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Tag: SEC

  • BULLETIN: SEC Charges 2 Executives Of Purported Clean-Coal Firm In Alleged $43 Million Offering Fraud; 1 Of Them Has Conviction For Bank Fraud And Was Arrested Dec. 1 Amid Allegations He Was Flogging New Offer In Violation Of Plea Agreement

    BULLETIN: The SEC has gone to federal court in Minnesota, alleging that two executives of a clean-coal tech firm repeatedly lied to investors and that one of the executives had a conviction for bank fraud — a fact not disclosed to investors when the company was trawling for cash and using unregistered brokers to do so.

    Bixby Energy Systems Inc. raised at least $43 million from more than 1,800 investors between 2001 and 2010, the SEC charged.

    Bixby executives Robert A. Walker and Dennis L. DeSender, according to the SEC, touted the firm’s purported coal-gasification machine as “proven and operating when in fact it had substantial technological defects, did not function properly, and was at risk of self-destruction.”

    “Investors were falsely informed that Bixby’s coal gasification technology was proven, fully functional, and ready for market,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.

    Records show that DeSender, 64, of Minneapolis, was released from federal prison in 1998, about three years prior to Bixby’s offering. He went on to work for Bixby as its CFO and COO, and also as an independent consultant, according to the SEC.

    In September 2011, DeSender pleaded guilty to a criminal charge of securities fraud that flowed from his role at Bixby, according to records. But he was arrested again on Dec. 1 “for soliciting investors for another issuer in violation of his plea agreement,” the SEC said.

    Bixby itself was charged with securities fraud in September 2011, entering into a deferred- prosecution agreement with the government after the firm accepted accountability for fraud committed by “former officers and agents” and its board ousted an individual federal prosecutors described only as an “unidentified coconspirator.”

    In its complaint today, the SEC said Walker — Bixby’s 69-year-old former president, CEO and board chairman — no longer held any titles at the firm and had “asserted his Fifth Amendment right against self-incrimination and refused to provide testimony in response to a Commission investigative subpoena.”

    Walker resides in Anoka, Minn.

    The SEC today also charged six individuals and three companies with hawking Bixby’s offering illegally.

    “Investors who purchased Bixby shares through the unregistered brokers were deprived of the protections afforded under the federal securities laws requiring the registration of broker-dealers and securities offerings like these,” Gillette said.

    The Star Tribune is reporting this afternoon that Walker has been arrested.

  • BULLETIN: First, Notre Dame’s ‘Rudy’ — Now, Willie Gault Of The ‘Super Bowl Shuffle’ Chicago Bears; SEC Charges Former NFL Wide Receiver In Alleged Stock Caper; Feds Arrest Lawyer

    BULLETIN: The SEC has gone to federal court in the Central District of California to charge former U.S. Olympian and NFL wide receiver Willie Gault in an alleged stock scheme involving Heart Tronics Inc.

    Gault, 51, was a member of the 1980 U.S. Olympic Team that boycotted the summer games in Moscow. He later played in the NFL for 11 seasons for the Chicago Bears and the then-Los Angeles Raiders. With Gault playing wide receiver, the 1985 Bears team won the Super Bowl over the New England Patriots. The Bears’ team also was famous for the “Super Bowl Shuffle” video and recording.

    Just last week, the SEC charged former Notre Dame walk-on Daniel “Rudy” Ruettiger  and 12 others in an alleged penny-stock caper. Ruettiger, 63, was the inspiration behind the 1993 movie “Rudy.” The agency said today that the separate scheme involving Gault also involved others, including J. Rowland Perkins, a founder of the Creative Artists Agency talent agency, and Mitchell J. Stein, an attorney in Hidden Valley, Calif., and Boca Raton, Fla.

    Perkins and Gault were charged civilly. Stein, 53, was charged both civilly and criminally.

    Stein was arrested Sunday at Los Angeles International Airport, the Justice Department said this afternoon. He is charged with one count of conspiracy to commit mail fraud and wire fraud, three counts of mail fraud, three counts of wire fraud, three counts of securities fraud, three counts of money laundering and one count of conspiracy to obstruct justice.

    “Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” said Stephen L. Cohen, associate director in the SEC’s Division of Enforcement. “Stein secretly sold millions of dollars in stock while peddling false claims of Heart Tronics’s lucrative sales orders, and has been living the high life off his illicit proceeds with multiple homes, exotic cars, and private jets.”

    Also charged civilly was Martin B. Carter of Boca Raton. The SEC described him as Stein’s “chauffer and handyman.” Other civil defendants include Ryan A. Rauch of San Clemente, Calif., and Mark C. Nevdahl of Spokane, Wash.

    “Stein and Gault together defrauded one investor into making a substantial investment in Heart Tronics based on false representations that his money would fund the company’s operations,” the SEC alleged. “Instead, Stein and Gault diverted the investor’s proceeds for personal use, including the purchase of Heart Tronics stock in Gault’s personal brokerage account ‘Catch 83’ to create the false appearance of volume and investor demand for the stock.”

    Gault wore No. 83 for the Bears and the Raiders. The SEC said Heart Tronics installed him “as a figurehead co-CEO along with . . .  Perkins in order to generate publicity for the company and foster investor confidence.”

    “Stein orchestrated the repeated announcement of fictitious sales orders for Heart Tronics’ products in public filings with the Commission, press releases, and other public broadcasts, all designed to make it appear that Heart Tronics was more successful than it actually was,” the SEC charged.

    As part of the fraud, the SEC charged, Carter flew to Japan to mail back a letter to the United States in a bid to advance the scheme.

    Carter, the chauffer, also posed as a person named “Tony Nony,” the SEC charged.

    Read the SEC complaint.

  • UPDATE: Criminal Prosecutors Say Jason Bo-Alan Beckman Stole Nearly $4 Million From Elderly Husband And Wife; Wife A Stroke Victim With ‘Hemispheric Paralysis,’ According To Court Records; Beckman’s Manipulations Amount To ‘Contumacious Disobedience,’ SEC Says

    UPDATE: Facing a margin deficit of more than $10 million and at risk of having his trading account closed in February 2008, Jason Bo-Alan Beckman — a figure in the Trevor Cook Ponzi scheme — sought to address the whopping shortfall and prop up the monumental fraud by stealing about $3.9 million from an elderly couple, federal prosecutors in Minnesota now say.

    Separately, a federal judge has denied Beckman’s bid for the court to release $3,000 for living expenses. Chief Judge Michael J. Davis ruled Beckman could not have the money after receiver R.J. Zayed and the SEC claimed Beckman had failed to repay an earlier loan of more than $5,120 made to him from receivership proceeds and had shown no proof that $1,248 of that sum had gone to pay child-support obligations as required.

    Beckman, 41, has been charged both civilly and criminally, amid allegations he was a central figure in Cook’s $194 million fraud, believed to among the largest in Minnesota history. Victims have complained that Beckman is thumbing his nose at them, and prosecutors say he “has provided shifting and inconsistent rationalizations” for his conduct.

    The SEC chose a different phrase to describe Beckman’s alleged manipulations of victims and the courts: contumacious disobedience. (See definition below.)

    In shocking new allegations, criminal prosecutors said Beckman stole millions of dollars from an elderly husband and wife now in their nineties and tried to make it appear as though the wife — a stroke victim with “hemispheric paralysis” — had become his business partner.

    Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged.

    He told neither the wife nor the husband about the sale, but later claimed that the woman — described by prosecutors as “C.O.” — had become an investor in Oxford Private Client Group, an advisory firm controlled by Beckman that allegedly fed Cook’s Ponzi.

    “Put differently,” prosecutors alleged, “Beckman now claims that C.O., who was a stroke victim in her eighties, knowingly contributed millions of dollars to the Oxford Private Client Group capital so that she could become Beckman’s partner in high finance.”

    The woman, prosecutors said, resides with her husband at an assisted-living facility and suffers from partial paralysis on her left side.

    She “can transfer herself from one place to another only with significant assistance,” prosecutors said.

    Prosecutors interviewed the woman at the facility last month and now are seeking court approval to take her formal deposition at the facility and preserve it for trial, saying it was “doubtful that she would be able to give live testimony in a federal courtroom without great hardship to herself.”

    Prosecutors argued that she was a “critical witness” who’d told them that “Beckman arranged for the purchase of the life insurance policies” on her husband’s life in 2005, telling the couple that he would sell the policies “at a substantial profit.”

    But Beckman “subsequently told her that the policies had no value,” prosecutors said. “She reported that Beckman did not tell her that he sold the policies or that their sale had generated almost $4 million in proceeds. She reported that she certainly did not give Beckman permission to use the proceeds. Perhaps most importantly, she reported that she never purchased an interest in the Oxford Private Client Group. On this point she was unequivocal.”

    In successfully arguing against the release of funds to Beckman, the SEC said his victims “face a dire situation.”

    “The Court has already accommodated Beckman by ordering that some of the limited, frozen funds be advanced to him,” the SEC argued. “Beckman has returned the Court’s leniency with contumacious disobedience.”

    See definition of “contumacious” here.

  • URGENT >> BULLETIN >> MOVING: SEC Says Utah Father And Son Were At Helm Of $220 Million Ponzi Scheme That Traded On Faith

    URGENT >> BULLETIN >> MOVING: The SEC has gone to federal court in Utah to halt what it described as a $220 million real-estate Ponzi scheme that appeared to grow in part because the alleged operators used their membership in the Church of Jesus Christ of Latter-Day Saints to disarm skeptics.

    A “complex web of over 200 entities” were part of the scheme, which involved purported opportunities “to invest in limited liability companies in order to share ownership of large apartment communities in eight states,” the SEC said.

    Charged civilly with securities fraud were Wendell A. Jacobson, 58, and his son Allen R. Jacobson, 33. The Jacobsons operated from Fountain Green, Utah, and the scheme operated under an umbrella company known as Management Solutions Inc., the SEC said.

    U.S. District Judge Bruce S. Jenkins approved an asset freeze, the agency said, adding that about 225 investors were ensnared in the scheme.

    “Wendell and Allen Jacobson misled investors to believe they were financially supporting what was portrayed as a widespread and reputable operation to revamp apartment communities and turn a significant profit,” said Ken Israel, director of the SEC’s Salt Lake Regional Office. “Their promises were anything but truthful.”

    The scheme, according to the SEC, began at least in 2008 and involved “material and pervasive misrepresentations.”

    Read the SEC complaint.

  • UPDATE: Top Federal Prosecutor Describes Edward L. Moskop As ‘Financial Predator’; Judge Imposes Maximum Prison Term On Southern Illinois Swindler; St. Louis Post-Dispatch Reports Woman Who Survived Nazi Labor Camp Was Among The Victims

    Recidivist huckster Edward L. Moskop was sentenced yesterday to 20 years in federal prison by U.S. District Judge William Stiehl of the Southern District of Illinois.

    Among the victims of his fraud scheme was an 85-year-old woman who survived a Nazi labor camp during World War II, the St. Louis Post-Dispatch reported.

    At Moskop’s sentencing hearing, the district’s top federal prosecutor addressed the judge and asked him to impose the maximum prison term permitted under the facts of the case. Stiehl imposed the maximum after hearing from the defense, the prosecution team and the victims, including the labor-camp survivor.

    “Mr. Moskop is a financial predator,” said U.S. Attorney Stephen R. Wigginton of the Southern District of Illinois. “He preyed on hardworking citizens who toiled for years at their jobs in order to save for their retirement. Instead, many of the victims lost everything. Moskop imposed a financial death sentence on many of these victims.”

    Court records suggest that Moskop, 64, of Belleville, Ill., also stole from the labor-camp survivor’s elderly husband. In November 2010, the SEC described two of the victims of the scheme as an 88-year old man and his 84-year-old wife who’d come to the United States from Poland in 1949 and had been systematically ripped off by Moskop since 1989.

    Moskop’s long-running investment scheme was exposed in part by the elderly couple’s daughter, according to court filings. Other victims included Moskop’s own relatives, customers referred by word-of-mouth and the local VFW post.

    “This conduct is reprehensible and Moskop deserved the lengthy prison sentence imposed by the court,” Wigginton said.

    The FBI, the IRS, the U.S. Postal Inspection Service, the State of Illinois Securities Department and the SEC helped unmask the scheme, which involved more than $2.4 million gathered from 26 victims, prosecutors said.

  • BULLETIN: SEC Says Stiefel Laboratories Inc. Lowballed Employees And Other Shareholders, Ripping Them Off In Alleged $110 Million Stock-Buyback Scheme

    BULLETIN: The SEC has gone to federal court in the Southern District of Florida, alleging that Stiefel Laboratories Inc. was buying back stock from its employees and shareholders at “severely undervalued prices” and caused losses to its own people over a period of years to the tune of $110 million.

    The firm and former CEO Charles W. Stiefel have been charged civilly in the alleged fraud, the SEC said.

    “Stiefel Labs and Charles W. Stiefel profited at the expense of their employee shareholders who lost more than $110 million by selling their stock based on the misleading valuations they were provided,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “Private companies and their officers must understand that they are not immune from the federal securities laws, which protect all shareholders regardless of whether they bought stock in the open market or earned shares through a company’s stock plan.”

    Once a family owned dermatology-products business, Stiefel Labs was acquired by GlaxoSmithKline in 2009. Severe lowballing by Stiefel Labs aimed at acquiring more than 1,900 employee and shareholders’ shares of the firm dated back to 2006, the SEC said.

    The fraud culminated with the sale of the company after it had engaged with multiple suitors and private -equity firms and knew the money it offered employees for their shares paled in comparison to the sums offered by companies privately, according to the SEC.

    When the firm changed hands, the value amounted to more than $68,000 a share, the SEC said.

    Among other claims, the SEC alleged that, between Dec. 3, 2008 and April 1, 2009, “Stiefel Labs purchased more than 800 shares of its stock from shareholders at $16,469 a share even though Charles Stiefel knew that equity valuation was low and misleading, in part because he was negotiating the sale of the company.”

    In January 2009, according to the SEC, GlaxoSmithKline expressed interest in a Stiefel Labs acquisition and signed a confidentiality agreement.

    “As late as March 16, 2009, Charles Stiefel ordered that the ongoing negotiations not be disclosed to employees, and he misled shareholders to believe the company would remain family-owned,” the SEC charged. “On April 20, 2009, Stiefel Labs announced that GlaxoSmithKline would acquire the company for a value that amounted to more than $68,000 per share. This price was more than 300 percent higher than the per share price that Stiefel Labs had been paying to buy back shares from its shareholders.”

    Read SEC news release. Read the complaint.

  • BULLETIN: Former Radio Host John Farahi Indicted In Alleged Ponzi Scheme; His Attorney Also Indicted Amid Allegations He Obstructed SEC Probe

    BULLETIN: John Farahi, a former Los Angeles radio host who once was a member of the city council of Reno, Nev., has been indicted on dozens of counts of defrauding investors and banks out of at least $20 million, federal prosecutors in the Central District of California said.

    David Tamman, an attorney, was indicted amid allegations he conspired with Farahi to obstruct an SEC probe. Farahi and Beverly Bills-based New Point Financial Services Inc. were charged civilly by the SEC in January 2010.

    Farahi, 54, resides in  Bel Air Estates. Tamman, 44, resides in Santa Monica.

    Prosecutors said Farahi falsely promised investors that “their money would be used to purchase corporate bonds backed by the Troubled Asset Relief Program,” alleging Tamman helped cover up the fraud.

    Most of Farahi’s investors were members of the Iranian-Jewish community, prosecutors said.

    “Farahi attracted many of the investors through his daily radio show in which he touted a conservative investment philosophy,” prosecutors said. “When Farahi met with investors he falsely told them New Point Financial Services invested in low-risk investments like certificates of deposit, TARP-backed corporate bonds, and deeds of trust backed by substantial amounts of borrower equity.”

    In reality, prosecutors said, Farahi used investors’ money to support his “lavish lifestyle,” to make Ponzi payments and engage in “high-risk and speculative future options trading.”

    Farahi lost “at least $15 million through his undisclosed” trading and continued to solicit new investors as losses piled up, prosecutors said.

    To keep the scheme afloat, Farahi drew down lines of credit and lied to banks, prosecutors said.

    After the SEC began its probe in 2009, Farahi and Tamman “engaged in a conspiracy” to backdate documents and remove “incriminating” documents, prosecutors said.

    Farahi was charged with 16 counts of mail fraud, five counts of selling unregistered securities, five counts of altering documents, four counts of loan fraud, four counts of obstruction of justice and single counts of conspiracy, wire fraud, aggravated identity theft, suborning perjury, concealing a material fact and witness-tampering.

    He faces a maximum prison term of 717 years, if convicted on all counts.

    Tamman is charged with five counts of alteration of records, three counts of obstruction of justice and single counts of conspiracy and of being an accessory after the fact to mail fraud and securities violations.

    If convicted on all counts, Tamman faces a maximum prison sentence of 190 years.

    The FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) led the criminal probe.

  • URGENT >> BULLETIN >> MOVING: Legisi HYIP Pitchman Matthew John Gagnon Named In Criminal Complaint By U.S. Secret Service

    Matthew John Gagnon

    URGENT >> BULLETIN >> MOVING: Matthew J. Gagnon, an alleged online pitchman for the Legisi HYIP Ponzi scheme, has been named in a criminal complaint filed by the U.S. Secret Service.

    Gagnon, 42, of Portland Ore., and Weslaco, Texas, was accused civilly by the SEC in 2010 of being “a danger to the investing public,” amid allegations he promoted multiple fraud schemes — including Legisi — on his Mazu.com website.

    He is accused in a Secret Service affidavit filed Nov. 28 in the Eastern District of Michigan of not disclosing $1.7 million in payments from Legisi while he was touting it to “the investing public” between January 2006 and May 2007.

    Legisi, the Secret Service said in the affidavit, was a “massive Ponzi scheme” that gathered about $72 million from more than 3,000 investors before the fraud was exposed.

    Among the allegations against Gagnon is that he promoted Legisi’s unregistered offering as exempt from registration requirements and “literally the greatest” program he had “ever seen. ” (The complaint includes several specific allegations about how Gagnon promoted Legisi. One promo attributed to Gagnon by the Secret Service shows that Gagnon  used six exclamation points in a single paragraph consisting of about 66 words.)

    Gagnon already is facing Legisi-related civil judgments totaling more than $2.5 million.

    Like Florida-based AdSurfDaily, Legisi has been linked to E-Bullion, the shuttered California payment processor operated by James Fayed. Fayed, 48, was formally sentenced to the death penalty last month for arranging the brutal contract slaying of Pamela Fayed, his estranged wife and a potential witness against him before she was slashed 13 times in a greater Los Angeles parking garage in July 2008.

    Legisi also was promoted on Ponzi boards such as TalkGold and MoneyMakerGroup. The Legisi Terms of Service, according to federal court filings, included language that made members avow they were not an “informant, nor associated with any informant” of the IRS, FBI, CIA and the SEC, among others.

  • URGENT >> BULLETIN >> MOVING: SEC Says D.C. Attorney Brynee K. Baylor Was Running Prime-Bank Swindle With Frank L. Pavlico III, A Felon On Probation In Case Involving ‘Drug Trafficking’ Proceeds

    UPDATED 10:04 A.M. ET (DEC. 8, U.S.A.)  Frank L. Pavlico III — convicted in 2007 of felony conspiracy to conduct financial transactions involving the proceeds of drug trafficking and released in 2008 after serving his 10-month prison term — has been arrested for wire fraud by the FBI in an alleged prime-bank swindle that occurred while Pavlico was on probation, the SEC said.

    Charged civilly with securities fraud is Brynee K. Baylor, an attorney in the District of Columbia, Maryland and New Jersey. The SEC said Baylor helped Pavlico pull off the swindle, which allegedly gathered about $2.1 million and affected at least 13 investors.

    U.S. District Judge Rosemary Collyer of the District of Columbia approved an emergency asset freeze, the SEC said.

    “Pavlico and Baylor produced paperwork dotted with legal-sounding gibberish designed to deceive investors into believing this is a highly-sophisticated investment opportunity,” said Stephen L. Cohen, associate director of the SEC’s Division of Enforcement. “This case is particularly egregious because attorneys hold a special position of trust, and Baylor and her law firm cloaked the Milan investment in the guise of licensed legal services to deceive investors and steal their money.”

    Baylor, 37, of Silver Spring, Md., is co-founder and managing partner of Baylor & Jackson PLLC in the District of Columbia, according to the SEC. The agency said she and the law firm “acted as ‘counsel’ for Pavlico’s company The Milan Group, vouching for Pavlico and acting as an escrow agent that in reality was merely receiving and diverting the majority of investor funds.”

    The Milan Group, which also was known as The Milan Trading Group Inc., operated from Pavlico’s home in Clarks Summit, Pa., the SEC said. Pavlico is 41, the SEC said.

    The scheme operated in a shroud of mystery, with inexperienced investors being told about a purported “private trading platform” and that  “confidentiality and secrecy requirements prevented the defendants from providing details of the investments,” the SEC charged.

    Baylor “deceive[ed] investors into believing that the Milan investment was legitimate and that investors’ funds would be safe,” the SEC charged, adding that she provided notarized “Attorney Attestation” letters to some investors.

    Moreover, the SEC charged, Baylor “told investors that she had personally witnessed millions of dollars paid to investors through B&J’s trust account, consistent with Pavlico’s representations.”

    Pavlico “deceived investors by using the name ‘Frank Lorenzo’ and by failing to disclose that he pled guilty to a felony, served 10 months in prison, and was on supervised release at the time he was soliciting their investments,” the SEC charged.

    Investors were duped by high-sounding terms such as “standby letters of credit” and “bank guarantees,” the SEC said. Meanwhile, “Pavlico and Baylor also provided investors with bogus excuses attempting to explain the delay in providing the promised returns including, among other things, feigned illnesses, false representations that the European bankers supposedly involved in the transaction were on extended vacation, or that there were unspecified problems with processing the transactions through ‘Euroclear,’ a supposed necessary step in the transaction,” the SEC charged.

    The scheme began in August 2010 or earlier, the SEC charged. Prison records show Pavlico was released in November 2008. His probation ran through Nov. 5, 2011, according to records.

    “Pavlico offered returns of up to twenty times the original investment within forty-five days,” the SEC charged. “Investors were told that the investment involved no risk and that their principal would be returned if a successful bank instrument transaction was not completed.”

    Fake “screen shots” also were used to dupe investors, the SEC charged.

    Collyer also is presiding over the AdSurfDaily Ponzi case in the District of Columbia. The FBI alleged last month that Collyer was targeted with false liens by Kenneth Wayne Leaming, 55, of Spanaway, Wash.

    Read the SEC complaint against Pavlico and Baylor.

  • URGENT >> BULLETIN >> MOVING: FBI Undercover Operation Leads To Charges Against 13 Individuals In Alleged Penny-Stock Caper; SEC Halts Trading In 7 Companies

    URGENT >> BULLETIN >> MOVING: Thirteen individuals, including lawyers, corporate officers and a stock promoter, have been charged criminally in an FBI sting aimed at microcap fraud. The SEC has suspended trading in seven companies: 1st Global Financial Inc. (FGFB), based in Las Vegas; Augrid Global Holdings Corp. (AGHD), based in Houston; ComCam International Inc. (CMCJ), based in West Chester, Pa.; MicroHoldings US Inc. (MCHU), based in Vancouver, Wash; Outfront Companies (OTFT), based in Florida; Symbollon Corp./Symbollon Pharmaceuticals Inc. (SYMBA), based in Medfield, Mass; and ZipGlobal Holdings Inc. (ZIPG), based in Hingham, Mass.

    Investigators alleged the fraud involved illegal kickbacks and sham consulting agreements in schemes to hype penny stocks. The criminal activity occurred “in the midst of an undercover FBI operation,” the SEC said.

    Charged criminally, according to the SEC, were:

    • Kelly Black-White, 51, of Mesa, Ariz. Black-White operates Premier Funding Inc. and Premiere Services Inc.. He is charged with wire fraud.
    • James Prange, 60, of Greenbush, Wisc. He is affiliated with Northern Equity Inc., and is charged with wire fraud.
    • Michael Lee, 51, of Hingham, Mass. Lee is ZipGlobal’s CEO. He is charged with mail fraud and conspiracy to commit securities fraud.
    • Edward Henderson, 69, of Lincoln, R.I. He is charged with wire fraud.
    • Paul DesJourdy, 50, of Medfield, Mass. DesJourdy is the CEO of Symbollon Pharmaceuticals. He is charged with mail fraud and conspiracy to commit securities fraud.
    • James Wheeler, 51, of Camas, Wash. Wheeler is CEO of MicroHoldings Inc. He is charged with mail fraud and conspiracy to commit securities fraud.
    • Steve Berman, 49, of Hillsboro, Ohio. He is CEO of China Wi-Max Communications, and is charged with mail and wire fraud.
    • Richard Kranitz, 68, of Grafton, Wisc. He is a board member of China Wi-Max Communications, and is charged with mail and wire fraud.
    • JC Jordan, 60, of Cameron Park, Calif. Jordan is CEO of Vida Life International LTD. He is charged with mail and wire fraud.
    • Karen Person, 61, of Naperville, Ill. She is president of Small Business Company Inc., and is charged with mail and wire fraud.
    • Albert Reda, 65, of Tustin, Calif. He is treasurer of 1st Global Financial, and is charged with mail and wire fraud.
    • Steve Stuart, 48, of Monrovia, Md. Stuart is a major shareholder in ComCam International Inc., and is charged with mail and wire fraud.
    • Muhammad “MJ”  Shaheed, 44, of Houston. He is CEO of Augrid Global Holdings Corp., and is charged with mail and wire fraud.

    The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts is handing the criminal cases, the SEC said.

    “Kickbacks and phony consulting agreements have no place in the financial strategies of any public company, and executives who engage in this kind of fraud are just selling out their own investors,” said David Bergers, director of the SEC’s Boston Regional Office.

    The undercover operation, according to the SEC, was under way for a year, and Desjourdy, Henderson, Lee and Wheeler also were charged civilly.

  • ‘Uniform’ Ponzi Swindler Richard Elkinson, 78, Sentenced To 102 Months In Federal Prison; 20-Year Scheme Collapsed After Arrest Of Bernard Madoff

    Richard Elkinson, the 78-year-old Ponzi swindler whose promissory notes scheme gathered $29 million over 20 years, has been sentenced to 102 months in federal prison.

    Elkinson resided in Framingham, Mass., and told investors he was in the business of providing uniforms to the government and other entities.

    But it was all a scam that lured investors with promises of outsize returns of between 9 percent and 15 percent in less than a year, federal prosecutors, the FBI and the SEC said.

    The scheme began to collapse in late 2008 after investors — motivated by the publicity the Bernard Madoff Ponzi began to receive  — “started seeking more information and documents about the uniform business,” the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said yesterday.

    Madoff, himself a senior swindler at the helm of a long-running Ponzi caper, was arrested on Dec. 11, 2008.

    Although Elkinson initially lulled investors in early 2009 with a variety of excuses about why he wasn’t making payments, he later fled Massachusetts. Elkinson was arrested at a Mississippi casino in January 2010. Investigators said they discovered evidence that the con man had an affinity for gambling and had conducted “a total of more than $3.7 million in currency transactions over $10,000” at Las Vegas casinos dating back to 1998.