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Articles Posted in Current Investigations

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Two-South-Florida-Brokers-in-the-FINRA-Spotlight-for-Making-Inappropriate-Loans-300x199On May 1, 2018, FINRA Department of Enforcement entered into a settlement via Acceptance, Waiver, and Consent (AWC) with Respondent Laidlaw & Company. Without admitting or denying any wrongful acts, Laidlaw consented to a public censure by FINRA, the imposition of a $25,000 fine, as well as agreeing to give FINRA a written statement saying that systems mentioned in the AWC are designed to achieve compliance with “applicable securities laws, regulations, and rules.

FINRA Enforcement alleged that from April 2014 through December 2015, Laidlaw did not establish and maintain a supervisory system and written supervisory procedures (WSPs) designed to ensure that recommendations of leveraged and inverse exchange traded funds (Non-Traditional ETFs) complied with applicable securities laws and FINRA rules.

Non-Traditional ETFs are risky financial products because they are designed to return a multiple of an underlying benchmark or index over the course of a trading session. They are not intended to be held for more than a single trading session. FINRA Regulatory Notice 009-31 states “The performance of Non-Traditional ETFs over periods of time longer than a single trading session can differ significantly from the performance of their underlying or benchmark during the same period of time.”

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John William Cutshall (CRD #874352) is a registered broker and former registered investment advisor currently employed with Lombard Securities Incorporated (CRD #27954) of Woodsboro, MD. His previous employers include Morgan Stanley (CRD #149777), RBC Capital Markets, LLC (CRD #31194) and Ferris, Baker Watts, LLC (CRD #285), also of Frederick, MD. He has been in the industry since 1979.

Three Individuals Charged by the SEC for Defrauding Elderly Clients on elderfinancialfraudattorneys.comCutshall has four recent disclosures in his record. The most recent is a pending FINRA disciplinary complaint filed by their Department of Enforcement on 8/10/2018 (the full complaint is available here.) His actions are described in detail regarding the misappropriation of trusts that he was administering for three individuals. Between 2012 and 2014, Custshall abused his position for these trusts (for one elderly woman and a now-deceased married couple), converting and improperly using funds from the trusts.

The trust provided for the couple’s disabled daughter, who was in a residential facility for intellectually disabled individuals. When the daughter died in 2012, Cutshall used his position as a trustee to write 34 checks from the trust for a total of $400,000. These checks were deposited into his own bank account. Cutshall then presented an unwitnessed handwritten note that was allegedly written by the deceased husband, but not the wife. The note named Cutshall as a 50% beneficiary, defending his converting of funds from the trust. He took a total of $463,000, which was more than he was entitled to, assuming the note was genuine. Cutshall never disclosed this note until 2013, and failed to disclose to two firms that he was a client’s trustee.

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Investment Center Broker Accused of Stealing $300K from Elderly Client on silverlaw.comLeon Vaccarelli allegedly defrauded a total of nine clients out of more than $1 million

In May, former financial advisor Leon Vaccarelli was charged with 12 counts of fraud and money laundering in a federal court in Connecticut. If convicted on all of them, he could receive a maximum penalty of 210 years in prison. After pleading not guilty, Vaccarelli was released on a $100,000 bond.

Vaccarelli is alleged to have stolen money from several clients between 2011 and 2017. During that time, he reportedly informed his clients that their money would be invested in different places, including money market accounts and retirement products. What Vaccarelli actually did, according to investigators, was put the money into his own account and use it to pay his own expenses. In addition, federal prosecutors also say that he also used client money to make interest payments to other investors.

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Silver Law Group is investigating brokers and brokerage firms that sold American Finance Trust, Inc.  Recently, the American Finance Trust (Stock Ticker: AFIN) begins trading on the Nasdaq Exchange 40% less than what investors initially paid.

American Finance Trust went public and was listed on the Nasdaq Exchange in July 2018.  American Finance Trust began trading on the exchange at $15-per-share, which is $10 less per share than what many investors paid when they initially purchased the investment, making it a collective billion-dollar disaster for investors.

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Silver Law Group is investigating claims on behalf of investors who purchased American Finance Trust, Inc. (Nasdaq: AFIN) – a real estate investment trust (REIT) sponsored by AR Global with a focus on the management and acquisition of a service-focused tenant portfolio.

Are-or-Were-Unsuitable-Non-Traded-REITs-in-Your-Portfolio-300x224AFIN REIT LOSSES?

According to a report from investment bank, Robert A. Stranger & Co. Inc., AFIN American Finance Trust’s listing has been described as a “belly flop,” and has “eroded approximately $1,000,000,000.00 of the company’s equity value.”

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http://www.investmentnews.com/article/20180730/FREE/180739993/schorsch-reit-listing-a-billion-dollar-disaster-for-investors

Are-or-Were-Unsuitable-Non-Traded-REITs-in-Your-Portfolio-300x224As many brokers and other investment professionals know, investing in a REIT, or Real Estate Investment Trust, is something that’s best left to experienced, sophisticated investors. There’s a reason for that, and some recent activities have proven, once again, that illiquid REITs are definitely not for amateurs.

There are two types—publicly traded and nontraded. While both file papers with the SEC, file regular reports and must return 90% to shareholders, there are obvious differences. Of course, one is traded publicly, and the other isn’t. The idea is that eventual dividends come from the real estate that it’s invested in.

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Do you live in Knoxville, Tennessee? Have you invested or lost money with 1st Global Capital?

iStock-494312894-300x2001st Global Capital has recently filed for Chapter 11 Bankruptcy after investigations alleging sales of unregistered securities, sales of securities by unregistered brokers, and other acts of fraud in connection with the sales of securities. Several state attorney generals are also investigating the solicitation of multiple individuals into investing in MCA deals.

The alleged loan fraud totals $283 million.

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Silver Law Group continues to investigate investor claims against former Raymond James & Associates and Moors & Cabot broker Scott Sibley (CRD# 1523981) for various claims, including unauthorized trading.

Scott Sibley has 27 Disclosures on his FINRA BrokerCheck Report

Silver Law Group has been investigating customer claims against Sibley for over a year now.

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Silver Law Group continues to investigate Perry Santillo Jr. (“Santillo”), founder and chief executive of High Point Wealth Management. According to a recent Investment News article, Santillo was barred by Maryland regulators for “dishonest and unethical trade practices,” that included selling unregistered securities by fraudulent means. Santillo allegedly solicited clients from an investment advisory business he acquired last year from its barred owner, Philip Rousseaux. Santillo faces almost $3.5 million in civil penalties and fines. Santillo acquired Everest Investment Advisors after its owner, Mr. Rousseaux, had his registration as an investment adviser revoked in March for deceptive securities sales practices. Mr. Rousseaux previously recruited clients through his popular infomercials featuring “The Money Guys.” Santillo, according to the order barring him, in November began soliciting former Everest clients through e-mails explaining how their transition would work in regards to their investments. He would then advise them to sell securities and transfer assets to a self-directed IRA. He also asked client to sell their annuities in face-to-face meetings. Then, Santillo would recommend the clients invest in unsecured promissory notes that were used to finance his own companies.

SWhat-Keeps-a-Ponzi-Scheme-Running-300x200antillo, Chris Parris and others are accused of running a massive Ponzi scheme and paying former stockbrokers and investment advisors to retire and send their clients to their companies.  Silver Law Group is assisting investors who were encouraged to liquidate retirement accounts and other investments to invest in the First Nationle Ponzi scheme.

Silver Law Group is representing investors in claims against their former advisors who recommended that their clients invest with Santillo, Chris Parris, Nationle or United RL.  Investors allege that their former advisors failed to inform them that their stockbrokers failed to tell them that they had received money for the recommendation or that their financial advisor had failed to conduct reasonable due diligence into Santillo and his partners.

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On June 19, 2018, the Securities and Exchange Commission (the “SEC”) shut down a $102 million Ponzi scheme and charged five (5) individuals and three (3) businesses with various securities laws violations.

The massive Ponzi scheme’s alleged orchestrators were all formerly registered with FINRA and employed by FINRA-registered firms, according to the SEC complaint. The following individuals were named in the SEC’s complaint:

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