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Regulation and Compliance > Federal Regulation > SEC

Ex-Radio Host Craig Carton Sentenced to Prison in ‘Hamilton’ Ticket Scheme: Enforcement

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A New York-based sports radio personality convicted in November 2018 of securities and wire fraud and conspiracy following a federal jury trial was sentenced to 42 months’ imprisonment on April 5.

The defendant, Craig Carton, was also sentenced to three years’ supervised release following his prison sentence, and was ordered to pay $4.8 million in restitution and to forfeit $4.6 million.

Carton used to co-host the “Boomer and Carton” morning sports radio talk show on CBS New York’s WFAN with former NFL player Boomer Esiason, but left the show after his arrest.

Carton was previously charged by the Securities and Exchange Commission for related civil violations of the federal securities laws.

The criminal charges against Carton arose from the same conduct alleged by the SEC. In September 2017, the SEC charged Carton and another New York City man, Joseph Meli, along with six of their companies, with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets.

Meli was also separately charged by the SEC in January 2017 with fraud for running a Ponzi scheme, which raised money from investors to fund businesses purportedly created to purchase and resell tickets to such high-demand shows as Adele concerts and the Broadway musical “Hamilton.” Meli, who was charged in a parallel criminal case, previously pleaded guilty and was sentenced to more than six years’ imprisonment. Meli was also ordered to forfeit over $104 million and pay over $56 million in restitution.

SEC Charges 15 in Illegal Microcap Offering

The SEC charged 15 individuals with acting as unregistered brokers or aiding and abetting such activity in connection with Intertech Solutions, Inc.’s fraudulent and unregistered securities offerings.

The SEC’s complaints allege that Alexander Bevil, Richard Bohnsack, Daniel Broyles, Charles Davis, William Roth, Glenn Story, Harold Wasserman, Michael Duke, Martin Lewis, Mark Parman, Kenneth Shelton, Billy Ray Statham, Jr., Joel Duncan, Paula Saccomanno, and Dennis Swerdlen were hired by Intertech Solutions to engage in or facilitate cold-call solicitations of hundreds of prospective investors throughout the United States and Canada from at least February 2014 through December 2016.

The complaints allege that, as a result of the defendants’ conduct, Intertech Solutions raised more than $7 million from retail investors.

According to the complaints, Intertech Solutions paid the defendants exorbitant commissions ranging from 35% to 50% of the funds provided by each investor. The complaints allege that the defendants did not disclose their commission rates to investors and instead distributed private placement memoranda that indicated that only 10% of investor proceeds would be used as commissions.

The SEC previously charged Intertech Solutions and its control persons with orchestrating the fraudulent and unregistered offerings.

Without admitting or denying the SEC’s allegations, 11 of the defendants have agreed to the entry of final judgments that enjoin them from violating these provisions, enjoin them from future solicitation of the purchase or sale of securities, impose penny stock bars, and order them to pay disgorgement of ill-gotten gains and civil monetary penalties. These settlements are subject to court approval.

SEC Charges New Jersey Investment Advisor With Securities Fraud

The SEC charged a New Jersey resident with defrauding an investor by lying about his trading success, concealing trading losses and misappropriating funds.

The SEC’s complaint alleges that Gonzalo Ortiz, 45, of Hackensack falsely touted his success in investing in stocks and promised the investor a minimum 50% return in a year, and induced the investor to give him control of over $570,000 the investor’s retirement savings.

The complaint alleges that contrary to these promises, Ortiz misappropriated almost half of the funds and invested the other funds in high-risk microcap companies that generated significant losses.

Ortiz then concealed the misappropriation and losses by providing the investor with a phony account statement that falsely showed high returns. According to the complaint, Ortiz misappropriated approximately $224,500 of the investor’s money, and lost approximately $290,000 through his trading.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced criminal charges against Ortiz.

The SEC’s complaint is seeking permanent injunctions and financial penalties against Ortiz, and return of allegedly ill-gotten gains with prejudgment interest.

SEC Charges Former SeaWorld Lawyer With Insider Trading

The SEC charged a former senior lawyer at SeaWorld Entertainment Inc. with insider trading based on nonpublic information that the company’s revenue would be better than anticipated for the second quarter of 2018.

The SEC alleges that Paul Powers had early access to key revenue information as the company’s associate general counsel and assistant secretary, and he purchased 18,000 shares of SeaWorld stock the day after he received a confidential draft of the 2018 second-quarter earnings release that detailed a strong financial performance by the company after a lengthy period of decline.

According to the SEC’s complaint, Powers immediately sold his SeaWorld shares for approximately $65,000 in illicit profits after the company announced its positive earnings and the company’s stock price increased by 17%.

The SEC’s complaint charges Powers with fraud. Powers has consented to a permanent injunction with the amounts of disgorgement and penalties, if any, to be decided by the court. The settlement is subject to court approval.

In a parallel action, the U.S. Department of Justice announced criminal charges against Powers arising out of the same conduct.

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