Articles Posted in Ponzi Scheme

shutterstock_173088497-300x199The law offices of Gana Weinstein LLP are investigating the Massachusetts Securities Division’s enforcement action and administrative complaint against ARO Equity, LLC (ARO Equity), Thomas David Renison (Renison), and Timothy James Allcott (Allcott).  The complaint alleges that ARO Equity is Ponzi-scheme.  This is not Renison’s first securities offense.  In 2014, the Securities and Exchange Commission (SEC) issued an order permanently barring Renison from the securities industry.  The SEC’s order was the result of Renison’s role in a 2008 scheme to defraud one of his former advisory clients through the sale of a promissory note.  A year after the SEC issued its permanent bar, Renison established ARO Equity which is a self-described “private investment fund” claiming to invest in various business ventures throughout Massachusetts and New England.

The state of Massachusetts has claimed that Allcott was the manager of ARO Equity and together with Renison took $5.8 million of investor funds since August 2015.  The complaint alleges that these funds were raised through the sale of unsecured promissory notes promising 8-12% annual returns over three to five-year terms.  The complaint alleges that investors made significant investments from their retirement accounts by transferring qualified retirement assets to a self-directed IRA to invest in ARO Equity.

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shutterstock_94632238-300x214The law offices of Gana Weinstein LLP are investigating the Securities and Exchange Commission’s (SEC) charges and asset freeze against several individuals and companies behind what the agency calls a $102 million Ponzi scheme that defrauded investors throughout the country.  According to the SEC’s complaint, the defendants misled 600 investors through sales of securities in issuers First Nationle Solution LLC (First Nationle), United RL Capital Services (United RL), and Percipience Global Corp. (Percipience Global).  The so-called advisors involved charged by the SEC include Perry Santillo, Christopher Parris, Paul LaRocco, John Piccarreto, and Thomas Brenner (the Advisors).

The SEC alleged that investors were solicited by the Advisors after they had acquired the brokerage practices from retiring investment advisors or through a sale of their business.  After the business was acquired investors were told that their funds would be invested in companies with guaranteed dividends returns.  However, the SEC alleges that the defendants stole $20 million of investor funds, paid $38.5 million in Ponzi payments to other investors, and transferred the remainder in transactions that the SEC believes was unrelated to the companies’ claimed businesses.

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shutterstock_177082523-243x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor David Zier (Zier), in October 2014, was terminated by his then employer City National Securities, Inc. (City National) and was under investigation by the Securities and Exchange Commission (SEC) and FINRA.  Zier was the CEO of Convergent Wealth Advisors (Convergent) through which he allegedly solicited clients for a private fund he managed called ZAM LLC (ZAM).  According to regulators, from 2007 to 2014 Zier falsely told clients ZAM was profitable and gave them fabricated account statements that concealed the fund’s losses.

In October 2014, Zier was found dead in an apparent suicide.  Zier’s death occurred just weeks after Convergent’s compliance officers became suspicious of the ZAM fund and began to question Zier about irregularities in ZAM’s records.  It is currently unknown the total fund losses but at one time the fund had $20 million.  According to the U.S. Commodity Futures Trading Commission (CFTC) Zier fraudulently solicited $2.9 million in investments in ZAM.

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shutterstock_160071281-300x168The law offices of Gana Weinstein LLP are investigating reports by multiple securities regulatory agencies that Yasuna Murakami (Murakami), Avi Chiat (Chiat) and the companies and hedge funds that the two managed defrauded over 50 investors by raising $15 million and then misappropriating funds in Ponzi like fashion.

According to the SEC, From 2007 to 2016, Murakami and Chiat defrauded more than 50 investors in three hedge funds run through their investment advisory businesses, MC2 Capital Management, LLC and MC2 Canada Capital Management, LLC.  The three hedge funds are the MC2 Capital Partners, LLC (Partners Fund), MC2 Capital Value Partners, LLC (Value Fund), and the MC2 Capital Canadian Opportunities Fund, LLC (Canadian Fund).

The SEC alleged that the firms and their principals violated their fiduciary duties as advisers to the funds by lying to investors about the funds’ performance, falsifying account statements, falsifying tax documents, falsifying performance letters, and providing other misleading communications to investors. According to the SEC, Murakami and Chiat continually misled investors into believing they had invested in profitable ventures when in reality Murakami and Chiat engaged in unprofitable trading that lost more than 70% of the money raised for their first hedge fund in less than two years.

Further, the SEC found that over nearly a decade Murakami stole more than $8 million of investor funds and spent those funds on personal and business expenses.  The SEC also alleged that Murakami used $1.3 million of investor funds to make Ponzi-like payments to earlier investors while telling those investors that the proceeds were from investment gains.

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shutterstock_172105349-199x300The investment lawyers of Gana Weinstein LLP are investigating allegations by the Securities and Exchange Commission (SEC) claiming that financial advisor Leon Vaccarelli (Vaccarelli) defrauded his elderly clients out of more than $1 million.

According to FinancialPlanning, the SEC filed a complaint in federal court in New Haven alleging Vaccarelli engaged in a Ponzi scheme for more than four years. To pay his mortgage and other personal expenses, Vaccarelli allegedly did not put client funds in conventional brokerage accounts as promised and instead had some clients write checks payable directly to him and used the funds to pay for his expenses or to repay earlier investors.

Upon information and belief, as of September 7, 2017, Gana Weinstein LLP is the only firm to have brought civil claims in arbitration to help investors recovery their money from this Ponzi Scheme.

shutterstock_185190197-300x199The law offices of Gana Weinstein LLP have recently filed a complaint on behalf of nearly a dozen investors alleging that Dean Mustaphalli (Mustaphalli) engaged in securities fraud.  The claim was brought against brokerage firms Sterne Agee Financial Services, Inc. (Sterne Agee) and Interactive Brokers LLC (Interactive Brokers) alleging that the firms failed to supervise Mustaphalli’s misconduct and otherwise aided his fraud causing them approximately $3,000,000 in losses.

If you unfortunately trusted Mustaphalli with your investments there is still time to act.  Gana Weinstein LLP’s securities fraud attorneys represent investors who have suffered investment losses at the hands of securities professionals. Details concerning Mustaphalli’s alleged fraud continue to surface.

On June 14th, 2017, New York Attorney General Eric T. Schneiderman announced charges against Mustaphalli and entities he controlled with defrauding elderly clients out of millions of dollars.  The New York Attorney General alleged that Mustaphalli engaged in a six-year scheme to defraud clients that were elderly and near retirement by investing their money in his hedge fund and in many instances without their knowledge  Schneiderman said in a statement – “As we allege, Dean Mustaphalli squandered and looted $10 million from hardworking individuals. New Yorkers deserve to know that their investments are safe—and financial professionals who won’t play by the rules will face consequences.”

According to the complaint, since 2011, Mustaphalli invested 58 New York funds – total of more than $11 million – in his hedge fund and then lost $10 million by engaging in a risky options trading strategy that was not consistent with his clients’ investment profiles and objectives.  The complaint also alleges that Mustaphalli took an additional $100,000 from his hedge fund to pay for his own personal expenses.

The fund performed horribly losing $6.6 million or 92% in 2012 alone.  By December 2014, the fund’s historical performance was 97.6%, – practically a total loss. When clients complained about losses, Mustaphalli provided false and misleading reasons to blame such as market conditions in oil and because of the election.  Other investors were promised that the fund would stabilize.

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shutterstock_94632238-300x214The investment lawyers of Gana Weinstein LLP are investigating the action brought by the Department of Justice (DOJ) involving property acquired by Mark Sellers (Sellers) as part of a $10 million investment fraud scheme.  According to authorities Sellers shot and killed himself on Aug. 2, 2016.  The DOJ alleged that Sellers fraud scheme involved stealing approximately $10 million from approximately 100 investors through his firm, Selden Companies, LLC, from December 2007 through at least 2015.

According to the DOJ, Sellers fraudulently misrepresented to investors that he would use the funds to purchase companies and turn them around to sell at a profit. However, Sellers and his wife spent almost all of the invested funds to maintain their own lavish lifestyle.  Sellers’ used investor funds for vehicles, life insurance policies, homes, jewelry, and credit card purchases laundering the invested funds through multiple bank accounts.

It has also been alleged that Sellers used former Ameriprise Financial Services, Inc. (Ameriprise) broker John Elliott (Elliott) to raise funds for the fraud.  According to records kept by the Financial Industry Regulatory Authority (FINRA) Elliott working out of Overland Park, Kansas location from November 2011 through September 2016.  Thereafter, Ameriprise terminated Elliott alleging “compliance policy violations related to selling away.

The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.  In a subsequent, FINRA regulatory action Elliott consented to sanctions in the form of a permanent bar because he failed to provide documents and information requested by FINRA during the course their investigation.

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shutterstock_173088497-300x199The investment lawyers of Gana Weinstein LLP are investigating allegations by investors that Tripoint Global Equities, LLC (Tripoint Global) and its agents Robert Nathan, Mark Elenowitz, and Michael Boswell acted as placement agents to solicit investments tied to a massive $97 million Ponzi scheme involving the false sale of tickets for shows such as the Broadway hit Hamilton.

Tripoint Global allegedly formed a joint venture with certain entities under the control of Joseph Meli and Matthew Harriton such as 875 Holdings, LLC, 127 Holdings, LLC, Advance Entertainment, LLC, and Advance Entertainment II, LLC to sell interests in these entities.

As reported, The Securities and Exchange Commission (SEC) and the also the Department of Justice have alleged in civil and criminal charges that Joseph Meli ran a fraudulent ticket business.  Meli also used other to raise funds for the ventures such as Steven Simmons who was the head of an alternative investments at Sideris Capital Partners – were also arrested on securities fraud and wire fraud charges related to the scheme.

The scheme was unraveled and Meli’s arrest came after prosecutors said that Mark Varacchi, founder of Sentinel Growth Fund Management LLC, plead guilty in Manhattan federal court to charges of securities fraud and agreed to cooperate with authorities concerning their investigation into the other participants.  Varachhi also admitted to having schemed to defraud his prior employer, also a hedge fund, through embezzling money from vendors.

According to newsources and law enforcement agencies, of $81 million the raised from 125 investors just $48 million was used to repay earlier investors.  The rest of the funds allegedly were used for jewelry, private school tuition, gambling, and other expenses.

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shutterstock_143448874The securities lawyers of Gana Weinstein LLP are investigating the regulatory and criminal investigations concerning the Platinum Partners LP Funds.  The hedge funds include the Platinum Partners Value Arbitrage Funds and the Platinum Partners Credit Opportunities Fund.

In June, news sources began reporting that the New York-based hedge fund began liquidating its funds, after the firm’s longtime associate Murray Huberfeld (Huberfeld) was accused of arranging for a $60,000 bribe and kickback, in a Salvatore Ferragamo bag, to a correctional officers’ union official.  The alleged bribe was a reward to Norman Seabrook, president of the New York City Correction Officers Benevolent Association, for directing the union’s retirement funds to investment with Platinum.  The union official allegedly directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund.  In addition, Platinum and its chief investment officer, Mark Nordlicht, are also implicated in the probe.  Both Seabrook and Huberfeld pleaded not guilty to the charges.

However, it is uncertain at this time if the bribe charges are the end of the story.  Federal agents raided Platinum’s office in late June after the charges were announced for reasons reportedly separate from the bribery case.  This has caused news sources to speculate as to a potentially wider fallout including the potential that the purported $1.35 billion funds may be involved in a scheme to defraud investors.

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shutterstock_94632238The attorneys with the offices of Gana Weinstein LLP are investigating customer complaints and The Securities and Exchange Commission (SEC) recently filed complaint alleging that Oregon-based investment firm Aequitas Management, LLC (Aequitas Management) and its subsidiaries operated a Ponzi-like scheme that defrauded its 1,500 customers of approximately $350 million.

Upon information and belief, the following firms sold Aequitas notes to clients: CONCERT Wealth Management, Summit Advisor Solutions, LLC, Private Advisory Group, Elite Wealth Management, Integrity Bank & Trust, CliftonLarsonAllen Wealth Advisors (CLA Wealth Advisors), and Innovator Management LLC.

The SEC also alleged that the top three executives of Aequitas Management – CEO Robert Jesenik (Jesenik), executive vice president Brian Oliver (Oliver) and chief operating officer N. Scott Gillis (Gillis) were aware as early as 2014 that constraints in the company’s cash flow would make it difficult to meet existing obligations but continued to raise money anyway based on false premises in order to prop up the company.

According to the SEC, an investor would be issued a note promising that their principal plus interest ranging anywhere from 5 to 15 percent annually would be paid.  Jesenik and Oliver raised funds primarily by issuing promissory notes through Aequitas Commercial Finance, LLC (ACF), an entity wholly owned by Aequitas Holdings, LLC (Aequitas Holdings).  Other promissory notes were issued by a series of Aequitas-affiliated investment funds (the Aequitas Funds – See list below).  The manager of ACF is Aequitas Capital Management, Inc. (ACM) and the manager of the Aequitas Funds is Aequitas Investment Management, LLC (AIM).

According to the complaint, when the executives learned of large discrepancies between their assets and obligations they declined to cut expenses and raised hundreds of millions of dollars from new investors.  The SEC found that since 2014, Aequitas defrauded investors into thinking that they were investing in a portfolio of trade receivables in healthcare, education, transportation, or consumer credit while in reality the vast majority of investor funds to repay prior investors and to pay the operating expenses of the Aequitas enterprise.  In addition, the company used funds to support the lavish salaries and lifestyles of the owners.

At the heart of the company’s troubles is its outsized investment in Corinthian College, a Canadian for-profit college that was effectively shuttered after the province of Ontario suspended its operating license in early 2015.  Corinthian College then declared Chapter 11 bankruptcy in May 2015, crushing Aequitas finances since 75 percent of its trade-receivables portfolio was tied to the college.

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