Raymond Daniel Schmidt of LPL Fraud Investigation

Please call 1-866-817-0201 if you were invested with Raymond Schmidt, formerly of LPL.  As first reported by Suzanne Barlyn of Reuters, A former LPL Financial LLC broker who borrowed nearly $2.3 million from clients to build a vacation rental property in Hawaii has been permanently barred from the securities industry in a settlement reached with Wall Street regulators after an investigation.

Raymond Daniel Schmidt, who was affiliated with the unit of LPL Financial Holdings Inc in Oceanside, California, borrowed the money from seven clients between 2009 and 2012, a violation of industry rules, according to a settlement with the Financial Industry Regulatory Authority (FINRA), a regulator that oversees the actions of licensed stockbrokers.

Schmidt neither admitted nor denied FINRA’s findings, according to the settlement.

In a 2013 regulatory filing, Schmidt disclosed his involvement in the “Pakalana Sanctuary” in Waimea, also known as Kamuela, on Hawaii’s Big Island. He described the property as a “retreat center” and vacation rental where he spent 10 percent of his time.

Schmidt bought the Hawaiian real estate in 2009 and opened it for business in 2012 as its only owner and operator, according to the settlement.

Securities industry rules generally prohibit brokers from borrowing clients’ money. Brokers are also not allowed to engage in business activities outside of their firms without first notifying the firm. Even then, firms typically require their brokers to get approval for such ventures.

Schmidt initially did not tell LPL about the Hawaiian property or customers’ loans in answers to several annual questionnaires that LPL requires its brokers to complete. He later disclosed the property to LPL, but denied owning an interest, FINRA said.

He resigned from LPL in August 2014 “while under internal review,” FINRA said.

In February, Schmidt told FINRA’s enforcement unit that he would not provide its staff with documents nor cooperate with its investigation, FINRA said.

It is unclear whether Schmidt repaid his clients’ $2.3 million. Schmidt is the subject of a $375,000 lawsuit in a California state court, alleging elder abuse and negligence related to the plaintiff’s Hawaiian real estate investment, according to Schmidt’s public disclosure report.

The Hawaiian property, which includes six bedrooms and seven bathrooms, is listed for sale at $2.4 million, according to Zillow, the real estate website.


Richard Rupp Barred

The commissioner for the Colorado Division of Securities, a part of the Department of Regulatory Agencies (“DORA”), announced today, March 16, 2015, that a settlement has been reached in the case of Gerald Rome v. Richard Roop and Bottom Line Results, Inc. The settlement was reached following successful litigation by the Colorado Attorney General’s office in both contempt proceedings and a motion for partial summary judgment against the defendants. The latter resulted in an order of the court that permanently bars Roop individually and his company, Bottom Line Results, Inc., from recommending or selling securities in Colorado.

“This is an important decision for the Division of Securities, as Mr. Roop and his company have consistently balked at and side-stepped the common sense regulations in place to protect consumers against unscrupulous securities professionals,” the commissioner said of the summary judgment order. “The court’s ruling prohibits Mr. Roop’s further participation in the securities industry in Colorado, and this is a good outcome for investors in our state.”
The permanent injunction resulting from the motion for partial summary judgment addresses multiple violations of the Colorado Securities Act by Roop and his company dating back to 2008.

In 2012, both Roop and the company—in the business of selling third party investments for a real estate “private lending program”—were placed under a temporary restraining order, which barred them from engaging in securities-related business.

Despite the restraining order, in 2013 Roop acquired financing to purchase a property using three separate investments. Once the Division of Securities was made aware of these sales, Commissioner Rome pursued a motion for contempt. On Feb. 5, 2015, Denver District Court Judge Michael Martinez ordered the defendants to rescind the transactions and pay the Division’s attorney’s fees incurred in litigation of the contempt motion. Following the contempt order, the Court issued a subsequent order on March 5, 2015, granting the Division’s motion for partial summary judgment, imposing a permanent injunction, and concluding that the defendants offered and sold unregistered securities in Colorado and acted as an unlicensed broker-dealer and sales representative.

Losses with Brookville Capital

Please call 866-817-0201 if you suffered losses with Brookville Capital.  FINRA has barred from the securities industry Anthony Lodati, president of the wealth management firm Brookville Capital Partners.  The regulator has also fined the firm $500,000 for fraud and ordered it to make full restitution of more than $1 million to customers that the agency said were defrauded in connection with sales of a private placement offering.  Investors should contact an attorney to maximize their recovery of losses.

The investment leading to the enforcement action was the private placement offering was Wilshire Capital Partners Group LLC, one through which investors were told they would have an indirect interest in pre-initial public offering shares of Fisker Automotive. The conduct took place from January 2011 to October 2011.

During the time Brookville solicited customers to invest in the offering, Lodati learned that Wilshire’s CEO and managing director, John Mattera, had a significant criminal and regulatory background. Instead of disclosing such history, which included, among other things, Mattera had been sanctioned by the SEC in 2010 for securities fraud and convicted of a felony in Florida in 2003, Lodati and Brookville purposely hid both Mattera’s background and his involvement with Wilshire, and continued to solicit its customers to invest

Joshua Ray Abernathy Investment Losses

Please call 866-817-0201 if you suffered investment losses or invested money with Joshua Ray Abernathy.  Conversations will be confidential and those seeking representation will be represented on a contingency fee basis.

As first reported in the Virginian-Pilot, Joshua Ray Abernathy, 37, of Norfolk was charged Monday in U.S. District Court with mail fraud and conducting an unlawful monetary transaction.  According to court documents, Abernathy stole almost $1.3 million from at least 14 victims living in Virginia and Texas.

The allegations in the charge are that Abernathy did not invest his clients’ money and simply stole the funds, placing some money in his personal securities account, which lost money.

Abernathy prepared fraudulent quarterly statements to conceal the fraud from his clients and hide his “unsuccessful trading strategy.”

Abernathy, formerly of Texas, is no longer licensed by the Financial Industry Regulatory Authority Inc., a self-regulatory organization based in Washington, D.C. He was permanently barred from working in the industry last month after failing to respond to a FINRA request for information and then failing to respond to a suspension letter.

Abernathy – who also sold life insurance – previously worked for The O.N. Equity Sales Company and Next Financial Group Inc. while working in Norfolk, FINRA reported.

Municipal Bond Investors Victimized

Investors have recourse for losses in municipal bonds.  Please call toll-free 1-866-817-0201 for a free consultation.

As first reported by Ted Knuteson of FA.com, the SEC has found that many investors are victims of costs and fees for which they are not aware.  sec-commissioner-aguilar–retail-investors-victimized-by-lack-of-muni-bond-oversight-20818.

Securities and Exchange Commissioner Luis Aguilar claimed Friday, February 13, 2015, retail investors in  municipal bonds are victimized by a lack of transparency, higher markups than for institutional investors and the SEC’s inability to regulate public offerings by issuers.  The result of this was $10 billion in excessive costs between 2005 and 20013

Pointing out consumers paid an average of double the spread of institutional investors, Mr. Aguilar said, “Retail investors lack access to reliable price information about the municipal securities they may want to buy or sell. As a result, it is exceedingly difficult for retail investors to determine if the prices they are offered and the fees they are charged by their brokers are reasonable.”

Aguilar urged the Financial Industry Regulatory Authority (Finra) and the Municipal Securities Rulemaking Board to impose a more transparent markup/markdown disclosure requirement and to require dealers to disclose their proposed markups before a trade is executed.

Losses with John Carris Investments

FINRA Hearing Panel Expels John Carris Investments and Bars CEO George Carris for Fraud

If you suffered losses with John Carris Investments, please contact us at 1-866-817-0201 for a free consultation.  The Financial Industry Regulatory Authority (FINRA) announced January 14, 2015 that a FINRA hearing panel has expelled John Carris Investments, LLC (JCI) and barred CEO George Carris from the securities industry for securities fraud and investment suitability violations. The panel found that JCI and George Carris recklessly sold stock and promissory notes issued by its parent company using misleading statements and by omitting material facts.  Andrey Tkatchenko, a broker for John Carris, was suspended for two years and fined $10,000 for recommending the stock and promissory notes without a reasonable basis. JCI and Carris were also barred from the industry for manipulating the price of Fibrocell stock. The panel found that JCI and Carris manipulated the price of Fibrocell stock through unfunded purchases and pre-arranged trading . Head Trader Jason Barter (“Barter”) was suspended for 18 months, fined $5,000  The ruling resolves charges brought by the FINRA Department of Enforcement in September 2013. The FINRA panel found that JCI and Carris fraudulently sold stock and notes in its parent company by not disclosing its poor financial condition. According to the decision, the JCI and Carris omitted material facts in the documents, including omissions in the Bridge Offering documents that JCI was out of net capital compliance.  Carris failed to inform investors that proceeds would be used to cure JCI’s net cap deficiencies. Carris also omitted other material information from the Offering documents regarding how proceeds would be used. For example, Carris used proceeds of the Offerings to pay for personal costs such as liquor purchases, clothing and dry cleaning. Carris also failed to pay hundreds of thousands of dollars in employee payroll taxes to the United States Treasury. The FINRA panel noted in its decision that it did not find Carris credible. For example, Carris asserted he never received his emails, claiming that a friend set up a personal email account for him so that Carris could “get on the PlayStation and also some other games that I was playing at the time,” when in fact Carris used an iPhone to send emails. We have represented hundreds of investors and would be interested in speaking to you if you have invested with JCI.

Oppenheimer Violations from “Failed Compliance Culture”

If you have lost funds investing in penny stocks with Oppenheimer, please call 1-866-817-0201 for a free consultation.  Oppenheimer & Co. Inc. has agreed to pay fines equally $20 million and, in a rare move for any financial firm paying such a fine, admit guilt as part of settlements with the SEC.  The allegations concern the improper trading of penny stocks.

Oppenheimer failed to properly detect and report suspicious penny stocks trades, which are thinly traded securities that can be vulnerable to manipulation by stock promoters. The  matter involves at least 16 customers in five states who engaged in “patterns of suspicious activity.”

This sanction is the latest in a list of regulatory sanctions against Oppenheimer.  SEC Commissioners Aguilar and Stein argued such a history indicated that Oppenheimer has a “wholly failed compliance culture.”

“Broker–dealers face the same money laundering risks as other types of financial institutions,” said  Jennifer Shasky Calvery, in a release. “And by failing to comply with their regulatory responsibilities, our financial system became vulnerable to criminal abuse.

More information can be found at the following:  http://www.investmentnews.com/article/20150127/FREE/150129925/oppenheimer-to-pay-20m-for-penny-stock-violations



William H. Murphy & Co. Investment Losses

On November 7, 2014, the Financial Industry Regulatory Authority (“FINRA”) brought suit against William H. Murphy for violations of Regulation D requirements concerning the solicitation and sale of certain private placement investments.  Though not specifically stated, the complaint also alludes that the investments were sold to investors to whom the investments were not suitable and were not appropriately accredited.  We are currently investigating the matter and we are interested in speaking to investors of William H. Murphy.  If you are such an investor interested in learning more and receiving a free evaluation of your potential case, please call us toll-free at 1-866-817-0201.

GL Capital Losses, Multiple Avenues for Recovery

As published in Investmentnews.com on Dec. 16, 2014, a prominent alternative fund manager in Waltham, Mass., was arrested on securities fraud charges last week after the FBI accused him of a fraudulent scheme to divert some $12.6 million from a fund he was overseeing.

Daniel Thibeault, chief executive of asset manager GL Capital Partners, was released after posting $700,000 in bail secured by the equity in his house. A court date is scheduled for Jan. 2.

Since March 2012, Mr. Thibeault took out fictitious loans to gain access to money in a closed-end interval mutual fund, known as the Beyond Income Fund, according to the testimony of Federal Bureau of Investigation special agent Jennifer Hale Keenan in U.S. District Court for Massachusetts. Mr. Thibeault co-managed the fund, which invested in consumer debt.

Around $36.6 million worth of loans had been issued from the fund, of which some $12.6 million was taken out through an intermediary that Mr. Thibeault had created purportedly for borrowing money in the name of friends and associates. The money from the loans made through the intermediary, Taft Financial Services, did not go to individual borrowers, however, but to a GL-controlled bank account, according to Ms. Keenan’s testimony.

“[Mr.] Thibeault caused the fund to issue or acquire fictitious loans to individuals who never requested or did not, in fact, receive such loans, falsified or cause to be falsified the documentation related to those loans and used the fictitious loans to divert a portion of the fund’s assets into the operating accounts of GL,” Ms. Keenan said.




James Maloney, MetLife Losses in Equity-Indexed Annuities

If you have invested in an annuity with James Maloney, formerly with MetLife in Colorado Springs, Colorado, we are interested in speaking to you irrespective of the type of annuity.  Please call 303-300-5022 in Colorado or nationally 1-866-817-0201.

On November 28, 2014, Mr. Maloney and regulators agreed to a sanction where he would be suspended from the securities industry for ten months and pay a $10,000 fine.  The allegations against Mr. Maloney are that from 2004 to March 2013, while he was registered with FINRA as a MetLife broker, Mr. Maloney sold 65 equity-indexed annuities (“EIAs”),  totaling over $8 million in sales, without providing his supervisors or compliance with notice of the sale.  Such an action is commonly referred to as “trading away.” Mr. Maloney neither admitted nor denied the allegation in agreeing to the sanction.  The sanction stipulation settled the regulatory case against Maloney.

The reason trading away violations are punished by regulators is because trading away can be done to mask significant fraud.  There are certain legal limitations on individuals to whom a broker can sell certain securities and insurance products.  Securities and insurance products falling in such a class will often pay significantly higher commissions to a broker.  The ability to sell insurance or securities without the approval of a supervisor or compliance officer means that a broker can sell products that are in violation of the law to earn a significantly higher commission.

While neither the agreement with the regulators nor the underlying charge Identify any fraud committed by Mr. Maloney, the matter does involve the sale of products that generally pay brokers a very high commission.  The matter also involves a relatively large number of sales of a product that is generally legally suitable for only certain investors.

Posted 12/9/2014