Articles Posted in Ponzi Scheme

shutterstock_180341738-200x300The attorneys at Gana Weinstein LLP are investigating potential claims against brokerage firms for selling securities issued by entities related to EquiAlt, LLC.  EquiAlt purports to be a private real estate company with at least four private placements offerings: EquiAlt Fund, LLC; EquiAlt Fund II, LLC; EquiAlt Fund III, LLC; and EA Sip, LLC.

On February 18, 2020, the Securities and Exchange Commission (SEC) filed an emergency enforcement action and sought to obtain a temporary restraining order along with an asset freeze against EquiAlt LLC, its CEO Brian Davison, and its Managing Director Barry Rybicki.  The SEC alleged that the action was being made in connection with EquiAlt’s alleged fraudulent unregistered securities offering that raised more than $170 million from at least 1,100 investors.

According to the SEC’s complaint, in the U.S. District Court for the Middle District of Florida, EquiAlt, Davison, Rybicki, and the other entities involved in the claimed fraud, raised millions of dollars by making material misrepresentations and false claims to investors about EquiAlt’s investment strategy.  The SEC claims that the EquiAlt told investors they would pool investor funds and use approximately 90% of the money to purchase under-valued real estate, rent or flip the properties, and pay investors 8-10% annual interest generated from the real estate investments. However, as in the case with so many frauds, the SEC is claiming that a large portion of investor money went to support Davison’s and Rybicki’s lavish personal spending and that in fact less than 50% of the funds raised were used to invest in properties and other legitimate purposes.  The SEC is claiming that money from one investment fund controlled by EquiAlt was allegedly used to make Ponzi-like payments to investors in another fund.  Such commingling of funds amongst supposedly separate entities is common in Ponzi-schemes.

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shutterstock_69882820-300x228The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge).  The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensnaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages.  In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Roger Owens (Owens) appears to be an agent for Woodbridge fraudulent note sales.  Owens was formerly associated with Cetera Advisors LLC (Cetera) out of the firm’s Elkton, Maryland office location.  Owens has four complaints related to his Woodbridge note sales.

In addition, in August 2019 FINRA found that Owens consented to sanctions and findings that he engaged in private securities transactions without providing notice to Cetera. FINRA determined that Owens solicited investors to purchase promissory notes relating to a purported real-estate investment fund [Woodbridge]. Owens was found to have sold at least $1,170,000 in promissory notes to investors while receiving $59,471 in commissions in connection with these transactions. FINRA also found that Owens falsely attested in compliance questionnaires that he had not engaged in any private securities transactions without receiving prior written approval from his firm.

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shutterstock_145123405-200x300Advisor Steven Netzel (Netzel), formerly employed by Kalos Capital Inc. (Kalos Capital) has been subject to at least one customer complaint, one regulatory action, and one financial disclosure during the course of his career.  According to a BrokerCheck report the customer complaint concerns alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

One private placement that a large number of clients of Kalos Capital were sold is GPB Capital Holdings (GPB Capital) related investments.  GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation.  Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships.  While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice.  In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future.  In sum, investors now know there is nothing to hang onto.  By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.

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shutterstock_57938968-200x300According to a compliance officer with Purshe Kaplan Sterling Investments, Inc., (Purshe Kaplan) the firm continued to sell securities offered by GPB Capital Holdings (GPB Capital) after she had reported misgivings as to the entities business model and recommended that the firm not sell the product.  According to court documents, the compliance officers responsibilities included reviewing new product offerings, regulatory disclosures, and conducting monthly and quarterly compliance reviews among other duties.

In January 2016, the compliance officer raised concerns about GPB Capital and did not recommend that the product be added to the Purshe Kaplan platform based upon her finding that members of senior management at the sponsor of the product were using investor funds for personal business interests.  However, Purshe Kaplan dismissed her concerns and re-reviewed GPB Capital without the compliance officer’s input.  Further, Purshe Kaplan instructed the compliance officer not to raise concerns about the product before it was offered to purchasers.  Moreover, it was alleged that less experienced personnel were given the role to evaluate GPB Capital.  If these allegations are true Purshe Kaplan may have intentionally withheld material information from all of its investors concerning GPB Capital.

One private placement that a large number of clients of Purshe Kaplan were sold is GPB Capital related investments.  GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation.  Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships.  While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice.  In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future.  In sum, investors now know there is nothing to hang onto.  By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.

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shutterstock_172399811-297x300Our firm represents multiple clients who have collectively lost millions in the sale of fraudulent GPB Capital Holdings (GPB Capital) related investments.  Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review these offerings in any significant detail.  Any serious due diligence would have revealed that GPB Capital was an investment fraud scheme.

Advisor Darren Kubiak (Kubiak), according to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), has been accused of selling GPB Capital.  Kubiak is formerly registered with member firm Kalos Capital, Inc. (Kalos Capital).  In addition, Kubiak disclosed three total customer complaints and one FINRA regulatory action. If you have been a victim of Kubiak’s alleged misconduct our firm may be able to assist you in recovering funds.

FINRA alleged in a regulatory filing that Kubiak consented to sanctions and findings that he recommended the purchase of leveraged and inverse exchange traded funds (LIETFs) to customers without having a sufficient understanding of the risks and features associated with the LIETFs. FINRA found that Kubiak failed to have a reasonable basis to make these recommendations. In addition, according to FINRA Kubiak recommended these customers purchase LIETFs then held them for an average of 722 days causing Kubiak’s customers to incur approximately $98,000 in losses. FINRA found that Kubiak failed to perform reasonable due diligence and accordingly did not understand that LIETFs are generally expected to lose value over time and that losses are compounded because of daily resets.

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shutterstock_143685652-300x300Our firm represents multiple clients who have collectively lost millions in the sale of fraudulent GPB Capital Holdings (GPB Capital) related investments.  Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review these offerings in any significant detail.  Any serious due diligence would have revealed that GPB Capital was an investment fraud scheme.

Advisor Luke Johnson (Johnson), according to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), has been accused of selling GPB Capital.  Johnson is currently registered with member firm Coastal Equities, Inc. (Coastal Equities).  In addition, Johnson disclosed seven total customer complaints. If you have been a victim of Johnson’s alleged misconduct our firm may be able to assist you in recovering funds.

Our firm’s investigation has found that brokerage firms failed to conduct due diligence and investigate multiple aspects of GPB Capital’s business including its senior management, fantastical business claims, and intra-fund lending practices.  For instance, with respect to GPB Capital’s senior management the company was founded by David Gentile (Gentile).  Had brokerage firms investigated GPB Capital’s senior manager it would have found that prior to founding GPB Capital, Gentile’s experience was as a CPA and company advisor with the accounting practice his family ran at Gentile Pismeny & Brengel, LLP (GP&B) in New York.  Nonetheless, GPB’s PPMs claimed expertise in these areas.   GPB Holdings II, LP, PPM, pg. 9 (Apr. 13, 2015) (“GPB’s senior management have a great deal of experience investing in the Automotive Retail, Managed IT Services and Life Sciences sectors.”).

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shutterstock_183525509-300x200The attorneys at Gana Weinstein LLP are looking into potential actions to help investors ensnared in the 1st Global Capital LLC (1st Global Capital) investment fraud scheme.  According documents filed by The Securities and Exchange Commission’s (SEC) it appears that some of the victims were brought to 1st Global by brokers who formerly worked for Taylor Capital Management (Taylor Capital).  These advisors include James Heafner (Heafner) and Trae Wieniewitz (Wieniewitz).  Heafner operated out of a d/b/a company called Heafner Financial Solutions, Inc.

In August 2018 Heafner’s employer terminated him alleging that he failed to follow written policies concerning the firm’s outside business activities.  In addition, Heafner has three customer complaints alleging that the clients lost funds in the now defunct 1st Global Capital scheme.

As revealed in court documents and the complaint filed by SEC – 1st Global Capital engaged in a four year unregistered securities offering overseen by Carl Ruderman (Ruderman) – also charged.  The SEC has alleged that more than 3,400 investors nationwide have been caught in the company’s $287 million fraud.

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shutterstock_185913422-300x200The securities attorneys of Gana Weinstein LLP are experienced in helping investors recover investment losses due to various investment fraud schemes including Ponzi schemes, investment value manipulation, and outright theft and conversion of funds.

Unfortunately, the vast majority of investment fraud victims do not receive any recovery for a variety of reasons.  First, many victims are embarrassed and feel a sense of guilt over having been deceived and prefer not to talk about the experience.  Second, many victims believe that investor recovery is conducted by regulators and if a regulator such as the Securities and Exchange Commission (SEC) or Financial Industry Regulatory Authority (FINRA) take action investors are entitled to those funds.  The truth is regulators rarely compensate victims for their losses and if they do the process can take years, in some cases around a decade, during which time investors may loss their legal rights to pursue additional avenues of recovery.

Often time the best, and in many instances the only avenue of recovery, is by hiring a private attorney to investigate and pursue your claim.  The SEC has stated on its website that “It is important to understand that not all harmed investors will be able to recover money. Investors who do recover money may receive substantially less than their losses.  In addition, even when harmed investors are able to recover money, the process for distributing the money to harmed investors may take a long time.”

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shutterstock_94632238-300x214The securities lawyers of Gana Weinstein LLP are investigating potential recovery options concerning an investment fraud scheme recently enjoined by the the Securities and Exchange Commission (SEC).  The SEC recently announced it obtained a court order halting an ongoing Ponzi-like scheme conducted by Kevin B. Merrill (Merrill), Jay B. Ledford (Ledford) and Cameron Jezierski (Jezierski) that raised more than $345 million from over 230 investors.  Investors dealt with the defendants entities including Global Credit Recovery, LLC (Global Credit Recovery), Delmarva Capital, Rhino Capital, DeVille Asset Management, and Riverwalk Financial Corporation.

The SEC alleged that Merrill, Ledford and Jezierski, from at least 2013 through the present, through the web of entities they control have offered and sold investments relating to consumer debt portfolios, claiming to generate significant profits through their expertise in collecting on and reselling consumer debt.  However, the SEC found that in nearly every interaction with investors Merrill and Ledford misled investors about what they would do with the raised money.  The SEC found that the defendants made false statements, fabricated nonexistent debt portfolios, created fake wire transfers and contracts, and founded shell companies meant to mimic legitimate companies.  The SEC claimed that instead of purchasing debt as promised, investor money was largely used investor money to fund the defendants’ lavish lifestyles and prop up the scheme with Ponzi-like payments to other investors.

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shutterstock_155271245-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Frank Zito (Zito), formerly associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) in Ridgeland, Mississippi and currently registered with Coker & Palmer was terminated concerning allegations that Zito engaged in conduct such as failure to adhere to firm standards regarding selling away and failure to fully disclose participation in an outside business activity.  A month earlier in May 2018 a customer filed a complaint against Zito alleging that the broker made unsuitable recommendations and sold unapproved products from 2013 through January 2018.  The complaint is currently pending and alleges $571,000 in damages.

At this time, the claims against Zito are unclear as to the exact nature and extent of the unapproved product sale activity.  Zito has outside business disclosures including timber purchasing from timber management firm.

It is possible that this activity is related to the alleged Ponzi Scheme orchestrated by Arthur Adams (Adams) and Madison Timber Properties LLC (Madison Timber) by The Securities and Exchange Commission (SEC).   The complaint against Adams and Madison Timber was unsealed on May 1, 2018 Mississippi federal court and revealed the SEC’s fraud charges against the Mississippi company and its principal who has been accused of stealing from at least 150 investors in a $85 million Ponzi scheme.  Adams and Madison Timber agreed to a permanent injunction, an asset freeze, and expedited discovery.

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