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Articles Posted in Ponzi Schemes

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There are many different types of investment and securities fraud scams designed to bilk investors out of millions of dollars. Sometimes even billions.

As was the case of one of the world’s most famous Ponzi schemers, Bernie Madoff, who is spending the rest of his life in prison.

Attorney Scott Silver, of the Silver Law Group says:

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The SEC has strict rules about how a broker-dealer operates, runs their business and keeps records.  Any variation from these rules can trigger a sanction or other regulatory process. Centaurus Financial has been the subject of multiple sanctions for various infractions and disputes filed by customers. For these regulatory sanctions, the company has paid over half a million dollars in penalties, fines and fees over the years. In some cases, there were no financial products involved or sold, only regulatory violations.

Centaurus has paid out over three million dollars in securities arbitration awards and judgments.

Attorney Scott Silver, of the Silver Law Group says:

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Hector May (CRD #323779) is a former registered broker and investment advisor, last employed with Securities America, Inc. (CRD #10205) of New York City. His previous employers include Prime Capital Services, Inc. (CRD #18334) of Poughkeepsie, NY, Equico Securities, Inc. (CRD #6627) and The Equitable Life Assurance Society Of The United States (CRD #4039) of New York City. He has been in the industry since 1973.

May has three disclosures filed this year. The first, on 03/08/2018, is an official criminal investigation by the US Department of Justice for a “suspected felony.”  No additional information is available.

On 3/9/2018, May was discharged from Securities America due to “Misappropriation of client assets.”

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Silver Law Group Managing Partner Scott Silver was again quoted in Investment News regarding the new charges by the SEC against the alleged real estate investment company Woodbridge.

“I think these types of investments are a massive problem, and it’s bigger than people give credence to,” Mr. Silver said. “Look at the ads in the back of the newspaper, or go to retirement conferences in South Florida. Companies there are pitching investments untethered to the stock market that are not securities.”

Ponzi-Schemes2-300x150Much like the recent bankruptcy of 1st Global, Woodbridge was found to be operating a huge Ponzi scheme worth approximately $1.2 billion (and is also located in Florida.) At the center of this operation are individuals acting as brokers and investment advisors. Many of these unregistered salespeople are former brokers and advisors who have been barred by FINRA after a customer complaint, employment separation or other unresolved administrative issue.

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Attorney Scott Silver was quoted in an article from Investment News regarding the recent bankruptcy filing by small business merchant service company 1st Global Capital, and a sister company, 1 West Capital.

Good News about Elder Financial Fraud? on elderfinancialfraudattorneys.comPrior to the bankruptcy, the SEC and the US Attorney’s office in the Southern District of Florida opened similar investigations into the companies. Court documents indicate that the companies used “independent sales organizations, underwriters and other funding agents” to find and secure investors. Once the investigations began, the company could no longer raise capital, and filed for Chapter 11 bankruptcy to protect assets and continue the business. (Another company called 1st Global, located in Dallas, is unrelated.)

Mr. Silver notes that the 1st Global case is “eerily similar” to a prior case, a Ponzi scheme by a company called Woodbridge. That company was charged in December, as well as its founder, Robert Shapiro. That scheme was worth $1.2 billion, and targeted 8,400 investors. Mr. Silver sees 1st Capital as “following the Woodbridge model,” using unregistered brokers nationwide to sell to investors.  It’s clear, Mr. Silver says, that investors, who are mostly mom-and-pop, will not be receiving any distributions. They’ve been left without the promised income, and wondering how much of their principal will be lost in the bankruptcy.

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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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Following the SEC charging five individuals with fraud related to a Ponzi scheme, Bank of America (“BOA”) has now been sued over its involvement with the First Nationle scheme. The class-action suit on behalf of multiple investors who lost money alleges that BOA provided more than 100 accounts for the individuals to perpetuate their scheme.  Others charged in the scheme include Perry Santillo, Chris Parris, Paul LaRocco, Percipience and United RL.

Ponzi-Schemes2-300x150According to the complaint, the brother and sister that sued to recover losses from their late father’s investment allege that the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed.”

After promising to invest the monies into profitable and dividend paying companies, they used the funds for lavish personal expenses and to pay “dividends” to other investors. The bank is accused of failing to catch their suspicious activity, which included transfers of large amounts of cash into accounts with small, negative or even non-existent balances, and then transferring the cash out in the same week. The money was transferred to their personal accounts, or to that of some of the investors. This fraud occurred over a period of time beginning in or about 2011. By not alerting authorities or putting a stop to the fraudulent activity, BOA assisted in the perpetuation of the scheme.

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On the heels of a Ponzi scheme that cheated investors out of $102 million, the SEC has charged a former insurance broker with defrauding inexperienced retail investors. James Hocker, aged 48, of Bellefonte, Pennsylvania has been charged with defrauding 25 investors of $1.27 million for non-existent securities. He operated his own insurance agency out of his home, James E. Hocker & Associates, selling insurance and annuities as an unregistered entity.

Hocker’s tactic was different—he sold them insurance first to gain their trust, then offered these customers non-existent “investment securities.” He was licensed to sell insurance and annuities, but not securities.

Promising “guaranteed returns” of 10% to 30%, Hocker told these customers that he would invest their money into the S&P 500 and other unspecified investments. However, the monies he collected were deposited in bank accounts he controlled, and investors were not informed that they were his. Hocker used the money to pay bills, tax liens, and spousal support to his ex-wife. He also spent the monies on restaurants and casinos.

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The SEC has shut down a $102 Million Ponzi Scheme that was defrauding investors in several states. The complaint that was filed in federal district court in Manhattan charges Perry Santillo from Rochester, New York, Christopher Parris from Rochester, New York, Paul LaRocco from Ocala, Florida, John Piccarreto from San Antonio, Texas, and Thomas Brenner from Orville, Ohio. These brokers are said to have defrauded over 600 investors through sales of securities in issuers that they controlled including the following: First Nationle Solution LLC, United RL Capital Services, and Percipience Global Corp. If you or someone you know lost their investment by investing with one of these brokers and/or companies, then it is highly recommended to speak to an attorney in order to assess your potential legal options to recover your investment capital.

The SEC Allegations of Fraud

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On June 6, 2018, the Securities and Exchange Commission (the “SEC”) charged Essex Capital Corporation and its founder, Ralph Iannelli, with defrauding investors in connection with the sale of over $80 million in promissory notes. Silver Law Group is investigating potential claims against third parties for losses in Essex Capital Corporation.

According to the SEC’s complaint, Iannelli and Essex Capital Corporation induced approximately 70 investors to collectively invest over $80 million dollars in the company’s failing equipment leasing business through two (2) unnamed registered investment advisors.  Iannelli and Essex Capital Corporation induced these investors by making false and misleading statements and illusory personal guarantees to these two registered investment advisors.

The first investment advisor, based out of Santa Barbara, California, had been recommending Essex Capital Corporation to its customers since 2002. Between 2015 and 2017, this investment advisor invested over $8.1 million on behalf of over 20 customers in Essex Capital Corporation. According to the SEC complaint, a major reason this investment advisor recommended Essex Capital Corporation customers to invest were due to false financial statements prepared by Essex Capital Corporation’s outside accountant.

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