AICPA Irs Pcaob Ald 2014 QTR 4

SEC Accounting and Auditing Enforcement Releases
2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
jurisdiction, etc.) Name
MD
NY
Possible Licensure
Jurisdictions Based
on ALD Search (May
Require Add'l Info to
Confirm - middle
name, DOB, SSN,
etc.)
Release Number
Disposition Date Issues
Facts
Conclusions
Link
Peter A. Jenson, Chartered

Accountant
AAER-3589
10/3/2014
T his matter involves an order instituting

a dministrative proceedings.
Peter A. Jenson, age 48, was a Managing Director and the Chief Operating Officer of Harbinger Capital Partners LLC
(Harbinger) from April 2009 through July 2011. Jenson is an Australian citizen and resides in Winnetka, Illinois. Jenson
was at one time licensed as a certified public accountant in Maryland, but his license expired in 2007. Jenson ha s active
designation as a Chartered Accountant. Jenson previously was a Member of the Financial Services Institute of Australia
and previously held a Series 27 license. As part of the Consent Judgment, Falcone and Harbinger admitted, among other
things, that on October 14, 2009, without seeking or obtaining investor consent, in connection with the purchase, offer or
sale of a security, Falcone improperly borrowed $113.2 million from the Harbinger Capital Partners Special Situations
Fund, L.P. (SSF) to pay his state and federal taxes. Jenson, Harbingers Chief Operating Officer, among other things,
Jenson is denied the privilege of appearing or practicing before the Commission as an accountant. After two years from the date of this
executed the loan agreement and other transaction documents on behalf of the SSF in connection with the loan.
order, Respondent may request that the Commission consider his reinstatement by submitting an application.
http ://www.se c. gov/lit iga ti on/ admin /20 14/ 34-7 3294.pdf
BDO China Dahua CPA Co.,

Ltd., et al.
AAER-3590
10/22/2014
This matter involves an extension order.
On October 20, 2014, Respondents Ernst & Young Hua Ming LLP (EYHM), KPMG Huazhen (Special General Partnership)
(KPMG Huazhen), Deloitte Touche Tohmatsu Certified Public Accountants, Ltd. (DTTC), Pricewaterhousecoopers Zhong
Tian CPAs Limited (PwC Shanghai) (collectively the Big Four Respondents), and the Division of Enforcement
(Division), jointly requested a 45-day extension to the briefing schedules set by the Commission by order dated August
14, 2014.1 The Division represents that Respondent BDO China Da hua CPA Co. Ltd. (Dahua) a grees with the proposed
extension. In support of their motion, the Division and the Big Four Respondents state that, in light of the progress made
thus far and current prospects for a potential settlement, it is worthwhile to continue their discussions, so a 45-day
extension is warranted. Absent an extension, continuing these ta lks while briefing the appeal would present challenges, Extensions of time are disfavored. It appears appropriate, however, to gra nt the
given the breadth, complexity, and sensitivity of the issues involved.
requested extension.

Hovanec, age 61, of Westlake Village, California, has been a certified public accountant licensed to practice in the State
of New York since 1976; the status of his license is currently not registered. Hovanec served as Vice President of Finance
and Chief Financial Officer at Vitesse from December 1993 through April 2005. In April 2005, after being promoted to
Executive Vice President he relinquished his role as CFO. Hovanec served as Executive Vice President until May 17, 2006,
when he was terminated by Vitesses Board. Between 1994 and 2007, Hovanec served on the board of Interlink
Electronics, Inc., a U.S. public company. The Commissions complaint alleged, among other things, that starting from
about September 2001 through April 2006, Hovanec participated in a channel stuffing scheme to improperly record
revenue on product shipments. In furtherance of this scheme, Hovanec failed to timely record customer credits required
by large returns of unwanted product, and he directed the misapplication of cash receipts to obscure aged accounts
receivables that resulted from the failure to timely record credits. The complaint also alleged, that from 1995 to 2006,
Hovanec participated in a scheme to backdate stock option grant dates for his personal benefit and the benefit of other
Vitesse executives and employees. Hovanec also failed to ensure that Vitesse properly recorded compensation expense
for backdated stock o ption grants. The complaint alleges that as a result of these a ctions, between 1996 and early 2006,
Hovanec, among other violations: engaged in fraudulent accounting practices that materially misstated the Companys
quarterly and annual financial statements, and that Hovanec knowingly circumvented or failed to implement Vitesses
system of internal accounting controls and falsified Vitesses books, records and accounts; and made material
misrepresentations to Vitesses independent auditor. The complaint also alleges that as part of his misconduct, between
June 1996 and February 2005, Hovanec signed registration statements and annual and quarterly reports that contained Hovanec is suspended from appearing or pra cticing before the Commission as an accountant. After ten years (or 120 months) from the
false and misleading financial sta tements and disclosures.
date of the Order, Respondent may request that the Commission consider his reinstatement by submitting an application.
Eugene F. Hovanec, CPA
NY
AAER-3591
10/23/2014
FL
Berman & Compa ny, P.A., and

Elliot Berman CPA
FL
AAER-3592
10/24/2014

a dministrative and cea se-and-desist
proceedings.
Elliot Berman and Berman & Co. shall cease and desist from committing or causing any violations and any future violations of Section
10A(j) and 13(a) of the Exchange Act, Rule 13a-1 promulgated thereunder, and Rule 2-02 of Regulation S-X. Berman & Co. is censured.
Elliot Berman is denied the privilege of appearing or practicing before the Commission as an accountant. After 1 year from the date of this
order, Elliot Berman may request that the Commission consider his reinstatement by submitting an application. The Commission will
Berman & Co. audited the financial statements o f Issuer A for the yea r ended December 31, 2011, as it had done for the consider an application by Elliot Berman to resume appearing or practicing before the Commission provided that his state CPA license is
prior five years. Berman & Co.s owner, Elliot Berman (Elliot) had been the lead partner for the Issuer A audit for the
current and he has resolved all other disciplinary issues with the applicable state boards of accountancy. However, if state licensure is
previo us five years. Accordingly, Elliot could no longer serve as the lead partner for the fiscal year (FY) 2011 audit.
dependent on reinstatement by the Commission, the Commission will consider an application on its other merits. The Commissions
Elliot appointed an employee at Berman & Co. (Employee A) as the nominal lead partner of the FY 2011 audit of Issuer review may include co nsideration of, in addition to the matters referenced above, any other matters relating to Elliot Berman s character,
A. Employee A was not a certified public accountant (CPA). Employee A was not otherwise qualified to be the lead
integrity, professional conduct, or qualifications to appear or practice before the Commission. Elliot Berman and Berman & Co. shall
partner. While Berman & Co. was registered in the State of Florida and with the Public Company Accounting Oversight
jointly and severa lly pay civil penalties of $15,000, to the Securities and Exchange Commission. Payment shall be made in the following
Board (PCAOB) to issue audits, relevant Florida statutes governing the practice of accounting in that state did not
installments:
permit Employee A to issue an audit opinion and Employee A was not qualified under the standards of the PCAOB to
Within 14 days of the issuance of this Order $3,750
express an opinion on the financial statements of a public company in an audit report. In addition, despite the
Commissions rule that he rotate off the engagement, Elliot performed certain services of a lead partner on the audit.
Performing these duties violated the rotation requirements of the Federal securities laws and the rules and regulations
thereunder. By appointing Employee A as nominal lead partner and by Elliots continued performance of certain lead
If any payment is not made by the date the payment is required by this Order, the entire outstanding balance of disgorgement,
partner duties, Berman & Co. and Elliot Berman engaged in improper professional conduct and willfully violated and
prejudgment interest, and civil penalties, plus any additio nal interest accrued pursuant to SEC Rule of Practice 600 or pursuant to 31
aided and abetted violations of the Federal securities laws and the rules and regulations thereunder.
U.S.C. 3717, shall be due and payable immediately, without further application.
IL
Great Lakes Dredge & Dock

Corporation
AAER-3593
10/27/2014

cease-and-desist proceedings.
During the second and third quarters of 2012, Great Lakes overstated revenue in its demolitio n segment. Specifically,
the demolition segment recorded revenue for pending change orders even though it did not have sufficient pro of of
customer acceptance of the pending change orders. The companys inadequate internal controls over revenue
recognition with respect to pending change orders on its demolition projects failed to prevent or detect these
misstatements. The revenue overstatements were discovered during the year-end 2012 audit process. A material
weakness in the companys system of internal control over fina ncial reporting failed to prevent or detect misstatements
of the companys financial statements for the quarterly and year-to-date periods ended June 30, 2012, and September
30, 2012. Specifically, the companys controls failed to capture and analyze timely and consistently pending change
orders in its demolition segment, largely as a result of inadequate accounting policies and procedures, inadequate
training of segment personnel, and insufficient monitoring by corporate a ccounting staff. In addition, by recognizing
certain pending change order revenue in its demolition segment without sufficient proof of customer acceptance, the
company did not comply with its accounting policies set forth in its annual Commission filings. Moreover, by overstating
revenue in its demolition segment, Great Lakes also materially overstated its net income for the second and third
quarters of 2012. Accordingly, Great Lakes violated Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and
Rules 12b-20 and 13a-13 thereunder, the reporting, books and- records, and internal co ntrols provisions of the federal
securities laws. Respondent Great Lakes Dredge & Dock Corporation is a Delaware corporation, headquartered in Oak
Pursuant to Section 21C of the Exchange Act, Respondent Great Lakes cease and desist from committing or causing any violations and any
Brook, Illinois, that in 2012 operated in two reportable segments: a dredging segment with both U.S. and foreign
future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder. Respondent
operations, which was responsible for 85% of the companys revenues; and a demolition segment with only U.S.
shall, within 30 days of the entry of this Order, pay a civil money penalty in the amount of $150,000 to the Securities and Exchange
operations, which was responsible for the remaining 15% of revenues.
Commission.
AAER-3594
11/3/2014

From approximately 2005 to 2010, subsidiaries of Bio-Ra d made unlawful payments in Vietnam a nd Thailand to obtain or
retain business. During the same perio d, Bio- Rads subsidiary paid certain Russian third parties, disregarding the high
probability that at least some of the money would be used to make unlawful payments to government officials in Russia.
With respect to Russia, one of Bio-Rads foreign subsidiaries paid three off-shore agents (the Russian Agents) for
alleged services in connection with sales of its medical diagnostic and life science equipment to government agencies.
These agents were not legitimate businesses, and despite receiving large commissions, they did not provide the
contracted-for services. In paying these a gents, Bio-Rads foreign subsidiary demonstrated a conscious disregard for the
high probability that the Russian Agents were using at least a portion of the commissions to pay foreign officials to obtain
profitable government contracts. The Genera l Manager (GM) of Bio-Rads Emerging Markets sub-division and the
Emerging Markets Controller, both employees of the parent company (collectively, the Emerging Markets managers)
ignored red flags, which permitted the scheme to continue for years. In Vietnam and Thailand, Bio-Rads foreign
subsidiaries used agents and distributors to funnel money to government officials. In total, Bio-Rad made $35.1 million in
illicit profits from these improper payments. In violation of Bio-Rads policies, Bio-Rads foreign subsidiaries did not record
the payments in their own books in a ma nner that would accurately or fairly reflect the transactions. Instead they booked Pursuant to Section 21C of the Exchange Act, Respondent Bio -Rad cease and desist from committing or causing any violations and any
them as commissions, advertising, and training fees. These subsidiaries books were consolidated into the pa rent
future violations of Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act; Respondent shall pay, within 10 days of the entry of
companys books and records. During the relevant period, Bio-Rad also failed to devise and maintain adequate internal this Order, disgorgement o f $35,100,000 and prejudgment interest of $5, 600,000 to the Securities and Exchange Commission.
accounting controls. Bio -Rad Laboratories, Inc. (Bio-Rad) is a co rporation organized under the laws of the state of
Respondent shall report to the Commission staff periodically, at no less than twelve-month intervals during a two-year term, the status of
Delaware. Bio-Ra ds corporate headquarters is Hercules, California.
its remediation and implementation of compliance measures.
AAER-3595
11/5/2014
This matter involves reinstatement.
On the basis of the information supplied, representations made, and undertakings agreed to by Blain, it appears that he has complied with
the terms of the September 19, 2008 order denying him the privilege of appearing or practicing before the Commission as an accountant,
that no information has come to the attention of the Commission rela ting to his character, integrity, professional conduct or qualifications
to practice before the Commission that would be a basis for adverse action against him pursuant to Rule 102(e) of the Commission's Rules
of Practice, and that Blain, by undertaking to have his work reviewed by the independent audit committee of any company for which he
works, or in some other manner accepta ble to the Commission, in his practice before the Commission as a preparer or reviewer of
On September 19, 2008, David Blain, CPA (Blain) wa s denied the privilege of appea ring or practicing as an accountant financial statements required to be filed with the Commission, and that Blain, by undertaking to comply with all requirements of the
before the Commission as a result of settled public administrative proceedings instituted by the Commission against
Commission and the Public Company Accounting Oversight Board, including, but not limited to, all requirements relating to registration,
Blain pursuant to Rule 102(e)(1)(iii) of the Commission's Rules of Practice.1 This order is issued in response to Blains
inspections, concurring partner reviews and quality control standards, in his practice before the Commission as an independent
application for reinstatement to practice before the Commission as an accountant.
accountant has shown good cause for reinstatement.
CA
Bio-Rad Laboratories, Inc.
PA
David Blain, CPA
TX
Dr. L.S. Smith
AAER-3596
11/12/2014

This case arises out of financial repo rting, boo ks and records, and internal controls violations by DGSE Companies Inc.
(DGSE) and its former Chief Financial Officer, I. John Benson (Benson), that occurred during Smiths tenure as DGSEs
Chief Executive Officer. These violations led to a number of accounting misstatements in DGSEs publicly-filed annual
and quarterly reports, which were caused by fraudulent accounting entries made or directed by Benson. As a result,
DGSE was required to restate its financial statements. The Commission does not allege that Smith participa ted in the
wrongful conduct. Smith has not, however, reimbursed DGSE for incentive compensation and stock sale profits he
received during the relevant period, as required by Section 304(a) of the Sarbanes-Oxley Act of 2002 (Sa rbanesPursuant to Section 21C of the Exchange Act, Respondent Smith cease and desist from committing or causing any violations and any
Oxley). Smith, age 67, was the Chairman of the Bo ard of Directors and Chief Executive Officer of DGSE from 1980 until future violations of Sarbanes-Oxley Section 304(a). Respondent shall, within thirty (30) days of the entry of this Order, reimburse DGSE a
2011.
total of $106,250 and 59,738 shares of DGSE stock pursuant to Section 304(a) of the Sarbanes-Oxley Act, 15 U.S.C. 7243.
NY
Linden Boyne
AAER-3597
11/14/2014

public administrative hearings.
Linden Boyne, age 71, is a British citizen and resident of Surrey, England. Beginning in 2003, he served as the chief
financial officer (CFO), secretary, and director of Electronic Game Card, Inc. (EGMI). On October 8, 2014, the U.S.
District Court for the Southern District of New York entered a final judgment against Boyne. The Commissions complaint
alleged that Boyne and others engaged in a fraudulent scheme through EGMI to reap approximately $12 million in
unlawful gains between 2006 and 2009. Throughout that period, Boyne while serving as EGMIs chief financia l officer
repeatedly misled the investing public about the companys operations and financial status. For example, he artificially
inflated EGMIs stock price by preparing and certifying materially false quarterly and annual financial statements that
were filed with the Commission and distributed to the investing public. Those filings overstated the value of, or omitted
material facts concerning, EGMIs assets, revenues, and investments and understated the number of common shares the
company had outstanding. While in control of EGMIs business and financial records, Boyne repeatedly provided false
information and falsified documents to EGMIs outside auditors. The Commissions complaint further alleges that, while Based upon the foregoing, the Commission finds that a court of competent jurisdiction has permanently enjoined Boyne from violating the
Boyne and EGMIs chief executive officer were making material misstatements to elevate EGMIs stock price, they were Federal securities laws within the meaning of Rule 102(e)(3)(i)(A) of the Commissions Rules of Practice. In view of these findings, the
also secretly a nd improperly funneling millions of shares of EGMI stock to Gibraltar-based entities they controlled. While Commission deems it appropriate and in the public interest that Boyne be temporarily suspended from appearing or practicing before the
he was a director and officer of EGMI who controlled more than 5% o f the companys co mmon stock, Boyne failed to file Commission. IT IS FURTHER ORDERED that Boyne may within thirty days after service of this Order file a petition with the Commission to
Schedules 13D and Forms 4 with the Commission that accurately reported his holdings and transactions in EGMI
lift the temporary suspension. If the Commission within thirty days after service of the Order receives no petition, the suspension shall
securities.
become permanent pursuant to Rule 102(e)(3)(ii).
MA, TX
Charles Elliot Smith, CPA
AAER-3598
11/14/2014

Smith, 57 years old, is a resident of Rockwall, Texas. He is the founder and coprincipal of Yo rkdale Capital, LLC
(Yorkdale), along with his brother Mark Smith. From 1983 to the present, Smith has also been a self-employed
accountant, doing business as Charles E. Smith, CPA. Smith obtained his CPA certificate in Massachusetts. He transferred
it to Texas in 1982. Smith previously held securities licenses, which are now expired. Smith has also served as an officer
and/or director of various penny stock issuers, and has participated in offerings of penny stocks. The Commissions
complaint alleged that, among other things, since at least 2006, Smith, along with his brother Mark Smith, Yorkdale and
other affiliates, formed and operated at least eight publicly-traded shell companies, caused four of those shell companies
to make offerings of penny stocks, and caused each of the shell companies to be sold through reverse merger
transactions, all without complying with the Commissions rules and regulations applicable to shell company registration
and reporting. The complaint further alleged that in connection with the offer, purchase and sale of securities of the shell
companies, Smith engaged in a fraudulent scheme and made and ca used to be made various materially false and
misleading statements that, among other things, hid his, his brother Mark Smiths, Yorkdales and/or various affiliates
control of the shell companies, missta ted the intended uses of proceeds from the securities offerings, misstated the ro le Accordingly, it is hereby ORDERED pursuant Section 15(b)(6) of the Exchange Act, Respondent Smith be, and hereby is barred from
of the named officers and directors of the companies and failed to disclose various compensation to be paid to Smith,
association with any broker, dea ler, investment adviser, municipa l securities dealer, municipal advisor, transfer agent, or nationally
Mark Smith, Yorkdale and their affiliates. The complaint further alleged that Charles Smith falsely applied the signature of recognized statistical rating organization with the right to apply for reentry a fter five years to the appropriate self-regulatory organization,
one of the shell companies chief executive o fficers to two Commission filings, without that officers consent or
or if there is none, to the Commission. It is further ORDERED pursuant to Rule 102(e)(3) of the Commissions Rules of Practice,
knowledge. The complaint further alleged that, in connection with the offer and sale of the shell companies securities, Respondent is suspended from appearing or practicing before the Commission as an accountant. After five years from the date of this
Smith acted as an unregistered broker and as an unregistered dealer.
order, Respondent may request that the Commission consider his reinstatement by submitting an application
PA
TX
AAER-3599
11/14/2014

Smith, 50 years old, is a resident of Allen, Texas. Since 2006, he has been a coprincipal of Yorkdale Capital, LLC
(Yorkdale) with his brother Charles Elliot Smith. From at least 2006 to the present, Smith has also been a self-employed
accountant, doing business under the name AM Group. Smith obtained his CPA certificate in Massachusetts in 1989,
which he kept current until 1991. He does not hold a CPA certificate or license in Texas. The Commissions complaint
alleged that, among other things, since at least 2006, Smith, along with his brother Charles Smith, Yorkdale and other
affiliates, formed and operated at least eight publicly-traded shell companies and caused four of the shell companies to
be sold through reverse merger transactions, all without complying with the Commissions rules and regulations
applicable to shell company registration and reporting. The complaint further alleged that Smith prepared filings with the
Commission, financial statements and communications to auditors tha t contained materially false or misleading
statements or omissions, including, among other things, fraudulent statements or omissions concerning control of the
shell companies by Smith, his brother Charles Smith, Yorkdale and/or their affilia tes, missta tements about the intended
uses of proceeds from the securities offerings, misstatements about the role of the named officers and directors o f the
Respondent is suspended from appearing or practicing before the Commission as an accountant. After three years from the date of this
companies, and omissions concerning the compensation to be paid to Smith, Charles Smith, Yorkda le and their affiliates. order, Respondent may request that the Commission consider his reinstatement by submitting an application.
AAER-3600
12/5/2014

proceedings.
This matter involves HRBS s accounting treatment in connection with the recording of its deferred tax asset (DTA) in
2009 and 2010. During 2009 and the first quarter of 2010, HRBS reco rded a large DTA without taking a significant
valuation allowance against it. 2 HRBS concluded that based on anticipated future earnings, the Company was more
likely than no t to realize its DTA within the applicable carry-forward period. This conclusion was unreasonable because
the financial projections underlying HRBSs projections of future earnings were not supportable based on the Companys
financial condition, including in particular the ongoing deterioration of its loan portfolio. HRBSs financial condition was
deteriorating by early 2010, and the Company was discussing remedial measures to address its problems. HRBS was
facing possible adverse regulatory consequences. In August 2010, HRBS amended its 2009 Form 10-K and first quarter
2010 Form 10-Q to include restated financial statements, reflecting a valuation allowance against the DTA, reducing the
reported DTA for 2009 from over $56 million to less than $400,000, and to $0 thereafter. In its restated Form 10-K for
2009, HRBS reported that it was undercapitalized a s of December 31, 2009, as opposed to adequately capitalized, as
originally reported. Similarly, in its restated Form 10-Q for the first quarter of 2010, HRBS reported that it was
HRBS cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B)
significantly undercapitalized, rather than undercapitalized as originally reported. Accordingly, HRBS violated the
of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. HRBS shall, within 10 days of the entry of this Order, pay a civil
reporting, books and records and internal controls provisions of the Exchange Act.
money penalty in the amount of $200,000 to the Securities and Exchange Commission.
VA
AAER-3601
12/5/2014

proceedings.
This matter involves the accounting treatment by Hampton Roads Bankshares, Inc. (HRBS or the Company) in
connection with the recording of its deferred tax asset (DTA) in 2009 and 2010. Petrovich was the Chief Financial Officer
of HRBS from February 2009 through May 2010. During 2009 and the first quarter of 2010, HRBS recorded a large DTA
without taking a significant valuation allowance against it. 2 HRBS, relying on an analysis performed under Petrovichs
direction, concluded that based on anticipated future earnings, the Company was more likely than not to realize its
DTA within the applicable carry-forward period. This conclusion was unreasonable because the financial projections
underlying HRBSs projections of future earnings were not supportable based on the Companys financial condition,
including in particular the ongoing deterioration of its loan portfolio. HRBSs financial condition was deteriorating by early
2010, and the Company was discussing remedial measures to address its problems. HRBS was facing possible adverse
regulatory consequences. In August 2010, HRBS amended its 2009 Form 10-K and first quarter 2010 Form 10-Q to
include restated financial statements, reflecting a valuation allowance against the DTA, reducing the reported DTA for
2009 from over $56 million to less than $400,000, and to $0 thereafter. In its restated Form 10-K for 2009, HRBS reported
that it was undercapitalized as of December 31, 2009, as opposed to adequately ca pitalized, as originally reported.
Similarly, in its restated Form 10-Q for the first quarter of 2010, HRBS reported that it was significantly
undercapitalized, rather than undercapitalized as originally reported. Accordingly, Petrovich was a cause of HRBSs
violations of the reporting, books and records and internal controls provisio ns of the Exchange Act. Neal Petrovich, 52, is
a resident of Chesapeake, Virginia, and was HRBSs Executive Vice President and CFO from February 2009 through May Petrovich shall, within 10 days of the entry of an Order, make a payment in the nature of a penalty in the amount of $25,000 to the
2010. On May 13, 2010, Petrovich informed HRBS of his intention to end his employment with HRBS effective June 4,
Securities and Exchange Commission. it is hereby ORDERED that: Petrovich cease and desist from committing or causing any violations
2010, and he left the company on that date. Petrovich is currently employed as Senior Vice President Finance with a
and any future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13
publicly traded financial services company in the area. He is a licensed CPA in Virginia.
thereunder.
TX
S.W. Hatfield, CPA and Scott W.

TX
Hat field, C PA
AAER-3602
12/5/2014
T his matter involves an opinion on a

cease-and-desist proceeding.
The Division of Enforcement appeals from the decision of an administrative la w judge dismissing a proceeding brought
pursuant to Sections 4C(a)(1) and (3), 21B, and 21C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(i) and (iii)
of the Commission's Rules of Practice and based on allegations that Respondents willfully violated the antifraud
provisions of the federal securities laws.1 The law judge found that the Division failed to allege that S.W. Hatfield, CPA
("the Firm"), a Texas accounting firm, and Scott W. Hatfield, the Firm's sole proprietor (together, "Respondents"), made
ORDER IMPOSING REMEDIAL SANCT IONS
misrepresentations with respect to certain audit reports that Respondents issued while the Firm was not in possession of On the basis of the Commission's opinion issued this day, it is ORDERED that S.W. Hatfield, CPA and Scott W. Hatfield, CPA are
a state license to do so. Accordingly, the law judge fo und that there was no basis for sanctioning Respondents. We base permanently denied the privilege of appearing or practicing before the Commission as accountants; and it is further ORDERED that S.W.
our findings on an independent review of the record, except with respect to those findings not challenged on appeal. We Hatfield, CPA and Sco tt W. Hatfield, CPA cease and desist from committing or causing any viola tions or future violations of Exchange Act
find that the legal conclusions on which the law judge ba sed her dismissal were incorrect. We further find that the
Section 10(b) and Rule 10b-5 thereunder; and it is further ORDERED that S. W. Ha tfield, CPA and Scott W. Hatfield, CPA, jointly and
Division met its burden under Rule of Practice 250 to show that "there is no genuine issue with regard to any material
severally, disgorge $112,529, plus prejudgment interest of $18,469.78, such prejudgment interest calculated beginning from March 1,
fact" and that it "is entitled to a summary disposition as a matter of law." We find that Respondents willfully violated the 2010, in accordance with Commission Rule of Practice 600; and it is further ORDERED that S. W. Hatfield, CPA and Scott W. Hatfield, CPA
antifraud provisions and that certain sanctio ns are in the public interest.
pay a civil monetary penalty of $110,500, for which they are jointly and severally liable.
http ://www.se c. gov/lit iga ti on/ opi nio ns/2014 /34-737 63. pdf
MO
BKD, LLP
AAER-3603
12/8/2014

public administrative and cease-anddesist proceedings.
This matter concerns violations of the Commissions auditor independence rules by BKD. BKD audited the annual
financial statements that were filed with the Commission for 21 broker dealer audit clients for the fiscal years 2010,
2011, and/or 2012. For at least one audit of nine of these broker-dealer audit clients, BKD was not independent under
auditor independence criteria established by the Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to
audits of bro kers and dealers. As a result o f this conduct, BKD engaged in improper professional conduct, vio lated the
auditor independence rules, and caused each of the broker-dealers failure to file an a nnual report audited by an
independent accountant. Respondent BKD, a limited liability partnership, is an accounting and auditing firm registered
with the Public Company Accounting Oversight Board (PCAOB). BKD has 245 partners and roughly 1,200 additional
professional staff located in 34 offices in 15 states, with its principal office in the state of Missouri.
IL
Robert Cooper, Company and

CPA PC
IL
AAER-3604
12/8/2014
This matter concerns violations of the Commissions auditor independence rules by Cooper. Cooper audited the annual
financial statements that were filed with the Commission for twelve broker-dealer audit clients for the fiscal years 2010,
2011, and/or 2012. For the 2011 audit of one of these broker-dealer audit clients, Cooper was not independent under
audits of bro kers and dealers.4 As a result of this conduct, Cooper engaged in improper professional conduct, violated
the auditor independence rules, and caused the broker-dealers failure to file an annual report audited by an
T his matter involves and order instituting independent accountant. Respondent Cooper, a professional corporation, is an accounting and auditing firm registered
public administrative and cease-andwith the Public Company Accounting Oversight Board (PCAOB). Cooper has o ne partner, Robert Cooper, who is located Cooper is hereby censured. Cooper shall cease and desist from committing or causing any violations and any future violations of Section
desist proceedings.
in an office in Chicago, Illinois.
17(a) of the Exchange Act and Rule 17a-5 promulgated thereunder. Cooper shall comply with the undertakings
CA
Joseph Yafeh CPA, Inc.
CA
AAER-3605
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by Yafeh. Yafeh audited the annual
financial statements that were filed with the Commission for approximately 22 broker-dealer audit clients for the fiscal
years 2010, 2011, and/or 2012. For at least one of the audits of those clients during that time period, Yafeh was not
independent under auditor independence criteria established by the Commission and made applicable by Exchange Act
Rule 17a-5(f)(3) to audits o f brokers and dealers. 4 As a result of this conduct, Yafeh engaged in improper professional
Yafeh is hereby censured. Yafeh shall cease and desist from committing or causing any violations and any future violatio ns of Section 17(a)
conduct, violated the auditor independence rules, and caused each of the broker-dealers failure to file an annual report of the Exchange Act and Rule 17a-5 promulgated thereunder. Yafeh shall comply with the undertakings enumerated in Section (III)(C)(5)
audited by an independent accountant. Respondent Yafeh, a professional corporation, is an accounting and auditing firm above. Yafeh shall pay civil penalties of $20,000 to the Securities and Excha nge Commission. Payment shall be made in the following
registered with the Public Company Accounting Oversight Board (PCAOB) with its office in Los Angeles, California. Yafeh installments: $10,000 within ten days of the entry of this Order and $10,000 in three quarterly installments o f $3,333.33 beginning 120
has one professional staff member, plus one administrative staff member.
days after the entry of the Order and continuing thereafter at 120-day intervals until the three quarterly payment schedule is complete.
PA
Lally & Co., LLC
AAER-3606
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by Lally. Lally audited the annual
financial statements that were filed with the Commission for ten broker-dealer audit clients for the fiscal years 2010,
2011, and/or 2012. For at least one of the audits of seven of those clients during that time period, Lally was not
Rule 17a-5(f)(3) to audits o f brokers and dealers. 4 As a result of this conduct, Lally engaged in improper professional
conduct, violated the auditor independence rules, and caused each of the broker-dealers failure to file an annual report
audited by an independent accountant. Respondent Lally, a limited liability company, is an accounting and auditing firm Lally is hereby censured. Lally shall cease and desist from committing or causing any violations and any future violations of Section 17(a)
registered with the Public Company Accounting Oversight Board (PCAOB) with its office in Pittsburgh, Pennsylvania.
of the Exchange Act and Rule 17a-5 promulgated thereunder. Lally shall comply with the undertakings enumerated in Section (III)(C)(5)
Lally has thirty professional staff plus six administrative staff.
above. La lly shall within ten days o f the entry of this Order pay a civil penalty of $10, 000 to the Securities and Exchange Commission.
NH
Brace & Associates, PLLC
NH
AAER-3607
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by Brace. Brace audited the annual
financial statements that were filed with the Commission for 20 broker-dealer audit clients for the fiscal years 2010
through 2012. Fo r at least one audit for two of these broker-dealer audit clients during that time period, Brace was not
Rule 17a-5(f)(3) to audits o f brokers and dealers. 4 As a result of this conduct, Brace engaged in improper professional
conduct, violated the auditor independence rules, and caused each of the broker-dealers failure to file an annual report
audited by an independent accountant. Respondent Brace, a professional company, is an accounting and auditing firm
registered with the Public Company Accounting Oversight Board (PCAOB) with its office in Londonderry, New
Brace is hereby censured. Brace shall cease and desist from committing or causing any violations and any future violations of Section
Hampshire. Brace is a solo practitioner with no administrative staff.
17(a) of the Exchange Act and Rule 17a-5 promulgated thereunder. Brace shall comply with the undertakings.
CA
Boros & Farrington Account ancy

CA
Corporation
AAER-3608
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by Boros & Farrington. Boros &
Farrington audited the annual financial statements that were filed with the Commission for 26 broker-dealer audit clients
for the fiscal years 2010, 2011, and/or 2012. For at least one audit of each of these broker-dealer audit clients, Boros &
Farrington was not independent under auditor independence criteria established by the Commission and made
applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers.4 As a result of this conduct, Boros &
Farrington engaged in improper professional conduct, violated the auditor independence rules, and caused each of the Boros & Farrington is hereby censured. Boros & Farrington shall cease and desist from committing or causing any violations and any future
broker-dealers failure to file an annual report audited by an independent accountant. Respondent Boros & Farrington, a violations of Section 17(a) of the Exchange Act a nd Rule 17a-5 promulgated thereunder. Boros & Farrington shall comply with the
professional corporation, is a n accounting and auditing firm registered with the Public Company Accounting Oversight
undertakings enumerated in Section (III)(C)(5) above. Boros & Farrington shall, within seven days of the entry of this Order, pay a civil
Board (PCAOB). Boros & Farrington has two partners and two professional staff located in San Diego, Califo rnia.
money penalty in the amount of $30,000 to the Securities and Exchange Commission.
TX
Mark Smith, CPA
VA
Hampton Roads Bankshares,

Inc.
VA
Neal A. Petrovich, CPA
TX
BKD is hereby censured. BKD shall cease and desist from committing or causing any violations and any future violations of Section 17(a)
of the Exchange Act and Rule 17a-5 promulgated thereunder. BKD shall comply with the undertakings. BKD shall, within seven days of the
entry of this Order, pay a civil money penalty in the amount of $15, 000 to the Securities and Exchange Commission.
CA
OUM & Co. LLP
CA
AAER-3609
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by OUM. OUM audited the annual
financial statements that were filed with the Commission for six brokerdealer audit clients for the fiscal years 2010,
2011, and/or 2012. For at least one audit of four of these broker-dealer audit clients, OUM was not independent under
audits of bro kers and dealers.4 As a result of this conduct, OUM engaged in improper professional conduct, violated the
auditor independence rules, and caused each of the four broker-dealers failure to file an annual report audited by an
OUM is hereby censured. OUM shall cease and desist from committing or causing any violations and any future violations of Section 17(a)
independent accountant. Respondent OUM, a limited liability partnership, is an accounting and auditing firm registered of the Exchange Act and Rule 17a-5 promulgated thereunder. OUM shall comply with the undertakings enumerated in Section (III)(C)(5)
with the Public Company Accounting Oversight Board (PCAOB). OUM has 11 partners and 54 professional staff located above. OUM shall, within seven days of the entry of this Order, pay a civil money penalty in the amount of $10,000 to the Securities and
in three offices located in California.
Exchange Commission.
NY
Lerner & Sipkin CPAs LLP
FL
AAER-3610
12/8/2014

This matter concerns violations of the Commissions auditor independence rules by Lerner. Lerner audited the annual
financial statements that were filed with the Commission for 74 brokerdealer audit clients for the fiscal years 2010, 2011,
and/or 2012. For at least one audit of approximately 70 of these broker-dealer audit clients, Lerner was not independent
under auditor independence criteria established by the Commission and made applicable by Exchange Act Rule 17a-5(f)
(3) to audits of brokers and dealers. 4 As a result of this conduct, Lerner engaged in impro per professional conduct,
Lerner is hereby censured. Lerner shall cease and desist from committing or causing any violations and any future violations of Section
violated the auditor independence rules, and caused each of the approximately 70 broker-dealers failure to file an
17(a) of the Exchange Act and Rule 17a-5 promulgated thereunder. Lerner shall comply with the undertakings enumerated in Section (III)
annual report audited by an independent accountant. Respondent Lerner, a limited liability partnership, is an accounting (C)(5) above. Respondent shall pay civil penalties of $55,000 to the Securities and Exchange Commission. Payment shall be made in the
and auditing firm registered with the Public Company Accounting Oversight Bo ard (PCAOB). Lerner has two partners
follo wing installments: $25,000 to be paid within seven days of entry of the Order; $10,000 to be paid within 120 days of entry of the
and three additional professional staff located in one office in the state of New York.
Order; $10,000 to be paid within 240 days of entry of the Order; and $10,000 to be paid within 360 days of entry of the Order.
MA
Bruker Corporation
AAER-3611
12/15/2014

This matter concerns violations of the books and records and internal controls provisions of the Foreign Corrupt Practices
Act (FCPA) by Bruker. T he violations took place from at least 2005 through 2011 and occurred throughout Brukers
China operations. Employees of the China offices of four Bruker subsidiaries (collectively, the Bruker China Offices)
made unlawful payments of approximately $230,938 to government officials (Chinese government officials) who were
emplo yed by state owned entities (SOEs) in China that were Bruker customers. These payments were made to obtain
or retain business from the SOEs for the Bruker China Offices. Specifically, all of the Bruker China Offices provided nonbusiness related travel to Chinese government officials, and one Bruker China Office also paid Chinese government
officials under research cooperation ventures and collaboration agreements (collectively, the Collaboration
Agreements) for which there was no legitimate business purpose. Bruker rea lized approximately $1.7 million in profits
from sales contracts with SOEs whose officials received the improper payments. The payments to the Chinese
government officials were recorded as legitima te business and marketing expenses in the Bruker China Offices books
and records, when in fact they were improper payments designed to personally benefit the officia ls. The Bruker China
Offices books and records were consolidated into Brukers books and records, thereby causing Brukers books and
Pursuant to Section 21C of the Exchange Act, Respondent Bruker cease and desist from committing or causing any violations and any
records to be inaccurate. Bruker failed to devise and maintain an adequate system of internal accounting controls
future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Respondent shall, within ten (10) days of the entry of this
sufficient to prevent and detect the improper payments that occurred over several years. Bruker Corporation is a
Order, pay $2,399,969 to the United States Treasury, including $1,714, 852 in disgorgement, $310,117 in prejudgment interest, and a civil
Delaware corporation with its headquarters in Billerica, Massachusetts. Bruker designs, manufactures, and ma rkets
monetary penalty of $375,000. Respondent acknowledges that the Commission is not imposing a civil penalty in excess of $375,000
analytical tools and life science and materials research systems (e.g., infrared spectrometers and microscopes) and
based upon its cooperation in a Commission investigation and related enforcement action. If at any time following the entry of the Order,
maintains operations in North America, Europe, and China. Bruker manages its China operations through the Shanghai
the Division of Enforcement (Division) obtains information indicating that Respondent knowingly provided materially false or misleading
and Beijing representative offices of the Asia-based subsidiaries of four Bruker divisions: Bruker Optics, Bruker BioSpin, information or materials to the Commission or in a related proceeding, the Division may, at its sole discretion and with prior notice to the
Bruker Daltonics, and Bruker Materials (formerly Bruker AXS). Brukers common stock is registered with the Commission Respondent, petition the Commission to reopen this matter and seek an order directing that the Respondent pay an additional civil
pursuant to Section 12(g) of the Exchange Act and is listed on the NASDAQ Global Select Market (ticker: BRKR).
penalty.
BDO China Dahua CPA Co., Lt d.

Deloit te Touche Tohmat su
Cert if ied Public Accountant s Lt d.
Ernst & Young Hua Ming and LL P
KPMG Huazhen (Special General
Partnership)
PricewaterhouseC oopers Zhong
Tian CPAs Limit ed
AAER-3612
12/15/2014
On December 12, 2014, Respondents Ernst & Young Hua Ming LLP, KPMG Huazhen (Special General Partnership), Deloitte
Touche Tohmatsu Certified Public Accountants, Ltd., Pricewaterhousecoopers Zhong Tian CPAs Limited (collectively the
Big Four Respondents), and the Division of Enforcement (Division), jointly requested an approximately 70-day
extension to the briefing schedule set by the Commission by order dated October 22, 2014.1 The Division represents
that Respondent BDO China Dahua CPA Co., Ltd. agrees with the proposed extension. In support of their motion, the
Division and the Big Four Respondents state that, the substantial progress already made towa rds settlement has
increased significantly; however, the multi-party nature of the negotiations, the importance, complexity and sensitivity of
the matters under discussion, and the legal and cross-border regulatory issues presented have continued to require
significant time and care to discuss. The Division and Big Four Respondents now anticipate that this will be the final
extension request. The parties jointly seek an additional extension of all briefing schedules of approximately 70-days.
Extensions of time are disfavored. It appears appropriate, however, to grant the requested extension.
CA
Canadian Solar, Inc. and Yan

Zhuang
CA
AAER-3613
12/15/2014

This matter arises from Canadian Solars violations o f the reporting, books and records, and internal controls provisions
of the Exchange Act resulting from CSIs recognition of revenue for certain transactions with United States (U.S.)
customers during the second, third, and fourth quarters of 2009 even though certain criteria for revenue recognition had
not been met. Yan Zhuang, CSI s Vice President of Global Sales and Marketing during the relevant period, was a cause of
CSIs violations. In addition, by directing a customer to make certain revisions to purchase orders, Zhuang also violated
Section 13(b)(5) of the Exchange Act. Canadian Solar, Inc. is a Canadian corpora tion headquartered in Ontario that
designs, develops, manufactures and markets solar power products. Canadian Sola r has its principal place of business in
Suzhou, Peoples Republic of China (PRC), and has a U.S. head office and customer center in San Ramon, California.
Canadian Solar is a foreign private issuer of securities registered with the Commission pursuant to Section 12(b) of the Respondent Canadian Solar cease and desist from committing or causing any violations and any future viola tions of Section 13(a) and
Exchange Act and quoted on NASDAQ under the ticker symbol CSIQ. Yan Zhuang, age 49, is a resident of the PRC.
Sections 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20 and 13a-16 thereunder. Respondent Yan Zhuang cease and desist from
Zhuang has been Senior Vice President and Chief Commercial Officer of Canadian Solar since May 2012. From July 2011 committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(5) of the Exchange Act and Rules
until May 2012, Zhuang was Senior Vice President of Global Sales and Marketing. From June 2009 until July 2011, and
12b-20 and 13a-16 thereunder. Within 30 days of the entry of this Order:
during the relevant period, Zhuang was Vice President of Global Sales and Marketing. From September 2007 until June
Respondent Canadian Solar shall pay to the United States Treasury a civil money penalty in the amount of $500,000; Respondent Yan
2009, Zhuang was an independent director of CSI.
Zhuang shall pa y to the United States Treasury a civil money penalty of $50,000.
FL
Angel E. Lana, CPA
FL
AAER-3614
12/16/2014

Lana, age 56, is a resident of Boca Raton, Florida. He is a certified public accountant (CPA) licensed to practice in the
State of Florida since 1981. Lana has worked as a sole practitioner since 1986, a nd has performed accounting work for
several public companies. Lana also has an affiliation with an accounting firm that represents public companies. From
May 2011 to 2014, Lana served as Chief Financial Officer (CFO) of Aurum Mining, LLC (Aurum). Lana was also one of Lana shall cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act. Lana
three managers of Aurum and was to receive an aggregate compensation of $288,000 for his services to Aurum during is denied the privilege of appearing or practicing before the Commission as an accountant. After five years from the date of this order,
the relevant period, which remains unpaid. Lana was negligent in soliciting investors for Aurum using materially false
Respondent may request that the Commission consider his reinstatement by submitting an application. Respondent shall pay a civil
and misleading documents. Lana was the CFO and a mana ger of Aurum, and he participated in the review and approval penalty of $50, 000. Respondent acknowledges that the Commission is not imposing a civil penalty in excess of $50,000 based upon his
of Aurum s offering documents. As a result, Lana knew or should have known about Crows bankruptcy and previous
agreement to cooperate in a Commission investigation and/or related enforcement actio n. If at any time following the entry of the Order,
securities laws violations, Aurums failures in Brazil, and Crow and Clugs use of the offering proceeds to benefit
the Division of Enforcement (Division) obtains information indicating that Respondent knowingly provided materially false or misleading
themselves in spite of Aurums failures in Brazil. Due to these red flags, Lana should have investigated whether the
information or materials to the Commission or in a related proceeding, the Division may, at its sole discretion and with prior notice to the
offering documents he used to solicit investors for Aurum contained inaccurate or misleading representations. Lana
Respondent, petition the Commission to reopen this matter and seek an order directing that the Respondent pay an additional civil
failed to do so.
penalty.
Baker Tilly, a PCAOB-registered audit firm located in Hong Kong, was retained to audit the December 31, 2009, financial
statements of China North East Petroleum Holdings Limited (CNEP), a Nevada corporation with operations exclusively
in the Peoples Republic of China (China). During that audit, from January 2010 until at least September 2010, Baker
Tilly and two of its directors (the equivalent of a partner at a U.S. firm), Ross and Kwok, engaged in improper professional
conduct, including violations of PCAOB auditing standards, with regard to material related-party transactions among
CNEP, its Chief Executive Officer (CEO), Wang Hongjun (Wang), the CEOs mother, Ju Guizhi (Ju), and others.
Respondents also violated Section 10A(a)(2) of the Exchange Act, dealing with audit procedures to identify related-party
transactions. During the course of the CNEP audit, Respondents were advised that CNEP had engaged in 176 rela tedparty transactions totaling over $59 million in 2009. Respondents also encountered numerous red flags suggesting that
these related-party transactions involved a high risk of fraud, e.g., the chairman of CNEPs Audit Committee resigned due
to concerns relating to these transactions, and Baker Tilly itself determined that CNEPs internal controls relating to such
transactions were seriously deficient. Respondents, however, failed to plan and implement an appropriate audit response Baker Tilly, Ross, and Kwok shall cease and desist from committing or causing any violations and any future violations of Section 10A(a)(2)
to these related-party transactions in compliance with PCAOB standa rds. Further, contrary to generally accepted
of the Exchange Act. Baker Tilly is censured. Ross and Kwok are denied the privilege of appearing or practicing before the Commission as
accounting principles in the United States of America (U.S. GAAP), CNEPs December 31, 2009 financial statements did accountants. After three years from the date of this order, Ross and/or Kwok may request that the Commission consider their
not disclose the related-party transa ctions other than as a single entry showing a small, net ba lance due to the CEO.
reinstatement by submitting an application. Ba ker Tilly shall, within 30 days of the entry of this Order, pay disgorgement of $75,000,
Nonetheless, Ba ker Tilly issued an audit report conta ining an unqualified opinion regarding CNEP s 2009 financial
which represents profits gained as a result of the conduct described herein, and prejudgment interest of $9,101 to the Securities and
statements. That report, which Respondents knew would be filed with the company s 2009 Form 10-K, inaccurately
Exchange Commission. If timely payment is no t made, additional interest shall accrue pursuant to SEC Rule of Practice 600. Ross and
stated that the audit had been conducted in accordance with PCAOB standards and that CNEPs financial statements
Kwok shall, within 30 days of the entry of this Order, pay civil money penalties in the amounts of $20,000 and $10,000, respectively, to
fairly presented the company s position and results in conformity with U.S. GAAP.
the Securities and Exchange Commission.
NY
Baker Tilly Hong K ong Limited,

et al.
AAER-3615
12/17/2014

Avon Products, Inc.
AAER-3616
12/17/2014
T his matter involves a charge of FCPA

violations
The Securities and Exchange Commission today charged Avon Products, Inc. (Avon), a global beauty products
Avon consented to the entry of a proposed final judgment ordering the company to pay disgorgement of $52,850,000 in benefits resulting
manufacturer and seller, with failing to put in place controls that could have detected and prevented payments made to from the alleged misconduct, plus prejudgment interest of $14,515,013.13, permanently enjoining the company from violating Exchange
Chinese government officials by employees and consultants at an Avon Chinese subsidiary from 2004 through the third Act Sections 13(b)(2)(A) and 13(b)(2)(B), and requiring the company to retain an independent compliance monitor to review its FCPA
quarter of 2008. In addition, Avon's books and records failed to accurately record the details a nd purpose of the
compliance program for a period of 18 months, followed by an 18-month period of self-reporting on its compliance efforts. The settlement
payments. The SEC alleged that the conduct violated the Foreign Corrupt Practices Act (FCPA). Avon has agreed to pay
is subject to the a pproval of the U.S. District Court for the Southern District of New York.
more than $67 million in disgorgement and prejudgment interest to settle the SEC's charges.
In reaching the proposed settlement, the SEC took into account Avon's cooperation and significant remedial measures, including its
The SEC's complaint alleges that the Chinese subsidiary made $8 million worth of payments in cash, gifts, travel, and
implementation of an enhanced compliance program a nd worldwide FCPA training.
entertainment to various Chinese officials to gain access to officials dra fting and implementing direct selling regulations
in China, to be among the first allowed to test the regulations, to be the first to receive a direct selling license, and,
In related criminal proceedings, the U.S. Department of Justice and the United States Attorney's Office for the Southern District of New
subsequently to keep the clean corporate image required to retain the license. Avon received approval to test direct
York today announced a deferred prosecution agreement with Avon and criminal charges against Avon's Chinese subsidiary. Avon entities
selling in China in 2005, and in March 2006, it received the first direct selling business license.
agreed to pay over $67 million in criminal penalties in connection with those proceedings.
http ://www.se c. gov/lit iga ti on/ litreleases/201 4/lr2 3159.htm
Frank A. Dunn, et al.
AAER-3617
12/19/2014
This matter involves a dismissal.
On December 19, 2014, the Securities and Exchange Commission filed Stipulations of Dismissal that dismiss with
prejudice all claims against the remaining five defendants in SEC v. Dunn, et al., Civil Action No. 07 CV 2058 (S.D. N. Y.) -Frank A. Dunn, Douglas C. Beatty, Michael J. Gollogly, MaryAnne E. Pahapill (a.k.a. Mary Anne Poland), and Douglas A.
Hamilton -- arising out of their alleged role in accounting misconduct at Nortel Networks Corporation. The Commission's
case, filed in 2007, has been stayed since 2009. In January 2013, a Canadian court acquitted Dunn, Bea tty and Gollogly The dismissals filed today conclude the Commission's litigation in this matter. The distribution of the Fair Fund established in 2009 from
of all criminal charges brought against them for the same earnings management allegations charged by the Commission. the Commission's related enforcement actions, which consists o f approximately $35 million, is nearly complete.
http ://www.se c. gov/lit iga ti on/ litreleases/201 4/lr2 3165.htm
AAER-3618
12/23/2014
On December 23, 2014, Thomas D. Melvin, CPA (Respondent) requested an extension to file a brief in support of the
petition for review. Respondent represents that the Division consents to this request. The briefing schedule in this matter
ordered Respondent to file his brief in support of the petition for review by December 26, 2014, with a brief in opposition
Extensions of time are disfavored. It appears appropriate, however, to grant an extension.
due January 26, 2015, and the reply brief, if any, by February 9, 2015.
http://www.sec.gov/litigation/admin/2014/34-73931.pdf
Facts
Link
Thomas D. Melvin, CPA
GA
SEC Litigation Releases

2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
Possible Licensure
Jurisdictions Based
on ALD Search (May
Confirm - middle
name, DOB, SSN,
etc.)
Release Number
Conclusions
The SEC's Complaint alleges that fro m March 2009 through December 2010, Villarreal conducted a fra udulent offering,
known as Fund III, which raised $9.2 million from 46 investors. According to the complaint, Villarreal told investo rs tha t
their money was to be used to make private equity investments in companies in the petroleum, steel, and other
industries in Mexico. Villarreal lied to these investors about the success of a previous fund he operated, lied in saying
that he used their money to purchase and profitably operate a Mexican pipeline manufacturer, and lied by telling
investors that Fund III had ownership interests in several U.S. and Mexican drilling companies. Villarreal instead used
$7.4 million of Fund III assets to trade in publicly traded securities in a brokerage account-contrary to his representations
to investors-and sustained heavy losses, and also stole $5.8 million for himself. By November 2011, Fund III was
essentially insolvent.
The Commission's complaint also alleges that, between August 2010 and March 2011, Villarreal conducted a second
fraudulent offering, known as the Standard Asset Management Fund I, ("SAM Fund"), which raised $9 million from 11
investors, six of whom had previously invested in Fund III. According to the complaint, Villarreal told these investors that
the SAM Fund would invest in companies listed on the Mexican stock exchange. Villarreal made numerous
misrepresentations to these investors. Among o ther things, Villarreal repeated his earlier lies about Fund II and Fund III's
purported acquisitio n and profitable operation of a Mexican pipeline manufacturer, he stole at least $327,000 of SAM
Fund assets, and Villarreal's trading was a massive failure, resulting in an 83% loss for the SAM Fund.
OH
Oscar F. Villarreal
TX
LR-23102
10/1/2014
This matter involves an indictment.
The complaint also alleges that Villarreal defrauded the SAM Fund investors between March 2012 and May 2012 by
offering to "exchange" limited partnership units he claimed he owned in Fund III for the SAM Fund investors' limited
partnership units in the SAM Fund. Eight SAM Fund investors accepted Villarreal's offer and exchanged their SAM Fund
The SEC's Complaint alleges that Villarreal violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange
units, which they had purchased for a total of $3.1 million. Villarreal, however, lied about the number o f Fund III limited Act of 1934 and Rule 10b-5 thereunder, Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8
partnership units he owned and the value of the Fund III units. Villarreal did not disclose to these investors tha t the Fund thereunder. The Commission's complaint seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and
III limited partnership units were worthless.
civil penalties.
http://www.sec.gov/litigation/litreleases/2014/lr23102.htm
IL, FL
Patrick G. Rooney, John R.

Rooney, and Positron
Corporation
GA (Patrick)
LR-23103
10/3/2014
This matter involves a civil injunction.
According to the SEC's complaint filed in the United States District Court for the Southern District of Florida, Positron
Corporation, Patrick Rooney, and John Rooney, engaged in market manipulation fraud in which they made an inducement
payment to a stock promoter who would purchase shares of Positron in the open market ahead of planned press releases
to help them manipulate the stock. The SEC alleges that the scheme was designed to generate the appearance of
The SEC's complaint alleges that the defendants violated Section 10(b) of the Securities Excha nge Act of 1934 and Rules 10b-5(a) and
market activity in the company's stock to induce investors to purchase the stock and a rtificially increase the trading price 10b-5(c). The SEC is seeking permanent injunctions and civil money penalties against all three defendants, as well as penny stock bars
and volume.
against both Patrick and John Ro oney and an officer-and-director bar against Patrick Rooney.
This matter involves an injunction.
In its case, the SEC alleged Battoo was a hedge fund manager who defrauded numerous investors located worldwide by
claiming to achieve exceptional risk-adjusted returns while concealing huge losses suffered by his asset management
The Securities a nd Exchange Commission announced today that, on September 30, 2014, Judge Edmond E. Chang, of the U.S. District
operation and his misappropriation of investor funds to pay for his flamboyant lifestyle. By 2012, Battoo and his BC
Court for the Northern District of Illinois, Eastern Division, in Chicago, Illinois, issued an Order and Final Judgment by default, imposing
Capital entities had raised more than $400 million from investors, including more than $200 million from U.S.-based
sanctions against defendants Nikolai Battoo and two companies he controlled, BC Ca pital Group S. A. (Panama) and BC Capital Group
investors. According to the SEC, Battoo's fraud began by at least 2008, when he incurred major losses caused by a failed Limited (Hong Kong). Judge Chang imposed permanent injunctions against Battoo and his two BC Capital companies and ordered them to
derivative investment program and leveraged investments in Madoff feeder funds. Rather than disclose the losses to
pay $290, 129,196.86 in disgorgement and prejudgment interest. Judge Chang also ordered Battoo and his two BC Capital companies to
investors, Battoo hid them. From at least 2008, Battoo ca used fraudulent account statements to be sent to investors,
pay a civil penalty totaling $68 million, concluding that such a penalty was appropriate "because of the sheer enormity of the fraud, both
their auditors, and others that concealed the massive losses and grossly misstated the existence and value of nearly all in dollar figure and number of investo rs. There must be a substantial penalty both to punish the Battoo Defendants, and to deter others
of the investments in those accounts. According to the SEC, Battoo also misappropriated at lea st $49 million o f investor from committing fraud on this scale." In total, the disgorgement, prejudgment interest, and penalty imposed, jointly and severally, on
http://www.sec.gov/litigation/litreleases/2014/lr23104a.htm
funds so that he could live the high life during his scheme.
Battoo and his two BC Capital companies totaled $358,129,196.86.
Nikolai Battoo, BC Capital

Group S. A. (Panama), BC
Capital Group Limited (Hong
Kong), and Tracy Lee
Sunderlage
LR-23104
10/6/2014
Puglisi, et al.
LR-23105
10/6/2014
This matter involves a subpoena.
The Securities and Exchange Commission announced today that, o n September 30, 2014, it filed a subpoena
enforcement action in the U.S. District Court for the Eastern District of Pennsylvania against John Puglisi, Progressive
Capital Solutions LLC, and others. Puglisi and Progressive are defendants in a state court litigation brought by CMS Life
Insurance Opportunity Fund, L.P. (which is also a respondent in the subpoena enforcement action) and CNF II Partners, in
which it is alleged that Puglisi and Progressive-instead of safeguarding certain investments they were retained to make- Among other things, the subpoena enforcement action was filed because, despite the issuance of administrative subpoenas duces tecum
had been stealing the investments and selling them for their own benefit. As set forth in the Commission's Application, to Puglisi and Progressive, they have not produced any documents and, thus, have not complied with the subpoenas. Pursuant to its
the staff of the Commission's Philadelphia Regional Office is investigating whether there were misstatements and
Application, the Commission is seeking an order from the federal district court compelling compliance with various subpoenas and for
omissions related to the use of investor funds and the profitability, safety, value, and existence of assets purportedly
other relief. The Commission notes tha t it is continuing to conduct a fact-finding inquiry and has not concluded that anyone has broken the
owned by CMS Life Insurance Opportunity Fund and others.
law.
CA
Nationwide Automated
Systems, Inc. et al.
LR-23106
10/8/2014
This matter involves a ponzi scheme.
The SEC alleges that NAS raised more than $123 million in the past 18 months by telling investors they could purchase
ATMs from NAS and then lease them back in return for rent of 50 cents per ATM transaction. Investors were
guaranteed an investment return of at least 20 percent per year in these sale-and-leaseback agreements. However, the
vast majority of NAS s revenue is fro m new investor funds, and this money is being used to pay the promised returns
owed to earlier investors. NAS does not actually own most of the ATMs it claims to operate, a fact unknown to investors The SECs complaint charges NAS, Gillis, a nd Wishner with violating Section 10(b) of the Securities Exchange Act of 1934 and Rules 10bwho were contractually forbidden in their agreements from contacting the locations where their ATMs were supposedly 5(a) and (c) as well as Sections 17(a)(1) and (3) of the Securities Act o f 1933. NAS and Gillis also are charged with violations of Rule 10bhttp://www.sec.gov/litigation/litreleases/2014/lr23106.htm
located.
5(b) of the Exchange Act and Sections 5(a), 5(c) and 17(a)(2) of the Securities Act.
MA
Geoffrey J. Eiten and National

Financial Communications
Corp.
LR-23107
10/8/2014
This matter involves fraud.
The Commissions complaint, file on December 12, 20122, alleged that Eiten and NFC issued a penny stock promotional
publication called the OTC Special Situations Reports. According to the complaint, the defendants promoted penny
stocks in this publication on behalf of clients in order to increase the price per share and/or volume of trading in the
The judgment enjoins Eiten from further violations of the antifraud provisions of the federal securities laws (Section 10(b) of the Securities
market for the securities of penny stock companies. The complaint alleged that Eiten and NFC made misrepresentations Exchange Act of 1934 and Rule 10b-5 thereunder) and from certain specified activities related to penny stocks, including the promotion of
in these reports about the penny stock companies they promoted. The Commissions complaint alleged that in four
a penny stock or deriving compensation from the pro motion of a penny stock. The judgment also imposed a penny sto ck bar against
reports, Eiten and NFC made material misrepresentations and omissions, concerning, among other things, the
Eiten, which permanently bars him from participating in an offering of penny stock, including engaging in activities with a broker, dealer,
companies financial condition, future revenue projections, intellectual property rights, and Eitens interaction with
or issuer for the purpose of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock. The judgment
company management as a basis for his statements. According to the complaint, Eiten and NFC were hired to issue the orders Eiten to pay disgorgement of $605,262, representing ill-gotten gains, plus prejudgment interest of $71,767 and a civil penalty of
above reports and used false information provided by their clients, without checking the accuracy of the information with $50,000.
the co mpanies in question or otherwise ensuring that the statements they were making in the OTC Special Situations
Reports were true.
In a previous default judgment aga inst NFC on July 24, 2013, the Court ordered NFC to pay over $1. 6 million.
Paul T. Mannion, Jr., et al.
LR-23108
10/8/2014
This matter involves a final judgment.
barred each of them from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent;
prohibited each of them from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or
depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or
principal underwriter; and
barred each of them from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or
other perso n who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or
inducing or attempting to induce the purchase or sale of any penny stock;
On July 1, 2014, the Court granted the Commissions motion to dismiss the claims preserved for trial and to proceed to a
determination of remedies. In advance of the scheduled remedies hearing, the parties reached a settlement agreement. with the right to apply for reentry after two (2) years to the appropriate self-regulatory organization, or if there is none, to the Commission. http://www.sec.gov/litigation/litreleases/2014/lr23108.htm
MI
The Estate of Vincent James

Saviano and Palmetto
Investments LLC
LR-23109
10/10/2014
This matter involves a civil action.
According to the SEC's complaint filed in U.S. District Court for the Eastern District of Michigan, Saviano ran his business
out of his home in Rochester Hills, Michiga n, until his recent death. He marketed and operated an investment program
that supposedly made money through what he termed "extreme" day trading of stocks. Saviano touted the program as a
collective investment pool that individuals could join as "members" so they could split the resulting profits from
Saviano's day trading, and he attracted more than 100 clients to invest by claiming it to be a resounding success. He
told prospective investors - both orally and in a written prospectus - that the program enjo yed historical returns ranging
from 5 to 10 percent per month and never encountered a monthly lo ss. Saviano and Palmetto Investments reassured
investors that the program was receiving investment advice from an established investment adviser registered with the
SEC. Based on these representations, Saviano was a ble to raise at least $2 million for the day trading program.
The SEC has brought this enforcement action against Mr. Saviano's estate and Palmetto Investments to secure investor funds that remain
in their names before the assets are dissipated and investors are further harmed. The SEC is seeking disgorgement of funds in the
The SEC alleges that in reality, the program was an unmitigated failure. Savia no's day trading consistently lost money
possession of the estate or the firm as a result of the securities fraud so any remaining funds can be returned to investors who were
rather than generating the consistent monthly gains that he advertised. Saviano kept his massive trading losses hidden victims of the scheme.
from investors, routinely reporting extraordinary gains in monthly and quarterly performance statements and falsely
telling clients their principal remained intact. Meanwhile Savia no did not seek any investment advice from a registered The SEC's complaint charges that Saviano and Palmetto Investments violated Section 17(a) of the Securities Act of 1933, Section 10(b) of
investment adviser as he suffered the massive undisclosed trading losses, which during a 45-mo nth period amounted to the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of
approximately 81 percent of the money invested with him. Immediately before his death, Saviano admitted to a select
1940 and Rule 206(4)-8 thereunder. The complaint seeks final relief in the form of a permanent injunction against Palmetto Investments
group of investors that he also misappropriated an unidentified portion of investor funds to feed his gambling habit.
and disgorgement and prejudgment interest from both the Saviano estate and Palmetto Investments.
PA, MD
8000, Inc., Jonathan E.

Bryant, Thomas J. Kelly, and
Carl N. Duncan, Esq.
LR-23110
10/10/2014
This matter involves a judgment.
The Commission's complaint alleged that the defendants participated in a scheme to manipulate the trading volume and
price of 8000 Inc.'s common stock by disseminating false information about the company a nd simultaneously selling, or
facilitating the sale of its securities which were not for sale to the general public. According to the complaint, from
November 2009 through October 2010, Kelly and Bryant disseminated financial reports and press releases falsely
representing that 8000, Inc. had millions o f dollars in capital financing and revenues when, in fact, the company had
The Final Judgment orders Kelly to disgorge the $415,592 in profits that he realized from trading in 8000, Inc.'s securities a nd to pay $
neither. As 8000, Inc.'s stock price rose based on the false information they were disseminating, Bryant is alleged to have 46,697in pre-judgment interest. The Final Judgment follows the Judgment that the court entered against Kelly on June 6, 2013, with Kelly's
sold 56.8 million "restricted" shares of 8000, Inc. into the market with the assistance of Duncan who provided false legal consent and without him admitting or denying the allegations in the Commission's Complaint. That Judgment permanently enjoins Kelly
opinions removing the restrictions, and Kelly to have bought and sold the company's securities in the secondary market. from violating Section 17(a) of the Securities Act o f 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and
The complaint alleged that the defendants' scheme increased the volume of trading in 8000, Inc. by 93% and the
Rule 10b-5 thereunder. It also permanently bars Kelly from acting as an officer or director of any issuer that has a class of securities
company's stock price from less than $0. 01 per share to $0.42 per share between November 2009 and October 2010.
registered pursuant to Section 12 of the Exchange Act, and permanently bars him from participating in an offering of a penny stock.
Edwin Yoshihiro Fujinaga and

MRI International, Inc., et al.
LR-23111
10/10/2014
T his matter involves a summa ry

judgment.
In a case o riginally filed on September 11, 2013, the SEC alleged that Fujinaga and his co mpany, MRI, perpetrated an
elaborate Ponzi scheme designed to misappropriate money from investors. The SEC alleged that the defendants raised
more than $800 million from thousands of investors living primarily in Japan under the ruse that MRI was using their
investments to buy medical accounts receivable from medical providers at a disco unt to reco ver their full value from
insurance companies. The SEC alleged that the defendants used the investments to pay back earlier investors, and that
Fujinaga used investor funds for his own purposes, including to buy property and luxury cars. In granting summary
The court's summary judgment opinion finds that Fujinaga and MRI violated Sections 17(a)(1), (2), and (3) of the Securities Act of 1933
judgment in favor of the SEC, the court found that "Fujinaga had sole control over investment funds, using them for his and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court has not yet determined the appropriate
own personal benefit" and, "[w]hile depleting the pool of collected investments, Fujinaga facilitated a Ponzi scheme
relief against the defendants, and the litigation is ongoing for remedies purposes. The SEC's case is also continuing against multiple relief
funded by new investments."
defendants, who the SEC alleges received and used investors' funds.
NY, CA
iShopNoMarkup.com, Inc., et
al.
LR-23112
10/15/2014
MA
Zachary Zwerko
LR-23113
10/15/2014
This matter involves insider trading.
The complaint charges Zwerko, who lives in Cambridge Mass., with violating Section 10(b) o f the Securities Exchange Act
The investigation is continuing.
of 1934 and Rule 10b-5.
TX, GA
Stephen D. Ferrone, et al.
LR-23114
10/15/2014
After completion of discovery, the SEC moved for summary judgment, and for partial summary judgment, respectively, against McClain Sr.
The SEC's complaint, filed in federal court in Chicago, alleged, among other things, that the defendants misleadingly
and McClain Jr. In granting the SEC's motion for summary judgment, the Court found that McClain Sr. committed securities fraud by taking
stated in public filings with the SEC and in ora l presentations that Argyll, Immuno syn's controlling shareholder, planned money from investors and failing to deliver Immunosyn shares and by telling investors that Immunosyn would secure approval for SF-1019
to commence the regulatory approval process for human clinical trials for SF-1019 in the U.S. or that regulatory approval from the FDA in about a year and that the U.S. Department of Defense had purchased SF-1019. The Court also found that McClain Sr. and
was underway. The complaint alleges that these statements misled investors because the statements omitted to disclose McClain Jr. engaged in insider trading by selling their Immunosyn stock based on the material, non-public information that the FDA had
that the U.S. Food and Drug Administration ("FDA") had already twice issued clinical holds on drug applications for SFissued clinical holds on drug applications for SF-1019. The Court found that McClain Sr. and McClain Jr. viola ted Section 17(a) of the
1019, which prohibited clinical trials involving SF-1019 from occurring.
Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5.
This matter involves stealing.
The Securities a nd Exchange Commission (the "Commission") announced today that on October 9, 2014, the United States District Court
for the Middle District of Pennsylvania entered a final judgment by consent in a previously filed enforcement action against defendant
Dennis F. Wright, a former registered representative based in Lewistown, Pennsylvania. The final judgment permanently enjoins Wright
According to the Commission's complaint filed on September 30, 2014, Wright misappropriated more than $1.5 million
from violating Section 17(a) of the Securities Act o f 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
from at least 28 customers. Wright fraudulently induced his customers to redeem securities held in their securities
thereunder. Wright is also ordered to disgorge his ill-gotten gains of $1,533,416.33 and prejudgment interest thereon of $490,618.77,
accounts, including variable annuities and mutual funds, by falsely representing that he would invest the proceeds from which will be deemed satisfied by the entry of an order of restitution in a parallel criminal case. On October 16, 2014, the Commissio n
the redemptions in a mana ged account that held other securities that yielded higher returns than their existing securities issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities and Exchange Act and Section 203(f)
accounts. Instead, Wright deposited his customers' funds in a bank account he controlled and from which he
of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (""Order") against Wright. The Order
misappropriated the funds in order to pa y his personal expenses as well as to fund customer withdrawals. Wright
permanently bars Wright from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor,
concealed his fraud by providing his customers with falsified account statements purportedly showing that they had
transfer agent, or nationally recognized statistical rating organization; and also bars him from participating in any offering of a penny
purchased and owned interests in the non-existent managed accounts with appreciating balances.
stock. Wright consented to the issuance of the Order.
On March 25, 2013, the Court entered summary judgment in the Commissions favor with respect to the Commissions
claim that Defendants misappropriation of certain warrants belonging to the Fund violated Section 206(2) of the
Advisers Act. Conversely, the Court granted Defendants summary judgment with respect to the Commissions claims
under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder that related to the allegedly fraudulent
overvaluations of Fund assets and to the alleged material misrepresentation in connection with the stock purchase. In
addition, the Court granted Defendants summary judgment limiting the Commissions valuation claims under Sections
206(1) and 206(2) of the Advisers Act and dismissing certain misappropriation claims under Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder and under Sections 206(1) and 206(2) of the Advisers Act. The Courts March
25, 2013 ruling preserved remaining claims for trial.
NY, IN, PA, MD

(Thomas)
Consistent with the parties settlement agreement, on October 3, 2014, the Commission issued an order instituting administrative and
cease-and-desist proceedings that found that Mannion and Reckles willfully violated Section 206(2) of the Advisers Act, ordered them to
cease and desist from committing or causing any violations and any future violations of Section 206(2) of the Advisers Act, required each
of them to pay a penalty of $75,000, and
The Commission cha rged that from the fall of 1999 until the summer of 2000, iShop conducted a fraudulent and
unregistered securities offering. iShop distributed offering memoranda and other documents to investors that
misrepresented, and failed to disclose, material information concerning iShop's business operations. Knight and others
also made oral misrepresentations to investors to persuade them to invest in iShop stock. Knight also supervised Scott
W. Brockop, iShop's former Vice President of Sales and Marketing, who oversaw an operation at iShop through which
emplo yees cold-called potential investors, and made material misrepresentations to induce them to purchase iShop
stock. Through the offering, iShop sold nearly 6.75 million shares of stock to over 350 investors, and obtained proceeds
of approximately $2.3 millio n. iShop did not file a registration statement for the sale of these securities, and there was no
registration statement otherwise in effect.
The Commission also charged iShop, Brockop, and Moussa Yeroushalmi a/k/a Mike Yeroush, iShop's former President. On The jury found that defendant Knight violated Sections 5(a), 5(c), and 17(a ) of the Securities Act of 1933, Section 10(b) of the Securities
October 26, 2006, the District Court entered a final judgment by default against Brockop, and on February 15, 2007, a
Exchange Act of 1934, and Rule 10b-5 thereunder. Judge Hurley will make the determination as to the final relief that should be imposed
Commission administrative law judge entered an order by default against Brockop barring him from association with any against the defendant. The Commission seeks an order permanently enjoining the defendant from vio lations of the above provisions of the
broker or dealer. On January 21, 2011, the District Court entered a final judgment by consent against Yeroush. On April
federal securities laws, requiring disgorgement of ill-gotten gains, plus prejudgment interest thereon, and imposing civil penalties
30, 2014, the District Court entered a final judgment by consent against iShop, leaving Knight as the sole remaining
pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. The Commission also seeks an order barring the
defendant in the litigation.
defendant from acting as an officer or director of a public company under Section 21(d)(2) of the Exchange Act.
The SEC alleges that Zachary Zwerko was tasked with evaluating potential acquisitions, and he repeatedly accessed
confidential files about his employer's acquisition targets and passed details onto a friend from business school so he
could purchase securities prior to public announcements. Zwerko accessed and shared information about a deal he was
assigned to work on as well as a potential acquisition tasked to others. The illegal tips enabled his friend to make
approximately $683,000 in illicit profits.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges
against Zwerko.
PA
Dennis F. Wright
LR-23115
10/17/2014
The Commission's complaint, filed on May 8, 2013, in the U.S. District Court for the Southern District of New York, alleged
that Subaye began promoting itself during 2010 as a provider of cloud computing services to Chinese businesses.
According to the complaint, Subaye claimed to have over 1,400 sales and marketing employees in 2010, with reported
revenues of $39 million that fisca l year and projected revenues of mo re than $71 million for 2011. However, by May
2011, according to the complaint, Subaye was revealed to be a company with no verifiable revenues, few, if any, real
customers, and no infrastructure to support its claimed cloud computing business. The complaint alleges that the
business that Subaye had presented to investors and described in filings with the Commission was imaginary and nonexistent.
Subaye, Inc. and James T.

Crane
NJ
MA
LR-23116
10/21/2014
This matter involves a fraud scheme.
The complaint further alleged that Crane signed Subaye's materially misleading filings with the Commission that
contained false statements about Subaye's revenues, business, number of employees, and number of paying customers.
According to the complaint, Crane also falsified the books, records, and accounts of Subaye and provided false
information to Subaye's outside auditors. The Commission's complaint also charged Crane with violating a bar from the
Public Company Accounting Oversight Board (PCAOB). According to the complaint, in January 2011, Crane and his
Crane consented to the injunction and penalty components of the final judgment. The court determined the length of the officer and
Cambridge, Massachusetts-based accounting firm were sanctioned by the PCAOB, which permanently revoked his firm's director bar after considering the filings in the case. The final judgment permanently enjoins Crane from violating Section 10(b) of the
registration and barred him from being associated with a registered accounting firm or being associated with any public Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and Section 105(c)(7)(B) of the
company in an accounting or financial management capacity. The complaint allege that, in violation of the January 2011 Sarbanes-Oxley Act of 2002, and from aiding and abetting any violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange
PCAOB order, Crane remained as the CFO of Subaye until March 2011, even after the PCAOB denied his request to
Act and Rules12b-20, 13a-1, 13a-11, thereunder, and orders Crane to pay a civil penalty of $150, 000. The final judgment also prohibits
remain as Subaye's CFO for those two months.
Crane from serving as an officer or director of a public company for a period of ten years.
Recycle Tech, Inc., et al.,
LR-23117
10/24/2014
The Securities a nd Exchange Commission announced that on February 14, 2014, the United States District Court for the Southern District
of Florida entered final judgments of permanent injunction and other relief, by consent, against defendants Anthony Thompson, OTC
Solutions LLC, Jay Fung, and Pudong LLC, and that on April 11, 2014, it entered a final judgment, by consent, against defendant Ryan
Gonzalez. The final judgments enjoin Thompson, OTC, Fung, Pudong and Gonzalez from violations. Thompson, OTC, Fung, and Pudong are
also enjoined. In addition, the Court entered penny stock bars against Thompson, Fung, and Gonzalez. The final judgment against
Gonzalez also enjoins him from aiding and abetting a violation. It also prohibits Gonzalez fro m acting as an officer or director of any issuer
that has a class of securities registered. In a ddition to injunctive relief, Thompson and OTC Solutions are found jointly and severally liable
for disgorgement in the amount of $349, 504.61 with prejudgment interest of $23,735.15. Fung and Pudong are jointly and severally liable
for disgorgement in the amount of $456, 457 with prejudgment interest of $30, 998.36. The final judgments also impose civil penalties of
$120,000 each against Thompson and Fung and dismiss the civil penalty claims against OTC and Pudong. T he Court did not order
Gonzalez to pay a civil penalty based on representations in his sworn Statement of Financial Condition and other documents and
information he submitted to the Commission. Previously, on November 16, 2012, the Court entered a default judgment of permanent
injunction against Recycle Tech, Inc. The judgment enjoins Recycle Tech from violations. On May 4, 2012, the Court entered final
judgments of permanent injunction and other relief, by consent, against defendants Kevin Sepe a nd David Rees, and a final judgment
against relief defendant Charter Consulting Group, Inc. The Court also entered a final judgment against Ronny J. Halperin on May 11, 2012.
The final judgments against Sepe and Halperin enjoin them from violations and ordered penny stock bars against them. The final
judgment also ordered Sepe to pay $150,000 in disgorgement and $9,125 in prejudgment interest, on a joint and several basis with
Charter Consulting, and imposes a $125,000 civil penalty against him. The final judgment imposes a five-year officer and director bar
against Halperin, the payment of $235,060 in disgorgement, $15,000 in prejudgment interest, and a $75,000 civil penalty. The final
judgment against Rees permanently enjoins him from future violations, a nd orders him to pay $5,982 in disgorgement, $406.25 in
prejudgment interest, and imposes a $7,500 civil penalty. It also prohibited Rees, for a period of one year, from providing professional
legal services to any person in connection with the offer or sale of securities to, or claiming an exemption under Section 4(1) of the
Securities Act, including, without limitation, participating in the preparation or issuance of any opinion letter related to such offerings. The
The SEC commenced this action by filing its complaint on May 2, 2012, followed by an amended complaint on August 17, final judgment against Charter Consulting ordered the company to pay, on a joint and several basis with Sepe, $150,000 in disgorgement
2012. Both the original and amended complaints alleged the defendants violated the securities laws as described above. and $9,125 in prejudgment interest.
Stephen E. Slawson
LR-23118
10/24/2014
The SEC's complaint alleges that Slawson violated the antifraud provisions of the federal securities laws: Section 17(a) of the Securities
According to the SEC's complaint filed in federal court in the Northern District of Georgia, Slawson conducted insider
Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks a permanent injunction,
trading on at least eight occasions in the hedge fund's accounts or personal accounts belonging to him or other family
disgorgement with prejudgment interest and civil monetary penalties pursuant to Section 21A of the Exchange Act.
members. Slawson was initially tipped with nonpublic information about Carter's by a hedge fund investment consultant
named Dennis Rosenberg, who received the inside information from a Carter's executive. Slawson later communicated
Previously, the U.S. Attorney's Office for the Northern District of Georgia announced that a grand jury had indicted Slawson and charged
directly with that executive: Eric Martin, who at the time was vice president and director of investor relations.
him with one count of conspiracy to commit securities fraud and wire fraud, 25 counts of securities fraud, and nine counts of wire fraud,
based on substantially similar conduct as alleged in the SEC's complaint. He is awaiting a trial in the criminal case.
The SEC alleges that based on the illegal tips that Slawson received from Rosenberg and Martin, his insider trading in
Carter's stock generated more than $500,000 in profits or avoided losses.
The SEC's investigation continues into insider trading of Carter's stock.
According to the SEC's amended complaint filed in U.S. District Court for the Southern District of New York, Post traded
on the basis of confidential details about two acquisitio n targets of the pharmaceutical company where Zwerko then
worked. The insider trading first occurred in 2012 when Zwerko learned his employer was among several other
pharmaceutical companies in a competitive bidding process for Ardea Biosciences Inc. In the several weeks leading up to
Ardea's public announcement, Post received regular updates from Zwerko about the status of confidential negotiations
and purchased $227,000 worth of Ardea securities - the most he had ever invested in a single company. Post had never
before purchased Ardea securities. After Ardea publicly a nnounced that it had accepted an acquisition bid and its stock
price rose by 51 percent, Po st sold all of his shares and reaped profits of approximately $105,000.
NJ
Zachary Zwerko and David L.

Post
TX (Post)
LR-23119
10/27/2014
eAdGear, Inc., et al.
LR-23120
10/28/2014
The SEC further alleges that Zwerko tipped Post with confidential details about his employer's nonpublic negotiations to
acquire Idenix Pharmaceuticals Inc. earlier this year. Although not directly involved in the deal, Zwerko accessed
confidential files in the company's database during the negotiations and gleaned additional nonpublic information in his
communications with others at the company. Post, who had never before purchased Idenix securities, made purchases
The SEC's amended complaint charges Zwerko and Post with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10btotaling $219,000 from May 21 to June 6. After a public announcement was made on June 9, Post sold his Idenix
5. The complaint seeks permanent injunctive relief, disgorgement with prejudgment interest on a joint and several liability basis, and
securities for a profit of approximately $579,000.
financial penalties.
The complaint alleges that eAdGear's operators used money from new investors to pay earlier investors as well as to
repay a persona l loan and purchase million-dollar homes for themselves. It alleges the operators concealed and
perpetuated the scheme by displaying sham websites on eAdGear's own site to make it appear as if it had real, paying
customers and manipulated revenue distributions to investors to appear profitable.
The eAdGear case followed one filed earlier that week in federal court in Georgia against Zhunrize Inc. and CEO Jeff Pan In both cases, the courts granted the SEC's request for an asset freeze and issued a temporary restraining order. In the case of eAdGear,
for allegedly defrauding investors of more than $105 million since 2012. Despite its claims to be a legitimate multi-level that order bars the defendants from soliciting investors, including through websites they have used until now - www.eadgear.com,
marketing company, Zhunrize derived most of its funds from selling memberships, no t products, according to the SEC
www.eadgear.net, www.winteam777.com, and www.winteam168.com. A hearing on the SEC's motion for preliminary injunction has been
complaint.
scheduled for November 14.
The Commission's enforcement action, filed April 11, 2012, alleged that AutoChina senior executive and director Hui Kai
Yan and others, including the ten defendants against whom judgments were just entered, fraudulently traded
AutoChina's stock to boost its daily trading volume in order to create the appearance of liquidity of AutoChina's stock and
thereby enhance the company's ability to get much-needed financing. Starting in October 2010, the defendants and
others deposited more than $60 million into U.S.-based brokerage accounts and engaged in hundreds of fraudulent
trades over the next three months through these accounts and accounts with a Hong Kong-based broker-dealer. The
complaint alleged that the fraudulent trades included matched orders, where one account sold shares to another account The U.S. District Court for the District of Massachusetts entered the final judgments by default against ten defendants on October 27,
at the same time and for the same price, and wash trades, which resulted in no change of beneficial ownership of the
2014. The final judgments enjoin Rui Ge Dong, Victo ry First Limited, Rainbow Yield Limited, Yong Qi Li, Ai Xi Ji, Ye Wang, Zhong Wen Zhang,
shares. According to the complaint, AutoChina and the other defendants engaged in the scheme after lenders offered
Li Xin Ma, Yong Li Li, and Shu Ling Li from viola tions of Section 17(a) of the Securities Act of 1933 and Sections 9(a)(1), 9(a)(2), and 10(b)
AutoChina unfavorable terms for a stock-backed loan due to low trading volume in its stock.
of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and orders each of them to pay a civil penalty of $150,000.
AutoChina International
Limited, Hui Kai Yan, Rui Ge
Dong, Victory First Limited,
Rainbow Yield Limited, Yong
Qi Li, Ai Xi Ji, Ye Wang, Zhong
Wen Zhang, Li Xin Ma, Yong Li
Li, and Shu Ling Li
CT
LR-23121
Francisco Illarramendi,
Highview Point Partners, LLC
and Michael Kenwood Capital
Management, LLC, as
Defendants, a nd Highview
Point Master Fund, Ltd.,
Highview Point Offshore, Ltd.,
Highview Point LP, Michael
Kenwood Asset Management,
LLC, Michael Kenwood Energy
and Infrastructure LLC, and
MKEI Solar, LP, as Relief
Defendants
LR-23122
10/28/2014
10/28/2014
T his matter involves a market

manipulation scheme.
The SEC complaint alleged tha t in the three months before the defendants opened the U.S.-based brokerage accounts, The judgments entered on October 27, 2014 bring the Commissio n's case to a conclusion against all defenda nts in this case. The court
the average daily trading volume of AutoChina's stock was approximately 18,000 shares. From November 1, 2010
previously entered final judgments by consent against defendants AutoChina and Hui Kai Yan in June 2014 that, among other things,
through January 31, 2011, the average daily trading volume increased to more than 139,000 shares. On some days, the ordered AutoChina to pay a civil penalty of $4.35 million and Yan to pay a civil penalty of $150,000, and barred Yan permanently from
defendants and related accounts' trading accounted for as much as 70% of the trading of AutoChina's stock.
acting an officer or director of a public company.
In Janua ry 2011, the SEC charged Illarramendi and various entities owned or controlled by him, including investment
advisers Highview Point Partners, LLC, and Michael Kenwood Capital Mana gement, LLC, with engaging in a multi-year
Ponzi scheme involving hundreds of millions o f dollars. On February 3, 2011, the U.S. District Court for the District of
Connecticut appointed a receiver in the case to marshal the assets of a number of entities formerly owned or controlled The SEC's action against Illarramendi and others remains pending. In a parallel criminal action, on March 7, 2011, Illarramendi pleaded
by defendants Illarra mendi, Highview Point Partners, and Michael Kenwood Capital Management. The receiver ha s
guilty to two counts of wire fra ud, one count of securities fraud, one count of investment advisor fraud, and one count of conspiracy to
collected substantial assets to distribute to parties harmed by the defendants' alleged wrongdoing, and the Court has
obstruct justice, to obstruct an official proceeding and to defraud the SEC. He is awaiting sentencing. Also, on August 3, 2011, the
approved the receiver's initial plan to distribute over $264 million. The receiver plans to make a dditional distributions to Commission issued an Order by consent barring Illarramendi from association with any broker, dealer, investment adviser, municipal
harmed parties a t a later time as additional funds beco me available.
securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.
CA, MA
Timothy J. Coughlin, et al.
OH, MN
LR-23123
10/30/2014
The SEC's complaint, filed on April 11, 2014, alleged that between June 2007 and December 2009, Coughlin and Oxford
International Credit Union collected deposits exceeding $12.8 million dollars fro m more than 5, 000 investors who
believed that they were investing in a bona fide credit union but in reality were victims of a classic Ponzi scheme.
According to the SEC's complaint, to facilitate and further the fraud, the defendants posted false information to
Pursuant to the judgments docketed on October 30, 2014, the court ordered OICU Ltd. and OICU Investments Corp. , jointly and severally,
members' online accounts to create the appearance that their deposits were earning substantial daily investment
to pay disgorgement of $10,053,234 plus prejudgment interest thereon of $1,466,479, and to each pay a civil penalty of $775,000,
returns. The Oxford Internatio nal Credit Union website, for example, showed investors that their deposits were
enjoined Coughlin and the two entities from participating in the issuance, purchase, offer or sale of any security, permanently barred
purportedly earning investment returns that a veraged, during the January 2007 through December 2009 period, 0.471% Coughlin from acting as an o fficer or director of any public company, and permanently enjoined Coughlin and the two entities from
compounded daily. The credit union, however, was a fiction, and the defendants did not actually make investments with violations of the registratio n and antifraud provisions of the federal securities laws. The judgment against Coughlin did not order monetary
the members' deposits sufficient to generate the returns they boasted. Coughlin and Oxford International Credit Union
relief in considera tion of the forfeiture, restitution and incarceration to which he was sentenced in the parallel criminal action, US v.
also falsely claimed that member accounts were insured by a private insurance company.
Coughlin, Crim. No. 1:14-CR-221 (E.D. Va.). On October 24, 2014, Coughlin was sentenced to 90 months imprisonment and three years of
supervised release and ordered to pay restitution of $10,084,625. Finally, the Court entered a judgment against relief defendants
The SEC's complaint further alleged that, beginning in December 2008, Coughlin began operating a successor to Oxford American Quality Cleaning Services, Inc. (d/b/a "Oxford Privacy Group") and Avocalon, LLC, ordering the former to pay disgorgement of
International Credit Union, called Oxford International Cooperative Union. Oxford International Coo pera tive Union's
$2,270,100 plus prejudgment interest thereon of $152,016, and ordering the latter to pay disgorgement of $1,823,750 plus prejudgment
website also boasted bogus investment returns from its inception in late 2008 through December 2011.
interest thereon of $429,659.
TX
Charles E. Smith, CPA and

Mark Smith, CPA
CT, CA, VA, TX

(Charles)
LR-23124
10/31/2014
T his matter involves a shell-factory

scheme.
The SEC alleges that the Smiths carried out the scheme by "renting" legitimate operating companies from small business The SEC's complaint charges Charles Smith with violating Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Sections
owners in exchange fo r the promise of additional financing through an initia l public o ffering (a/k/a an "IPO"). The Smiths 10(b), 13(b)(5) and 15(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and with
then installed the small business owners as nominal officers and directors of the public shell companies tha t they
aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 15(d) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13,
secretly controlled. They funded the IPOs by soliciting their friends, family and affiliates to buy shares in the now-public 13b2-2, 15d-1, and 15d-13 thereunder. The SEC's complaint also charges Mark Smith with violating Section 17(a)(2) and (3) of the
shell companies. However, contrary to promises made by the Smiths to the small business owners and to information
Securities Act and Exchange Act Rule 13b2-1, and with aiding and abetting viola tions of Sections 13(a), 13(b)(2)(A), and 15(d) of the
disclosed to the public, most of the money raised in the IPOs was retained by the public shell companies instead of being Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13, 13b2-2, 15d-1, and 15d-13 thereunder.
used to finance the operating co mpanies. The SEC also alleges that to further their scheme, the Smiths caused the small
business owners to submit materially false and misleading registration statements and periodic reports to the SEC.
Without admitting or denying the allegations in the Commission's complaint, the Smiths have consented to the entry of a final judgment
These false documents gave the public companies the appearance of legitimacy, which allowed the Smiths to sell the
that permanently enjoins them from future violations o f the applicable provisions of the federal securities laws, orders them to pay
public shells for a higher value in the reverse merger transaction. The Smiths received significant cash proceeds and
disgorgement plus prejudgment interest totaling $78,750.52, orders tha t Charles Smith pay a civil penalty of $150,000 and be subject to
stock from these reverse merger transactions, while the small business owners were left with little or no benefit from
five-year officer and director and penny stock bars, and orders that Mark Smith pay a civil penalty of $50,000 and be subject to a threetheir association with the Smiths.
year penny stock bar. The settlement remains subject to court approval.
The SEC alleges that Sasan Sabrdaran, the former director of drug safety risk management at Brisbane, Calif.-based
InterMune Inc. , tipped Farhang Afsarpour with confidential details while he was involved with shepherding the company's
application before a European Union regulatory body to market a drug called Esbriet to be used for the treatment of
patients with a type of fata l lung disease. Afsarpour, a restaurant owner in the United Kingdom, traded on the inside tips
that Sabrdaran communicated to him about the progress of Esbriet's EU marketing application by purchasing securities
in his own accounts and using money obtained from friends to trade on their behalf.
According to the SEC's complaint filed yesterday in U.S. District Court in the Northern District of California, InterMune
submitted its marketing applicatio n to the European Medicines Agency in March 2010. While in possession of material
nonpublic information received from Sabrdaran, Afsarpour placed orders in early December 2010 through a UK-based
spread betting firm to buy spread bets on InterMune securities. A spread bet is purchased fro m a counterparty in order to
have the opportunity to profit from changes in the price of an underlying asset, which in this case was InterMune
common stock and call options being traded on U.S. exchanges. Besides the spread bet orders, Afsarpour also bought
InterMune common stock.
CA
WA
Sasan Sabrdaran and Farhang

Afsarpour
LR-23125
10/31/2014
The SEC's complaint alleges that Afsarpour urged approximately a dozen friends to purchase InterMune securities, and
some gave him money that he used to buy spread bets on their behalf through his personal account. Afsarpour also
tipped two other friends who traded on their own. InterMune announced in mid-December 2010 that the EMA advisory
The SEC's complaint charges Sabrdaran and Afsarpour with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
subcommittee a ssessing the application had issued a positive opinion for Esbriet, causing InterMune's sto ck and options The complaint seeks disgorgement, prejudgment interest, and financial penalties as well as injunctions. The SEC also seeks an officer-andhttp://www.sec.gov/litigation/litreleases/2014/lr23125.htm
prices to soar.
director bar against Sabrdaran.
Vineet Kalucha et al.
LR-23126
10/31/2014
T his matter involves payment of

expenses.
As previously announced, on May 5, 2014, the SEC filed fraud charges and sought emergency relief against Aphelion,
Aphelion's chief investment officer, Vineet Kalucha, and Aphelion's chief financial officer, George Palathinkal. The SEC's
complaint alleges that Kalucha fraudulently altered an outside audit firm's report reviewing the performance of an
investment account he managed, that Palathinkal allegedly learned about Kalucha's falsificatio ns, which essentially
changed an investment loss into a major investment gain in the account, and that the falsified report showing the phony The order a utho rizes Funds' administrator, Pinnacle Canada Fund Administration, Ltd. ("Pinnacle"), to distribute $5,562,135.55 to investors
gain instead of the actual loss was distributed to prospective investors. The complaint further alleges that investors were in the Funds on a ratable basis in accordance with their respective account balances and $72,333.78 to service providers to cover due and
separately provided false information about Aphelion's assets under management and Kulucha's litigation history, and
owing expenses which are appropriately payable under the terms of the Funds' organizational documents. The order also authorizes the
that Kalucha allegedly siphoned investor proceeds for his luxury car payments and settlements of legal actions against Funds to hold a total of $615,525.29 in cash as a reserve to address uncertain future expenses. This $615,525.29 shall remain frozen
him personally that are unrelated to Aphelion.
pending further order of the Court.
James Wheeler and

MicroHoldings US, Inc.
LR-23127
11/4/2014
This matter involves judgments.
The Commission's complaint alleged that in May 2011, Wheeler met with a n individual who purported to be a Bosto n,
Massa chusetts-based representative of a major hedge fund. In fa ct, the hedge fund representative was an undercover
FBI agent. The complaint alleged that Wheeler and the hedge fund representative agreed to a scheme whereby the
The judgments in the Commission's action, to which MicroHoldings and Wheeler consented, permanently enjoin MicroHoldings and
hedge fund would purchase $5 million of MicroHoldings stock in return for the payment of kickbacks to the hedge fund
Wheeler from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The judgment
representative. Wheeler and the hedge fund representative a greed to structure the transaction in such a way that it
as to Wheeler ho lds him liable for $24, 000 in disgorgement, but deems his disgorgement satisfied by the forfeiture order for the same
would avoid detection by the hedge fund's compliance personnel and securities regula tors. Among other things, they
amount of money in the related criminal action. The judgment also prohibits Wheeler from acting as an officer or director of any issuer
agreed to structure the transaction into smaller "tranches" of securities purchases, and to make the kickback payments that has a class of securities registered under Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of
to the hedge fund representative through a shell corporation pursuant to a consulting agreement to make it appear that the Exchange Act, and prohibits Wheeler fro m participating in any offering of penny stock, pursuant to Section 21(d)(6) of the Exchange
the kickback payments were co mpensation for consulting services. The complaint alleged that, in May and June 2011,
Act.
MicroHoldings and Wheeler followed through by entering agreements whereby the hedge fund purcha sed a total of
$48,000 worth of MicroHoldings stock and kickbacks totaling $24,000 were funneled back to the hedge fund
The Commission suspended trading in the stock of MicroHoldings on December 1, 2011.
representative.
The Commission's case against Edward Henderson, also charged on December 1, 2011 as a result of the FBI undercover operation,
In the related criminal action, Wheeler was sentenced on January 16, 2014 to 18 months of probation and was ordered to remains pending. Judgments by consent were entered again Michael Lee and ZipGlobal Holdings, Inc. on September 4, 2014 and against
forfeit $24,000 after pleading guilty on January 18, 2012 to one count of mail fraud and one count of conspiracy.
Paul Desjourdy on September 11, 2014.
Rajarengan (a/k/a Rengan)

Rajaratnam
LR-23128
11/5/2014
Rengan Rajaratnam, who beca me a portfolio manager at Galleon after co-founding hedge fund advisory firm Sedna Capital Management,
The SEC filed civil charges in March 2013 against Rengan Rajaratnam for his role in the widespread insider trading
neither admitted nor denied the SEC's allegations in agreeing to the settlement. The final judgment permanently enjoins Rengan
scheme conducted by his brother Raj Rajaratnam and hedge fund advisory firm Galleon Management. The insider trading Rajaratnam from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and requires him to pay $372,264.42 in
occurred in securities of more than 15 companies for illicit gains totaling nearly $100 million. The SEC has now obtained disgorgement, $96,714.27 in prejudgment interest, and a $372,264.42 penalty. Separately, Rengan Rajaratnam also agreed to be barred
court judgments or settlements in Galleon-related enforcement actions against 35 defendants, resulting in approximately from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent with the right to a pply for
$165 million in monetary sanctions.
reentry after five years.
The SEC alleges that Richard Weed, a partner in a Newport Beach law practice, facilitated a scheme to pump and dump
the stock of CitySide Tickets Inc., which he helped structure into a publicly traded company through reverse mergers.
Weed created backdated promissory notes and authored false legal opinion letters that enabled Thomas Brazil and
Coleman Flaherty to obtain millions of purportedly unrestricted shares of stock in the company. Investors were then
blitzed with a false and misleading promotional campaign touting CitySide Tickets as a budding national leader on the
verge of acquiring smaller ticket firms across the country and positioning itself as an attractive takeover target for
Ticketmaster. As the company's stock price increased on the false hype, Brazil and Flaherty sold their shares to
unsuspecting investors for illicit proceeds of approximately $3 million, and Weed was well-compensated for his role in the
scheme. Shortly thereafter, the market for CitySide Tickets stock collapsed and the company eventually went out of
business.
In a parallel case, the U.S. Attorney's Office for the District of Massachusetts has a nnounced criminal actions against
Weed, Brazil, and Flaherty.
CA
Richard Weed et al.
LR-23129
11/7/2014
According to the SEC's complaint filed in federal court in Boston, all of the false promotions painted a rosy, optimistic
picture of a company that was actually in dire financial straits. For example, one promotional alert falsely claimed that
CitySide Tickets was "in the process now of swallowing up 5 smaller ticket resellers that could send next year's profits
through the roof." In reality, CitySide Tickets lacked the means for such acquisitions. The alert further embellished that
the co mpany's growth from purportedly swallowing up smaller fish in the ticket-selling market would make CitySide
Tickets "an irresistible takeover target for Ticketmaster, the biggest fish o f all." The alert estimated that a Ticketmaster
This matter involves stock manipulation. acquisition of CitySide Tickets "could easily jump this under-50-cent stock to $2.50 - $3.50 overnight."
The SEC's complaint alleges that all defendants violated the antifraud provisions of the securities laws in Section 10(b) of the Securities
Exchange Act of 1934 (Exchange Act) and Rule 10b-5(a) and (c) thereunder, and Section 17(a)(1) and (3) of the Securities Act of 1933
(Securities Act). The complaint further alleges that Weed aided and abetted Brazil's and Flaherty's violations of Section 10(b) of the
Exchange Act and that Weed also violated Rule 10b-5(b) thereunder as well as Section 17(a)(2) of the Securities Act. Finally, the complaint
charges all defendants with violations of Section 5(a) and 5(c) of the Securities Act. As relief, the SEC seeks disgorgement of ill-gotten
gains plus pre-judgment interest and penalties as well as penny stock bars and permanent injunctions against further violations of the
securities laws. The SEC also seeks to bar Weed from serving as an officer or director of any public company. Weed lives in Newport Beach,
California; Brazil lives in Topsfield, Massachusetts, and Flaherty lives in Hingham, Massachusetts.
IL
Eric W. Johnson
LR-23130
11/12/2014
On November 5, 2014, the Securities and Exchange Commission filed an emergency action a lleging that from at least
2004 to the present, Eric W. Johnson, of Hinsda le, Illinois, misappro priated at least $1 million from certain of his advisory
clients. The SEC's complaint alleged that he did so while affiliated with a Chicago-based broker-dealer and investment
adviser. The SEC's compla int further alleged that Johnson admitted to the SEC that he misa ppropriated the funds by
forging his clients' signatures on more than 100 separate wire transfer instructions so that he could funnel cash from his After a hearing on the matter, the Honorable Edmond E. Chang of the United States District Court, Northern District o f Illinois, issued an
clients' accounts directly into his own personal bank account. The complaint charged Johnson with violations of Section Order granting injunctive relief, freezing assets and other emergency relief including expedited discovery.
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder and Sections 206(1) and 206(2) of the
T his matter involves an emergency a ction. Investment Advisers Act of 1940.
The SEC's investigation in this matter is continuing.
MA
J. Patrick O'Neill and Robert H.

Bray
LR-23131
11/14/2014
MD
Wilfred T. Azar, III, et al.
LR-23132
11/14/2014
In a parallel case, the U.S. Attorney's Office for the District of Maryland toda y announced criminal charges against Azar.
The SEC filed civil charges in November 2012 against the hedge fund advisory firm CR Intrinsic Investors and others for
their role in an insider trading scheme involving the securities of pha rmaceutical companies Elan Corporation and Wyeth.
In March 2013, CR Intrinsic and its a ffiliates agreed to pay $601.7 million in disgorgement, prejudgment interest, and
civil penalties to resolve the SEC's claims. The Court a pproved the SEC's settlement with CR Intrinsic and its affiliates in
June 2014, and in August 2014 CR Intrinsic and its affiliates paid approximately $601.7 million to an interest bearing
account with the Court Registry Investment System. In its November 20, 2012 complaint, the SEC alleged that Mathew
Martoma, then a portfolio manager at CR Intrinsic, illegally obtained confidential details about the clinical trial from Dr.
Sidney Gilman, who served as chairman of the safety monitoring committee overseeing the trial. Dr. Gilman was selected
by Elan Corporation and Wyeth to present the final drug trial results to the public. In phone calls that were arranged by a
New York-based expert network firm for which he moonlighted as a medical consultant, Dr. Gilman tipped Martoma with
safety data and eventually details about negative results in the trial about two weeks before they were made public in
July 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth
securities in just over a week. The Commission is requesting that the Court establish a Fair Fund for the funds paid in the
settlement and to be used to compensate those investors harmed in connection with the insider trading of CR Intrinsic
and its affiliates. Congress and court decisions have agreed that certain contemporaneous investors may be considered
victims of insider trading. Where, as is the case here, the size of the fund and the circumstances of the trading make the
identification of harmed investors feasible, the Commission has determined it is appropriate to create a Fair Fund fo r
investor victims. The Commission is recommending that the Fair Fund be established for the benefit of those investors
who traded contemporaneously with CR Intrinsic and its a ffiliates from July 21 to July 29, 2008, up to 100% of such
The Court previously entered a consent judgment against Gilman requiring him to pay disgorgement and prejudgment interest, and
investors' harm, with the remainder of the funds, if any, to be sent to the Treasury. Whether any particular investor will permanently enjoining him from further violations of the federal anti-fraud securities laws. Martoma was convicted of criminal securities
receive a distribution will ultimately be subject to the plan of distribution that the Court approves.
fraud for his role in the scheme in February 2014. The SEC's litigation against Martoma continues.
CA
The Commission previously charged Bray and J. Patrick O'Neill ("O'Neill") with insider trading in a civil action filed on
August 18, 2014. The criminal charges are based on the same conduct underlying the SEC's action. The SEC's complaint
alleged that O'Neill, a former senior vice president at Eastern Bank Corporation, learned through his job responsibilities
that his employer was planning to acquire Wainwright. According to the SEC's complaint, O'Neill tipped Bray, a friend and
fellow golfer with whom he socialized at a local country club. In the two weeks preceding a public anno uncement about
the planned acquisition, Bray sold his shares in other stocks to accumulate funds he used to purchase 31, 000 shares of
Wainwright. After the public announcement of the acquisition caused Wainwright's stock price to increase nearly 100
percent, Bray sold all of his shares during the next few months for nearly $300,000 in illicit profits.
The Commission also announced that on October 31, 2014, the United States Attorney's Office for the District of
Massa chusetts filed a criminal Information against O'Neill. The criminal Information charges O'Neill with one count of
conspiracy to commit securities fraud. O'Neill was initially charged by a crimina l complaint when he was arrested in
August 2014.
The SEC's action, which is pending, seeks injunctions against each of the defendants from further violations of the charged provisions of
the federal securities laws, disgorgement o f ill-gotten gains, and civil penalties.
The SEC alleges that Wilfred T. Azar III sold investors purported bonds in his company Empire Corporation, which he
touted as a successful and profitable business with the resources to pay promised annual returns of 10 percent. Along
with Joseph A. Giordano, Azar and his company raised more than $7 million by making these and other false and
misleading statements exa ggerating the safety and low risk of the bo nds. However, Empire Corporation was functionally
insolvent in reality, and despite saying investor funds would be used for various corporate purposes, Azar used the
money to pay personal expenses as well as thousands of dollars in compensation to Giordano for participating in the
The SEC's complaint filed in federal court in Baltimore charges Empire Corporation, Azar, and Giordano with violations of Sections 5(a),
fraud. Giordano also steered a mutual fund tha t he managed into purchasing the bonds despite knowing the company
5(c) and 17(a) of the Securities Act of 1933 as well as Sectio n 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint
was nearly broke. The scheme collapsed when they were unable to recruit new investors to fund Empire Corporation's
also charges Giordano with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 as
operations and repay existing investors, who did not receive their promised returns and lost substantially all of their
well as Section 34(b) of the Investment Company Act of 1940. The SEC seeks disgorgement plus prejudgment interest a nd pena lties as
investments.
well as permanent injunctions. The agency is seeking an officer-and-director bar against Azar.
The SEC's investigation is continuing,
CA
CR Intrinsic Investors, LLC et

al.
LR-23133
11/14/2014
CA
Joseph A. Noel
LR-23134
11/17/2014
The SEC also suspended trading in YesDTC stock today, a nd instituted an administrative proceeding to revoke its
registration.
This matter involves a scheme.
On November 18, 2014, the Securities and Exchange Commission ("Commission") charged a Canadian life settlement
company, its CEO, and three other individuals for engaging in a pump-and-dump scheme that misled investors and
artificially inflated the price of the company's stock. According to the Commission's complaint, filed in the United States
District Court for the Central District of California, Daniel Clozza, the CEO of Forum National Investments Ltd. , and one of
his associates, Robert Logan Dunn, hired two penny stock promoters, William Anguka and Alex Ghaznawi, to create and
publish promotional materials about Forum during the summer of 2012. These ma terials, which Anguka and Ghaznawi
The Commission's compla int alleges that Forum, Clozza, Dunn, Anguka, and Ghaznawi violated Section 10(b) of the Securities Exchange
posted on the internet under fake and assumed names, made false and misleading statements abo ut Forum, fabricated Act of 1934 and Rule 10b-5 thereunder, that Anguka and Ghaznawi violated Section 17(b) of the Securities Act of 1933 and that Dunn
quotes and "buy" recommendations from stock analysts who did not cover the company, and claimed that a fictitious
aided and abetted those violations, and that Forum violated Sectio n 13(a) o f the Securities Act and Rule 13a-1 thereunder. The complaint
entity named "Welsson Financial Media" funded the promotion. At the same time, the complaint alleges, Clozza caused seeks permanent injunctions and financial penalties against each defendant, disgorgement with prejudgment interest and penny stock
Forum to issue press releases that made false and misleading statements about the company, including the launch and bars against the individua l defendants, and an officer-and-director bar against Clozza.
success of a non-existent bond offering. The defendants' scheme caused significant increases in the trading volume and
price of Forum stock - from $0.36 per share on a volume of 15,000 shares to $1.90 on a volume of 254,000 shares - from Also on November 18, the Commission also instituted public administrative proceedings against Forum pursuant to Section 12(j) of the
which Clozza's relatives and associates, including Dunn, profited by selling more than one million shares in the public
Exchange Act in order to determine whether to suspend or revoke the registration of the company's securities as a result of its failure to
markets.
comply with the reporting provisions of the Exchange Act.
T his matter involves an unregistered

broker.
The SEC alleges that Albert J. Scipione and his business partner solicited investors to establish accounts at their company
called Traders Ca f for the purposes o f day trading, which entails the rapid buying and selling of stocks throughout the
day in hope that the stock values continue climbing or falling for the seconds to minutes they own them so they can lock
in quick profits. Scipione touted Traders Caf's software trading platform and made a series of false misrepresentations
to investors about low commissions and fees, high trading leverage, and safety of their assets. More than $500,000 was
raised from investors who were assured that funds invested with Traders Caf would be segregated and used only for
day trading or other specific business purposes. However, many customers encountered technical service problems that
prevented them from trading at all, and Scipione and his business partner squandered nearly all of the money in investor
accounts for their personal use. Meanwhile, Traders Caf was never registered with the SEC as a broker-dealer as
required under the federal securities laws. The SEC previously charged Scipione's business partner Matthew P. Ionno,
who agreed to settle the case and has been barred from the securities industry. Financial penalties will be decided by the
court at a later da te. In a parallel action, the U.S. Attorney's Office for the Middle District of Florida has announced that
Scipione has pleaded guilty to criminal charges. The U.S. Attorney's Office previously brought a criminal case against
Ionno. According to the SEC's complaint filed against Scipione in federal court in Tampa, customers across the country
deposited approximately $367,000 with Traders Caf from December 2012 to October 2013 with the intention of opening
day trading accounts. Traders Caf also received approximately $150,000 from an investor who invested directly in
Traders Caf's business. Customers encountered problems with Traders Caf from the outset, and many of them
cancelled their accounts and requested refunds of their remaining acco unt balances. Scipione and Ionno tried to cover
up their fraudulent scheme by offering excuses and delays for why customers could not get refunds. Eventually less than The SEC's complaint against Scipione alleges that he violated Section 17(a) of the Securities Act of 1933 as well as Section 15(a) and
$1,200 remained in Traders Caf's accounts primarily due to the repeated misuse of investor funds by Scipione and
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC seeks disgorgement of ill-gotten gains, financial penalties,
Ionno.
and permanent injunctive relief to enjoin Scipione from future violations of the federal securities laws.
According to the SEC's complaint filed against Joseph A. Noel in federal district court in San Francisco, the deceptive
press releases about his company YesDTC Holdings touted exclusive distribution rights, licensing agreements, and
certain products purportedly certified by the government. Noel's promotional campaigns based on such false information
caused a spike in YesDTC's thinly-tra ded stock and enabled him to dump millions of his own shares for a profit. To conceal
his sales, Noel sold the shares through a company he created in his teenage daughter's name without disclosing as
required that he was a ctually selling the shares.
Forum National Investments

Ltd., et al.
FL
Albert J. Scipione
LR-23135
LR-23136
11/19/2014
11/19/2014
The SEC's complaint charges Noel with violating antifraud and registratio n provisions of the federal securities laws. The SEC seeks
disgorgement of ill-gotten gains plus prejudgment interest and a financial penalty as well as a permanent injunction. The SEC also is
seeking an officer-and-director bar and a penny stock bar against Noel.
MD, FL
Anthony J. Thompson, Jr., Jay

Fung, and Eric Van Nguyen
LR-23137
11/21/2014
According to the SEC's complaint filed in federal court in Manhattan, Anthony Thompson, Jay Fung, and Eric Van Nguyen
worked in coordinated fashio n to gain co ntrol of a large portion of shares in the stock of microcap companies and then
hyped those stocks in newsletters they distributed to prospective investors. After creating demand for the stock and
increasing the value, they so ld their holdings at the higher prices and earned significant profits. Once they stopped their
promotional efforts, the demand for the stocks subsided and the prices dropped, leaving investors who had purchased
the promoters shares with significant losses. The complaint alleges that the newsletters published by Thompson,
Fung, and Van Nguyen misleadingly stated that they "may" or "might" sell shares they owned when in reality their
intentions always were to sell the stocks they were promoting. In fact, in some instances they already were selling the
stocks to which they were saying "may" or "might" sell. They also failed to fully disclose in their newsletters the amounts
of compensation they were receiving for promoting the stocks, cloaking the fact that they were coordinating their
promotion of the penny stocks to deliberately increase the prices and dump their own shares. According to the SEC's
complaint, the three promoters conducted five separate schemes that resulted in more than $10 million in ill-gotten
gains. The penny stocks they manipulated were Blast Applications Inc., Smart Holdings Inc., Blue Gem Enterprise Inc.,
Lyric Jeans Inc., and Mass Hysteria Entertainment Company Inc. Thompson, who lives in Bethesda, Md., distributed
several electronic penny stock promotion newsletters with such names as FreeInvestmentReport.com and
OxofWallStreet.com. Fung, who resides in Delray Beach, Fla., distributed his newsletters at such websites as
PennyPic.com, and Van Nguyen was typically based in Canada and distributed electronic penny stock promotion
The SEC's complaint charges Thompso n, Fung, and Van Nguyen with violating the antifraud and anti-touting provisio ns of the federal
newsletters on such websites as UnrealStocks.com and InsanePicks.com. The SEC's complaint names two relief
securities laws and related rules. The SEC is seeking disgorgement of ill-gotten gains from the schemes plus prejudgment interest and
defendants for the purposes of recovering money in their possession that resulted from the schemes. Thompson's wife penalties as well as permanent injunctions against further violations of the securities laws.
Kendall Thompso n received $200,000 in proceeds from one of the stock manipulation schemes. John Babikian, who
operated a penny stock promotion business primarily from a website named AwesomePennySto cks.com, received $1
Thompson and Fung also were named in a separate SEC case for their roles in a Florida-based scheme in which they promoted a penny
million as a result of one of the schemes. In a separate SEC ca se involving a different scheme, a court ordered $3.73
stock in their newsletters without adequately disclosing they were selling their shares in the same stock and receiving compensation for
million in sanctions against Babikian.
their promotional efforts. A court issued a final judgment requiring them to pay more than $1 millio n combined.
NJ
William E. Redmond, Jr., and

Stefano Signorastri
LR-23138
11/21/2014
The SEC alleges that William E. Redmond Jr. frequently dined at a Manhattan restaurant managed by Stefano Signorastri,
with whom he eventually became good friends and discussed personal matters as well as his work at GenTek Inc., an
Redmond and Signorastri, who each live in New York City, a greed to pay more than $324,000 to settle the SECs charges.
engineering and chemical company where he served on the board of directors in addition to being CEO. GenTeks
nonpublic negotiations to find suitors for a company sale were among the topics that Redmond shared with Signorastri. According to the SECs complaint, GenTek stock also was purchased while in possession of confidential information from Redmond by a
Redmonds frequent disclosures of confidential corpora te information to Signorastri violated his fiduciary duty and other waiter at the restaurant managed by Signorastri and the manager of another restaurant where Redmond held a meeting with American
duties of trust and confidence that he owed to GenTek.
Securities representatives. The waiter and the other manager similarly tendered their GenTek shares after the announcement about the
sale for $6, 162 in combined profits. In the settlement, which is subject to court approval, Redmond agreed to pay disgorgement of
According to the SECs complaint filed in federal court in Manhattan, Signorastri first purchased GenTek stock while in
$149,139 representing the illicit profits of these two traders and most of the trading profits made by Signorastri, who agreed to
possession of material nonpublic information obtained from Redmond as the company began various negotiations, and a disgorgement of the remaining $21,283 of his profits. Redmond also agreed to pay prejudgment interest of $26,052 and a penalty of
year later he purchased additional GenTek stock as the compa ny began negotiating in earnest with American Securities $64,821 for a total of $240,012. Signorastri agreed to pay prejudgment interest of $3, 717 and a penalty of $59,609 for a total of $84,609.
LLC. Two business days after Signorastris last stock purchase, GenTek announced it would be acquired by American
Redmond additionally agreed to be barred from acting as an officer or director of a public company for five years. Redmond and
Securities in a tender offer, and its stock price shot up by nearly 40 percent on the news. Signorastri then tendered all of Signorastri neither admit nor deny the charges in the SECs complaint that they violated the antifraud and tender offer provisions of the
his GenTek shares to obtain his illicit profits.
federal securities laws.
MN
Jeremy Fisher, The Good Life

Financial Group, Inc., and The
Good Life Global, LLC
LR-23139
11/24/2014
This matter involves a sentencing.
The criminal charges arose out of the same facts tha t were the subject of a settled civil enforcement action that the
Commission filed against Fisher on September 30, 2013. The Commission's complaint alleges that from at least August
2009 through December 2012, Fisher raised approximately $1.04 million from approximately 18 investors who invested
in unregistered securities offerings conducted by Fisher through his two companies. Fisher offered investors the
opportunity to invest their money through a "special trading platform" that supposedly generated significant returns.
Fisher told investors that their money would be deposited in an overseas bank account and used as collateral for the
purchase and sale of collateralized debt obligations and medium term notes on the trading platform. However, Fisher
instead fraudulently misappropriated and converted investors' funds for his personal use to pay previous investors, to
purchase a house and car and to pay his daughter's tuition and other personal and business expenses. Fisher also
provided quarterly statements to investors which falsely represented that investors were earning money on their
investments. The Commission's complaint alleged that Fisher and his companies violated Sections 5(a), 5(c), and 17(a)
of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The
complaint also alleged Fisher violated Section 15(a) of the Exchange Act.
MA
Edward M. Laborio, Jona than

Fraiman, Ma tthew K. Lazar,
Envit Capital, LLC, Envit
Capital Group, Inc., Envit
Capital Holdings, Inc., Envit
Capital Private Wealth
Management, LLC, Envit
Capital Multi Strategy Mixed
Investment Fund I LP, Aetius
Group PLC, and Aetius Group
LLC
LR-23140
11/24/2014
This matter involves a judgment.
Laborio, Envit Capital, LLC ("Envit LLC"), Envit Capital Group, Inc. ("Envit Group"), Envit Capital Holdings, Inc. ("Envit Holdings"), Envit
Capital Private Wealth Management, LLC ("Envit Wealth"), Envit Capital Multi Strategy Mixed Investment Fund I LP ("Envit Fund"), Aetius
Group, PLC ("Aetius PLC" ), and Aetius Group, LLC ("Aetius LLC") from future violations.
The judgments also o rder civil penalties of $4 million against Laborio and each of the Envit entities, and orders Laborio and the entities to
disgorge, jointly and severally, $5, 006,590 in ill-gotten gains plus prejudgment interest. Laborio's judgment also bars him from serving as
an officer or director of a public company and from participating in any offering of penny stock. On October 8, 2013, the court entered a
The Securities and Exchange Commission announced that on November 18, 2014, the federal court in Boston,
judgment against Fraiman, enjoining him from future violations of the antifraud provisions of the federal securities laws. On October 11,
Massa chusetts, entered final judgments against defendant Edward M. Laborio and his group of related entities, most with 2013, the Commission issued an Order barring Fraiman from any future association with any broker, dealer, investment adviser, municipal
the name "Envit," in a boiler room scheme case filed by the Commission in 2012. The judgments permanently enjoin
securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after
Laborio and the Envit entities from violating va rious sections of the federal securities laws, bars Laborio from certain
ten years. Fraiman consented to both the judgment and the Co mmission Order. On November 27, 2013, the court entered a judgment
parts of the securities industry, and orders Laborio and the entities to pay a total of $37,006,590 in disgorgement of ill- against Lazar, enjoining him from future violations of the antifraud provision of the federal securities laws. On December 11, 2013, the
gotten gains, prejudgment interest, and civil penalties.
Commission issued an Order barring Lazar from a ny future association with any broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after three
On August 10, 2012, the Commission filed a complaint against Laborio, Jonathan Fraiman, Matthew K. Lazar, and seven years. Lazar consented to both the judgment and the Commission Order. In a parallel criminal case, on August 7, 2014, a federal Grand
entities owned and controlled by Laborio, including a non-existent hedge fund, alleging that they participated in a boiler Jury in the District of Massachusetts indicted Laborio and Fraiman on one count of conspiracy and one count of mail fraud for their roles in
room scheme that raised more than $4 million from approximately 150 investors between October 2006 and late August the Envit boiler room scheme. Also on August 7, 2014, a Magistrate Judge of the United States District Court for the District of
2009 through the use of false promises and pressurized sales tactics.
Massachusetts issued arrest warrants for Laborio and Fraiman. Fraiman was arrested on August 27, 2014. Laborio is currently a fugitive.
NJ
Robert Benou, Marc Benou,

and Conolog Corporation
LR-23141
11/25/2014
The SEC's complaint charges Conolog Corporatio n and the Benous with violating the antifraud provisions of the federal
securities laws. The complaint charges Robert and Marc Benou with violating securities law provisio ns requiring officers
and directors of public companies to report their transactions in the company's stock within two business days, and
requiring all owners of mo re than 5 percent of a company's stock to timely report the size of their holdings and any
material changes to them.
LR-23142
11/25/2014
According to the SECs complaint filed in the U.S. District Court for the Eastern District of Missouri, Donnelly knew of
Eastmans interest in acquiring Solutia and learned on November 18, 2011, that Eastman would be submitting an
improved offer. The complaint a lleges that between November 18, 2011, and November 22, 2011, Donnelly made
Without admitting or denying the SECs a llegations, Donnelly agreed to settle the case against him. The settlement is pending final
multiple purchases of So lutia stock totaling 8,130 shares in brokerage accounts in the names of his children. The
approval by the court. Specifica lly, Donnelly consented to the entry of a final judgment permanently enjoining him from violations of
complaint also alleges that between February 2, 2012, and February 8, 2012, Donnelly sold all 8,130 shares of Solutia
Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; requiring him to pay disgorgement of $104,391, the
stock for a pro fit of $104,391. The complaint alleges that Donnelly misappropriated this information for his own personal amount of his ill-gotten gains, plus prejudgment interest of $8,371.71, and a civil penalty o f $104,391; and prohibiting him from serving as
benefit and breached the duty of trust and confidence that he owed to Solutia and its shareholders.
an officer and director of a public company.
The Securities a nd Exchange Commission announced today that on October 27, 2014, the Honorable John E. Steele of the United States
District Court for the Middle District of Florida sentenced Jeremy S. Fisher to 30 months in prison, followed by 3years of supervised release
and ordered him to forfeit $500,000. The Court has scheduled a hearing to set the amount of restitution to be ordered on December 15,
2014. Fisher, 44, of La Crescent, Minnesota, had previously pled guilty to two counts of wire fraud for his role in stealing over $1 million
from 18 victims in an investment scam. The U.S. Attorney's Office for the Central District of Florida filed criminal charges against Fisher on
January 14, 2014. Fisher was ordered to surrender on December 1, 2014, to begin serving his prison sentence. On October 16, 2013 the
Court in the Commission's case entered orders o f permanent injunction and disgorgement, plus prejudgment, totaling $936,226 to be paid
jointly and severa lly among Fisher and his companies and ordered Fisher to pay a civil penalty of $150,000. Fisher and his companies
consented to the entry of the Court's orders.
The court entered the judgments by default permanently enjoining:
According to the SEC's complaint filed in federal court in Newark, N.J., Robert Benou hired a public relations firm to
promote Co nolog's stock using the false and misleading statements from the press releases. The promotional efforts
significantly increased the company's stock price and tra ding volume, and Robert and Marc Benou made combined
profits of more than $81,000 through undisclosed sales of some of their stock holdings at the artificially inflated prices.
They also each violated the federal securities laws requiring company insiders to disclose information about their
holdings and transactions in company stock so other investors are aware of their moves.
D. Michael Donnelly
NY
Robert Benou agreed to settle the charges without admitting or denying the allegations by paying $77,490 in disgorgement of illegal
profits made from selling Conolog stock as the misleading press releases were issued. He also must pay prejudgment interest of $12,400
and a penalty of $177,490, and will be permanently barred from acting as an officer or director of a public company or participating in
penny stock offerings. Marc Benou agreed to settle the charges by paying disgorgement of $4,191 plus prejudgment interest of $671 and
a penalty of $51,250. He will be barred for at least two years from acting as a n officer or director of a public company or participating in
penny stock offerings. The settlement is subject to court approval.
On September 25, 2012, the SEC issued a consent order in an administrative proceeding finding that Hold Brothers had
violated the federal securities laws by enabling and failing to adequately monito r deceptive trading practices by certain
offshore traders who used its systems. It required Hold Brothers to pay disgorgement, civil penalties, and post-order
interest totaling $2,535,237.44 in five installments over the next 360 days. Hold Brothers made only the first scheduled
payment of $503,333.40 before defaulting.
TX
Hold Brothers On-Line

Investment Services, LLC,
now known as Tafferer
Trading, LLC, Grego ry Hold,
and Steven Hold
LR-23143
11/25/2014
This matter involves an enforcement.
The SEC alleges that Gregory Hold and Steven Hold controlled Hold Brothers, which paid at least $1. 4 million to certain
members (equity holders) in the same month that the Commission issued its consent order. According to the SECs
application, Gregory and Steven Hold culpably caused Hold Brothers to fail to comply with the Commissions consent
order and are jointly and severally liable with Hold Brothers for the unpaid amount of disgorgement, civil penalty, and
post-order interest.
Paul R. Downey, et al.
LR-23144
11/26/2014
The SEC alleges that between January 2010 and May 2011, the father-son duo of Paul and Jeffry Downey used Quest, an
Alba ny, Texas-based oil and gas company, to fraudulently offer Quest preferred stock and limited partnership units in an
entity called Permian Advanced Oil Recovery Investment Fund I, LP (PAOR). Investors were told that PAOR would acquire
working interests in oil and gas leases from Quest and receive revenue from those leases. With assistance from
unregistered salesman John Leonard, the Downeys raised $4.8 million from approximately 17 investors. The PAOR
offering was fraudulent on account of blatantly deceptive misstatements about Quest and PAOR. More particularly, the
Downeys made false statements in the private placement memorandum about the financial viability of Quest; the
The SEC's complaint against the Downeys and Leonard alleges that the Downeys violated Section 17(a) of the Securities Act of 1933 and
purchase debt and liens associated with certain leases in which PAOR was acquiring an interest; the current and
Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and that Leonard violated Section 15(a)
projected petroleum production from the leases; the use of investor funds raised in the offering; independent audits of
of the Exchange Act. The SEC's complaint seeks from the Downeys and Leonard disgorgement of ill-gotten gains with prejudgment
PAOR; and foreseeable litigation against Quest and the Downeys.
interest, civil penalties, and permanent injunctive relief, and a dditionally against the Downeys, officer and director bars.
SEC filed a consent order requiring Hold Brothers to pay a balance of over $2 million in disgorgement, civil penalties, and post-order
interest. The SEC further seeks to have Gregory and Steven Hold, the eponymous Hold brothers, held jointly and severally liable as
control persons for culpably causing Hold Brothers to fail to pay the agreed-upon amount to the SEC.
The SEC alleges that Vinay Kumar Nevatia, who used several aliases while living in Palo Alto, Calif., sold approximately
$900,000 worth of stock he supposedly owned in a privately-held information techno logy company called CSS Corp.
Technologies (Mauritius) Limited. He deceived the buyers into believing that he owned the shares, orchestrated a series
of secret wire transfers, and induced the stock transfer agent into recording his fraudulent sales. He stole the money he
received from investors for his own use.
CA
Vinay Kumar Nevatia
MN
Levi Lindemann
MT
Matthew Carley
LR-23145
According to the SEC's complaint filed in federal district court in San Francisco, Kumar provided the true owners of the
shares with fake updates on their investments for more than a year after he had disposed of their stock in these
subsequent sales in 2011 and 2012. The a ctual owners had bought the CSS stock through Kumar in 2008. Kumar has
never been registered with the SEC nor licensed to trade securities.
The SEC's complaint charges Kumar with violating Sections 17(a)(1), (a)(2), and (a)(3) of the Securities Act of 1933 as well as Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, the return of ill-gotten gains,
and a financial penalty.
12/2/2014
LR-23146
12/2/2014
On November 24, 2014, the Securities and Exchange Commission filed an emergency action alleging that Levi
Lindemann, a former registered representative and resident of West Lakeland Minnesota, operated a fraudulent scheme
through his private company, Gershwin Financial, Inc. and his sole proprietorship, Alternative Wealth Solutions. The SEC's
complaint alleged that from at least September 2009 to August 2013, Lindemann raised approxima tely $976,000 from
six investors located in Wisconsin, including elderly individuals and a member of his own family. The complaint further
After a hearing on November 24, 2014, the Honorable Patrick J. Schiltz of the United States District Court for the District of Minnesota
alleged that Lindemann told these investors that their money would be used to purchase a variety of purported
issued an Order granting the relief sought by the SEC including a preliminary injunction, freezing assets and other emergency relief.
investments including various notes and interests in a unit investment trust. The complaint alleged that in reality, none Counsel for Lindema nn consented to the relief sought by the SEC.
of these investments were ever made. The complaint charged Lindemann with violations of Section 17(a) of the
T his matter involves an emergency a ction. Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The SEC's investigation in this matter is continuing.
LR-23147
12/4/2014
Carley agreed to settle the SEC's charges and be barred from the penny stock industry.
OH
The SEC alleges that Matthew Carley, who lives in Bozeman, Mont., engineered a reverse merger and gained control of
free-trading shares of Red Branch Technologies located in Ashburn, Va. Carley then orchestrated two blast e-mail
campaigns promoting Red Branch stock, and he timed the e-mails to coincide with the dissemination of materially false
and misleading company press releases touting technology related to airport security and homeland security. However
as Carley well knew, Red Branch had no true business operations and no sales revenue. Once the promotional
campaigns generated dramatic increases to Red Branch's share price and trading volume, Carley immediately sold
several million Red Branch shares for $789,478 in unlawful profits.
The SEC's complaint, which was filed in U.S. District Court for the Eastern District of Virginia, alleges that Carley violated Section 17(a) of
the Securities Act of 1933, Sectio n 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.
A parallel criminal case against Carley was announced today by the U.S. Attorney's Office for the Eastern District of Virginia.
The settlement with the SEC, subject to court approval, would bar Carley from participa ting in any future penny stock offering and
permanently enjoin him from future violations of the antifraud provisions. The settlement would also hold him liable for disgorgement and
prejudgment interest of $921,232 that he is anticipated to pay as part of his obligations in the criminal case.
The Securities a nd Exchange Commission announced that on October 23, 2014, October 29, 2014 and November 6, 2014, the United
States District Court for the Southern District o f Florida entered judgments of permanent injunction and other relief, by consent, against
defendants Pa trick G. Rooney, Positron Corporation, and John R. Ro oney, respectively. The judgments enjoin the defendants from future
violations of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c), and permanently bar Patrick and John
Rooney from participating in offerings of penny stock. The judgment against Patrick Rooney also permanently bars him from serving as an
officer or director of public companies. In addition to injunctive relief, the judgments provide for the imposition of civil penalties against all
three defendants in amounts to be determined by the Court upon mo tion by the Commission.
LR-23148
12/4/2014
T his matter involves a permanent

injunction.
The SEC commenced this action by filing its complaint on September 30, 2014 charging Positron, Patrick Rooney and
John Rooney for orchestrating a market manipulation scheme involving Positron's stock.
IL
City of Harvey, Illinois, et al.
LR-23149
12/5/2014
This matter involves a settlement.
On June 25, 2014, the SEC obtained an emergency court order in the U.S. District Court for the Northern District of Illinois
against the Chicago suburb and its comptroller, Joseph T. Letke, to stop a fraudulent bond offering that the city had been
marketing to potential investors. The complaint alleged that the city and Letke had been engaged in a scheme for the
The city has agreed to the entry of a final judgment which will enjoin it from committing future violations of Section 17(a) of the Securities
past several years to divert bond proceeds from prior bond offerings for improper, undisclosed uses. While investigating Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, Harvey has agreed to retain
Harvey's past bond offerings, the SEC learned that the city intended to issue new limited obligation bonds. The SEC a lso an independent consultant a nd an independent audit firm, and will be prohibited from engaging in the offer or sale of any municipal
learned that the city had drafted offering documents that made materially misleading statements about the purpose and securities for three years unless it retains independent disclosure counsel. These measures are designed to prevent future securities fraud
risks of those bonds, while omitting that past bond proceeds had been misused.
by Harvey and to enhance transparency into Harvey's financial condition for future bond investors. The litigation against Letke is pending. http://www.sec.gov/litigation/litreleases/2014/lr23149.htm
MA
J. Patrick O'Neill and Robert H.

Bray
LR-23150
12/5/2014
O'Neill was initially charged by a criminal complaint and arrested in August 2014. On October 31, 2014, the United
States Attorney's Office for the District of Massachusetts filed a criminal Information against O'Neill charging him with
conspiracy to commit securities fraud. Bray was arrested by the Federal Bureau of Investigation on November 12, 2014
and charged by a criminal complaint with participating in the insider trading conspiracy.
Reema D. Shah and Robert W.

Kwok
LR-23151
12/8/2014
This matter involves a settlement.
The SEC's complaint alleged that in July 2009, Robert W. Kwok, a former Senior Directo r of Business Management at
Yahoo, tipped Shah material, nonpublic information concerning an upcoming announcement of an internet search engine
partnership agreement between Yahoo and Microsoft Corporation. The SEC alleged that, based on Kwok's tip, Shah
caused certain of the funds she helped manage, including the Seligman Communications and Information Fund, to
The final judgment against Shah, entered by consent, orders her to pay disgorgement of $388,807 plus prejudgment interest of $1,296,
purchase approximately 700,000 shares of Yahoo. The shares were later sold resulting in profits of $388, 807. The SEC
and permanently enjoins her from any future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
also alleged that in April 2008, Shah tipped Kwok material, nonpublic information concerning an upcoming acquisition of thereunder. No penalty was imposed in light of Shah's sentence in a parallel criminal case and her cooperation. In the parallel criminal
Moldflow by Autodesk, Inc., which had been misappropriated by an Autodesk insider and tipped to Shah. The SEC alleged action, Shah previously pled guilty to securities fraud and conspira cy to commit securities fraud and recently was sentenced to two years
that, based on this tip, Kwok purchased 1,500 shares of Moldflow in a personal account, which he sold after
of probation, and ordered to forfeit $11,751 and pay a $500,000 criminal fine. United States v. Reema Shah, 12 CR 0404 (S. D.N.Y. ). In
announcement of the acquisition, realizing profits of approximately $4,750. The Court previously entered a final
related administrative proceedings, Shah previously consented to a Commission Order barring her from association with any investment
judgment, by consent, against Kwok.
adviser, broker, dealer, municipal securities dealer or transfer agent. In the Matter of Reema D. Shah, File No. 3-15084 (Oct. 31, 2012).
Servergy, Inc.
LR-23152
12/8/2014
This matter involves a subpoena.
According to the SEC's court papers, the staff in the SEC's Fort Worth Regional Office issued subpoenas to Servergy
seeking, among other things, documents and communications related to statements Servergy and its agents made to
investors and prospective investors; the alleged pre-orders; third-party testing of the Cleantech-1000; and charts
comparing the Cleantech-1000 to other servers. The SEC contends that Servergy either has not responded, or has not
fully responded, to these requests.
The Commission also announced today charges against Holley's first-cousin, Robert J. Hahn-Baiyo r, for trading on the basis of inside
information about the impending acquisition of Home Diagnostics that was tipped to him by Holley. In a Complaint filed in the United
States District Court for the District of New Jersey, the SEC alleges that Hahn-Baiyor violated Sections 10(b) and 14(e) of the Securities
In its Complaint, the SEC alleged that, in 2010, Holley, who co-founded Home Diagnostics, tipped six of his friends,
Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder,. Without admitting or denying the allegations in the SEC's Complaint
relatives, and employees with confidential information about the impending acquisition of Home Diagnostics by Nipro
against him, Hahn-Baiyor has co nsented to the entry of a final judgment that permanently enjoins him from future violations of the
Corporation. Each of the tippees subsequently purchased HDI stock on the basis of Holley's tips and, following the public provisions of the federal securities la ws that he is alleged to have violated and requires him to pay a civil penalty of $66,100. Hahnannouncement of the acquisition, sold their HDI shares for a combined profit of over $260,000.
Baiyor's settlement is subject to approval by the Court.
Patrick G. Rooney, et al.
GA
The Commission previously charged O'Neill and Robert H. Bray ("Bray") with insider trading in a civil action filed on
August 18, 2014. The criminal charge is based on the same conduct underlying the SEC's action. The SEC's complaint
alleged that O'Neill, a former senior vice president at Eastern Bank Corporation, learned through his job responsibilities
that his employer was planning to acquire Wainwright Bank & Trust Company ("Wainwright"). According to the SEC's
complaint, O'Neill tipped Bray, a friend and fellow golfer with whom he socialized at a local country club. In the two
weeks preceding a public announcement about the planned acquisition, Bray sold his shares in other stocks to
accumulate funds he used to purchase 31,000 shares of Wainwright. After the public announcement of the acquisition
caused Wainwright's stock price to increase nearly 100 percent, Bray sold all of his shares during the next few months for
nearly $300,000 in illicit profits.
The SEC's action, which is pending, seeks injunctions against each of the defendants from further violations of the charged provisions of
the federal securities laws, disgorgement o f ill-gotten gains, and civil penalties.
In its court papers, the SEC explains that Servergy has raised approximately $26 million from selling shares of common
stock to private investors between 2009 and 2013. The SEC further asserts that, to raise these funds, Servergy
represented to investors that, among other things, it had received pre-orders from both Amazon.com, Inc. and Freescale
Semiconductor, Ltd. for its only product, the Cleantech-1000 server. The SEC is also investigating Servergy's
representations to investors that the Cleantech-1000 consumes up to 80% less power, cooling, and space in comparison
to other servers currently available.
TX
Pursuant to its application, the SEC is seeking an order from the court compelling Servergy to produce all materials responsive to the
subpoenas. The SEC notes that it is continuing to conduct a fact-finding investigation and has not concluded that anyone has broken the
law.
On August 8, 2012, Holley pleaded guilty to federal crimina l charges of securities fraud in a parallel criminal action before the District
Court for the District of New Jersey in United States v. George H. Ho lley, Crim. No. 11-0066-JAP (D.N.J.). On December 18, 2012, Holley was
sentenced to three years of probation and fined $260,000.
The final judgment permanently enjoins Holley from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934
and Rules 10b-5 and 14e-3 thereunder, the general antifraud and tender offer fraud provisions of the federal securities laws. In addition,
the judgment against Holley permanently bars him from acting as an officer or director of a public company, and o rders him to pay
disgorgement of $66, 100, plus prejudgment interest thereon, and a civil penalty in the amount of $312,440. Holley consented to the entry
of the final judgment.
George H. Holley, et al.;

Robert J. Hahn-Baiyor
LR-23153
12/9/2014
The allegations in the criminal indictment stem from the same misconduct underlying the Commission's pending action
filed against Weed and two other defendants on November 6, 2014. In that case, the SEC alleges that Weed facilitated a
scheme to pump and dump the stock of CitySide Tickets Inc. , which he helped structure into a publicly traded company
through reverse mergers. Weed created backdated promissory notes and authored false lega l opinion letters that
enabled Thomas Brazil and Coleman Flaherty to obtain millions of purportedly unrestricted shares of stock in the
company. Investors were then blitzed with a false and misleading promotional campaign touting CitySide Tickets as a
budding national leader on the verge of acquiring smaller ticket firms across the country a nd positioning itself as an
attractive takeover target for Ticketmaster. As the company's stock price increased on the false hype, Brazil and Flaherty
sold their shares to unsuspecting investors for illicit proceeds of approximately $3 million, and Weed was wellcompensated for his role in the scheme. Shortly thereafter, the ma rket for CitySide Tickets stock collapsed and the
company eventually went out of business.
CA
Richard Weed
LR-23154
12/9/2014
This matter involves an indictment.
The Securities a nd Exchange Commission announced today that on December 4, 2014, Richard Weed ("Weed"), a partner in a Newport
Weed was originally charged by a criminal complaint and arrested on November 6, 2014. The SEC's action, which is
Beach, California law practice, was indicted on eleven criminal charges by a grand jury in the U.S. District Court for the District of
pending, seeks disgorgement of ill-gotten gains plus pre-judgment interest and penalties as well as penny stock bars and Massachusetts in connection with an alleged pump-and-dump scheme that defrauded investors in a Boston-based ticket brokering
permanent injunctions a gainst further violations of the securities laws. The SEC also seeks to bar Weed from serving as business. The indictment charges Weed with one count of conspiracy to commit securities fraud and wire fraud, one count of securities
an officer or director of any public company.
fraud, and nine counts of wire fraud.
According to the SEC's complaint filed in the U.S. District Court for the Southern District o f California, San Diego resident Crafton has agreed to a settlement that is subject to court approval. In settlement papers that Crafton signed in April 2014 which were
Bill C. (Billy) Cra fton was the sole owner of Martin Kelly Capital Management, through which he provided investment
filed with the co urt simultaneously with the complaint, Crafton consented to the entry of a final judgment permanently enjoining him
advice and wealth administration services to current and former professional athletes in Major League Baseball, the
against future violations of the Section 17(a) of the Securities Act of 1933; Sections 10(b) and 15(a) of the Securities Exchange Act of 1934
National Football League, the National Hockey League, and the National Basketball Association. From at least 2006 to
and Rule 10b-5; and Sections 206(1), 206(2), and 206(3) of the Investment Advisers Act of 1940. The final judgment to which Crafton
2010, Crafton received more than $1. 5 million in undisclosed compensation and brokerage commissions from the
consented would order that he is liable for $1,505,952 in disgorgement plus prejudgment interest of $192,959, for a total of $1,698,911
principals of certain funds and businesses in exchange for recommending that his clients invest in those enterprises or that he is anticipated to pay as part of his obligations in a parallel criminal case by the U.S. Attorney's Office for the Southern District of
do business with them. In some instances, Crafton falsely disavowed to his clients that he was receiving such
California in which he pled guilty to charges of conspiracy to commit wire fraud on October 17, 2014.
compensation in connection with client transactions.
Additio nally, Crafton consented to the future entry of a Commission order that would bar him from association with any broker, dealer,
The SEC further alleges that Crafton knowingly o rchestrated a fraudulent scheme in June 2010 when he arranged
investment adviser, municipal securities dealer, municipal advisor, tra nsfer agent, or nationally recognized statistical rating organization,
through forged wire transfer authorizations and other means for two of his clients to purchase a third client's $700,000 and also bar him from participating in a ny penny stock offering.
position in a fund. Crafton was well aware that the fund had been the subject of an asset freeze obtained by the SEC four
days earlier for allegedly operating as a Ponzi-like scheme.
The SEC investigatio n is continuing,
The SEC's complaint alleges that Crafton violated Section 17(a) of the Securities Act of 1933; Sections 10(b) and 15(a) of the Securities
Exchange Act of 1934, and Rule 10b-5; and Sections 206(1), 206(2), and 206(3) of the Investment Advisers Act of 1940.
CA
Bill C. (Billy) Crafton
LR-23155
12/11/2014
The Securities a nd Exchange Commission announced today that on November 12, 2014, the Honorable Victor Marrero of the United States
District Court for the Southern District of New York entered a final judgment against defendant Donald L. Johnson, formerly a Managing
Director of The NASDAQ Stock Market ("NASDAQ"), ordering Johnson to disgorge insider trading profits of $755,066.20, together with
prejudgment interest thereon in the amount of $143,041.72, for a total payment of $898,107. 92. Johnson consented to the entry of the
final judgment. The Court previously had entered a judgment permanently enjoining Johnson from violating Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder, representing the full injunctive relief sought by the SEC in the same civil action.
NY
Donald L. Johnson, et al.

(Corrected)
CO, OK, IA
LR-23156
12/12/2014
In its Complaint, filed in May 2011, the SEC had alleged that Johnson had unlawfully traded in advance of nine
announcements of material nonpublic information involving NASDAQ-listed companies from August 2006 to July 2009.
According to the SEC's Complaint, Johnson took advantage of both fa vorable and unfavorable information that was
entrusted to him in confidence by NASDAQ and its listed companies, shorting stocks on several occasions and
establishing long po sitions in other instances. The SEC alleged that Johnson rea ped illicit profits in excess of $755, 000
from his illegal trading.
On May 26, 2011, Johnson pleaded guilty to a federal criminal charge of securities fraud in a para llel criminal action arising out of certain
of the conduct underlying the SEC's action. On August 12, 2011, Johnson was sentenced to forty-two months in prison and ordered to
forfeit $755,066.
Following the entry of the final judgment against Johnson, which provided for payment of full disgorgement with prejudgment interest, the
SEC voluntarily dismissed its relief defendant claim against Johnson's wife, Dalila Lopez. This co ncludes the SEC's civil action against
Johnson.
The Commission's complaint alleges that from at least September to December 2010, Furth engaged in a fraudulent
broker bribery scheme designed to manipulate the market for SearchPath stock through matched trades. The complaint
also alleges that Furth entered into a kickback arrangement with an individual ("Individual A") who cla imed to represent
a group of registered representatives with trading discretion over the accounts of wealthy customers. Furth promised to
pay a 30% kickback to Individual A and the registered representatives he represented in excha nge for the purchase of up
to $10-30 million of SearchPath stock.
OH
LA
Douglas Furth
LR-23157
12/15/2014
The Commission's complaint further alleges that on Octo ber 13-15 and December 6-10, in accordance with the illicit
arrangement, Furth instructed Individual A to purchase approximately 52 million shares of SearchPath stock for a total of The complaint charges Furth with violating Section 17(a)(1) of the Securities Act of 1933 and Sections 9(a)(1) and 10(b) of the Securities
approximately $80,000. Furth gave Individual A detailed instructions concerning the size, price and timing of the orders. Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The Commission seeks permanent injunctive relief from Furth, disgorgement
T his matter involves market manipulation. Thereafter, Furth paid Individua l A bribes of approximately $24,000 for those purchases.
of ill-gotten gains, if any, plus pre-judgment interest, civil penalties, and a penny stock bar.
Treaty Energy Corporation, et

al.
Avon Products, Inc.
LR-23158
LR-23159
12/15/2014
12/17/2014
According to the SEC's complaint filed in U.S. District Court for the Eastern District of Texas, Treaty Energy Corporation
issued deceptive press releases touting drilling successes in Belize and Texas to induce investor demand for its
unregistered stock, which was then illegally distributed to the public. The SEC alleges that Treaty Energy's founder
Ronald Blackburn and four company officers Andrew V. Reid, Bruce A. Gwyn, Lee C. Schlesinger, and Michael A.
Mulshine obtained at least $3.5 million in illicit profits from the scheme. The SEC's complaint further alleges that
Treaty Energy's outside counsel Samuel Whitley abused his gatekeeper role and enabled the scheme by authoring
improper legal opinion letters that a llowed the company and its officers to illegally distribute unregistered stock to the
public. Whitley was aware that Blackburn was running the company and Treaty Energy was abusing registration rules
under the federal securities laws. Yet these facts did not deter him from issuing the opinion letters that allowed the
scheme to proceed. According to the SEC's complaint, the scheme had three basic components. The first part began in
January 2012 when Blackburn directed Treaty Energy to issue a press release claiming that its purported oil strike in
Belize co ntained an estimated five to six million barrels of recoverable oil. Treaty's stock price shot up nearly 80 percent
that day. However, the Belize government publicly refuted Treaty Energy's purported oil strike the very next day, calling
the co mpany's statement "false and misleading" and "irresponsible." The SEC alleges that despite Belize's denial,
Blackburn and the company's officers continued to mislead investors by claiming that Belize was merely downplaying an
actual oil strike for strategic reasons. The SEC alleges that the second part of the scheme entailed Treaty Energy's
failure to disclose in public filings from 2009 to 2013 that Blackburn previously convicted of federal income tax
evasion actually controlled the company and was a de facto officer. The SEC alleges that Reid, Gwyn, Schlesinger, and
Mulshine all knew Blackburn's true role at the company, but intentionally kept this fact out of its disclosures to conceal
from the public that a co nvicted felon was in charge. According to the SEC's complaint, the final part of the scheme got
underway in November 2013 when Treaty Energy began offering investors working interests in a well in West Texas.
The SEC's complaint charges Treaty Energy, Blackburn, Reid, Gwyn, Mulshine, and Schlesinger with securities fraud as well as violations of
Investors were enticed with claims that the working interests were low-risk and expected to yield a return of 111.42
the registration and reporting violations of the federal securities laws. The SEC seeks disgorgement of ill-gotten gains with prejudgment
percent over a 10-year period. The SEC alleges that Treaty Energy and its officers knew these claims were baseless
interest plus financial penalties as well as penny stock bars, officer-and-director bars, and permanent injunctions against them. Reid and
because the well was producing only marginal amounts of oil. In fact, the well produced 235 total barrels from October Gwyn are additionally charged with signing false certifications in Treaty Energy's SEC filings, and Whitley is accused of securities
This matter involves stock manipulation. 2013 to October 2014.
registration violations.
see AAER-3616
Robert J. Hahn-Baiyor
LR-23161
12/18/2014
Joseph Saranello and

Ruettiger, et al.
LR-23162
12/18/2014
The SEC's complaint charges that Saranello violated Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act of 1933 (" Securities
Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5(a) and 10b-5(c) thereunder. To settle these
charges, Saranello has agreed to a final judgment, subject to court approval, that permanently enjoins him from violating these provisions;
bars him from participating in the offering of any penny stock in the future; and orders disgorgement o f $60,000 and prejudgment interest
of $2,953. No civil penalty is being imposed in light of Saranello's cooperation with the Commission's investigation. In a related criminal
case, Saranello previously pleaded guilty to conspiracy to commit wire fraud and is awaiting sentencing. See U.S. v. Joseph A. Saranello,
The SEC's complaint against Saranello, also filed in the District of Nevada, alleges that he set up phony Panamanian
Crim. Action No. 10-63-JVS.
companies and opened brokerage accounts that he and others used in the scheme. According to the complaint,
Saranello did so at the direction of Chad Smanjak, who sought to conceal his involvement in the scheme. The complaint Additio nally, on November 12, 2014, the court entered a default final judgment against defendant Pawel P. Dynkowski, who is a fugitive,
alleges that Saranello, Smanjak and others arranged for these companies to receive large blocks of purportedly
for his role in the Rudy Nutrition scheme. The final judgment against Dynkowski enjoins him from violating Securities Act Sections 5 and
unrestricted Rudy Nutrition stock. The complaint charges that Saranello, Smanjak and others then sold that stock to the 17, Exchange Act Section 10(b) and Rule 10b-5; bars him from participating in the offering of any penny stocks in the future; orders
public after participants in the scheme had artificially inflated the price and volume of Rudy Nutrition stock through
disgorgement in the amount of $2,010,286 and prejudgment interest in the amount of $467,308.88; and orders a civil penalty in the
This matter involves a manipulation ring. fraudulent touting and manipulative trading.
amount of $2,010,286.
The SEC commenced this action by filing its complaint on December 8, 2014, charging Hahn-Baiyor for trading on the
The Securities a nd Exchange Commission announced today that on December 15, 2014, the Honorable Joel A. Pisano of the United States
basis of inside information about the impending acquisition of Home Diagnostics, Inc., that was tipped to him by his
District Court for the District of New Jersey entered a final judgment against defendant Robert J. Hahn-Baiyor. The final judgment
cousin, the Chairman of Home Diagnostics's Board o f Directors, George H. Holley. Hahn-Baiyor consented to the entry of permanently enjoins Hahn-Baiyor from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10bhttp://www.sec.gov/litigation/litreleases/2014/lr23161.htm
the final judgment without admitting or denying the allegations in the Co mmission's complaint.
5 and 14e-3 thereunder, and orders him to pay a civil penalty of $66,100.
The SEC alleges that Dwayne Malloy, Chris Damon, and Theirry Ruffin treated vulnerable older investors as their personal
ATM machines. They cold-called names from a list they maintained at Premier Links Inc. and used high-pressure sales
tactics to convince senio rs to invest in companies purportedly on the brink of conducting initial public offerings (IPOs).
They never disclosed to the investors that only a small fraction of the money would be transmitted to the promoted
companies, and Premier Links diverted investor funds to other entities controlled by the sales representatives or other
associates.
According to the SEC's complaint filed in U.S. District Court for the Eastern District of New York, Premier Links has never
been registered with the SEC as a broker-dealer as required under the federal securities laws to conduct this type of
business with investors. Premier Links, Malloy, Damon, and Ruffin fraudulently obtained at least $9 million from more
than 300 investors across the country by building a relationship of purported trust and confidence with them. In one
particularly egregious example, Damon and Malloy spent months earning the trust of an elderly veteran in order to
defraud him of $300,000. In many instances, investors were provided with misleading account statements showing the
shares they purportedly purchased as being held for safekeeping in their Premier Links accounts while awaiting the
promised IPOs. Yet transfer a gent records for the relevant companies indicate that shares were never purchased for
these investors. Investor money was simply stolen instea d.
NY
Premier Links, Inc., et al.
LR-23163
12/19/2014
In a parallel action, the U.S. Attorney's Office for the Eastern District of New York filed criminal charges.
he SEC's complaint charges Premier Links, Malloy (who was company president from 2007 to 2012), Damo n, and Ruffin with violating the
antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 as well as the broker-dea ler registration
provisions of the Exchange Act. T hey also are charged with selling securities without a registration statement filed with the SEC. T he
complaint seeks disgorgement of ill-gotten gains and financial penalties among other remedies. The complaint also names several relief
defendants for the purposes of recovering money from the scheme in their possession.
The Commission's complaint, filed on August 22, 2014, alleges that Zhunrize is operating as a pyramid scheme because
its co mmission structure is based on the co ntinual recruitment of new members, with the most lucrative returns
dependent on the downline recruitment of other members through store sales irrespective of a ny product sales.
According to the complaint, Zhunrize has taken in approximately $105 million from approximately 77,000 investors since
2012.
Zhunrize, Inc.
Frank A. Dunn, et al.
NC, AL
LR-23164
LR-23165
12/19/2014
12/19/2014
T his matter involves a permanent

injunction.
see AAER-3617
The Commission's complaint further alleges that in its promotional materials, Zhunrize touts the ability to earn
commissions from the sale of products, both through the owner's store and through downstream owners' stores. For
example, a Zhunrize promotional video differentiates Zhunrize from other on-line multi-level marketing plans, claiming
that Zhunrize has " sustainability." According to the video, the Zhunrize "model will sustain itself beca use we will have
millions more customers than distributors." Later, the narrator in the video claims "we have the Vendor Relationships, the
Logistics, the Payment Gateways to reach millions of new customers each month." The Commission's complaint also
alleges that Zhunrize does not disclose, however, that to date substantially all of its revenue has comes from the sale of The Securities a nd Exchange Commission ("Commission") announced today that the Honorable Richard W. Story, United States Judge for
memberships (referred to as stores) and the corresponding monthly internet ho sting fees associated with operating
the Northern District of Georgia entered permanent injunctions against Zhunrize, Inc. ("Zhunrize") and its CEO, Jeff Pan ("Pan")
those stores, rather than the sale of products. Indeed, Pan testified that the company currently derives 80-90% of its
(collectively "Defendants"). These judgments enjoin Defendants from future violations of Sections 5(a), (c) and 17(a) of the Securities Act
revenue from selling online stores and the monthly internet hosting fees fo r them, as opposed to actual products from
of 1933 and Section 10b of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The judgments further provide
these stores. Thus, contrary to the representations to potential investors, Zhunrize is actually a fraudulent pyramid
that upon motio n of the Commission, the Court will set disgorgement, prejudgment interest, and civil penalties. Defendants consented to
scheme.
the entry of these judgments without admitting or denying the allegations of the Commission's complaint.
The SEC alleges that while marketing AlphaSector into the largest active ETF strategy in the market, F-Squared falsely
advertised a successful seven-year track record for the investment strategy based on the actual performance of real
investments for real clients. In reality, the algorithm was not even in existence during the seven years of purported
performance success. The data used in F-Squared's advertising was actually derived through backtesting, which is the
application of a quantitative model to historical market data to generate a hypothetical performance during a prior
period. F-Squared and Present specifically advertised the investment strategy as "not backtested." Furthermore, the
hypothetical data contained a substantia l performance calculation error that inflated the results by approximately 350
percent.
MA
Howard B. Present
LR-23166
12/22/2014
According to the SEC's complaint against Present filed in federal court in Boston, he was responsible for F-Squared's
advertising materials that were often posted on the company website and sent to clients and prospective clients. Present
also was responsible for the descriptions of AlphaSector in its filings with the SEC, and he certified the accuracy of those
filings. F-Squared and Present made the false and misleading statements about AlphaSector from September 2008 to
September 2013. The SEC alleges tha t they claimed AlphaSector was based on an investment strategy that had been
used to invest client assets since April 2001. Yet Present knew that the algorithm was not finalized until late summer
F-Squared consented to the entry of the order finding that it violated Sections 204, 206(1), 206(2), 206(4), and 207 of the Investment
2008 when he devised rules for turning the signals into a model ETF portfolio and directed an assistant to calculate
Advisers Act of 1940 a nd Rules 204-2(a)(16), 206(4)-1(a)(5), 206(4)-7, and 206(4)-8. The order a lso finds that F-Squared aided and
hypothetical returns for the portfolio going back to April 2001.
abetted and caused certain mutual funds sub-advised by F-Squared to violation Section 34(b) of the Investment Company Act of 1940. FSquared acknowledged that its conduct violated federal securities laws, and agreed to cease and desist from committing or causing
The SEC further alleges that the F-Squared analyst who calculated the backtested AlphaSector performance
violations of these provisions. F-Squared a greed to retain an independent compliance consultant and pay disgorgement of $30 millio n and
inadvertently applied the buy/sell signals to the week preceding any ETF price change that the signals were based on.
a penalty of $5 million.
The mistake carried the model portfolio's backtested buy and sell decisions back in time one week, enabling the model
to buy an ETF just before the price rose and sell an ETF just before the price fell. The SEC alleges that the analyst tried to The SEC's complaint against Present alleges that he violated Sections 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of
explain this possible calcula tion error to Present in late September 2008, yet F-Squared went on to advertise the inflated 1940 and Rule 206(4)-8.
data for the next five years and overstated that AlphaSector significantly outperformed the S&P 500 from April 2001 to
This matter involves making false claims. September 2008.
The SEC's investigation is continuing.
Shivbir S. Grewal and

Preetinder Grewal
LR-23167
12/22/2014
The Grewals agreed to pay $90,000 to settle the SEC's charges, and Shivbir Grewal also agreed to be suspended from practicing as an
attorney before the SEC on behalf of any publicly traded company or other entity regulated by the agency.
The SEC alleges that while serving a s outside counsel to Spectrum Pharmaceuticals last year, Shivbir Grewal learned that
the co mpany was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in The SEC's complaint alleges that the Grewals violated Sections 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities
orders for its top-selling drug. Grewal sold his entire investment in Spectrum stock within 48 hours of getting the
Exchange Act of 1934 as well as Rule 10b-5. Without admitting or denying the allegations, the Grewals agreed to be permanently enjoined
nonpublic information from company officials who sought the disclosure advice of his law firm. He tipped his wife
from violating these provisions of the securities laws. Shivbir Grewal agreed to pay disgorgement of $30,343.17, prejudgment interest of
Preetinder Grewal, who also sold all of her Spectrum shares on the basis of the nonpublic information. The day after
$997.68, and a penalty o f $30,343.17. Preetinder Grewal agreed to pay disgorgement of $14,400.05, prejudgment interest of $476.73,
Grewal sold her stock, Spectrum issued a press release revealing the expectation of decreased sales of the drug Fusilev and a penalty of $14,400.05. The settlement is subject to court approval.
and the consequent expectation of reduced revenue, and Spectrum's stock price fell more than 35 percent. Shivbir
Grewal and his wife avoided losses of nearly $45,000 by selling ahead of the bad news.
The SEC's investigation is continuing.
E-Monee.com Inc., et al.
LR-23168
12/23/2014
The Securities a nd Exchange Commission announced that on December 11, 2014, the Hono rable William J. Zloch, United States District
The Commission's complaint, filed on March 19, 2013, alleged tha t from approxima tely January 2010 through at least
Court Judge for the Southern District of Florida entered a Final Judgment ordering Defendant Robert B. Cook to pay a $150,000 civil money
May 2011, E-Monee.com, Inc., its president Estuardo Benavides, and Cook one of its directors, offered shares in E-Monee, penalty.
while claiming the company owned Mexican bonds purportedly worth billions of dollars, and that E-Monee's shares would
substantially increase in value. The complaint alleged that the Mexican bonds were essentially worthless and there was Previously, on May 14, 2014, the Court entered a judgment, by consent, against Defendant Cook, which permanently enjoined him from
no valid basis for the claims by Benavides and Cook that E-Monee's stock price would increase significantly.
future violations of Section 17(a)(1) and (3) of the Securities Exchange Act of 1933 and from participating in any offering of a penny stock. http://www.sec.gov/litigation/litreleases/2014/lr23168.htm
Argyropoulos and Prima Capital agreed to settle the SEC's charges and to be barred from working for an investment adviser or brokerdealer, and financial penalties will be determined at a later date.
The SEC's complaint alleges that Argyropoulos and Prima violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and
Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and seeks permanent
injunctions, disgorgement of ill-gotten gains with prejudgment interest, and, against Argyropoulos only, civil money penalties.
On December 23, 2014, the Securities and Exchange Commission charged a stock promoter based in Santa Barbara,
Calif., with fraudulently raising nearly $3. 5 million from investors purportedly to purchase Facebook a nd Twitter shares
prior to their initial public offerings (IPOs).
CA
Efstratios Elias D.
Argyropoulos and Prima
Capital Group, Inc.
LR-23169
12/23/2014
This matter involves a fraud.
The SEC alleges that instead of purchasing the shares in the secondary ma rket as promised, Efstratios "Elias"
Argyropoulos and his firm Prima Capital Group misappropriated investor funds. They used the money primarily for day
trading of stocks and options as well as to pay off certain investors who complained when they didn't receive the
promised Facebook or Twitter shares.
Without admitting or denying the allegations in the SEC's complaint, Argyropoulo s and Prima consented to a judgment permanently
enjoining them from violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5
thereunder, ordering them to pay, jointly and severally, disgorgement with prejudgment interest, and ordering Argyropoulos to pay civil
money penalties. There will be further proceedings before the District Court to determine the amounts of disgorgement with prejudgment
interest and civil money penalties. The bifurcated settlement remains subject to court approval. Argyropoulos also consented, without
admitting or denying the SEC's findings, to an administrative proceeding order barring him from, among other things, association with any
broker, dealer or investment adviser. The administrative proceeding will be instituted following court approval of the bifurcated
settlement.
Also on December 23, 2014, SEC separately announced a n administrative proceeding against Khaled A. Eldaher, a registered
representative living in Austin, Texas. The SEC Enforcement Division alleges that while working for a registered broker-dealer, Eldaher
reached a side agreement with Argyropoulos to solicit investors and receive 50 percent of the mark-up on Faceboo k shares he sold.
Eldaher sold $362,887.50 worth of Facebook shares and was paid $15,478 by Prima Capital. He was later terminated by the broker-dealer
for selling securities other than through the firm. The Enforcement Division alleges that Eldaher's sales of unregistered securities violated
Section 15(a)(1) of the Exchange Act. The matter will be scheduled for a public hearing before an administrative law judge for proceedings
to adjudicate the Enforcement Division's allegations and determine what, if any, remedial actions are appropriate.
AICPA Disciplinary Actions

2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
Possible Licensure
Jurisdictions Based
on ALD Search (May
Confirm - middle
name, DOB, SSN,
etc.)
MO
James C. Thompson
MO
10/3/2014
Conclusion
In consideration of the AICPA foregoing a full investigation of his a lleged misconduct, Mr. Thompson entered into a
settlement agreement under the Joint Ethics Enforcement Program effective July 3, 2014.
AL
Heather S. Smartt
AL
10/3/2014
PA
Julie Zakroff
PA
Disposition Date
Link
http ://www.aicpa .org/f orthepu blic/disc ipli naryactio ns/page s/ defa ult. aspx
Under the automatic disciplina ry provisions of the Institutes bylaws, Ms. Smartts AICPA membership was terminated,
effective June 5, 2014, in connection with the disciplinary action taken by the Alabama State Bo ard of Public
Accountancy.
10/3/2014
As a result of an investigation o f alleged violations of the Codes of Professional Conduct of the AICPA and the
Pennsylvania Institute of CPAs, Ms. Zakroff, with the firm of Julie H. Zakroff, CPA, entered into a settlement agreement
under the Joint Ethics Enforcement Program, effective September 11, 2014.
AL
Robert H. Moore
AR, ID, MD, AL
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Moore s AICPA membership was terminated,
Accountancy.
WV
Leland Oneal
WV
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. ONeal was admonished, effective July 1, 2014,
in connection with the disciplinary action taken by the West Virginia Board of Accountancy.
VA
N. Wesley Pughsley
VA
10/3/2014
As a result of an investigation of alleged violations of the Code of Professional Co nduct of the AICPA, Mr. Pughsley, with
the firm of N. Wesley Pughsley, Jr., CPA, PC, entered into a settlement agreement under the Joint Ethics Enforcement
Program, effective August 25, 2014.
AL
Austin K. Senseman
AL
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Sensemans AICPA membership was terminated,
Accountancy.
AZ
Harish P. Shah
AZ
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Shahs AICPA membership was terminated,
effective June 5, 2014, in connection with the disciplinary action taken by the Arizona State Board of Public Accountancy.
MD
Michael Lippman
NC, VA
10/3/2014
Under the automatic disciplinary provisions of the Institutes bylaws, Mr. Lippman was admonished, effective July 24,
2014, in connection with the disciplinary actio n taken by the North Carolina State Board of Certified Public Accountant
Examiners.
NJ
Paul Marchant
NJ
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Marchants AICPA membership was suspended
for a period of three-years, effective May 6, 2014, in connection with the disciplinary action taken by the Public Company
Accounting Oversight Board (PCAOB).
AZ
Deborah Gilreath Martinez
MO, AZ
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Ms. Martinez was admonished, effective June 5,
2014, in connection with the disciplinary actio n taken by the Arizona State Bo ard of Accountancy.
CA
Henry Mendoza
IL, CA
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Mendozas AICPA membership was terminated,
effective June 5, 2014, in connection with the disciplinary action taken by the Public Company Accounting Oversight
Board (PCAOB).
CA
Dazhang Li
CA
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Lis AICPA membership was terminated,
effective June 24, 2014, because of a fina l judgment of conviction for a crime punishable by imprisonment for more than
one year.
TX
Larry Kimes
TX
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Kimes AICPA membership was terminated,
effective June 5, 2014, because of a final judgment of conviction for a crime punishable by imprisonment fo r more than
one year.
CA
Kenneth E. Lonchar
ID
10/3/2014
In lieu of an investigation of alleged violations of the Code of Professional Conduct of the AICPA, Mr. Lonchar entered into
a settlement agreement under the Joint Ethics Enforcement Program effective August 2, 2012.
10/3/2014
Under the automatic disciplinary provisions of the Institutes bylaws, Mr. Fuoco s AICPA membership was suspended for a
period of six-months in connection with the disciplinary action taken by the State of Utah Division of Occupational and
Professional Licensing Division.
UT
James Fuoco
LA
Stephen Higgins
GA
Louis G. Gutberlet
GA, NY, VA
10/3/2014
As a result of an investigation o f alleged violations of the Codes of Professional Conduct of the AICPA and the Society of
Louisiana CPAs, Mr. Higgins, with the firm of Stephen P. Higgins, CPA, entered into a settlement agreement under the
Joint Ethics Enforcement Program, effective August 11, 2014.
As a result of a decision of a hearing panel of the Joint Trial Board, Mr. Gutberlets AICPA membership was terminated
effective September 16, 2014.
NJ
Robert Jeffrey
KS, NJ, NY
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Jeffreys AICPA membership was suspended for a
period of three-years, effective September 16, 2014, in connection with the disciplinary action taken by the Public
Company Accounting Oversight Board (PCAOB).
GA
Robert A. Gard
AL, FL, GA, IL, TX,

CA
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Gards AICPA membership was terminated,
Accountancy.
AZ
Paul Collings
AZ
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Collings was admonished, effective June 24,
2014, in connection with the disciplinary actio n taken by the Arizona State Bo ard of Accountancy.
TX, LA, OH, NY
10/3/2014
TN
James H. Dorton
AL, LA
10/3/2014
FL
Tanya Davis
FL, PA, NJ, TX
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Dortons AICPA membership was terminated,
Accountancy.
As a result of a decision of a hearing panel of the Joint Trial Board, Ms. Davis AICPA membership was terminated
CA
Chih-Pin Cheng
CA
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Cheng s AICPA membership was suspended for a
period of ninety-days, in connection with the disciplinary action taken by the California Board of Accountancy.
GA
Charles E. Bailey
GA, AL
10/3/2014
Under the automatic disciplina ry provisions of the Institutes bylaws, Mr. Baileys AICPA membership was terminated,
Accountancy.
AZ
David Goodman
AZ, IA
10/3/2014
As a result of an investigation o f alleged violations of the Code of Professional Conduct of the AICPA, Mr. Goodman, with
the firm of David Goodman, PLC, entered into a settlement agreement under the Joint Ethics Enforcement Program,
NJ
Kayode Agunbiade
NJ, NY
10/3/2014
As a result of an investigation o f alleged violations of the Codes of Professional Conduct of the AICPA and New Jersey
Society of CPAs, Mr. Agunbiade, with the firm of Kayode Agunbiade & Co., CPAs, entered into a settlement agreement
under the Joint Ethics Enforcement Program, effective August 14, 2014.
AICPA Peer Review Board Open Meeting Minutes

2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
jurisdiction, etc.) Firm Name
Possible Licensure
Jurisdictions Based
on ALD Search (May
Confirm - middle
name, DOB, SSN,
Meeting Report Date Effective Date
etc.)
11/14/2014
Conclusion
No information contained in the Open Session Meeting this Quarter.
Link
www.aicpa.org/InterestAreas/PeerReview/Community/PeerReviewBoard/MeetingMinutes/DownloadableDocuments/Nov2014PRBOpenMtgMaterials.pdf
IRS OPR Disciplinary Reports

2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
jurisdiction, etc.) Name/Profession
CA
Rathana Ung, Enrolled Agent
CA
Nathan M. Gilliland, CPA
CA
James P. Kleier, Attorney
CA
Trudy N. Reed, CPA
Possible Licensure
Jurisdictions Based
on ALD Search (May
Confirm - middle
name, DOB, SSN,
Bulletin Date
etc.)
Effective Date
Conclusion
Link
Suspended by default decision in expedited proceeding under 31 C.F.R. 10.82(b)
www.irs.gov/fi le_source/pub/irs-irbs/irb14-46.pdf
CA
11/10/2014
Indefinite from
August 22, 2014
Indefinite from
August 14, 2014
11/10/2014
Indefinite from
September 10,
2014
CA
11/10/2014
Indefinite from
September 9,
2014
11/10/2014
DC
Stephanie Y. Bradley, Attorney
11/10/2014
GA
Matthew A. Adegbite, CPA
11/10/2014
HI
Andrew A. Agard, Attorney
IL
George L. Spencer, CPA
IL, NC
11/10/2014
IL
Paul M. Daugerdas,
Attorney/CPA
IL
MA
Carlos M. Sousa, Attorney
11/10/2014
11/10/2014
11/10/2014
MI
Arthur Kroon, CPA
11/10/2014
MN
Joan L. Meidinger, Attorney
11/10/2014
NJ
Muhammed Saleem, Enrolled

Agent
NJ
Raymond Rekuc, CPA
Indefinite from
September 9,
2014
Indefinite from
August 12, 2014
Indefinite from
August 14, 2014
Indefinite from
October 3, 2014
Indefinite from
August 14, 2014
Indefinite from
August 14, 2014
9-Jul-14
Censured by consent for admitted violation of 10.22(a)(1) (Revs. 2005 and 2008) (requiring practitioner to exercise due
diligence in preparing, and filing of, tax returns for the tax years 2006, 2007, 2008, and 2009)
Suspended by decision in expedited proceeding under 31 C.F.R. 10.82(b)
NJ
Thomas L. Murphy, Attorney
11/10/2014
NY
Matthew P. Wattoff, Attorney
11/10/2014
Indefinite from
October 1, 2014
Indefinite from
August 14, 2014
Indefinite from
August 1, 2014
Indefinite from
October 1, 2014
Indefinite from
August 14, 2014
11/10/2014
NJ
11/10/2014
NY
Barry Balaban, Attorney
11/10/2014
Indefinite from
September 3,
2014
NY
Ronald L. Simons, CPA
NY
11/10/2014
Indefinite from
September 11,
2014
PA
William N. Easton III, CPA
PA
11/10/2014
PA
Jerome Pinkowski, CPA
PA
TN
John E. Clemmons, Attorney
VA
Charles W. Bee, CPA
WV
Harold S. Albertson, Attorney
11/10/2014
11/10/2014
FL, NY
11/10/2014
11/10/2014
Indefinite from
September 15,
2014
Indefinite from
October 2, 2014
Indefinite from
September 9,
2014
Indefinite from
August 14, 2014
Indefinite from
August 14, 2014
PCAOB Disciplinary Reports

2014 - Quarter 4
States
Specifically
Referenced in
Agency Report
(licensure,
location of
violation, court of
AZ
BeachFleischman PC
UT
Reginald G. Campos, CPA
NJ
Carney, Delplato LLC
FL
Appelrouth, Farah & Co. PA
Possible Licensure
Jurisdictions Based
on ALD Search (May
Confirm - middle
name, DOB, SSN,
Release Number
etc.)
TX, CA, AZ
PR, TX, FL
NY
Facts
Conclusions
Link
105-2014-008
11/4/2014
T his matter involves an order making

findings and imposing sanctions.
Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), BeachFleischman is censured; and
Bea chFleischman is a professional corporation located in Tucson, Arizona. BeachFleischman is licensed by the Arizona
B. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $1,000 is imposed upon
State Board of Accountancy to engage in the practice of public accounting (License No. 770). The firm registered with the BeachFleischman. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in accordance
Board on August 16, 2011, pursuant to Section 102 of the Act and Board rules.
with Section 109(c)(2) of the Act.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Be achFleischman.pdf
105-2014-009
11/4/2014

Reginald G. Campos, CPA, P.C. is a professional corporation located in Hurricane, Utah. The firm registered with the Board
on May 10, 2005, pursuant to Section 102 of the Act and Board rules. Campos was licensed by the Utah Division of
Occupational and Professional Licensing to engage in the practice of public accounting (License No. 5651733-2603), but Accordingly, it is hereby ORDERED that:
such license expired on September 30, 2008. A search of public records indicates that the firm has not issued any audit A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Campos is censured; and
reports or broker-dealer certifications since registering with the Board.
B. Pursuant to Section 105(c)(4)(A) of the Act and PCAOB Rule 5300(a)(1), the registration of Campos is revoked.
http://pcaobus.org/Enforcement/Decisions/Documents/Campos.pdf
105-2014-010
11/4/2014


Carney, Delplato LLC is a limited liability corporation located in West Orange, New Jersey. The firm was licensed by the
A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Respondent, Carney, Delplato LLC, is censured; and
New Jersey State Board of Accountancy to engage in the practice of public accounting (License No. 20CB00349900), but B. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $3,000 is imposed upon
such license expired June 30, 2012 (under the name "Snare, Foti & Delplato LLP"). The firm registered with the Board on Respondent. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in acco rdance with
January 27, 2004, pursuant to Section 102 of the Act and Board rules.
Section 109(c)(2) of the Act.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Ca rn ey. pdf
105-2014-011
12/8/2014


A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Appelrouth is censured;
B. Pursuant to Section 105(c)(4)(C) of the Act and PCAOB Rule 5300(a)(1), Appelrouth's registration is temporarily suspended for a period
of one year from the date of the issuance of this Order; and
Appelrouth is a co rporation located in Coral Gables, Florida. Appelrouth is licensed by the Florida Department of Business C. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $1,000 is imposed upon
& Professional Regula tion to engage in the practice of public accounting (License No. AD0016486). The firm registered
Appelrouth. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in accordance with
with the Board on September 4, 2008, pursuant to Section 102 of the Act and Board rules.
Section 109(c)(2) of the Act.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Ap pel ro uth.pdf
105-2014-012
12/8/2014


A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Dar is censured; and
Dar is a proprietorship loca ted in Valley Stream, New York. Dar is licensed by the New York State Education Department B. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $1,000 is imposed upon
to engage in the practice of public accounting (License No. 052646). The firm registered with the Board on May 17, 2011, Dar. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in accordance with Section
pursuant to Section 102 of the Act and Board rules.
109(c)(2) of the Act.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Iftikha r_ Da r.pdf
NY
Iftikhar A. Dar, CPA
TX
Riley and Company, PLLC
105-2014-013
12/8/2014

Riley is a corporatio n located in Houston, Texas. Riley is licensed by the Texas State Board of Public Accountancy to
engage in the practice of public accounting (License No. C07672). The firm registered with the Board on April 5, 2005,
pursuant to Section 102 of the Act and Board rules.

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Riley is censured; and
B. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $1,000 is imposed upon
Riley. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in accordance with Section
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Ril ey.pdf
FL
Southwest CPA, LLC
FL
105-2014-014
12/8/2014

Southwest is a limited liability company located in Bradenton, Florida. Southwest is licensed by the Florida Department
of Business & Professional Regulation to engage in the practice of public accounting (License No. AD67345). The Firm
registered with the Board on January 31, 2012 pursuant to Section 102 of the Act and Board rules.

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Southwest is censured; and
B. Pursuant to Section 105(c)(4)(A) of the Act and PCAOB Rule 5300(a)(1), the registration of Southwest is revoked.
CA
Timpson Garcia, LLP
CA
105-2014-015
12/8/2014

Timpson is a limited liability partnership located in Oakland, California. Timpson is licensed by the California Board of
Accountancy to engage in the practice of public accounting (License No. PAR 5673). The firm registered with the Board
on October 22, 2003, pursuant to Section 102 of the Act and Board rules.

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Timpson is censured;
B. Pursuant to Section 105(c)(4)(C) of the Act and PCAOB Rule 5300(a)(1),Timpson's registration is temporarily suspended for a period of
one year from the date of the issuance of this Order; and
C. Pursuant to Section 105(c)(4)(D) of the Act, and PCAOB Rule 5300(a)(4), a civil money penalty in the amount of $1,000 is imposed upon
Timpson. All funds collected by the Board as a result of the assessment of this civil money penalty will be used in accordance with Section
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Timps on.p df
NC
OH, CA, TX, GA, VA,

Walker & Associates, CPA, PA NC, KY, MO
105-2014-016
12/8/2014

Walker is a corporation located in Charlotte, North Ca rolina. Walker is licensed by the North Carolina Board of
Accountancy to engage in the practice of public accounting (License No. 31023). The firm registered with the Board on
November 16, 2010, pursuant to Section 102 of the Act and Board rules.

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Walker is censured; and
B. Pursuant to Section 105(c)(4)(A) of the Act and PCAOB Rule 5300(a)(1), the registration of Walker is revoked.
105-2014-017
12/8/2014
ATA is a registered public accounting firm with offices in ten locations in Tennessee and Kentucky. At all relevant times,
the Firm was licensed by the Tennessee State Board of Accountancy (license nos. 29, 196, 358, 359, 360, 361, 472, 883,
890, 909, 2826, 3994) and the Kentucky Sta te Board of Accountancy (license nos. 486, B 486). The Firm, formed in 1997,
is registered with the Board pursuant to Section 102 of the Act and Board rules. ATA prepared the financial statements
for a broker-dealer audit client ("Broker-Dealer") for the year ended December 31, 2012. As a result, the Firm was not
independent of the Broker-Dealer under auditor independence criteria established by the Commission and made
applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers.2 The Firm nevertheless audited the
financial statements and issued an audit report that the Broker-Dealer included with the financial statements it filed with Accordingly, it is hereby ORDERED that:
the Commission. In the audit report, the Firm represented that the audit had been performed in accordance with
A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), the Firm is censured.
disciplinary proceedings, making findings Generally Accepted Auditing Standards (" GAAS"). Because GAAS requires independence, however, that representation
B. Pursuant to Section 105(c)(4)(D) of the Act and PCAOB Rule 5300(a)(4), a civil money penalty of $2,500 is imposed upon the Firm.
a nd imposing sanctions.
violated Rule 17a-5(i), which required the audit report to state whether the audit was made in accordance with GAAS.
C. Establish various policies and procedures.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Alex ander_Th om pson .pd f
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /So uth west _CPA. pdf
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Walker.pdf
TN, KY
Alexander Thompson Arnold

PLLC
KY
Dean Dorton Allen Ford, PLLC KY
105-2014-018
12/8/2014
DDAF is a registered public accounting firm with offices in Lexingto n and Louisville, Kentucky. It is a member firm of the
McGladrey Alliance. At all relevant times, the Firm was licensed by the Kentucky State Board of Accountancy (license nos.
56, B 56). The Firm, formed in 1982, is registered with the Board pursuant to Section 102 of the Act and Board rules.
DDAF prepared the financial statements for a broker-dealer audit client ("Broker-Dealer") for the year ended December
31, 2012. As a result, the Firm was not independent of the Broker-Dealer under auditor independence criteria established
by the Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dea lers.2 The Firm
nevertheless audited the financial statements and issued an audit report that the Broker-Dealer included with the
financial statements it filed with the Commission. In the audit report, the Firm represented that the audit had been
performed in accordance with Generally Accepted Auditing Standards (" GAAS"). Because GAAS requires independence, A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), the Firm is censured.
disciplinary proceedings, making findings however, that representation violated Rule 17a-5(i), which required the audit report to state whether the audit was made B. Pursuant to Section 105(c)(4)(D) of the Act and PCAOB Rule 5300(a)(4), a civil money penalty of $2,500 is imposed upon the Firm.
in accordance with GAAS.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Dea n_Dorto n.p df
GA
Goldman & Company CPAs PC RI, GA
105-2014-019
12/8/2014
Goldman & Company is a registered public accounting firm with offices in Marietta, Georgia. At all relevant times, the
Firm was licensed by the Georgia Board of Accountancy (license no. ACF004707). The Firm, formed in 2002, is registered
with the Board pursuant to Section 102 of the Act and Board rules. Goldman & Company prepared the financial
statements for a brokerdealer audit client ("Broker-Dealer") for the year ended December 31, 2012. As a result, the Firm
was not independent of the Broker-Dealer under auditor independence criteria established by the Commission and made
violated Rule 17a-5(i), which required the audit report to state whether The audit was made in accordance with GAAS.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Goldman.pdf
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Lederman.pdf
MO, KY, SC, AR
CA
Lederman Zeidler Gray & Co.,

CA
LLP
105-2014-020
12/8/2014
Lederman Zeidler Gray is a registered public accounting firm with offices in Beverly Hills, California. At all relevant times,
the Firm was licensed by the California Board of Accountancy (license no. 5364). The Firm, formed in 1989, is registered
with the Board pursuant to Section 102 of the Act and Board rules. Lederman Zeidler Gray prepared the financial
statements for a brokerdealer audit client ("Broker-Dealer") for the year ended September 30, 2012. As a result, the Firm
was not independent of the Broker-Dealer under auditor independence criteria established by the Commission and made
violated Rule 17a-5(i), which required the audit report to state whether the audit was made in accordance with GAAS.
NY
Leonard Rosen & Company,

PC
105-2014-021
12/8/2014
Leonard Rosen is a registered public accounting firm with offices in New York, New York. At all relevant times, the Firm
was registered with the New York State Education Department (Professional Service Corporation No. 007897). The Firm,
formed in 1976, is registered with the Board pursuant to Section 102 of the Act and Board rules. Leonard Rosen prepared
the financial statements for a broker-dealer audit client ("Broker-Dealer") for the year ended December 31, 2012. As a
result, the Firm was not independent of the Broker-Dealer under auditor independence criteria established by the
Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers. The Firm
nevertheless audited the financial statements and issued an audit report that the Broker-Dealer included with the
financial statements it filed with the Commission. In the audit report, the Firm represented that the audit had been
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Leona rd _Rosen.pdf
12/8/2014
Raines and Fischer is a registered public accounting firm with offices in New York, New York. At all relevant times, the
Firm was registered with the New Yo rk State Education Department (Partnership Identification No. 024631). The Firm,
formed in 1984, is registered with the Board pursuant to Section 102 of the Act and Board rules. Raines and Fischer
prepared portions of the financial statements for a broker-dealer audit client ("Broker-Dealer") for the year ended
December 31, 2012. As a result, the Firm was not independent of the Broker-Dealer under auditor independence criteria
established by the Commission and made applicable by Exchange Act Rule 17a-5(f)(3) to audits of brokers and dealers.2
The Firm nevertheless audited the financial sta tements and issued an audit report that the Broker-Dealer included with
the financial statements it filed with the Commission. In the audit report, the Firm represented that the audit had been
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Rain es_ and_Fi sch er.pd f
12/8/2014
Raphael and Raphael is a registered public accounting firm with offices in Massachusetts and New Jersey. At all releva nt
times, the Firm was licensed by the Massachusetts Boa rd of Public Accountancy (license no. 23) and the New Jersey State
Board of Accountancy (license no. 20CB00602100). The Firm, formed in 1944, is registered with the Boa rd pursuant to
Section 102 of the Act and Board rules. Raphael and Raphael prepared the financial statements for a brokerdealer audit
client ("Broker-Dealer") for the year ended September 30, 2012. As a result, the Firm was not independent of the BrokerDealer under auditor independence criteria established by the Commission and made a pplicable by Exchange Act Rule
17a-5(f)(3) to audits of brokers and dealers.2 The Firm nevertheless audited the financial statements and issued an audit
report that the Broker-Dealer included with the financial statements it filed with the Commission. In the audit report, the Accordingly, it is hereby ORDERED that:
Firm represented that the audit had been performed in accordance with Generally Accepted Auditing Standa rds
disciplinary proceedings, making findings ("GAAS"). Because GAAS requires independence, however, that representation violated Rule 17a-5(i), which required the B. Pursuant to Section 105(c)(4)(D) of the Act and PCAOB Rule 5300(a)(4), a civil money penalty of $2,500 is imposed upon the Firm.
audit report to state whether the audit was made in accordance with GAAS.
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Raphae l_a nd_Rapha el.pdf
NY
MA, NJ
CA
Raines and Fischer LLP
Raphael and Raphael LLP
Akiyo Yoshida, CPA
105-2014-022
NH, NJ, RI, MA
CA
105-2014-023
105-2014-024
12/17/2014
Akiyo Yoshida, age 52, of Tokyo, Japan, is a certified public accountant ("CPA") licensed under the la ws of the state of
California (license no. 64454). In 2000, Yoshida's California CPA license became inactive. As a result, Yoshida is not
required to meet California's continuing professional education requirements, and is not licensed to engage in the
practice of public accountancy. At all relevant times, Yoshida was a partner in the Tokyo, Japan office of Grant Thornton
Taiyo ASG, LLC ("GT Japa n"),3 a registered public accounting firm, and was an associated person of a registered public
accounting firm as that term is defined in Section 2(a )(9) of the Act and PCAOB Rule 1001(p)(i). This matter concerns
disciplinary proceedings, making findings Yoshida's failures to comply with PCAOB rules and auditing standards in connection with his audit work concerning the
revenue recognized by Baldwin-Japan, Limited ("BJL" ), a material subsidiary of Baldwin.

A. Pursuant to Section 105(c)(4)(E) of the Act and PCAOB Rule 5300(a)(5), Akiyo Yoshida is hereby censured;
B. Pursuant to Section 105(c)(4)(B) of the Act and PCAOB Rule 5300(a)(2), Akiyo Yoshida is suspended for one (1) year from the date of
this Order from being a n associated person of a registered public accounting firm, as that term is defined in Section 2(a)(9) of the Act and
PCAOB Rule 1001(p)(i);33
C. Pursuant to Section 105(c)(4)(C) of the Act and PCAOB Rule 5300(a)(3), for one (1) year following the termination of the suspension
ordered in paragraph B, Akiyo Yoshida's role in any "audit," as that term is defined in Section 110(1) of the Act and PCAOB Rule 1001(a)(v),
shall be restricted as follows: Yoshida shall not (1) serve, or supervise the work of another person serving, as an "engagement partner," as
that term is used in the Board's Auditing Standard No. 10, Supervision of the Audit Engagement; (2) serve, or supervise the work of
another person serving, as an " engagement quality reviewer," as that term is used in the Board's Auditing Standard No. 7, Engagement
Quality Review; (3) serve, or supervise the work of another person serving, in a ny role that is equivalent
to engagement partner or engagement quality reviewer, but differently denominated (such as "lead partner," "practitioner-in-charge," or
"concurring partner"); (4) exercise authority, or supervise the work of another person exercising authority, either to sign a register ed
public accounting firm's name to an audit report, or to consent to the use of a previously issued audit report, for any issuer, broker, or
dealer; or (5) serve, or supervise the work of another person serving, as the "other auditor," or "another audito r," as those terms are used
in the Board's Interim Auditing Standard AU Section 543, Part of Audit Performed by Other Independent Auditors; and
D. Pursuant to Section 105(c)(4)(F) of the Act and PCAOB Rule 5300(a)(6), Akiyo Yoshida is required to complete, within one (1) year from
the date of the issuance of this Order, forty (40) hours of continuing professional education ("CPE") in subjects that are directly related to
the audits of issuer financial statements under PCAOB standards (such hours shall be in addition to, and shall not be counted in, the CPE
that he is required to obtain in connection with any professional license).
http ://p caobu s. org/E nfo rcem ent /Decisio ns/D ocumen ts /Yoshida.pdf
S. BELL 1/10/15
Enforcement information in this report is gathered from publicly available information on the respective agency web sites. For further information regarding a specifi c matter, please contact Stacey Grooms at NASBA at sgrooms@nasba.org.

AICPA Irs Pcaob Ald 2014 QTR 4

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SEC Accounting and Auditing Enforcement Releases

Disposition Date Issues

Peter A. Jenson, Chartered

T his matter involves an order instituting

BDO China Dahua CPA Co.,

This matter involves an extension order.

T his matter involves an order instituting

Eugene F. Hovanec, CPA

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T his matter involves an order instituting

Great Lakes Dredge & Dock

T his matter involves an order instituting

T his matter involves an order instituting

This matter involves reinstatement.

Bio-Rad Laboratories, Inc.

David Blain, CPA

Dr. L.S. Smith

T his matter involves an order instituting

T his matter involves an order instituting

Charles Elliot Smith, CPA

T his matter involves an order instituting

T his matter involves an order instituting

T his matter involves an order instituting

T his matter involves an order instituting

S.W. Hatfield, CPA and Scott W.

T his matter involves an opinion on a

T his matter involves an order instituting

Robert Cooper, Company and

Joseph Yafeh CPA, Inc.

T his matter involves an order instituting

Lally & Co., LLC

T his matter involves an order instituting

Brace & Associates, PLLC

T his matter involves an order instituting

Boros & Farrington Account ancy

T his matter involves an order instituting

Mark Smith, CPA

Hampton Roads Bankshares,

Neal A. Petrovich, CPA

OUM & Co. LLP

T his matter involves an order instituting

Lerner & Sipkin CPAs LLP

T his matter involves an order instituting

T his matter involves an order instituting

BDO China Dahua CPA Co., Lt d.

This matter involves an extension order.

Canadian Solar, Inc. and Yan

T his matter involves an order instituting

Angel E. Lana, CPA

T his matter involves an order instituting

Baker Tilly Hong K ong Limited,

T his matter involves an order instituting

Avon Products, Inc.

T his matter involves a charge of FCPA

Frank A. Dunn, et al.

This matter involves a dismissal.

http ://www.se c. gov/lit iga ti on/ litreleases/201 4/lr2 3165.htm

This matter involves an extension order.

Thomas D. Melvin, CPA

SEC Litigation Releases

Disposition Date Issues

This matter involves an indictment.

Patrick G. Rooney, John R.