SEC Settles Case Against Convicted California Fraudster
The Securities and Exchange Commission announced that the U.S. District Court for the Southern District of New York entered a final judgment against Donald G. Blakstad, a self-employed individual from San Diego, California for securities fraud, among other things.
On Nov. 21, 2022, the Court entered final judgments against Robert J. Maron, a personal friend of Blakstad, and Martha Patricia Bustos, a former accountant at Illumina Inc. and close friend of Blakstad.
According to the SEC’s amended complaint, Bustos tipped Blakstad material, nonpublic information concerning at least four different Illumina quarterly performance announcements. Blakstad enlisted two individuals to trade on his behalf ahead of two of the announcements, and also tipped Maron and at least three other individuals, each of whom traded in advance of at least one of the announcements. After receiving the tip, Maron purchased out-of-the-money, near-expiration Illumina put option contracts in an account owned by his friend Joubin Torkan, which generated $900,000 in unlawful profits for Maron and $113,833 for Torkan. Torkan previously settled the SEC’s relief defendant claims against him, agreeing to disgorge $113,833 and to pay prejudgment interest of $8,606, which the Court approved on Sept. 29, 2021.
Blakstad and Bustos were both charged criminally by the U.S. Attorney’s Office for the Southern District of New York. On June 8, 2021, Blakstad was convicted at trial of conspiracy to commit securities fraud, securities fraud of SEC rules, conspiracy to commit wire fraud, wire fraud and aiding and abetting. The Court sentenced Blakstad to 36 months of imprisonment; three years of supervised release; criminal forfeiture of $4.5 million; restitution of $669,000; and an assessment of $700.
Bustos pleaded guilty to securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud. The Court sentenced her to time served, two years of supervised release, criminal forfeiture of $12,000, a criminal fine of $20,000, and 250 hours of community service.
In the SEC action, both Blakstad and Bustos have consented to the entry of judgments enjoining them from violation of SEC rules. Blakstad was ordered to pay disgorgement of $3.6 million, plus prejudgment interest of $188,068. Bustos was ordered to pay disgorgement of $12,000. For each, the monetary judgments were deemed satisfied by the orders of forfeiture against them in the criminal matters.
Maron consented to the entry of a judgment permanently enjoining him and ordering that he pay a civil penalty of $1.8 million.
Additionally, on April 17, 2023, the Commission entered an administrative order suspending Bustos from appearing or practicing before the Commission pursuant to SEC rules based on her criminal conviction.
Blakstad also was charged and agreed to settle the securities fraud charges against him.
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