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Washington D.C. – The Securities and Exchange Commission today announced fraud charges against five individuals for allegedly operating a call center in Medellin, Colombia, which used high pressure sales tactics and made false and misleading statements to retail investors to convince them to buy the stocks of small companies trading in the U.S. markets.
According to the SEC’s complaint, filed on March 14, 2022, U.S. citizen Chester Alvarez, Canadian citizens Francis Biller, Raymond Dove, and Troy Gran-Brooks, and Dutch citizen Justin Plaizier operated call centers, set up as phony investment management firms, with fake names, websites, and phone numbers. The SEC’s complaint alleges that, using the false personas, the defendants orchestrated a pump-and-dump scheme and made false and misleading statements when they promoted the stock of at least 18 issuers, and that they generated more than $58 million in trading from this scheme. The complaint also alleges that the defendants were paid approximately $10 million for promoting thinly traded stocks, which they misled investors to believe had high prospects for success.
“These scam artists went to great lengths – using bogus companies, aliases, and spoofing their phone numbers – to defraud and mislead investors into a pump-and-dump scheme,” said Paul Levenson, Director of the SEC’s Boston Regional Office. “We urge investors to read the investor education materials about fraud in the ‘penny stock’ market, which are available at Investor.gov.”
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of New York, charges all defendants with violations of antifraud provisions of the securities laws and charges Alvarez with violating market manipulation provisions of the securities laws. It also seeks injunctive relief, disgorgement plus prejudgment interest, civil penalties, and a prohibition on participating in any offerings of penny stocks by all defendants.
The SEC’s continuing case is being handled by Trevor Donelan, Kathleen Shields, Jonathan Allen, and Amy Gwiazda of the SEC’s Boston Regional Office with the assistance of Marlee Miller and Owen Granke of the Office of International Affairs and Alex Lefferts in the Office of Investigative and Market Analytics. The SEC appreciates the assistance in this matter of Rebecca Israel of the SEC’s Office of Market Intelligence, the Financial Industry Regulatory Authority (FINRA), the Argentinian Comisión Nacional de Valores, the British Columbia Securities Commission, the Royal Canadian Mounted Police, the Hong Kong Securities and Futures Commission, the Malta Financial Services Authority, the Mauritius Financial Services Commission, the Mexican Comisión Nacional Bancaria y de Valores, the Panamanian Superintendencia del Mercado de Valores, the Monetary Authority of Singapore, the Dubai Financial Services Authority, the UAE Securities and Commodities Authority, the Superintendencia Financiera de Colombia, the Colombian Office the Attorney General, the Swiss Financial Market Supervisory Authority, and the Switzerland Federal Office of Justice.
Oshri deberá pagar las costas procesales de la corresponsal española por tratar de silenciar su serie de investigación
California (USA) – Emprender acciones legales sin fundamento jurídico puede resultar costoso, sobre todo cuando el querellante tiene como objetivo censurar la libertad de expresión en temas de interés público y éste no presenta pruebas admisibles. Es decir, cuando se pierde una querella mordaza (anti-SLAPP en inglés).
Y ahora Hadari Oshri está a punto de saber por qué.
Según documentos presentados ante el Tribunal Superior de Los Ángeles, la corresponsal Aitana Vargas ha solicitado 23.000 dólares en honorarios legales después de una audiencia celebrada el 13 de septiembre de 2021, en la que la jueza Doreen Boxer falló a favor de la periodista y reconoció que las medidas cautelares solicitadas por Oshri suponían un intento por censurar la libertad de expresión garantizada por la Primera Enmienda de la Constitución estadounidense.
Hadari Oshri’s meritless civil harassment restraining order petition against award-winning news correspondent Aitana Vargas could cost Oshri thousands of dollars.
Hadari Oshri firma una declaración plagada de acusaciones incomprensibles, indemostrables y bochornosas
Durante la vista, la jueza recalcó que la declaración jurada que Oshri presentó el 22 de junio de 2021 contra la periodista “no era clara”. De hecho, la magistrada le recriminó a los abogados de la empresaria que ni siquiera habían “incluído pruebas” y que, de haberlo hecho, éstas “carecían de fundamento” y eran inadmisibles.
En su denuncia escrita, Oshri se cubrió de gloria y le dedicó todo tipo de perlas a la galardonada periodista, incluyendo calificativos como “Mis Vergas” y “Señorita Vergas”. También la acusó de ser una “mujer muy peligrosa”, “desesperada” y una “reportera corrupta” sin ninguna prueba, e incluso identificó a Vargas como un miembro de la inexistente raza “española”. Pero las acusaciones de Oshri también incluyeron otras declaraciones incomprensibles y memorables como:
“(Vargas) está cavando en lugares que no están aquí ¡¡ no es AUTÉNTICA, NO ES EL FBI NI LA CIA, que puede perseguirme así por todas mis cuentas en las redes sociales, perseguir mis artículos en las redes sociales, y contactar con todos los implicados ¡¡¡”
“Mis Vergas es tan peligrosa, que está hablando de la situación públicamente en aquí su FB, diciendo que ella es un SLAPP y que la ley la protege, Mis Vargas no es el FBI y no es la CIA, sus historias sobre mí son mentira, y no tiene motivo para contactar con nadie en mi red”.
“Aitaina Vergas es una periodista corrupta, no es auténtica, HAY QUE PARARLA YA!!!”
“Un vistazo rápido a su post reciente en su página de Facebook es una evasión para aquí proceso de pensamiento y aquí urgencia”.
“Mi abogado le envió una sesión de espiritismo y desistir, y ella siguió”.
“¡Deja de escribir sobre mí y contactar con mi red! ¡Suspensión de su licencia de periodista para que no pueda hacerle esto a nadie más!”
Oshri interrumpió la vista varias veces
Además de las acusaciones infundadas de Oshri, ésta interrumpió la audiencia en varias ocasiones levantando la mano, acercándose a su abogada y susurrándole indicaciones al oído hasta que su comportamiento acabó colmando la paciencia de la magistrada, la cual le ofreció un receso a la empresaria para que pudiera compartir cualquier información oportuna con su equipo de abogados penalistas, Veronica Barton y Paul Adkins (los cuales armaron una trama que parecía el guion de una película de bajo presupuesto de Hallmark).
Al reanudar la audiencia media hora después, el caso estaba visto para sentencia. Y aunque la jueza le permitiera a ambas partes resumir y matizar sus respectivas posturas, sin titubear, ésta se dirigió al abogado de la reportera ante una sala repleta de asistentes y dijo: “Moción concedida”.
La periodista fue la primera en abandonar la sala. Sus declaraciones fueron rotundas: “Corramos un tupido velo sobre este lamentable episodio y centrémenos de nuevo en dar visibilidad a las víctimas de posibles entramados fraudulentos, que es el motivo real por el que hoy estamos aquí”.
Hadari Oshri pidió medidas cautelares contra la periodista porque ésta se negó a retirar su serie de investigación
Court documents show that Hadari Oshri instructed her attorney, John Tamborelli, to silence news reporter Aitana Vargas.
Documentos judiciales –entre otros– demuestran que, desde febrero de 2021, la periodista ha estado sometida a constantes presiones legales dirigidas a impedir la publicación de su serie de investigación, cuya primera entrega se difundió el 30 de mayo de 2021.
Antes de que Oshri solicitara medidas cautelares ante un juzgado de Los Ángeles, Vargas ya había reiterado en las redes sociales que no renunciaría a su investigación como resultado de la presión que Oshri y su anterior abogado, John Tamborelli, estaban ejerciendo sobre ella.
La periodista se negó a acatar las exigencias legales de Tamborelli, las cuales éste también incorporó en un acuerdo extrajudicial que mencionaba a Vargas y del que ésta ni formaba parte ni había firmado. En dicho acuerdo, el abogado de Oshri exigía a una de las fuentes de la periodista que ésta retirara cualquier artículo que mencionara al letrado (Tamborelli), a Oshri o a Lubaszka.
Hadari Oshri’s former attorney, John Tamborelli, tried to silence reporter Aitana Vargas’s media coverage and online complaints about the legal pressure she was enduring.
A finales de junio de 2021, el Sindicato Nacional de Escritores (NWU en inglés) le envió una carta a Tamborelli exigiéndole que cesara todo intento de intimidación hacia la corresponsal.
“El NWU se toma cualquier intento por silenciar o amenazar a un periodista, especialmente a una mujer, de forma muy seria”, decía la carta. “También nos gustaría recalcar que, aunque cualquier fuente confidencial pueda retractarse en cualquier momento, incluso bajo coacción, ésta no tiene el derecho legal a exigir la retirada de un artículo. Le pedimos que cese cualquier acto de intimidación hacia nuestro miembro”.
Hadari Oshri cuenta con varias querellas legales
La empresaria israelí se ha enfrentado a varios procesos legales en el pasado, y algunos exsocios o antiguos trabajadores que han obtenido sentencias contra ella aún están tratando de recaudar sus respectivas indemnizaciones.
En 2020, Oshri y Tamborelli se enfrentaron a una querella vinculada a un accidente de tráfico ocurrido en Los Ángeles. En la audiencia contra Vargas, los abogados de Oshri negaron la existencia de dicha querella a pesar de estar judicialmente documentada.
En la actualidad, Oshri es la directora ejecutiva de Trade Safe Pro y de A1A Management. Al frente de esta última compañía también está el exmodelo Patrick Seller. Hasta 2019, Oshri fue la directora ejecutiva de Xehar, Inc., una compañía de modelos de talla grande (o “hadas de la moda”) que naufragó y se fue a pique en 2018.
Screenshot of a promotional video of Xehar University, one of Hadari Oshri’s many defunct business projects.
Al inicio de la pandemia, Oshri se asoció con Marc Lubaszka, un empresario que está acusado de estafar dos millones de dólares a decenas de personas que invirtieron en sus planes de pensión y que ha sido investigado por el FBI. Lubaszka es el presidente de la compañía de jets privados Fly Private X, cuya página web se encuentra “en construcción” desde que Vargas publicó la primera entrega de su serie de investigación. En los últimos meses, Lubaszka ha reanudado la venta de oro a través de Buy Gold Brightly.
La corresponsal española está representada por Michael Creamer, con oficinas en el condado de Orange.
Desde julio de 2021, Oshri está representada por Veronica Barton y Paul Adkins, con oficinas en los condados de Los Ángeles y Orange.
**Esta historia se va actualizando conforme se recibe información adicional. Last update: March 20, 2022.
***Investor News provides on demand Spanish-language content to readers. Please contact the newsroom if you’d like to read specific stories in Spanish, and we’ll do our best to accomodate your needs promptly.
Have you been SLAPPED? Contact the newsroom at info@investornews.io and share your story with us.
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Washington D.C. — The Securities and Exchange Commission announced today an award of about $14 million to a whistleblower who published an online report exposing an ongoing fraud. The whistleblower, who days later shared the same information with the SEC and was persistent in reaching out to the staff, prompted the opening of an investigation which resulted in a successful enforcement action and the return of millions of dollars to harmed investors.
“Whistleblowers can play a critical role in an investigation,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Here, the whistleblower posted a research report online outlining the allegations against the company and its officer and also, importantly, took expeditious steps to provide this information to the Commission. This case demonstrates the importance of whistleblowers reporting directly to the SEC so that the agency can promptly investigate allegations of wrongdoing.”
The SEC has awarded approximately $1.2 billion to 249 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.
For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.
A California man pleaded guilty this week in the Central District of California to stealing government funds designed to aid medical providers in the treatment of patients suffering from COVID-19 and using them for his own personal benefit.
According to court documents, Grigor Garibyan, 36, of North Hollywood, admitted that he owned GMA Home Health Inc. (GMA), a home health agency in Van Nuys, which closed around June 2019. GMA, which was never operational during the COVID-19 pandemic, received approximately $57,591 designated for the medical treatment and care of COVID-19 patients. Garibyan admitted he stole the funds by transferring and spending them for his own personal use, rather than using the funds in conjunction with pandemic relief efforts as required.
Garibyan pleaded guilty to two counts of theft of government property. He is scheduled to be sentenced on June 16 and faces up to 10 years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The charges against Garibyan resulted from his intentional misuse of funds distributed from the CARES Act Provider Relief Fund, money specially apportioned by the CARES Act to help health care providers who were financially impacted by the COVID-19 pandemic, to provide care to patients who were suffering from COVID-19, and to compensate providers for the cost of that care. These funds were critical to delivering relief to health care providers and maintaining access to medical care during the pandemic.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Tracy L. Wilkison for the Central District of California; and Special Agent in Charge Timothy B. Francesca of the U.S. Department of Health and Human Services Office of Inspector General’s Los Angeles Regional Office made the announcement.
Trial Attorney Chris Wenger and Senior Litigation Counsel Jim Hayes of the National Rapid Response Strike Force of the Criminal Division’s Fraud Section are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
San Diego (CA) – Two defendants charged in a nationwide “grandparent scam” have pleaded guilty to conspiracy charges under the Racketeer Influenced and Corrupt Organizations (RICO) Act.
Jack Owuor, 25, of Paramount, California pleaded guilty in federal court today. Timothy Ingram, 29, of North Hollywood, California, pleaded guilty on March 2, 2022.
According to court documents, the defendants were members and associates of a criminal enterprise that engaged in extortion and fraud to swindle more than $2 million from 70-plus elderly victims across the nation. At least 10 elderly San Diego County residents lost more than $300,000 to the fraud.
From approximately November 1, 2019, until October 14, 2020, the members of the criminal enterprise targeted elderly Americans, contacting them by phone and feeding them phony stories that their grandchildren were in legal trouble and needed money to pay for bail, pay medical expenses for car accident victims, or prevent additional charges from being filed, according to court documents. Members and associates obtained money from victims through in-person cash pick-ups, by mail or commercial carriers, or via wire transfers. Conspirators laundered the proceeds by transferring the funds or converting from fiat currency to cryptocurrency.
Ingram admitted in his plea agreement that he organized the criminal activity of at least five other participants, including codefendants Anajah Gifford and Jack Owuor. Ingram admitted that he recruited mules to receive transfers of money from victims, and to pick up cash from victims in California and elsewhere. As part of the guilty plea, Ingram agreed to forfeit $124,700 in proceeds from the offense. Ingram will also be subject to an order of restitution to the victims of the offense in the amount of at least $1,932,507.93.
Owuor admitted in his plea agreement that he conducted cash pick-ups from victims under Ingram’s direction, and later recruited women to pick up cash. In their phone messages, Ingram and Owuor discussed using female mules for cash pick ups to make “it more smooth.” As part of his guilty plea, Owuor agreed to forfeit $4,300 in proceeds he personally received from the offense, and pay at least $434,600 to the victims in restitution.
This case was investigated by the San Diego Elder Justice Task Force, which is a collaboration between the U.S. Attorney’s Office, the FBI, the District Attorney’s Office and all San Diego County law enforcement agencies. The Elder Justice Task Force was established in February 2021 and is believed to be the first comprehensive law enforcement effort for this purpose anywhere in the country. The case was prosecuted by the U.S. Attorney’s Office and the Department of Justice’s Consumer Protection Branch.
“These defendants exploited the sacred bond between grandparent and grandchild and left many victims financially and emotionally traumatized,” said U.S. Attorney Randy Grossman. “We will vigorously investigate and bring to justice those who prey on the elderly.” Grossman thanked the prosecution team, the Department of Justice’s Consumer Protection Branch and members of the San Diego Elder Justice Task Force for their excellent work on this case.
“The Department of Justice’s Consumer Protection Branch will pursue and prosecute individuals who systematically target elderly Americans by preying on their concern for loved ones,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “We are grateful to our partners at the U.S. Attorney’s Office for the Southern District of California and the FBI for their work to advance the department’s efforts against organized elder fraud, and to the San Diego County District Attorney’s Office.”
“These guilty pleas are a prime example of the collaboration and coordination among our local, state, and federal partners who make up San Diego’s Elder Justice Task Force, and the great work being done to protect our elderly population,” said FBI Special Agent in Charge Suzanne Turner. “The task force is committed to aggressively pursuing criminal organizations who prey on our senior citizens, and will utilize all available investigative means to bring them to justice. I would also like to thank the FBI’s Los Angeles Field Office for their continued support in this case.”
As of today, four of the eight defendants charged in the case are pending trial. Two defendants are fugitives and remain at large.
AN IMPORTANT NOTE:On June 22, 2021, Hadari Oshri –Marc Lubaszka’s business partner– filed a frivolous civil harassment restraining order (CHRO) against Investor News reporter Aitana Vargas to stop the publication of her investigative series “A Special Report: The Harrowing Impunity of White-Collar crime,” and any subsequent installments or future media coverage. On August 3, 2021, Vargas filed an anti-SLAPP motion to strike Oshri’s CHRO petition. In a hearing held on September 13, 2021, Los Angeles Superior Court Judge Doreen Boxer granted Vargas’s anti-SLAPP motion and denied Oshri’s civil harassment petition for failure to sustain the applicable burden of proof. Oshri will now have to pay Vargas’s attorney’s fees for filing a frivolous case. The Israeli entrepreneur also declined to go on a recorded interview or provide statements via email. This outlet has striven to reach out to sources to ensure they have the opportunity to provide their own account of events.
California – Israeli entrepreneur Hadari Oshri has deactivated her LinkedIn account after Investor News broke an investigative story exposing her alleged participation in a joint PPE scheme with broker Marc Lubaszka.
Oshri’s LinkedIn account was one of several sources of misrepresentation of her professional success and experience as a businesswoman.
Prior to her account’s deactivation, Oshri had made multiple false statements, including that she was a “Strategic Partnerships and Investments Executive” with startup 2030.io in the UK ––a misrepresentation that she also featured on her Twitter account for several months.
In an email to this outlet, the company denied any relationship or knowledge of Oshri and requested that she remove all information relating to 2030.io from her social media accounts. Eventually, Oshri deleted any reference to 2030.io.
For months, Hadari Oshri claimed on her Twitter account that she was part of 2030.io. The company has denied any links to Oshri.A screenshot of Hadari Oshri’s LinkedIn account showing that she falsely stated that she had worked at 2030.io in the UK.
Hadari Oshri took to social media to sell PPE amid the COVID-19 pandemic.
According to information that will soon be released by this outlet, Trade Safe Pro, LLC has engaged in multiple dubious business practices during the pandemic. Public records show that the company is linked to a luxurious beachfront Malibu property.
Hadari Oshri and Patrick Seller are listed as principals of A1A Management, Inc., a company registered in Montana linked to a luxurious Malibu property.
A previous story released by Investor News earlier this year linked Oshri to an alleged PPE scheme involving convicted fraudster Arael Doolittle and former Aurum Advisors CEO Marc Lubaszka.
In 2021, Hadari Oshri tried to sell PPE on Facebook Marketplace.
On March 31, 2022, Oshri re-activated her LinkedIn account, which does not list conman Marc Lubaszka’s Fly Private X as one of the companies she worked for.
This is a developing story and will be updated as more information comes in.
RELATED COVERAGE
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Washington D.C., March 8, 2022 — The Securities and Exchange Commission today charged siblings John and JonAtina (Tina) Barksdale with defrauding thousands of retail investors out of more than $124 million through two unregistered fraudulent offerings of securities involving a digital token called “Ormeus Coin.”
According to the SEC’s complaint, from June 2017 through the present, the Barksdales offered and sold Ormeus Coin to investors on crypto trading platforms. In addition, from June 2017 to April 2018, through a multi-level marketing business called Ormeus Global, the Barksdales offered and sold subscription packages that included Ormeus Coin and an investment in a crypto trading program. As alleged, to promote the offerings, John Barksdale held roadshows around the world while he and his sister, Tina, led the production of social media posts, YouTube videos, press releases, and other promotional materials. The complaint alleges that at the events, in the produced materials, and currently on Ormeus Coin’s website, the defendants falsely claimed that Ormeus Coin was supported by one of the largest crypto mining operations in the world, even though they abandoned their mining operations in 2019 after generating less than $3 million in total mining revenue. As alleged, in many of these investor communications, the defendants falsely stated that Ormeus Coin had a $250 million crypto mining operation and was producing $5.4 million to $8 million per month in mining revenues.
According to the complaint, to preserve the fiction that Ormeus Coin was successfully mining crypto, the Barksdales arranged for a public website to display a wallet of an unrelated third party showing more than $190 million in assets as of November 2021, even though the Ormeus wallets were worth less than $500,000. The complaint also alleges that the Barksdales manipulated Ormeus Coin’s price and misused millions of dollars of investor funds for personal expenses.
“We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit,” said Melissa Hodgman, Associate Director in the SEC’s Division of Enforcement. “We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products.”
The complaint, filed in the U.S. District Court for the Southern District of New York, charges the Barksdales with violating the federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York unsealed criminal charges against John Barksdale.
The SEC’s Office of Investor Education and Advocacy cautions investors to be wary of potential crypto investment scams and of investing based on social media.
The SEC’s investigation was conducted by Matthew B. Reisig under the supervision of Timothy England and Melissa Hodgman. Melissa Armstrong and Fred Block will lead the litigation.
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Fraudulently Claimed Nearly $3 Million in Refunds
Two Florida tax preparers were sentenced to prison yesterday for conspiring to defraud the United States and preparing false tax returns.
Nikency Alexis, the owner and operator of Unity Tax & Financial Services (Unity Tax), a Broward County tax preparation business, was sentenced to 45 months in prison, and Thony Guillaume, who worked as a return preparer at Unity Tax, was sentenced to 40 months in prison. According to court documents, from 2011 through 2016, Alexis and Guillaume conspired to defraud the IRS by preparing returns for clients that claimed fictitious business and education expenses the clients never incurred. After learning about the criminal investigation,Alexis and Guillaume continued to file false returns and concealed their involvement in the filing of those returns by listing other individuals as the paid preparers. In total, Alexis and Guillaume sought more than $2.8 million in fraudulent refunds from the IRS.
In addition to the terms of imprisonment, U.S. District Judge Raag Singhal ordered Alexis to serve three years of supervised release and to pay approximately $464,006 in restitution to the IRS. The judge ordered Guillaume to serve three years of supervised release and to pay approximately $221,823 in restitution to the IRS.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida made the announcement.
IRS-Criminal Investigation investigated the case.
Trial Attorney Matthew Hicks of the Justice Department’s Tax Division and Assistant U.S. Attorney Deric Zacca for the Southern District of Florida prosecuted the case.
Washington D.C., April 28, 2020 — The Securities and Exchange Commission today announced charges against Praxsyn Corp. and its CEO for allegedly issuing false and misleading press releases claiming the company was able to acquire and supply large quantities of N95 or similar masks to protect wearers from the COVID-19 virus. The SEC previously issued an order on March 26 temporarily suspending trading in the securities of Praxsyn.
According to the SEC’s complaint, Praxsyn, which is purportedly based in West Palm Beach, Florida, issued a press release on Feb. 27 stating that it was negotiating the sale of millions of N95 masks and “evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule.” On March 4, Praxsyn issued another press release claiming it had a large number of N95 masks on hand and had created a “direct pipeline from manufacturers and suppliers to buyers” of the masks. Praxsyn’s CEO Frank J. Brady was quoted in the release as telling any interested buyers that the company was accepting orders of a minimum of 100,000 masks. Despite these claims, according to the complaint, Praxsyn never had any masks in its possession, any orders for masks, or a single contract with any manufacturer or supplier to obtain masks. After regulatory inquiries, Praxsyn issued a third press release on March 31 admitting that it never had any masks available to sell.
“As alleged in the complaint, in the midst of the ongoing COVID-19 pandemic, Praxsyn and Brady sought to exploit unsuspecting investors by issuing false and misleading press releases concerning Praxsyn’s ability to source and supply N95 masks for the COVID-19 virus,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.
“Today’s fraud action against Praxsyn and its CEO demonstrates the SEC’s dedication to investor protection and accountability,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement. “We will move swiftly against those who seek to profit off this national emergency by cheating or misleading investors.”
“The Enforcement Division is committed to swiftly shutting down COVID-19 investment scams, seeking trading suspensions where appropriate, and pursuing fraud charges against both entities and individuals when warranted,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.
The SEC’s complaint, filed in federal court in the Southern District of Florida, charges Praxsyn and Brady with violating antifraud provisions of the federal securities laws, and seeks permanent injunctive relief and civil penalties. The SEC also seeks an officer and director bar against Brady.
The SEC’s investigation, which is ongoing, has been conducted by the Microcap Fraud Task Force and supervised by Elisha L. Frank and Glenn S. Gordon. Robert K. Levenson is leading the SEC’s litigation under the supervision of Andrew O. Schiff. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA).
The SEC’s Office of Investor Education and Advocacy previously issued an investor alert cautioning investors to be aware of COVID-19 scams.
Washington D.C. — The Securities and Exchange Commission today charged venture capital fund adviser Alumni Ventures Group, LLC (AVG) with making misleading statements about its management fees and engaging in inter-fund transactions in breach of fund operating agreements. The SEC also charged AVG’s CEO, Michael Collins, with causing AVG’s violations. To settle the charges, AVG repaid $4.7 million to affected funds and agreed to pay a $700,000 penalty, whereas Collins agreed to pay a $100,000 penalty.
According to the SEC’s order, AVG’s website and other marketing communications represented that its management fee for the venture capital funds that it managed was the “industry standard ‘2 and 20.’” The order found that these representations were misleading because they led some investors to believe that AVG would collect a two-percent management fee during each year of its funds’ 10-year term, and separately collect a 20-percent performance fee. According to the order, AVG’s typical practice was instead to assess management fees totaling 20 percent of an investor’s fund investment (representing ten years’ of two-percent annual management fees) upon the investor’s initial fund investment.
The order found that Collins approved of AVG employees using the “industry standard ‘2 and 20’” language and personally used it with fund investors and prospective investors. The order also included findings that AVG made inter-fund loans and cash transfers between funds and made loans to certain funds in violation of the funds’ respective operating agreements.
“Venture capital fund advisers, like all advisers to funds, must accurately describe their fees and abide by the funds’ agreements,” said Adam S. Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “When appropriate, enforcement actions like this one hold firms accountable when they fail to meet these obligations.”
AVG and Collins consented to the entry of the SEC’s order finding that AVG violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8, and that Collins caused AVG’s violations. Without admitting or denying the SEC’s findings, AVG and Collins agreed to a cease-and-desist order, AVG agreed to a censure and to pay a $700,000 penalty, and Collins agreed to pay a $100,000 penalty.
The SEC’s investigation was conducted by Luke Pazicky and Michael Moran, and was supervised by David Becker, all within the Enforcement Division’s Asset Management Unit. The SEC appreciates the assistance of the New Hampshire Bureau of Securities Regulation and the Massachusetts Securities Division.
On March 31, 2022, Oshri re-activated her LinkedIn account, which does not list conman Marc Lubaszka’s Fly Private X as one of the companies she worked for.
