The Securities and Exchange Commission charged a Wisconsin businessman with stealing millions of dollars of investor funds which he used to purchase a Cadillac Escalade and Green Bay Packers tickets, among other improper uses.
The SEC’s complaint alleges that Ronald Van Den Heuvel lured investors with promises that he would use their funds for an eco-friendly recycling process called the “Green Box Process.”
According to the SEC, Van Den Heuvel told investors that he would use their funds to buy equipment, open a Green Box facility, and create a “green” solution for post-consumer waste. Van Den Heuvel allegedly raised nearly $7.6 million from at least 10 investors, including several who were participants in the U.S. government’s EB-5 immigrant investor program.
Instead of using the investors’ funds for the Green Box Process, the SEC alleges that Van Den Heuvel used over $3.9 million in investor funds to make unauthorized personal purchases, and pay unrelated business expenses.
Aside from allegedly using investor funds to buy a Cadillac Escalade and Green Bay Packers tickets, he also used investor funds to pay overdue taxes to the state of Wisconsin and the IRS, to pay his ex-wife and mother-in-law, and to pay an outstanding judgment.
Van Den Heuvel also allegedly lied about the Green Box Process in order to attract funds from investors, including by telling investors that tax-exempt bonds would provide approximately $95 million to $125 million in financing when he knew that the state of Michigan had all but denied the bond application.
The SEC’s complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil penalties. In a parallel action, on Wednesday, the U.S. Attorney for the Eastern District of Wisconsin announced criminal charges against Van Den Heuvel.
SEC Suspends Trading In Company Claiming Role in Hurricane Harvey Relief
The Securities and Exchange Commission suspended trading in a company amid questions surrounding its statements about sending response teams and equipment to help with Hurricane Harvey disaster recovery efforts in Houston and surrounding areas.
The SEC’s trading suspension order says that a recent press release issued by Texas-based Grupo Resilient International claimed that the company added a “FEMA approved contractor” to the board of its subsidiary and was deploying workers and preparing to deploy a network of mobile broadband trailers to assist in relief efforts.
The SEC’s order also says there are questions regarding the adequacy and accuracy of statements made by the company on other matters in prior press releases. Grupo was previously known as Paradise Ridge Hydrocarbons and trades under the ticker symbol GRUI.
“This is further reminder of the need for vigilance when investing in penny stock companies, especially when they are being touted in connection with humanitarian aid during a natural disaster such as Hurricane Harvey,” Stephanie Avakian, co-cirector of the SEC’s Division of Enforcement, said in a statement. “Investors are reminded to keep on the lookout for schemes that seek to attract people who are eager to invest with companies that genuinely provide assistance to those in need.”
Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
Earlier this month, the SEC issued an alert that warned investors to be vigilant for investment scams related to Hurricanes Harvey and Irma, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.
FINRA Fines Goldman Sachs $2.5 Million
Goldman Sachs & Co. LLC was censured and fined a total of $2.5 million – of which $1.435 million is payable to the Financial Industry Regulatory Authority – for failing to report more than 16,700 over-the-counter options positions in at approximately 6.8 million instances to the Large Options Positions Reporting (LOPR) system.
The firm also failed to report an unknown number of intraday positions.
According to the disciplinary action, Goldman is required to address its LOPR deficiencies and ensure that it has implemented controls and procedures that are reasonably designed to achieve compliance with the applicable rules and regulations.
State Street Fined $1.5 Million by FINRA
State Street Global Markets was censured, fined $1.5 million and required to conduct a review of its relevant policies and procedures, according to FINRA’s disciplinary actions.