Financial Enforcement Actions | Week Of December 02 To 07

Financial Enforcement Actions | Week of December 02 to 07

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FINRA

$15,000.00 in Fines

Penalties: N/A
Respondent: Ralph Richard Von Lutzow
Violation: On or about October 27, 2017, and December 12, 2017, Von Lutzow provided false and misleading information to FINRA in response to requests for documents and information issued pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $12,500.00
Respondent: James E. Armstrong, Jr., James E. Armstrong, Sr.
Violation: At various times from February 2012 through March 2015 (“Relevant Period”), Armstrong Sr. and Armstrong Jr. failed to reasonably supervise registered representative Mark Perry (“Perry”). Armstrong Jr. failed to reasonably supervise Perry by: (1) ignoring red flags, which indicated possible unsuitable trading by Perry; and (2) failing to review Perry’s email correspondence, which would have revealed that Perry received a customer complaint and alleviated another customer’s concerns by making misleading and promissory statements… Read More

Penalties: N/A
Respondent: Michael Prikopa
Violation: Between September and October 2017, while he was associated with Wells Fargo, Respondent converted $6,400 from a Wells Fargo Bank customer. He ordered a debit card for a customer’s Wells Fargo Bank account, withdrew funds from the customer’s bank account, and retained the funds for his own personal benefit, all without the customer’s authorization or consent. By reason of the foregoing, Respondent violated FINRA Rule 2010… Read More

Penalties: TBD
Respondent: Ronald R. Blasczyk
Violation: TBlasczyk’s recommendation EF to liquidate the Voya VA and purchase the AIG VA was unsuitable in violation of F1NRA Rules 2111 and 2010. Separately, Blasczyk created a false and misleading firm business record of what occurred at the July 2015 meeting in violation of FINRA Rule 2010… Read More

Penalties: N/A
Respondent: Mitchell Kurtz
Violation: Kurtz failed to produce documents and information requested by FINRA pursuant to FINRA Rule 8210 in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $2,500.00
Respondent: Danijel Velicki
Violation: In or around October 2017, Velicki instructed his assistant to complete Firm Element continuing education coursework on his behalf, in violation of FINRA Rule 2010… Read More

Penalties: N/A
Respondent: Nicholas Randolph Radke, Jr
Violation: Radke failed to provide documents and information requested pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

CFPB

$528,869.00 in Fines

Penalties: $528,869.00
Respondent: Village Capital and Investment, LLC
Violation: Village Capital violated the Consumer Financial Protection Act of 2010 by misleading veterans regarding its Interest Rate Reduction Refinancing Loans—loans that allow veterans to refinance their mortgages at lower interest rates with a loan guaranteed by the Department of Veterans Affairs… Read More

FTC

$4,351,810.00 in Fines

Penalties: $182,000.00
Respondent: Nobetes Corp.
Violation: Making unsubstantiated health claims, misleading consumers about the terms of “free trial” offers, billing consumers without their consent, and other practices related to the use of “expert” endorsements and consumer testimonials… Read More

Penalties: $60,000.00
Respondent: Lawrence L. Duskin
Violation: Providing contact lenses to consumers without obtaining the required prescription, failing to verify the prescription information, and failing to keep the records required by the Rule… Read More

Penalties: $609,810.00
Respondent: James L. Dolan
Violation: Violated the Hart-Scott-Rodino Act by failing to report in a timely manner his acquisition of voting securities in Madison Square Garden Company… Read More

Penalties: $3,500,000.00
Respondent: Sage Auto Group
Violation: The auto dealership with “yo-yo” financing tactics, pressuring consumers who have signed contracts into later accepting a different deal, while the defendants packed extra, unauthorized charges for “addons,” or aftermarket products and services, into car deals financed by consumers… Read More

SEC

$69,981,719.22 in Fines

Penalties: TBD
Respondent: SEC Complaint – Mark Suleymanov
Violation: Between at least early 2012 and early 2016, Suleymanov engaged in the fraudulent unregistered offer and sale of binary options securities over the internet. Suleymanov, who was doing business as SpotFN and a number of other brands, raised at least $4 million from retail investors, some of whom were senior citizens without investment experience. As a result of the scheme, investors suffered losses, including losses of retirement funds, which SpotFN encouraged investors to use… Read More

Penalties: $30,267,681.00
Respondent: Chen et al.
Violation: Defrauding Chinese investors in connection with the EB-5 Immigrant Investor Program… Read More

Penalties: $3,983,661.51
Respondent: Fifth Street Management, LLC
Violation: FSM’s improper allocation of expenses to its former business development company (“BDC”) clients, and failures relating to the valuation of two portfolio company investments held by one of the BDCs (“BDC-1”). In 2013 and 2014, FSM improperly allocated to the BDC clients $1,208,510 in rent and other overhead expenses that the adviser should have paid. Further, during 2014, FSM also improperly allocated $118,895 in compensation expenses of two FSM employees to the BDC clients… Read More

Penalties: TBD
Respondent: Mark Suleymanov
Violation: From at least 2012 to 2016, Suleymanov engaged in the unregistered offer and sale of binary options, which are securities that pay out depending on the outcome of a “yes/no” proposition, such as whether a specific equity security will close at or above a specified price on a given trading day… Read More

Penalties: TBD
Respondent: John C. Maccoll
Violation: Between 2008 and March 2018, Respondent Maccoll defrauded at least 15 of his retail brokerage customers out of nearly $4 million while working as a registered representative associated with a large, nationwide broker-dealer and investment adviser dually registered with the Commission… Read More

Penalties: TBD
Respondent: David G. Dreslin, et al.
Violation: David Dreslin and Michael Toups created a shell company, Anglesea Enterprises, Inc., by filing false and misleading registration statements and periodic reports with the SEC, creating a phony business plan, and appointing nominal officers and directors to conceal their control over the company… Read More

Penalties: $14,005,376.71
Respondent: Linkbrokers Derivatives LLC
Violation: On August 15, 2016, pursuant to Rule 1103 of the Commission’s Rules on Fair Fund and Disgorgement Plans (“Rules”), 17 C.F.R. § 201.1103, the Commission published a Notice of Proposed Plan of Distribution and Opportunity for Comment (“Notice”)… Read More

Penalties: TBD
Respondent: SEC Complaint – David G. Dreslin, et al.
Violation: This SEC enforcement action concerns a fraudulent scheme by Dreslin, a certified public accountant, and Michael Toups, a former registered representative, to create and sell a public shell company in a reverse merger… Read More

Penalties: N/A
Respondent: KCAP Financial, Inc.
Violation: From at least 2010 through the third quarter of 2014 (the “relevant period”) KCAP, a New York-based company that elected to be regulated as a business development company (“BDC”) under the Investment Company Act, received approximately $35.8 million from its wholly-owned Asset Manager Affiliates (“AMAs”) and improperly recorded and distributed the entire amount as taxable dividends when, in fact, approximately $22.3 million (62.3%) of the funds received were actually returned of capital… Read More

Penalties: TBD
Respondent: SEC Complaint – Chen et al.
Violation: This matter concerns two fraudulent securities offerings carried out by 18 Edward Chen, his wife, Jean Chen, and several entities they control. In doing so, 19 they have misappropriated millions of dollars of investor money, much of it in cash 20, and cashier’s checks… Read More

Penalties: TBD
Respondent: SEC Complaint – Michael B. Rothenberg
Violation: This case arises out of Defendants’ scheme to defraud both the venture capital funds they manage and the investors in those funds. According to documents filed with the Commission, the venture capital funds have nearly 200 investors and over $64 million of assets under management. The venture capital funds were established with the purpose of investing primarily in equity of early-stage technology companies… Read More

Penalties: TBD
Respondent: Michael B. Rothenberg
Violation: Over a three-year period, Rothenberg and his firm misappropriated millions of dollars from the funds, including an estimated $7 million of excess fees, which Rothenberg used to support personal business ventures he claimed were self-funded and to pay for private parties and events at high-end resorts and Bay Area sporting arenas… Read More

Penalties: $21,675,000.00
Respondent: Taberna Capital Management, LLC, Michael Fralin, and Raphael Licht
Violation: Between 2009 and 2012, in connection with restructuring transactions undertaken between the Taberna collateralized debt obligation clients (the “Taberna CDOs”) and the issuers of the underlying obligation in Taberna CDOs’ portfolios, Taberna retained certain fees (“Exchange Fees”) that should have been paid to the Taberna CDOs… Read More

Penalties: N/A
Respondent: Jesse C. Litvak
Violation: On December 6, 2018, the U.S. District Court for the District of Connecticut entered an order dismissing, with prejudice, the U.S. Securities and Exchange Commission’s complaint against Jesse Litvak. The court’s order was based on the SEC’s motion to dismiss its claims against Litvak… Read More

Penalties: N/A
Respondent: NVC Fund LLC and Frank Ekejija
Violation: VC Fund and Ekejija produced a limited number of documents, and Ekejija gave limited testimony. Both refused to produce key documents responsive to the subpoenas, and Ekejija refused to testify about matters relevant to his participation in the conduct being investigated… Read More

Penalties: $50,000.00
Respondent: CoinAlpha Advisors LLC
Violation:Respondent violated Section 5(a) of the Securities Act, which prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect, and Section 5(c) of the Securities Act, which prohibits the offer to sell any security through interstate commerce or the mails, unless a registration statement has been filed as to such security with the Commission… Read More