CPA Suspended in ADMI Fraud case

ADMI fraudCalifornia based CPA was suspended from practicing before SEC on account of ADMI fraud case. Bishop is a sole practitioner CPA who conducted audits of the financial statements for Asthma Disease Management Inc [ADMI] for the fiscal year ended May 31, 1993 through the fiscal year ended May 31, 1999.
In ADMI fraud, former president, CEO, and chairman of the board, alongwith two of its directors, engaged in a fraudulent marketing scheme in which they issued false press releases, fraudulently inflated ADMI’s assets and disseminated misleading information in Commission filings by omitting the auditor’s going concern opinion and by failing to disclose significant stock-based executive compensation and related party transactions. The complaint further alleges that Bishop aided and abetted the fraud by improperly booking a material asset on ADMI’s balancesheet, by failing to review ADMI’s Forms 10-K before or after they were filed with the Commission, and by failing to conduct her audit of ADMI’s financial statements in accordance with generally accepted auditing standards.

ADMI Fraud case

  • In February and March 2000, ADMI, Young and Anderson issued false and misleading press releases, claiming ADMI had obtained contracts with three HMOs to provide physician training for asthma treatment services when no such contracts existed.
  • Anderson personally benefited from his role in the dissemination of the false press releases by selling 93,000 shares of ADMI stock for $59,973 when the market price was artificially inflated by the false information in the press releases.
  • ADMI and Young fraudulently inflated its assets by at least 70% in Commission filings. In its Forms 10-K for the fiscal years ended May 31, 1998 and May 31,

Global Icons who Laundered proceeds of corruption

global icons

According to a first of its kind report on ‘Ascertaining size of corruption in India with respect to money laundering’, an individual spent over Rs 2,000 as a cost of corruption in 2009, which is 260 per cent higher than the amount borne by a citizen ten years back. “In the past decade, money laundered out of India was at least Rs 18,86,000 crore or $419 billion. If the gross domestic product-based money laundering model is translated to quantify the corruption, then the size of corruption in the last decade is Rs 15,55,000 crore or $345 billion in India.
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Keyuan Petrochemicals – Story of another reverse merger fraud

keyuan

Keyuan Petrochemicals Fraud

The SEC alleges that Keyuan Petrochemicals, which was formed through a reverse merger in April 2010, systematically failed to disclose to investors numerous related party transactions involving its CEO, controlling shareholders, and entities controlled by management or their family members. Keyuan also operated a secret off-balance sheet cash account to pay for cash bonuses to senior officers, travel and entertainment expenses and an apartment rental for the CEO, and cash and non-cash gifts to Chinese government officials. Continue reading

Top ten Ponzi schemes of 2012

According to the SEC data on Ponzi scheme revelations, US investors have lost nearly $1488 Million to some of the biggest ponzi schemes in USA. Here are the top ten ponzi schemes according to the amount quantified by SEC.

Name of Ponzi Player Loss in Million Dollars Summary of the Scheme Destination
Paul Burks and Rex Venture Group 600 SEC shut down a $600 million Ponzi scheme on the verge of collapse after an online marketer raised money from more than one million Internet customers through the website ZeekRewards.com and the “net profits” being paid to investors were merely funds received from new investors. Nationwide
Agape World Inc 415 SEC charged four sets of siblings and other sales agents who misled investors and illegally sold securities for a Long Island-based investment firm at the center of a $415 million Ponzi scheme. Long Island
George Levin and Frank Preve  157 SEC charged two individuals who provided the biggest influx of investor funds into one of the largest-ever Ponzi schemes in South Florida. South Florida
Wayne Palmer  100 SEC halted a $100 million real estate-based Ponzi scheme operated by a Utah man and his company that bilked investors nationwide. Utah
Jim Donnan and Gregory Crabtree  80 SEC announced fraud charges against a former college football coach who teamed with an Ohio man to conduct an $80 million Ponzi scheme that included other college coaches and former players among its victims. Ohio
John Geringer  60 SEC charges a Northern California-based fund manager with running a $60 million investment fund like a Ponzi scheme and defrauding investors by touting imaginary trading profits instead of reporting the actual trading losses he incurred. North California
Mark Feathers  42 SEC shut down a $42 Million Ponzi-like scheme in which a San Jose area man promised high returns for investors in two mortgage investment funds but paid them in part with money from new investors. San Jose
Bridge Premium Finance 15.7 SEC announced fraud charges and an emergency asset freeze against a Denver-based company and Colorado residents Michael Turnock and William Sullivan II for carrying out a $15.7 million Ponzi scheme harming more than 120 investors nationwide. Denver
Ephren Taylor II  11 SEC charged a self-described “Social Capitalist” with running a Ponzi scheme that raised more than $11 million by targeting socially-conscious investors in church organizations. Nationwide

Author: Mayur Joshi

SEC investigates KPMG Deloitte PwC and EY

Securities and Exchange Commission began administrative proceedings on 3rd December’2012, against the China affiliates of KPMG Deloitted PwC EY and another large U.S. accounting firm BDO, for refusing to produce audit work papers and other documents related to China-based companies under investigation by the SEC for potential accounting fraud against U.S. investors.

  • BDO China Dahua Co. Ltd
  • Deloitte Touche Tohmatsu Certified Public Accountants Ltd
  • Ernst & Young Hua Ming LLP
  • KPMG Huazhen (Special General Partnership)
  • PricewaterhouseCoopers Zhong Tian CPAs Limited

The SEC order can be found here.

In Massive Probe Of Chinese Reverse Mergers, Securities and Exchange Commission is investigating allegations that U.S. firms and individuals have joined with partners in China to steal billions of dollars from American investors through stock market frauds. David Zhou and his son were penalised in the reverse merger frauds.

Reverse Merger

The private company shareholders receive a substantial majority of the shares of the public company (normally 85% to 90% or more) and the control of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company. The transaction does not go through a review process with state and federal regulators because the public company has already completed the process. The transaction involves the private and shell company exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. At the closing the public shell company issues a substantial majority of its shares and the board control to the shareholders of the private company. The private company shareholders pay for the shell and contribute their private company shares to the shell company and the private company is now public.

In our next article we will discuss the specific companies involved in the reverse merger frauds in USA.