Securities Lawyers Blog

Broker Jennifer Ling Accused of Selling Aequitas Ponzi-Scheme Investments to Customers

July 26, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Jennifer Ling (Ling), formerly associated with Axiom Capital Management, Inc. (Axiom Capital) in New York, New York has been subject to three customer complaints concerning her sale of Aequitas related promissory notes.

The Securities and Exchange Commission (SEC) filed a 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. The SEC’s complaint also claimed that Aequitas’ 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.

According to the complaint, when the executives learned of large discrepancies between their assets and obligations they declined to cut expenses and raised hundreds of millions of dollars from new investors. The SEC found that since 2014, Aequitas defrauded investors into thinking that they were investing in a portfolio of trade receivables in healthcare, education, transportation, or consumer credit while in reality the vast majority of investor funds to repay prior investors and to pay the operating expenses of the Aequitas enterprise. In addition, the company used funds to support the lavish salaries and lifestyles of the owners.

Broker Shaun Hayes Subject to Unauthorized Trading Complaints

July 26, 2018 | by Staff Attorney

Securities attorneys at Gana Weinstein LLP have been investigating previously registered broker Shaun Hayes (Hayes). According to BrokerCheck Records, Hayes has been subject to seven customer disputes in the past year, four of which are still pending. The majority of these disputes allege unauthorized trading of customer accounts.

In December 2017, a customer alleged that from May 2013 to December 2017, Hayes was executing unauthorized trades in the customer’s accounts. This dispute is currently still pending.

In December 2017, another customer alleged that Hayes was engaging in unauthorized trades in the customer account and is requesting $139,000 in damages. This complaint is still pending.

Timothy Gibbons Suspended by FINRA for Unsuitable Investments in Energy Stocks

July 24, 2018 | by Staff Attorney

The security fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Timothy Gibbons (Gibbons).

According to BrokerCheck records, in November 2017, the Financial Industry Regulative Authority (FINRA) suspended Gibbons for recommending unsuitable investments to 5 elderly customers and over-concentrating the accounts from 65% to 79% into a highly risky energy sector security. Gibbons recommendations were not appropriate for the customer in consideration of the customer’s age, risk tolerance, financial needs, and investment objectives. Without admitting or denying the findings, Gibbons consented to the sanctions and to the entry of findings. As a result of the violation, FINRA imposed a suspension of 18 months, a $20,000 fine and a restitution fee of $716,749.78 to remedy the customer losses.

In addition, Gibbons has also been subject to two pending customer disputes involving unsuitable investments in energy securities. In May 2018, a customer alleged that from 2012 to 2015, Gibbons was recommending unsuitable shares of energy stock to the customer.

Stephen Dellelo Subject to Pending Customer Complaint Alleging $900,000 in Damages

July 24, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are currently investigating NEXT Financial Group, Inc. (Next Financial) broker Stephen Dellelo (Dellelo).

According to BrokerCheck records, Dellelo is subject to one pending customer complaint concerning unsuitable placements in illiquid investments.

In November 2017, a customer alleged that from 2007 to 2017, Dellelo placed the customer into private and illiquid investments that were unsuitable to the customer and resulted in losses of $900,000. This dispute is currently still pending.

The Parking REIT (MVP REIT II) Investment Loss Options

July 23, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in The Parking REIT (formerly known as the MVP REIT II) a non-traded real estate investment trust (Non-Traded REIT). According to the firm’s website, the REIT owns parking lots and claims that Americans own more than 253 million passenger vehicles and that an investment in the REIT provides benefits including, low operating and maintenance costs, potential for long-term capital appreciation, redevelopment opportunities, a fragmented Industry, and heavy demand.

However, the board of The Parking REIT announced that it would be suspending the company’s distributions. The Board claims that the move is intended to focus on preserving capital in order to maintain sufficient liquidity to continue to operate the business and maintain compliance with debt covenants, including minimum liquidity covenants, and to seek to enhance the value of the company for stockholders through potential future acquisitions. The elimination of dividends is never a good sign for a REIT.

Because The Parking REIT in non-traded there are no market pricing for the value of the securities. Secondary market sources for non-traded REITs are currently pricing the REIT at $12.17 per share based on a tender offer. This is a far drop from the sale price of $25 per share when the REIT issued shares to investors.

Jeffrey Eglow Subject to Multiple Complaints Alleging Unsuitable Alternative Investments

July 23, 2018 | by Staff Attorney

Securities firm Gana Weinstein LLP is investigating Newbridge Securities Corporation (Newbridge Securities) broker Jeffrey Eglow (Eglow). According to BrokerCheck records, Eglow has been subject to 4 customer complaints and one criminal action. The majority of these disputes involve unsuitable, over-concentrated alternative investments.

In May 2017, a customer alleged that Eglow overcharged customers fees for trading which resulted in damages of $48,758. The customer’s request for damages was fully remedied by the court.

In July 2016, a customer alleged that Eglow placed over-concentrated investments in Unit Investment Trusts (UITs) and energy securities which was unsuitable to the customer and resulted in unrealized losses. In addition, Eglow leveraged Exchange-Traded Funds (ETF) in long positions also resulted in losses to the customer. The case was settled at $115,000.

Edward Davig Subject to One Customer Complaint Alleging $500,000 in Losses

July 23, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are investigating claims against Packerland Brokerage Services, Inc. (Packerland Brokerage) broker Edward Davig (Davig).

According to BrokerCheck records, Davig has been subject to six customer complaints, one of which is still pending. The majority of these customer complaints involve unsuitable recommendations in oil and gas securities.

In April 2018, a customer alleged that Davig recommended the client to invest in unsuitable, illiquid oil and gas Master Limited Partnership investment which generated many losses for the client. The client has requested $500,000 for damages. This dispute is still pending.

Advisor Howard Utz Under FBI and SEC Investigation Over Securities Dealings

July 22, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Howard Utz (Utz), formerly associated with Hazard & Siegel, Inc. (Hazard & Siegel) in Mars, Pennsylvania was terminated by his firm concerning allegations that Utz’s failed to report outside business activities, engaged in private securities transactions, and accepted checks from clients made personally payable to Utz and subsequent conversion to personal use.

In addition, in May 2018 the Federal Bureau of Investigation opened an investigation into Utz but have not disclosed any details of the investigation. Similarly, in January 2018 the Securities and Exchange Commission (SEC) opened an investigation into Utz’s activities but again there are no disclosures concerning the nature of the investigation.

At this time, the selling away claims against Utz are unclear as to the exact nature and extent of the activity. Utz has outside business disclosures including Noble and Utz Enterprises – a rental property business. In addition, Utz discloses Utz Financial Services – his investment d/b/a among other disclosures.

Essex Capital Corporation Charged By SEC In $80 Million Fraud – Investor Recovery Options

July 22, 2018 | by Staff Attorney

The attorneys at Gana Weinstein LLP are reviewing court documents and complaints related to The Securities and Exchange Commission’s (SEC) charge that an equipment leasing company – Essex Capital Corporation (Essex) – and its founder Ralph Iannelli (Iannelli) defrauded investors in connection with sales of over $80 million in promissory notes.

In the pleading the SEC called Iannelli a securities fraud recidivist and alleged that his Essex from 2014 through 2017 sold investments through the sale of promissory notes that paid typically 8.5% per annum. The SEC claimed that investor returns were supposed to be based on the strength of Essex’s equipment leasing model. However, the SEC charged that between 2014 and 2017 Iannelli raised over $80 million from approximately 70 promissory note investors through materially false and misleading information. The SEC claims that Iannelli protected only his own financial interests and siphoned millions out Essex to himself from 2014 to the present.

According to the SEC, Essex sold approximately $8.4 million in promissory notes to 21 Daniel Investment Associates (Daniel Investment) clients since 2014 and approximately $23.36 million from Granger Management LLC (Granger) since 2015. Granger clients invested through a pooled investment fund.

Borland Capital Group and Belize Infrastructure Fund Recovery Options

July 21, 2018 | by Staff Attorney

The Securities and Exchange Commission (SEC) charged Brent Borland (Borland), the owner of a alternative investment firm, with misappropriating approximately $6 million in investor funds that were supposed to finance the construction of an international airport in Belize. The SEC alleges that between 2014 and 2017, Borland sold more than $21 million of promissory notes in two companies – Borland Capital Group LLC and Belize Infrastructure Fund I, LLC – to dozens of investors as bridge financing for development of an international airport in Placencia, Belize. Borland also purportedly promised investors that their investments would be protected by pledges of real estate as collateral.

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.