FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
December 5, 2012
Federal Court in Idaho Orders CFTC Defendant Trigon Group, Inc. to Return More than $20.6 million of Ill-Gotten Gains to Victims of its Fraud
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Edward J. Lodge of the U.S. District Court for the District of Idaho entered a consent order of permanent injunction that requires defendant Trigon Group, Inc. (Trigon), an Idaho-based business, to disgorge more than $20.6 million of ill-gotten gains to the victims of its fraud. The consent order also imposes permanent trading and registration bans against Trigon and prohibits it from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.
The consent order stems from a CFTC complaint filed on February 27, 2009, that charged the defendant Trigon as well as defendant Daren L. Palmer with solicitation fraud and misappropriation in operating a commodity pool Ponzi scheme (see CFTC Press Release 5623-09, February 27, 2009, under Related Links). Earlier, on October 4, 2010, Judge Lodge entered a summary judgment order requiring Palmer to disgorge more than $20.6 million and to pay a civil monetary penalty of more than $20.6 million. The order also permanently bars Palmer from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC (see CFTC Press Release 5919-10, October 6, 2010, under Related Links).
The consent order finds that, from at least September 2000 to date of the complaint, defendants directly and indirectly solicited at least $40 million from at least 57 individuals or entities to invest in Trigon entities. Pool participants understood that their funds would be used for trading commodity futures on their behalf, among other things, S&P 500 index futures contracts. Defendants made repeated misrepresentations that the pool was profitable and growing. In fact, defendants misappropriated the vast majority of the funds invested by pool participants. The consent order also finds that the defendants violated registration requirements as charged.
The CFTC appreciates the assistance of the Securities and Exchange Commission (SEC) and the Idaho Department of Finance. The SEC filed a related action against Palmer and Trigon that also resulted in sanctions against them.
The CFTC Division of Enforcement staff members responsible for this case are Alison Wilson, John Dunfee, Mary Kaminski, A. Daniel Ullman, Paul G. Hayeck, and Joan Manley.
Friday, December 7, 2012
Wednesday, December 5, 2012
INVESTMENT ADVISOR AND COMPANY FOUND TO HAVE COMMITTED SECURITES FRAUD BY JURY
FROM: U.S. DEPARTMENT OF JUSTICE
Jury Returns Verdict of Liability Against Massachusetts Investment Adviser and his Advisory Firm
The Securities and Exchange Commission announced that, on November 26, 2012, a federal court jury in Boston, Massachusetts returned a verdict of securities fraud liability against registered investment adviser EagleEye Asset Management, LLC, and its sole principal, Jeffrey A. Liskov, both of Plymouth, MA, in connection their fraudulent conduct toward advisory clients. The trial was presided over by U.S. District Court Judge William G. Young.
In its complaint, the Commission alleged that, between at least November 2008 and August 2010, Liskov made material misrepresentations to at least six advisory clients to induce them to liquidate investments in securities and instead invest the proceeds in foreign currency exchange ("forex") trading. The forex investments, which were not suitable for older clients with conservative investment goals, resulted in steep losses for clients, totaling nearly $4 million, but EagleEye and Liskov came away with over $300,000 in performance fees, in addition to other management fees they collected from clients. Liskov’s strategy was to generate temporary profits on client forex investments to enable him to collect performance fees, after which client investments invariably would sharply decline in value. According to the Commission’s complaint, Liskov made material misrepresentations or failed to disclose material information to clients concerning the nature of forex investments, the risks involved, and his poor track record in forex trading for himself and other clients. The Commission’s complaint further alleged that, in the case of two clients, without their knowledge or consent, Liskov liquidated securities in their brokerage accounts and transferred the proceeds to their forex trading accounts where he lost nearly all client funds, but not before first collecting performance fees for EagleEye (and ultimately himself) on short-lived profits in the clients’ forex accounts. The complaint alleged that Liskov accomplished the unauthorized transfers by doctoring asset transfer forms. On several occasions, Liskov took old forms signed by the clients and used "white out" correction fluid to change dates, asset transfer amounts, and other data. Liskov also used similar tactics to open multiple forex trading accounts in the name of one client, thereby maximizing his ability to earn performance fees for EagleEye (and ultimately himself) on the client’s investments, all without disclosing this to the client or obtaining the client’s consent. The Commission alleged that, as a result of this conduct, EagleEye and Liskov violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also alleged that EagleEye failed to maintain certain books and records required of investment advisers in violation of Section 204 of the Advisers Act and Rule 204-2 thereunder, and that Liskov aided and abetted EagleEye’s violations of these provisions.
After an eight day trial, the jury deliberated for approximately four hours before rendering its verdict of liability against Liskov and EagleEye under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder as to four clients and under Section 206(1) of the Advisers Act as to five clients. The Court will decide the Commission’s claims under Section 204 of the Advisers Act and Rule 204-2 thereunder and will hold a hearing on the Commission’s request for injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest thereon, and the imposition of a monetary penalty against both EagleEye and Liskov, based on the jury’s verdict. The case was tried by Deena Bernstein and Naomi Sevilla of the Commission’s Boston Regional Office.
Jury Returns Verdict of Liability Against Massachusetts Investment Adviser and his Advisory Firm
The Securities and Exchange Commission announced that, on November 26, 2012, a federal court jury in Boston, Massachusetts returned a verdict of securities fraud liability against registered investment adviser EagleEye Asset Management, LLC, and its sole principal, Jeffrey A. Liskov, both of Plymouth, MA, in connection their fraudulent conduct toward advisory clients. The trial was presided over by U.S. District Court Judge William G. Young.
In its complaint, the Commission alleged that, between at least November 2008 and August 2010, Liskov made material misrepresentations to at least six advisory clients to induce them to liquidate investments in securities and instead invest the proceeds in foreign currency exchange ("forex") trading. The forex investments, which were not suitable for older clients with conservative investment goals, resulted in steep losses for clients, totaling nearly $4 million, but EagleEye and Liskov came away with over $300,000 in performance fees, in addition to other management fees they collected from clients. Liskov’s strategy was to generate temporary profits on client forex investments to enable him to collect performance fees, after which client investments invariably would sharply decline in value. According to the Commission’s complaint, Liskov made material misrepresentations or failed to disclose material information to clients concerning the nature of forex investments, the risks involved, and his poor track record in forex trading for himself and other clients. The Commission’s complaint further alleged that, in the case of two clients, without their knowledge or consent, Liskov liquidated securities in their brokerage accounts and transferred the proceeds to their forex trading accounts where he lost nearly all client funds, but not before first collecting performance fees for EagleEye (and ultimately himself) on short-lived profits in the clients’ forex accounts. The complaint alleged that Liskov accomplished the unauthorized transfers by doctoring asset transfer forms. On several occasions, Liskov took old forms signed by the clients and used "white out" correction fluid to change dates, asset transfer amounts, and other data. Liskov also used similar tactics to open multiple forex trading accounts in the name of one client, thereby maximizing his ability to earn performance fees for EagleEye (and ultimately himself) on the client’s investments, all without disclosing this to the client or obtaining the client’s consent. The Commission alleged that, as a result of this conduct, EagleEye and Liskov violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also alleged that EagleEye failed to maintain certain books and records required of investment advisers in violation of Section 204 of the Advisers Act and Rule 204-2 thereunder, and that Liskov aided and abetted EagleEye’s violations of these provisions.
After an eight day trial, the jury deliberated for approximately four hours before rendering its verdict of liability against Liskov and EagleEye under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder as to four clients and under Section 206(1) of the Advisers Act as to five clients. The Court will decide the Commission’s claims under Section 204 of the Advisers Act and Rule 204-2 thereunder and will hold a hearing on the Commission’s request for injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest thereon, and the imposition of a monetary penalty against both EagleEye and Liskov, based on the jury’s verdict. The case was tried by Deena Bernstein and Naomi Sevilla of the Commission’s Boston Regional Office.
Tuesday, December 4, 2012
MBF CLEARING CORP., ORDERED TO PAY $650,000 FOR VIOLATING CUSTOMER FUND SEGREGATION REQUIREMENTS
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
Federal Court Orders MBF Clearing Corp. to Pay $650,000 for Violating Customer Fund Segregation Requirements
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court order requiring MBF Clearing Corp. (MBF), a registered futures commission merchant, to pay a $650,000 civil monetary penalty for violating the Commodity Exchange Act (CEA) and CFTC regulations concerning the segregation of customer funds, and for supervision failures. The order also permanently prohibits MBF and its successors from further violations of the CEA and CFTC regulations, as charged, and from failing to diligently supervise its employees and agents to insure the proper segregation of customer funds.
The consent order resolves the charges against MBF.
The consent order for permanent injunction, entered on November 28, 2012, by Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York, stems from a CFTC complaint filed on March 13, 2012. As set forth in the complaint, from September 2008 through March 2010, MBF routinely held between $30 million and $90 million of its customer funds in an account at another financial institution, but that account was not legally qualified to hold customer segregated funds.
The complaint charged that, in violation of CFTC regulations, the account did not have a legal obligation to make customer funds available for redemption by the next business day following a request, and was not properly titled as a "customer segregated funds" account. The complaint also charged that MBF failed to obtain from the financial institution a letter acknowledging that the funds in the account were customer funds to be kept segregated from MBF’s funds, and that MBF similarly failed to obtain and/or keep written acknowledgments for at least six additional accounts that held customer funds. The complaint also charged MBF with supervision failures, including that MBF did not have written policies or procedures governing the opening and maintenance of customer segregated accounts.
David Meister, the Director of the CFTC’s Division of Enforcement stated, "As was evident from the filing of this case in court earlier this year, we expect strict compliance with the CFTC segregated account requirements. When it comes to protecting customer funds, T’s must be crossed and I’s dotted. We will not tolerate less."
The order permanently enjoins MBF and its successors from violating the customer segregated funds provisions of the CEA and Commission Regulations and from failing to diligently supervise its employees and agents to insure the proper segregation of customer funds.
The following CFTC Division of Enforcement staff were responsible for this case: Elizabeth N. Pendleton, Melissa Glasbrenner, William P. Janulis, Michael P. Geiser, Joseph Rosenberg, Rosemary Hollinger, Scott R. Williamson and Richard B. Wagner, with assistance from CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) staff Nicholas Chiacchere and Robert Laverty.
Federal Court Orders MBF Clearing Corp. to Pay $650,000 for Violating Customer Fund Segregation Requirements
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court order requiring MBF Clearing Corp. (MBF), a registered futures commission merchant, to pay a $650,000 civil monetary penalty for violating the Commodity Exchange Act (CEA) and CFTC regulations concerning the segregation of customer funds, and for supervision failures. The order also permanently prohibits MBF and its successors from further violations of the CEA and CFTC regulations, as charged, and from failing to diligently supervise its employees and agents to insure the proper segregation of customer funds.
The consent order resolves the charges against MBF.
The consent order for permanent injunction, entered on November 28, 2012, by Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York, stems from a CFTC complaint filed on March 13, 2012. As set forth in the complaint, from September 2008 through March 2010, MBF routinely held between $30 million and $90 million of its customer funds in an account at another financial institution, but that account was not legally qualified to hold customer segregated funds.
The complaint charged that, in violation of CFTC regulations, the account did not have a legal obligation to make customer funds available for redemption by the next business day following a request, and was not properly titled as a "customer segregated funds" account. The complaint also charged that MBF failed to obtain from the financial institution a letter acknowledging that the funds in the account were customer funds to be kept segregated from MBF’s funds, and that MBF similarly failed to obtain and/or keep written acknowledgments for at least six additional accounts that held customer funds. The complaint also charged MBF with supervision failures, including that MBF did not have written policies or procedures governing the opening and maintenance of customer segregated accounts.
David Meister, the Director of the CFTC’s Division of Enforcement stated, "As was evident from the filing of this case in court earlier this year, we expect strict compliance with the CFTC segregated account requirements. When it comes to protecting customer funds, T’s must be crossed and I’s dotted. We will not tolerate less."
The order permanently enjoins MBF and its successors from violating the customer segregated funds provisions of the CEA and Commission Regulations and from failing to diligently supervise its employees and agents to insure the proper segregation of customer funds.
The following CFTC Division of Enforcement staff were responsible for this case: Elizabeth N. Pendleton, Melissa Glasbrenner, William P. Janulis, Michael P. Geiser, Joseph Rosenberg, Rosemary Hollinger, Scott R. Williamson and Richard B. Wagner, with assistance from CFTC Division of Swap Dealer and Intermediary Oversight (DSIO) staff Nicholas Chiacchere and Robert Laverty.
Monday, December 3, 2012
CPA SENTENCED IN CONNECTION WITH MASSIVE CORPORATE INVESTMENT FRAUD SCHEME
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, November 30, 2012
New Jersey Man Sentenced to 54 Months in Prison for Half-Billion Dollar Fraud Scheme with Thousands of Victims Worldwide
A certified public accountant (CPA) and purported outside auditor for Provident Capital Indemnity Ltd. (PCI) was sentenced today in Richmond, Va., to 54 months in prison for his role in an approximately half-billion-dollar fraud scheme that affected more than 3,500 victims throughout the United States and abroad, announced U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Jorge Luis Castillo, 57, a resident of New Jersey, was sentenced today by U.S. District Judge John A. Gibney in the Eastern District of Virginia. In addition to his prison term, Castillo was sentenced to three years of supervised release and ordered to pay $43,582,699 in forfeiture.
Castillo pleaded guilty on Nov. 21, 2011, to one count of conspiring to commit mail and wire fraud. Castillo was a PCI employee prior to becoming PCI’s "outside auditor."
"As a licensed accountant, Mr. Castillo used his expertise to create fraudulent financial statements out of whole cloth," said U.S. Attorney MacBride. "Many elderly investors relied on Mr. Castillo’s credibility as an outside auditor before entrusting their life savings in this fraud scheme. Accountants and auditors are the gatekeepers of our financial system and are entrusted with the critical role of protecting the public from fraud. Today’s sentence will hopefully send a strong message to those in the accounting profession that they will be held responsible when they break that trust by facilitating or participating in fraud."
"Jorge Luis Castillo will spend 54 months in prison for trading on his qualifications as a CPA to facilitate a massive fraud scheme that harmed investors throughout the United States and abroad," said Assistant Attorney General Breuer. "Mr. Castillo’s prison sentence demonstrates the Justice Department’s commitment to holding accountable any fraudster who preys on innocent, unsuspecting investors."
According to court records, PCI was an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors. PCI marketed these bonds to its clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy. PCI’s clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.
Castillo admitted that he conspired with Minor Vargas Calvo, 61, the president and majority owner of PCI, to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies. These claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds.
Castillo further admitted that he never performed an audit of PCI’s financial statements and that, in fact, he personally created the statements he claimed to be independently auditing. He also admitted that he and others at PCI knew that the company never actually entered into reinsurance contracts with any major companies. Castillo also admitted that he and other conspirators provided the false financial statements and fraudulent independent auditors’ report to Dun & Bradstreet (D&B), which D&B relied on in compiling its commercial reports on PCI and issuing its 5A rating of PCI’s financial strength.
From 2004 through 2010, PCI sold at least $485 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to make up-front payments of six to 11 percent of the underlying settlement as "premium" payments to PCI before the company would issue the bonds. Court records state that Castillo received approximately $84,000 from his work as the purported outside auditor of PCI from 2004 through 2010.
Vargas, a citizen and resident of Costa Rica, was convicted on April 30, 2012, of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, three counts of wire fraud and three counts of money laundering. On Oct. 23, 2012, he was sentenced to 60 years in prison. PCI pleaded guilty on April 18, 2012, to conspiring to commit mail and wire fraud, and was sentenced on Sept. 6, 2012, to one year of probation.
This investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service – Criminal Investigation, and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Assistant Chief Albert B. Stieglitz Jr. of the Justice Department Criminal Division’s Fraud Section.
Friday, November 30, 2012
New Jersey Man Sentenced to 54 Months in Prison for Half-Billion Dollar Fraud Scheme with Thousands of Victims Worldwide
A certified public accountant (CPA) and purported outside auditor for Provident Capital Indemnity Ltd. (PCI) was sentenced today in Richmond, Va., to 54 months in prison for his role in an approximately half-billion-dollar fraud scheme that affected more than 3,500 victims throughout the United States and abroad, announced U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Jorge Luis Castillo, 57, a resident of New Jersey, was sentenced today by U.S. District Judge John A. Gibney in the Eastern District of Virginia. In addition to his prison term, Castillo was sentenced to three years of supervised release and ordered to pay $43,582,699 in forfeiture.
Castillo pleaded guilty on Nov. 21, 2011, to one count of conspiring to commit mail and wire fraud. Castillo was a PCI employee prior to becoming PCI’s "outside auditor."
"As a licensed accountant, Mr. Castillo used his expertise to create fraudulent financial statements out of whole cloth," said U.S. Attorney MacBride. "Many elderly investors relied on Mr. Castillo’s credibility as an outside auditor before entrusting their life savings in this fraud scheme. Accountants and auditors are the gatekeepers of our financial system and are entrusted with the critical role of protecting the public from fraud. Today’s sentence will hopefully send a strong message to those in the accounting profession that they will be held responsible when they break that trust by facilitating or participating in fraud."
"Jorge Luis Castillo will spend 54 months in prison for trading on his qualifications as a CPA to facilitate a massive fraud scheme that harmed investors throughout the United States and abroad," said Assistant Attorney General Breuer. "Mr. Castillo’s prison sentence demonstrates the Justice Department’s commitment to holding accountable any fraudster who preys on innocent, unsuspecting investors."
According to court records, PCI was an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica. PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors. PCI marketed these bonds to its clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy. PCI’s clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.
Castillo admitted that he conspired with Minor Vargas Calvo, 61, the president and majority owner of PCI, to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies. These claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds.
Castillo further admitted that he never performed an audit of PCI’s financial statements and that, in fact, he personally created the statements he claimed to be independently auditing. He also admitted that he and others at PCI knew that the company never actually entered into reinsurance contracts with any major companies. Castillo also admitted that he and other conspirators provided the false financial statements and fraudulent independent auditors’ report to Dun & Bradstreet (D&B), which D&B relied on in compiling its commercial reports on PCI and issuing its 5A rating of PCI’s financial strength.
From 2004 through 2010, PCI sold at least $485 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere. PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world. Purchasers of PCI’s bonds were allegedly required to make up-front payments of six to 11 percent of the underlying settlement as "premium" payments to PCI before the company would issue the bonds. Court records state that Castillo received approximately $84,000 from his work as the purported outside auditor of PCI from 2004 through 2010.
Vargas, a citizen and resident of Costa Rica, was convicted on April 30, 2012, of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, three counts of wire fraud and three counts of money laundering. On Oct. 23, 2012, he was sentenced to 60 years in prison. PCI pleaded guilty on April 18, 2012, to conspiring to commit mail and wire fraud, and was sentenced on Sept. 6, 2012, to one year of probation.
This investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service – Criminal Investigation, and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities. This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Assistant Chief Albert B. Stieglitz Jr. of the Justice Department Criminal Division’s Fraud Section.
Sunday, December 2, 2012
SEC IMPOSES A PENNY STOCK BAR AND OFFICER AND DIRECTOR BAR AGAINST FORMER CEO
FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced that on November 14, 2012, the Honorable Colleen McMahon, United States District Court Judge for the Southern District of New York, granted the Commission's motion for summary judgment against Defendant Christopher Metcalf, and issued a final judgment imposing a $50,000 penalty against Metcalf and barring him from participating in an offering of penny stock and from acting as an officer or director of a public company for a period of five years. Metcalf had previously consented to the entry of partial judgment against him, permanently enjoining him from future violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission's complaint, filed on January 24, 2011 in federal court in Manhattan, alleges that Metcalf, former President and CEO of Pantera Petroleum, Inc. ("Pantera"), and stock promoter Bozidar "Bob" Vukovich engaged in a fraudulent broker-bribery scheme designed to manipulate the market for Pantera common stock.
After considering the undisputed facts, the Court found that Metcalf "knowingly and enthusiastically engaged in a broker bribery/stock manipulation scheme involving Pantera's stock while serving as Pantera's President and CEO." The Court found a clear record of Metcalf's violations of the anti-fraud provisions of the federal securities laws and imposed a $50,000 civil penalty and a penny stock bar and officer and director bar against him.
The SEC acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.
The Securities and Exchange Commission announced that on November 14, 2012, the Honorable Colleen McMahon, United States District Court Judge for the Southern District of New York, granted the Commission's motion for summary judgment against Defendant Christopher Metcalf, and issued a final judgment imposing a $50,000 penalty against Metcalf and barring him from participating in an offering of penny stock and from acting as an officer or director of a public company for a period of five years. Metcalf had previously consented to the entry of partial judgment against him, permanently enjoining him from future violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission's complaint, filed on January 24, 2011 in federal court in Manhattan, alleges that Metcalf, former President and CEO of Pantera Petroleum, Inc. ("Pantera"), and stock promoter Bozidar "Bob" Vukovich engaged in a fraudulent broker-bribery scheme designed to manipulate the market for Pantera common stock.
After considering the undisputed facts, the Court found that Metcalf "knowingly and enthusiastically engaged in a broker bribery/stock manipulation scheme involving Pantera's stock while serving as Pantera's President and CEO." The Court found a clear record of Metcalf's violations of the anti-fraud provisions of the federal securities laws and imposed a $50,000 civil penalty and a penny stock bar and officer and director bar against him.
The SEC acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.
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