Investor Fraud

Mercer Hicks Has Regulatory Complaint Over REIT Investment Sales

February 18, 2020 | by Staff Attorney

Advisor Mercer Hicks (Hicks), currently employed by Southeast Investments, N.C., Inc. (Southeast Investments) has been subject to at least five liens, three employment terminations for cause, and one regulatory complaint during the course of his career. According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In December 2019 Hicks was named a respondent in a FINRA complaint alleging that he recommended unsuitable investments to five senior customers to purchase speculative REITs and non-traded business development companies (BDCs). FINRA alleges that the prospectuses and subscription agreements for these non-traded REITs and non-traded BDCs stated that investing in these securities involved a high degree of risk, was speculative, was not suitable for persons who require immediate liquidity, guaranteed income, or seek short-term investments, and was only appropriate for those investors who could afford a complete loss of their investments.

FINRA claims that the five senior customers at issue were not seeking to make speculative, high-risk investments. The customers’ account documents indicated that they were seeking to preserve their capital or capital appreciation. In addition, FINRA claims that some of these customers have encountered difficulties liquidating the investments to obtain funds that they needed to pay for medical care. FINRA alleged that Hicks recommended purchases of unsuitable non-traded REITs and non-traded BDCs to the five senior customers totaling approximately $665,000 while Hicks received a seven percent commission from each sale totaling $46,550.

George Shadie Discharged By NYLife Over Securities Sales Practices

October 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor George Shadie (Shadie), formerly employed by NYLife Securities LLC (NYLife Securities) has been subject to one employment termination for cause, five customer disputes, and three civil liens or judgements during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Shadie concerns allegations over variable annuity sales practices.

In July 2019 a customer complained that Shadie violated the securities laws by alleging that Shadie sold two variable annuities issued on or about November 18, 2015 and December 17, 2015 were unsuitable investments due to liquidity restrictions and various fees associated with the accounts. The claim was settled for $45,000.

In February 2019, NYLife Securities discharged Shadie claiming that he was terminated after the company’s review of his business practices raised a number of concerns regarding the quality of his business.

In October 2018 a customer complained that Shadie violated the securities laws by alleging that transactions in January and May 2018 in two variable annuities were initiated without her authorization. Customer demands rescission of all products purchased and compensation in the amount of $100,000. The claim was settled for $60,000.

Variable annuities are complex financial and insurance products. In fact, the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

Broker Sergio Rovner Subject to Multiple Investment Complaints

September 26, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are currently investigating claims against broker Sergio Rovner (Rovner), currently associated with Aegis Capital Corp. (Aegis) out of New York, New York. According to a BrokerCheck report, Rovner has been subject to at least six customer disputes and two regulatory actions during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Rovner concern allegations of unauthorized trading, unsuitable investments, and misrepresentations among other claims.

In February 2018 a customer filed a complaint alleging that Son executed unauthorized trades in the customer’s account and made unsuitable investment recommendations. The customer requested $32,398 in damages. The claim settled for $12,635.

In December 2005 FINRA found that Rovner violated NASD Rules 2110 and 2310 by engaging in excessive trading and unsuitable investments. Without admitting or denying the allegations, Rovner consented to the described sanctions and to the entry of the findings. Rovner was fined $10,000 and suspended for 30 days.

Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

Brenda Smith and Broad Reach Capital Charged By SEC With Fraud – Investor Recovery Options

September 22, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims made by The Securities and Exchange Commission (SEC) in which the agency charged a Pennsylvania investment adviser, Brenda Smith (Smith) with operating an investment advisory fraud involving over $100 million in investments. In conjunction with the SEC action the regulatory obtained an emergency asset freeze in order to preserve investor funds.

The SEC’s complaint alleges that Brenda Smith, and her fund Broad Reach Capital, LP, (Broad Reach Capital) raised $105 million from approximately 40 investors by representing that she would invest their money in publicly traded securities through various trading strategies that were promoted as providing consistent high returns. The SEC found that Smith instead made very few investments in these trading strategies and largely used investors’ money to repay other investors and for her own personal investments. The SEC alleged that Smith through entities she controlled disseminated false statements in order to tout positive returns and fabricated documents in an attempt to inflate Broad Reach Capital’s assets in order to lull investors into believing their capital was safe.

The SEC’s complaint charges Smith, Broad Reach Capital, the fund’s general partner Broad Reach Partners, LLC, and the adviser, Bristol Advisors, LLC with violating the anti-fraud provisions of the federal securities laws.

SagePoint Advisor Paul Mauro Subject to Multiple Investment Complaints

September 18, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating broker Paul Mauro (Mauro), currently associated with SagePoint Financial, Inc. (SagePoint Financial) out of Westborough, Massachusetts. According to a BrokerCheck report, Mauro has been subject to at least nine customer disputes, two regulatory actions, and one criminal matter during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Mauro concern allegations of unsuitable investment recommendations and misrepresentations.

In February 2018, as a result of Mauro’s disclosure incidents, the State of Massachusetts Securities Division placed conditions on Mauro’s registrations in Massachusetts and required him to be placed under heightened supervision by his brokerage firm.

In December 2018 a customer alleged that in 2017 Mauro unsuitably purchased variable annuity causing $6,630 in damages. The claim was denied.

In June 2017 a customer filed a complaint alleging that Mauro made unsuitable recommendations causing $86,000 in damages. The claim was denied.

Derrick Trussell Barred Over Unapproved Product Sales – Investor Recovery

May 27, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Derrick Trussell (Trussell) has engaged in an investment fraud scheme by selling products not approved by his brokerage firm. Trussell, formerly registered with PFS Investments Inc. (PFS Investments) out of San Antonio, Texas has been accused by at least four customers of engaging in unapproved activity.

In May 2017 PFS Investments terminated Trussell after alleging that the firm received allegation that the representative engaged in an unapproved outside business activity and/or an undisclosed private securities transaction in which a client’s funds were used to purchase securities not offered by PFSI without the client’s knowledge or consent.

Thereafter in August 2018 FINRA barred Trussell after FINRA stated that Trussell failed to respond to FINRA request for information.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in fraudulent securities sales or misappropriation schemes. Trussell’s activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. 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. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Edward Matthes Accused of Misappropriating Funds – Investor Recovery

May 19, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Edward Matthes (Matthes) has engaged in a misappropriation scheme. Matthes, formerly registered with Mutual of Omaha Investor Services, Inc. (Mutual of Omaha) and operating out of Oconomowoc, Wisconsin, has been accused by more than 10 customers of engaging in securities fraud and misappropriating their funds.

In March 2019, Mutual of Omaha terminated Matthes employment stating that Matthes was discharged for creating fictitious account statements and diverting customer funds for his own personal use. Also in March of 2019 the Federal Bureau of Investigation (FBI) opened an investigation into Matthes for alleged misappropriation of funds. Since then over ten customers have filed complaints alleging that Matthes misappropriated funds by diverting assets into his own bank account and created fictitious account statements.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in misappropriation schemes. Matthes activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. 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. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Hilltop Securities Broker Mark Augusta Subject to 19 Customer Complaints

May 4, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Mark Augusta (Augusta), currently employed by Hilltop Securities, Inc. (Hilltop Securities) has been subject to at least an astonishing 19 customer complaints and one employment termination for cause. According to records kept by The Financial Industry Regulatory Authority (FINRA), Augusta’s customer complaints allege that Augusta sold his clients a variety of improper products including Puerto Rico municipal bonds, interest rate swap CDs (structured CDs), and other unsuitable debt securities.

In May 2015 Augusta’s then employer Wedbush Securities Inc. (Wedbush Securities) terminated Augusta after a client filed a complaint against him.

In February 2019 a customer filed a complaint alleging that Augusta violated the securities laws by, among other things, engaged in unauthorized and unsuitable investments made by the financial advisor in June 2014. The claim alleged $398,832 in damages and is currently pending.

In August 2018 a customer filed a complaint alleging that Augusta violated the securities laws by, among other things, making unsuitable investments, breach of fiduciary duty, misrepresentations and omissions, negligence, and violations of California securities laws. The claim alleged $97,774 in damages and is currently pending.

In July 2018 a customer filed a complaint alleging that Augusta violated the securities laws by, among other things, misrepresentation by omission with respect to the disclosure of representative’s regulatory and disciplinary history, unsuitable recommendations, and financial abuse of an elder. The claim seeks $375,000 in damages and is currently pending.

Advisor George McCaffrey Accused of Selling Unapproved Products to Clients

January 20, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor George McCaffrey (McCaffrey), formerly associated with NTB Financial Corporation (NTB Financial), in September 2018, was sanctioned and suspended from the securities industry by FINRA over accusations of potentially selling unapproved products.

In September 2018 FINRA alleged that McCaffrey consented to the sanctions and findings that he participated in 22 undisclosed private securities transactions in which nine investors purchased $1,775,000 in debt and equity securities. FINRA found that McCaffrey introduced the nine individuals to representatives of a greenhouse building and leasing company so they could invest in the company. Other activities McCaffrey is alleged to have performed include reviewing and editing documents relating to the investments, forwarding investment-related documents to the customers, and communicating with the customers about their investments.

The investors were found to have purchased $1,775,000 in promissory notes of the greenhouse building and leasing company and preferred stock in one of the company’s affiliates. FINRA also found that the company paid $124,250 in commissions to an entity controlled by McCaffrey’s wife.

The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

Advisor Kari Bracy Accused of Selling Future Income Payments Investment Fraud

December 29, 2018 | by Staff Attorney

According to BrokerCheck records financial advisor Kari Bracy (Bracy), currently employed by NYLife Securities LLC (NYLife Securities) has been subject to one customer complaint during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaint against Bracy concerns allegations of unsuitable investments in Future Income Payments, Inc. (FIP). Bracy has several disclosed outside business activities including Amani Properties, LLC and his d/ba/a name Mahoney Financial Organization, LLC and Wahby Financial Group LLC.

In July 2018 a customer complained that Bracy recommended an investment in Future Income Payments, Inc. a private securities transaction, was misrepresented as a conservative and safe investment with a 7.5% annual return for ten years. The claim alleged $142,697.27 in damages and settled for $80,000.

The law offices of Gana Weinstein LLP have been investigating investor recovery options due to the alleged pay advance fraud scheme orchestrated by Future Income Payments, LLC (Future Income Payments) also known as Pensions, Annuities, and Settlements, LLC, and its owner Scott Kohn (Kohn). Future Income Payment is an unregistered and illegal security offering. Numerous state and local regulators and agencies also have concluded that FIP product violates a host of laws including securities, loan laws, usury laws, elder abuse, and consumer protection laws.