributed hundreds of radio advertisements that contained prohibited client testimonials; failed to enforce the firm’s code of ethics (“Code of Ethics”) with regard to the radio advertisements and the reporting and review of certain securities accounts in which the firm’s president had a beneficial interest; failed to keep true and accurate books and records; and failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act... Read More
Penalties: $23,803.77
Respondent: Jennifer R. Johnson
Violation: Johnson used her position as a financial advisor to transfer or attempt to transfer funds from customer accounts to an account she controlled and by doing so did obtain possession of property or services from another person of a value more than $5,000, by means of swindle all in violation of Minnesota Statute: § 609.52.2(a)(4)... Read More
Penalties: $978,950.51
Respondent: Susan E. Walker
Violation: Walker, for the purpose of executing a scheme and artifice to defraud and to obtain money and property from advisory clients by means of materially false and fraudulent pretenses, representations and promises, knowingly diverted over $980,000 in client funds for her own use and benefit utilizing the instrumentalities of interstate commerce, including the mails, telephone, and email, all in violation of 18 U.S.C. § 1341... Read More
Penalties: TBD
Respondent: SEC Complaint - Emil Botvinnik - Emil Botvinnik
Violation: From December 2015 to November 2017, Aquino, then a registered representative at a broker-dealer based in New York City, engaged in a fraud involving excessive trading in the accounts of his retail customers that generated substantial commissions to enrich himself while his customers experienced significant losses... Read More
Penalties: TBD
Respondent: SEC Complaint - Jovannie Aquino; - Emil Botvinnik
Violation: From December 2015 to November 2017, Aquino, then a registered representative at a broker-dealer based in New York City, engaged in a fraud involving excessive trading in the accounts of his retail customers that generated substantial commissions to enrich himself while his customers experienced significant losses... Read More
Penalties: $20,804,145.00
Respondent: Clovis Oncology, Inc., Patrick J. Mahaffy, and Erle T. Mast
Violation: Over a four-month period starting in July 2015, Clovis Oncology Inc. and CEO Patrick Mahaffy misled investors about how well Clovis' flagship lung cancer drug worked compared to another drug... Read More
Penalties: TBD
Respondent: John Paul Waymack
Violation: Potential insider trading and potential misstatements in the public disclosures of Kitov Pharmaceuticals Holdings, Ltd... Read More
Penalties: $6,348.00
Respondent: Phillip R. Grogan, Esq.
Violation: In violation of the antifraud provisions of the federal securities laws, Young misled investors into thinking that their funds would be placed into and safely remain in an escrow account maintained by Grogan until a purported bond or hedge fund offering was complete. Young provided each investor with contracts which indicated that Grogan was a party to the investment agreement, acting in his professional capacity as attorney and trustee for the receipt and disbursement of funds... Read More
Penalties: $5,066,353.00
Respondent: Robert Torino
Violation: One count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371... Read More
Penalties: $20,000.00
Respondent: Bronson L. Quon, CPA
Violation: One count of omission of material facts in a statement to accountants in violation of 15 U.S.C. §§ 78m(b)(2)(B), 78ff(a) and 17 C.F.R. § 240.13b2-2... Read More
Penalties: $45,583.55
Respondent: Michael L. LaPenna
Violation: This matter involves material misstatements and omissions by Michael L. LaPenna in the fraudulent sale of securities... Read More
Penalties: $293,145.69
Respondent: Allan Michael Roth
Violation: Roth solicited former brokerage customers to purchase BZRT shares, which they did based on Roth’s representations. Between January 1, 2012 and May 2, 2012, Roth sold or offered to sell securities in BZRT to 20 different investors in 34 separate transactions, receiving a total of $295,465.69 in investor funds in the form of checks payable to JACO... Read More
Penalties: $5,066,353.00
Respondent: Nasir Shakouri
Violation: One count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371... Read More
Penalties: $61,185.29
Respondent: CSIR Group, LLC, et al.
Violation: CSIR Group, LLC hired writers like Meyer to publish dozens of bullish articles on its clients, which appeared to be independent research pieces but, in fact, were paid advertisements... Read More
Penalties: $1,520,000.00
Respondent: James Douglas Miller
Violation: Miller manipulated BBSI's accounting records to hide the fact that its workers' compensation expense was increasing relative to its revenue... Read More
Penalties: $11,585,000.00
Respondent: CMB Export, et al.
Violation: Between 2011 and 2015, each of the Certain CMB Limited Partnerships offered its limited partnership interests without registering the offering and lacking a valid exemption from registration, thereby violating Section 5(a) and (c) of the Securities Act... Read More
Penalties: $50,000.00
Respondent: Dasan Zhone Solutions, Inc.
Violation: These proceedings arise out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing (the “Interim Review Requirement”). On two occasions, Dasan Zhone violated the Interim Review Requirement by filing Forms 10-Q with the Commission that contained financial statements that were not reviewed by an independent public accounting firm... Read More
Penalties: $50,000.00
Respondent: Infrax Systems, Inc.
Violation: These proceedings arise out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing (the “Interim Review Requirement”). On two occasions, Infrax violated the Interim Review Requirement by filing Forms 10-Q with the Commission that contained financial statements that were not reviewed by an independent public accounting firm... Read More
Penalties: $200,000.00
Respondent: Primoris Services Corporation
Violation: Primoris’s failure to (i) devise and maintain a sufficient system of internal accounting controls and (ii) adequately evaluate the effectiveness of its Internal Control over Financial Reporting (“ICFR”) as of year-end 2014. Due to these control failures, Primoris also failed to make and keep accurate books and records... Read More
Penalties: $245,199.00
Respondent: Jason W. Galanis, et al.
Violation: The defendants participated in a scheme to secretly issue $72 million of unrestricted Gerova shares to a Galanis family friend in Kosovo, and then bribe investment advisers to purchase the family friend's Gerova stock in client accounts through coordinated trades. Jason Galanis, his family and associates collectively realized approximately $20 million in illicit profits from the scheme... Read More
Penalties: $50,000.00
Respondent: First Hartford Corporation
Violation: These proceedings arise out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing (the “Interim Review Requirement”). On two occasions, First Hartford violated the Interim Review Requirement by filing Forms 10-Q with the Commission that contained financial statements that were not reviewed by an independent public accounting firm... Read More
Penalties: $691,823.00
Respondent: Leroy "Lee" Young and Young Capital Management LLC
Violation: From January 2013 through December 2017, Young and YCM illegally raised at least $362,000 from at least 32 investors through false promises of high returns on their principal investment... Read More
Penalties: $109,522.76
Respondent: Eric Hall & Associates, LLC and Eric Hall
Violation: By failing to disclose material facts related to their registration status to their client, EHA and Hall breached their fiduciary duty and did not deal fairly with their client, in violation of Section 15B(c)(1) of the Exchange Act and Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”)... Read More
Penalties: $1,500,000.00
Respondent: Barrett Business Services, Inc. and Mark Cannon, CPA
Violation: From 2012 through 2014, BBSI through its former Chief Financial Officer, James Miller, engaged in a number of fraudulent accounting practices primarily to mask negative trends in BBSI’s workers’ compensation exposure including (1) misclassifying expenses to understate BBSI’s recorded workers’ compensation expense and overstate BBSI’s recorded payroll tax and other related expenses, (2) improperly recognizing certain federal and state unemployment tax expenses over multiple periods rather than in the period incurred, and (3) intentionally underreporting BBSI’s workers’ compensation liability by, in part, concealing the existence of a second actuarial report that corroborated BBSI’s independent actuary’s view that BBSI needed to increase its workers’ compensation reserve by $80 million... Read More
Penalties: $500,000.00
Respondent: Ophrys, LLC
Violation: These proceedings concern the failure of a registered investment adviser, Ophrys, LLC, to provide adequate written disclosure to clients regarding the capacity in which it was acting with respect to, and obtain consent from its clients for, agency transactions for which Ophrys received compensation in addition to its advisory fee, and Ophrys’ failure to disclose its role in a principal transaction... Read More
Penalties: $2,280,000.00
Respondent: Heartland Payment Systems, LLC, f/k/a Heartland Payment Systems, Inc. and Robert O. Carr
Violation: Between 2013 and 2015, Heartland’s NMI Metrics were consistently overstated as a measure of new business or future revenue growth. During the relevant period, Heartland, with the knowledge of Carr, included in its disclosed NMI numbers categories of margin that (1) were not the result of new business but instead resulted from re-signing existing merchants in circumstances where accounts experience a change of ownership (“COO Margin,” as further discussed below); and (2) resulted from products that were added to Heartland’s calculation of NMI, but which were already being sold to merchants and included in reported revenue during prior periods (“APD Margin,” as further discussed below, and collectively with COO Margin, “COO and APD Margin”)... Read More
Penalties: $131,958.00
Respondent: Dennis W. Hamilton, CPA
Violation: On September 12, 2016, a judgment of conviction was entered against Hamilton in United States v. Dennis W. Hamilton, No. 3:16-cr-00058-AWT, in the United States District Court for the District of Connecticut, finding him guilty of one count of securities fraud... Read More
Penalties: $409,405.00
Respondent: Tarek D. Bahgat, Lauramarie Colangelo, and WealthCFO, LLC
Violation: Misappropriated money from seven of his investment advisory clients... Read More
Penalties: $75,000.00
Respondent: Cool Technologies, Inc.
Violation: These proceedings arise out of the violation of the Regulation S-X requirement that interim financial statements filed as part of a Form 10-Q be reviewed by an independent public accounting firm prior to filing (the “Interim Review Requirement”). On three occasions, Cool Technologies violated the Interim Review Requirement by filing Forms 10-Q with the Commission that contained financial statements that were not reviewed by an independent public accounting firm... Read More
