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Articles Posted in Investment Fraud

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Questions have been raised about financial advisor's due diligence related to GPB Capital Holdings' private pacements and Five Star Carting.GPB Capital Holdings is being investigated by the state of Massachusetts, FINRA, the SEC, the New Jersey Bureau of Securities, and the FBI. If that weren’t enough, the New York City Business Integrity Commission, which oversees the city’s private trash industry, is also investigating the company.

The company says it buys “income-producing private companies” with the money it raises by having financial advisers sell private placements to investors. A private placement is a way to raise funding by selling securities to investors in a private, rather than a public, offering. Private placements involve significant risk, are illiquid, and are not suitable for many investors’ goals. Continue reading

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The FBI is now investigating GBP Capital Holdings. The state of Massachussetts, the SEC, and FINRA are also investigating.In February, we told you about three investigations focused on GPB Capital Holdings. The first is by the state of Massachusetts, with two additional separate investigations by FINRA and the SEC. On Thursday, February 28th, the FBI, accompanied by officials from the New York City Business Integrity Commission, paid an impromptu visit to GPB’s corporate headquarters.

The announcement was made in a letter sent to investors, explaining that “authorities” made an unannounced visit to their offices, and “collected materials.” While the company did not disclose the identity of the “authorities,” an anonymous industry insider disclosed to the press that the visit was from the FBI and the Commission. Continue reading

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The state of Massachusetts is looking into the "infrastructure fees" Fidelity charges for using its platform for 401(k) plans. This follows a lawsuit by an investor in T-Mobile's 401(k) plan that claims Fidelity's fees are concealed. The US Labor Department is also investigating.If you use Fidelity’s platform for your 401(k) investments, you may have some additional, unfamiliar fees to pay. You wouldn’t be the only one—others have noticed, and now the State of Massachusetts has launched an inquiry into Fidelity’s fees. The fees are being charged to some mutual funds for using their platform for access to its retirement plan customers.

The securities division of the Massachusetts Secretary of the Commonwealth sent a letter on February 27th to Fidelity to ask about what’s called “infrastructure fees.” The letter follows a lawsuit by an investor in T-Mobile USA’s 401(k) plan that claims Fidelity conceals these fees. The US Labor Department is also investigating the fees. Continue reading

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Boca-Raton-Oppenheimer-Employees-Settle-SEC-Investigation-300x208The CFTC, along with the Utah Department of Commerce, Division of Securities, through its Attorney General, jointly filed a civil enforcement action in the U.S. District Court for the District of Utah, Central Division. They filed against Gaylen Dean Rust and his business Rust Rare Coin (RRC). The complaint charges Rust and his company with committing fraud against approximately 200 individuals from Utah, and also from 16 other states. Rust allegedly obtained more than $170 million from investors since May 2013 in a precious metals ponzi scheme.

The complaint states that Rust’s fraudulent actions are ongoing. From January to August of 2018, Rust received $42 million from investors, which he claimed he used to buy and sell silver. He also allegedly attempted to solicit new investors recently.

On November 15, 2018, the U.S. District Court Judge for the District of Utah, Honorable Tena Campbell, entered a restraining order to freeze Rust’s assets and to permit the CFTC and State of Utah to inspect his records. Jonathan O. Hafen was appointed as a temporary receiver to take control of RRC and Rust’s assets.

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Fabio Bretas de Freitas of Miami, Florida, was arrested on fraud and identity theft charges for allegedly misappropriating more than $5.5 million. His potential convictions involve the two investment companies he managed; Phynance Capital Management LLC and Absolute Experience LLC.Fabio Bretas de Freitas of Miami, Florida, was arrested on fraud and identity theft charges for allegedly misappropriating more than $5.5 million. He also allegedly attempted to deceive federal regulators and he impersonated a victim-investor.

The 53-year-old was taken into custody on December 6 and was then scheduled to appear before a magistrate judge.

“The defendant obtained more than $5.5 million from people who invested their money in good faith. But as alleged, instead of investing those funds as he had promised, the defendant used it to cover his own personal expenses, even going so far as to impersonate one of his own victims to deceive investigators,” said William F. Sweeney Jr., the assistant director in charge of the New York Field Office of the FBI.  “Bretas’ arrest should serve as a stark reminder that those who seek to manipulate our financial systems for their personal gain will be identified and disrupted.”

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Florida-Broker-Peter-Gouzos-Banned-by-FINRA-300x206Silver Law Group is investigating claims against brokers and financial advisors who committed securities misconduct in Tampa, Florida and the surrounding area.

Tampa is located in Hillsborough County, Florida. It is located on the west coast of Florida on the Tampa Bay near the Gulf of Mexico. As of July 2015, Tampa’s population is estimated to be 369,075. Tampa is part of the Tampa Bay Metropolitan area, which consists of St. Petersburg and Clearwater.

Tampa features numerous attractions such as the Tampa Bay Lightning, the Tampa Bay Buccaneers, the theme park Busch Gardens, the Florida Aquarium, and crystal blue gulf beaches.

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Class-Action-1-300x150-300x150A putative class of investors sued JPMorgan Chase & Co. and a group of precious metals traders employed by the bank in New York federal court Wednesday, saying they manipulated futures contracts through spoofing, days after the U.S. Department of Justice announced a former trader had pled guilty to his role in the alleged scheme.

The complaint accuses JPMorgan and its employees of manipulating the prices of precious metals futures contracts on the New York Mercantile Exchange and Commodity Exchange Inc. through a spoofing scheme where its traders would place orders for futures contracts with the intent to cancel those orders before execution, which would cause investors to buy and sell at artificial prices.

According to the complaint, JPMorgan, Edmonds and several unnamed employees orchestrated a scheme “to inject materially false and illegitimate signals of supply and demand into the market and … to induce other market participants to trade against” the orders that were placed by the defendants, which resulted in the investors trading at prices, quantities and times that they may have not traded at or during that timeframe.

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When you purchase insurance from a broker, investment advisor or insurance agent, shouldn’t they have your best interests at heart?

Proposed-Fiduciary-Duty-Rule-Poised-to-Pass-Leaves-Brokers-Seething-300x199New York’s Regulation 187 was designed to do just that, and could take effect as early as August of 2019. In it, agents and brokers are required to have the “best interest” of the consumer in mind when offering recommendations for their life insurance policies and annuities. Agents and brokers are not to consider any financial incentives or compensation that they might receive as a result of the financial products they offer while discussing different options for annuities and policies.

While Regulation 187 is intended to supplement New York’s existing consumer protection laws and “fill in the gaps” of regulations, it isn’t being met with resounding applause by Wall Street. According to one trade industry group, a number of issues exist with the new law that can be problematic.

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After the state of Massachusetts began an investigation into 63 brokers selling private placements into GPB after the company stopped selling them, The SEC and FINRA have followed suit. Both agencies have launched their own investigations into the company and its practices.

The SEC Has Proposed New Regulations for Fiduciaries on silverlaw.comGPB announced in August that they would cease finding new investment money in order to focus on compliance and straightening out their accounting and financial statements for their two biggest funds. The SEC is, according to one executive, interested in seeing how accurate GPB’s disclosures are that were given to investors. The SEC also wants to review fund performances and distribution of the company’s capital to their investors, as well as broker-dealers who sold these private placements to investors.

Launched in 2013, GPB Capital became one of the fastest growing private placement firms selling shares of their funds through independent broker-dealers. Promoting themselves as offerors of alternative investment assets, New York-based GPB uses the business model of “acquiring income-producing private companies,” primarily auto dealerships. The company has raised $1.8 billion of investor funds.

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In September, we told you about Morgan Stanley brokers James Polese and 29-year-old Cornelius Peterson, who were found guilty of financial charges ranging from conspiracy to aggravated identity theft. They have both been sentenced in the case.

How to Report Elder Financial Fraud on elderfinancialfraudattorneys.comJames Polese has been sentenced to 60 months (five years) in prison after pleading guilty to one count of conspiracy, one count of investment adviser fraud and eight counts of bank fraud as well as a charge of aggravated identity theft. The government originally requested 75 months, and the federal guidelines indicate a minimum sentence of 87 months. Polese’s attorney argued for a shorter sentence of 40 months.

Polese was ordered to pay $462,000 in restitution plus a $30,000 fine. After his release from prison, he will be supervised for three years. He will be restricted from working in financial services, and prohibited from drinking alcohol beyond a blood alcohol content (BAC) of 0.10. The judge recognized Polese’s work towards rehabilitation, which included speaking with two ministers who offered letters of support.

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