Financial Enforcement Actions | Week of November 02 to November 08

Penalties: $2,500.00
Respondent: Nudge, LLC, Response Marketing Group, LLC, et al.
Violation: The Division seeks temporary, preliminary, and permanent injunctive relief, rescission of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, civil penalties, fines, and other equitable relief for Defendants’ acts, omissions, or practices that violated the Utah Consumer Sales Practices Act (“UCSPA”), Utah Code § 13-11-1 et seq., the Business Opportunity Disclosure Act (“BODA”), Utah Code § 13-15-1 et seq., the Telephone Fraud Prevention Act (“TFPA”), Utah Code § 13-26-1 et seq., and the TSR, 16 C.F.R. Part 310… Read More

Penalties: N/A
Respondent: RagingWire Data Centers, Inc
Violation: RagingWire has represented, directly or indirectly, expressly or by implication, that it complies with the Privacy Shield Principles. In fact, as described in Paragraphs 26-29, RagingWire failed to comply with the verification requirements during the time it participated in Privacy Shield. Therefore, the representations set forth in Paragraph 40 were false or misleading… Read More

Penalties: N/A
Respondent: AT&T Mobility LLC
Violation: Federal Trade Commission, Plaintiff, v. AT&T Mobility LLC, a limited liability company, Defendant AT&T reached a settlement with the FTC over allegations that the wireless provider misled millions of its smartphone customers by charging them for “unlimited” data plans while reducing their data speeds… Read More

Penalties: $1,350,000.00
Respondent: HomeStreet Bank
Violation: engaged in violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. Part 1024, by entering into certain co-marketing agreements using online platforms and desk rental agreements that resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business… Read More

Penalties: N/A
Respondent: Collector’s Coffee (d/b/a Collectors Café), and Mykalai Kontilai
Violation: The complaint alleges the defendants went so far as to sue two investors that it believed breached one of the illegal agreements. Following the filing of the SEC’s action in May 2019, the defendants allegedly have continued to misrepresent to investors material facts about Collectors Café’s business and the reasons why Kontilai took money from the company for personal expenses, including continuing to tell investors that he loaned Collector’s Café millions of dollars in the late 2000s when, in reality, he never lent the company the amounts that he claims… Read More

Penalties: $1,324,788.00
Respondent: Richard Eden, et al. and Dale Pearlman
Violation: Eden and Pearlman allegedly called prospective investors and convinced them to purchase shares of ITEC in their own brokerage accounts at prices and volumes that were coordinated by Eden, Pearlman, and ITEC’s undisclosed control person. ITEC’s undisclosed control person simultaneously entered sell orders at the coordinated price and volume, making it highly likely that his sell orders and the solicited investors’ buy orders would match. Through this matched trading, ITEC’s undisclosed control person was able to offload his shares into a ready market. The Commission previously charged ITEC and its control person for fraud and registration violations… Read More

Penalties: N/A
Respondent: Richard Eden and Christopher Neumann; – Richard Eden, et al. and Dale Pearlman
Violation: Defendants violated and, unless restrained and enjoined by this Court, may continue to violate Section 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78o(a)(1)]. Additionally, by engaging in this conduct, as further described herein, Defendant Eden violated and, unless restrained and enjoined by this Court, may continue to violate Sections 5(a) and (c) and 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and (c), 77q(a)(1) and (3)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Exchange Act Rule 10b–5(a) and (c) [17 C.F.R. § 240.10b–5(a) and (c)]… Read More

Penalties: $50,295,232.00
Respondent: Bethany Liou And Golden California Regional Center, LLC
Violation: Respondents sold to investors at least $45,000,000 in limited partnership interests in GCRC Cupertino Fund, LP (“Cupertino Fund”). Instead of deploying those funds to the developer in accordance with the Cupertino Fund offering documents, Respondents transferred the investor funds to accounts in Liou’s name and then pledged those funds as collateral for a line of credit, thereby violating Section 17(a)(2) of the Securities Act… Read More

Penalties: N/A
Respondent: Ira Warkol
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Ira Warkol (“Warkol” or “Respondent”)… Read More

Penalties: N/A
Respondent: Monarch America, Inc. and VW Win Century, Inc.,
Violation: VWIN has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended March 31, 2017… Read More

Penalties: N/A
Respondent: Hawk Street Acquisition Corp., and Mobad Service Corporation,
Violation: Mobad Service has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended January 31, 2012… Read More

Penalties: N/A
Respondent: Competitive Companies, Inc., Unilava Corporation, and Uplift Nutrition, Inc.,
Violation: UPNT has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended September 30, 2016… Read More

Penalties: N/A
Respondent: NXChain, Inc. f/k/a AgriVest Americas, Inc., Rock Energy Resources, Inc., and SoOum Corp
Violation: NXCN has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended February 28, 2017… Read More

Penalties: N/A
Respondent: Bolton Securities Corporation d/b/a Bolton Global Asset Management
Violation: “BoltonSecurities invested advisory clients in mutual fund share classes that charged 12b-1 fees, and which had an available share class without 12b-1 fees. Those 12b-1 fees were paid to an affiliated broker-dealer under common ownership and control with Bolton Securities, which in turn paid some of the fees to Bolton Securities’ investment adviser representatives. Bolton Securities, however, did not disclose to clients that it purchased or held share classes for its clients that generated 12b-1 fees for Bolton Securities’ affiliate when different share classes of the same mutual fund were available that did not carry 12b-1 fees. In addition, the SEC alleges that from November 2014 through at least March 2019, Bolton Securities used the principal trading account of the broker dealer under common ownership and control to engage in self-dealing transactions with its advisory clients that generated principal trading compensation for the broker-dealer, without providing disclosure sufficient for clients to provide informed consent to the conflicted transactions, and without obtaining required client consent”… Read More

Penalties: $1,767,000.00
Respondent: David N. Osegueda, et al.
Violation: The SEC previously charged Osegueda and three other defendants for deceiving a brokerage firm into allowing Osegueda and two other defendants to deposit their Green Cures stock into their accounts in advance of their pumping up the company’s stock price through a promotional campaign. Osegueda and two other defendants then dumped their shares on unsuspecting investors, generating approximately $1.9 million in illicit proceeds. On November 4, 2019, the U.S. District Court for the Central District of California entered a judgment against Osegueda, permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b5 thereunder… Read More

Penalties: N/A
Respondent: American Rare Earths and Materials, Corp., PureSafe Water Systems, Inc., and SpendSmart Networks, Inc.
Violation: PSWS has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended September 30, 2015… Read More

Penalties: $1,545,758.99
Respondent: Morgan Stanley Smith Barney LLC
Violation: MSSB willfully violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, which prohibit any person in the offer or sale of securities from obtaining money or property by means of any untrue statement of material fact or any omission to state a material fact necessary in order to make statements made not misleading, and from engaging in any practice or course of business which operates or would operate as a fraud or deceit in the offer or sale of securities, respectively.4 Negligence is sufficient to establish violations of Sections 17(a)(2) and (3) of the Securities Act. See Aaron v. SEC, 446 U.S. 680, 696-97 (1980). As a result of these violations, certain Eligible Customers incurred upfront sales charges, CDSCs, and higher ongoing fees and expenses, and MSSB received additional revenue… Read More

Penalties: $25,000.00
Respondent: David Pruitt, CPA
Violation: Respondent caused L3’s violations of Section 13(b)(2)(A) of the Exchange Act, which requires an issuer to make and keep books, records, and accounts, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer. As a result of the conduct described above, Respondent violated Rule 13b2-1 of the Exchange Act, which prohibits any person from, directly or indirectly, falsifying or causing to be falsified, any book, record, or account that the Exchange Act requires an issuer to maintain… Read More

Penalties: N/A
Respondent: Michael A. Gramins, et al.
Violation: On November 6, 2019, the U.S. District Court for the Southern District of New York entered an order dismissing with prejudice the U.S. Securities and Exchange Commission’s complaint against Tyler Peters. The court’s order was based on the SEC’s motion to dismiss its claims against Peters. This matter related to Peters’ role in buying and selling residential mortgage-backed securities at Nomura Securities International… Read More

Penalties: N/A
Respondent: Chet Inglis
Violation: “The Commission’s Complaint alleged that Inglis served as a public face of TEM, even though co-Defendant James E. VanBlaricum actually directed TEM’s day-to-day business operations. The Complaint also alleged that Inglis knew the offering materials and website contained materially misleading and false information, including that: (1) the securities had a guaranteed return of 10% per year; (2) the drilling programs were productive and profitable, when many of the wells were dry holes; and (3) investor funds would be used for a variety of legitimate oil-and-gas related activites when, in fact, they were being used to pay, among other things, Ponzi payments to other investors, significant personal expenses, and large undisclosed sales commissions”… Read More

Penalties: N/A
Respondent: KRM Services, LLC and Roberto J. Clark, Jr.
Violation: According to the SEC’s complaint, Roberto J. Clark, Jr. of Palm Bay, Florida and his company KRM Services, LLC raised hundreds of thousands of dollars from retail investors by falsely telling them the money would be used to develop and market motorized surfboards. The SEC alleges that to facilitate the scheme Clark showed investors a forged contract for surfboard orders from a major cruise line, made misrepresentations about purported orders from water sports vendors in Florida, and marketed the investment in his company using baseless revenue projections. In fact, the complaint alleges, Clark misappropriated most of the investors’ money and used it for personal expenses including high-end apparel, a luxury automobile, event tickets, and patronage of adult entertainment establishments… Read More

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