Category: Securities Fraud

Founder Arrested in NanoSave Patent Scheme

Founder Arrested in NanoSave Patent Scheme

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Patent Scheme Results in $3m Fine

The SEC has sued the men and two of their companies for a patent scheme that duped dozens of investors. The men, Rockey “Roc” Hatfield and Steve Lovern, fooled investors into paying $3 million for penny stocks and shares of absurd patents that never made it past the application stage.

Hatfield Has History as Recidivist Offender

According to the complaint, the SEC called Hatfield “a prolific recidivist offender” with a history of legal trouble that started in the early 1990’s. Hatfield ran two companies, N1 Technologies Inc. and NanoSave Technologies Inc., that used false press releases and unregistered sales agents to convince investors to buy fractional shares of patents for a variety of nanotechnologies that supposedly would be licensed or sold.

According to the indictment, products included ‘NanoSave N1 Organic,’ a drinkable motor oil, ‘Dynamicon Solar Kinetic Generator,’ an electric generator able to ‘power a small city,’ ‘NanoBolt Lithium Battery,’ a lithium tungsten battery, and ‘Viritron VDX,’ a ‘natural nanobot that could be programmed to deliver a knockout punch to a wide range of bacterial and viral infections.’

Investors Duped into NanoSave Patent Scheme

Investors were given an opportunity to buy 1 percent of a patent for $20,000 with the expectation that a fractional owner would receive a stream of payments from the sale or license of the patent by N1 or NanoSave to companies around the world.

However, the complaint alleges that no patents ever actually were issued by the U.S. Patent and Trademark Office. The SEC alleges that the scheme took in $2.5 million between 2015 and 2017. The Justice Department claims that the number is at least $3 million, dating back to 2012.

To date, Hatfield’s history with the law already includes two federal injunctions, a finding of contempt of court, a ban on working as a broker-dealer or investment adviser and from working with penny stocks, two state securities commission orders, and a criminal conviction.

Have You Lost Money in an Investment Scheme?

If you believe you have been the victim of investment fraud, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Regulator says SII Investments Failed to Supervise Brokers

Regulator says SII Investments Failed to Supervise Brokers

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Massachusetts securities regulators recently charged SII Investments with dishonest or unethical conduct and failure to supervise the sale of non-traded real estate investment trusts (REITs) to investors by inflating the liquid net worth of their clients.

Massachusetts securities regulations require that an investor’s purchase of a non-traded REIT can constitute no more than 10% of the investor’s liquid net worth. The regulators’ complaint charges that SII brokers acted dishonestly, improperly calculating their clients’ liquid assets on suitability and disclosure forms for non-traded REITs. The complaint states that SII’s compliance team failed to supervise the sale of inappropriate investments.

The brokerage firm allegedly sold more than $4 million of non-traded REITs, resulting in high commissions for both the firm and its brokers. State regulators say that many of the non-traded REITs would have been in violation of Massachusetts limitations, as well as SII’s internal compliance requirements and mandates. The complaint states that even though SII’s policies are clear that annuities are illiquid products, agents included annuities with material pending surrender fees as part of their liquid net worth calculations. Had these calculations been done correctly, many of these non-traded REIT sales could not have occurred.

SII Investments Part of LPL Financial

SII is an independent broker-dealer within National Planning Holdings, which is being acquired by LPL Financial. In a released statement by LPL, the company said, “Under the construct of our agreement, LPL would not be liable for this matter.”

Have You Lost Money with SII or LPL Financial?

If you believe you have been the victim of investment fraud, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Gerova Ex-CEO Gets 78 Months in Pump-And-Dump Scheme

Ex-CEO Gets 78 Months in Gerova Pump-And-Dump Scheme

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Gerova Ex-CEO has been sentenced in New York federal court to 78 months in prison. In addition to prison time, U.S. District Judge Kevin Castel also ordered the ex-CEO to serve one year of supervised release and forfeit about $19 million.

Gerova Ex-Ceo Convicted in Scheme

Last year in September, a jury convicted the Gerova ex-CEO Gary Hirst of securities fraud in connection with the illegal Gerova pump-and-dump scheme. According to prosecutors, the former executive secretly awarded nearly $72 million dollars of Gerova’s stock to himself and others. He did so by quietly taking control of nearly half of the company’s public float, cashing out after bribing investment advisers to buy shares for their own clients.

Prosecutors said, in total, the scheme generated nearly $20 million dollars of illegal profit. Of that, Hirst received a total of $2.62 million.

In a statement, acting U.S. Attorney Joon Kim said, “Hirst and his co-conspirators issued large amounts of stock, lied about their roles, and found other novel means to defraud the stockholders of Gerova Financial and the investing public.”

Gerova Scheme Involves Seven People

Hirst, 64, is one of seven people charged and sentenced over the Gerova pump-and-dump scheme. Former investment banker Jason Galanis, along with his father and two brothers also have been charged and sentenced. One defendant remains at large.

Have You Been a Victim of Securities Fraud?

If you have been a victim of securities fraud, you may have certain legal rights that require your immediate attention.

Call a Securities Fraud Attorney Today

If you are looking for a securities fraud attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from brokers and brokerage firms for their wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our securities fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact a securities fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Sanomedics Execs Convicted for Microcap Scheme

Sanomedics Execs Convicted for Microcap Scheme

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Two executives of a pet healthcare company, Sanomedics, have been sentenced to time in prison for a microcap scheme that defrauded over 700 investors of $23 million.

Sanomedics Microcap Scheme

The executives are Sanomedics Inc. founder Craig V. Sizer and president Keith Houlihan. The judge sentenced Sizer to 15 years in prison and Houlihan to 9 years for orchestrating a scheme that used false claims to solicit investors to buy shares in their company. The company sold non-contact infrared thermometers for home health care for dogs.

From April 2009 through August 2015 the company made solicited investors to buy stock in the company. The sales pitch included false statements that the stock was safe and that no commissions would be charged. Some victims were even told that TV’s “Dog Whisperer,” Cesar Millan, was heavily invested in the company. The investment fraud scheme operated out of Miami Lakes, Florida, and Marina Del Rey, California.

Sanomedics Associates Also Sentenced

In June 2017, a Miami federal grand jury convicted five other associates for their roles in the Sandomedics Microcap investment fraud scheme. In addition to their role in the Sandomedics scheme, several defendants used a similar investment fraud scheme to sell shares of Fun Cool Free (FCF), a company that claimed to own a smartphone gaming portfolio with hundreds of gaming applications.

Did Your Loose Money to Sanomedics?

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerages firms for their wrongful actions.

Call an Investment Fraud Attorney Today

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

SEC Rules Digital Tokens Are Securities

SEC Rules Digital Tokens Are Securities

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Digital Tokens Are Securities When Part of an ICO

A recent report published by the Securities and Exchange Commission (SEC) has confirmed that “coins” or digital tokens are securities. The ruling could affect coins offered in “Initial Coin Offerings” (ICOs).

In the press release accompanying the report, the SEC writes, “Virtual coins or tokens may be securities and subject to the federal securities laws. The federal securities laws provide disclosure requirements and other important protections of which investors should be aware.”

In the release, the SEC also explained that the source of the report focused on an inquiry into a 2016 offering known as “The DAO“. The offering was based on the Ethereum blockchain—a popular form of digital blockchain currency—that quickly fell apart when hackers stole the tokens on offer. While most of the tokens were recovered, legal fallout triggered a SEC investigation. Though no charges have been filed in the case related to The DAO, the report clearly indicates that measures may be taken going forward.

Supporters of ICOs claim that the tokens are not securities, but are instead a form of credit. However, many of the tokens are traded on secondary markets, casting doubt on the claims that tokens issued are not securities.

The report released comes at a time when many companies have completed, or are in the midst of, raising money through the ICO process. The announcement may temper some enthusiasm for ICOs in the U.S.

The Benefits of an ICO

An initial coin offering (ICO) lets a company raise capital from multiple sources, similar to an initial public offering (IPO). With an ICO, rather than issue shares of ownership, the offering company sells digital tokens or “coins” created through blockchain technology.

The popularity of recent ICOs has been well reported, with several companies raising hundreds of millions of dollars in recent months. Their ability to raise such large sums is due in part to the ease with which an ICO can be set up and investor’s desire to invest in blockchain technology.

SEC Calls for Collaboration

Of ICOs going forward, the SEC encouraged an open dialogue, suggesting that there may be other ways to use blockchain for financial gains while also protecting investors.  The SEC stated, “We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.”

Call an Investment Fraud Attorney Today

If you are looking for an attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million for clients for wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Juno Drivers File Suit for Securities Fraud

Juno Drivers File Securities Fraud Suit

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Three Juno drivers have filed a federal class action lawsuit against New York-based ride-hail service Juno. The drivers are filing for breach of contract, false advertising, and securities fraud.

Juno Drivers Misled by Equity Program

The Juno drivers allege the company lured away high-performing drivers from competing companies Uber and Lyft with the promise of equity in the company. In April, when Juno was acquired by New York-based Gett, the equity program was dissolved.

As part of the acquisition deal, drivers were informed that those who had Juno shares were to be cashed out. As reported by Recode, drivers were receiving on average around $100 – regardless of how many shares they held. One driver reportedly had more than 6,000 shares.

The suit filed alleges that Juno used the equity program to lure drivers to the company with intentions to sell the company when an offer came its way. In addition to the equity program, Juno paid drivers $50 to be on the platform, even before drivers were carrying riders. When the company launched, riders were given deep discounts and drivers were only charged 10 percent commission. The result was an unsustainable business model.

In response to the suit from the Juno drivers, the company states that it was considering changes to the equity program prior to the acquisition by Gett. Gett acquired Juno for $200 million, including the company’s assets and its founding team.

Have You Been a Victim of Securities Fraud?

If you are the victim of investment fraud or believe you have been scammed, you may have certain legal rights that require your immediate attention.

Call a Securities Fraud Attorney Today

If you are looking for a securities fraud lawyer to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from companies for their wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our securities fraud lawyers may be able to help you recover your investment losses.

Contact a securities fraud lawyer at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Valeant Tries to Clear Claims in 4 Securities Fraud Suits

Valeant Tries to Clear Claims in 4 Securities Fraud Suits

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Valeant Pharmaceuticals International Inc. has asked a New Jersey federal court to waive four securities fraud suits brought against it by institutional investors. The investors – including companies T. Rowe Price Growth Stock Fund Inc. – are seeking to recover damages for Valeant securities they say were purchased under false filings with the U.S. Securities and Exchange Commission.

Valeant Tries to Wavie Divergent Parts of Class Action Suit

The investors filing suit have many of the same allegations about Valeant’s business practices and undisclosed ties to a mail-order pharmacy that have been raised in a securities class action lawsuit against Valeant. As a result, Valeant is seeking to waive parts of the four lawsuits that diverge from the class action. The complaint by Valeant accuses the so-called Section 18 claims as overly generalized since the investors did not link purchases to statements in the filings.

The suits filed last year by the institutional investors are claiming that Valeant operated a “secret network” of pharmacies, used to fraudulently push high-priced generic drugs on patients. To hide the deception, Valeant allegedly lied to regulators and investors.

Did You Invest with Valeant?

If you are looking for a securities fraud attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million for clients for wrongful actions.

Call a Securities Fraud Attorney Today

With offices in Los Angeles, New York, West Palm Beach and Miami, our securities fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact a securities fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Auditors Face Lawsuit for Colonial BancGroup Failure

Auditors Face Lawsuit for Colonial BancGroup Failure

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An Alabama federal judge has ruled that auditors PricewaterhouseCoopers LLP and Crowe Horwath LLP must face a $2.2 billion lawsuit. The lawsuit is brought by regulators who allege the auditors overlooked a mortgage fraud scheme that resulted in the failure of Colonial BancGroup Inc. The judge said the damages to the Federal Deposit Insurance Corp. (FDIC) are too complicated, so it would be impossible to impose interest against the auditors once the lawsuit goes to trial.

Auditors Lawsuit Brought by FDIC

The bankruptcy trustee for Colonial BancGroup and the FDIC claim that auditors from PricewaterhouseCoopers LLP and Crowe Horwath LLP failed to correct irregularities and fake collateral from its biggest customer, Taylor Bean & Whitaker Mortgage Group, causing losses for Colonial BancGroup and its subsidiary Colonial Bank.

The auditors claim they can’t be held liable for the losses but U.S. District Judge Barbara Jacobs Rothstein has rejected the claim, stating the case would go forward.

Colonial BancGroup Damages Vary

On both sides of the case, the estimates of the damages as a result of the bank failure vary widely. Judge Rothstein wrote that damages are “uncertain and difficult to ascertain” and the consequences could be in the hundreds of millions.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million for clients for wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

Booz Allen Retirees May Have Securities Fraud Suit

Booz Allen Retirees May Have Securities Fraud Suit

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A lawsuit against Booz Allen Hamilton Inc. by retirees of the government contractor has been partly resuscitated by The Second Circuit. The court claims that the plaintiffs had no case under the Employee Retirement Income Security Act (ERISA) but a securities class action is possible.

Booz Allen Employees Lose Money in Split Deal

The three retirees in the suit, Bruce Pasternack, Reginald Boudinot and Paul Kocourek, retired from Booz Allen before a deal in 2008 split the contracting side of the business with the consulting side. The consulting side of the business folded into PricewaterhouseCoopers LLP and the contracting unit went to the private equity giant Carlyle Group.

Until the 2008 deal, the company had been owned by its employees, who accrued equity under a stock rights plan (SRP). Typically, upon retirement, employees sold their equity back to the company for gain. When Pasternack and Boudinot retired, they sold their shares back Booz Allen. Shortly after, the Carlyle Group acquired the contracting unit from Booz Allen for far more than Booz Allen had paid for the retiree’s shares.

A few months later, Kocourek managed to sell his shares to Carlyle Group directly at a higher price, only to find out that his shares were also undervalued when the company took Booz Allen public two years later for almost double what it had initially paid for it.

The three filed suit to claim they lost money in the deal and the companies had violated its duties to the SRP under ERISA. A district judge dismissed the initial claims, stating that there was no duty to the SRP under ERISA.

Booz Allen Suit to Move Forward with Securities Fraud Charge

With the claims rejected, Kocourek tried to amend the complaint to a securities fraud claim on behalf of a class of hundreds of Booz Allen employees. Upon filing the amendment, U.S. District Judge Lew Kaplan denied Kocourek the permission, stating Kocourek waived his right to bring a securities fraud suit when he transferred his shares to Carlyle.

Now, the Second Circuit court has said that the waiver Kocourek signed wasn’t legal and a securities fraud case could move forward. We’ll continue to report as the case unfolds.

Did You Lose Money as a Result of Securities Fraud?

If you invested with the Chans or think you may be involved in an EB-5 investor scam, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for a securities fraud attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered over $100 million from for clients for wrongful actions.

With offices in Los Angeles, New York, West Palm Beach and Miami, our securities fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact a securities fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

AMG Energy Broker Denied New Trial

AMG Energy Broker Denied New Trial

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A Texas federal judge has denied a former AMG Energy broker’s request for a new trial. The U.S. Securities and Exchange Commission’s case against the broker involved charges that the broker sold $22 million in unregistered investment vehicles disguised as partnerships in oil and gas drilling. The judge granted summary judgment in favor of the SEC.

SEC Wins Against AMG Energy Broker

The SEC filed a claim against AMG Energy Broker Alfredo Gonzalez for his involvement in an investment scheme that claimed $22 million dollars of investor funds. The scheme, headed by Leon Ali “Alex” Parvizian, lured investors with promises of investment returns achieved through his claimed expertise in managing oil and gas well enterprises.

The SEC contended that Parvizian sold the joint ventures through AMG Energy and R. Thomas & Co. Gonzalez was paid a 12 percent “finder’s fee” for all money that he raised from investors.

Did You Invest with an AMG Energy Broker?

If you invested with AMG Energy broker Alfredo Gonzalez, you may have the right to take legal action.

Call an Investment Fraud Attorney Today

If you are looking for an attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerages firms for their wrongful actions.

Contact an attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.