According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ahmed Gheith (Gheith) and two other registered representatives of Paulson Investment Company, LLC (Paulson Investment) may have been a referral source to Borland’s fraud. As our firm previously reported, FINRA alleged that two registered representatives informed Gheith about a private offering related to a real estate development in Belize. The investment was described as a short-term note meant to raise money for the development of an airport and Gheith thereafter referred several customers to invest. FINRA alleged that Gheith was paid $93,165 for his role in soliciting and referring the customer.
According to the SEC, instead of using the funds for their intended purpose Borland used millions of dollars of investor funds for personal expenses and unrelated business expenses, including mortgage and property tax payments on his Florida mansion, luxury automobiles, and almost $2.7 million to pay off credit cards.
The allegations against Gheith concerning promissory notes, a private securities transaction, –is known in the industry as “selling away”. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Gheith entered the securities industry in 2010. From December 2010 until August 2011, Gheith was associated with Joseph Gunnar & Co. LLC. From August 2012 until March 2013 Gheith was registered with Cabot Lodge Securities LLC. From March 2013 until October 2013 Gheith was associated with Aegis Capital Corp. Finally, from January 2014 until August 2011 Gheith was registered with Paulson Investment out of the firm’s New York, New York office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. The attorneys at Gana LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.