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2018 Report from TSSB with Crypto Scams Title

2018 Securities Report Suggests Fraud in the Financial Sector Goes Beyond Cryptocurrency

Reading Time: 2 minutes by on February 12, 2019 Business, Crime, Finance, Regulation

On February 7, the Texas State Securities Board (TSSBpublished a report wherein it makes an analysis of the millions of dollars lost related to fraud during 2018. The report reveals that the majority of the losses far beyond the cryptocurrency sector.

Fraud and Millions lost During 2018

The 2018 Enforcement report from the Texas State Securities Board (TSSB) has made an analysis related to cases associated with fraud during 2018. The report ended up revealing that many millions of dollars have been lost to fraud schemes last year. TSSB made a distinction between the various cases and in which sectors were the acts committed.

The Board analyzed several criminal cases which ended in 244 years sentences, 38 years community supervision acts, $13.2 million in restitution orders, and 12 individuals convicted, while 16 others ended up indicted. 

Cooperating with Law Enforcement

Throughout 2018, the Texas authority assisted with numerous lawsuits and cooperated with law enforcement agencies. The State Securities Board provided investigative, financial, and prosecutorial assistance to state and federal prosecutors. It partnered with the Dallas County District Attorney’s Office to help convict five individuals who stole their investor’s portfolios. 

The Board followed and assisted with specific cases too. Juan Miguel Lopez who attracted millions of dollars in investment, Timothy Lloyd Booth, a pastor selling investment contracts in a ghost web advertising company, and Gabriel Claudio Jr. who offered fake financial services. All three men tried to flee with millions of dollars from investors by recurring to fake enterprises. All three were indicted with securities fraud and are now serving heavy sentences.

Fraud in the Oil and Gas Sector

The Board identified several fraudulent schemes in the oil and gas sector posing risk to investors in the state of Texas.

The State Securities Board assisted with the case of James Dean French, who committed securities fraud in connection with the sale of investments in a West Texas oil and gas project. In other cases, attorneys and investigators cooperated in cases related to five individuals accused of fraud in the sale of oil and gas-related investments.

Fraud on the Web

The Board considered cryptocurrency-related offerings a high-risk endeavor. According to the TSSB, this industry seeks to take advantage of anonymous features and manipulate social media to influence investors in Texas.

In 2018, there were 16 administrative orders against promoters of cryptocurrency investments who were making use of online advertisements, social media, and other solicitations to get the attention of investors.

The TSSB joined forces with prosecutors and law enforcement agents in the U.S. District Courts for the Southern and Western Districts to monitor administrative orders, investor alerts, video announcements, including FTC and CFTC webcasts on cryptocurrency fraud, special enforcement reports on trends in cryptocurrency offerings, and a  cryptocurrency glossary ending which helped land the shut down of the infamous BitConnect scam.

Registered Firms Penalized by the TSSB

The TSSB is also responsible for conducting compliance examinations of investment advisory firms and has the power to apply penalties.

The Board applied fines amounting to $68,000. These penalties were applied to Brazos Securities Inc., a Dallas investment adviser and to Trade-PMR Inc., a provider of trading platform and technology services to independent investment advisers. Two registered individual also had penalties applied by the TSSB.

All and all, the TSSB report stated that fraud seems to be a constant in the financial sector and while cryptocurrencies presented some risks when it comes to fraud, other sectors seem to be more often afflicted by this sort of attack.   

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