Category Archives: SEC News

On March 18, 2021, the Securities and Exchange Commission charged James Roland Jones with running a fraudulent online scheme to market “insider tips” on the dark web.  The dark web enables users to access the internet anonymously and is frequently used as a marketplace for illegal activity.  This is also referred to as the “black market.”

In late 2016 and 2017, Jones, utilizing the dark web, sought to acquire non-public, inside information that for his own use.  He later sought the non-public information in order to sell it.  Although Jones never acquired inside information, he attempted to deceive others into believing he had the information and that it was for sale.

Several clients paid in bitcoin and purchased the alleged tips based on the information Jones provided. The Securities and Exchange Commission charged Jones with violating anti-fraud provisions.

This case demonstrates that the SEC can and will go after securities law violators wherever they operate, including the dark web.  If you have not hired an attorney and wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On February 4, 2021, the Securities and Exchange Commission charged three individuals and their associated companies with operating a Ponzi-like scheme that allegedly raised over $1.7 billion from securities issued by GPB Capital.  The SEC also charged GPB Capital with violating the whistleblower protection rules.

The SEC’s complaint alleges that David Gentile, the owner and CEO of GPB Capital, and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital, lied to investors about the source of money used to make an 8% annualized distribution payment to investors.  According to the complaint, these defendants along with Ascendant Alternative Strategies, which marketed GPB Capital’s investments, told investors that the distribution payments were paid exclusively with monies generated by GPB Capital’s portfolio companies.  As alleged, GPB Capital actually used investor money to pay portions of the annualized 8% distribution payments.  GPB Capital and Gentile with assistance from Jeffrey Lash, a former managing partner at GPB Capital, also allegedly manipulated the financial statements of certain limited partnership funds managed by GPB Capital to perpetuate the deception by giving the false appearance that the funds’ income was closer to generating sufficient income to cover the distribution payments than it actually was.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “Whistleblower protections are a cornerstone of the SEC’s whistleblower program.  The charges filed today reinforce the Commission’s commitment to protecting whistleblowers from retaliation and attempts to stifle the free flow of information to the Commission about possible securities law violations.” If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On June 25^th, 2020, the Alabama Securities Commission filed a Cease and Desist Order against John Paul Maroney and his companies Harbor City Capital Corp. and Harbor City Digital Ventures, Inc. Based out of Melbourne, FL, Maroney advertises unrealistic returns on investments that, in fact, do not exist. The Securities Exchange Commission has no records of any of Maroney’s companies or the bonds he offers; the Alabama Securities Commission does not have any records either. Maroney is not registered as a broker or investment advisor in the State of Alabama. Maroney advertised an 18% annual return on investment, along with other fraudulent investments.

What is most surprising about this case is that despite the Cease and Desist Order, Harbor City Capital’s website is still live and soliciting investments. The website currently lists a bond titled HCCF-4.  HCCF-4 guarantees a 12% return on the one-year bond with no risk to the principal. Harbor City Capital Corp. is not listed in Sunbiz as a Florida entity.  The website states, “Pocket 12% Yield With ZERO Risk To Your Principal.”  So where are our regulators when we need them?

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6^th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On June 12, 2020, the SEC filed a Complaint alleging multiple instances of fraud against Frederick M. Stow, a Tennessee-based broker at Raymond James & Associates, Inc. The SEC alleges that Stow stole over $900,000 from one of his clients, a World War II. The elder exploitation victim was Stow’s client for nearly 40 years, electing to remain with Stow whenever Stow relocated to another firm. Between October 2015 and April 2019, Stow sold securities in his client’s IRA and subsequently forged wire transfer Letters of Authorization in order to transfer the sales proceeds into his own account. The client passed away in March 2019 at the age of 98. Following his passing, the executor of the estate repeatedly requested explanations for the suspicious wire transfers. Stow then confessed his theft to his supervisor and was terminated by Raymond James. The SEC also alleges that Stow stole $32,000 from a separate client in April 2019.

Elder exploitation of this nature is not uncommon in the financial services industry.  Numerous stockbrokers have been imprisoned as a result of their greed.  It is only because of an estate executor’s due diligence that this theft was discovered.  For ideas on how you can help your friends or relatives avoid being a victim of this type of crime, feel free to call me.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6^th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On June 9, 2020, the SEC filed a Complaint alleging that Jason C. Nielsen operated a “pump and dump” scheme, thereby defrauding other investors. Nielsen knowingly posted false statements on investment forums in regard to the stock of a biotechnology company, Arrayit Corporation. A “pump and dump” scheme is when an investor buys stock in a given company and subsequently lies about the company’s affairs in order to “pump” up the value of his investment, and then proceeds to “dump” his shares after their value has gone up. Nielsen allegedly made approximately $137,000 from this scheme.

Nielsen, through his posts on investment forums, proclaimed that Arrayit had developed a COVID-19 blood test and that the test had gotten emergency approval from the FDA. Neither was true. Nielsen owned about 10% of Arrayit’s common stock. His false and/or misleading claims defrauded investors. On top of this, Nielsen also allegedly utilized a tactic known as “spoofing,” where an investor places orders for large amounts of a company’s stock and then cancels them, creating the appearance of an increase in demand.

The SEC charged Nielsen with violating the antifraud provisions of the federal securities laws, and seeks permanent injunctions, civil money penalties, a penny stock bar, and disgorgement with prejudgment interest.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6^th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On June 4, 2020 the SEC announced a nearly $50 million whistleblower award to an individual who alerted the agency of firsthand observations of misconduct by a company that resulted in a successful enforcement action that returned a significant amount of money to harmed investors.  This is the largest amount ever awarded to one individual under the SEC’s whistleblower program.

The Securities and Exchange Commission has awarded more than $500 million to whistleblowers since the inception of the agency’s whistleblower program in 2011.   This award is the largest individual whistleblower award since the inauguration of the program.   The whistleblower program was established by Congress to incentivize whistleblowers with specific, timely and credible information about federal securities laws violations to report to the SEC.  The Commission emphasizes, that no money has been taken or withheld from harmed investors to pay whistleblower awards.  The informant’s award is based on a percentage of the money collected in fees and sanctions paid by the violators they uncovered, and if they provided the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not discloses information that could reveal a whistleblower’s identity.   Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.  If you believe you have information of a material nature that would be helpful to the SEC’s mission, David A. Weintraub, P.A. may be able to represent you in connection with your whistleblower claim.

On May 22^nd, 2020, the Securities and Exchange Commission issued a press release detailing a Ponzi scheme designed to target the elderly. The SEC filed an emergency action and subsequently obtained a temporary restraining order and asset freeze against Paul Horton Smith Sr. and his various companies, which he used to organize the scheme. Smith Sr., according to the SEC’s complaint, offered and sold securities through his company Northstar Communications LLC.

Smith Sr. allegedly used his other companies to sponsor events, such as financial workshops and free-meal seminars, at which he would promise investors, often elderly people, guaranteed annual interest payments of anywhere from three percent to ten and a half percent if they invested in so-called private annuity contracts.” However, Smith Sr. did not invest the funds he raised in any securities. Instead, he would use those funds to pay returns to previous investors. This is a classic Ponzi scheme.

Smith Sr. and his entities stand accused of raising over $5.6 million from at least thirty-five investors and then paying $5.2 million to those investors in the form of interest payments or principal reward. He and his companies have been charged with violating the antifraud provisions of the federal securities laws. The complaint seeks civil penalties, injunctions, and the return of ill-gotten gains plus interest.

If you have not hired an attorney and wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6^th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

On May 18, 2020 the Securities and Exchange Commission sued three Texas residents who used deceptive offering materials and promotional videos to sell $2.7 million in fraudulent oil and gas investments.  Defendants Paul R. Montgomery, Jr., Michael D. Fisher, and James H. Willingham, Jr. were charged after the SEC found that approximately 15 investors lost about $2.7 million by investing in joint venture interests in two oil and gas projects.  Defendants lured investors with, among other things, promises of 32% investment returns, as well as representations about Montgomery’s expertise and qualification in the oil and gas exploration industry.

The complaint alleges Defendants never drilled or reworked a single well for the projects.  Defendants misrepresented and/or omitted numerous material facts to investors that were fundamental to the nature and risks of the investment offerings.  Defendants distributed written offering materials in which they promised to use investor funds only for specified purposes, instead they misappropriated investor funds, spending hundreds of thousands of dollars for a number of uses not permitted in the offering documents, such as undisclosed commissions, and payments to Montgomery and Willingham.   In the end, investors suffered a complete loss of their funds.

In the interest of protecting the public from any further fraudulent activity and harm, the SEC brought this action against Defendants.  The Commission charged Montgomery and Fisher with aiding and abetting Willingham’s violations of the charged anti-fraud provisions.  Additionally, the SEC is seeking disgorgement of ill-gotten gains plus interest, civil penalties, and injunctive relief.  Willingham has agreed to be enjoined against future violations of the charged provisions, and to pay disgorgement, prejudgment interest, and civil penalty, the amounts of which will be determined by the court upon a motion filed by the SEC.