Securities Fraud Headlines: ConvergEx Group Subsidiary Gets Criminal Sentence for Fraud, Ohio Man Gets Prison Term for Scam, Two Men Face Charges Over Predictive Software, and Fund Manager Admits to $17M Ponzi Scam

CGM Limited Pleads Guilty to Securities Fraud
CGM Limited, a subsidiary of ConvergEx, must pay a criminal penalty and restitution of $26 million for conspiracy to commit both securities fraud and wire fraud, as well as for wire fraud. The U.S. Department of Justice says that CGM limited charged clients millions of dollars in hidden and unwarranted fees. CovergEx is a global trading and brokerage firm. CGM Limited pleaded guilty to the criminal charges.

The government says that CGM Limited and certain traders and executives bilked clients by lying to them and taking the money in the form of fees. CGM Limited admitted that there were ConvergEx Group broker-dealers that regularly sent over securities trade orders so a mark-up could be taken when the orders were executed.

To hide the fees, traders issued false transaction reports to clients that included inaccurate details about how many many shares were part of a trade, how long it took to execute a trade, and the price at which shares were sold or bought. In total, about $12.8 million in trading profits were taken from the clients who were sent the false statements.

CGM Limited and ConvergeEx Group are paying about $43.8 million in restitution and criminal penalties.

Ohio Man to Go to Prison for $1.8M Securities Fraud
Anthony Davian was sentenced to almost five years behind bars for running a fraudulent investment scam that bilked investors of close to $1.8 million. Davian, who is from Ohio, pleaded guilty earlier this year to wire fraud, mail fraud, securities fraud, and money laundering. He also must pay nearly $1.8 million in restitution.

Between 2008 and 2013, Davian used Davian Capital Advisers LLC to sell securities to at least 20 investors in several states. But rather than investing customer’s funds, he paid back earlier investors and bought himself expensive items. He persuaded them to place money in his hedge fund by pretending that he oversaw millions of dollars.

Direction Labs Executives Charged with Soliciting Investments In Predictive Software
Direction Labs Chairman Chisan Cong and COO Steve Linnenkamp are facing multiple counts of felony securities fraud and theft. The two men were arrested and charged with soliciting investments in predictive software that they claimed could let investors know whether to go into or leave positions. The product was supposed to eliminate any guesswork in making trades on domestic and foreign exchanges. One investor was purportedly bilked out of $848,000.

Investment Fund Manager Enters Guilty Plea, Admits to $17M Ponzi Scam
James M. Peister has pled guilty to securities fraud involving a $17.9 million Ponzi scam. In addition to forfeiting that amount, Peister has consented to pay over $9.6 million in restitution to investors that were defrauded. He also faces up to 20 years behind bars and a $5 million fine.

Peister fooled 74 investors about how well their investments were doing in funds that he managed so they wouldn’t try to get their money back. The scam went on for nearly 10 years, during which time he used investors’ money to pay for his expensive lifestyle and pay earlier investors. He also deceived investors by generating false financial statements to make it appear as if their investments were doing well and so they would keep investing.

Peister’s Ponzi scheme was discovered when the investor pool ran out of funds during the 2008 financial crisis.

Investment Fund Manager Pleads Guilty to Securities Fraud for Operating a $17 Million Ponzi Scheme, Federal Bureau of Investigation, November 12, 2014

2 Greenwood Village executives arrested, charged with bilking Englewood couple out of $848,000, The Denver Channel, November 28, 2014

Securities Fraud Nets Ohio Man Prison Sentence, FA-Mag, November 26, 2014

ConvergEx Group Subsidiary Sentenced for Securities Fraud Scheme, FBI, November 19, 2014

More Blog Posts:
Unregistered Florida-Based Broker Charged with Securities Fraud, Stockbroker Fraud Blog, November 26, 2014

Citigroup, Bank of America Are Selling Soured Home Loans, Sources Tell Bloomberg, Stockbroker Fraud Blog, November 13, 2014
Fidelity, Schwab, and Pershing Suspend Trading of Schorsch Nontraded Real Estate Investment Trusts, Institutional Investor Securities Blog, November 13, 2014