Articles Tagged with Misappropriation

shutterstock_143685652-300x300The securities attorneys at Gana LLP are investigating potential claims against former Capital Securities Management Inc. broker Teryl Trenchard (Trenchard). According to Trenchard’s BrokerCheck records, he was identified in a Financial Industry Regulatory Authority (FINRA) investigation on March 10, 2017. FINRA is examining alleged fraudulent activities of Trenchard.

Trenchard was terminated by Capital Securities Management on March 10, 2017 based upon the FINRA investigation for fraud.

In a pending customer complaint, it has been alleged that Trenchard engaged in misappropriation, forgery, fraud and unauthorized trading in unsuitable transactions between 2005 and 2017. The alleged damages are $1,800,000.

In another pending complaint, a customer is alleging breach of fiduciary duty, breach of contract, conversion, and unsuitable investment recommendations. The customer is alleging damages of $700,000.

In 2000, a customer alleged that Trenchard made several unauthorized trades in her account. This complaint settled for $28,049.49.

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shutterstock_185913422-300x200In early September, we reported that the investment lawyers of Gana LLP were investigating allegations by the Securities and Exchange Commission (SEC) finding that Sonya Camarco (Camarco) misappropriated over $2.8 million in investor funds from her clients and customers.

In a separate but parallel action, Colorado state authorities have arrested Camarco on charges that she stole $850,000 from clients. According to news sources, a Colorado grand jury indicted Camarco on six counts of securities fraud and seven counts of theft on September 21. Authorities say Camarco operated her scheme between January 2013 and May 2017. An SEC investigator allegedly traced nearly 130 checks from Camarco’s clients’ accounts to a post office box she controlled. Camarco is accused of using the money to pay her own credit card bills and taxes, and to buy real estate.

LPL terminated Camarco in August 2017 “for depositing third party checks from client accounts into a bank account she controlled and accessing client funds for personal use.”

According to BrokerCheck records, beginning in approximately 2004 and continuing through at least August 2017, Camarco allegedly used investor accounts to pay hundreds of thousands of dollars in credit card bills, took cash advances on investor accounts, transferred investor funds directly to her personal bank account, and funneled investor funds into her personal bank accounts. Camarco allegedly spent investor funds on the purchase of a house and the payment of her personal mortgage.

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shutterstock_76996033-300x200The investment lawyers of Gana LLP are investigating allegations by the Securities and Exchange Commission (SEC) finding that LPL Financial LLC (LPL) advisor, Sonya D. Camarco (Camarco), misappropriated over $2.8 million in investor funds from her clients and customers. LPL terminated Camarco in August 2017 “for depositing third party checks from client accounts into a bank account she controlled and accessing client funds for personal use.”

Camarco is a 23-year industry veteran. From 1993 to 2000, Camarco was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Thereafter, from 2000 to 2004, Camarco became registered with Morgan Stanley DW Inc. Finally, from 2004 to 2017, Camarco was associated with LPL Financial LLC.

According to FinancialPlanning, Camarco faces five counts of fraud charges and an asset freeze after investigators said she used third-party checks and other means to forward client funds towards personal expenses. Camarco allegedly forged clients’ signatures on at least 120 first- and third-party checks, having them sent to a post office box at a UPS store and signing them over to an entity she controlled.

According to BrokerCheck records, beginning in approximately 2004 and continuing through at least August 2017, Camarco allegedly used investor accounts to pay hundreds of thousands of dollars in credit card bills, took cash advances on investor accounts, transferred investor funds directly to her personal bank account, and funneled investor funds into her personal bank accounts. Camarco allegedly spent investor funds on the purchase of a house and the payment of her personal mortgage.

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shutterstock_184149845The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Ralph Savoie (Savoie) (FINRA No. 2015046239401) resulting in a bar from the securities industry alleging that Savoie failed to provide FINRA staff with information and documents requested. The failure to provide those documents and information to FINRA resulted in an automatic bar from the industry. FINRA’s document requests related to the regulators investigation into claims the Savoie misappropriated more than $665,000 from at least one member firm customer.

FINRA’s investigation appears to stem from Savoie’s termination from Cambridge Investment Research, Inc. (Cambridge) in August 2015. At that time Cambridge filed a Form U5 termination notice with FINRA stating in part that the firm discharged Savoie under circumstances where there was allegations that Savoie failed to disclose and receive approval for an outside business activity. It is unclear the nature of the outside business activities from publicly available information at this time. However, Savoie’s Brokercheck disclosures reveal several outside business activities including working for the Savoie Financla Group, LLC in Baton Rouge, LA and as being and independent insurance agent for various companies.

Savoie entered the securities industry in 1973. From March 2007 until July 2013, Savoie was associated with ING Financial Partners, Inc. Thereafter, from July 2013 until September 2015, Savoie was associated as a registered representative with Cambridge.

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shutterstock_173509961As previously reported by Gana LLP, the Financial Industry Regulatory Authority (FINRA) in an acceptance, waiver, and consent action (AWC) barred broker Eric Johnson (Johnson) concerning allegations that he misappropriated more than $1,000,000 from at least six firm customers’ brokerage accounts. FINRA had also alleged that Johnson falsified the signatures of two firm employees and notarized seals on firm documents.

In a second disciplinary proceeding FINRA sanctioned RedRidge Securities, Inc. (RedRidge) and principal Brent D. Hurt (Hurt) alleging that the firm and Hurt failed to establish and enforce a supervisory system reasonably designed to detect unauthorized wire transfers.

In March 1999, Johnson became registered with RedRidge and operates out of his DBA business called HD Brent & Company (HD Brent). RedRidge terminated Johnson’s registration on September 24, 2014.

FINRA rules require that firms establish and enforce supervisory control procedures that are reasonably designed to review and monitor all transmittals of customer funds to any third party. The control procedures for third-party wire transfers must include a means or method of customer confirmation, notification, or follow-up that can be documented.

In this case FINRA found that Hurt was Johnson’s supervisor and Redridge’s CEO and CCO responsible for ensuring that the firm established, maintained, and enforced a supervisory systems. FINRA found that the firm’s supervisory system was unreasonable because it required approval by only one principal, either Hurt or Johnson for third-party wire transfers. Thus, FINRA alleged that Hurt and Johnson were both authorized to approve third party wire transfers originated by their own customers and processed by themselves. FINRA found this system was not reasonably designed to prevent fraudulent or otherwise unauthorized third-party wire transfers from customer accounts.

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shutterstock_186772637The Financial Industry Regulatory Authority (FINRA) in an acceptance, waiver, and consent action (AWC) barred broker Eric Johnson (Johnson) concerning allegations that Johnson misappropriated more than $1,000,000 from at least six firm customers’ brokerage accounts. FINRA also alleged that Johnson falsified the signatures of two firm employees and notarized seals on firm documents. Finally, Johnson failed to provide documents, information, and on-the-record testimony during FINRA’s investigation of this matter.

Johnson first became registered with FINRA in 1991. In March 1999, Johnson became registered with RedRidge Securities, Inc. (RedRidge). Johnson operates out of his DBA business called HD Brent & Company (HD Brent). RedRidge terminated Johnson’s registration on September 24, 2014, in connection with the firm’s investigation concerning the alleged theft of customer funds. RedRidge may have only become aware of the misappropriation of funds when the Federal Bureau of Investigation (FBI) contacted the firm concerning their investigation of Johnson.

FINRA alleged that from approximately December 2006, through September 2014, Johnson misappropriated more than $1,000,000 in customer funds. FINRA determined that Johnson made at least 60 wire transfers from at least six firm customers’ brokerage accounts to his own personal bank accounts. The wire transfers required the signature of a firm principal and the signature and seal of the firm’s notary public that FINRA alleged Johnson falsified in order to effectuate the transfers. Given that Johnson’s activities took place over the course of eight years it is astonishing that RedRidge did not supervise and detect Johnson’s activities sooner.

NASD Rule 2330(a), and FINRA Rule 2150(a), prohibits the “improper use of a customer’s securities or funds.” NASD Rule 2110, and FINRA Rule 2010, requires brokers to observe high standards of commercial honor and just and equitable principles of trade in connection with their business. FINRA found that by misappropriating customer brokerage funds totaling more than $1,000,000, Johnson violated these rules.

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shutterstock_173809013LPL Financial, LLC (LPL) is one of the largest independent brokerage firms in the United States employing approximately 13,840 registered reps and advisers. However, the firm’s growth has come with a host of regulatory actions focusing on the firm’s alleged supervisory failures.

Recently, InvestmentNews reported that the firm was hit with a $2 million fine, and ordered to pay $820,000 in restitution, for failing to maintain adequate books and records documenting variable annuity exchanges. The mounting firm fines have led to flat second quarter earnings at LPL.  The firm has stated that the company is instituting enhanced procedures with a view to ensuring that surrender charges incurred in connection with variable annuity exchange transactions are accurately reflected in the firm’s books and records as well as in any disclosures given to clients. The firm is also purportedly taking steps to make sure that its advisers are adequately documenting the basis for their variable annuity recommendations.

LPL has been on the radar of FINRA and several state regulators that have focused on the firm’s supervisory and other record systems as well as examining sales of investment products, including non-traded real estate investment trusts (REITs). In February 2013, LPL settled with the Commonwealth of Massachusetts to pay at least $2 million in restitution and $500,000 in fines concerning the firm’s non-traded REIT practices. In addition, in the last year, FINRA has fined LPL Financial $7.5 million for significant e-mail system failures. Moreover, we have reported on numerous LPL registered representatives who have been fined over the past year for a variety of misconduct ranging from misappropriation of funds, sales of alternative investments, selling away activities, and private placements. Continue Reading

Broker Neil Winterrowd (Winterrowd), formerly of J.P. Turner & Company, LLC (“JP Turner”), has been barred by the Financial Industry Regulatory Authority (FINRA) concerning allegations that from August 12, 2009, through September 21, 2011, Winterrowd misappropriated approximately $1.5 million from at least four different customers and used the funds for his own purposes.  FINRA’s action against Winterrowd is the latest in a number of recent actions against brokers formerly associated with JP Turner, many of which highlight allegations of supervisory failures at the firm.

Winterrowd was associated with Crown Capital Securities, L.P. from 2004 through August 2009.  In August 2009, Winterrowd transferred to JP Turner until September 21, 2011 at which time he was discharged from JP Turner for improper handling of customer funds.  According to Winterrowd’s BrokerCheck, there have been seven customer complaints filed against the broker.

FINRA alleged that Winterrowd provided a variety of financial services to his clients, including annuity products, life insurance, and fixed annuities.  According to FINRA, Winterrowd’s customers held brokerage accounts at JP Turner but were also sold products that did not need to be sold through a registered firm.  FINRA’s investigation uncovered that Winterrowd misappropriated approximately $1.5 million from at least four different customers.  FINRA found that broker accomplished the misappropriations by directing withdrawals from customer accounts to a company under his control.  According to FINRA, Winterrowd obtained the funds through partial withdrawals, surrenders, and the proceeds of a death benefit from the annuity products sold to customers.  In addition, FINRA alleged that checks were made payable to Annuity Investment Group, an entity owned and controlled by Winterrowd.  After funds were deposited in the bank accounts of Annuity Investment Group, FINRA alleged that Winterrowd improperly and without his clients’ knowledge or consent converted funds for his own benefit.

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The Financial Industry Regulatory Authority (FINRA) has barred Todd Lloyd Goedeke and Ronald W. Nichter from the financial industry after the brokers were accused of misappropriating funds from customers.

In March 26, 2004, Goedeke became a registered representative with Cantella & Co., Inc. (Cantella), a FINRA regulated broker-dealer.  Goedeke remained associated with Cantella until his termination on June 18, 2010.  On or about July 1, 2010, Cantella filed a Form U5 that stated that Goedeke had been terminated.  On or about February 22, 2011 and March 16, 2011, Cantella filed amendments to their Form U5 disclosing allegations that Goedeke may have converted customer funds.  Goedeke’s public disclosures also list that he is employed by Wealthcare & Retirement Solutions, a financial planning company that provides insurance, fixed annuities, and life insurance.

Ronald W. Nichter became registered in the securities industry in December 2008 with Cantella Nichter’s registration was terminated by Cantella on April 4, 2013.

Both brokers have been accused by FINRA of misappropriating customer funds.  Continue Reading

Blake Richards (Richards), a former Georgia representative of LPL Financial (LPL), was charged by the Securities and Exchange Commission (SEC) with defrauding investors and misappropriating $2 million dollars from at least seven clients.  According to the complaint filed by the SEC in the Northern District Court of Georgia, Richards directed clients to write checks from retirement accounts or from life insurance policy proceeds in the name of investment businesses he owned, such as “Blake Richards Investments” and “BMO Investments.”  However, according to the SEC, his clients’ money was not used for legitimate investing purposes as Richards siphoned off millions for his own personal use.

Richards was a registered representative of LPL from 2009 through May 2013 out of his company, Lanier Wealth Management LLC.  According to the SEC’s complaint, Richards used a variety of devices to deceive investors and gain their trust.  For instance, Richards is alleged to have created fictitious statements on LPL letterhead in order to continue and conceal his scheme.  Richards also gave investors business cards with false professional designations, such as “AAMS”, standing for Accredited Asset Management Specialist, when Richards was not accredited.  Finally, Richards even delivered pain medication during a snowstorm to one client’s husband who had been diagnosed with terminal pancreatic cancer in order to gain the client’s trust.

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