1. Former NY Official Pleads Guilty in 'Pay-to-Play' Case
David Loglisci, formerly the top investment officer for New York’s state pension fund, pleaded guilty on Wednesday to securities fraud charges stemming from a massive “pay-to-play” scandal that has engulfed the state comptroller’s office, the Associated Press reported. Hired to manage investments for the $150 billion pension fund, the A.P. said, Loglisci admitted in court that he had secured his high-profile position by granting a political advisor to Alan Hevesi – New York’s former comptroller – the power to award investment business to firms in exchange for political donations. “Investment decisions were made in part according to political benefit for the comptroller, rather than exclusively in the best interests of the people,” Loglisci said at a court hearing covered by the A.P. “The political motivations for investment selection were chronic and institutionalized throughout the office, creating a culture of corruption at the highest levels.” With his guilty plea this week, the A.P. noted, Loglisci became the highest-ranking member of Hevesi’s administration so far to admit a role in the sweeping “pay-to-play” scheme.
2. Tax Accountant Pleads Guilty to Operating Ponzi Scheme
William Murray, a California-based accountant, has pleaded guilty to stealing more than $13 million from his clients through a long-running Ponzi scheme, the Associated Press reported. Between 2001 and 2009, the A.P. said, Murray collected fees from dozens of clients for tax payments and investments and then used their money to finance a lavish lifestyle for himself instead. Once a federal tax agent who offered tax advice on local television shows, the A.P. said, Murray will be formally sentenced for mail fraud and tax violations in May.
3. SEC Shuts Down Suspected Scam Targeting Retirees
The U.S. Securities and Exchange Commission has secured an emergency court order halting further investments in a suspected Ponzi scheme targeting retirees at estate-planning seminars. According to the SEC, USA Retirement Management Services (USARMS) and its two managing partners – Francois Durmaz and Robert Pribilski – invited seniors to attend investment seminars at country clubs and banquet halls and then convinced them to spend millions on fictitious “Turkish Eurobonds” with guaranteed returns. The defendants never purchased any Turkish Eurobonds, the SEC says, using the money to pay earlier investors and finance personal items – including luxury cars, homes, vacations and Internet pornography – instead. All told, the SEC estimates, the pair raised $20 million from more than 120 investors who fell for their alleged scam. A judge has frozen the assets of USARMS and its leaders while the SEC moves forward with its investigation and seeks recoveries for victims who lost money in the suspected Ponzi scheme.
4. Former New York Broker Accused of Stealing Millions
Jose Vianna, a former stockbroker at the New York-based Maxim Group, faces civil fraud charges for allegedly diverting millions of dollars worth of trading profits from a large institutional investor to an account established by an offshore company. Between July of 2007 and March of 2008, the U.S. Securities and Exchange Commission claims, Vianna shifted more than $3.3 million in trading profits from the account of a large Spanish bank and deposited the proceeds into an account established Creswell Equities in the Virgin Islands. The SEC is seeking full disgorgement, plus interest and penalties, from both Vianna and Creswell.
5. Former McKesson Attorney Inks Settlement with SEC
Jay Lapine, the former general counsel of McKesson’s (NYSE: MCK) HBOC division, must pay a $60,000 fine – and refrain from serving as an officer or director of any public company for the next five years – to settle charges stemming from his alleged role in an accounting scam at the giant drug distributor. According to the U.S. Securities and Exchange Commission, Lapine allowed McKesson and HBOC to prematurely recognize revenue and fraudulently report “an unbroken run of financial success” to its followers on Wall Street. When McKesson finally revealed “financial reporting irregularities” in 1999, the SEC notes, the company’s stock plummeted from $65 to $34 a share – triggering $9 billion in investor losses – as a result of its accounting games. Acquitted of criminal fraud charges last November, Lapine inked the settlement without admitting or denying the SEC’s claims.
6. Repeat Offender Suspected of New Investment Scam
Richard Crumpton Murphy, a Florida businessman punished five years ago for selling unregistered securities, faces dozens of new felony charges for allegedly operating another illegal investment scam. This time, authorities says, Murphy bilked his victims by raising money for a nonexistent “Emedicaid Smartcard” – designed to store a patient’s entire medical history – and an overhyped real estate project. According to police, Murphy told investors that the smartcard had already generated $2.7 million in revenue when it had yet to even be developed. In addition, police say, he misled investors with claims that a major supermarket chain had agreed to purchase water from aquifers located on his property. Moreover, police add, he told investors that several major corporations had expressed interest in purchasing his business ventures. Accused of stealing more than $338,000 from his victims, Moore was arrested and placed in custody on Wednesday.
7. Regulators Charge Four with Penny Stock Violations
The U.S. Securities and Exchanges has filed charges against former RECOV Energy CEO Richard Verdiramo and three others – including Verdiramo’s father, Vincent, an attorney – for allegedly profiting from illegally issued shares in the penny-stock company. Between February and August of 2005, the SEC claims, the Verdiramos pocketed $350,000 by selling unregistered shares of RECOV that should have gone to the company itself. The SEC has accused the buyers of that stock, Edward Meyer and Victoria Chen, of knowingly violating securities laws as well. Meyer, who faces an additional charge for alleged insider trading, has been sanctioned by regulators in the past. The SEC is now seeking to ban the younger Verdiramo from serving as an officer or director of other public companies and bar all four defendants from future participation in the penny-stock trade.
8. Financial Adviser Fined for Exposing Investors to Scam
Robert Dokken, a Florida-based financial adviser, has been ordered to pay almost $200,000 to three clients who lost money in a suspected Ponzi scheme, The News Herald of Panama City reported. The Financial Industry Regulatory Authority (FINRA) ruled against Dokken during a recent arbitration hearing on the case, the newspaper said, siding with investors who accused him of breach of contract, negligence and fraud. According to the prevailing attorney, the newspaper said, Dokken invested client funds in Resort Holding International when even “basic research” of the company would have revealed that “numerous cease-and-desist orders had been previously entered by various states against the person in charge” of the alleged Ponzi scheme. Through his own attorney, the newspaper said, Dokken has already announced plans to appeal the ruling against him in the case.
9. Jadis Capital Leaders Plead Guilty to Fraud Charges
Isaac Ovid, the former chairman and CEO of Jadis Capital, has joined four other leaders of the New York-based investment firm, in pleading guilty to defrauding investors – including members of their own church – who sank money into the firm’s two hedge funds. According to the FBI, the defendants convinced their victims to invest $12.3 million in the hedge funds and then either spent or lost most of that money. For example, the FBI says, the defendants used $1.6 million of the funds to renovate their offices and another $200,000 to purchase a Bentley automobile. In addition to Ovid, the following Jadis Capital executives – all leaders of a New York church – have pleaded guilty to fraud charges stemming from the scam: Aaron Riddle, former CFO; Joseph Coleman, former chief marketing officer; Timothy Smith, former chief business strategist; and Robert Riddle, a former regional vice president of sales.
10. Leaders of Investment Firm Arrested for Alleged Scam
Euirang Hwang and his girlfriend Sang Yi, leaders of the California-based Pinupito investment firm, have been arrested on wire fraud charges for allegedly bilking fellow Korean-Americans through an $8 million Ponzi scheme. According to federal prosecutors, the couple scammed 60 Korean-Americans – courting some of them at Korean-language churches -- by promising them huge returns on investments in Korean companies and then used their money to cover personal expenses and payouts to earlier investors instead. They face up to 20 years in prison if found guilty of the crimes.
Melissa Davis, senior editor of The Street Sweeper, poses with celebrity stock picker Jim Cramer after a recent taping of his “Mad Money” television show. Davis worked as an investigative reporter for TheStreet.com, where Cramer serves as chairman, before assuming her current role at The Street Sweeper.
Toreador: The Story behind the Stock's Wild Bull Run
by Melissa Davis, 3/11/2010 8:00:09 AM
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Shortly before New York Times reporter Zachery Kouwe resigned for plagiarizing the work of others, he wrote a speculative column about Toreador Resources (Nasdaq: TRGL) that – in an ironic twist -- spawned copycat reports by competing journalists. Those stories, suggesting an imminent buyout of Toreador that failed to materialize, raised some eyebrows even before Kouwe’s public fall from grace.
At the time that Kouwe penned his Jan. 20 “DealBook” column, Toreador desperately needed to raise money for looming debt obligations that could trigger massive payments later on this year. As a small resource company with ambitious plans, Toreador also needed cash to finance an expensive drilling program in Paris – home to its controversial new vice chairman – in order to reinvent itself as a major energy player on the international stage. more...
Will CSKI's Auditor Bless the Numbers This Time?
by Manuel Asensio, 3/11/2010 6:39:20 AM
* Editor's Note: This report has been republished with the permission of its author, Manuel Asensio, an accomplished investor with a track record for spotting possible fraud long before the market itself. Click here to read more of Asensio's research on CSKI and other companies.
A report issued by asensio.com on Tuesday revealed that Moore Stephens, the accounting firm that serves as auditor to China Sky One Medical (NASDAQ: CSKI), is the subject of a lawsuit.
The complaint against Moore Stephens alleges that the accounting firm is liable for securities fraud in issuing an unqualified opinion letter on CSKI's audited financial statements and not correcting its opinion when it knew or should have known that CSKI's financial statements were materially inaccurate. It is unclear whether this lawsuit could make Moore Stephens withhold or withdraw an opinion on CSKI's 2009 financial statements. This week, CSKI announced that it will release earnings for the fourth quarter of 2009 on March 17. more...
Tradeshow Marketing Knows How to Sell Its Stock
by Melissa Davis, 3/3/2010 8:21:22 AM
Give Tradeshow Marketing (OTC: TSHO.PK) some credit. For a company riddled with so many ugly conflicts, TSHO sure knows how to put on a pretty face for investors.
TSHO can thank SkyMark Research – a promotional firm operated by the apparent son of TSHO’s own founder – for reshaping its public image. For years, TSHO looked like a failed business with limited appeal to even speculative investors willing to place bets on high-risk penny stocks. After SkyMark launched favorable coverage of TSHO late last year, however, the company saw interest in its long-overlooked stock suddenly skyrocket. more...
AENY: Look What's Hiding beneath that Former Shell
by Melissa Davis, 2/22/2010 5:42:45 AM
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Americas Energy Company (AENY.OB) exposed some ugly flaws when it emerged from its corporate shell.
Following its heavily hyped reverse merger, AENY now counts CEO Christopher Headrick – a longtime dealmaker with a history of failure – as its sole officer, director and member of its staff. Although AENY has announced plans to expand its senior management team, the company aims to do so by hiring leaders who have benefited handsomely from a series of generous related-party deals. One of those potential executives, already identified as a company vice president in the past, has agreed to plead guilty to felony tax evasion charges and could face up to five years in prison for his crime. more...
Surgeon Seeks to Cut Influence of Device Industry
by Melissa Davis, 11/23/2009 5:51:37 AM
Charles Rosen is a soft-spoken spine surgeon who has earned the kind of reputation that’s normally assigned to a hard-nosed cop.
He first blew the whistle on a giant healthcare company a decade ago, when a hospital owned by Tenet – the second-largest publicly traded hospital chain in the country – failed to inform him that its operating-room sterilizer had not been working properly for months. As the hospital’s chief of surgery, Rosen was asked to minimize the problem during an upcoming inspection by the Joint Commission on Accreditation of Healthcare Organizations. Instead, Rosen sounded an alarm during JCAHO’s annual visit and promptly resigned in protest when the agency – which counted one of the hospital’s directors among its own board members – ignored his concerns. more...
Former Mafia Prosecutor Focuses on White-Collar Crime
by Melissa Davis, 10/12/2009 4:18:26 PM
Gregory J. O’Connell, a founding partner of New York-based De Feis, O’Connell & Rose, has successfully prosecuted Mafia bosses, represented multimillionaires accused of white-collar crimes and even scored a feature role in the latest book published by Jordan Belfort, the so-called “Wolf of Wall Street.” In short, at this point in his illustrious career, O’Connell needs no introduction. Belfort penned such a colorful one in his new book, however, that it would be a crime to skip past the opportunity to share it here. more...
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