Ponzi Scheme

Aequitas Funds Ponzi-Scheme Recovery Options

March 20, 2016 | by Staff Attorney

The attorneys with the offices of Gana Weinstein LLP are investigating customer complaints and The Securities and Exchange Commission (SEC) recently filed complaint alleging that Oregon-based investment firm Aequitas Management, LLC (Aequitas Management) and its subsidiaries operated a Ponzi-like scheme that defrauded its 1,500 customers of approximately $350 million.

Upon information and belief, the following firms sold Aequitas notes to clients: CONCERT Wealth Management, Summit Advisor Solutions, LLC, Private Advisory Group, Elite Wealth Management, Integrity Bank & Trust, CliftonLarsonAllen Wealth Advisors (CLA Wealth Advisors), and Innovator Management LLC.

The SEC also alleged that the top three executives of Aequitas Management – CEO Robert Jesenik (Jesenik), executive vice president Brian Oliver (Oliver) and chief operating officer N. Scott Gillis (Gillis) were aware as early as 2014 that constraints in the company’s cash flow would make it difficult to meet existing obligations but continued to raise money anyway based on false premises in order to prop up the company.

Recovery Options for Investors Caught in Christopher Brogdon’s Nursing Home Investment Scheme

December 27, 2015 | by Staff Attorney

The securities attorneys of Gana Weinstein LLP are investigating potential recovery options for investors of Christopher Brogdon’s (Brogdon) nursing home investment scheme who suffered losses as a result of the fraud. Recently, the Securities and Exchange Commission (SEC) filed a complaint against Brogdon and affiliated entities alleging that Brogdon amassed nearly $190 million through dozens of municipal bond and private placement offerings to investors who would earn interest from revenues generated by nursing homes, assisted living facilities, or other retirement community projects. Instead, the SEC found that Brogdon secretly commingled investor funds in typical Ponzi scheme like fashion and diverted investor money to other business ventures and personal expenses.

Investors should be asking how Brogdon could have possibly been allowed to conduct this scheme. The Federal Industry Regulatory Authority (FINRA) has noted in a related action (FINRA No. 2013035130101) against brokerage firm Cantone Research and its majority owner Anthony Cantone that Brogdon had twice been barred from the securities industry. FINRA describes the two Brogdon actions – once for “egregious misconduct” involving unauthorized transactions and the second for a “scheme” involving financial misconduct. In addition, Brogdon had also been indicted for racketeering, theft, and Medicaid fraud, and had been found liable for breaching a stock repurchase guarantee agreement. Furthermore several entities Brogdon controlled had filed for bankruptcy.

These complaints against Brogdon enablers like Cantone are just starting to be filed. The Bank of Oklahoma Financial has also been alleged to be the trustee for many of the Brogdon deals and faces investor scrutiny. The bank has filed its own suit against Brogdon.

New York Attorney General Arrests Advisor Frederick Monroe On Charges of Running a Ponzi Scheme

July 25, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Frederick Monroe (Monroe) has been the subject of at least three customer complaints alleging that the broker misappropriated funds. In total the customers complaint that over $2 million has been taken by the broker. Subsequently, Monroe’s brokerage firm, Voya Financial Advisors (Voya Financial), terminated Monroe due to the allegations. Monroe had been associated with Voya Financial since 2006.

On June 10, 2015, Attorney General Eric T. Schneiderman announced the arrest of Monroe and charging him with stealing over $1 million from investors by fraudulently soliciting them to reinvest their retirement monies in what essentially was a Ponzi scheme. Monroe was accused of luring clients that he provided services to as a financial planner by diverting their monies for his own personal use and paying back earlier investors he had defrauded. Monroe faces up to 25 years in prison.

The New York Attorney General also stated that while the current charges pertain to three victims the investigation has identified at least a dozen individuals who Monroe allegedly defrauded. According to the Attorney General’s felony complaint, Monroe’s fraud was carried by instructing investors to write checks to him personally and then deposited them into his personal operating account. Monroe is alleged to have advertised his services on the Capital Financial Planning, LLC website to “clients who have amassed a significant level of assets and seek to take advantage of advance advisory programs.”

FINRA Files Complaint Against ARI Financial Services and William Candler Concerning Bridgeport Oaks Fund

July 16, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently filed a complaint against ARI Financial Services, Inc. (ARI) and William Candler (Candler), the firm’s President and former Chief Compliance Officer (CCO) alleging that that he facilitated at least ten private placement offerings from September 1, 2009, to December 31, 2012. The complaint found that the respondents failed to implement reasonable supervisory procedures in connection with the sales of the private placements.

ARI has been a FINRA member firm since 2005 and derives most of its revenue as a wholesaler of private placements that it marketed to retail broker-dealers who then sold those interests to retail investors. ARI’s main office was located in Kansas and during certain times had registered up to five branch offices and over 30 registered representatives located in six different states. ARI is currently owned by Candler and two other individuals. Candler is ARI’s majority owner.

Candler entered the securities industry in 1996. From March 2011, until November 2012, Candler was associated with Connor Capital Investments, LLC. Since April 2014, in addition to ARI, Candler is associated with JCC Advisors, LLC.

Gana LLP Investigation: George Montgomery’s Sales of Twin Peak Investment

July 13, 2015 | by Staff Attorney

According to news reports, broker George Montgomery (Montgomery) committed suicide but questions surrounding the death left many believing that foul play was involved. Montgomery, a former ASU running back, before injuries took him off the field.

Montgomery became a registered broker in 1998. From 2005 until October 2011, Montgomery was associated with United Planners’ Financial Services of America (United Planners). Thereafter, from January 2012 until July 2013, Montgomery was associated Fortune Financial Services, Inc. (Fortune Financial).

Montgomery was found July 31, 2014, submerged in Wet Beaver Creek by two hikers with a handgun next to the dead man. When police inspected the scene, investigators found that there were four gunshot wounds and two had penetrated the Montgomery’s chest while there were also a hand wound and one leg also wound.

SEC Charges Advisor Patrick Churchville with $11 Million Fraudulent Investment Scheme

July 6, 2015 | by Staff Attorney

The Securities and Exchange Commission (SEC) recently announced fraud charges against Rhode Island investment adviser ClearPath Wealth Management, LLC, (ClearPath) and its president, Patrick Churchville (Churchville), for operating a fraudulent investment scheme that resulted in at least $11 million investor losses.

According to the complaint, from December 2010 onward ClearPath and Churchville diverted deposits from new investors to pay prior investors, used proceeds from selling investments to pay unrelated investors, used investors’ funds as collateral for personal loans, used investors’ money to repay the loans, converted investor funds, and also outright stole $2.5 million of investor funds to purchase a waterfront home in Barrington, Rhode Island for Churchville. The SEC’s complaint alleges that Churchville performed deceptive acts and used misleading accounting tricks to conceal the fraud.

The SEC’s alleged that when ClearPath’s investors requested distributions of their investments in September 2013, Churchville lied to investors about the status, worth, and disposition of those investments. Four other entities: ClearPath Multi-Strategy Fund I, L.P., ClearPath Multi-Strategy Fund II, L.P., ClearPath Multi-Strategy Fund III, L.P., and HCR Value Fund, L.P. were named by the SEC as relief defendants.

SEC Complaint Alleges Veros Partners, Matthew Haab Jeffery Risinger, and Tobin Senefeld Engaged in a Farm Loan Ponzi Scheme

June 7, 2015 | by Staff Attorney

The Securities and Exchange Commission (SEC) brought charges against Veros Partners, Inc. (Veros), an Indianapolis investment adviser, Matthew Haab (Haab), and two associates, attorney Jeffrey Risinger (Risinger) and Tobin Senefeld (Senefeld), fraudulently raised at least $15 million from at least 80 investors, most of whom were Veros advisory clients for the purposes of engaging in two fraudulent farm loan offerings. The SEC alleged the defendants made ponzi scheme payments to investors in other offerings and paid themselves hundreds of thousands of dollars in undisclosed fees. The SEC obtained a temporary restraining order and an asset freeze in order to put a stop to the scheme.

According to the complaint in each offering the investors purchased securities issued in 2013, by Veros Farm Loan Holding LLC (VFLH) and in 2014, by FarmGrowCap LLC (FarmGrowCap). VFLH and FarmGrowCap are controlled and operated by Haab and two associates, Risinger and Senefeld. The investors in the two offerings were informed, orally and in writing by Haab, and in the written offering documents, that investor funds would be used to make short-term operating loans to farmers for the 2013 and 2014 growing seasons. However, the SEC found that contrary to these representations significant portions of the loan proceeds were not used for current farming operations but were used to cover the farms’ prior unpaid debt.

In addition, the SEC alleged that Haab, Risinger, and Senefeld used money from the offerings to make at least $7 million in payments to investors in other offerings and to pay themselves over $800,000 in undisclosed “success” and “interest rate spread” fees. The SEC also has complained that the defendants repeatedly misled investors about the risks, nature, and performance of the investments and underlying farm loans.

Former MetLife and Pruco Securities Advisor Bryan Anderson Charged With Ponzi Scheme

April 10, 2015 | by Staff Attorney

According to news sources Bryan Anderson (Anderson) has been charged with wire fraud, money laundering and securities fraud, according to the FBI and the Alabama Securities Commission Anderson agreed to plead guilty to the charges under a plea agreement. Under the plea agreement Anderson will pay restitution of about $3.1 million to the victims of his Ponzi scheme.

According to the allegations, between January 2009 and January 2014, Anderson’s false investment promises caused 18 individuals to deliver more than $8.4 million to Anderson, which he deposited into an account held at BancorpSouth. When the scheme collapsed in May 2014, about 12 investors lost about $3.1 million.

It is alleged that Anderson solicited investors to invest in stock options that he said employed various trading strategies. However, the stock options he described were not registered securities. Anderson also offered investments in a company he owned called 360 Properties. Beginning in or about 2009, Anderson falsely represented to investors in 360 Properties that their returns would come from leased property income, when in fact there were no leased properties.

SEC Alleges that Levi Lindemann Engaged in a Ponzi Scheme

March 11, 2015 | by Staff Attorney

The Securities and Exchange Commission (SEC) has filed a complaint against former FINRA registered broker Levi Lindemann (Lindemann) alleging that from about September 2009, to August 2013, Lindemann, a resident of Minnesota, fraudulently raised at least $976,000 from six investors located in Wisconsin including elderly individuals and a member of his own family among other allegations.

Previously, Lindemann was a FINRA registered broker with several brokerage firms beginning in 2001. From March 2008 until October 2009, Lindemann was associated with United Equity Securities, LLC. Then, from October 2009 until November 2010, Lindemann was a broker for Workman Securities Corporation. Thereafter, from November 2010 until March 2012, Lindemann was associated with J.P. Turner & Company, L.L.C. (JP Turner).

According to the SEC’s complaint Lindemann told investors that their money would be used to purchase a variety investments, including 1) secured notes in Home Path Financial LP (Home Path), a Wisconsin-based real estate investment company; 2) notes issued by GWG Life, LLC (GWG Life); and 3) interests in a unit investment trust through Lindemann’s sole proprietorship, Alternative Wealth Solutions (AWS). The SEC alleged that none of these investments were ever made.

FINRA Bars Former Pruco Securities and MetLife Securities Broker Derek Weaver

January 14, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently barred broker Derek Weaver (Weaver) alleging that Weaver failed to provide documents and information to FINRA in response to demands made to investigate the broker’s activities. On December 1, 2014, FINRA sent Weaver a request for documents concerning allegations that he participated in a Ponzi scheme. The details concerning the exact nature of the alleged Ponzi scheme and Weaver’s role are not yet fully known.

The allegations against Weaver are consistent with a potential “selling away” securities violation. 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. Under the FINRA rules, a brokerage firm owes a duty to properly monitor and supervise its employees in order to detect and prevent brokers from offering such products. In order to properly supervise their brokers each firm is required to establish and maintain written supervisory procedures and implement such policies in order to monitor the activities of each registered representative. Selling away often occurs in environments where the brokerage firms either fails to put in place a reasonable supervisory system or fails to actually implement that system and meet supervisory requirements.

In selling away cases, investors are unaware that the advisor’s investments are either not registered or not real. Typically investors will not learn that the broker’s activities were wrongful until after the investment scheme is publicized or the broker simply shuts down shop and stops returning client calls.