Posts tagged with "SEC"

SEC charges Hollywood actor with operating $690M Ponzi scheme based on fake Netflix deals

April 8, 2021

The U.S. Securities and Exchange Commission has obtained an asset freeze against Los Angeles-based actor Zachary Horwitz (also known by the stage name Zach Avery) in connection with an alleged Ponzi scheme that raised over $690 million, Business Insider reports.

The U.S. regulator said in a Tuesday statement that Horwitz allegedly lied to investors that he and his company were buying film rights and reselling them to Netflix and HBO. In reality, his company had no business relationship with the entertainment giants and relied on fake emails to fool investors.

According to the SEC statement, Horowitz and his company, 1inMM Productions, promised investors returns in excess of 35%, and for years paid supposed returns on earlier investments using funds from new investments.

“We allege that Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.

In addition, Business Insider reports, Horwitz misappropriated investor funds for his personal us,—using victims’ money to purchase a $6 million property in Beverlywood, California.

The US Justice Department separately issued a statement saying that the FBI arrested Horwitz on Tuesd, April 6. Horwitz was criminally charged with raising $227 million over the course of about five years that has yet to be repaid as part of a scheme in which he claimed he would acquire rights to films that Netflix and HBO would then distribute abroad, particularly in Latin America, the statement said.

Research contact: @BusinessInsider

Elon Musk officially has been crowned the ‘Techno-King of Tesla’

March 16, 2021

Tesla officially gave CEO Elon Musk the title of “Techno-King [AKA Technoking] of Tesla,” in a new regulatory filing on Monday, March 15, NBC News reports.

Musk will retain his position as CEO, Tesla said. Zach Kirkhorn, Tesla’s CFO, has also been given a new title: “Master of Coin.”

In a filing with the Securities and Exchange Commission on March 15, the electric vehicle company said: “Effective as of March 15, 2021, the titles of Elon Musk and Zach Kirkhorn have changed to Technoking of Tesla and Master of Coin, respectively. Elon and Zach will also maintain their respective positions as Chief Executive Officer and Chief Financial Officer.”

It’s unclear what has prompted the new titles, NBC news says. Last month, the Californian startup announced it had bought $1.5 billion worth of bitcoin.

Tesla shares surged by 600% last year, quadrupling Musk’s personal fortune and briefly putting him ahead of Amazon CEO Jeff Bezos as the world’s richest man. Tesla shares have had a rockier start to 2021, but last week the stock surged 20% in one day after data from the China Passenger Car Association showed Tesla sold 18,318 Model 3s and Model Ys made at its Shanghai vehicle plant in China.

Research contact: @NBCNews

Chomping at the ‘bit’: Tesla buys $1.5 billion in bitcoin; plans to accept it as payment

Febraury 9, 2021

Tesla announced Monday that it has bought $1.5 billion worth of bitcoin, CNBC reports.

In a filing with the Securities and Exchange Commission, the company said it bought the bitcoina cryptocurrencyfor “more flexibility to further diversify and maximize returns on our cash.”

Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.” That would make Tesla the first major automaker to do so. (The $1.5 billion worth of bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.)

Interestingly enough, this is not Tesla CEO Elon Musk’s first foray into digital payments. He also is the majority stockholder in PayPal.

However, Tesla’s move into bitcoin represents an investment of a significant percentage of its cash in the investment, CNBC reports. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.

The moves raised immediate questions around Musk’s behavior on Twitter in recent weeks, where he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin by posting positive messages that have encouraged more people to buy the digital currencies.

Two weeks ago, the billionaire Tesla owner added the hashtag #bitcoin to his Twitter bio, in a move that helped to briefly push up the price of the cryptocurrency by as much as 20%. Two days later, he said on the social medial chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”

Bitcoin prices surged to new highs Monday following Tesla’s announcement, reaching a price of at least $44,200. Tesla shares were up more than 2% Monday morning. Tesla warned investors of the volatility of bitcoin’s price in its SEC filing.

Musk has gotten into trouble for his market moving tweets in the past, but it’s unclear how that applies to his tweets about cryptocurrencies.

Research contact: @CNBC

Theranos whistleblowers launch advisory group on ethical practices for tech startups

April 4, 2019

March seemed to be “Theranos month” on U.S. television, as network, premium cable, and streaming channels ran stories on the stunning rise and fall of the Silicon Valley company helmed by Elizabeth Holmes—who claimed she had found a way to test for a full range of diseases with a small blood sample and a “magic box.”

Now, Erika Cheung and Tyler Shultz—two former employees who blew the whistle on Theranos—have launched a new organization called Ethics in Entrepreneurship, which seeks to help other entrepreneurs from suffering the same fate as Holmes, CNN reports.

Cheung, who lives in Hong Kong, is the former Theranos lab worker who tipped off the Centers for Medicare and Medicaid Services to look into the blood testing startup.

Shultz, who is the grandson of Theranos board member and former Secretary of State George Shultz, was an ex-research engineer instrumental in helping Wall Street Journal investigative reporter John Carreyrou expose the company, according to the news outlet..

Theranos had a reported $9 billion valuation and employed hundreds of workers who bought into its mission to create a cheaper and more efficient alternative to traditional blood testing methods. After Carreyrou’s initial investigation into the company in 2015, its technology and testing methods started to unravel.

In March 2018, the Securities and Exchange Commission settled charges against Theranos and Holmes, over “massive fraud “involving more than $700 million raised from investors. In September, Theranos announced plans to dissolve itself. The company remains the subject of an ongoing criminal investigation by the Department of Justice.

Ethics in Entrepreneurship, which is seeking non-profit status in the United States and Hong Kong, according to CNN, wants to make talking about ethical practices the norm in the startup world. The founders plan to help connect early stage entrepreneurs to ethicists, seasoned entrepreneurs, and other relevant industry experts who can guide them on how to make ethical decisions when building a company. It also plans to make available tools and frameworks for ethical decisions that benefit businesses, employees and consumers.

There were so many instances, even for someone like Elizabeth Holmes, to turn back and say, ‘I’m taking things a little too far here,'” Cheung told CNN Business. “She had many opportunities to — even at the very end, she could have said, ‘OK, I’m sorry. I messed up. I’ll stop processing patient samples and I’m going to get my team together, we’re going to work on this and we’re going to make a good product.’ I don’t think she’s ever said that, until she had to go to court and say those things.'”

The organization is accepting donations on its website to help support the development of resources guides and workshops.

“I do think entrepreneurship can empower people and empower society but we also have to not let things escalate to this degree,” Cheung said.

Research contact: @saraashleyo