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   Strategies & Market TrendsAnthony @ Equity Investigations, Dear Anthony,


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From: scion6/3/2013 2:29:00 PM
   of 122029
 
SEC Charges Fortune 200 Company for Accounting Deficiencies

FOR IMMEDIATE RELEASE
2013-99

Washington, D.C., June 3, 2013 — The Securities and Exchange Commission today charged a Bellevue, Wash.-based commercial truck manufacturer and a subsidiary for various accounting deficiencies that clouded their financial reporting to investors in the midst of the financial crisis.

Additional Materials
SEC Complaint
sec.gov

The SEC alleges that PACCAR’s internal accounting controls included ineffective procedures that kept the company from adhering to various accounting rules. PACCAR failed to report the operating results of its aftermarket parts business separately from its truck sales business as required under segment reporting requirements, which are in place to ensure that investors gain the same insight into a company as its executives. PACCAR and its subsidiary also failed to provide complete information about their respective loan and lease portfolios, and PACCAR overstated some loan and lease originations and collections at two foreign subsidiaries in its statement of cash flows.

PACCAR and its subsidiary PACCAR Financial Corp. agreed to settle the SEC’s charges.

“Companies must continually and diligently monitor their internal accounting systems to ensure that the information they are providing investors is accurate and consistent with relevant accounting guidance,” said Michael S. Dicke, Associate Regional Director of the SEC’s San Francisco Regional Office. “The deficient controls and procedures at PACCAR caused inconsistencies in its financial reporting and kept investors and regulators from seeing the company through the eyes of management.”

According to the SEC’s complaint filed in federal court in Seattle, PACCAR is a Fortune 200 company that designs, manufactures, and distributes trucks and related aftermarket parts that are sold worldwide under the Kenworth, Peterbilt, and DAF nameplates. From 2008 through the third quarter of 2012, PACCAR failed to report the results for its parts business as a separate segment from its truck sales as required under Generally Accepted Accounting Principles (GAAP). For example, PACCAR’s 2009 annual report showed $68 million in income before taxes for its truck segment. However, PACCAR documents and board materials reviewed by senior executives depicted the trucks business with a $474 million loss and the parts business with $542 million profit to arrive at the net income before taxes of $68 million. By at least 2008, PACCAR should have been reporting aftermarket parts as a separate segment in its SEC filings, but failed to do so until year-end 2012.

The SEC’s complaint further alleges that PACCAR and PACCAR Financial Corp. failed to maintain accurate books and records regarding their impaired loans and leases, causing them to improperly identify and disclose loans and leases for impairment. As a result, they understated the amounts of their impaired receivables and the specific reserve associated with the receivables in footnotes to their respective 2009 Form 10-K filings. PACCAR understated the amount of its impaired receivables by 65 percent and the amount of the specific reserve associated with the receivables by 78 percent. PACCAR Financial Corp. understated the amounts by 64 percent and 37 percent. As a result of these deficiencies, PACCAR also made inaccurate statements to the SEC’s Division of Corporation Finance regarding its processes for calculating the specific reserves on its impaired receivables.

According to the SEC’s complaint, PACCAR also overstated equal and offsetting amounts in two lines within its statement of cash flows in the second and third quarters of 2009. PACCAR identified these errors during the first quarter of 2010 and reported corrected figures in its second and third quarter filings in 2010.

The SEC’s complaint charges PACCAR with violations of the reporting, books and records and internal control provisions of the federal securities laws, and charges PACCAR Financial Corp. with violations of the books and records and internal control provisions. Without admitting or denying the charges, they agreed to the entry of a permanent injunction and PACCAR agreed to pay a $225,000 penalty. The settlement, which is subject to court approval, takes into account that PACCAR and PACCAR Financial Corp. have implemented a number of remedial measures to enhance their internal accounting controls and improve their compliance with GAAP.

The SEC’s investigation was conducted by Jason Habermeyer and Cary Robnett of the SEC’s San Francisco Regional Office, and Peter J. Rosario of the Washington D.C. office.

# # #

sec.gov

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From: scion6/3/2013 5:03:23 PM
   of 122029
 
SEC Charges Cincinnati Resident and Delaware Firm with Offering Fraud

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. lr-22712 / June 3, 2013

Securities and Exchange Commission v. Detroit Memorial Partners, LLC and Mark Morrow, Civil Action No. 1:13-cv-1817-WSD, United States District Court, Northern District of Georgia

SEC Charges Cincinnati Resident and Delaware Firm with Offering Fraud

On May 30, 2013, the Securities and Exchange Commission filed a civil injunctive action in the Northern District of Georgia against Detroit Memorial Partners, LLC ("DMP") and its managing member, Mark Morrow, a resident of Cincinnati, Ohio. The Commission alleges that Morrow caused DMP to issue approximately $19 million in fraudulent promissory notes and to sell $4.5 million in equity interests. DMP, which purported to be in the business of operating cemeteries, made material misrepresentations and omissions to investors who purchased the promissory notes and equity interests. Most significantly, DMP and Morrow misrepresented that it owned various cemetery properties and that the notes would be secured by those properties in Michigan. In fact, DMP did not own any cemetery properties and none of the notes were secured. Defendants also misrepresented that the proceeds from the notes would be used to acquire and manage cemeteries. In fact, significant amounts of the proceeds were used to fund Morrow's personal equity interest in DMP, for high risk trading in securities and to pay interest owed to other DMP note holders. Morrow also falsely told the equity investors that DMP was debt free, while knowing that DMP had incurred substantial obligations to the note holders.

The complaint further alleges that DMP failed to register the note offering with the commission in violation of the registration provisions of the securities laws.

The notes were sold by Morrow's long-time business associate Angelo Alleca through his investment advisory firm, Summit Capital. Alleca and Summit are the subjects of another lawsuit brought by the Commission charging them with operating a massive Ponzi scheme. See, SEC v. Alleca, et al., Lit. Rel. No. 22485 (Sept. 19, 2012)

According to the Commission's complaint, a total of approximately $19 million in DMP notes have been sold to at least 190 investors in multiple states. Substantial investor funds are missing and unaccounted for.

The Commission seeks an injunction against the Defendants to prevent further violations of the securities laws, disgorgement of their ill-gotten gains, civil penalties and interest.

SEC Complaint
sec.gov

sec.gov

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From: StockDung6/3/2013 5:45:44 PM
   of 122029
 
Prison Inmate Allegedly Pulls Off Scam


By Paul Johnson

Story Created: Jun 3, 2013 at 3:35 PM MDT
Story Updated: Jun 3, 2013 at 3:35 PM MDT

BOISE, Idaho (KBOI-TV) - It's clear that Mark Brown is a smart guy, maybe even borderline brilliant.

But what's astounding is the way prosecutors say he apparently pulled off a major, years long financial fraud, taking in big corporations, courts and attorneys across the nation, all from behind bars in an Idaho prison cell.
Investigators believe he used a cherished electric typewriter that he was allowed to keep in his small, spare cell, and legal ads found in national newspapers including the Wall Street Journal and USA Today, to make fraudulent claims in big class-action lawsuits and bankruptcies.

He's alleged to have typed up professional-looking legal documents, false letters from law firms and more, and made skillful use of the "legal mail" exception for inmates that allows for correspondence with attorneys and judges without review from prison staff. Big checks poured in - Brown's take in multiparty lawsuits including a $70 million GlaxoSmithKline drug-pricing settlement and a $20 million IBM shareholders' settlement.
Authorities say Brown collected close to $64,000 through those settlements and deposited the money in his prison trust account, which inmates can use for things like commissary purchases. He then transferred much of it out to an investment account that authorities have targeted for potential forfeiture.

Brown is now facing a 12-count federal indictment for mail fraud and awaiting a September trial.

The story of how Brown went from 23-year-old University of Idaho computer science student to 53-year-old inmate suspected of perpetrating one of the most inventive prison scams ever discovered is a tale of habitual crime, long sentences, mental illness and lack of treatment. Before he'd turned 18, he'd committed 13 burglaries, according to court documents, including one at a U.S. post office. He faced other struggles, including a suicide attempt, an escape from a juvenile detention center and temporary placement in a foster home. By 1982, he'd been involved in 60 known thefts and burglaries.

He enrolled at the University of Idaho in the spring of 1978 to work toward a computer science degree and excelled there. But at night, he broke into university buildings, homes and businesses, hiding away his loot. He was on felony probation in 1982 when a search of his university dorm room turned up piles of stolen property, from computer components and other electronics to jewelry. Brown was diagnosed with kleptomania and borderline personality disorder. In a 20-minute, tearful statement to the court, he pleaded for leniency as the judge pondered a 20-year prison sentence.

"I'm not saying I don't need to be locked up," the young defendant told the court, as the Lewiston Tribune reported at the time. "If that's what needs to be done to keep me from stealing, then that's what I wish. At the same time, I feel I need something else. I honestly feel that the things I've done stem from things I was never in control of."

Brown got out on parole in 1994, but by then, he was a 35-year-old with a long list of disciplinary violations in prison. He'd broken rules, stolen items and forged purchase orders at his job at Correctional Industries. Brown found work at Terry Rich's company, Applied Process Controls, doing technical support for industrial instrumentation controls.

"He adapted very quickly to any circumstance you could put him in, whether it was a conference room of Idaho Power engineers, anything," Rich recalled. "He was great on the phones."

Then, a few months later, Rich got a call in the middle of the night from Boise police detectives. "They said, 'Does Mark Brown work for you?' and I said yes. And they said, 'Well, not any longer, because he's going back to prison.'"

Eight days after a state parole office in east Boise had been torched, silent alarms were tripped at another Department of Correction office in west Boise. Police found a broken window and an oily liquid spread across computers and other equipment; moments later, outside, Brown sped around the corner in his two-tone 1978 Volkswagen bus. Officers gave chase and cornered him in an alley behind a grocery store; in the bus were a baseball bat with fragments of glass on it, a gas can, gloves, a flashlight, and a puddle of the oily liquid.

Brown was arrested and his apartment searched; it was full of stolen property, including lots and lots of computer equipment, along with exotic birds in cages and other items that were tied to a string of business burglaries in Boise. He was sentenced to serve up to 116 years in prison.

"I went and visited him at the Ada County Jail before he went back to prison," Rich said. "I said, 'Mark, why would you do this? I trusted you, gave you a chance to really start your life over again - this is what you do?'?"

Rich was looking at Brown through the glass in the jail's visiting area; Brown was emotionless, he said. "He just sort of shook his head. He told me he was a career criminal. He told me, 'This is what I do.'?"

It's unclear exactly when Brown obtained the electric typewriter that investigators believe he used in the fraud scheme and carried with him from one prison to the next.

According to his federal indictment, Brown's securities and bankruptcy fraud scheme started in September 2007. That was the same month he was transferred to the North Fork Correctional Facility in Sayre, Okla., a private prison run by Corrections Corp. of America, as Idaho shipped hundreds of inmates out of state due to crowding. Brown stayed there two years, before being returned to the CCA-run Idaho Correctional Center south of Boise.

On Aug. 28, 2009, a search of Brown's cell at ICC turned up curious items: numerous typewritten letters from various nonexistent law firms "purporting to provide proof of Brown's purchase of various stocks or interest in various settlements," from IBM corporate securities litigation to NovaStar Financial Inc. securities litigation. CCA officials placed Brown in segregation for five days, reclassified him to medium security and notified the Ada County Sheriff's Department that they had a case of apparent mail fraud by an inmate. He also lost commissary privileges for 45 days.

Nearly two years later, on Oct. 31, 2011, Brown was transferred to the state prison in Orofino. He brought along his typewriter; officials there weren't told of the alleged fraud.

In March 2012, a mail room officer mentioned to Cpl. Wesley Heckathorn, a guard at the Orofino prison and a former investigator for the U.S. Navy, that Brown seemed to be receiving "a large amount of mail that's marked 'legal mail.'?"

Legal mail is handled differently than other mail in prisons, which is routinely screened by prison authorities. Inmates are allowed to correspond with their attorneys and the courts to conduct appeals or address other legal matters without such screening.

The volume of legal mail "struck me as odd," Heckathorn said; he figured such a long-term inmate likely was past the appeals period.

Heckathorn reported the matter to the warden and other prison authorities, who authorized him to start screening the correspondence. "From March to July, I just kind of covertly monitored all of his phone calls, I was looking at his mail, I was watching his finances, kind of collecting data," Heckathorn said. "In July, I had enough data to indicate that a crime was likely being committed."

In July 2012, Heckathorn and the prison sent a report to the FBI, which began investigating. In August, a publishing company called him to say Brown had filed a fraudulent claim in the company's bankruptcy litigation.

A federal grand jury indicted Brown on charges of mail fraud, and a trial is tentatively set to begin in September in U.S. District Court. Much of the nearly $64,000 that authorities believe he received through the prison fraud scheme was transferred to an investment account now targeted for potential forfeiture.

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From: scion6/4/2013 11:24:18 AM
   of 122029
 
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From: StockDung6/4/2013 3:19:50 PM
   of 122029
 
Prosecutors Want Prison For Ex-Baker Atty in $55M Fraud
Share us on: Twitter Facebook LinkedIn By Juan Carlos Rodriguez

Law360, New York (June 04, 2013, 3:11 PM ET) -- Federal prosecutors Friday recommended prison for a former Baker & McKenzie LLP partner who recently pled guilty to taking part in a $55 million stock-fraud deal and skimming $1.6 million in interest from a client’s escrow account.

Martin Weisberg was a securities partner at the firm’s New York office from 2005 to 2007, when Brooklyn prosecutors charged him with taking kickbacks as part of a scheme that raked in $55 million in illegal profits through secret sales of discounted shares in Ramp Corp. and Xybernaut Corp....

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From: StockDung6/4/2013 6:07:27 PM
   of 122029
 
'We're going to die, we're going to die': Storm chaser's last words as widest ever twister bore down

From POST WIRE SERVICES Last Updated: 4:38 PM, June 4, 2013 Posted: 4:13 PM, June 4, 2013


    AP

    This undated photo provided by The Discovery Channel shows Carl Young, left, and Tim Samaras watching the sky.

    OKLAHOMA CITY — The deadly tornado that struck near Oklahoma City late last week killing 18, including three storm chasers, had a record-breaking width of 2.6 miles and was the second top-of-the-scale EF5 twister to hit the area in less than two weeks, the National Weather Service reported Tuesday.

    The weather service initially rated the Friday tornado that hit El Reno as an EF3. But the agency upgraded the ranking after surveying damage from the twister, which along with subsequent flooding killed 18 people. The weather service determined that the storm packed winds reaching 295 mph.

    Caught in the midst of the gigantic storm was a group of storm chasers who had nowhere to hide. Oklahoma Highway Patrol Trooper Betsy Randolph heard the panicked voices of the crew over her patrol radio right before the storm turned into their car.

    "They were screaming, 'We're going to die, we're going to die,'" Randolph told USA Today. "There was just no place to go. There was no place to hide."

    The three storm chasers — Tim Samaras, his photographer son Paul Samaras, and meteorologist Carl Young — were killed when the twister they were pursuing made a sudden left turn and slammed into their car, sending it flying through the air like a toy.

    The three had no chance, said Tim Samaras’ brother, Jim.



    KFOR TV

    An image taken from video shows the vehicle that longtime storm chaser Tim Samaras, his son Paul and colleague Carl Young were killed when a powerful tornado hit near El Reno, Okla. on May 31.

    “Because of the circumstances on the two-lane road, it appears that he could not get out of the way, and, basically, the tornado picked up his vehicle,” Jim Samaras told the “Today” show.

    The tornado then hurled the light Chevy Cobalt to the ground, leaving it looking as though it had been rammed through a trash compactor, police said.

    Tim Samaras, 55, was found dead still belted into the mangled wreck, while the bodies of his son, 24, and Young, 45, were flung a quarter-mile away— in opposite directions.

    Their car was found upright in a ditch with its wheels blown off and the engine a quarter-mile away.

    The update from the National Weather Service means the Oklahoma City area has seen two of the extremely rare EF5 tornadoes in only 11 days. The other hit Moore, a city about 25 miles away from El Reno, on May 20, killing 24 people and causing widespread damage.

    But Friday's massive tornado avoided the highly populated areas near and around Oklahoma City, and forecasters said that likely saved lives. When the winds were at their most powerful, no structures were nearby, said Rick Smith, chief warning coordination meteorologist for the weather service's office in Norman.

    "Any house would have been completely swept clean on the foundation. That's just my speculation," Smith said. "We're looking at extremes ... in the rare EF5 category. This in the super rare category because we don't deal with things like this often."

    El Reno Mayor Matt White said that while his city of 18,000 residents suffered significant damage — including its vocational-technical center and a cattle stockyard that was reduced to a pile of twisted metal — he said it could have been much worse had the violent twister tracked to the north.

    "If it was two more miles this way, it would have wiped out all of downtown, almost every one of our subdivisions and almost all of our businesses," White said. "It would have taken out everything.

    "It's very scary ... I don't think a normal person can fathom just how scary. I don't think they realize how lucky El Reno was."

    The EF5 storm that hit Moore decimated neighborhoods. In Friday's storm, many of the deaths were caused by heavy flash flooding following the storms. Three storm chasers died in that storm.

    Smith said the storm's 2.6-mile path — besting a record set in 2004 in Hallam, Neb. — would have made the storm hard to recognize up close.

    "A two-and-a-half mile wide tornado would not look like a tornado to a lot of people," Smith said.

    With AP.

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    From: scion6/5/2013 3:35:54 AM
    1 Recommendation   of 122029
     
    Why Didn't the SEC Catch Madoff? It Might Have Been Policy Not To

    By Matt Taibbi
    POSTED: May 31, 5:20 PM ET
    rollingstone.com

    More and more embarrassing stories of keep leaking out of the SEC, which is beginning to look somehow worse than corrupt – it's hard to find the right language exactly, but "aggressively clueless" comes pretty close to summing up the atmosphere that seems to be ruling the country's top financial gendarmes.

    The most recent contribution to the broadening canvas of dysfunction and incompetence surrounding the SEC is a whistleblower complaint filed by 56-year-old Kathleen Furey, a senior lawyer who worked in the New York Regional Office (NYRO), the agency outpost with direct jurisdiction over Wall Street.

    Furey's complaint is full of startling revelations about the SEC, but the most amazing of them is that Furey and the other 20-odd lawyers who worked in her unit at the NYRO were actually barred by a superior from bringing cases under two of the four main securities laws governing Wall Street, the Investment Advisors Act of 1940 and the Investment Company Act of 1940.

    According to Furey, her group at the SEC's New York office, from a period stretching for over half a decade through December, 2008, did not as a matter of policy pursue cases against investment managers like Bernie Madoff. Furey says she was told flatly by her boss, Assistant Regional Director George Stepaniuk, that "We do not do IM cases."

    Some background is necessary to explain the significance of this tale.

    There are four main laws that the SEC uses to regulate the financial sector. At least as far as numbers go, the agency has a fairly extensive record of enforcement actions with the first two, which are aimed at the securities markets.

    The first of those is the Securities Act of 1933, also commonly known as the "Blue Sky laws," which among other things set down the rules mandating public disclosure of pertinent information to investors in securities. The second is the Securities Exchange Act of 1934, which governs securities already issued, and includes the laws barring insider trading. Both of these laws are primarily intended to prevent fraud in the securities markets.

    But the agency's record is a little spottier when it comes to the other two key pieces of legislation, the Investment Advisers Act of 1940 and theInvestment Company Act of 1940. These are the agency's main tools for prosecuting fraud and malfeasance involving people who manage other people's money – mutual funds, hedge funds, investment managers. Somebody like Bernie Madoff, who took billions from investors and simply stole the money instead of investing, would largely be regulated under the latter two acts.

    Kathleen Furey joined the SEC in September of 2004, starting as a law clerk in the Enforcement Division. She steadily rose within the agency and was promoted three times over the next three years.

    Then in 2007, Furey started work on a case that involved Value Line, a high-profile family of mutual funds that was being accused of charging tens of millions of dollars in bogus commissions. The company had appeared on the SEC's radar via a referral in 2004, but the agency's higher-ups had not yet approved a formal investigation, which is necessary for the issuance of subpoenas.

    When she tried to take that next step in the Value Line case, Furey says she was denied. This is when she says Stepaniuk filled her in on his "We don't do IM cases" policy. Upset, and convinced that the Assistant Director of the New York office did not have the authority to unilaterally non-enforce two major portions of the SEC's regulatory mandate, Furey appealed to Stepaniuk's superior in the NYRO.

    According to Furey's complaint, this official, instead of helping her and paving the way for the investigation to proceed, gave Furey two options. He said she could either recant her statement about being told not to pursue "IM cases," or she could go to the SEC Inspector General.

    Incidentally, Furey in her internal arguments over this case specifically warned that the agency needed to begin enforcing section 206 of the Investment Advisers Act, which barred money managers from employing "any device, scheme, or artifice to defraud any client or prospective client." She warned that pursuing cases under that statute "may save the agency from future embarrassment." Section 206 was the exact statute that the SEC ultimately employed both in the Value Line case (many years later), and in the case against Bernie Madoff.

    This background is key to understanding the timeline of the SEC's response to both the Madoff story and Investment Management cases in general.

    In Furey's complaint, she cites statistics that provide unsettling evidence that there was, in fact, some kind of policy in place that prevented her group from going after investment advisers. During the period from January 1, 2002, through January 20, 2009, Stepaniuk's group did not file a single case under the Investment Advisors Act (IAA) or Investment Company Act (ICA).

    During this time frame, Stepaniuk reportedly approached the SEC's Commission 60 times with requests to to file cases or to open formal investigations, which, again, is necessary to file subpoenas. Out of those 60 cases, only one, the Value Line investigation opened on April 18, 2008, was an Investment Management case.

    In a not-so-amazing coincidence, April 18, 2008 happened to be the same day that the SEC's Inspector General released a report that in part addressed the office's apparent mishandling of that same Value Line case. In other words, the SEC seemed not to move on Value Line until it became a public issue.

    Even more damning, however, was the reaction after the Madoff story broke, toward the tail end of 2008. The scandal was incredibly embarrassing to the SEC, which had failed to investigate Madoff despite being tipped off in extraordinarily detailed fashion by investigator Harry Markopolos over eight years before.

    It came out that Madoff had not merely stolen from his clients but not conducted any trades at all, simply bilking money in the most primitive conceivable Ponzi scheme. This meant that the SEC would have been able to uncover the fraud with even the most cursory examination at any time during the fund's existence.

    Unsurprisingly, by the start of 2009, the SEC was being hammered by members of Congress in both parties – institutionally a terribly troubling development, given that Congress controls the regulator's budget.

    So how did the agency respond? After having conducted no "IM cases" at all for years, that NYRO group's next nine cases from January 2009 on were all IAA or ICA cases.

    When I contacted the SEC, I made it clear that if they could produce any evidence that Furey's statistics were off, that Stepaniuk's unit had in fact filed IAA or ICA cases during the relevant time period, then I probably wouldn't write about her complaint.

    But when I pressed the agency for specifics on that question, they responded with red herrings.

    First, they sent a list of 14 IM cases pursued by the SEC's New York Office between 2006 and 2009. When I asked how many of those were pursued by Stepaniuk's group, it turned out that only one of them was – a case against Henry "Hank" Morris, a top fundraiser for New York City Comptroller Alan Hevesi. But that case was charged in March 2009, right after the Madoff story broke. This was completely consistent with what Furey had claimed, that her group had essentially not pursued IM cases until after Madoff.

    When I pointed this out, they sent yet another list of cases, two of which appeared to have been filed by Stepaniuk's group prior to the Madoff case. One of those, SEC vs. Kevin Dunn, involved a stockbroker for MetLife who was accused of swindling the widow of a Port Authority policeman who died in 9/11.

    While no doubt a worthy matter to pursue, this, too turned out not to be an "IM case." Dunn was exclusively charged with violations under the old-school '33 and '34 Acts. The only references to the IAA in the entire case were two totally extraneous facts.

    One was that MetLife, which was not charged in the case at all and merely happened to be Dunn's employer, was a registered Investment Adviser. Two was that Dunn, as a condition of his punishment, agreed to be barred from any affiliations with any registered broker-dealer or investment adviser in the future. This is a common regulatory/punitive throw-in and had nothing to do with what kind of case it was.

    Claiming that this was an IM case was not much different than sending on a case involving a stockbroker who had committed insider trading while flying over a registered Investment Company office in a hot air balloon – and claiming that was an "IM case." It was silly.

    The other case I was sent was . . . SEC vs. Value Line!

    The fact that the SEC would try to discredit Furey and sell its own sterling record of investigating investment management cases by citing the same troubled investigation that had caused Furey to blow the whistle in the first place should tell you a lot about how disorganized the agency now seems to be.

    The SEC did note that the Inspector General, years back, could not find corroborating evidence for Furey's claim that Stepaniuk had told her there was a policy against "IM cases." But what was or wasn't said is not of primary relevance to the story.

    What is highly relevant is that Furey was unquestionably on record – in emails and other complaints – complaining about the lack of action in this arena even before the Madoff story broke. And there's little doubt that this unit's actual record of pre-Madoff IM cases in the rest of the 2000s is essentially nonexistent.

    This being the SEC, the story unfortunately did not end with a key unit of the agency merely failing to regulate an entire sector of the finance world until a $60 billion Ponzi scheme exploded in its face. In this incident they've also continued to show an inability to deal with whistleblowers, a problem that of course has been epidemic in the last two presidential administrations, but has been particularly acute in the SEC.

    Noted author William Cohan described Furey's post-whistleblowing struggles within the SEC in great detail in a Bloomberg piece.

    As Cohan explains, Furey went through all the usual nonsense after coming forward and complaining about the failure to bring "IM cases": She was shunned by superiors, kept away from sensitive work and taken off the promotion track.

    Moreover, when Furey in 2010 asked then-NYRO director George Canellos if her career was being held back by her whistleblowing, he gave an interesting answer. She says he responded by saying that there were people in the New York office who were "not fans" of what she had done.

    Canellos today mans one of the SEC's top jobs. Along with Andrew Ceresney, who worked with new chief Mary Jo White as a partner at her old firm Debevoise and Plimpton, he runs the SEC's enforcement division.

    Furey contends that for a time, she was being compensated at a level not commensurate with her actual duties – without getting too wonky, Furey believed she was being paid as an "SK-14"-level civil servant while she was in fact handling the duties of an "SK-16." When Canellos and other officials did not respond to her complaints directly, she requested an external "desk audit," a government procedure in which an outside official assesses the duties of an agency employee.

    Furey received a perfect score of 1,760 out of 1,760 from the outside auditor, who agreed that she was working at the SK-16 level and recommended that, if she remained in that position, she be promoted.

    The SEC and Canellos instead stripped her of her duties, essentially demoting her and not implenting the recommendation of the desk audit, an action rare enough that the agency's human resources department apparently had to do research to see if it was legal (according to Furey's attorney, this checking was done only after the demotion).

    The SEC, meanwhile, contends that Furey only temporarily held the higher position, filling a spot vacated by a promoted official, and that the agency had to demote her. "As a general matter, managers are not permitted to indefinitely assign work above an employee’s grade level," says SEC spokesman John Nester. "If there is not a higher level position that has been approved for filling, managers are required to remove the higher level duties."

    Beyond that, neither Stepaniuk nor Canellos has any comment on Furey's allegations.

    While a lot of this will seem like a meaningless intramural squabble to outside readers, it points to a larger pattern within the agency. For years, people who come forward and try to press the SEC to pursue important cases have often been treated very poorly, if not with outright hostility.

    This has been true of people outside the SEC, like Harry Markopolos or Leyla Wydler, who came forward with information about the Stanford Ponzi scheme, only to be ignored by the SEC. Both the Madoff and Stanford cases, which incidentally were both "IM cases," snowballed into far bigger disasters than was necessary because the agency identically blew off those two whistleblowers.

    The agency also has a poor record with whistleblowers within the SEC, like onetime investigator Gary Aguirre, who famously won a $755,000 wrongful termination settlement against the SEC after he was fired for trying to press an insider trading case against future Morgan Stanley chief John Mack.

    Aguirre, ironically, now represents Furey, and it sometimes feels like we're re-living the same stories over and over again with this agency. The same kinds of blindly political creatures keep getting promoted to the top jobs, while hardworking line investigators who are just trying to do the work keep running into the same kinds of ludicrous intra-office

    rollingstone.com

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    To: StockDung who wrote (116456)6/5/2013 9:59:23 AM
    From: Bear Down
       of 122029
     
    Porcari pump and dump KNDI on a tear today with a nice volume spin. Started a short @6.75 and ready to add.

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    To: Bear Down who wrote (116458)6/5/2013 1:15:34 PM
    From: StockDung
       of 122029
     
    Porcari operated porn sites and now he is analyst for KNDI lol HEY SEC!! Peeping-N-Peeing was a site dedicated to spying by camera on women when they where going to the bathroom.

    Guess the SEC does not remember NCDR stock fraud

    To: Arthur_Porcari who wrote (787) 6/12/1999 3:59:00 PM
    From: Q Read Replies (2) of 1437
    Arthur: www.peeping-n-peeing.com -- you registered this porno domain, didn't you?

    Registrant:Angelique Photo Art Productions (PEEPING-N-PEEING-DOM)
    10759 Valley Hills Dr. Houston, TX 77071 US
    Domain Name: PEEPING-N-PEEING.COM Administrative Contact:
    PORCARI, Arthur (AP2859) this1@HYPERCON.COM

    networksolutions.com


    To: StockDung who wrote (951) 6/13/1999 10:53:00 PM
    From: Q Read Replies (1) of 1437
    another PORCARI porn site: FINEGIRLS.COM

    Registrant:
    Photo/Art Inc. (FINEGIRLS-DOM)
    10759 Valley Hills Dr.
    Houston, TX 77071

    Domain Name: FINEGIRLS.COM

    Administrative Contact:
    PORCARI, Arthur (AP2859) this1@HYPERCON.COM
    713-771-3636 (FAX) 713-771-5544

    To: StockDung who wrote (951) 6/13/1999 10:48:00 PM
    From: Bear Down Read Replies (1) of 1437
    I think Porcari's friends may be closer to Siberia than Palermo.

    From Floydies Links listing Art Porcari's address from Northern Lights (address taken from DL info. You first find APAproductions.com------- their info:

    Registrant:
    Mikluhomaklai Sensation corp. (APAPRODUCTIONS2-DOM)
    141, 24 Lenin st.
    Omsk, SIB 644024
    RU

    Domain Name: APAPRODUCTIONS.COM

    Administrative Contact, Technical Contact, Zone Contact:
    Gross, Peter (PG6594) dompro@DMR800.COM
    +7 3812 313672 (FAX) +7 3812 311756
    Billing Contact:
    Gross, Peter (PG6594) dompro@DMR800.COM
    +7 3812 313672 (FAX) +7 3812 311756

    Now from the second link www.amateurexihbitionists.com (anothy PORCARI Porn site) you get the following:

    If you submit your photos and either elect not to enter as "Amateur Angel of the Month" or your portfolio is not selected, then we will pay you $5.00 per picture that we elect to publically use. All images become the property of APA Productions and cannot be returned.

    Any comments Ivan??

    To: StockDung who wrote (951) 6/13/1999 10:47:00 PM
    From: Q Read Replies (1) of 1437
    here's another Arthur PORCARI porn-site: AMATEUREXHIBITIONISTS.COM

    Registrant:Photo/Art Inc (AMATEUREXHIBITIONISTS-DOM)
    10759 Valley Hills Dr.
    Houston, TX 77071 Domain Name: AMATEUREXHIBITIONISTS.COM

    Administrative Contact: <bPORCARI, Arthur (AP2859) this1@HYPERCON.COM
    713-771-3636 (FAX) 713-771-5544

    Advanced Message Search Results

    Subject Title Author Date
    JAWS;A P/E of 2 with 150%/yr E Latest news... The whole crew at GW is preparing for the big short squeeze tha PistolPete 12/6/1999
    2TheMart.com TMRT Archer; Agreed, and while CReMe Porcari is just as stupid as Magliarditi, Hamo jjs64 8/31/1999
    Business Wire Falls for April I've been wondering the same thing: why no trading halt? More in the Smal Janice Shell 7/30/1999
    NCDR Surelock; Great finds....until CRIM Porcari gets his wish and NCDR somehow get jjs64 7/26/1999
    Mr. Pink's Picks: selected ev Dale, do you think I am less credible because I choose to use an AKA? You mig Mama Bear 7/8/1999
    Anthony @ Equity Investigation Forrest, I don't believe short sales have to be reported on OTC-BB like the who cares? 6/29/1999
    NCDR "virtue" and "Porcari": two words that together don't s Q 6/27/1999
    NCDR CRIM Porcari; If you were 1/100th as smart as you think you are you would call jjs64 6/25/1999
    NCDR Sometimes it is better to shut up and avoid bringing attention to an issue. NCDR Mark Marcellus 6/24/1999
    NCDR Sometimes it is better to shut up and avoid bringing attention to an issue. NCD J.Y. Wang 6/24/1999
    NCDR My nonsense?? You and daddy porco talk about shorting BB's as illegal and Bear Down 6/20/1999
    NCDR The Complaint names Janice Shell,sure looks&sounds like you. Not sure how i Janice Shell 6/15/1999
    NCDR The Complaint names Janice Shell,sure looks&sounds like you. Could it also Ginco 6/15/1999
    NCDR Yet another one that can't tell one poster from the other. What is it with Mama Bear 6/14/1999
    NCDR another Porcari porn site: FINEGIRLS.COM Registrant: Photo/Art Inc. (FINEGIR Q 6/13/1999
    NCDR I think Porcari's friends may be closer to Siberia than Palermo. From Floy Bear Down 6/13/1999
    NCDR here's another Arthur Porcari porn-site: AMATEUREXHIBITIONISTS.COM Regist Q 6/13/1999
    NCDR 'Porcari', eh? .. could that have been anglisised from 'Porquerí Janice Shell 6/13/1999
    NCDR Hoo, boy .. 'Porcari', eh? .. could that have been anglisised from ' marcos 6/13/1999
    NCDR Thanks for the post Tide. I especially like this part: But the athlete's c dumbmoney 6/13/1999
    NCDR Involuntarily resolved?? Why for art thou not a company no more? Arty, come Bear Down 6/13/1999
    NCDR He's really slimey, isn't he? Wait'll you get to the part about hi Janice Shell 6/13/1999
    NCDR thanks TG, hadn't seen it. some highlights for those that didn't read Bear Down 6/12/1999
    NCDR Excuse please if this article has been published. elibrary.com Stockbro TideGlider 6/12/1999
    NCDR CRIM Porcari; A little touchy that you've been busted? Buyer Beware! jjs64 6/12/1999
    NCDR CRIM Porcari; No-one is impressed or intimidated with your shallow threats. Yo jjs64 6/12/1999
    NCDR Great stuff!! Arthur Porcari Angelique Studios 10759 Valley Hills Dr Janice Shell 6/12/1999
    NCDR To: Arthur_Porcari (787 ) From: John G Saturday, Jun 12 1999 3:59PM ET Reply steve31 6/12/1999
    NCDR Arthur: www.peeping-n-peeing.com -- you registered this porno domain, didn' Q 6/12/1999
    NCDR CRIM Porcari; Why not do a little research before you speak, everyone else can jjs64 6/12/1999
    NCDR Is this Our Arthur? All data from: networksolutions.com Porcari, A J ( Janice Shell 6/12/1999
    NCDR Arthur, is this what gentlemen brokers do to their clients: the firm, acting t Q 6/11/1999
    NCDR CRIM Porcari; Why do you continue this charade? Your cover has been blown. You jjs64 6/11/1999
    NCDR Perhaps Mr. Porcari will say "NCDR management is unaware of any trading ha Mama Bear 6/11/1999
    NCDR CRIM Porcari; Oh look....NCDR halted by SEC! So sorry CRIM! Buyer Beware! jjs64 6/11/1999
    NCDR You mean more public relation hype from a company that even major shareholder, Bear Down 6/8/1999
    NCDR CRIM Porcari; I think a more likely scenario is con artists and scamsters who jjs64 6/8/1999
    NCDR "How many times have you call Arthur Porcari a felon/criminal?" None. Mama Bear 6/5/1999
    NCDR I can tell you a few things about the company. First of all they have their d Bear Down 6/4/1999
    NCDR re. felonies, to my knowledge nobody has convicted Arthur of one, but that migh Q 6/4/1999
    NCDR Arthur Porcari - yes, my real name is Jacalyn Deaner, and having read the entir Jacalyn Deaner 6/4/1999
    NCDR CRIM Porcari; In Honor of Mr. Pink you are now CREME Porcari. That being said jjs64 6/4/1999
    NCDR Gino; You had better believe there will be many many posts reiterating CRIM Po jjs64 6/4/1999
    NCDR CRIM Porcari; Will the "duration" be longer than your NASD suspensio jjs64 6/2/1999
    NCDR CRIM Porcari; To file so many Qs and Ks WITHOUT the associated NT filings indi jjs64 6/2/1999
    NCDR CRIM Porcari, you must mean the "high-end" products which were not in jjs64 6/1/1999
    NCDR Gino; Why dont you do a little research? John G did and this is what he found jjs64 6/1/1999
    NCDR CRIM Porcari...you must really believe your own BS to say your past is not dark jjs64 6/1/1999
    NCDR CRIM Porcari, your very presence indicates a scam at work. Dunavant's pres jjs64 5/31/1999
    NCDR Oh, whatever. I can't believe anyone actually believes that because someone Mama Bear 5/31/1999
    NCDR "If this stock is a scam why is it holding up?" Did you not read the p who cares? 5/27/1999
    NCDR I'm neither long or short,just waiting for a big drop. If this stock is a s Ginco 5/27/1999
    NCDR What do you mean i'm not giving them a chance? You or Porcari one or both s who cares? 5/27/1999
    NCDR Dude when a company makes a technological claim it is up to them to back it up, who cares? 5/26/1999
    NCDR It is manipulation when it is NOT "investor" buying but rather above jjs64 5/26/1999
    NCDR Mr. Porcari, Why do you question everyone's position? You, the bankrup Bear Down 5/26/1999
    Zia Sun(zsun) <<<Bear Down, it should be relatively easy to obtain trading records Bear Down 5/21/1999
    NCDR Arthur Porcari, you have been exposed for what you are....a BANKRUPT CRIM. Your jjs64 5/21/1999
    NCDR you said "No Gordon, that is me and very proud of it. However, I am worth Bear Down 5/21/1999
    NCDR A rehabilitated rat you say???? I am not convinced. Let me guess, these ar Bear Down 5/20/1999
    NCDR bear down....I have been trying to understand what you mean by KUSH. I went ba steve31 5/19/1999
    NCDR Yea, Ok steve. Registrant: Stephen Porcari (KUSHONLINE-DOM) 800 Shelmar Bear Down 5/19/1999
    HITSGALORE.COM (HITT) Yes, Porcari is indeed an interesting fellow, isn't he? Not to mention Dun Janice Shell 5/18/1999
    NCDR Mr. Porcari, since the NASD considers you a criminal, and you have not disputed realmoney 5/18/1999
    NCDR You are so full of it. OK smart ass, send me a video clip via "cinemai Bear Down 5/18/1999
    NCDR Wow, I go away for 1 week and who appears on the NCDR board to hype this piece jjs64 5/17/1999
    NCDR The suspensions of Arthur J. Porcari and Michael T. Fearnow imposed in both acti Janice Shell 5/15/1999
    NCDR >Anyone who is interested in understanding how a paid >tout operates shou surelock 5/15/1999
    50% Gains Investing Dale, you might be interested in the posts of one Arthur Porcari on the NCDR th Mama Bear 5/15/1999
    NCDR It is interesting to note how those touting worthless stocks with the intenti Mama Bear 5/15/1999
    NCDR Where does this info come from??? Please state your source. And Arty, Just Bear Down 5/14/1999
    NCDR Let me get this right: when you want to post under your own name, you use your surelock 5/12/1999
    NCDR Go away Porcari. Nobody wants to associate with a criminal like you. Besides, realmoney 5/12/1999
    NCDR john, did you notice mr. porcari now has TWO SI accounts. one shows membershi doc 5/12/1999
    NCDR searching anywho.com for 'Arthur Porcari' turned up exactly one p Q 5/12/1999
    NCDR Here's a newspaper article that says Arthur "doesn't inspire inves Q 5/11/1999
    NCDR NASD Notices to Members Q 5/11/1999
    NCDR NASD Notices to Members Q 5/11/1999
    NCDR Arthur Porcari: fined & suspended by the NASD June 1989 for insider trading Q 5/11/1999
    NCDR When did he get off of it? How do we know that Porcari is his real name? Did Mama Bear 5/11/1999
    NCDR Arthur, I'm just curious whether you were involved in "Porcari, Fearno Q 5/11/1999
    NCDR OK, ok, I hate to keep waffling, but after that last post, Mr. Porcari is back realmoney 5/11/1999
    NCDR Mr. Porcari, I have carefully read and re-read your post and have come to the c realmoney 5/11/1999
    NCDR Mr. Porcari certainly managed to tag every cliched phrase ever used by a promo Mama Bear 5/11/1999

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    From: scion6/6/2013 5:02:52 AM
       of 122029
     
    SEC Charges Penny Stock Company and CEO for Illegal Stock Offering and Insider Trading

    FOR IMMEDIATE RELEASE
    2013-100

    Washington, D.C., June 5, 2013 — The Securities and Exchange Commission today charged a microcap company that was ensnared in an SEC trading suspension proactively targeting questionable penny stocks, and also charged the CEO who illicitly profited from selling his shares while investors were unaware of the company’s financial struggles.

    Additional Materials
    SEC Complaint
    sec.gov

    The SEC alleges that Laidlaw Energy Group and its CEO Michael B. Bartoszek sold more than two billion shares of Laidlaw’s common stock in 35 issuances to three commonly controlled purchasers at deep discounts from the market price. Laidlaw did not register this stock offering with the SEC, and no exemptions from registration were applicable. Bartoszek knew that the purchasers were dumping the shares into the market usually within days or weeks of the purchases to make hundreds of thousands of dollars in profits. Laidlaw’s $1.2 million in proceeds from these transactions was essentially the sole source of funds for the company’s operations during most of its existence. Laidlaw, which is based in New York City, purports to be a developer of facilities that generate electricity from wood biomass.

    The SEC alleges that these transactions diluted the value of shares previously purchased by common investors in the market, who were not told about the huge blocks of cheap stock Laidlaw was selling. Investors also were not aware that Laidlaw relied on these transactions to fund its operations entirely. The SEC suspended trading in Laidlaw stock in June 2011.

    “Registration violations are often at the core of microcap fraud and we will vigorously pursue these violations wherever we find them.” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

    According to the SEC’s complaint filed in federal court in Manhattan, Bartoszek violated insider trading laws when he personally sold more than 100 million shares of Laidlaw common stock from December 2009 to June 2011, and he made more than $318,000 in profits. Bartoszek was in possession of material, non-public information while making these trades on the basis of his insider knowledge about Laidlaw’s poor financial condition, the illegal fire sale of more 80 percent of Laidlaw’s stock, and adverse developments about Laidlaw’s business prospects. As a result of the volume of Bartoszek’s sales and the lack of current, publicly available information about the company, these sales also violated the registration requirements of the federal securities laws.

    The SEC further alleges that Laidlaw and Bartoszek made subsequent false statements about the ownership of Laidlaw shares in SEC filings to register certain common stock following the trading suspension. Laidlaw and Bartoszek misled investors to believe that the purchasers of the two billion unregistered shares had acquired them to hold as an investment in the company. The filings falsely represented that these purchasers were the current “beneficial owner” of more than 80 percent of Laidlaw’s common stock, an assertion that only could have been true if the purchasers had not sold any of their Laidlaw stock. In fact, as Laidlaw and Bartoszek knew, the purchasers had long ago dumped all of the stock.

    The SEC’s complaint charges Laidlaw and Bartoszek with violations of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. The complaint also charges Bartoszek with violations of Section 17(a) of the Securities Act and secondary liability under Sections 20(a) and 20(e) of the Exchange Act for Laidlaw’s violation of Section 10(b) of the Exchange Act and Rule 10b-5. The SEC seeks disgorgement plus prejudgment interest, financial penalties, and injunctive relief, and is seeking penny stock and officer and director bars against Bartoszek.

    The SEC’s investigation has been conducted by Michael Paley, Haimavathi Marlier, and Todd Brody of the New York Regional Office with assistance from the Microcap Fraud Working Group. Mr. Brody and Ms. Marlier will lead the SEC’s litigation.

    # # #

    sec.gov

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