Four Brokers Barred from Securities Industry in Settlement with FINRA Over Misrepresented Mining Industry Private Placement Investments

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.