SEC Actions

SEC Actions Against Pagartanis, Global Trading Institute, TCFG Investment Advisors, Brent Borland

The SEC filed four civil injunctive proceedings last week and no administrative proceedings. This excludes tag-along or similar proceedings.

Offering fraud. SEC v. Pagartanis. Civil Action No. 25242, which was filed on October 7, 2021, is an earlier action that names Steven Pagartanis as the defendant. Defendant was an investment professional and sold investments to the public based upon a series of false statements. He also misappropriated investor money. Parallel criminal proceedings saw Mr. Pagartanis plead guilty to one count each of conspiracy to commit wire and mail fraud. He was sentenced to 120 months imprisonment followed by three years of supervised freedom. He was also ordered to make restitution in the amount of $6,519594. Defendant agreed to the entry and the Court’s entry of a final judgment, which enjoins him against future violations of Securities Act Section 17 (a) and Exchange Act Section 10 (b). He was also ordered to disgorge $6,519594 by the Court. This amount is considered satisfied by the restitution orders in the criminal case. SeeLit. Rel. Rel. 25242 (October 7, 2002).

Offering fraud. SEC v. CanaFarma hemp products Corp., Civil Action No. 21 Civ. 8211 (S.D.N.Y. 8211 (S.D.N.Y.). This petition names the defendants of the company, which is alleged to be an integrated hemp business, Vitaly Fargesen who was a co-founder of the company, and Igor Palatnik who was also a founder of the firm. The defendants sought investors to CanaFarma from April 2019 through October 2020. The company was marketed as an integrated hemp business that produced multiple products and owned its own farms. These claims were false. The company didn’t own any farms and was not fully integrated. Furthermore, its financial projections were incorrect. Over 60 investors contributed $15 million. Around $4 million was stolen. The complaint claims violations of Securities Act Section 17 (a) and Exchange Act Section 10 (b). The case is currently pending.

Offering fraud: SEC, Civil Action No. 8:21-01610 Ca. Filled September 30, 2021. This action names Ron K. Harrison, LLC, and Global Trading Institute, LLC. Starting in 2016, Mr. Harrison and his company acted as unregistered financial advisers, continuing until August 2021. The Defendants incurred losses of more than $2 million for clients and collected fees in excess of $900,000. The losses were not disclosed to clients. FINRA had previously banned Mr. Harrison from entering the securities industry. The complaint claims violations of Securities Act Section 17 (a), Exchange Act Section 10 (b), and Advisers Act Sections 206-206. The Commission was granted an emergency freeze order. The case is currently pending. Please see it. Rel. Rel. 25241 (October 6, 2002).

Manipulation: SEC v. Melnick, Civil Action No. 1:21-cv-04054 N.D. Ga. This action was filed September 30, 2021, and names, Mark J. Melnick, as a defendant. He is the host of a subscription radio program. He manipulated the stock price of many options and stocks, starting in January 2018 and continuing for two more years. Particularly, Melnick was notified by Trader A that certain public companies were the subject of false information. Melnick helped spread the rumors by declaring on his radio program that the companies were the subject of “chatter.” Then he traded in shares of the affected firms. He traded in shares of approximately 100 firms over the course of the period, earning about $374 835 in profits. The complaint claims violations of Securities Act Section 17 (a) and Exchange Act Section 10 (b). The case is currently pending.

False statements: SEC v Roberts, Civil Action No. 21-cv-1615 Ca. Filled September 30, 2021. This action names Richard Roberts, CEO of Defendant TCFG Investment Advisors, LLC, a registered investment adviser who also controls the holding company that is the registered broker-dealer TCFG Wealth Management, LLC. Defendant Roberts, along with his advisory firm, falsely claimed to advisory clients over a six-year period that TCFG’s affiliated broker-dealer, TCFG, was receiving a portion of the fees it charged advisory accounts by its third-party clearing and custody company. The fees were actually being charged and then passed on to advisory clients approximately 60% of the times. The complaint claims violations of Advisers Act Sections 206-2, 206(2), and 206(4). The case is currently pending.

Criminal cases

Offering fraud, the U.S. against Borland, No. 18-cr00487 (S.D.N.Y. After pleading guilty, Brent Borland was sentenced to 84 months imprisonment in an action that took place on October 5, 2021. These charges stemmed from a four-year scheme that began in 2014. The defendant solicited investors to purchase interests in the fund. The money would be used to develop infrastructure in Belize. High returns were promised. Around 40 investors contributed $26 million. Many of the funds were actually misappropriated. Mr. Borland pleaded guilty in the conspiracy to commit and to commission securities fraud and wire fraud.

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