SEC Halts $5.3 million Twitter/Uber Ponzi Scheme

On Feb. 27, 2015 the Securities and Exchange Commission (SEC) charged Gregory W. Gray Jr. and his firms Archipel Capital LLC and BIM Management LP with fraud for operating a Ponzi scheme.

Gray and his firms would solicit money for a fund investing in pre-IPO shares of Twitter (NYSE: TWTR). The shares were to be delivered to investors once the company went public. Gray raised $5.3 million, but only purchased a fraction of the shares he was supposed to purchase with the funds. He then appeased investors with funds from other unrelated funds to make up for the shortfall.

The complaint was filed in the Southern District of New York, the location of an investor which gave Gray $5 million to  purchase shares of Uber Technologies, however, Gray fabricated a stock purchase agreement to convince the investor that shares of Uber were being purchased in his name when in actuality they were being used to pay back investors in Twitter.

Andrew M. Calamari, Director of the SEC’s New York Regional Office had this to say about the announcement:

Gray sold investors on a seemingly great idea to acquire pre-IPO shares of high-profile companies like Twitter and Uber at a low price.  But rather than come clean when he failed to invest as promised, Gray stole from investors to cover his misdeeds.

To read the original announcement click here.

Texas Man Sentenced To 25 Years For Securities Fraud

On February 19, 2015 Charles Wayne Kiway of North Richland Hills, Texas was sentenced to 15 years in state prison for securities fraud and theft. This was on top of a 10 year sentence for violating the conditions of probation from an earlier securities fraud incident. The two sentences will run concurrently.

Kilway sold promissory notes and used the money to pay for personal expenses by transferring funds to his wife's account. In addition to the prison term he was also ordered to pay $602,120 in restitution.

To read the actual order click here.

Diane Glatfelter of Billerica Massachusetts Accused of Selling $2.2M In Fake "Bank Guarantees"

On February 15, Diane Glatfelter of Billerica, Massachusetts was barred from selling securities after selling $2.225 million in fictitious investments called "bank guarantees" through K2 Unlimited, Inc. and 211 Ventures, LLC. Glatfelter promised high returns and guarantees against losses. Additional penalties have yet to be announced. We'll continue to track this story as it evolves.

To read the original order click here.

CEO of San Fran-Based Penny Stock Company Pump and Dump Scheme Fined $300,000

On February 25, 2015 Joseph A. Noel, of Martinez, California was ordered to pay $315,000 resulting from a complaint originally filed by the Securities and Exchange Commission (SEC) on Nov. 17, 2014.

As the CEO of the YesDTC Holdings, Noel is accused of defrauding investors via a pump and dump scheme. Noel issued misleading press releases and infomercials to market shares of his company, pushing the price of the thinly-traded securities up. He then sold his shares and made $300,000. Noel hid his sales through an account he made in his teenage daughter's name.

To read the original charges click here.

To read the final order click here.

Texas Hedge Fund/Commodity Pool Manager Sentenced to 8+ Years In Federal Prison

On February 26, 2015, Kevin G. White of The Woodlands, Texas, was sentenced to 8+ years of prison resulting from a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on July 9, 2013. A concurrent filing was made by the Securities and Exchange Commission (SEC).

The suit alleged that RFF GP, LLC, and KGW Capital Management, LLC, tricked investors into investing in Revelation Forex Fund, LP, a purported $7.4 million hedge fund/commodity pool scam in which he used $1.7 million for his own personal use.

White found investors through websites and presentations at trade shows. According to the order, "White fabricated Revelation’s performance and lied about his investment experience".  Aitan Goelman, the CFTC’s Director of Enforcement, cleary used this case to make a statement about CFTC's willingness to assign prison time to financial fraud cases. Goelman had this to say about the verdict in the announcement:

The sentence in this case should serve as a warning that those who willfully commit fraud in our markets face the very real possibility of a significant term of imprisonment. The CFTC will continue its vigilance in protecting commodities and derivatives investors from fraud and other forms of financial crime.

To read the full announcement click here.

How Investors Can Claim $4.1 billion in SEC Settlement Dollars

In 2013, the SEC collected over $1.6 billion in monetary penalties. In 2014, according to Chairman Mary Jo White's address at SEC Speaks 2015 a few days ago, the amount more than tripled to $4.1 billion. After the order is obtained, the money is placed in a “fair fund” for distribution to harmed investors. 

While every effort is made to identify harmed investors it is important to know how to follow up with the fund yourself. In the coming weeks we'll be publishing an updated contact list for our readers, meanwhile you can start by seeing if the company you invested in is on this list and following the instructions as posted for that particular claim.

The Dodd-Frank Wall Street Reform and Consumer Protection Act is the catalyst behind much of the change going on in the financial industry today. It also authorizes the SEC to pay an award to eligible whistle-blowers if you submit leads to an SEC action that results in monetary sanctions over $1 million. To learn more about this program click here. You can see a list of FAQs about the whistle-blower program here.

To see if a class action lawsuit has been filed relating to your investment you can visit Stanford's Securities Class Action Clearinghouse by clicking here.

If the issue is with your registered broker/dealer going out of business you can visit the Securities Investor Protection Corporation to see if you can file a claim by clicking here. 

CFTC's Energy Committee To Hold First Meeting In 5 Years on 2/26 @ 10am

When: Thursday, February 26, 2015 from 10:00 a.m. to 4:00 p.m
Location: The Commission’s headquarters in Washington, D.C. from

Commissioner J. Christopher Giancarlo, sponsor of the EEMAC had this to say about the meeting:

The EEMAC’s first meeting in over five years will examine what impact the Commission’s proposed position limits and aggregation rulemakings will have on the ability of energy firms, utilities and producers to protect against fluctuations in the price of electricity, winter heating oil, gasoline, natural gas and other commodities used every day by millions of American consumers.

Meeting Agenda as taken from the original press release.

10:00 a.m. to 10:10 a.m.	Opening Remarks Commissioner J. Christopher Giancarlo, Sponsor, EEMAC Chairman Timothy Massad Commissioner Mark Wetjen Commissioner Sharon Bowen
10:10 a.m. to 10:30 am	Current Conditions in U.S. Energy Markets Adam Sieminski, Administrator, U.S. Energy Information Administration EEMAC Member Questions
10:30 a.m. to 11:30 a.m.	Panel I: What Does the Data Show? Witnesses Vince McGonagle, Director, Division of Market Oversight Steve Sherrod, Senior Economist, Division of Market Oversight Tom LaSala, Chief Regulatory Officer, CME Erik Haas, Director – Market Regulation, ICE Futures U.S. Craig Pirrong, Professor of Finance and Energy Markets, Director of Global Energy Management Institute, Bauer College of Business, University of Houston Open Discussion
11:30 a.m. to 11:45 a.m.	Break
11:45 a.m. to 12:45 p.m.	Panel II: Designated Contract Market Experience with Position Limits and Trading Liquidity Witnesses Tom LaSala, Chief Regulatory Officer, CME Erik Haas, Director – Market Regulation, ICE Futures U.S. Open Discussion
12:45 p.m. to 2:00 p.m.	Lunch
2:00 p.m. to 3:30 p.m.	Panel III: Bona Fide Hedging Witnesses Vince McGonagle, Director, Division of Market Oversight Steve Sherrod, Senior Economist, Division of Market Oversight Joe Nicosia, Commodity Markets Council Ron Oppenheimer, Commercial Energy Working Group Open Discussion
3:30 p.m. to 3:45p.m.	Closing Remarks

Santa Cruz Investment Fund Charged $2.7M For $60M Ponzi Scheme

February 24, 2015 -- On February 23 the SEC imposed a final judgement against John A. Geringer and GLR Advisors, LLC (GLR Advisors) which renders a charge of $2.7 million. The SEC says Geringer and GLR Advisors managed the GLR Growth Fund, L.P., which is based in Scotts Valley, California, as a Ponzi scheme by reporting fictitious trading profits. The group raised $60 million from investors, mostly in the Santa Cruz, California area. Geringer pleaded guilty on June 4, 2014 and awaits sentencing.

For the full announcement click here.

Silicon Valley Initiative Event Discussing Regulatory Issues in Capital Formation 3/5 @ 7pm

7 p.m. (4 p.m. PT) on Thursday, March 5, 2015

The Silicon Valley Initiative: Emerging Regulatory Issues in Private Equity, Venture Capital and Capital Formation. The event is being co-Hosted by the SEC’s San Francisco Office and Stanford University’s Rock Center for Corporate Governance. 

Speakers include: SEC Commissioner Kara Stein, SEC National Exam Program Director Andrew Bowden, and SEC Corporation Finance Director Keith Higgins

The event is located at Stanford Law School, 559 Nathan Abbott Way, Stanford, Cali.

The contact for the event is the Office of Public Affairs, 202-551-4120

SEC Director, Office of Minority and Women Inclusion To Speak At Georgetown 2/27 @ 11:15am

11:15 a.m. on Friday, Feb. 27, 2015

Pamela Gibbs, Director, Office of Minority and Women Inclusion, will be a panelist at Georgetown University’s Georgetown Law Women’s Forum. 

 

The panel is titled “Why Women Lead: Insights from Women in Government.”

 

Location: Georgetown University, Eric E. Hotung Building, Room 2001, 600 New Jersey Ave., N.W., Washington, D.C.

 

The contact for the event is: Kara Tershel, 202-662-9037, kat5@law.georgetown.edu