SEC Files Charges in Elaborate Microcap Stock Fraud

Washington, D.C.–(Newsfile Corp. – February 15, 2019) – The Securities and Exchange Commission today announced charges against four individuals and related businesses for their roles in two microcap frauds and unlawful securities offerings.  In sum, the alleged illegal transactions resulted in proceeds of more than $25 million.

According to the SEC’s complaint, from approximately December 2012 to June 2013, microcap stock financier Magna Group, which was founded and owned by Joshua Sason, engaged in a scheme to acquire fake convertible promissory notes supposedly issued by penny stock issuer Lustros Inc. and then to convert those notes into shares of Lustros common stock.  The defendants then sold the shares to unsuspecting retail investors, who did not know that the shares were fraudulently acquired and were being sold illegally.  The defendants’ sales of the Lustros shares also had the effect of destroying the value of the Lustros shares held by the public.  The complaint alleges that Marc Manuel, Magna Group’s former head of research and due diligence, personally negotiated and executed the sham transactions. 

The complaint also alleges that in November 2013, Magna Equities II, which also was wholly-owned by Sason, and Manuel, purchased another fake promissory note from Pallas Holdings.  Magna Equities II and the note’s issuer, NewLead Holdings Ltd., later agreed to retire the fake debt in exchange for shares of the issuer through a court-approved settlement agreement.  To obtain approval of the settlement, Sason and Magna Equities II falsely swore to the court that the fake promissory note was a bona fide debt of NewLead.  Kautilya “Tony” Sharma and Perian Salviola, who controlled Pallas Holdings, are alleged to also have participated in the scheme. 

“As alleged in our complaint, Magna Group and its co-defendants used fake debt instruments to unlawfully obtain shares in microcap companies, which they then dumped on unsuspecting retail investors,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office.  “This action demonstrates the resolve of the SEC in pursuing fraudsters who use elaborate financing schemes to engage in securities fraud.”

The SEC’s investigation was conducted by Lee A. Greenwood, Philip A. Fortino, John O. Enright, Christopher Ferrante, Diego Brucculeri, and Sheldon L. Pollock of the New York office.  The SEC’s litigation will be handled by Messrs. Fortino, Greenwood, Enright, and Alexander M. Vasilescu.  The case is being supervised by Mr. Wadhwa. 

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SEC Charges Cognizant and Two Former Executives With FCPA Violations

Washington, D.C.–(Newsfile Corp. – February 15, 2019) – Cognizant Technology Solutions Corporation has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA), and two of the company’s former executives were charged for their roles in facilitating the payment of millions of dollars in a bribe to an Indian government official. 

The Securities and Exchange Commission’s complaint alleges that in 2014, a senior government official of the Indian state of Tamil Nadu demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million square foot campus in Chennai, India.  As alleged in the complaint, Cognizant’s President Gordon Coburn and Chief Legal Officer Steven E. Schwartz authorized the contractor to pay the bribe, and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders.  The SEC also alleges that Cognizant authorized the construction firm to make two additional bribes totaling more than $1.6 million.  Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm.

“Bribery to further corporate goals is an illusory path to long-term success.  While always the wrong choice, it is particularly egregious when senior executives chart that course for those they lead, as our complaint alleges here.  We are committed to holding them accountable for their actions,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit.

The SEC charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.  The SEC is seeking permanent injunctions, monetary penalties, and officer-and-director bars against Coburn and Schwartz.

The SEC’s order as to Cognizant found that the company violated Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, which are anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.  Without admitting or denying the allegations, the company agreed to pay disgorgement and prejudgment interest of approximately $19 million and a penalty of $6 million.

The Department of Justice and the U.S. Attorney’s Office for the District of New Jersey today announced the indictment of Coburn and Schwartz on criminal charges of violating and conspiring to violate the FCPA’s anti-bribery and accounting provisions.

The SEC’s investigation was conducted by Michael K. Catoe, Paul W. Sharratt, and M. Shahriar Masud of the FCPA Unit under the supervision of Robert I. Dodge.  The litigation will be led by John Bowers.  The SEC appreciates the assistance of the Justice Department’s Fraud Section, the U.S. Attorney’s Office for the District of New Jersey, and the Federal Bureau of Investigation.

SEC Extends Comment Period for Rulemaking Proposal Regarding Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts

Washington, D.C.–(Newsfile Corp. – February 14, 2019) – The Securities and Exchange Commission today announced that it is extending for one month the comment period on the proposed rulemaking to amend rules and forms to help investors make informed investment decisions regarding variable annuity and variable life insurance contracts that was published in the Federal Register on November 30, 2018 (Release Nos. 33-10569; 34-84508; IC-33286). 

The public comment period for the proposed rulemaking “Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts,” Release Nos. 33-10569; 34-84508; IC-33286 (Oct. 30, 2018) will now end on March 15, 2019. The scope and comment process for this release remains as stated in the original Federal Register notice of November 30, 2018.   

Atrium Mortgage Investment Corporation Achieves Record Revenues and Net Income in 2018

Toronto, Ontario–(Newsfile Corp. – February 13, 2019) – Atrium Mortgage Investment Corporation (TSX: AI) (TSX: AI.DB) (TSX: AI.DB.A) (TSX: AI.DB.B) (TSX: AI.DB.C) (TSX: AI.DB.D) today released its financial results for the year ended December 31, 2018.

Highlights

  • Record revenues of $58.3 million, up 15.8% from prior year
  • Record net income of $33.8 million, up 16.2% from prior year
  • $0.95 basic and $0.94 diluted earnings per share for the year ended December 31, 2018
  • $0.04 per share special dividend to shareholders of record December 31, 2018
  • $0.94 total dividends per share paid to shareholders in 2018
  • Mortgage portfolio increased to $684.4 million, 8.2% increase from prior year
  • High quality mortgage portfolio
    • 84.1% of portfolio in first mortgages
    • 88.6% of portfolio is less than 75% loan to value
    • average loan-to-value is 61.1%

“2018 was another good year for Atrium and represented a sixth consecutive year of portfolio growth and record income. We ended the year with a mortgage portfolio balance of $684.4 million, up 8.2% from the beginning of the year and up 3.3% from Q3 2018. We had annual revenue of $58.3 million and net income of $33.8 million. We increased our weighted average interest rate from 8.44% in 2017 to 8.85% at the end of this year. Notwithstanding those impressive results, we continued our practice of lending conservatively, with an average portfolio loan to value of 61.1%. We would like to thank our new and existing shareholders for the strong demand on the recent public offering of our common shares completed on February 8, 2019. We will continue to work hard to earn your continued support,” said Rob Goodall, CEO of Atrium.

“We are proud to state that Atrium continues to be regarded as Canada’s premier non-bank lender™.”

Interested parties are invited to participate in a conference call with management on Thursday, February 14, 2019 at 4:00 p.m. ET to discuss the results. To participate or listen to the conference call live, please call 1 (888) 241-0551 or (647) 427-3415. For a replay of the conference call (available until February 27, 2019) please call 1 (855) 859-2056, Conference ID 4959418.

Results of operations

Atrium ended the year with assets of $699.8 million, and revenues grew to a record $58.3 million, an increase of 15.8% from the prior year. Net income for 2018 was $33.8 million, an increase of 16.2% from the prior year.

Basic and diluted earnings per common share were $0.95 and $0.94, respectively, for the year ended December 31, 2018, compared with $0.95 basic and $0.94 diluted earnings per common share in the prior year.

The company had $682.7 million of mortgages receivable as at December 31, 2018, an increase of 8.9% from December 31, 2017. During the year, $306.0 million of mortgages were advanced, and $240.4 million of mortgages were repaid.

The weighted average interest rate on the mortgage portfolio increased to 8.85% at December 31, 2018, compared with 8.44% at December 31, 2017.

Financial summary

Condensed Statements of Earnings and Comprehensive Income

Year ended
December 31,

2018
Year ended
December 31
,
2017
Year ended
December 31,
2016
Revenue $ 58,316 $ 50,359 $ 44,042
Mortgage servicing and management fees (6,279) (5,470) (4,661)
Other expenses (1,142) (1,251) (1,221)
Provision for mortgage losses (1,800) (1,850) (1,519)
Income before financing costs 49,095 41,788 36,641
Financing costs (15,326) (12,729) (10,521)
Earnings and total comprehensive income $ 33,769 $ 29,059 $ 26,120
       
Basic earnings per share $ 0.95 $ 0.95 $ 0.97
Diluted earnings per share $ 0.94 $ 0.94 $ 0.95
       
Dividends declared $ 33,658 $ 28,545 $ 25,918
       
Mortgages receivable, end of year $ 682,721 $ 626,756 $ 530,590
Total assets, end of year $ 699,750 $ 627,859 $ 531,856
Shareholder’ equity, end of year $ 387,306 $ 349,064 $ 278,540

 

Analysis of mortgage portfolio
(dollars in 000s)

    December 31, 2018 December 31, 2017
Property type Number Outstanding amount % of Portfolio Number Outstanding amount % of Portfolio
Low-rise residential 38 $ 232,713 34.0% 39 $ 256,581 40.6%
High-rise residential 15 146,027 21.3% 10 81,939 13.0%
Mid-rise residential 20 139,708 20.4% 6 37,071 5.9%
House and apartment 101 64,230 9.4% 120 86,287 13.6%
Condominium corporation 14 2,533 0.4% 14 2,887 0.4%
   Residential portfolio 188 585,211 85.5% 189 464,765 73.5%
Commercial 20 99,193 14.5% 27 167,622 26.5%
   Mortgage portfolio 208 684,404 100.0% 216 632,387 100.0%

 

  December 31, 2018
Location of underlying property Number of mortgages Outstanding amount Percentage outstanding Weighted average loan to value Weighted average interest rate
(outstanding amounts in 000s)          
Greater Toronto Area 162 $ 431,334 63.0% 65.5% 8.94%
Non-GTA Ontario 26 29,160 4.3% 57.9% 8.28%
Alberta 3 15,698 2.3% 52.5% 8.83%
British Columbia 17 208,212 30.4% 53.1% 8.76%
  208 $ 684,404 100.0% 61.1% 8.85%
           
  December 31, 2017
Location of underlying property Number of mortgages Outstanding amount Percentage outstanding Weighted average loan to value Weighted average interest rate
(outstanding amounts in 000s)          
Greater Toronto Area 159 $ 397,293 62.8% 62.5% 8.51%
Non-GTA Ontario 35 26,383 4.2% 65.9% 8.54%
Saskatchewan 2 17,107 2.7% 100.0% 8.06%
Alberta 5 22,518 3.6% 59.4% 8.87%
British Columbia 15 169,086 26.7% 54.7% 8.24%
  216 $ 632,387 100.0% 61.5% 8.44%

 

For further information on the financial results, and further analysis of the company’s mortgage portfolio, please refer to Atrium’s consolidated financial statements and its management’s discussion and analysis for the year ended December 31, 2018, available on SEDAR at www.sedar.com, and on the company’s website at www.atriummic.com.

Conference call

Interested parties are invited to participate in a conference call with management on Thursday, February 14, 2019 at 4:00 p.m. ET to discuss the results. To participate or listen to the conference call live, please call 1 (888) 241-0551 or (647) 427-3415. For a replay of the conference call (available until February 27, 2019) please call 1 (855) 859-2056, Conference ID 4959418.

About Atrium

Canada’s Premier Non-Bank Lender™

Atrium is a non-bank provider of residential and commercial mortgages that lends in major urban centres in Canada where the stability and liquidity of real estate are high. Atrium’s objectives are to provide its shareholders with stable and secure dividends and preserve shareholders’ equity by lending within conservative risk parameters. Atrium is a Mortgage Investment Corporation (MIC) as defined in the Canada Income Tax Act, so is not taxed on income provided that its taxable income is paid to its shareholders in the form of dividends within 90 days after December 31 each year. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same position as if the mortgage investments made by the company had been made directly by the shareholder. For further information about Atrium, please refer to regulatory filings available at www.sedar.com or investor information on Atrium’s website at www.atriummic.com.

For additional information, please contact

Robert G. Goodall
President and Chief Executive Officer
(416) 867-1053
info@atriummic.com
www.atriummic.com

Jennifer Scoffield
Chief Financial Officer

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42820

Quadro Reports Results from Second Phase Drilling at Staghorn

Vancouver, British Columbia–(Newsfile Corp. – February 13, 2019) – Quadro Resources Ltd. (TSXV: QRO) (“Quadro” or the “Company”) reports results from its second phase diamond drill program on the Staghorn Gold Property located in southwestern Newfoundland. A total of 887 metres was completed in five holes. Highlights from the drilling was the intersection of a 50 metre wide graphitic schist/breccia zone carrying anomalous gold including 0.94 gpt Au over 3.0 m.

This drill program targeted previously untested portions of the Cape Ray Fault (CRF) system which transects Quadro’s claims over a 20 km strike length. The initial three holes (ST18-01,02 and 03) completed a “stratigraphic” fence across the interpreted CRF zone in proximity to the Ryan’s Hammer area, where previous sampling had defined a cluster of high-grade gold values up to 32.15 gpt Au in brecciated and foliated diorite. Hole ST18-04 was a 100 metre step-out and ST18-05 tested a gold-in-soil anomaly, 9 km to the southwest.

The highlight from this drilling was from DDH ST18-01 which intersected a brecciated and sulphide rich mineralized section within a graphitic schist zone. The 50 m graphitic zone was anomalous in gold (0.145 gpt over 50.0m) with an internal brecciated zone assaying 0.94 gpt over 3.0 meters from 218.5m to 221.5m. The section is described as poly-metallic with minor amounts of chalcopyrite, sphalerite and arsenopyrite, however ICP analysis results are pending. Results from the other holes were negative with only isolated gold values up to 0.255 gpt Au (over 0.4m).

Anomalous drill results follow:

DDH FROM TO INTERVAL
(metres)
Au g/t
ST18-01
incl
incl
189.0
217.0
218.5
239.0
227.55
221.5
50.0
10.55
3.00
0.145
0.461
0.940
ST18-02 Nil
ST18-03 Nil
ST18-04 82.15 82.55 0.4 0.255
ST18-05 Nil

 

Additional drilling is being contemplated to better test the known gold trends and other targets on the Staghorn property. To date Quadro’s drilling has been limited to the Woods Lake Zone and this recent drilling concentrating on the Ryan’s Hammer area. Future drilling will target extensions of the graphitic breccia zone, additional areas around the high-grade Ryan’s Hammer mineralization and the Mark’s Pond area where a strong soil anomaly (up to 7,000 ppb Au) is coincident with the northern edge of a diorite plug and the regionally significant Rogerson Lake conglomerate. This target was slated to be tested in the latest drill campaign however wet conditions made access impractical.

The Cape Ray Fault structure is a regionally extensive `break` and hosts a number of recently discovered gold deposits and prospects. The most advanced of these is Marathon Gold’s Valentine Lake deposit with latest published resources of 2,691,400 oz Au indicated and measured and 1,531,600 oz Au inferred (Marathon Gold`s website). Other hot spots along the fault includes Matador Mining`s Cape Ray deposits and Sokomon Iron`s Moosehead Project where recent drilling intersected 44.96 gpt Au over 11.9m (Sokoman Iron news release dated Oct 1, 2018).

QRO acknowledges the financial support of the JEA Program, Department of Natural Resources, Government of Newfoundland and Labrador.

Wayne Reid, P. Geo., VP Exploration for Quadro and a qualified person as defined in National Instrument 43-101, is responsible for this release and supervised the preparation of the information forming the basis for this release.

QA/QC – Quadro has implemented a quality control program on its drill programs at the Staghorn Project to ensure best practice in sampling and analysis. Quadro maintains strict quality assurance/quality control protocols including the systematic insertion of certified standard reference and blank materials into each sample batch. Analyses in this release were performed by Eastern Analytical of Springdale, NL with ISO 17025 accreditation. Samples were transported in sealed bags to Eastern and all samples were assayed using industry-standard assay techniques for gold. Gold was analyzed by a standard 30 gram fire assay with an AA finish.

About Quadro Resources – Quadro is a publicly traded mineral exploration company. It is led by an experienced and successful management team and is focused on exploring for gold in North America. Quadro has approximately 28 million shares outstanding. The Company’s shares trade on the TSX Venture Exchange under the symbol “QRO”. Quadro owns a 100% interest in the Staghorn and Conche properties in Newfoundland.

On behalf of the board of directors,
Quadro Resources Ltd.

“T. Barry Coughlan”
President and CEO
Tel (778) 373-6734

“Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.” The information contained herein contains “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be “forward-looking statements.” Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ from those reflected in the forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the Company’s expectations or projections.”

For more information on the Company, interested parties should review the Company’s filings that are available at www.sedar.com.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42815

SEC Charges Former Senior Attorney at Apple With Insider Trading

Washington, D.C.–(Newsfile Corp. – February 13, 2019) – The Securities and Exchange Commission today filed insider trading charges against a former senior attorney at Apple whose duties included executing the company’s insider trading compliance efforts.    

The SEC’s complaint alleges that Gene Daniel Levoff, an attorney who previously served as Apple’s global head of corporate law and corporate secretary, received confidential information about Apple’s quarterly earnings announcements in his role on a committee of senior executives who reviewed the company’s draft earnings materials prior to their public dissemination.  Using this confidential information, Levoff traded Apple securities ahead of three quarterly earnings announcements in 2015 and 2016 and made approximately $382,000 in combined profits and losses avoided.  The SEC’s complaint alleges that Levoff was responsible for securities laws compliance at Apple, including compliance with insider trading laws.  As part of his responsibilities, Levoff reviewed and approved the company’s insider trading policy and notified employees of their obligations under the insider trading policy around quarterly earnings announcements. 

“Levoff’s alleged exploitation of his access to Apple’s financial information was particularly egregious given his responsibility for implementing the company’s insider trading compliance policy,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement.  “The SEC is committed to pursuing insiders who breach their duties to investors.”  

The SEC’s complaint, filed in federal district court in Newark, New Jersey, charges Levoff with fraud and is seeking the return of his ill-gotten trading profits plus interest, penalties, a permanent injunction, and an officer-and-director bar.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges.

The SEC’s investigation, which is continuing, has been conducted by Pei Chung and Elizabeth Doisy.  The case has been supervised by Deborah A. Tarasevich and Ms. Chion.  The litigation will be led by Daniel Maher and Cheryl Crumpton.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

Rumley Holmes LLP Proudly Announces Our Merger with Smith & Lassaline, CPAs Effective January 1, 2019

Barrie, Ontario–(Newsfile Corp. – February 13, 2019) – This merger was predicated on our common commitment to client satisfaction and we are excited to combine our leadership, expertise and service offerings to enhance the value we bring to our clients.

The merger of Rumley Holmes LLP and Smith & Lassaline, CPAs, brings together two firms with long histories of serving Simcoe County and the Greater Toronto Area will allow us to offer a broad range of services including: business valuations Canadian and U.S. Tax services, in-depth succession planning, accounting and bookkeeping. These services will allow us to meet the needs of our existing client base and those of our rapidly growing community.

The combined firm will continue to operate as Rumley Holmes LLP from a newly expanded space located at its existing location, 301 Bryne Drive, Barrie, ON L4N8V4.

About Rumley Holmes LLP:

Rumley Holmes LLP is an accounting and advisory firm with over 20 professionals serving Barrie, Simcoe County and the Greater Toronto Area. We are proud to ensure our clients reach their full potential.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42810