October 2021 SEC Updates

  1. On October 29, 2021, the SEC charged BNZ, Brett Barber and Louis Zimmerle for fraudulently raising $13.5 million from more than 100 retail investors. BNZ, Barber, and Zimmerle told investor that BNZ was in the business of making investments in real estate and alternative investments and promising to pay investors significant returns, generally 10% per year. The matter is being litigated. 


  1. On October 27, 2021, the SEC charged Swapnil Rege with stealing money from investment advisory clients, and doing so while he was subject to a prior SEC order barring him from being in the investment advisory business. Rege and his company SwapStar Capital, LLC solicited Rege’s friends, neighbors, and other referrals to be the defendants’ investment advisory clients. Rege and SwapStar misrepresented to their clients that client money would be invested in securities for guaranteed returns. The matter is being litigated.  https://www.sec.gov/litigation/litreleases/2021/lr25249.htm


  1. On October 26, 2021, the SEC announced that it filed an emergency action against Steven Gallagher for committing securities fraud through a long running scheme to manipulate stocks using Twitter. Gallagher used his Twitter handle to make thousands of tweets encouraging his numerous followers to buy stocks in which Gallagher had secretly amassed holdings. Gallagher would then sell those stocks at inflated prices, while he continued to recommend others buy them-never disclosing that he was selling the stocks. The matter is being litigated.  https://www.sec.gov/litigation/litreleases/2021/lr25248.htm


  1. On October 26, 2021, the SEC instituted administrative proceedings against David Bandimere. Bandimere raised at least $9.3 million from over 60 investors while acting as an unregistered broker for these Ponzi schemes and earned transaction-based compensation, which provided the vast majority of his income. Bandimere initially sold IV Capital directly to investors, but then formed three LLCs to facilitate bringing in investors for both IV Capital and UCR. Bandimere also encouraged the investment of the investors’ retirement funds by setting up self-directed IRA accounts through a third-party provider. https://www.sec.gov/litigation/admin/2021/34-93425.pdf


  1. On October 26, 2021, the SEC charged Ann Vick with fraudulently raising approximately $3.2 million from nearly two dozen investors for AMV Investments LLC, a pooled investment fund of which she is the sole owner. Vick represented herself to investors as a consistently successful options trader and promised investors exorbitant investment returns. However, Vick’s options trading resulted in a volatile mix of gains and losses, and she had never generated the consistent profits necessary to pay investors the returns she promised. The matter is being litigated.  https://www.sec.gov/litigation/litreleases/2021/lr25246.htm


  1. On October 25, 2021, the SEC obtained a final judgment against defendant Marcus Boggs, whom the SEC previously charged with stealing more than $1.7 million from at least three of his investment advisory clients. Boggs, without his clients’ knowledge or authorization, misappropriated his clients’ money by selling securities in their advisory accounts and then transferring the proceeds to his personal credit card account. Boggs made more than 200 illegal transfers from three advisory clients’ accounts to his personal credit card account. https://www.sec.gov/litigation/litreleases/2021/lr25245.htm


  1. On October 22, 2021, the SEC instituted administrative proceedings against Jason Rhodes. Rhodes acted as an associated person of Sentinel Growth Fund Management, LLC (“Sentinel”), an unregistered investment adviser that Rhodes co-founded. Sentinel was the investment adviser to several private funds. Rhodes pled guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of securities, one count of wire fraud, and one count of investment adviser fraud before the United States District Court for the Southern District of New York. https://www.sec.gov/litigation/admin/2021/ia-5895.pdf


  1. On October 20, 2021, the SEC instituted administrative proceedings against Disciplined Capital Management LLC. The matter involves DCM’s failure to file with the Commission and to deliver to retail investor clients its Form CRS. DCM was required to file its initial Form CRS with the Commission as Part 3 of its Form ADV and to begin delivering its Form CRS to prospective and new retail investor clients. DCM was further required to deliver its Form CRS to existing retail investor. The firm failed to file and deliver Form CRS, not becoming compliant. As a result, DCM violated Advisers Act Section 204 and Rules 204-1 and 204-5. https://www.sec.gov/litigation/admin/2021/ia-5893.pdf


  1. On October 20, 2021, the SEC charged Robert Bernardi, founder and former CEO of GigaMedia Access Corporation (Giga), Nihat Cardak, former CFO of Giga, and Sunil Chandra, Giga’s former VP of Business Development, with fraudulently raising tens of millions from investors. Bernardi and Cardak told potential investors and lenders that Giga had revenues over $50 million, a solid balance sheet with at least $18 million in available cash, and a promising new product that already had many customers. Giga had revenues of a little over $1 million, less than $1 million in available cash, and far fewer customers than it represented to investors. The matter is being litigated. https://www.sec.gov/litigation/litreleases/2021/lr25244.htm


  1. On October 19, 2021, the SEC instituted administrative proceedings against Credit Suisse Group AG. This matter concerns an offering fraud and violations of the internal accounting controls and books and records provisions of the Foreign Corrupt Practices Act by Credit Suisse, in connection with three interconnected transactions involving, United Kingdom-based Credit Suisse entities and Mozambican state-owned entities. The transactions include a syndicated loan and two securities offerings by Mozambican state-owned entities, the first of which Credit Suisse underwrote, structured, marketed and distributed, and the second of which Credit Suisse underwrote, structured, marketed and distributed as a joint lead manager with another international investment bank, VTB Capital plc (“VTB”). https://www.sec.gov/litigation/admin/2021/33-11001.pdf


  1. On October 19, 2021, the SEC instituted administrative proceedings against VTB Capital plc. This matter concerns material omissions and misleading statements in bond offering for which VTB Capital Plc (“VTB”) acted with Credit Suisse Group AG (“Credit Suisse”) as joint-lead manager. The bond offering allowed investors to exchange their loan participation notes for a direct sovereign bond issued by the Republic of Mozambique. Credit Suisse structured the bonds, while both banks prepared and distributed the offering materials. https://www.sec.gov/litigation/admin/2021/33-11000.pdf


  1. On October 15, 2021, the SEC instituted administrative proceedings against Clifton Sneed, Jr. Sneed defrauded numerous clients—often targeting members of churches—while acting as an investment adviser. Sneed held himself out as an investment expert who could help investors earn outsized returns and achieve financial independence if they became members of his sole proprietorship, The Trade Group (“TTG”). Clients paid Sneed an upfront fee to join TTG, and Sneed engaged in the business of advising them on investing in securities and other investments. But TTG was a scam. Sneed lied about his certifications, actively concealed that he had been the subject of multiple regulatory and criminal actions for securities violations, and misrepresented the size and scope of TTG. https://www.sec.gov/litigation/admin/2021/ia-5888.pdf


  1. On October 15, 2021, the SEC obtained a final judgment against Vassilios Trikantzopoulos and his business, Navis Ventures LLC, who were previously charged with operating a fraudulent long-running investment scheme. The SEC charged Trikantzopoulos and Navis with running a multi-year scheme that solicited investors for various international real estate ventures but then used the investors’ funds for unauthorized personal expenses. https://www.sec.gov/litigation/litreleases/2021/lr25243.htm


  1. On October 14, 2021, the SEC instituted administrative proceedings against William King. King solicited clients to invest in a penny stock issuer, American Rebel Holdings, Inc. (“AREB”). King did not disclose that he received $72,250 in AREB shares as a commission for soliciting sales nor that he retained $447,384 in AREB shares as fees. Commission also found that King operated as a broker-dealer through his solicitation of investors and other activities without registering. King was ordered to pay $628,022.13 in total. https://www.sec.gov/litigation/admin/2021/34-93320.pdf


  1. On October 13, 2021, the SEC instituted administrative proceedings against Robert Balunas. Balunas on behalf of Arcturus Corporation and Aschere Energy LLC 2, offered and sold securities in the form of fractionalized interests in so-called joint ventures to drill oil and gas wells. Balunas was a registered representative associated with Amerest Securities, Inc. a previously-registered, captive broker-dealer for Arcturus and Aschere. Ali Parvizian and his two companies, Arcturus and Aschere, directed Balunas and his company to market to thousands of members of the general public nationwide investments in purported joint ventures that would conduct oil and gas exploration and drilling activities. Balunas engaged in these activities while not registered as a broker-dealer with the Commission or associated with a broker-dealer registered with the Commission. https://www.sec.gov/litigation/admin/2021/34-93310.pdf


  1. On October 7, 2021, the SEC entered a final judgment against Steven Pagartanis whom defrauded investors. While working as an investment professional, Pagartanis defrauded retail investors by selling investments using false and misleading statements and misappropriating the proceeds to pay personal expenses and make payments to his investors in a Ponzi scheme-like manner. https://www.sec.gov/litigation/litreleases/2021/lr25242.htm


  1. On October 6, 2021, the SEC obtained an emergency court order freezing the assets Ron Harrison for carrying out an ongoing investment advisory fraud. Ron Harrison fraudulently collected over $900,000 in performance and other fees from twenty-two clients since 2016. Harrison collected these fees based on purported gains from his option trading in the clients’ brokerage accounts when, in fact, almost all of the clients suffered substantial losses from Harrison’s trading. https://www.sec.gov/litigation/litreleases/2021/lr25241.htm


  1. On October 6, 2021, the SEC charged CanaFarma Hemp Products Corp. and its co-founders with fraudulently raising approximately $15 million from investors, and misappropriating a significant portion of the investor funds for personal use and other unrelated purposes. CanaFarma, a Canadian start-up hemp company and its co-founders Vitaly Fargesen and Igor Palatnik, raised millions of dollars from investors. While raising these funds, the defendants made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. https://www.sec.gov/litigation/litreleases/2021/lr25240.htm


  1. On October 1, 2021, the SEC charged Keith Wakefield, a former managing director and head of fixed income trading at IFS Securities, Inc., an Atlanta-based broker-dealer, with causing millions of dollars of losses through unauthorized trading in fixed income securities, and with fraudulently obtaining approximately $820,000 in fictitious commission income. Wakefield engaged in unauthorized speculative trading in U.S. Treasury securities, on behalf of IFS and incurred millions of dollars in losses for the firm. Wakefield engaged in a variety of fraudulent practices to create the appearance of fictitious trading profits and disguise his unauthorized trading losses, including falsifying IFS’s books and records. https://www.sec.gov/litigation/litreleases/2021/lr25239.htm


  1. On October 1, 2021, the SEC charged Laguna Niguel, California-based TCFG Investment Advisors, LLC (TCFG), TCFG’s affiliated broker-dealer TCFG Wealth Management, LLC (TCFG Wealth), and Richard Roberts – their CEO, president, and managing member – with making materially false and misleading statements and omissions related to fee markups charged to TCFG’s advisory clients. TCFG and Roberts breached their fiduciary duty to advisory clients. TCFG and Roberts disclosed that TCFG Wealth “may” receive portions of the fees charged to TCFG accounts by its unaffiliated clearing and custody firm when, in fact, Roberts had directed that firm to charge TCFG clients significant markup fees that were paid to TCFG Wealth. https://www.sec.gov/litigation/litreleases/2021/lr25238.htm