FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23140 / November 24, 2014
Securities and Exchange Commission v. Edward M. Laborio, Jonathan Fraiman, Matthew 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, Civil Action No. 1:12-cv-11489-PBS, (District of Massachusetts, Complaint filed August 10, 2012)
United States v. Edward Laborio and Jonathan Fraiman, 12-cr-10238-FDS-JGD (District of Massachusetts)
Court Enters Judgments Against Former Massachusetts-Based Boiler Room Operator and His Companies, Also Indicted by Grand Jury
The Securities and Exchange Commission announced that on November 18, 2014, the federal court in Boston, Massachusetts, entered final judgments against defendant Edward M. Laborio and his group of related entities, most with the name "Envit," in a boiler room scheme case filed by the Commission in 2012. The judgments permanently enjoin Laborio and the Envit entities from violating various sections of the federal securities laws, bars Laborio from certain parts of the securities industry, and orders Laborio and the entities to pay a total of $37,006,590 in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
On August 10, 2012, the Commission filed a complaint against Laborio, Jonathan Fraiman, Matthew K. Lazar, and seven entities owned and controlled by Laborio, including a non-existent hedge fund, alleging that they participated in a boiler room scheme that raised more than $4 million from approximately 150 investors between October 2006 and late August 2009 through the use of false promises and pressurized sales tactics.
The court entered the judgments by default permanently enjoining:
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 of Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder;
Laborio and Envit Wealth from future violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder;
Laborio, Envit LLC, Envit Group, Envit Holdings, and Aetius PLC from future violations of Section 5 of the Securities Act;
Envit Fund and Aetius LLC from future violations of Section 7(a) of the Investment Company Act of 1940; and
Laborio from future violations of Section 15(a)(1) and 16(a) of the Exchange Act and Rule 16a-3 thereunder.
The judgments also order 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 judgment against Fraiman, enjoining him from future violations of the antifraud provisions of the federal securities laws. On October 11, 2013, the Commission issued an Order barring Fraiman from any 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 ten years. Fraiman consented to both the judgment and the Commission Order.
On November 27, 2013, the court entered a judgment against Lazar, enjoining him from future violations of the antifraud provision of the federal securities laws. On December 11, 2013, the Commission issued an Order barring Lazar from any 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 years. Lazar consented to both the judgment and the Commission Order.
In a parallel criminal case, on August 7, 2014, a federal Grand 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 the Envit boiler room scheme. Also on August 7, 2014, a Magistrate Judge of the United States District Court for the District of Massachusetts issued arrest warrants for Laborio and Fraiman. Fraiman was arrested on August 27, 2014. Laborio is currently a fugitive.
For more information, see Exchange Act Release No. 34-59900 (May 12, 2009) [Order suspending trading in Envit Group securities]; Initial Decision Release No. 385 (August 13, 2009) [Initial decision revoking registration of Envit Group securities]; Exchange Act Release No. 60658 (September 11, 2009) [Notice of final decision revoking registration of Envit Group securities]; Litigation Rel. No. 22444 (August 10, 2012) [Civil Complaint]; Litigation Rel. No. 22836 (October 8, 2013) [Fraiman settlement]; Exchange Act Release No. 70678 (October 11, 2013) [Fraiman Order]; Litigation Release No. 22881 (December 2, 2013) [Lazar settlement]; Exchange Act Release No. 71043 (December 11, 2013) [Lazar Order].
Showing posts with label FALSE PROMISES. Show all posts
Showing posts with label FALSE PROMISES. Show all posts
Wednesday, November 26, 2014
Thursday, January 16, 2014
PHONY MORTGAGE RELIEF SCAM GETS DEFENDANTS BANNED FROM BUSINESS
FROM: FEDERAL TRADE COMMISSION
Defendants in Phony Mortgage Relief Scheme to Pay Nearly $3.6 Million; Orders Ban Them from Mortgage Relief Business
The South Florida-based defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief services to consumers under a settlement with the Federal Trade Commission. This settlement represents the FTC’s largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans. Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants’ corporate and personal assets pending settlement of the case.
“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They broke the law by taking money upfront and making false promises.”
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers’ loans and providing access to full-service, expert legal representation to fight their lenders. The defendants, who marketed their programs in English and Spanish through a national outbound telemarketing campaign, allegedly told consumers that “80 percent of mortgages contain some fraud” and, in some cases, that even a small error in their loan documents could nullify the mortgage. The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would “halt the foreclosure process” and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt. In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief. The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.
Under the settlements announced today, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. They also are prohibited from placing unsolicited calls both to numbers listed on the Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the Do Not Call Registry.
The settlements require the Defendants to pay nearly $3.6 million to redress consumer victims. Under the terms of the settlements:
A $25.1 million judgment, reflecting the total amount of fees taken in by the scheme, is imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC, and five other corporate defendants. The judgment will be suspended when they surrender their assets – an estimated $3.5 million. The order also resolves allegations against Desmond’s wife, relief defendant Shelie Desmond, by requiring her to turn over an estimated $110,000 in unearned ill-gotten gains that she received from the scheme.
$1,428,658 judgments are imposed on Andrew Primavera and Lazaro Dinh and four corporate defendants. The judgments, entered August 22, 3013, reflect these defendants’ ill-gotten gains, and were suspended after they surrendered their assets: about $20,0000 from Dinh and $1,600 from Primavera. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee, Dinh’s sister Maria Soltura. The $336,929 judgment against Soltura and the Trust was suspended when the FTC received the $1,575 that was frozen in the trust’s bank account when the FTC shut down the operation last year.
A $392,215 judgment was imposed against Christopher N. Edwards and Reaching U Network, Inc., and a $102,417 judgment was imposed upon Kim E. Landolfi. The judgments, entered May 22, 2013, reflect these defendants’ ill-gotten gains and were suspended when they surrendered frozen assets to the FTC: approximately $950 from Edwards and Reaching U Network, Inc. and $40,000 from Landolfi.
If it is later determined that a defendant provided false financial information to the FTC, the full amount of the judgment against that defendant will become due.
Under federal law, foreclosure rescue and loan modification service providers are banned from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. For consumer information about avoiding mortgage and foreclosure rescue scams, see this FTC material.
The Commission vote approving the consent decree for Radzikowski, Desmond, Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Legal Servicing and Billing Partners LLC; and Back Office Support Systems LLC was 4-0. The consent decree was filed in the U.S. District Court for the Southern District of Florida and entered by the court on December 27, 2013.
NOTE: Consent decrees have the force of law when approved and signed by the District Court judge.
Defendants in Phony Mortgage Relief Scheme to Pay Nearly $3.6 Million; Orders Ban Them from Mortgage Relief Business
The South Florida-based defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief services to consumers under a settlement with the Federal Trade Commission. This settlement represents the FTC’s largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans. Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants’ corporate and personal assets pending settlement of the case.
“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They broke the law by taking money upfront and making false promises.”
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers’ loans and providing access to full-service, expert legal representation to fight their lenders. The defendants, who marketed their programs in English and Spanish through a national outbound telemarketing campaign, allegedly told consumers that “80 percent of mortgages contain some fraud” and, in some cases, that even a small error in their loan documents could nullify the mortgage. The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would “halt the foreclosure process” and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt. In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief. The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.
Under the settlements announced today, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. They also are prohibited from placing unsolicited calls both to numbers listed on the Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the Do Not Call Registry.
The settlements require the Defendants to pay nearly $3.6 million to redress consumer victims. Under the terms of the settlements:
A $25.1 million judgment, reflecting the total amount of fees taken in by the scheme, is imposed on Derek Radzikowski, Jason Desmond, Prime Legal Plans LLC, and five other corporate defendants. The judgment will be suspended when they surrender their assets – an estimated $3.5 million. The order also resolves allegations against Desmond’s wife, relief defendant Shelie Desmond, by requiring her to turn over an estimated $110,000 in unearned ill-gotten gains that she received from the scheme.
$1,428,658 judgments are imposed on Andrew Primavera and Lazaro Dinh and four corporate defendants. The judgments, entered August 22, 3013, reflect these defendants’ ill-gotten gains, and were suspended after they surrendered their assets: about $20,0000 from Dinh and $1,600 from Primavera. The Dinh order also resolved allegations against two relief defendants: the San Lazaro Irrevocable Life Insurance and its trustee, Dinh’s sister Maria Soltura. The $336,929 judgment against Soltura and the Trust was suspended when the FTC received the $1,575 that was frozen in the trust’s bank account when the FTC shut down the operation last year.
A $392,215 judgment was imposed against Christopher N. Edwards and Reaching U Network, Inc., and a $102,417 judgment was imposed upon Kim E. Landolfi. The judgments, entered May 22, 2013, reflect these defendants’ ill-gotten gains and were suspended when they surrendered frozen assets to the FTC: approximately $950 from Edwards and Reaching U Network, Inc. and $40,000 from Landolfi.
If it is later determined that a defendant provided false financial information to the FTC, the full amount of the judgment against that defendant will become due.
Under federal law, foreclosure rescue and loan modification service providers are banned from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. For consumer information about avoiding mortgage and foreclosure rescue scams, see this FTC material.
The Commission vote approving the consent decree for Radzikowski, Desmond, Prime Legal Plans LLC; Freedom Legal Plans, LLC; Frontier Legal Plans, LLC; American Hardship, LLC; Legal Servicing and Billing Partners LLC; and Back Office Support Systems LLC was 4-0. The consent decree was filed in the U.S. District Court for the Southern District of Florida and entered by the court on December 27, 2013.
NOTE: Consent decrees have the force of law when approved and signed by the District Court judge.
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