MAN SENTENCED IN SOUTH FLORIDA $135 MILLION INVESTOR FRAUD CASE

FROM:  SEC
Royal West Properties, Inc. Founding Principal Sentenced In $135 Million Investor Fraud
On April 4, 2012, U.S. District Judge Kathleen Williams of the Southern District of Florida sentenced Gaston E. Cantens to five years’ imprisonment followed by three years of supervised release for conspiring to commit mail and wire fraud in violation of 18 U.S.C. §371 involving a $135 million securities offering fraud and Ponzi scheme targeting Cuban-American investors primarily from South Florida. Cantens, who is now 73, served as president of Royal West Properties, Inc. (Royal West), a Miami-based real estate developer that purchased and resold thousands of parcels of real estate on the west coast of Florida. Cantens funded Royal West by offering investors no-risk promissory notes that promised investors annual returns of 9% to 16% purportedly backed by recorded mortgage assignments. On January 25, 2012, Cantens pled guilty to a criminal Information filed by the United States Attorney for the Southern District of Florida. According to the Information, beginning in 2008, Cantens made numerous material misrepresentations to investors about the financial health of Royal West when Cantens knew that Royal West, among other things, paid existing investors with new investors’ funds, assigned the same collateral to multiple investors, assigned investors to non-performing or non-existing mortgages, and failed properly to record mortgages and other interests in the public records, causing investors to have unsecured legal interests in the mortgages and parcels.

On March 3, 2010 the SEC filed an injunctive action that named Cantens and his wife, Teresita Cantens, as defendants.  The SEC’s complaint alleged that Cantens and his wife violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. On March 24, 2011, both Cantens and Teresita Cantens each consented to entry of a Final Judgment of Permanent Injunction and Other Relief in the SEC action. In addition to being enjoined from further violations of the federal securities laws, Cantens and his wife were ordered to pay full injunctive relief and disgorgement of $5,276,750, along with prejudgment interest of $88,297.62. The Order forgoes seeking payment of civil penalties under Section 20(d) of the Securities Act and Section 21(d) of the Exchange Act based on the Cantens’s asserted inability to pay as evidenced by their sworn financial statements and supporting documents submitted to the Commission staff.

COURT ORDERS FOUNDERS OF INTEGRITY FINANCIAL TO PAY $4.2 MILLION FOR FRAUDULANT PROMISSORY NOTES

The following excerpt is from the SEC website: "The U.S. Securities and Exchange Commission (Commission) today announced that, on November 23, 2011, the U.S. District Court for the Northern District of Ohio entered final judgments against Steven R. Long and Stanley M. Paulic in a Commission injunctive action, United States Securities and Exchange Commission v. Integrity Financial AZ, LLC, Steven R. Long, Stanley M. Paulic, Walter W. Knitter, and Robert C. Koeller, Civil Action No. 10-CV-782 (SO) (N.D. Ohio filed Apr. 15, 2010). The Commission’s complaint alleges that Long and Paulic founded Integrity Financial AZ, LLC (IFAZ) and, with assistance from Walter W. Knitter and Robert C. Koeller, used the company to raise more than $8 million in a fraudulent unregistered offering of promissory notes purportedly secured by real estate in Arizona. The final judgments were entered after the district court granted the Commission’s motion for summary judgment against Long and Paulic. The order granting summary judgment found that Long “knowingly made misrepresentations or omissions of material fact regarding the offer and sale of securities, while utilizing investors’ money for his own gain” and that “Paulic misrepresented material facts in connection with the offer and sale of securities” and “acted recklessly in conjunction with his activities and responsibilities as CEO and co-owner of IFAZ.” The final judgments against Long and Paulic permanently enjoin each of them from further violations of Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rule 10b‑5. The final judgment against Long also finds him liable for disgorgement in the amount of $1,481,736, plus prejudgment interest thereon in the amount of $97,723.32, and a civil penalty in the amount of $1,465,306. The final judgment against Paulic also finds him liable for disgorgement in the amount of $586,225, plus prejudgment interest thereon in the amount of $38,662.65, and a civil penalty in the amount of $586,225. The Commission also announced today, that on October 7, 2011, the district court entered a default judgment against IFAZ permanently enjoining it from violations of Sections 5 and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Exchange Act Rule 10b‑5, and finding it liable for disgorgement in the amount of $5,598,717, plus prejudgment interest thereon in the amount of $429,403.44, and a civil penalty in the amount of $650,000. Knitter settled with the Commission previously. The remaining defendant, Koeller, reached a partial settlement with the Commission on September 28, 2011."