NY Investment Firm to Pay $35 Million to Resolve Fraud Allegations

DOJ News & Litigation Updates

NY Investment Firm to Pay $35 Million to Resolve Fraud Allegations

New York-based investment firm International Investment Group LLC (IIG) agreed to pay the Securities and Exchange Commission (SEC) over $35 million to resolve allegations that the firm defrauded its customers by hiding losses sustained by one of the firm’s flagship hedge funds. According to the SEC’s complaint, IIG began hiding losses in its Trade Opportunity Fund in 2007 by inflating the value of defaulted loans in the fund’s portfolio and creating fraudulent documentation, such as promissory notes and credit agreements, to memorialize fake loans.

The SEC’s complaint can be found here.

Founder of Pokerstars Pleads Guilty to Running Unlawful Internet Gambling Business

On March 25, Isai Scheinberg, the founder and former executive of online poker company Pokerstars, pled guilty in Manhattan federal court to operating an unlawful internet gambling business. The charges against Scheinberg stem from his decision to continue to make online poker available to U.S.-based users until March 2011 despite the passage of the Unlawful Internet Gambling Enforcement Act in 2006, which made it a federal crime to accept most forms of payment associated with unlawful internet gambling.

The plea resolves 2011 charges filed by the United States Attorney’s Office for the Southern District of New York against 11 defendants. All remaining defendants have plead guilty and have been sentenced. Scheinberg faces up to five years imprisonment.

In 2012, Pokerstars agreed to pay $547 million to settle civil forfeiture and money laundering charges.

The DOJ’s press release can be found here.

Attorney Indicted for Role in $2.7 Million Securities Fraud Scheme

On March 24, the United States Attorney’s Office for the Eastern District of Pennsylvania unsealed an indictment charging attorney Todd Lahr with one count of conspiracy to commit securities fraud and wire fraud, two counts of securities fraud, and four counts of wire fraud.

Lahr is alleged to have conspired with others from 2012 to 2019 to perpetuate a securities fraud scheme in which he sold securities to investors, including his own clients, for two entities - THL Holdings LLC and Ferran Global Holdings Inc. – and used the funds from the investments for his own personal expenses, including his mortgage and child’s school tuition. To perpetuate the scheme, Lahr diverted funds received from new investors to pay existing investors.

The DOJ’s press release can be found here.