Articles Posted in Texas Securities Fraud

In federal court in Sherman, TX, the US Securities and Exchange Commission has filed an emergency action to halt a $22.7M mortgage investment scam involving Thurman P. Bryant, III and his Bryant United Capital Funding, Inc. According to the regulator’s complaint, Bryant and his firm raised about $22.7M from about 100 investors by making false promises, including telling them that the investments were free of risk and guaranteed 30% minimum yearly returns.

The SEC claims that Bryant told investors that his firm would fund the mortgages, which would be sold right away to third parties for a fixed fee. He allegedly informed them that their money would be left in secure escrow account as evidence of funds in order to obtain a credit line to cover the mortgage loans. Bryant and his firm are accused of violating the Securities act of 1933’s Section 17(a) and the Securities Exchange Act of 1934’s Section 10(b) and Rule 10b-5 thereunder.

According to the Commission, since the start of this year alone, Bryant has raised about $1.4M from investors. So far, Bryant’s firm has paid about $16.8M as supposed investment return and also as referral fees to investors who’ve helped identify additional prospective investors.

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Two investment promoters are accused of running an advance fee scheme from what they claimed was a Dallas-based investment advisory firm. According to an Emergency Cease and Desist Order entered by the Texas Securities Commission, the Mark Diaz and Raymond Hill offered to buy investors’ stock under the condition that those selling would have to cover transaction costs. The two men promoted their alleged Texas-based securities fraud through social media, bogus websites, forged documents, and supposed IRS affiliations.

Two websites they set up had names similar to Cain Capital LLC, which is a firm that is actually registered with the SEC. According to the Texas regulator, one of the bogus websites directs visitors to a regulator filing that the real Cain Capital submitted to the SEC, as well as to that firm’s Twitter and Facebook pages.

Both sites and the social media accounts are not connected to Cain Capital in anyway. The two men are accused of sending unsolicited email that included documents with Cain Capital’s name in the letterhead to prospective investors.

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Financial Firm and Its CEO Settle Life Settlement Fraud Charges
The US Securities and Exchange Commission announced that Verto Capital Management and its CEO William Schantz III have settled civil charges accusing them of running a Ponzi-like scam involving life settlements. As part of the settlement, Verto Capital and Schantz will pay over $4M.

According to the regulator’s complaint, the two of them raised about $12.5M through promissory note sales that were supposed to pay for the firm’s purchase and sale of life settlements. The notes were sold mostly through insurance brokers in Texas.

Investors who were religious were the main target of the alleged fraud.They were allegedly told that that the securities were short-term investments that were at low risk of defaulting.

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Grand Jury Indicts Texas Woman in $1M Ponzi Scam
A federal grand jury has indicted Nemelee Liwanag Jiao on two wire fraud counts for allegedly running a Texas Ponzi scam that cost investors over $1M. At least 35 investors were bilked.

According to the indictment, Jiao, a Texas resident, had investors back promissory notes that were supposedly issued by two non-profit schools in the Philippines when, in reality, she was using their money on herself. Jiao told investors she represented both Lord of Peace Learning Center and Shepherd’s Light Learning Center and she got them to invest their money in the promissory notes after promising 10-100% in returns. She also promised that they would get back their principle plus interest within 30-days to a year of investing.

The indictment against Jiao stated that she will have to forfeit all proceeds if convicted. She faces up to 20 years in prison for wire fraud, as well as a $250K fine.

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The US Securities and Exchange Commission is charging Matthew Fox and his Wayne Energy LLC with securities fraud. The regulator brought its Texas securities case in federal district court in the city of Sherman.

According to the Commission’s complaint, Fox raised about $950K for a joint venture that was supposedly involved in reworking and recompleting an oil and gas well. However, contends the SEC, Fox raised the funds by recycling offering documents from another oil and gas company that he previously ran (that company failed) rather than customizing the paperwork to this new venture and its specific risks.

Prior to setting up Wayne Energy in 2015, Fox had run Frisco Exploratory Company and it is the latter’s offering documents that he used. The Commission claims that the offering documents made a false statement, which was that Wayne Energy would not commingle its own money with the joint venture’s funds. The documents also falsely stated that the oil and gas company was licensed as an operator with the Texas Railroad Commission.

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Business partners Janniece Kaelin and Robert Allen Helms have pleaded guilty to bilking investors of up to $20M in a Texas-based Ponzi scam. The oil and gas financiers used the funds raised for energy ventures to cover their own expenses from 1/2010 to 12/2013.

The US Securities and Exchange Commission filed a securities fraud lawsuit against Kaelin, Helms, and their companies Iron Rock Royalty Partners LP and Vendetta Royalty Partners LTD in 2013. According to the regulato, they misled investors about their professional experience, meantime raising almost $18M that were supposed to go toward royalty interests in oil and gas.

Included among the alleged purchases they made: using investors’ money to pay for a 3 1/2-week trip around the world and paying for the more than $247K wedding of Kaelin’s daughter in Hawaii.

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In federal court in Texas, Charles Banks, the former financial adviser to ex-NBA star Tim Duncan, has pleaded guilty to wire fraud. Banks admitted to misleading Duncan into guaranteeing a $6M loan to a company that had financial connections to the ex-advisor.

Duncan, who retired from professional basketball in 2016, claims that he lost more than $20M through deals he was involved in because of Banks. The two first started working together in 1997 when Banks was employed with CSI Capital Management Inc. and Duncan was an NBA rookie. After Banks left the firm he continued working with Banks.

Banks encouraged Duncan to lend a company, Gameday Entertainment, $7.5M. The company then obtained a $6M bank loan using what Duncan contends was his forged signature. Banks was Gameday’s chairman at the time.

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Carlton Chadbourne Sayers has been indictment in district court. The 51-year-old is accused of Texas investment fraud and he is charged with mail fraud, wire fraud, aggravated identity fraud, and bank fraud. The scam caused dozens of investors to lose over $3M.

According to the indictment, Sayers allegedly sought to bilk a number of fraud victims by asking that they lend or invest funds with him and Wellington & Franklin Financial. He allegedly promoted that their funds would go toward buying or renovating residential real property and would be securitized by interest in these properties. He also is accused of promising a significant return rate.

Instead, states the indictment, rather than invest the funds the way he represented they would be invested, Sayers failed to secure interests in actual property or, in instances when he and Wellington & Franklin Financial actually owned a residential property, it was one that had already been bought with a pre-existing loan from an experienced investor and to whom the property was already acting as a security. Sayers is accused of bilking dozens of inexperienced investors who thought they were getting involved in secure investments that were giving them an opportunity to make higher returns than they would have with other investments.

San Angeleno Man Goes to Prison Over Investment Scams
Stanley Jonathan Fortenberry of Texas has been sentenced to 78 months behind bars for running two investment scams and bilking investors of about $900K. He pleaded guilty to obstruction of justice and mail fraud in 2016. Now, Fortenberry must pay over $890K in restitution and forfeit more than $311K.

Fortenberry ran Premier Investment Fund and raised money for social media projects operated by another company. According to prosecutors, the Texas man misled investors about that company’s profitability and regarding what their money would be used for. He admitted to diverting about half of investors’ money to himself and to his fundraising operation.

Fortenberry also ran Wattenberg Energy Partners, a company that raised money for oil and glass drilling projects in Colorado. He admitted to establishing the company under his son’s name because the US Securities and Exchange Commission was already investigating him about the way Premier investors’ funds were being used.

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Herschel “Tress” Knippa III, a Dallas, Texas resident, has pleaded guilty to conspiracy to commit securities fraud. The former registered broker, who owned a commodities trading firm, was implicated over fraudulent market rigging involving ForceField Energy Inc. (FNRG), which was a supposed global distributor and provider of LED lighting products and solutions. Investors lost $131M because of the scam. 

According to court filings and facts submitted at the plea hearing, between 1/2009 and 4/2015, Knippa and others worked together to bilk those who invested in ForceField.  The conspirators artificially manipulated the price and volume of ForceField shares by 1) using nominees to buy and sell the stock but without disclosing this to investors and potential investors, 2) manipulating ForceField stock trading to make it seem as if there was real interest and genuine trading volume, and 3) hiding payments made to brokerage firms and stock promoters that marketed and sold the stock.

All the while, Knippa and others claimed that ForceField was an independent company. Also, they used disposable prepaid cell phones, encrypted message applications to communicate, and paid kickbacks in cash.

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