MAN AND COMPANY ORDERED TO PAY RESTITUTION AND PENATIES TO SETTLE FOREX FRAUD CHARGES

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION

Federal Court in Puerto Rico Orders Angel F. Collazo, ACJ Capital, Inc., and Solid View Capital LLC to Pay over $1.5 Million to Settle Forex Fraud Charges in CFTC Enforcement Action

Court also orders Fernando Clemente and Felgi Investments Corp. to pay $150,000 in restitution and penalties and to disgorge over $120,000


Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court consent order requiring defendants Angel F. Collazo, formerly of Salinas, Puerto Rico, and his companies, ACJ Capital, Inc. (ACJ) and Solid View Capital LLC (Solid View), both of San Juan, Puerto Rico, jointly and severally to pay $843,444 in restitution and to pay a $750,000 civil monetary penalty for fraudulently soliciting customers to participate in an off-exchange leveraged foreign currency (forex) pool, misappropriating pool participant funds, and issuing false statements to conceal trading losses and misappropriation.

The CFTC also obtained a second federal court consent order, requiring defendants Fernando Clemente, of Weston, Florida, and his company, Felgi Investments Corp. (Felgi) of Caguas, Puerto Rico, to pay $30,000 in restitution, to disgorge $120,933 in pool participant funds to which they were not legitimately entitled, and to pay a $120,000 civil monetary penalty.

The Orders also impose permanent trading and registration bans against all defendants and prohibit them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

The orders, entered by Judge Jose A. Fuste of the U.S. District Court for the District of Puerto Rico on February 13, 2013 and June 10, 2013, respectively, stem from a CFTC complaint originally filed in February of 2012 (see CFTC Press Release 6180-12, February 15, 2012). In July 2012, the CFTC complaint was amended to include defendants Clemente and Felgi. Clemente and Felgi were also named as relief defendants for receiving funds from ACJ, Solid View, and Collazo to which they were not legitimately entitled.


The February 13, 2013 Order finds that Collazo and his companies fraudulently solicited commodity pool participants by falsely claiming profitable returns, while minimizing and failing to fully disclose the risks of trading leveraged forex. The Order also finds that Collazo, ACJ, and Solid View misappropriated pool funds to make payments to pool participants and for personal uses, failed to disclose their intended uses of pool participant funds, misrepresented the profitability of pool trading accounts, and distributed statements to ACJ and Solid View pool participants that contained false account values, including showing consistent trading profits.

The June 10, 2013 Order finds that Clemente and Felgi, misappropriated $30,000 in customer funds that were to have been provided by Felgi to Solid View for personal uses and failed to disclose their intended uses of pool participant funds. The Order also finds that Clemente and Felgi retained $120,933 in purported trading profits to which they were not entitled.

The CFTC appreciates the assistance of the U.S. Attorney’s Office of the District of Puerto Rico in this matter.

CFTC Division of Enforcement staff members responsible for this case are Kara Mucha, James A. Garcia, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.

PARTIES CHARGED IN ALLEGED PUMP-AND-DUMP SCHEME INVOLVING FICTITIOUS BUYOUT OFFER

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Charges Company based in Massachusetts and Canada and Other Parties in Stock Pump-and-Dump Scheme Involving Fictitious Buyout Offer

The Securities and Exchange Commission filed an enforcement action on December 17, 2012, in federal court in Boston charging Spencer Pharmaceutical Inc., its officers, and several other parties for their roles in a "pump-and-dump" scheme involving Spencer’s stock. The Commission’s complaint alleges that Jean-François Amyot, a Canadian resident who controlled Spencer, orchestrated the scheme and worked with Maximilien Arella and Ian Morrice, Spencer’s officers and directors, as well as IAB Media Inc. and Hilbroy Advisory Inc., two other companies controlled by Amyot, to create and disseminate false press releases, including press releases about a fictitious buyout offer for Spencer, and to otherwise promote Spencer’s stock. The Commission alleges that the promotional campaign pumped up the price of Spencer’s stock, and Amyot benefited by dumping his own Spencer stock at artificially inflated prices.

The Commission’s complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that beginning in November 2010, Spencer, a purported pharmaceutical company with addresses in Boston, Massachusetts, and Canada, disseminated false and misleading press releases claiming that it had received an unsolicited buyout offer from a Mideast company for $245 million when, in fact, the purported buyout offer was not real. The complaint further alleges that Arella and Morrice worked with Amyot to create and disseminate the fraudulent press releases. According to the complaint, while Spencer was issuing the press releases, the defendants were conducting a promotional campaign using Internet websites and newsletters to tout Spencer’s stock and the bogus buyout offer, and the false press releases and promotional campaign were successful in pumping up the price of Spencer’s stock. For example, after Spencer publically announced that the Mideast company proposed to pay $245 million for Spencer, the price of Spencer stock more than doubled in two days – opening at $0.25 per share on November 10, 2010 and closing at $0.60 per share on November 12 – and the daily trading volume for Spencer’s stock reached almost six million shares on November 11, compared to a daily average trading volume of less than 50,000 shares during the previous three months. During the time the buyout offer was being promoted, Amyot sold approximately 36 million Spencer shares for gross proceeds of approximately $5.8 million. Each of the defendants are charged by the Commission with violating various antifraud provisions of the federal securities laws. The complaint further charges Spencer, Amyot, and Arella with violating securities registration provisions of the securities laws. According to the complaint, Amyot and Arella were involved in a series of transfers involving 12 million Spencer shares that were done to evade the securities registration requirements and move the shares into an account controlled by Amyot.

The Commission also suspended trading in Spencer securities on December 17, 2012, 34-68447. Securities of Spencer were quoted on OTC Link operated by OTC Markets Group Inc.

The Commission alleges that Spencer, Amyot, Arella, and Morrice violated Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; that IAB Media and Hilbroy violated Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c); and that Arella, Morrice, IAB Media, and Hilbroy aided and abetted the violations by Spencer of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The Commission also alleges that Amyot is liable for Spencer’s violations of Section 10(b) and Rule 10b-5 as the company’s control person and that Spencer, Amyot, and Arella violated Sections 5(a) and 5(c) of the Securities Act. The Commission is seeking permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against Spencer, Amyot, Arella, Morrice, IAB Media, and Hilbroy. It also seeks an order prohibiting Amyot, Arella, and Morrice from serving as an officer or director of a public company and from participating in the offering of a penny stock.

The Commission acknowledges the assistance of the Quebec Autorité des Marchés Financiers in this matter.

SEC SUES EXECUTIVE AND HIS COMPANIES FOR ALLEGED FRAUDULENT NOTE OFFERINGS

The following excerpt is from the SEC website:

December 28, 2011
“On August 10, 2011, the Securities and Exchange Commission filed suit in the United States District Court for the Southern District of Texas against Damian Omar Valdez of New York and two Houston-area firms he controlled, Evolution Capital Advisors (“Evolution Capital”) and Evolution Investment Group I (“EIGI”). Evolution Capital was an investment adviser registered with the Commission until June 2010. The firms and Valdez raised at least $10 million from more than 80 investors through two fraudulent note offerings.
After a contested evidentiary hearing on October 19 and 20, 2011, the Court found that: (1) Valdez, Evolution Capital, and EIGI misled investors to believe that the notes were safe and secured by assets guaranteed by the United States government; (2) the defendants falsely promised to use leverage to purchase the assets securing the notes; (3) the assets securing the notes were subject to significant undisclosed default and prepayment risk; (4) the defendants paid themselves more than $2.4 million in fees and expenses and used approximately $2.7 million from the second note offering to make Ponzi payments to investors in the first note offering; (5) because of defaults and prepayments on the underlying assets, failure to obtain leverage, and excessive Ponzi payments and fees, the defendants lacked sufficient assets to repay investors in accordance with the notes; and (6) the defendants would have continued taking all monies from the account each month as “profit” had the Commission not brought its enforcement action. The Court specifically found that Defendant Valdez acted with fraudulent intent.
Based on these findings, the Court granted the Commission’s motion for preliminary and permanent injunction, asset freeze, and appointment of a receiver. The Court also permanently froze the defendants’ assets. In addition, the Court specifically enjoined the defendants against further violations of the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s requests for disgorgement of ill-gotten gains plus prejudgment interest, as well as civil penalties, remain pending.”