Articles Posted in Broker Theft

shutterstock_93851422-300x240The law offices of Gana Weinstein LLP are currently investigating claims that advisor Benjamin Bourgeois (Bourgeois) has taken funds from clients and engaged in certain business activities not approved by his brokerage firm.  Bourgeois, formerly registered with Commonwealth Financial Network (Commonwealth Financial) out of Metairie, Louisiana has been barred by The Financial Industry Regulatory Authority (FINRA) for failing to answer questions concerning his conduct.  In addition, Bourgeois disclosed at least three customer complaints and one termination for cause.

In May 2019 FINRA found that Bourgeois consented to sanctions and findings that he failed to produce documents and information requested by FINRA during the course of an investigation into allegations reported that he borrowed money from a customer, converted customer funds, and committed fraud.

In April 2019 a customer alleged that Bourgeois engaged in conversion of customer funds made by personal check purportedly for investment purposes; employing devices, schemes or artifices to defraud; making untrue statements of material facts; fraud beginning around 2016.  The claim alleged $519,500 in damages and is currently pending.

Bourgeois’ CRD disclosures states that Bourgeois has an outside business activity through which he engages in fixed insurance sales.

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shutterstock_185190197-300x199The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Chris Kubiak (Kubiak) has engaged in a misappropriation scheme.  Kubiak, formerly registered with Calton & Associates, Inc. (Calton) and American Global Wealth Management, Inc. (American Global Wealth) operating out of McDonough, Georgia and Brookfield, Wisconsin respectively has been accused by customers and the Department of Justice (DOJ) of engaging in securities fraud and misappropriating funds.

In October 2018 FINRA barred Kubiak after he consented to the sanction and to the entry of findings that he converted customer funds.  FINRA found that four customers, including three seniors, gave funds to Kubiak totaling approximately $270,000 to invest on their behalf.  FINRA found that instead Kubiak deposited the funds into his personal bank account and then used them for his own personal use such as gambling and to paying for personal medical bills.

In March 2019 the DOJ announced  charges against Kubiak include seven counts of wire and mail fraud concerning Kubiak’s scheme where he arranged to make withdrawals or to liquidate the investment accounts of his elderly clients. The DOJ indictment identifies a total of six clients from whom he is alleged to have wrongfully misappropriated approximately $370,000 over a five year period.

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shutterstock_156764942-200x300The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Robert High (High) has engaged in a misappropriation scheme.  High, formerly registered with First Financial Equity Corporation (First Financial) and operating out of Scottsdale, Arizona, has been accused by a customer of engaging in securities fraud and misappropriating funds.

In February 2019 the Federal Bureau of Investigation (FBI) opened an investigation into High for alleged misappropriation of funds and forgery.  Shortly thereafter First Financial terminated High claiming that he was in violation of firm’s policies.  In March 2019 a client filed a complaint alleging that High misappropriated funds causing $146,000 in funds.  The claim is currently pending.

Also in March 2019, FINRA suspended High for failing to respond to the regulator’s requests for documents and information.  If High continues to fail to respond he will be barred from the securities industry.

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shutterstock_143179897-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Kristian Gaudet (Gaudet), formerly associated with Ameritas Investment Corp. (Ameritas) in Cut Off, Louisiana has been terminated by the firm for using client funds for personal use.  Thereafter, in January 2019, Gaudet consented to the sanction and findings that he refused to appear for and provide FINRA on-the-record testimony concerning the internal investigation by Ameritas that Gaudet was found to have utilized client funds for personal use. Accordingly, Gaudet was barred by FINRA from the securities industry.

According to newsources, Gaudet arrested for stealing nearly $1 million from his clients.  Gaudet was a former vice president of the Greater Lafourche Port Commission and owner of Kris Gaudet Insurance and Financial Services.  Authorities received a complaint form a couple that found issues with a $350,000 investment made to “Winston Financial” in 2012.  Authorities claim that the money was used for purposes other than the investment purposes for which it was intended.  Authorities also accused Gaudet of using funds received in May from another couple to buy a home in Larose.  Gaudet has been accused of frequently using money he received from investors for personal gain including using money clients paid for insurance to buy real estate.

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shutterstock_94632238-300x214According to the Department of Justice (DOJ) William Hightower, a 60-year-old resident of Bellaire was charged with a 13-count indictment charging him with wire fraud, mail fraud and money laundering.  The charges claim that he was the president of Hightower Capital Group (HCG) founded it in 2010 and held himself out to be an investment advisor.  The charges outline that Hightower took money from clients from 2013-2018 and made false promises as to their investments when in reality he was conducting a Ponzi Scheme.

Hightower would allegedly tell investors their money was being invested in various projects, such as restaurants, movies, insurance contracts.  However, DOJ alleges that none of these projects existed and that instead Hightower received more than $10 million from investors and used investor funds to pay earlier investors in a Ponzi Scheme and to pay himself and fund his lifestyle.

The DOJ also charges that Hightower also concealed from his clients that the Financial Industry Regulatory Authority (FINRA) had barred him in October 2015.  The DOJ stated that if convicted, Hightower faces up to 20 years in federal prison for each count as well as possible fines.

According to BrokerCheck records kept by FINRA Hightower has six customer complaints – most of which relate to the alleged securities fraud activities.

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shutterstock_46993942-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor John Schmidt (Schmidt), formerly associated with Wells Fargo Advisors Financial Network, LLC (Wells Fargo) in Dayton, Ohio has been accused by the Securities and Exchange Commission (SEC) of misappropriating over $1.16 million from at least seven clients.

In September 2018 the SEC filed a complaint alleging that for the past 35 years Schmidt has been a registered representative in the brokerage industry.  The SEC found that from at least 2003 through 2017, Schmidt betrayed his customers’ trust by perpetrating a classic fraudulent scheme, acting without customer authorization, and repeatedly selling securities belonging to some of his brokerage customers and secretly transferring the sale proceeds to cover shortfalls in the accounts of other customers.   The SEC alleged that Schmidt misappropriated over $1.16 million from accounts belonging to seven customers and transferred that cash to at least ten other customers whose accounts were experiencing shortfalls.  In addition, the commission found that rather than tell those customers the truth about their dwindling funds, Schmidt sent them fake account statements and falsely assured the customers that their investment returns could fund their withdrawals without jeopardizing their principal. Most of Schmidt’s customers were elderly retirees with little to no financial expertise and several of Schmidt’s victims were suffering from Alzheimer’s disease or other forms of dementia.  The SEC claimed that at least five of Schmidt’s victims passed away during the course of his fraud. Further, Schmidt’s allegedly profited from the scheme and received over $230,000 in commissions from customers who were either the source of, or recipient of, misappropriated funds.

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shutterstock_162013331-300x199There is a need for strong protection of the elderly investing population. About one out of every five Americans 65 years and older has been a victim of financial abuse.  The elderly are estimated to lose up to $2.9 billion per year from scams.   In fact, these figures are likely lower than the actual incidence of fraud since only reported accounts of frauds are considered and seniors are “less likely” to report being scammed.

Elders are abused by a variety of persons including family members, caregivers, and scam artists.  Unfortunately, financial advisers, fiduciaries (such as agents under power of attorney and guardians), and brokers also have known to take advantage of the elderly.  Usually the person is already in a position of trust or is able to acquire a high level of trust due to the diminished capacity of the victim.

Brokerage firms are in the perfect position to recognize the signs elder abuse and elder fraud.  Firms should be able to recognize diminished capacity and dementia, decreased ability to handle finances, questionable purchases or transfers, and the inability of their clients to understand or comprehend their financial assets.   When there are reasonable grounds to believe a firm client is being financially exploited the member firm must report potential exploitation to proper authorities and otherwise hold transactions pending review and determination.

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shutterstock_186211292-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor James Knee (Knee), formerly associated with Voya Financial Advisors, Inc. (Voya) and Ameriprise Financial Services, Inc. (Ameriprise) in Concord, New Hampshire was terminated for cause by Voya concerning allegations that Knee failed to cooperate in an internal investigation relating to potential receipt by the representative of a cash gift from a customer.  Thereafter, in May 2018, FINRA barred him from the financial industry after Knee consented to the sanction due to his refusal to appear for testimony requested by FINRA in connection with their investigation into allegations that he misappropriated customer funds.

At the same time a Merrimack County grand jury returned 11 indictments against Knee relating to conduct between 2014 and 2017.  Knee was charged with theft by misapplication, theft by deception, financial exploitation of the elderly, and investment adviser fraud.  He allegedly stole over $490,397 for personal expenses.  In addition, Knee was also indicted on perjury charges in connection with statements he made to the Bureau of Securities Regulation while it was investigating him in 2016 and witness-tampering.

Knee disclosed a number of outside business activities including Sterling Financial Services, LLC which appears to be his d/b/a through which Knee operated.  In addition, Knee also disclosed involvement with Opulencia Dressage, certain real estate rental properties, and an insurance agency.