Financial Enforcement Actions | Week Of November 11 To 16

Financial Enforcement Actions | Week of November 11 to 16

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FTC

Penalties: TBD
Respondent: Inside Publications, LLC
Violation: Falsely representing that endorsements reflected the independent opinions and experience of impartial users, failing to disclose material connections between the endorsers and the marketer of the product, specifically that certain endorsers were paid or reimbursed by, or employees of, the PR firm promoting the product; and falsely representing that paid ads were the independent statements and opinions of impartial publications… Read More

Penalties: TBD
Respondent: Creaxion Corp.
Violation: Falsely representing that endorsements reflected the independent opinions and experience of impartial users; failing to disclose material connections between the endorsers and the marketer of the product, specifically that certain endorsers were paid or reimbursed by, or employees of, the PR firm promoting the product; and falsely representing that paid ads were the independent statements and opinions of impartial publications… Read More

FINRA

$1,012,637.68 in Fines

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Penalties: $311,654.46
Respondent: Linda C. Milberger, Kyle P. Harrington
Violation: Providing false documents and information to FINRA and for trying to obstruct FINRA’s investigation into his conversion. Harrington is also ordered to pay disgorgement, restitution, and costs… Read More

Penalties: N/A
Respondent: John J. Baldeck
Violation: After Morgan Stanley permitted Baldeck to resign, FINRA staff sent a request to Baldeck for on-the-record testimony pursuant to FINRA Rule 8210. On October 23, 2018, Baldeck provided a partial day of on-the-record testimony to FINRA staff. However, before completing his testimony, he informed Enforcement staff that he refused to complete his on-the-record testimony that day or at any time. By refusing to complete his on-the-record testimony as requested pursuant to FINRA Rule 8210, Baldeck violates FINRA Rules 8210 and 2010… Read More

Penalties: $17,483.22
Respondent: Chalres A. Laverty
Violation: Respondent borrowed $1.35 million from an elderly married couple who were customers over a four-year period without informing his employer firms. He submitted false compliance questionnaires to two employers to conceal his borrowing. He provided false testimony to FINRA during a prior investigation into his borrowing from other customers. Respondent also failed to disclose a judgment and a tax lien on his Form U4… Read More

Penalties: $5,000.00
Respondent: Ronald Jacob Dawson
Violation: In June 2016, while associated with Merrill Lynch, Dawson borrowed $250,000 from a customer contrary to Firm policies. By virtue of his conduct, Dawson violated FINRA Rules 3240 and 2010… Read More

Penalties: $5,000.00
Respondent: Ronald Jacob Dawson
Violation: In June 2016, while associated with Merrill Lynch, Dawson borrowed $250,000 from a customer contrary to Firm policies. By virtue of his conduct, Dawson violated FINRA Rules 3240 and 2010… Read More

Penalties: $495,000.00
Respondent: Spencer Edwards, Inc.
Violation: Respondent also distributed false, unbalanced, and misleading communications about the notes to potential investors. Respondent had inadequate written supervisory procedures in place and failed to adequately supervise due diligence conducted in connection with the notes. Furthermore, Respondent failed to transmit promptly to the issuer a customer check for investment in the note offering and, as a result, violated the Net Capital and Customer Protection Rules… Read More

Penalties: TBD
Respondent: John Lodge Farmer, Jodi Oyler Padgett, Charles Edwin Taylor
Violation: During the period from 1999 through August 2016, Respondents Charles E. Taylor, Jodi 0. Padgett and John L. Farmer, while registered as General Securities Representatives with Royal Alliance Associates, Inc. (“Royal” or the “Firm”), engaged in an undisclosed and unapproved outside business activity involving the sale of precious metal bullion coins, in violation of NASD Rules 3030 and 2110, and FINRA Rules 3270 and 2010… Read More

Penalties: N/A
Respondent: Terrence R. Puricelli
Violation: In September 2018, Puricelli failed to provide information requested by FINRA staff pursuant to FINRA Rule 8210. Puricelli thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: $50,000.00
Respondent: Healthios Capital Markets, LLC
Violation: Between January 14, 2013 and October 5, 2016 (the “Relevant Period”), Healthios allowed four individuals to conduct investment banking activities, including drafting marketing materials and documentation supporting the firm’s investment banking business, without requiring that those individuals pass the Series 79 examination, and become qualified and registered as Investment Banking Representatives… Read More

Penalties: $123,500.00
Respondent: Carol Ann Holesha
Violation: In May 2013, Holesha borrowed $125,000 from a Firm customer, in violation of FINRA Rules 3240 and 2010. Additionally, between 2013 and 2017, Holesha made misstatements to the Firm in her annual compliance questionnaires, in violation of FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: John H. Neely
Violation: Neely exercised discretion in two customers’ accounts between June 1, 2014 and June 30, 2015, without written authorization from the customers and without his member firm accepting the accounts as discretionary. Through this conduct, Neely violated NASD Conduct Rule 2510(b) and FINRA Rule 2010… Read More

Penalties: N/A
Respondent: Robert Lee Basile
Violation: Between January 2015 and October 2017, Basile converted over $130,000 from his elderly mother’s brokerage account at Waddell in violation of FINRA Rules 2150(a) and 2010… Read More

SEC

$15,166,965.00 in Fines

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Penalties: $4,497,804.00
Respondent: Quadrant 4 System Corp., et al.
Violation: Former chief executive officer Nandu Thondavadi and former chief financial officer Dhru Desai stole more than $4 million from Schaumburg, Illinois-based Quadrant 4 System Corp. (“QFOR”) over a nearly five-year period. The former executives also allegedly caused QFOR to understate its liabilities and inflate its revenues and assets, evading scrutiny by lying to the company’s auditors and providing them with forged and doctored documents… Read More

Penalties: N/A
Respondent: Mullan Agritech, Inc., ReliaBrand, Inc. and UBL Interactive, Inc.
Violation: UBLI has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it failed to file its required Forms 10- Q for the periods ended March 31, 2016 and 2017, June 30, 2016 and 2017, and December 31, 2015 and 2016. UBLI also failed to file its required Forms 10-K for the periods ended September 30, 2015 and 2016… Read More

Penalties: TBD
Respondent: Richard G. Cody, et al.
Violation: Cody defrauded at least three of his retired clients over a twelve-year period by concealing the fact that their retirement accounts had lost substantial value and were being rapidly depleted… Read More

Penalties: N/A
Respondent: Nutrastar International, Inc.
Violation: Nutrastar 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 September 30, 2015. As of August 28, 2018, the company’s stock (symbol “NUIN”) 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: N/A
Respondent: America Greener Technologies, Inc., MV Portfolios, Inc. and Trycera Financial, Inc.
Violation: AGRNQ has 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 the period ended March 31, 2016… Read More

Penalties: $1,500,000.00
Respondent: James V. Mazzo, et al.
Violation: DeCinces also allegedly tipped five of his friends, including a former Baltimore Orioles teammate and a businessman, David L. Parker. DeCinces’s trading resulted in over $1.3 million in alleged ill-gotten gains, and the tippees obtained another $1 million in ill-gotten gains… Read More

Penalties: N/A
Respondent: Solaris Power Cells, Inc., Stragenics, Inc. and Ultimate Rack Inc.
Violation: SPCL has 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 the period ended September 30, 2015… Read More

Penalties: $327,000.00
Respondent: Town of Ramapo, et al.
Violation: Violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder… Read More

Penalties: TBD
Respondent: Mark Burnett, Jeffrey Miller, Christian Romandetti, Frank Sarro, Anthony Vassallo, and Elite Stock Research, Inc.
Violation: From at least September 2013 until about June 2016, the defendants used multiple accounts in an attempt to disguise their trading, engaged in manipulative trading practices, and hired Elite Stock Research, a boiler room run by defendant Anthony Vassallo, to promote First Choice to vulnerable investors, some of who invested retirement savings… Read More

Penalties: $277,161.00
Respondent: James S. Polese, et al.
Violation: Securities fraud for engaging in various schemes to defraud their clients, including fraudulently misappropriating $350,000 of their client’s money, using $100,000 of those funds to make investments in their own names, and directing the remaining $250,000 to Polese’s personal bank account and investing $100,000 of another client’s funds into an investment in which Peterson and Polese held a financial interest, without informing the client or disclosing their conflict of interest… Read More

Penalties: $65,000.00
Respondent: Giga Entertainment Media, Inc. et al.
Violation: Between February and August 2016, the company bought at least 559,662 downloads from outside marketing firms to boost the profile of the company’s mobile app, SELFEO… Read More

Penalties: TBD
Respondent: Gaylen D. Rust and Rust Rare Coin, Inc.
Violation: Gaylen D. Rust and his company Rust Rare Coin, Inc. (RRC) are engaged in an ongoing investment scheme involving a purported silver trading program… Read More

Penalties: N/A
Respondent: AMI James Brands, Inc., et al.
Violation: AMI James 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: N/A
Respondent: Function(x), Inc.
Violation: Function(x) has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, while its common stock was registered with the Commission in that it has not filed any periodic reports with the Commission subsequent to its fiscal quarter ending December 31, 2016… Read More

Penalties: $250,000.00
Respondent: CarrierEQ, Inc., d/b/a AirFox
Violation: AirFox violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without having a registration statement filed or in effect with the Commission or qualifying for exemption from registration with the Commission… Read More

Penalties: $8,000,000.00
Respondent: DeVere USA, Inc.
Violation: Respondent failed to make full and fair disclosure to clients and prospective clients, between at least June 2013 and March 2016, of material conflicts of interest regarding compensation obtained from third-party product and service providers, that Respondent’s investment adviser representatives made materially misleading or incomplete statements concerning the benefits of transferring U.K. pension assets to a Qualifying Recognised Overseas Pension Scheme… Read More

Penalties: $250,000.00
Respondent: Paragon Coin, Inc.
Violation: Paragon violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without having a registration statement filed or in effect with the Commission or qualifying for exemption from registration with the Commission… Read More