Category: Securities Fraud

Trolice Consulting Services Investment Scam

Trolice Consulting Services Investment Scam

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A Connecticut and former New Jersey resident pled guilty to two counts of securities fraud and transacting in criminal proceedings after he was charged in federal court with defrauding investors of more than $5 million.

According to the complaint, James Trolice was the president and owner of Trolice Consulting Services LLC, and president and chief marketing officer of eAgency, a California-based company. Trolice and a colleague, Lee Vaccaro, sold investors interest in Trolice Consulting Services as well as various entities controlled by Vaccaro. They falsely represented that they held warrants in eAgency.

Warrant Claims Part of Trolice Consulting Services Investment Scam

A warrant is a derivative security that gives the holder the right to purchase stock at a specific price within a certain time frame. Trolice admitted, though, that he made misrepresentations concerning the existence and validity of the number of eAgency warrants owned by the investment companies, as well as the amount of money he had personally invested in and his position with eAgency.

In order to entice investors, Trolice brought people to lavish investor parties at his multi-million-dollar home, where he would tout his track record of successful startups. Instead of using investors’ money to invest in eAgency, Trolice used their funds to pay his mortgage and credit card bills, car payments, and other personal expenses. Vaccaro blew at least $250,000 at Las Vegas casinos. Trolice and Vaccaro also spent investors’ money on trips to Hawaii and California and on shopping sprees at high-end retailers.

Trolice Consulting Services Executive Facing Prison

Trolice is facing a maximum of 20 years in prison for the securities fraud charge and a $5 million fine, and up to an additional 10 years for transacting in criminal proceedings along with a potential $250,000 fine.

Involved in an Investment Scam?

Scammers like James Trolice and Lee Vaccaro use any and all means at their disposal to convince you to invest with them. If you invested with either of these men, or believe you have been the victim of a similar scheme, you may have legal rights that require your immediate attention.

Call a Securities Fraud Attorney Today

The Fraud Report partners with the law firm Dimond Kaplan & Rothstein, P.A.With offices in Los Angeles their securities lawyers have helped stockbroker fraud victims throughout Santa Monica, Beverly Hills, and Hollywood and recovered over $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.

Safety Technologies Executive to Pay $1.8 Million to SEC

Safety Technologies Executive to Pay $1.8 Million to SEC

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A Safety Technologies executive was indicted by the Securities & Exchange Commission (SEC) and ordered to pay $1.8 million in penalties and disgorgement to settle claims that he scammed investors – including women he met while online dating – by promising substantial returns on surgical glove technology.

SEC Settles with Thomas Connerton, Safety Technologies Executive

The SEC settled with Safety Technologies Executive Thomas Connerton and his company, Safety Technologies LLC. The settlement will end claims that Connerton persuaded investors to fork over $2.3 million by touting Safety Technologies’ purported technology. The Safety Technologies executive instead was spending the majority of investors’ money on his fiancée and himself.

The settlement requires Connerton to repay $1.7 million in disgorgement and a further $160,000 in civil penalties. The deal comes only a few weeks after Connerton and his fiancée, Jean Erickson, were criminally indicted for their activities in the same matter.

According to the complaint, the company was founded in 2006 to develop the ideas of a chemical engineer to create a puncture and cut-resistant surgical glove. He told investors that his product was both low-cost and revolutionary, claiming that his company was on the verge of signing several large-scale deals that would net the company as much as $1.7 billion over the next 10 years. He also claimed that he turned down an offer of $30 million for his company, which Connerton said was worth as much as $200 million.

Just over half of the money he raised came from women he met via online dating and their families or friends. Connerton circulated a fake private placement memorandum along with what he claimed was a law firm opinion letter concerning a patent application that stated the surgical glove technology was “novel and useful.”

SEC Claims Against Safety Technologies

The SEC stated that Connerton’s company Safety Technologies did not keep financial records other than tax returns, and investors were not allowed to keep a copy of the private placement memorandum. Further, Connerton spent only 7 percent of the money he had raised since 2009 on research and development. None of the money raised in 2016 was used for research and development for the company.

Have You Been a Victim of Securities Fraud?

Scammers like Thomas Connerton and his company are constantly coming up with new ways to defraud potential investors – including using online dating as a platform form which to raise investor money – to fleece unwitting investors.

Call a Securities Fraud Attorney Today

Contact an attorney today to schedule an appointment or consultation to review your rights and options. With offices in Los Angeles the attorneys at DKR have helped stockbroker fraud victims throughout Santa Monica, Beverly Hills, and Hollywood and recovered over $100 million from banks and brokerages firms for their wrongful actions.

Investors Seek Class Certification Against Fitbit

Investors Seek Class Certification Against Fitbit

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Investors of the popular fitness tracker Fitbit were in court arguing that Fitbit covered up problems with its technology, which led to an inflated stock price. Once the truth about technology problems was revealed, it adversely affected investors.

A group of investors who purchased shares of Fitbit in the company’s June 2015 initial public offering (IPO) are seeking to66 represent a larger “class”  –  anyone who bought shares in the IPO and have lost money as a result of statements relied upon by the company in advance of their purchase, and those who bought shares in the IPO through May 2016, when relevant information about the company’s technology came to light.

According to the plaintiffs, Fitbit misled investors both before and after its 2015 IPO by telling the public their proprietary algorithms “accurately measure and analyze user health and fitness metrics” despite knowing that issues existed.

The shareholder suit arose after users started complaining that Fitbit devices provided “wildly inaccurate” results, especially during periods of intense exercise. News of the issues caused the stock to drop from nearly $31 to just under $14 from January through May of 2016.

Board Members Named in Lawsuit

The lawsuits also name the company CEO and Chairman James Park, CFO William Zerella and CTO Eric Friedman. A motion to dismiss was denied last October and again in part in January, with the judge ruling the shareholders’ claims were strong enough to survive and proceed.

Are you involved in the Class Certification Against Fitbit?

If you invested in Fitbit, you may have certain legal rights that require your immediate attention.

Call a Los Angeles Securities Fraud Attorney Today

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

LeapFrog Investor Lawsuit Moves Forward in California.

LeapFrog Investor Lawsuit Moves Forward

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A California federal judge is moving forward with a proposed LeapFrog investor lawsuit. The class action accuses the children’s educational game manufacturer LeapFrog Enterprises Inc. – along with its top executives – of hiding demand and inventory issues that caused executives to issue a $36.5 million asset write-down.

Last September, investors alleged in their amended complaint that the LeapFrog CEO and chief financial officer were overly optimistic about earnings expectations and other financial matters. This past week, the judge dismissed part of the LeapFrog investor lawsuit, but said investors adequately pled claims that LeapFrog told investors that its long-term assets were not impaired – only to announce the multimillion-dollar write down shortly thereafter.

In a matter of only two months, executives “failed to explain why…they changed their view on long-lived assets from no impairment to a 96% impairment,” according to the judge’s written order.

Litigation began in 2015 after the company announced that its third quarter results were lower than anticipated. As a result, shareholders felt that the company kept share prices artificially high by concealing logistical issues plaguing the launch of its new LeapTV video game system, and failing to report that many of their products were not selling.

Involved in the LeapFrog Investor Lawsuit?

If you invested with LeapFrog Enterprises Inc. or invested in another company that kept material information from you and you experienced a loss as a result, you may have certain legal rights that require your immediate attention.

Call a Los Angeles Securities Fraud Attorney Today

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

A Gerova Financial Group executive will go to jail.

Gerova Financial Group Executive Sentenced

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Gerova Financial Group Executive once involved in the adult entertainment industry was recently sentenced to 11 years in prison after pleading guilty last August to securities fraud and other charges.

Jason Galanis, a Gerova Financial Group Executive, was sentenced in Manhattan federal court over charges stemming from his manipulation of the market for a publicly traded company, Gerova Financial Group Ltd., between 2009 and 2011.

According to prosecutors, the Gerova Financial Group executive was the ringleader of a multimillion-dollar fraud scheme that secretly acquired shares of Gerova and then manipulated the market by cashing out. We blogged about Galanis’ charges when he first pled guilty here.

Second Time Schemer

Galanis also targeted South Dakota’s Oglala Sioux in a separate $60 million bond scheme, using the proceeds to purchase luxury items and to invest in other ventures. He amassed nearly 5 million shares, and hid his ownership through the use of a shell company. Galanis eventually cashed out, netting himself a tidy sum of $20 million between 2007 and 2011. He has yet to be sentenced in this matter.

Did You Invest with Gerova Financial? 

If you invested with Jason Galanis, Gerova Financial Ltd., or one of his related ventures, you may have certain legal rights that require your immediate attention.

Call a Los Angeles Securities Fraud Attorney Today

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

Unregistered Securities Sales violate SEC laws.

Former Broker Settles Over Unregistered Securities Sales

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Adviser Sold Unregistered Securities to NFL Players

A former investment adviser for Morgan Stanley and Wells Fargo settled charges with the U.S. Securities & Exchange Commission (SEC) over allegations that he sold more than $5 million in unregistered securities to NFL players while misrepresenting the investment returns and failing to disclose his financial stake in the deal.

According to the SEC, Sylvester King Jr. failed to verify investment information for clients from the NFL Players Association who invested in Global Village Concerns Inc. (GVC), a now-defunct internet branding company. The adviser failed to tell his clients that he was paid in GVC stock options for soliciting investments in the company. King also was charged with failing to disclose that information to clients. King worked with Morgan Stanley from 2009 to 2011 and then moved to Wells Fargo, where he worked until 2015. During that time, he had roughly 40 current or former NFL players as clients.

King got involved with GVC in 2009, when the CEO of the company approached him about raising money from investors. His clients served as the primary source of money raised for the company, including $3.2 million in two stock offerings and another $2.5 million in convertible note offerings.

Because he failed to disclose his own interest in the deal, he violated the NFLPA code of conduct requiring advisers to disclose their financial interests. The SEC also charged King with misrepresenting or omitting information about GVC.

King allegedly told one client to expect a 20 percent return, and then told another that he saw a 40 percent increase in only 6 months; however, these findings were not based on any facts and there was “no reasonable basis” to quantify that sort of expected return, according to the SEC.

In 2015, King was suspended from associating with any FINRA member brokerage firm for 18 months and ordered to pay a $35,000 fine. FINRA then revoked his registration for failing to pay fines and costs.

Were You Sold Unregistered Securities?

If you invested with Sylvester King Jr. and think you may be caught in a scheme with unregistered securities, or suspect your advisor who failed to disclose his or her interests to you, you may have certain legal rights that require your immediate attention.

Call a Los Angeles Securities Attorney Today

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

The SEC sign barred Scott Landress.

SEC Bars Scott Landress Over His $20 Million Fee

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The Securities & Exchange Commission (SEC) has permanently barred California-based real estate investor Scott Landress from the securities industry and fined him $1.25 million for improperly withdrawing a fee of more than $20 million from two U.K.-focused private equity funds.

Landress directed his company, SLRA Inc. to take money from Liquid Realty Partners III LP and Liquid Realty Partners III-A LP in 2014 as “payment” for several years of service. He then put the money into his personal account.

According to the SEC, private equity fund advisers have a duty to act in their clients’ best interest. In this case, Landress took money that he had no rightful claim to. The money was to be used for a real estate project in the U.K., and has since been returned.

The two aforementioned funds started in 2006 and then lost money during the real estate crisis. Between 2009 and 2011, Landress asked for additional compensation from the funds’ limited partners but was denied. In 2014, he took the money and told partners it was for fees owed to a Liquid Realty affiliate for services rendered between 2006 and 2013. The funds and their partners were not aware of the existence of the alleged fees owed for services rendered.

The limited partners, in this case, included university endowments and pension funds who had invested upwards of $700 million toward the two funds, which had been investing in trusts and had interests in 197 retail, office and industrial properties.

Did you invest with Scott Landress or Liquid Realty Partners? 

Even though Landress returned the money taken, the SEC still permanently barred him from ever operating in the securities industry again. As a reminder to anyone looking to invest, always check on your broker’s history online. If you believe your broker might have been disciplined or barred from investing, you may have certain legal rights that require your immediate attention.

Call a Los Angeles Securities Fraud Attorney Today

Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.

Western Union Facing Lawsuit Following Fraud Disclosure

Western Union Facing Lawsuit Following Fraud Disclosure

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The Western Union Company found itself facing a class action lawsuit in California federal court after disclosing that it agreed to pay the U.S. government $586 million to settle claims that it violated anti-fraud laws and aided and abetted fraud between 2004 and 2012.

Shareholder Martin Herman is suing the company and three top executives, following the fraud disclosure, on behalf of investors who purchased stock between February 14, 2012, and January 19, 2017. The investors suffered a loss after the stock price took a hit following Western Union’s public fraud disclosure.

On January 19, Western Union admitted that it failed to maintain an effective anti-money laundering program and to aiding and abetting wire fraud, resulting in the $586 million fraud disclosure settlement to resolve charges from the Federal Trade Commission and criminal charges from the Justice Department.

Herman’s basis for the lawsuit stems in part from SEC filings between 2012 and 2016 claiming that Western Union’s fraud prevention measures were “effective” and compliant with its regulatory responsibilities. When news of the fraud disclosure charges and subsequent settlement were made public, the complaint alleged that these statements were materially false and misleading, resulting in damage to investors.

Following the fraud disclosure, stock prices fell $.87 per share, over 3.9 percent of the total, over two trading days following the news to the public.

The suit claims that had investors known Western Union’s statements were misleading, he and other proposed class members would not have purchased stock in the company.

As part of its agreement for the fraud disclosure, Western Union admitted it violated the Bank Secrecy Act and other anti-fraud laws. Authorities claimed that fraudsters would contact unwitting victims, pretending to be relatives who needed money for a variety of reasons. The money would be sent through Western Union, with the help of complicit agents within the company who received a cut of payments in exchange for their cooperation.

The authorities claimed that Western Union knew about such activity as far back as 2004 due to consumer fraud reports. The company failed to implement measures to prevent further losses which resulted from the actions of more than 2,000 agents worldwide between 2004 and 2012.

Call a Los Angeles Securities Fraud Attorney Today

If you invested in Western Union between the dates mentioned, or are a shareholder in another company that you believe is being similarly mismanaged, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.

Facebook Faces Shareholders Lawsuit Over Video Metrics

Facebook faces Shareholders Lawsuit Over Video Metrics

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A shareholder filed putative class action suit last week in California federal court claiming that the social media giant Facebook made misleading statements in regards to the amount of time users spend watching video ads. The Facebook lawsuit stated that the disclosure of that information caused Facebook’s stock price to drop.

The shareholder in the Facebook shareholders lawsuit, Daniel Anshen, claimed that the company used a flawed metric to determine how long users were watching video ads online. According to the lawsuit, Facebook’s acknowledgment of its error in September 2016 caused shareholders who purchased stock between May 5, 2014, and Dec. 9, 2016, to suffer a loss. Also according to the complaint, much of Facebook’s growth between the dates in question was the result of paid advertisements targeting its users. In order to entice advertisers to buy placements, data was provided to induce ad purchases based on flawed metrics.

Instead of providing information that reflected total time ads were watched divided by the number of viewers, Facebook calculated its data by the total time spent watching a video divided by the number of views lasting at least three seconds long. As a result, the average time users spent watching video advertisements allegedly was overestimated by between 60-80 percent. The shareholder is now claiming that share prices dropped when the truth came out.

According to the complaint in the shareholders lawsuit, Facebook’s stock price dropped twice in relation to the flawed metric: the first was last September upon discovery and disclosure of the error, causing a $2.77 (2.12%) drop. The second occurred in mid-November, when Facebook’s press release claimed it would update its metrics. After the announcement shares fell an additional $.86.

The shareholder in the Facebook lawsuit is claiming that the company and its top executives “knowingly and recklessly participated in a scheme to defraud plaintiffs” by knowingly publicizing an incorrect metric and failing to disclose it to potential advertisers.

Call a Los Angeles Securities Attorney Today

If you invested in Facebook, or are a shareholder in another company that you believe is being mismanaged or in a shareholder lawsuit, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.

Concept art of lock in a digital space illustrating securities fraud.

Understanding Securities Fraud

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Securities fraud is any type of deception, misrepresentation, or omission intended to induce an investor to buy, sell, or hold a security. The term is sometimes referred to as investment fraud or stock fraud. Fraudsters target both unsophisticated investors and experienced, savvy investors. Regardless of what you call it, securities fraud is illegal.

The Different Types of Securities Fraud

Securities or investment fraud scams come in all shapes and sizes. Some common forms of securities fraud include insider trading, internet fraud, Ponzi schemes, stock price manipulation, churning, and general misrepresentation or omissions of material information.

How to Avoid Securities Fraud

Don’t fall for to-good-to-be-true sales pitches that claim enormous rates of return with little to no risk. And do not be afraid to ask as many questions as you need to in order to fully understand the investment. If you choose to invest, look into the broker’s or salesperson’s background and confirm they have a license to sell securities. Also pay close attention to any history of customer complaints the broker may have or regulatory trouble that the person has been in. You can find out who is soliciting you by using online tools, such as FINRA’s BrokerCheck at https://brokercheck.finra.org/. If you cannot find enough information about an investment or about the salesperson or broker, you should get a second opinion from a qualified professional.

If someone is pressuring you to invest, guaranteeing significant rates of return, or offering a free seminar with some incentive for your participation, take time to investigate further. These tactics are commonly used in schemes involving securities fraud and should raise red flags. Remember: when it comes to investing, if it sounds too good to be true, it probably is!

Were You a Victim of Securities Fraud?

If you suffered investment losses because your broker or brokerage firm committed securities fraud, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.