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Thursday, July 3, 2014


SEC Files Settled Charges Against Arizona Resident in Prime Bank Investment Scheme

On June 26, 2014, the Securities and Exchange Commission charged Cheryl L. Robinson with violating the antifraud and registration provisions of the federal securities laws in connection with an advance-fee high-yield investment scam perpetrated by Switzerland-based Malom Group AG ("Malom") and Las Vegas-based M.Y. Consultants, Inc. As alleged in the complaint, Robinson acted as a promoter who recruited investors for Malom Group AG and M.Y. Consultants, Inc. from approximately 2009 to 2011. In this role, Robinson made materially false and misleading statements to investors about, among other things, Malom's background, its financial resources, and history of success. She also failed to inform investors that none of her clients had received any profits from a transaction with Malom and that all had lost their entire investment. Finally, she omitted to tell any of the investors that she would be paid approximately 25% of the investors' advance fees regardless of whether a transaction produced profits. The complaint also alleged that Robinson acted as an unregistered broker dealer and sold unregistered Malom securities. By virtue of this conduct, the complaint alleges Robinson violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and aided and abetted violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.

Without admitting or denying the SEC's allegations, Robinson agreed to settle the case against her. The settlement is pending final approval by the court. Specifically, Robinson consented to the entry of a final judgment that (1) permanently enjoins her from future violations of Securities Act Sections 5(a), 5(c), and 17(a), Exchange Act Sections 10(b), 15(a), and Rule 10b-5 thereunder, and from aiding and abetting violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5; (2) permanently enjoins her from directly or indirectly participating in the issuance, offer, or sale of any security, including but not limited to joint venture agreements, proofs of funds, bank guarantees, medium term notes, standby letters of credit, structured notes, and similar instruments, with the exception of the purchase or sale of securities listed on a national securities exchange; (3) orders that she is liable for disgorgement in the amount of $204,417 and $13,802 in prejudgment interest, for a total of $218,219, and waives that amount based on her demonstrated inability to pay. The Commission also decided to forego a civil penalty based on her demonstrated financial condition.

As part of the settlement, and following the entry of the proposed final judgment, Robinson, without admitting or denying the Commission's findings, has consented to the entry of a Commission order, pursuant to Exchange Act Section 15(b)(6), permanently barring her from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating in an offering of penny stock.

The SEC previously charged Malom Group AG, its principals, and agents with violating the antifraud and securities registration provisions of the federal securities laws in SEC v. Malom Group AG, et al, 2:13-cv-2280 (D. Nev. Dec. 16, 2013), SEC v. Erwin et al., 2:14-cv-623 (D. Nev. Apr. 23, 2014), and SEC v. Smith, 1:14-cv-192 (D.N.H. May 2, 2014). For additional information about these cases, see Litigation Release Number 22890 (Dec. 16, 2013); Litigation Release Number 22978 (Apr. 28, 2014); and Litigation Release Number 22984 (May 2, 2014).

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