Articles Posted in Securities Fraud

shutterstock_120556300-300x300The law offices of Gana Weinstein LLP are currently investigating claims that advisor Michael Carter (Carter) was discharged by his employer after being accused of misappropriating client funds.  According to BrokerCheck records, Carter is formerly registered with The Financial Industry Regulatory Authority (FINRA) member firm Morgan Stanley.  In addition, Carter disclosed three customer complaints related to misappropriating funds. If you have been a victim of Carter’s alleged misconduct our firm may be able to assist you in recovering funds.

In July 2019 Morgan Stanley discharged Carter after alleging that he was terminated after allegations of misappropriation of funds occurred.

In September 2019 FINRA filed a regulatory action alleging that Carter consented to the sanction and findings that he failed to provide documents and information requested by FINRA during the course of an investigation after FINRA received a tip relating to allegations of misconduct made by Morgan Stanley.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling fraudulent securities sales through OBAs.  The sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws.  In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm.  Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

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shutterstock_160304408-300x199The law offices of Gana Weinstein LLP are currently investigating claims that advisor Kerry Hoffman (Hoffman) engaged in undisclosed outside business activities (OBAs) and investment sales that were not approved by his brokerage firm.  Hoffman, formerly registered with LPL Financial LLC (LPL Financial) and Union Capital Company (Union Capital) was subject to charges of securities fraud by The Securities and Exchange Commission (SEC) according to records kept by The Financial Industry Regulatory Authority (FINRA).  In addition, Hoffman disclosed two customer complaints and three employment termination for cause.

In July 2019 the SEC charged Hoffman along with Thomas Conwell (Conwell) for fraudulently selling securities to retail investors.  The SEC’s complaint alleges that from July 2015 through July 2018, Conwell and Hoffman raised over $3.3 million from approximately 46 investors through the sale of unregistered GT Media, Inc. securities. The SEC alleged that Conwell is no stranger to securities fraud and was previously enjoined by the SEC and criminally convicted for stealing money from investors.  In the case of GT Media, the SEC alleged that investors received numerous false representations including that two Fortune 500 companies were seeking to acquire GT Media and that GT Media would soon conduct an initial public offering.  The SEC claims that Conwell misappropriated $161,500 from investors for his his personal expenses. The SEC also alleged that Hoffman solicited advisory clients to invest in GT Media securities without disclosing his financial conflicts of interest, including his compensation from GT Media and his short-term loans to GT Media that were repaid using investor funds.

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shutterstock_25054879-300x200The law offices of Gana Weinstein LLP are currently investigating claims against broker Nick Son (Son), currently associated with Aegis Capital Corp. (Aegis) out of New York, New York.  According to a BrokerCheck report, Son has been subject to at least seven customer disputes during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Son’s customer complaints concern allegations of unauthorized trading, unsuitable investments, and misrepresentations among other claims.

In February 2018 a customer filed a complaint alleging that Son violated the securities laws by making unauthorized trading and unsuitable investment recommendations.  The customer requested $224,968 in damages.  The dispute is currently pending.

In April 2016 a customer alleged that in March 2016, Son engaged in high pressure sales tactics and misrepresentations causing $65,984 in damages.  The claim was denied.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

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shutterstock_143685652-300x300The attorneys at Gana Weinstein LLP are currently investigating reports that advisor Nicolas Barrios (Barrios) engaged in undisclosed outside business activities (OBAs) that were not approved by his brokerage firm resulting in potential fraudulent investments.  Barrios, formerly registered with UBS Financial Services Inc. (UBS) out of Winter Haven, Florida was barred from the financial industry according to records kept by The Financial Industry Regulatory Authority (FINRA).  In addition, Barrios disclosed at least four customer complaints and one employment termination for cause.

In April 2019 UBS terminated Barrios for cause alleging that he was discharged after stating during a firm review: (1) he arranged for client to invest away from firm in private company; (2) he personally invested in that company without firm approval; and (3) he used personal email to communicate with client’s family in an attempt to evade firm detection.  UBS claims to have subsequently learned that at least seven of Barrios’ clients moved money from UBS accounts to outside bank accounts from which they wrote checks to an entity with which Barrios is affiliated

In June 2019 FINRA found that Barrios consented to the sanctions and findings that he failed to provide FINRA with requested documents and information in connection with FINRA’s investigation into allegations that Barrios mismanaged and committed fraud with respect to a customer’s account. Accordingly, Barrios was automatically barred from the securities industry.

At this time it is unclear what OBA Barrios engaged in that FINRA was investigating.  Barrios’s public disclosures state that he was involved in a auto boat broker dealer business.  It is unclear if these OBAs were the subject of FINRA’s investigation.

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shutterstock_26813263-300x199The securities lawyers of Gana Weinstein LLP are investigating recommendations by brokerage firms for their clients to invest in NorthStar Healthcare Income Inc., (NorthStar Healthcare) – a non-traded real estate investment trust (Non-Traded REIT).  According to newsources, NorthStar Healthcare has suffered massive losses and may only be worth less than 30 cents for every dollar purchased.  In addition, NorthStar Healthcare no longer distributes a dividend – which previously had only been a return of investor principal and not funds from any business operations.  As is too common in the brokerage industry, firms fail to understand the flawed Non-Traded REIT business model and only recommend these products for their 7% commissions – not because they benefit investors.

According to the NorthStar Healthcare’s website, the investment formed to originate, acquire and asset manage equity and debt investments in healthcare real estate. NorthStar Healthcare claims that it is focused on making investments in the needs-driven senior housing sector including independent living facilities, assisted living, memory care, and skilled nursing facilities.  NorthStar Healthcare launched in February 2013 and raised total gross proceeds of $2 billion, including $225.3 million through its distribution reinvestment plan.  The company claims to have a $2.4 billion portfolio of 652 properties as of the third quarter of 2018.

According to The DI Wire, in December 2017, NorthStar Healthcare reduced its distribution rate from 6.67% to 3.31%.  One year later NorthStar Healthcare lowered the net asset value of its common stock from $8.50 per share to $7.10 per share. In addition, in October 2018, NorthStar Healthcare told shareholders that it was suspending its repurchase program – unless the shareholder was dead or had a qualifying disability.

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shutterstock_171721244-300x200The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ricky Flatt (Flatt) has taken loans from a client and engaged in certain business activities not approved by his advisory firm.  Flatt, formerly registered with Royal Fund Management, LLC (Royal Fund) out of Troy, Michigan has been terminated by Royal Fund and under investigation by the State of Michigan for accepting funds from a client.  In addition, Flatt disclosed at least 12 tax or judgement liens totaling hundreds of thousands of dollars.

In March 2019 the State of Michigan opened an investigation into Flatt alleging that he borrowed money from a client and defaulted on the loan while also failing to disclose an outside business activity.

In March 2019 Royal Fund terminated Flatt after alleging that Flatt breached the firm’s internal policies and procedures concerning reporting business activities and loans from a client.

Flatt’s IARD disclosures state that Flatt has an outside business activity called Financial Strategies, Inc. selling certain insurance policies.  It is unclear at this time what business activity that investigations concern.

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shutterstock_128856874-300x200According to BrokerCheck records financial advisor Michael Lyle (Lyle), currently employed by Transamerica Financial Advisors, Inc. (Transamerica) has been subject to four customer complaints and one tax lien during during his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the customer complaints against Lyle concern allegations over variable annuity sales practices.

In January 2019 a customer filed a complaint alleging that Lyle violated the securities laws by, among other things, that the product was misrepresented in that she was told she would receive returns of $7,500 monthly but that Lyle had failed to inform her of the IRS penalties for early withdrawals causing $100,000 in damages.  The claim is currently pending.

In June 2018 a customer filed a complaint alleging that Lyle violated the securities laws by, among other things, that the product was unsuitable and that Lyle failed to inform her of the IRS penalty for early withdrawals causing $73,594 in damages.  The claim was denied.

Variable annuities are complex financial and insurance products.  In fact, the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing.  Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you.  The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen.  The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

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shutterstock_93851422-300x240Our firm represents multiple clients who have been recommended GPB Capital Holdings (GPB Capital) related investments. GPB invests in a variety of businesses but primarily in auto dealerships and waste management businesses.  However, over the past year controversy has embroiled GPB Capital in a saga including multiple regulatory investigations and even an FBI referral which has left investors clueless to the fate of their investments.

According to our investigation Kalos Capital, Inc. (Kalos Capital) and its brokers including Jason Mosher (Mosher) have recommended GPB Capital private placements to investors.  Investors at this point should prepare themselves for the worst possible outcomes including significant losses on their investments.  Investors who have invested in GPB Capital are encouraged to contact us for a free consultation.

As a background, financial advisers sold $1.5 billion of these high-risk private placements offered by GPB Capital Holdings. More than a year ago GPB Capital was supposed to file registration forms with the SEC for two of its largest funds to make certain accounting and financial disclosures required under the securities laws.  However the company did not meet its deadline back in April 2018 and now over a year later has no firm date when annual reports for the two funds will be filed and the public has no clue what those values will look like. It is highly unusual for an audit of a fund to take over a year without any material update to investors.  Even the largest of publicly traded companies that have accounting irregularities rarely take this long to make a restatement of their accounting numbers.  However, GPB has merely told investors to continue to be patient as the company has come up with never ending excuses that follow an all too familiar pattern in an industry wracked with fraud and abuse.

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shutterstock_181783781-200x300According to BrokerCheck records financial advisor Xavier Patino (Patino), currently employed by Newbridge Securities Corporation (Newbridge Securities) and formerly with J.P. Morgan Securities LLC (JP Morgan) has been subject to one regulatory action, one one employment termination for cause, and two customer disputes during his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), the regulatory action against Patino concerns allegations over variable annuity sales practices.

In June 2018 Patino consented to sanctions and to the entry of findings that Patino made material misstatements to a customer and guaranteed the customer against loss in connection with a variable annuity purchase. FINRA also found that Patino solicited this customer to purchase a $192,000 variable annuity contract with the variable annuity prospectus describing the features and risks of the product. However, FINRA found that prior to finalizing the sale the client presented Patino with a document she had prepared and asked Patino to sign it explicitly signifying that he agreed with the statements.  FINRA found that thereafter, the customer’s variable annuity lost value, she complained to Patino’s member firm about her losses, and presented the guarantees signed by Patino.

In April 2017, JP Morgan discharged Patino claiming that he admitted to signing an unapproved document that guaranteed the customer would not lose principal on an investment in violation of firm policy.

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shutterstock_114128113-300x238According to BrokerCheck records financial advisor Christopher Bennett (Bennett), formerly employed by J.J.B. Hilliard, W.L. Lyons, LLC (JJB Hilliard), has been subject to at least thirteen customer complaints and one regulatory action during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Bennett has been accused by multiple customers of unsuitable investment advice concerning various investment products including energy stocks most likely including master limited partnerships (MLPs).  The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

In February 2019 Bennett was sanctioned by FINRA after the regulator made allegations that Bennett consented to the sanctions and findings that he exercised discretionary trading authority in the accounts of several customers without written authorization from the customers and without obtaining his member firm’s prior written acceptance of the accounts as discretionary.

In February 2019 a customer filed a complaint alleging that Bennett violated the securities laws including the Securities Act of Kentucky, breach of fiduciary duty, and unsuitable investment recommendations causing $139,214 in damages.  The claim is currently pending.

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