Sep 19, 2018 | Shareholder & Investor Protection
On September 19, 2018, the Securities and Exchange Commission announced that it has obtained a court order halting an ongoing Ponzi-like scheme that raised more than $345 million from over 230 investors across the U.S. The SEC also obtained an emergency asset freeze and the appointment of a receiver.
An SEC complaint unsealed yesterday alleges that Kevin B. Merrill (“Merrill”), Jay B. Ledford (“Ledford”) and Cameron Jezierski (“Jezierski”) attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. Allegedly, the defendants, however, were using a web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud. Rather than direct investor funds to the acquisition and servicing of debt portfolios as promised, the defendants, allegedly, used the funds to make Ponzi-like payments to earlier investors.
The SEC also alleges that Merrill and Ledford stole at least $85 million of the investor funds to maintain lavish lifestyles, spending millions of dollars on luxury items, including $10.2 million on at least 25 high-end cars, $330,000 for a 7-carat diamond ring, $168,000 for a 23-carat diamond bracelet, millions of dollars on luxury homes, and $100,000 to a private fitness club.
In a parallel action, the U.S. Attorney’s Office for the District of Maryland announced criminal charges against Merrill, Ledford, and Jezierski.
The SEC’s complaint, filed in United States District Court in Maryland, charges Merrill, Ledford, and Jezierski, along with their entities, Global Credit Recovery, LLC, Delmarva Capital, LLC, Rhino Capital Holdings, LLC, Rhino Capital Group, LLC, DeVille Asset Management LTD, and Riverwalk Financial Corporation, with violations of the antifraud provisions of the federal securities laws. The Court granted the SEC’s request for an asset freeze, temporary restraining order, and the appointment of a receiver. The SEC seeks disgorgement of allegedly ill-gotten gains and prejudgment interest, and financial penalties against the defendants.
Source: SEC.gov
Sep 12, 2018 | Shareholder & Investor Protection
On September 12, 2018, the SEC announced that Connecticut-based United Technologies Corporation will pay $13.9 million to resolve charges that it violated the Foreign Corrupt Practices Act (“FCPA”) by making illicit payments in its elevator and aircraft engine businesses.
According to the SEC’s order, United Technologies subsidiary Otis Elevator Co. made unlawful payments to Azerbaijani officials to facilitate the sales of elevator equipment for public housing in Baku and as part of a kickback scheme to sell elevators in China. The order also found that United Technologies, through its joint venture, made payments to a Chinese sales agent in a bid to obtain confidential information from a Chinese official that would help the company win engine sales to a Chinese state-owned airline.
The SEC’s order also found that United Technologies improperly provided trips and gifts to various foreign officials in China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia through its Pratt & Whitney division and Otis subsidiary in order to obtain business.
United Technologies consented to the SEC’s order without admitting or denying the findings that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934, and the company agreed to pay disgorgement of $9,067,142 plus interest of $919,392 and a penalty of $4 million.
Source: SEC.gov
Sep 11, 2018 | Securities Class Action Archive
Kehoe Law Firm, P.C. Announces a Securities Fraud Investigation On Behalf of Shareholders and Investors of USA Technologies, Inc. (NasdaqGM: USAT) (“USA Technologies”).
On September 11, 2018, USA Technologies disclosed that it will not file its Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (the “Annual Report”) by the September 13, 2018 deadline. In particular, the company revealed that
. . . [t]he Audit Committee of the Company’s Board of Directors, with the assistance of independent legal and forensic accounting advisors, is in the process of conducting an internal investigation of current and prior period matters relating to certain of [USA Technologies’] contractual arrangements, including the accounting treatment, financial reporting and internal controls related to such arrangements.The Audit Committee is working closely with its advisors to complete its investigation in as timely a manner as possible. [USA Technologies] will not be in a position to file its Form 10-K until the Audit Committee completes its investigation and [USA Technologies] and its independent auditor assess the results of that investigation.
Following this news, USA Technologies stock closed down more than 39% on September 11, 2018.
Class Action Lawsuit Filed on Behalf of USAT Investors
On September 11, 2018, a class action lawsuit was filed in United States District Court, District of New Jersey, on behalf a class consisting of all persons and entities, other than Defendants and their affiliates, who purchased publicly-traded USA Technologies securities from November 9, 2017 through September 11, 2018, both dates inclusive (the “Class Period”), seeking to recover compensable damages caused by Defendants’ violations of federal securities laws and pursue remedies under the Securities Exchange Act of 1934.
According to the class action complaint, the USA Technologies’ Defendants made materially false and/or misleading statements and/or failed to disclose the adverse facts pertaining to [USAT’s] business and operations which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) USA Technologies’ treatment of contractual arrangements in its financial statements would result in an internal investigation and delay the filing of its annual report for fiscal year 2018; (2) consequently, USA Technologies’ internal controls over financial reporting were weak and deficient; (3) as a result, Defendants’ statements about USA Technologies’ business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
USA Technologies, Inc.
According to the Company:
USA Technologies, Inc. is a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market. The company also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile® for customers on the go, ePort® Interactive, and QuickConnect, an API Web service for developers. Through its recent acquisition of Cantaloupe Systems, Inc. (“Cantaloupe”), the company also offers logistics, dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management solutions. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee services.
Shareholders and Investors of USA Technologies
If you purchased USAT securities from November 9, 2017 through September 11, 2018, both dates inclusive (“Class Period”), and would like to learn more about the securities investigation or your potential legal claims, please contact John Kehoe, Esq., [email protected], (215) 792-6676, Ext. 801, or e-mail [email protected].
Sep 7, 2018 | Shareholder & Investor Protection
On September 5, 2018, the Securities and Exchange Commission announced that it charged a Texas-based investment fund and its founder with defrauding investors with false promises of massive returns in cannabis-related businesses. The SEC also issued an alert to warn retail investors about marijuana-related securities offerings.
The SEC’s complaint alleged that Greenview Investment Partners L.P. and its founder Michael E. Cone (“Cone”) used misleading marketing materials in raising more than $3.3 million from investors. Allegedly, Cone employed boiler room sales staff who made cold calls to investors and promised them up to 24 percent annual returns from investments in Greenview. According to the SEC’s complaint, Cone used an alias to conceal his prior criminal convictions, lied about having a former agent from the U.S. Drug Enforcement Administration on staff, as well as falsely claimed to have a long record of profitably investing millions in cannabis-related businesses.
The SEC’s complaint alleged that, in reality, Greenview had no track record and its sole investment of $400,000 was in a cannabis company that had yet to harvest a crop. According to the SEC’s complaint, Cone spent investors’ money on designer clothes and luxury cars, and on payments to earlier investors to prolong the alleged scheme. In a parallel criminal proceeding, the U.S. Attorney’s Office for the Central District of California charged Cone and seized approximately $1.4 million in cash and assets.
The SEC’s complaint, filed in United States District Court for the Northern District of Texas, charged Greenview and Cone with securities fraud and violations of the registration provisions of the federal securities laws. Cone agreed to an officer-and-director bar and a permanent injunction. The court will eventually determine disgorgement and prejudgment interest.
As part of their ongoing collaboration to protect retail investors, the SEC’s Office of Investor Education and Advocacy and Retail Strategy Task Force issued the aforementioned Investor Alert about marijuana-related investments, urging investors to consider the risks of investment fraud and market manipulation before investing in a marijuana-related company.
Source: SEC.gov
Sep 7, 2018 | Whistleblower
On September 6, 2018, the Securities and Exchange Commission announced that it is awarding more than $39 million to one whistleblower and more than $15 million to another whose critical information and continued assistance helped the agency bring an important enforcement action. The more than $39 million award is the second-largest award in the history of the SEC’s whistleblower program.
“Whistleblowers serve as invaluable sources of information, and can propel an investigation forward by helping us overcome obstacles and delays in investigation,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “These substantial awards send a strong message about the SEC’s commitment to whistleblowers and the value they bring to the agency’s mission.”
For additional information, click the SEC’s “Order Determining Whistleblower Award Claims.”
The SEC has awarded more than $320 million to 57 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
Source: SEC.gov
