South Florida Investment Advisor George Elia Indicted for Investment Fraud Scheme

Source-  http://www.fbi.gov/miami/press-releases/2012/south-florida-investment-advisor-indicted-for-investment-fraud-scheme 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the April 5, 2012 indictment of George Elia, 68, formerly of Ft. Lauderdale, on one count of wire fraud, in violation of Title 18, United States Code, Section 1343.

According to the indictment, George Elia controlled International Consultants and Investment Group, Limited Corp., and several other investment companies that operated out of Broward County. From as early as October 2004, Elia solicited investors by making false assurances about the safety and soundness of their investments. The indictment alleges that Elia fraudulently assured investors that his companies had significant assets, that Elia engaged in day trading, that investors could immediately obtain their original investments, and that Elia’s companies consistently earned high rates of return. In fact, however, according to the indictment, Elia’s companies had substantially fewer assets than he represented, his companies paid earlier investors using investor funds from more recent investors, Elia used investor money for his personal use, and Elia’s companies did not earn the rates of return he had assured investors.

This case resulted from the Southern District of Florida’s ongoing Securities and Investment Fraud Initiative. The Securities and Investment Fraud Initiative is a coordinated, multi-agency initiative targeting criminals operating a broad range of stock and commodities frauds in the Southern District of Florida.

U.S. Attorney Wifredo A. Ferrer stated, “Investors should rest assured that individuals who engage in fraud and manipulate the financial system as their treasure trove will be brought to justice.”

“George Elia preyed on trusting investors by touting his purported investment experience and by creating fictitious account statements to create the illusion of success. An important part of the FBI’s mission is to investigate such financial frauds and hold perpetrators accountable. George Elia will now have to face his investors in a court of law,” said FBI Special Agent in Charge John V. Gillies.

Also today, the Securities and Exchange Commission announced it filed a separate civil case against George Elia and his companies for engaging in for engaging in a scheme to defraud investors, including several members of the gay community within Wilton Manors.

************************************************************************

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

www.reportsecuritiesfraud.net 

Martin B. Feibish Pleads Guilty to Defrauding Investor of $5 Million in Ponzi Scheme

Source-  http://www.fbi.gov/boston/press-releases/2012/investment-broker-pleads-guilty-to-defrauding-investor-of-5-million-in-ponzi-scheme 

PROVIDENCE, RI—Martin B. Feibish, 81, of Providence, Rhode Island, an independent insurance agent, investment broker, and creator of two investment companies, pleaded guilty in federal court in Providence today to defrauding a Florida investor out of approximately $5 million by perpetrating a self-contained Ponzi scheme, announced United States Attorney Peter F. Neronha. Feibish also pleaded guilty to filing a false tax return.

Feibish admitted to the court that between 2001 and February 2011, he induced an investor to invest with him more than $5 million by creating false and fictitious investment schemes. Feibish admitted that he returned only a portion of the funds to the investor and that he falsely and fraudulently represented that the funds were returns on the investor’s investments. Feibish admitted that the funds he provided to the investor were actually the result of a Ponzi scheme he perpetrated with the investor’s own money. Feibish admitted to the court that he induced the victim to invest money with his companies so that he could control the funds and use them for his own benefit.

Feibish also admitted to the court that he filed a false tax return for tax year 2009, claiming income in the negative amount of $94,699. Feibish admitted that he had received income substantially more than the amount he reported.

Appearing before U.S. District Court Judge John J. McConnell, Feibish pleaded guilty to one count of mail fraud and one count of filing a false tax return. He is scheduled to be sentenced on June 29, 2012.

Mail fraud is punishable by a maximum sentence of 20 years in federal prison, three years’ supervised release, and a fine of $250,000. Filing a false tax return is punishable by up to three years in federal prison, three years’ supervised release, and a fine of $1,000,000.

************************************************************************

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

www.reportsecuritiesfraud.net 

Timothy Melvin Murphy Pleads Guilty to Ponzi-Style Investment Fraud Scheme

Source-  http://www.fbi.gov/losangeles/press-releases/2012/orange-county-man-pleads-guilty-to-ponzi-style-investment-fraud-scheme 

LOS ANGELES—An Orange County man pleaded guilty today in federal court to conducting a Ponzi-style investment fraud scheme that caused approximately 28 victims to suffer a total loss of approximately $2.7 million.

Timothy Melvin Murphy, 70, of Orange, pled guilty to a single count of mail fraud, in violation of Title 18, United States Code, Section 1341. Murphy is a retired colonel in the California Army National Guard who previously served as the Commanding Officer of the Guard’s base in Los Alamitos, California.

At his change of plea hearing, Murphy admitted that he devised and executed a scheme to obtain money from certain of his clients by means of material false promises. Murphy admitted that he executed the scheme through his business, Capital Investors Inc., which he operated out of Orange, California.

Murphy admitted that, in furtherance of his scheme, he offered fraudulent investment opportunities to certain clients and that he created and used a variety of false documents to execute the scheme. The investigation revealed that, in presenting the bogus investment opportunities, Murphy falsely represented that certain clients’ funds would be invested as promised and would generate substantial rates of return, which, in some cases, he falsely portrayed as “guaranteed” rates of return. Murphy created false account statements to mislead his clients into thinking that their money was properly invested and generating the promised income. In fact, as he admitted today, Murphy did not use the clients’ investment funds as he promised he would, and the government estimates that Murphy’s victims suffered losses in the amount of approximately $2.7 million.

The charge of mail fraud carries a statutory maximum sentence of 20 years in federal prison; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and three years’ supervised release. In addition, Murphy will be required to pay restitution to the victims of his fraud scheme.

************************************************************************

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

www.reportsecuritiesfraud.net 

SEC Charges AutoChina International Limited and 11 investors with Stock Manipulation

Source-  http://www.sec.gov/news/press/2012/2012-59.htm 

Washington, D.C., April 11, 2012 — The Securities and Exchange Commission today charged AutoChina International Limited and 11 investors, including a senior executive and director at the China-based firm, with conducting a market manipulation scheme to create the false appearance of a liquid and active market for AutoChina’s stock.

According to the SEC’s complaint filed in the U.S. District Court for the District of Massachusetts, AutoChina senior executive and director Hui Kai Yan, a former AutoChina manager, and others fraudulently traded AutoChina’s stock to boost its daily trading volume. Starting in October 2010, the defendants and others deposited more than $60 million into U.S.-based brokerage accounts and engaged in hundreds of fraudulent trades over the next three months through these accounts and accounts with a Hong Kong-based broker-dealer. The fraudulent trades included matched orders, where one account sold shares to another account at the same time and for the same price, and wash trades, which resulted in no change of beneficial ownership of the shares. AutoChina and the other defendants engaged in the scheme after lenders offered AutoChina unfavorable terms for a stock-backed loan due to low trading volume in its stock.

“AutoChina and the other defendants engaged in a brazen manipulation of AutoChina’s stock to obtain favorable loan terms,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The SEC will hold accountable publicly-traded companies including foreign companies that violate the U.S. securities laws and disrupt the U.S. capital markets.”

David P. Bergers, Director of the SEC’s Boston Regional Office, added, “The investing public has a right to honest and fair markets. Manipulation of stocks has no place in the financial strategies of any public company.”

The SEC complaint alleges that in the three months before the defendants opened the U.S.-based brokerage accounts, the average daily trading volume of AutoChina’s stock was approximately 18,000 shares. From Nov. 1, 2010 to Jan. 31, 2011, the average daily trading volume increased to more than 139,000 shares. On some days, the defendants and related accounts’ trading accounted for as much as 70 percent of the trading of AutoChina’s stock.

According to the SEC’s complaint, several of the defendants are related to AutoChina’s Chairman and Chief Executive Officer, who at the time of the scheme owned more than 57 percent of the company. Three of the defendants are siblings of AutoChina’s Chairman and Chief Executive Officer and another is married to one of his siblings.

The SEC’s complaint charges AutoChina, Hui Kai Yan, Rui Ge Dong, Victory First Limited, Rainbow Yield Limited, Yong Qi Li, Ai Xi Ji, Ye Wang, Zhong Wen Zhang, Li Xin Ma, Yong Li Li, and Shu Ling Li with violating Section 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint further alleges that Rui Ge Dong, Victory First Limited, Rainbow Yield Limited, Yong Qi Li, Ai Xi Ji, Ye Wang, Zhong Wen Zhang, Li Xin Ma, Yong Li Li, and Shu Ling Li aided and abetted AutoChina’s violations of Section 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

The SEC’s investigation was conducted by Eric Forni, Rachel Hershfang, Sofia Hussain, Matthew Jacques, and John Kaleba of the Boston Regional Office, and Stuart Jackson of the Division of Risk, Strategy, and Financial Innovation. Forni is a member of the Enforcement Division’s Market Abuse Unit. The SEC’s Cross Border Working Group, which focuses on U.S. companies with substantial foreign operations, and the SEC’s Office of International Affairs assisted the Boston Regional Office enforcement staff in the investigation. The SEC’s investigation is continuing.

The SEC acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) and the Hong Kong Securities and Futures Commission.

************************************************************************

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

www.reportsecuritiesfraud.net 

SEC Settles Fraud Charges Against Benedict Van

Source-  http://www.sec.gov/news/press/2012/2012-57.htm

Washington, D.C., April 9, 2012 – The Securities and Exchange Commission today charged a Silicon Valley man who raised millions for two Internet start-ups by falsely promising investors that his companies were on the verge of undergoing successful initial public offerings and were well on their way to becoming the “next Google.”

The SEC alleges that Benedict Van, of San Jose, Calif., lured investors into web-based start-ups hereUare, Inc. and eCity, Inc. by falsely telling them that the companies would go public within a matter of months and generate millions in quick returns. In truth, Van had no plans to take the companies public and relied solely on investor funds to stay in business. Ultimately, when investor funds ran out by the end of 2008, Van was forced to shut down operations.

“Van played on the hopes of investors, tricking them into believing that his companies were on the verge of becoming the next Silicon Valley success stories,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office. “Investors should be wary of pitches promising IPO riches from companies with minimal operations and track records.”

According to the SEC’s complaint, filed in federal court in the Northern District of California, Van raised more than $6.2 million from investors for hereUare in 2007 and 2008, and raised $880,000 in investor funds for eCity in 2008. In presentations to prospective investors, chiefly in homes in Sacramento and Stockton, Van held himself out as a wealthy venture capitalist with prior IPO experience. Van told prospective investors that the companies had lucrative deals and patents, and that he had retained Goldman Sachs and an international law firm to help take the companies public within six months. According to the SEC, all of these representations were false.

The SEC’s complaint charges Van and hereUare violated the antifraud and registration provisions of U.S. securities laws, and charges eCity with violations of the antifraud provisions. Van, hereUare, and eCity have agreed to settle the charges against them without admitting or denying the SEC’s allegations and have consented to permanent injunctions. Van also consented to a district court order to permanently bar him from serving as a public company officer or director, and hereUare has consented to an administrative proceeding order deregistering its stock with the Commission. The SEC waived any financial payment against Van based on his demonstrated inability to pay.

Jennifer J. Lee and Jina L. Choi of the San Francisco Regional Office conducted the SEC’s investigation.

************************************************************************

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

www.reportsecuritiesfraud.net 

Nasser V. Hamedani and Sholeh A. Hamedani Convicted of Obstructing SEC Investigation into Misuse of Investor Monies and False Filings in Connection with IPO

Source-  http://www.fbi.gov/sanfrancisco/press-releases/2012/father-and-daughter-sentenced-for-lying-to-sec 

OAKLAND, CA—For conspiring to obstruct an investigation of the Securities and Exchange Commission, Nasser V. Hamedani and Sholeh A. Hamedani were sentenced yesterday to 25 months and 20 months, respectively, in prison, United States Attorney Melinda Haag announced. They were also ordered to perform a total of 1,750 hours of community service as part of their two-year terms of supervised release.

The defendants, father and daughter, pled guilty on November 9, 2011 to violating 18 U.S.C. § 371-conspiracy to obstruct justice. According to the plea agreement, the Hamedanis admitted to making false statements while under oath and producing fraudulent documents in order to impede and obstruct the SEC’s investigation into the registration and sales of securities issued by the company known as The Children’s Internet Inc. (TCI). TCI was an Internet start-up company based in San Ramon, California that was in the process of developing and marketing software to protect and secure children’s access to the Internet.

Nasser Hamedani, 74, and Sholeh Hamedani, 44, both residents of Antioch, California, were indicted by a federal grand jury on May 12, 2009. A superseding indictment was returned on July 21, 2009. The two defendants were charged with conspiracy, securities fraud, false statements to accountants, false books and records, and obstruction of justice.

“Obstructing the SEC from carrying out its mission to protect investors and the integrity of the financial markets is a serious offense with serious consequences,” U.S. Attorney Haag said. “This investigation demonstrates the U.S. Attorney’s office’s commitment to prosecuting individuals who make false statements and fabricate documents in response to investigations by our enforcement partners at the SEC.”

In addition to their criminal convictions, the Hamedanis remain subject to final judgments entered by U.S. District Judge Claudia Wilken on October 23, 2008 in the SEC’s civil action. According to those judgments, the Hamedanis were held jointly and severally liable for disgorgement and prejudgment interest of approximately $4.0 million and were each fined $100,000 in civil penalties. The final judgments also impose permanent injunctions against the Hamedanis from violating certain provisions of the federal securities laws, prohibit them from serving as an officer or director of a publicly reporting company, and prohibit them from engaging in penny stock transactions.

************************************************************************

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

www.reportsecuritiesfraud.net 

Brett A. Amendola Pleads Guilty to Ponzi Scheme Involving Purchase of Beacon Hill Golf Course

Source-  http://www.fbi.gov/washingtondc/press-releases/2012/ashburn-man-pleads-guilty-to-ponzi-scheme-involving-purchase-of-beacon-hill-golf-course 

ALEXANDRIA, VA—Brett A. Amendola, 37, of Ashburn, Virginia, pled guilty today to defrauding more than $3.8 million from investors through a Ponzi scheme involving his purported purchase of a golf course in Loudoun County, Virginia.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Michael L. Chapman, Loudoun County Sheriff, made the announcement after the plea was accepted by United States District Judge Gerald Bruce Lee.

Amendola pled guilty today to wire fraud and faces a maximum penalty of 20 years in prison when he is sentenced on June 29, 2012.

According to a statement of facts filed with his plea agreement, during 2010 and 2011, Amendola persuaded various investors to provide him with short-term funding that would be held in escrow to fulfill a requirement by his lender to purchase the Beacon Hill Golf Course in Loudoun County. He promised that the money would be returned to the investors—with interest—in a matter of days. In reality, Amendola diverted the investors’ money to his own use, including funding his and family members’ trading accounts, making payments to investors in this and other schemes, and paying for personal expenses.

To carry out his fraud, Amendola posed as the attorney representing the escrow account both over the phone and through various e-mail messages, leading investors to believe that they were wiring funds to financial accounts controlled by the escrow attorney, when, in reality, the financial accounts were controlled by Amendola and quickly looted for his personal use.

************************************************************************

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

www.reportsecuritiesfraud.net 

David A. Nilsen Sentenced to 97 Months for Real Estate Investment Fraud

Source-  http://www.fbi.gov/sanfrancisco/press-releases/2012/former-monterey-businessman-sentenced-to-97-months-for-real-estate-investment-fraud 

SAN JOSE, CA—David A. Nilsen was sentenced today to 97 months in prison and ordered to pay $69,828,833 in restitution following his conviction for conspiracy to commit mail and wire fraud in connection with his operation of Cedar Funding, a Monterey-based hard money lender, United States Attorney Melinda Haag announced.

Nilsen pleaded guilty on October 24, 2011 to conspiracy to commit mail and wire fraud. According to the plea agreement, Nilsen founded Cedar Funding in 1980 and connected residential real estate developers seeking to borrow money using real property as collateral with individual investors who were willing to make such loans. Nilsen admitted that, from 2004 through 2008, an increasing number of borrowers defaulted on loans funded by Cedar Funding investors, due to market conditions and management and construction problems.

According to court documents, in response to those developments, and in an attempt to salvage the real estate projects that secured Cedar Funding loans, Nilsen and his loan servicing manager failed to inform investors of certain material facts about the true condition of their investments. In particular, they failed to inform investors that borrowers had defaulted, that Nilsen had taken over many of the loans, and that Cedar Funding had advanced substantial additional investor funds into those loans. Nilsen further admitted that the increasing loan balances, combined with the declining value of the underlying real estate collateral, resulted in the amount of the loan exceeding the value of the collateral. Nilsen also acknowledged that he and his loan servicing manager did not properly record investors’ fractional deeds of trust and did not inform investors that Cedar Funding had used a significant portion of the investment money to make interest payments to investors on those loans.

“Not every fraud begins as a criminal scheme,” United States Attorney Melinda Haag said. “This case is an example of what so often happens when, rather than address problems in an honest and forthright manner, a businessman instead decides, as the situation worsens, to deceive his investors. My office will continue to investigate and prosecute defendants who mislead investors in an attempt to ride out the storm.”

Nilsen, 61, of Seaside, California, was indicted with co-defendant Manoel Errico by a federal grand jury on September 8, 2009. Errico is a fugitive. Nilsen was charged with 31 counts of conspiracy, mail, wire, and securities fraud in violation of 18 U.S.C. §§ 1349, 1341, 1343 and 15 U.S.C. §§ 78j(b), and 78ff. After his initial appearance in federal court in San Jose in September 2009, Nilsen was released upon a secured $1 million bond and has remained out of custody.

************************************************************************

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

www.reportsecuritiesfraud.net 

SEC Charges George Elia and International Consultants & Investment Group Ltd. Corp., in Investment Fraud Scheme

Source-  http://www.sec.gov/news/press/2012/2012-56.htm 

Washington, D.C., April 6, 2012 — The Securities and Exchange Commission today charged that a South Florida investment manager defrauded investors by making false claims about his investment track record and providing bogus account statements that reflected fictitious profits.

In the complaint filed in the U.S. District Court for the Southern District of Florida, the SEC alleges that since 2005, George Elia and International Consultants & Investment Group Ltd. Corp., pulled in at least $11 million from investors by falsely claiming annual returns as high as 26%, and that Elia transferred more than $2.5 million of investor funds to two entities he controlled, Elia Realty, Inc., and 212 Entertainment Club, Inc.

Elia, age 67, and until recently a resident of Oakland Park, Florida, told investors that he had extensive experience in day trading stocks and exchange-traded funds, but his trading resulted in losses or only marginal gains, and the quarterly account statements he sent to clients overstated their returns, the SEC alleged.

According to the SEC’s complaint, Elia typically met and pitched prospective investors over meals at expensive restaurants in and around Fort Lauderdale. The SEC said his clients typically came to him through word-of-mouth referrals among friends and relatives. A significant number of the victims of his scheme were members of the gay community in Wilton Manors, Florida.

"Elia's blatant fraud and cruel deceptions have wrecked the lives of investors and their families," said Eric I. Bustillo, Regional Director of the SEC's Miami Regional Office. "This is a sad lesson that investors must always be skeptical of claims of high and steady investment returns, even when the manager is recommended by trusted friends or members of one’s own community."

In a parallel criminal case, the U.S. Attorney for the Southern District of Florida announced that Elia was indicted on April 5 on one count of wire fraud.

The SEC alleges that Elia and ICIG operated through an informal “Investor Funding Club” and through funds including Vision Equities Fund II, LLC and Vision Equities Fund IV, LLC. It alleges that Elia sent one investor a statement for the first three quarters of 2009, showing returns of 3.48%, 3.48%, and 3.52% respectively. The SEC alleges the statement was false and misleading because the returns exceeded Elia’s trading gains for the period. In at least one instance, the SEC alleges Elia reassured an investor by showing him falsified statements that grossly overstated account balances.

The SEC’s complaint charges that Elia and ICIG violated antifraud provisions of U.S. securities laws and that Elia aided and abetted violations by the firms. The SEC is seeking permanent injunctions against Elia and ICIG, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties. The complaint also named Elia Realty, Inc. and 212 Club Entertainment, Inc. as relief defendants.

************************************************************************

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

www.reportsecuritiesfraud.net 

SEC Freezes Accounts of Six Chinese Citizens and One Offshore Entity Charged with Insider Trading

Source-  http://www.sec.gov/news/press/2012/2012-54.htm 

Washington, D.C., April 6, 2012 — The Securities and Exchange Commission today announced that it has obtained a court-ordered freeze of the assets of six Chinese citizens and one British Virgin Islands entity charged with insider trading in Zhongpin Inc., a China-based pork processor whose shares trade in the U.S.

The SEC’s complaint, filed in U.S. District Court in Chicago on April 4, alleges the defendants reaped more than $9 million by trading in Zhongpin ahead of a March 27 announcement of a proposal to take the company private. The complaint names as defendants one entity, Prestige Trade Investments Ltd., and six individuals, Siming Yang, Caiyin Fan, Shui Chong (Eric) Chang, Biao Cang, Jia Wu, and Ming Ni. The SEC alleged that Yang formed Prestige in January and funded its U.S. brokerage account in March with $29 million transferred from a Hong Kong bank.

According to the SEC’s complaint, the seven defendants bought substantial quantities of common stock and call options in Zhongpin between March 14 and March 26. Zhongpin’s stock price jumped 21.8% on March 27 when the company publicly announced that its Chairman and CEO Xianfu Zhu had made a non-binding offer to acquire all of Zhongpin’s outstanding stock at $13.50 a share, a 46% premium over the previous day’s closing price.

“The defendants in this action – all with seemingly limited resources - suddenly and inexplicably purchased more than $20 million in Zhongpin securities just before an important public announcement,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “The SEC’s swift action to secure a judicial freeze order prevented millions of dollars from moving offshore.”

The SEC alleges that the purchases of Zhongpin stock and options were inconsistent with the defendants’ financial situations and prior investment behavior. In particular:

The defendants’ trades made up a significant portion of the trading in Zhongpin between March 14 and March 26. Prestige’s purchases alone represented about 41% of the common stock trading in this period.

Only one of the defendants had traded in Zhongpin before March 14.

For most of the individual defendants, the purchases of Zhongpin securities equaled or exceeded their stated annual income and represented a significant portion of their net worth.

Yang identified himself to his broker as an accountant in China with an annual income of $52,500 and a net worth of less than $250,000, when at the time he was a research analyst with a New York–based registered investment adviser.

Each of the defendants placed at least some of their trades from computer networks and hardware that other defendants also used to place trades.

The SEC alleges that the defendants violated federal anti-fraud laws, namely Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. The emergency court order that the SEC obtained on April 4 on an ex parte basis froze defendants’ assets held in U.S. brokerage accounts, grants expedited discovery and prohibits the defendants from destroying evidence.

************************************************************************

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

www.reportsecuritiesfraud.net 

SEC Sues Michael A. Baker and former CFO Michael Gluk to Recover Bonuses and Stock Profits Received During Accounting Fraud

Source-  http://www.sec.gov/news/press/2012/2012-51.htm 

Washington, D.C., April 2, 2012 — The Securities and Exchange Commission today sued two former executives at an Austin, Texas-based surgical products manufacturer to recover bonus compensation and stock sale profits they received during an accounting fraud at the company.

According to the SEC’s complaint filed in federal court in Austin, former ArthroCare Corporation CEO Michael A. Baker and former CFO Michael Gluk are not charged with personal misconduct, but they are still required under Section 304 of the Sarbanes-Oxley Act to reimburse ArthroCare for bonuses and stock profits that they received after the company filed fraudulent financial statements during 2006, 2007, and the first quarter of 2008.

"Clawback of incentive compensation and stock sale profits as authorized under the Sarbanes-Oxley Act is yet another reason for CEOs and CFOs to be vigilant in preventing misconduct and requiring that companies comply with financial reporting obligations," said Robert Khuzami, Director of the SEC’s Division of Enforcement.

The SEC brought a settled enforcement action against ArthroCare in February 2011, and in July charged former ArthroCare executives John Raffle and David Applegate with perpetrating a fraudulent scheme to overstate ArthroCare’s revenues and earnings.

Section 304 of the Sarbanes-Oxley Act provides for reimbursement by some senior corporate executives of certain compensation and stock sale profits received while their companies were in material non-compliance with financial reporting requirements due to misconduct. The "clawback" provision can include an individual who has not been personally charged with the underlying misconduct or alleged to have otherwise violated the federal securities laws.

************************************************************************

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

www.reportsecuritiesfraud.net 

Krittibas Ray Pleads Guilty To Multimillion Dollar Investment Fraud Scheme

Source-  http://www.justice.gov/usao/can/news/2012/2012_03_30_ray.guiltyplea.press.html 

SAN FRANCISCO – Krittibas Ray pleaded guilty in federal court in San Francisco today to two counts of wire fraud resulting from his operation of a multimillion dollar fraudulent investment scheme, United States Attorney Melinda Haag announced.

In pleading guilty, Ray admitted to enticing victims to invest in hedge funds he operated by falsely telling them that by placing funds into banks in India he could guarantee returns of 7 to 8.5 percent and that the hedge funds he was operating were profitable. In addition, Ray admitted that he failed to disclose to investors that he was using their money for personal expenses and to pay other investors, and that the gains he reported to investors were false.

Ray admitted that he received approximately $3.3 million from investors between February 2008 and December 2011, and that his fraudulent scheme caused more than $2.5 million of losses.

Ray, 43, of Albany, Calif., was arrested on Dec. 16, 2011, after he was charged by Criminal Complaint. On Dec. 29, 2011, a federal grand jury indicted Ray on two counts of wire fraud, in violation of Title 18, United States Code, Section 1343, and one count of money laundering, in violation of Title 18, United States Code, Section 1957. According to the plea agreement, Ray pleaded guilty to both wire fraud counts.

Ray has been in custody since his arrest. He is scheduled to be sentenced on June 15, 2012, at 11 a.m., before United States District Court Judge Susan Illston in San Francisco. The maximum statutory penalty for each count of wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison, a fine of $250,000 and restitution. Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

************************************************************************

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

www.reportsecuritiesfraud.net 

Former President And Ceo Of Billionaire Catt Entertainment Maurice Michael McCant Pleads Guilty To Stealing From Victims’ Investment Funds

Source-  http://www.justice.gov/usao/can/news/2012/2012_03_30_mccant.guiltyplea.press.html 

SAN FRANCISCO – Today Maurice Michael McCant, the former President and CEO of Billionaire Catt Entertainment (BCE) pleaded guilty to a fraud scheme in which he solicited investors for BCE by offering them a 30 percent return on any money they invested, United States Attorney Melinda Haag announced. According to the plea agreement, McCant told investors in BCE that their money would be used to promote rap concerts and that he would pay investors a portion of the profits received from ticket sales for the concerts. Instead, McCant used investors’ funds to pay his own personal expenses and to pay other investors.

On March 11, 2011, a federal grand jury in San Francisco indicted McCant on four counts of wire fraud, and this morning he pleaded guilty to all four counts. According to the Indictment, McCant, 50, of San Francisco, solicited investors from 2007 through 2009 by telling them he would invest their money in the promotion of rap concerts and by promising investors a 30 percent return on their investments. McCant also promised to pay all federal and state tax liability associated with two victim investors who liquidated their IRAs in order to invest in BCE.

According to the Indictment, McCant operated a scheme through which he stole a total of more than $1 million from more than 10 victim investors. In pleading guilty, McCant admitted that he used the proceeds of his scheme to pay mortgages, to pay his own personal expenses, and to pay other investors their expected returns on their investments in BCE.

McCant is scheduled to be sentenced on Aug. 3, 2012, before United States District Court Judge Susan Illston in San Francisco. The maximum statutory penalty for each count of wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison, a fine of $250,000, three years of supervised release, and restitution.

************************************************************************

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

www.reportsecuritiesfraud.net 

Indianapolis-Area High-Profile Financier Keenan R. Hauke Charged with Securities Fraud

Source-  http://www.fbi.gov/indianapolis/press-releases/2011/hogsett-announces-indianapolis-area-high-profile-financier-charged-with-securities-fraud 

INDIANAPOLIS—Joseph H. Hogsett, United States Attorney, announced that Keenan R. Hauke, age 40, of Fishers, has been charged with securities fraud in connection with his role as owner and CEO of Samex Capital, a Fishers-based company. The information filed by the U.S. Attorney’s Office alleges that Hauke defrauded more than five dozen victims of over $7 million from 2004-2011.

“I want to be clear this morning: Hoosiers have no tolerance for those who foster a culture of corruption in our communities, and neither does this office,” Hogsett said. “No matter who it is or how much the amount, whether they be shareholders or taxpayers, if you are swindling hardworking Hoosiers this office is committed to finding you, investigating you, and bringing you to justice.”

“These are serious allegations, and the personal tragedies involved sadden all of us,” Hogsett said. “With millions of dollars lost in this case, and dozens of Hoosier families affected, we are looking forward to the successful conclusion of this prosecution.”

Robert J. Holley, FBI Special Agent in Charge, stated, “Corporate & Securities Fraud is a high priority criminal threat for the Indianapolis Division of the FBI, and this investigation is an example of our commitment to aggressively investigate corporate insiders who seek to steal money from their investors.”

The information states that in 1999, Hauke founded Samex Capital in Fishers, allegedly forming a hedge fund and soliciting investors. As owner and CEO, Hauke is alleged to have procured millions of dollars in investment funds beginning in 1999. The information alleges that between 2004 and 2011, Hauke engaged in a scheme to defraud these investors.

The information states that 67 investors lost a total of $7,022,020.12 as a result of the scheme, in which Hauke allegedly failed to invest the money as promised, falsely reporting to investors that the fund was resulting in high rates of returns in an effort to dissuade them from closing their investment accounts. New investor money was used to pay those who did choose to close their account. It is also alleged that as part of the scheme, Hauke misappropriated and converted investor funds to his own benefit without the knowledge or authorization of the investors.

In April, 2011, a former employee became suspicious of Hauke and resigned from Samex Capital. That employee informed a number of investors that their investments may not be secure, an allegation that was denied by Hauke at the time. Shortly thereafter, the alleged fraudulent scheme was reported to the public, and Hauke’s personal accounts were frozen.

“I am pleased to learn that Keenan Hauke will be held accountable for his criminal conduct. This case provides another example that securities fraud will not be tolerated in Indiana. I commend U.S. Attorney Hogsett and his office for their efforts in working with us and achieving justice,” said Chris Naylor, Indiana Securities Commissioner. “I also thank the Securities Division team for their quick actions in stopping the illegal flow of money to Hauke through the Asset Freeze and Receivership. The Securities Division will continue to provide assistance to the Receiver in the marshaling of assets and return of ill-gotten gains to investors.”

************************************************************************

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

www.reportsecuritiesfraud.net 

Indiana-Based Biomet Inc. Agrees to Pay $17.2 Million for Bribes in Latin America and China

Source-  http://www.fbi.gov/washingtondc/press-releases/2012/third-medical-device-company-resolves-foreign-corrupt-practices-act-investigation 

WASHINGTON—Biomet Inc. has entered into a deferred prosecution agreement with the Department of Justice to resolve improper payments by the company and its subsidiaries in violation of the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division.

The matter is part of an investigation into bribery by medical device companies of health care providers and administrators employed by government institutions. Previously, Johnson & Johnson and Smith & Nephew Inc. have agreed to pay criminal penalties and entered into deferred prosecution agreements related to the ongoing investigation.

Biomet, headquartered in Warsaw, Indiana, manufactures and sells medical devices worldwide and is listed on the NASDAQ. According to the criminal information filed today in U.S. District Court in the District of Columbia in connection with the agreement, Biomet and its subsidiaries, employees, and agents made various improper payments from approximately 2000 to 2008 to publicly employed health care providers in Argentina, Brazil, and China to secure lucrative business with hospitals. During this time, more than $1.5 million in direct and indirect corrupt payments were made. In addition, at the end of each fiscal year, Biomet and its executives, employees, and agents falsely recorded the payments on its books and records as “commissions,” “royalties,” “consulting fees,” and “scientific incentives” to conceal the true nature of the payments.

As part of the agreement, Biomet will pay a $17.28 million criminal penalty and is required to implement rigorous internal controls, cooperate fully with the department, and retain a compliance monitor for 18 months. The agreement recognizes Biomet’s cooperation with the department’s investigation, thorough and wide-reaching self-investigation of the underlying conduct, and the remedial efforts and compliance improvements undertaken by the company. In addition, Biomet received a reduction in its penalty as a result of its cooperation in the ongoing investigation of other companies and individuals.

In a related matter, Biomet reached a settlement today with the U.S. Securities and Exchange Commission (SEC), under which Biomet agreed to pay $5.4 million in disgorgement of profits, including pre-judgment interest.

************************************************************************

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

www.reportsecuritiesfraud.net 

David Rubin Sentenced on Multi-Million-Dollar Securities Fraud

Source-  http://www.fbi.gov/stlouis/press-releases/2012/coral-mortgage-operator-sentenced-on-multi-million-dollar-securities-fraud 

ST. LOUIS—The United States Attorney’s Office announced today that David Rubin, employee and operator of two local offices of Coral Mortgage Bankers Corporation, was sentenced to five years’ probation, six months home confinement, 200 hours of community service, and ordered to pay restitution in the amount of $1.2 million.

According to court documents, between May 2007 and December 31, 2010, Rubin and co-defendant Joshua Gould embezzled approximately $1,500,000 from a retired individual solicited by Rubin to provide funds for operating capital for Coral’s St. Louis operations. The individual was assured that the funds would not be spent, would be held in a secure trust account, used only as collateral for Coral’s operations, and that the individual would receive regular interest payments. Between May 2007 and December 2008, the client provided Rubin approximately $1,200,000 from his and his wife’s life savings. Despite his representations that the funds would not be spent, Rubin used approximately $250,000 of the funds for operating expenses, including payment of his own salary. Rubin transferred the balance of the funds to Gould. Gould used those funds for personal expenses, including car payments, mortgage payments, payment of substantial personal credit card bills, the renovation of his personal residence, jewelry, and adult entertainment, including substantial expenses at the Penthouse Club and PT’s. Gould also used the money to finance start up costs and operational costs of several business ventures including The Sports Nook, True Hockey, and Free Poker Experience. Gould and Rubin prepared and gave the individual victim false account statements, including statements falsely representing to the victim that as of September 30, 2010, he had $1,126,365 in his investment fund and $217,123 in his family charity fund, when, in fact, all of the funds had been embezzled, diverted, and stolen by Gould and Rubin.

************************************************************************

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

www.reportsecuritiesfraud.net 

Ahmad “Zack” Noory Who Profited from Illegal Insider Trading Scheme Sentenced to 20 Months in Federal Prison

Source-  http://www.fbi.gov/losangeles/press-releases/2012/investor-relations-executive-who-profited-from-illegal-insider-trading-scheme-sentenced-to-20-months-in-federal-prison 

LOS ANGELES—The former owner of the Beverly Hills investor relations firm Nexus Investor Relations, Ahmad “Zack” Noory, 37, has been sentenced to 20 months in federal prison for secretly making stock trades based on inside information over a period of nearly five years—trades that generated more than $400,000 in illegal profits.

Noory, of Ladera Ranch, California, was sentenced Monday by United States District Judge John F. Walter. Noory was one of five defendants charged in March 2010 with carrying out an illegal insider trading scheme based on information from a source at the investor relations firm. According to prosecutors, as part of that scheme, co-defendant Ahmad Haris Tajyar paid $30,000 in cash bribes to co-defendant Zachary Bryant, who was an executive at the prominent investor relations firm Lippert Heilshorn. In exchange for those bribes, Bryant regularly gave Tajyar information about upcoming press releases for Lippert Heilshorn’s publicly traded clients before they had been announced to the public.

According to the prosecutors, Tajyar in turn gave inside information about these companies to Noory, co-defendant Omar Tajyar, 32, of Porter Ranch; and Vispi Shroff, 58, of Canyon Country, each of whom traded in advance of the press releases. Noory pled guilty in 2011 to participating in this scheme, admitting from 2004 through 2007, he made more than $100,000 in illegal profits from trades in advance of the press releases. Bryant also pled guilty to his role in this scheme and was sentenced in April 2011 by Judge Walter to 16 months in federal prison. Shroff pled guilty in 2010 and was sentenced in March 2011 by Judge Walter to nine months in federal prison.

In connection with his plea, Noory also admitted that he participated in a later scheme to profit from information that was stolen from Lippert Heilshorn’s e-mail system. At the previous sentencing hearing for co-defendant Bryant, prosecutors explained that Bryant provided Omar Tajyar with the password that Lippert’s employees used to remotely access their e-mail accounts at the firm. Omar Tajyar then used that password to secretly access the e-mail accounts of various Lippert Heilshorn employees to obtain information about upcoming press releases which had not yet been announced to the public. Omar Tajyar shared this stolen information on a regular basis with Noory, who used the information to make stock trades in 2008 and 2009 that generated more than $300,000 in illegal profits.

At the Noory sentencing hearing, prosecutors emphasized that Noory actively and enthusiastically participated in both illegal insider trading schemes, noting that Noory had used his brokerage accounts of his friends and family members to expand his ability to profit from the inside information as well as to conceal his actions from the government. Prosecutors also noted that Noory continued to trade based on information stolen from Lippert Heilshorn’s e-mail system even after Noory knew that the government was investigating his insider trading activities.

************************************************************************

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

www.reportsecuritiesfraud.net 

C. Tate George NBA Player and CEO of The George Group Indicted in Ponzi Scheme

Source-  http://www.fbi.gov/newark/press-releases/2012/former-nba-player-and-ceo-of-the-george-group-indicted-in-ponzi-scheme 

NEWARK—C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was indicted today by a Newark grand jury for allegedly orchestrating a $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

George, 43, of Newark, was indicted on four counts of wire fraud. He was previously charged by criminal complaint with one count of wire fraud. He will be arraigned on the new charges in Newark federal court on a date to be determined.

According to the indictment and other documents filed in this case:

George, a former player for the New Jersey Nets and Milwaukee Bucks, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management. He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey. George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank accounts. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi scheme fashion. He also used some of the money for home improvement projects, meals at restaurants, clothing, and gas. The George Group had virtually no income-generating operations.

Under the wire fraud counts with which he is charged, George faces a maximum potential penalty of 20 years in prison and a $250,000 fine for each count.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward; postal inspectors of the USPIS, under the direction of Postal Inspector in Charge Philip R. Bartlett; and the Securities and Exchange Commission, under the direction of George S. Canellos, director of the New York Regional Office, with the investigation leading to today’s Indictment.

The government is represented by Assistant U.S. Attorney Christopher J. Kelly of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations contained in the indictment are merely accusations and the defendant is considered innocent unless and until proven guilty.

************************************************************************

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

www.reportsecuritiesfraud.net