FEDERAL COURT ORDERS CONVICTED COMMODITY POOL FRAUDSTER TO PAY $2.1 MILLION PENALTY

A lot of millionaires make their money the old fashion way: they steal it. The following is an excerpt from the CFTC website:

"July 13, 2011

Federal Court in Illinois Orders Joseph A. Dawson to Pay $2.1 Million Penalty for Commodity Pool Fraud and Misappropriation
Dawson sentenced to 54 months of imprisonment and ordered to pay $3.3 million in restitution in criminal proceeding for the same scheme.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that on July 5, 2011, Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois entered a supplemental consent order imposing a $2.1 million civil monetary penalty on Joseph A. Dawson of Fox Lake, Ill. The CFTC charged Dawson and his company, Dawson Trading LLC (Dawson Trading) of McHenry, Ill., with fraudulent solicitation and misappropriation of customer funds in a commodity pool scheme (see CFTC Press Release 5860-10, July 26, 2010).

Previously, on April 26, 2011, the court entered a consent order of permanent injunction against Dawson finding that he violated the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged. The consent order found that, between at least February 2005 and December 2009, Dawson and his company misappropriated approximately $2.1 million of Dawson Trading participant funds. The order found that Dawson used the misappropriated funds for personal purchases and expenses, including a down payment on a personal residence, mortgage payments, an in-ground swimming pool, landscaping, furniture, restaurant bills, movie tickets, and car payments. The order permanently barred Dawson from any commodity-related activity, including trading and registering or seeking exemption from CFTC registration, and from violating the CEA’s anti-fraud provisions. The order left the issues of any restitution and a civil monetary penalty to be resolved later.

On July 11, 2011, Judge Kendall entered a default judgment and permanent injunction order against Dawson Trading, finding that the company violated the same CEA anti-fraud provisions as Dawson, was liable for Dawson’s violations as his principal, failed to register as a commodity pool operator as required by CFTC regulations, and unlawfully permitted Dawson to act as its agent without being lawfully registered as an associated person of the company. The order requires Dawson Trading to pay a $2.1 million civil monetary penalty and permanently prohibits it from engaging in any commodity-related activity, including trading and registering with the CFTC.

In a related criminal proceeding in March 2011, Dawson was sentenced to 54 months imprisonment and required to pay $3.3 million in restitution to pool participants (U.S. v. Dawson, 09-cr-1037-1 (N.D. Ill.)).

The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation, and the Securities and Exchange Commission for their assistance.

CFTC Division of Enforcement staff responsible for this action are Stephanie Reinhart, William Janulis, Ken Hampton, Scott Williamson, Rosemary Hollinger, and Richard Wagner."

After reading the above story I'll be wondering about how every neighbor made the money they used to put in their new pool.

THE CURRENCY TRADER WHO WASN’T

The following is an excerpt from the SEC website:

“Washington, D.C., July 15, 2011 – The Securities and Exchange Commission filed fraud charges Thursday against the CEO of a purported foreign currency trading firm, alleging he scammed hundreds of investors with false promises of high, fixed-rate returns while secretly using their money to fund his start-up alternative newspaper.

First Capital Savings & Loan Ltd. Chief Executive Jeffery A. Lowrance, who had fled to Peru and was arrested there earlier this year, was arraigned today on criminal fraud charges in a 2010 indictment filed by the United States Attorney’s Office for the Northern District of Illinois. In addition, the Commodity Futures Trading Commission filed fraud charges Thursday against Lowrance and First Capital.
The SEC alleges that Lowrance raised approximately $21 million from investors in at least 26 states, including California, Oregon, Illinois and Utah, by promising huge profits from a specialized foreign currency trading program. First Capital actually conducted little foreign currency trading, lost money on the little trading that it conducted, and never engaged in any profitable business operations. Lowrance targeted certain investors by purporting to share their Christian values and their limited-government political views. He solicited investors through, among other things, ads in his start-up newspaper USA Tomorrow, which he distributed at a September 2, 2008 political rally in Minneapolis, Minnesota.
“Lowrance ironically portrayed himself as a crusader against corruption in government, while he ripped off investors who put their trust in him,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office.
According to the SEC’s complaint, filed in federal district court in San Jose, California, Lowrance and First Capital promised investors a “predictable monthly income,” with monthly returns up to 7.15 percent through foreign currency trading. Some investors were told their investments were guaranteed and were given bogus letters of credit. First Capital also published a spreadsheet purporting to show its multi-year history of profitable trades, but the trades were fictitious, the SEC alleged. Instead of engaging in foreign currency trading as claimed, the SEC said Lowrance and First Capital secretly diverted investor funds to pay fake returns to earlier investors, to pay Lowrance (despite his failure to earn a profit for the investors), and to fund his newspaper.
Lowrance’s scheme began to unravel in June 2008 and Lowrance and First Capital had lost all of the investors’ money by September 2008. Nevertheless, Lowrance solicited at least an additional $1 million from at least 36 investors between June 2008 and February 2009 by continuing to tout First Capital’s fictitious high returns, the SEC alleged.
The SEC’s lawsuit seeks court orders prohibiting the defendants from engaging in securities fraud and requiring them to disgorge their ill-gotten gains and pay financial penalties.”

ARIZONA BANK GOES BUST

The following is an excerpt from an e-mail press release from the FDIC:

"July 15, 2011 Summit Bank, Prescott, Arizona, was closed today by the Arizona Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The Foothills Bank, Yuma, Arizona, to assume all of the deposits of Summit Bank.

The sole branch of Summit Bank will reopen on Monday as a branch of The Foothills Bank. Depositors of Summit Bank will automatically become depositors of The Foothills Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Summit Bank should continue to use their existing branch until they receive notice from The Foothills Bank that it has completed systems changes to allow other The Foothills Bank branches to process their accounts as well.

This evening and over the weekend, depositors of Summit Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2011, Summit Bank had approximately $72.0 million in total assets and $66.4 million in total deposits. The Foothills Bank will pay the FDIC a premium of 0.25 percent to assume all of the deposits of Summit Bank. In addition to assuming all of the deposits of the failed bank, The Foothills Bank agreed to purchase essentially all of the assets.

Customers with questions about today's transaction should call the FDIC toll-free at 1-800-895-0586. The phone number will be operational this evening until 9:00 p.m., Mountain Standard Time (MST); on Saturday from 9:00 a.m. to 6:00 p.m., MST; on Sunday from noon to 6:00 p.m., MST; and thereafter from 8:00 a.m. to 8:00 p.m., MST. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/summitbank.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.3 million. Compared to other alternatives, The Foothills Bank's acquisition was the least costly resolution for the FDIC's DIF. Summit Bank is the 55th FDIC-insured institution to fail in the nation this year, and the second in Arizona. The last FDIC-insured institution closed in the state was Legacy Bank, Scottsdale, on January 7, 2011."

SEC ANNOUNCED DISTRIBUTION IN WG TRADING FRAUD CASE

The following excerpt comes from the SEC web site:

“SEC Announces Initial Distribution of $792 Million to Injured Investors in WG Trading Investment Fraud
On April 21, 2011, the court-appointed Receiver in the Commission’s case against defendants Paul Greenwood, Steven Walsh and their affiliated WG Trading entities made an initial distribution of approximately $792 million to investors injured in the investment fraud orchestrated by Walsh and Greenwood. On March 20, 2011, Judge George B. Daniels of the United States District Court for the Southern District of New York approved a pro rata net investment distribution plan proposed by the Receiver and recommended by the SEC and the Commodity Futures Trading Commission (CFTC). Today’s distribution marks the first distribution by the Receiver and constitutes a return to investors of nearly 85% of approved claims.
On February 25, 2009, the SEC and CFTC obtained emergency relief against Walsh, Greenwood and their WG Trading affiliated entities in SEC v. WG Trading Investors, L.P., et al., Civ. No. 09-1750 (GBD)(SDNY) and CFTC v. Walsh, et al., Civ. No. 09-1749 (GBD)(SDNY). The SEC has since obtained an order of permanent injunction against Greenwood, who also pleaded guilty to criminal violations in a criminal action based on the same underlying conduct. Criminal and civil cases against Walsh continue.
The Receiver responsible for the distribution is Robb Evans & Associates, LLC, of Sun Valley, California.”

STOCK PROMOTER CHARGED WITH WIRE FRAUD

The following is an excerpt from the SEC website:

"July 11, 2011
Securities and Exchange Commission v. Presto Telecommunications, Inc. and Alfred Louis Vassallo, Jr., United States District Court, Southern District of California, Case No. 04CV00162IEG (filed Jan. 24, 2004).
TELECOMMUNICATIONS STOCK PROMOTER ALFRED LOUIS “BOBBY” VASSALLO, JR. INDICTED FOR WIRE FRAUD
The Securities and Exchange Commission announced today that, at the request of the United States Attorney’s Office for the Central District of California, a federal grand jury in Santa Ana, California, returned an indictment against Alfred Louis “Bobby” Vassallo, Jr. on July 6, 2011 charging him with three felony counts of wire fraud. Vassallo, age 61, is a resident of La Jolla, California.

The indictment charges Vassallo with making false representations to an investor in connection with an investment in a wireless communication venture including failing to disclose that he had been sued by the Commission and that a permanent injunction and monetary judgment had been entered against him in the Commission’s action. United States of America v. Alfred Louis Vassallo, Jr. aka “Bobby Vassallo,” U. S. District Court, Central District of California, case no. 8:11-CR-00150 (filed July 6, 2011).

The Commission filed a civil complaint against Vassallo and his former company, Presto Telecommunications, Inc., in the U. S. District Court, Southern District of California, on January 27, 2004 that charged Vassallo with violating the securities registration and antifraud provisions of the federal securities laws for his role in perpetrating a fraudulent scheme through Presto, which raised approximately $26 million from more than 500 investors. The Court entered a Final Judgment of Permanent Injunction and Other Relief against Vassallo on August 24, 2005 that permanently enjoined him from violating the securities registration and antifraud provisions and ordered him to pay a total of $2,009,082 in disgorgement plus prejudgment interest, civil penalties, and the costs and expenses of the permanent receiver for Presto.

The Commission filed an application for an order to show cause re civil contempt against Vassallo on September 21, 2010 which alleged that Vassallo violated the Final Judgment by offering and selling unregistered securities of wireless ventures and telecommunications companies, by committing fraud in connection with the offer and sale of those securities, and by failing to pay any of the monetary relief he was ordered to pay. The Court issued an order to show cause on September 24, 2010 why Vassallo should not be held in civil contempt of the Final Judgment. The Court issued an order on October 26, 2011 referring Vassallo’s alleged violations of the permanent injunction to the United States Attorney for the Southern District of California for prosecution for criminal contempt. The Court subsequently stayed the civil contempt proceeding. "

FLORIDA BANK CLOSED BY REGULATORS

The following is an excerpt from an e-mail sent out as a press release by the FDIC:

July 15, 2011
"First Peoples Bank, Port Saint Lucie, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Premier American Bank, National Association, Miami, Florida, to assume all of the deposits of First Peoples Bank.

The six branches of First Peoples Bank will reopen during their normal business hours beginning Saturday as branches of Premier American Bank. Depositors of First Peoples Bank will automatically become depositors of Premier American Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First Peoples Bank should continue to use their existing branch until they receive notice from Premier American Bank that it has completed systems changes to allow other Premier American Bank branches to process their accounts as well.

This evening and over the weekend, depositors of First Peoples Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2011, First Peoples Bank had approximately $228.3 million in total assets and $209.7 million in total deposits. In addition to assuming all of the deposits of the failed bank, Premier American Bank agreed to purchase essentially all of the assets.

Customers with questions about today's transaction should call the FDIC toll-free at 1-800-895-3212. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/firstpeoples.html.

As part of this transaction, the FDIC will acquire a value appreciation instrument. This instrument serves as additional consideration for the transaction.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $7.4 million. Compared to other alternatives, Premier American Bank's acquisition was the least costly resolution for the FDIC's DIF. First Peoples Bank is the 54th FDIC-insured institution to fail in the nation this year, and the seventh in Florida. The last FDIC-insured institution closed in the state was First Commerce Bank of Tampa Bay, Tampa, on June 17, 2011."