TWO INDIVIDUALS TO PAY $7.5 MILLION FOR FOREX PONZI SCHEME

FROM:  U.S  CFTC
Federal Court in South Carolina Orders Ronald E. Satterfield and Nicholas and Patricia Bos to Pay over $7.5 Million for Fraud in Connection with a Forex Ponzi Scheme
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained two federal court consent orders of permanent injunction, one order requiring defendant Ronald E. Satterfield, of Charleston, S.C., to pay $957,146 of restitution and a $2,871,438 civil monetary penalty, and the other order requiring defendant Nicholas Bos (Bos) of Ludington, Mich., to pay $849,146 of restitution and a $2,547,438 civil monetary penalty, for operating a foreign currency (forex) Ponzi scheme.  The Bos order also requires Patricia Bos (P. Bos), a relief defendant and Bos’ wife, to disgorge $295,000 in ill-gotten gains.  The orders also impose permanent trading and registration bans against Satterfield and Bos.

The consent orders, entered by Judge Richard M. Gergel, of the U.S. District Court for the District of South Carolina, Charleston Division, arise from a CFTC complaint filed on November 8, 2010, that charged the defendants with operating a forex Ponzi scheme involving the fraudulent solicitation of at least $3.3 million from at least 70 individuals – residing in South Carolina, North Carolina, Michigan, and Maryland – to engage in leveraged or margined forex transactions (see CFTC Press Release 5935-10, November 15, 2010).

The Satterfield order, entered on May 9, 2012, finds that Satterfield fraudulently solicited customers by representing that his forex trading was profitable and that customers could receive monthly returns ranging from two to four percent.  The order also finds that Satterfield issued false account statements reflecting the promised returns when, in fact, a large amount of customer deposits were used to pay purported returns to other customers, rather than to trade forex.  The forex trading Satterfield actually did, according to the order, resulted in losses in almost every month.

The Bos order, entered on April 25, 2012, finds that Bos fraudulently solicited customers to trade forex through accounts managed by Satterfield.  The order also finds that Bos falsely represented to customers that there would be no risk to their deposits and failed to disclose that he was collecting commissions and fees paid from customer funds and that he misappropriated $295,000 in customer funds to purchase a house in Ludington, Mich., titled in his name and in that of his wife.

Default order entered against corporate defendants in June 2011
Earlier, on June 14, 2011, the CFTC obtained a default judgment order from Judge Gergel against the corporate defendants in this action: Graham Street Forex Group, LLC and Shore-2-Summit Financial, LLC.  The default order requires the corporate defendants jointly and severally to pay over $5.6 million in equitable relief and a monetary sanction and imposes permanent trading and registration bans against them.
The CFTC appreciates the assistance of the U.S. Attorney’s Office, District of South Carolina, and the South Carolina Attorney General’s Office.
CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Patricia Gomersall, Christine Ryall, Paul G. Hayeck, and Joan Manley.

MULTIMILLION DOLLAR PONZI FRAUDSTER GETS 33 YEARS IN PRISON

FROM:  SECURITIES AND EXCHANGE COMMISSION 

April 11, 2012

Robert Stinson, Jr. Sentenced to 33 Years in Prison and Ordered to Pay $14 Million in Restitution for Orchestrating Multimillion Dollar Ponzi SchemeThe Securities and Exchange Commission announced that on April 10, 2012, Robert Stinson, Jr., of Berwyn, Pennsylvania, was sentenced in a parallel criminal action for orchestrating a Ponzi scheme that defrauded at least 263 investors of more than $17 million. Judge Michael M. Baylson of the United States District Court for the Eastern District of Pennsylvania sentenced Stinson to 33 years in federal prison, followed by three years of supervised release, and ordered him to pay more than $14 million in restitution. On August 15, 2011, Stinson pleaded guilty to five counts of wire fraud, four counts of mail fraud, nine counts of money laundering, one count of bank fraud, three counts of filing false tax returns, two counts of obstruction of justice, and two counts of making false statements to federal agents.

On June 29, 2010, the Commission filed a civil injunctive action against Stinson and related persons and entities based on the same conduct, and sought and obtained a Temporary Restraining Order and Order Freezing Assets and the appointment of a receiver. According to the Commission’s complaint, from 2004 through June 2010, Stinson, primarily through Life’s Good, Inc. and Keystone State Capital Corporation, two companies he controlled, sold purported “units” in four Life’s Good private real estate hedge funds. Stinson falsely claimed that the Life’s Good funds generated annual returns of 10 to 16 percent by originating more than $30 million in commercial mortgage loans, and other investment income gained on the sale of foreclosure and investment properties. The Commission’s complaint alleges that Stinson stole investor funds for his personal use, transferred money to family members and others, and used new investor proceeds to pay existing investors as part of a Ponzi scheme. On June 20, 2011, the United States District Court entered partial summary judgment against Stinson and his co-defendants, finding violations of the federal securities laws and ordering permanent injunctive relief. The court deferred the determination of the amount of disgorgement and prejudgment interest, as well as the imposition of any civil penalties.

SEC STOPS PONZI SCHEME WHICH ALLEGEDLY TARGETED PERSIAN-JEWISH COMMUNITY

FROM:  SECURITIES AND EXCHANGE COMMISSION
SEC Shuts Down Ponzi Scheme Targeting Persian-Jewish Community in Los Angeles
04/13/2012 03:30 PM EDT
Washington, D.C., April 13, 2012 –The Securities and Exchange Commission today obtained an emergency court order to halt an ongoing Ponzi scheme that targeted members of the Persian-Jewish community in Los Angeles.

The SEC alleges that for the past two years, Shervin Neman raised more than $7.5 million from investors by claiming to be a hedge fund manager. Neman told investors that his purported hedge fund – Neman Financial L.P. – invested in foreclosed residential properties that would be quickly flipped for profit as well as in Facebook shares obtained in private transactions and other highly anticipated initial public offerings including Groupon, LinkedIn, and Angie’s List. Although Neman promised investors exorbitant returns resulting from his investing acumen and access to pre-IPO shares of well-known companies, what they actually received was simply other investors’ money in hallmark Ponzi scheme fashion.

“Neman deceived members of his own community to raise money in this fraudulent Ponzi scheme,” said Michele Wein Layne, Associate Regional Director of the SEC’s Los Angeles Office. “By exploiting investors’ trust in him, Neman was continually able to raise more money to pay back existing investors and finance an extravagant lifestyle.”
The Honorable Jacqueline H. Nguyen for the U.S. District Court for the Central District of California granted the SEC’s request for a temporary restraining order and asset freeze against Neman and the entities he controlled.

According to the SEC’s complaint, Neman raised funds from at least 11 investors in the fraudulent securities offering. Most of the investors are members of the Los Angeles Persian-Jewish community along with Neman, who lives in the Century City area of Los Angeles. More than 99 percent of the money Neman raised was used either to pay existing investors or fund his lavish lifestyle. Neman spent nearly $1.6 million of investor funds to buy jewelry and high-end cars as well as to finance his wedding and honeymoon, other vacations, and VIP tickets to sporting events.

The SEC’s investigation was conducted by Cindy Eson of the Los Angeles Regional Office. Molly White will lead the litigation. Joshua Bauder, Harden Sooper, and Yanna Stoyanoff conducted the SEC examination that prompted the investigation.
Judge Nguyen has scheduled a court hearing for April 23 at 2 p.m. on the SEC’s motion for a preliminary injunction.

THE MAN WHO ALLEGEDLY PUT HIS FAITH IN A PONZI SCHEME

FROM:  SEC
Washington, D.C., April 12, 2012 — The Securities and Exchange Commission today charged a self-described “Social Capitalist” with running a Ponzi scheme that targeted socially-conscious investors in church congregations.

The SEC alleges that Ephren W. Taylor II made numerous false statements to lure investors into two investment programs being offered through City Capital Corporation, where he was the CEO. Instead of investor money going to charitable causes and economically disadvantaged businesses as promised, Taylor secretly diverted hundreds of thousands of dollars to publishing and promoting his books, hiring consultants to refine his public image, and funding his wife’s singing career.

The SEC also charged City Capital and its former chief operating officer Wendy Connor, who lives in North Carolina and along with Taylor received hundreds of thousands of dollars from investors in salary and commissions.

“Ephren Taylor professed to be in the business of socially-conscious investing. Instead, he was in the business of promoting Ephren Taylor,” said David Woodcock, Director of the SEC’s Fort Worth Regional Office. “He preyed upon investors’ faith and their desire to help others, convincing them that they could earn healthy returns while also helping their communities.”

According to the SEC’s complaint filed in federal court in Atlanta, Taylor strenuously cultivated an image of a highly successful and socially conscious entrepreneur. He marketed himself as “The Social Capitalist” and touted that he was the youngest black CEO of a public company and the son of a Christian minister who understands the importance of giving back. He authored three books and appeared on national television programs, and promoted his investment opportunities through live presentations, Internet advertisements, and radio ads. For instance, Taylor conducted a multi-city “Building Wealth Tour” during which he spoke to church congregations including Atlanta’s New Birth Church and at various wealth management seminars.

The SEC alleges that Taylor and City Capital offered two primary investments: promissory notes supposedly funding various small businesses, and interests in “sweepstakes” machines. In addition to promising high rates of return, Taylor assured investors that he had a long track record of success and that investor funds would be used to support businesses in economically disadvantaged areas. A portion of profits were to go to charity. Taylor devoted considerable time to denigrating traditional investment vehicles such as CDs, mutual funds, and the stock market, labeling them as “foolish” and “money losers.” He told audiences they could make far greater returns using their self-directed IRAs for investments in small businesses and sweepstakes machines offered by City Capital.

In reality, according to the SEC’s complaint, more than $11 million that Taylor and City Capital raised from hundreds of investors nationwide from 2008 to 2010 was instead used to operate the Ponzi scheme. Investor money was misused to pay other investors, finance Taylor’s personal expenses, and fund City Capital’s payroll, rent, and other costs. City Capital’s business ventures were consistently unprofitable, and no meaningful amounts of investor money were ever sent to charities.

The SEC’s complaint seeks disgorgement, financial penalties and permanent injunctive relief against City Capital, Taylor, and Connor as well as officer and director bars against Taylor and Connor.

ALLEGED STOCK PRICE INFLATION TRANSACTIONS LEAD TO FRAUD CHARGES AGAINST CORP. EXECUTIVES

October 6, 2011 The following is an excerpt from the SEC website: “The Securities and Exchange Commission today filed fraud charges against two former sales executives with Mountain View, Calif. medical equipment company Hansen Medical, Inc., alleging they orchestrated fraudulent transactions to inflate the company’s reported revenues. In a separate proceeding, the SEC also filed settled charges against Hansen Medical for providing misleading financial information to public investors. The SEC’s complaint, filed in federal district court in San Francisco, alleges that Christopher Sells, Hansen Medical’s former Vice President of Commercial Operations, and Timothy Murawski, a former Vice President of Sales who reported to Sells, participated in multiple improper sales transactions in 2008 and 2009. The SEC alleges the individuals engaged in the scheme as Hansen Medical underwent efforts to raise additional capital from investors. According to the SEC’s complaint, on multiple occasions Sells of Dallas, Tex., and Murawski of Lake Zurich, Ill., schemed to have Hansen Medical personnel temporarily install the company’s robotic catheter system at a customer site before the customer was ready for it so that Hansen Medical could record the product sale. Hansen Medical personnel would then immediately dismantle the equipment and put it in storage until months later, when they would return to reinstall the equipment. The SEC further alleges that, in a sales transaction in the final days of December 2008, Sells and Murawski instructed Hansen Medical personnel to forge a customer signature on certain required documents to allow the company to record the revenue that quarter. According to the SEC, Sells and Murawski’s schemes were intended to circumvent revenue recognition rules and to fool Hansen Medical’s finance personnel and auditors into believing that the sales had been completed and revenue could be recorded. The SEC’s complaint charges Sells and Murawski with violations of Sections 17(a)(1) and (3) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The SEC also charges Sells with violations of Rules 13b2-2 under the Exchange Act. The SEC seeks permanent injunctions and financial penalties against Sells and Murawski, and also seeks to bar Sells from serving as an officer or director of a public company. In a separate administrative proceeding, Hansen Medical consented (without admitting or denying the SEC’s findings) to the entry of a Order that requires that Hansen Medical to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In considering whether to accept Hansen Medical's settlement offer, the Commission took into consideration Hansen Medical’s cooperation with the Commission’s investigation and its remedial efforts once the fraud came to light.”