Securities Lawyers Blog

Broker Patrick Maddren Subject to Multiple Securities Fraud Allegations

July 11, 2018 | by Staff Attorney

The security fraud attorneys at Gana Weinstein LLP are currently investigating Westpark Capital, Inc. (Westpark Capital) broker Patrick Maddren (Maddren). According to BrokerCheck records, Maddren has been subject to two customer disputes involving various forms of security fraud.

In March 2016, a customer alleged that Maddren engaged in a wide range of security fraud, including false representations, excessive trading, unauthorized trading, unsuitable recommendations, and breach of contract. The dispute was settled for $295,000.

In May 2012, a customer alleged that in February 2012, Maddren executed unauthorized trades in the account. The customer requested $62,530 in damages.

Bruce Musselman Subject to Customer Complaints Alleging Unsuitable Investments

July 8, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are investigating claims against Fortune Financial Services, Inc. (Fortune Financial) broker Bruce Musselman (Musselman). According to BrokerCheck records, Musselman has been subject to nine customer complaints and one criminal regulatory action.

Most recently, in February 2013, customers alleged that Musselman recommended unsuitable investments, misrepresented securities, over-concentrated customer funds into aggressive investments, and excessively used margin. The dispute was settled at $14,900.

In August 2011, a customer alleged that from 2007 to 2009, Musselman recommended highly risky investments that were unsuitable and inappropriate to customer’s needs. The customer requested $80,000 in damages.

FS Energy & Power Fund Investment Loss Options

July 8, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in FS Energy & Power Fund a business development company (BDC). According to the firm’s website, FS Energy is designed to provide income and growth. It invests primarily in the debt and, to a lesser extent, equity securities of private U.S. energy and power companies.

Because FS Energy in non-traded product there are no market pricing for the value of the securities. Secondary market sources for BDCs are currently pricing the BDC at $5.12 per share based on a tender offer. This is a far drop from the sale price of $10 per share when the BDC issued shares to investors.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

Madison Timber Properties Ponzi Scheme Recovery Options

July 8, 2018 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating investor recovery options due to the alleged Ponzi Scheme orchestrated by Arthur Adams (Adams) and Madison Timber Properties LLC (Madison Timber) by The Securities and Exchange Commission (SEC).

The complaint against Adams and Madison Timber was unsealed on May 1, 2018 Mississippi federal court revealing the SEC’s fraud charges against the Mississippi company and its principal who has been accused of stealing from at least 150 investors in a $85 million Ponzi scheme. Adams and Madison Timber agreed to a permanent injunction, an asset freeze, and expedited discovery.

The SEC’s complaint alleges that Adams misled investors by telling them that their money would be used to secure harvest timber rights from land owners in several states. The SEC alleged that Adams promised investors annual returns of 12-15%. However, Madison Timber is accused of never having obtained any harvesting rights at all. Instead, Adams allegedly forged deeds and other documents to purportedly reflect the value of the timber on the land. The SEC also alleged that Adams paid early investors with later investors’ funds and convinced other investors to roll over their investments and remain invested in the scheme. Adams is also accused of using investors’ money for his own personal expenses and to develop an unrelated real estate project.

FINRA Suspends Derrick Watts for Providing Misleading Information on Documents

July 6, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are investigating claims against Wunderlich Securities, Inc. (Wunderlich Securities) broker Derrick Watts (Watts). According to BrokerCheck records, Watts has been subject to a regulatory matter in which the Financial Industry Regulatory Authority (FINRA) sanctioned Watts for various violations of the securities laws including churning, otherwise known as excessive trading. In March 2016, FINRA found that Watts failed to report his involvement in four unsatisfied civil judgments from 2009 to 2013 on his U4 registration form. Without admitting or denying the findings, Watts consented to the sanctions and the entry of findings. In April 2016, Watts was suspended for three months.

In addition to the FINRA sanctions, Watts has been subject to three customer complaints and two financial disclosures – including filing for bankruptcy and a tax lien.

In February 2016, Watts was discharged for bankruptcy due to failure in a real estate development that he was involved in. Bankruptcies and large tax liens are a potential sign that the advisor has difficulty managing their own finances. FINRA provides this information to the public because it is material for consumers to know whether or not their advisor’s financial situation influences the advisor’s recommendations.

Mark Solomon Accused of Selling $1.4 Million In Private Placements Without Notifying His Firm

July 6, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Mark Solomon (Solomon), formerly associated with M Holdings Securities, Inc. (M Holdings) in Wynnewood, Pennsylvania was suspended by FINRA concerning allegations that he engaged private securities transactions in a real estate private placement. M Holdings terminated Solomon in January 2016 during an ongoing internal review that centered around potential violations of investment related statues and the firm’s policies and procedures.

Thereafter in January 2018 FINRA found that Solomon solicited seven investors to purchase a total of $1,400,000 in interests in a private placement without providing his firm written notice of that activity or obtaining the firm’s written approval prior to doing so. FINRA found that Solomon first provided written notice of his sales activity to his firm after responding to inquiries made by FINRA during an examination of the firm. FINRA suspended Solomon for 12 months and imposed a fine.

At this time it is unclear the extent of Solomon’s outside business activities or private securities transactions. Solomon disclosed a number of outside business activities including that he is the control person limited partnerships, is involved with Devon Park Partnership, Horsham Business Center, and 1000 Howard Blvd Partners LP.

Wells Fargo Terminates Robert Meyers for Recommending Private Investments

July 6, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Robert Meyers (Meyers).

According to the Financial Industry Regulation Authority (FINRA) BrokerCheck records, in October 2017, Meyers was terminated from Wells Fargo Clearing Services LLC (Wells Fargo) for recommending investments to customers that he did not notify the firm about.

In addition, Meyers has been subject to eight customer disputes. In August 2005, a customer alleged that Meyers failed to follow the customer’s instructions regarding the investment. The customer requested $1,000,000 in damages.

James Flynn Subject to at Least 10 Customer Complaints Over Alternative Investments

July 5, 2018 | by Staff Attorney

Former IFS Securities, Inc. (IFS) and Voya Financial Advisors, Inc. (Voya) broker James Flynn (Flynn) has been subject to at least ten customer complaints, two employment terminations for cause, three tax or civil judgment liens, and one bankruptcy proceeding. According to a BrokerCheck report many of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In February 2017 Voya discharged Flynn accusing the broker of providing misleading information to the firm during a complaint investigation. Despite numerous customer complaints and financial troubles IFS hired Flynn anyway only to also discharge him a year later in February 2018. IFS claims that Flynn was terminated because he executed unauthorized trades.

In addition, Flynn was subject to large tax liens totaling hundreds of thousands of dollars. In April 2005 Flynn disclosed a tax lien of over $256,000. Thereafter, Flynn declared bankruptcy in April 2013. The fact that a broker cannot manage his own personal finances is material information for a client to consider. In addition, the types of products clients have alleged were unsuitable are high commission products that may be recommended to generate high profits for the advisor at the expense of the client.

Larry Boggs Barred by FINRA from Industry for Executing Unauthorized Trades

July 5, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), in January 2018, advisor Larry Boggs (Boggs) was barred indefinitely from the financial industry by FINRA concerning allegations that he engaged in unsuitable investments, excessive trading and unauthorized transactions. According to FINRA, Boggs exercised discretion in customer accounts without written approval from customers or the firm. Boggs would also allegedly falsely state the investment objectives and risk tolerance of customers in the firm’s books so that customers would conform to his high-frequency trading strategy.

FINRA found that in June 2010, Boggs updated the risk tolerance in 4 investment portfolios from Moderate to Moderate/Aggressive, and changed 2 investment portfolio objectives to Aggressive. FINRA determined that the high-frequency trading strategy was unsuitable to his customer’s needs and did not match the customer’s investment portfolio objectives. By changing Ameriprise’s books and records, Boggs violated FINRA Rules 4511 and 2010.

In addition, in May 2015, Boggs’ employer, Ameriprise Financial Services, Inc. (Ameriprise Financial) discharged Boggs alleging that Boggs violated the company’s discretionary trading and suitability policies.

Frank Dietrich Terminated Over Sale of Fraudulent Woodbridge Mortgage Investments

July 5, 2018 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge). The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensnaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages. In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Frank Dietrich (Dietrich) appears to be an agent for Woodbridge fraudulent note sales. Dietrich was formerly associated with Quest Capital Strategies, Inc. (Quest Capital) out of the firm’s Lake Forest, California office location. At least seven customers have accused Dietrich of selling them the fraudulent Woodbridge investment. In addition, Qeust Capital terminated Dietrich in March 2018 for failing to disclose his involvement with Woodbridge.