Specifically, the SEC charged that the petitioners had misrepresented who served as the primary brokers and auditor, misrepresented the funds’ investment parameters and safeguards, and overvalued the funds’ assets for the purpose of increasing the fees that they could charge investors. The petitioners were found liable and penalties were ordered, including the disgorgement of all illegal gains. During the course of the proceedings, the petitioners raised various constitutional objections, all of which were rejected.
The petitioners appealed the SEC’s decision, contending that the proceedings suffered from constitutional defects, and the court agreed on three separate grounds. First, the court ruled that the petitioners were deprived of their constitutional right to a jury trial because the SEC’s enforcement action is similar to traditional actions at law to which the right to a jury trial attaches. Second, the court concluded that Congress had unconstitutionally delegated legislative power to the SEC by giving it the authority to choose the forum in which to bring the action while failing to provide the SEC with an “intelligible principle” to guide its use of the delegated power. Finally, the court was persuaded by the petitioners’ argument that the SEC’s restrictions on removal of its Administrative Law Judges, and of the Commissioners that hire them, are unconstitutional. Although the court ordered that the judgment be vacated, it did not address whether the last constitutional defect alone would be a sufficient basis on which to vacate the SEC’s judgment.
The information provided by three of the four whistleblowers caused the SEC staff to open a new investigation, and also prompted another agency to open an investigation. The investigations led to two separate, successful actions by the SEC. The fourth whistleblower provided insights on publicly available information that allowed the staff to focus on new allegations that advanced the investigation.
Since the SEC’s first issuance of an award to a whistleblower in 2012, approximately $1.3 billion has been issued to 273 individuals under the program.
Director/Officer |
Role |
Company |
Long Deng |
CEO |
iFresh, Inc. |
Amount |
Director/Officer |
Role |
Company |
$103,591 |
John Henderson |
CEO |
Global Resrces Leadership, LLC |
$225,000 |
Louis Schiliro |
Former COO |
United Health Products, Inc. |
$666,913 | Willard Jackson | CEO | 420 Real Estate, LLC |
$1,250,976.15 | Douglas Beplate | Former CEO | United Health Products, LLC |
$33,906,548 | Patrick Churchville | President | ClearPath Wealth Management, LLC |