Articles Posted in Investment Fraud

According to a Letter of Acceptance Waiver and Consent filed with the Financial Industry Regulatory Authority (“FINRA”), Thomas Buck has been barred by FINRA from working with any FINRA member firms. Mr. Buck was a former top broker at Bank of America Merrill Lynch and was at the time a broker at RBC Wealth Management.

Mr. Buck was a registered broker at Merrill Lynch’s Carmel, Indiana office, which was part of the firm’s Indiana complex. While at Merrill Lynch, Mr. Buck, who reportedly oversaw $1.3 billion in assets, was accused of failing to discuss pricing alternatives with customers, among other allegations.  In addition, Mr. Buck was accused of unauthorized trading and using discretion in customer accounts improperly and in violation of FINRA Rules.

Buck was reportedly fired from Merrill Lynch in March.  Just four months after, he was reported as being barred from working at any FINRA-associated broker-dealer.  According to FINRA, Mr. Buck used commission-based accounts even though fee-based accounts would have been less expensive for clients. In some cases, clients were allegedly charged significantly more in commissions by virtue of the fact that they were not placed in fee-based accounts.

The extent of Mr. Buck’s use of commission-based accounts, if true, is shocking.  Nearly 80% of the revenues generated by Buck were from commission-based activity, according to the AWC.  Whereas, 70% of the revenue generated at the Indiana complex that housed Buck’s group was said to be from fee-based accounts.  Not only did he allegedly mislead clients about the two account options, but he also is said to have actively engaged in unauthorized trading.

Mr. Buck, who had 33 years of experience in the securities industry, has 12 customer disputes according to his FINRA BrokerCheck report. These disputes were all filed in 2015 and seem to stem from his actions at Merrill Lynch.

Malecki Law has previously represented many investors successfully in FINRA arbitration proceedings involving  firms’ failures to supervise their registered representatives and financial advisors.  If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.

Per reports, William Galvin, the Secretary of the Commonwealth of Massachusetts, recently filed complaints against Securities America and its broker Barry Armstrong over allegedly misleading advertisements that targeted vulnerable seniors.

Securities America allegedly participated in and failed to supervise Mr. Armstrong, in conducting a misleading radio advertising campaign.  In what has been described as a “bait and switch” technique, Mr. Armstrong reportedly ran the Alzheimer’s disease ads as a pretext to obtain the contact information needed to sell another service.

Mr. Armstrong, who hosts his own radio show, was said to have run ads on various AM radio stations that instructed listeners to call him for free information on Alzheimer’s disease.  Once listeners called in, their contact information was allegedly used to advertise financial services. According to reports, these deceptive ads were submitted to Securities America for review and were all approved by the firm.

The complaints requested a permanent cease and desist order, censure, an undetermined fine, and a requirement that Securities America hire an independent compliance consultant.

These allegations highlight the growing concern in the financial industry regarding elderly investors. Given their vulnerability, both regulators and firms have taken steps to ensure that seniors are protected from potential frauds. For instance, FINRA recently created a securities helpline for seniors.

Securities America is a FINRA registered broker-dealer and believed to have more than 2,000 financial professionals.  According to records, Mr. Armstrong has been a registered broker since 1984 and has been employed at Securities America since 2007. He has five disclosures on his FINRA BrokerCheck report, including three customer disputes. He was previously discharged from a broker-dealer for allegedly violating company procedures and for failure to supervise..

Malecki Law has previously represented many investors successfully in FINRA arbitration proceedings involving  firms’ failures to supervise their registered representatives and financial advisors.  If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.

On July 1, 2015, the Financial Industry Regulatory Authority (FINRA) accepted settlement offers from brokers Jonah Engler, Hector Perez, Jonathan Michael Sheklow and Joshua William Turney for their roles in selling fraudulent investments to 59 customers.  According to FINRA’s Orders Accepting Offers of Settlement, these individuals sold $3 million worth of Senior Secured Zero Coupon Notes issued by a company called Metals, Milling and Mining LLC.  Mr. Engler himself has settled 11 customer complaints over the years, according to the FINRA CRD system.  The Orders state that each of the brokers has been barred from associating with any FINRA member in the future.

As reported in the Orders, the Notes were sold upon misrepresentations that they would return 100% within one year by extracting valuable minerals left over from mining operations.  The Orders detailed that all investors, except for three, lost all of the money they invested, with those three investors being repaid with money from new investors, a classic sign of a Ponzi scheme.

The Order stated that the company that issued the notes was partially owned or controlled by a Managing Partner of the brokerage firm that the above brokers worked for.  When a brokerage firm owns a company that issues securities, this may create a conflict of interest between the broker-dealer and the customer, because the securities may be recommended in order for the brokerage firm to make money, and not because it is suitable or in the best interest of the customer.

The Orders further detailed that the investments were misrepresented to be collateralized by barrels of “ore concentrate” when, in fact, there was no collateral, and the concentrate the company did have was nearly worthless.  In the Orders, it was described that the brokers failed to confirm whether the collateral existed and recklessly misrepresented the investments would be adequately secured.  Additionally, the brokers failed to investigate and understand the science of the investments, the Orders detailed.

Malecki Law has successfully brought many securities actions on behalf of investors who were sold fraudulent investments.  Broker-dealers are required by the securities laws and industry rules to supervise the recommendations of their brokers, and may be liable to investors for their failure to do so.  If you believe you have suffered losses as a result of questionable securities recommended to you, or questionable taken in your securities account, please contact us immediately for a confidential consultation.

Another oil and gas venture domino falls.  The Securities and Exchange Commissions (SEC) released a press release on July 6, 2015 announcing charges brought against Luca International, a California based oil and gas company, and Bingqing Yang, the company’s CEO.  The SEC charged Luca and Ms. Yang with running an alleged $68 million Ponzi scheme and affinity fraud against the Chinese-American community in California and elsewhere.

The SEC alleged that Ms. Yang knew the company was failing, but misrepresented the projected returns of the company as 20-30% annually.  Ms. Yang allegedly also commingled funds and diverted $2.4 million through a separate offshore entity to purchase a home and pay for personal expenses.

Ms. Yang allegedly relied on two tactics: affinity fraud and Chinese citizens who sought to immigrate to the United States through the EB-5 visa program, which grant green cards for making certain investments in U.S. companies.  Other Luca employees were also reported to be implicated in the fraud.  Additionally, the SEC’s press release noted that in a separate administrative action, Wisteria Global and one Hiroshi Fujigami settled charges that they acted as brokers for the Luca entities and were to disgorge ill-gotten gains of more than $1.1 million.

Affinity fraud occurs when a fraudulent product is marketed towards a specific group that are defined by a common interest, such as through religion or the community.  The Luca International investors were largely Chinese-American investors from the California area.  The investors were allegedly lured by advertisements made in Chinese language television, radio and newspapers.

We at Malecki Law have represented several groups who were drastically affected by affinity fraud.  It is essential that broker-dealers properly vet private placements in investments such as oil and gas ventures before permitted the investments to be marketed and recommended to investors.  Brokers and broker-dealers may be liable to their customers for failing to properly perform this due diligence.

If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.

The Securities and Exchange Commission (SEC) announced today that is has formally charged Malcolm Segal with running a Ponzi scheme and stealing investor money from his office in Pennsylvania.  According to his BrokerCheck Report, Mr. Segal was formerly a registered stockbroker with Aegis Capital Corp. and Cumberland Advisors.  Mr. Segal reportedly was a partner in J&M Financial and the president of National CD Sales.

According to the SEC, Mr. Segal allegedly sold what he called certificates of deposit (CDs) to his brokerage customers under the false pretense that he could get them a higher rate of interest than was then available through banks.  Mr. Segal allegedly represented to his victims that his CDs were FDIC insured and risk-free. Mr. Segal reportedly defrauded at least fifty investors out of roughly $15.5 million.

As his scheme was unravelling, Mr. Segal allegedly began to steal from his customers’ brokerage accounts by falsifying fraudulent paperwork such as letters of authorization. This fake paperwork reportedly allowed Mr. Segal to withdraw funds from his customers’ accounts without them knowing.  Ultimately, in July 2014, the scheme collapsed completely.  Mr. Segal has since been barred from the securities industry by the Financial Industry Regulatory Authority.

Because Mr. Segal was registered with a broker-dealer, Aegis, at the time he was operating this scheme, investors may be able to recover against the broker-dealer for supervisory failures and negligence.  In this way, it is possible that Aegis may be responsible to Mr. Segal’s victims for some or even all of their losses.  The same may also apply to Mr. Segal’s prior broker-dealer, Cumberland.

Malecki Law has significant experience representing the victims of Ponzi-schemes and stockbroker theft.  The attorneys at Malecki Law have successfully handled numerous cases on behalf of Ponzi scheme victims.  If you or a family member were a victim of Malcolm Segal or a similar Ponzi scheme, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

 

 

It was recently reported that Keith M. Rogers, formerly employed by GLS & Associates, Inc., a FINRA broker-dealer, has been indicted and held on $2 million bond on securities fraud charges, where it was reported that he took investors’ money to pay for personal expenses and repay other investors, a classic Ponzi scheme scenario.  Previously, it was reported that Mr. Rogers was ordered by the Alabama Securities Commission to cease and desist from dealing in securities in the State of Alabama.  In September 2014, Mr. Rogers apparently consented to a bar from the securities industry was barred from the securities industry by the Financial Industry Regulatory Authority (FINRA) for failing to cooperate in FINRA’s investigation into Mr. Roger’s alleged diversion of customer funds away from GLS brokerage accounts.  According to the Administrative Order filed by the Alabama Securities Commission Mr. Rogers facilitated transactions in a company called R&P Development LLC from 2009 through 2013, when he was registered by GLS & Associates, Inc. and Warren Averett Asset Management.

FINRA specifies strict rules on a broker’s ability to solicit business to businesses that are not run by their employing broker-dealer.  Malecki Law attorneys have seen instances where employing broker-dealers fail to properly supervise a broker’s activities.  According to FINRA Rules, Broker-dealers like GLS & Associates Inc. have an important non-delegable duty to supervise the conduct of their financial advisors and employees.  The firm may be held liable for customer losses if the firm failed to properly supervise their employees.  If a broker violates FINRA Rules or securities laws, both the broker and the broker’s employing firm may be held liable for the customer’s losses.

Malecki Law has previously represented many investors successfully in FINRA arbitration proceedings involving outside business activities and firms’ failures to supervise their registered representatives and financial advisors.  If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.

A former University of Washington faculty member pled guilty in connection with a Ponzi scheme that lasted at least six years.  It has been reported by the Washington State Sky Valley Chronicle on May 20, 2015 that Satyen Chatterjee, who owned and operated a financial advisory business called Strategic Capital Management, Inc. for more than twenty years.  The news article reported that the Washington State Department of Financial Operations ordered the business to cease operating illegally in 2013.  The guilty plea was also announced by the Federal Bureau of Investigations in a press release dated May 18, 2015.

According to the article, Mr. Chatterjee used his faculty post at the University of Washington to promote his advisory business.  The article went on the detail that Mr. Chatterjee convinced investors to transfer funds on the belief they were purchasing fixed rate securities, when in reality he transferred the money to personal bank accounts to fund his lifestyle or lost the money day trading.  Also detailed in the article was another scheme whereby Mr. Chatterjee solicited investments in a nutrient supplement company, but used that money to pay off investors who thought they invested in the fixed rate securities.

According to the FBI press release, Mr. Chatterjee admitted to the scheme to defraud investors during a period of 2007 to 2013.  The FBI press release estimates that at least six investors were defrauded out of more than $600,000.

The FBI press release also detailed that Mr. Chatterjee fabricated account statements for at least one investor, and blamed some of the investor losses on investment associates who defaulted on agreements they had with Mr. Chatterjee, as well as blaming them for certain of the losses.

Malecki Law has previously investigated and successfully handled securities arbitrations concerning Ponzi schemes and fraudulent investments perpetrated by financial advisors.  If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.

Victims of securities fraud and negligence are entitled to receive damages to compensate them for their losses, as well as other remedies that may be available depending on the specific case.  Frequently investors who have lost money in their investment accounts do not realize that they may be the victims of securities fraud and/or negligence on the part of their financial advisor (i.e., investment advisor and/or stockbroker).

Therefore, today we are going to answer the question:

“Can I sue my financial advisor, investment advisor or stockbroker?“

The short answer to that question is:

“Yes, you may be able to sue your investment advisor, financial advisor or stockbroker, if you have suffered losses in your account as a result of their fraud or negligence.”

When do investors sue their financial advisor?  In simple terms, people sue their financial advisor when they feel that they have been cheated or misled.

Financial advisors are under a number of duties and obligations by virtue of having a license to sell securities.  The firms that they work for are also under specific duties and obligations with respect to what they permit the financial advisors that work for them to do and how they are supervised.  These duties stem from the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), as well as both state and federal laws.

So, if you to suffer losses in your investment account because your financial advisor, their firm, or both breached one or more of those duties to you, then you could have the right sue them to recover money.  It is important to file a lawsuit as quickly as you can, but always consult a lawyer, even if it seems like it happened a long time ago.

Did my financial advisor break the law?

A financial advisor and their firm have the obligation to provide their customers (you) with full and accurate information about investments they recommend.  If a firm or financial advisor provides you with misleading or false information that induced you to buy or sell and investment or did not tell you something important – then you may have a claim for fraud.

Churning is another example.  Churning occurs when a financial advisors buys and sells investments over and over in a very short period of time (oftentimes day-trading) in a customer’s account.  When this happens, the customer usually loses a lot of money in the account, while the financial advisor “earns” a lot of commissions from the account.  A customer who has had their account churned can sue their financial advisor and their firm to recover their losses and refund the commissions the customer paid.

Frequently when churning an account, the financial advisor is also engaged in what is known as “unauthorized trading.”  Unauthorized trading is just what it sounds like – trading in a customer account without the customer’s permission.  Unless a customer gives their financial advisor what is known as “discretion” (i.e., permission) to trade their account at will, a financial advisor is supposed to get the customer’s permission for every trade they make.  If not, then the financial advisor and their firm can be liable to the customer for losses sustained in the unauthorized trades.

Another duty that all financial advisors have to their customers is to make only suitable (i.e., appropriate) recommendations to their customers.  Therefore, financial advisors cannot legally make unsuitable or inappropriate recommendations to their customers.  For example, if a financial advisor has a customer who is conservative and not willing to risk losing a lot of money in their account and they recommend to that customer an investment that is very speculative (i.e., risky with high upside but high downside, too), that financial advisor and their firm can be on the hook to that customer if and when the investment loses money.

Finally, financial advisors (just like everybody else) are not permitted to forge documents or steal their customer’s money.  Unfortunately, financial advisors across the country regularly do both.  These financial advisors and their firms can be held liable to reimburse their customers for all money stolen and losses in the accounts effected.

Financial advisors who do “go bad” seem to do so during periods of personal crisis in their own lives – usually when they are going through a rough divorce, facing personal bankruptcy, or battling addiction to drugs/alcohol.  While those going through life’s major struggles deserve sympathy and a helping hand, that is no excuse to abuse the trust of their customers as so frequently happens.

Investors who believe they may be the victim of fraud or negligence on the part of their financial advisor should contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212)943-1233.  The attorneys at Malecki Law have extensive experience representing investors, and are here to help.

The Financial Industry Regulatory Authority (FINRA) has permanently barred Nicholas Hansen Harper.  Harper worked in Wells Fargo’s Topeka, Kansas branch office from 1997 through 2013 according to his BrokerCheck Report.

Per the Letter of Acceptance Waiver and Consent filed with FINRA, Harper resigned from Wells Fargo on August 7, 2013, shortly after the firm’s compliance department began to review trading in the accounts of certain of his customers.  The timing of Harper’s resignation can only serve to raise suspicions.

Presumably suspicious of Harper, in March of 2015, FINRA requested Harper provide testimony to FINRA investigators pursuant to Rule 8210.   More than one month after the request was issues, FINRA staff spoke to Harper’s attorney, who purportedly indicated that Harper would not be appearing before FINRA to provide testimony at any time.

In response to his violation of FINRA Rule 8210, Harper has agreed to a bar from association with any FINRA member in any capacity.

FINRA investigations are serious matters and for that reason Rule 8210 provides FINRA with a “big stick” to force compliance from registered representatives.

For Harper, this has already become something future employers and clients, alike, in any business can see.  This can affect future employment possibilities, future licensing and the ability to get financing for personal and/or business endeavors.  For a registered person receiving an 8210 request, proper handling of these matters by experienced counsel is essential.

FINRA is one of the few regulators that specifically oversee the securities industry.  Because of that, FINRA’s enforcement division is a crucial part of preventing investment fraud and punishing those who have committed violations.

In addition to the state and federal laws that are on the books, the securities industry is also governed by industry rules promulgated by the Securities and Exchange Commission and FINRA.   These rules, including Rule 8210, are important and must be complied with.

Failure to comply with FINRA and SEC rules can expose a person to civil liability and loss of professional licenses, as in the case of Nicholas Harper.  If a licensed stockbroker or financial advisor has broken the rules with respect to a customer account, that customer could be entitled to recover their losses.

Malecki Law has handled numerous cases stemming from inappropriate trading by brokers in customer accounts.  If you or a family member invested with Nicholas Harper or Wells Fargo and have lost money, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

This oil and gas investment was a bust, but not because of the current market conditions.  According to Securities and Exchange Commission (SEC) court filings, brokers Jeffrey Gainer, Jerry Cicolani, Jr. and Kelly Hood were terminated from their employer PrimeSolutions Securities, Inc., a Cleveland, Ohio broker-dealer, as a result of marketing and recommending investments in KGTA Petroleum, Ltd.  In its complaint filed in the United States District Court for the Northern District of Ohio, the SEC described KGTA Petroleum, Ltd. as a scam and Ponzi scheme.  As reported recently by Crain’s Cleveland Business, the FBI announced on April 15, 2015 that Mr. Cicolani had been charged criminally as a result of selling unregistered KGTA Petroleum, Ltd. securities.

Brokers Gainer and Cicolani allegedly engaged in three separate fraudulent acts by recommending the KGTA investments without properly registering the securities, engaging in “selling away” activities by selling the KGTA investments not through their employer, PrimeSolutions Securities, Inc., and failing to disclose to their public investor customers the very large fees they earned as a result of the recommendations and placements.  According to the SEC complaint, Brokers Gainer and Cicolani earned approximately $6 million in fees, or around 29% of all funds raised in the fraudulent KGTA investments.

The SEC detailed in its complaint that the investments KGTA Petroleum, Ltd. held by customers were often in the form of “promissory notes” or “agreements,” but really represented a typical Ponzi scheme, with interest and other payments made to old investors from the funds of new investors.  The SEC complaint alleged that the scheme affected at least 57 customers.

Selling private securities offerings without the required registration, disclosures and approval of a FINRA member broker-dealer are a very serious violation of the securities laws and rules.  Any investors who invested in these investments may have claims against the brokers and perhaps the broker-dealer PrimeSolutions Securities, Inc., who had affirmative supervision obligations over the branch office at which the brokers worked.  PrimeSolutions Securities, Inc. is obligated to investigate any “red flags” and perform regular audits to root out potentially fraudulent conduct.

According to his publicly available Financial Industry Regulatory Authority (FINRA) CRD report, Mr. Cicolani was the subject of approximately 70 customer complaints at his previous broker-dealer Merrill Lynch, Pierce, Fenner & Smith, Inc.  This number of complaints alone would require PrimeSolutions Securities, Inc. to subject Mr. Cicolani to “heightened supervision,” requiring closer scrutiny of his activities and accounts.  Ms. Hood was allegedly Mr. Cicolani’s girlfriend and was also terminated from PrimeSolutions Securities, Inc. as a result of the KGTA investments.

Malecki Law has previously investigated and successfully handled securities arbitrations concerning private securities transactions and other fraudulent conduct by brokers who are employed by FINRA member broker-dealers.  If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.