All information in this report was compiled from public records maintained by the SEC.
Unreal Marijuana Growth Opportunity
Mark W. Heckele, Esq., 43, of Friday Harbor, Washington, on June 6, entered an offer of settlement for an SEC order after he was accused of selling unregistered securities, misrepresenting expected returns to investors, and acting as an unregistered broker.
Heckele was the managing member of Green Growth Ventures and Extraction Capital Tier 1, two entities selling unregistered securities to finance marijuana-related businesses. From January 2018 to September 2018, Heckele prepared offering materials suggesting investors were guaranteed a 100% or more annual return. He was never registered as a broker or affiliated with a registered broker.
The SEC barred Heckele from associating with any broker, transfer agent, dealer, municipal security dealer, investment adviser, or statistical rating organization, and from participating in the offering of any penny stock.
Sports Betting Ponzi-Style Scheme
Damian Ostertag, 48, of American Canyon, California, on June 7 entered an offer of settlement for an SEC order. Ostertag was found guilty of acting as an unregistered broker for an unregistered fraudulent sports betting securities offering.
From July 2018 to October 2018, Ostertag sold customers securities of QSA, an unregistered sports betting offering. During this time, Ostertag was not registered as a broker or affiliated with a registered broker but received over $414,000 in commissions for selling QSA securities.
A final judgment was entered against Ostertag in October 2021, in this Ponzi-style sports betting scheme in the civil action entitled Securities and Exchange Commission v. Damian Ostertag, et al., Civil Action Number 2:19-cv-01515-APG-VCF, in the United States District Court for the District of Nevada. The scheme included Daniel Martin, and the duo collected about $30 million from over 600 investors in 40 states. Ostertag was ordered to repay $434,725 for his role in the scheme.
The SEC barred Ostertag from associating with any investment adviser, broker, municipal security dealer, transfer agent, broker, or statistical rating organization, and from participating in the offering of any penny stock.
Stacking Up on Fraudulent Schemes
William Andrew Stack, Esq., 53, of Oklahoma, on June 8 was issued an SEC suspension order. Stack was found guilty of selling unregistered securities and defrauding investors.
Stack was an attorney admitted to practice law in Oklahoma. On Jan. 15, 2021, the SEC filed an injunction against Stack for engaging in a fraudulent penny stock scheme. Stack acted as the CEO, president, treasurer, secretary, and director of Preston Corp., a penny stock issuer that claimed to provide royalty financing to gold mining enterprises. Preston never registered the offering with the SEC, making the private placement illegal.
Additionally, Stack made misrepresentations about Preston to investors and in misleading press releases. The company’s operations relied on a $5 million bond offering that never materialized. Preston never acquired any royalty streams, though Stack realized personal financial benefits.
The final judgment ordered Stack to pay disgorgement and prejudgment interest totaling $438,103, and a $333,110 civil penalty. The SEC barred him from associating with any investment adviser, broker, municipal security dealer, transfer agent, broker, or statistical rating organization, and from participating in the offering of any penny stock for five years. Stack is also prohibited from providing legal services related to securities for five years and barred from being an officer and director for five years.
Unregistered Securities and Ill-Gotten Gains
Daniel V. Martinez, Esq., 63, of Yuba City, Calif., on June 8, was issued an SEC cease-and-desist order. Martinez pled guilty to selling unregistered securities and failing to disclose stock sales.
Martinez served as a real estate attorney for Avtar Singh Dhillon, who was then the chairman of several public companies including OncoSec. In March 2011, Martinez, working with Dhillon, decided to acquire, hold, and sell millions of “founders’ shares” of OncoSec for Dhillon’s secret benefit. Martinez established a limited liability company in California called MMXI to further this plan.
Similarly, the duo decided to acquire, hold, and sell “founders’ shares” of Arch Therapeutics, also chaired by Dhillon. Another limited liability company was established in California for this purpose, called Walk on Water Ventures. At Dhillon’s direction, Martinez sold shares and distributed proceeds for Dhillon’s benefit, and took a small portion for himself.
The SEC barred Martinez from associating with any investment adviser, broker, municipal security dealer, transfer agent, broker, or statistical rating organization, and from participating in the offering of any penny stock. He was also ordered to pay a disgorgement of $154,624 plus prejudgment interest of $28,197, for a total of $182,821.
Aggravated Unregistered Broker Activity
Vincent J. Caputo, 54, of Fort Lauderdale, Florida, on June 12, was issued an SEC order instituting administrative proceedings for acting as an unregistered broker.
Caputo worked for various introducing brokers from 1992 until 2000 and was registered as an associate. In 1994 and 1995, he allegedly engaged in fraudulent sales practices and was temporarily barred from National Futures Association (NFA) membership for one year in March 1998. In April 1999, he was temporarily banned from NFA membership again for six months. Then, from July 2018 through April 2019, Caputo acted as an unregistered broker selling penny stock securities of MediXall Group.
Caputo sold to dozens of investors across the country, totaling more than $500,000 of MediXall stock, and received compensation of about $25,000. The SEC said it wants answers to these allegations from Caputo and expects him to stop acting as an unregistered broker.