Malecki Law Announces Investigation of Former PrimeSolution Securities, Inc. Brokers Jeffrey Gainer, Jerry Cicolani, Jr. and Kelly Hood

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.