Washington D.C., May 26, 2015 — The Securities and Exchange Commission has announced that fraud charges have been filed against a securities lawyer who used his New York law office as the headquarters for planning and implementing market manipulation schemes. Also charged are two stock promoters from Canada who assisted him.
The SEC alleges that Adam S. Gottbetter orchestrated promotional campaigns that touted the prospects of microcap companies and enticed investors to buy their stock at inflated prices so he and his cohorts could sell shares they controlled and reap massive profits. Gottbetter enlisted Mitchell G. Adam and K. David Stevenson to help him in the last of three schemes he conducted in a six-year period. They repeatedly cautioned each other about the dangers of missteps that might draw law enforcement attention to the scheme, such as failing to keep secret the identities of Adam and Stevenson. The three rehearsed stories they would tell if ever questioned by law enforcement. During one meeting in New York City, Gottbetter complained about the difficulties of stock manipulation but conceded that robbing a bank was the only other way to make so much money so quickly.
Gottbetter agreed to pay $4.6 million to settle the SEC’s charges. Stevenson also agreed to settle the SEC charges against him while a case against Adam will be litigated in federal court in Newark, N.J.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Gottbetter, Adam, and Stevenson.
“As a securities lawyer, Gottbetter should have served as a gatekeeper and protected the capital markets and investors from fraudsters. Instead, he swung the gates wide open and illicitly profited at investors’ expense,” said Andrew Ceresney, director of the SEC’s Division of Enforcement.
According to the SEC’s complaint, Gottbetter was involved in the manipulation of the stocks of Kentucky USA Energy Inc. (KYUS) and Dynastar Holdings Inc. (DYNA) before teaming up with Adam and Stevenson in July 2013 to utilize their offshore ties for a new and potentially more lucrative scheme. Together they schemed to drive up the stock price for purported oil and gas exploration company HBP Energy Corp. (HBPE) through fraudulent trades generated by a trading algorithm. They then planned to launch an extensive promotional campaign featuring multiple call centers, roadshows, and a listing on the Frankfurt Stock Exchange. After creating the false appearance of liquidity and investor interest, they planned to dump their shares of the stock on unsuspecting investors around the world. While Stevenson and Adam managed to do some small coordinated trades, the scheme was thwarted before the planned manipulation and promotion could be launched when Stevenson was arrested by the FBI.
The SEC’s complaint alleges that Gottbetter violated Sections 5(a), 5(c) and Section 17(a) of the Securities Act of 1933, and violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint alleges that Adam and Stevenson violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Gottbetter agreed to be barred from the penny stock industry in addition to paying $4.6 million in disgorgement and prejudgment interest from ill-gotten gains in the Kentucky USA Energy manipulation scheme. He consented to injunctions against future violations. Stevenson also agreed to be barred from the penny stock industry and consented to an injunction against future violations. The settlements are subject to court approval.
The SEC’s investigation was conducted by Simona Suh of the Market Abuse Unit and Nancy A. Brown and Elzbieta Wraga of the New York office. The case was supervised by Amelia A. Cottrell and Michael J. Osnato Jr. The SEC’s litigation against Adam will be led by Ms. Brown and Ms. Suh. The SEC appreciates the assistance of the Newark Field Office of the Federal Bureau of Investigation, the U.S. Attorney’s Office for the District of New Jersey, and the Financial Industry Regulatory Authority.
Source: U.S. Securities and Exchange Commission
MARK TWAIN: FATHER OF AMERICAN LITERATURE -- FACT FACTS
ABOVE: Samuel Clemens, aka Mark Twain, was cemented as a premier writer of late 19th century America with his works "The Adventures of Tom Sawyer" and "Adventures of Huckleberry Finn." Find out more about his life and writing in this video.
Showing posts with label securities. Show all posts
Showing posts with label securities. Show all posts
Securities Broker Sentenced to 84 Months
(DOJ) - 5/22/2013 - A former stock broker was sentenced to prison on May 16 for his role in an extensive pump-and-dump stock manipulation scheme.
The announcement was made by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division , U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma, Special Agent in Charge James E. Finch of the FBI’s Oklahoma City Division and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison. In addition to his prison term, Lankford was ordered to forfeit $250,000. Proceeds from forfeited assets will be used to bring partial restitution to victims.
On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.
“Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” Raman said. “As this case shows, stockbrokers and other professionals will be punished if they break the law. Lankford now faces substantial time in prison for his manipulation scheme.”
According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges. Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.
Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.
Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants. Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012. James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme. Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme. Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison. The fifth defendant, Dean Sheptycki, remains a fugitive.
The case is being prosecuted by trial attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma. The case is being investigated by IRS-CI and the FBI.
Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison. In addition to his prison term, Lankford was ordered to forfeit $250,000. Proceeds from forfeited assets will be used to bring partial restitution to victims.
On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.
“Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” Raman said. “As this case shows, stockbrokers and other professionals will be punished if they break the law. Lankford now faces substantial time in prison for his manipulation scheme.”
According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges. Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.
Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.
Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants. Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012. James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme. Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme. Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison. The fifth defendant, Dean Sheptycki, remains a fugitive.
The case is being prosecuted by trial attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma. The case is being investigated by IRS-CI and the FBI.
Subjects
investment,
money,
securities,
stocks
Insurance Executive Indicted for Insider Trading
DENVER – 11/2/2012 - Insurance executive Michael Van Gilder, age 45, of Denver, was indicted by a federal grand jury in Denver on five counts of insider trading, U.S. Attorney for the District of Colorado John Walsh and FBI Denver Special Agent in Charge James Yacone announced.
The case is being prosecuted in conjunction with the U.S. Attorney’s Office for the Southern District of New York. The U.S. Securities and Exchange Commission (SEC), which has filed a complaint charging Van Gilder with civil insider trading violations, conducted a parallel civil investigation and substantially contributed to the criminal investigation of the case as well. The defendant allegedly traded based on inside information regarding a Denver oil and natural gas company called Delta Petroleum Corp. Van Gilder surrendered to the FBI this morning at the U.S. Marshals’ Office, and will appear in U.S. District Court in Denver this afternoon for an initial appearance.
According to the indictment, Van Gilder was the CEO and a member of the board of directors of Van Gilder Insurance Company, an insurance business owned by the defendant’s family. Van Gilder was a close personal friend of an executive at Delta Petroleum. Delta Petroleum was a Denver-based oil and gas exploration and development company whose core area of operations was in the Gulf Coast and Rocky Mountain regions. The company’s stock was traded on NASDAQ under the ticker symbol “DPTR.” Van Gilder at times arranged for and provided insurance policies covering certain of Delta’s business operations.
From Nov. 5, 2007, and continuing until at least Jan. 9, 2008, Van Gilder allegedly committed securities fraud by trading in securities based on material, non-public information.
Specifically, on Nov. 8, 2007, Delta publicly announced and filed with the SEC a quarterly report disclosing its operational performance, revenues, earnings and other financial performance for its quarterly period which ended Sept. 30, 2007. Three days prior to the disclosure, the financial publication Barron’s disseminated an article entitled “Day of Reckoning” focusing on Delta, expressing pessimism about the company and its stock. Following the publication of the article, the price of Delta’s common stock dropped $1.49 per share. Van Gilder was, at the time, a shareholder of Delta and held shares of its common stock and long-term call options to purchase Delta common stock in a brokerage account with Merrill Lynch and Company.
The Barron’s article was brought to Van Gilder’s attention. Based on the article, Van Gilder called his stockbroker and asked whether he should sell his shares of Delta. Later that day, Van Gilder spoke with a Delta executive. According to the indictment’s allegations, the executive conveyed to Van Gilder that Delta planned on announcing figures in its third quarter financial report that would not miss its third quarter forecasts and projections for its financial and operational performance, a first in a number of quarters that Delta would meet its projected numbers. At the time Van Gilder received this information, the financial and operational performance had not yet been publicly released and was not generally known to the investing public.
Based on this confidential material, Van Gilder decided not to sell his Delta investment but instead instructed his stockbroker to buy more Delta common stock on his behalf. As a result, the stockbroker purchased an additional 1,250 shares of Delta common stock at $15.55 per share. Several hours after he purchased the additional stock, Van Gilder emailed two friends and told them that the Barron’s article was “bogus” and that they should buy Delta stock because Delta “will hit their numbers.” In the Nov. 8, 2007, third quarter results Delta disclosed earnings and other financial figures that were in line with or exceeding previous forecasts and predictions of its performance for the quarter.
In late November 2007, discussions also began for Delta to get a large cash infusion from a privately held investment company called Tracinda, owned by California resident Kirk Kerkorian, through a large equity investment by Tracinda in the oil and gas company. The indictment alleges that the Delta executive shared confidential information about the possible investment with Van Gilder, and that, on Nov. 26, 2007, following a series of calls and other communications, Van Gilder contacted his stockbroker and purchased an additional 1,750 shares of Delta common stock at $13.87 and $13.88 per share.
As the indictment further relates, the Delta executive continued to share information about the confidential discussions about the contemplated Tracinda equity investment in Delta with defendant Van Gilder, as the confidential discussions progressed over the course of early December 2007. As result, according to the indictment, on Dec. 8, 2007, Van Gilder, in turn, emailed his stockbroker to advise him that he “wanted to purchase as much Delta stock as possible” and two days later arranged through the stockbroker to purchase an additional 4,000 shares of Delta common stock at $17.64 per share. Within minutes of execution of these purchases, Van Gilder spoke by phone with a family member, who, several minutes later, instructed his own stockbroker to purchase Delta common stock.
On Dec. 17, 2007, the Delta executive advised its board of directors of his discussions with Tracinda. The board authorized the executive to proceed with negotiations with Tracinda. That evening, the executive exchanged a series of text messages with the defendant regarding the board’s decision. Several hours later, Van Gilder directed that $40,000 be wire transferred from a bank account to his Merrill Lynch brokerage account.
On Dec. 19, 2007, a representative of Tracinda contacted the Delta executive and made an offer for Tracinda to purchase a one-third interest in Delta through a purchase of Delta’s common stock at $17 per share. At the time, Delta’s stock was trading at approximately $14.65 per share. Tracinda’s overture remained confidential. Van Gilder, knowing about the overture, purchased 200 call options, entitling him to purchase up to 20,000 shares of Delta common stock at $20 per share. Delta continued negotiations with Tracinda, and on Dec. 22, 2007, Tracinda agreed to increase its stock purchase to $19 per share. The indictment alleges that in a series of calls Van Gilder was informed of the progress of the confidential negotiations. Immediately following one of these conversations between Van Gilder and the Delta executive, Van Gilder sent an email to two of his family members, with the subject line entitled “Xmas present.” In the email, he advised the family members to purchase Delta stock because “something significant will happen in the next 2-4 weeks.”
On Dec. 24, 2007, Van Gilder, through his stockbroker, purchased 3,000 more shares of Delta common stock at prices ranging between $15.63 and $15.65 per share, and 90 more call options to purchase up to 9,000 additional shares at $20 per share. On Dec. 28, 2007, during the course of working to finalize the Tracinda stock purchase, the Delta executive exchanged a series of cell phone text messages with Van Gilder. As a result, Van Gilder caused $272,212 from a bank account to be wire transferred into his Merrill Lynch brokerage account. The following day Van Gilder emailed his stockbroker, requesting the broker to “get it on Delta asap.”
On Dec. 29, 2007, Delta’s board of directors approved a finalized stock purchase agreement for Tracinda to purchase approximately 35 percent of Delta’s common stock for $19 per share. On Monday, Dec. 31, 2007, before the commencement of NASDAQ’s regular trading hours, Delta and Tracinda issued a press release announcing the stock purchase agreement. Within an hour of the commencement of regular trading hours that day, Van Gilder’s stockbroker purchased an additional 4,000 shares of Delta common stock at prices ranging from $19.28 to $19.33 per share, and 114 additional call options. By the close of regular hours trading that day, Delta’s common stock price had risen $3.34 from its previous close of $15.51. Over the course of the next three trading days, Delta’s stock price continued to rise, closing at $22.82 per share by Jan. 4, 2008. On Jan. 9, 2008, Van Gilder sold the 290 call options that he had purchased between Dec. 19 and Dec. 24, 2007, realizing a profit of approximately $86,100 on the transaction.
The indictment charges Van Gilder with five counts of securities fraud, reflecting five transactions between Nov. 6, 2007 and Dec. 24, 2007 where Van Gilder purchased Delta common stock based on confidential insider information. If convicted on all counts, the defendant faces up to 100 years in federal prison, and up to $25 million in fines.
“Trading on inside information undercuts the fairness and transparency of our financial markets,” said U.S. Attorney Walsh. “This case demonstrates that in the highly networked world we now live in, insider trading knows no geographic boundaries. This office, and U.S. Attorney’s Offices around the country, will continue to target insider trading wherever it may occur. Thanks to the hard work of this office, the U.S. Attorney’s Office in the Southern District of New York, the SEC and the FBI, a Denver insurance executive has been charged for profiting using confidential information.”
Thr case was investigated by the FBI, New York and Denver Divisions, with the assistance of and working with the SEC.
Van Gilder is being prosecuted by Assistant U.S. Attorney Ken Harmon and Special Assistant U.S. Attorney Michael Levy from the Southern District of New York.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
According to the indictment, Van Gilder was the CEO and a member of the board of directors of Van Gilder Insurance Company, an insurance business owned by the defendant’s family. Van Gilder was a close personal friend of an executive at Delta Petroleum. Delta Petroleum was a Denver-based oil and gas exploration and development company whose core area of operations was in the Gulf Coast and Rocky Mountain regions. The company’s stock was traded on NASDAQ under the ticker symbol “DPTR.” Van Gilder at times arranged for and provided insurance policies covering certain of Delta’s business operations.
From Nov. 5, 2007, and continuing until at least Jan. 9, 2008, Van Gilder allegedly committed securities fraud by trading in securities based on material, non-public information.
Specifically, on Nov. 8, 2007, Delta publicly announced and filed with the SEC a quarterly report disclosing its operational performance, revenues, earnings and other financial performance for its quarterly period which ended Sept. 30, 2007. Three days prior to the disclosure, the financial publication Barron’s disseminated an article entitled “Day of Reckoning” focusing on Delta, expressing pessimism about the company and its stock. Following the publication of the article, the price of Delta’s common stock dropped $1.49 per share. Van Gilder was, at the time, a shareholder of Delta and held shares of its common stock and long-term call options to purchase Delta common stock in a brokerage account with Merrill Lynch and Company.
The Barron’s article was brought to Van Gilder’s attention. Based on the article, Van Gilder called his stockbroker and asked whether he should sell his shares of Delta. Later that day, Van Gilder spoke with a Delta executive. According to the indictment’s allegations, the executive conveyed to Van Gilder that Delta planned on announcing figures in its third quarter financial report that would not miss its third quarter forecasts and projections for its financial and operational performance, a first in a number of quarters that Delta would meet its projected numbers. At the time Van Gilder received this information, the financial and operational performance had not yet been publicly released and was not generally known to the investing public.
Based on this confidential material, Van Gilder decided not to sell his Delta investment but instead instructed his stockbroker to buy more Delta common stock on his behalf. As a result, the stockbroker purchased an additional 1,250 shares of Delta common stock at $15.55 per share. Several hours after he purchased the additional stock, Van Gilder emailed two friends and told them that the Barron’s article was “bogus” and that they should buy Delta stock because Delta “will hit their numbers.” In the Nov. 8, 2007, third quarter results Delta disclosed earnings and other financial figures that were in line with or exceeding previous forecasts and predictions of its performance for the quarter.
In late November 2007, discussions also began for Delta to get a large cash infusion from a privately held investment company called Tracinda, owned by California resident Kirk Kerkorian, through a large equity investment by Tracinda in the oil and gas company. The indictment alleges that the Delta executive shared confidential information about the possible investment with Van Gilder, and that, on Nov. 26, 2007, following a series of calls and other communications, Van Gilder contacted his stockbroker and purchased an additional 1,750 shares of Delta common stock at $13.87 and $13.88 per share.
As the indictment further relates, the Delta executive continued to share information about the confidential discussions about the contemplated Tracinda equity investment in Delta with defendant Van Gilder, as the confidential discussions progressed over the course of early December 2007. As result, according to the indictment, on Dec. 8, 2007, Van Gilder, in turn, emailed his stockbroker to advise him that he “wanted to purchase as much Delta stock as possible” and two days later arranged through the stockbroker to purchase an additional 4,000 shares of Delta common stock at $17.64 per share. Within minutes of execution of these purchases, Van Gilder spoke by phone with a family member, who, several minutes later, instructed his own stockbroker to purchase Delta common stock.
On Dec. 17, 2007, the Delta executive advised its board of directors of his discussions with Tracinda. The board authorized the executive to proceed with negotiations with Tracinda. That evening, the executive exchanged a series of text messages with the defendant regarding the board’s decision. Several hours later, Van Gilder directed that $40,000 be wire transferred from a bank account to his Merrill Lynch brokerage account.
On Dec. 19, 2007, a representative of Tracinda contacted the Delta executive and made an offer for Tracinda to purchase a one-third interest in Delta through a purchase of Delta’s common stock at $17 per share. At the time, Delta’s stock was trading at approximately $14.65 per share. Tracinda’s overture remained confidential. Van Gilder, knowing about the overture, purchased 200 call options, entitling him to purchase up to 20,000 shares of Delta common stock at $20 per share. Delta continued negotiations with Tracinda, and on Dec. 22, 2007, Tracinda agreed to increase its stock purchase to $19 per share. The indictment alleges that in a series of calls Van Gilder was informed of the progress of the confidential negotiations. Immediately following one of these conversations between Van Gilder and the Delta executive, Van Gilder sent an email to two of his family members, with the subject line entitled “Xmas present.” In the email, he advised the family members to purchase Delta stock because “something significant will happen in the next 2-4 weeks.”
On Dec. 24, 2007, Van Gilder, through his stockbroker, purchased 3,000 more shares of Delta common stock at prices ranging between $15.63 and $15.65 per share, and 90 more call options to purchase up to 9,000 additional shares at $20 per share. On Dec. 28, 2007, during the course of working to finalize the Tracinda stock purchase, the Delta executive exchanged a series of cell phone text messages with Van Gilder. As a result, Van Gilder caused $272,212 from a bank account to be wire transferred into his Merrill Lynch brokerage account. The following day Van Gilder emailed his stockbroker, requesting the broker to “get it on Delta asap.”
On Dec. 29, 2007, Delta’s board of directors approved a finalized stock purchase agreement for Tracinda to purchase approximately 35 percent of Delta’s common stock for $19 per share. On Monday, Dec. 31, 2007, before the commencement of NASDAQ’s regular trading hours, Delta and Tracinda issued a press release announcing the stock purchase agreement. Within an hour of the commencement of regular trading hours that day, Van Gilder’s stockbroker purchased an additional 4,000 shares of Delta common stock at prices ranging from $19.28 to $19.33 per share, and 114 additional call options. By the close of regular hours trading that day, Delta’s common stock price had risen $3.34 from its previous close of $15.51. Over the course of the next three trading days, Delta’s stock price continued to rise, closing at $22.82 per share by Jan. 4, 2008. On Jan. 9, 2008, Van Gilder sold the 290 call options that he had purchased between Dec. 19 and Dec. 24, 2007, realizing a profit of approximately $86,100 on the transaction.
The indictment charges Van Gilder with five counts of securities fraud, reflecting five transactions between Nov. 6, 2007 and Dec. 24, 2007 where Van Gilder purchased Delta common stock based on confidential insider information. If convicted on all counts, the defendant faces up to 100 years in federal prison, and up to $25 million in fines.
“Trading on inside information undercuts the fairness and transparency of our financial markets,” said U.S. Attorney Walsh. “This case demonstrates that in the highly networked world we now live in, insider trading knows no geographic boundaries. This office, and U.S. Attorney’s Offices around the country, will continue to target insider trading wherever it may occur. Thanks to the hard work of this office, the U.S. Attorney’s Office in the Southern District of New York, the SEC and the FBI, a Denver insurance executive has been charged for profiting using confidential information.”
Thr case was investigated by the FBI, New York and Denver Divisions, with the assistance of and working with the SEC.
Van Gilder is being prosecuted by Assistant U.S. Attorney Ken Harmon and Special Assistant U.S. Attorney Michael Levy from the Southern District of New York.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
Subjects
Insider trading,
insurance,
securities,
stocks
Investment Advisor Pleads Guilty in Scheme
NEW YORK – 1/10/2011 - A registered investment advisor pleaded guilty on Jan. 7 to conspiracy and securities fraud charges in connection with his participation in an insider trading scheme, announced U.S. Attorney for the Southern District of New York Preet Bharara.
Alexei P. Koval, aka “Aleksey Koval,” admitted that he obtained inside information from his co-conspirator, Igor Poteroba, a former investment banker in the Healthcare Group of UBS Securities LLC, and then traded on that information.
The information related to six mergers and acquisitions that certain UBS clients were contemplating. Koval pleaded guilty in Manhattan federal court before U.S. District Judge Paul A. Crotty.
“Alexei Koval flagrantly violated the securities laws to make a quick profit, and now he will pay for his crimes,” Bharara said. “Insider trading undermines faith in the market and cheats honest investors. It will not be tolerated. Together with our law enforcement partners, we will continue to prosecute and punish those who use their access to inside information to break the law.”
According to documents previously filed in Manhattan federal court, from May 2006 through at least 2009 Koval was a registered investment adviser. During approximately the same time period, Poteroba served as an executive director at UBS. In that capacity, Poteroba obtained material, non-public information regarding certain mergers and acquisitions involving the following six publicly traded healthcare companies: Guilford Pharmaceuticals Inc., Molecular Devices Corporations, PharmaNet Development Group Inc., Via Cell Inc., Millennium Pharmaceuticals Inc. and Indevus Pharmaceuticals Inc.
In violation of his duties of trust and confidence, Poteroba then disclosed the UBS inside information to Koval, who in turn disclosed the UBS inside information to another co-conspirator (CC-1).
As part of the scheme, Koval typically received tips from Poteroba by telephone in advance of a public announcement about certain mergers and acquisitions. Shortly after receiving a tip from Poteroba, Koval and CC-1 purchased securities in one of the healthcare companies on the basis of the UBS inside information.
Following the public announcement of the acquisition, Koval and CC-1 quickly sold the securities they had purchased. Koval and CC-1 executed dozens of securities transactions based on UBS inside information provided by Poteroba. Koval then paid a portion of the profits to Poteroba.
Koval pleaded guilty to three counts of securities fraud and one count of conspiracy to commit securities fraud. The securities fraud counts each carry a maximum sentence of 20 years in prison and a maximum fine of $5 million.
The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Koval agreed as part of his plea agreement to forfeit at least $1,414,290, representing the amount of proceeds obtained as a result of the securities fraud offenses.
Koval, 36, of Chicago, and Pasadena, Calif., will surrender to federal authorities on Jan. 14, 2011, and is scheduled to be sentenced by Judge Crotty on April 12, 2011, at 2:30 p.m.
Poteroba, 37, of Darien, Conn., pleaded guilty to similar charges before Judge Crotty on Dec. 21, 2010. He is scheduled to be sentenced on March 16, 2011.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The case is being handled by the U.S. Attorney Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Marissa Molé is in charge of the prosecution.
Note: Original release date was Jan. 7, 2011. Source: Financial Fraud Enforcement Task Force
Alexei P. Koval, aka “Aleksey Koval,” admitted that he obtained inside information from his co-conspirator, Igor Poteroba, a former investment banker in the Healthcare Group of UBS Securities LLC, and then traded on that information.
The information related to six mergers and acquisitions that certain UBS clients were contemplating. Koval pleaded guilty in Manhattan federal court before U.S. District Judge Paul A. Crotty.
“Alexei Koval flagrantly violated the securities laws to make a quick profit, and now he will pay for his crimes,” Bharara said. “Insider trading undermines faith in the market and cheats honest investors. It will not be tolerated. Together with our law enforcement partners, we will continue to prosecute and punish those who use their access to inside information to break the law.”
According to documents previously filed in Manhattan federal court, from May 2006 through at least 2009 Koval was a registered investment adviser. During approximately the same time period, Poteroba served as an executive director at UBS. In that capacity, Poteroba obtained material, non-public information regarding certain mergers and acquisitions involving the following six publicly traded healthcare companies: Guilford Pharmaceuticals Inc., Molecular Devices Corporations, PharmaNet Development Group Inc., Via Cell Inc., Millennium Pharmaceuticals Inc. and Indevus Pharmaceuticals Inc.
In violation of his duties of trust and confidence, Poteroba then disclosed the UBS inside information to Koval, who in turn disclosed the UBS inside information to another co-conspirator (CC-1).
As part of the scheme, Koval typically received tips from Poteroba by telephone in advance of a public announcement about certain mergers and acquisitions. Shortly after receiving a tip from Poteroba, Koval and CC-1 purchased securities in one of the healthcare companies on the basis of the UBS inside information.
Following the public announcement of the acquisition, Koval and CC-1 quickly sold the securities they had purchased. Koval and CC-1 executed dozens of securities transactions based on UBS inside information provided by Poteroba. Koval then paid a portion of the profits to Poteroba.
Koval pleaded guilty to three counts of securities fraud and one count of conspiracy to commit securities fraud. The securities fraud counts each carry a maximum sentence of 20 years in prison and a maximum fine of $5 million.
The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. Koval agreed as part of his plea agreement to forfeit at least $1,414,290, representing the amount of proceeds obtained as a result of the securities fraud offenses.
Koval, 36, of Chicago, and Pasadena, Calif., will surrender to federal authorities on Jan. 14, 2011, and is scheduled to be sentenced by Judge Crotty on April 12, 2011, at 2:30 p.m.
Poteroba, 37, of Darien, Conn., pleaded guilty to similar charges before Judge Crotty on Dec. 21, 2010. He is scheduled to be sentenced on March 16, 2011.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The case is being handled by the U.S. Attorney Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Marissa Molé is in charge of the prosecution.
Note: Original release date was Jan. 7, 2011. Source: Financial Fraud Enforcement Task Force
Subjects
conspiracy,
fraud,
Insider trading,
investment,
securities
Hariri Sentenced in Historic Hedge Fund Case
Former Executive Gets 18 Months, Fine for Role in Trading Scam
NEW YORK – 11/9/10 - Ali Hariri, a former executive at Atheros Communications Inc., was sentenced on Nov. 8 in Manhattan federal court to 18 months in prison for his participation in the largest hedge fund insider trading case in history, U.S. Attorney for the Southern District of New York Preet Bharara announced this week. U.S. District Judge Richard J. Holwell, who imposed the sentence, also imposed a two year term of supervised release and a $50,000 fine.
According to documents previously filed in Manhattan federal court and statements made during Hariri’s guilty plea proceeding, from 2008 to March 2009, Hariri, a vice president at Atheros, engaged in an insider trading scheme in which he obtained material, nonpublic information relating to Atheros.
Hariri provided this inside information to Ali Far, a hedge fund manager, for the purpose of executing profitable securities transactions Hariri knew that the information he provided to Far was material and non-public, and he disclosed it in breach of fiduciary and other duties of trust and confidence that he owed to Atheros. In exchange for inside information regarding Atheros, Far provided Hariri with tips to buy and sell the stocks of other technology companies.
“Ali Hariri’s sentencing provides another reminder of how pervasive insider trading has become and the lengths to which corrupt insiders will go to misuse confidential information for their own personal gain,” Bharara said. “It should also remind those who might contemplate similar crimes that we will ultimately find you, prosecute you and convict you. This office is committed to stopping insider trading in its tracks to protect the integrity of our markets.”
On March 3, 2010, Hariri, 39, of San Francisco, pleaded guilty to conspiring to commit insider trading crimes Hariri also pleaded guilty to substantive securities fraud. Far has also separately pled guilty to conspiring to commit insider trading crimes and to substantive securities fraud. He is awaiting sentencing.
Bharara praised the investigative work of the FBI. He also thanked the U.S. Securities and Exchange Commission. Bharara said the investigation is continuing.
The case is being handled by the office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.
Source: Financial Fraud Enforcement Task Force .
Subjects
Insider trading,
securities,
Wall Street
Former Madoff Securities Employee Under Scrutiny
NEW YORK - 8/5/2010 - Preet Bharara, the United States Attorney for the Southern District of New York, announced this week the filing of an amended civil complaint seeking the forfeiture of a total of more than $5.1 million in assets from Annette Bongiorno.
Bongiorno had spent more than 40 years working for Bernard L. Madoff Investment Securities LLC ("BLMIS"), the fraudulent investment advisory business owned and operated by Bernard L. Madoff, and the assets allegedly subject to forfeiture constitute property traceable to proceeds of Madoff's fraud.
This week's amended verified complaint follows the filing of two civil forfeiture complaints on June 22 seeking the forfeiture of various assets controlled by Bongiorno and another long-time Madoff employee, Joanne Crupi. According to the verified amended complaint filed in Manhattan federal court today, the U.S. Attorney's Office for the Southern District of New York has been able to trace more than $2 million in additional assets under Bongiorno's control -- including houses in Florida and New York -- to her allegedly knowing participation in the massive Ponzi scheme operated through the investment advisory business of BLMIS.
The amended Complaint seeks to forfeit property directly traceable to the BLMIS fraud, or property traceable to such property, including the following:
1. A house in Manhasset, New York, for which Bongiorno paid approximately $1.4 million.
2. A house in Boca Raton, Florida, for which Bongiorno paid approximately $862,000.
3. Approximately $1.1 million currently or formerly held in accounts at Citibank, Morgan Stanley Smith Barney, and HSBC;
4. A 2005 Bentley Continental, for which Bongiorno paid approximately $182,605;
5. A 2007 Mercedes Benz, for which Bongiorno paid approximately $90,000;
6. Another 2007 Mercedes Benz, for which Bongiorno paid approximately $66,000; and
7. Approximately $1.3 million paid towards a luxury condominium.
The United States Attorney's Office for the Southern District of New York will ask that property forfeited in the civil case announced today be liquidated and used to compensate victims of the BLMIS fraud.\
According to the amended Complaint, a number of former BLMIS employees have already been charged criminally. No criminal charges have been filed against Bongiorno.
Bharara praised the work of the Federal Bureau of Investigation; the Internal Revenue Service; the U.S. Department of Labor's Employee Benefits Security Administration and Office of the Inspector General; and the United States Marshals Service. He also thanked the Securities and Exchange Commission and the Securities Investor Protection Corporation Trustee for their assistance.
This case was brought in coordination with the Financial Fraud Enforcement Task Force, on which Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group.
Assistant United States Attorneys Lisa A. Baroni, Julian J. Moore, Barbara A. Ward and Matthew L. Schwartz are in charge of the cases.
Source: Financial Fraud Enforcement Task Force
Bongiorno had spent more than 40 years working for Bernard L. Madoff Investment Securities LLC ("BLMIS"), the fraudulent investment advisory business owned and operated by Bernard L. Madoff, and the assets allegedly subject to forfeiture constitute property traceable to proceeds of Madoff's fraud.
This week's amended verified complaint follows the filing of two civil forfeiture complaints on June 22 seeking the forfeiture of various assets controlled by Bongiorno and another long-time Madoff employee, Joanne Crupi. According to the verified amended complaint filed in Manhattan federal court today, the U.S. Attorney's Office for the Southern District of New York has been able to trace more than $2 million in additional assets under Bongiorno's control -- including houses in Florida and New York -- to her allegedly knowing participation in the massive Ponzi scheme operated through the investment advisory business of BLMIS.
The amended Complaint seeks to forfeit property directly traceable to the BLMIS fraud, or property traceable to such property, including the following:
1. A house in Manhasset, New York, for which Bongiorno paid approximately $1.4 million.
2. A house in Boca Raton, Florida, for which Bongiorno paid approximately $862,000.
3. Approximately $1.1 million currently or formerly held in accounts at Citibank, Morgan Stanley Smith Barney, and HSBC;
4. A 2005 Bentley Continental, for which Bongiorno paid approximately $182,605;
5. A 2007 Mercedes Benz, for which Bongiorno paid approximately $90,000;
6. Another 2007 Mercedes Benz, for which Bongiorno paid approximately $66,000; and
7. Approximately $1.3 million paid towards a luxury condominium.
The United States Attorney's Office for the Southern District of New York will ask that property forfeited in the civil case announced today be liquidated and used to compensate victims of the BLMIS fraud.\
According to the amended Complaint, a number of former BLMIS employees have already been charged criminally. No criminal charges have been filed against Bongiorno.
Bharara praised the work of the Federal Bureau of Investigation; the Internal Revenue Service; the U.S. Department of Labor's Employee Benefits Security Administration and Office of the Inspector General; and the United States Marshals Service. He also thanked the Securities and Exchange Commission and the Securities Investor Protection Corporation Trustee for their assistance.
This case was brought in coordination with the Financial Fraud Enforcement Task Force, on which Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group.
Assistant United States Attorneys Lisa A. Baroni, Julian J. Moore, Barbara A. Ward and Matthew L. Schwartz are in charge of the cases.
Source: Financial Fraud Enforcement Task Force
Subjects
fraud,
Madoff,
securities
