Securities Attorney and Five Others Indicted for Conspiracy, Wire and Mail Fraud in Stock Manipulation Scheme

Source- http://www.justice.gov/opa/pr/2011/February/11-crm-212.html

WASHINGTON – Six individuals, including a securities attorney, were charged in an indictment unsealed today with defrauding investors in a stock manipulation scheme from 2003 to 2008, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Deputy Chief Inspector Daniel S. Cortez for the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. In a related action, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint in the Southern District of Florida, Miami division.

The defendants charged in the indictment returned in the Southern District of Florida are: Jonathan Randall Curshen, 46, of Sarasota, Fla.; Michael Simon Krome, 49, a securities attorney from Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, of Israel. Curshen was arrested this morning in Sarasota, Fla., and made an initial appearance in U.S. District Court in Tampa, Fla. Krome was arrested in Long Island, N.Y., and will make an initial appearance later today in U.S. District Court in Central Islip, N.Y. Weidenbaum was arrested today in Miami and is making his initial appearance in U.S. District Court in Miami at 2 p.m. EST. Zigdon was previously arrested in Germany in October 2010 and the United States is seeking his extradition.

“The indictment unsealed today alleges that the defendants used their access and training to illegally manipulate stock prices for their own advantage,” said Assistant Attorney General Breuer. “Pump and dump schemes like the one alleged in this case leave legitimate investors holding worthless stocks. Anyone who defrauds the investing public in this way – whether you are a securities lawyer, a stock trader, or a simple fraudster – will be held to account.”

According to the indictment, Curshen was the principal behind Red Sea Management and Sentry Global Securities, two companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks. The indictment alleges that Weinbaum and Zigdon took control of the outstanding shares of a company called CO2 Tech (ticker CTTD), which traded in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. Weinbaum and Zigdon allegedly obtained the shares by retaining Krome who allegedly employed a method to evade federal securities registration requirements in order to provide co-conspirators with millions of unregistered and “free-trading” shares of CO2 Tech that the co-conspirators could not have otherwise legally obtained.

The indictment alleges that the shares were subsequently sold to the general investing public by Weinbaum, Zigdon, Curshen and Salazar, a Sentry Global stock trader, through Sentry Global’s stock trading floor in Costa Rica. According to the indictment, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the company by evading the registration requirements. The indictment also alleges that Weidenbaum was paid approximately $1 million by Weinbaum and Zigdon to participate in sham stock trades of CO2 Tech to make it appear that there were genuine investors in the market that were buying the shares.

As alleged in the indictment, coordinated trades were often made between the co-conspirators in conjunction with the issuance of false and misleading press releases that were designed to make CO2 Tech appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes. The indictment alleges that these relationships never existed.

After fraudulently “pumping” the market price and demand for CO2 Tech stock through these press releases and coordinated trades, Weinbaum, Zigdon, Curshen and Salazar allegedly “dumped” shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets. These shares were allegedly purchased by unsuspecting investors, including in the Southern District of Florida, and were often rendered virtually worthless.

The defendants are charged with one count of conspiracy to commit securities, mail and wire fraud. Additionally, Weinbaum and Zigdon are charged with three counts of wire fraud, Weidenbaum with two counts of wire fraud and Krome with one count of wire fraud; Curshen and Salazar are charged with two counts of mail fraud, Weinbaum and Weidenbaum with one count of mail fraud; and Krome is charged with one count of violating the securities registration laws and one count of obstruction of justice. The indictment also seeks forfeiture from the defendants.

The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The securities registration violation carries a maximum penalty of five years in prison and a $10,000 fine, while the obstruction count carries a maximum penalty of 20 years in prison and a $250,000 fine.

In a related civil matter, the SEC charged Curshen, Krome, Salazar, Weinbaum and Zigdon with violations of the Securities Act of 1933 and violations of the Securities Exchange Act of 1934. Weidenbaum is charged with aiding and abetting certain violations by Weinbaum and Zigdon.

An indictment is merely a charge and defendants are presumed innocent until proven guilty.

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Dorothy Samantha Delay-Wilson Indicted by Federal Grand Jury for Fraud

Source- http://anchorage.fbi.gov/dojpressrel/pressrel11/ak021811.htm

ANCHORAGE, AK—United States Attorney Karen Loeffler announced that an Anchorage woman was indicted by a federal grand jury in Anchorage, Alaska, for securities fraud, wire fraud, mail fraud, money laundering, bankruptcy fraud and bank fraud.

The 26-count indictment names Dorothy Samantha Delay-Wilson, 64, of Anchorage, Alaska, as the sole defendant.

According to the indictment, from 1996, to 2009, Delay-Wilson carried out a scheme to defraud numerous individuals and organizations of money by making false representations and promises and by providing false documents to victims. According to the indictment, Delay-Wilson guaranteed investors a high-rate of return and made false claims regarding how she was going to invest the victims' money, making different claims to different victims. She told victims she would invest their money in a global investment fund, European sub-prime loans, and an investment banking service company, when in fact she used the victims' money for her personal expenses and to pay out earlier investors in a classic Ponzi scheme. Delay-Wilson also provided lending entities with fraudulent statements and documents regarding her assets to obtain loans. She also provided false statements in a bankruptcy proceeding regarding her assets.

Assistant U.S. Attorney Andrea ("Aunnie") Steward, who presented the case to the grand jury, indicated that the law provides for a maximum total sentence of 30 years in prison, a fine of $5 million, or both and full restitution to the victims. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history of the defendant.

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SEC Charges Seven in Global Warming Pump-and-Dump Scheme

Source- http://www.sec.gov/news/press/2011/2011-46.htm

Washington, D.C., Feb. 18, 2011 — The Securities and Exchange Commission today charged a group of seven individuals who perpetrated a fraudulent pump-and-dump scheme in the stock of a sham company that purported to provide products and services to fight global warming.

The SEC alleges that the group included stock promoters, traders, and a lawyer who wrote a fraudulent opinion letter. The scheme resulted in more than $7 million in illicit profits from sales of stock in CO2 Tech Ltd. at artificially inflated prices. Despite touting impressive business relationships and anti-global warming technology innovations, CO2 Tech did not have any significant assets or operations. The company was purportedly based in London, and its stock prices were quoted in the Pink Sheets.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, the scheme was perpetrated through Red Sea Management Ltd., a Costa Rican asset protection company that laundered millions of dollars in illicit trading proceeds out of the United States on behalf of its clients. The U.S. Department of Justice today announced related criminal charges against six of the individuals.

“This group of illicit stock promoters sought to hide their scheme behind offshore entities, but their misconduct was exposed by the excellent cooperation of law enforcement agencies here and abroad,” said Cheryl Scarboro, Associate Director in the SEC’s Division of Enforcement.

According to the SEC’s complaint, the fraudulent pump-and-dump scheme in CO2 Tech stock occurred from late 2006 to April 2007 through the efforts of the following individuals:
Jonathan R. Curshen, a Sarasota, Fla., resident who founded and led Red Sea.

David C. Ricci and Ronny Morales Salazar of San Jose, Costa Rica, who were Red Sea stock traders.

Ariav “Eric” Weinbaum and Yitzchak Zigdon of Israel, who were Red Sea clients.

Robert L. Weidenbaum of Coral Gables, Fla., a stock promoter who operates a company called CLX & Associates.

Michael S. Krome of Lake Grove, N.Y., a lawyer who allegedly wrote a fraudulent opinion letter.

The SEC’s complaint alleges that CO2 Tech falsely touted business relationships that the company had not formed, including a relationship with the Boeing Company. In fact, there were no communications, correspondence or understandings between CO2 Tech and Boeing.

The SEC alleges that Weinbaum and Zigdon initiated the pump-and-dump of CO2 Tech by utilizing the services of Krome, who issued a fraudulent opinion letter to enable them to have the restrictive legend removed from their CO2 Tech stock certificate. This provided them nearly full control over the freely tradeable shares of CO2 Tech stock. Weinbaum then hired Red Sea to sell massive quantities of CO2 Tech stock to the investing public through its web of nominee brokerage accounts. Zigdon caused the materially false and misleading information about CO2 Tech to be disseminated in press releases and on CO2 Tech’s website.

According to the SEC’s complaint, Weinbaum hired Weidenbaum to redistribute the false information through websites, spam e-mails and fax blasts. Weidenbaum enlisted a group of stock promoters who then executed illegal “matched orders” with Red Sea’s nominee brokerage accounts in order to “jump-start” the market and increase the price of the stock. As a result of the false media campaign and the illegal matched orders, the market price of CO2 Tech stock increased 81 percent increase in one day and trading volume increased 1,573 percent.

The SEC alleges that after Weinbaum hired Red Sea, he directed Red Sea stock traders Ricci and Salazar to sell the stock. Ricci and Salazar placed multiple layered orders to sell CO2 Tech stock – thereby creating the false appearance that the market for the stock was deeper than it actually was. This coordinated misconduct enabled stock sales at artificially inflated prices for profits of more than $7 million at the expense of unsuspecting investors.

The SEC’s complaint alleges that Curshen, Ricci, Salazar, Weinbaum, Zigdon, and Krome violated Section 5(a), (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Weidenbaum is charged with aiding and abetting Weinbaum and Zigdon’s violations of Exchange Act 10(b) and Rule 10b-5. Without admitting or denying the allegations in the complaint, Ricci settled the SEC’s charges by agreeing to an injunction against future violations of these provisions and a penny stock bar.

In the related criminal action, charges brought by the Justice Department’s Criminal Division were unsealed against Curshen, Krome, Salazar, Weidenbaum, Weinbaum, and Zigdon. The defendants are charged in the Southern District of Florida variously with conspiracy to commit securities, mail and wire fraud; wire fraud; mail fraud; violating the securities regulation laws and obstruction of justice.

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Kurt Branham Barton, founder, president, and CEO of Triton Financial, L.L.C., Indicted by Federal Grand Jury in Ponzi Scheme

Source- http://sanantonio.fbi.gov/dojpressrel/pressrel11/sa021611.htm

United States Attorney John E. Murphy announced the return of a federal grand jury indictment in Austin charging a former Austin businessman in connection with a Ponzi scheme which victimized more than 300 individuals and resulted in a total estimated loss to investors of $41 million.

The 39-count indictment, returned late yesterday afternoon, charges 43-year-old Kurt Branham Barton, founder, president, and CEO of Triton Financial, L.L.C., with conspiracy to commit wire fraud, make false statements to secure loans from financial institutions, and money laundering. Barton is also charged with multiple substantive counts including one count of securities fraud, 15 counts of wire fraud, five counts of making a false statement related to the acquisition of loans, and 17 counts of money laundering.

The indictment alleges that between December 2005 and December 2009, Barton devised a scheme to obtain money from investors under false pretenses. Barton allegedly represented to investors that Triton was purchasing properties, businesses, and other assets with their funds when, in fact, he was using their money to satisfy the needs of other ventures and the need to pay quarterly dividends or redemptions to prior investors. According to the indictment, Barton used prominent former National Football League players and Heisman Trophy winners to solicit and encourage additional investors. To conceal his scheme, Barton allegedly presented fabricated and fictitious versions of his E*Trade monthly account statement to financial institutions, commercial lenders, and potential investors.

Upon conviction of all charges, Barton faces up to life in federal prison as well as restitution.

This investigation was conducted by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Mark Lane is prosecuting this case on behalf of the Government.

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Stephen Shea Pleads Guilty in Manhattan Federal Court in Connection with $140 Million Investment Fraud and Stock Manipulation Scheme

Source- http://www.fbi.gov/newyork/press-releases/2011/former-chief-operating-officer-pleads-guilty-in-manhattan-federal-court-in-connection-with-140-million-investment-fraud-and-stock-manipulation-scheme

PREET BHARARA, the United States Attorney for the Southern District of New York, announced today that STEPHEN SHEA, the former chief operating officer at Sky Capital, LLC, has pled guilty in Manhattan federal court in connection with a scheme to defraud investors through two successive securities broker-dealers—The Thornwater Company, L.P. ("Thornwater"), and Sky Capital, LLC.

According to the superseding indictment to which SHEA pled guilty, and statements made during the guilty plea proceedings before U.S. District Judge PAUL A. CROTTY:

From 1998 through 2006, SHEA participated in a scheme with ROSS MANDELL, ADAM HARRINGTON, and others to defraud investors through material misrepresentations and omissions that induced people to invest in private placements and other purported securities investment opportunities. In fact, investor funds were substantially used to enrich the defendants and others; to pay excessive, undisclosed commissions to brokers; and to pay off victims who had lost money through prior purported investment opportunities. In connection with the scheme, brokers, acting primarily from the offices of Thornwater and Sky Capital, LLC, in New York, New York, raised a total of approximately $140 million from investors. MANDELL allegedly controlled the operations of both broker-dealers.

As part of the scheme, brokers at Sky Capital, LLC, manipulated the market price of the stock of two affiliated entities, Sky Capital Holdings Ltd., and Sky Capital Enterprises Inc. (collectively "Sky Capital"). SHEA and others directed the market manipulation of Sky Capital stocks by enforcing a "no-net sales" policy designed to inflate the price of Sky Capital stocks. SHEA, and allegedly MANDELL and HARRINGTON, made undisclosed payments to Sky Capital brokers in exchange for their assistance with this aspect of the scheme.

SHEA, 38, of Brooklyn, New York, pled guilty to conspiracy and securities fraud charges. The conspiracy count carries a maximum sentence of five years in prison, and the securities fraud count carries a maximum sentence of 20 years in prison. SHEA faces a maximum fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy count, and a maximum fine of $5 million on the securities fraud count. SHEA also faces mandatory restitution to the victims of his crimes. The charges against MANDELL and HARRINGTON remain pending and are merely accusations. They are presumed innocent unless and until proven guilty.

Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation. He thanked the U.S. Securities and Exchange Commission for its assistance in this matter.

This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a co-chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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Daniel Spitzer Allegedly Swindled $105 Million from Approximately 400 Victims in Investment Fraud Scheme

Source- http://chicago.fbi.gov/dojpressrel/pressrel11/cg021111.htm

CHICAGO—A suburban Chicago man was charged with allegedly engaging in an investment fraud scheme, swindling more than $105 million from approximately 400 victims who invested in funds he purported to operate. Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Tom Brady, Inspector-in-Charge of the United States Postal Inspection Service, Chicago; and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation announced that Daniel Spitzer was charged with eight counts of mail fraud in a criminal indictment filed yesterday. Spitzer allegedly misused money he raised from investors for his own benefit, and to make Ponzi-type payments to investors.

Spitzer, 51, formerly of the U.S. Virgin Islands, currently resides in Barrington, Illinois, and will be arraigned at a later date in U.S. District Court. The indictment alleges that Spitzer was the principal officer and sole shareholder of Kenzie Financial Management, a U.S. Virgin Islands corporation; the sole manager and member of Kenzie Services, LLC ("Kenzie Services"), a corporation located in Charlestown, Nevis, West Indies; the president of Draseena Funds Group, Corp., an Illinois corporation; the manager of DN Management Company, LLC ("DN"), a Nevada limited liability company, and the manager of Nerium Management Company, an Illinois corporation.

According to the charges, through these corporate entities, defendant Spitzer controlled twelve investment funds collectively known as "the Kenzie Funds." Spitzer offered and sold to the public investments in the various Kenzie Funds in the form of membership interests and limited partnership interests. Through sales agents and various marketing materials, he informed investors and potential investors in the Kenzie Funds that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns. The defendant had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which the defendant concealed and intentionally failed to disclose to both new and earlier investors. Although Spitzer falsely represented to prospective investors and investors that different Kenzie Funds had different levels of risk and different investment strategies, the defendant commingled the money invested in all twelve of the Kenzie Funds, then misappropriated a significant portion, and only invested less than one third of the approximately $105 million raised from investors.

The indictment further alleges that Spitzer represented to investors that the Kenzie Funds had rates of returns ranging from 4.52 percent to 13.54 percent over the prior five years, although the bank accounts for the Kenzie Funds reflected that the total net return over the five year period on the approximately $105 million investors contributed to all of the Kenzie Funds was less than 1 percent. As of June 30, 2009, Spitzer represented that the Kenzie Funds were worth approximately $250 million, at a time when the Funds collectively had only approximately $4 million in its bank accounts. As a part of the alleged Ponzi scheme, the defendant fraudulently obtained over $105 million from approximately 400 investors. The information alleges that as a result of his Ponzi scheme, Spitzer fraudulently obtained over $105 million.

The government is being represented by Assistant U.S. Attorney Madeleine Murphy. The United States Attorney's Office acknowledges the assistance of the Securities and Exchange Commission, Chicago Regional office. The investigation was conducted by the United States Postal Inspection Service and the FBI.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. In addition to the charges, the government is also seeking forfeiture in the amount of approximately $34 million in funds, the approximate amount of loss to the victims. 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, however, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

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Richard A. Hansen Pleads Guilty in Manhattan Federal Court to Insider Trading

Source- http://www.fbi.gov/newyork/press-releases/2011/former-chairman-of-pennsylvania-investment-banking-firm-pleads-guilty-in-manhattan-federal-court-to-insider-trading

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that RICHARD A. HANSEN, a former chairman of The Keystone Equities Group ("Keystone Equities"), pled guilty yesterday in Manhattan federal court to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme. HANSEN pled guilty before U.S. District Judge PAUL A. CROTTY.

According to the information previously filed and the statements made during the guilty plea proceeding:

From June 2006 through September 2006, while he was chairman of Keystone Equities, HANSEN made stock purchases based on material, non-public information ("Inside Information"). HANSEN received the Inside Information from an individual named DONNA MURDOCH, who in turn obtained the Inside Information from JAMES GANSMAN. GANSMAN had access to the Inside Information because of his employment as a partner at the accounting firm Ernst & Young.

On June 20, 2006, GANSMAN informed MURDOCH that he had learned that Advanced Microdevices, Inc. ("AMD") and ATI Technologies ("ATI") were in discussions concerning AMD’s potential acquisition of ATI. MURDOCH thereafter tipped HANSEN about the impending acquisition and informed HANSEN that GANSMAN was working on the transaction. On June 23, 2006, HANSEN purchased or caused to be purchased 1,000 shares of ATI in two brokerage firm accounts in his daughters’ names. On July 24, 2006, ATI and AMD jointly announced that an AMD subsidiary would acquire all of ATI’s outstanding common stock. On that same day, ATI’s stock price climbed to a 52-week high of $19.69 before closing at $19.67—up nearly 19 percent from its previous day’s close. HANSEN thereafter sold or caused to be sold the ATI stock in his daughters’ accounts, realizing profits of almost $10,000.

Additionally, on June 23, 2006, GANSMAN learned that Ernst & Young had been retained by the Blackstone Group in connection with a possible acquisition of Freescale Semiconductor Corporation. Between June 23, 2006, and July 18, 2006, GANSMAN gave information to MURDOCH concerning this impending transaction. MURDOCH then tipped HANSEN about the Freescale deal, including that GANSMAN was working on it. On July 18, 2006, HANSEN purchased Freescale stock through two brokerage firm accounts held in his daughters’ names. On September 11, 2006, a wire service reported that Freescale would be acquired by an investment consortium led by Ernst & Young client Blackstone, and Freescale publicly announced it was "in discussions with parties relating to a possible business transaction." That day, Freescale’s stock price rose to a 52-week high of $37.18 before closing at $37.06, up 20.5 percent from its previous trading day’s close of $30.75. Approximately four days later, Freescale announced that it had entered into a definitive agreement to be acquired by a private equity consortium led by Blackstone. Shortly after the acquisition announcement, HANSEN sold or caused to be sold the Freescale shares he had purchased in his daughters’ accounts, realizing a profit of over $20,000.

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SEC Charges Tyson Foods with FCPA Violations

Source- http://www.sec.gov/news/press/2011/2011-42.htm

Washington, D.C., Feb. 10, 2011 — The Securities and Exchange Commission today charged Tyson Foods Inc. with violating the Foreign Corrupt Practices Act (FCPA) by making illicit payments to two Mexican government veterinarians responsible for certifying its Mexican subsidiary’s chicken products for export sales.

The SEC alleges that Tyson de Mexico initially concealed the improper payments by putting the veterinarians’ wives on its payroll while they performed no services for the company. The wives were later removed from the payroll and payments were then reflected in invoices submitted to Tyson de Mexico by one of the veterinarians for “services.” Tyson de Mexico paid the veterinarians a total of $100,311. It was not until two years after Tyson Foods officials first learned about the subsidiary’s illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.

Tyson Foods agreed to pay more than $5 million to settle the SEC’s charges and resolve related criminal proceedings announced today by the Department of Justice.

“Tyson and its subsidiary committed core FCPA violations by bribing government officials through no-show jobs and phony invoices, and by having a lax system of internal controls that failed to detect or prevent the misconduct,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

According to the SEC’s complaint filed in federal court in the District of Columbia, the scheme occurred during fiscal years 2004 to 2006. In order to export products, meat-processing facilities in Mexico must obtain certification through an inspection program administered by Mexico’s federal government and supervised by an office in the Mexican Department of Agriculture. Tyson de Mexico participated in the program in order to export goods to Japan and other countries. The two veterinarians involved were responsible for certifying Tyson de Mexico’s chicken products for export and served as official Mexican government veterinarians at Tyson de Mexico’s facilities.

The SEC’s complaint alleges that a Tyson de Mexico plant manager discovered the wives on the payroll in June 2004 and informed a Tyson Foods accountant of the situation. After subsequent meetings involving Tyson Foods and Tyson International officials, the payroll payments to the veterinarians’ wives were replaced with invoice payments to one of the veterinarians. An executive of Tyson International approved this approach.

The SEC alleges that in connection with these improper payments, Tyson Foods failed to keep accurate books and records and failed to implement a system of effective internal controls to prevent the salary payments to phantom employees and the payment of illicit invoices. The improper payments were improperly recorded as legitimate expenses in Tyson de Mexico’s books and records and included in Tyson de Mexico’s reported financial results for fiscal years 2004, 2005 and 2006. Tyson de Mexico’s financial results were, in turn, a component of Tyson Foods’ consolidated financial statements filed with the SEC for those years.

Without admitting or denying the SEC’s allegations, Tyson Foods consented to the entry of a final judgment ordering disgorgement plus pre-judgment interest of more than $1.2 million and permanently enjoining it from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, codified as Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934. The proposed settlement is subject to court approval.

In a related criminal information filed today, the Department of Justice charged Tyson Foods with conspiring to violate the FCPA and violating the FCPA. DOJ and Tyson Foods agreed to resolve the charges by entering into a deferred prosecution agreement. Tyson Foods has agreed to pay a $4 million criminal penalty.

The SEC’s case was investigated by Allen Flood and Conway Dodge of the SEC’s Division of Enforcement. The SEC acknowledges the cooperation of Tyson Foods in the investigation. The SEC acknowledges and appreciates the assistance of the U.S. Department of Justice’s Fraud Section and the Federal Bureau of Investigation.

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Anthony James Tuomi, former chief financial officer for Willamette Development Services (WDS), pleaded guilty today to conspiring to commit securities fraud

Source- http://portland.fbi.gov/dojpressrel/pressrel11/pd020811.htm

EUGENE, OR—Anthony James Tuomi, former chief financial officer for Willamette Development Services (WDS), pleaded guilty today to conspiring to commit securities fraud. He is scheduled to be sentenced for sentencing on August 9, 2011 before U.S. District Judge Michael R. Hogan. Tuomi is 36 and resided in Albany, Oregon when he committed the offense. WDS was located at 110 3rd Avenue SE in Albany, Oregon.

The case arose in 2008 from an investigation into allegations of fraud involving the chief executive officer (CEO) of WDS. WDS was ostensibly operated to develop profitable real estate projects. The CEO was ousted by the WDS executive board in January of 2008 amidst allegations of financial improprieties. In pleading guilty, Tuomi admitted that helped facilitate the financial improprieties, and that in soliciting investors, a number of false statements were made which caused people to invest, and lose, over $5,260,000 in WDS securities.

Tuomi admitted that, among other things, he facilitated misrepresentations about the financial condition of WDS. As an example, in January 2008, he prepared financial summaries of WDS projects which were sent to all investors. The summaries accompanied a letter written by the WDS CEO which claimed that all WDS investments were secure. The project summaries indicated substantial financial value in each project and substantial profits for WDS, even though Tuomi knew WDS was insolvent and that little financial value could be obtained from the projects. Prior to that time, since WDS had insufficient income to pay monthly obligations to its investors, new investor proceeds were used to satisfy existing investor obligations, creating the perception of a successful business. Private placement memoranda furthered this perception by falsely representing the experience of the CEO, as well as project business plans, financial practices, the frequency and accuracy of reports to investors, and compliance with fiduciary obligations. Tuomi admitted that, contrary to representations made to investors, investor proceeds were often diverted from their intended purposes without investor consent.

"Over the past few years, we've watched as the U.S. economy has faltered on false promises of financial success," said Arthur Balizan, Special Agent in Charge of the FBI in Oregon. "Enough is enough. Those who target investors through fraud and manipulation are going to find us knocking at their door."

"The loss of over $5 million from this fraud shows how critical it is that statements made to potential investors be truthful," said Marcus Williams, the IRS Special Agent in Charge of the Pacific Northwest. "I look forward to the day when white collar criminals realize that law enforcement will always be there to hold them accountable for the suffering they cause."

WDS did business through various entities including 21st Avenue, LLC; 36th & Division, LLC; Blossom Crossings, LLC; CTJ, LLC; Elite Funding, LLC; Far Shore Enterprises LLC; Far Shore Imports, LLC; Fisherman's Wharf, LLC; Gibson Hill Estates, LLC; High Level Investments, LLC; Jasper Homes, LLC; Joe LaCoste, LLC; Joe's Run, LLC; LaCoste Enterprises, LLC; LaCoste Investments, LLC; Lebanon Airport Estates, LLC; Lincoln City Roads Ends, LLC; Lunceford and LaCoste Investments, LLC (subsequently renamed Greyson Financial, LLC); Martin Willamette, LLC; McCoy Acquisitions, LLC; McKenzie Aviation, LLC; McKenzie Construction, LLC; McMinnville Corners, LLC; Nuera; Nuera Realty; Newport Bridge View, LLC; North Albany Town Homes, LLC; North Point Estates, LLC; Pac First Financial, LLC; Pac First Mortgage; Property Options; Santa Clara Homes, LLC; Santiam Engineering, LLC; St. James, LLC; Strawberry Fields, LLC; Stoltz Hill Estates, LLC; Sunset Ridge, LLC; The Walston Building, LLC; Turner Road, LLC; Willamette Lee, LLC; Willamette Village Business Center, LLC; Willamette Wetlands, LLC; Wisteria Estates, LLC; Yates Estates, LLC; and www.wds-llc.com.

The maximum statutory penalty for conspiring to commit securities fraud is a five-year term of prison and a $250,000 fine, followed by a three-year term of supervised release.

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SEC Charges Hedge Fund Managers and Traders in $30 Million Expert Network Insider Trading Scheme

Source- http://www.sec.gov/news/press/2011/2011-40.htm

Washington, D.C., Feb. 8, 2011 — The Securities and Exchange Commission today charged a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. The scheme netted more than $30 million from trades based on material, nonpublic information about such companies as AMD, Seagate Technology, Western Digital, Fairchild Semiconductor, and Marvell.

The charges are the first against traders in the SEC’s ongoing investigation of insider trading involving expert networks. The SEC filed its initial charges in the case last week against technology company employees who illegally tipped hedge funds and other investors with material nonpublic information about their companies in return for hundreds of thousands of dollars in sham consulting fees.

In its amended complaint filed today in federal court in Manhattan, the SEC alleges that four hedge fund portfolio managers and analysts received illegal tips from the expert network consultants and then caused their hedge funds to trade on the inside information.

“It is illegal for company insiders who moonlight as consultants to sell confidential information about their companies to traders, and it is equally illegal to buy that corruptly obtained information and trade on it,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Instead of competing on a level playing field with other investors, these hedge fund managers sought to illegally trade today on what others would not learn until tomorrow.”

The SEC’s ongoing investigation is focusing on the activities of expert networks that purportedly provide professional investment research to their clients. While it is legal to obtain expert advice and analysis through expert networking arrangements, it is illegal to trade on material nonpublic information obtained in violation of a duty to keep that information confidential.

The technology company insiders who tipped the confidential information were expert network consultants to the firm Primary Global Research LLC (PGR).

The SEC’s amended complaint alleges:

Samir Barai of New York, N.Y., the founder and portfolio manager of Barai Capital Management, obtained inside information about several technology firms from company insiders, and then traded on the inside information on behalf of Barai Capital.

Jason Pflaum of New York, N.Y., a former technology analyst at Barai Capital Management, obtained inside information about technology companies and shared it with Barai. After Pflaum shared the confidential information with him, Barai used it to illegally trade on behalf of Barai Capital.

Noah Freeman of Boston, Mass., a former managing director at a Boston-based hedge fund, obtained inside information regarding Marvell and shared it with Donald Longueuil of New York, N.Y., a former managing director at a Connecticut-based hedge fund. Longueuil caused his hedge fund to trade on the inside information. Freeman also obtained inside information about another technology company and caused his hedge fund to trade on the nonpublic information.

The SEC’s amended complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and additionally charges Barai, Pflaum, Freeman and Longueuil with aiding and abetting others’ violations of Section 10(b) and Rule 10b-5 thereunder. The complaint also charges Barai, Pflaum and Barai Capital with violations of Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties.

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Mark Cahn Named SEC General Counsel

Source- http://www.sec.gov/news/press/2011/2011-39.htm

Washington, D.C., Feb. 4, 2011 — The Securities and Exchange Commission today announced that Mark D. Cahn has been promoted to General Counsel in the SEC's Office of the General Counsel. He will assume his new role when David M. Becker steps down from the position later this month.

Since March 2009, Mr. Cahn has served as Deputy General Counsel for Litigation and Adjudication, and has counseled the Commission on a wide variety of litigation, appellate and enforcement matters and played a key role in regulatory initiatives.

"Over the past two years, Mark has shown a tremendous grasp of securities law as well as incredible judgment on a range of issues," said SEC Chairman Mary L. Schapiro. "He is well-positioned to help the agency evolve and keep pace with the ever-changing markets."

Mr. Cahn said, "It has been a particular honor to work alongside David and the talented and dedicated staff of the General Counsel's office these past two years. It is a privilege to work at the SEC, and I look forward to continuing to serve a Chairman and a Commission so committed to protecting investors."

From 1988 until joining the SEC staff, Mr. Cahn, 49, worked at the law firm of WilmerHale LLP, where he was a partner in the firm's Securities Litigation and Enforcement Practice. Prior to joining WilmerHale, Mr. Cahn clerked for the Honorable John J. Gibbons, U.S. Court of Appeals for the Third Circuit, and for the Honorable Herbert J. Stern, U.S. District Court for the District of New Jersey. He earned his JD in 1986 from Yale Law School, and his BA, summa cum laude, from Tufts University in 1983.

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Former Principal and Chief Operating Officer of WexTrust Capital Joseph Shereshevsky, Pleads Guilty in Manhattan Federal Court to Investment Fraud Scheme

Source- http://newyork.fbi.gov/dojpressrel/pressrel11/nyfo020311.htm

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that JOSEPH SHERESHEVSKY, a principal and chief operating officer of private equity firm WexTrust Capital, LLC ("WexTrust Capital"), pled guilty today in Manhattan federal court to three felony counts arising out of his employment at WexTrust Capital. SHERESHEVSKY pled guilty before U.S. District Judge DENNY CHIN.

Manhattan U.S. Attorney PREET BHARARA said: "Today, Joseph Shereshevsky accepted responsibility for cheating hundreds of victims out of millions of dollars by repeatedly lying to them about what their money was being used for, and then covering up those lies with more lies. Today's guilty plea represents another step in our ongoing effort to combat investment fraud and Ponzi schemes, and to return hard-earned money to the victims of these devastating financial crimes."

According to the indictment and other documents previously filed in Manhattan federal court and statements made at the plea proceeding:

From 2003 to 2008, WexTrust Capital was a globally diversified private equity company specializing in investments in real estate and specialty finance opportunities. WexTrust Capital was headquartered in Chicago, Illinois, and had offices in Norfolk, Virginia; New York, New York; and elsewhere. WexTrust Capital was affiliated with several companies of a similar name, including WexTrust Securities, LLC, a broker-dealer registered with the United States Securities and Exchange Commission ("SEC").

Beginning in at least 2003, SHERESHEVSKY and others raised money from investors pursuant to private placement offerings and then used material amounts of that money for other purposes, and did not disclose their diversion of funds to investors. For example, in one instance, SHERESHEVSKY and others raised approximately $9.2 million in investor funds by representing that the funds would be used to purchase and operate seven commercial properties that were leased to the United States General Services Administration ("GSA"). According to the GSA private placement memorandum issued to investors by WexTrust Capital, the $9.2 million raised from investors, together with a mortgage of approximately $21 million, would be used to purchase the seven GSA properties and cover related acquisition expenses. The seven GSA properties, however, were never purchased. Instead, virtually all of the funds raised from investors to purchase the properties were diverted by SHERESHEVSKY and others to be used for other purposes, but investors were never informed that the funds were used for any purpose other than to purchase and operate the seven GSA properties. SHERESHEVSKY and others later agreed to make up a story to tell the GSA investors regarding what happened to their investment.

SHERESHEVSKY, 54, of Norfolk, Virginia, pled guilty to conspiracy, securities fraud, and mail fraud charges. The conspiracy count carries a maximum sentence of five years in prison, and the securities fraud and mail fraud counts each carry a maximum sentence of 20 years. SHERESHEVSKY faces a maximum fine of $250,000, or twice the gross gain or loss from the offense on the conspiracy and mail fraud counts, and a maximum fine of $5 million on the securities fraud count. SHERESHEVSKY also faces mandatory restitution to the victims of his crimes.

SHERESHEVSKY is scheduled to be sentenced by Judge CHIN on May 13, 2011, at 10:00 a.m.

Mr. BHARARA praised the work of the Federal Bureau of Investigation. He also thanked the SEC for its assistance in the investigation of this case.

This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a co-chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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New York Broker Gregg M. Berger Indicted for Alleged Role in International Stock Fraud Scheme Spam E-Mails Promoting Stocks Used to Artificially Inflate Prices; Scheme Generated $30 Million for Co-Conspirators

Source- http://detroit.fbi.gov/dojpressrel/pressrel11/de020111.htm

WASHINGTON—An indictment unsealed today in Detroit charges stock broker Gregg M. Berger, of New York, for his role in a wide-ranging fraud scheme to illegally "pump-and-dump" thinly traded Chinese and Israeli stocks, announced Assistant Attorney General Lanny A. Breuer and U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade.

The single count superseding indictment returned in the Eastern District of Michigan alleges that Berger, 47, conspired with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley, and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007. The indictment alleges that during the course of the scheme, Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for his co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and Bradley have all been previously convicted and sentenced for their roles in the case.

"Pump-and-dump schemes undermine the integrity of our stock markets," said Assistant Attorney General Breuer. "When stock brokers exploit their trusted positions to enrich themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we will pursue them vigorously."

"Investor fraud schemes like this one prey on small investors and are motivated by greed," said U.S. Attorney McQuade. "Financial fraud is an important priority so that we can protect victims and the integrity of our financial systems."

The charges arose after a multi-year investigation led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, which revealed a sophisticated and extensive pump-and dump operation in which the defendants sent spam e-mails to manipulate thinly traded stocks. After the e-mail recipients bought the stock being promoted, thereby driving up the share price, Berger and his coconspirators profited by selling their existing shares at the newly inflated prices.

According to the indictment, Berger's role was to act as the stock broker for the conspiracy. Berger allegedly established brokerage accounts for trading the stocks that were illegally promoted, arranged for shares of the stocks to be transferred into the brokerage accounts, executed stock trades at the direction of co-conspirator Tribble rather than the direction of the named account holders and transferred funds from the trading of the stocks to bank accounts controlled by the conspirators. Berger also allegedly routinely provided confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, all without authorization from the named account holders.

The stocks artificially inflated and then sold by Berger and his co-conspirators included China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions, and m-Wise.

The indictment charges Berger with one count of conspiracy to commit securities fraud and wire fraud. It also seeks forfeiture of criminal proceeds. If convicted, Berger faces a maximum penalty of 25 years in prison, and a $250,000 fine. Berger is scheduled to be arraigned on Feb. 8, 2011, in U.S. District Court in Detroit.

An indictment is merely an allegation, and a defendant is presumed innocent unless proven guilty in a court of law.

In a related action, the U.S. Securities and Exchange Commission (SEC) today filed civil fraud charges against Berger as well as seven other individuals and three companies involved in the scheme. The SEC seeks permanent injunctions, disgorgement and civil penalties, and a penny stock bar against Berger for violations of the antifraud and registration provisions of the securities laws.

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SEC Releases Money Market Fund Portfolio and "Shadow NAV" Information to the Public

Source- http://www.sec.gov/news/press/2011/2011-32.htm

Washington, D.C., Jan. 31, 2011 — The Securities and Exchange Commission today announced that investors can for the first time access detailed information that money market funds file with the Commission — including information about a fund's investments and the market-based price of its portfolio known as its "shadow NAV" (net asset value) or mark-to-market valuation.

The information is available on the SEC's website and will be updated monthly.

As part of its overhaul of money market fund regulation, the Commission last year adopted a rule requiring money market funds to file information about their holdings and portfolio valuations.

"While the Commission uses this information in its real-time oversight of money market funds, we also believe that public disclosure can provide investors and market analysts with useful insight for their evaluation of these funds," said SEC Chairman Mary L. Schapiro.

Funds began filing the information on the SEC's new Form N-MFP in December. Under the rule, the SEC will release the information with a 60-day delay. The rule also requires money market funds to post more current but less detailed portfolio information on their own websites within five business days after the end of the month.

The information on the SEC website is available through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. The information can be retrieved in several ways, including by typing in the fund's name or ticker symbol or by reviewing recent Form N-MFP filings.

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