Example from Irs website San Diego – A La Jolla-based CEO pleaded guilty today to multiple felonies relating to the operation of his financial firm, Surf Financial Group, LLC, including conspiring to defraud shareholders of publicly traded companies, transmitting millions of dollars through an unlicensed money transmitting business, and falsifying multiple years of federal tax returns.
David John Nava pleaded guilty to one count of conspiracy to commit securities fraud, one count of operating an unlicensed money transmitting business (an "MTB"), and one count of tax fraud before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California. Nava further agreed to forfeit more than $3.1 million for his crimes.
"Twenty years after David John Nava was censured and permanently barred from the securities industry, he orchestrated a multimillion-dollar scheme and fabricated documents to circumvent SEC requirements in order to sell fraudulent securities and victimize innocent shareholders," said IRS Criminal Investigation Special Agent in Charge Ryan L. Korner. "Nava failed to report nearly $2.8 million in gross receipts from his scheme, thereby stealing over $609,000 in tax revenue from the United States. Today's guilty plea evidences the hard work of our Special Agents and IRS Criminal Investigation's commitment to working with our law enforcement partners to bring to justice fraudsters who repeatedly corrupt our securities exchanges and banking systems, while victimizing innocent Americans to feed their greed."
According to the plea agreement filed today, Nava managed Surf Financial Group, LLC despite federal securities regulators permanently banning and censuring him in 1994 from participating in the industry. Despite the ban, Nava admitted that he and other co-conspirators, including a licensed attorney, converted the debt of various publicly traded companies under materially false and fraudulent pretenses into unrestricted stock and then sold the stock for profit. Nava further admitted that he and his co-conspirators carried out their fraudulent scheme by entering into agreements where Nava sold shares of various entities' stock on public exchanges after fraudulently claiming an exemption from the U.S. Securities and Exchange Commission's ("SEC") registration requirements for selling securities in the public marketplace.
To conceal his involvement in the securities fraud scheme, Nava admitted using various nominees to ensure that, as Nava described it, he was a "ghost" in the transactions. Brokerage firms relied on the purported truth and accuracy of the attorney opinion letters in evaluating whether to clear the sale of shares of the restricted stocks on public markets. After the stocks were cleared for sale as a result of the false attorney opinion letters, Nava and his co-conspirators sold millions of shares of these stocks to the investing public.
"The defendant flagrantly engaged in an egregious fraud scheme on multiple levels—with securities for publicly traded companies; through the operation of an underground and unlicensed money transmitting business; and by misrepresenting his income for these schemes to the IRS," said U.S. Attorney Robert S. Brewer, Jr. "Law enforcement will vigorously pursue both the individuals and entities who commit fraud and operate outside the conventional financial system to carry out that fraud." U.S. Attorney Brewer commended Homeland Security Investigations, IRS Criminal Investigation, the Financial Investigations and Border Crimes Task Force, and the Department of Justice Criminal Division's Fraud Section for their work on this case.
Nava further admitted that, from approximately 2017 to 2018, he operated an unlicensed MTB as a means to transmit financial proceeds from foreign locations, including Hong Kong and the Bahamas, as a way to disguise the source, origin, and control of the proceeds. As stated in his plea agreement, in 2017 Nava entered into a business partnership with at least one person who resided in Mexico and delivered dairy products for a living. To conceal Nava's control over the MTB, Nava directed the Mexican resident to open a bank account at a financial institution in San Diego, and to transmit millions of dollars in funds as directed by Nava. Nava failed to register his MTB with the U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, as required under federal law.
"This investigation is an excellent example of the work Homeland Security Investigations (HSI) continues to do in its fight against transnational criminal enterprises that seek to exploit the global financial system," said Cardell T. Morant, Special Agent in Charge of HSI in San Diego. "No matter how creative or sophisticated the scheme; HSI and our partners at IRS-CI will continue to work tirelessly to stamp out fraud and the illicit movement of money, even in these trying times."
This case was investigated by IRS Criminal Investigation, Homeland Security Investigations, the Financial Investigations and Border Crimes Task Force, and the Department of Justice Criminal Division's Fraud Section. Trial Attorney Kevin Lowell of the Criminal Division's Fraud Section and Assistant U.S. Attorney Daniel Silva of the U.S. Attorney's Office for the Southern District of California are prosecuting the case.
Sentencing is scheduled to occur on January 8, 2021 before U.S. District Court Judge Dana Sabraw.
Page Last Reviewed or Updated: 08-Oct-2020
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