MAN WHO MISAPPROPRIATED COMMODITY POOL MONEY SENTENCED TO 8+ YEARS IN PRISON

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

Kevin G. White Sentenced to over Eight Years in Federal Prison for $7.4 Million Commodity Pool Investment Scam

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Kevin G. White of The Woodlands, Texas, who orchestrated a $7.4 million commodity pool investment scam during which he misappropriated approximately $1.7 million from pool participants, was sentenced to over eight years in federal prison for charges related to his fraudulent misconduct. Earlier, on December 11, 2013, White pleaded guilty to committing mail fraud for his actions in connection with the scam.

The criminal charges arose from White’s solicitation fraud and misappropriation of pool participant funds, as charged in a Complaint filed by the CFTC on July 9, 2013 (see CFTC Press Release 6644-13, July 12, 2013), and a companion Complaint filed by the Securities and Exchange Commission. According to the CFTC’s Complaint, White, along two other Defendants in the CFTC’s action, RFF GP, LLC, and KGW Capital Management, LLC, duped pool participants into investing in Revelation Forex Fund, LP, a purported hedge fund and commodity pool. The CFTC’s Complaint further alleged that in making their solicitations through two websites and at a tradeshow presentation, White fabricated Revelation’s performance and lied about his investment experience. A proposed consent Order between the CFTC and White, RFF GP, and KGW Capital is currently pending in the U.S. District Court for the Eastern District of Texas.

Aitan Goelman, the CFTC’s Director of Enforcement, stated: “The sentence in this case should serve as a warning that those who willfully commit fraud in our markets face the very real possibility of a significant term of imprisonment. The CFTC will continue its vigilance in protecting commodities and derivatives investors from fraud and other forms of financial crime.”

The CFTC congratulates the U.S. Attorney’s Office for the Eastern District of Texas for its successful prosecution of this matter.

CFTC Division of Enforcement staff members responsible for the related CFTC case are Harry E. Wedewer, Dmitriy Vilenskiy, John Einstman, and Paul G. Hayeck.

COURT ORDERS $26 MILLION PENALTY AGAINST MAN, FIRM FOR COMMODITY POOL FRAUD

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

March 3, 2015

Federal Court in New York Imposes a $26 Million Civil Monetary Penalty against Mark Evan Bloom and his Company, North Hills Management, LLC, for Commodity Pool Fraud

Bloom pleaded guilty in a parallel criminal proceeding and is currently awaiting sentencing

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge John G. Koeltl of the U.S. District Court for the Southern District of New York entered a Supplemental Consent Order requiring Defendants Mark Evan Bloom of Monmouth Beach, New Jersey, and his firm North Hills Management, LLC (NHM) jointly to pay a $26 million civil monetary penalty for operating a fraudulent commodity pool called North Hills LP (North Hills) and misappropriating customer funds (see CFTC Press Release and Complaint 5622-09, February 25, 2009). The Supplemental Consent Order resolves the CFTC’s case in its entirety.

Previously, on June 11, 2010, the court entered a Consent Order of permanent injunction against the Defendants (see the Consent Order under Related Links). In the Consent Order, the court found that Bloom and NHM misappropriated approximately $13 million from North Hills, which they operated from at least 2002 until February 2009. During this period, Bloom maintained a lavish lifestyle, including purchasing a luxury apartment in Manhattan for over $5 million. The Consent Order also found that Bloom and NHM concealed their misappropriation and made several other misrepresentations and material omissions to pool participants. For example, they failed to disclose that pool participants’ assets were invested contrary to their stated investment strategy, and they issued false statements concerning the nature and status of North Hills and participants’ interests in it. The Consent Order imposed a permanent injunction and permanent trading, solicitation, and registration bans against the Defendants.

In February 2009, Bloom was charged in a parallel criminal proceeding based on allegations that are similar to those in the CFTC’s Complaint (see United States v. Bloom, 1:09-cr-367-JGK (S.D.N.Y.)). On July 30, 2009, Bloom pleaded guilty to the charges and is currently awaiting sentencing. The plea agreement in Bloom’s criminal case requires him to pay restitution to investors in an amount to be determined by the court. For this reason, the Supplemental Consent Order in the CFTC’s case does not mandate restitution.

The CFTC appreciates the assistance of the Office of the U.S. Attorney for the Southern District of New York and the Securities and Exchange Commission.

CFTC Division of Enforcement staff members responsible for this case are Glenn Chernigoff, Kara Mucha, Alison Wilson, Rick Glaser, and Gretchen L. Lowe.

Remarks to PLI Investment Management Institute 2015

Remarks to PLI Investment Management Institute 2015

SEC FILES CHARGES AGAINST OPTIMA GLOBAL FINANCIAL, INC.

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23213 / March 3, 2015

Securities and Exchange Commission v. Ahmad Fnaikher Alyasin and Optima Global Financial, Inc., Civil Action No. 4:15-cv-00566

SEC Files Fraud and Related Charges Against Optima Global Financial, Inc., Its CEO, Ahmad Alyasin, and Their Lawyer Gary Patterson

The Securities and Exchange Commission today announced that, on March 3, 2015, the Commission filed fraud and other related charges against Optima Global Financial, Inc. ("Optima"), its CEO, Ahmad Fnaikher Alyasin ("Alyasin"), and, on March 3, 2015, against their lawyer Gary Eugene Patterson ("Patterson").

The Commission's Order finds and its complaint alleges that, from at least September 2010 through at least March 2011, Alyasin and Optima engaged in a fraudulent scheme to obtain and sell purportedly unrestricted shares of China North East Petroleum Holdings Limited ("CNEP") in unregistered transactions. Their attorney, Patterson, issued two baseless Rule 144 legal opinions, allowing the restrictive legends to be improperly removed from the securities. Alyasin and Optima loaned $3.5 million to the former Chief Executive Officer and President and current director of CNEP ("Borrower"). The loan was secured by a pledge of 2.5 million shares of restricted CNEP control stock. Under the provisions of the lending agreements, Alyasin and Optima agreed not to sell those restricted shares for the term of the loan.

According to the Commission's Order and complaint, Alyasin and Optima, however, immediately took steps to remove the restrictive legends from the shares, allowing them to margin and then, in contravention of the federal securities laws and the stated terms of the lending agreements, to sell those securities into the open market. Patterson caused this fraudulent scheme by issuing two baseless Rule 144 opinion letters incorrectly stating that the restrictive legends on the CNEP stock certificates could be removed based on the terms of the lending agreements.

By engaging in the unregistered offer and sale of securities, the Commission alleges in its complaint that Alyasin, Optima, and Patterson each violated the registration requirements of Sections 5(a) and (c) of the Securities Act of 1933 ("Securities Act"). In addition, Alyasin and Optima are alleged to have violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 by engaging in the fraudulent scheme, and Patterson caused Alyasin's and Optima's violations of those antifraud provisions.

Without admitting or denying the findings, Patterson agreed to settle the SEC's claims against him. As part of his settlement with the Commission, Patterson, consented to the issuance of an order that requires him: (1) to cease-and-desist from committing or causing any violations and any future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder; (2) to pay a civil penalty of $30,000. In addition, the order prohibits Patterson from providing professional legal services to any person or entity in connection with the offer or sale of securities, including, without limitation, participating in the preparation of any opinion letter related to such offerings; and bars him from appearing or practicing as an attorney before the Commission for ten years.

Alyasin and Optima agreed to a bifurcated settlement whereby they, without admitting or denying the allegations, consent to: (1) the entry of a final judgment permanently enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and (2) the entry of a final judgment imposing disgorgement of ill-gotten gains along with prejudgment interest, and civil penalties in amounts, if any, to be determined by the Court upon motion of the Commission.

The SEC's investigation was conducted by Ansu Banerjee and Delane Olson, and supervised by Melissa Hodgman. The litigation will be led by John Bowers.

CFTC CHARGES MICHIGAN MAN WITH COMMODITY POOL FRAUD

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

March 3, 2015

CFTC Charges Michigan Resident Jerry Stauffer with Commodity Pool Fraud and Other Violaions

Federal Court Issues Emergency Order Freezing Stauffer’s Assets and Protecting Books and Records

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced that Chief Judge Paul L. Maloney, of the U.S. District Court for the Western District of Michigan issued an emergency Order freezing and preserving the remaining pool participant assets under the control of Defendant Jerry Stauffer of Traverse City, Michigan. The Order, entered under seal on February 25, 2015, also prohibits Stauffer from destroying books and records and grants the CFTC immediate access to those records.

The Order arises out of a civil enforcement Complaint filed under seal by the CFTC on the same date, charging Stauffer with fraudulently soliciting at least $968,000 from members of the public to trade foreign exchange (forex) in a commodity pool, by among other things, guaranteeing pool participants a monthly return on their investment based on profits purportedly earned from forex trading. The CFTC Complaint further alleges that Stauffer prepared and distributed to pool participants false account statements showing huge profits, while at the same time he traded very little forex and diverted pool participants’ funds for his own use. In addition to fraud, the Complaint alleges that Stauffer illegally operated a commodity pool.

In its continuing litigation, the CFTC seeks full restitution to defrauded pool participants, disgorgement of any ill-gotten gains, the payment of appropriate monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of federal commodities laws, as charged.

The CFTC appreciates the cooperation of the Civil Division of the U.S. Attorney’s Office for the Western District of Michigan and the Federal Bureau of Investigation in this matter.

CFTC Division Enforcement staff members responsible for this case are Eugenia Vroustouris, Michelle Bougas, Kathy Banar, Erica Bodin, and Rick Glaser.

* * * * *

CFTC’s Foreign Currency (Forex) Fraud and CFTC’s Commodity Pool Fraud Advisories

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.

The CFTC has also issued a Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in

SEC.gov | FCPA, Disclosure, and Internal Controls Issues Arising in the Pharmaceutical Industry

SEC.gov | FCPA, Disclosure, and Internal Controls Issues Arising in the Pharmaceutical Industry