The Securities and Exchange Commission charged a Chicago-based immigration attorney with defrauding investors participating in the EB-5 immigrant investor program by improperly commingling and misusing a portion of the approximately $88.7 million raised.
The SEC alleges that Seyed Taher Kameli and his companies, Chicagoland Foreign Investment Group LLC and American Enterprise Pioneers Inc., falsely claimed to at least 226 foreign investors that each of their $500,000 investments would be used to help construct a specific senior living project in the Chicago area or Florida and create at least 10 permanent full-time jobs within that project. This would qualify each investor for a potential path to permanent U.S. residency through the EB-5 program.
According to the SEC's complaint, rather than use investor funds solely for the senior living project for which an investor was solicited, Kameli diverted millions of dollars to fund other projects and to make unrelated payments, which was contrary to representations to investors and the requirements of the EB-5 Program. Kameli also spent a significant portion of investor proceeds for his own benefit, for his brother's benefit, and for the benefit of companies he owns.
The SEC's complaint seeks a temporary restraining order and preliminary, permanent and conduct-based injunctions as well as disgorgement of ill-gotten gains plus prejudgment interest, and penalties. The SEC is also seeking a court-ordered asset freeze and appointment of a receiver over certain of the companies involved in the alleged fraud.
Foreign Insider Trading Defendant to Pay Nearly $7.3 Million
The SEC has obtained a default judgment against a foreign defendant charged with insider trading that orders him to pay approximately $7.3 million.
The court's final judgment orders Yu-Cheng Lin, also known as Believe Lin, to pay disgorgement of approximately $1.8 million, prejudgment interest of approximately $44,000, and a civil penalty of approximately $5.4 million. The court's entry of judgment resolves this litigation in its entirety.
The court had previously issued an arrest warrant for Lin after the judge found him in contempt of two previously issued orders by dissipating assets and refusing to repatriate funds.
In an emergency action, the SEC alleged that Lin traded on material inside information ahead of quarterly earnings announcements on May 5, Aug. 4 and November 3, 2016, by Ubiquiti Networks Inc., a California-headquartered company where Lin had worked from approximately March 2011 until June 2015. Lin allegedly did so by purchasing Ubiquiti common stock, call options and contracts-for-difference in brokerage accounts located in the United States and overseas. On April 3, 2017, the SEC filed an amended complaint alleging that Lin directed or controlled trading by a 34-year-old woman residing in Taipei, Taiwan, who was a close associate of Lin and traded Ubiquiti securities in 2014 while Lin was working for the company.
Additional Charges Announced in Case Involving Pre-released ADRs
The SEC announced additional charges in an enforcement investigation involving the improper handling of American Depositary Receipts (ADRs) by a Wall Street firm's securities lending desk.
The SEC's order finds supervisory failures by Anthony Portelli, a former managing director and head of operations at broker-dealer ITG Inc. Portelli supervised ITG's securities lending operations and was responsible for the firm's compliance with "pre-release agreements" for ADR transactions. ADRs are U.S. securities that represent foreign shares of a foreign company. Before obtaining a "pre-released ADR" to lend to a customer, brokers like ITG must own, or determine that a customer owns, the number of foreign shares that corresponds to the number of shares the ADR represents.
Under Portelli's watch, personnel on ITG's securities lending desk failed to take reasonable steps to determine whether the proper amounts of foreign shares were owned and held by ITG's customers. This failure opened up the possibility that the ADRs could be used improperly for short selling or dividend arbitrage.
Portelli has agreed to settle the charges without admitting or denying the SEC's findings and pay a $100,000 penalty. He also is prohibited from acting in a supervisory capacity for at least 18 months.
Earlier this year, ITG agreed to pay more than $24 million to settle the SEC's case against the firm.
SEC Files Fraud Charges Against Stock Promoters in Market Manipulation Scheme
The Securities and Exchange Commission charged a New Jersey-based group of stock promoters with fraud involving the manipulation and artificial inflation of the share price of a microcap company. The scheme grossed more than $1 million.
The SEC alleges that James M. Farinella, and his purported consulting firm Integrated Capital Partners Inc. (ICP), controlled virtually the entire public float of stock in microcap issuer Pazoo Inc. Farinella paid Equity Awareness Group (EAG) to promote Pazoo and to engage in matched trading to create the appearance of an active market for Pazoo stock and boost the stock price. The SEC further alleges that Anthony Amado, an owner of EAG, and Carlo Palomino, an EAG employee, carried out the scheme, enabling Farinella to dump Pazoo shares for over $1 million.
