SEC CHARGES 2 COMPANIES WITH FRAUD

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Charges Projaris Management LLC and Victory Partners Financial with Fraud

On September 9, 2013, the Securities and Exchange Commission brought securities fraud charges against Projaris Management, LLC (Projaris), Victory Partners Financial (Victory), Joe G. Lawler, Brandt A. Lawler, Michael S. Lawler, Ryan G. Lawler, Timothy J. Lawler, and Pamela Hass in a connection with an offering fraud that raised approximately $1.4 million from over 23 investors in multiple states from May 2008 through August 2012.

The complaint, filed in the United States District Court for the District of New Mexico, alleges that Projaris and Victory, which operated in Farmington, New Mexico and Phoenix, Arizona, along with the Lawlers of Farmington, New Mexico participated in a scheme that defrauded investors out of more than $835,000. Additionally, the complaint alleges that the primary function of the defendants’ scheme was to convince investors to invest in a fraudulent pooled investment that purportedly invested in metals, commodities, real estate, and a fund that, among other things, invested overseas. The defendants then siphoned off the invested funds for their own purposes and to continue to perpetuate the fraud. According to the complaint, none of the securities offered was covered by a registration statement filed with the Commission, and Hass, Projaris’ National Sales Director of Tomahawk, Wisconsin, solicited investors to invest in Projaris, but was not a registered broker-dealer.

The complaint alleges that Projaris, Victory, and the Lawlers violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 (Securities Act). The complaint also alleges that Projaris, Victory, Joe Lawler, and Hass violated Section 5 of the Securities Act for the offer and sale of securities in unregistered transactions. Finally, the complaint alleges that Joe Lawler and Hass violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers. The Commission seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties.

DAY TRADER CHARGED BY SEC WITH DEFRUADING INVESTORS IN ALLEGED HIGH-FREQUENCY TRADING PROGRAM

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., Jan 29, 2013 — The Securities and Exchange Commission today charged a day trader in Sugar Land, Texas, with defrauding investors in his supposed high-frequency trading program and providing them falsified brokerage records that drastically overstated assets and hid his massive trading losses.

The SEC alleges that Firas Hamdan particularly targeted fellow members of the Houston-area Lebanese and Druze communities, raising more than $6 million during a five-year period from at least 33 investors. Hamdan told prospective investors that he would pool their investments with his own money and conduct high-frequency trading using a supposed proprietary trading algorithm. Hamdan promised annual returns of 30 percent and assured investors that his program was safe and proven when in reality it was a dismal failure, generating $1.5 million in losses. As he failed to deliver the promised profits, Hamdan told investors that his funds were tied up in the Greek debt crisis and the MF Global bankruptcy among other phony excuses.

The SEC is seeking an emergency court order to halt the scheme and freeze Hamdan’s assets and those of his firm, FAH Capital Partners.

"Hamdan’s affinity scam preyed upon people’s tendency to trust those who share common backgrounds and beliefs," said David R. Woodcock, Director of the SEC’s Fort Worth Regional Office. "Hamdan raised money by creating the aura of a successful day trader among friends and family in his community, and he continued to mislead them and hide the truth while trading losses mounted."

According to the SEC’s complaint filed in federal court in Houston, Hamdan is well-known in the Lebanese and Druze communities in the Houston area and is a former treasurer of the Houston branch of the American Druze Society. Hamdan found investors for his trading program by talking with his friends and family in these communities. As word spread about his purported trading success, he asked existing investors to solicit their friends for investments.

The SEC alleges that Hamdan misrepresented to investors that he generated positive returns in 59 of 60 months between 2007 and 2012. He showed them phony documentation to support his false claims. For instance, a purported brokerage statement he provided investors for the first quarter of 2010 showed an opening balance of more than $2.3 million with quarterly trading gains of $2.7 million for a closing balance above $5.1 million. An actual brokerage statement obtained by SEC investigators for Hamdan’s account during that same period shows the opening balance at just $27,970.76 and the closing balance at $148,210.02, with quarterly trading losses of $7,452.80.

According to the SEC’s complaint, Hamdan made several other false claims to potential investors. For instance, he lied about the existence of a cash reserve account that secured their investments. Hamdan falsely stated that investments were further secured by a $5 million "key-man" insurance policy. He also falsely claimed that a well-known hedge fund manager in the Dallas area made a million-dollar investment with him and promised to invest more based on Hamdan’s continuing success.

The SEC’s complaint alleges that Hamdan violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint seeks various relief including a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The SEC’s investigation was conducted by Jonathan Scott, Timothy Evans, and Mark Pittman of the Fort Worth Regional Office. Bret Helmer will lead the SEC’s litigation.