CHARGES FILED IN AN OHIO $14 MILLION DOLLAR REAL ESTATE INVESTMENT FRAUD

The following is an excerpt from the SEC website:

"June 30, 2011
SEC v. Edward A. Allen, David L. Olson, and A&O Investments, LLC, Case No. 1:10-cv-01143 (N.D. Ohio, filed May 20, 2010)
The Securities and Exchange Commission announced today that the U.S. Attorney's Office for the Northern District of Ohio filed criminal charges against Edward A. Allen and David L. Olson, residents of Lakeland, Florida, accusing them of securities fraud, mail fraud, wire fraud, and conspiracy for their roles in a $14 million real estate investment fraud.

The criminal case includes many of the same allegations in a civil injunctive action previously filed by the Commission on May 20, 2010 in the United States District Court in Cleveland, Ohio against Allen, Olson, and A&O Investments, LLC (A&O). According to the Commission's complaint, from approximately September 2005 through December 2008, Allen and Olson raised approximately $14.8 million from at least 100 investors through the offer and sale of promissory notes issued by A&O. The complaint alleges that Allen and Olson recruited promissory note investors from customers of Georgia-based registered broker-dealer World Group Securities, Inc., for which Allen and Olson were registered representatives, and through other means. The complaint alleges that Allen and Olson told investors that they would use the investors' money to purchase, rehabilitate, and sell real estate. The complaint alleges that Allen and Olson's representations about their use of offering proceeds, the collateral securing the investments, and the success of the investments were all false. According to the complaint, in reality Allen and Olson operated a Ponzi scheme by using approximately $4.4 million of investors' funds to pay "interest" and, in some cases, principal to previous investors and spent only $5.1 million of the $14.8 million raised to purchase and rehabilitate real estate. The complaint further alleges that Allen and Olson used $2.2 million to pay personal expenses for themselves and their family members. According to the complaint, Allen and Olson also misrepresented and omitted to state material facts regarding the collateral securing the notes, in that as much as approximately $5.5 million worth of A&O promissory notes purportedly were secured by the same piece of property in Lakeland, Florida. This property's value was grossly inadequate to secure the notes. The complaint charges Allen, Olson, and A&O with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder.

On November 9, 2010, the Commission obtained a judgment against Defendants Olson and A&O, which includes permanent injunctions against future violations of the securities laws and orders them to pay disgorgement of $10,339,849, representing ill-gotten gains, and prejudgment interest of $736,631. On June 6, 2011, an administrative law judge issued an order pursuant to Section 15(b)(6) of the Exchange Act barring Olson from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent, and from participating in any offering of penny stock. The Commission's case against Allen is still pending."

CFTC ORDERS FLORIDA MAN TO PAY $140,000 PENALTY FOR FOREIGN CURRENCY SCHEME

THE FOLLOWING IS AN EXCERPT FROM THE CFTC WEBSITE:

"CFTC Orders Mark Adrian of Florida to Pay $140,000 Civil Penalty in Fraudulent Foreign Currency Scheme
Adrian pleaded guilty to federal criminal wire fraud and faces sentencing on August 2, 2011.
Washington, DC ― The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Mark Adrian of Delray Beach, Fla., for his role in issuing false statements to customers in a fraudulent foreign currency (forex) scheme. The CFTC order requires Adrian to pay a $140,000 civil monetary penalty and prohibits him from trading for or on behalf of any other person and applying for registration with the CFTC. Adrian is currently not registered with the CFTC.

The CFTC order finds that, from approximately 2005 through approximately August 2008, KJW Capital Management, LLC (KJW), where Adrian was an employee and member, solicited customers — directly and indirectly through brokers — to open managed accounts in which KJW would trade off-exchange forex on behalf of these customers. KJW used purported proprietary trading methodologies and obtained more than $18.4 million from at least 58 customers, according to the order. KJW traded forex in individual customer accounts at Avidus Trading, LLC (Avidus), where Adrian was also an employee and member, and where all of KJW’s customers were required to open and maintain forex trading accounts, according to the order.

Customers suffered significant forex trading losses, and, instead of informing customers of these losses, Adrian created false bank records and spreadsheets to hide the losses from customers, the order finds. For example, one of Avidus’ Dresdner Bank (Dresdner) account statements that Adrian falsified had the same font, color and account number as the actual Dresdner statement; however, the balances were vastly different, the order finds. The actual Dresdner balance totaled $181,000, whereas the Dresdner balance per Adrian was $2,488,000, according to the order.

The information contained in these false bank records and spreadsheets became the basis for numerous oral and written material misrepresentations and omissions made to customers, the order finds. By these misrepresentations and omissions, Adrian deceived customers into not withdrawing their funds, which resulted in customers suffering losses of at least $2.3 million, according to the order.

In a related criminal proceeding, the U.S. Attorney’s Office for the Northern District of Illinois filed an information against Adrian on September 13, 2010 (Case No. 1:10-cr-00754). Adrian pleaded guilty to wire fraud on October 26, 2010. Sentencing is scheduled for August 2, 2011.

The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation and the U.K.’s Financial Services Authority for their assistance in this matter.

CFTC staff members responsible for this case are Charles Marvine, Rick Glaser and Richard Wagner."

SEC GOES AFER CEOS FOR MICROCAP STOCK PRICE MANIPULATION

The following is an excerpt from the SEC website:

"The Securities and Exchange Commission today charged three CEOs, their companies, and two penny stock promoters with securities fraud for their roles in various schemes to manipulate the volume and price of microcap stocks and illegally generate stock sales. The schemes featured illicit kickbacks, a bribe to a purported corrupt broker, and the creation of a website to deliver e-mail blasts to potential investors.

The SEC worked closely with the U.S. Attorney's Office for the Southern District of Florida and the Federal Bureau of Investigation as the separate schemes were uncovered through an FBI undercover operation. The operation was conducted in such a way that no investors suffered harm. The U.S. Attorney's Office today announced criminal charges against the same individuals facing SEC civil charges.

According to the SEC's complaints filed in U.S. District Court for the Southern District of Florida, most of the schemes involved the payment of kickbacks to a purportedly corrupt pension fund manager, in exchange for the fund's purchase of restricted shares of stock in the various microcap companies. Another scheme involved a bribe that was to be paid to a purported corrupt stockbroker who agreed to use his ability to buy stock in his customers' discretionary accounts to purchase a microcap company's stock in the open market. What the insiders and promoters did not know was that the people with whom they arranged these illegal transactions were actually undercover FBI agents or confidential sources participating in an undercover operation. A final scheme involved a stock promoter who created a website to tout a penny stock company through a volley of e-mail blasts and who posted phony testimonials from fake investors. The defendants reside or are based in South Florida, California, Texas, and Nevada.

These charges follow a series of cases filed in October and December 2010, in which the SEC charged more than fourteen penny stock promoters and their companies with similar stock manipulation schemes.

The SEC alleges that the company officers and a promoter in most of the schemes understood they needed to disguise the kickbacks as payments to phony consulting companies, which they knew would perform no actual work. They also knew the purported corrupt fund trustee would be violating his fiduciary duties to his clients by taking part in the kickbacks. In other instances, they knew that their illegal activities were meant to artificially inflate the companies' stock price.

The SEC's complaints allege the defendants violated Section 17(a) of the Securities Act of 1933, and/or Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions and financial penalties against all the defendants; disgorgement plus prejudgment interest against the defendants who received ill-gotten gains; and penny stock bars against all the individual defendants.

The SEC acknowledges the assistance and cooperation of the United States Attorney's Office for the Southern District of Florida and the Federal Bureau of Investigation, Miami Division in investigating these matters.

SEC Complaint in this matter against Brian Gibson
SEC Complaint in this matter against Douglas Newton and Real American Brands, Inc. n/k/a Real American Capital Corp.
SEC Complaint in this matter against Donald W. Klein and KCM Holdings Corp.
SEC Complaint in this matter against Thomas Schroepfer"

NEBRASKA RESIDENT CHARGED WITH FRUAD IN COMMODITY POOL

The following case is an excerpt from the CFTC website:

"CFTC Charges Grand Island, Nebraska Resident with Fraud and Records Violations in Connection with $4 Million Commodity Pool
Grace Elizabeth Reisinger and ROF Consulting, LLC charged with solicitation fraud and records violations.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) filed a complaint in the U.S. District Court for the District of Nebraska, charging Grace Elizabeth Reisinger of Grand Island, Neb., and ROF Consulting, LLC (ROF) with operating a fraudulent commodity pool scheme. The defendants operated the commodity pool NCCN, LLC (NCCN).

The CFTC complaint, filed on June 29, 2011, alleges that from at least February 28, 2005 to October 26, 2009, Reisinger and ROF fraudulently solicited and accepted approximately $4 million from NCCN pool participants. The defendants allegedly operated NCCN while not being registered as Commodity Pool Operators (CPOs), as required under the Commodity Exchange Act and CFTC regulations. Reisinger also allegedly acted as a CPO for a part of the relevant period under a falsely claimed exemption from the registration requirement.

The complaint also charges Reisinger with making several fraudulent representations to actual and prospective pool participants. Such fraudulent misrepresentations included that she was exempt from the CFTC’s registration requirement, that the pool only solicited and accepted funds from participants who met the definition of a “qualified eligible person” (QEP), and that the minimum required investment in the pool was $5 million. Reisinger and ROF also allegedly failed to (1) furnish pool participants with required monthly account statements and annual reports, (2) advise pool participants that Reisinger and ROF directed fees paid from pool participants’ funds to an undisclosed “foreign introducing broker,” and (3) advise pool participants that Reisinger and ROF were required to be registered as CPOs.

Specifically, the CFTC complaint alleges that months after the date Reisinger and ROF delivered subscription agreements for the pool to some prospective pool participants and began acting as the CPOs of NCCN, she filed a letter with the National Futures Association (NFA) on June 24, 2005 claiming exemption from the requirement to register as a CPO pursuant to CFTC regulation 4.13(a)(4), 17 C.F.R. § 4.13(a)(4)(2005). Accordingly, prior to June 24, 2005, Reisinger acted as the CPO of NCCN without registration or a claimed exemption from registration, according to the complaint. Throughout this same period ROF also allegedly acted as the CPO of NCCN without being registered as a CPO and without a claimed exemption from the requirement to register as a CPO, according to the complaint.

Because Reisinger could not reasonably believe all persons participating in the pool were QEPs, admitted that she “did not know” whether some participants were QEPs at the time she accepted their funds, and failed to provide all participants with the required written statements mandated by CFTC regulation 4.13(a)(5)(i)(A) and (B), 17 C.F.R. § 4.13(a)(5)(i)(A) and (B) (2005), according to the complaint. Reisinger was not eligible for the exemption that she claimed and, therefore, should have been registered as a CPO, according to the complaint.

At no time during the relevant period did Reisinger amend her claimed notice of exemption from the requirement to register as a CPO, despite knowledge that her claimed exemption was invalid, according to the complaint.

In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, a civil monetary penalty, permanent trading and registration bans and a permanent injunction against further violations of the federal commodities laws."

INSIDER TRADING STRIKES AGAIN

The following is an excerpt from the SEC web site:

“The Securities and Exchange Commission announced today that, on June 8, 2011, the Honorable Jed S. Rakoff of the United States District Court for the Southern District of New York entered a judgment against Defendant Shammara Hussain in SEC v. Feinblatt, 11-CV-0170, an insider trading case the SEC filed on January 10, 2011. The Judge also entered a stipulation and order of dismissal as to Defendant Trivium Capital Management LLC, a New York-based hedge fund investment adviser which has wound down its investment management business, in exchange for its agreement to cooperate and cease doing business.
The Complaint alleged that Robert Feinblatt, a co-founder and principal of Trivium, and Jeffrey Yokuty, a Trivium analyst, engaged in insider trading in the securities of Polycom, Hilton, Google and Kronos. The complaint further alleged that Polycom senior executive Sunil Bhalla and Hussain, an employee at investor relations consulting firm Market Street Partners that did work for Google, tipped the inside information that enabled the insider trading by Feinblatt and Yokuty on behalf of Trivium’s hedge funds for illicit profits of more than $15 million.
To settle the SEC’s charges, Hussain consented to the entry of a judgment that: (i) permanently enjoins her from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and (ii) orders her to pay disgorgement of $21,619.80, plus $4,795.47 in prejudgment interest, plus a civil penalty of $21,619.80. Based on Hussain’s financial condition, the Court did not order a higher penalty. Trivium has agreed to cooperate and to not in the future engage in investment management or other operations.”

JUDGE ENTERS FINAL JUDGEMENT AGAINST TWO PENNY STOCK PROMOTERS

The following is an excerpt from the SEC website:

"The SEC announced today that on June 24, 2011, the Honorable Judge Richard A. Lazzara, United States District Judge for the Middle District of Florida, entered final judgments against two penny stock promoters, Robert M. Esposito and Gregory A. King, ordering them to pay $19,515,598 and $943,166, respectively, in disgorgement and civil penalties, in a fraudulent touting case the Commission filed on March 17, 2008. SEC v. Esposito, et al., No. 08 CV 494 T26 (M.D. Fla.). See Lit. Rel. No. 20499. The Court had previously entered judgments against Esposito and King permanently enjoining them from violating the anti-fraud and other provisions of the federal securities laws, and barring them from participating in any future penny stock offering. See Lit. Rel. No. 21449 (March 11, 2010).

In this action, the Commission charged that Esposito, King, and others participated in a fraudulent touting scheme of the stock of Anscott Industries, Inc. The complaint alleged that in April 2003, Esposito, a penny stock promoter, orchestrated a reverse merger between Anscott (then a private company) and Liquidix, Inc., a public shell company which, after the merger, changed its name to Anscott. According to the complaint, Esposito received 4 million shares of Anscott stock from the company as compensation for arranging the reverse merger and for future stock promotion work. The complaint further alleged that a fraudulent Form S-8 registration statement was filed with the Commission for the 4 million shares of Anscott issued to Esposito, which improperly enabled Esposito to sell these shares to the public during the fraudulent touting scheme.

As alleged in the complaint, after the reverse merger and the issuance of shares to Esposito, Esposito paid King, another penny stock promoter with whom Esposito had worked previously, to prepare and disseminate materially false and misleading tout sheets promoting Anscott stock. The Commission alleged that these tout sheets -- crafted to appear like independent investment newsletters and entitled the Wall Street Bulletin -- recommended Anscott as a "strong buy," and were disseminated to the public through fax spamming from late May 2003 through July 2003.

According to the complaint, these tout sheets, which King prepared, contained materially false and misleading representations about Anscott's products, business affiliations, and projected revenues. The complaint further alleged that these tout sheets failed to disclose, among other information, that Esposito, who was paid by the company to promote Anscott stock, was paying King to prepare and disseminate these "newsletters," and that Esposito was selling his Anscott stock during the touting scheme contrary to the Wall Street Bulletin's "strong buy" recommendation and price targets.

During the touting campaign, the price of Anscott's stock rose from around $1.40 a share in mid-May 2003, to a high of $4.59 a share on July 11, 2003. The complaint alleged that Esposito sold most of his Anscott stock to the public, realizing millions of dollars in illicit profits.

The Court's final judgment against Esposito orders him to pay disgorgement of $7,691,135, prejudgment interest of $4,133,326, and third tier civil penalty of $7,691,135. The judgment against Esposito also (a) permanently enjoins him from future violations of Sections 17(a), 5(a) and 5(c) of the Securities Act of 1933, Sections 10(b) and 13(d) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13d-1 and 13d-2; and (b) permanently bars him from participating in any future penny stock offerings.

The Court's final judgment against King orders him to pay disgorgement of $358,000, prejudgment interest of $227,166, and a third tier civil penalty of $358,000. The judgment against King also (a) permanently enjoins him from future violations of Sections 17(b) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and (b) permanently bars him from participating in any future penny stock offerings.

The Court previously entered final judgment against other defendants in this case, Anscott and its CEO, Jack R. Belluscio, on October 27, 2008: (1) permanently enjoining them from future violations of Sections 5(a) and 5(c) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; (2) permanently barring Belluscio from acting as an officer or director of a public company; (3) ordering Belluscio to pay third tier civil penalties of $240,000; and (4) ordering Anscott to pay third tier civil penalties of $1,200,000. In a related administrative proceeding, on May 7, 2008, the Commission issued an Order revoking the registration of Anscott securities pursuant to Section 12(j) of the Exchange Act. See In the Matter of Anscott Industries, Inc., Release No. 34-57791."