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Reports US

US stock market daily report (December 16, 2013, Monday)

December 17, 2013, Tuesday, 06:24 GMT | 01:24 EST | 10:54 IST | 13:24 SGT
Contributed by Millennium Traders

Securities and Exchange Commission announced fraud charges against Swiss-based Malom Group AG and six individuals who conducted the schemes from Las Vegas and Zurich, on Monday. The complaint was filed in U.S. District Court for the District of Nevada. The group used an acronym for “Make A Lot Of Money” that was behind a pair of advance fee schemes guaranteeing astronomical returns to investors in purported prime bank transactions and overseas debt instruments. Malom Group used a series of lies and forged documents to steer U.S. investors into seemingly successful foreign trading programs that were nothing more than vehicles to steal money, totaling $11 million.

The six individuals making up Malom Group are not only be charged with fraud by the SEC but also face criminal charges from the U.S. Department of Justice.

Anthony B. Brandel was main point of contact for U.S. investors. He explained investments, collected investor funds and put off inquiring investors about the status of transactions. Brandel's Las Vegas company M.Y. Consultants is also charged in the complaint from the SEC. Brandel is from Las Vegas, Nevada.

Sean P. Finn recruited U.S. investors through his Wyoming-based company M. Dwyer LLC which is also charged in the complaint from the SEC. Finn is from Whitefish, Montana.

Hans-Jurg Lips was referred to as president or chairman of the board of directors. Lips is located in Switzerland.

Joseph N. Micelli was referred to as compliance office for Malom Group and is from Las Vegas, Nevada.

Martin U. Schlapfer was referred to as Malom Group’s chief executive officer, managing director and legal counsel. Schlapfer is located in Switzerland.

James C. Warras was referred to as executive vice president for Malom Group and is from Waterford, Wisconsin.

The alleged schemes, according to the SEC complaint, occurred from 2009 to 2011 while lulling of investors continued into 2013. Malom Group supplied investors with forged bank statements and “proof of funds” letters to give false impression that the group had the millions of dollars needed for the transactions. 

In the first scheme, the group offered “joint venture” agreements that purportedly allowed investors to “use” Malom Group’s financial resources in exchange for an upfront fee. Investors who participated in their scheme were required to propose investment transactions for Malom Group to enter into with third parties in order to generate returns for the company and the investor. None of the transactions in securities offered or sold were registered with the SEC or eligible for an exemption. 

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and financial penalties against the group. Malom Group, Schlapfer, Lips, Warras, and Micelli are charged with violating antifraud and securities registration provisions of the federal securities laws, per the SEC complaint. The SEC’s complaint alleges that Malom Group, Schlapfer, Lips, Warras, and Micelli violated antifraud and securities registration provisions of the federal securities laws. Brandel, Finn, M.Y. Consultants and M. Dwyer LLC are charged with violating antifraud, securities and broker-dealer registration provisions. 

The SEC complaint indicates that the second scheme falsely promised investors that Malom Group would generate funding by creating structured notes that would be listed on “Western European” exchanges. 

Malom Group reneged on the guarantees of repayment and failed to issue any structured notes after inducing investors to pay an “underwriting fee” along with making personal and corporate guarantees of repayment. The perpetrators quickly distributed investor funds among themselves, for their own, individual use.

Stephen L. Cohen, an associate director in the SEC’s Division of Enforcement said, “Under the guise of a name insinuating they would make a lot of money for investors, the individuals behind this scheme sought nothing more than to make a lot of money for themselves. They peddled agreements and transactions filled with technical-sounding jargon that was as meaningless as their promises to investors.”

Malom Group allegedly charged investors fees for bogus services while individuals behind the scheme distributed funds collected from investors, among themselves for personal use. As investors inquired about the progress of their investments, the group lied to them with excuses about why they have yet to receive investment returns or refunds.

Malom Group touted the supposed use of well-known overseas banks to attract investors. The group used advance fee fraud to solicit investors into making upfront payments before purported {fake} deals can go through. The perpetrators fool investors with official-sounding terminology to add an air of legitimacy to the investment scheme.