Articles Tagged with Allstate Financial Services

shutterstock_113066620The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Robert Cross (Cross) (FINRA No. 2014041637201) of Rome, Georgia. Since August 2006, Cross was registered with Allstate Financial Services, LLC, where he resigned on June 28, 2013. On June 19, 2014, Allstate Financial Services filed a Form U5 amendment disclosing that a customer complaint had been filed against Respondent regarding Cross.

Thereafter, FINRA investigated Cross on the grounds that Allstate Financial Services’ Form U5 amendment stated that a customer complained of breach of contract, fraud, conversion, and negligence related to a collateralized bond obligation. FINRA’s investigation involved Cross’ outside business activities, financial reporting obligations, and whether Cross accepted unapproved loans from a customer while engaging in a private securities transaction – otherwise known in the industry as “selling away”. Thereafter, Cross refused to appear on the record to give testimony drawing an automatic bar from the financial industry.

At this time it unclear the nature and scope of Cross’ outside business activities and private securities transactions. However, according to Cross’ public records his outside business activities include Cross, Cross & Sims, Inc. and CCS Property.

The law offices of shutterstock_183525503Gana Weinstein LLP has filed an arbitration complaint before the Financial Industry Regulatory Authority (FINRA) alleging damages in excess of $3.7 million against Allstate Financial Services, LLC (Allstate) and the estate of Paul J. Godlewski (Godlewski).  The complaint alleges improper supervision and selling away related to Godlewski’s fraudulent Ponzi scheme.  Godlewski’s scheme was targeted at the retirement savings of around two dozen victims, mostly in the Pennsylvania area.  The complaint alleges that Allstate failed to properly supervise and enforce compliance measures over Godlewski, one of Allstate’s registered representatives.  The failure to supervise was alleged to cause violations of federal, state securities laws, and the financial industry’s rules and regulations.  The complaint alleged that these investors, many of whom used IRA or 401K proceeds, have lost substantially all of their investment.

“I believe there are more victims out there who are in need of help to assert their rights under the securities industry rules,” according to securities attorney Adam Gana.  As background on Godlewski, the broker was barred from the securities industry by FINRA in April 2015 after failing to respond to the regulator’s requests concerning his activities.  In June 2015, Godlewski passed away.  After Godlewski’s death many of his investors received letters from Godlewski’s estate stating that the estate was conducting a four to six months accounting on the assets and liabilities left behind by Godlewski.  Beyond these brief correspondence, investors have been left in the dark as to the status of their funds.

In the complaint, it is alleged that Godlewski created a fictional persona of a brilliant venture capital fund manager in order to sell investors.  Godlewski claimed that he created innovative trading algorithms and and managed funds with $100 million in assets under management.  To promote this persona Godlewski made appearances on television talk shows such as Money Matters purporting to be the president of Global Enterprise Investment Venture Capital a/k/a GEIVC.  GEIVC was one of the fraudulent funds that the complaint alleged Godlewski sold to claimants.  Over time Godlewski’s scheme is alleged to evolved and improved in order to better protect Godlewski from being found out.  These other more sophisticated funds include Tall Tree Note Fund I, LP (Tall Tree), another Godlewski fund, and 611 Swede Street LLC, a real estate property investment.

shutterstock_12144202The Financial Industry Regulatory Authority (FINRA) recently sanctioned and barred broker Paul Godlewski (Godlewski) concerning allegations Godlewski refused cooperate with requests made by FINRA in connection with an investigation into possible outside business activities. Such activities may, under certain circumstances also involve investment transactions referred to as “selling away” in the industry. According to FINRA BrokerCheck records Godlewski has disclosed outside business activities include Preferred Systems, Inc., PA Tags & Notary, and certain rental property real estate interests. It is unclear whether FINRA’s investigation concerns these particular outside business activities.

Godlewski entered the securities industry in 2004, when he became associated with Allstate Financial Services, LLC (Allstate). Godlewski held a Series 6 license which is for an Investment Company and Variable Contracts Products Representative. On January 12, 2015, Allstate filed a termination notice (known as a Form U5) with FINRA disclosing that Godlewski was discharged from the firm.

According to FINRA, in March 2015, the agency began investigating whether Godlewski had engaged in outside business activities and failure to follow Allstate’s procedures concerning televised public appearances. As part of its investigation, on March 12, 2015, FINRA sent a request to Godlewski for certain documents and information. According to FINRA, Godlewski stated on a call with FINRA staff on March 16, 2015, that he will not cooperate with the investigation. Consequently, Godlewski was barred by FINRA.

The Financial Industry Regulatory Authority (FINRA) sanctioned broker Marylin T. Meyers (Myers) $20,000 and barred her for two years concerning allegations between September 2009, and February 2011, she participated in a series of private securities transactions totaling approximately $1,000,000 without notifying her firm, Allstate Financial Services, LLC (Allstate) or obtaining the firm’s written approval. FINRA alleged that Meyers recommended that five investors invest in On The Edge and she helped facilitate their purchases of On the Edge Notes.  On The Edge is a California based company formed to be a supplier of consumer goods such as tents, folding chairs, wagons, and promotional items related to retailers.  To date, On The Edge has failed to repay the principal and interest due to the investors.

Meyers first became registered with FINRA in 1986 with Merrill Lynch, Pierce, Fenncr & Smith Incorporated.  In 2001, Meyers became associated with Metlife Securities Inc.  Thereafter, in July 2004, Meyers joined Allstate until her termination on May 17, 2012.

The allegations against Meyers are typical of a “selling away” violation.  A broker sells away from their brokerage firm when they solicit securities that were not approved by the broker’s affiliated firm or recorded on the firm’s books and records.  NASD Rule 3040 requires an associated person to provide written notice to the firm prior to participating in any private securities transaction. An associated person is prohibited from participating in any manner in the private securities transaction without the Firm’s approval.  Under FINRA Rule 3010, brokerage firms are required to supervise their brokers and implement supervisory procedures reasonably designed to detect and prevent violations of NASD Rule 3040.