COMPANY PUFFED UP AMOUNT OF ONLINE SERVICES AVAILABLE

November 4, 2011

The following excerpt is from the SEC website:
“The United States District Court for the Southern District of Florida has entered final judgments against defendants Christopher M. Dubeau and Atlantis Technology Group, enjoining them from violating the antifraud provisions of the federal securities laws. The Court’s final judgments, issued on October 31, 2011, enjoin Dubeau and Atlantis from violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and also enjoin Dubeau from violations of Section 17(a) of the Securities Act of 1933. In addition to granting injunctive relief, the Court permanently barred Dubeau from participating in an offering of a penny stock and from acting as an officer or director of any public company. The Court also ordered Dubeau to disgorge his ill-gotten gains of $312,000.00, plus prejudgment interest in the amount of $12,947.93, and pay a civil penalty of $100,000.00.The Commission’s Complaint against Dubeau and Atlantis, filed September 30, 2010, alleges that from at least August 7, 2009 through April 5, 2010, they issued numerous false press releases claiming, among other things, that Atlantis’ subsidiary, Global Online Television Corporation (GOTV), offered internet protocol television and video phone services to consumers, and claiming that GOTV had relationships with television networks to offer their content to Atlantis subscribers. The Complaint further alleges these claims were not true because, at the time Atlantis issued its press releases, GOTV was not able to offer internet protocol television services to consumers or video phone service, and it did not have relationships with television networks to offer content to its subscribers.”

MF GLOBAL FINANCIAL CRISIS

The following excerpt is from the SEC website:

"Washington, D.C., Oct. 31, 2011 – The Securities and Exchange Commission and Commodity Futures Trading Commission today made the following joint statement:
"For several days, the SEC, CFTC and other regulators had been closely monitoring developments affecting MF Global, Inc., a jointly registered futures commission merchant and broker-dealer, in anticipation of a transaction that would include the transfer of customer accounts to another firm. Early this morning, MF Global informed the regulators that the transaction had not been agreed to and reported possible deficiencies in customer futures segregated accounts held at the firm. The SEC and CFTC have determined that a SIPC-led bankruptcy proceeding would be the safest and most prudent course of action to protect customer accounts and assets.
SIPC announced today that it is initiating the liquidation of MF Global under the Securities Investor Protection Act (SIPA)."

COMPANY OWNER CHARGED WITH WIRE FRAUD

October 31, 2011

The following excerpt comes from the SEC website:
“The Securities and Exchange Commission today announced that the U.S. Attorney for the District of Massachusetts has charged Andrey C. Hicks of Boston, Mass., in a criminal complaint unsealed on Friday, October 28, 2011. Hicks was charged with committing wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud, in violation of 18 U.S.C. Sections 1343, 1349, and 2.
On October 26, 2011, the SEC filed an emergency enforcement action charging Hicks and Locust Offshore Management, LLC, his investment advisory firm, with fraud in connection with misleading prospective investors about their supposed quantitative hedge fund and diverting investor money to the money manager’s personal bank account. The SEC alleges in its complaint that Hicks and his advisory firm made misrepresentations about his education, work experience, and the hedge fund’s auditor, prime broker/custodian, and corporate status when soliciting individuals to invest in the purported hedge fund, called Locust Offshore Fund, Ltd. By making these representations and creating other indicia of legitimacy, the SEC alleged that Hicks may have obtained at least $1.7 million from 10 investors and may have misappropriated at least a portion of these funds for personal expenses. In the Commission’s action, the U.S. District Court in Massachusetts issued a temporary restraining order on October 26 that, among other things, freezes the assets of the money manager, his advisory firm, and the hedge fund. On October 28, 2011, the Court converted the temporary restraining order into a preliminary injunction that will continue the asset freeze and other relief until further order of the Court.”

HOUSING DEVELOPMENT COMPANY SETTLES WITH DOJ OVER REQUIRED DISABLED HOUSING FEATURES

The following is from the Department of Justice website:
Thursday, October 27, 2011
“WASHINGTON – The Justice Department today announced a settlement of its lawsuit alleging that Equity Homes Inc, PBR LLC, BBR LLC and Shane Hartung violated the Fair Housing Act (FHA) by failing to provide features that would make their multi-family housing developments in Sioux Falls accessible to people with disabilities as required by the Fair Housing Act.
The case originated from discrimination complaints filed with the U.S. Department of Housing and Urban Development (HUD), concerning six Sioux Falls complexes - East Briar Apartments, West Briar Apartments, Kensington Apartments, Beverly Gardens Apartments, Sertoma Hills Apartments and Sertoma Hills Villas. After investigating, HUD issued a charge of discrimination and referred the matter to the Justice Department, which filed this lawsuit in May 2009. In its complaint, the Justice Department named Equity Homes Inc., PBR LLC, BBR LLC and Shane Hartung as defendants liable for violations of the FHA. The complaint also names Scott Snoozy, Myron R. Van Buskirk, Wayne Hansen, Martin McGee and Sertoma Hills Villas Association Inc., the current owners of the properties who were named in order to obtain complete relief.
The settlement filed today, along with a prior consent order entered in this case on July 20, 2011, now fully resolves this matter. Today’s agreement must still be approved by the court. According to the settlement, defendants Equity Homes Inc., BBR LLC and Shane Hartung will modify the six apartment complexes to make them accessible to persons with disabilities and will pay $41,500 in monetary damages to those harmed by the inaccessible housing. The settlements in this case also require these defendants to undergo training on the requirements on the Fair Housing Act and provide periodic reports to the government.
“Building apartments and condominiums that are accessible to persons with disabilities is not an option, it is the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Builders, architects and others who build or design multi-family housing need to consider accessibility at the outset, or they risk much greater expenses to fix the problem later.”
“My office is committed to ensuring that South Dakota’s disabled citizens receive the reasonable accommodations they need to function and live as others do,” said Brendan Johnson, U.S. Attorney for the District of South Dakota. “We will remain vigilant in enforcing our nation’s fair housing laws so that our citizens are not excluded from housing opportunities.”
“Access to a unit brings access to self-sufficiency and independence for people with disabilities,” stated John Trasviña, HUD Assistant Secretary for Fair Housing & Equal Opportunity. “Through industry training and legal compliance, we will make this a reality across the nation.”

DOJ ENFORCES EMPLOYMENT RIGHTS OF U.S. AIR FORCE RESERVIST

The following is an excerpt from the Department of Justice website:
Thursday, October 27, 2011
“Justice Department Settles Lawsuit with Washington State Company to Enforce Employment Rights of U.S. Air Force Reservist
WASHINGTON - The Justice Department announced today that it has reached a settlement with James J. Williams Bulk Service Transport Inc. (JJW), its parent company Trans-System Inc. and System TWT Transportation Inc. alleging that the companies violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to promptly and properly reemploy U.S. Air Force reservist Dave Axtell in April 2009 when he returned from military service in support of Operation Enduring Freedom. The complaint also alleged that the defendants unlawfully terminated Axtell’s employment without cause shortly after he was reemployed. If approved by the court, the settlement would resolve the allegations that the defendants violated the reemployment rights of Axtell.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment not been interrupted by military service, or in a position of like seniority, status and pay. In addition, any individual with Axtell’s length of absence for military service who is reemployed cannot be terminated, except for just cause, within one year after the date of reemployment.
According to the department’s complaint, filed in the U.S. District Court for the Western District of Washington in Tacoma, the defendant companies violated USERRA by not promptly or properly reemploying Axtell in his previous pre-service position as a driver supervisor or in a position with comparable seniority, status and pay. The defendants waited three months to reemploy Axtell, and thereafter employed him in an unsalaried, lower status position requiring longer hours. Ultimately, according to the complaint, defendants terminated Axtell’s employment without cause, also in violation of USERRA.
Under the terms of the settlement, embodied in a consent decree that has been submitted for approval to the federal district court in Tacoma, the defendants must pay Axtell $60,000 to compensate him for lost wages and benefits. Among other things, the settlement also requires the defendants to provide training to JJW’s high level officials and human resources staff on the USERRA rights and obligations of employers and covered employees.
“The men and women who bravely serve our nation in the armed forces should not have to sacrifice their jobs to do so. Employers have a legal obligation to ensure returning service members get their jobs back when they return from military duty as required by law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their courage and sacrifice, secure the rights of all Americans.”
“The United States Attorney’s Office is committed to enforcing the laws that protect the rights of those brave men and women who serve our country proudly,” U.S. Attorney for the Western District of Washington Jenny A. Durkan said today. “Our soldiers must be able to serve with the confidence that they will get their jobs back when they return to the workforce and will not be discharged without just cause.”
The case was litigated by Assistant U.S. Attorney J. Michael Diaz in the U.S. Attorney’s Office for the Western District of Washington, in collaboration with Jodi Danis, Special Counsel, and Kristofor Hammond, Senior Trial Attorney, in the Civil Rights Division of the Justice Department. The case stems from a referral from the U.S. Labor Department following an investigation by its Veterans’ Employment and Training Service.”

COMPANY SENTENCED FOR TRADING IN PROTECTED BLACK CORAL

The following is an excerpt from the Department of Justice website:
“Wednesday, October 26, 2011
U.S. Virgin Islands Company Sentenced for Illegal Trade of Protected Coral
Gem Manufacturing Sentenced to Highest Financial Penalty for Illegal Coral Trade
WASHINGTON – A U.S. Virgin Islands company was sentenced Wednesday in federal court in St. Thomas, U.S.V.I., for knowingly trading in falsely-labeled, protected black coral that was shipped into the United States in violation of the Endangered Species Act and the Lacey Act, the Department of Justice announced.
On July 15, 2011, GEM Manufacturing LLC, headquartered in St. Thomas, pleaded guilty to seven counts of v iolations of both the Endangered Species Act and the Lacey Act. The Lacey Act makes it a felony to falsely label wildlife that is intended for international commerce. The Endangered Species Act is the U.S. domestic law that implements the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations.
GEM was sentenced to pay a criminal fine of $1.8 million. The criminal fine will be apportioned between the Lacey Act Reward Fund and the National Oceanic and Atmospheric Administration (NOAA) Asset Forfeiture Fund, accounts established by Congress to assist U.S. Fish and Wildlife Service (FWS) and NOAA in the enforcement of federal conservation laws. GEM was sentenced to pay an additional $500,000 in community service payments for projects to study and protect black coral.
GEM was also ordered to forfeit dozens of jewelry items, ten artistic sculptures and over 13,655 pounds of raw black coral, the total value of which, at current prices, exceeds $2.17 million. The aggregate financial penalty of $4.47 million makes this the largest for the illegal trade in coral, the largest non-seafood wildlife trafficking financial penalty and the fourth largest for any U.S. case involving the illegal trade of wildlife.
“We face a growing challenge to preserve the world’s coral, which serves as essential habitat for marine biodiversity,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “We will continue to work with our federal partners to aggressively investigate and prosecute those who violate U.S. law by illegally trading in protected species.”
“I have stated before and reiterate that the U.S. Attorney's Office will vigorously protect the environment,” said U.S. Attorney Ronald W. Sharpe for the District of the U.S. Virgin Islands. “It is critical that we do everything we can to prevent the decline and depletion of coral and other protected flora and fauna so that the environment, in this case the marine environment, may be preserved for our enjoyment and that of future generations.”
“Illegal trade further threatens already fragile coral reef ecosystems. The penalties here should make it clear that the United States will not tolerate trafficking in these protected resources,” said William C. Woody, Chief, U.S. Fish and Wildlife Service (FWS) Office of Law Enforcement.
“Black corals are valuable resources that serve as habitat for a myriad of species in the deep sea,” said Eric Schwaab, assistant NOAA administrator for NOAA's Fisheries Service. “They are slow-growing, and some species can live for hundreds to thousands of years. Effective enforcement and regulation of their trade in support of CITES are among our most important tools in ensuring that collection of these species is sustainable and that their survival in the wild is assured.”
“CBP Officers and Agriculture Specialists in the Caribbean work hand in hand with the U.S. Fish and Wildlife Service to detect and intercept falsely labeled and concealed wildlife from illegally entering into U.S. commerce,” said Marcelino Borges, U.S. Customs & Border Protection (CBP) Director of Field Operations for the Caribbean. “Cooperation and collaboration between U.S. Customs & Border Protection and U.S. Fish & Wildlife Service were critical in the success of this investigation.”
“This sentence sends a clear message to black coral traffickers that we and our federal law enforcement partners are in the business of preventing illegal wildlife trade,” said Roberto Escobar Vargas, special agent in charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Puerto Rico. “We will continue to identify and apprehend those who exploit protected species for commercial gain.”
GEM was sentenced to three and a half years of probation and a 10-point compliance plan that includes an auditing, tracking and inventory control program. GEM was also banned from doing business with its former coral supplier, Peng Chia Enterprise Co. Ltd. and its management team of Ivan and Gloria Chu. GEM was the entity known as “Company X” in the related case of U.S. v. Gloria and Ivan Chu, Case No. 2010-003 (D. Virgin Islands). In January 2010, federal agents arrested the Chus as part of a sting operation in Las Vegas. The Chus were subsequently indicted in 2010 for illegally providing black coral to GEM. On June 23, 2010, Ivan Chu was sentenced to serve 30 months in prison and pay a $12,500 fine. Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.
Black coral is a precious coral that can be polished to a high sheen, worked into artistic sculptures, and used in inlaid jewelry. Black coral is typically found in deep waters, and many species have long life spans and are slow-growing. Using deep sea submersibles, scientists have observed that fish and invertebrates tend to accumulate around the black coral colonies. Thus, black coral communities serve important habitat functions in the mesophotic and deepwater zones. In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear, and the introduction of invasive species have threatened this group of coral. Recent seizures of illegal black coral around the world have led many to believe that black coral poaching is on the rise.
GEM is a manufacturer of high-end jewelry, art, and sculpture items that contain black coral. The vast majority of GEM’s sales are through retail stores called “galleries.” In order to facilitate its operations, GEM Manufacturing LLC operated through several subsidiaries that did business in Florida, Nevada, California, Hawaii, U.S. Virgin Islands, Alaska and the Cayman Islands.
Prior to 2010, GEM’s primary supplier of black coral was a Taiwanese company, Peng Chia Enterprise Co., Ltd., located in Taipei, Taiwan. Peng Chia was, at times, able to obtain CITES export permits from the Taiwanese government, but by 2007, the Taiwanese government had increased scrutiny of the trade and insisted on a proper certificate of origin. Because much of the black coral was of, at best, undeterminable, if not legally questionable origin, it was basically impossible to arrange for a legitimate certificate of origin to be issued.
According to the plea documents, in order to be able to continue to supply GEM with raw black coral, Peng Chia sought other black coral sources in mainland China, routing them through Hong Kong on their way to GEM facilities. None of the shipments from Hong Kong had the required CITES certificates. Instead of being labeled “wildlife,” each shipment was labeled “plastic of craft work” or something similarly deficient. The scheme had been running for at least two years by the time the year 2009 black coral shipments were sent to St. Thomas. The 2009 shipments form the basis of the charges contained in the bill of information.
A GEM company officer (terminated in early 2010) procured black coral from Peng Chia knowing that there were no CITES certificates. Under the supervision of this company officer, other GEM personnel confirmed that it was part of their jobs to receive and sort through incoming boxes of black coral and that none of those boxes arriving from Hong Kong contained CITES certificates. During the period 2007-2009, those same individuals reported seeing boxes containing black coral that were externally labeled as “plastic of craft work.” GEM never ordered plastic and does not use plastic in any of its manufacturing.
In January 2009, GEM agreed to pay Peng Chia $38,965.00 for an order of black coral. After the funds were received in February 2009, Peng Chia used its Chinese supplier and Chinese intermediary to send six separate shipments of black coral to GEM in St. Thomas. Through a then company officer, GEM knew about the false labeling and lack of CITES certificates through emails with Peng Chia. On Aug. 19, 2009, Peng Chia sent a shipment comprised of 10 boxes of black coral that were labeled “plastic of craft work” to GEM. A CBP Contraband Enforcement Team flagged the shipment as suspicious and contacted FWS based in San Juan, Puerto Rico. As part of "Operation Black Gold," boxes from all six of the 2009 shipments were seized as evidence during a search of GEM’s St. Thomas facility in September 2009. None of these six shipments was accompanied by CITES certificates. Boxes from the Aug. 19, 2009, May 10, 2009, and other shipments were falsely labeled as “plastic of craft work.”
The case was investigated by agents of the FWS and NOAA with support from ICE-HSI and CBP. Analysis of coral samples by the FWS’s National Forensics Laboratory in Ashland, Ore., was critical to the investigation. The case is being prosecuted by Christopher Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division, and Nelson Jones of the U.S. Attorney’s Office in St. Thomas.”