On January 31, the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower posted six new Notices of Covered Actions (NoCAs). These NoCAs signal that the SEC is now accepting whistleblower award claims for the cases.

Through the SEC Whistleblower Program, eligible whistleblowers who voluntarily provide original information that leads to a successful enforcement action are entitled to monetary awards of 10-30% of the funds collected by the government. The SEC must collect at least $1 million in the enforcement action for a whistleblower to be eligible for an award. The agency posts NoCAs for every enforcement action where they collect at least $1 million.

Whistleblowers have 90 days from the posting of an NoCA to file an award claim by submitting a Form WB-APP to the SEC Office of the Whistleblower.

The NoCAs provide a sampler of the types of frauds that whistleblowers can report to the SEC to become eligible for awards.

SEC v. Michael K. Molen, Enviro Impact Resources, Inc., Seth M. Molen, and Pixel Arcanum, Inc.

In this microcap fraud case, the SEC charged Enviro Impact Resources, Inc., formerly known as Industry Source Consulting, Inc. (INSO), a Georgia microcap company, the company’s former CEO Michael Molen, his son Seth Molen, and Pixel Arcanum, Inc. (Pixel), a Georgia company that was controlled by both Michael and Seth Molen, with securities fraud and registration violation.

The SEC alleges that the defendants “made numerous false and misleading statements and engaged in other deceptive conduct during the relevant period, largely for Michael Molen’s financial benefit.”

“From at least 2014 to 2022, under Michael Molen’s direction, INSO publicly posted false and misleading annual and quarterly disclosure reports, including false financial statements, and false and misleading attorney opinion letters relating to INSO’s disclosure reports,” the SEC alleges. “The defendants made false and misleading statements to third parties, including brokerage firms and INSO’s transfer agent, and engaged in other deceptive conduct, including the creation and use of forged documents, to facilitate Pixel’s fraudulent and unregistered transactions in INSO stock and convertible promissory notes.”

A trial in this matter is pending.

In the Matter of Credit Suisse Securities (USA) LLC; Credit Suisse Asset Management, LLC; and Credit Suisse Asset Management Limited

In this enforcement action, Credit Suisse agreed to pay $10 million to settle charges that they provided prohibited underwriting and advising services to mutual funds.

According to the SEC, because of a consent order that Credit Suisse entered with Superior Court of New Jersey in 2022 “Credit Suisse Securities and its affiliates were prohibited from serving as principal underwriter or investment adviser to mutual funds and employees’ securities companies pursuant to the Investment Company Act of 1940.”

The SEC alleges, however, that Credit Suisse “continued serving in these prohibited roles.” Without admitting or denying the SEC’s findings, the Credit Suisse Entities agreed to pay more than $6.7 million in disgorgement and prejudgment interest and civil penalties totaling $3.3 million.

SEC v. Bradley C. Reifler

In this case, the SEC charged Bradley C. Reifler, the founder and chief executive officer of multiple New York-based financial services firms, “with an extensive fraud that enabled him to divert millions of dollars from investors into entities and ventures that he owned and controlled.”

According to the SEC, in 2014, Reifler received a $6 million investment “by representing that the money would be used to invest in a telecom receivables business.” “Instead,” the SEC alleges, “Reifler diverted the $6 million to support real-estate development projects in which he had an interest and to acquire a $34 million portfolio of reinsurance trust assets in North Carolina.”

The SEC further alleges that Reifler “defrauded the trust by investing its funds in various struggling entities in which he had an interest” and that “to cover up his improper allocation of the trust assets, Reifler created fictitious documents and forged counter-party signatures to make it appear as if the assets had been reallocated into permissible investments.”

A trial in this matter is pending.

SEC v. Mark Burnett, Jeffrey Miller, Christian Romandetti, Frank Sarro, Anthony Vassallo, Elite Stock Research, Inc.

In this elder financial exploitation case, the SEC brought charges against five individuals who allegedly engaged in a New York boiler room scheme targeting seniors. The SEC alleges that “First Choice Healthcare Solutions Inc. CEO Christian Romandetti, the boiler room, and four others, manipulated the company’s shares generating more than $3.3 million of illegal profits and more than $560,000 in kickbacks for Romandetti.”

According to the SEC, “Romandetti and the other defendants duped more than 100 victims in a scheme that inflated First Choice’s stock price from less than $1 per share to $3.40 per share.”
The SEC also alleges that the defendants “used multiple accounts in an attempt to disguise their trading, engaged in manipulative trading practices, and hired Elite Stock Research, a boiler room run by defendant Anthony Vassallo, to promote First Choice to vulnerable investors, some of who invested retirement savings.”

SEC v. Mark Marchi

In this enforcement action, the SEC charged Mark Marchi, a New Jersey resident and unregistered investment adviser, with defrauding investors of his fund Precipio Capital, LLC. out of $2.8 million via a Ponzi-like scheme.

According to the SEC, “Marchi solicited over $2.8 million of investments in Precipio from at least 22 investors by falsely telling them he was profitably trading securities in Precipio’s accounts.”

The SEC states that “in order to conceal his fraud, Marchi allegedly falsified investment documentation, including entering thousands of fake trades into an electronic portal accessed by investors.”

The Commission further alleges that “Marchi misappropriated investor funds by secretly paying over $1.4 million in Ponzi-like disbursements to earlier-in-time investors and by diverting cash from Precipio’s bank accounts to his own bank accounts.”

SEC v. Dennis M. Jali

In this Ponzi-scheme case, the SEC charged two Maryland companies and their principals with engaging in a scheme that “defrauded approximately 1,200 investors, many of them African immigrants, of more than $27 million.”

The SEC alleges that the defendants “often targeted vulnerable African immigrants and exploited their common ancestry and religious affiliations” and “falsely told investors that their funds would be used by a team of skilled and licensed traders for foreign exchange and cryptocurrency trading, promising risk-free returns of between 6% and 42%.”

The defendants allegedly “diverted investor funds for personal use and to make Ponzi payments to prior investors.”

This article was authored by Geoff Schweller.