December 13, 2018 8:24 PM
Jared Rice, Sr. and Stanley Ford settle with the SEC, but Rice’s days in court are hardly over.
Two former executives of AriseBank agreed to settle a fraudulent ICO lawsuit brought against them by the US Securities and Exchange Commission (SEC). The SEC announced on December 12 that former CEO Jared Rice, Sr. and former COO Stanley Ford will pay about $2.7 million in disgorgement and penalties for operating a scam that claimed to raise $600 million of its $1 billion ICO goal in just two weeks.
The agreement between the SEC, Rice, and Ford does not impact the federal criminal fraud charges brought against Rice in November. Rice has been indicted on three counts each of securities fraud and wire fraud.
The indictment states that Rice promoted AriseBank as the “first decentralized banking platform.” He allegedly told investors that the bank could offer FDIC-insured accounts and traditional banking services, including a partnership with Visa to provide customers with crypto credit and debit cards.
In reality, it seems Rice knowingly had no partnership or contract with Visa, could not offer customers FDIC-insured accounts, and had not been authorized by the Texas Department of Banking to conduct banking in the state of Texas. Through this scheme, Rice raised in crypto and fiat currency the equivalent of approximately $4,250,000 from hundreds of investors.
On January 5, 2018, the Texas Department of Banking issued a cease and desist order against AriseBank for “violat[ing] Texas Finance Code Chapter 31 by using the term ‘bank’ in its name and marketing materials to imply that it is in the business of banking in this state.” A few weeks later, AriseBank was charged by the SEC with this week’s settled lawsuit.
As part of the settlement agreement, Rice and Ford agreed to be held “jointly and severally liable” for $2,259,543 in disgorgement and $68,423 in prejudgment interest. In addition, they must each pay a $187,767 penalty. The SEC also enforced lifetime bans on the two from serving as officers and directors of public companies or participating in digital securities offerings.
While Rice and Ford both agreed to the settlement, neither admitted to or denied the SEC’s allegations.
Nicholas Ruggieri studied English with an emphasis in creative writing at the University of Nevada, Reno. When he’s not quoting Vines at anyone who’s willing to listen, you’ll find him listening to too many podcasts, reading too many books, and crocheting too many sweaters for his dogs, RT and Peterman.
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