Securities: USA's SEC goes hyperactive III

Magnum d'Or Resources, Inc (29 April)

The Securities and Exchange Commission filed a civil action in the United States District Court for the Southern District of Florida against Magnum d'Or Resources, Inc. and its former chief executive officer and president Joseph J. Glusic of Henderson, Nevada, for antifraud and registration violations and against Dwight Flatt of Delray Beach, Florida, David Della Sciucca, Jr. of Fort Lauderdale, Florida, and Shannon Allen of Miami, Florida for registration violations.

K.W. Brown and Company, et al. (27 April)

The Securities and Exchange Commission announces that investors who were defrauded by the cherry-picking scheme involving K.W. Brown will receive nearly $6 million from the SEC created Fair Fund. Specifically, on April 22, 2011, the Court appointed distribution agent dispersed more than $5.88 million to defrauded investors.

Prevost, Harrold, et al. (21 April)

The Securities and Exchange Commission announced that on April 20, 2011, the United States Attorney, District of Minnesota, obtained indictments against David W. Harrold, age 51, of Del Ray Beach, Florida, and Bruce F. Prevost, age 51, of Palm Beach Gardens, Florida, on four counts of securities fraud for fraudulently marketing investments in hedge funds they managed. Harrold and Prevost are alleged to have invested assets of their hedge funds in notes issued by entities controlled by Minnesota businessman Tom Petters. Petters was in fact operating a multi-billion dollars Ponzi scheme. If convicted, Harrold and Prevost face a potential maximum penalty of five years on each securities fraud count.

Biovail Corporation, Eugene Melnyk, Brian Crombie, John Miszuk, and Kenneth G. Howling (19 April)

On April 14, 2011, the Honorable Lewis A. Kaplan of the United States District Court for the Southern District of New York entered a final consent judgment against defendant Brian Crombie, Biovail Corporation's former chief financial officer, with respect to violations of the federal securities laws alleged by the Commission in a civil enforcement action filed in March 2008. Crombie consented to a final judgment that (i) permanently enjoins him from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2 and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Rules 12b-20, 13a-1 and 13a-16; (ii) requires him to pay a civil penalty in the amount of $100,000; and (iii) bars him from serving as an officer or director of a public company for five years. Additionally, on February 15, 2011, the court entered a judgment by consent against Biovail's former chief executive officer, Eugene Melnyk, that (i) permanently enjoins Melnyk from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5; (ii) imposes a civil penalty in the amount of $150,000; and (iii) bars Melnyk from serving as an officer or director of a public company for five years. As the Commission previously has settled all charges against the other defendants identified in the complaint, the settlements with Melnyk and Crombie provide final resolution to this matter.

IU Group, Inc., Elijah Bang (a/k/a Elijah Bhang), and Daniel Lee (25 April)

On April 22, 2011, the Securities and Exchange Commission obtained an emergency court order to shut down a Beverly Hills, Calif. hedge fund and wealth management business targeting retirees, university professors, and members of the Christian community. The SEC alleges that IU Group Inc., its principal Elijah Bang, and its salesperson Daniel Lee targeted retirees and claimed on websites to have been founded by “devoted Christians who believe in God, Jesus Christ, and the Holy Spirit.” Lee allegedly also sent “cold call” e-mail solicitations to university professors.

William K. Harrison, et al. (15 April)

The Securities and Exchange Commission (“Commission”) announced today that the Honorable Frank D. Whitney, United States District Judge for the Western District of North Carolina, entered an order permanently enjoining William K. Harrison (“Harrison”). The order restrained and enjoined Harrison from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 promulgated thereunder. Harrison was also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission’s Complaint shall be deemed true. Harrison consented to the entry of the order without admitting or denying the allegations of the Commission’s Complaint.

mUrgent Corporation, et al. (21 April)

On April 21, 2011, the Securities and Exchange Commission filed a complaint in the United States District Court for the Central District of California against mUrgent Corporation, Vladislav Walter Bugarski (Walter), and his twin sons Vladimir Boris Bugarski (Boris) and Aleksander Negovan Bugarski (Aleks). The SEC alleges that the defendants defrauded investors in a $10 million boiler room scheme.

Johnson and Johnson (8 April)

The Securities and Exchange Commission today announced a settlement with Johnson and Johnson (“J&J”) to resolve SEC charges that the New Brunswick, NJ-based global pharmaceutical, consumer product, and medical device company violated the Foreign Corrupt Practices Act (FCPA) by bribing public doctors in several European countries and paying kickbacks to Iraq to illegally obtain business. The SEC alleges that, since at least 1998, J&J’s subsidiaries paid bribes to public doctors in Greece who selected J&J surgical implants, paid bribes to public doctors and hospital administrators in Poland who awarded tenders to J&J, and paid bribes to public doctors in Romania to prescribe J&J pharmaceutical products. J&J also paid kickbacks to Iraq in order to obtain contracts under the United Nations Oil for Food Program (“Program”).

Joseph F. “Chip” Skowron III, et al. (13 April)

The Securities and Exchange Commission today charged a former hedge fund portfolio manager with insider trading in a bio-pharmaceutical company based on confidential information about negative results of the company’s clinical drug trial. The SEC alleges that Dr. Joseph F. “Chip” Skowron, a former portfolio manager for six health care-related hedge funds affiliated with FrontPoint Partners LLC, sold hedge fund holdings of Human Genome Sciences Inc. (HGSI) based on a tip he received unlawfully from a medical researcher overseeing the drug trial. HGSI’s stock fell 44 percent after it publicly announced negative results from the trial of Albumin Interferon Alfa 2-a (Albuferon), and the hedge funds avoided at least $30 million in losses.

Luis Garg, Jason Zakocs, RealFund Investment Trust, First Atlanta LP, Weatherby LP, and Citiprop Corporation (8 April)

On April 8, 2011, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Central District of California against Luis Garg, Jason Zakocs, and four companies owned and/or controlled by Garg, RealFund Investment Trust ("RealFund"), First Atlanta, LP ("First Atlanta"), Weatherby LP ("Weatherby"), and Citiprop Corporation ("Citiprop"), for allegedly participating in fraudulent offerings of promissory notes. RealFund and Citiprop are based in, and Garg and Zakocs reside in, Los Angeles, California. First Atlanta and Weatherby are based in Atlanta, Georgia.