by T. GormanPosted on Posted in SECActions

Last week the Commission filed three new enforcement actions.  Each centered on an offering fraud claim.

Be careful, be safe this week.

SEC Enforcement – Filed and Settled Actions

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

Offering fraud:  SEC v. Markan,  Civil Action No. 3:25-cv-01653 (N.D. Tx. Filed June 27, 2025) is an action which names as defendant Rajesh Markan.  He is a former representative at two different brokerage firms. Over a nine-year period, beginning in 2015,  Defendant Rajesh Markan convinced 10 clients to put money in an investment account  he called Intrinsic Value Portfolio.  The account had about $2.9 million in client funds.  The investors were told the money had to remain in the account for a period of six to twelve years. Defendant convinced the clients to put their money in the accounts and keep it there.  In fact, there was no fund – it did not exist. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. The U.S. Attorney’s Office for the Northern District of Texas filed parallel criminal charges.  Defendant pleaded guilty to those charges.  He settled with the Commission, consenting to the entry of permanent injunctions based on the Sections cited in the Order. Monetary sanctions will be assessed at a future date.  See Lit. Rel. No. 26337 (June 27, 2025).

Offering fraud:  SEC v. Alexander,  Civil Action No. 1:25-cv-00242 (D. N.H. June 26, 2025) is an action which names as defendant Robynne Alexander, a real estate developer.  Over a six-year period beginning in 2018, Defendant convinced at least 28 investors to put their money in a fund that supposedly would use the funds to enhance the operations of certain real estate projects. In fact, the representations were false – there were no investments.  As a result,  investors lost at least $3 million. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. Defendant resolved the claims, consenting to the entry of permanent injunctions and also enjoining her from engaging in activities for the purpose of buying and selling securities or serving as an officer or director of a public company.  Monetary sanctions will be resolved at a later date.  The U.S. Attorney’s Office for the District of New Hampshire filed charges and administrative charges brought. See  Lit. Rel. No. 26336 (June 26, 2025).

False statements:  SEC v. American Patriot Brands, Inc.,  Civil Action No. 2:23-cv-05379 (CD. Cal.) is a previously filed action which named as defendants: the firm, a cannabis cultivation and distribution company;  CEO Robert Y. Lee; COO Brian F. Pallas; J. Bernard Rice, a former executive; and J. Bernard Rice, a former executive at the company;  and certain APB subsidiaries. The complaint alleged that Defendants defrauded investors using a series of misrepresentations. Those concerned the firm assets, collateral for the investment fund,  financial performance of the company and the use of company funds. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.   The court granted summary judgment in favor of the Commission.  Remedies will be assessed in the future. See  Lit. Rel. No. 26335 (June 26, 2025).

Financial fraud:  SEC v. O’Donnell,  Civil Action No. 1:23-cv-08543 (S.D.N.Y.) is a previously filed action which named as defendants Edward O’Donnell and Vicor Bozzo, respectively, the former Chief Financial Officer and Former Chief Commercial Officer of telecommunications company Pareteum Corp.  Over a period of about five years defendant engaged in a fraudulent revenue recognition scheme. During the prior defendants recognized revenue based on orders that were incomplete.  Through this process they materially overstated revenue by $12 million or 60% for fiscal 2018, and $27 million or 91% for the first and second quarters of 2019. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.  In addition, Mr. O’Donnall was charged  with violations of Exchange Act Section 13(b)(5),   13(b)(2)(A) and 13(b)(2)(B) as either a primary or secondary violations. Defendants resolved the action by consenting to the entry of permanent injunctions, an officer – director bar and Disgorgement of $225,000 and $60,000, respectively, as to Defendants Bozzo and O’Donnell. Those amounts will be satisfied by payments of the forfeiture in the parrel criminal case.  There each pleaded guilty and was directed to pay forfeiture in amounts equal to those in the Commission’s action. Mr. O’Donnell was also sentenced in the criminal case to serve one year and a day in prison. See  Lit. Rel. No. 26334 (June 24, 2025).

Offering fraud:  SEC v. Mausner,  Civil Action No. 3:25-cv-01591 (S.D. Cal. Filed June 23, 2025). Named as defendants in this action are Ian O. Mausner and his firm, Evolution Lending, LLC.  Ian Mausner is a recidivist.  He was an investment adviser registered with the Commission until 2004. At that point he was named as a defendant by the agency in a fraud case, In the Matter of J.S. Oliver Capital Management, L.P., AP File No. 3-15446, Release Nos. 10100, 78098, 4431 and 32152, 2016 SEC LEXIS 2157 (June 17, 2016).  That action was settled with sanctions against Mr. Mausner. He was the principal member, manager and owner of Evolution. That firm now has no known bank accounts. Mr. Mausner was barred from the industry based on the following: Defendant Mausner implemented a scheme over a two-year period. It began in late 2020. The scheme defrauded clients out of over $400,000.  Specifically, Defendant used the Fund to defraud investors who were told that Mr. Mausner had 30 years of experience in the financial advisory and money management industry.  Investors were told the Mr. Mausner and the Fund were investment advisers who would invest their money in specific crypto asset trading.  The claims were false.  Defendants did not disclose their regulatory background. Investors were not furnished with any registration statements or other records showing that the interests being sold were in accord with Commission regulations or that either Mr. Mausner or his Fund operating in accord with Commission regulations.  The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(a) and 206(2) and Rule 206(4)-8.  See  Lit. Rel. No. 26333 (June 24, 2025).

ESMA

 

Comments:   The European regulator is calling for input on ways to streamline financial transaction reporting, according to a report published on June 23, 2025.

Hong Kong

Remarks: Kelvin Wong delivered the Keynote speech at the 11th Investor Relations Awards Ceremony on June 27, 2025.

Singapore

 Consultation paper:  The paper discusses a Proposed Regulatory Approach, Regulations, Notices and Guidelines for Digital Token Service Providers issued under the Financial Services and Markets Act of 2022 (May 30, 2025).

 

by T. GormanPosted on Posted in SECActions

The Commission has what appears to be a continuous stream of offering fraud actions.   Those cases come in all shapes and sizes; those who implement them use a variety of schemes to convince investors to trust them with their money and then steal it. No doubt investors looking for the quick buck facilitate this. Also key to these cases, however, is a failure of the investor to question or investigate representations furnished to them.  Stated differently, it is far too easy for investors to trust someone who often does nothing more than say “trust me”    a which point the money goes from the investor to the bad guys with little or no checking and is then gone.  The Commission’s latest case in this is a good example, SEC v. Mausner,  Civil Action No. 3:25-cv-01591 (S.D. Cal. Filed June 23, 2025).

 

Named as defendants in this action are Ian O. Mausner and his firm, Evolution Lending, LLC.  Ian Mausner is a recidivist.  He was an investment adviser registered with the Commission until 2004. At that point he was named as a defendant by the agency in a fraud case, In the Matter of J.S. Oliver Capital Management, L.P.,  AP File No. 3-15446, Release Nos. 10100, 78098, 4431 and 32152, 2016 SEC LEXIS 2157 (June 17, 2016).  That action was settled with sanctions against Mr. Mausner. He was the principal member, manager and owner of Evolution. That firm now has no known bank accounts. Mr. Mausner was barred from the industry.

 

Here Defendant Mausner implemented a scheme over a two-year period, beginning late 2020, which defrauded clients out of over $400,000.  Specifically, over that period he used the Fund to defraud investors who were told that Mr. Mausner had 30 years of experience in the financial advisory and money management industry.  Investors were told the Mr. Mausner and the Fund were investment advisers who would invest their money in specific crypto asset trading.  The claims were false.

 

Defendants did not disclose their regulatory background. Investors were not furnished with any registration statements or other records showing that the interests being sold were in accord with Commission regulations or that either Mr. Mausner and his Fund operating in accord with Commission regulations.  The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(a) and 206(2) and Rule 206(4)-8.  See  Lit. Rel. No. 26333 (June 24, 2025).

 

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