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Category Archives: SEC News

Arizona Corporation Commission issued an order against Gutman

Posted byValerie Escobar

On May 5th, 2021, the securities division of the Arizona Corporation Commission issued an order against Jerry L. Gutman. Gutman was a broker with United Planners’ Financial Services of America. Gutman sold unregistered securities in the form of membership interests in at least six different LLCs to thirty-one clients of his firm and seven non-clients without disclosing the sales to his firm. The sales totaled over $7,000,000.

For instance, Guttman sold membership interests in Serenity Cemeteries VI, LLC to sixteen investors in exchange for $2,687,500, of which $1,678,374 has been repaid. None of the investments were registered with the ACC and none of them were recorded in United’s records.

Guttman sold membership interests in the following companies: Serenity Cemeteries II, LLC; Serenity Cemeteries IV, LLC; Serenity Cemeteries VI, LLC; Serenity VII, LLC; and Champion Entertainment Group, LLC.

Guttman was ordered to pay restitution to the investors and penalties to the State of Arizona.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

SEC Charges Felon and Six Others in Oil-and-Gas Offering Fraud

Posted byValerie Escobar

On April 14, 2021 the Securities and Exchange Commission charged seven individuals, including criminal recidivist Richard Dale Sterritt, Jr., with defrauding investors in a multimillion-dollar oil-and-gas bid racket and related market manipulation scheme.

The SEC’s complaint alleges that, between March 2018 and at least November 2020, Sterritt – who used the pseudonym “Richard Richman” – Michael Greer, Deanna Looney, Robert Magness, Jr., Katie Mathews, James Christopher Pittman, and Mark Ross raised more than $16 million from more than 300 investors through an unregistered private placement of the common stock of Zona Energy Inc., a Dallas-based company that claimed to be focused on the oil and gas industry. According to the complaint, the defendants made various false and misleading statements verbally and in offering materials to solicit investors, including that their funds would be used to support Zona’s operations, namely to develop the mineral rights on a West Texas cattle ranch. The complaint further alleges that instead of using investors’ money to capitalize Zona, Sterritt and his co-defendants misappropriated millions of dollars raised in the offering, using the funds to pay for luxury goods, rental apartments, a car, and to make cash payments to friends, family members, and Sterritt’s girlfriends. Also, according to the complaint, the offering materials falsely claimed that Zona had no debt when the company actually owed millions of dollars in demand notes to various Sterritt-controlled companies.

The Securities and Exchange Commission urges investors to check the background of anyone selling them an investment and to always independently research investment opportunities.  FINRA’s BrokerCheck website is one such source.  When verifiable information is unavailable, generally, one should walk away.

SEC Obtains Emergency Asset Freeze, Charges Actor with Operating a $690 Million Ponzi Scheme

Posted byValerie Escobar

The Securities and Exchange Commission reported on April 6, 2021 that it had secured an asset freeze and other urgent relief in an emergency compliance action against Los Angeles-based actor Zachary Horwitz and his firm, 1inMM (one in a million) Capital, LLC, in connection with an alleged Ponzi scheme that raised over $690 million. Horwitz and 1inMM reportedly told investors that they were purchasing film rights with the intent of reselling them to Netflix and HBO; however, 1inMM had no commercial arrangement with either group.

Horwitz reportedly gave investors fabricated agreements and emails relating to the suspected HBO and Netflix sales. Horwitz guaranteed excessive returns and made them seem possible by using the titles of two well-known film firms and fabricating records. Horwitz misappropriated investment funds for personal use, including the purchasing of his multi-million dollar home, flights to Las Vegas, and payment to a millionaire interior designer. Horwitz falsely claimed to have a track record of successfully selling movie rights to Netflix and HBO when in fact neither Horwitz nor 1inMM had ever sold or done business with these two companies.

The SEC accused Horwitz and 1inMM of violating the antifraud provisions of the federal securities laws. The fact of the matter is that there is nothing unusual about this scam.  Simply put, there was an abundance of people looking to invest money without engaging in adequate due diligence.  As long as investors are willing to be naïve with their savings, there will always be someone out there hawking returns that seem to good to be true.

SEC Charges California-Based Fraudster With Selling “Insider Tips” on the Dark Web

Posted byValerie Escobar

On March 18, 2021, the Securities and Exchange Commission charged James Roland Jones with running a fraudulent online scheme to market “insider tips” on the dark web.  The dark web enables users to access the internet anonymously and is frequently used as a marketplace for illegal activity.  This is also referred to as the “black market.”

In late 2016 and 2017, Jones, utilizing the dark web, sought to acquire non-public, inside information that for his own use.  He later sought the non-public information in order to sell it.  Although Jones never acquired inside information, he attempted to deceive others into believing he had the information and that it was for sale.

Several clients paid in bitcoin and purchased the alleged tips based on the information Jones provided. The Securities and Exchange Commission charged Jones with violating anti-fraud provisions.

This case demonstrates that the SEC can and will go after securities law violators wherever they operate, including the dark web.  If you have not hired an attorney and wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

SEC Charges Investment Adviser and Others With Defrauding Over 17,000 Retail Investors

Posted byValerie Escobar

On February 4, 2021, the Securities and Exchange Commission charged three individuals and their associated companies with operating a Ponzi-like scheme that allegedly raised over $1.7 billion from securities issued by GPB Capital.  The SEC also charged GPB Capital with violating the whistleblower protection rules.

 

The SEC’s complaint alleges that David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an 8% annualized distribution payment to investors.  According to the complaint, these defendants along with Ascendant Alternative Strategies, which marketed GPB Capital’s investments, told investors that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies.  As alleged, GPB Capital actually used investor money to pay portions of the annualized 8% distribution payments.  GPB Capital and Gentile with assistance from Jeffrey Lash, a former managing partner at GPB Capital, also allegedly manipulated the financial statements of certain limited partnership funds managed by GPB Capital to perpetuate the deception by giving the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it actually was.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “Whistleblower protections are a cornerstone of the SEC’s whistleblower program.  The charges filed today reinforce the Commission’s commitment to protecting whistleblowers from retaliation and attempts to stifle the free flow of information to the Commission about possible securities law violations.” If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

Alabama Securities Commission issued a Cease and Desist order against Mail-Shops and Ronald Scott

Posted byValerie Escobar

On December 1, 2020, the Alabama Securities Commission issued a Cease and Desist order against Mail-Shops and Ronald Scott.  The Commission sought to put a stop to the Respondents’ solicitation of Alabama residents to invest in a variety of sectors, including real estate, oil, coal, electricity, automotive, aviation, and manufacturing. MailShops and Scott sent mass phishing emails to Alabama residents. In the emails, Scott indicated that for more details about the projects and cash distributions, interested investors should “get in touch… ASAP For further proceedings and funding.”

As of December 2, 2020, Alabama’s registration files revealed no efforts to register either Mail-Shops or Ronald Scott.  Doing business in Alabama as an unregistered investment advisor is a violation of Alabama law.  As a result of their illegal conduct in Alabama, the Respondents were ordered to cease and desist from further violations of Alabama law.

This case illustrates how easily vulnerable adults can be exploited through simple email communications.  If you have elderly friends or relatives who may be vulnerable, please take whatever steps you can to protect them from this type of exploitation.  If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

The SEC Charged the CEO of Allied Energy Services, LLC with Fraud for Running a Ponzi Scheme

Posted byValerie Escobar

On July 30th, 2020, the Securities and Exchange Commission charged Clarence Dean Alford with defrauding at least 100 investors in a ponzi scheme, which he operated through Allied Energy Services, LLC (“Allied”), where he was CEO. Alford is also a former Georgia state legislator and former member of the Georgia Board of Regents. Alford sold at least $23 million worth of two types of promissory notes to at least 100 investors, claiming that the funds from one brand of note would be used to fund a waste-to-energy conversion plant in Augusta, GA, while funds from the other brand of note would be used to fund Allied’s solar program. The promissory notes were sold between January 2017 and September 2019.

Alford claimed that Allied was a robust and thriving energy company, when in reality it was struggling. In 2016, the company began providing retrofit lighting services, which became its primary source of revenue, not energy production.

Alford sent at least one investor a “Solar Business Plan”, which detailed the plan for Allied’s fake solar business. In it, Alford fraudulently claimed that Allied had partnered with major international solar companies in an effort to solicit investments.

Alford sent approximately $5.79 million of funds from the promissory notes to his personal bank accounts. He used the funds to buy a Tesla and a house in Utah, to pay off credit card bills, withdrew over $51,000 in cash, and made almost $14,000 in political contributions. He also used funds to finance his other business ventures. The scheme eventually collapsed. Allied has since ceased operations and voluntarily filed Chapter 7 bankruptcy in February 2020.

Whether one is a broker, CEO, former politician, or any other occupation, the potential for fraud is always there. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

Alabama Securities Commission filed a Cease and Desist Order Against John Paul Maroney and two of his Florida companies

Posted byValerie Escobar

On June 25th, 2020, the Alabama Securities Commission filed a Cease and Desist Order against John Paul Maroney and his companies Harbor City Capital Corp. and Harbor City Digital Ventures, Inc. Based out of Melbourne, FL, Maroney advertises unrealistic returns on investments that, in fact, do not exist. The Securities Exchange Commission has no records of any of Maroney’s companies or the bonds he offers; the Alabama Securities Commission does not have any records either. Maroney is not registered as a broker or investment advisor in the State of Alabama. Maroney advertised an 18% annual return on investment, along with other fraudulent investments.

What is most surprising about this case is that despite the Cease and Desist Order, Harbor City Capital’s website is still live and soliciting investments. The website currently lists a bond titled HCCF-4.  HCCF-4 guarantees a 12% return on the one-year bond with no risk to the principal. Harbor City Capital Corp. is not listed in Sunbiz as a Florida entity.  The website states, “Pocket 12% Yield With ZERO Risk To Your Principal.”  So where are our regulators when we need them?

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

 

Stockbroker Exploits Elderly WWII Veteran

Posted byValerie Escobar

On June 12, 2020, the SEC filed a Complaint alleging multiple instances of fraud against Frederick M. Stow, a Tennessee-based broker at Raymond James & Associates, Inc. The SEC alleges that Stow stole over $900,000 from one of his clients, a World War II. The elder exploitation victim was Stow’s client for nearly 40 years, electing to remain with Stow whenever Stow relocated to another firm. Between October 2015 and April 2019, Stow sold securities in his client’s IRA and subsequently forged wire transfer Letters of Authorization in order to transfer the sales proceeds into his own account. The client passed away in March 2019 at the age of 98. Following his passing, the executor of the estate repeatedly requested explanations for the suspicious wire transfers. Stow then confessed his theft to his supervisor and was terminated by Raymond James. The SEC also alleges that Stow stole $32,000 from a separate client in April 2019.

Elder exploitation of this nature is not uncommon in the financial services industry.  Numerous stockbrokers have been imprisoned as a result of their greed.  It is only because of an estate executor’s due diligence that this theft was discovered.  For ideas on how you can help your friends or relatives avoid being a victim of this type of crime, feel free to call me.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

COVID-19 PUMP AND DUMP

Posted byValerie Escobar

On June 9, 2020, the SEC filed a Complaint alleging that Jason C. Nielsen operated a “pump and dump” scheme, thereby defrauding other investors. Nielsen knowingly posted false statements on investment forums in regard to the stock of a biotechnology company, Arrayit Corporation. A “pump and dump” scheme is when an investor buys stock in a given company and subsequently lies about the company’s affairs in order to “pump” up the value of his investment, and then proceeds to “dump” his shares after their value has gone up. Nielsen allegedly made approximately $137,000 from this scheme.

Nielsen, through his posts on investment forums, proclaimed that Arrayit had developed a COVID-19 blood test and that the test had gotten emergency approval from the FDA. Neither was true. Nielsen owned about 10% of Arrayit’s common stock. His false and/or misleading claims defrauded investors. On top of this, Nielsen also allegedly utilized a tactic known as “spoofing,” where an investor places orders for large amounts of a company’s stock and then cancels them, creating the appearance of an increase in demand.

The SEC charged Nielsen with violating the antifraud provisions of the federal securities laws, and seeks permanent injunctions, civil money penalties, a penny stock bar, and disgorgement with prejudgment interest.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.