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Tag: IPO frauds

  • URGENT >> BULLETIN >> MOVING: SEC Charges Shervin Neman In Alleged Ponzi Scheme Targeted At Los Angeles Persian-Jewish Community; Federal Judge Issues Emergency Asset Freeze

    URGENT >> BULLETIN >> MOVING: The SEC has gone to federal court in Los Angeles, alleging that a California man was operating a $7.5 million Ponzi scheme targeted at the Persian-Jewish community.

    U.S. District Judge Jacqueline H. Nguyen has issued an emergency asset freeze.

    Charged in the alleged affinity-fraud caper was Shervin Neman, 30, of the Century City area of Los Angeles. Neman, according to the SEC, formerly was known as Shervin Davatgarzadeh. He presided over an entity known as Neman Financial LP, which the agency described as a “purported hedge fund.”

    It was the second major affinity-fraud case announced by the SEC in the past 24 hours. The agency said yesterday that Ephren W. Taylor II, 29, of New York, was operating an $11 million Ponzi scheme targeted at African American church congregations. Taylor was charged in Atlanta.

    The Scheme Aimed At The Persian-Jewish Community

    “Neman deceived members of his own community to raise money in this fraudulent Ponzi scheme,” said Michele Wein Layne, associate regional director of the SEC’s Los Angeles Office. “By exploiting investors’ trust in him, Neman was continually able to raise more money to pay back existing investors and finance an extravagant lifestyle.”

    The Neman Ponzi married a real-estate flipping scheme involving purported foreclosures to purported opportunities to profit from IPOs conducted by Facebook , Groupon, LinkedIn and Angie’s List, the SEC said.

    “Although Neman promised investors exorbitant returns resulting from his investing acumen and access to pre-IPO shares of well-known companies, what they actually received was simply other investors’ money in hallmark Ponzi scheme fashion,” the agency said.

    Named a relief defendant in the case was Neman’s wife, Cassandra C. Neman, 33. She is not charged with wrongdoing, but the SEC said she received gifts from her husband, including a $60,000 ring, that were paid for from Ponzi proceeds.

    Neman’s investors also were paying for his wife’s personal expenses, the SEC said. The Nemans  wed in October 2010. The fraud scheme may date back to June  2010. It allegedly raised at least $7.54 million from investors in California, Florida and Texas, the agency said.

    More than 99 percent of investors’ funds were directed either to Ponzi payments or to prop up Neman’s tony lifestyle, the SEC said.

    “Specifically,” the agency said, “of the $7.54 million raised from investors since June 2010, Neman has used more than $5.4 million to make Ponzi payments to existing investors, and has spent another nearly$1.6 million to support a lavish lifestyle and maintain the appearance of an upscale
    business operation. Due to recent investments from new and existing investors,Neman owes nearly $2.7 million in principal payments alone to his investors.”

    Neman filled his personal bank account with investors’ money, the SEC said.

    “In most instances, Neman directed investors to wire their funds to a personal bank account held in Neman’s name or to write checks to him personally, which he then deposited into his personal account,” the SEC charged. “Neman commingled investor funds in his personal account.”

    As was the case yesterday in the SEC’s allegations against Taylor in the alleged affinty-fraud scheme targeted at Christians, the agency said today that Neman’s fraud involved promissory notes.

    Neman was operating a straightforward scam, the SEC said.

    “Among other things, Neman used investor funds to pay for his wedding and honeymoon, his wife’s engagement ring, luxury cars, VIP tickets to entertainment venues, jewelry, hotels, and restaurants,” the SEC charged. “Neman also used investor funds to lease and redecorate a new office in an upscale building in the Century City area of Los Angeles, hire two administrative assistants, and pay legal and other professional expenses . . .”

    Read the Neman complaint.

  • FLORIDA — AGAIN (BOCA RATON VIA NEW YORK): John A. Mattera, Purported Philanthropist, Arrested By Feds And Sued By SEC Amid Allegations He Set Up Scam Using Names Of Groupon And Facebook; Suspect Also Traded On Name Of Red Cross; Investigators Call Him A Recidivist Felon

    John Mattera: Source: Mattera Foundation Nov. 2. 2011, news release

    EDITOR’S NOTE: So, you recognize the power of the names of  Groupon and Facebook and want to trade on their magnetism to drive traffic to your purported “opportunity” — and you want to further sanitize your scheme by describing yourself as a philanthropist and trading on the name of a charity such as the American Red Cross?

    And you perhaps want to give money from your scheme to your wife and your mother, a senior citizen?

    What follows is a story about the allegations against John Mattera and some of his activities in Florida . . .

    John A. Mattera of Boca Raton, Fla., pleaded guilty in 2003 to seven counts of grand theft in three separate Florida criminal cases, according to court records. Among other things, “Mattera stole $34,000 from two Florida investors by promising to provide them with shares of stock that Mattera falsely represented he owned,” the SEC said of the 2003 cases.

    In 2009, the SEC charged Mattera “with fraudulently attempting to avoid registration requirements by backdating promissory notes to obtain improperly unrestricted shares of a company,” according to the agency.

    And now Mattera, 50, has been sued civilly by the SEC and charged criminally by federal prosecutors in New York in yet another alleged scheme — this one involving claims that Mattera traded on the names of Groupon, Facebook and others in a scam that netted between $11 million and $12.6 million.

    The SEC said it is seeking an emergency court order to freeze the assets of Mattera; John R. Arnold, 61, of Florida; Joseph Almazon, 22, of Hicksville, N.Y.; David E. Howard II, 32, of New York City;  Bradford Van Siclen, 43, of Montclair, N.J., and eight different business entities. (Ages in this paragraph approximate.)

    Authorities said Mattera and “cohorts” duped investors into believing that they could convert shares in Mattera’s purported hedge fund — a company that happened to be pushed by “a web of registered and unregistered broker-dealers” — into shares of companies such as Groupon and Facebook in advance of the famous firms’ IPOs.

    Both the SEC and federal prosecutors used descriptive verbs when describing what is alleged to be Mattera’s latest scam — a scam that allegedly involved a network of associates and a company with the high-sounding name of “The Praetorian Global Fund.”

    (Emphasis added to SEC’s choice of verbs.)

    “By conjuring up a seemingly prestigious hedge fund and touting the safety of an escrow agent, these men exploited investors’ desire to get an inside track on a wave of hyped future IPOs,” said George S. Canellos, director of the SEC’s New York Regional Office. “Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.”

    (Emphasis added to U.S. Attorney’s choice of verbs and other descriptors.)

    “As alleged, John Mattera duped investors into believing they had bought rights to shares of coveted stock in Facebook and other highly visible and attractive companies which had not yet gone public,” said U.S. Attorney Preet Bharara of the the Southern District of New York. “As the complaint describes, Mattera told elaborate lies about stock he did not own and about how he would keep investors’ money safe in escrow accounts. Instead, Mattera took the investors’ money to fund his own extravagant lifestyle. With today’s charges, his charade is exposed and he will be held to account for his alleged crimes.”

    Named relief defendants in the SEC case are Ann Mattera, Mattera’s 71-year-old mother, and Lan T. Phan, Mattera’s wife. Phan, 43, is a physician and yoga practitioner. Authorities say the women, who are not charged with an offense, were beneficiaries of the scheme. (Ages in this paragraph approximate.)

    The publicity surrounding John Mattera’s alleged business misdeeds has caused embarrassment for a local chapter of the American Red Cross in South Florida. John Mattera, who is linked on the web to numerous companies or philanthropic organizations even in the wake of previous lawsuits and criminal charges against him, was on the Red Cross board in Broward County until last month, according to the Sun-Sentinel.

    On Nov. 2, just days before the SEC and the Feds came knocking, John Mattera was quoted in this news release about an entity known as the Mattera Foundation, which purported to look “to support those in need” by making it easier for them to find grant funding.

    “John Mattera hopes that organizations across South Florida will use the new grant application tool to contact The Mattera Foundation and secure funding for their causes,” the news release read in part.

    On March 24, 2011, meanwhile, John Mattera was quoted in this news release about a Red Cross golf tournament sponsored by the Mattera Foundation.

    From March 2011 news release by the Mattera Foundation.

    “Investor and American Red Cross board member John Mattera announced today that his eponymous The Mattera Foundation will sponsor the upcoming American Red Cross Golf Tournament,” the release read in part. “The tournament will be held at the Inverrary Country Club on April 1, and all proceeds will benefit the American Red Cross, South Florida Region.”

    It was not immediately clear if Mattera plowed investors’ money into charities. What is clear, according to federal prosecutors, is that he had high appetites and caused investors to believe their money was going into escrow accounts.

    “Based on the misrepresentations of Mattera and others, investors sent more than $11 million into escrow accounts maintained at a Florida bank,” prosecutors charged. “Mattera reassured investors that their money would be held in the escrow accounts until either the offering was completed or another triggering event took place, at which time the investors would receive their ownership interest in the particular special purpose entity. However, instead of maintaining the investor money in the escrow accounts as he promised, Mattera caused the vast majority of it to be transferred to other entities with which he was associated. Ultimately, Mattera misappropriated more than $11 million of investor money and spent nearly $4 million on personal items for his family and himself, such as expensive jewelry, interior decorating and luxury cars.”

    A veteran IRS agent also used strong language when describing Mattera’s latest alleged fraud scheme. (Emphasis added.)

    “The allegations against Mr. Mattera show that the appearance of success can be a tangled web of financial lies,” said Victor W. Lessoff, special agent-in-charge of the Newark (N.J.) Field Office of the IRS Criminal Investigation Unit (IRS-CI).

    Such descriptions also surfaced in the epic Scott Rothstein Ponzi caper, which also operated in South Florida.

    Read SEC news release on John Mattera’s latest alleged scam.

    Read the SEC complaint.

    Read Feds’ news release on John Mattera’s latest alleged scam.

  • BULLETIN: FLORIDA — AGAIN (VIA NEW YORK): SEC Says Men Gathered $8 Million Through Lure Of Nonexistent IPO And ‘Contracts’ With Famous Companies; Angelo Cuomo And Recidivist George Garcy Of E-Z Media Inc. Charged With Securities Fraud

    BULLETIN: A recidivist securities offender in Florida and his business partner in New York have been charged by the SEC with fraud in a case that alleges they pumped an IPO that never happened.

    Charged in the civil case were George Garcy, 54, of Aventura, Fla., and Angelo Cuomo, 62, of Staten Island, N.Y. Garcy also is known as Jorge Garcia, and was charged by the SEC in 1997 with improperly selling stock, the SEC said.

    Today’s case was brought in federal court in the Eastern District of New York. It involved an offering fraud for a company known as E-Z Media Inc., the SEC said.

    “Garcy and Cuomo conducted an offering fraud that was rife with false statements and omissions to entice unsuspecting investors,” said George S. Canellos, director of the SEC’s New York Regional Office. “Instead of using the offering proceeds to develop their business, Garcy and Cuomo treated E-Z Media’s bank account as a personal slush fund and diverted millions of dollars to line their pockets.”

    Both Garcy and Cuomo failed to tell investors of E-Z Media Inc. about Garcy’s previous encounter with regulators when he was a California resident, the SEC charged.

    As part of the newly detected fraud, E-Z Media investors were told the firm had “contracts” with Heineken, Anheuser Busch and Aramark Corp. for its beverage and -food carrier product, but no contracts existed, the SEC said.

    Investors also were lured by the promise of a profitable IPO, but E-Z Media “never took even the basic steps to prepare” for an IPO, the agency said.

    The scheme attracted “at least” 200 investors and gathered about $8 million between April 2003 and March 2009, the SEC charged.

    Garcy and Cuomo diverted about half of the scheme proceeds to themselves and family members, the agency charged.

    A carrier patent E-Z Media purportedly held also was used to lure investors, but the patent was contingent upon a $14.5 million payment to Cuomo and may not have been valid to begin with because “Cuomo had previously transferred his ownership rights” to his sister, the agency charged.

    Cuomo’s sister,  Judith Guido, 55,  received at least $1.7 million from the scheme, the SEC said. She has been named a relief defendant, as have two sons of Cuomo: Ralph Cuomo, 37, and Vincent Cuomo, 31.

    The Cuomo brothers received a combined total of at least $240,500 from the scheme, the SEC said.

    Also named a relief defendant was attorney Joseph Lively, 55, of Farmingdale, N.Y. Lively received at least $120,000, the SEC said.

    The SEC described the payments to the relief defendants as ill-gotten gains, saying none of the relief defendants had any legitimate claim to the money.