Articles Tagged with investment fraud

Patrick Churchville of Rhode Island has been accused of orchestrating a $21 million Ponzi scheme and was recently sentenced to 7 years in prison by a federal judge, according to an Investment News report. Mr. Churchville is thefinancial-fraud-300x200 owner and president of ClearPath Wealth Management and according to SEC’s complaint, he allegedly diverted funds from investors to pay older investors, used their funds as collateral for loans or converted investments to benefit ClearPath Wealth Management. According to the news report, he allegedly used $2.5 million of borrowed money to buy a lavish waterfront home in Rhode Island.

Mr. Churchville started running his Ponzi scheme 2010 onwards and like in any Ponzi scheme, he added to his net worth at the cost of his victims, who lost their homes and all their savings. One of his victims was left on food stamps and needed heating assistance by the end of it, and others were forced back into the workforce in their retirement years. U.S. District Court Chief Judge William E. Smith called the whole scheme a “tragedy”. Churchville allegedly pleaded guilty to five counts of wire fraud and one of tax fraud for failing to pay more than $820,000 in taxes. He has also reportedly been ordered to pay restitution to his 114 victims although the number is unspecified.

Being victimized by financial fraud not only means lost savings but can completely wreak someone’s life and strain personal relationships. At Malecki Law, we regularly help victims of Ponzi scheme get justice and restitution. If you suspect a financial advisor or brokerage firm has been taking advantage of you or your loved ones, reach out for legal advice.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Matthew Meehan.  Mr. Meehan was last employed and registered with E.J. Sterling, LLC, a Garden City, New York, broker-dealer, from November 2011 to October 2015, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was previously registered with Aegis Capital Corp. from March 2010 to November 2011 and with Gunnallen Financial, Inc. from September 2008 to March 2010, according to BrokerCheck records.

In 2017, Mr. Meehan was fined and suspended from association with any FINRA member broker-dealer for 12 months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2016050114901 .  According to the AWC, Mr. Meehan violated FINRA Rule 2111 (Suitability) and FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) because from January 2014 through June 2015, he exercised discretion without the customers’ written authorization to do so, and engaged in unsuitable trading in several customers’ accounts “resulting in annualized turnover rates of 12, 21, and 32, respectively, and annualized cost-to-equity ratios of 54%, 110%, and 179%, respectively.”  Trading at these levels of turnover and cost-to-equity ratios could be considered churning, which is defined as excessive trading by the broker in the client’s account to generate commissions.

FINRA Rules require that recommendations made by the broker to the customer be suitable.  This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

Securities & Exchange Commission (SEC) charged broker Marc Broidy and his firm, Broidy Wealth Advisors, for $1.4 million worth of ill-gotten gains, as per reports. It is believed that the firm profited off their client’s trusts by intentionally over-charging accounts.

It has also been reported that Marc Broidy allegedly used this money to finance his personal lifestyle, using the money to pay off mortgages, leases on his Mercedez-Benz cars and overseas trips. According to the SEC complaint, Broidy has misappropriated $865,000 from client’s accounts and billed $643,000 in excessive fees. He also reportedly misled clients by not disclosing his affiliation to certain private companies where investments were made. Briody Wealth Advisors had $25 million in assets under its management until this year, but the recent ADV from February 2016 reported $13.6 million.

According to an SEC risk advisory Office of Compliance Inspections and Examinations, they have increased their scrutiny of registered representatives. In Mr. Broidy’s case he “fell well short of his fiduciary obligations as an investment adviser”, according to SEC’s regional director.

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors who have purchased Variable Universal Life Insurance (VUL) policies.

According to Investopedia, VUL policies combine a death benefit with investment feature.  The investment feature generally includes sub-accounts, as with other variable annuities, that invest in stocks and bonds, or mutual funds that have exposure to stocks and bonds.  While a VUL investment feature may offer an opportunity to gain an increased rate of return by investing in securities, it generally comes with higher management fees and commissions.  As a result, these commissions and fees must be weighed against the risk of loss in the securities purchased.  These risks must be disclosed to the investor prior to investment.

Issues surrounding VUL policies are not new.  A U.S. News and World Report article from 2011 highlighted that these types of policies generally come with higher fees, fewer investment options and sometimes surrender policies.

businesswoman-with-briefcase-silhouette_1463647The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Megan Resch.  Ms. Resch is currently registered to sell securities with LPL Financial LLC in the broker-dealer’s Morristown, New Jersey office, according to her publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA). Ms. Resch has been registered with LPL Financial since November, 2010, and before then was registered to sell securities with Multi-Financial Securities Corporation in Martinsville, New Jersey from January 2006 to November 2010, according to her BrokerCheck records.

Ms. Resch’s BrokerCheck records indicate that two customers have raised disputes regarding her recommendations, including 2014 allegations of an unsuitable limited partnership investment that causes losses, which was settled for $78,400.  Additionally, a customer alleged in 2011 that there were misrepresentation and suitability issues on investments from April 2007 to December 2010, which dispute was settled for $105,000, according to the BrokerCheck records.

Generally speaking, FINRA Rules require that recommendations made by the broker to the customer be suitable.  This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

exchange-cross-rates-1241602-300x200Malecki Law’s team of investment fraud attorneys are interested in hearing from investors who have complaints regarding broker Brett A. Baffa. Mr. Baffa was most recently licensed through NYLife Securities before being terminated by the firm, per industry records.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Baffa has been the subject of two employment separations after allegations and a regulatory inquiry.

Mr. Baffa’s FINRA records indicate that in 2006, Mr. Baffa was “discharged” by J.P. Turner & Co, LLC for “failure to follow principal’s instructions; use of unapproved correspondence that included price predictions.”

businessman-with-the-notebook-1-1362246-m-141x300The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Steven M. Wisniewski.  Mr. Wisniewski is currently employed and registered with Newbridge Securities Corporation and works at the broker-dealer’s Boca Raton, Florida office, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Wisniewski was previously employed and registered by Cambridge Investment Research, Inc. from November 2012 to May 2015, Ridgeway & Conger, Inc. from September 2011 to November 2012, and J.P. Turner & Company, LLC from July 2003 to September 2011.

According to his BrokerCheck report, Mr. Wisniewski was the subject of a recent customer complaint received in or around April 2015 alleging churning, unauthorized trading, misrepresentation, negligence, forgery and fraud.  The case is currently pending, with alleged damages of $200,000, according to BrokerCheck records.

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:

The attorneys at Malecki Law are interested in hearing from customers of Steven Syslo who were recommended investments in SandRidge Energy, Inc. as a safe investment, or suitable for conservative investors. Mr. Syslo was employed by Morgan Stanley from June 2009 to June 2016, according to his publicly available BrokerCheck report maintained by the Financial Industry Regulatory Authority (FINRA). As disclosed in his BrokerCheck report, Mr. Syslo is currently employed by UBS Financial Services, Inc.

In July 2011, SandRidge Energy, Inc. traded at around $12 per share. The company announced that it was filing for bankruptcy protection on May 16, 2016, as reported by the Wall Street Journal.  According to the article, SandRidge Energy is an Oklahoma City-based driller, and is the latest oil and gas company to file for bankruptcy in 2016. Now, the company’s stock trades for pennies, and it is the company’s stockholders, including individual investors, who may be feeling the effects of substantial losses in their portfolios.

Broker-dealer firms such as Morgan Stanley are obligated by the securities laws and industry rules to ensure that recommended investments are suitable for each investor. Brokers must consider each investor’s age, tax status, net worth, investment experience and risk tolerance, among other factors. Investments in commodities such as oil and gas companies are generally considered to be risky investments. If investors were seeking conservative, stable investments, but were recommended oil and gas stocks or limited partnership interests, they may have claims for damages for unsuitable investments.