Alvin S. Mirman, of Sarasota, Florida, was accused Thursday of fraudulently registering and secretly selling stock in shell companies. He was charged by federal prosecutors with conspiracy to commit securities fraud in a penny-stock scheme that netted $6 million. Last year, the Securities and Exchange Commission (SEC) filed a civil complaint against Mirman, claiming he violated numerous federal securities laws by selling “blank-check” companies that were falsely presented to investors as legitimate start-up businesses. Mirman was a former stockbroker who was banned from the securities industry in 2007. Allegedly, Mirman, along with other conspirators, recruited individuals to serve as straw CEOs for shell companies, some of which had addresses in Sarasota and Manatee counties. For almost seven years, the conspirators prepared phony corporate documents, including stock certificates and shareholder lists, and submitted them to the SEC in order to register securities offerings. The men then would find people to pretend they were shareholders, thereby creating class of shares that could be publicly traded. The “shareholders” were promised money after the company was sold. The buyer’s acquisition of the company would typically take the form of a reverse merger and be publicly disclosed. The secretly controlled unrestricted shares would typically be transferred to a third party or other account designated by the buyer, and would not be disclosed to the SEC or the public. In this way, the buyer would be in a position immediately to engage in stock swindles or other manipulation schemes.
The Securities and Exchange Commission (SEC) last week said it will make positive reforms such as automated processes, a mediation service to protect minority shareholders, and a crackdown on investment scams. In addition to the automation, the SEC will also strengthen its program against investment scams and the Capital Market Development Plan (CMDP) and finally, organizational enhancement. The SEC intends to fully automate procedures to allow corporations to register and file required submissions online and complete such processed within one day. Online payment methods will also be offered. The SEC will lobby to keep revenue only from fees and charges, not from penalties, which is an adopted practice in some other countries. This proposed amendment to the Securities Regulation Code would further provide the SEC with the power of disgorgement. This will allow the commission to fine or cause the forfeit of amounts pocketed by companies found in violation of the rules. In line with its ongoing efforts to protect investors, the SEC has expanded its presence across the country with the establishment of more satellite and regional offices.
Stoltmann Law Offices is interested in speaking to investors who may have potential securities claims on behalf of shareholders of FLY Leasing Limited (NYSE:FLY). FLY may have issued materially misleading business information to the investing public. On March 8, 2016, FLY discussed its accounting policy for business combinations, including their accounting policy for intangible assets and liabilities for aircraft acquired with in-place leases with the Securities and Exchange Commission (SEC). The company also disclosed that there could be a material impact to its previously issued consolidated financial statements if the SEC determines that FLY should separately recognize other intangible assets or liabilities from what was previously recorded. If you or someone you know purchased shares of FLY, please call our securities law firm in Chicago as soon as possible. We may be able to help you recover your investment losses in the Financial Industry Regulatory Authority (FINRA) arbitration process on a contingency fee basis.
The Vanguard Group and its affiliates have filed suit against Vereit, Vereit Operating Partnership, AR Capital, ARC Properties Advisers, RCAP Holdings, RCS Capital Corporation and five former company executives. Vereit is accused of an accounting fraud that cost investors billions. Vereit was a moderate-sized company with $132 million in assets in 2011 and in 2014, it ballooned to $21.3 billion in assets. The lawsuit claims that Nicholas Schorsh, squired real estate companies on the premise that they would help grow the company, but Vanguard alleges his true motive was to “rob shareholders and to give to himself and his friends.” Vanguard also alleged that Schorsh transferred hundreds of millions of dollars to entities controlled by him or other top executives and that the company’s financial statements were “riddled with error,” including a miscalculation that inflated its “adjusted funds from operations” and gave the company access to additional capital. In October 2014, Vereit disclosed an audit report of an “intentionally made” accounting error that was “intentionally not corrected,” and stock prices dropped by 36% costing investors billions of dollars. The individual defendants in the claim include Nicolas Schorsch, David Kay, Brian Block, Lisa Pavelka McAlister and Lisa Beeson. If you invested money with Vereit, or any of its affiliates, please call our securities law firm in Chicago for a free consultation with an attorney. We may be able to help you recover your financial losses with Vereit.
Stoltmann Law Offices is investigating master limited partnerships (MLPs). A master limited partnership is a type of limited partnership that is publicly traded. There are two types of partners in it: The limited partner is the person or group that provides the capital to the partnership and receives periodic income distributions from the MLP’s cash flow, and the general partner is the party responsible for managing the MLP’s affairs and receives compensation that is linked to the performance of the venture. It is publicly traded on an exchange and combines the tax benefits of a limited partnership with the liquidity of publicly traded securities. Many of them own pipelines, storage tanks and other cash-generating energy infrastructures and give almost all of their income to shareholders in the form of distributions. MLP’s can be very risky for investors, as they can be difficult to understand. Also, in order to grow, they must borrow money or issue new shares, and banks, not investors, earn fees on those transactions. MLP’s typically generate high rates of return, therefore are riskier investments.
Stoltmann Law Offices is investigating the following MLP’s:
Enterprise Products Partners LP (EPD)
The Securities and Exchange Commission (SEC) charged First Eagle with improperly using mutual fund shareholder’s assets to pay two brokerage firms to market and distribute its funds. First Eagle Investment Management and FEF Distributors will be charged $40 million, which will be used to pay back fund shareholders. The SEC is continuing to investigate asset management firms for these transgressions. They may also investigate broker-dealers and whether funds are illegally being funneled to broker-dealers while being passed off as accounting and other services. According to the SEC, First Eagle “unlawfully caused the First Eagle Funds to pay nearly $25 million for distribution-related services, rather than making the payments out of the firms’ own assets. Mutual fund advisers have a fiduciary duty to manage the conflict of interest associated with fund distribution, namely whether to use their own assets or to recommend to their fund’s board to use the fund’s assets to distribute shares. First Eagle breached that fiduciary duty by using the funds’ assets rather than its own money to pay for distribution and failed to provide accurate information to the funds’ boards.” First Eagle told the boards the fees they were paying were for accounting services, not for distribution. These took place from January 2008 until March 2014.