by John J. Tollefsen | Apr 17, 2018 | Fraud, Fraud, Fraud WA, SEC, Securities US
Regulating ICOs The regulators of money and securities are facing a new challenge with the emergence of crypto-currencies like Bitcoin. Not only do crypto-currencies live in cyberland computers usually outside the jurisdiction of the regulators, their mere existence is a challenge to the modern notion that only nation-states have the right to issue fiat currencies. Recently the Securities and Exchange Commission has entered the fray. It used to be said the securities regulators could be divided between the philosophy of the states and the philosophy of feds. The states were adherents to the central government control view (called “merit review”) believing that the staff of the Department of Financial Institutions (DFI) in Olympia knew what was good for investors and would be the appropriate gate-keepers for the investing public. For example, when Apple Computer went public, DFI would not approve its IPO stock for sale in Washington (it was too risky) so Washington investors had to purchase post-IPO stock at a substantial premium on the national public markets. The SEC was said to hold to a view that anything could be sold if there was full disclosure. Over time, the positions modified. The SEC is now known to make it difficult or impossible to register an offering its employees do not like. Recently the SEC insisted on applying traditional stock trading and Investment Company Act of 1940 rules to registration of crypto-currency ETF-like funds which were designed to allow investor speculation in a basket of crypto-currencies1Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings, January 18, 2018. In a typical government “catch-22”, now that the SEC had held...
by John J. Tollefsen | Feb 25, 2018 | Blog, Fraud
Available for years to people with a specialized digital (ISDN PRI circuit), caller ID spoofing has been used by collection agencies, law-enforcement officials, and private investigators. The first caller ID spoofing service generally available to the public, Star38.com, went online in September 2004. Star38.com was the first service to allow spoofed calls to be placed from a web interface. It stopped offering the service in 2005.1https://en.wikipedia.org/wiki/Caller_ID_spoofing)) The FTC has posted this on whether ID Spoofing is legal: Under the Truth in Caller ID Act, FCC rules prohibit any person or entity from transmitting misleading or inaccurate caller ID information with the intent to defraud, cause harm, or wrongly obtain anything of value. If no harm is intended or caused, spoofing is not illegal. Anyone who is illegally spoofing can face penalties of up to $10,000 for each violation. In some cases, spoofing can be permitted by courts for people who have legitimate reasons to hide their information, such as law enforcement agencies working on cases, victims of domestic abuse or doctors who wish to discuss private medical matters.3https://www.fcc.gov/consumers/guides/spoofing-and-caller-id A quick check of Google reveals there are several internet caller ID spoofing services with adverting pitches like “Fake Calls » Call ID Spoofing describes the method to make fake calls with any number you want to set for a sender. Get the ability to change what someone sees on their caller ID display when they receive a phone call from you and play amazing phone pranks”((https://www.spoofcard.com/features It is easy to spoof caller ID and text messages from your cell phone. Just load an app from Google play like “Spoof Call...
by John J. Tollefsen | Jan 9, 2017 | Blog, Federal Law, Fraud, Fraud, International, Securities US
Local EB-5 VISA Fraud SEC Complaint: 15-sec-v-dargey-complaint Recent Seattle newspaper headlines have informed us that Lobsang Dargey, a local real-estate developer, has agreed to plead guilty to EB-5 fraud allegedly involving at least $125 million from 250 Chinese investors. This type of fraud is a form of securities and immigration fraud and has become more common on both sides of the transaction: investors make fraudulent claims regarding their eligibility for the program and promoters misappropriate their investments. EB-5 was enacted by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot program enacted in 1992, and regularly reauthorized since then, investors may also qualify for EB-5 visas by investing through regional centers designated by U.S. Citizenship and Immigration Services (USCIS) based on proposals for promoting economic growth. On September 29, 2016, President Obama signed Public Law 114-223 extending the regional center program through December 9, 2016. Ten thousand visas are allocated each year and processing times can be two years. Not only does the investor and family need to be vetted for the visa (e.g. where did the money come from?). There are two investment amounts $500,000 and $1,000,0000. Both require creation of ten full time (35 hours per week) permanent jobs. The $500,000 is by far the most popular and is only available in rural and high unemployment area. This is where the developers get involved. They package a deal, arrange for USCIS processing, and arrange permanent management. Teams of well-paid sales agents sell the package in China and elsewhere. Since the package involves an investment with an expectation...
by John J. Tollefsen | Nov 13, 2014 | Blog, Cayman Islands, Fraud
How to freeze assets in the Cayman Islands. Copy of new act: 141020-Cayman-Grand-Court-Amendment In many people’s minds, the Cayman Islands have been the place where fraudsters go to hide their money. Even we can prove the money was wired by the perpetrators into a Cayman Island bank, the ability to freeze the money prior to judgment was in doubt. The Cayman Islands have added a new anti-fraud protection for offshore victims. The Cayman Island court now clearly has the statutory power to appoint a receiver and grant other interim relief while the case is pending in another jurisdiction. The cases we see are something like this: The perpetrators defraud investors in a Ponzi scheme (or pump and dump) and we can trace the money to the Cayman Islands. We cannot sue the perpetrators in the Cayman Islands (either because of lack of jurisdiction or for tactical reasons) and begin the case in a state or federal court. Once we file the case and let the perpetrators know that we have found the Cayman Island money, they move the money to parts unknown. If we get an injunction freezing the money from the local court, the Cayman bank does not have to (and probably will not) honor it. The only practical solution is to obtain an order freezing the assets from the Cayman court. Prior to the passage of the amendment, it was not clear if the Cayman court could assist offshore plaintiffs prior to the time they obtained an offshore judgment. The plaintiffs would then need to take their judgment to the Cayman Islands and go through the process of...
