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Securities Newsletter

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In this issue, NC Secretary of State Elaine F. Marshall introduces our latest investor alert about so-called “finfluencers,” or financial influencers who often are paid to promote various investments – including investments related to cryptocurrency - on social media. Later in the newsletter, we also include investor advisories about investments made in the “metaverse,” as well as romance scams. We also report on a small business event Secretary Marshall and some of her staff members participated in that was sponsored by the Harnett County Chamber of Commerce and the Small Business Center at Central Carolina Community College in Lillington, NC. Secretary Marshall highlighted her NC Rural RISE (Resources for Innovators, Start-ups and Entrepreneurs) Initiative as a way her office is helping small businesses succeed. We also include tips from the US Securities and Exchange Commission (SEC) on ways teachers can invest for their retirement. In our Cybersecurity Corner, we provide lots of resources for small businesses to be better prepared to thwart cyberattacks. And we include our regular features, News from the Regulators as well as our Enforcement News.
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In this issue, we provide a link to Secretary Elaine F. Marshall’s comments made during the World Elder Abuse Awareness Day conference hosted by the NC Department of Health and Human Services about her and her department’s efforts to protect seniors from elder financial abuse. We also provide a link to a program on cryptocurrency-related scams sponsored by AARP North & South Carolina and the US Securities and Exchange Commission’s (SEC) Atlanta District Office. Andy Penry, Director of the NC Department of the Secretary of State’s Securities Division, was one of the panelists on this program. We include important information about a deceptive mailing that people with recent financing statement filings with the Department’s Uniform Commercial Code Section may have received. We include an announcement by the North American Securities Administrators Association (NASAA) regarding two new publications it has released free to the public about the use of a power of attorney in managing one’s financial affairs. We also include information about the landmark remote online notarization bill Governor Cooper signed into law that allows notaries to use internet technologies to identify people and notarize their signatures remotely. This significant legislation means homebuyers will soon be able to close loans and buy houses from the comfort of their couch, marking a major advance in Secretary of State Elaine F. Marshall’s twenty-five year effort to lead the digital transformation of North Carolina’s business environment. We also include a link to “Investomania,” the SEC’s latest public awareness campaign that uses the game show concept to playfully illustrate that investing is not a game and that investors need to do their due diligence when making investment decisions. Finally, we include several items of interest in our Cybersecurity Corner and News from the Regulators sections.
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In this edition we report on two enforcement cases the NC Department of the Secretary of State were involved with. The first involves Delano Page and Brandon Teague, the founders of a supposed Kings Mountain “hedge fund” called D&T Investment Group. The pair pleaded guilty on April 27th to federal charges for orchestrating a $4 million Ponzi scheme that defrauded hundreds of investors, some of whom were at or near retirement age, following a joint investigation by the NC Secretary of State’s Securities Division, the FBI and US Postal Inspection Service. The second case involves Marlin Hershey and Dana Bradley, both of Cornelius, NC. Hershey and Bradley were charged with mail and wire fraud conspiracy, mail fraud, securities fraud, and money laundering conspiracy. They are alleged to have induced dozens of victims to invest millions of dollars in unregistered securities offerings, promoted by the defendants through Performance Holdings and other entities controlled by the defendants and other individuals, including Performance Retire on Rentals, LLC, Distressed Lending Fund, LLC, Moteng Funding, LLC and Southeast Lot Acquisitions, LLC, among others. We also report on the Rural RISE NC (Resources for Innovators, Start-ups, and Entrepreneurs) program, a new initiative announced by Secretary of State Elaine F. Marshall that seeks to connect new businesses with crucial resources for success. We also include news from the US Securities and Exchange Commission, the North American Securities Administrators Association, and the Federal Trade Commission.
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In this edition, we spotlight the conclusion of the criminal case against Russell Joseph Mutter, a former investment adviser who was found guilty of defrauding 12 victims, many of them elderly, out of more than $3.3 million. Mutter was charged with 41 counts of Investment Adviser Fraud, Financial Exploitation of an Older Adult, and Obtaining Property by False Pretenses. The multi-year investigation led by law enforcement agents with the North Carolina Secretary of State’s Securities Division with the assistance of the US Postal Inspection Service ended in February with Forsyth County Superior Court Judge David Hall sentencing Mutter to a minimum of 16 years, 3 months and a maximum of 22 years, 5 months in prison for his role in the scam. Secretary Elaine Marshall provides tips on how to give generously but wisely to help Ukrainian refugees displaced by Russia’s invasion of Ukraine, as well as to be on the lookout for investment scammers who seek to capitalize on rising energy and fuel prices by pitching risky or fake investments in the energy sector. We also include a link to an interview that J.W. Simmons, host of WCLN’s “We Should Know” program, conducted on cryptocurrencies with Shawn Pruett, Secretary of State Special Agent in Charge of Special Investigations and Forensic Services, and John Maron, Director of Investor Protection and Education. We also include a link to the North American Securities Administrators Association’s (NASAA) new webcast series, “NASAA’s Senior Issues and Diminished Capacity Committee Presents.” The inaugural webcast is entitled, “Cognition: Problems and Solutions.” We also provide a link to an informative video about spotting and avoiding romance scams that was produced by the Montana Securities and Insurance Commission. With the Russian invasion of Ukraine, we provide information from various federal agencies that warn about the heightened risk of cyberattacks and what people and businesses should do to prepare themselves. We also include different notices from NASAA, the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA) requesting comments on various proposals and rule changes.
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In this edition, we feature a listing of top investor threats for 2022 and information on a coordinated enforcement action taken just this week to stop an alleged fraudulent precious metals scheme that targeted seniors in North Carolina and across the nation. The action focuses on Safeguard Metals, LLC and Jeffrey Santulan (a/k/a Jeffrey Hill) who are alleged to have solicited investors in North Carolina and across the nation by touting precious metals at grossly inflated prices that were not disclosed. We also provide information on testimony offered by a senior FINRA Foundation official before the Senate Special Committee on Aging as part of its examination of trends regarding financial literacy among older adults. We include a link to “Deep Learning: The Future of Market Manipulation Surveillance Program,” the latest episode of FINRA’s “Unscripted” podcast. This episode discusses how FINRA uses artificial intelligence to detect market misconduct. In our “Cybersecurity Corner,” we include information about efforts the SEC is taking to shore up the financial sector’s cybersecurity defenses. In related SEC news, we report on the Commission’s proposed rulemaking to better protect investors and enhance cybersecurity by bringing more Alternative Trading Systems (ATS) that trade Treasuries and other government securities under the regulatory umbrella. We also report that NASAA has named Kristem Hutchens as Director of Policy and Government Affairs. Finally, we include our regular Enforcement News segment.
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