SEC Actions

SEC Charges Mark A. Jones with Operating $10 Million Ponzi Scheme that Claimed to Offer Loans to Jamaican Businesses

March 28, 2016 | Silver Law Group

The U.S. Securities and Exchange Commission (SEC) has charged former Boston resident, and current Miami resident, Mark A. Jones with operating a $10 million Ponzi scheme that claimed to generate profits from “bridge loans” to Jamaican businesses.

According to the SEC’s Complaint — filed earlier this month in federal court in Boston — Mr. Jones began soliciting investors in 2007 and said their money would be pooled and used for “bridge loans” to Jamaican businesses awaiting funds from approved commercial bank loans. Mr. Jones purportedly told the investors that the loans would generate approximately 15 to 20 percent interest each year. He appeared in YouTube videos promoting investment opportunities in Jamaica and even met with some investors in Jamaica to show them local projects in which their funds were purportedly invested. Contrary to those representations, though, the SEC alleges that Mr. Jones was actually using investors’ money to pay other investors — the hallmark of a Ponzi scheme. In addition, Mr. Jones is alleged to have used some of the invested funds for his own personal use. In all, Mr. Jones raised about $10 million from at least 21 investors in several states and Washington, D.C., including some of his own relatives. Targeting investors from the same community or religious group is generally referred to as affinity fraud.

The SEC has obtained a Court order freezing Mr. Jones’ assets and an order to repatriate investor funds that were moved overseas. In addition, the SEC is seeking a permanent injunction, return of allegedly ill-gotten gains with interest, and other monetary penalties. Mr. Jones is also being criminally prosecuted by the U.S. Attorney for the District of Massachusetts for his actions.

SEC Halts Fraud by New Jersey-Based Fund Manager of Investments in Pre-IPO Tech Companies

March 28, 2016 | Silver Law Group

The Securities and Exchange Commission announced fraud charges and asset freezes obtained in a case filed on March 21, 2016 against a New Jersey-based fund manager and two firms he controls for orchestrating a Ponzi-like scheme that marketed shares in promising pre-IPO technology companies in the Bay Area.

The SEC alleges in its complaint that John Bivona raised over $53 million through Saddle River Advisors and SRA Management Associates (collectively, the “SRA Funds”) and used the assets to pay off earlier investors, establish and fortify other funds, and pay family-related expenses. The complaint also alleges that Bivona stole over $5.7 million from investors and diverted millions more to other improper and undisclosed uses.

According to the complaint, much of the funds were diverted to Bivona’s nephew, Frank Mazzola, who was barred from the securities industry in a prior SEC enforcement action and is also charged in the complaint. The diverted funds were used to pay, among other things, credit card bills, income taxes, a car loan, unrelated defense attorney fees, and the mortgage on a Jersey Shore vacation home, according to the complaint.

FBI Raids United Development Funding (“UDF”) Headquarters Amidst SEC Investigation

March 15, 2016 | Silver Law Group

On February 18, 2016, the FBI raided the headquarters of UDF, the manager of a family of real estate investment trusts (“REITs”) and other funds, sending shares of UDF’s largest fund, United Development Funding IV (“UDF IV”), tumbling 54% before NASDAQ halted trading, according to InvestmentNews.

The FBI raid is the most recent negative activity for the troubled fund manager. In November 2015, UDF’s auditor, Whitley Penn disclosed he would no longer be auditing UDF’s financial statements and UDF board member William Kahane resigned. A few weeks later in December 2015, Kyle Bass and his firm Hayman Capital Management, posted a report and letter alleging UDF was managed “like a Ponzi scheme.” UDF responded to the reports, saying that it had been under SEC investigation since April 2014.

On February 5, 2016, Bass and his firm set up the website https://udfexposed.com/ in order to further substantiate his allegations. Additionally, Bass revealed that he had a significant short position in UDF.

SEC Alleges New York-Based Lending Company and its Placement Agent Raise $8.6 million by Lying to Investors

February 9, 2016 | Silver Law Group

The Securities and Exchange Commission announced fraud charges against a Manhattan-based lending company and its placement agent for falsely stating that its financial statements were being audited and lying about the returns on the loans.

The SEC filed a complaint in federal district court in Manhattan against lending company American Growth Funding II LLC (“AGF II”) and brokerage firm Portfolio Advisors Alliance (“PAA”), as well as two of its executives, for promising investors 12-percent annual returns and concealing pertinent details about the deteriorating loan values that could jeopardize full payment of the promised returns to investors. PAA and its owner Howard Allen and president Kerri Wasserman allegedly knew the offering documents were inaccurate yet continued using them to solicit sales of AGF II securities.

The SEC’s complaint states that AGF II raised approximately $8.6 million from investors in a private placement offering from March 2011 to December 2013 and the company represented in offering documents that its financial statements had been audited and would continue to be audited each fiscal year. It further states that Ralph Johnson, AGF II’s sole managerial employee and 51 percent owner, knew AGF II’s financial statements had not been audited and would not continue to be audited each fiscal year but still caused AGF II to send out monthly account statements to investors that concealed the precariousness of its business.

The SEC Brings Christopher Brogdon to Justice After More Than a Decade of Fraudulent Activity

November 24, 2015 | Silver Law Group

The SEC Brings Christopher Brogdon to Justice After More Than a Decade of Fraudulent Activity on silverlaw.com

Allegations state that since 1992, Brogdon has conducted fraud through at least 43 of the entities he owns or controls

Former broker Christopher Brogdon, who was a licensed broker at Dean Witter Reynolds in New York from 1978 to 1991, was permanently barred from membership in the National Association of Securities Dealers (FINRA’s predecessor) and is now being brought to justice by the SEC.

With decades of misdoing shrouding his history, including making unauthorized trades and preparing inaccurate records while he was working for Harbor Twin Securities, and paying a fine in excess of $50,000, ten years after his broker’s license was revoked, Brogdon now faces a lawsuit by the SEC in an action that alleges that since 1992, he has conducted fraud through at least 43 of the entities he owns or controls.

Legal Investigations Follow SEC Risk Alert Regarding Oil & Gas Investments

October 24, 2015 | Silver Law Group

Legal Investigations Follow SEC Risk Alert Regarding Oil & Gas Investments on silverlaw.com

Bank-issued structured notes under scrutiny after sustained losses over a 2 year period

A risk alert issued in August by the Securities and Exchange Commission (SEC) has prompted legal investigations into potential claims by investors. In its alert, the SEC announced it had analyzed 26,600 structured product transactions that equaled $1.25 billion, finding numerous instances where investments were made that were unsuitable for investors’ objectives and needs.

In addition, the SEC found that the brokerage firms involved followed weak and insufficient supervisory procedures, especially in their supervision of sales of structured products. Of interest in the legal investigation are structured notes linked to oil and gas prices issued by the following firms, among others:

Five Arizona Residents Charged By SEC for Stealing From Investors

October 22, 2015 | Silver Law Group

According to one accused, they “robbed Peter to pay Paul” while living the high life

Living the high life has come to an end for five Arizona who were charged with stealing millions from investors by the SEC. According to the SEC release on September 11, the participants allegedly used stolen funds to make car payments, buy clothes and fund travel and entertainment at luxury resorts, casinos and strip clubs.

It is alleged that the five individuals—Jason Mogler, James Hinkeldey, Casimer Polanchek, Brian Buckley and James Stevens—raised close to $18 million from 225 investors who believed the group was acquiring and developing beachfront property in Mexico, as well as operating recycling facilities and purchasing foreclosed residential properties for resale. They told investors they were buying promissory notes from licensed brokers, however, none of the accused were registered with the SEC to solicit investments, according to Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.

Silver Law Group Investigates Arthur Jacob, CPA and Innovative Business Solutions, LLC

October 8, 2015 | Silver Law Group

According to recent SEC allegations, from approximately mid-2009 through at least July 2014, Jacob and Innovative Business Solutions, LLC (“IBS”), which Jacob owns and controls, engaged in a fraudulent scheme involving material misrepresentations and omissions and other deceptive devices and practices. Jacob engaged in this scheme in order to obtain and retain investment advisory clients and thereby collect advisory fees.

For at least five years, Jacob (alone and acting through IBS) routinely made false statements and omissions to current clients, prospective clients, and others, where he:

concealed his 2003 disbarment by the State of Maryland for misappropriating client funds, making false statements under oath, making numerous false statements to Bar Counsel, filing false tax returns on behalf of a client, willfully violating a court order, and

Boca Raton Oppenheimer Employees Settle SEC Investigation

August 11, 2015 | Silver Law Group

Each faces a one-year suspension for alleged unregistered sale of penny stocks

On Thursday, the Securities and Exchange Commission announced settlements in the cases of three Oppenheimer & Co. employees in Boca Raton, Florida. Scott A. Eisler, Arthur M. Lewis and Robert Okin allegedly were involved in the unregistered sale of more than 2.5 billion shares of penny stocks for a customer in 2009 and 2010.

The investigation alleges that Eisler should have conducted an inquiry into the customer’s trading activity, as it raised red flags that could point to illegal activity. According to the SEC, the proceeds from these transactions amounted to about $12 million, with Oppenheimer making more than $588,000 in commissions.

SEC Charges 54Freedom, Inc. with Securities Fraud

August 10, 2015 | Silver Law Group

The Securities and Exchange Commission (SEC) had announced it has charged two individuals and eight companies with fraud in relation to company securities and what was described as “charitable gift annuities.” The complaint was filed in the U.S. district court in Syracuse, New York.

Allegations of Investment Fraud

One of the defendants is James P. Griffin, the founder and Chief Executive Officer (CEO) of 54Freedom Inc. (54Freedom). Both Griffin and the company are located in Cazenovia, New York. 54Freedom was initially formed to sell insurance products to Americans with disabilities. However, after several years, the defendants changed the company’s purported business plan to focus on the sale of its charitable gift annuities. Throughout the company’s existence, the SEC claims the defendants provided unrealistic financial projections to prospective investors.