Articles Posted in Investment Fraud

Recently, CNBC interviewed Jenice Malecki for their white collar crime series, “American Greed”. The episode tonight (Feb 13, 2017), by CNBC correspondent Scott Cohn, is focused on John Bravata, who ran a real estate Ponzi Scheme from 2006 to 2009, through his company BBC Equities LLC. He collected more than $50 million from investors, promising their money would be used to purchase real estate. However, most of it went into financing his lavish lifestyle. Being an experienced securities fraud lawyer and having handled high-profile real estate scams, Ms. Malecki was asked to share her expertise on-camera about real estate investment scams and what to watch out for.

In the video, Ms. Malecki cautions investors about typical real estate scams, who they target, the telltale signs of fraud and resources available for investor protection. This interview has already aired on CNBC and in over 27 NBC affiliated channels. It can also be viewed on http://www.cnbc.com/2017/02/10/the-greed-report-tempted-by-the-real-estate-market-investor-beware.html

hand-cuffs-1255790-300x179Wells Fargo financial advisors, David Jeremy Welty and Ane Plate have been barred from the securities industry by FINRA and the SEC, respectively, per AdvisorHUB. Both advisors were accused of stealing customer funds.

Welty was alleged to have converted $8,700 for personal expenses from an account that was originally set up as a “memorial fund,” according to reports. Prior to his termination in December 2016, Welty worked in the Wells Fargo branch in Norristown, PA, beginning in March 2012, according to records. He reportedly consented to the bar without admitting nor denying the allegations.

Plate was accused to stealing $176,000 that was raised through the sale of securities from elderly clients’ account without authorization. According to the AdvisorHUB report, the pilfered money was allegedly used to pay Plate’s mortgage and upgrade her home. Records indicate that Plate worked at the Wells Fargo office in Deltona, FL from 2005 through 2014. Earlier this month, she was reportedly sentenced to 27 months in federal prison.

visions-from-im-5-1466265-225x300According to news reports, the SEC has fined UBS more than $15 million for its failures to properly supervise employees who sold complex investment products to unsophisticated and inexperienced clients of the firm. Complex products are traditionally reserved for only sophisticated investors who have a full understanding of the product and are appreciative and willing to take the risks involved. These are not typically appropriate or suitable for unsophisticated “mom and pop” investors.

Nonetheless, reports indicated that UBS’s financial advisors sold more than half a billion dollars’ worth of these complex products to more than 8,000 inexperienced investors. Making matters worse, reports reveal that many of these investors had moderate or conservative risk profiles. The products sold to investors are said to have included reverse convertible notes, some of which had derivatives that were tied to implied volatility.

This is not new for UBS, which just paid $19.5 million last year in connection with the firm’s sale of complex structured notes.

White eggs in a brown nest labelled with IRA, Pension, 401k and House representing a typical nest egg.
First, it was M.I.T., Yale and N.Y.U. Then, Duke University, Johns Hopkins, University of Pennsylvania, and Vanderbilt were sued for excessive fees in their employees’ retirement accounts, according to a New York Times report. With these class-action suits filed, let’s examine what are the common problems and allegations made against 403(b) plans.

403(b) plans, are similar to 401(k) retirement plans available to employees of public schools and nonprofit institutions like universities and hospitals. The most common allegation that has been reported against 403(b) plans is excessive fees that result in lost retirement savings for the investors. These universities reportedly used multiple ‘record keeper’ providers and paid excessive revenue sharing payments to these providers, amounting to millions of dollars in lost savings.

While the employee investors would have benefited more from fewer simplified options that leveraged economies of scale, there were 400+ investment options which were confusing for them and made them opt for duplicative strategies according the same news report. Allegedly, millions of dollars in retirement assets were unsuitably invested in underperforming funds in a retail share class as opposed to a less-expensive institutional share class. The investment advisors for these plans allegedly breached their fiduciary duty which mandates the reduction of excessive fees and conflicts of interest that erode retirement savings for all investors.

FINRA newThe Financial Industry Regulatory Authority (FINRA) announced today a complaint filed against Hank Marker Werner for allegations including securities fraud for churning the account of a senior-aged blind widow customer and for making excessive and unsuitable trading recommendations in a News Release.

According to his publicly available BrokerCheck report records maintained by FINRA, Mr. Werner was employed and licensed by Legend Securities, Inc. from December 2012 to March 2016.  Prior to working at Legend Securities, Inc., he was employed by Liberty Partners Financial Services, LLC from July to December 2012, Brookstone Securities, Inc. from March 2011 to June 2012, and Alexander Capital, LP from November 2009 to March 2011, per Mr. Werner’s BrokerCheck report.

FINRA’s News Release detailed that Mr. Werner allegedly engaged in a deceptive and fraudulent scheme by churning the elderly client’s over the course of three years “to maximize his compensation by charging more than $243,000 in commissions, while causing the customer approximately $184,000 in net losses.”  The News Release also stated:

businessman-silhouette-1237574-256x300The investment fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Oppenheimer & Co. broker Joseph Iovino. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Iovino has been the subject of seven reportable disclosure events, including customer complaints.

Per FINRA records, Mr. Iovino has been involved in two regulatory events, four customer complaints and an employment separation after allegations.

According to his BrokerCheck, in 1992, Mr. Iovino was terminated by Prudential Securities for violating firm policy.

visions-from-im-5-1466265-225x300Malecki Law’s team of investment attorneys are interested in speaking with those who invested in AR Global REITs. Industry analysts and consultants believe that investors in a number of AR Global-sponsored real estate investment trusts (REITs) are in danger of having their distributions cut, per InvestmentNews.

Specifically, investors in American Realty Capital Global Trust II, American Realty Capital New York City REIT, American Finance Trust, American Realty Capital Hospitality Trust, American Realty Capital Retail Centers of America, Healthcare Trust, and Realty Finance Trust may be at risk, according to the report.

The problem is said to stem from the MFFO (modified funds from operations a/k/a cash flow) at seven of AR Global’s REITs. The MFFO of these seven funds reportedly failed to match or exceed their distributions. In simple terms, this would mean that the funds failed to take in as much as they were distributing. Such a situation has the potential to mean big trouble for investors including distribution cuts and rapid decline in asset value – i.e., less income and large losses to the principal.

hammer-legal-300x123We are pleased to announce that after a six-day long arbitration, our client was awarded his full net out-of-pocket damages of $142,168.00 by a Financial Industry Regulatory Authority (FINRA) Arbitration Panel.  The story was recently reported by InvestmentNews.  The arbitration panel also assessed all forum fees in the amount of $14,400 against the Respondent Garden State Securities, Inc.

The case was brought against Garden State alleging unsuitable investment recommendations, including over-concentration in Chinese stocks, penny stocks and low-priced securities, as well as leveraged exchange traded funds (ETFs). The claims also centered around allegations of churning and excessive trading. In the end, the Panel found Garden State liable.  Ultimately, broker-dealers must be held responsible for the recommendations their brokers make.

Our client’s case exemplifies many of the issues facing senior-aged investors today. Many seniors find themselves in situations where they have saved their entire lives for retirement and are seeking a financial professional to help guide them and preserve their nest egg. There is usually a lot of trust in the financial advisor-client relationship. But that trust can be easily and quickly abused. As they grow older, people generally became more conservative, downsizing and limiting expenses. Yet, all-too-frequently brokers recommend more speculative investments to their aging customers – for the broker’s own purposes (commonly higher commissions and fees). Such a situation is not appropriate nor permissible.

11618726-business-woman-black-silhouette-hold-briefcaseThe securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Catherine A. Sheridan.  Since April 2015, Ms. Sheridan has been employed and registered with Race Rock Capital, LLC, a broker-dealer, working out of the Boston, Massachusetts office, according to her publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per her BrokerCheck report, Ms. Sheridan was previously employed by North South Capital, LLC from 2010 to 2015, Sound Securities, LLC from 2007 to 2010 and Tradition Asiel Securities, Inc. from 2004 to 2007.

Ms. Sheridan was fined and suspended for two months from association with any FINRA member broker-dealer by FINRA according to a Letter of Acceptance, Waiver and Consent No. 2015044475901 (AWC).  According to the AWC, Ms. Sheridan violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010 for failing to timely file amendments to her U-4 to report tax liens.  According to the AWC, Ms. Sheridan resigned from North South Capital, LLC two days after she amended her U-4 to report a tax lien.  According to FINRA BrokerCheck records, Ms. Sheridan’s suspension started on May 16, 2016 and ends on July 15, 2016.

12234_corporate_blurThe investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Wells Fargo financial advisor Robert Ross.  According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Ross recently moved to Wells Fargo after spending 30 years at Merrill Lynch.

Mr. Ross was recently the subject of a customer complaint alleging unsuitable investment recommendations and excessive trading, per FINRA records.  BrokerCheck indicates that an arbitration related to this customer complaint is presently pending.

Excessive trading, also known as churning, in the industry can be disastrous for a portfolio.  When a broker trades an account excessively, large amounts of commissions and fees may be generated, if the account is commission based (as opposed to fee based).  Churning is a classic example of a broker putting his or her own monetary gain above the best interests of his or her customer.