Among recent enforcement actions, the Consumer Financial Protection Bureau ordered JPMorgan Chase & Co., Wells Fargo and a loan officer to pay fines, saying they illegally traded referrals to a title company for marketing services.
Meanwhile, the Securities and Exchange Commission filed charges against attorneys and auditors in a phony mining scheme, an investment advisory firm and its manager in a fraud scheme, and a former executive at an engineering firm for Foreign Corrupt Practices Act violations.
In addition, FINRA censured and fined a firm for inadequate supervision that led to compliance failures.
CFPB Orders Wells Fargo, JPMorgan Chase to Pay More Than $35M Over Mortgage Kickbacks
The Consumer Financial Protection Bureau and the Maryland attorney general took action against Wells Fargo and JPMorgan Chase for an illegal marketing services kickback scheme they allegedly participated in with Genuine Title, a title company that is no longer in business.
Also targets of the action were former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen.
According to the CFPB, Genuine Title, which was based in Maryland, offered real estate closing services from 2005 until it went out of business in April 2014. Genuine Title gave the banks' loan officers cash, marketing materials, and consumer information in exchange for business referrals.
Among the services the company offered as part of the payoffs were purchasing, analyzing and providing data on consumers, and mailing consumers letters with the banks' logos. In exchange, the banks' loan officers would refer homebuyers to the company for closing services. This scheme was especially profitable for the loan officers, who generally work on commission.
More than 100 Wells Fargo loan officers in at least 18 branches, largely in Maryland and Virginia, participated in this scheme, along with at least six Chase loan officers in three different branches in Maryland, Virginia and New York.
Cohen was employed by Wells Fargo as a loan officer from April 2009 through August 2010, and not only got marketing materials but cash payments — which were made to his then-girlfriend in an effort to disguise them.
Subject to court approval, Wells Fargo will pay $10.8 million in redress and $24 million in fines. Chase will pay approximately $300,000 in redress and a $600,000 fine. Cohen and Oliphant Cohen will pay a $30,000 fine, and Cohen will be banned from the mortgage industry for two years.
SEC: Attorneys, Auditors Faked Mining Firms to Bilk Stock Investors
The SEC has charged attorneys, auditors, and others for involvement in a microcap scheme that was shut down last year when the agency suspended the registration statements of 20 purported mining companies being used to scam investors in phony stock offerings.
According to the agency, the scheme was masterminded by Canadian attorney and stock promoter John Briner. Briner, after being suspended by the SEC from practicing on SEC-regulated entities, hid behind clients and associates to run shell companies that were supposedly engaged in mining exploration. Briner made all the decisions while others were nominally in charge, according to the companies' registration statements. Those charged who are going to court are:
Colorado-based attorney Diane Dalmy, who allegedly provided opinion letters for 18 of the mining companies in which she claimed to have conducted an investigation of the companies' stock issuance.
Nevada-based audit firm De Joya Griffith LLC and partners Arthur De Joya, Jason Griffith, Philip Zhang and Chris Whetman, whom Briner brought in to audit the financial statements of some of the mining companies. They not only ignored red flags of fraud, the auditing work they did was so cursory that it could not properly be termed auditing.
Texas-based audit firm M&K CPAS PLLC and partners Matt Manis, Jon Ridenour, and Ben Ortego, who were also hired by Briner to audit some of the companies' statements. They too ignored red flags of fraud and didn't really conduct audits at all.
Others who were charged but have settled with the SEC without admitting or denying the allegations were:
Stuart Carnie of Ocala, Florida, and Charles Irizarry of Peoria, Arizona, each of whom supposedly was the sole CEO of three of the companies. Both participated in the stock offerings and signed bogus registration statements for their own three companies. Each must pay disgorgement of $6,000 plus prejudgment interest of $337.85 and a penalty of $12,000 for a total of $18,337.85.
Wayne Middleton of Salt Lake City, Utah, was supposedly the sole CEO of two of the companies. He participated in their stock offerings and also signed false and misleading registration statements. He must pay disgorgement of $4,000 plus prejudgment interest of $225.24 and a penalty of $8,000 for a total of $12,225.24.
Each has agreed to be barred from serving as an officer or director of a public company or from participating in penny stock offerings, in addition to the financial penalties.
