SEC Enforcement

Healthcare Investment Scam Targeted Dozens of Investors

Published on: June 26, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Unregistered investment advisers (IAs) David Wagner and Mark Lawrence, Downing Investment Partners, Downing Partners, and Downing Digital Healthcare Group are now facing US Securities and Exchange Commission (SEC) charges accusing them of involvement in an $8M scam that allegedly defrauded dozens of healthcare fund investors. Wagner and Downing are also facing parallel criminal charges.

The regulator contends that between 5/2014 and 1/2017, Wagner, Lawrence, and the companies they headed sold healthcare services and technology-related investment opportunities while defrauding 30 investors, many of them “purported” employees at two of the defendant companies, as well as at Downing Health Technologies, Inc., and Cliniflow Technologies. According to the SEC’s complaint, the two unregistered investment advisers and their companies claimed to acquire, oversee, and resell companies that offered technologies and services for the investment portfolios of the healthcare funds at issue.

To bring in new investors, the two unregistered IA’s allegedly would inflate how much was available in cash reserves at the funds, including at Downing Digital Healthcare Group and Downing Investment Partners, as well as the revenue from the portfolio companies of the funds. Wagner is also accused of secretly negotiating a deal that obligated Downing Digital Healthcare Group to pay him and an entity that he operated certain management fees. This allegedly resulted in the defendants misusing at least $540K of the $1.5M that was invested in Downing Digital Healthcare Group to go toward these fees.

Recent SEC Cases Involves Market Rigging

Published on: June 19, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Investors in Alleged $2.3M Prime Bank Fraud Were Promised Huge Profits

In the US Securities and Exchange Commission’s (SEC) prime bank investment fraud case against Elizabeth Oharriz of Florida and Peter Baker of Georgia, the regulator is accusing the two of them and their companies of stealing more than $2.2M from investors. The Commission contends that Oharriz and Baker sold fake prime bank instruments from supposedly known banks while promising investors “astronomical profits.” The regulator’s complaint said that they also were also told that if these instruments could not be obtained, then their advance payments would be returned to them.

Instead, claims the SEC, Oharriz and Baker allegedly used investors’ money for their own personal spending or sent the funds to third parties. Meantime, investors were given bogus bank instruments along with accompanying documents.

Leon Vaccarelli Convicted on 21 Counts Involving Investor Fraud

Published on: June 14, 2019 | by Shepherd Smith Edwards & Kantas, LLP

A federal jury has found Leon Vaccarelli guilty of 21 counts of fraud and money laundering. Vaccarelli, a former registered The Investment Center broker, an ex-IC Advisory Services-associated investment adviser, and the owner of LWLVACC who conducted business through Lux Financial Services, is accused of defrauding investors, including elderly clients, of $1.5M.

Vaccarelli gave investment advice and sold securities and investments to families in Connecticut. According to Justice.gov, from about 2011 and 2017, the ex-former investment adviser and broker defrauded about 15 victims. He falsely represented that their money would be invested in IRA rollover accounts, certificates of deposit, money market accounts, and other investments that would earn interest.

Instead, Vaccarelli put investors’ money into his own business and personal accounts, commingling their funds with his, and used the money to help cover his own mortgage and other personal expenses, as well as certain business costs. Some customers’ monies were used to pay “interest” to other investors whom he was also defrauding.

Recent Ponzi Fraud Allegedly Targeted College Grads

Published on: June 7, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) is accusing a recent college graduate of running a Ponzi fraud that targeted young investors, including college students and other recent graduates. The regulator announced its emergency action against Syed Arham Arbab, Artis Proficio Capital Management, LLC, and Artis Proficio Capital Investments, LLC this week. It wants an asset freeze, emergency relief, civil penalties, and the repayment of allegedly ill-gotten earnings along with prejudgment interest.

At least eight college students, recent college graduates, or their relatives invested over $269K in the alleged hedge fund fraud. According to the regulator’s complaint, Arbab ran his scam out of a fraternity house close to the University of Georgia campus. He is a recent alumni and is accused of using his college connections to perpetuate his alleged scam.

According to the SEC’s complaint, Arbab sold investments in Artis Proficio Capital, a supposed hedge fund, that he touted as making up to 56% returns the year before, and he supposedly guaranteed up to $15K of investor money. Investors who purchased bond agreements were told that their money would be returned with a fixed return rate.

Stephen Brandon Anderson Accused of Multiple SEC Findings

Published on: June 5, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Investment Advisor Allegedly Overcharged Clients $367K in Advisory Fees

The US Securities and Exchange Commission (SEC) has filed investor fraud charges against investment adviser Stephen Brandon Anderson, accusing him of defrauding clients and overcharging them at least $367K in advisory fees. Anderson ran River Source Wealth Management, LLC. The formerly registered investment advisory firm (RIA) is no longer in operation.

However, while in business, said the SEC, the RIA’s main income source was customer advisory fees. The fees were determined according to the assets under management of each customer.

Investors Defrauded in Alleged $1.4M Prime Bank Fraud

Published on: May 30, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) has filed fraud charges against David Sims and Mario Procopio accusing them of running a $1.4M prime bank scam that defrauded 13 investors. ALC Holdings, LLC, Sims Equities, Inc., and El Cether-elyown, which are companies that they control, are also defendants in the investor fraud scam. This is not the first time that the SEC has charged Sims in relation to alleged fraud.

The regulator contends that the two men mostly found their investors through referrals given to them by associates and friends. Between 4/2014 and 5/2017, Sims and Procopio allegedly told those whom they solicited, usually by phone, that their investments would go into “prime bank” financial instruments that would make returns of 1200-40,000% percent.

Procopio and Sims falsely touted “special access” to trading platforms that they claimed also were used by rich investors, corporations, and governments to purchase huge amounts of currency, usually $500M to $1B, at a reduced rate from different banks. The notes could then supposedly be sold for an up to 30% profit.

Broker Allegedly Illegally Sold Over $23M in Woodbridge Securities

Published on: May 22, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) has filed civil charges against Charles Nilosek for acting as an unregistered broker and illegally selling Woodbridge securities to retail investors. The regulator said that Nilosek, who is based in Massachusetts, was one of the top revenue earners when it came to selling the unregistered investments from the Woodbridge Group of Companies.

The Woodbridge investments are tied to a $1.2B Ponzi scheme that ran from 2012 to 2017. Woodbridge and its 281 related companies are accused of bilking more than 8,400 investors, many of whom were elderly investors who lost their money investing in the company’s promissory notes and private placements. The customers were promised 5-8% in yearly returns and many used their retirement money to invest.

The SEC’s complaint said that Nilosek and his Position Benefits LLC sold over $23M in Woodbridge securities to more than 200 investors in at least four states between 9/2013 and 9/2015. He was paid over $1.4M in compensation. The regulator contends that Nilosek was never a registered broker nor was he ever registered with a brokerage firm.

Recent Fraud Cases Targeted Hedge Funds, Senior Investors, and Israeli-Americans

Published on: April 25, 2019 | by Shepherd Smith Edwards & Kantas, LLP

SEC Accuses Investment Adviser of Misappropriating Funds from Hedge Funds

The US Securities and Exchange Commission (SEC) has secured an emergency asset freeze, as well as a temporary restraining order, to stop an ongoing allegedly fraudulent securities offering that was purportedly conducted to conceal the misappropriation of about $570K from hedge fund clients. The regulator contends that investment adviser Eric D. Lyons and his investment advisory businesses, Synchronicity Capital GP, LLC, Synchronicity Capital Group, and Synchronicity Group, LLC, used the money to pay for Lyons’ personal spending, including Broadway shows, concert tickets, sailing expenses, rent, and other costs.

According to the regulator’s complaint, the allegedly fraudulent securities offering involved securing about $300K from one investor who thought other large investors would be potentially involved and that there was a $100M business valuation. The SEC alleges that, in total, the Synchronicity entities and Lyons raised about $700K through both the misappropriation of funds and the allegedly fraudulent offering.

Hundreds of Retail Investors Harmed in Two Separate Fraud Cases

Published on: April 24, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) has filed civil fraud charges accusing 15 people of either “acting as unregistered brokers” or “aiding-and-abetting” this kind of activity related to the solicitation of microcap issuer Intertech Solution’s “unregistered and fraudulent securities offerings.” Already, 11 of the defendants have consented to the entry of final judgments but without denying or admitting to wrongdoing.

The 15 individuals are:

- Daniel Broyles

SEC Charges Abraaj Investment Management With Defrauding Investors

Published on: April 19, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) is accusing Abraaj Investment Management Ltd., a Dubai-based investment advisory firm, with misappropriating money from the Abraaj Growth Markets Health Fund. The regulator said that the fraud has resulted in losses for US investors, including charitable organizations that invested over $100M in the Fund. Also facing civil fraud charges is Abraaj founder Arif Navqi. In total, the investment adviser and Navqi are accused of misappropriating more than $230M from the fund between at least 9/2016 and 6/2018.

According to the regulator’s civil complaint, investors were told that their money would go into businesses related to healthcare in emerging markets. Instead, Abraaj Investment Management allegedly used the money to pay for cash shortfalls at the firm and at parent company Abraaj Holdings, Ltd., both of which Navqi controlled. Meantime, investors were allegedly sent financial statements and quarterly reports that were materially misleading or false.

Registered in the Cayman Islands, the Abraaj Growth Markets Health Fund’s investors had committed $850M. Additionally, the SEC stated that one of the fund’s investors was a US government entity that had committed an additional $150M debt investment.