We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

   Strategies & Market TrendsAnthony @ Equity Investigations, Dear Anthony,

Previous 10 Next 10 
From: scion4/25/2012 8:52:07 AM
   of 122081
Source's Cover Blown by SEC

Updated April 25, 2012, 6:50 a.m. ET

Federal securities regulators, in a sensitive breach, inadvertently revealed the identity of a whistleblower during a probe of a firm that ran a stock trading platform.

The gaffe by the Securities and Exchange Commission occurred during an investigation of Pipeline Trading Systems LLC when an SEC lawyer showed an executive who was being questioned a notebook from the whistleblower filled with jottings about trades, calls and meetings. The executive says he recognized the handwriting.

Pipeline, the operator of an alternative trading system known as a "dark pool," reached a settlement in October with the SEC, which asserted in findings released at the time that Pipeline had misled investors about how their orders were filled.

Pipeline, which didn't admit or deny the allegations, was the subject of a page-one Wall Street Journal article earlier this month. The article didn't name the whistleblower, but he has now agreed to be publicly identified. He is Peter C. Earle, 41, a former employee of a Pipeline trading affiliate. Mr. Earle said he was "disappointed" the SEC took steps in its probe that ended up disclosing his identity to Pipeline.

The SEC confirmed showing the notebook to an executive of the business it was investigating. SEC officials said there is always a risk a whistleblower's identity might be disclosed during an investigation, but its practice has been to avoid unnecessarily revealing an informant's identity.

"Our review of the facts confirms that we followed this practice in this case," an SEC spokesman said in a statement. "While we utilize evidence from all witnesses, we do not reveal which witnesses may be cooperating with the government except as required by law or the governing rules of civil procedure."

The SEC is encouraging whistleblowers to come forward under the 2010 Dodd-Frank regulatory overhaul. A provision lets tipsters claim up to 30% of penalties collected by the U.S. for their help in unearthing improper practices—which some market watchers see as a growing issue in the modern age of computerized, opaque markets.

The SEC has received more than 1,000 tips from people seeking to collect under the law since it took effect in August, and it is expected to announce its first recipient within weeks, according to people familiar with the matter. Mr. Earle isn't eligible because he contacted the SEC before the law took effect.

The notebooks in the Pipeline matter, which Mr. Earle said he gave to SEC lawyers in early 2010, helped frame questions the agency asked during the probe of Pipeline, according to people familiar with the investigation.

The person shown the notebook (in a November 2010 SEC interview), Gordon Henderson, was the head of Pipeline's trading affiliate, Milstream Strategy Group. He said in an interview that he previously suspected Mr. Earle was an SEC informant. Mr. Henderson's desk was near Mr. Earle's in Milstream's New York office, and he said he recognized Mr. Earle's handwriting in the notebook.

Mr. Henderson said he was allowed to go through it and look at details on its pages. He said he discussed the matter with others at Pipeline, saying: "Pete's the whistleblower."

The SEC lawyer who showed him the notebook was Daniel Walfish, according to people familiar with the matter. Mr. Walfish declined to comment.

For years, whistleblowers sought rewards from the SEC of up to 10% of regulatory penalties for passing along information pertaining to insider-trading cases. (The Pipeline matter didn't involve insider trading.)

The Dodd-Frank law broadened this and raised the bounty to as much as 30% of penalties collected by the government if original information from a whistleblower leads to enforcement actions and sanctions totaling more than $1 million.

SEC enforcement chief Robert Khuzami said at a conference last week the agency is getting about six or seven tips a day under the new program, some of "particularly high quality." That is up from roughly six applications for remuneration per year filed by tipsters in the much narrower rewards arrangement prior to Dodd-Frank's adoption.

The program reflects the reality that employees may put their jobs or careers at risk by speaking with their bosses or regulators about their concerns. "This is why you pay…bounties, so there's an incentive," said Reuben Guttman, a lawyer who represents tipsters. "You would hope there are certain precautions taken by the agency to protect confidentiality."

In a list of frequently asked questions about the law, the SEC says it is "committed to protecting your identity to the fullest extent possible" but may be required to disclose it in certain instances, such as an administrative or court proceeding. The agency adds, "We may use information you have provided during the course of our investigation" and "in appropriate circumstances, we may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities."

Michael Rubenstein for The Wall Street Journal

The identity of whistleblower Peter C. Earle, pictured near his Kinnelon, N.J., home, was inadvertently revealed by an SEC lawyer who showed one of his notebooks filled with jottings about trades, phone calls and meetings, to an executive at the trading business the agency was investigating

Mr. Earle, a West Point graduate, began trading stocks on Wall Street in the 1990s. He worked at several day-trading firms. In 2005 he joined Pipeline's trading affiliate, eventually named Milstream.

Pipeline ran a platform designed to fill stock investors' buy or sell orders privately, without disclosing them to the wider world of Wall Street—the dark pool system. The idea, as advertised by Pipeline, was software would privately match one customer's order to buy shares with another customer's sell order.

Because Pipeline didn't have enough customers to ensure quick order execution when it started up in 2004, its parent company, also bearing the Pipeline name, created a trading unit to fill orders. To fill a Pipeline customer's buy order, for instance, this affiliate could first buy shares of the stock on the open market and then use these to fill the customer's order.

Pipeline hoped to attract enough trading clients so it wouldn't need this affiliate forever. However, the SEC said in outlining its findings when it settled with Pipeline, the trading affiliate continued to fill most orders, even as Pipeline was telling customers their orders were being filled via a matchup with other customers. A spokesman for Pipeline acknowledged to the Journal that it had "misinformed" clients.

Mr. Earle said he and other employees were told that Pipeline's long-term goal was to turn the trading affiliate into an operation that could operate independently of the Pipeline dark pool.

Mr. Earle said that a few months after he joined the trading affiliate, he raised concerns internally about Milstream's trading activities. During trading days, he also began writing notes, which included observations about trading activities and conversations at the affiliate.

In December 2005, he emailed Mr. Henderson that an incentive system used to reward traders had "the potential for perverse incentives," according to a copy of the email reviewed by the Journal. Mr. Henderson said he didn't recall the email.

Mr. Earle said he made other internal complaints about trading, and was fired on April 3, 2009. Mr. Henderson said the reasons for dismissal included poor performance and a belief Mr. Earle was having an affair with the wife of another Milstream trader at the time. Mr. Earle denied both allegations, calling the notion of poor performance "ridiculous."

Mr. Earle first told the SEC about Pipeline's activities in an April 6, 2009, email. In it, he said he had "extensive information" about "an ongoing situation of which I have first hand knowledge, having worked at the firm for several years."

Mr. Earle said he never told any Pipeline employee about his involvement with the SEC. But soon after he contacted the regulators, he said, he told them that some Pipeline employees were suspicious he had spoken to the agency.

"Pipeline's efforts at all junctures have been to malign me. That's one of the reasons I went to the SEC in the first place," Mr. Earle said. Pipeline, which this year changed its named to Aritas Securities LLC, declined to comment on Mr. Earle's remark.

Mr. Earle said he has been the target of ire from current and former Pipeline employees. He said he ran into a Pipeline executive while walking in New York's Times Square in early December, a little over a month after the SEC fined Pipeline $1 million and two of its executives $100,000 each for failing to disclose Milstream's activities to clients.

Mr. Earle said he asked the executive, Reid Curley, how he was doing. "Just trying to clean up your wreckage," he said Mr. Curley responded. Mr. Curley declined to comment.

Write to Scott Patterson at and Jenny Strasburg at

A version of this article appeared April 25, 2012, on page A1 in some U.S. editions of The Wall Street Journal, with the headline: Source's Cover Blown By SEC.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)

To: scion who wrote (114663)4/25/2012 8:58:35 AM
From: scion
   of 122081
SEC enforcement chief Robert Khuzami said at a conference last week the agency is getting about six or seven tips a day under the new program, some of "particularly high quality." That is up from roughly six applications for remuneration per year filed by tipsters in the much narrower rewards arrangement prior to Dodd-Frank's adoption.

Share RecommendKeepReplyMark as Last Read

From: scion4/25/2012 9:40:59 AM
   of 122081
US regulator warns investors against pre-IPO fraud

Tue Apr 24, 2012 7:11pm EDT

* SEC alerts public about pre-IPO investment scams

* Says is aware of "a number of complaints"

* Alert comes weeks after capital-raising law passed

By Alexandra Alper

WASHINGTON, April 24 (Reuters) - The U.S. securities regulator warned investors on Tuesday to beware of scams offering shares of hot tech companies such as Twitter and Facebook that have not yet gone public.

The alert, posted on the Securities and Exchange Commission's website, said that, while legitimate offerings of pre-IPO shares are not uncommon, they generally are limited to sophisticated investors.

The SEC said it is "aware of a number of complaints and inquiries about these types of frauds, which may be promoted on social media and internet sites, by telephone, email, in person, or by other means."

The SEC pointed to pre-IPO schemes in recent years as reason for concern.

Earlier this month, the U.S. District Court for the Southern District of Florida in Miami i ssued an order in a bid to halt an allegedly fraudulent sale of securities of an investment vehicle that purportedly held pre-IPO shares of Facebook.

The SEC's warning also comes just weeks after President Barack Obama signed into a law a bill making it easier for firms to raise capital and solicit investors.

Some SEC officials, Democrats, and industry watchdogs have sharply criticized the law for rolling back critical shields that protect unsophisticated investors from securities fraud.

The law, which was held up as a job-creation bill, will make it easier for companies to solicit private investors and relaxes filing requirements associated with initial public offerings.

It also allows startup companies to engage in crowdfunding, in which investors take small stakes in companies over the Internet.

Share RecommendKeepReplyMark as Last Read

From: scion4/25/2012 12:38:49 PM
   of 122081
Attorney, Wall Street Trader, and Middleman Settle SEC Charges in $32 Million Insider Trading Case


Washington, D.C., April 25, 2012 — The Securities and Exchange Commission today announced a settlement in a $32 million insider trading case filed by the agency last year against a corporate attorney and a Wall Street trader.

Additional Materials
SEC Complaint

The SEC alleged that the insider trading occurred in advance of at least 11 merger and acquisition announcements involving clients of the law firm where the attorney — Matthew H. Kluger — worked. He and the trader — Garrett D. Bauer — were linked through a mutual friend now identified as Kenneth T. Robinson, who acted as a middleman to facilitate the illegal tips and trades. Kluger and Bauer used public telephones and prepaid disposable mobile phones to communicate with Robinson in an effort to avoid detection. Robinson, now also charged, cooperated in the SEC’s investigation.

Bauer, Kluger, and Robinson each agreed to give up their ill-gotten gains plus interest in order to settle the SEC’s charges. Those amounts under the terms of their consent agreements are approximately $31.6 million for Bauer, $516,000 for Kluger, and $845,000 for Robinson.

"Bauer, Kluger and Robinson schemed to outsmart law enforcement by structuring their relationships and communications to avoid detection and frustrate insider trading detection mechanisms," said Robert Khuzami, Director of the SEC's Division of Enforcement. "They were ultimately unsuccessful due to the SEC's sustained efforts to combat hard-to-detect insider trading, particularly among lawyers and other gatekeepers who have solemn duties to maintain the confidentiality of information entrusted to them."

In parallel criminal actions brought by the U.S. Attorney’s Office for the District of New Jersey, Bauer, Kluger, and Robinson have all pled guilty and are scheduled to be sentenced on June 4, 2012.

Acknowledging the facts to which they have admitted as part of their guilty pleas, Bauer, Robinson, and Kluger consented to final judgments in the SEC’s civil actions that are subject to court approval. In the proposed final judgments, Bauer would be ordered to disgorge $30,812,796 plus prejudgment interest of $859,135; Kluger would be ordered to disgorge $502,500 plus prejudgment interest of $14,010; and Robinson would be ordered to disgorge $829,129 plus prejudgment interest of $16,106. They also would be permanently enjoined from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Each of the orders of disgorgement will be deemed partially satisfied and offset on a dollar-for-dollar basis by assets seized at the direction of the U.S. Attorney’s Office for the District of New Jersey based upon orders of forfeiture.

Bauer also has agreed to settle a related SEC administrative proceeding by consenting to the entry of an order that would bar him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock. Kluger agreed to settle a related administrative proceeding by consenting to the entry of an order which would permanently suspend him from appearing or practicing before the SEC as an attorney pursuant to Commission Rule of Practice 102(e).

The terms of the proposed settlement with Robinson reflect credit given to him by the SEC for his substantial assistance and cooperation in the investigation.

The SEC’s investigation was conducted by Colleen K. Lynch, David W. Snyder and John S. Rymas, members of the Market Abuse Unit in the Philadelphia Regional Office, under the supervision of Daniel M. Hawke, Chief of the Market Abuse Unit and Regional Director, and Elaine C. Greenberg, Associate Regional Director for Enforcement in the Philadelphia Regional Office. G. Jeffrey Boujoukos and Scott A. Thompson have been handling the litigation.

The SEC brought this enforcement action in coordination with the U.S. Attorney’s Office for the District of New Jersey. The SEC also appreciates the assistance of the Federal Bureau of Investigation, Financial Industry Regulatory Authority, and Options Regulatory Surveillance Authority.

# # #

Share RecommendKeepReplyMark as Last Read

From: StockDung4/25/2012 5:27:04 PM
   of 122081
SEC secures $4.8-million (U.S.) penalty for Glisson

2012-04-25 14:25 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-CMKX) CMKM Diamonds Inc

by Mike Caswell

The U.S. Securities and Exchange Commission has secured $4.8-million in disgorgement and fines for Marco Glisson, a Las Vegas man who sold shares in Saskatchewan diamond explorer CMKM Diamonds Inc. after the stock was deregistered in 2005. (All figures are in U.S. dollars.) Mr. Glisson agreed to the penalties as part of a negotiated settlement, without admitting any wrongdoing. He also agreed to a permanent penny stock ban and to an order barring future violations.

The penalties stem from an odd scheme in which the SEC said Mr. Glisson arranged to buy and sell shares of CMKM through chat forums. He would agree to purchase large volumes of the stock for a fraction of a cent, and then arrange a sale for a slightly higher price. In this manner he made $2.7-million, the SEC claimed.

The "trades" took place after the SEC had deregistered the stock in 2005, citing a massive fraud run by Canadian promoter Urban Casavant and others. (In a separate case, the SEC claimed that Mr. Casavant and British citizen John Edwards dumped billions of the company's shares while promoting the non-existent "Casavant diamond brand" from 2002 to 2004. They touted the stock at drag racing events, and found around 40,000 buyers, the SEC said. Both men face criminal charges in the U.S., for which they have not yet answered.)

SEC's complaint against Glisson

The SEC named Mr. Glisson in a civil complaint filed in the District of Nevada on Jan. 15, 2009. It identified him as a 53-year-old automobile worker who had never been registered as a broker or dealer.

In December, 2005, after the SEC had deregistered CMKM (meaning it could no longer be lawfully traded), Mr. Glisson set himself up as a dealer of the company's shares, the complaint stated. He frequented Internet chat rooms where current and prospective CMKM shareholders still exchanged information and propagated rumours about the company. (During the promotion, CMKM developed a substantial group of followers that remained interested even after the SEC had deregistered the stock.)

Mr. Glisson, who used the name "Deli dog" or "Deli," posted messages stating that he was willing to buy and sell the stock, and provided contact information to interested parties. Typically, he offered sellers 0.01 cent per share, although he sometimes paid as much as 0.05 cent, the SEC said. He usually sold at prices between 0.03 cent and 0.025 cent.

As the prices were small, he purchased billions of CMKM shares from individuals throughout Canada and the United States, according to the SEC. Between December, 2005, and May, 2006, he sold stock in at least 100 transactions, grossing $850,000, the SEC claimed.

Essential to his scheme, according to the complaint, was the assistance of CMKM's transfer agent, 1st Global Stock Transfer LLC. The firm agreed to confirm the validity of CMKM stock certificates that Mr. Glisson bought, and then to cancel and reissue those certificates in accordance with his instructions, the SEC said. (The regulator has since revoked 1st Global's registration for its role in the CMKM promotion. The firm repeatedly issued stock for Mr. Edwards or Mr. Casavant based on fraudulent or flimsy paperwork, the SEC claimed.)

In June, 2006, after being contacted by the SEC, Mr. Glisson agreed to stop dealing in CMKM shares. He suspended the buying and selling for about three months, but resumed in September, 2006, according to the complaint. He then commented in Internet forums that he would not stop until ordered to do so by a court.

Mr. Glisson did take some steps to avoid detection after resuming, the complaint stated. Initially he started routing wire transfers from his buying and selling through an account in his wife's name. He then stopped using wire transfers altogether, and relied on payments exclusively by mail, the SEC said.

The scheme came to an end in April, 2007, when 1st Global stopped performing transfer agent services for Mr. Glisson. The SEC said he tried to keep the scheme alive by entering into private contractual arrangements with prospective buyers, but that effort was unsuccessful.

Mr. Glisson's penalty is contained in a consent judgment handed down on April 11, 2012. His $4.8-million fine includes disgorgement of $2.76-million in profits, interest of $670,000 and a $1.4-million civil penalty. The disgorgement portion includes a provision that allows the SEC to seek a contempt of court order if Mr. Glisson fails to pay within 14 days.

Reader Comments - Comments are open to paying subscribers of Stockwatch and unmoderated, although libelous remarks, obscene language and impersonations may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.
For information regarding Canadian libel law, please view the University of Ottawa's FAQ regarding Defamation and SLAPPs.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)

To: StockDung who wrote (114667)4/25/2012 5:54:13 PM
From: scion
   of 122081
SEC Charges Former Morgan Stanley Executive with FCPA Violations and Investment Adviser Fraud


Washington, D.C., April 25, 2012 — The Securities and Exchange Commission today charged a former executive at Morgan Stanley with violating the Foreign Corrupt Practices Act (FCPA) as well as securities laws for investment advisers by secretly acquiring millions of dollars worth of real estate investments for himself and an influential Chinese official who in turn steered business to Morgan Stanley’s funds.

Additional Materials
SEC Complaint

The SEC alleges that Garth R. Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, had a personal friendship and secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. – a Chinese state-owned entity with influence over the success of Morgan Stanley’s real estate business in Shanghai. Peterson secretly arranged to have at least $1.8 million paid to himself and the Chinese official that he disguised as finder’s fees that Morgan Stanley’s funds owed to third parties. Peterson also secretly arranged for him, the Chinese official, and an attorney to acquire a valuable Shanghai real estate interest from a Morgan Stanley fund. Peterson was acquiring an interest from the fund but negotiated both sides of the transaction. In exchange for offers and payments from Peterson, the Chinese official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. Peterson’s deception, self-dealing, and misappropriation breached the fiduciary duties he owed to Morgan Stanley’s funds as their representative.

Peterson agreed to a settlement of the SEC’s charges in which he will be permanently barred from the securities industry, pay more than $250,000 in disgorgement, and relinquish his interest in the valuable Shanghai real estate (currently valued at approximately $3.4 million) that he secretly acquired through his misconduct. The U.S. Department of Justice has filed a related criminal case against Peterson.

“Peterson crossed the line not once, but twice. He secretly bribed a government official to illegally win business for his employer and enriched himself in violation of his fiduciary duty to Morgan Stanley’s clients,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This case illustrates the SEC’s commitment to holding individuals accountable for FCPA violations, particularly employees who intentionally circumvent their company's internal controls.”

Kara Novaco Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, added, “As a rogue employee who took advantage of his firm and its investment advisory clients, Peterson orchestrated a scheme to illegally win business while lining his own pockets and those of an influential Chinese official.”

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Peterson’s violations occurred from at least 2004 to 2007. His principal responsibility at Morgan Stanley was to evaluate, negotiate, acquire, manage and sell real estate investments on behalf of Morgan Stanley’s advisers and funds. He was terminated in 2008 due to his FCPA misconduct.

The SEC alleges that Peterson led Morgan Stanley’s effort to build a Chinese real estate investment portfolio for its real estate funds by cultivating a relationship with the Chinese official and taking advantage of his ability to steer opportunities to Morgan Stanley and his influence in helping with needed governmental approvals. Morgan Stanley thus partnered with Yongye on a number of significant Chinese real estate investments. At the same time, Peterson and the Chinese official expanded their personal business dealings both in a real estate interest secretly acquired from Morgan Stanley as well as by investing together in Chinese franchises of well-known U.S. fast food restaurants. Peterson failed to disclose these investments in annual disclosures that Morgan Stanley required him to make as part of his employment.

According to the SEC’s complaint, Peterson openly credited the Chinese official with helping obtain approvals required from other Chinese government entities for a deal to close. He wrote to several Morgan Stanley employees in response to an e-mail discussing the terms of one of Yongye’s purported investments, “Everyone pls keep in mind the big picture here. YY gave us this deal. ... So we owe them a favor relating to this deal. ... This should be very easy and friendly.” In another e-mail a week later, Peterson described “YYI” as “our friends who are coming in because WE OWE THEM A FAVOR.”

The SEC alleges that a Morgan Stanley compliance officer specifically informed Peterson in 2004 that employees of Yongye, a Chinese state-owned entity, were government officials for purposes of the FCPA. Peterson also received at least 35 FCPA compliance reminders from Morgan Stanley, but nonetheless committed the FCPA violations.

The SEC’s complaint charges Peterson with violations of the anti-bribery, books and records and internal control provisions of the FCPA, and with aiding and abetting violations of the anti-fraud provisions of the Investment Advisers Act of 1940. Peterson consented to a court order requiring him to disgorge $254,589 and relinquish to a court-appointed receiver the interest he secretly acquired from Morgan Stanley’s fund in the Jin Lin Tiandi Serviced Apartments. Peterson’s interest has a current estimated value of approximately $3.4 million. The proposed settlement is subject to court approval. Peterson also has consented to permanent industry bars based on the anticipated entry of the injunctions against him and his criminal conviction.

The SEC acknowledges the assistance of the Fraud Section of DOJ’s Criminal Division, the U.S. Attorney’s Office for the Eastern District of New York, and the Federal Bureau of Investigation. Morgan Stanley, which is not charged in the matter, cooperated with the SEC’s inquiry and conducted a thorough internal investigation to determine the scope of the improper payments and other misconduct involved.

The SEC’s investigation was conducted by David Neuman of the Asset Management Unit and Assistant Director Greg Faragasso, and the litigation was led by Richard Hong.

# # #

Share RecommendKeepReplyMark as Last Read

From: peter michaelson4/26/2012 10:46:16 AM
   of 122081
Can anyone tell me what happened in the end with Monk's Den at iHub? Were there legal consequences or were they simply kicked out of iHub? Or something else.....

Penny stock falls despite campaign

Cascadia Investments, a Tacoma-based penny-stock company, has been championed for a year by a website that claims it can organize traders to "lock up" all available shares in a company and cause its price to go through the roof.

Egged on by Monk's Den and its financial guru, Jerry Williams, they've banked on the theory that their group can buy up all the freely trading shares of CDIV.

Then, the story goes, short-sellers who've bet against the stock will have to pay dearly to obtain the shares needed to cover their obligations.

"It really doesn't matter what the company does," a Monk's Den leader under the screen name Lone Grey wrote last fall on the InvestorsHub website, which has accumulated an astonishing 158,000 posts cheerleading for CDIV. "While I feel Cascadia is fundamentally sound and will grow nicely, take a peek at what we did with two worthless companies."

He went on to describe scenarios where "a group of disciplined investors" bought up all the freely trading shares of companies and supposedly drove up the price short-sellers had to pay.

Share RecommendKeepReplyMark as Last Read

From: scion4/26/2012 8:08:04 PM
   of 122081
Six Charged in Financing-Fraud Case

Updated April 26, 2012, 7:12 p.m. ET

PHILADELPHIA—The Justice Department said Thursday that it indicted six men on charges of tricking investors into paying upfront fees to connect them with lenders, without delivering. Prosecutors say the men defrauded more than 800 people of at least $10 million.

The men charged are either current or former employees of Remington Financial Group, later renamed Remington Capital, or had ties to the company. The Scottsdale, Ariz., firm describes itself on its website as a financing specialist that helps secure commercial loans for business ventures, particularly those unable to get bank financing.

The U.S. Attorney's Office in Philadelphia, where the company operated a branch office, said the men fraudulently induced hundreds of people to pay Remington advance fees of more than $10,000 apiece, based on allegedly false representations that Remington would line up investors or lenders to fund real-estate and other business projects. Prosecutors said the vast majority of Remington's business was fraudulent, but there may have been some legitimate transactions.

Prosecutors say Remington failed to provide or arrange the purported funding, and in some cases cited problems with the proposed projects so that Remington could blame its failure to provide financing on the victims. The alleged fraud took place between 2005 and 2011, prosecutors said.

"In this circumstance, the reality was Remington did not have the money or the backing to finance the projects," Zane David Memeger, U.S. attorney for the Eastern District of Pennsylvania, said at a news conference in Philadelphia on Thursday. Remington didn't return a call seeking comment.

Andrew Bogdanoff, of Scottsdale, Remington's founder and chairman, was charged with conspiracy to commit mail and wire fraud, and related charges.

The others charged in connection with the case were: Matthew McManus, of Glenside, Pa., Remington's former president who ran its Philadelphia office; Shayne Fowler, of Scottsdale, Ariz., who worked as a Remington account executive; Joel Nathanson, of San Diego, who also worked as an account executive at the company; Frank Vogel, of Rochester Hills, Mich., a broker who allegedly referred customers to Remington; and Aaron Bogdanoff, who is the son of Andrew Bogdanoff and who occasionally worked for Remington.

The six men couldn't immediately be reached. Lawyers for three of the men didn't return calls seeking comment; the Justice Department said Mr. Vogel doesn't have an attorney.

Mr. McManus's attorney, Lisa Mathewson, said her client intends to fight the charges. "The charges appear to relate to Mr. McManus's relationship with a former business associate in Arizona," she said. "They do not reflect on Mr. McManus's own Philadelphia-based business, nor on his excellent reputation for closing successful business deals with integrity."

Mr. Fowler's attorney, Michael Piccarreta, said he hadn't seen the indictment.

None of the men are in custody and no court date has been set, prosecutors said. All of the men except Aaron Bogdanoff were charged with conspiracy to commit mail and wire fraud, committing mail and wire fraud, and related charges. Aaron Bogdanoff was charged with conspiracy to defraud the U.S. and filing false tax returns.

If convicted, all except Aaron Bogdanoff could face prison terms of at least 10 years under federal sentencing guidelines. Aaron Bogdanoff could face two years in prison under guidelines, Mr. Memeger said.

The Wall Street Journal reported in June 2008 that federal and state authorities in Pennsylvania and California were investigating Remington over allegations of advance-fee fraud.

One of the alleged victims was the former acting mayor of San Diego, Ed Struiksma, who said he paid $25,000 in fees to Remington, but received no financing for land he wanted to buy for a housing development.

Write to Peter Loftus at

Share RecommendKeepReplyMark as Last Read

From: scion4/27/2012 9:33:09 AM
   of 122081
Trading Suspensions: 34-66869 Apr. 27, 2012 Berman Center, Inc., Cyberkinetics Neurotechnology Systems, Inc., and Java Detour, Inc.

See also Order

Share RecommendKeepReplyMark as Last Read

From: StockDung4/28/2012 8:12:21 AM
   of 122081
"The Mass Psychology of Suckers Part 1 & 2– Sefe, Inc. (SEFE)"
(CMKX included)

Unless it is to cover…..Skip navigation

AboutThe Mass Psychology of Suckers Part 1 – Sefe, Inc. (SEFE)April 23, 2012 – 7:39 pm
Posted in Bucket Shops, Fail, Morons, Reverse Mergers
Every once in a while someone will ask us here at BuyersStrike! about a small company that is, in our eyes, obviously a stock promotion. But to some it seems real. They want to believe it is real. And now is one of those times. Introducing SEFE, Inc. (SEFE), a company that hits new highs on increasing volume every single day. A company that today possesses a market cap of over $110mm, but at the end of 2011 had less than $6000.00 in the bank.

SEFE is also the newest client of Geoffrey Eiten‘s notorious stock pumping investor relations shop OTC Financial Network aka National Financial Communications, and Paul Cohen‘s ridiculous Grassroots Research aka Cohen Research. More on those two fine fellows in a bit, but first lets look at the origins of SEFE, Inc.

Sleepy Indio, California, most famous for the Coachella Valley Music Festival every spring, was also in 2005 the birthplace of SEFE. SEFE began life as a humble Nevada incorporated shell called Midnight Candle Company (MCDL). The sole officer, director, and 95.6% majority shareholder was Ms. Helen C. Carey. The company was being run out of a 1700 square foot condominium at 79013 Bayside Court in Indio. See it here.

A woman with the same name, and of the same age, shows up linked to several properties in the Phoenix/Scottsdale area of Arizona. Remember that.

In January 2006, shares of Midnight Candle were listed for trading on the Pink Sheets. By May 2008, enough time had passed to “season” the shell, and activity began. First Helen decided to do a 30 for 1 forward split of the stock, and to increase the amount of authorized shares to 200,000,000.

Then, sometime between May and July of 2008, a gentleman named Patrick Deparini linked up with Helen and became the CFO. According to his resume, Deparini went to school at the University of Nevada – Las Vegas in 1993, finally emerging with a B.S. in Finance in 1999. This genius took six years to get a degree from UNLV. One wonders who else was fighting for the rights to hire this wunderkind. Midnight Candle must have been lucky.

Or was it something else, different from luck? For Mr. Deparini’s resume shows lots of fascinating, overlapping work experience. From 2001 up until this very day Patrick has worked for the Nascent Group:

Nascent Group, Inc.
May 2001 – Present (11 years)

Nascent Group, Inc. is a boutique consulting services firm. We are a group of attorneys, CPAs and consultants that work hard to obtain results for our clients in both a timely and cost-effective manner. We are a full-service team with a great deal of experience and expertise in the following:

* Taking companies public
* Private and public securities offerings

In reality the Nascent Group is one of many reverse-merger schlock house located in Las Vegas. Check out their website here. At the same time that Patrick was working in the dirtiest part of the stock market at Nascent Group, he was also working as a lowly paralegal.

Law Offices of Harold P. Gewerter, Esq., Ltd.
2001 – 2004 (3 years)

• Formed securities law and litigation division for the law firm.
• Provided regulatory and accounting services to clients.
• Marketed the firm’s services to attract clients and negotiated contract terms.
• Grew client base to over 100 companies across the US and Internationally.
• Communicated with FINRA, SEC and various State Securities Divisions.

Wow! If Patrick formed the securities law and litigation division, he must have been some amazing paralegal. Or is Patrick just buffing his resume a lot?

Gewerter has been practicing law since 1979, and his business appears to be almost entirely securities law and litigation. The Las Vegas law firm of Harold P. Gewerter is connected to many penny stocks, including two that seem to do nothing more than create and promote more reverse merger trash! Check out the website for Gerwerter’s Crown Equity Holdings (CRWE) a one and a half cent special, and under a penny pinksheeter Public Company Management Corp (PCMC). However, Harold is most well known for his role as John Edwards‘ attorney in the CMKM Diamonds (CMKX) scam. Edwards was instrumental in putting the CKMX deal together in the first place. According to an article in the Las Vegas Review-Journal:

The scheme started when Edwards did a reverse merger between his public company, CMKM, and several private Canadian companies controlled by Urban Casavant, according to the order.

Casavant was chief executive and chairman of CMKM while Edwards, using the alias Ian McIntyre, was director of post-term matters.

The Las Vegas Review Journal has done a great job reporting on the CMKX fraud. Read more about it here, and more here, and in the New York Times, here and here.

CMKX was quite a phenomenon, although an obvious fraud its low share price and massive media attention created a large following of shareholders who were virtually cult-like. While likely accidental, the frequency and repetition of the CMKM Diamonds message, name, and ticker, would have made Goebbels proud. Many CMKX shareholders, like China Agritech (CAGC) shareholders, still have not accepted that they were scammed, check out this moron who still appears to believe that the SEC, the DTCC, and other actors secretly conspired to keep untold riches out of CMKX shareholders’ hands.

But enough for today. Let’s come back to Patrick, Midnight Candle, Geoff Eiten and SEFE very soon…

« Last Edit: Apr 26, 2012, 12:40am by travelerone3 »

Read more:

AboutThe Mass Psychology of Suckers Part 2 – Sefe, Inc. (SEFE)April 24, 2012 – 4:14 pm
Posted in Bucket Shops, Fail, Morons, Reverse Mergers
When we ended The Mass Psychology of Suckers Part 1, we were examining the unique resume of SEFE (aka Midnight Candle) CFO, Patrick Deparini. At first glance he appears to be an odd choice as CFO. He had no real experience working in finance, nor in the candle business. His real job was as a paralegal at the law firm of Harold P. Gewerter, Esq. Ltd.

Harold Gewerter’s most famous client, John Edwards*, was mighty busy by the mid-00s. Not only was John the mastermind behind the CMKX fraud, but he was also behind Pinnacle Business Management (PBCM), US Canadian Minerals (UCAD), St. George Minerals (SGGM), BioTech Medics (BMCS), Global Diamond Exchange (GBDX), Equitable Mining (EQBM), OMDA Oil and Gas (OOAG), and Grand Entertainment & Music (GMSC). Read more in this excellent piece by Janice Shell, here, or go to Pacer, and read the entire USA v. Turino, Edwards, et. al. indictment of March 24, 2010.

So, perhaps some of John’s industriousness rubbed off on Patrick, for soon Patrick started his very own little shell company. In late 2004, young Patrick, then only 29, was listed as the CEO and majority shareholder of Las Vegas based Nascent Wine Company (NCTW) today a pink sheet stock that sells for less than 1/4 of a cent per share.

How did SEFE (fka MDCL) CEO, Helen C. Cary, sitting in Indio, CA and Patrick Deparini, in the offices of a sleazy law firm in Las Vegas, find one another?

The lawyer that is listed on the original SB-2 filing (see here) for NCTW was Wendy E. Miller. Wendy was not only an attorney at the firm of Harold P. Gewerter, Esq. Ltd., (see here) but she also represented Harold in the most recent SEC v CMKX case, filed in November of 2011.

The lawyer that is listed on the original SB-2 filing for MCDL (nka SEFE)? Wendy E. Miller yet again (check it out here). What a surprise!

First Gewerter‘s firm creates a shell, then they install one of their own as CFO, but now what? By the end of 2008, SEFE (fka MDCL) has still not generate a dime in revenues, and has only $272.00 in the bank. By the end of 2009, according to their 10K, the company still has no revenues and only $11 remains on the balance sheet.

Where is the money coming from to pay the ongoing costs of the shell? A 10Q filing, available here, for the quarter ended March 31, 2010 gives a clue, when it explains the $16k in Notes Payable on the balance sheet:

Represents numerous unsecured loans aggregating $16,535 from a non-affiliated third-party that loans the Company money on an as-needed basis. The notes are due on demand and bear no interest.

What non-affiliated third-party would ever loan money to a candle company, that has not had a penny in revenues since its formation almost 6 years prior, on an as-needed basis at no interest? Clearly something is up. And we will not have to wait long to find out…

*Edwards‘ wife Diana Lee Edwards (fka Diana Lee Flaherty) is also a felon, and a onetime fugitive from justice herself. She was involved in the Phoenix Metals USA II (PMTU) scam in the mid 90s. Read more about her and PMTU here and here.

Read more:

Share RecommendKeepReplyMark as Last ReadRead Replies (2)
Previous 10 Next 10