SEC Enforcement Actions

Gignesh Movalia, Edwin V. Gaw and OM Investment Management, LLC. – Florida Investment Advisor and Hedge Fund Fraud, Misrepresentation and Mismanagement Litigation and Arbitration Attorney

Published on: September 28, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. OM Investment Management LLC, Gignesh Movalia, and Edwin V. Gaw, Civil Action No. 1:13-cv -23486-Martinez (S.D. Fla., filed September, 2013)

SEC Charges Tampa-Based Adviser with Fabricating Statements and Making Unauthorized and Undisclosed Investments

The Securities and Exchange Commission recently charged a formerly SEC-registered Tampa-based investment adviser, OM Investment Management LLC, its principal, Gignesh Movalia, and its director of investments, Edwin V. Gaw, with fraudulently raising money and making material misrepresentations and omissions relating to OM Global Investment Fund, LLC, an unregistered hedge fund.

Frank Dappah and Yatalie Capital Management – Florida Excessive Investment Advisory Fee Litigation and FINRA Arbitration Attorney

Published on: September 28, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Frank Dappah and Yatalie Capital Management, et al., Civil Action No. 3:13-cv-00546 (W.D.N.C.)

SEC Charges Charlotte Investment Advisors with Excessive Fee Scheme

Recently, the Securities and Exchange Commission filed an action in federal court in the Western District of North Carolina, charging Frank Dappah of Charlotte, NC, and his firm, Yatalie Capital Management (a/k/a Yatalie Capital Management Co, Creato Funds L.P., a/k/a Yatalie Capital, Inc., a/k/a Creato Funds, L.P., a/k/a Yatalie Capital Management Co.), a sole proprietorship, with violations of the federal securities laws for charging grossly excessive fees to their advisory clients without authorization or notice and other violations. The Commission’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an asset freeze against the defendants.

Nicolette Loisel – Florida Corporate Hijacking Litigation and FINRA Arbitration Attorney

Published on: September 28, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Irwin Boock, et al., Civil Action No. Civil Action No. 09 CV 8261 (S.D.N.Y) (DLC)

SEC Obtains Final Judgments Against Attorney Involved in 22 Corporate Hijackings and a Relief Defendant

Recently, the United States District Court for the Southern District of New York entered a consent final judgment against Nicolette Loisel, a Houston-based attorney, in a pending civil injunctive action in which the Commission charged Loisel, along with others, with hijacking 22 defunct or inactive publicly-traded companies and drafting 28 legal opinion letters falsely representing that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws. The final judgment permanently enjoins Loisel from violating the antifraud and registration provisions of the federal securities laws, prohibits her from participating in any penny stock offering, and orders her to pay disgorgement and prejudgment interest of $143,755. Pursuant to the final judgment, payment of these amounts was waived, and no civil penalty was imposed, in light of her financial condition.

Chan Tze Ngon – Florida Reverse Merger Fraud, Misrepresentation and Breach of Contract Litigation and FINRA Arbitration Attorney

Published on: September 27, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Chan Tze Ngon and Jiang Xiangyuan, Civil Action No. 13-cv-6828 (S.D.N.Y.)

The Securities and Exchange Commission recently charged the former CEO of an education services provider based in China with stealing tens of millions of dollars from investors in a U.S. public offering, and charged another executive with illegally dumping his stock in the company after he helped steal valuable company assets.

The SEC alleges that ChinaCast Education Corporation’s former CEO and chairman of the board Chan Tze Ngon illicitly transferred $41 million out of the $43.8 million raised from investors to a purported subsidiary in which he secretly held a controlling 50 percent ownership stake. From there, Chan transferred investor funds to another entity outside ChinaCast’s control. Chan also secretly pledged $30.4 million of ChinaCast’s cash deposits to secure the debts of entities unrelated to ChinaCast. None of the transactions were disclosed in the periodic and other reports signed by Chan and filed with the SEC.

Ronald Walblay, RyHolland Fielder, Inc. and Energy Securities Inc. – South Florida Oil and Gas Limited Partnership Fraud, Mismanagement and Unregistered Securities FINRA Arbitration and Litigation Attorney

Published on: September 27, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. Ronald E. Walblay, Energy Securities, Inc., and RyHolland Fielder, Inc., Civil Action No. 9:13-cv-80978 (S.D. FL.)

The Securities and Exchange Commission recently charged the owner of two Florida-based companies with defrauding investors in five oil and gas offerings by misrepresenting such key facts as the amount of available reserves, the use of investor funds, and his past success in the oil and gas industry.

The SEC alleges that Ronald Walblay of Delray Beach, Fla., perpetrated the fraud through RyHolland Fielder Inc., which has managed a number of oil and gas limited partnerships, and his former brokerage firm Energy Securities Inc., which sold the partnerships’ interests – none of which were registered with the SEC as required under the federal securities laws. Walblay raised at least $12 million from more than 195 U.S. and foreign investors by falsely touting in sales brochures that RyHolland Fielder offered millions of barrels of oil and natural gas reserves. Walblay also falsely touted in offering materials that investors could receive potential returns of up to 2,270 percent. Meanwhile, not a single investor had ever profited from any of the partnerships, and Walblay used a greater percentage of investor funds than was disclosed to pay salaries and marketing expenses for investor conferences.

Peter Kirschner and Stuart Rubens – Florida Elder (Senior) Investment Abuse and Securities Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney

Published on: September 26, 2013 | By Russell L. Forkey, P.A.

SEC Charges Operators of Boiler Room Scheme Targeting Seniors to Invest in Football-Related Scam

The Securities and Exchange Commission recently charged the operators of a South Florida-based boiler room scheme with defrauding seniors and other investors they pressured into purchasing stock in a company that purportedly developed ground-breaking technology for the National Football League to use in the Super Bowl.

The SEC alleges that Peter Kirschner of Delray Beach, Fla. and his business partner Stuart Rubens of North Miami struck an agreement with Thought Development Inc. (TDI) to solicit investors and sell unregistered company stock to help the Miami Beach-based company raise capital. TDI states that its signature invention is a laser-line system that generates a green line on a football field that is visible as a first-down marker not only on television, but also within the stadium to players, fans, and officials. TDI claims its technology would decrease the time needed by officials to determine first downs and generate more time to be sold to television advertisers.

Stephen L. Kirkland and the Kirkland Organization, Inc. – False and Misleading Statements to Foreign and Domestic Investors – Florida FINRA Arbitration and Litigation Attorney

Published on: September 26, 2013 | By Russell L. Forkey, P.A.

SEC Charges Atlanta-Area Defendants with Securities Fraud

Recently, the Securities and Exchange Commission filed an action in federal court in the Northern District of Georgia, charging Stephen L. Kirkland (Kirkland), a Marietta, Georgia resident, and his company The Kirkland Organization, Inc. (TKO), a Georgia corporation, with violations of the federal securities laws for making false and misleading statements to investors in the United States and in Great Britain. The Commission’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.

The Commission’s complaint alleges that between late 2008 and late 2010, Kirkland and TKO repeatedly made false and misleading statements to investors and potential investors including but not limited to: (a) if they invested with the defendants through a managed account at Westover Energy Trading Partners, LLC (Westover), there would be no risk of losing their principal; (b) they would earn 2% to 3% per month; (c) a specified New York real estate developer/owner was a manager of Westover; and (d) the New York real estate developer/owner’s substantial wealth would be used to indemnify investors against loss. Investors in the United States and Great Britain have invested at least $800,000 with the defendants based upon those false representations.

Investment Overvaluation and Valuation Misstatement – South Florida Investment and Mismanagement Litigation and FINRA Arbitration Attorney

Published on: September 25, 2013 | By Russell L. Forkey, P.A.

JPMorgan Chase Agrees To Pay $200 Million and Admits Wrongdoing to Settle SEC Charges – Firm Must Pay $920 Million in Total Penalties in Global Settlement

The Securities and Exchange Commission (Commission) recently charged JPMorgan Chase & Co. with misstating financial results and lacking effective internal controls to detect and prevent its traders from fraudulently overvaluing investments to conceal hundreds of millions of dollars in trading losses.

The SEC previously charged two former JPMorgan traders with committing fraud to hide the massive losses in one of the trading portfolios in the firm”s chief investment office (CIO). The SEC”s subsequent action against JPMorgan faults its internal controls for failing to ensure that the traders were properly valuing the portfolio, and its senior management for failing to inform the firm”s audit committee about the severe breakdowns in CIO”s internal controls.

Private Equity – Private Investment – Private Security – Florida Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney

Published on: September 25, 2013 | By Russell L. Forkey, P.A.

Private Equity, Private Placement and Private Investment – South Florida Fraud, Misrepresentation and Mismanagement State and Federal Litigation and FINRA Arbitration Attorney:

The Securities and Exchange Commission recently charged the former president of a purported private equity real estate firm based in San Bernardino, Calif., with defrauding nearly 500 investors who purchased promissory notes under the false premise that they were secured by specific properties or other collateral.

The SEC alleges that Larry Polhill used his company American Pacific Financial Corporation (APFC) to buy and sell real estate and distressed assets, and he offered investors the opportunity to invest in the company through unregistered notes that would yield them interest payments of 5 to 17 percent per year. However, the collateral that Polhill and APFC claimed made the investments secure was often non-existent or otherwise impaired. The properties underlying the investments were sometimes even sold without notice to investors. When APFC eventually filed for bankruptcy, it named the investors as unsecured creditors who were owed nearly $160 million. None of Polhill’s investment offerings were registered with the SEC.

Benjamin S. Staples and Benjamin O. Staples – Florida Terminally Ill Investment and Securities Fraud Litigation and FINRA Arbitration Attorney

Published on: September 22, 2013 | By Russell L. Forkey, P.A.

SEC Charges Father and Son in South Carolina for Fraudulent Program Designed to Profit From Fate of Terminally Ill

The Securities and Exchange Commission recently charged a father and son in Lexington, S.C., with operating a fraudulent investment program designed to illegally profit from the deaths of terminally ill individuals.

The SEC alleges that Benjamin S. Staples and his son Benjamin O. Staples deceived brokerage firms and bond issuers and made at least $6.5 million in profits by lying about the ownership interest in bonds they purchased in joint brokerage accounts opened with people facing imminent death who were concerned about affording the high costs of a funeral. The Stapleses recruited the terminally ill individuals into their program by offering to pay their funeral expenses if they agreed to open the joint accounts and sign documents that relinquished their ownership rights to the accounts or any assets in them.