SEC Case Headlines: New Jersey Fund Manager Faces Charges Over $1.1M Ponzi Scam, $32M Fraud Scam Involving Amber Mining is Halted, and Executives Face Charges for Allegedly Bilking Investor in Stock Fraud

NJ Fund Managers Faces SEC Fraud Charges
The Securities and Exchange Commission is charging William J. Wells and his Promitor Capital Management LLC with bilking investors in a $1.1 million Ponzi scam. According to the regulator, Wells falsely misrepresented himself as a registered investment adviser to some investors. However, rather than invest their money in specific stock as he told them he would, Wells and his firm placed most of the funds primarily in risky options that garnered poor results. He then allegedly hid the outcomes using bogus investor account statements that recorded performance figures that were severely inflated.

Wells also allegedly tried to conceal the investment loses by making Ponzi-like payments in which he paid earlier investors using the funds of new investors. By the end of this summer, fund brokerage accounts at Promitor held under $35 while the remainder were sucked dry from the Ponzi-like payment, trading losses, or transferred into Wells’ own bank account.

Meantime, the U.S. Attorney’s Office for the Southern District of New York has filed a parallel criminal action against Wells.

Regulator Files Charges, Obtains Asset Freeze in $32M Amber Mining Scam
The SEC has gotten asset freeze and file fraud charges against Steve Chen and 13 entities based in the state of California. According to the regulator, Chen falsely promised investors they would make money in an investment venture involving amber holdings.

The SEC contends that Chen, the entities, including USFIA Inc., raised more than $32M in investor funds under the guise that they were getting involved in a lucrative IPO for USFIA and there were amber deposits worth $50B involved.

The agency says that Chen falsely touted USFIA as a multi-level marketing company that owned a number of amber mines abroad. Investors believed they could make a profit by investing anywhere from $1,000 to $3,000. They thought they could make even more depending on how many investors they brought in. Now, the Commission wants temporary relief, disgorgement of ill-gotten gains plus prejudgment interest, preliminary and permanent injunctions, and civil penalties.

SEC Charges ContinuityX Executives with Financial Fraud
The SEC is charging former ContinuityX Solutions Inc. CEO David P. Godwin and Ex-CFO Anthony G. Roth with running a scam to inflate the revenues of the company and make themselves significant profits as a result.

ContinuityX, which is publicly traded, claimed to sell Internet services to businesses. From 4/11 to 9/12, the company reported purported revenues of $27.2 million. The SEC contends that 99% of that was allegedly from fake sales. The two men are accused of using fraudulent SEC filings to raise millions of dollars from investors in private offerings of the company’s securities.

Meantime, Roth made $351,800 in compensation and $456,098 in stock sale profits while Godwin earned $1.3 million in compensation. Commissions from allegedly bogus sales were reported as revenue in quarterly and yearly reports. The SEC says that Roth and Godwin cheated investors of millions of dollars.

Contact our stockbroker fraud law firm today.

Read the complaint against Wells and Promitor (PDF)

Read the complaint in the amber mining scheme (PDF)

SEC Enforcement: Advisor Pushed Risky Investments in Firms He Owned, ThinkAdvisor, October 1, 2015

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