Securities Fraud

NorthStar Healthcare REIT Investors Suffer Massive Losses

June 17, 2019 | by Staff Attorney

The 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.

Ricky Flatt Terminated Over Taking Money From Clients – Investor Recovery

June 11, 2019 | by Staff Attorney

The 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.

Advisor Michael Lyle Has Annuity Complaints

June 4, 2019 | by Staff Attorney

According 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.

Xavier Patino Sanctioned Over Variable Annuity Sales Practices

May 22, 2019 | by Staff Attorney

According 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.

Advisor Christopher Bennett Alleged to Have Recommended Unsuitable Energy Securities

April 21, 2019 | by Staff Attorney

According 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.

Advisor Dean Grant Arrested On Charges of Defrauding His Investment Clients

April 13, 2019 | by Staff Attorney

According 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”.

Advisor Dudley Stephens Accused of Churning and Unapproved Product Sales

February 23, 2019 | by Staff Attorney

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 san ctioned 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”.

Advisor James Schwartz Subject to Multiple Churning Claim

January 23, 2019 | by Staff Attorney

According 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.

Brandon Stimpson Subject to Multiple Customer Complaints Over Put Options Trading

November 24, 2018 | by Staff Attorney

According 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.

Bradley Ford Subject to Multiple Complaints Alleging False Representation of Investments

September 19, 2018 | by Staff Attorney

The investment fraud attorneys are currently investigating USA Financial Securities Corporation (USA Financial) broker Bradley Ford (Ford). According to BrokerCheck Records held by the Financial Industry Regulatory Authority (FINRA), Ford has been subject to eight customer disputes and three regulatory disputes. The majority of these disputes concern the misrepresentation of investments and documents to customers.

Most recently, in April 2018, a customer alleged from August 2013 to November 2016, Ford misrepresented that liquidity and penalty charges of fixed indexed annuities.

In June 2015, a customer alleged that Ford forged the customer’s signature on a strategy request form.

In March 2012, a customer alleged the insurance life policy that Ford recommended and placed the customer in was falsely represented. The case was settled at $450,000 in damages.

Ford has also been subject to various regulatory actions. In June 2009, the Kentucky Department of Insurance found that Ford misrepresented documents to customers by changing the state in which customers had signed their insurance contracts. The Kentucky Department of Insurance imposed a monetary penalty for the false representation.