Two former top executives of AriseBank have agreed to settle fraud charges brought against them by the U.S. Securities and Exchange Commission.
The SEC announced Wednesday that AriseBank ex-chief executive officer Jared Rice Sr. and ex-chief operating officer Stanley Ford will pay about $2.7 million in disgorgements and penalties for operating a cryptocurrency scheme that used former heavyweight boxing champ Evander Holyfield as a spokesperson.
The agreement reached Wednesday between the SEC and Rice and Ford doesn’t impact the federal criminal fraud charges brought against them Nov. 29 by U.S. Attorney Erin Neely Cox of the Northern District of Texas.
Rice and Ford promoted AriseBank as the “first decentralized banking platform” in the world and told investors that they had partnerships with VISA credit cards and that they offered consumers FDIC-insured bank accounts. In addition, the pair fraudulently tried to sell unregistered securities to raise $600 million in capital through the sale of its own cryptocurrency called “AriseCoin.”
In reality, according to the SEC, AriseBank officials had no government authorization to conduct any banking operations in Texas.
“Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its-kind decentralized bank offering its own cryptocurrency for customer products and services,” said Shamoil Shipchandler, director of the SEC’s Fort Worth Regional Office.
“The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud,” Shipchandler said.
As part of the settlement agreement, Rice and Ford will pay $2,259,543 in disgorgement and $68,423 in prejudgment interest. In addition, each must pay a $184,767 penalty and both are banned for life from serving as officers and directors of public companies and participating in digital securities offerings.
The SEC’s investigation and litigation was conducted by SEC staff attorney David Hirsch, trial attorney Chris Davis and regional trial counsel B. David Fraser – all of the Fort Worth Regional Office. Staff from the SEC’s Cyber Unit assisted with the investigation and litigation.
Rice is represented by prominent Atlanta criminal defense attorney Ed Garland. Ford does not have a lawyer.