Investment Fraud

Stockbroker Patricia Miller Terminated for Allegedly Misappropriating Customer Funds

January 16, 2015 | Silver Law Group

Patricia Miller was associated with Investors Capital Corp from July 2010 until Investors Capital Corp fired her in May 2014. In October 2014, FINRA suspended her in all capacities from any FINRA firm for her failure to cooperate in a FINRA investigation. Investors Capital Corp is now facing multiple arbitration claims relating to Ms. Miller’s alleged misappropriation from multiple customers and Ms. Miller is facing criminal charges relating to her handling of client funds.

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Commodity Trader Paul Greenwood Sentenced to a Decade in Federal Prison for Billion-Dollar Investment Scam

December 26, 2014 | Silver Law Group

The U.S. Commodity Futures Trading Commission (CFTC) has announced that New Yorker Paul Greenwood, who operated a billion dollar investment scam where he misappropriated at least $500 million from investors, was sentenced to 10 years in federal prison for charges related to his participation in the scam.

The criminal charges arose from Greenwood’s illegal solicitation and theft of investors’ money. According to CFTC findings, from at least 1996 to 2009, Greenwood and a co-Defendant solicited more than $7.6 billion from institutional investors, including charitable and university foundations and pension and retirement plans. The Defendants defrauded victims by falsely depicting that all investor funds would be employed in a single investment strategy that consisted of index arbitrage. However, investors money was transferred to another entity from which Greenwood and the co-Defendant stole funds.

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers routinely handle NFA arbitrations and CFTC claims. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

GL Capital Partners Chief Executive Officer Charged with Securities Fraud

December 22, 2014 | Silver Law Group

Daniel Thibeault, chief executive of GL Capital Partners, a brokerage firm which specialized in alternative investments, was arrested on securities fraud charges after the FBI accused him of a fraudulent scheme to divert some $12.6 million from a fund he was overseeing.

Mr. Thibeault allegedly took out fictitious loans to gain access to money in an alternative mutual fund, known as the Beyond Income Fund. Mr. Thibeault co-managed the fund, which invested in consumer debt. Alternative investments are frequently investments which are not directly tied to a stock or bond index.

Over $35 million dollars of loans had been issued from the fund. Mr. Thibeault allegedly took over $12 million dollars through an intermediary. The money from the loans made through the intermediary, Taft Financial Services, did not go to individual borrowers, however, but to a GL-controlled bank account, according to the FBI.

FINRA Fines 10 Firms $43.5 Million for Conflicts of Interest by Research Analysts in Advance of an IPO

December 17, 2014 | Silver Law Group

The Financial Industry Regulatory Authority (FINRA) fined 10 brokerage firms a total of $43.5 million for allowing their analysts to solicit investment banking business and for offering favorable research coverage in connection with the 2010 IPO of Toys R Us.

Firms and fines:

Barclays Capital	$5 million
Citigroup Global Market	$5 million
Credit Suisse	$5 million
Goldman Sachs	$5 million
JP Morgan Sec	$5 million
Deutsche Bank	$4 million
Merrill Lynch	$4 million
Morgan Stanley	$4 million
Wells Fargo	$4 million
Needham & Co.	$2.5 million

For the complete FINRA Press Release, click here. These allegations are remarkably reminiscent of claims investors made against FINRA firms relating to the collapse of technology stocks in 2000 including allegations that FINRA firms used its research analysts as cheerleaders for its investment banking departments publishing biased research to help boost IPO’s. A decade later, it does not appear that much has changed on Wall Street.

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Former LPL Broker Travis Wetzel Pleads Guilty to Defrauding an Elderly Client

December 8, 2014 | Silver Law Group

Travis Wetzel of Frederick, Maryland has pleaded guilty to wire fraud relating to a fraudulent scheme to steal over 1.2 million dollars from an elderly client’s annuity account.

According to the government press release, Wetzel processed financial distribution documents for his investment advisory firm located in Rockville, Maryland. According to his plea agreement, from July 2010 to September 2012, Wetzel took a total of approximately $1,282,224 from an annuity account of an elderly client without the client’s knowledge, and used the money for his personal benefit. Wetzel knew that the client was elderly, whose age and physical condition would facilitate repeatedly taking money from the client’s account. Wetzel also laundered some of the money he took by transferring the money to other bank accounts he controlled.

We are currently involved in multiple cases against brokerage firms for mismanagement of elderly investors’ accounts and/or improper conflicts of interest between the financial advisor and the customer. We routinely work closely with estate planning attorneys to help resolve disputes between family members regarding the management of an elderly family member’s financial affairs and we are frequently consulted regarding the improper sale of securities or mismanagement of the portfolio by a fiduciary, trustee or other trusted advisor.

FINRA Hits Newport Coast Securities and Its Representatives with Churning Charges

August 14, 2014 | Silver Law Group

Last week, the Financial Industry Regulatory Authority (FINRA) filed charges against Newport Coast Securities, Inc. (“Newport Coast”) and some of its current and former registered representatives, accusing them of using margin and risky securities to artificially generate huge commissions for themselves while wiping out most of their customers’ investment capital.

Newport Coast, a New York-based broker-dealer, by and through brokers Douglas Leone, Andre LaBarbera, David Levy, Antontio Costanzo, and Donald Bartlet, allegedly churned the accounts of twenty four customers — many of whom are retirees — causing more than $1,000,000 in losses to the investor-clients. “Churning,” as it is known in the industry, is the act of a broker who excessively and needlessly engages in trading in a client’s account primarily to generate commissions for the broker on each trade without regard for the client’s financial well-being. Churning is an illegal and unethical practice that violates SEC rules and securities laws. The brokers are also purported to have created new account forms for their victimized clients that misstated the clients’ net worth, investment experience, and objectives; and two of the brokers (Levy and Costanzo) attempted to dissuade several customers from cooperating with FINRA’s investigation into the matter — all of which was done to cover up the illegality of the brokers’ excessive activity in the client accounts.

According to FINRA, former Newport Coast supervisors Marc Arena and Roman Luckey saw what was transpiring but took no meaningful steps to curtail the misconduct. To the contrary, the firm’s managers, supervisors, and the former President of the company allegedly profited through overrides on the churned accounts.

SEC Charges Palm Beach CEO, Cecil Franklin Speight, in $3 Million Fraud Scheme

July 29, 2014 | Silver Law Group

The U.S. Securities and Exchange Commission (“SEC”) has filed a civil lawsuit against a Palm Beach, Florida-based transfer agent and its owner for allegedly defrauding more than 70 investors out of more than $3 million by using “aggressive boiler room tactics” to sell worthless investment securities.

According to the SEC’s lawsuit, which was filed in federal court in New York, International Stock Transfer, Inc. (“IST”) and its sole owner, Cecil Franklin Speight, committed mail fraud and securities fraud by creating and issuing fake securities certificates to both domestic and foreign investors. While orchestrating a group of “cold callers” who promised investors high returns or discounted prices, Speight and IST actually provided the investors nothing more than counterfeit foreign bond certificates and stock certificates, including some for a publicly-traded microcap company with no connection to IST. Moreover, to cloak his scheme with an appearance of legitimacy, Speight and IST told investors to send their investment funds to two attorneys who would place the funds in their own bank accounts. From there, however, the funds did not go to any issuers; instead, the funds went to IST, where Speight used the money to pay personal expenses, including purchases at Mercedes-Benz, Nordstrom, and Groupon. In the course of this scheme, Speight allegedly stole more than $3.3 million, sporadically paying prior foreign bond fund investors with new investor money in classic Ponzi scheme fashion.

Speight and IST have agreed to settle the SEC’s charges, with Speight agreeing to be barred from serving as an officer or director of a public company, agreeing to be enjoined from participating in any penny stock offerings, and requiring Speight and IST to disgorge all of their ill-gotten gains. Monetary sanctions will be determined by the Court at a later date, though Speight reportedly faces at least $3.3 million in restitution and a fine equal to double the investors’ losses. Additionally, Speight has pleaded guilty to a criminal charge in a parallel action brought against him by the U.S. Attorney for the Eastern District of New York. He faces up to five years in prison.

Silver Law Group Represents 93 year old Victim of Elder Financial Abuse

July 3, 2014 | Silver Law Group

According to the Sun Sentinel, the Palm Beach County Sheriff’s Office has charged Sultaine Valcius of Boynton Beach with fraud after taking $1.4 million from a 93 year-old man that hired her as a medical aide.

The Sun Sentinel reports Sultaine Valcius, 48, is charged with organized scheme to defraud for taking the money from her employer for at least five years. Ms. Valcius requested the money for various reasons, including, nursing school tuition, purchasing a home as an investment property, repairing a home in Haiti that had been destroyed by an earthquake and for general financial assistance due to her husband purportedly losing his job. However, Ms. Valcius was allegedly never enrolled in school, the house that was purchased was used as the primary residence by Ms. Valcius and her husband was never laid off from the job she claimed he had.

Ms. Valcius convinced the elderly gentleman to write her numerous checks ranging from a couple of hundreds of dollars to tens of thousands of dollars from two of his brokerage accounts maintained at two national broker/dealers. However, even if convicted, it is unlikely that Ms. Valcius will have the adequate resources to repay the victim.

Winsome Investment Trust, U.S. Ventures LC, and their Individual Owners Assessed $44 Million Sanction for Commodity Pool Fraud and Misappropriation

July 2, 2014 | Silver Law Group

The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court Order imposing $44 million in sanctions against Robert J. Andres of Houston, TX; his company, Winsome Investment Trust (“Winsome”); Robert L. Holloway of San Diego, CA; and his company, US Ventures LC (“US Ventures”); for fraud in operating a commodities futures pool. The sanction includes a civil monetary penalty of over $32 million as well as a restitution award of $12 million to be paid to defrauded investors. The Order also imposes upon the individuals and companies a permanent trading and registration ban.

According to the Order entered by the Honorable Bruce S. Jenkins of the U.S. District Court for the District of Utah, Andres and Winsome (from May 2005 through November 2008) fraudulently solicited and accepted over $50 million from investors who were told that they would be investing in a commodity futures pool operated by Holloway and US Ventures. To garner the investors’ funds, Andres and Winsome purportedly made false statements claiming that the investment program had a successful track record and that each investor would be guaranteed a return of his/her principal plus profits. The Court found those representations to be false, as Holloway and US Ventures’ futures trading actually suffered nearly $11 million in net losses.

The Court went on to conclude that the defendants misappropriated the majority of participant funds to pay investors false “profits” in a manner akin to a Ponzi scheme and that the defendants used investor funds for other improper purposes, such as providing money to Andres’ wife, funding Holloway’s and his wife’s lavish personal expenses (houses, cars, jewelry, etc.), and investing in various unrelated and undisclosed businesses including a business Holloway’s wife ran on eBay. The Court Order explained that Andres and Holloway attempted to conceal the fraud by directing employees to falsify participants’ account records and to falsely represent to investors that the pool funds were trading profitably with virtually no losses during the relevant period.

Silver Law Group Settles Investor Class Action for $13 Million

June 27, 2014 | Silver Law Group

Silver Law Group settles a Class Action Complaint on behalf of a group of investors which generally alleged Regions Bank assisted U.S. Pension Trust Corp (“USPT”) in the sale of unregistered securities and failed to properly disclose the high fees and costs of the program. Plaintiffs pursued a class action because many investors were located internationally and a class action was an appropriate vehicle to pursue damages. The SEC had previously charged USPT with violating the federal securities laws and entered judgment against USPT in September 2010. Plaintiffs alleged Defendants violated the Florida Securities and Investor Protection Act and aided and abetted the unregistered sale of securities, amongst other claims.

The victims were primarily from Latin America and over 5,000 investors were identified as potential class members. A United States District Court Judge in Miami appointed Silver Law Group and its co-counsel as attorneys to represent the Plaintiffs. The Plaintiffs further alleged Regions advised USPT on the design and content of marketing materials, had a role in drafting documents, participated in sales conventions and was paid as the trustee on USPT trust accounts. The class action ultimately settled for approximately $13 million. The case was reported by the Daily Business Review.

If you have questions about your legal rights, or have been the victim of investment fraud, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or Toll Free at (800) 975-4345.