Attorney ordered to pay SEC $13.7 million in stock scheme

By David Hutton | Oct 13, 2017

LOS ANGELES — The U.S. District Court Central District of California has ordered an attorney accused by the Securities and Exchange Commission (SEC) of operating a stock scheme to pay $13.7 million.

The order was issued by Judge Beverly R. O’Connell. The SEC had filed a motion for entry of final judgment against Marcus Luna, which O’Connell granted.

According to court documents, the SEC alleged that Luna and Norrell Walker orchestrated the scam, in which the defendants set up boiler rooms of telemarketers to push two companies they secretly controlled.

The pair began to set up their alleged scheme in 2012, with Luna handling the flow of stock and Walker driving the sales, court records state.

Court documents noted that between February 2013 and February 2014, NL Walker & Associates, a company owned by Walker, operated the boiler room. It was pushing stock for Umax Group Corp. and Azure Holding Group Corp.

Two other associates linked to Walker ran boiler rooms. Paul Gomez ran one in Beverly Hills, and Dustin Smith managed an office in Costa Mesa.

In the boiler rooms, telemarketers who were trained and supervised by Walker, Gomez and Smith would cold-call investors and push them to buy penny stocks that they touted had the potential to skyrocket in value. When investors ordered stocks from personal accounts, Walker called Luna to reach out to an offshore brokerage that filled orders with Luna’s personal shares, according to court documents.

Luna would then split the proceeds with Walker.

The judgment requires Luna to pay $13.7 million to the SEC within 14 days of the entry of the final judgment. He will be credited with any amount that he is ordered to pay as restitution in U.S. v. Luna, which is pending in the Central District of California.

Further, Luna is required to provide proof of payment to the SEC’s counsel.

If Luna fails to make the payments, the SEC can move for civil contempt after the 14-day period.

The SEC decided against seeking a civil penalty against Luna, and the order dismissed that claim. The court retained jurisdiction over the case to ensure it can enforce terms of the final judgment.

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