|
|
 |
From the archives of the U.S. Securities and Exchange
Commision, Stock Detective scours thousands of public records
to display these highlights of the graft and punishment of
accused Wall Street "no-gooders." Use this page for amusement
and for an educational dose of reality... lest the next
deceived investor be yourself. |
| Date |
SEC
File |
Stock Detective
Summary |
| 10/26/00 |
16780
|
Kingdom of Fraud-The SEC
permanently enjoined Robert Moore from violating the
antifraud provisions of the federal securities laws.
Robert Moore was doing business as the Kingdom of
Enenkio and he represented that he was head of state of
Enenkio. Through the Internet, he offered $1 billion in
Enenkio Gold War bonds and represented that the bonds
were backed by gold. Unfortunately for investors, the
bonds were not backed by gold or anything else.
Moreover, the Kingdom of Enenkio is not recognized as a
sovereign state by any international forum.
|
| 10/25/00 |
16778
|
A Fraudulent Solution-A Fraudulent Solution. Enterprises Solutions, its
president Dr. John Solomon, and Herbert Cannon were
permanently enjoined from violating the antifraud
provisions of the federal securities laws. The company
issues a series of false press releases projecting $30
million to $50 million in revenues. The company also
failed to disclose that it was controlled by Herbert S.
Cannon, a convicted felon. Cannon has three prior
criminal convictions, including a conviction for
conspiracy to defraud the federal government in
connection with the sale of coal mine tax shelters to
investors. On March 30, 2000, the SEC suspended trading
in Enterprises Solutions' stock. Subsequently, the Court
in the Southern District of New York froze more than
$2.3 million in the defendants' brokerage
accounts.
|
| 10/12/00 |
16762
|
Don't Buy Thus Broker-Dealer's
Stock-Don't Buy
This Broker-Dealer's Stock. If you are a broker-dealer
and want to sell your customers a fraudulent offering,
why not sell your own stock? That's exactly what was
perpetrated by two principals of a Manhattan brokerage
firm, Golden Lender Financial Group, and two of its
brokers. The individuals, Aron Bronstein, Tomer Yuzary,
Roman Sakarovich and Iosif Pak, plead guilty to charges
that they defrauded investors through a series of false
representations. They raised at least $5.2 million in a
fraudulent unregistered offering of Golden Leaf stock to
their retail customers. Many of the defrauded customers
were elderly and infirm customers of modest means who
fell victim to the defendant's high-pressure sales
tactics.
|
| 9/28/00 |
16736
|
Investors Burned-The SEC
announced that civil enforcement judgements for a
fraudulent offering were entered against Richard Fulcher
of Virginia, Thomas Dolan of New York and Lawrence
Seppanen and Walter Lapp of New Jersey, all former
brokers associated with World Marketing Alliance. These
four brokers allegedly were among a group of brokers
that sold 80 individuals more than $19 million in a
fictitious "international bank debenture trading"
program called Private Pool. The duped investors were
led to believe they would earn one percent per week for
40 weeks, that their funds would be secured by
government bonds in a two-to-one ratio, and that they
would receive a securities interest evidenced by a UCC-1
financing statement filed with New York state. The
program was a total sham, with the funds used in part to
pay for personal purposes, including lots of cars and
jewelry.
|
| 9/28/00 |
16735
|
Forged Transfer Scheme-The SEC obtained a temporary restraining order
and asset freeze against Robert Sears, an unregistered
investment advisor from Northampton, Massachusetts.
Sears allegedly misappropriated funds from several
clients' brokerage accounts and fraudulently induced
other clients to transfer funds to an entity he
controlled. Sears allegedly forged clients' signatures
on at least 13 Letters of Authorization directing
brokerage firms to transfer client funds to his own
corporation, Last Minute Concessions. One client lost
more than $500,000, including his retirement savings and
college funds for his three young sons. Through Last
Minute, Sears allegedly used the money he stole to buy
an interest in a golf course and a condominium project
associated with the golf course in Belchertown,
Massachusetts.
|
| 9/27/00 |
16732
|
Countryland Wellness Resorts is
Sick-The SEC
alleged financial statement fraud against Las
Vegas-based Countryland Wellness Resorts, its president
Fred Cruz, its auditor Luis Hidalgo, and its attorney
Donald Studer. According to the SEC, Countryland made
some big-country lies to its investors. First, purported
Indonesian bank guarantees of $400 million to $1.1
billion did not exist. Second, the company reported
mining reserves of $1.2 billion to $2.1 billion, but
extensive work will be required to determine the value,
if any, of its reserves. Finally, the gold in its
warehouse with a reported value of $20 million was
little more than dirt.
|
| 9/22/00 |
16721
|
Royal Pictures is a Royal Fraud-The SEC filed a federal civil action against
Royal Pictures of North Miami, its former CFO David
Olinsky, and its former advisor Robert Brent. As often
happens, the defendants consented "without admitting or
denying the allegation." Allegedly, Royal Pictures made
false and misleading allegations concerning its
relationships with actors and actresses in its upcoming
films. Besides lacking $24 million in funding that it
touted to investors, Royal wasn't in final negotiations
with Paul Newman, Alec Baldwin, Isabella Rossellini, or
any other major actors. In fact, Royal had financed only
one picture and its brochure failed to disclose that
Brent is a twice-convicted felon.
|
| 9/14/00 |
16700
|
1st Buy Wasn't a Good Buy-It's always tempting for some investors: Why make
a lot of money with an IPO when you can make an
incredible amount of money when you get in earlier at
the pre-IPO stage? But an extremely attractive pre-IPO
deal often is just a fraud. According to the SEC, this
was the case with 1stBuy.com Inc. and its founder, Roger
D. Pringle. According to the SEC, 1st Buy raised
approximately $3.8 million through use of its website
and "spam." The company claimed that an IPO price range
of $12-$18 had already been set. In addition, investors
were told that a $5,000 investment would grow 1,200
percent in one year and an additional 21,000 percent in
three years. According to the SEC, virtually all the
company's claims were false. One would think investors
would be suspicious of such claims, but 1,200
individuals nationwide invested.
|
| 9/12/00 |
16698
|
Broker Sells Fictitious Bonds-Due to the actions of the SEC, a permanent
injunction was issued against Regald B. Smith, a broker
for Stifel Nicolaus in the firm's Pikesville, Kentucky
office. Allegedly, Smith stole from his client's funds
by enticing them with a "special situation." He told
them that other clients want to sell short-term,
tax-free bonds with high yields. But Smith wasn't
selling them bonds, he simply took their money for his
own personal use, such as renovating a local hotel. When
the bond was set to mature, Smith convinced at least one
victim to continue to buy another "special situation."
Smith admitted that, to cover his scheme, he tried to
get a bank officer to give him copies of legitimate bond
certificates. Finally, his scheme collapsed. All told,
he misappropriated more than $5 million, including $3.8
million from one customer.
|
| 9/6/00
|
16690
|
Football Franchise Scheme Sacked by the
FBI-Want to buy a
piece of the NFL''s newest football franchise? Lots of
investors said yes. But the group selling the interests,
Houston Texans NFL Football Team Holding Co., had
nothing whatsoever to do with the NFL or its actual
Houston franchise. A FBI investigation led to a
restraining order against the alleged scam artist, Edgar
A. Guilbeau of Pearland, Texas. Guilbeau allegedly had
been promoting his scheme primarily on the Internet
through its website www.houstontexans-nfl.com that was
designed to misled investors into believing they were
dealing with the real franchise.
|
| 9/6/00
|
16688
|
Arctic Can Scam Burns Investors-The SEC filed fraud allegations against Chill
Tech Industries Inc., a Nevada corporation, and its CEO,
Lee Gahr of Vancouver, British Columbia. The company,
using its www.chilltech.com Internet website, allegedly
made numerous false and misleading about the company's
ability to make the Arctic Can, purportedly a
self-cooling beverage can. Among other things, the
company misrepresented its sales, financial and stock
projections, and supposed agreements to acquire
substantial assets. The SEC charged that the company had
neither tested the Arctic Can, nor had the ability to
manufacture it. The SEC also charged that Gahr sold his
stock for a profit of more than $275,000.
|
| 8/29/00 |
1667
|
Tutoring in Fraud-The SEC
alleged that Tutornet.com Group and its President,
Euburn Ford, conducted a tutorial in fraud,
misrepresentation and material omission instead of
providing value for its shareholders. Tutornet stated
that it was co-branding with AOL and the arrangement
could generate potential annual revenues of $324
million. Tutornet also claimed it was in the process of
obtaining a $30 million investment from Princeton
Investments Ltd. According to the SEC, both these claims
were utterly false. AOL had terminated its relationship
with Tutornet and Tutornet had no reasonable basis for
believing it would obtain a $30 million loan.
|
| 8/29/00 |
16665
|
Internet Pyramid Scheme Collapses on
Investors-The SEC filed
a civil action in Dallas, Texas, against an Internet
investment club, Le Club Prive, alleging that the club
was just a fraudulent pyramid scheme. It is alleged that
Le Club solicited "members" over the Internet to make
money by multilevel marketing commissions and by
acquiring shares in mutual funds promising huge returns.
Basic memberships cost about $1,500 with $150 monthly
dues. But for another $3,000 you could become a Premier
Member, able to purchase funds that "guaranteed"
risk-free returns of six to 40 percent per month.
Unfortunately for duped investors, the operation was a
total scam, according to the SEC.
|
| 8/28/00 |
16663
|
Meeting Analysts' Projections: No Problem for
This Gang-Jeffrey
Sudikoff, Edward Cheramy and Rudy Wann, former officers
of IDB Communications Group, made sure that IDB made its
numbers. But the group was slapped with a permanent
injunction by a U.S. District Judge in the Central
District of California. According to the SEC, this trio
fraudulently inflated IDB's 1994 first-quarter earnings
from $9 million to $15 million to meet the expectations
of Wall Street analysts. The SEC also alleges that the
group concealed fabricated documents, knowingly made
false adjustments to the books and lied to IDB's
independent auditors. Moreover, Sudikoff engaged in
insider trading and tipped off his parents. In related
criminal actions, Sudikoff was sentenced to 12 months in
jail, a $3 million criminal fine and three years of
supervised release. Cheramy pled guilty to one count of
securities fraud and was sentenced to three years
probation, 500 hours of community service and a $250,000
criminal fine.
|
| 8/17/00 |
16656
|
Internet Stock Promotion Scheme Rips
Investors-Whatever you
do in the future, use extreme caution before purchasing
an investment promoted on the Internet. In this
instance, the SEC filed a complaint against Merger
Communications of Houston, Texas, and its two owners,
Jukka U. Tolnen, a citizen of Finland, and David Drake,
both living in Houston. According to the SEC, Merger
Communications distributed highly favorable information
for issuers intended to create immediate increases in a
company's stock price. Merger's remuneration was
structured so that the number of shares they received
was dependent upon a stock's increase during their
promotional efforts. Sadly for investors, Merger's
touting was successful. After two days of promotion,
PinkMonkey.com increased 400 percent. Clearworks
Technologies increased 66 percent after three days.
Typically, after Merger's promotional efforts ceased,
the stocks would drop back to their original
price.
|
| 8/16/00 |
16653
|
Nothing Precious for Investors in These
Stones-The SEC filed
a complaint in the U.S. District Court of the Southern
District of New York against Precious Stones Trading
Worldwide and three individuals (Rusian Rapoport, Edward
Landenbaum, and Igor Landenbaum) for defrauding 208
investors of about $5.5 million. The duped investors
thought Precious Stones was engaged in the business of
buying and selling rare art, coins and gemstones from
Eastern Europe, Russia and South America. Precious
Stones further represented that these investors were
getting in on the ground floor and an IPO soon would be
launched. Sounds like a jewel of a business plan. But
according to the SEC allegations, Precious Stones had
only one real business objective -- defrauding
investors. The defendants allegedly took most of the
money for themselves and used funds to pay for personal
expenses.
|
| 8/10/00 |
16649
|
Only 40% to 50% Return Per
Month?-Unbelievably,
such outrageous claims still have appeal and greedy
investors still bite. The SEC recently filed a complaint
in North Carolina against Elfindepan, S.A., Southern
Financial Group, Tracy Dunlap and Barry Lowe. {romising
investors returns of 40 to 50 percent per month, this
group enticed a large number of individuals from nine
states to invest $13.5 million. They claimed to be a
Costa Rican finance company with plans that would earn
their investors huge returns. Elfindepan and the others
represented that these investments were associated with
the International Monetary Fund and the World Bank.
According to the SEC, there was no basis for such
representations. It was a classic Ponzi scheme with the
funds raised going to pay early investors and
distributors.
|
| 8/10/00 |
16650
|
Where the Ponzi Money Goes-A recent Indiana court action provides an
instance of how a group split the proceeds of a Ponzi
scheme. A U.S. District Court Judge entered a retraining
order against JMS Investment Group, Heartland Financial
Services Inc. and four individuals for defrauding 330
investors. The investors, many of who were elderly, put
$29.1 million in IPO offerings of financial
institutions, Internet and technology companies and a
bank in Belize. According to the SEC, only $2 million
was used for investment purposes (significantly less
than 10 percent), the defendants kept $2.2 million, $1.3
million was withdrawn in cash, $1 million was used for
travel and entertainment and $15 million (or about 50
percent) was used to repay investors. The SEC did not
specify the fate of the rest of the money, nearly $8
million.
|
| 8/3/00
|
16644
|
Just Disgorge Please!-Ponzi schemes are never out of season. The SEC
announced that a federal judge in the Southern District
of Florida ordered Chemical Trust and United Marketing
Trust to disgorge, jointly and severally, $17 million in
ill-gotten gains. These entities told investors that
they could earn between 9.25 and 15 percent annually,
depending upon how much they invested. Invest more, reap
a higher return! The investments were represented to be
100 percent guaranteed by U.S. Treasury notes. Not
surprisingly, the funds invested were not used to
purchase distressed properties as promised, and the
investments were not guaranteed by U.S. Treasury notes.
This appears to be a classic Ponzi scheme, as new
investor funds paid existing investors.
|
| 8/2/00
|
16642
|
Fraud is Ringing on These
Telephones-The SEC is
seeking emergency relief against Phoenix Telecom, Jerold
Clawson, Jerry Beachem and Ellis Ragland. Allegedly, the
defendants promoted a massive fraud through the use of
insurance agents and over the Internet. Two thousand
mostly elderly individuals invested more than $74 in the
scam. Purportedly, these individuals were investing in
customer-owned, coin-operated telephones sold in units.
Not surprisingly, no registration was filed with the SEC
for the offering and investors were not told that
Phoenix was losing money. In fact, Phoenix was dependent
upon new investors to sustain its operations.
|
| 7/31/00 |
16638
|
This Broker-Dealer Has Sticky
Fingers-The SEC filed
a complaint and consent to permanent injunction against
a Tallahassee, Florida broker-dealer, Meridian Asset
Management, and its president, Robin McEachin.
Allegedly, McEachin misappropriated at least $1 million,
including pension fund accounts, from his customers.
McEachin was able to conceal his fraud by sending his
customers fictitious account statements showing stock
purchases. But the sad truth is that, for many of these
customers, McEachin purchased no stock whatsoever for
their accounts. The SEC also took action against two
other companies McEachin controlled, Benefit Plans
Consultants and Consolidated Capital Resources, that
allegedly took at least $120,000 in stolen customer
funds.
|
| 7/27/00 |
16635
|
Auto Receivable Scam Taken Off the
Road-In response
to a motion by the SEC, a Federal Court Judge issued a
temporary restraining order and asset freeze against
Gary Van Waeyenberghe, a Mishawaka, Indiana resident,
and First Choice Management Services. Based on the SEC's
findings, it appears that the 200 investors in 29 states
who made First Choice Management Services their choice
made a big mistake. These investors were told that funds
would be used to buy high-interest automobile loans for
their own accounts, that the loans were guaranteed by
Lloyd's of London and the program was management by a
highly seasoned management team. But according to the
complaint, Van Waeyenberghe actually appears to have
been seasoned in fraud -- enjoined for his role in a
securities fraud in 1984, twice convicted of felonies
(mail fraud and conspiracy to defraud the U.S) and
currently under indictment for bank fraud and bankruptcy
fraud. Individuals invested more than $21 million in Van
Waeyenberghe's automobile loan scam.
|
| 7/27/00 |
16636
|
Funeral Home Scam Bites the Dust-The SEC filed a complaint against in New York
against Phillip Herman, Marc Wein, Millennium Services
and Branin Investments for making false and misleading
statements in selling unregistered securities of
Millennium. Millennium was a start-up company that
supposedly would acquire and operate funeral homes.
According to the SEC, at least half the $4.8 million
raised went to other Branin-related businesses, hefty
commissions and other improper uses. Moreover, they
represented that they had already acquired several
funeral homes at the time of the offering when, in fact,
they had not acquired a single funeral home. In
addition, as frequently happens in scams, investors were
told that their investments would be risk-free. Finally,
Marc Wein failed to disclose that the investment was not
appropriate for unaccredited investors. He also forged
at least 15 signatures to establish that certain of
their investors were accredited.
|
| 7/21/00 |
16632
|
System of Excellent Fraud-Theodore Melcher owned and operated SGA Goldstar
Research, publisher of Goldstar Whisper Stocks
newsletter, a newsletter that promoted unknown and
untested penny stocks. You should be able to guess the
rest. According to the SEC, Melcher and Goldstar
received stock for promoting securities and,
specifically, he was hired by Charles Huttoe, the CEO of
Systems of Excellence. At the same time Melcher was
recommending SOE stock, he was selling his unregistered
SOE stock in his name and in the name of his Bahamian
shell company. Investors lost millions in this scam. In
fact, to date the SEC has recovered approximately $11
million from enforcement actions related to the Systems
of Excellence fraud. Moreover, six individuals have
plead guilty to felony charges stemming from the fraud.
Huttoe received 46 months in prison and Melscher
received 12 months in prison.
|
| 7/17/00 |
16630
|
This ATM Doesn't Pay-Larry W. Ellis allegedly had a great idea for an
ATM business, specifically for his Dallas-based ATM
Technology. For a mere $10,000 investment, an individual
would receive a secured interest in a specific ATM
machine. Unfortunately, large numbers of investors were
duped into thinking they would have their own machines.
Besides a profit-share interest in the machine, Ellis
promised investors they would receive their money back
plus interest in three years. Investors lost
approximately $1 million in this scam. A judge has
ordered a permanent injunction against Ellis for
violations of securities laws and will later determine
the specific amount of disgorgement and whether civil
penalties should be imposed.
|
| 7/13/00 |
16626
|
Internet Magazine Business: Don't
Subscribe-The SEC
requested a temporary restraining order and an asset
freeze for the benefit of 50 defrauded investors who
lost $900,000. Stadtt Media, a Texas liability company,
allegedly sold investors units for the development of
C-Magazines.com. Supposedly, the Company, using its
patents would enable computer users to read
digitally-reproduced, mainstream magazines online and
translate these magazines into 25 languages. In truth,
according to the SEC, the Company owned no patents and
had never even made arrangements with an investment
banker to conduct an IPO. Instead, the money was used
for a $126,000 Ferrari, two Mercedes Benzs, three luxury
apartments -- including one in St. Martin -- and other
items.
|
| 7/12/00 |
16624
|
Papa Serves Investors Bad Food-The SEC filed an injunction against 12 sales
agents employed by Papa Holdings, a Southern Californian
company operated under the name "Papashon." The sales
agents represented that they were receiving a 10 percent
sales commission, but they actually received 31 to 40
percent. But the real bad news for the defrauded
investors, according to the SEC, was the fact that the
$23 million raised was not used to create a publicly
traded company and to open four new restaurants.
Instead, the money was used primarily to pay for the
sales agents and for losses at existing
restaurants.
|
| 7/6/00
|
16621
|
Beverly Hills Pump and Dump-A Judge from the U.S. District Court of Central
California issued a temporary restraining order against
24-year-old Rafael Shaoulian of Beverly Hills,
California and an asset freeze against Shaoulian and his
father. According to the SEC, Shaoulian manipulated the
stock price of Universal Standard Healthcare. After
purchasing a large block of the stock, he posted
hundreds of messages under numerous pseudonyms to
Internet message boards. To post these messages, he used
the publicly available computers at UCLA, where he
graduated. In these messages, he indicated that the
company was about to be acquired. In fact, the company
previously had ceased all its operations. Not
surprisingly, Shaoulian sold all his stock for a big
profit and thereafter the stock collapsed. The amended
SEC complaint charges that Shaoulian also manipulated
the stock of four other OTC Bulletin Board companies --
iChargeit Inc., Worldtradeshow.com Inc., Casino
Pirata.com Ltd. and E*TwoMedia.com. The SEC is seeking
nearly $400,000 in disgorgement from Shaoulian, his
father and his brother.
|
| 7/3/00
|
16618
|
Senior Runs Ponzi-Often seniors
are the victims of Ponzi schemes, but Benjamin Schmidt,
age 66, of St. Petersburg, Florida showed that seniors
can also run such schemes. Schmidt, who co-founded Ben
Mar Investments with Mark Gatch, was found guilty of
violating securities laws by a U.S. District Court Judge
from the Southern District of Ohio. Schmidt told
investors he solicited that they could expect to earn
profits on their investments of four to five percent per
month. According to the SEC, the Schmidt and Gatch Ponzi
scheme resulted in investor losses exceding $12 million.
Schmidt was ordered to disgorge more than $1.8 million
in ill-gotten gains. Gatch, his partner, previously
settled with the SEC and is now serving a five-year
prison sentence.
|
| 6/26/00 |
16610
|
Does Your Investment Advisor Have 15
Cars?-A U.S.
District Court Judge for the Northern District of Texas
granted a SEC request for a temporary restraining order
against Thomas Kearns and his company, Kearns Financial
Services Inc., that froze all assets of the company.
Thomas Kearns was a licensed insurance agent in Dallas
County, Texas who also represented himself as an
investment advisor. According to the SEC, he victimized
seniors by gaining their trust and then obtaining powers
of attorney from the trusting seniors that gave him
complete authority over their money. Unfortunately, the
defrauded seniors didn't get the safe investments that
he had promised. In fact, Kearns obtained at least $1.5
million and apparently did not make any legitimate
investments whatsoever for his clients. He loaned more
than $300,000 to a friend to start a ginseng vitamin
company and used other money to buy a vacation home,
home improvements and to acquire 15 automobiles.
|
| 6/22/00 |
16604
|
This Peat Stock Smells-A U.S. District Court Judge in Chicago entered a
judgment against five individuals connected with
Exsorbet Industries, including former company president
Lee Ogle, in a microcap stock manipulation case.
Exsorbet produced a peat moss oil absorbent product
supposedly used in environmental cleanup. Unfortunately,
according to the SEC, Exsorbet investors were totally
deceived about the company and its prospects, as its
stock price was manipulated from $1 to $13 a share.
Besides giving and receiving bribes to manipulate the
stock price, an EPA document endorsing the product was
forged and a press release announcing $5 million in
sales was bogus, the SEC said. The defendants consented
to the judgments without admitting or denying the SEC's
allegation and were ordered to pay at least $2.3 million
in disgorgement of ill-gotten gains and civil
penalties.
|
| 6/15/00 |
16590
|
Virtual Pyramid Collapses-SG Limited, based in the Caribbean island of
Dominica, operated the StockGeneration Web site, touting
itself as a “virtual stock exchange” that offered stocks
in “virtual companies.” The SEC announced the unsealing
of a temporary restraining order and asset freeze issued
by U.S. District Court in Boston against the company.
Numerous investors flocked to SG and particularly to one
"privileged company" it offered. SG told investors that
the stock in this company would only rise – even
guaranteeing investors a 10 percent monthly return. But
it is not a privilege to invest money in a fictitious
company. According to the SEC, this virtual arrangement
was, in fact, just a classic pyramid scheme.
|
| 6/1/00
|
16579
|
Chicago Casino is Bad Bet-The SEC filed a complaint in U.S. District Court
in Minnesota against Robert Shanks and Mary West and
their company, Skyline Group Inc., for misappropriation.
Victimized investors were told that all funds raised
would be used to finance a Native American tribe's
request for the Department of the Interior to return
land to the tribe in the Chicago area so that a casino
could be built. The SEC did not allege the Native
American tribe engaged in any wrongdoing, but charged
the defendants with violations of federal securities
laws. Specifically, the SEC alleged that the couple
diverted $1.36 million of the $3 million to cover their
personal debts and expenses, such as their mortgage
payment.
|
| 5/31/00 |
16569
|
Fraud in the Skies-The SEC filed
a civil action against Pacific Air Transport and Robert
B. Hirsch for an alleged fraudulent securities offering.
According to the SEC, Hirsch and his cohorts offered
investors nine-month "secured" promissory notes.
Investors of the notes were promised returns of 12 to 13
percent and were told that their funds were guaranteed
by an offshore insurance company. Pacific Air Transport
raised approximately $8 million through this scheme and
many of its victims were elderly. Unfortunately, there
was no guarantee and the SEC indicates that these
investors have lost most, if not all, of their
investment.
|
| 5/10/00 |
16548
|
120 Percent Phony-The SEC
announced a civil action to halt an ongoing fraudulent
scheme run under the names Oakleaf International,
Rosewood International and Meliorations Management.
Gullible individuals investing at least $40 million
nationwide were promised capital preservation and 120
percent annual returns. It appears that these investors
asked few questions. The SEC alleges that Rosewood or
the other companies were able to obtain the $40 million
without even specifying to their investors how they
would obtain the promised 120 percent returns. Clearly,
investors were not told how the money was really being
used. The SEC alleged that the defendants used the funds
to purchase houses and cars for themselves and to
transfer money to offshore bank accounts. One item the
SEC found particularly appalling: The companies paid 25
percent commissions to their salespeople.
|
| 4/10/00 |
16511
|
Dial M for Misrepresentation-Allegedly, William H. B. Chan, the former
chairman of defunct Empower Communications, and other
defendants sold more than $6.5 million in unregistered
securities to investors. According to the SEC, these
duped investors were told that their investments would
be used to build and operate telephone exchanges in
Indonesia. Chan and others falsely misrepresented the
existence of an agreement with a major
telecommunications company, the company's assets and the
existence of an independent audit by a nationally
recognized public accounting firm. Chan fared rather
well at the expense of his investors, using $1.2 million
of the offering proceeds for undisclosed expenses of
himself and another company. As you would expect, no
telephone services were ever provided.
|
| 4/3/00
|
16499
|
Entertainers Scammed-Dana C. Giacchetto and his Cassandra Group
decided to target entertainers rather than widows.
Presumably, Giacchetto believed he could make more money
that way, and he probably was right. The SEC charged the
Manhattan investment adviser with fraudulently diverting
more than $20 million from the investment accounts of
his clients. To lure his entertainer clients, he claimed
a "conservative" investment strategy with the assets
kept in trust by an independent custodian. But his
claims were a sham, according to the SEC. Allegedly,
Giacchetto diverted more than $4 million of his clients'
funds to pay Cassandra's operating expenses and his
living expenses. He also used more than $12,000 in
client funds as a down payment for a Mercedes for a law
enforcement officer. According to the SEC, when his
clients asked questions, he was quick to respond -- with
lies. He often totally misrepresented the stocks
comprising his clients' portfolios and discussed stock
transactions with clients that never actually took
place. To back up his lies, he provided his customers
with false order tickets, false portfolio statements,
and data regarding nonexistent "escrow" accounts and
fictitious "private placements."
|
| 3/31/00 |
16496
|
Thanks for the House-Kay L. Cahill, a convicted felon, and other
defendants allegedly raised approximately $9.5 million
for "investments" in foreign bank instruments. Cahill
and his cohorts promised investors returns of as much as
1,000 percent per year. Unfortunately, promises of
unbelievable returns still attract gullible investors.
According to the SEC, Cahill was running an
old-fashioned Ponzi scheme. He used some of the proceeds
for an 11,000-square-foot $1.2 million house in Tyler,
Texas. Of course, a house of that size needs furniture,
and Cahill also used investor funds to purchase
furniture and automobiles. The SEC's request for an
emergency asset freeze and other equitable relief to
halt the fraudulent investment scheme was granted. The
Judge also entered an order against Robert H. Alberding
for his role in soliciting investors for the program in
exchange for commissions. Alberding, a self-employed
sales and marketing consultant who conducted business
under the name CanAmerican Business Capital, was orderee
to pay $125,000 he received in commissions.
|
| 3/3/00
|
16461
|
Law School Fraud Project-The creative efforts of Douglas Colt, a
Washington, D.C.-area law student, received the
attention of a hometown institution, the Securities and
Exchange Commission. Unfortunately, his scheme will look
very bad on his resume. According to the SEC, Douglas
created an Internet company -- fast-trades.com -- that
recommended stocks and then used this company to
manipulate the prices of four stocks during early 1999.
This scheme generated over $345,000 in profits for
himself, his mother, three of his law school classmates
and two friends. Allegedly, Colt targeted thinly traded
stocks, purchased the shares in advance, and then
promoted and recommended the stocks to his subscribers.
When the stocks went up, Colt and his law school buddies
were in great shape because they already had sell limit
orders in place. It took considerable work to attract
new victims, thus Colt and his three law school
classmates -- Kenneth Terrell, Jason Wychoff, and Adam
Altman -- had to post hundreds of false messages to
Internet message boards to maintain and expand
fast-trades.com subscribers. One wonders if they had
time to attend legal ethics classes.
|
| 2/22/00 |
16446
|
Lifestyles of the Rich and
Fraudulent-The SEC
announced an emergency enforcement action against David
W. Mobley, a hedge-fund manager. Mobley allegedly
defrauded investors of at least $59 million since 1993.
According to the SEC complaint, he claimed his funds
averaged 51 percent return per year, net of his
management fees of 30 percent. But Mobley actually lost
millions for his investors. Perhaps one reason for his
clients' losses was that he had put their money into a
number of businesses he owned, including a golf and
country club development, a research and polling
company, and a cigar lounge. But Mobley did more than
smoke cigars. According to the SEC, he diverted millions
of dollars of investor funds to pay for a luxurious
lifestyle for himself, including a $1 million salary and
a $2 million bonus and a Porsche. But it appears his
passion was diverting his customers' funds to pay for
housing for himself and his family -- an $864,000 home
and a $1 million lot in Naples, Florida, homes for his
sister and daughter, and a $1.7 million vacation home in
Vail, Colorado.
|
| 2/1/00
|
16421
|
Oil in this Boiler-The SEC filed
a civil action against David Lewis and Spartan Oil
Corporation alleging fraud in connection with their sale
of oil and gas partnership interests. According to the
SEC, Lewis and a boiler room sales force raised
approximately $1.8 million from misled investors and
misrepresented Lewis’ petroleum experience and past
results. They also were not truthful about oil leases
Spartan owned or other important data about the
company's assets and operations. Lewis allegedly
misappropriated some of the funds, using some of the
money to repay investors of another company, Centurion
Oil Production Corporation. Most galling to Spartan's
investors, their investments were used to run Lewis'
boiler room operation.
|
| 1/18/00 |
16411
|
In the Rough-Golf Emporium
and its President, Frederick Tropeano, may be closing up
shop. Allegedly since January 1998, Tropeano and his
salespeople raised at least $640,000 through fraudulent
misrepresentations to investors, many of whom were
elderly. According to the SEC, investors were told that
their Golf Emporium investment would appreciate to at
least three times its "private placement" price and the
company soon would go public. Sadly for investors, the
"going public" day never happened. In fact, the
defendants failed to even answer the SEC's charges. As a
result, the U.S. District Court for the Southern
District of New York permanently enjoined Tropeano from
further violations of the Federal securities laws and
continued the freeze of Golf Emporium's assets so that
remaining funds could be disgorged.
|
| 1/6/00
|
16401
|
The Option to Hang Up-Currency Trading International and six of its
principals are accused of bilking investors out of more
than $16 million through high-pressure telephone sales
of foreign currency options. According to the SEC, 900
investors in four states were told they could double or
triple their money in two or three days but never told
them how risky the investments were. Once they had
someone hooked, they never let go. Investors were not
allowed to sell option positions without buying new ones
or control their accounts. The defendants allegedly
never returned any of the investors' funds and often
pressured them into sending more money to cover losses.
The SEC is seeking an injunction, return of the $16
million and civil penalties against California-based
Currency Trading International, its two owners and four
managers.
|
| 1/5/00
|
16399
|
Scalpers Anonymous-The SEC may
be shutting down one of the online world's best-known
stock-picking characters, Tokyo Joe (aka Yun Soo Oh
Park). Familiar to message board aficionados and paying
members alike, Tokyo Joe and his Societe Anonyme are
accused of recommending stocks to subscribers on one
screen while dumping his own shares of those stocks on
another. Societe subscribers pay between $100 and $200
per month for Tokyo Joe's advice. The SEC hasn't put a
dollar figure on what it hopes to recover but, at those
rates, it should be plenty.
| | | |
.gif){kind=small}
.gif){kind=small}
