SEC Actions

SEC Announces Fraud Charges against eCareer Holdings, Inc. and Brokers Dean Esposito of Boca Raton, FL, Joseph Devito of Brooklyn, NY and Frederick Birks of Orlando, FL

May 4, 2015 | Silver Law Group

The Securities and Exchange Commission (“SEC”) halted a microcap scheme in South Florida that included three boiler room stockbrokers trying to conceal the fact that they were barred from the securities industry. The stockbrokers’ investment scheme included the financial exploitation of the elderly, as well as the concealment of their disciplinary histories. Brokers Dean Esposito, Joseph Devito, and Frederick Birks, cold called investors, including many elderly, ages 85 to 98 years old, and defrauded them into purchasing unregistered stock shares of eCareer Holdings, Inc. The CEO of eCareer Holdings, Inc., Joseph Azzata of Boca Raton, FL, knowingly hired the 3 barred brokers and their sales agents, while allegedly perpetrating the fraud on investors.

“We allege that senior citizens and other investors were falsely told that purchasing eCareer stock was a good, profitable investment,” stated Eric Bustillo, Director of the SEC’s Miami Regional Office. “Concealed from these investors were the exorbitant fees being paid to sales agents as well as the disciplinary histories of Esposito, DeVito, and Birks.” That being, according to the SEC’s complaint filed in the U.S. District Court for the Southern District of Florida, these brokers were the subjects of a prior SEC enforcement action that resulted in them being barred from acting as a broker or dealer or participating in any offering of a penny stock, such as eCareer’s stock.

The SEC alleges that eCareer, Azzata, Esposito, Devito and Birks fraudulently raised more than $11 million in funds from more than 400 investors since August 2010, and that $3.5 million of that amount was for undisclosed exorbitant fees. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors. The SEC’s request for a temporary restraining order was granted as well as an asset freeze. The SEC also suspended the trading in shares of eCareer Holdings.

SEC Charges Boiler Room with Being a Fraud Targeting Seniors

December 22, 2014 | Silver Law Group

The Securities and Exchange Commission alleged New York-based Premier Links, Inc., its former president, and two cold callers formed a fraudulent boiler room scheme targeting retirees and elderly to invest in speculative or high risk companies with limited or no real chance of making a profit.

The SEC alleges that Dwayne Malloy, Chris Damon, and Theirry Ruffin victimized vulnerable older investors using investors’ money for their own personal gain. Premier Links Inc. cold called investors using high-pressure sales tactics to convince seniors to invest in companies which would soon have initial public offerings (IPOs). They never disclosed to the investors that only a small fraction of the money would be transmitted to the promoted companies, and Premier Links diverted investor funds to other entities controlled by the sales representatives or other associates for their own use and benefit.

Premier Links, Malloy, Damon, and Ruffin were never registered with FINRA or as stockbrokers and fraudulently obtained over $8 million from more than 300 victims across the USA by building a relationship of purported trust and confidence with them. The SEC alleges that the defendants rarely even invested the money in the companies they were pitching.

SEC Charges Palm Beach CEO, Cecil Franklin Speight, in $3 Million Fraud Scheme

July 29, 2014 | Silver Law Group

The U.S. Securities and Exchange Commission (“SEC”) has filed a civil lawsuit against a Palm Beach, Florida-based transfer agent and its owner for allegedly defrauding more than 70 investors out of more than $3 million by using “aggressive boiler room tactics” to sell worthless investment securities.

According to the SEC’s lawsuit, which was filed in federal court in New York, International Stock Transfer, Inc. (“IST”) and its sole owner, Cecil Franklin Speight, committed mail fraud and securities fraud by creating and issuing fake securities certificates to both domestic and foreign investors. While orchestrating a group of “cold callers” who promised investors high returns or discounted prices, Speight and IST actually provided the investors nothing more than counterfeit foreign bond certificates and stock certificates, including some for a publicly-traded microcap company with no connection to IST. Moreover, to cloak his scheme with an appearance of legitimacy, Speight and IST told investors to send their investment funds to two attorneys who would place the funds in their own bank accounts. From there, however, the funds did not go to any issuers; instead, the funds went to IST, where Speight used the money to pay personal expenses, including purchases at Mercedes-Benz, Nordstrom, and Groupon. In the course of this scheme, Speight allegedly stole more than $3.3 million, sporadically paying prior foreign bond fund investors with new investor money in classic Ponzi scheme fashion.

Speight and IST have agreed to settle the SEC’s charges, with Speight agreeing to be barred from serving as an officer or director of a public company, agreeing to be enjoined from participating in any penny stock offerings, and requiring Speight and IST to disgorge all of their ill-gotten gains. Monetary sanctions will be determined by the Court at a later date, though Speight reportedly faces at least $3.3 million in restitution and a fine equal to double the investors’ losses. Additionally, Speight has pleaded guilty to a criminal charge in a parallel action brought against him by the U.S. Attorney for the Eastern District of New York. He faces up to five years in prison.

Federal Appeals Court Upholds SEC Ban on Broker-Dealer Principal for Failing to Prevent Churning and Excessive Trading

June 19, 2014 | Silver Law Group

In July 2013, the U.S. Securities and Exchange Commission (“SEC”) issued a lifetime ban upon Carl Birkelbach, the founder and principal of Birkelbach Investment Securities (headquartered in Chicago, Illinois), which prevents him from participating in any working capacity in the securities industry. Mr. Birkelbach appealed the SEC’s ban, claiming in part that the SEC exceeded its authority in imposing such a severe penalty upon him. Earlier this month, the U.S. Court of Appeals for the Seventh Circuit in Chicago denied his appeal and upheld the SEC ban, stating that Mr. Birkelbach’s offenses were sufficiently egregious to warrant the sanction imposed by the SEC.

As the head of Birkelbach Investment Securities, Mr. Birkelbach was required to supervise the trading activities of the company’s registered representatives, including William Murphy. According to the SEC, Mr. Murphy engaged for years in unauthorized conduct, steering clients into unsuitable investments, and churning in client accounts — all of which Mr. Birkelbach was purportedly aware of. Despite Mr. Birkelbach’s alleged knowledge of the wrongdoing taking place at his company, he imposed no discipline upon Mr. Murphy, never disapproved of a single trade by Murphy, and never contacted the most egregiously harmed customer to discuss the high volume of trading in the customer’s account. During the years in question, the revenues from Mr. Murphy’s trading in that account, according to SEC calculations, represented nearly 20% of Birkelbach Investment Securities’ total revenue. Even when the Financial Industry Regulatory Authority (FINRA) requested that Mr. Birkelbach place Mr. Murphy on heightened supervision, Mr. Birkelbach failed to comply. As a result, FINRA imposed upon Mr. Birkelbach a punishment that ultimately became a lifetime ban from the securities industry in any capacity, which the SEC subsequently affirmed in its July 2013 ruling.

If you have questions about your legal rights, or have been the victim of investment fraud, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or Toll Free at (800) 975-4345.

SEC Charges Investment Advisor with Improperly Raising Funds for Ponzi Scheme

May 28, 2014 | Silver Law Group

The U.S. Securities and Exchange Commission (“SEC”) continued its onslaught against Scott Rothstein associates earlier this month when it filed suit in federal court against Barry R. Bekkedam (“Bekkedam”), Chairman and Chief Executive Officer of investment advisory firm Ballamor Capital Management (“Ballamor”). The SEC suit follows a growing number of SEC actions against individuals and corporations accused of providing investor funds and assistance to convicted South Florida Ponzi-schemer Scott Rothstein.

The SEC alleges that Bekkedam, through Ballamor, solicited his clients and other prospective investors to invest $100 million into the Banyon Income Fund (“Banyon Fund’”), an enormous hedge fund that primarily financed Rothstein’s Ponzi-scheme operations. The Banyon Fund was created by Bekkedam and Rothstein investor George Levin to solicit additional funds for Rothstein and, the SEC alleges, bolster Ballamor’s business and protect Levin’s multi-million dollar investments with Rothstein.

In seeking disgorgement and civil penalties against Bekkedam, the SEC details allegations of Bekkedam’s material misstatements and omissions to his customers in connection with the Banyon Fund, as well as misrepresentations about his dealings with George Levin, which the SEC alleges were quid pro quo for Bekkedam’s securing investments in the Banyon Fund. The SEC also alleges numerous securities law violations.