SEC Files Offering Fraud and Ponzi Plan Cases

SEC Files Offering Fraud and Ponzi Plan Cases

SEC Files Offering Fraud and Ponzi Plan Cases


A standard feature of SEC enforcement recently continues to be offering fraud and Ponzi plan cases. Now the Commission filed two greater number of these actions, each offering fraud targeting military personnel an additional and investment fund fraud situation which virtually told investors it had been a Ponzi plan. SEC v. Brown, Civil Action No. 6:15-cv-119 (W.D. Texas. Filed April 13, 2015) SEC v. Evans, Civil Action No. 1:15-01118 (N.D. Ga. Filed April 13, 2015).

The offering fraud: Leroy Brown was part of the U . s . States Army for twelve years. He became a member of the military at age 18 in 2001. He created LB Stocks and Trades Advice LLC and it has claimed on his Facebook page to become its Chief executive officer and founder since 2004, even though the needed certificates for that formation from the firm weren’t filed with Texas condition government bodies until 2014.

Mr. Brown and the firm claim on its web site to furnish a number of securities and investment related services. Individuals include investment recommendations, portfolio management, research and brokerage services for securities, currencies, goods and property. The firm also claims to become a FINRA broker-dealer, even though it hasn’t registered using the regulator. The firm also claimed to provide 7,600 leading mutual funds which investors can trade over 200 future products. These representations also were incorrect. Mr. Brown isn’t a licensed securities professional.

Mr. Brown, who resides near Fort Hood military instillation, started targeting military personnel to buy $1,000 membership certificates in the organization. Touting his military service, he claimed that investors would take part in LB Stocks’ speculative investments in raw, undeveloped land. Potential investors were advised to wire their investment funds to Mr. Brown.

Starting in early 2014 Mr. Brown started receiving substantial deposits into his personal brokerage account. Mr. Brown then transferred almost all of these funds from his brokerage account to his personal banking account. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Section 10(b). The Commission acquired a brief freeze order at that time the complaint was filed. The situation is pending.

The Ponzi plan: Starting in 2012 defendant James Evans, operating an internet site while using DollarMonster name through website name, soliciting investors with claims of massive profits. The website claimed to possess been dealing with investors since 2003 and is built to furnish reliable, lucrative returns on investments.

The DollarMonster site mentioned the payout of profits was associated with receipt of more investment funds from others. Particularly, investors were advised their funds could be pooled, the pool takes care of the next one lined up providing them with coming back of 200% then that investor returns towards the finish from the line. Every time funds are available in there’s a payoff. If no funds are available in the road doesn’t change. With this service DollarMonster billed a charge of two.5% along with a $2.24 transaction fee.

The web site particularly symbolized that DollarMonster had compensated out sums exceeding individuals contributed by investors, that is false. Additionally, it didn’t tell investors when there have been no additional contributions the plan would collapse.

In 2013 the website was altered. In October the website told investors that DollarMonster would be a “financial adviser” with more than 120 management teams and $38 million of assets under management. The following month the website claimed DollarMonster managed a hedge fund which purchased stock. Later the website claimed DollarMonster would be a private holding company. Once the staff issued a subpoena towards the site it stopped operation, even though the complaint alleges, on information and belief, that Mr. Evans is constantly on the solicit investor funds. The complaint alleges violations of Securities Act Sections 5(a) and 5(c), each subsection of Section 17(a), Exchange Act Section 10(b) and Advisors Act Section 206(4). The situation is pending.




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