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Daily fraud update: 6th April

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US regulator announces charges against alleged investment fraud couple

A leading regulator in the US has brought charges against a couple from the state of Texas.

The couple, Larry Donnell and Shuwana Leonard, have been charged by the Securities and Exchange Commission (SEC).

The charges pertain to an unusual token sale focused around alkaline water.

It is alleged that the couple brought more than 500 investors into the fraud through the sale of online tokens backed by their alkaline water firm.

The sale of the tokens aimed to raise around $20m, reports in the financial press indicated.

It is also understood that they offered stock certificates which allegedly turned out to be fake.

The allegation suggests that investors who participated were told that they would receive a return as large as 3,000% of their original investment.

It is believed that the couple drew most of their alleged victims from the African-American community.

As part of the lawsuit brought by the SEC, two firms have also been named as defendants.

These are Teshua Business Group and Teshuater.

Specifically, the charges pertain to violation of the US’ Securities Act, and its provisions for anti-fraud and registration.

In a statement, the regulator – which is known for being active in the field of tackling crypto fraud – went into further detail about the mechanisms allegedly used by the pair.

It explained how the total sum of cash raised was close to half a million US dollars.

“The SEC’s complaint alleges that the Leonards and two companies they control, Teshuater, LLC and Teshua Business Group, LLC, targeted investors in the African-American community with three separate fraudulent offerings, raising nearly $500,000 from over 500 investors across the United States”, it said.

“According to the complaint, the Leonards first sold bogus stock certificates in Teshuater, a company that bottled and sold alkaline water.”

“Larry Leonard then allegedly tried to raise $20 million by selling a valueless cryptocurrency called TeshuaCoin, which he falsely claimed was backed by Teshuater’s water products”, it added.

It also alleged that Leonard went on to trade options using the cash raised.

“Finally, the complaint alleges that Larry Leonard raised funds for a non-existent bitcoin mining investment, promising exorbitant returns, and then used the funds to make speculative options trades”, it said.

In addition to making these trades, Leonard and his wife are understood to have also devoted some of the funds to personal expenditures.

Leonard is understood to be a former religious leader.

The SEC also said that it would seek a number of restitution-focused outcomes from the pair as part of the lawsuit it brought.

It has asked for disgorgement of ill-gotten gains, including prejudgment interest.

It is also asking for a range of civil penalties, plus permanent injunctive relief.

The SEC has further requested “all other equitable and ancillary relief to which the Court determines the Commission is entitled”.