Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Hector May (May), formerly associated with Securities America, Inc. (Securities America) in New York, New York is under criminal investigation by the U.S. Department of Justice (DOJ) for investment fraud. At the same time, May was terminated by Securities America on concerns that the advisor misappropriated client assets.
Investors who have come forward concerning May’s fraud claim that he sold what now appear to be fake tax-free corporate bonds. It is doubtful that these investments ever existed. Instead, the allegations claim that May most likely pocketed client funds and paid other clients funds with the proceeds from other investors – a classic Ponzi-scheme. As with all Ponzi schemes this one collapsed when May could not make promised payments.
It appears that May conducted his alleged scheme through a disclosed outside business activity called Executive Compensation Planners, Inc. May may have used this company to handle client investments and distribute fake returns to investors. Outside business activities such as Executive Compensation Planners should have caused concern at May’s brokerage firm because these separate corporate entities are frequently used by unscrupulous advisors to conceal and commit frauds. According to news sources, Executive Compensation Planners’ website in 2016 stated the firm was registered to sell securities and insurance but has since been taken down. Further, May disclosed to clients in a brochure from Executive Compensation Planners that the firm handled more than $18 million in assets.