SEC Cases: Litigation Marketing Company Accused of Defrauding Retirees, NY Town Officials Hide Money Problems from Municipal Bond Investors, and Ski Resort is Tied to Fraudulent E-B Five Offerings

Elder Financial Fraud: LA Based-Company Accused of Bilking Retirees and Others
The Securities and Exchange Commission is charging PLCMGMT LLC, also known as Prometheus Law or PLC, and co-founders David Aldrich and James Catipay of bilking retirees and other investors. The two men are accused of raising $11.7M by telling investors that their money would go toward bringing together plaintiffs for class action cases and other lawsuits. Investors were promised substantial returns of 100% to 300% from any settlements. PLC is a litigation marketing company based in Los Angeles.

The SEC contends that only $4.3M of the money was used to find prospective plaintiffs and not much revenue was made from any settlements reached. Instead, Aldrich and Catipay took $5.6M to cover their own expenses. The two men downplayed the risks involved and did not disclose that their business model was “unrealistic.” Instead, PLC and its founders claimed that investments were secure and guaranteed when they were actually very speculative and high risk, especially as not all potential plaintiffs typically qualify to become actual plaintiffs. Compound this factor with the reality that winning any lawsuit is never a guarantee.

Our elder financial fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP are here to help older investors recoup their losses.

Officials of Ramapo, NY Accused of Hiding Financial Woes from Muni Bond Investors
The SEC is accusing the New York town of Ramapo, its local development corporation, and four town officials of fraud. The Commission claims that the officials committed fraud to hide the financial stress caused by the $60M spent on constructing a baseball stadium, as well as the decline in sales and property tax revenues. The four individuals allegedly cooked the books of Ramapo’s main operating fund to make it seem as if it held positive balances of up to $4.2 million over a six-year period when actually the balance deficit at one point reached close to $14M.

The regulator said that since the town guaranteed the stadium bonds that Ramapo Local Development Corp. (RLDC) had issued, an operating revenue shortfall at the corporation was concealed and investors were not apprised that the town would likely have to subsidize bond payments, which would cause the general fund to lose even more money.

The SEC said that offering materials for 16 municipal bond offerings made by RLDC or Ramapo to investors included inflated general fund balances. Also, one credit agency was purportedly misled about Ramapo’s general fund balance on purpose prior to the rating of certain bonds.

The four individuals under fire include former RLDC president Christopher P. St. Lawrence, former RLDC executive director and assistant town lawyer Aaron Troodler, town lawyer Michael Klein, and town deputy finance director Nathan Oberman. Meantime, state prosecutors have filed related criminal charges against Troodler and St. Lawrence.

Ski Resort Tied to Fraud Involving EB-5 Immigrant Investor Program
The SEC is charging Ariel Quiros, William Stenger, and their companies of failing to disclose key information and making false statements while raising over $350M that was supposed to go toward constructing a biomedical research center and ski resort facilities. They are accused of fraud related to the alleged misuse of millions of dollars solicited under the EB-5 Immigrant Investor Program.

Investors were told that they were investing in projects involving Vermont-based ski resort Jay Peak Inc., which was run by Stenger and Quiros. Instead, the two men operated a Ponzi-like scam in which investor money would be misappropriated to help fund earlier projects. Over $200M allegedly went to uses other than what was stated, including Quiros’s personal expenses, income taxes, and a luxury condo.

Speaking about the case, SEC Enforcement Division Director Andrew Ceresney accused the men of deceptive financial transactions and theft. He noted that investors’ funds were misappropriated and their immigration petitions placed “in jeopardy.”

Under the EB-5 program, foreign investors who are able to show that certain types of investments they’ve made are creating jobs in the U.S. may be eligible to obtain legal permanent residency in this country. Unfortunately, the EB-5 program has become a way for some fraudsters to bilk foreign nationals seeking U.S. residence of substantial amounts of money.

Contact our securities fraud lawyers for our free case consultation.
The SEC complaint in the Ramapo muni bond case (PDF)

The SEC complaint in the EB-5 fraud case (PDF)

The SEC complaint against PLCMGMT LLC (PDF)