by T. GormanPosted on Posted in SECActions

When responding to a solicitation by a new adviser it is critical that the investor undertake a careful review of the person making the solicitation.  This requires more than a casual conversation or simply listening to the would-be adviser talk about his or her background.  While such a conversation may be informative, and at least appear to provide useful and critical information, in far too many instances the facts offered by the would-be adviser are inaccurate, incomplete or both. That was clearly the case in the Commission’s most recent action in this area.  SEC v. Gomez,  Civil Action No. 5:25-cv-805 (W.D. Tx. Filed July 14, 2025).

Named as defendants in the action are: Imer Gomez, d/b/a K&GF Investment Solutions, LLC and Helios Venture Fund, LLC. Mr. Gomez is a citizen of Mexico as well as a U.S. resident and the President and CFO of Helios. That firm  is a limited liability company based in San Antonio.

Over a two-year period, beginning in August 2021, Mr. Gomez used K&G and Helios, entities he controlled, to solicit clients to open investment advisory accounts he would manage. During the solicitations Helios was referred to as a “fund.”  In fact, neither Helios nor K&G were funds.

Potential investors were told that Mr. Gomez was an experienced trader who would monthly generate double-digit returns from investing in funds such as Helios. Mr. Gomez also claimed that K&G and Helios were insured for up to 75% of the value of each client’s account.  The solicitations were primarily focused on soliciting investments from Hispanic clients. Over the period about $9 million was entrusted to Mr. Gomez.

The funds obtained from investors were never used to trade securities or to create accounts.  Rather, the investor funds were used for unrelated business matters. Defendant also loaned about $666,000 to his ex-girlfriend’s father, Eric Claxton and his family.  The funds were used to purchase real estate.

In an effort to conceal the fraud, Defendants sent clients fake account statements. The papers reflected fictitious gains. When Mr. Gomez ran short of assets, he claimed there was a “sudden liquidation that destroyed the business and prevented him from returning the investments. He also claimed that Helios was finalizing a guaranteed bailout loan so he could repay clients. The claim was false.  The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(1) and (2). The complaint names as relief defendants Eric and Heather Claxton. See  Lit. Rel. No. 26349 (July 14, 2025).

 

Tagged with: ,

by T. GormanPosted on Posted in SECActions

The Commission filed three new cases last week. One centered on insider trading. The second involved an offering fraud. The third centered on the sale of unregistered shares.  The agency also continued to dismiss actions without explanation.

Have good week.  Be careful and be safe.

SEC Enforcement – Filed and Settled Actions

Statistics:  Last week the Commission filed 3 new civil enforcement actions and continued to settle others.

Insider trading:  SEC v. Vakil,  Civil Action No. 7:25-cv-05697 (S.D.N.Y. Filed July 19, 2025) is an action which names as defendants Trijya Vakil and Neeraj Visen. Defendant Vakil was employed during the period at Elanco Animal Health, Inc. as Senior Director of Product Innovation. Defendant Visen was employed as Senior Licensing Manager at a university in Florida. Beginning in April 2021 Defendant Vakil took part in Elanco’s due diligence related to the acquisition of  Kindred Biosciences, Inc. through her employment at Elanco. On May 12, 2021, Defendant Vakil purchased shares of Kindred’s stock in advance of the deal announcement.  Subsequently, on June 16, 2021, when it was announced that Kindred would acquire Elanco, the firm’s share price increased by about. 46%.  Defendant Vakil had  profits of over $2,400 on the sale of the shares. Just prior to the deal announcement, Defendant Vakil tipped her friend Visen about the pending deal.  Visen then traded prior to the deal announcement.  He had profits of $109,437.  The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. Each Defendant pleaded guilty in the parallel criminal action initiated by the U.S. Attorney’s Office for the Southern District of New York. See  Lit. Rel. No. 26348 (July 11, 2025).

Dismissal:  SEC v. Pinnacle Advisors, LLC,  Civil Action No. 5:23-cv-00547 (N.D.N.Y.) is an action that names as defendants the Advisory and Robert F. Cuculich, Benjamin R. Quilty, Mark E. Wadach and Lawton A. Williamson.  Defendants and the Commission entered into stipulation dismissing the action with prejudice.  As with earlier dismissals, there was no explanation.

Offering fraud:  SEC v. Fernandez, Civil Action No. 5:23-cv-00372 (N.D. W.Va.) is a previously filed which named as defendant Diana Mae Fernandez.  The complaint alleges that beginning in 2018, and continuing into 2020, Ms. Fernandez conducted an offering fraud in which she raised $365,000 from about 20 investors by falsely claiming that she was a successful businesswoman with access to no risk short term investments. Rather than invest the money obtained from investors a promised, Defendant used it to support her lifestyle. Defendant pleaded guilty in the parallel criminal action.  She also resolved the Commission’s action, consenting to the entry of permanent injunctions based on Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. In addition, she agreed to pay disgorgement of $296,021 which is deemed satisfied by her criminal forfeiture amount.  See  Lit. Rel. No. 26346 (July 11, 2025).

Offering fraud:  SEC v. Jackson, Civil Action No. 4:25-cv-00733 (E.D. Tex, Filed July 8, 2025) is an action which names as defendant Joshua Thomas Jackson. The complaint alleges that over a three-year period, beginning in August 2019 and continuing until May 2021, Defendant raised about $2.65 million from 13 investors.  Investors were promised that the funds would be used to acquire and renovate residential properties specific to each investor. The investor’s funds were to eventually be returned and during the investment period generate monthly interest payments. The representations were lies. The complaint alleges violations of each subsection of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. See  Lit. Rel. No. 26345 (July 11, 2025).

Unregistered shares: SEC v. Rosenbaum,  Civil Action No. 3:25-cv-01716 (N.D. Tex. Filed July 1, 2025).  Named as defendants in this action are: Keith A. Rosenbaum, William A. Justice, Randell R. Torno; and Brian D. Shibley. Defendants Justice, Shibley and Torono were each the CEO of a penny stock firm (collectively the “CEOs”) in an earlier action. Mr. Rosenbaum is a disbarred California attorney. Each person was charged earlier by the Commission for their role in an alleged $112 million pump-and-dump scheme orchestrated by Philip Verges. The action here centered on June 2017 through June 2022. During that period Mr. Verges directed the CEOs to sign, or to permit their signature to be signed, on  incomplete disclosure statements published on a penny stock trading platform. Those materials, among other things, concealed the role of Mr. Verges and his directive regarding the false disclosure papers — the papers were executed without taking reasonable steps to ensure they were accurate.   In addition, Mr. Rosenbaum is  alleged to have executed 17 attorney opinion letters for one of the nominees  after being suspended from practicing law in California.  Subsequently, he executed 73 more opinion letters. The complaint alleges violations of each subsection of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. Defendants resolved the action.  Each of the CEOs consented to the entry of injunctions based on the statutes cited in the complaint and an officer-and-director bar. Each also agreed to pay disgorgement totaling  $22,398.08 plus prejudgment interest of $2,011.92;  Defendants Torno and Shibley were each directed, in addition, to pay a penalty of $35,000.  Mr. Rosenbaum consented to the entry of a consent judgment based on the antifraud provisions as well as an order regarding the payment of disgorgement, prejudgment interest,  civil penalties and a penny stock bar, all to be resolved at a later date. See  Lit. Rel. No. 26344 (July 10, 2025).

 

Offering fraud:  SEC v. Palazzo,  Civil Action No. 5:24-6602 (ND. Ca.).  Defendants in this action are:  Nicholas Palazzo, a graduate of Harvard University where he played football and stayed in touch with former teammates and others who later joined the team;  4TA Sports, Inc. a firm controlled by Defendant Palazzo who was the firm CEO; NP Ventures Holdings, LLC, another firm controlled by Defendant Palazzo; and Play Caller Sports Gaming, LLC, also a defendant that was controlled by Defendant Palazzo. Beginning in October 2019,  and continuing until the end of 2023,  Mr. Palazzo and his controlled entities  raised funds from investors.  During the period he focused on two schemes.  First, what the complaint calls the STACK scheme raised about $900,000 from three investors. Those solicited  were told the offering proceeds would be used to raise money to repurchase the assets of STACK Media, Inc. — a sports media entity.  Defendant Palazzo had previously sold the firm. Supposedly Mr. Palazzo had, or shortly would have, $5 million to facilitate the repurchase process.  The claims were false.  The money raised was spent on personal items for Mr. Palazzo, not to reacquire an interest in STACK. Second, is the Play Caller Scheme. Beginning in September 2020,  and continuing through the end of December 2023, Mr. Palazzo raised about $2.1 million.  Investors were told that their money would be used to develop and launch a sports betting operation.  Instead, the funds were used for other interests of Mr. Palazzo, including vacations, paying himself fees and to settle a lawsuit.   The complaint alleges violations of Securities Act Sections 17(a) and Exchange Act Section 10(b)(5) and Rule 10b-5.  Mr. Palazzo and the entity Defendants settled the litigation, each consenting to the entry of permanent injunctions based on the provisions cited in the complaint except 20(a). Mr. Palazzo was also directed to pay disgorgement of $2,648,132.72 along with prejudgment interest with the corporate entities being liable for their part of that amount.  In addition, Mr. Palazzo paid a civil penalty of $150,000. The final judgment bars Mr. Palazzo from serving as a corporate officer for director for five years or from participating in the issuance, purchase and offer or sale of any security for a period of five years other than for his own account. See  Lit. Rel. No. 26343 (July 9, 2025).

 

Hong Kong

 

Remarks:   Julia Leung delivered remarks titled “Anti-Scam Consumer Protection Charter 3.0”. Her remarks focused on the evolution of the charter to say out in front of those conducting the scams. The remarks were delivered on July 9, 2025.

 

Singapore

 

Initiative:   Singapore and the UK Collaborated on Energy Transition and Sustainable Infrastructure Investments in Southeast Asia, discussed in a release dated July 14, 2025.

 

 

Tagged with: , , ,