SEC Cases: NY Lawyer Accused of Shell Company Stock Fraud, Research Scientist is Charged with Insider Trading, Officer in Pyramid Scam That Targeted Latinos Must Pay Disgorgement, and Two Men Are Accused of Price Rigging

Lawyer Barred Over Fraud Allegations
The US Securities and Exchange Commission has barred David Lubin, a New York-based lawyer, from practicing or appearing before the regulator and acting as any company’s director or officer. The regulator is accusing him of making misleading and false statements in corporate filings and committing fraud while he was the attorney and director of Entertainment Art. He was also the public company’s biggest shareholder.

According to the SEC’s securities order, not only did Lubin draft and sign misleading public filings, but also, he concealed their “true ownership” as well as that the fact that a significant chunk of the shares were of a “restricted nature.”

As a result, after Entertainment Art’s name was changed to Biozoom, over 14 million shares were resold illegally in an unregistered distribution, rendering $34M of illicit profits. At the time, the shares had belonged to a shell investor.

In 2013, the Commission froze assets in the brokerage accounts of several defendants over the unregistered transactions. Criminal charges were brought against Lubin this week.

TelexFree Officer Ordered to Pay $25K in disgorgement in Pyramid Scheme
Steven Labriola, the international sales director of TelexFree, must pay $25K in disgorgement plus prejudgment interest over an alleged pyramid scam. The SEC originally brought the case against him in 2014.

The pyramid scam primarily targeted Brazilian and Dominican immigrants. TelexFree LLC and TelexFree Inc. claimed that they were running a multilevel marketing company involving voice over Internet technology. Securities were sold as TelexFree “memberships” that were supposed to bring in 200% yearly returns for members who promoted the company’s supposed phone service by bringing in new members and placing ads online. Earlier investors were paid with money from newer investors.

SEC Probe Alleges Market Rigging of Shell Company Stocks
In an alleged market rigging fraud that is believed to have rendered about $3.8M in illegal profits, the SEC has filed civil charges against two men accused of manipulating the stock prices of two shell companies. The men, Troy Flowers and Sean Nevett, allegedly generated the false impression that there was active trading in Artec Global Media and Licont Corp. These are companies that they both controlled, but they allegedly concealed their ownership in the two companies.

Flower and Nevett dumped their shares into the market after investors bought the stock, leaving the latter with shares that were practically worthless. Now, the Commission is seeking disgorgement of ill-gotten gains plus interest, penalties, permanent injunctions, and penny stock bars.

Research Scientist is Accused of Insider Trading
In the SEC’s insider trading charges brought against Fei Yan, the research scientist is accused of buying options and stocks prior to two corporate acquisitions in 2016 because of confidential information that his wife was privy to since she worked on the deals as a law firm associate. The regulator said that Yan made about $120,000 in illicit profits when he sold his holdings in Stillwater Mining Company and Mattress Firm Holding Corp. after news that they would be acquired went public.

Yan is accused of trying to hide his illegal actions by making illicit trades in a brokerage account that was in his mother’s name. She resides in China but is now a relief defendant in the case.

Meantime, prosecutors in NY have brought criminal charges against Yan.

Contact the SSEK Partners Group to request your free, no obligation case consultation. We can help you determine whether you have legal grounds to file a securities fraud case.

The SEC Order in the Lubin Case (PDF)

SEC Obtains Final Judgment Against Officer of Pyramid Scheme Targeting Latino Community, SEC, July 14, 2017

The SEC Complaint against Flowers and Nevett (PDF)

The SEC Complaint in the Yan Case (PDF)