Former broker ordered to pay nearly $3 million over securities scheme

On Behalf of | Jan 20, 2023 | Financial Advisor Misconduct

The Securities and Exchange Commission announced that it has obtained a final judgment against a man accused in a multi-million dollar securities offering fraud case, ThinkAdvisor reports.

The action in the United States District Court for the District of Maine orders Paul Hess to pay approximately $2,977,000 in disgorgement, prejudgment interest, and penalties.

According to a complaint filed by the SEC in 2018, “Hess schemed with co-defendants, including Michael Liberty, to induce investors to purchase unregistered interests in shell companies controlled by Michael Liberty that supposedly owned transferrable interests in a fintech startup then known as Mozido, LLC.”

But the SEC said the shell companies did not actually own, or were not permitted to transfer, interests in the company. Hess and Liberty are accused of lying to investors about Mozido’s finances, the amount Liberty invested in the company, and the use of their funds. From 2010 to 2016 the co-defendants fraudulently raised over $48 million and most of it was used to fund Liberty’s lifestyle, the complaint alleged.

Under the terms of the final judgment consented to by Hess, he was permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; the broker-dealer registration requirements of Section 15(a) of the Exchange Act; and the securities offering registration requirements of Sections 5(a) and 5(c) of the Securities Act.

Hess was also banned from participating in the issuance, purchase, offer, or sale of any security with the exception of purchasing or selling securities for his own personal accounts.

The attorneys at Lewitas Hyman are uniquely qualified to represent individual investors in investment-related claims against financial professionals and their firms. We understand how financial professionals and their firms are supposed to operate through decades of experience working for the SEC and firms like Morgan Stanley and UBS Financial Services. If you have suffered investment losses as a result of misconduct by your financial professional or their firms, contact Lewitas Hyman at (844) 651-2641 or through our online contact form for a free consultation.

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