Securities Fraud and Mismanagement

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Ponzi at Southport Capital

John Woods, James Woods, Michael Mooney and Iris Israel conducted a Ponzi at Southport Capital and Horizon Private Equity. The scheme started on or about 2007 and continued through 2021. Call for a free and confidential consultation if you believe you were a victim. The Law Offices of Jeffrey Pederson has been recovering funds for investors for over 20 years.

Livingston Group Asset Management Company d/b/a Southport Capital (“Southport”), and Horizon Private Equity, III, LLC (“Horizon”), employed these advisors. Private and regulatory actions allege that John Woods ran a massive Ponzi scheme for over a decade.

Investors in the Ponzi scheme are owed over $110,000,000 in principal. There are more than 400 investors, residing in at least 20 different states, who currently hold investments in the Ponzi at Southport, which goes by the name “Horizon.” Many of the victims are elderly retirees who Woods and his advisors preyed upon. Southport, a registered investment adviser firm, is owned and controlled by John Woods.

The Scheme lasted until the SEC filed suit. The SEC’s 2021 complaint alleged that the Ponzi scheme was ongoing and continues to raise money from new investors each month. John Woods and other investment adviser representatives at Southport told clients that they would receive returns of 6-7% interest, guaranteed for two to three years, for non-specific investments in a fund called “Horizon Private Equity.”

John Woods and his cohorts at Southport generally told investors that Horizon would earn a return by investing their money in, for example, government bonds, stocks, or small real estate projects; investors were not told that their money would or could be used to pay returns to earlier investors. But that is exactly what the Defendants did, they were only able to pay the guaranteed returns to existing investors by raising and using new investor money.

Horizon has not earned any significant profits from legitimate investments; instead a very large percentage of purported “returns” to earlier investors were simply paid out of new investor money.

Investors allege a Ponzi at Southpark Capital.

Ron Filoramo

Ron Filoramo is a financial advisor for Morgan Stanley. Filoramo is alleged to have converted the funds of his investors. Please contact us if you are an investor of Mr. Filoramo. Investment firms are required to have supervisory systems. Adequate supervision would have prevented the actions of Filoramo.

Four investor arbitrations all allege that Ron Filoramo advised his clients to invest in certain private investments outside of Morgan Stanley. This itself is fraud. The investors further allege that Filoramo took the funds from their accounts for the investment, but then never made the investment. Current claims seek losses in excess of $800,000. All four suits seek recovery from Morgan Stanley.

Filoramo is a broker and a financial advisor located in Florida. He has worked for Morgan Stanley since 2011. He began his career in 2002.

The aggrieved investors indicate that the actions began in 2016 and continued through 2022. It is possible that Filoramo’s actions extended for a longer period of time.

He identifies himself as a vice president with Morgan Stanley. His office is in Fort Lauderdale.

Jeffrey Pederson has recovered lost and stolen investments for investors for over 20 years. Understanding and proving the supervisory lapses that allows investment theft, such as alleged against Filoramo, takes skill and experience.

Ron Filoramo is alleged to have abused the trust of his investors.
Ron Filoramo is alleged to have abused the trust of his investors.

Paul Koch of RBC

Paul Koch is currently barred from the securities industry. He previously served as a financial adviser (broker) for RBC and UBS. His office and many of his victims were in the Twin Cities area.

In an action filed by a former investor of Koch’s, the investor alleges that this financial advisor misappropriated approximately $2 million from the investor’s portfolio. This misappropriation took place in the time period between October 2018 and February 2022. The investor filed the suit in March 2023.

A similar suit previously resulted in a $3.75 million settlement with an investor. UBS paid this settlement in response to a suit alleging that Koch and his wife diverted funds from businesses where Koch was partial owner. He recommended these companies to his investors. These include a janitorial business, a second-hand store, venture capital enterprises, and housing developments.

Koch received a regulatory bar for his actions. The Financial Industry Regulatory Authority (FINRA), the regulator overseeing the actions for securities brokerages, barred him from the industry in March 2022. FINRA alleged that this financial advisor sold unsuitable investments in outside business ventures. He was partial owner of these businesses and diverted funds to his personal accounts, per FINRA. FINRA barred Paul Koch when he stopped cooperating with the investigation.

Paul Koch previously faced even further issues. This includes an investigation by the United States Secret Service. Though the Secrete Service did not elaborate on the basis of the charges, the nature of the other charges create a strong likelihood that they stem from money laundering.

Koch’s actions are what the securities industry refers to as “selling away.” This is when a financial advisor sells an investment to investors outside the oversight of the advisor’s employer. Securities firms are required to diligently audit and have supervisory systems to protect against such sales. We handle and have successfully handled a significant number of these suits for investors over the last 20 years.

Paul Koch used his other businesses to defraud his investors.
Many allege that Paul Koch inappropriately recommended and diverted investor funds to his companies.

Stifel Nicolaus Fined

We are currently investigating claims of seniors concerning the investment recommendations of Stifel Nicolaus. Please contact us if you have questions concerning your losses.

Stifel, Nicolaus & Co. was ordered Monday, May 1, 2023, to pay $2.5 million by Massachusetts’ top securities regulator, William Galvin, for ignoring a former Stifel broker-dealer agent’s questionable trades that resulted in many of his clients — including older adults, nonprofits and a church — to be charged excessive and unauthorized fees.

Regulators also ordered the investment firm to pay more than $700,000 in restitution to affected customers, as part of a consent order the broker-dealer has entered with Galvin’s Securities Division.

Former Stifel broker-dealer agent Joseph Crespi “subjected many of his clients to predatory sales practices over several years, leading to higher commission sales for himself and his employer,” Galvin said Monday in a statement.

The regulator’s investigation further found “wide-ranging harm” to investors resulting from “multiple instances of Stifel employees using personal cell phones to conduct business and distributing retail communications in violation of firm and regulatory requirements.”

From 2018 to 2022, Crespi was “Stifel’s sixth highest revenue-producing employee in New England as of June 30, 2019 (as considered year-to-date) and continued to be a top producing agent […] thereafter,” according to the regulator consent order.

“Despite repeated warnings by Crespi’s own branch manager,” Galvin’s office said, “Stifel failed for years to discipline Crespi or take any meaningful actions to correct his behavior.” The firm chose to ignore the harm Crespi was doing and could be argued that the ignorance was willful because of Crespi’s production for the firm.

We have helped investors recover losses caused by bad financial advisors for over 20 years. Please contact us for a consultation.

Joseph Crespin of Stifel is alleged to have not disclosed material information in the sale of private placements.
A Stifel financial advisor is alleged to have violated securities laws in the sale of investments to seniors and a church.

Rita Mansour Lawsuits

Investors accuse Rita Mansour of McDonald Partners of inappropriately recommending alternative investments not appropriately suitable or researched. Investors suffering losses in private investments recommended by Mansour should contact us about a potential action for negligence or fraud.

Rita Mansour is a financial advisor with over 30 years of experience. In the period starting in February 2019 to March 2022, her investors brought four separate suits and the Securities Exchange Commission brought a regulatory suit against her. All these proceedings concern the sale of private placement securities.

The Securities and Exchange Commission found Mansour’s arose from the sales of securities in connection with private securities offerings in the form of pooled investments. McDonald Partners advised the sale of these pooled investment private securities. The investments offered and sold securities to raise bridge funding for the construction of a resort in Montenegro.

Between September 2013 and continuing through January 2017, Mansour’s employer offered and sold more than $14 million in securities issued by the investment to investors located in the United States, including both McDonald’s brokerage customers and its advisory clients.

In October 2016, Mansour’s employer became aware of allegations that their point-person at the Montenegrin entity had misappropriated $488,331 of investor funds. The point-person did this by misusing a debit card belonging to that entity to pay for certain personal expenses. After being confronted with the allegations that this individual had misappropriated funds from the Montenegrin entity, he conceded that he was not entitled to certain of the funds alleged to have been misappropriated. Accordingly, after negotiation, the individual agreed to repay approximately $335,000 that he had allocated to personal expenses. 

Neither Rita Mansour nor McDonald disclosed the misappropriation to existing investors in October 2016. In early 2017, Mansour’s employer then raised approximately $1.5 million in additional funds. These sales of securities issued by PIV2 to both existing security holders and new investors. These included brokerage customers and advisory clients and without disclosing the misappropriation to those investors.

Rita Mansour is alleged to have violated the trust of her investors.
Rita Mansour is alleged to have abused the trust of her investors.

Doug McKelvey Accused of Misappropriation

Doug McKelvey is accused of misappropriation of client funds. Regulators barred this ex-Morgan Stanley broker from the securities industry in August 2022. Call 1-844-253-5858 toll-free nationwide if you were an investor of McKelvey.

Morgan Stanley terminated McKelvey in April 2022 for his “unauthorized activity and misappropriation of funds from client accounts, which were held by relatives of the representative.” This means that his employer believed that he was making unauthorized transactions, which often include churning. This was in addition to stealing funds investor accounts.

Lawsuits followed the allegations. Morgan Stanley settled one of the lawsuits for $1.2 million. The second suit is still pending. These lawsuits were filed as arbitrations with FINRA. Morgan Stanley, like all FINRA members, has a mandatory arbitration clause in its investor contracts. Criminal charges have not yet been filed but may be pending.

McKelvey refused to defend himself when given the opportunity to do so. FINRA, the Financial Industry Regulatory Authority, then barred him from the securities industry for failing to cooperate in the FINRA investigation.

McKelvey operated primarily in the Dallas / Ft. Worth Metroplex and did so for approximately 20 years. He worked with UBS and Citi Group prior to his employment with Morgan Stanley.

Morgan Stanley stated, “McKelvey was terminated following an internal review regarding allegations that he engaged in unauthorized activity and misappropriation of funds from accounts held by a small number of his relatives.”

We are a firm representing investors and recovering lost or stolen funds. Since 2002 we have represented hundreds of investors across the country seeking to hold investment professionals responsible for misdeeds.

Investors have recourse when financial advisors abuse investors' trust.
Doug McKelvey is accused of stealing millions. Financial advisors do not always act in their investors’ best interests. Criminal charges are rarely brought. Investors need seeking recourse need to contact a private attorney.

Mismarked “short” sales as “long”

Mismarked “short” sales as “long”

If your short sale investments have been mismarked as long, or vice versa, by your securities brokerage please call for a free consultation. Our toll-free number is 1-844-253-5858. We represent investors nationwide concerning losses due to brokerage negligence and fraud.

Brokerage mismarking of trades is common and preventable. Trading systems can be structured to detect and prevent the routing of inaccurately marked short or long trades. Failing to institute such safeguards is a breach of industry standards in addition to the violation state and federal securities regulations.

We believe such system failures have existed at least three periods in the past and likely many more times. Goldman Sachs had such failures, where options were mismarked, from October 2015 to April 2018, and again in October 2019. TD Ameritrade had such failures in February and March 2021. reports that Goldman Sachs paid a $3 million penalty in April 2023 for such failures. The identified reason was a missing line of code in the automated trading system. The Financial Industry Regulatory Authority cited this failing as a violation to keep accurate books and records. Further, FINRA found that Goldman could have prevented the problem had it maintained a “supervisory system reasonably designed” to comply with FINRA rules.

Likewise, we have reason to believe similar issues existed at TD Ameritrade in 2021. In February and March of that year, trades were mismarked as short or long due to a system failure. The problems that this can cause include forced margin maintenance sales and inappropriate loss sales.

Trading options is a difficult process for investors. Options being mismarked causes the effort to be lost. It also causes the portfolio to be put in jeopardy by betting against the research by taking a position opposite of the position intended.

For the last 20 years, we have represented investors suffering losses due to brokerage wrongdoing. Please call for a free initial consultation.

Trading relies on accuracy of orders.
Investing is tough enough without orders being mismarked.

Recovery of FIP Loss

Investors suffering FIP, future income payments, loss may be entitled to recovery including losses from the scheme of Scott Kohn.

We are a firm focused on obtaining recovery for investors, such as those sustaining loss from FIP investments. FINRA, the Financial Industry Regulatory Authority, recently entered into a settlement with the brokerage firm Hornor Townsend & Kent (HTK) concerning the sale of FIPs. Investment News reports that the settlement stems from the supervision of a cohort of Scott Kohn, the notorious Ponzi scam ringleader.

The regulatory settlement states that from July 2013 to March 2016, HTK failed to reasonably supervise its representative’s disclosed, but unapproved, activity involving the sale of FIP securities, including to HTK’s customers. In July 2013, the HTK representative submitted an outside business activity, OBA, request for approval to sell interests in FIP. In his request, the representative described the OBA as “Structured Cash Settlement[s]” that were “investment related,” and involved the purchase of “a fixed income from a source such as a lotery [sic] winner or a retiree.” The representative informed HTK that he anticipated approximately $50,000 a year in commissions and fees from these FIP sales. The representative also informed HTK that he intended to commence the OBA on July 20, 2013, at his HTK branch office.

HTK did not approve but apparently failed to inform the representative. The representative assisted Scott Kohn, who was sentenced to 10 years in prison last year for organizing a Ponzi scheme.

We believe investors who were clients of HTK or believed that HTK had approved the FIP sale should contact us about recovery of their losses. Our firm represents investors and has been doing so for the last 20 years.

Investors have recourse for FIP
 stockbroker fraud and negligence.
FIP Fraud and Negligence often goes unnoticed due to the complexity of securities.

Selling Away by Kevin Hobbs of PFS

PFS Investments broker Kevin Hobbs inappropriately invested clients in accounts away from PFS, a selling away violation. This is the allegation of regulators in a suit that resulted in Hobbs being barred from the securities industry. PFS may also have exposure because brokerage firms are required to supervise their broker’s investment activities, even activities away from the firm.

The regulatory matter originated from allegations in a customer suit disclosed by PFS in a regulatory disclosure. FINRA Rule 8210(a)(1) states that FINRA, a regulator overseeing brokers, may require a broker to provide information in writing with respect to any matter involved in a FINRA regulatory investigation. Providing false information to FINRA in connection to with an investigation violates FINRA Rules.

On October 18, 2022, in connection with FINRA’s investigation into the selling away, the regulator asked him to identify all individuals for whom he had effected a securities transaction in an account other than at PFS Investments. Hobbs provided an inaccurate response to the FINRA request that failed to identify at least one other individual whose account he had traded away from PFS Investments. This false response was enough to warrant a resolution where Hobbs would be barred from the securities industry.

The more serious charge of selling away was not resolved due to the settlement on the lesser issue. FINRA Rule 3280(b) prohibits a broker from selling investments away from the broker’s employing firm. A broker may not participate in any manner in a private securities transaction unless, prior to participating, the broker provides notice to his employing firm describing the trade. FINRA Rule 3280(e)

From April 2020 to at least November 2020, Hobbs participated in private securities transactions “away” from PFS when he effected numerous trades in at least three individuals’ third-party brokerage accounts. Hobbs never sought nor received PFS’s permission to participate in any of these private securities transactions.

Even without the approval of PFS, PFS can still be held responsible for failing to detect trades its broker made away from the firm. As a controlling entity PFS is responsible for the securities law violations of those individuals that in directly or indirectly control. The duty that brokerage firms have to supervise the actions of their representatives who invest away is well-established.  The NASD first discussed the issue in NASD NTM 94-44 and later elaborated in NASD NTM 96-33.  The NASD and now FINRA have held that this duty creates the obligation to review trades, conduct surprise examinations and take other reasonable supervisory steps to protect the investments of the clients.  The broker-dealer must supervise the participation of its representatives and associate persons in the advisory “as if the transaction were executed on behalf of the [broker-dealer].”  NASD NTM 96-33.   

The brokerage firms have the ability to control all actions of their representatives, including off-book or selling away transactions, and they are required to have specific supervisory procedures to prevent selling away. Martin v. Shearson Lehman Hutton, 986 F.2d 242 (5th Cir. 1993); Stat-Tech Liquidating Trust v. Fenster, 981 F. Supp. 1325 (D. Colo. 1997).  They also have the right to discipline the representative for violations of the supervisory provisions. Id.

Selling away is fraud against the investor. A broker chooses to sell away as a way to circumvent supervision into his trades. There is little reason to sell away other than to commit fraud. As such, selling away is considered to be a highly suspect and fraudulent act.

Hobbs had a history of these actions and this gave notice of his fraud. He had multiple suits alleging wrongdoing going back to 2002. Selling away complaints go back at least to 2021.

We have significant experience in the handling of selling away cases. Please contact us for more information.

Morgan Stanley’s Fernando Silva Barred

Regulators barred Morgan Stanley broker Fernando Silva from the securities industry on December 6, 2022. FINRA, the Financial Industry Regulatory Authority, the regulatory agency that oversees securities brokerages, entered into a settlement with Mr. Silva to reach this punishment. The FINRA investigation started after Morgan Stanley reported to the regulator that Silva had misappropriated client funds. FINRA filed suit against Silva, an Arizona securities broker in 2022.

This settlement happened after Silva’s relatively short relationship with Morgan Stanley. Though the relationship was short, Morgan Stanley is ultimately responsible for losses occurring due to Silva’s actions.

From August 2021 through September 2022, Silva was registered with FINRA as a General Securities Representative (“securities broker”) through an association with Morgan Stanley. On September 23, 2022, Morgan Stanley filed a
Uniform Termination Notice for Securities Industry Registration (Form U5). A Form U5 is the form a brokerage is required to file with regulators when one of its brokers is discharged. The Form U5, written and submitted by Morgan Stanley, stated that Morgan Stanley had “concerns that Silva had misappropriated client funds.”

FINRA Rule 8210(a)(1) states that FINRA shall have the right to require a “[securities broker] to provide information orally, in writing, or electronically . . . with respect to any matter involved in [a FINRA] investigation.” FINRA Rule 8210(c) provides that “[n]o [securities broker or brokerage] shall fail to provide information . . . or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.”

A violation of FINRA Rule 8210 is also a violation of FINRA Rule 2010, which requires securities brokers to “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business.

On October 14, 2022, FINRA sent a request to Silva for the production of information and documents pursuant to FINRA Rule 8210. Silva failed to provide a response to that request. On November 1, 2022, FINRA sent a second request to Silva for the production of information and documents. As stated in email correspondence to FINRA on November 14, 2022, and by this agreement, Silva acknowledges that he received FINRA’s requests and will not produce the information or documents requested. By refusing to produce the information or documents as requested pursuant to FINRA Rule 8210, Silva violated FINRA Rules 8210 and 2010.

Please contact us if you have information or have suffered losses due to Fernando Silva.

Investors have recourse for Wall Street corruption.