Rulebook

The Blotter Report: Swindlers and Thieves

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$22 Million Paperwork Problem

A California man paid $22 million on Thursday to settle SEC charges that he operated as an oil-and-gas investment advisor without bothering to register with regulators.

According to the federal watchdog, Behrooz Sarafraz acted as a salesman for TVC Opus I Drilling Program LP and Tri-Valley Corporation for eight years, raising over $97 million. For his efforts, he was paid over $18 million in commissions, $16.4 million he took home after paying referral fees, the SEC says.

The settlement bars him from breaking securities laws again, but the SEC made no allegations that investors complained or lost money because of Sarafraz’s actions.

 

Playboy Punk

A former Citigroup and First Allied Securities investment advisor will spend up to 7 years in prison after admitting to defrauding an elderly client to fund lavish habits.

A New York judge sentenced Glenn Schwarzkopf to jail on Wednesday for swindling an 84-year-old client out of $1 million while he was working at Citigroup. According to the complaint, Schwarzkopf lied, assuring his client the money was safe and growing, all while making withdrawals for luxury hotel stays, AmEx payments and pet care.

The New York advisor pled guilty in March to tax fraud and grand larceny, among other charges.  In addition to jail time, Schwarzkopf must also pay $128,000 in taxes and fines. 

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Compliance, regulatory and legal issues, with a fair amount of cops and robbers for fun.

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