Securities Lawyers Blog
The 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.
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. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.