Wednesday, October 31, 2012

Syed Qaisar Madad was Arrested on Federal Charges of Running Ponzi Scheme That Raised $49 Million from Investors in Day Trading Scheme


Source- http://www.fbi.gov/losangeles/press-releases/2012/diamond-bar-man-arrested-on-federal-charges-of-running-ponzi-scheme-that-raised-49-million-from-investors-in-day-trading-scheme

LOS ANGELES—Federal agents this morning arrested a Diamond Bar man on federal wire fraud charges that allege he ran an investment scheme that raised $49 million from investors who suffered losses of approximately $32 million after he lost millions on bad trades and spent millions on Ponzi payments and personal expenses such as gambling.

Syed Qaisar Madad, 65, the CEO and co-owner of Technology for Telecommunication and Multimedia Inc. (TTM), was arrested at his home without incident by special agents with the FBI and IRS-Criminal Investigation. Madad is expected to be arraigned on a 16-count indictment this afternoon in United States District Court in Los Angeles.

Madad, a native of Pakistan who is now a Canadian citizen residing in the United States as a lawful permanent alien, allegedly bilked investors with false promises that his day trading method would make consistent, substantial profits. The indictment also alleges that Madad falsely told victims that their money was safe and would be returned to them upon request.

However, as the indictment alleges, Madad was actually running a Ponzi scheme in which he used funds from some investors to repay others. While Madad promised that he would not take any fees or compensation for managing the invested funds, Madad allegedly withdrew investors’ money in cash and used millions of investor funds to pay his own personal expenses and expenses of his wife’s business.

The indictment further charges that Madad provided the FBI with fraudulent documents that he claimed were brokerage statements for UBS accounts in Switzerland. The indictment also includes tax fraud charges based on Madad’s failure to report all the money and benefits he received from TTM in 2007, 2008, and 2009.

Madad’s scheme came to light when he was sued by one of his investors. In lawsuits filed by the government seeking forfeiture of Madad’s residence and other property, authorities allege that, even after the victim’s lawsuit was filed, Madad continued to solicit investors to put money into his day trading scheme.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting

Tuesday, October 30, 2012

Gordon Driver was Surrenders in Los Angeles Following Indictment for Operating a Ponzi Scheme and Lying to Federal Authorities


Source- http://www.fbi.gov/losangeles/press-releases/2012/las-vegas-man-surrenders-in-los-angeles-following-indictment-for-operating-a-ponzi-scheme-and-lying-to-federal-authorities

LOS ANGELES—The architect of a fraudulent investment scheme is scheduled to be arraigned this afternoon after surrendering to authorities here on charges related to an alleged Ponzi scheme that bilked victims out of millions of dollars.

Gordon Driver, 54, of Henderson, Nevada, was arrested in this case in Nevada on October 9. He appeared in federal court in Las Vegas that afternoon and was released on bond. Driver was directed to appear today in United States District Court in Los Angeles, where a federal grand jury indicted him October 4 on charges of mail fraud, wire fraud, commodity pool operator fraud, and making false statements to the Securities and Exchange Commission.

According to the indictment, Driver falsely told victims that he was producing earnings of 1 percent to 5 percent a week through a commodity futures trading program involving e-Mini S&P 500 futures contracts. In reality, his trading activity was overwhelmingly unprofitable, causing him to lose nearly almost all the money that he used to trade commodities.

Investigators believe that Driver took in at least $15 million and that investors—including several Southland residents and people in Canada—collectively lost at least $9 million as a result of the scheme.

Driver solicited investments through Nevada-based companies with names like Axcess Automation LLC and a hedge fund he called Axcess Fund LP. In addition to claiming he was earning huge returns, Driver allegedly told victims that he had never sustained a net trading loss over the course of any month, and he allegedly failed to tell clients that he used some of their money to pay personal expenses and to make Ponzi payments to some investors.

In addition to the fraud allegations, the indictment charges Driver with making false statements in a matter pending before the SEC in April 2009. Reiterating some of the false statements made to investors, Driver allegedly made false under-oath statements to an SEC attorney in a deposition in April 2009.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The indictment specifically charges Driver with two counts of mail fraud, nine counts of wire fraud, two counts of commodity pool operator fraud, and three counts of making false statements. If he is convicted of the 16 charges in the indictment, Driver would face a statutory maximum sentence of 275 years in federal prison.

The Commodities Futures Trading Commission filed suit against Driver and two of his companies in 2009. In July of this year, a federal judge in Los Angeles ordered the defendants to pay more than $41 million in restitution and penalties (see: http://www.cftc.gov/PressRoom/PressReleases/pr6304-12).

The Securities and Exchange Commission also filed a civil action in 2009 in Los Angeles federal court against Driver and his companies, and Driver subsequently consented to entry of a permanent injunction barring him from violating certain federal securities laws (SEC v. Driver, et al., CV 09-3410-ODW). The case is still pending a determination by the court of the amount of disgorgement and penalties to be imposed.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Monday, October 29, 2012

William J. Reilly was Arrested on Securities Fraud Charges


Source- http://www.fbi.gov/miami/press-releases/2012/boca-raton-attorney-arrested-on-securities-fraud-charges

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced that defendant William J. Reilly, a resident of Boca Raton, Florida, was arrested yesterday based on a criminal complaint charging him with committing securities fraud. Reilly had his initial appearance in federal court yesterday in Miami and was released on a $200,000 personal surety bond.

Reilly had previously been sanctioned by the U.S. Securities and Exchange Commission for violating the federal securities laws and he was disbarred earlier this year from practicing law by the state of New York.

According to the affidavit filed in support of the criminal complaint, Reilly engaged in a scheme to fraudulently sell the stock of Caribbean Pacific Marketing, Inc. (Caribbean Pacific), an emerging growth company under the recently enacted Jumpstart Our Business Startups Act (commonly known as the JOBS Act), that had filed with the U.S. Securities and Exchange Commission to engage in an initial public offering of its stock. Reilly sold the stock to a confidential source (CS), who was cooperating with an ongoing FBI investigation targeting penny stock fraud in South Florida. The complaint alleges that Reilly sold the stock to the CS in two transactions ahead of Caribbean Pacific’s initial public offering (IPO), in violation of the registration provisions of the Securities Act of 1933.

The complaint further alleges that Reilly violated the antifraud provisions of the federal securities laws by causing Caribbean Pacific to file a false and misleading registration statement and prospectus with the SEC. More specifically, the complaint alleges that Reilly was secretly a control shareholder of Caribbean Pacific who had arranged with certain stock promotion firms to publish prearranged press releases around the time of Caribbean Pacific’s IPO to generate interest in Caribbean Pacific’s stock. The complaint alleges that Caribbean Pacific’s SEC filings were false and misleading because, in part, they failed to disclose that Reilly was a control shareholder who had previously been sanctioned by the SEC and who had been disbarred from the practice of law.

Mr. Ferrer commended the investigative efforts of the FBI in this and other cases targeting penny stock fraud in South Florida. Mr. Ferrer would also like to thank the U.S. Securities and Exchange Commission for its assistance in this matter. This case is being handled by Assistant U.S. Attorney Harold E. Schimkat.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Sunday, October 28, 2012

Michael Cardillo was Sentenced in Manhattan Federal Court for Insider Trading


Source- http://www.fbi.gov/newyork/press-releases/2012/galleon-portfolio-manager-sentenced-in-manhattan-federal-court-for-insider-trading

Preet Bharara, the United States Attorney for the Southern District of New York, announced that MICHAEL CARDILLO, a former portfolio manager at Galleon Group (“Galleon”), was sentenced today to three years of probation in connection with an insider trading scheme in which CARDILLO traded based on material, nonpublic information (“Inside Information”) stolen from public companies. CARDILLO pled guilty in January 2011 to one count of conspiracy to commit securities fraud and one count of securities fraud. He was sentenced today in Manhattan federal court by U.S. District Judge Jed S. Rakoff.

According to the information, statements made during CARDILLO’s guilty plea proceeding, and CARDILLO’s testimony during the criminal trials of Rajat Gupta (the former Chairman of McKinsey and former member of the Board of Directors of Goldman Sachs and Procter & Gamble (“P&G”)) and Zvi Goffer (a former portfolio manager at Galleon):

In 2007, CARDILLO traded based on Inside Information relating to the acquisitions of 3Com Corporation and Axcan Pharma, Inc. CARDILLO was tipped by a co-conspirator at Galleon, Craig Drimal, who had obtained the Inside Information from Goffer, who, in turn, had obtained the Inside Information from two attorneys at Ropes & Gray, Arthur Cutillo and Brien Santarlas. In return for the Inside Information, Goffer made cash payments to Cutillo and Santarlas. Prior to trading in these deals, CARDILLO had traded based on Inside Information relating to the acquisitions of Kronos, Inc., and Hilton Hotels Corp. Although CARDILLO did not know the identity of the ultimate sources of the Inside Information relating to Kronos and Hilton, he knew that the trades were based on Inside Information coming from someone who was violating a duty of confidentiality.

In 2008 and early 2009, CARDILLO traded based on Inside Information relating to J.M. Smucker Company and P&G. He was tipped by a co-conspirator at Galleon, RK Rajaratnam, who had obtained the Inside Information from Raj Rajaratnam, the head of Galleon, who, in turn, had obtained the Inside Information from Gupta. In June 2008, Gupta tipped Raj Rajaratnam that P&G was selling its coffee business to J.M. Smucker. In January 2009, Gupta tipped Raj Rajaratnam that P&G was going to announce a reduction in its forecasted organic sales growth, a key metric for assessing the company’s operational performance. Although CARDILLO did not know the identity of Raj Rajaratnam’s source of Inside Information on P&G’s Board, CARDILLO understood that the Inside Information was coming from a P&G Board member who was breaching his fiduciary duties to the company and its shareholders.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Friday, October 26, 2012

SEC Charges Michael Van Gilder with Insider Trading


Source- http://www.sec.gov/news/press/2012/2012-217.htm

Washington, D.C., Oct. 26, 2012 — The Securities and Exchange Commission today charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company.

The SEC alleges that Michael Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda — which has previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company — was planning to acquire a 35 percent stake in Delta Petroleum for $684 million. Van Gilder subsequently purchased Delta Petroleum stock and highly speculative options contracts. He tipped several others, encouraging them to do the same, including a pair of relatives via an e-mail with the subject line “Xmas present.” After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20 percent. Van Gilder and his tippees made more than $161,000 in illegal trading profits.

The U.S. Attorney’s Office for the District of Colorado today announced a parallel criminal action against Van Gilder.

“Michael Van Gilder crossed the line when he took advantage of highly confidential corporate information to make trades and reap illicit profits,” said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. “He may have thought that he could get away with it, but he is faced today with the consequences of his actions.”

According to the SEC’s complaint filed in federal court in Denver, Van Gilder is the CEO of Van Gilder Insurance Company. He obtained the confidential information about Tracinda’s proposed investment and loaded up on Delta Petroleum stock and options in November and December 2007. He then tipped his broker, a co-worker, and relatives.

The SEC alleges that a mere two minutes after speaking to his source at Delta Petroleum on December 22, Van Gilder e-mailed two relatives with the “Xmas present” subject line and stated, “my present (just kidding) is that I can’t stress enough the opportunity right now to buy Delta Petroleum.” That same day, Van Gilder contacted his broker and arranged to purchase more Delta stock and options for himself. Following the public announcement, Van Gilder reaped approximately $109,000 in illegal profits and his broker, co-worker, and a relative made approximately $52,000.

The SEC’s complaint charges Van Gilder with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering him to disgorge his and his tippees’ ill-gotten gains and pay prejudgment interest and a financial penalty, and permanently enjoining him from future violations of these provisions of the federal securities laws.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Thursday, October 25, 2012

SEC Charges Kris Chellam for Role in Galleon Insider Trading Scheme


Source- http://www.sec.gov/news/press/2012/2012-216.htm

Washington, D.C., Oct. 26, 2012 — The Securities and Exchange Commission today charged a former senior executive at a Silicon Valley technology company for illegally tipping convicted hedge fund manager Raj Rajaratnam with nonpublic information that allowed the Galleon hedge funds to make nearly $1 million in illicit profits.

The SEC alleges that Kris Chellam tipped Rajaratnam in December 2006 with confidential details from internal company reports indicating that Xilinx Inc. would fall short of revenue projections it had previously made publicly. The tip enabled Rajaratnam to engage in short selling of Xilinx stock to illicitly benefit the Galleon funds. Chellam tipped Rajaratnam, who was a close friend, at a time when Chellam had his own substantial investment in Galleon funds and was in discussions with Rajaratnam about prospective employment at Galleon. Chellam was hired at Galleon in May 2007.

Chellam, who lives in Saratoga, Calif., has agreed to pay more than $1.75 million to settle the SEC’s charges. The settlement is subject to court approval.

“Chellam was entrusted with sensitive company information that he divulged to Rajaratnam knowing full well that Rajaratnam would trade on it,” said Sanjay Wadhwa, Associate Director of the SEC’s New York Regional Office and Deputy Chief of the Enforcement Division’s Market Abuse Unit. “Corporate executives who exploit company confidences for personal gain will ultimately be held accountable for their illegal acts.”

According to the SEC’s complaint, filed in federal court in Manhattan, Xilinx announced in October 2006 the financial results for the second quarter of its 2007 fiscal year. Xilinx also provided guidance for the third quarter by projecting revenues of approximately $476 million to $490 million. Xilinx said it would update this revenue guidance on Dec. 7, 2006.

The SEC alleges that in the weeks leading up to Xilinx’s December 7 update, Chellam received multiple reports indicating that the company’s third quarter business results were not going to be as positive as projected in October. Chellam learned on November 21 that the top end of the projected revenue range was being lowered from $490 million to $470 million. He attended a December 4 confidential executive staff meeting where the bottom end of the revenue projection was lowered from $476 million to $455 million. On December 5, Chellam telephoned Rajaratnam and tipped him about Xilinx’s worse-than-expected performance. Just minutes after the call, Galleon hedge funds controlled by Rajaratnam sold short Xilinx stock, eventually selling short more than 650,000 shares over the course of that day and the following day.

According to the SEC’s complaint, the Galleon hedge funds reaped approximately $978,684 in illegal profits after the December 7 announcement by covering the substantial short position that Rajaratnam had accumulated based on Chellam’s tip. Chellam had more than $1 million invested in one of the Galleon hedge funds in which Rajaratnam placed these trades. In May 2007, Chellam became the co-managing partner of the Galleon Special Opportunities Fund, a venture capital fund that focused on investments in late-stage technology companies. Chellam continued to work at Galleon until April 2009 and continued to obtain confidential information about Xilinx’s financial performance and pass it along to Galleon colleagues. Chellam earned approximately $675,000 in total compensation during his employment at Galleon.

The SEC’s complaint charges Chellam with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 17(a) of the Securities Act of 1933. The proposed final judgment orders Chellam to pay $675,000 in disgorgement, $106,383.05 in prejudgment interest, and a $978,684 penalty. Chellam also would be barred for a period of five years from serving as an officer or director of a public company, and permanently enjoined from future violations of these provisions of the federal securities laws. Chellam neither admits nor denies the charges.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Tuesday, October 23, 2012

Celia Gallardo Agrees to Plead Guilty in Multi-Million-Dollar Real Estate Ponzi Scheme


Source- http://www.fbi.gov/losangeles/press-releases/2012/san-fernando-valley-woman-agrees-to-plead-guilty-in-multi-million-dollar-real-estate-ponzi-scheme

LOS ANGELES—A San Fernando Valley real estate agent and self-described real estate investor has agreed to plead guilty to running a multi-million-dollar Ponzi scheme out of companies based in the Santa Clarita Valley.

In a plea agreement filed last Friday in United States District Court in Los Angeles, Celia Gallardo, 42, of North Hills, agreed to plead guilty to wire fraud for perpetrating the Ponzi scheme.

In the plea agreement, Gallardo admitted that she defrauded investors from September 2007 through September 2008 by falsely promising them high rates of return for investing in her purported real estate program. Gallardo admitted that instead of investing victims’ money in real estate transactions, she spent the vast majority of the money on house payments, foreign luxury travel, cash withdrawals, and Ponzi payments to earlier investors.

The plea agreement details how one investor lost $500,000 after Gallardo pressured him to invest quickly with claims that her investment program consisted of buying unfinished condominiums for pennies on the dollar in Florida and Tennessee. This victim borrowed money against his home in order to invest with Gallardo. Instead of using the money to purchase real estate, Gallardo used this victim’s money to make Ponzi payments to earlier investors, pay her employees, withdraw cash, pay personal expenses, pay her mortgage, and go on a luxury Mediterranean cruise with close friends and family.

Gallardo admitted that her scheme caused losses of at least $2.245 million to dozens of victims, who primarily resided in California and Arizona.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Monday, October 22, 2012

Marat Yunusov and Ayrat Yunusov Were Indicted on Federal Charges in $7.2 Million Commodities Fraud Scheme


Source- http://www.fbi.gov/chicago/press-releases/2012/twin-brothers-in-russia-indicted-on-federal-charges-in-7.2-million-commodities-fraud-scheme

CHICAGO—Twin brothers who live in Russia were indicted on federal fraud charges for attempting to illegally turn a profit of $7.2 million through manipulative trades in currency futures using the CME Group’s electronic trading platform. The defendants allegedly engaged in matching trades using two different futures commission merchants in Chicago to obtain profits from one while not paying the corresponding losses to the other.

Marat Yunusov and Ayrat Yunusov, both 48, of Kazan, Russia, were each charged with eight counts of wire fraud and two counts of commodities fraud in a 10-count indictment that was returned by a federal grand jury on Wednesday and announced today. Arrest warrants will be issued in the United States for both men.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and William C. Monroe, Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodities Futures Trading Commission assisted in the investigation and filed a civil lawsuit in 2010 that prevented the defendants from obtaining $7.2 million in trading profits.

According to the indictment, between April and June 2010 the defendants entered into a series of currency futures trades on the CME’s Globex electronic trading platform to collect approximately $7.2 million in profits from one futures commission merchant, Velocity LLC, while not paying a corresponding $7.8 million loss to another merchant, Open E Cry LLC. The defendants’ trades substantially exceeded the deposits in Marat Yunusov’s trading account at Open E Cry and intentionally shifted the risk of loss to that merchant.

The defendants allegedly matched their orders for ruble and e-micro British pound futures contracts in their respective accounts at Open E Cry and Velocity by entering a buy or sell order in one account and, within seconds, entering an opposite but equal quantity buy or sell order in the other account. As part of the scheme, the defendants entered their orders in the back of the month contracts where trading volume was low to increase the likelihood of matching the trade orders against each other.

The defendants tested their scheme in April 2010 in preparation for matching a substantially greater volume of trades during overnight trading on June 4, 2010, the charges allege. They calibrated their trades to provide the appearance that profits from pound contract trading covered the losses from the ruble contract trading, the indictment adds.

Each count of commodities fraud carries a maximum penalty of 25 years in prison, and each wire fraud count carries a maximum of 20 years in prison. All 10 counts carry a maximum fine of $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Sunday, October 21, 2012

Vincent Thakur Singh was Arrested in Idaho for $20 Million Investment Fraud


Source- http://www.fbi.gov/sacramento/press-releases/2012/former-elk-grove-man-arrested-in-idaho-for-20-million-investment-fraud

SACRAMENTO, CA—Vincent Thakur Singh, 43, formerly of Elk Grove, was arrested late Monday on federal investment fraud and bankruptcy fraud charges in Caldwell, Idaho. Singh is charged in a 24-count indictment, returned by a federal grand jury in Sacramento on October 4 and unsealed this morning, with wire fraud, false statements in bankruptcy, and bankruptcy bribery, United States Attorney Benjamin B. Wagner announced.

The indictment alleges that Singh carried out an investment fraud through an entity known as the Perfect Financial Group. According to the indictment, Singh targeted 190 members of the ethnic Indian Fijian community for an investment fraud that grossed approximately $20 million. Singh told investors that he was using their money for hard money lending, but actually, he put it to other purposes. The indictment alleges that he lost $12 million through gambling; diverted more than $2 million to personal bank accounts and withdrew much of that in cash; spent $880,000 on a film project; and spent more than $1 million on other business ventures. Singh also used the money to pay other victims, falsely representing that the payments were profits from the short-term hard money lending business.

According to court documents, on August 19, 2010, Singh declared bankruptcy and committed fraud crimes in the bankruptcy. In the bankruptcy, Singh allegedly failed to disclose bank accounts and tried to induce his victims not to participate in the bankruptcy proceedings.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Saturday, October 20, 2012

SEC Charges Geoffrey H. Lunn, Darlene A. Bishop and incent G. Curry in ".44 MAGNUM" Investment Scheme


Source- http://www.sec.gov/news/press/2012/2012-213.htm

Washington, D.C., Oct. 18, 2012 — The Securities and Exchange Commission today charged a purported money manager and two of his chief marketers with defrauding investors in a fake company he created that bore a similar name to what was formerly one of Germany's largest banks.

The SEC alleges that Geoffrey H. Lunn of Sheridan, Colo., operated the $5.77 million investment scheme with assistance from Darlene A. Bishop of Odessa, Texas, and Vincent G. Curry of Las Vegas. Lunn portrayed himself as the vice president of Dresdner Financial, a firm whose executives he claimed had connections to Dresdner Bank and was purportedly planning to purchase several other banks to expand its operations. Lunn, Bishop, and Curry solicited investors throughout the U.S. and in several foreign countries for their ".44 Magnum Leveraged Financing Program" that they promised could turn an investment of just $44,000 into $2 million within 10 to 12 banking days. However, Dresdner Financial was not a real company and investor money was not used for any investment purpose. Lunn withdrew the money in cash and Western Union transfers, paid hundreds of thousands of dollars to Bishop and Curry, and gave nearly a million dollars to three Las Vegas call girls.

"Lunn, Bishop, and Curry created an aura of credibility by inventing a fictitious firm with a name similar to a legitimate company," said Robert J. Burson, Associate Regional Director of the SEC's Chicago Regional Office. "But their 100 percent guaranteed investment program and the astronomical returns they promised were nothing more than an elaborate hoax."

According to the SEC's complaint filed in federal court in Denver, the scheme occurred between February 2010 and February 2011, and the securities offered were never registered with the SEC as required under the federal securities laws. Lunn, Bishop, and Curry told investors that Dresdner offered 100 percent guaranteed rates of return through a process involving the lease and monetization of bank instruments. Curry and Bishop marketed the program directly to potential investors through phone calls, e-mails, and other communications. Lunn held conference calls with marketers and investors to explain the workings of the program.

According to the SEC's complaint, Lunn admitted in sworn testimony during the SEC's investigation that, "It was a con, basically." Lunn admitted that he did not lease any bank instruments, obtain any insurance wraps, monetize any bank instruments, or place any money into trading platforms as represented to investors. Nor did he return the money to investors. When Lunn, Bishop, and Curry were unable to repay investors after the promised 10 to 12 days, they perpetuated the scheme by repeatedly postponing the payout dates and claiming the delays were due to holds placed by banks or the government.

The SEC alleges that Lunn did not invest any investor funds as promised and instead began making cash withdrawals after the very first investor deposit. In October 2010, Lunn began making payments to three women he met in Las Vegas whom he described as "call girls." Lunn testified that he gave at least $848,500 to the three women so that they could have "a better type of life." In November 2010, Lunn used investor money to make a $1 million Ponzi-like payment to a favored investor who he thought "was a deserving person." Lunn paid $1.3 million to marketers of the scheme, including more than $650,000 to Bishop and Curry. Lunn used the remaining investor funds to pay for his personal and business expenses.

According to the SEC's complaint, Lunn also testified to SEC investigators that it was a "one-eyed man" using the alias "Robert Perello" who actually created Dresdner and the Magnum program. Lunn testified that Perello told him that he named the program accordingly because "when people found out they'd been ripped off, they would buy a .44 Magnum and shoot themselves in the head." Lunn claimed that Perello threatened to kill him and his family if he did not cooperate in the Dresdner scheme, and that he gave the cash he withdrew from investor funds and the Western Union transfers to Perello. Lunn is the only person who claims to have met Perello in person, saying he does not know Perello's true identify or current whereabouts and that his only distinguishing characteristic is that he has just one eye. Despite Lunn's assertions, no individual resembling Perello has been identified or located.

The SEC's complaint alleges that Lunn, Bishop and Curry violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker registration provisions of Section 15(a) of the Exchange Act. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Friday, October 19, 2012

Well Advantage Firm to Pay $14 Million to Settle Insider Trading Charges




Source- http://www.sec.gov/news/press/2012/2012-212.htm

Washington, D.C., Oct. 18, 2012 — The Securities and Exchange Commission today announced that a Hong Kong-based firm charged with insider trading in July has agreed to settle the case by paying more than $14 million, which is double the amount of its alleged illicit profits. The proposed settlement is subject to the approval of Judge Richard J. Sullivan of the U.S. District Court for the Southern District of New York.

The SEC filed an emergency action against Well Advantage to freeze its assets less than 24 hours after the firm placed an order to liquidate its entire position in Nexen Inc. The SEC alleged that Well Advantage had stockpiled shares of Nexen stock based on confidential information that China-based CNOOC Ltd. was about to announce an acquisition of Nexen. Well Advantage sold those shares for more than $7 million in illicit profits immediately after the deal was publicly announced. Well Advantage is controlled by prominent Hong Kong businessman Zhang Zhi Rong, who also controls another company that has a "strategic cooperation agreement" with CNOOC.

"If approved by the court, Well Advantage has agreed to give up all of its ill-gotten profits from these trades and pay a substantial penalty on top of that," said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division's Market Abuse Unit and Associate Director of the New York Regional Office. "The speedy resolution of this case shows the serious consequences that await traders who engage in insider trading."

Well Advantage has agreed to the entry of a final judgment requiring payment of $7,122,633.52 in illegal profits made from trading Nexen stock, and payment of a $7,122,633.52 penalty. The proposed judgment also enjoins Well Advantage from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. Well Advantage neither admits nor denies the charges.


************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Thursday, October 18, 2012

SEC Charges Hedge Fund Adviser and Two Executives With Fraud in Continuing Probe of Suspicious Fund Performance


Source- http://www.sec.gov/news/press/2012/2012-209.htm

Washington, D.C., Oct. 17, 2012 – The Securities and Exchange Commission today charged a former $1 billion hedge fund advisory firm and two executives with scheming to overvalue assets under management and exaggerate the reported returns of hedge funds they managed in order to hide losses and increase the fees collected from investors.

The SEC alleges that New Jersey-based Yorkville Advisors LLC, founder and president Mark Angelo, and chief financial officer Edward Schinik enticed pension funds and other investors to invest in their hedge funds by falsely portraying Yorkville as a firm that managed a highly-collateralized investment portfolio and employed a robust valuation procedure. They misrepresented the safety and liquidity of the investments made by the hedge funds, and charged excessive fees to the funds based on the fraudulently inflated values of the investments.

This is the seventh case arising from the SEC’s Aberrational Performance Inquiry, an initiative by the Enforcement Division’s Asset Management Unit that uses proprietary risk analytics to identify hedge funds with suspicious returns. Performance that is flagged as inconsistent with a fund’s investment strategy or other benchmarks forms a basis for further investigation and scrutiny.

“The analytics put Yorkville front and center on our radar screen,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit. “When we looked further we found lies to investors and the firm’s auditors as well as a scheme to inflate fees by grossly overvaluing fund assets. We will continue to pursue hedge fund managers whose success is based on fiction rather than fact.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Yorkville, Angelo, and Schinik defrauded investors in the YA Global Investments (U.S.) LP and YA Offshore Global Investments Ltd hedge funds.

The SEC alleges that Yorkville and the two executives:
Failed to adhere to Yorkville’s stated valuation policies.
Ignored negative information about certain investments by the funds.
Withheld adverse information about fund investments from Yorkville’s auditor, which enabled Yorkville to carry some of its largest investments at inflated values.
Misled investors about the liquidity of the funds, collateral underlying the investments, and Yorkville’s use of a third-party valuation firm.

The SEC alleges that by fraudulently making Yorkville’s funds more attractive to potential investors, Angelo and Schinik enticed more than $280 million in investments from pension funds and funds of funds. This enabled Yorkville to charge the funds at least $10 million in excess fees based on the inflated values of Yorkville’s assets under management.

The SEC’s complaint charges Yorkville with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. Yorkville also is charged with violating Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8. Angelo is charged with violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5, and Sections 206(1), (2) and (4) of the Advisers Act and Rule 206(4)-8. He also is charged with aiding and abetting Yorkville’s violations of the Exchange Act and Advisers Act. Schinik is charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5, and with aiding and abetting Yorkville’s violations of the Exchange Act and Advisers Act.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Wednesday, October 17, 2012

SEC Charges Four Brokers With Defrauding Customers in $18.7 Million Scheme


Source- http://www.sec.gov/news/press/2012/2012-207.htm

Washington, D.C., Oct. 5, 2012 – The Securities and Exchange Commission today charged four brokers who formerly worked on the cash desk at a New York-based broker-dealer with illegally overcharging customers $18.7 million by using hidden markups and markdowns and secretly keeping portions of profitable customer trades.

The SEC alleges that the brokers purported to charge customers very low commission fees that were typically pennies or fractions of pennies per transaction, but in reality they were reporting false prices when executing the orders to purchase and sell securities on behalf of their customers. The brokers made their scheme especially difficult to detect because they deceptively charged the markups and markdowns during times of market volatility in order to conceal the fraudulent nature of the prices they were reporting to their customers. The surreptitiously embedded markups and markdowns ranged from a few dollars to $228,000 and involved more than 36,000 transactions during a four-year period. Some fees were altered by more than 1000 percent of what was being told to customers.

The SEC further alleges that when a customer placed a limit order seeking to purchase shares at a specified maximum price, the brokers filled the order at the customer’s limit price but used opportune times to sell a portion of that order back to the market to obtain a secret profit for the firm. They falsely reported back to the customer that they could not fill the order at the limit price. Meanwhile, the brokers made millions of dollars in illicit performance bonuses based on the fraudulent earnings they were generating on the cash desk.

The brokers charged in the SEC’s complaint are Marek Leszczynski, Benjamin Chouchane, Gregory Reyftmann, and Henry Condron.

“These brokers stole millions of dollars by overcharging customers for trades involving stocks with high trading volumes and price volatility, which are characteristics they wrongly thought would conceal their illicit pricing scheme,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “They underestimated the SEC’s ability and resolve to pursue such illegal schemes.”

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Leszczynski and Chouchane. Condron has pled guilty to criminal charges.

According to the SEC’s complaint filed in federal court in Manhattan, the brokers were employed at an interdealer broker firm. Interdealer brokers typically operate only as agents and execute large volumes of securities trades on behalf of customers for low commissions. The cash desk where these brokers worked executed trades in U.S. and Canadian stocks, and customers were primarily large foreign institutions and foreign banks. The firm’s internal records show that customers were to be charged flat commission rates between $0.005 and $0.02 per share.

The SEC’s complaint alleges that the scheme spanned from 2005 to 2009. Reyftmann, Chouchane, and Leszczynski were sales brokers on the cash desk who were responsible for finding customers, developing relationships, and taking orders from customers. Reyftmann supervised the cash desk. Condron was a sales trader and middle-office assistant on the cash desk who entered orders received from the sales brokers and ensured the orders were executed.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Monday, October 15, 2012

George P. Hranowskyj was Sentenced To 168 Months For Elaborate Bank And Tax Fraud


Source- http://www.justice.gov/usao/vae/news/2012/10/20121015hranowskyjnr.html

NORFOLK, Va. – George P. Hranowskyj, 47, of Chesapeake, Va., was sentenced today to 168 months in prison for carrying out elaborate and sophisticated fraud schemes that contributed to the failure of the Bank of the Commonwealth and defrauded investors and the government of millions of dollars.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Juan C. Molina, Acting Special Agent in Charge of the FBI’s Norfolk Field Office; Rick A. Raven, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office; Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG), made the announcement after sentencing by United States District Judge Raymond A Jackson.

“Mr. Hranowskyj’s agreement to perform personal and professional favors for Bank insiders in exchange for unfettered access to millions of dollars in credit exposes the ugly underbelly of how certain insiders treated the Bank of the Commonwealth as their personal piggy bank,” said U.S. Attorney MacBride. “His sentence of 14 years in prison sends a strong and unequivocal message that white collar criminals will be held accountable for the often devastating impact of their crimes on our communities.”

“Today’s sentence marks another chapter in bringing to justice those individuals who were responsible for the wanton fraud that so pervaded the financial dealings of the Bank of the Commonwealth,” said FBI Acting SAC Molina. “I want to thank the agents, prosecutors and supporting staff for their unwavering commitment to reveal these wide-ranging criminal misdeeds; they have served the public, and in particular the Hampton Roads community, well.”

“Hranowskyj treated this bank like he owned it, calling himself ‘Big Daddy’ to bank employees, overdrawing his accounts by $600,000, and demanding that the bank ‘lower his rates ASAP’ and cash his employees’ paychecks even though his account was in the red,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “If the bank did not do what he wanted, he threatened to stop participating in a vast fraud where he helped senior bank executives extend-out bad loans, pretending that they were current on the bank’s books, and bid up bank-owned property at auction using the bank’s own money. Hranowskyj and his partner, Eric Menden, leveraged such control over the bank due to this scheme, that bank employees called it the ‘Bank of Eric and George.’ The $40 million fraud scheme perpetrated by these partners in crime contributed to the failure of the bank, a failure that left the entire Tidewater area without an important source of lending. SIGTARP and our law enforcement partners will bring to justice all those responsible for all fraud that drove Bank of the Commonwealth into the ground.”

“Today’s sentencing is fitting punishment for one of the principal perpetrators of the complex fraud scheme contributing to the failure of the Bank of the Commonwealth and related losses to the Deposit Insurance Fund,” said FDIC Inspector General Rymer. “The American people can be assured that the Federal Deposit Insurance Corporation Office of Inspector General will continue to partner with law enforcement colleagues in efforts to ensure the safety and soundness of our nation’s banks and the viability of the insurance fund.”

“Criminal conspiracies involving financial fraud of this magnitude are often described as a house of cards, the underlying structure often times falls apart and exposes the individuals’ responsible without warning,” said IRS SAC Raven. “Mr. Hranowskyj’s contribution to the Bank of the Commonwealth’s criminal conspiracy was significant, and today’s sentence restores public confidence in our system of justice.”

Hranowskyj pled guilty on July 12, 2012 to conspiracy to commit wire fraud and conspiracy to commit bank fraud.

According to court records, from January 2008 through August 2011, Hranowskyj and his business partner, Eric H. Menden, 53, of Chesapeake, Va., performed favors for insiders at the Bank of Commonwealth in exchange for preferential lending treatment and assisted insiders in concealing the extent of the Bank’s non-performing assets by purchasing Bank-owned property.

At the time the Bank failed on September 23, 2011, Hranowskyj and his business partner were the Bank’s largest lending relationship – together, the partners guaranteed approximately $41 million in loans. Almost all of these loans were on an interest-only basis, and the two men were regularly permitted to overdraw their accounts. According to court records, Hranowskyj obtained loans simply by sending an e-mail to a Bank insider asking for money to purchase a Hummer or beach-front property. The close relationship between Hranowskyj, Menden, and Bank insiders caused employees at the Bank to sometimes refer to the Bank of the Commonwealth as “the Bank of Eric and George.”

Court records indicate that in November 2008, the Bank sent to the Federal Reserve an application requesting approximately $28 million from the Troubled Asset Relief Program (TARP). Based on its regulator’s concerns about the health of the Bank, the Federal Reserve later requested that the Bank withdraw its TARP application, which the Bank did.

In July 2010, the Bank entered into an agreement with the Federal Reserve and other regulators that specifically prohibited the Bank from extending, renewing, or restructuring any loans to specific troubled borrowers, which included Hranowskyj and his business partner.

In addition to the fraudulent conduct involving the Bank of the Commonwealth, Hranowskyj was sentenced for a separate scheme aimed at illegally profiting from historic rehabilitation tax credits. In this scheme, Hranowskyj and Menden systematically falsified invoices for large construction projects and used them to apply for federal and state historic tax credits. They had no personal use for the tax credits, but they instead sold them to investors in need of reducing their own tax liability.

In total, corporate investors paid Hranowskyj and his business partner approximately $8.7 million for illegitimate tax credits. As a result, the United States of America suffered a loss of approximately $6.2 million and the Commonwealth of Virginia suffered a loss of approximately $6.3 million.

Menden pled guilty for his role in these fraud schemes on April 12, 2012, and was sentenced on Sept. 26, 2012, to 138 months in prison.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Friday, October 12, 2012

Robert Kelly, the Chief Executive Officer of Wwebnet Inc. was Charged in Manhattan Federal Court for $2 Million Securities Fraud Scheme


Source- http://www.fbi.gov/newyork/press-releases/2012/software-company-ceo-charged-in-manhattan-federal-court-for-2-million-securities-fraud-scheme

Preet Bharara, the United States Attorney for the Southern District of New York, and Mary Galligan, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced today the arrest of Robert Kelly, the chief executive officer of Wwebnet Inc. (Wwebnet), a software development company, on securities and wire fraud charges. Kelly allegedly diverted for his own personal use over $2 million in investor proceeds that was intended for the development of a software program capable of transmitting music, videos, and movies over the Internet. He used the money to trade options, to pay his personal income taxes, and for other purposes unrelated to software development. Kelly was arrested yesterday afternoon in Raleigh, North Carolina, and was presented there in federal court this morning.

Manhattan U.S. Attorney Preet Bharara stated, “As alleged, Robert Kelly was simply an old-fashioned grifter touting a new technology opportunity in order to pick people’s pockets. He is the latest in a long line of defendants who allegedly lured unsuspecting investors with the allure of new technology only to be caught by law enforcement but, regrettably, probably not the last.”

FBI Acting Assistant Director in Charge Mary Galligan stated, “The audacity of this defendant’s alleged scheme was matched by its simplicity. He solicited and obtained millions of dollars from investors and simply pocketed the money for personal use. He told investors they were funding software development, then told his development team he hadn’t found investors. Taking investors’ money under false pretenses is essentially stealing it.”

According to the complaint unsealed yesterday in Manhattan federal court:

From 2004 through November 2008, Kelly solicited investors to send money to various Wwebnet-related bank accounts by misrepresenting that the funds would be used to develop software for transmitting music, videos, and movies over the Internet. Instead of using the millions of dollars in investor proceeds that he obtained for legitimate business purposes, Kelly diverted a substantial portion of the money that he raised for his own financial benefit. For example, Kelly transferred at least $2.11 million in investor funds into his personal trading account in the Cayman Islands which he used to trade options. By May 2008, that account had a zero balance. Kelly also used money he received from investors to pay his federal and state personal income taxes. At the same time that he was using investors’ money for his own personal benefit, Kelly falsely told his software development team that he was unable to allocate adequate resources for software development and could do so only when he was able to raise money from investors.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net

Thursday, October 11, 2012

Michael Winans, Jr. Pleads Guilty to $8 Million Ponzi Scheme


Source- http://www.fbi.gov/detroit/press-releases/2012/maryland-resident-pleads-guilty-to-8-million-ponzi-scheme

Michael Winans, Jr., 30, of Jessup, Maryland, pleaded guilty today in federal court to defrauding investors out of approximately $8 million dollars, United States Attorney Barbara McQuade announced.

Joining in the announcement was Wayne County Prosecutor Kym Worthy and Special Agent in Charge Robert Foley, III, Federal Bureau of Investigation (FBI).

Information presented to the court at the time of the plea showed that Winans operated the Winans Foundation Trust (the trust) and represented that the trust was a company investing in crude oil bonds in Saudi Arabia. Winans initially recruited eleven other individuals, whom he called “shareholders” in the trust, to invest in the crude oil bonds. Winans required the shareholders to solicit additional investors and send the investors’ funds to the trust. Over 1,000 victim investors from several states sent over $8,000,000 to the trust. All these victims were led to believe they were investing in Saudi Arabian crude oil bonds that Winans well knew did not exist. Winans guaranteed the victim investors that the bonds would yield returns of $1,000 to $8,000 within 60 days. In reality, Winans converted some of the victim investors’ money to his own personal use while giving some of his later victims’ money to his earlier victims and falsely represented to them that it was the return on their “investments” he had promised.

“Investor fraud schemes like this one are just a fancy way to steal other people’s money,” McQuade said. “Anyone who robs citizens of their hard-earned savings will be brought to justice.”

Wayne County Prosecutor Kym Worthy stated, “Winans has allegedly fleeced many innocent people and betrayed their trust. This is a significant step in bringing justice to his many victims.”

FBI Special Agent in Charge Foley, “”Those individuals who engage in illegal investment schemes will face severe penalties for their criminal activity. The FBI is committed to vigorously pursuing anyone who commits these crimes.”

Winans sentencing has been set for February 27, 2013, at 2:00 p.m. before the Honorable Sean F. Cox, at which time he could face a statutory maximum penalty of 20 years in prison.



************************************************************************
Report Securities Fraud by Calling 1-888-482-6825 or by visiting
www.reportsecuritiesfraud.net