Dec 19, 2018 | Shareholder & Investor Protection
On December19, 2018, the SEC announced charges against an additional 13 individuals and 10 companies for unlawfully selling securities of Woodbridge Group of Companies LLC to retail investors. Woodbridge collapsed into bankruptcy in December 2017, and the SEC previously charged the company, its owner and others with operating a $1.2 billion Ponzi scheme and charged five of the top Florida-based sales agents for securities and broker-dealer registration violations.
The 13 individual defendants charged were among Woodbridge’s top revenue producers, selling more than $350 million of its unregistered securities to more than 4,400 investors. According to the complaints, the defendants marketed Woodbridge’s securities as a “safe” and “secure” investment and reaped millions of dollars in commissions on their sales even though they were not registered as, or associated with, registered broker-dealers. The SEC also alleged that defendant Jordan Goodman, a self-described “media influencer,” touted Woodbridge without disclosing that he was paid to do so.
In its latest actions, the SEC is seeking court-ordered injunctions, return of allegedly ill-gotten gains with interest, and financial penalties against Robert S. “Lute” Davis, Jr., Donald Anthony Mackenzie, Jordan E. Goodman (“Goodman”), Aaron R. Andrew, Jeffrey L. Wendel, Alan H. New (“New”), David N. Knuth (“Knuth”), Randy T. Rondberg, Richard Fritts, Marcus Bradford Bray, Gregory W. Anderson, Claude Steven Mosley, Gregory A. Koch, and their companies Old Security Financial Group Inc., Paramount Financial Services Inc., d/b/a Live Abundant, Wendel Financial Network LLC, Synergy Investment Services LLC, Trager LLC, Fritts Financial LLC, Bradford Solutions LLC, Balanced Financial Inc., Security Financial LLC, and Koch Insurance Brokers LLC.
Goodman settled the SEC’s charges without admitting or denying the allegations and agreed to disgorgement of $2.29 million plus prejudgment interest of $315,850 and a $100,000 penalty, and to be subject to an injunction and industry and penny stock bars. Synergy Investment Services, New, and Knuth settled the SEC’s charges without admitting or denying the allegations with the court to determine disgorgement, interest, and penalties at a later date.
The SEC also announced that it reached settlements in its previously filed action against Florida-based sales agents Barry M. Kornfeld, Ferne Kornfeld, and Albert D. Klager (“Klager”). Without admitting or denying the allegations, the three agreed to a permanent injunction and industry and penny-stock bars. The Kornfelds agreed to disgorgement of $3.69 million plus $690,497 in prejudgment interest. Additionally, Barry Kornfeld agreed to a $500,000 penalty, and Ferne Kornfeld agreed to a $150,000 penalty. Klager agreed to $1.36 million in disgorgement, $278,908 in prejudgment interest, and a $100,000 penalty.
Source: SEC.gov
Dec 18, 2018 | Shareholder & Investor Protection
On December 17, 2018, the Securities and Exchange Commission announced that Bank of New York Mellon will pay more than $54 million to settle charges of improper handling of “pre-released” American Depositary Receipts (“ADRs”).
According to the SEC, ADRs – U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.
The SEC’s order found that BNY Mellon improperly provided ADRs to brokers in thousands of pre-release transactions when neither the broker nor its customers had the foreign shares needed to support those new ADRs. Such practices resulted in inflating the total number of a foreign issuer’s tradeable securities, which resulted in abusive practices like inappropriate short selling and dividend arbitrage that should not have been occurring.
This, according to the SEC, is the seventh action against a bank or broker and third action against a depositary bank resulting from the SEC’s ongoing investigation into abusive ADR pre-release practices. Information about ADRs is available in an SEC Investor Bulletin.
Without admitting or denying the SEC’s findings, BNY Mellon agreed to disgorge more than $29.3 million in alleged ill-gotten gains plus pay $4.2 million in prejudgment interest and a $20.5 million penalty for total monetary relief of more than $54 million. The SEC’s order acknowledges BNY Mellon’s cooperation in the investigation and remedial acts.
Source: SEC.gov
Dec 13, 2018 | Shareholder & Investor Protection
On December 12, 2018, the SEC announced that two former executives behind an allegedly fraudulent initial coin offering (“ICO”) stopped by the SEC earlier this year have been ordered in federal court to pay nearly $2.7 million and prohibited from serving as officers or directors of public companies or participating in future offerings of digital securities.
The SEC reported that AriseBank’s then-CEO, Jared Rice, Sr. (“Rice”), and then-COO, Stanley Ford (“Ford”), were accused of offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors.
“Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its kind decentralized bank offering its own cryptocurrency for customer products and services,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud.”
According to the SEC, to settle the charges, Rice and Ford agreed to be held jointly and severally liable for $2,259,543 in disgorgement plus $68,423 in prejudgment interest, and each must pay a $184,767 penalty. Rice and Ford also agreed to lifetime bars from serving as officers and directors of public companies and participating in digital securities offerings, and permanent prohibitions against violating the antifraud and registration provisions of the federal securities laws.
Chief Judge Barbara M.G. Lynn of United States District Court for the Northern District of Texas ordered the sanctions on December 11. Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC’s complaint, and on Nov. 28, 2018, the U.S. Attorney’s Office for the Northern District of Texas announced parallel criminal charges against Rice.
Source: SEC.gov
Dec 6, 2018 | Consumer Protection, Employment & Technology Archive
On December 6, 2018, the Federal Trade Commission announced that it issued the National Do Not Call Registry Data Book for Fiscal Year 2018. The FTC’s National Do Not Call Registry allows consumers to choose not to receive most legal telemarketing calls. The data, according to the FTC, show that the number of active registrations on the National Do Not Call Registry (“DNC Registry”) has increased significantly over the past year, while the total number of consumer complaints decreased for the first time in five years.
The National Do Not Call Registry Data Book (“Data Book”) contains substantial information about the DNC Registry for FY 2018 (October 1, 2017-September 30, 2018). The FTC’s Data Book provides the most recent information available on robocall complaints, the types of calls consumers reported to the FTC, and a complete state-by-state analysis.
FY 2018 Registration & Complaint Data
According to the FTC’s Data Book, at the end of FY 2018, the DNC Registry contained 235,302,818 actively registered phone numbers, up from 229,816,164 at the end of FY 2017. The number of consumer complaints about unwanted telemarketing calls significantly decreased, from 7,157,337 in FY 2017 to 5,780,172 in FY 2018.
According to the FTC, during the past fiscal year, the FTC has continued to receive many consumer complaints about telemarketing robocalls, but this number has also decreased. In FY 2018, the FTC received 3,790,614 complaints about robocalls, compared with 4,501,960 in FY 2017. For every month in the fiscal year, robocalls—defined under FTC regulations as calls delivering a prerecorded message—made up the majority of consumer complaints about DNC violations.
Reducing Debt, Medical/Prescriptions & Imposter Scams – Most Frequently Reported Robocall Complaint Topics
This year, according to the FTC, consumers most frequently reported robocalls about the following complaint topics: 1) reducing debt, 2) medical and prescriptions, and 3) imposter scams. While reducing debt remains the top robocall topic, robocalls about vacations and timeshares, and warranties and protection plans, dropped out of the top three complaint topics.
As it did last year, the FTC has developed a mini site on its website to make the information in the FY 2018 Data Book more accessible for the public, such as providing a webpage for each state. In addition, the data behind the report will be available in data files on the new website.
Additionally, to make it as user-friendly as possible, the FTC’s Data Book includes the following features:
- The number of DNC complaints about robocalls versus live callers.
- Information about the topics of calls reported to the FTC and gathered from the FTC’s online complaint form.
- A state-by-state analysis of DNC complaints.
- The underlying data in the report is publicly available at: www.ftc.gov/donotcall-databook2018.
Source: FTC.gov
Do You Believe You Are a Victim of Illegal Robocalls, Text Messages, “Junk” Faxes or Telemarketing Sales Calls?
Depending on the facts and circumstances of your case, you may be able to recover at least $500 for each illegal call, text or fax you received and, possibly, as much as $1,500 for each illegal call, text message or facsimile that was made either willfully or knowingly.
To help evaluate your potential legal claims under the Telephone Consumer Protection Act, please complete KLF’s confidential Robocall Questionnaire or, if you prefer to speak with an attorney, please complete the form above on the right, e-mail [email protected] or contact Michael Yarnoff, Esq., [email protected], (215) 792-6676, Ext. 804, for a free, no-obligation evaluation of your potential legal rights.
Dec 6, 2018 | Consumer Protection, Employment & Technology Archive
On December 6, 2018, the Federal Trade Commission announced that it is mailing 43,456 checks totaling more than $3.5 million to consumers subjected to deceptive and unfair sales and financing tactics by the Sage Auto Group and its owners between 2014 and 2016. Affected consumers will receive their checks soon, with the average refund amount totaling $81.76.
In September 2016, the FTC charged nine Los Angeles-area auto dealerships and their owners with using a wide range of deceptive and unfair sales and financing practices. The FTC’s action, filed in the United States District Court for the Central District of California, sought to end these practices and return money to consumers.
The action against the Sage Auto Group defendants was, according to the FTC, the FTC’s first to charge an auto dealer for “yo-yo” financing tactics: using deception or other unlawful pressure tactics to coerce consumers who have signed contracts into later accepting a different deal. The FTC also alleges that the defendants packed extra, unauthorized charges for “add-ons,” or aftermarket products and services, into car deals financed by consumers. In addition to barring the allegedly illegal conduct, the March 2017 order settling the FTC’s charges required the defendants to pay approximately $3.6 million for return to affected consumers.
Recipients, according to the FTC, should deposit or cash checks within 60 days, as indicated on the check. The FTC never requires consumers to pay money or provide account information to cash a refund check. Impacted consumers will receive a percentage of their total add-on costs for vehicles they bought.
Source: FTC.gov
