SEC v. MALOM GROUP AG; MARTIN U. SCHLÄPFER; HANS-JÜRG LIPS; JAMES C. WARRAS; JOSEPH N. MICELLI; M.Y. CONSULTANTS, INC., et al., No. 2:13-CV-2280, District of Nevada (Jan. 1, 2013) — Complaint

Stephen W. Simpson
Timothy N. England
Stephen L. Cohen
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Fax: 202.772.9228
[email protected] /  Tel. 202.551.4513
[email protected] /  Tel. 202.551.4969
[email protected] /  Tel. 202.551.4472
 Attorneys for the Plaintiff
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEVADA

SECURITIES AND EXCHANGE )
COMMISSION, )
)
Plaintiff, )
)
v. )
)
MALOM GROUP AG, MARTIN U.
SCHLÄPFER, HANS-JÜRG LIPS,
)
)
2:13-CV-2280
JAMES C. WARRAS, JOSEPH N. )
MICELLI, M.Y. CONSULTANTS, INC., )
ANTHONY B. BRANDEL, M. DWYER, )
LLC, AND SEAN P. FINN, )
)
Defendants. )
)
COMPLAINT
Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows:
SUMMARY
1. In two advance-fee investment schemes perpetrated from at least August 2009
until November 2011, Switzerland-based Malom Group AG (“Malom”) – an acronym for “Make
A Lot Of Money” – through its principals, agents, and promoters, defrauded more than 30
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investors out of $11 million using forged documents, fake histories of success, and the promise
of risk-free investments and astronomical returns.  Orchestrating the fraud from Switzerland and
Las Vegas, Nevada, the defendants lured investors into agreements and transactions with Malom
that involved fictitious “prime bank” instruments and exotic high-yield trading programs.  In
fact, Malom was nothing more than a sham company and the investments the defendants peddled
were nothing more than vehicles used to steal investors’ money.  Several of the defendants,
through at least October 2013, continued to lie to investors that transactions would occur or that
refunds or returns were forthcoming.
2. In furtherance of the schemes, the defendants made numerous false and
misleading statements to investors and engaged deceptive acts, including lying about Malom’s
history and financial resources; creating false and misleading documents provided to investors,
such as forged Malom account statements and “proof of funds” letters from top overseas banks;
lying about their own history of successful transactions with Malom; lying about the use of
investor funds; and lying about the status of transactions and refunding investor funds.
3. Malom’s principals, Martin U. Schläpfer, (“Schläpfer) and Hans-Jürg Lips
(“Lips”), both residents of Switzerland, directed the scheme together with Malom’s U.S.-based
officers, executive vice president James C. Warras (“Warras”) and compliance officer Joseph N.
Micelli (“Micelli”).  Anthony B. Brandel (“Brandel”), through his Las Vegas, Nevada company
M.Y. Consultants, Inc., served as Malom’s agent and main point of contact for investors.  Sean
P. Finn (“Finn”), through his company M. Dwyer LLC (“M. Dwyer”), solicited investors for the
schemes.  Each of these defendants participated in both schemes, with the exception of Lips, who
participated only in the second scheme.
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4. In the first scheme, which took place from August 2009 to the summer of 2011,
the defendants lured investors into “joint venture” agreements with Malom that purported to
allow the investors, in exchange for an upfront fee, to “use” Malom’s financial resources to
entice third parties to enter into investment transactions with Malom that would generate returns
for Malom and the investor.  The purported transactions typically involved high-yield overseas
trading programs.  The joint venture agreements and the trading programs bore the usual
hallmarks of “prime bank” frauds, including guaranteed and astronomically-high investment
returns, use of well-known overseas banks to demonstrate evidence of funds, inordinate
complexity, and use of technical-sounding but nonsensical financial terminology.
5. Under the joint venture agreements, Malom was to evaluate the trading program
proposed by the investor and, if it posed no “perceptible risk of loss” to Malom, Malom would
enter into the transaction with the third party and share most of the profits with the investor.
6. However, even though the defendants almost always knew at least basic details
about the trading programs investors intended to propose before accepting their upfront fees,
Malom took the fees and proceeded to reject every proposed trading program on the grounds that
the transactions were fraudulent, carried some risk of loss to Malom funds, or for other
deficiencies.  In a few instances, defendants Micelli, Brandel, and Finn actually provided
investors with particular trading programs to propose to Malom, which the defendants later
rejected after taking the investors’ funds.
7. The defendants never used investors’ upfront fees for any proposed transaction
with Malom.  Instead, they diverted the funds for their personal use.
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8. In the second scheme, which took place between early 2011 and fall 2011, Malom
promised to generate funding through the creation of structured notes that would be listed on
“Western European” exchanges, in some cases supported by Brazilian sovereign bonds from the
1970s that the Brazilian government has publicly disclaimed as worthless.  To induce investors
to pay an “underwriting fee,” Malom and Lips issued corporate and personal guarantees to repay
investors’ fees if Malom did not successfully generate funding within 90 to 120 days.
9. Contrary to defendants’ representations, Malom quickly distributed the investors’
funds among the defendants and others for their personal use, and had no other means to refund
the underwriting fees.  Malom also failed to issue any structured notes.
10. When investors became wary that the investments were real, defendants Lips,
Warras, Micelli, and Brandel repeatedly lied to them about the progress of transactions and the
prospect of receiving investment returns or refunds from Malom or M.Y. Consultants.  These lies
lulled investors into not disrupting the scheme through public complaints, lawsuits, or by
reporting the defendants to governmental authorities.  This lulling activity continued until at least
October 2013.
11. None of the transactions in securities offered or sold by or for the defendants was
registered with the Commission, or are eligible for an exemption from registration.
12. None of the defendants was registered with the Commission as broker-dealers, as
is required for offering securities to investors in the circumstances described in this Complaint.
13. By virtue of their conduct, the defendants have engaged, and unless enjoined will
continue to engage, in violations of, and/or aid and abet violations of, the anti-fraud and
registration provisions of the federal securities laws.  Additionally, M.Y. Consultants, Brandel,
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M. Dwyer, and Finn have further violated the federal securities laws by failing to register as a
broker or dealer of securities.
JURISDICTION AND VENUE
14. The Commission brings this action, and this Court has jurisdiction over this
action, pursuant to authority conferred by Section 20(b) and 22(a) of the Securities Act [15
U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C.
§§ 78u(d), 78u(e) and 78aa].
15. This Court has personal jurisdiction over the defendants and venue is proper in
the District of Nevada pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and
Section 27 of the Exchange Act [15 U.S.C. § 78aa] because each defendant engaged in
transactions, acts, practices, and courses of business constituting the violations alleged in this
Complaint within this district.  Further, three of the defendants reside and can be found within
this district.
16. The defendants, directly and indirectly, have made use of the means and
instrumentalities of interstate commerce, and the means and instruments of transportation and
communication in interstate commerce, in connection with the transactions, acts, practices, and
courses of business alleged in this Complaint.
17. A majority of the investors are located in the United States and signed their
investment contracts in the United States, which became binding upon execution by the
investors.  All investors received investment-related documents and contracts from Las Vegas-
based M.Y. Consultants, all but one investor entered into escrow agreements with M.Y.
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Consultants and U.S.-based escrow companies, and all investors ultimately paid funds into U.S.­
based escrow accounts to purchase the securities.
DEFENDANTS
18. Malom Group AG is a company formed under the laws of Switzerland in 1973.
Its principal place of business is Baar, Switzerland.  “Malom” is an acronym for “Make A Lot Of
Money.”
19. Martin U. Schläpfer, sometimes spelled Martin U. Schlaepfer, age 55, is a
resident of Switzerland.  At the time of this filing he is believed to be incarcerated in Zurich,
Switzerland, where he has been since September 2011 pending an investigation by Swiss
authorities into investment fraud involving Malom Group’s offer of joint venture and structured
note agreements, as well as a separate fraudulent scheme that took place between 2003 and 2011
involving the sale of surety bonds by another company Schläpfer controlled.  Schläpfer is a
member of Malom’s board of directors and is variously described as its Chief Executive Officer,
managing director and legal counsel, although he is not a lawyer.
20. Hans-Jürg Lips, sometimes spelled Hans-Juerg Lips, age 50, is believed to be a
resident of Says, Switzerland.  He is a principal of Malom and is described as the Chairman of
Malom’s board of directors; Malom’s Swiss incorporation papers refer to this position as
“President” of the board.  Lips was incarcerated in Zurich, Switzerland between September and
December 2011 pending an investigation by the Swiss authorities into investment fraud
involving Malom Group’s offer of joint venture and structured note agreements.
21. James C. Warras, age 67, is a resident of Waterford, Wisconsin and is the
Executive Vice President of Malom.  Warras pled guilty in 2002 to felony charges that he made
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false statements in a sale of securities in Wisconsin.  He was sentenced to probation and largely
prohibited from offering or selling securities for five years.
22. Joseph N. Micelli, age 70, is a resident of Las Vegas, Nevada.  He describes
himself as Malom’s Compliance Officer.  He was an attorney, but was disbarred in California in
1997 for failing to provide clients notice that he was previously suspended by the bar for lying to
clients.  He is not licensed to practice law in any state.
23. M.Y. Consultants, Inc. is a consulting firm formed under the laws of Nevada in
April 2007.  Its principal place of business was Las Vegas, Nevada.  Anthony Brandel served as
its sole director.  It had few, if any, regular employees.  Through Brandel, M.Y. Consultants
arranged transactions with Malom, handled investor funds, negotiated transaction documents,
and communicated with investors.
24. Anthony B. Brandel, age 46, is a resident of Las Vegas, Nevada.  He is the sole
director of M.Y. Consultants and was its Operations Director.  Anthony Brandel, through M.Y.
Consultants, served as Malom’s main point of contact with investors, explaining the investments,
collecting investor funds through escrow agreements, and lulling investors about the status of
their transactions.
25. M. Dwyer LLC is a limited liability company formed under the laws of
Wyoming in July 2010.  It was founded by Sean P. Finn, who was its sole manager and owner.
It has no employees.
26. Sean P. Finn, age 44, is a resident of Whitefish, Montana.  He is the founder and
sole manager of M. Dwyer LLC.  Through in-person contacts, email, internet advertisements,
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and other avenues, Finn, directly and through M. Dwyer, recruited investors to enter into
transactions with Malom.
FACTS
I. THE SCHEME TO DEFRAUD
27. From approximately August 2009 to fall 2011, with lulling activities by some of
the defendants continuing at least until October 2013, the defendants used the mail and wires to
defraud at least 30 investors out of approximately $11 million through two schemes involving
the offer and sale of securities.
28. The investors are largely located in the United States, including several in
Nevada.  They generally have limited investment experience.
29. The defendants participated in the scheme as principals, agents, and promoters.
Martin U. Schläpfer and Hans-Jurg Lips, based in Switzerland, were the two principals of
Malom, James C. Warras was its Executive Vice President, and Joseph N. Micelli was its
purported Compliance Officer.
30. Anthony Brandel, through M.Y. Consultants, served as Malom’s main point of
contact with investors, explaining the investments, collecting investor funds through escrow
agreements, and informing investors about the status of their transactions.
31. Sean P. Finn, through his company M. Dwyer LLC served as a promoter to recruit
investors.
32. In designing and orchestrating the scheme, the defendants required investors to
use the services of at least two escrow companies, American United Title and Escrow in Las
Vegas, Nevada and Commercial Escrow Services, Inc. in California.  These companies entered
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into escrow agreements with M.Y. Consultants and investors, set up accounts into which
investors deposited funds, and distributed investor funds at the defendants’ direction.  State
authorities shut down the Nevada escrow company in fall 2009 and the California escrow
company in 2011.
A. The “Joint Venture” Investment Program
33. The joint venture scheme targeted at investors to enter into trading programs and
other transactions that could purportedly yield extraordinary returns (e.g., 100% in a single day)
through risk-free transactions.  Investors were led to believe that, after paying an upfront fee and
entering into a joint venture agreement with Malom, Malom would enter into the transactions
with third parties using its substantial assets and give a lion’s share of the profit back to the
investor.  This offering lasted from August 2009 to approximately August 2011.
34. All of the defendants except for Lips were involved in this offering (the “Joint
Venture Defendants”), which resulted in at least 25 joint venture agreements and raised
approximately $7.5 million.
35. Under the joint venture agreements, investors were required to pay an upfront fee
of between $150,000 and $1 million and identify transactions to be funded by Malom and to be
entered into between Malom and third parties.  In turn, Malom was to provide the investors with
evidence of its funds, such as a bank statement or “proof of funds” bank letter, showing that
Malom, or an entity whose funds Malom purportedly had access to, had tens to hundreds of
millions of dollars available in overseas banks.  Malom was then responsible for exploring the
investors’ proposed transactions with third parties, called “contract counter-parties.”
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36. If, in its sole discretion, Malom deemed a transaction acceptable, it was to enter
into the transaction directly with the contract counter-party and share profits with investors.
Malom deemed acceptable only those transactions that posed “no perceptible risk of loss” to its
funds.
37. Although termed “Joint Venture Agreements,” the agreements did not purport to
create separate legal entities, contained no management provisions, and expressly did not create
general partnerships between the investors and Malom.
38. The Joint Venture Defendants led investors to believe that Malom’s funds could
somehow be used as collateral, leveraged, or “monetized” by contract counter-parties by
supplying only a “proof of funds,” having banks “block” or “reserve” funds in an account, or by
issuing bank-to-bank “SWIFT” communications.
1
 The Joint Venture Defendants needed to
invoke these seemingly sophisticated, but ultimately illegitimate or misused processes because
Malom did not have the funds reflected in the proof of funds documents, which were all
fraudulent and/or forged.  In fact, the joint venture agreements and its attachments the defendants
created and/or provided to investors used these and other catchphrases that government agencies
have warned are indicative of fraudulent high-yield or “prime bank” schemes, in addition to
describing terms or transactions in confusing and highly complex (but meaningless) ways,
another indication of their fraudulent nature.
1
 “SWIFT” is an acronym for the Society for World Interbank Financial Telecommunication, an organization owned
by more than 2,500 member banks that provides a system of standardized interbank telecommunications.
References to SWIFT messages are commonly used in prime bank schemes as they provide an illusion of
sophistication.
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39. In some instances, Malom provided proof of funds documents purporting to show
that other parties with which Malom had relationships had funds.  Those proof of funds
documents were also forged and/or fraudulently used by Malom.
40. Although the joint venture agreements charged investors with identifying and
proposing trading programs or transactions for Malom to enter into, in certain instances the Joint
Venture Defendants actually provided investors specific programs to propose to Malom,
including one called the “Chase One-Day Program.”  In March 2010, defendant Brandel
promoted a trading program whereby investors could supposedly secure a 100%, guaranteed
return in a single day by trading U.S. Treasury STRIPS
2
 through the “Fed window” at JP Morgan
Chase Bank in Manhattan.  To enter the program, investors needed $5.5 million.
41. According to program documents provided to Brandel by defendant Finn and
other promoters, these securities could be bought from the bank and almost immediately sold
back to it for a 100% profit.  The process could be done in two hours and could be repeated for
as long as the bank had instruments available.
42. Brandel and Finn mislead investors into believing such programs existed, despite
knowing or being reckless in not knowing that programs promising such astronomical,
guaranteed returns were fraudulent.
43. Micelli drafted a template joint venture agreement specific to this transaction to
help Finn and other promoters recruit additional investors.  The template agreement specifically
described the purchase and sale of STRIPS and a guaranteed 100% profit.  At the time he drafted
this template, Micelli knew that such guarantees were not legitimate.
2
 “STRIPS” is an acronym for Separate Trading of Registered Interest and Principal of Securities.
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44. As a result of this effort, five investors entered into joint venture agreements to
secure “proof of funds” for $5.5 million each in return for transaction fees ranging from
$150,000 to $200,000.  None of the investors received a return on their investment or a refund of
their upfront fees.
45. After accepting the upfront fees for the joint venture agreements, Malom, through
Micelli, Brandel, or at times Schläpfer, proceeded to reject every transaction proposed by
investors, and in some cases multiple transactions proposed by the same investor, because the
transactions posed a “perceptible risk of loss” to Malom’s funds, were fraudulent, or otherwise
did not comply with procedures that were “usual and customary in the banking and securities
industry.”  These rejections occurred repeatedly, even though Brandel and Micelli knew at least
basic details about the proposed transactions before investors entered into joint venture
agreements and paid fees to Malom.
46. Where transactions were rejected outright, the defendants told investors that they
would not receive any refund and that their fees were used to compensate Malom for reserving
its funds, to compensate it for the time spent exploring the trading program, and to reimburse
costs incurred in pursuing the fraudulent transaction.
47. These statements were false and misleading.  As the defendants knew or were
reckless in not knowing, Malom had no funds to reserve.  Moreover, the defendants spent little
or no time exploring proposed transactions and incurred little or no costs pursuing any
transactions.
48. If a transaction was not rejected outright, Malom, through Schläpfer, Micelli,
and/or Brandel, gave investors various excuses why the transaction had not occurred.  They
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would purport to encounter delay after delay resulting from feigned illnesses and
hospitalizations, banking holidays, weather crises, and vacations until the window for the
proposed transaction closed or the investors or contract counter-parties abandoned the
transaction.
B. The “Structured Note” Investment Program
49. Under the structured note scheme, which began in early 2011 and lasted through
fall 2011, Malom pledged to underwrite, securitize, “credit enhance”, register, list, and market
structured notes for companies who sought funding.  Malom promised to sell the structured notes
on unspecified “Western European” exchanges and to privately place the notes with unspecified
subscribers.  All of the defendants were involved in this offering, which resulted in at least six
agreements and raised nearly $3.5 million.
50. Malom failed to develop any funding through structured notes or otherwise, did
not refund any investors’ funds, and spent investors’ funds on activities unrelated to the
development of structured notes or other funding sources.
51. In the structured note agreements, Malom required investors to pay an upfront
“underwriting fee” or “deposit” that would be used for the structured note offering.  This was the
investors’ sole responsibility in the structured note transactions.
52. If a transaction was successful, Malom agreed to refund the investor’s
underwriting fee with a 25-50% premium.  If a transaction was not successful, Malom agreed to
refund the underwriting fee and pay a small penalty to the investor.  Generally, refunds were
payable between 90-120 days after entering into an agreement.
53. Malom failed to secure any funding and did not refund fees to any investor.
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54. Malom did not undertake any steps to create or market any structured notes.
Instead, the underwriting fees were immediately distributed among the defendants and others
who had no role in effecting the contemplated transactions.
55. As an example, in connection with the bankruptcy proceeding of USA Springs
Inc. (In re USA Springs, Inc., Case No. 08-11816 (Bankr. D. N.H. June 27, 2008)), Malom, USA
Springs, and two investors signed an “Investor Agreement” on or about June 23, 2011, whereby,
for an underwriting fee paid by the investors, Malom would create and sell structured notes to
raise $60 million for USA Springs to help it emerge from bankruptcy.
56. The Investor Agreement stated that it was “necessary for a third party to invest
and deposit with Malom [$1.2 million]” so that Malom could “underwrite, credit enhance and
securitize the Note; cause the Note to be listed on a Western-European exchange; and privately
place the Note to subscribers with whom [Malom] enjoys pre-existing relationships,” and that
Malom would use the $1.2 million investment in furtherance of these duties.
57. As part of the Investor Agreement, the investors would receive a 50% return after
a successful debt offering and Malom would receive a success fee, in this case, 1.5% of the face
value at maturity of the Structured Notes placed, and an origination fee of 3% of the principal
funding amount of $60 million.
58. If the effort was unsuccessful after 120 days, Malom promised to refund the $1.2
million without deduction, plus pay an additional $50,000 to the investors.
59. In other words, Malom guaranteed either a 50% return in 120 days or a complete
refund in addition to an approximately 4% penalty.
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60. However, the investors’ funds were immediately distributed among the
defendants or to others, were not spent on any investment-related purpose, and were never
refunded.  Moreover, Malom did not have any funds with which to refund the structured note
investors.
61. When investors in the structured note offering began to demand results or refunds,
Malom, typically through Lips, Warras, and Micelli, made excuses for why it could not complete
the transactions, usually blaming the European debt crisis.  Alternatively, Lips and Warras told
investors that Malom would secure funding through transactions involving H-series Brazilian
Letras do Tesouro Nacional (“LTNs”) – bonds issued by the Brazilian government in 1972 that
were purportedly worth in excess of US$200 million.
62. These LTNs, however, are worthless.
63. Well before Malom began telling investors it would repay them with these bonds
and continuing until the present, the Brazilian National Treasury has hosted an English-language
website unequivocally warning investors that “[a]ll LTN’s issued in the seventies, in printed
versions, had lost their value and are no longer valid,” that “[a]ny documents about rescheduling
these papers are an imitation intended to be passed off fraudulently or deceptively as genuine,”
and that “[a] number of law firms have generated negative outcomes for its clients, offering
deals, presenting false evidences, with calculations attaching high values to those bonds.”
64. To assuage investors’ concerns about this and other warnings, Malom, using
investor funds, paid Campos e Campos Advogados, a Brazilian law firm, and one of its partners
to acquire LTNs and to obtain a legal opinion and official documents explaining why and how
the LTNs were valid and had value.
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65. Some of the documents provided to Malom by the Brazilian law firm were
forgeries, including, for example, a November 19, 2010, “Repac Certificate,” which purports to
be a government re-validation of the worthless bonds.  Warras, Micelli, and Brandel provided
these documents to investors, including to the USA Springs investors, when it became clear that
Malom was not going to be able to create a structured note and needed to convince the investors,
creditors, and the bankruptcy court that it could still generate promised funding.
66. Lips, Warras, Micelli, and Brandel all represented that the structured note
transactions were risk-free to investors because of refunds guaranteed by Malom and personally
by Lips.  However, Malom and Lips did not have the funds to repay investors.  Neither Malom
nor Lips have returned any money to the structured note investors.
C. The Defendants’ Conduct in Furtherance of the Scheme
1. Martin U. Schläpfer
67. As a principal of Malom, Schläpfer signed at least 23 joint venture agreements
and documents attached thereto between August 2009 and January 2011.  Schläpfer signed most
of these agreements on behalf of Malom, and the remaining agreements on behalf of NAS
Operations AG and Maxmore Corporation Ltd., two companies affiliated with or controlled by
Schläpfer.
68. Schläpfer received contractual documents from and returned signed documents to
Nevada-based M.Y. Consultants, who in turn provided them to investors.  Four of these joint
venture agreements were with investors who were based in Nevada.
69. In the joint venture agreements with investors and in the attachments thereto,
Schläpfer claimed that Malom, NAS Operations, or Maxmore had hundreds of millions of
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dollars on deposit at overseas banks where they either did not have the amounts claimed on
deposit or never had accounts at all.  Schläpfer also supplied Warras, Micelli, Brandel, and
others with several bank statements purporting to reflect funds belonging to or accessible by
these entities.  However, as Schläpfer knew, most of the accounts referenced in these documents
did not exist, or, if an account did exist, the balance never approached the amounts reflected on
the statements Schläpfer provided.
70. For example, on June 20, 2011, Schläpfer forwarded an email to Lips, Warras,
Micelli, and Brandel, purporting to be from a banker at EFG Bank in Switzerland in which the
banker wrote that Malom was “a well-known client to us for many years” even though Malom
had only opened an account in April 2011.  The email further stated that Malom had “accounts . .
. currently well in excess of $3 mio.”
71. Malom had no funds in its EFG account on the date of the email and thereafter
never had more than $500,000 in this account.
72. Further, between at least July 2010 and April 2011, Schläpfer sent numerous
emails to Warras, Micelli, and Brandel describing how Malom needed to pay bank officers or
others to acquire bank documents.  In one email to Warras, Micelli, and Brandel, dated August
31, 2010, Schläpfer lamented that various parties had contacted Centrum Bank in Switzerland
about Malom’s accounts there, which “cost us a fortune to the responsible people (greed over
risk!).”
73. Schläpfer also told investors that their advance fees were used to compensate
Malom for reserving its funds for the investors’ transactions, even though Malom had not
“reserved” any funds because it did not have the funds to reserve.
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74. For example, in February 2011, Schläpfer wrote in an email to one investor that
Malom “received our engagement fee to offset our having held funds in abeyance” for the
investor.  According to its agreement with the investor, Malom was supposed to have reserved
$30 million for the investor at Centrum Bank.  Although Malom did have an account at Centrum
Bank for approximately four months, it was closed on January 19, 2011, and Malom never
deposited any funds into it.
75. In fact, as Schläpfer knew, he and the other defendants did not use the investors’
“fees” for any purported joint venture or structured note transaction.  Instead, the defendants
diverted the investors’ funds for their own personal use, to other parties involved in the schemes,
or to persons unrelated to the purported transactions.
76. On several occasions, Schläpfer misrepresented Malom’s previous successes to
investors.  For example, in fall 2010 he told one investor that Malom had successfully completed
10 deals in 2010 and netted $12 million.  In fact, Malom had not completed any successful deals
in 2010, as Schläpfer knew.
77. Further, in December 2010 and February 2011, Schläpfer also passed off lists of
“projects” from a company he was previously affiliated with, Northamerican Sureties Ltd.
(“NAS”), and replaced the NAS logo on the cover with a Malom logo, even though NAS was a
separate entity and operated in a different industry (surety bonds) from Malom.
78. Several of the companies on the list never had any relationship with NAS or
Malom and never engaged in the projects listed beside their names on the reference list.
79. When investors inquired as to the status of transactions or demanded refunds,
Schläpfer made a series of excuses as to why Malom had not performed, including a series of
18

feigned illnesses and hospitalizations, including one where, in March 2011 he told one investor
that he was “unavailable” because of a heart attack when, in reality, he was incarcerated in
Switzerland.
80. He also told investors that delays arose from problems with bank compliance
officers (from banks at which Malom did not have any relationship); delays in transferring funds
from one bank to another (sometimes involving banks at which Malom did not have accounts);
and unspecified changes in the law.
81. Schläpfer knew or was reckless in not knowing that the statements described
above were materially false or misleading or omitted to state material facts which would make
the statements he made not materially misleading.
82. Schläpfer received at least $2,306,000 of investor funds for his role in furthering
the fraudulent schemes.  Further, Malom received approximately $831,200 as part of the scheme.
2. Hans-Jurg Lips
83. Between February and September 2011, Lips, as Chairman and Head of
Structured Finance of Malom, signed several documents stating that Malom held hundreds of
millions of dollars at overseas banks where, as Lips knew, it either did not have the amounts
claimed on deposit or never had accounts at all.
84. Lips signed two structured note agreements with investors located in Nevada.
Further, all of the structured note investors negotiated their agreements through Nevada-based
M.Y. Consultants, who also arranged to have the agreements signed by Lips and the investors.
85. For example, on February 24, 2011, Lips signed documents claiming that Malom
had $25 million at Südtirol Bank in Italy or Centrum Bank.
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86. Malom never had an account at Südtirol.
87. Although it once had an account at Centrum Bank, it never had money on deposit
there and the account had been closed for over a month when Lips signed the documents.
88. Further, Lips supplied investors with a letter addressed to him from a banker at
Südtirol Bank.  The letter was forged.  The banker did not know Lips or Malom and the signature
on the letter was not his.
89. In another example, on September 16, 2011, Lips sent an investor a letter, drafted
by Micelli, claiming that Malom had funds on deposit at Estrategia Investimentos S.A., a
financial services firm located in Brazil, with offices in Miami, Florida.  However, Malom never
had an account with this firm.
90. Lips also made several written promises to investors that their underwriting fees
would be returned if no successful transactions took place, and made several false and
misleading statements intended to convince investors that their investments were safe and
Malom had the capacity to pay refunds.
91. On April 21, 2011, Lips supplied an investor with an email, purporting to be from
an EFG banker, stating that Malom had $2.4 million on deposit and was a well-known client for
many years.  EFG Bank records show that Malom had opened an account there approximately
two weeks earlier, on April 5, 2011.
92. Shortly thereafter, on June 22, 2011, Lips provided the same investor with a
signed statement in which he agreed to hold not less than $2.5 million on deposit at EFG Bank in
Switzerland to cover the cost of a refund.  Malom never held more than $500,000 at EFG Bank.
20

93. In both oral statements to investors and in written agreements, Lips also
misrepresented that the fees investors paid in the structured note transactions were to pay costs
associated with the underwriting of a bond offering.  In several structured note transactions,
including ones dated May 3, 2011, June 22, 2011, August 3, 2011, August 23, 2011, and
September 7, 2011, those costs are described as including due diligence, securitization, credit
enhancement, registration, listing fees, and all costs to be incurred in furtherance of these tasks.
Each investor’s funds were not, however, used in furtherance of their transactions.  Instead, the
defendants distributed investors’ funds among themselves for their personal use, to other parties
involved in the schemes, or to several individuals with no clear connection or role in the
structured note transactions at issue.
94. As did Schläpfer, in March 2011, Lips supplied Brandel and Micelli with the
deceptive reference list reflecting references for NAS, but with a Malom logo, so that they could
(and ultimately did) provide it to prospective investors.  As Lips knew, several of the companies
on the list never had any relationship with NAS or Malom and never engaged in the projects
listed beside their names on the reference list.
95. Lips made several oral and written misrepresentations and material omissions
regarding Malom’s purported Brazilian LTNs to investors.  First, he falsely claimed that the
LTNs had substantial value even though the Brazilian National Treasury unequivocally stated—
in English on its website—that they had no value.
96. Second, he failed to disclose to investors that Campos e Campos Advogados, the
Brazilian law firm that purported to verify the LTNs, once listed Schläpfer and Warras as
employees, and that the firm had an agreement with Malom to share any proceeds arising out of
21

transactions utilizing the LTNs.  Both facts call into question the law firm’s objectivity in
evaluating the LTNs.
97. Finally, he made misrepresentations to several investors and to the federal
bankruptcy court in the USA Springs transaction regarding the status of Malom’s attempts to
“monetize” the LTNs, first claiming that transactions were imminent only to later blame failure
on various problems such as issues with receiving SWIFT messages that purportedly could
verify the LTNs.  These last misrepresentations were made in three affidavits filed with the
bankruptcy court dated February 29, 2012, April 30, 2012, and May 13, 2012.
98. In addition, since December 2011, when Lips was released from approximately
two months of detention in Switzerland, Lips has contacted certain investors by telephone and
through instant messaging to assure them that transactions were underway that would enable
Malom to pay refunds.  These contacts continued until at least October 2013.
99. Lips knew or was reckless in not knowing that the statements described above
were materially false or misleading or omitted to state material facts which would make the
statements he made not materially misleading.
100. Lips received at least $431,295 of investor funds for his role in furthering the
fraudulent schemes.
3. James C. Warras
101. At various times from 2009 through 2011, Warras engaged in deceptive acts and
made direct misrepresentations to investors.  As the Executive Vice President of Malom, Warras
provided Nevada-based Brandel and Micelli with forged bank and other documents, made
several misrepresentations to investors about Malom and about the nature of various high-yield
22

trading programs into which he sought to recruit investors, and was an active participant in the
negotiations with investors regarding certain fraudulent transactions, including the structured
note transaction with USA Springs.  Warras orchestrated or directed many of Brandel’s and
Micelli’s false and misleading statements to investors from and in Nevada.
102. After Schläpfer and Lips were incarcerated, Warras regularly communicated with
investors to lull them by making false excuses as to why transactions had not occurred, false
promises that transactions were underway, and false promises that refunds were imminent.
103. Warras sent Brandel and Micelli by email several bank statements showing that
Malom had hundreds of millions of dollars on deposit at various overseas banks.  At the time he
sent these statements, he knew or was reckless in not knowing they were forgeries.
104. Furthermore, in these email communications, which often also involved
Schläpfer, Warras frequently told Micelli and Brandel that Malom needed to pay various bankers
and others to secure such documents.  For example, on July 14, 2010, Warras sent an email to
Micelli and Brandel warning them that it was possible they would not get an account statement
from Deutsche Bank in Germany, but adding that “[o]nce we get some more money to the
[purported account holder] then Martin can work on the Duestsche [sic] Statement and most
likely get it.”
105. In another example, on September 17, 2010, Warras forwarded a Deutsche Bank
statement he received from Schläpfer to Micelli and Brandel, warning them that “we will have to
pay for this [proof of funds] with the escrow that is created”; meaning that fees deposited into
escrow by investors who were deceived by the bank statement would be used to pay for the
23

statement itself.  In fact, the bank statement was a forgery.  As Warras knew, or was reckless in
not knowing, Malom never had an account at Deutsche Bank.
106. In another example, on March 19, 2011, Warras provided Micelli and Brandel
with a letter that had been written by a banker at Südtirol Bank for two individuals (“Individuals
A and B”) who were previously connected to the joint venture scheme as purported
counterparties to a joint venture transaction proposed by an investor who was defrauded.  Warras
asked Micelli and Brandel to draft a letter from Südtirol Bank that could be used for all escrow
deals, to which Micelli responded with suggested language.
107. On or about March 23, 2011, Warras received an email from Lips, purporting to
attach a letter from Südtirol Bank that used Micelli’s proposed text, with minor alterations.
108. The letter was never issued by Südtirol Bank; it was a forgery.
109. On or about the same day, March 23, 2011, Individual A sent Warras an invoice
for $100,000 for a “payment to Sudtirol Bank.”  Warras directed Micelli and Brandel to change
the invoice to reflect “Legal and Consulting Services for the [credit-linked notes] and BRIC fund
of Malom Group AG.”
110. In the ensuing week, between March 28 and April 4, 2011, Warras exchanged
several emails with Individuals A and B whereby Individual A demanded the $100,000 payment
or else he would have the Südtirol Bank letter “revoked.”
111. Individual A warned Warras that “the banker who trusted me and did what I asked
and delivered – he expects me to pay him.”  In several emails, Warras assured Individual A that
he would receive $100,000.  Warras then forwarded the emails to Brandel and Micelli, stating
that “Südtirol is getting dangerous.”
24

112. Warras later paid Individual A $75,000 out of investor funds given to Malom for
purported structured note transactions, including the USA Springs transaction.
113. Warras also directed others to forge documents to deceive investors into believing
Malom’s LTNs were legitimate and had value.  In July 2011, Warras directed the creation of a
fraudulent acquisition document for the LTNs.  In a series of emails to Campos e Campos law
partner Luis Fernando de la Roca and Micelli, Warras directed Micelli to draft and backdate a
joint venture contract showing how Malom acquired the LTNs, writing that Micelli should make
sure it was full of “BOILER PLATE BULL SHIT” with “as many pages of B.S. as possible” so
that it could be used as a “file stuffer” in negotiations with a bank who it tried to enlist in an
effort to monetize the LTNs.
114. Warras specifically directed Micelli to state in the contract that Malom had
acquired the LTNs in 1992, even though he testified during a deposition in the USA Springs
bankruptcy proceeding that Malom acquired the LTNs in 2009 or 2010.  He later instructed de la
Roca to take Micelli’s draft and “fill in the blanks and continue or change the story.”
115. In December 2011, Warras sent an investor a receipt and an attachment from
Merrill Lynch reflecting its acceptance into safe-keeping two LTNs.  In the attachment, a Merrill
Lynch employee purports to make several representations about the authenticity and value of the
LTN, including that the instruments had “full paperwork that confirms [the instruments’]
issuance, authenticity, and ownership chain and tax regularity.”  Merrill Lynch never issued the
attachment; Warras forged it and the signature of the Merrill Lynch employee.
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116. Warras also made several oral misrepresentations to investors about Malom’s
history of success.  In August 2010, for example, he told one investor that Malom and Schläpfer
had successfully concluded millions of dollars in transactions when they had not.
117. When Swiss authorities detained Schläpfer in September 2011, Warras served as
Malom’s primary point of contact for investors.  Continuing until at least October 2013, Warras
frequently contacted investors by telephone to discuss the status of their investments.  Largely,
these communications served to provide excuses for delays; to assure investors that various
transactions, mostly involving the Brazilian LTNs, were underway or had closed that would
permit the issuance of refunds; and, in the case of one investor, to warn him that going to
authorities would jeopardize Malom’s ability to refund money.
118. With respect to Malom’s purported Brazilian LTNs, Warras falsely promised
investors that transactions involving the LTNs would generate money for refunds for the joint
venture investors and funding/refunds for the structured note investors.  Like Lips, Warras
omitted to tell investors the nature of Malom’s investment-sharing relationship with (and
Schläpfer’s and Warras’ alleged employment or affiliation with) Campos e Campos Advogados,
the Brazilian law firm that purported to verify the LTNs.  Warras also made several false claims
regarding the value of the LTNs, which are worthless, and the status of closed and pending
transactions involving the LTNs.  In a November 18, 2011 affidavit Malom filed with a U.S.
Bankruptcy Court, for example, Warras stated that Malom had accepted offers to sell the LTNs
for $200 million when, in fact, Malom had purportedly “purchased” the LTNs through Campos e
Campos for no more than $833,000, reflecting an astonishing 24,000 percent return on an
instrument the Brazilian government publicly disclaimed as worthless.
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119. Warras knew or was reckless in not knowing that the statements described above
were materially false or misleading or omitted to state material facts which would make the
statements he made not materially misleading.
120. Warras received at least $1,066,915 of investor funds for his role in furthering the
fraudulent schemes.  He received these funds directly and through Carpe Diem Family Trust, a
trust he controlled.
4. Joseph N. Micelli
121. Between August 2009 and the present, Micelli, a disbarred attorney, a self-
professed and self-taught “expert” in the banking and securities industry, and Malom’s
“Compliance Officer,” drafted joint venture agreements and structured note contracts, and
reviewed the trading programs and other transactions the joint venture investors proposed both
before and after investors placed funds into escrow.  Micelli resides and worked primarily out of
Las Vegas, Nevada throughout the schemes.
122. Starting in March 2010, he also knew that Finn and other promoters were actively
pitching at least one risk-free, high-yield trading program to joint venture investors, the “Chase
One-Day Program” described above, and provided the promoters with template contractual
documents specific to that program to help their recruitment efforts.
123. In the joint venture transactions, after investors paid their advance fee, Micelli,
acting on Malom’s behalf, invariably rejected proposed transactions or trading programs using
various excuses.  For example, on June 18, 2010, Micelli informed several investors that trades
such as the “Chase One-Day Program” could be risk-free if they are conducted pursuant to
certain procedures that are “usual and customary in the banking and securities industry.”
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124. Despite having no formal training and having never worked in either industry,
Micelli subsequently told investors that transactions could not be done because some procedure
did not meet this generic standard or due to other deficiencies.  For example, on October 14,
2010, he told one investor that “the compliance department of Centrum Bank [was] demanding
to know” certain information about a transaction because it would have imposed “an independent
obligation of Centrum Bank” even though no such demand had been made by the bank.
125. He also frequently rejected proposed trading programs as fraudulent because they
contained red flags of illegitimacy such as guaranteed returns, enormous short-term returns and
other indicators of fraud.  In fact, Micelli knew that the joint venture agreements were designed
and intended to solicit fraudulent trading programs and investment scams.
126. Micelli provided fraudulent bank statements and bank letters to investors on
several occasions, including, among other occasions, by email on October 12, 2010, October 25,
2010, and December 23, 2010.  Micelli knew or was reckless in not knowing these bank
documents were fraudulent.
127. Among other clear indicators that they were illegitimate, between approximately
July 2010 and April 2011, Micelli received numerous emails from Warras and Schläpfer
discussing how Malom needed to pay bank officers or others for bank documents.  In addition,
these bank letters used several catchphrases that government agencies have warned are indicative
of fraud, including that Malom’s funds were “clean, clear, and of non-criminal origin,” could be
“blocked” or placed on “administrative hold,” and were “clean and clear” and “free of any liens
or encumbrances.”
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128. As far back as 2008, well before Micelli received these documents and provided
them to investors, he was aware that these phrases indicated fraud, having received and read a
detailed “handbook” titled “Lawyers’ Guide: Advising Clients on High Yield Investment
Programs and Ponzi Schemes,” which described how these catchphrases (among other tactics)
were used to deceive investors in fraudulent investment schemes.
129. Further, on or about August 24, 2009, he received electronic copies of several
government warnings regarding “prime bank” schemes and the types of red flags to be aware of,
including documents from the FBI, Department of the Treasury, and the Federal Reserve.  These
warnings identified high-yield schemes that use these phrases as fraudulent and illegal, and
identified other common characteristics of such schemes such as guaranteed and risk-free
investments, and astronomical returns on investments.
130. Micelli forwarded these warnings to Brandel by email at the outset of the joint
venture scheme, in August 2009.
131. Micelli knew or was reckless in not knowing that the bank statements and bank
letters also carried several other indicators of fraud.  For example, several documents from
Deutsche Bank carried different dates but had signatures, stamps, and document control numbers
(e.g., barcodes) that were identical; one PDF file of a document from a Brazilian depository
institution, IBRAC, contained mark-ups that showed that the original date was obscured
electronically and a new date was typed above it in a different font from the original.
132. Despite knowing these strong indicators of fraud, he drafted template joint
venture agreements and other contractual documents that referenced and attached these bank
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documents for delivery to investors, and even included several of the same fraudulent
catchphrases (e.g., “clean, clear, and of non-criminal origin”) in the documents he drafted.
133. Micelli forged documents as well.  One proposed transaction required notarized
documents.  On July 21, 2010, Micelli sent Brandel an email containing several electronic
images of what appear to be Swiss notary stamps and signatures.  Micelli copied these electronic
images from a document Schläpfer had previously signed and had notarized.  Micelli then pasted
these electronic images onto transactional documents and provided them to the counter-party in
the transaction to give the impression that Schläpfer had signed the documents and had them
notarized in Switzerland when he had not.
134. He also forged a document purporting to be a “Proof of Funds” letter from
Deutsche Bank evidencing Malom funds, which was provided by email to at least two investors
in October 2011 to entice them to deposit fees for purported transactions with Malom.
Electronic metadata on the .PDF format document shows that Micelli forged the letter by
layering text and signature stamps over a blank image of Deutsche Bank letterhead.
135. Micelli forged other bank documents using rudimentary electronic cut-and-paste
techniques.  Micelli and other defendants used these documents to deceive investors into parting
with their funds or in connection with proposed transactions after investors paid their fees.  For
example, in an email dated November 25, 2009, an assistant working with M.Y. Consultants
forwarded to Brandel a word document containing text for a bank letter from Falcon Private
Bank in Hong Kong.  Brandel immediately forwarded it to Micelli and Warras.  Micelli inserted
this text onto an electronic copy of Falcon Private Bank’s letterhead, which already had two
signatures of bank officers on it.
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136. He repeated this on at least three occasions, creating forged letters from Falcon
Private Bank dated December 9, 2009, February 1, 2010, and April 19, 2010.
137. On February 3, 2010, Micelli emailed the February 1, 2010 Falcon Private Bank
letter, along with executed copies of a joint venture agreement, to Brandel and Warras so that it
could be forwarded to an investor.
138. On April 19, 2010, Micelli emailed the April 19, 2010 Falcon Private Bank letter,
along with executed copies of a joint venture agreement to Brandel, Warras, and Schläpfer so
that it could be forwarded to an investor.  Ultimately, each of these letters were provided to
investors.
139. Micelli also made misrepresentations to investors by claiming that Malom had a
history of success and significant financial resources.  For example, on September 1, 2011,
Micelli filed an affidavit with the U.S. Bankruptcy Court in the USA Springs bankruptcy
proceeding in which he made several misrepresentations about Malom.  He stated that “Malom
has among its assets unencumbered cash in its bank account(s) totaling far in excess of $16.6
million” when he knew it did not.
140. Further, Micelli claimed that Malom had “experience in underwriting similar
transactions” when he knew it had none.
141. Micelli knew or was reckless in not knowing that the statements described above
were materially false or misleading or omitted to state material facts which would make the
statements he made not materially misleading.
142. Micelli received at least $828,903 of investor funds for his role in furthering the
fraudulent schemes.
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5. Anthony Brandel & M.Y. Consultants
143. Since at least August 2009 until fall 2011, Brandel, a Nevada resident and the
“Director of Operations” and the sole director of Nevada-based M.Y. Consultants, actively
recruited investors and facilitated their  entry into joint venture agreements and structured note
agreements by soliciting details of the transactions investors sought to access, explaining the
programs to investors, opening up escrow accounts into which investor funds would be
deposited, coordinating the exchange of contractual documents between investors and Malom,
and ultimately distributing investor funds amongst the defendants and others.
144. In recruiting investors, Brandel assured them that Malom had substantial assets
under its control and a long history of successful transactions.  Several of the investors Brandel
solicited resided in Nevada.
145. Brandel made misrepresentations to investors about the extraordinary historical
returns offered by trading programs, and explained how such trades were without risk when he
knew that such transactions did not exist.
146. Brandel also sought fictitious documents to be used as proof of Malom’s funds
(e.g., bank statements or bank letters), helped create them, was aware that Malom was paying for
their issuance, and then provided them to investors.
147. He induced investors into agreements knowing that Malom had no intent to
engage in the various transactions investors sought to enter, even remarking that one agreement
was a “straight JV that had a bullshit transaction attached to it.”
148. In communications with investors about Malom’s background, including its
financial resources and history of success, Brandel repeated the falsehoods he was told by others
32

including by Schläpfer, Warras, and Micelli.  He made no effort to verify whether Malom had
ever entered into successful transactions or whether it had any funds available.
149. Malom had not engaged in any successful transactions and did not have any
significant funds available.
150. For example, on November 18, 2009 Brandel stated in an email to one promoter
that Malom was a “multi billion dollar company and licensed every imaginable [sic],” and that
Schläpfer was a banking attorney.  Malom never had such funds available, there is no evidence
that it held any “licenses,” and Schläpfer was not an attorney.
151. In another example, on or about July 2010 Brandel told one investor that other
investors had been enormously successful even though he knew that none of the investors he had
worked with had received any investment return.
152. In yet another example, Brandel and Micelli received an email from Warras on
September 2, 2011, asking Brandel to let him know if a proof of funds from Estrategia
Investimentos S.A. would work.  Warras attached a marketing brochure from the company to the
email.
153. Approximately an hour later, Brandel sent an email to one prospective investor
stating that Malom has “been finalizing their Brazilian Treasury deal with ‘Estrategia
Investimentos S.A.’ . . . which is where the majority of [Malom’s] funds are,” and attached the
same marketing brochure.
154. Estrategia Investimentos did not hold any funds on behalf of Malom at that or at
any other time.
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155. Brandel also made several false and misleading statements about the risk of
entering into transactions with Malom.  For example, on or about late December 2009 or early
January 2010, Brandel orally informed one investor that an investment was risk-free and that if a
trade did not happen, the investor would get his funds back.  The investor did not receive any
funds back.
156. In April/May 2010, Brandel orally informed another investor that there was a
“less than one percent risk” involved in a high-yield scheme because it was not an investment but
rather a “transaction.”  That investor also lost all of his funds.
157. Further, Brandel represented to several investors that Malom’s funds could be
“administratively held,” “blocked,” or “reserved” by its banks to be used for the investors’
transactions.  For example, in emails dated November 17, 2009 and December 15, 2009, he
represented to potential investors that Malom’s banks could put administrative “holds” on its
funds, adding in the latter email that the hold would be in effect for “one year and a day.”
158. These banking concepts do not exist in legitimate commerce.
159. In explaining how he was paid and how Malom used investors’ funds, Brandel
informed one investor in August 2010 that he would be paid out of trading profits; told another
investor on or about December 2009 that his transaction fees would be refunded if a trading
program did not occur; and told another potential investor on July 12, 2010 that the fees were
used to compensate Malom for “blocking” or “reserving” funds (which it did not have).
160. In actuality, Brandel distributed nearly 50 percent of the investors’ funds amongst
a series of individuals and entities, including to M.Y. Consultants and to his own personal
34

account, almost immediately after investors sent funds into escrow accounts.  The remaining
funds were distributed amongst Schläpfer, Lips, and Warras.
161. Brandel performed several fraudulent and deceptive acts in connection with the
scheme.  For example, in March 2010, he encouraged Finn and other promoters to pitch trading
programs such as the “Chase One-Day Program” to investors, helped Micelli create template
documents specific to that transaction, and provided those documents to promoters to help recruit
additional investors for the program.
162. He also knew or was reckless in not knowing that he was providing fraudulent
bank statements and bank letters to investors.  Between July 2010 and April 2011 Brandel
received numerous emails from Schläpfer and Warras discussing how Malom needed to pay
bank officers or others for bank documents.
163. Further, the bank documents Brandel received from Schläpfer, Warras, and/or
Micelli contained clear signs that they were fraudulent or forged.  First, each contained several
catchphrases Brandel knew were used in high-yield scams and were indicative of fraud.  He
learned this, in part, from reviewing several government warnings Micelli sent to him by email
on August 24, 2009.
164. Moreover, the documents had several physical characteristics that were highly
indicative of fraud.  For example, several documents purporting to be from Deutsche Bank
carried different dates but had signatures and stamps and document control numbers that were
identical, indicating that they were not authentic.
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165. The “Deutsche Bank” letters appeared on letterhead for Deutsche Bank Privat-
und Geschäftskunden AG, but made representations on behalf of Deutsche Bank AG, a separate
legal entity and Deutsche Bank Privat- und Geschäftskunden AG’s parent company.
166. Further, the letters contained a footer that purported to list the members of the
Management Board of Deutsche Bank Privat- und Geschäftskunden AG.  The list is not accurate
for 2010, the year the letter was dated.
167. In another example, one PDF file of a bank document contained mark-ups that
showed that the original date was obscured and a new date was typed on the letter.
168. Another letter, from Südtirol Bank, directed the reader to contact the author at the
“below indicated address” when the address was in a header at the top of the page.
169. After receiving fraudulent bank documents from Warras, Micelli, and/or
Schläpfer, Brandel provided them to investors.  The bank documents were required attachments
to the joint venture and structured note agreements.
170. In trying to obtain more bank letters evidencing Malom’s supposed funds to
supply to potential investors, Brandel sent an email to Warras on February 17, 2011 with a
punch-list of statement requests, including for “500MM any major bank . . . 150MM any major
bank . . . 100MM must be Deutsche Bank . . . 200MM any major bank . . . 25MM Centrum
Bank.”
171. Until at least spring 2013, Brandel communicated with investors to promise
refunds and provide updates on the status of various transactions that would enable refunds to be
made.  During this period, he regularly communicated with investors to advise them of the status
36

of their purported investments and assuring them that successful transactions were imminent and
returns were forthcoming.
172. Brandel gave investors numerous reasons as to why transactions have not been
completed as promised.  For example, in communications with one investor over the course of
nearly two years, Brandel variously blamed delays on illness, European banking holidays,
trading licensing issues, fraudulent acts by others, and misrepresentations about the transactions
by the promoters.
173. Brandel also used offers of refunds to investors as a lulling tactic.  In February
2011, for example, he promised in writing to refund several investors’ funds without deduction
in exchange for a “hold harmless” agreement and later promised refunds in writing if an investor
retracted allegations made on an internet site that Malom and M.Y. Consultants were engaged in
fraud.  No refunds have been made.
174. Brandel knew or was reckless in not knowing that the statements described above
were materially false or misleading or omitted to state material facts which would make the
statements he made not materially misleading.
175. Brandel and M.Y. Consultants are alter-egos of each other, with Brandel using
M.Y. Consultants in furtherance of the scheme to defraud.  He used corporate funds for his own
purposes and to create and support several small businesses run by family members.  Further, the
company was inadequately capitalized and, when funds came in they were quickly transferred to
others or depleted, including on paying personal expenses and through large cash withdrawals.
Further, on information and belief, M.Y. Consultants failed to observe corporate formalities.
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176. Brandel received at least $532,500 in transaction-based compensation for his role
in furthering the fraudulent scheme.  M.Y. Consultants received approximately $546,607 in
connection with the scheme.
6. Sean P. Finn and M. Dwyer LLC
177. Sean P. Finn was a promoter working with M.Y. Consultants and Malom to solicit
investors.  At times, he acted through M. Dwyer, LLC, a company which he founded and serves
as its sole manager.  He participated in the fraud from approximately April 2010 to fall 2011.
178. Finn, through M. Dwyer, recruited investors for the joint venture and structured
note programs; handled investment contracts with investors; and held himself out as a
representative of Malom or intermediary between investors and Malom by explaining the joint
venture and structured note programs, and regularly communicating with investors regarding
updates on the status of their agreements.
179. Finn worked in association with Nevada-based M.Y. Consultants.  After he
solicited investors, he referred them to M.Y. Consultants, who entered into escrow agreements
with the investors and provided them with the joint venture and structured note agreements with
Malom.  Finn successfully solicited at least one Nevada-based investor.
180. Finn made misrepresentations to several investors regarding Malom, its history,
and the nature of transactions with Malom.  Finn made no effort to independently verify whether
Malom had ever entered into successful transactions or whether it had any funds available.
181. With respect to Malom’ s purported background, Finn wrote in one internet
posting, dated July 9, 2011, that he worked with Malom because it had “references from top
executives at Merrill Lynch and Goldman Sachs” and he had “spoken to several billion dollar
38

companies that owe their existence to Malom.”  On March 2, 2011, he sent an email to another
investor falsely claiming that Malom had “closed deals with Wal Mart, Bank of America and the
State of New York,” and that Malom was “a billion dollar company.”
182. Finn misrepresented to investors the safety and the nature of investments with
Malom.  In a January 26, 2010 email advertisement to current and prospective investors, for
example, Finn claimed that, with Malom, an investor’s “fee is always under [the investor’s]
control,” and that the “engagement fee is not released to us until [the investor’s] attorney/banker
advises [the investor] to do so.”
183. Finn made the same claims on M. Dwyer’s website, which generally solicited
clients for joint venture transactions with his unnamed “partners” who, for a fee, could provide a
minimum of $10 million cash to investors to enter into transactions.
184. Similarly, on November 19, 2011, Finn posted a response to several allegations
made against him on a website frequented by potential investors, falsely stating that his clients
opened escrow accounts and “received 100% of their money back” when transactions were not
successful.
185. Further, in a December 17, 2010 email Finn informed another investor that money
deposited into escrow belonged to the investor “until [the investor] is satisfied with the
documents and the account we provide,” and that only after the investor’s “team is satisfied”
does the investor release funds.  The escrow agreement, however, provided that escrowed funds
would be released automatically only days after documents were received.
186. At the time he made each of these statements, Finn was attempting to recruit
additional investors into transactions with Malom.
39

187. On M. Dwyer’s website, Finn also stated that Malom could place funds on an
“administrative hold via [SWIFT Message type] MT799 though UBS, Credit Suisse, HSBC,
HSH Nord and Clariden Leu.”  This cannot be done in legitimate banking.
188. In urging one investor to deposit money into escrow in a January 24, 2011 email,
Finn falsely stated that Malom had reserved $30 million for the investor and passed on other
offers for the same money.
189. Moreover, Finn omitted to tell investors that he would almost immediately be
paid a fee of approximately 25% of the amount deposited into escrow regardless of whether
Malom entered into any transactions or whether those transactions produced any profit.
190. Finn also made several misrepresentations to investors and potential investors
about his own history of partnering with Malom in successful transactions.  He falsely informed
investors that Malom had billions of dollars available and that he had “closed” more than 50
transactions with Malom when he had not.
191. He also acted as a reference for Malom when contacted by another investor,
falsely stating that he had personally engaged in successful transactions with Malom.  On July 9,
2011, Finn posted a response to an internet posting accusing him and his company of fraud,
falsely stating that “[t]he investors I have have made more money than they can spend in a
lifetime.”  Finn went on to recruit additional investors for transactions with Malom after making
this statement.
192. Finn knew or was reckless in not knowing that the statements described above
were materially false or misleading or omitted to state material facts which would make the
statements he made not materially misleading.
40

193. Finn and M. Dwyer are alter-egos of each other, with Finn using M. Dwyer in
furtherance of the fraud.  Finn commingled his assets with those of the company, the company
was inadequately capitalized, and, on information and belief, failed to observe any corporate
formalities.
194. Finn received at least $840,000 of investor funds in transaction-based
compensation for his role in recruiting investors and furthering the fraudulent schemes.
COUNT ONE

Violation of Exchange Act Section 10(b) and Rule 10b-5

(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn)
195.
The Commission realleges and incorporates herein by reference paragraphs 1 through
194 above.
196. Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer,
and Finn, directly and indirectly, with scienter, by use of the means or instrumentalities of
interstate commerce, or of the mails, employed devices, schemes or artifices to defraud; made
untrue statements of material fact or omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading; and
engaged in acts, practices or courses of business which have been and are operating as a fraud or
deceit upon the purchasers or sellers of securities.
197. As a part of and in furtherance of their scheme, Malom, Schläpfer, Lips, Warras,
Micelli, M.Y. Consultants, Brandel, M. Dwyer, and Finn, directly and indirectly, prepared,
disseminated, or used contracts, written offering documents, promotional materials, bank
documents, investor and other correspondence, and oral presentations, which contained untrue
statements of material facts and misrepresentations of material facts, and which omitted to state
41

material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading, including, but not limited to, those set forth in
Paragraphs 1 through 196 above.
198.
By reason of the foregoing, Malom, Schläpfer, Lips, Warras, Micelli, M.Y.
Consultants, Brandel, M. Dwyer, and Finn
have violated and, unless restrained and enjoined, will
continue to violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. §
240.10b-5].
COUNT TWO
Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule 10b-5
(Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn)
199. The Commission realleges and incorporates herein by reference paragraphs 1 through
198 above.
200. Pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)],
Schläpfer, Warras, and
Micelli knowingly or recklessly aided and abetted Malom by providing it with substantial
assistance in furtherance of its primary violations; and Lips, Smith, M.Y. Consultants, Brandel,
M. Dwyer, and Finn at least recklessly aided and abetted Malom by providing it with substantial
assistance in furtherance of its violations
 of Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and
Rule 10b-5 [17 C.F.R. § 240.10b-5].
201.
Furthermore, Brandel, M. Dwyer, and Finn at least recklessly aided and abetted
M.Y. Consultants by providing it with substantial assistance in furtherance of its violations
 of
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].
42

COUNT THREE

Violation of Securities Act Section 17(a)

(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn)
202. The Commission realleges and incorporates herein by reference paragraphs 1 through
201 above.
203.
Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer,
and Finn
, directly or indirectly, in the offer or sale of securities, by the use of the means or
instruments of transportation or communication in interstate commerce or by the use of the mails: (a)
has employed, is employing, or is about to employ devices, schemes or artifices to defraud; (b) has
obtained, is obtaining or is about to obtain money or property by means of untrue statements of
material fact and omissions to state material facts necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading; and (c) has engaged, is
engaged, or is about to engage in transactions, acts, practices and courses of business that operated or
would operate as a fraud upon purchasers of securities.
COUNT FOUR

Aiding and Abetting Violations of Securities Act Section 17(a)

(Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn)
204. The Commission realleges and incorporates herein by reference paragraphs 1 through
203 above.
205. Pursuant to Securities Act Section 15(b) [15 U.S.C. § 77o(b)], Schläpfer, Warras, and
Micelli knowingly or recklessly aided and abetted Malom by providing it with substantial assistance
in furtherance of its primary violations; and Lips, Smith, M.Y. Consultants, Brandel, M. Dwyer, and
Finn knowingly or at least recklessly aided and abetted Malom by providing it with substantial
assistance in furtherance of its violations of Securities Act Section 17(a) [15 U.S.C. § 77q(a)].
43

206. Brandel, M. Dwyer, and Finn knowingly or recklessly aided and abetted M.Y.
Consultants by providing it with substantial assistance in furtherance of its violations of Securities
Act Section 17(a) [15 U.S.C. § 77q(a)].
COUNT FIVE

Violation of Securities Act Section 5

(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn)
207. The Commission realleges and incorporates herein by reference paragraphs 1 through
206 above.
208.
Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer,
and Finn, directly or indirectly, made use of the means or instruments of transportation or
communication in interstate commerce or of the mails to offer and sell securities
 through the use
or medium of a prospectus or otherwise, and carried or caused to be carried through the mails or in
interstate commerce, such securities for the purpose of sale or for delivery after sale, when no
registration statement had been filed or was in effect as to such securities and no legally recognized
exemption from registration applied.
209. By reason of the foregoing,
Malom, Schläpfer, Lips, Warras, Micelli, M.Y.
Consultants, Brandel, M. Dwyer, and Finn violated and unless restrained and enjoined, will
continue to violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e(a) and (c)].
COUNT SIX

Violation of Exchange Act Section 15(a)

(M.Y. Consultants, Brandel, M. Dwyer, Finn)
210. The Commission realleges and incorporates herein by reference paragraphs 1 through
209 above.
44

211. M.Y. Consultants, Brandel, M. Dwyer, and Finn, while acting as brokers or dealers,
made use of the mails or any means or instrumentality of interstate commerce to effect transactions
in, or to induce or attempt to induce the purchase or sale of, securities without being registered with
the Commission as a broker or dealer or an associated person of a registered broker-dealer.
212. By reason of the foregoing,
M.Y. Consultants, Brandel, M. Dwyer, and Finn
violated and, unless restrained and enjoined, will continue to violate Exchange Act Section 15(a) [15
U.S.C. § 78o(a)].
PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court:

I.
Enter judgment in favor of the Commission finding that the defendants violated the federal
securities laws and Commission rules alleged against them in this Complaint;
II.
Permanently enjoin the defendants from further violations of the federal securities laws and
Commission rules alleged in this Complaint;
III.
Permanently enjoin the defendants from directly or indirectly participating in the issuance,
offer, or sale of any security, including but not limited to joint venture agreements, proofs of funds,
bank guarantees, medium term notes, standby letters of credit, structured notes, and similar
instruments, with the exception of the purchase or sale of securities listed on a national securities
exchange;
45

IV.
Order all defendants to disgorge, as the Court may direct, all ill-gotten gains received or
benefits in any form derived from the illegal conduct alleged in this Complaint, together with pre­
judgment interest thereon;
V.
Order all defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d)
[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and
VI.
Grant such other equitable and legal relief as may be appropriate or necessary for the benefit
of investors pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)].
Date:  December 16, 2013 By:
/s/ Stephen W. Simpson
Stephen W. Simpson
Timothy N. England
Stephen L. Cohen
Counsel for Plaintiff
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Fax: 202.772.9228
[email protected] /  Tel. 202.551.4513
[email protected] /  Tel. 202.551.4969
[email protected] /  Tel. 202.551.4472
46

Case 2:13-cv-02280 Document 1 Filed 12/16/13 Page 1 of 46 

Stephen W. Simpson 
Timothy N. England 
Stephen L. Cohen 
U.S. Securities and Exchange Commission 
100 F Street, N.E. 
Washington, DC 20549 
Fax: 202.772.9228 
[email protected] / Tel. 202.551.4513 
[email protected] / Tel. 202.551.4969 
[email protected] / Tel. 202.551.4472

 Attorneys for the Plaintiff  

UNITED STATES DISTRICT COURT
 
FOR THE DISTRICT OF NEVADA 


SECURITIES AND EXCHANGE ) 
COMMISSION, ) 

) 
Plaintiff, ) 

) 
v. ) 

) 
MALOM GROUP AG, MARTIN U.
SCHLÄPFER, HANS-JÜRG LIPS, 

) 
) 

2:13-CV-2280 

JAMES C. WARRAS, JOSEPH N. ) 
MICELLI, M.Y. CONSULTANTS, INC., ) 
ANTHONY B. BRANDEL, M. DWYER, ) 
LLC, AND SEAN P. FINN, ) 

) 
Defendants. ) 

) 

COMPLAINT  

Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows: 

SUMMARY 

1. In two advance-fee investment schemes perpetrated from at least August 2009 

until November 2011, Switzerland-based Malom Group AG (“Malom”) – an acronym for “Make 

A Lot Of Money” – through its principals, agents, and promoters, defrauded more than 30 

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investors out of $11 million using forged documents, fake histories of success, and the promise 

of risk-free investments and astronomical returns.  Orchestrating the fraud from Switzerland and 

Las Vegas, Nevada, the defendants lured investors into agreements and transactions with Malom 

that involved fictitious “prime bank” instruments and exotic high-yield trading programs.  In 

fact, Malom was nothing more than a sham company and the investments the defendants peddled 

were nothing more than vehicles used to steal investors’ money.  Several of the defendants, 

through at least October 2013, continued to lie to investors that transactions would occur or that 

refunds or returns were forthcoming. 

2. In furtherance of the schemes, the defendants made numerous false and 

misleading statements to investors and engaged deceptive acts, including lying about Malom’s 

history and financial resources; creating false and misleading documents provided to investors, 

such as forged Malom account statements and “proof of funds” letters from top overseas banks; 

lying about their own history of successful transactions with Malom; lying about the use of 

investor funds; and lying about the status of transactions and refunding investor funds.   

3. Malom’s principals, Martin U. Schläpfer, (“Schläpfer) and Hans-Jürg Lips 

(“Lips”), both residents of Switzerland, directed the scheme together with Malom’s U.S.-based 

officers, executive vice president James C. Warras (“Warras”) and compliance officer Joseph N. 

Micelli (“Micelli”).  Anthony B. Brandel (“Brandel”), through his Las Vegas, Nevada company 

M.Y. Consultants, Inc., served as Malom’s agent and main point of contact for investors.  Sean 

P. Finn (“Finn”), through his company M. Dwyer LLC (“M. Dwyer”), solicited investors for the 

schemes.  Each of these defendants participated in both schemes, with the exception of Lips, who 

participated only in the second scheme. 

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4. In the first scheme, which took place from August 2009 to the summer of 2011, 

the defendants lured investors into “joint venture” agreements with Malom that purported to 

allow the investors, in exchange for an upfront fee, to “use” Malom’s financial resources to 

entice third parties to enter into investment transactions with Malom that would generate returns 

for Malom and the investor.  The purported transactions typically involved high-yield overseas 

trading programs.  The joint venture agreements and the trading programs bore the usual 

hallmarks of “prime bank” frauds, including guaranteed and astronomically-high investment 

returns, use of well-known overseas banks to demonstrate evidence of funds, inordinate 

complexity, and use of technical-sounding but nonsensical financial terminology.   

5. Under the joint venture agreements, Malom was to evaluate the trading program 

proposed by the investor and, if it posed no “perceptible risk of loss” to Malom, Malom would 

enter into the transaction with the third party and share most of the profits with the investor.   

6. However, even though the defendants almost always knew at least basic details 

about the trading programs investors intended to propose before accepting their upfront fees, 

Malom took the fees and proceeded to reject every proposed trading program on the grounds that 

the transactions were fraudulent, carried some risk of loss to Malom funds, or for other 

deficiencies.  In a few instances, defendants Micelli, Brandel, and Finn actually provided 

investors with particular trading programs to propose to Malom, which the defendants later 

rejected after taking the investors’ funds.  

7. The defendants never used investors’ upfront fees for any proposed transaction 

with Malom.  Instead, they diverted the funds for their personal use.     

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8. In the second scheme, which took place between early 2011 and fall 2011, Malom 

promised to generate funding through the creation of structured notes that would be listed on 

“Western European” exchanges, in some cases supported by Brazilian sovereign bonds from the 

1970s that the Brazilian government has publicly disclaimed as worthless.  To induce investors 

to pay an “underwriting fee,” Malom and Lips issued corporate and personal guarantees to repay 

investors’ fees if Malom did not successfully generate funding within 90 to 120 days.   

9. Contrary to defendants’ representations, Malom quickly distributed the investors’ 

funds among the defendants and others for their personal use, and had no other means to refund 

the underwriting fees. Malom also failed to issue any structured notes.  

10. When investors became wary that the investments were real, defendants Lips, 

Warras, Micelli, and Brandel repeatedly lied to them about the progress of transactions and the 

prospect of receiving investment returns or refunds from Malom or M.Y. Consultants.  These lies 

lulled investors into not disrupting the scheme through public complaints, lawsuits, or by 

reporting the defendants to governmental authorities.  This lulling activity continued until at least 

October 2013. 

11. None of the transactions in securities offered or sold by or for the defendants was 

registered with the Commission, or are eligible for an exemption from registration. 

12. None of the defendants was registered with the Commission as broker-dealers, as 

is required for offering securities to investors in the circumstances described in this Complaint. 

13. By virtue of their conduct, the defendants have engaged, and unless enjoined will 

continue to engage, in violations of, and/or aid and abet violations of, the anti-fraud and 

registration provisions of the federal securities laws.  Additionally, M.Y. Consultants, Brandel, 

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M. Dwyer, and Finn have further violated the federal securities laws by failing to register as a 

broker or dealer of securities. 

JURISDICTION AND VENUE 

14. The Commission brings this action, and this Court has jurisdiction over this 

action, pursuant to authority conferred by Section 20(b) and 22(a) of the Securities Act [15 

U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C. 

§§ 78u(d), 78u(e) and 78aa]. 

15. This Court has personal jurisdiction over the defendants and venue is proper in 

the District of Nevada pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and 

Section 27 of the Exchange Act [15 U.S.C. § 78aa] because each defendant engaged in 

transactions, acts, practices, and courses of business constituting the violations alleged in this 

Complaint within this district.  Further, three of the defendants reside and can be found within 

this district. 

16. The defendants, directly and indirectly, have made use of the means and 

instrumentalities of interstate commerce, and the means and instruments of transportation and 

communication in interstate commerce, in connection with the transactions, acts, practices, and 

courses of business alleged in this Complaint. 

17. A majority of the investors are located in the United States and signed their 

investment contracts in the United States, which became binding upon execution by the 

investors.  All investors received investment-related documents and contracts from Las Vegas-

based M.Y. Consultants, all but one investor entered into escrow agreements with M.Y. 

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Consultants and U.S.-based escrow companies, and all investors ultimately paid funds into U.S.­

based escrow accounts to purchase the securities. 

DEFENDANTS 

18. Malom Group AG is a company formed under the laws of Switzerland in 1973.  

Its principal place of business is Baar, Switzerland.  “Malom” is an acronym for “Make A Lot Of 

Money.” 

19. Martin U. Schläpfer, sometimes spelled Martin U. Schlaepfer, age 55, is a 

resident of Switzerland.  At the time of this filing he is believed to be incarcerated in Zurich, 

Switzerland, where he has been since September 2011 pending an investigation by Swiss 

authorities into investment fraud involving Malom Group’s offer of joint venture and structured 

note agreements, as well as a separate fraudulent scheme that took place between 2003 and 2011 

involving the sale of surety bonds by another company Schläpfer controlled.  Schläpfer is a 

member of Malom’s board of directors and is variously described as its Chief Executive Officer, 

managing director and legal counsel, although he is not a lawyer. 

20. Hans-Jürg Lips, sometimes spelled Hans-Juerg Lips, age 50, is believed to be a 

resident of Says, Switzerland. He is a principal of Malom and is described as the Chairman of 

Malom’s board of directors; Malom’s Swiss incorporation papers refer to this position as 

“President” of the board. Lips was incarcerated in Zurich, Switzerland between September and 

December 2011 pending an investigation by the Swiss authorities into investment fraud 

involving Malom Group’s offer of joint venture and structured note agreements. 

21. James C. Warras, age 67, is a resident of Waterford, Wisconsin and is the 

Executive Vice President of Malom.  Warras pled guilty in 2002 to felony charges that he made 

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false statements in a sale of securities in Wisconsin.  He was sentenced to probation and largely 

prohibited from offering or selling securities for five years. 

22. Joseph N. Micelli, age 70, is a resident of Las Vegas, Nevada.  He describes 

himself as Malom’s Compliance Officer.  He was an attorney, but was disbarred in California in 

1997 for failing to provide clients notice that he was previously suspended by the bar for lying to 

clients. He is not licensed to practice law in any state.  

23. M.Y. Consultants, Inc. is a consulting firm formed under the laws of Nevada in 

April 2007. Its principal place of business was Las Vegas, Nevada.  Anthony Brandel served as 

its sole director. It had few, if any, regular employees.  Through Brandel, M.Y. Consultants 

arranged transactions with Malom, handled investor funds, negotiated transaction documents, 

and communicated with investors. 

24. Anthony B. Brandel, age 46, is a resident of Las Vegas, Nevada. He is the sole 

director of M.Y. Consultants and was its Operations Director.  Anthony Brandel, through M.Y. 

Consultants, served as Malom’s main point of contact with investors, explaining the investments, 

collecting investor funds through escrow agreements, and lulling investors about the status of 

their transactions. 

25. M. Dwyer LLC is a limited liability company formed under the laws of 

Wyoming in July 2010.  It was founded by Sean P. Finn, who was its sole manager and owner.  

It has no employees. 

26. Sean P. Finn, age 44, is a resident of Whitefish, Montana.  He is the founder and 

sole manager of M. Dwyer LLC.  Through in-person contacts, email, internet advertisements, 

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and other avenues, Finn, directly and through M. Dwyer, recruited investors to enter into 

transactions with Malom. 

FACTS 

I. THE SCHEME TO DEFRAUD 

27. From approximately August 2009 to fall 2011, with lulling activities by some of 

the defendants continuing at least until October 2013, the defendants used the mail and wires to 

defraud at least 30 investors out of approximately $11 million through two schemes involving 

the offer and sale of securities. 

28. The investors are largely located in the United States, including several in 

Nevada. They generally have limited investment experience. 

29. The defendants participated in the scheme as principals, agents, and promoters.  

Martin U. Schläpfer and Hans-Jurg Lips, based in Switzerland, were the two principals of 

Malom, James C. Warras was its Executive Vice President, and Joseph N. Micelli was its 

purported Compliance Officer.   

30. Anthony Brandel, through M.Y. Consultants, served as Malom’s main point of 

contact with investors, explaining the investments, collecting investor funds through escrow 

agreements, and informing investors about the status of their transactions.   

31. Sean P. Finn, through his company M. Dwyer LLC served as a promoter to recruit 

investors. 

32. In designing and orchestrating the scheme, the defendants required investors to 

use the services of at least two escrow companies, American United Title and Escrow in Las 

Vegas, Nevada and Commercial Escrow Services, Inc. in California.  These companies entered 

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into escrow agreements with M.Y. Consultants and investors, set up accounts into which 

investors deposited funds, and distributed investor funds at the defendants’ direction.  State 

authorities shut down the Nevada escrow company in fall 2009 and the California escrow 

company in 2011.  

A. The “Joint Venture” Investment Program 

33. The joint venture scheme targeted at investors to enter into trading programs and 

other transactions that could purportedly yield extraordinary returns (e.g., 100% in a single day) 

through risk-free transactions. Investors were led to believe that, after paying an upfront fee and 

entering into a joint venture agreement with Malom, Malom would enter into the transactions 

with third parties using its substantial assets and give a lion’s share of the profit back to the 

investor. This offering lasted from August 2009 to approximately August 2011. 

34. All of the defendants except for Lips were involved in this offering (the “Joint 

Venture Defendants”), which resulted in at least 25 joint venture agreements and raised 

approximately $7.5 million.   

35. Under the joint venture agreements, investors were required to pay an upfront fee 

of between $150,000 and $1 million and identify transactions to be funded by Malom and to be 

entered into between Malom and third parties.  In turn, Malom was to provide the investors with 

evidence of its funds, such as a bank statement or “proof of funds” bank letter, showing that 

Malom, or an entity whose funds Malom purportedly had access to, had tens to hundreds of 

millions of dollars available in overseas banks.  Malom was then responsible for exploring the 

investors’ proposed transactions with third parties, called “contract counter-parties.”   

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36. If, in its sole discretion, Malom deemed a transaction acceptable, it was to enter 

into the transaction directly with the contract counter-party and share profits with investors.  

Malom deemed acceptable only those transactions that posed “no perceptible risk of loss” to its 

funds. 

37. Although termed “Joint Venture Agreements,” the agreements did not purport to 

create separate legal entities, contained no management provisions, and expressly did not create 

general partnerships between the investors and Malom. 

38. The Joint Venture Defendants led investors to believe that Malom’s funds could 

somehow be used as collateral, leveraged, or “monetized” by contract counter-parties by 

supplying only a “proof of funds,” having banks “block” or “reserve” funds in an account, or by 

issuing bank-to-bank “SWIFT” communications.1  The Joint Venture Defendants needed to 

invoke these seemingly sophisticated, but ultimately illegitimate or misused processes because 

Malom did not have the funds reflected in the proof of funds documents, which were all 

fraudulent and/or forged. In fact, the joint venture agreements and its attachments the defendants 

created and/or provided to investors used these and other catchphrases that government agencies 

have warned are indicative of fraudulent high-yield or “prime bank” schemes, in addition to 

describing terms or transactions in confusing and highly complex (but meaningless) ways, 

another indication of their fraudulent nature.  

1 “SWIFT” is an acronym for the Society for World Interbank Financial Telecommunication, an organization owned 
by more than 2,500 member banks that provides a system of standardized interbank telecommunications. 
References to SWIFT messages are commonly used in prime bank schemes as they provide an illusion of 
sophistication. 

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39. In some instances, Malom provided proof of funds documents purporting to show 

that other parties with which Malom had relationships had funds.  Those proof of funds 

documents were also forged and/or fraudulently used by Malom. 

40. Although the joint venture agreements charged investors with identifying and 

proposing trading programs or transactions for Malom to enter into, in certain instances the Joint 

Venture Defendants actually provided investors specific programs to propose to Malom, 

including one called the “Chase One-Day Program.”  In March 2010, defendant Brandel 

promoted a trading program whereby investors could supposedly secure a 100%, guaranteed 

return in a single day by trading U.S. Treasury STRIPS2 through the “Fed window” at JP Morgan 

Chase Bank in Manhattan. To enter the program, investors needed $5.5 million.   

41. According to program documents provided to Brandel by defendant Finn and 

other promoters, these securities could be bought from the bank and almost immediately sold 

back to it for a 100% profit. The process could be done in two hours and could be repeated for 

as long as the bank had instruments available.  

42. Brandel and Finn mislead investors into believing such programs existed, despite 

knowing or being reckless in not knowing that programs promising such astronomical, 

guaranteed returns were fraudulent. 

43. Micelli drafted a template joint venture agreement specific to this transaction to 

help Finn and other promoters recruit additional investors.  The template agreement specifically 

described the purchase and sale of STRIPS and a guaranteed 100% profit.  At the time he drafted 

this template, Micelli knew that such guarantees were not legitimate. 

2 “STRIPS” is an acronym for Separate Trading of Registered Interest and Principal of Securities. 

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44. As a result of this effort, five investors entered into joint venture agreements to 

secure “proof of funds” for $5.5 million each in return for transaction fees ranging from 

$150,000 to $200,000. None of the investors received a return on their investment or a refund of 

their upfront fees. 

45. After accepting the upfront fees for the joint venture agreements, Malom, through 

Micelli, Brandel, or at times Schläpfer, proceeded to reject every transaction proposed by 

investors, and in some cases multiple transactions proposed by the same investor, because the 

transactions posed a “perceptible risk of loss” to Malom’s funds, were fraudulent, or otherwise 

did not comply with procedures that were “usual and customary in the banking and securities 

industry.”  These rejections occurred repeatedly, even though Brandel and Micelli knew at least 

basic details about the proposed transactions before investors entered into joint venture 

agreements and paid fees to Malom. 

46. Where transactions were rejected outright, the defendants told investors that they 

would not receive any refund and that their fees were used to compensate Malom for reserving 

its funds, to compensate it for the time spent exploring the trading program, and to reimburse 

costs incurred in pursuing the fraudulent transaction. 

47. These statements were false and misleading.  As the defendants knew or were 

reckless in not knowing, Malom had no funds to reserve.  Moreover, the defendants spent little 

or no time exploring proposed transactions and incurred little or no costs pursuing any 

transactions. 

48. If a transaction was not rejected outright, Malom, through Schläpfer, Micelli, 

and/or Brandel, gave investors various excuses why the transaction had not occurred.  They 

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would purport to encounter delay after delay resulting from feigned illnesses and 

hospitalizations, banking holidays, weather crises, and vacations until the window for the 

proposed transaction closed or the investors or contract counter-parties abandoned the 

transaction. 

B. The “Structured Note” Investment Program 

49. Under the structured note scheme, which began in early 2011 and lasted through 

fall 2011, Malom pledged to underwrite, securitize, “credit enhance”, register, list, and market 

structured notes for companies who sought funding.  Malom promised to sell the structured notes 

on unspecified “Western European” exchanges and to privately place the notes with unspecified 

subscribers. All of the defendants were involved in this offering, which resulted in at least six 

agreements and raised nearly $3.5 million.   

50. Malom failed to develop any funding through structured notes or otherwise, did 

not refund any investors’ funds, and spent investors’ funds on activities unrelated to the 

development of structured notes or other funding sources.  

51. In the structured note agreements, Malom required investors to pay an upfront 

“underwriting fee” or “deposit” that would be used for the structured note offering.  This was the 

investors’ sole responsibility in the structured note transactions.   

52. If a transaction was successful, Malom agreed to refund the investor’s 

underwriting fee with a 25-50% premium.  If a transaction was not successful, Malom agreed to 

refund the underwriting fee and pay a small penalty to the investor.  Generally, refunds were 

payable between 90-120 days after entering into an agreement.   

53. Malom failed to secure any funding and did not refund fees to any investor.   

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54. Malom did not undertake any steps to create or market any structured notes.  

Instead, the underwriting fees were immediately distributed among the defendants and others 

who had no role in effecting the contemplated transactions.   

55. As an example, in connection with the bankruptcy proceeding of USA Springs 

Inc. (In re USA Springs, Inc., Case No. 08-11816 (Bankr. D. N.H. June 27, 2008)), Malom, USA 

Springs, and two investors signed an “Investor Agreement” on or about June 23, 2011, whereby, 

for an underwriting fee paid by the investors, Malom would create and sell structured notes to 

raise $60 million for USA Springs to help it emerge from bankruptcy.   

56. The Investor Agreement stated that it was “necessary for a third party to invest 

and deposit with Malom [$1.2 million]” so that Malom could “underwrite, credit enhance and 

securitize the Note; cause the Note to be listed on a Western-European exchange; and privately 

place the Note to subscribers with whom [Malom] enjoys pre-existing relationships,” and that 

Malom would use the $1.2 million investment in furtherance of these duties.   

57. As part of the Investor Agreement, the investors would receive a 50% return after 

a successful debt offering and Malom would receive a success fee, in this case, 1.5% of the face 

value at maturity of the Structured Notes placed, and an origination fee of 3% of the principal 

funding amount of $60 million.   

58. If the effort was unsuccessful after 120 days, Malom promised to refund the $1.2 

million without deduction, plus pay an additional $50,000 to the investors. 

59. In other words, Malom guaranteed either a 50% return in 120 days or a complete 

refund in addition to an approximately 4% penalty.   

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60. However, the investors’ funds were immediately distributed among the 

defendants or to others, were not spent on any investment-related purpose, and were never 

refunded. Moreover, Malom did not have any funds with which to refund the structured note 

investors. 

61. When investors in the structured note offering began to demand results or refunds, 

Malom, typically through Lips, Warras, and Micelli, made excuses for why it could not complete 

the transactions, usually blaming the European debt crisis.  Alternatively, Lips and Warras told 

investors that Malom would secure funding through transactions involving H-series Brazilian 

Letras do Tesouro Nacional (“LTNs”) – bonds issued by the Brazilian government in 1972 that 

were purportedly worth in excess of US$200 million.   

62. These LTNs, however, are worthless. 

63. Well before Malom began telling investors it would repay them with these bonds 

and continuing until the present, the Brazilian National Treasury has hosted an English-language 

website unequivocally warning investors that “[a]ll LTN’s issued in the seventies, in printed 

versions, had lost their value and are no longer valid,” that “[a]ny documents about rescheduling 

these papers are an imitation intended to be passed off fraudulently or deceptively as genuine,” 

and that “[a] number of law firms have generated negative outcomes for its clients, offering 

deals, presenting false evidences, with calculations attaching high values to those bonds.”   

64. To assuage investors’ concerns about this and other warnings, Malom, using 

investor funds, paid Campos e Campos Advogados, a Brazilian law firm, and one of its partners 

to acquire LTNs and to obtain a legal opinion and official documents explaining why and how 

the LTNs were valid and had value. 

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65. Some of the documents provided to Malom by the Brazilian law firm were 

forgeries, including, for example, a November 19, 2010, “Repac Certificate,” which purports to 

be a government re-validation of the worthless bonds.  Warras, Micelli, and Brandel provided 

these documents to investors, including to the USA Springs investors, when it became clear that 

Malom was not going to be able to create a structured note and needed to convince the investors, 

creditors, and the bankruptcy court that it could still generate promised funding. 

66. Lips, Warras, Micelli, and Brandel all represented that the structured note 

transactions were risk-free to investors because of refunds guaranteed by Malom and personally 

by Lips. However, Malom and Lips did not have the funds to repay investors.  Neither Malom 

nor Lips have returned any money to the structured note investors. 

C. The Defendants’ Conduct in Furtherance of the Scheme 

1. Martin U. Schläpfer 

67. As a principal of Malom, Schläpfer signed at least 23 joint venture agreements 

and documents attached thereto between August 2009 and January 2011.  Schläpfer signed most 

of these agreements on behalf of Malom, and the remaining agreements on behalf of NAS 

Operations AG and Maxmore Corporation Ltd., two companies affiliated with or controlled by 

Schläpfer. 

68. Schläpfer received contractual documents from and returned signed documents to 

Nevada-based M.Y. Consultants, who in turn provided them to investors.  Four of these joint 

venture agreements were with investors who were based in Nevada. 

69. In the joint venture agreements with investors and in the attachments thereto, 

Schläpfer claimed that Malom, NAS Operations, or Maxmore had hundreds of millions of 

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dollars on deposit at overseas banks where they either did not have the amounts claimed on 

deposit or never had accounts at all.  Schläpfer also supplied Warras, Micelli, Brandel, and 

others with several bank statements purporting to reflect funds belonging to or accessible by 

these entities.  However, as Schläpfer knew, most of the accounts referenced in these documents 

did not exist, or, if an account did exist, the balance never approached the amounts reflected on 

the statements Schläpfer provided.   

70. For example, on June 20, 2011, Schläpfer forwarded an email to Lips, Warras, 

Micelli, and Brandel, purporting to be from a banker at EFG Bank in Switzerland in which the 

banker wrote that Malom was “a well-known client to us for many years” even though Malom 

had only opened an account in April 2011.  The email further stated that Malom had “accounts . . 

. currently well in excess of $3 mio.”  

71. Malom had no funds in its EFG account on the date of the email and thereafter 

never had more than $500,000 in this account. 

72. Further, between at least July 2010 and April 2011, Schläpfer sent numerous 

emails to Warras, Micelli, and Brandel describing how Malom needed to pay bank officers or 

others to acquire bank documents.  In one email to Warras, Micelli, and Brandel, dated August 

31, 2010, Schläpfer lamented that various parties had contacted Centrum Bank in Switzerland 

about Malom’s accounts there, which “cost us a fortune to the responsible people (greed over 

risk!).” 

73. Schläpfer also told investors that their advance fees were used to compensate 

Malom for reserving its funds for the investors’ transactions, even though Malom had not 

“reserved” any funds because it did not have the funds to reserve.   

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74. For example, in February 2011, Schläpfer wrote in an email to one investor that 

Malom “received our engagement fee to offset our having held funds in abeyance” for the 

investor. According to its agreement with the investor, Malom was supposed to have reserved 

$30 million for the investor at Centrum Bank.  Although Malom did have an account at Centrum 

Bank for approximately four months, it was closed on January 19, 2011, and Malom never 

deposited any funds into it. 

75. In fact, as Schläpfer knew, he and the other defendants did not use the investors’ 

“fees” for any purported joint venture or structured note transaction.  Instead, the defendants 

diverted the investors’ funds for their own personal use, to other parties involved in the schemes, 

or to persons unrelated to the purported transactions. 

76. On several occasions, Schläpfer misrepresented Malom’s previous successes to 

investors.  For example, in fall 2010 he told one investor that Malom had successfully completed 

10 deals in 2010 and netted $12 million.  In fact, Malom had not completed any successful deals 

in 2010, as Schläpfer knew. 

77. Further, in December 2010 and February 2011, Schläpfer also passed off lists of 

“projects” from a company he was previously affiliated with, Northamerican Sureties Ltd. 

(“NAS”), and replaced the NAS logo on the cover with a Malom logo, even though NAS was a 

separate entity and operated in a different industry (surety bonds) from Malom. 

78. Several of the companies on the list never had any relationship with NAS or 

Malom and never engaged in the projects listed beside their names on the reference list.  

79. When investors inquired as to the status of transactions or demanded refunds, 

Schläpfer made a series of excuses as to why Malom had not performed, including a series of 

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feigned illnesses and hospitalizations, including one where, in March 2011 he told one investor 

that he was “unavailable” because of a heart attack when, in reality, he was incarcerated in 

Switzerland. 

80. He also told investors that delays arose from problems with bank compliance 

officers (from banks at which Malom did not have any relationship); delays in transferring funds 

from one bank to another (sometimes involving banks at which Malom did not have accounts); 

and unspecified changes in the law. 

81. Schläpfer knew or was reckless in not knowing that the statements described 

above were materially false or misleading or omitted to state material facts which would make 

the statements he made not materially misleading. 

82. Schläpfer received at least $2,306,000 of investor funds for his role in furthering 

the fraudulent schemes.  Further, Malom received approximately $831,200 as part of the scheme. 

2. Hans-Jurg Lips 

83. Between February and September 2011, Lips, as Chairman and Head of 

Structured Finance of Malom, signed several documents stating that Malom held hundreds of 

millions of dollars at overseas banks where, as Lips knew, it either did not have the amounts 

claimed on deposit or never had accounts at all.   

84. Lips signed two structured note agreements with investors located in Nevada.  

Further, all of the structured note investors negotiated their agreements through Nevada-based 

M.Y. Consultants, who also arranged to have the agreements signed by Lips and the investors. 

85. For example, on February 24, 2011, Lips signed documents claiming that Malom 

had $25 million at Südtirol Bank in Italy or Centrum Bank.   

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86. Malom never had an account at Südtirol.  

87. Although it once had an account at Centrum Bank, it never had money on deposit 

there and the account had been closed for over a month when Lips signed the documents.   

88. Further, Lips supplied investors with a letter addressed to him from a banker at 

Südtirol Bank. The letter was forged. The banker did not know Lips or Malom and the signature 

on the letter was not his. 

89. In another example, on September 16, 2011, Lips sent an investor a letter, drafted 

by Micelli, claiming that Malom had funds on deposit at Estrategia Investimentos S.A., a 

financial services firm located in Brazil, with offices in Miami, Florida.  However, Malom never 

had an account with this firm.   

90. Lips also made several written promises to investors that their underwriting fees 

would be returned if no successful transactions took place, and made several false and 

misleading statements intended to convince investors that their investments were safe and 

Malom had the capacity to pay refunds.   

91. On April 21, 2011, Lips supplied an investor with an email, purporting to be from 

an EFG banker, stating that Malom had $2.4 million on deposit and was a well-known client for 

many years.  EFG Bank records show that Malom had opened an account there approximately 

two weeks earlier, on April 5, 2011. 

92. Shortly thereafter, on June 22, 2011, Lips provided the same investor with a 

signed statement in which he agreed to hold not less than $2.5 million on deposit at EFG Bank in 

Switzerland to cover the cost of a refund.  Malom never held more than $500,000 at EFG Bank.   

20Case 2:13-cv-02280 Document 1 Filed 12/16/13 Page 21 of 46 

93. In both oral statements to investors and in written agreements, Lips also 

misrepresented that the fees investors paid in the structured note transactions were to pay costs 

associated with the underwriting of a bond offering.  In several structured note transactions, 

including ones dated May 3, 2011, June 22, 2011, August 3, 2011, August 23, 2011, and 

September 7, 2011, those costs are described as including due diligence, securitization, credit 

enhancement, registration, listing fees, and all costs to be incurred in furtherance of these tasks.  

Each investor’s funds were not, however, used in furtherance of their transactions.  Instead, the 

defendants distributed investors’ funds among themselves for their personal use, to other parties 

involved in the schemes, or to several individuals with no clear connection or role in the 

structured note transactions at issue.            

94. As did Schläpfer, in March 2011, Lips supplied Brandel and Micelli with the 

deceptive reference list reflecting references for NAS, but with a Malom logo, so that they could 

(and ultimately did) provide it to prospective investors.  As Lips knew, several of the companies 

on the list never had any relationship with NAS or Malom and never engaged in the projects 

listed beside their names on the reference list. 

95. Lips made several oral and written misrepresentations and material omissions 

regarding Malom’s purported Brazilian LTNs to investors.  First, he falsely claimed that the 

LTNs had substantial value even though the Brazilian National Treasury unequivocally stated— 

in English on its website—that they had no value. 

96. Second, he failed to disclose to investors that Campos e Campos Advogados, the 

Brazilian law firm that purported to verify the LTNs, once listed Schläpfer and Warras as 

employees, and that the firm had an agreement with Malom to share any proceeds arising out of 

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transactions utilizing the LTNs.  Both facts call into question the law firm’s objectivity in 

evaluating the LTNs. 

97. Finally, he made misrepresentations to several investors and to the federal 

bankruptcy court in the USA Springs transaction regarding the status of Malom’s attempts to 

“monetize” the LTNs, first claiming that transactions were imminent only to later blame failure 

on various problems such as issues with receiving SWIFT messages that purportedly could 

verify the LTNs.  These last misrepresentations were made in three affidavits filed with the 

bankruptcy court dated February 29, 2012, April 30, 2012, and May 13, 2012. 

98. In addition, since December 2011, when Lips was released from approximately 

two months of detention in Switzerland, Lips has contacted certain investors by telephone and 

through instant messaging to assure them that transactions were underway that would enable 

Malom to pay refunds.  These contacts continued until at least October 2013.   

99. Lips knew or was reckless in not knowing that the statements described above 

were materially false or misleading or omitted to state material facts which would make the 

statements he made not materially misleading. 

100. Lips received at least $431,295 of investor funds for his role in furthering the 

fraudulent schemes. 

3. James C. Warras 

101. At various times from 2009 through 2011, Warras engaged in deceptive acts and 

made direct misrepresentations to investors.  As the Executive Vice President of Malom, Warras 

provided Nevada-based Brandel and Micelli with forged bank and other documents, made 

several misrepresentations to investors about Malom and about the nature of various high-yield 

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trading programs into which he sought to recruit investors, and was an active participant in the 

negotiations with investors regarding certain fraudulent transactions, including the structured 

note transaction with USA Springs. Warras orchestrated or directed many of Brandel’s and 

Micelli’s false and misleading statements to investors from and in Nevada.   

102. After Schläpfer and Lips were incarcerated, Warras regularly communicated with 

investors to lull them by making false excuses as to why transactions had not occurred, false 

promises that transactions were underway, and false promises that refunds were imminent. 

103. Warras sent Brandel and Micelli by email several bank statements showing that 

Malom had hundreds of millions of dollars on deposit at various overseas banks.  At the time he 

sent these statements, he knew or was reckless in not knowing they were forgeries.   

104. Furthermore, in these email communications, which often also involved 

Schläpfer, Warras frequently told Micelli and Brandel that Malom needed to pay various bankers 

and others to secure such documents.  For example, on July 14, 2010, Warras sent an email to 

Micelli and Brandel warning them that it was possible they would not get an account statement 

from Deutsche Bank in Germany, but adding that “[o]nce we get some more money to the 

[purported account holder] then Martin can work on the Duestsche [sic] Statement and most 

likely get it.”   

105. In another example, on September 17, 2010, Warras forwarded a Deutsche Bank 

statement he received from Schläpfer to Micelli and Brandel, warning them that “we will have to 

pay for this [proof of funds] with the escrow that is created”; meaning that fees deposited into 

escrow by investors who were deceived by the bank statement would be used to pay for the 

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statement itself.  In fact, the bank statement was a forgery.  As Warras knew, or was reckless in 

not knowing, Malom never had an account at Deutsche Bank.   

106. In another example, on March 19, 2011, Warras provided Micelli and Brandel 

with a letter that had been written by a banker at Südtirol Bank for two individuals (“Individuals 

A and B”) who were previously connected to the joint venture scheme as purported 

counterparties to a joint venture transaction proposed by an investor who was defrauded.  Warras 

asked Micelli and Brandel to draft a letter from Südtirol Bank that could be used for all escrow 

deals, to which Micelli responded with suggested language.   

107. On or about March 23, 2011, Warras received an email from Lips, purporting to 

attach a letter from Südtirol Bank that used Micelli’s proposed text, with minor alterations.   

108. The letter was never issued by Südtirol Bank; it was a forgery.   

109. On or about the same day, March 23, 2011, Individual A sent Warras an invoice 

for $100,000 for a “payment to Sudtirol Bank.”  Warras directed Micelli and Brandel to change 

the invoice to reflect “Legal and Consulting Services for the [credit-linked notes] and BRIC fund 

of Malom Group AG.”   

110. In the ensuing week, between March 28 and April 4, 2011, Warras exchanged 

several emails with Individuals A and B whereby Individual A demanded the $100,000 payment 

or else he would have the Südtirol Bank letter “revoked.”   

111. Individual A warned Warras that “the banker who trusted me and did what I asked 

and delivered – he expects me to pay him.”  In several emails, Warras assured Individual A that 

he would receive $100,000. Warras then forwarded the emails to Brandel and Micelli, stating 

that “Südtirol is getting dangerous.”   

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112. Warras later paid Individual A $75,000 out of investor funds given to Malom for 

purported structured note transactions, including the USA Springs transaction.     

113. Warras also directed others to forge documents to deceive investors into believing 

Malom’s LTNs were legitimate and had value.  In July 2011, Warras directed the creation of a 

fraudulent acquisition document for the LTNs.  In a series of emails to Campos e Campos law 

partner Luis Fernando de la Roca and Micelli, Warras directed Micelli to draft and backdate a 

joint venture contract showing how Malom acquired the LTNs, writing that Micelli should make 

sure it was full of “BOILER PLATE BULL SHIT” with “as many pages of B.S. as possible” so 

that it could be used as a “file stuffer” in negotiations with a bank who it tried to enlist in an 

effort to monetize the LTNs.   

114. Warras specifically directed Micelli to state in the contract that Malom had 

acquired the LTNs in 1992, even though he testified during a deposition in the USA Springs 

bankruptcy proceeding that Malom acquired the LTNs in 2009 or 2010.  He later instructed de la 

Roca to take Micelli’s draft and “fill in the blanks and continue or change the story.” 

115. In December 2011, Warras sent an investor a receipt and an attachment from 

Merrill Lynch reflecting its acceptance into safe-keeping two LTNs.  In the attachment, a Merrill 

Lynch employee purports to make several representations about the authenticity and value of the 

LTN, including that the instruments had “full paperwork that confirms [the instruments’] 

issuance, authenticity, and ownership chain and tax regularity.”  Merrill Lynch never issued the 

attachment; Warras forged it and the signature of the Merrill Lynch employee. 

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116. Warras also made several oral misrepresentations to investors about Malom’s 

history of success. In August 2010, for example, he told one investor that Malom and Schläpfer 

had successfully concluded millions of dollars in transactions when they had not.   

117. When Swiss authorities detained Schläpfer in September 2011, Warras served as 

Malom’s primary point of contact for investors.  Continuing until at least October 2013, Warras 

frequently contacted investors by telephone to discuss the status of their investments.  Largely, 

these communications served to provide excuses for delays; to assure investors that various 

transactions, mostly involving the Brazilian LTNs, were underway or had closed that would 

permit the issuance of refunds; and, in the case of one investor, to warn him that going to 

authorities would jeopardize Malom’s ability to refund money. 

118. With respect to Malom’s purported Brazilian LTNs, Warras falsely promised 

investors that transactions involving the LTNs would generate money for refunds for the joint 

venture investors and funding/refunds for the structured note investors.  Like Lips, Warras 

omitted to tell investors the nature of Malom’s investment-sharing relationship with (and 

Schläpfer’s and Warras’ alleged employment or affiliation with) Campos e Campos Advogados, 

the Brazilian law firm that purported to verify the LTNs.  Warras also made several false claims 

regarding the value of the LTNs, which are worthless, and the status of closed and pending 

transactions involving the LTNs.  In a November 18, 2011 affidavit Malom filed with a U.S. 

Bankruptcy Court, for example, Warras stated that Malom had accepted offers to sell the LTNs 

for $200 million when, in fact, Malom had purportedly “purchased” the LTNs through Campos e 

Campos for no more than $833,000, reflecting an astonishing 24,000 percent return on an 

instrument the Brazilian government publicly disclaimed as worthless.   

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119. Warras knew or was reckless in not knowing that the statements described above 

were materially false or misleading or omitted to state material facts which would make the 

statements he made not materially misleading. 

120. Warras received at least $1,066,915 of investor funds for his role in furthering the 

fraudulent schemes.  He received these funds directly and through Carpe Diem Family Trust, a 

trust he controlled. 

4. Joseph N. Micelli 

121. Between August 2009 and the present, Micelli, a disbarred attorney, a self-

professed and self-taught “expert” in the banking and securities industry, and Malom’s 

“Compliance Officer,” drafted joint venture agreements and structured note contracts, and 

reviewed the trading programs and other transactions the joint venture investors proposed both 

before and after investors placed funds into escrow.  Micelli resides and worked primarily out of 

Las Vegas, Nevada throughout the schemes.   

122. Starting in March 2010, he also knew that Finn and other promoters were actively 

pitching at least one risk-free, high-yield trading program to joint venture investors, the “Chase 

One-Day Program” described above, and provided the promoters with template contractual 

documents specific to that program to help their recruitment efforts.   

123. In the joint venture transactions, after investors paid their advance fee, Micelli, 

acting on Malom’s behalf, invariably rejected proposed transactions or trading programs using 

various excuses.  For example, on June 18, 2010, Micelli informed several investors that trades 

such as the “Chase One-Day Program” could be risk-free if they are conducted pursuant to 

certain procedures that are “usual and customary in the banking and securities industry.”   

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124. Despite having no formal training and having never worked in either industry, 

Micelli subsequently told investors that transactions could not be done because some procedure 

did not meet this generic standard or due to other deficiencies.  For example, on October 14, 

2010, he told one investor that “the compliance department of Centrum Bank [was] demanding 

to know” certain information about a transaction because it would have imposed “an independent 

obligation of Centrum Bank” even though no such demand had been made by the bank.   

125. He also frequently rejected proposed trading programs as fraudulent because they 

contained red flags of illegitimacy such as guaranteed returns, enormous short-term returns and 

other indicators of fraud. In fact, Micelli knew that the joint venture agreements were designed 

and intended to solicit fraudulent trading programs and investment scams.  

126. Micelli provided fraudulent bank statements and bank letters to investors on 

several occasions, including, among other occasions, by email on October 12, 2010, October 25, 

2010, and December 23, 2010.  Micelli knew or was reckless in not knowing these bank 

documents were fraudulent.   

127. Among other clear indicators that they were illegitimate, between approximately 

July 2010 and April 2011, Micelli received numerous emails from Warras and Schläpfer 

discussing how Malom needed to pay bank officers or others for bank documents.  In addition, 

these bank letters used several catchphrases that government agencies have warned are indicative 

of fraud, including that Malom’s funds were “clean, clear, and of non-criminal origin,” could be 

“blocked” or placed on “administrative hold,” and were “clean and clear” and “free of any liens 

or encumbrances.”   

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128. As far back as 2008, well before Micelli received these documents and provided 

them to investors, he was aware that these phrases indicated fraud, having received and read a 

detailed “handbook” titled “Lawyers’ Guide: Advising Clients on High Yield Investment 

Programs and Ponzi Schemes,” which described how these catchphrases (among other tactics) 

were used to deceive investors in fraudulent investment schemes.   

129. Further, on or about August 24, 2009, he received electronic copies of several 

government warnings regarding “prime bank” schemes and the types of red flags to be aware of, 

including documents from the FBI, Department of the Treasury, and the Federal Reserve.  These 

warnings identified high-yield schemes that use these phrases as fraudulent and illegal, and 

identified other common characteristics of such schemes such as guaranteed and risk-free 

investments, and astronomical returns on investments.   

130. Micelli forwarded these warnings to Brandel by email at the outset of the joint 

venture scheme, in August 2009.    

131. Micelli knew or was reckless in not knowing that the bank statements and bank 

letters also carried several other indicators of fraud.  For example, several documents from 

Deutsche Bank carried different dates but had signatures, stamps, and document control numbers 

(e.g., barcodes) that were identical; one PDF file of a document from a Brazilian depository 

institution, IBRAC, contained mark-ups that showed that the original date was obscured 

electronically and a new date was typed above it in a different font from the original.    

132. Despite knowing these strong indicators of fraud, he drafted template joint 

venture agreements and other contractual documents that referenced and attached these bank 

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documents for delivery to investors, and even included several of the same fraudulent 

catchphrases (e.g., “clean, clear, and of non-criminal origin”) in the documents he drafted.  

133. Micelli forged documents as well.  One proposed transaction required notarized 

documents.  On July 21, 2010, Micelli sent Brandel an email containing several electronic 

images of what appear to be Swiss notary stamps and signatures.  Micelli copied these electronic 

images from a document Schläpfer had previously signed and had notarized.  Micelli then pasted 

these electronic images onto transactional documents and provided them to the counter-party in 

the transaction to give the impression that Schläpfer had signed the documents and had them 

notarized in Switzerland when he had not. 

134. He also forged a document purporting to be a “Proof of Funds” letter from 

Deutsche Bank evidencing Malom funds, which was provided by email to at least two investors 

in October 2011 to entice them to deposit fees for purported transactions with Malom. 

Electronic metadata on the .PDF format document shows that Micelli forged the letter by 

layering text and signature stamps over a blank image of Deutsche Bank letterhead.   

135. Micelli forged other bank documents using rudimentary electronic cut-and-paste 

techniques.  Micelli and other defendants used these documents to deceive investors into parting 

with their funds or in connection with proposed transactions after investors paid their fees.  For 

example, in an email dated November 25, 2009, an assistant working with M.Y. Consultants 

forwarded to Brandel a word document containing text for a bank letter from Falcon Private 

Bank in Hong Kong. Brandel immediately forwarded it to Micelli and Warras.  Micelli inserted 

this text onto an electronic copy of Falcon Private Bank’s letterhead, which already had two 

signatures of bank officers on it. 

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136. He repeated this on at least three occasions, creating forged letters from Falcon 

Private Bank dated December 9, 2009, February 1, 2010, and April 19, 2010.   

137. On February 3, 2010, Micelli emailed the February 1, 2010 Falcon Private Bank 

letter, along with executed copies of a joint venture agreement, to Brandel and Warras so that it 

could be forwarded to an investor.   

138. On April 19, 2010, Micelli emailed the April 19, 2010 Falcon Private Bank letter, 

along with executed copies of a joint venture agreement to Brandel, Warras, and Schläpfer so 

that it could be forwarded to an investor.  Ultimately, each of these letters were provided to 

investors. 

139. Micelli also made misrepresentations to investors by claiming that Malom had a 

history of success and significant financial resources.  For example, on September 1, 2011, 

Micelli filed an affidavit with the U.S. Bankruptcy Court in the USA Springs bankruptcy 

proceeding in which he made several misrepresentations about Malom.  He stated that “Malom 

has among its assets unencumbered cash in its bank account(s) totaling far in excess of $16.6 

million” when he knew it did not.   

140. Further, Micelli claimed that Malom had “experience in underwriting similar 

transactions” when he knew it had none. 

141. Micelli knew or was reckless in not knowing that the statements described above 

were materially false or misleading or omitted to state material facts which would make the 

statements he made not materially misleading. 

142. Micelli received at least $828,903 of investor funds for his role in furthering the 

fraudulent schemes.   

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5. Anthony Brandel & M.Y. Consultants 

143. Since at least August 2009 until fall 2011, Brandel, a Nevada resident and the 

“Director of Operations” and the sole director of Nevada-based M.Y. Consultants, actively 

recruited investors and facilitated their  entry into joint venture agreements and structured note 

agreements by soliciting details of the transactions investors sought to access, explaining the 

programs to investors, opening up escrow accounts into which investor funds would be 

deposited, coordinating the exchange of contractual documents between investors and Malom, 

and ultimately distributing investor funds amongst the defendants and others.   

144. In recruiting investors, Brandel assured them that Malom had substantial assets 

under its control and a long history of successful transactions.  Several of the investors Brandel 

solicited resided in Nevada. 

145. Brandel made misrepresentations to investors about the extraordinary historical 

returns offered by trading programs, and explained how such trades were without risk when he 

knew that such transactions did not exist.   

146. Brandel also sought fictitious documents to be used as proof of Malom’s funds 

(e.g., bank statements or bank letters), helped create them, was aware that Malom was paying for 

their issuance, and then provided them to investors.   

147. He induced investors into agreements knowing that Malom had no intent to 

engage in the various transactions investors sought to enter, even remarking that one agreement 

was a “straight JV that had a bullshit transaction attached to it.”      

148. In communications with investors about Malom’s background, including its 

financial resources and history of success, Brandel repeated the falsehoods he was told by others 

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including by Schläpfer, Warras, and Micelli.  He made no effort to verify whether Malom had 

ever entered into successful transactions or whether it had any funds available.   

149. Malom had not engaged in any successful transactions and did not have any 

significant funds available. 

150. For example, on November 18, 2009 Brandel stated in an email to one promoter 

that Malom was a “multi billion dollar company and licensed every imaginable [sic],” and that 

Schläpfer was a banking attorney. Malom never had such funds available, there is no evidence 

that it held any “licenses,” and Schläpfer was not an attorney.   

151. In another example, on or about July 2010 Brandel told one investor that other 

investors had been enormously successful even though he knew that none of the investors he had 

worked with had received any investment return.   

152. In yet another example, Brandel and Micelli received an email from Warras on 

September 2, 2011, asking Brandel to let him know if a proof of funds from Estrategia 

Investimentos S.A. would work.  Warras attached a marketing brochure from the company to the 

email.   

153. Approximately an hour later, Brandel sent an email to one prospective investor 

stating that Malom has “been finalizing their Brazilian Treasury deal with ‘Estrategia 

Investimentos S.A.’ . . . which is where the majority of [Malom’s] funds are,” and attached the 

same marketing brochure.   

154. Estrategia Investimentos did not hold any funds on behalf of Malom at that or at 

any other time.   

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155. Brandel also made several false and misleading statements about the risk of 

entering into transactions with Malom.  For example, on or about late December 2009 or early 

January 2010, Brandel orally informed one investor that an investment was risk-free and that if a 

trade did not happen, the investor would get his funds back.  The investor did not receive any 

funds back. 

156. In April/May 2010, Brandel orally informed another investor that there was a 

“less than one percent risk” involved in a high-yield scheme because it was not an investment but 

rather a “transaction.” That investor also lost all of his funds. 

157. Further, Brandel represented to several investors that Malom’s funds could be 

“administratively held,” “blocked,” or “reserved” by its banks to be used for the investors’ 

transactions. For example, in emails dated November 17, 2009 and December 15, 2009, he 

represented to potential investors that Malom’s banks could put administrative “holds” on its 

funds, adding in the latter email that the hold would be in effect for “one year and a day.”   

158. These banking concepts do not exist in legitimate commerce.   

159. In explaining how he was paid and how Malom used investors’ funds, Brandel 

informed one investor in August 2010 that he would be paid out of trading profits; told another 

investor on or about December 2009 that his transaction fees would be refunded if a trading 

program did not occur; and told another potential investor on July 12, 2010 that the fees were 

used to compensate Malom for “blocking” or “reserving” funds (which it did not have).   

160. In actuality, Brandel distributed nearly 50 percent of the investors’ funds amongst 

a series of individuals and entities, including to M.Y. Consultants and to his own personal 

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account, almost immediately after investors sent funds into escrow accounts.  The remaining 

funds were distributed amongst Schläpfer, Lips, and Warras. 

161. Brandel performed several fraudulent and deceptive acts in connection with the 

scheme.  For example, in March 2010, he encouraged Finn and other promoters to pitch trading 

programs such as the “Chase One-Day Program” to investors, helped Micelli create template 

documents specific to that transaction, and provided those documents to promoters to help recruit 

additional investors for the program.   

162. He also knew or was reckless in not knowing that he was providing fraudulent 

bank statements and bank letters to investors.  Between July 2010 and April 2011 Brandel 

received numerous emails from Schläpfer and Warras discussing how Malom needed to pay 

bank officers or others for bank documents.   

163. Further, the bank documents Brandel received from Schläpfer, Warras, and/or 

Micelli contained clear signs that they were fraudulent or forged.  First, each contained several 

catchphrases Brandel knew were used in high-yield scams and were indicative of fraud.  He 

learned this, in part, from reviewing several government warnings Micelli sent to him by email 

on August 24, 2009. 

164. Moreover, the documents had several physical characteristics that were highly 

indicative of fraud.  For example, several documents purporting to be from Deutsche Bank 

carried different dates but had signatures and stamps and document control numbers that were 

identical, indicating that they were not authentic. 

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165. The “Deutsche Bank” letters appeared on letterhead for Deutsche Bank Privat- 

und Geschäftskunden AG, but made representations on behalf of Deutsche Bank AG, a separate 

legal entity and Deutsche Bank Privat- und Geschäftskunden AG’s parent company.   

166. Further, the letters contained a footer that purported to list the members of the 

Management Board of Deutsche Bank Privat- und Geschäftskunden AG.  The list is not accurate 

for 2010, the year the letter was dated. 

167. In another example, one PDF file of a bank document contained mark-ups that 

showed that the original date was obscured and a new date was typed on the letter.   

168. Another letter, from Südtirol Bank, directed the reader to contact the author at the 

“below indicated address” when the address was in a header at the top of the page.   

169. After receiving fraudulent bank documents from Warras, Micelli, and/or 

Schläpfer, Brandel provided them to investors.  The bank documents were required attachments 

to the joint venture and structured note agreements. 

170. In trying to obtain more bank letters evidencing Malom’s supposed funds to 

supply to potential investors, Brandel sent an email to Warras on February 17, 2011 with a 

punch-list of statement requests, including for “500MM any major bank . . . 150MM any major 

bank . . . 100MM must be Deutsche Bank . . . 200MM any major bank . . . 25MM Centrum 

Bank.” 

171. Until at least spring 2013, Brandel communicated with investors to promise 

refunds and provide updates on the status of various transactions that would enable refunds to be 

made.  During this period, he regularly communicated with investors to advise them of the status 

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of their purported investments and assuring them that successful transactions were imminent and 

returns were forthcoming.   

172. Brandel gave investors numerous reasons as to why transactions have not been 

completed as promised.  For example, in communications with one investor over the course of 

nearly two years, Brandel variously blamed delays on illness, European banking holidays, 

trading licensing issues, fraudulent acts by others, and misrepresentations about the transactions 

by the promoters.   

173. Brandel also used offers of refunds to investors as a lulling tactic.  In February 

2011, for example, he promised in writing to refund several investors’ funds without deduction 

in exchange for a “hold harmless” agreement and later promised refunds in writing if an investor 

retracted allegations made on an internet site that Malom and M.Y. Consultants were engaged in 

fraud. No refunds have been made.   

174. Brandel knew or was reckless in not knowing that the statements described above 

were materially false or misleading or omitted to state material facts which would make the 

statements he made not materially misleading. 

175. Brandel and M.Y. Consultants are alter-egos of each other, with Brandel using 

M.Y. Consultants in furtherance of the scheme to defraud.  He used corporate funds for his own 

purposes and to create and support several small businesses run by family members.  Further, the 

company was inadequately capitalized and, when funds came in they were quickly transferred to 

others or depleted, including on paying personal expenses and through large cash withdrawals.  

Further, on information and belief, M.Y. Consultants failed to observe corporate formalities.  

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176. Brandel received at least $532,500 in transaction-based compensation for his role 

in furthering the fraudulent scheme.  M.Y. Consultants received approximately $546,607 in 

connection with the scheme.    

6. Sean P. Finn and M. Dwyer LLC 

177. Sean P. Finn was a promoter working with M.Y. Consultants and Malom to solicit 

investors. At times, he acted through M. Dwyer, LLC, a company which he founded and serves 

as its sole manager.  He participated in the fraud from approximately April 2010 to fall 2011.   

178. Finn, through M. Dwyer, recruited investors for the joint venture and structured 

note programs; handled investment contracts with investors; and held himself out as a 

representative of Malom or intermediary between investors and Malom by explaining the joint 

venture and structured note programs, and regularly communicating with investors regarding 

updates on the status of their agreements. 

179. Finn worked in association with Nevada-based M.Y. Consultants.  After he 

solicited investors, he referred them to M.Y. Consultants, who entered into escrow agreements 

with the investors and provided them with the joint venture and structured note agreements with 

Malom.  Finn successfully solicited at least one Nevada-based investor.    

180. Finn made misrepresentations to several investors regarding Malom, its history, 

and the nature of transactions with Malom.  Finn made no effort to independently verify whether 

Malom had ever entered into successful transactions or whether it had any funds available.   

181. With respect to Malom’ s purported background, Finn wrote in one internet 

posting, dated July 9, 2011, that he worked with Malom because it had “references from top 

executives at Merrill Lynch and Goldman Sachs” and he had “spoken to several billion dollar 

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companies that owe their existence to Malom.”  On March 2, 2011, he sent an email to another 

investor falsely claiming that Malom had “closed deals with Wal Mart, Bank of America and the 

State of New York,” and that Malom was “a billion dollar company.”      

182. Finn misrepresented to investors the safety and the nature of investments with 

Malom.  In a January 26, 2010 email advertisement to current and prospective investors, for 

example, Finn claimed that, with Malom, an investor’s “fee is always under [the investor’s] 

control,” and that the “engagement fee is not released to us until [the investor’s] attorney/banker 

advises [the investor] to do so.”   

183. Finn made the same claims on M. Dwyer’s website, which generally solicited 

clients for joint venture transactions with his unnamed “partners” who, for a fee, could provide a 

minimum of $10 million cash to investors to enter into transactions.   

184. Similarly, on November 19, 2011, Finn posted a response to several allegations 

made against him on a website frequented by potential investors, falsely stating that his clients 

opened escrow accounts and “received 100% of their money back” when transactions were not 

successful. 

185. Further, in a December 17, 2010 email Finn informed another investor that money 

deposited into escrow belonged to the investor “until [the investor] is satisfied with the 

documents and the account we provide,” and that only after the investor’s “team is satisfied” 

does the investor release funds. The escrow agreement, however, provided that escrowed funds 

would be released automatically only days after documents were received. 

186. At the time he made each of these statements, Finn was attempting to recruit 

additional investors into transactions with Malom. 

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187. On M. Dwyer’s website, Finn also stated that Malom could place funds on an 

“administrative hold via [SWIFT Message type] MT799 though UBS, Credit Suisse, HSBC, 

HSH Nord and Clariden Leu.” This cannot be done in legitimate banking.   

188. In urging one investor to deposit money into escrow in a January 24, 2011 email, 

Finn falsely stated that Malom had reserved $30 million for the investor and passed on other 

offers for the same money.   

189. Moreover, Finn omitted to tell investors that he would almost immediately be 

paid a fee of approximately 25% of the amount deposited into escrow regardless of whether 

Malom entered into any transactions or whether those transactions produced any profit. 

190. Finn also made several misrepresentations to investors and potential investors 

about his own history of partnering with Malom in successful transactions.  He falsely informed 

investors that Malom had billions of dollars available and that he had “closed” more than 50 

transactions with Malom when he had not.   

191. He also acted as a reference for Malom when contacted by another investor, 

falsely stating that he had personally engaged in successful transactions with Malom.  On July 9, 

2011, Finn posted a response to an internet posting accusing him and his company of fraud, 

falsely stating that “[t]he investors I have have made more money than they can spend in a 

lifetime.”  Finn went on to recruit additional investors for transactions with Malom after making 

this statement.     

192. Finn knew or was reckless in not knowing that the statements described above 

were materially false or misleading or omitted to state material facts which would make the 

statements he made not materially misleading. 

40Case 2:13-cv-02280 Document 1 Filed 12/16/13 Page 41 of 46 

193. Finn and M. Dwyer are alter-egos of each other, with Finn using M. Dwyer in 

furtherance of the fraud. Finn commingled his assets with those of the company, the company 

was inadequately capitalized, and, on information and belief, failed to observe any corporate 

formalities. 

194. Finn received at least $840,000 of investor funds in transaction-based 

compensation for his role in recruiting investors and furthering the fraudulent schemes. 

COUNT ONE
 
Violation of Exchange Act Section 10(b) and Rule 10b-5 


(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn) 

195. The Commission realleges and incorporates herein by reference paragraphs 1 through 

194 above. 

196. Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, 

and Finn, directly and indirectly, with scienter, by use of the means or instrumentalities of 

interstate commerce, or of the mails, employed devices, schemes or artifices to defraud; made 

untrue statements of material fact or omitted to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading; and 

engaged in acts, practices or courses of business which have been and are operating as a fraud or 

deceit upon the purchasers or sellers of securities. 

197. As a part of and in furtherance of their scheme, Malom, Schläpfer, Lips, Warras, 

Micelli, M.Y. Consultants, Brandel, M. Dwyer, and Finn, directly and indirectly, prepared, 

disseminated, or used contracts, written offering documents, promotional materials, bank 

documents, investor and other correspondence, and oral presentations, which contained untrue 

statements of material facts and misrepresentations of material facts, and which omitted to state 

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material facts necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading, including, but not limited to, those set forth in 

Paragraphs 1 through 196 above. 

198. By reason of the foregoing, Malom, Schläpfer, Lips, Warras, Micelli, M.Y. 

Consultants, Brandel, M. Dwyer, and Finn have violated and, unless restrained and enjoined, will 

continue to violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 

240.10b-5]. 

COUNT TWO 
Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule 10b-5  

(Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn) 

199. The Commission realleges and incorporates herein by reference paragraphs 1 through 

198 above. 

200. Pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], Schläpfer, Warras, and 

Micelli knowingly or recklessly aided and abetted Malom by providing it with substantial 

assistance in furtherance of its primary violations; and Lips, Smith, M.Y. Consultants, Brandel, 

M. Dwyer, and Finn at least recklessly aided and abetted Malom by providing it with substantial 

assistance in furtherance of its violations of Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and 

Rule 10b-5 [17 C.F.R. § 240.10b-5]. 

201. Furthermore, Brandel, M. Dwyer, and Finn at least recklessly aided and abetted 

M.Y. Consultants by providing it with substantial assistance in furtherance of its violations of 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5]. 

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COUNT THREE
 
Violation of Securities Act Section 17(a)  


(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn) 

202. The Commission realleges and incorporates herein by reference paragraphs 1 through 

201 above. 

203. Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, 

and Finn, directly or indirectly, in the offer or sale of securities, by the use of the means or 

instruments of transportation or communication in interstate commerce or by the use of the mails: (a) 

has employed, is employing, or is about to employ devices, schemes or artifices to defraud; (b) has 

obtained, is obtaining or is about to obtain money or property by means of untrue statements of 

material fact and omissions to state material facts necessary in order to make the statements made, in 

light of the circumstances under which they were made, not misleading; and (c) has engaged, is 

engaged, or is about to engage in transactions, acts, practices and courses of business that operated or 

would operate as a fraud upon purchasers of securities. 

COUNT FOUR 

Aiding and Abetting Violations of Securities Act Section 17(a) 


(Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn) 

204. The Commission realleges and incorporates herein by reference paragraphs 1 through 

203 above. 

205. Pursuant to Securities Act Section 15(b) [15 U.S.C. § 77o(b)], Schläpfer, Warras, and 

Micelli knowingly or recklessly aided and abetted Malom by providing it with substantial assistance 

in furtherance of its primary violations; and Lips, Smith, M.Y. Consultants, Brandel, M. Dwyer, and 

Finn knowingly or at least recklessly aided and abetted Malom by providing it with substantial 

assistance in furtherance of its violations of Securities Act Section 17(a) [15 U.S.C. § 77q(a)].  

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206. Brandel, M. Dwyer, and Finn knowingly or recklessly aided and abetted M.Y. 

Consultants by providing it with substantial assistance in furtherance of its violations of Securities 

Act Section 17(a) [15 U.S.C. § 77q(a)]. 

COUNT FIVE
 
Violation of Securities Act Section 5 


(Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer, Finn) 

207. The Commission realleges and incorporates herein by reference paragraphs 1 through 

206 above. 

208. Malom, Schläpfer, Lips, Warras, Micelli, M.Y. Consultants, Brandel, M. Dwyer,  

and Finn, directly or indirectly, made use of the means or instruments of transportation or 

communication in interstate commerce or of the mails to offer and sell securities through the use 

or medium of a prospectus or otherwise, and carried or caused to be carried through the mails or in 

interstate commerce, such securities for the purpose of sale or for delivery after sale, when no 

registration statement had been filed or was in effect as to such securities and no legally recognized 

exemption from registration applied. 

209. By reason of the foregoing, Malom, Schläpfer, Lips, Warras, Micelli, M.Y. 

Consultants, Brandel, M. Dwyer, and Finn violated and unless restrained and enjoined, will 

continue to violate Securities Act Sections 5(a) and (c) [15 U.S.C. § 77e(a) and (c)]. 

COUNT SIX 

Violation of Exchange Act Section 15(a) 


(M.Y. Consultants, Brandel, M. Dwyer, Finn) 

210. The Commission realleges and incorporates herein by reference paragraphs 1 through 

209 above. 

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211. M.Y. Consultants, Brandel, M. Dwyer, and Finn, while acting as brokers or dealers, 

made use of the mails or any means or instrumentality of interstate commerce to effect transactions 

in, or to induce or attempt to induce the purchase or sale of, securities without being registered with 

the Commission as a broker or dealer or an associated person of a registered broker-dealer.  

212. By reason of the foregoing, M.Y. Consultants, Brandel, M. Dwyer, and Finn 

violated and, unless restrained and enjoined, will continue to violate Exchange Act Section 15(a) [15 

U.S.C. § 78o(a)].  

PRAYER FOR RELIEF 


WHEREFORE, the Commission respectfully requests that the Court: 


I. 

Enter judgment in favor of the Commission finding that the defendants violated the federal 

securities laws and Commission rules alleged against them in this Complaint; 

II. 

Permanently enjoin the defendants from further violations of the federal securities laws and 

Commission rules alleged in this Complaint; 

III. 

Permanently enjoin the defendants from directly or indirectly participating in the issuance, 

offer, or sale of any security, including but not limited to joint venture agreements, proofs of funds, 

bank guarantees, medium term notes, standby letters of credit, structured notes, and similar 

instruments, with the exception of the purchase or sale of securities listed on a national securities 

exchange; 

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IV. 

Order all defendants to disgorge, as the Court may direct, all ill-gotten gains received or 

benefits in any form derived from the illegal conduct alleged in this Complaint, together with pre­

judgment interest thereon; 

V. 

Order all defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]; and 

VI. 

Grant such other equitable and legal relief as may be appropriate or necessary for the benefit 

of investors pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. § 78u(d)(5)]. 

Date: December 16, 2013 By: 

/s/ Stephen W. Simpson 
Stephen W. Simpson 
Timothy N. England 
Stephen L. Cohen 

Counsel for Plaintiff 
U.S. Securities and Exchange Commission 
100 F Street, N.E. 
Washington, DC 20549 
Fax: 202.772.9228 
[email protected] / Tel. 202.551.4513 
[email protected] / Tel. 202.551.4969 
[email protected] / Tel. 202.551.4472 

46 


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mailto:[email protected]
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