Articles Posted in Securities Fraud

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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shutterstock_143179897-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Dean Grant (Grant), formerly associated with M Holdings Securities, Inc. (M Holdings), and operating under the d/b/a name Dean Grant Financial and GFG Strategic Advisors was arrested in February 2019 on charges of fraud.  Grant’s company purportedly offers financial and estate planning, life insurance, retirement planning, charitable giving, disability and long-term care.  In addition, Grant has three tax liens totaling approximately $150,000.

Grant purportedly turned himself in after an investigation by the Georgia Insurance Commissioner’s Office showed he used nearly $600,000 from at least three clients for his personal gain.  Yet, Grant apparently did not obtain any insurance investments with the money.  Grant was charged with three counts of insurance fraud, three counts of theft by taking, one count of forgery and two counts of trafficking of an elder person. Authorities claim that clients made checks made out to Dean Grant Financial and then he made checks made out to Dean Grant himself taking the money.

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”.

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According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Dudley Stephens (Stephens), formerly associated with Coastal Equities, Inc. (Coastal Equities), in September 2018, was sanshutterstock_99315272-300x300ctioned and barred from the securities industry by FINRA due to failures to provide documents and information requested by the regulator.  In addition, Stephens has three customer complaints, one termination, and one additional regulatory complaint.

In July 2018 Stephens was terminated by Coastal Equities on grounds that he was being reviewed over suspicious letters of authorization for third party wires.  Thereafter, FINRA barred Stephens.

In December 2018 a customer filed a complaint alleging that excessive and unauthorized commissions were charged of approximately $50,000 per year for 2.5 years in her advisory account. The client also alleged that $100,000 was invested in an unauthorized private securities transaction was a sham.  The claim alleges $250,000 in damages and is currently pending.

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”.

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shutterstock_94127350-300x205According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker James Schwartz (Schwartz) has been subject to nine customer complaints, one tax lien, and one bankruptcy during his career.  Schwartz is currently not registered but was previously employed by Joseph Gannar & Co. LLC (Joseph Gunnar).  Many of the the customer complaints against Schwartz concern allegations of high frequency trading activity also referred to as churning and unsuitable investments.

In October 2018 a customer filed a complaint alleging that Schwartz violated the securities laws by engaging in breach of fiduciary duty, unsuitable investments, and negligence causing $32,871.30 in damages.  The claim is currently pending.

In May 2018 a customer filed a complaint alleging that Schwartz violated the securities laws by engaging in churning, unsuitable investments, unauthorized trading, and breach of fiduciary duty causing $150,000 in damages. The claim is currently pending.

In February 2018 a customer filed a complaint alleging that Schwartz violated the securities laws by engaging in unsuitable investments and unauthorized trading causing $1,694,099 in damages. The claim is currently pending.

In addition, Schwartz has one financial disclosure concerning a tax lien for $15,667 and declared bankruptcy in June 2017.  This information has been found to be material for investors to have because an advisor who cannot manage his own finances is a relevant factor for investors to consider.  In addition, a broker in financial distress may be influenced to recommend high commission products or strategies.

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shutterstock_188269637-300x200According to BrokerCheck records former financial advisor Brandon Stimpson (Stimpson), formerly employed by Allegis Investment Services, LLC (Allegis Investment) has been subject to at least eight customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Stimpson concern allegations of unsuitable investments in a put options trading strategy.

In December 2017 Stimpson was terminated by Allegis Investment after the firm claimed that Stimpson failed to follow firm policies and code of ethics.  Prior to his termination, Stimpson was subject to multiple complaints.

In October 2017 a customer complained that Stimpson engaged in unsuitable investments in an options strategy that was active in the account was unsuitable and a trade in Aug 2015 caused the account losses.  The customer alleged $300,000 in damages and the claim is currently pending.

In June 2016 a customer complained that Stimpson engaged in unsuitable investments in an options strategy and a trade in Aug 2015 caused the account losses.  The customer alleged $400,000 in damages and the claim is currently pending.

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