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According to published materials, two years ago the SEC started investigating, American Realty Capital Properties Inc (ARCP) and its executives, for allegedly overstating financial results and deliberate concealment of financial mistakes, which rattled the REIT brokerage empire built by Nicholas Schorsch. After investigations, the SEC reported that it recently brought charges against Brian S. Block and Lisa P. McAlister, the former chief financial and chief accounting officers of American Realty Capital Properties Inc.

The FBI announced Block’s arrest at his home in Pennsylvania on charges of securities fraud and conspiracy. In June, McAlister reportedly pled guilty to four securities fraud and false filing counts. According to the charges brought by the SEC, they are alleged to have intentionally inflated a key metric to make sure that the REIT met analysts’ estimates for the first two quarters of 2014. As per AdvisorHub, Block’s attorney was quoted saying “[t]here is little precedent for the notion that criminal charges are appropriate when accountants make decisions involving these sorts of accounting principles [non-GAAP principles applicable only to REITs].”

After ARCP, with apparent market capitalization of $11.5 billion, publicly disclosed its intentional errors and result inflation in 2014, Schorsch controlled REITs and holding companies lost billions of dollars and ten broker dealers filed for Chapter 11 bankruptcy.

chessThe Financial Industry Regulatory Authority (FINRA) announced on July 19, 2016 in a News Release that it had fined Prudential Annuities Distributors, Inc. $950,000 for “failing to detect and prevent a scheme that resulted in the theft of approximately $1.3 million from an 89-year-old customer’s variable annuity account.  Prudential Annuities Distributors acts as a principal underwriter and distributing broker-dealer for life and annuity products issued by its affiliates.

According to the News Release, a former registered Sales Assistant named Travis Wetzel, who worked at LPL Financial, stole money from the elderly customer’s account by submitting to Prudential Annuities Distributors 14 forged annuity withdrawal requests.  The News Release detailed that each month, from July 2010 to September 2012, Mr. Wetzel submitted 4 to 5 withdrawal requests totaling approximately $50,000.  The News Alert detailed that all withdrawn funds were deposited into an account in Mr. Wetzel’s wife’s maiden name that was controlled by Mr. Wetzel.

Prudential Annuities Distributors consented to the fine by submitting a Letter of Acceptance, Waiver and Consent No. 2012034423502 (AWC).  According to the AWC, each transaction submitted by Mr. Wetzel triggered an alert, or a “red flag,” putting Prudential Annuities Distributors on notice that his requests may be fraudulent.  Each alert required that a person manually review and confirm each transaction, and for each transaction, personnel determined the activity appeared legitimate, according to the AWC.  The AWC also noted that for 44 transfers, Prudential Annuities Distributors also determined that the withdrawn funds were paid to the customer, when they were not actually sent to the customer.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Brandon Gioffre.  Mr. Gioffre was employed and registered from July 2014 to August 2015 with Constellation Wealth Advisors LLC, a New York broker-dealer, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  According to BrokerCheck records, Mr. Gioffre voluntarily resigned from Constellation amid allegations that he was involved in “soliciting a private placement” to three individuals.

Per his BrokerCheck report, prior to his employment and subsequent resignation from Constellation, Mr. Gioffre was employed by Morgan Stanley Smith Barney from June 2009 to June 2014 and was discharged from this firm amid allegations of “fee reversals in [his] personal Morgan Stanley account, continuing to maintain a pre-existing outside investment that never received written approval from the firm, and fund transfers between [his] personal Morgan Stanley account and the accounts of family members.”

Subsequent to his resignation, Mr. Gioffre was barred from association with any FINRA member broker-dealer on June 22, 2016 by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2015046448701 (AWC).  According to the AWC, Mr. Gioffre violated FINRA Rule 3040 by recommending to several people an investment in a private placement that was not offered through his firm.  The AWC further stated that Mr. Gioffre “created the false impression that [the firm] sanctioned the private placement” by using the firm’s offices for meetings and his business email account to communicate with the investors.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Joseph A. Miles.  Mr. Miles is believed to be currently employed and registered with St. Bernard Financial Services, Inc. based in Russellville, Arkansas.  He was also previously registered with Clearing Services of America, Inc., American Capital Equities, Inc., Dominick & Dominick, Inc. and David Lerner Associates, Inc., according to industry records.

According to his BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA), Mr. Miles has been the subject of three recent customer complaints, including one complaint seeking $169,865.70 alleging that Mr. Miles sold bonds that declined in value, with damages granted of $100,000.  The second most recent customer complaint alleged securities fraud, breach of fiduciary duty, common law fraud, and breach of contract related to South African Bonds which was settled for $75,000, according to FINRA records.  The third complaint involved allegations of fraud, breach of contract and negligence and was settled after the death of the customer, per BrokerCheck records.

If you or a family member lost money that was invested with Joseph A. Miles, you are encouraged to contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

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.

Jenice Malecki appeared on NBC’s Today Show tomorrow morning, March 14, 2013, to discuss the injunctive action filed by Spanx against Yummie Tummie. The video of Ms. Malecki is can be found here.

Yummie Tummie holds three design patents for its camisole products and at the end of 2012 informed Spanx that it was infringing upon those patent. Correspondence and negotiations ensued, resulting in Spanx filing an injunctive action in its home court in Georgia to preemptively stop Yummie Tummie from enforcing its patents. Yummie Tummie brought a prior infringement action against Maidenform in the United Stated Federal Court for the Southern District of New York, which case has been settled.

The issue will likely surround whether the patents are valid or invalid and whether the camisole passes the obviousness test. There are two fundamental tests: (1) the invention must be novel, not just a variation, and (2) it must be unobvious, something that someone with ordinary skills, would not have imagined. This will surely be a very fact intensive battle and this preemptive strike by Spanx is an aggressive move by a larger player exerting their financial muscles in order to attempt to control the course of the litigation against Yummie Tummie.

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Despite theater’s common expression that “the show must go on”, a large-scale musical planned to hit Broadway this month has been postponed following accusations of fraud and breach of contract levied against its stockbroker.  For further definitions of fraud and “BoC”, visit the Investors page of our firm’s website.   

 

Long Island-based broker Mark Hotton, 46, of West Islip, NY, is alleged to have deceived producers of Rebecca: The Musical via two counts of wire fraud – for which he faces up to 20 years in prison on each count – and the supposed fabrication of four fake investors in the show, who Hotton claimed were prepared to invest $4.5 million.  The show’s producers have since filed suit for a sum exceeding $100 million against Hotton and his wife and business partner, Sherri Hotton. 

Hotton’s story itself is said to be one of grandstanding theatrics in its own right.  When producers attempted to secure funds from allegedly falsified investor “Paul Abrams”, Hotton is said to have told them that the man had recently died on an African safari after contracting malaria.  Hotton also created false e-mail accounts and United Kingdom based mailing addresses for his invented investors, even corresponding with Rebecca‘s producers under these false identities.

Jenice Malecki will be speaking at the Practising Law Institute (PLI) Seminar tomorrow on Securities Arbitration 2012. If you cannot make it, there will be a webcast and course materials available.

Last year’s fervor over the fairness of arbitration has not so much subsided as it has been refined. In response to this shift, in 2012 FINRA will focus on streamlining and improving its dispute resolution forum, including fine-tuning the arbitrator disclosure process. FINRA’s goal is to ensure early disclosure of relevant arbitrator information, in order to save the parties the time and expense associated with replacing arbitrators whose disclosure is incomplete, while allowing for the parties’ continued input into the arbitrator selection process.

This year’s Securities Arbitration program will feature FINRA Dispute Resolution’s Director, staff, and arbitrators, as well as noted academics and experienced attorneys who represent both customers and industry players. Our faculty will explore FINRA’s efforts to improve the arbitrator disclosure process and provide you with practical tips on drafting claims and answers, striking and ranking proposed arbitrators, trying expungement hearings and resolving common ethical dilemmas that arise in securities arbitration practice.

In-cred-i-ble: Adjective 1. too improbable to be believed; 2. amazing, extraordinary; Merriam-Webster Dictionary 9.11.shos.photo.JPGWhen I was a student downtown at New York Law School, I lived on Maiden Lane at Broadway, a street that leads to where the Twin Towers stood, just one block away. I always considered myself a “maiden of Maiden Lane” and the Twin Towers were like the big protective brothers I never had. Let’s face it, the Twin Towers were incredible. I would see the Twin Towers from a distance and know exactly where I lived and where we were going. I would go to the Twin Towers from time to time, which had a shopping plaza, when I lived there. After I graduated law school and moved away, I frequently returned to the Twin Towers, as I had become a securities lawyer and the SEC, NYSE and Commodities Exchange were all housed there. All but about three years of my schooling and practice as a lawyer were spent in the financial district, my work home for sure. At the time of the first attack in 1993, I was both a lawyer and an actress. At night, for fun, I would act in a troupe which had a member that also worked at the Commodities Exchange. I heard my red-haired friend’s story about his evacuation and the crumbling (but standing) brick and mortar. Although I was frequently in the building, It would have been incredible to me if you would have told me that I would have been caught up in another attack there, or that there would even be another attack. By the second attack, September 11, 2001, I had started my own private practice a few years prior (after working for others in the neighborhood). At the time, I had a smaller office on the 4th floor at 11 Broadway (where I still incredibly have my office today) and, in 2001, my back windows faced the direction of the Twin Towers. On September 11, 2001, I was scheduled for a hearing at the National Association of Securities Dealers, Inc., now named the Financial Regulatory Authority. My adversary, from Texas, was staying at the Millennium Hotel just across from the Twin Towers. I was representing a woman who was in her 60s and in my office very early. I wore a black and white suit and the black shoes pictured here. I felt something like the earthquake we had just a few weeks ago and in my old building with large old windows, the windows bowed in just slightly, but significantly in and of itself. I (stupidly) rushed to the window and saw people running towards the water. In the past, I had a dream about a plane going into the water off the tip of the city, so that’s what I thought had happened. Within minutes, my sister and my mother phoned. We had a conference call and one told me not to leave the building, the other told me to get out as soon as I could. In true fashion, I did a little of each. I stayed until my older client got there, tried to call the NASD at her request – but all lines were down. The client insisted that we go to the NASD and see if the hearing was going forward. I agreed to walk with her to the building. When my client and I got outside, I saw the First Tower on fire. The securities attorney in me thought – “wow, look at those SEC investigation files burn.” Of course, I still had no idea what really happened, whether people were in the Towers or were evacuated. My client and I walked to the NASD building, which was then on Whitehall Street. No one was permitted up. She told me she was going on the subway and asked me to join her. I told her, respectfully, that there was not a chance I was going on the subway, I would walk home. At that time, I was living in Kip’s Bay, a neighborhood in the 30s. I received conflicting accounts of what was happening: a plane hit the building, there’s a war and around the country planes are going down, there are cars smashing all over the place in the City, there was a fire. I had no access to television, I was escorting a client, I wanted to get home as soon as possible and so I really did not know what was happening. I was not too far from the water at that point and I thought, well, if something really bad happens, I can jump in the water, so I headed for the water’s side. I made it to my beloved Maiden Lane, but was down near Water Street when the tower fell. I saw what seemed like a movie image coming at me, dust clouds higher than the highest building. I had no idea what the cloud was. Was I going to die in a bombing from some gas related death? It was not incredible at that point to think I might not make it. I had no idea what was really happening. I ran screaming certain expletives and tried to get to the water, as I planned, until I could not see anymore, then I had to stand in place; for 15-20 minutes I could not see my own hand in front of me. I was covered in the plumb and I used my suit jacket to protect my breathing. It was truly incredible. On my journey home, I heard more conflicting stories about what was happening. I started to walk home up the FDR Highway and, of course, had to take my black pumps off. I walked home barefoot, as many people did. While I was a bit dusty and shaken, there were people on the road so covered in dust, they truly looked like walking statues. I was lucky and I knew it. The fact that I was alive and breathing was a gift. On another day, I could have been right there, in the tower at the SEC. Early on, I heard someone calling my name. It was Gerard, a classmate from Manhattanville College. As we briefly reacquainted, he told me that “Shorty” worked at Cantor Fitzgerald. Within the next few minutes, the Second Tower fell and, sadly, Shorty, a family man with children, fell with it. He was the first loss I learned about. Months later, my mother was carrying around a picture of him to give me. She had no idea he had died in the Attack. It had fallen out of my closet at home. Thousands of people of all walks of life walked up the FDR and across the Brooklyn Bridge that day. It had rained just before this all happened, so people walked on pavement, in dirt and in puddles – many with their suit pants rolled up. I remember being angry, being upset with President Bush – whom I believed would put us in a war within 2 years of his election (I recall specifically voicing that to a cab driver, of all people), but here we were only 1 year out. Regardless, I wanted him to get these people. When I got home, my sister and my mother called again. I was pretty much in a daze at this point. It was surreal. My sister, very practically, told me to take a shower because I had been in so much dust. It was a good idea, I followed her instruction. Other friends and family called, very heartwarming. In fact, I had fairly recently joined the Public Investors Arbitration Bar Association, a national organization, and people around the country were emailing to make sure I was ok. I was very thankful so many people cared. I then received a call from Helene, a friend who lived nearby. Helene and I were both working that day in the ground zero area. We met at a local bar, watched the news together. Although no one wanted to say very much, as no one knew what to say, no one wanted to be alone – particularly not if you were there. A client of mine ran into the disaster to save a young boy. People I knew saw people jump to their deaths from top of the tower. They told me, but never in detail. No one could truly describe it – and no one wanted to even try. Just the thought of what the jumpers were feeling was sadder than words could convey. I feel lucky that I did not see that myself. The bar Helene and I met at had a big open wall in the front facing Second Avenue. The bar was pretty full every day, we all watched the fire trucks from all the Long Island towns race down Second Avenue from the tunnel to try to recover people. Transportation off of Manhattan Island was not an option in the days that followed and everyone wanted to stay near their homes, as you had no idea what would happen next or whether if you could make it somewhere, whether you would be able to make it back home – or be killed in transit – as there was speculation about bridges, tunnels and transportation hubs being hit. That night and for many sad weeks that followed, my home was filled by the sound of blood trucks running 24/7 to keep the blood cold. I lived near NYU Medical Center and as far as I could see out my window just off Second Avenue were 18 wheel trucks filled with blood. They never moved, as they never were used. Aside from the lingering injuries, people either got out and were pretty ok or died, there was no grand scale recovery. It was very sad to hear those trucks, just sitting there. People were turned away who wanted to donate blood and tents set up to do emergency medical work were empty. The City was pretty bleak for a long time thereafter. The site itself was unimaginable. The jutting metal and people working, exposed with no masks in the stench that lasted for a time that felt like forever. There has never been any doubt in my mind that the greatest, bravest, best people on earth were at the site trying to recover people and help us get our dignity back. They were each more than just a hero. My office was shut done for weeks, as I was in the restricted Ground Zero zone. Amazingly, after phone lines went back up, within days of the attack, I was getting subpoenas from my adversaries in mid-town on a home fax machine I set up. Even people in NYC who were not down there and not close to it did not feel it like we did, and certainly not for as long as we did watching the trucks and smelling the smell. It was incredible, after all. In the days after the attack, people communicated to try to go down there together to gather what we needed from our offices. It was a bit daunting. Eugenie, another lawyer in my office, gave me a mask to wear downtown when we met up to go down there. I could not bring myself to really use it. After about three weeks, my office opened, but on restricted hours for about three months thereafter. Friends of mine at American Express in the World Financial Center were carted off on busses to Parsipanny, New Jersey to work. There were military squads with machine guns all over downtown, literally camped there, in tents. You needed to show proof of living or working there to get in certain areas. That went on for a very long time and the men with machine guns were around for years. Tourists would ask to have their picture taken, smiling in front of the rubble. I would refuse. It was a huge murder scene. Every day that I was down there for at least six months, the air smelled thick of death and toxins. For what seemed to be an incredibly long time, I watched 18 wheel truck after 18 wheel truck cart away pieces of the Twin Towers to Staten Island down Broadway. The task of removing the Twin Towers rubble seemed impossible. Every day that I arrived at my office, I had to pry papers apart from one another, as any papers left out on my desk got a sticky coating overnight. Every day I cleaned it off and ignored it, just wanting to go on with life as if things were normal – they were not. A more rational person would have just gotten a new office, even for a while, but I refused to give in to the destruction that was intended and I went into my office in solidarity with my country – that is what I felt. After all, there were American flags waving everywhere those days. The subway was the most silent I had ever known it to be. It was pure sadness and fear that more terror awaited us. Remember all the alert codes and stories at the time were quite different than today’s news. Everyone was calling around to make sure that people were ok. I learned not long thereafter of other people that died. My friend’s new boyfriend that we had just spent that Labor Day weekend prior to the disaster with at a wedding for my friend Marci in San Francisco died in the Twin Towers. A woman I worked with, Susan, died in the Twin Towers. I learned of her death when my friend Lawrence, who worked at the NASD, called me. Oddly, her Rolodex card (yes, we still used Rolodex then) had fallen out in Lawrence’s office (which was evacuated) and onto the floor, much like my college friend’s picture from my old closet. I also found out that the brother of a woman I went to law school with was one of the men who stopped the terrorists on Flight 93, but lost his life in that plane. At some point, things got back to “normal”, but downtown was forever changed, as was I and many other people. Now tourists come to the Financial District to see where it all happened and more will come now with the Memorial. The neighborhood has become a neighborhood again, not just a work neighborhood, but also residential, unlike when I was a “maiden of Maiden Lane.” I now have a son, who is incredible, and every day, he and I drive to daycare/work together. Every day we pass by the site exactly on the side of one of the new Towers being erected on the way in and different Towers on the way home. My son loves the construction trucks, of course. I am glad that finally there will be life again on the ground where my big brothers, the Twin Towers, stood. One day, I will explain to him about the best people on earth and the worst day in New York. I will show him the shoes I wore and swore I would never wear again, literally or proverbially, which I put in a box with the articles of the day and the suit I wore. I am watching the workers, who see me drive by everyday, they don’t know my story. I am watching the trees and the water, they don’t know how welcome they are. I am watching the tourists, they don’t know needed they are. I am watching the businesses and politicians, they better know how much life depends upon them, their honesty, integrity and honor. I am watching, for life, in love of life and in love of my City and my son. In my heart and in my mind, it was incredible, in a terrible way, but in my same heart and in my same mind, we are all incredible in a wonderful way, every day. In respect of the day, remember to celebrate life, every day, because good or bad, the incredible is possible.