SEC: Town Officials in New York Hid Financial Troubles From Bond Investors

The Securities and Exchange Commission today announced fraud charges against Ramapo, N.Y., its local development corporation, and four town officials who allegedly hid a deteriorating financial situation from their municipal bond investors.

The SEC alleges that Ramapo officials resorted to fraud to hide the strain in the town’s finances caused by the approximately $60 million cost to build a baseball stadium as well as the town’s declining sales and property tax revenues.  They cooked the books of the town’s primary operating fund to falsely depict positive balances between $1.4 million and $4.2 million during a six-year period when the town had actually accumulated balance deficits as high as nearly $14 million.  And because the stadium bonds issued by the Ramapo... Read More

SEC: Research Analyst Is Insider Trading in Mother’s Brokerage Account

The Securities and Exchange Commission today announced insider trading charges against a research analyst who allegedly reaped more than $1.5 million in February through trades he made in his mother’s brokerage account based on nonpublic information he learned at work.

The SEC alleges that John Afriyie found out about an impending acquisition of home security company The ADT Corporation when prospective acquirer Apollo Global Management approached the Manhattan-based investment firm where he was employed and discussed potential debt financing for a public-to-private deal.  Afriyie subsequently accessed several highly confidential, deal-related documents on the firm’s computer network and purchased thousands of high-risk, out-of-the-money ADT call options in his mo... Read More

Marshall Sprung, Co-Chief of Asset Management Unit, to Leave SEC After 13 Years of Service

The Securities and Exchange Commission today announced that Marshall S. Sprung, co-chief of the Division of Enforcement’s Asset Management Unit, is planning to leave the agency later this month.

As co-head of the unit for the past two-and-a-half years, Mr. Sprung has overseen a nationwide staff of nearly 80 attorneys, industry experts, and other professionals that investigates violations of the federal securities laws by investment advisers, registered funds, and private funds.  Co-Chief Anthony Kelly will continue to lead the unit following Mr. Sprung’s departure.

“Marshall has served as a thoughtful, creative, and driven co-chief of the Asset Management Unit,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division.  “He helped the ... Read More

SEC: Company Misled Investors About Energy-Efficient Technology

The Securities and Exchange Commission today announced fraud charges against a Texas-based technology company and its founder accused of boosting stock sales with false claims about a supposedly revolutionary computer server and big-name customers purportedly placing orders to buy it.

Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of the company’s board of directors for allegedly recruiting investors while hiding they were being compensated to promote the company’s stock.

The SEC alleges that Servergy Inc. and William E. Mapp III sold $26 million worth of company stock in private offerings while misleading investors to believe that the Cleantech CTS-1000 server (the company’s sole product) was especia... Read More

Las Vegas Sands Paying Penalty for FCPA Violations

The Securities and Exchange Commission today announced that Las Vegas Sands Corp. has agreed to pay a $9 million penalty to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by failing to properly authorize or document millions of dollars in payments to a consultant facilitating business activities in China and Macao.

An SEC investigation found that LVS kept inaccurate books and records and frequently lacked supporting documentation or proper approvals for more than $62 million in payments to a consultant in Asia.  The consultant acted as an intermediary to obscure the company’s role in certain business transactions such as the purchases of a basketball team and a building in China, where casino gambling isn’t permitted.  At one point, LVS c... Read More

SEC Charges Four in Fraudulent “Free Dinner” Scheme

The Securities and Exchange Commission today announced that it has charged four individuals in a fraud whose victims included seniors who were solicited at “free dinner” investment seminars in Florida.

The SEC alleges that Philadelphia residents Joseph Andrew Paul and John D. Ellis, Jr. lied about the track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Florida, to lure potential victims with promises of lofty returns.

According to the SEC’s complaint, Paul and Ellis created fraudulent marketing materials including some with performance numbers that were “cut and pasted” from another firm’s website.  The complaint further alleges that Quay and Ellison used these materials to mislead seniors who re... Read More

SEC: Navistar International and Former CEO Misled Investors About Advanced Technology Engine

The Securities and Exchange Commission today charged Navistar International Corp. with misleading investors about its development of an advanced technology truck engine that could be certified to meet U.S. emission standards.

Navistar, without admitting or denying the charges, has reached a settlement with the SEC and agreed to pay a $7.5 million penalty.  Separately, in a complaint filed in federal court in the Northern District of Illinois, the SEC charged former Navistar CEO Daniel C. Ustian with misleading investors and with aiding and abetting violations by Lisle, Illinois-based Navistar.

The SEC alleges that Navistar and Ustian failed to fully disclose the company’s difficulties obtaining Environmental Protection Agency (EPA) certification of a truck engine ... Read More

SEC: Biotech Venture Capitalist Stole Investor Funds for Personal Use

The Securities and Exchange Commission today announced that a San Francisco-based biotech venture capitalist has agreed to settle charges that he siphoned money from a fund managed by his firm in order to prop up other struggling businesses he owned and finance his lavish lifestyle.

An SEC investigation found that G. Steven Burrill concealed from investors that he took money from the Burrill Life Sciences Capital Fund III under the guise of “advanced” management fees and spent it on family vacations to St. Barts and Paris as well as jewelry, gifts, car service, and private jets.

Burrill and his firm Burrill Capital Management agreed to the disgorgement of $4.785 million in investor money he stole for personal use plus a $1 million penalty.  Burrill also agreed to ... Read More

Former TV Commentator Settles Penny Stock Fraud Charges

The Securities and Exchange Commission today announced that a former market analyst and TV news commentator has agreed to settle charges that he and his company fraudulently promoted a penny stock to investors.

The SEC alleges that Tobin Smith and NBT Group Inc. were paid to prepare and disseminate e-mails, online blogs, articles, and other communications touting the stock of IceWEB Inc., a data storage company.  Smith and NBT did not fully disclose their compensation to investors, who did not have the benefit of knowing that part of their pay was tied to a sustained increase in IceWEB’s share price.  The promotional material also contained false and misleading statements intended to artificially increase the trading volume and share price of IceWEB’s stock. 

SEC: Biotech Company Misled Investors About New Drug’s Status With FDA

The Securities and Exchange Commission today announced fraud charges against a Massachusetts-based biotech company and three former executives for misleading investors about the company’s efforts to obtain Food and Drug Administration (FDA) approval for its flagship developmental drug to treat kidney cancer.

The SEC alleges that AVEO Pharmaceuticals Inc. concealed the FDA’s level of concern about Tivozanib in public statements to investors by omitting the critical fact that FDA staff had recommended a second clinical trial to address their concerns about patient death rates during the first clinical trial.  When the FDA made public months later that it had recommended an additional clinical trial, the company’s stock price declined 31 percent.  AVEO never conducte... Read More

Securities Professional Charged With Defrauding Institutional Investors

The Securities and Exchange Commission today charged a New York-based securities professional with defrauding two institutions he solicited to invest in a shell company he controlled whose name was deceptively similar to that of a legitimate private equity fund. 

According to the SEC complaint filed in federal district court in Manhattan, Andrew W.W. Caspersen, a New York City resident, solicited approximately $95 million from two institutional investors by offering promissory notes issued by Irving Place III SPV LLC.  The complaint alleges that Irving Place III SPV LLC is a shell entity formed and controlled by Caspersen with no legitimate business operations, unlike the similarly named Irving Place Capital Partners III SPV, a legitimate private equity fund not associated... Read More

SEC Halts Fraud by Manager of Investments in Pre-IPO Companies

The Securities and Exchange Commission today announced fraud charges and asset freezes obtained in a case filed against a New Jersey-based fund manager and two firms he controls that marketed shares in promising pre-IPO tech companies in the Bay Area. The SEC alleges they stole $5.7 million from investors and diverted millions more to other improper and undisclosed uses.

Specifically, the SEC alleges that John Bivona used money raised through Saddle River Advisors and SRA Management Associates to pay off earlier investors, prop up other funds, and pay family-related expenses.  He secretly steered the lion’s share of misappropriated funds to his nephew Frank Mazzola, who was barred from the securities industry... Read More