The SEC and the DOJ brought, respectively, civil and criminal charges against six individuals alleging an international prime bank scheme. The schemes, orchestrated from Switzerland and Nevada, were investigated by the Zurich, Switzerland state prosecutor as well as the Commission and the Department.
Beginning in 2009 six individuals are alleged to have engaged in two schemes, raising approximately $11 from investors, according to the court papers. The schemes centered on Swiss based Malom Group AG – Malom being an acronym for Make A Lot of Money. The schemes were perpetrated by a group of individuals which include: Malom principals Martin Schlapfer and Hans-Jung Lips, both of Switzerland; Malom’s U.S. based officers James Warras and Jospeh Micili; and Anthony Brandel through is company M.Y Consultants, Inc.; and Sean Finn through M. Dwyer LLC.
Overall 30 persons put funds in the schemes. In the first scheme investors were solicited to participate in joint ventures that were to place funds in European equity and debt offering represented to have very high rates of return. Under the plan investors would use the resources of the Malom group in exchange for an up front fee which ranged from $200,000 to $1.2 million per investor. To illustrate its significant financial resources Malom furnished investors with forged bank statements and “proof of funds” letters.
Investors would propose a trading program that had to be approved under the terms of the joint venture agreements. None of the proposed programs were approved although various defendants knew of some of the proposals at the time the investors were solicited. The defendants kept the fees paid.
Under the second proposal, Malom would to invest in structured notes that would be listed on Western European exchanges. As in the first scheme, investors were required to pay an up front fee. Once the fees were paid, the defendants simply pocketed the investor funds.
As investors became concerned, they were furnished with false status reports. Eventually they requested a return of their funds. Those requests were not honored. In one instance Defendants Micelli, Warras and Lips submitted a false declaration about the Malcom transactions in a U.S. bankruptcy proceeding involving one of the investors.
The criminal indictment charges conspiracy, wire fraud and securities fraud. U.S. v. Brandel, No. 2:13-cr-439 (D. Nev. Unsealed Dec. 16, 2013). The SEC’s complaint alleges violations of Securities Act Sections 5 and 17(a) and Exchange Act Sections 10(b) and 15(a). SEC v. Malom Group AG., Civil Action No. 2:13-cv-2280 (D. Nev. Dec. 16, 2013). See Lit. Rel. No. 22890 (Dec. 16, 2013). The cases are pending.