Tag Archives: due diligence

Kari Bracy – Future Income Payments (FIP)

Kari M. Bracy, formerly of NY Life, recently lost her securities license rather than cooperate in an investigation into her sale of unapproved investments in future income payment streams.   These investments are alleged to be part of an elaborate Ponzi scheme.  Our firm represents individuals in such suits and other Ponzi-type frauds.  Call 1-866-817-0201 for a free and confidential consultation.

On December 30, 2019, in connection with an investigation by the regulator FINRA, the Financial Industry Regulatory Authority, of Bracy’s sale of a Future Income Payments, LLC’s (“FIP”) structured cash flow investment comprised of pension streams, FINRA staff sent a request to Bracy directing her to appear for on-the-record testimony on January 16, 2020 pursuant to FINRA Rules. On December 31, 2019, Bracy acknowledged during a telephone call with FINRA staff that she received request letter and did not intend to appear for testimony.

FINRA is the regulator that is charged by the Securities and Exchange Commission with the oversight of all securities brokers in the United States.  The failure to cooperate led FINRA to bar Bracy from the securities industry.

FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational, which is the definition of a Ponzi scheme. When FIP ceased doing business in early 2018, investors were owed approximately $300 million.

This is not the first time Bracy has faced legal issues concerning these  FIP investments.  An investor initiated suit against NY Life concerning Bracy’s sale of these FIP investments in future income streams.  The investor filed for arbitration with FINRA in July 2018.

That lawsuit, which alleged damages in the amount $142,000, settled for $80,000.  The investor alleged that in December 2017 her investment in FIP, a private securities transaction, was misrepresented as a conservative and safe investment with a 7.5% annual return for ten (10) years.  The FIP investment is not a conservative investment and was known to be highly aggressive and inappropriate for most, if not all, investors.  

 

 

 

Tobin Joseph Senefeld

FINRA  has announced that  Tobin Joseph Senefeld, formerly of PIN Financial, a Carmel, Indiana brokerage firm owned by Veros Partners, has been barred from associating with any FINRA member institution, according to its monthly disciplinary report released last week. The sanction is related to a Securities and Exchange Commission suit that claimed Senefeld and two others operated a multimillion-dollar Ponzi scheme involving farm loans.

FINRAThe SEC case claimed the three raised $15 million from 80 investors in 2013 and 2014 to fund farm loans. New investor funds were used to pay older investors when the loans went bad.

Senefeld has a long history of misconduct.  The FINRA and SEC actions are just the latest of his legal problems.  The record of Senefeld contained on FINRA’s BrockerCheck indicates that Senefeld has 27 disclosure events dating back to 1997.

The prior misconduct of Senefeld, also known as “disclosure events,” include a substantial number of state regulatory actions, including the revocation of his license by Michigan in 2000 and other regulatory punishment by 16 other jurisdictions around the same time.  Senefeld also had a long history of tax liens, terminations, and civil suits initiated against him by other investors.

Co-defendants in the present SEC matter, Matthew D. Haab and Jeffrey B. Risinger, both have settled the civil suit for about $184,000 and $100,000, respectively. Senefeld and the SEC failed to reach a settlement at an in-person meeting Oct. 28, according to court filings, so Senefeld’s case remains on course for trial.

Senefeld, PIN and Risinger have all received lifetime bans from the securities industry by FINRA.

Platinum Partners

We are currently investigating losses suffered by investors in Platinum Partners.  If you have suffered losses please call 1-866-817-0201 for a free consultation with an attorney.

As reported on December 19, 2016 in the Wall Street Journal, top executives of hedge fund Platinum Partners were arrested Monday morning and will be charged with defrauding investors in one of the biggest such cases since Bernard L. Madoff’s Ponzi scheme.  The level of fraud is anticipated to approach or top $1 billion.

guy in handcuffsPlatinum previously reported more than $1 billion in assets under management.  This includes holdings scattered in eclectic investments like loans to bankrupt companies and thinly-traded pharmaceutical stocks. In form of a true Ponzi-type operation, Platinum boasted a performance track record with no down years for its funds.

The scheme targeted members of the Jewish community in New York, New Jersey, Florida and Texas.

The indictment unsealed Monday in federal court in Brooklyn charges Platinum founder and Chief Investment Officer Mark Nordlicht, co-chief investment officer David Levy, and former president Uri Landesman with counts of securities fraud, investment adviser fraud and conspiracy.

Authorities in New York said these Platinum executives and others falsely inflated the value of Platinum’s assets, allowing Platinum Partnersthe firm to collect a hefty cut of all investment gains and project a veneer of financial stability. In actuality, the firm’s investments were worth far less, and Platinum’s executives knowingly faked the performance figures, authorities said.

Recovery of ARCP Losses

If you have suffered losses in ARCP, please call 1-866-817-0201 to speak to an attorney about potential recovery of your losses.

guy in handcuffsThe Department of Justice and the Securities Exchange Commission on September 8, 2016 charged the former chief financial officer of American Realty Capital Properties Inc., (“ARCP”) a large traded REIT now known as Vereit Inc., with overstating the financial performance of the company by purposefully inflating a key metric used by analysts and investors to assess ARCP.

According to the SEC’s complaint, ARCP’s former CFO, Brian S. Block and then chief accounting officer Lisa McAlister devised a scheme to manipulate the calculation of the REIT’s adjusted funds from operations, or AFFO, a non-GAAP measure used when the company provided earnings guidance.

Block was arrested Thursday morning on conspiracy, securities fraud, and other charges at his home in Hatfield, Pa., according to a statement from the U.S. Attorney’s Office for the Southern District of New York.

McAlister pled guilty on June 29, 2016 to one count of conspiracy to commit securities fraud and other offenses, including one count of securities fraud, one count of making false filings with the SEC, and one count of making false statements in a matter within the jurisdiction of the executive branch of the U.S. government. The securities fraud and false filings charges each carry a maximum prison term of 20 years. The conspiracy and false statements charges each carry a maximum prison term of five years.

Jeffrey Pederson, PC represents investors in the recovery of investment losses through fraud and mismanagement.  Most cases resolve by means of FIRNA arbitration.

Information for this post obtained from Investmentnews.com.

Shamrock Asset Management

If you were invested in F-Squared or AlphaSector while with Shamrock Asset Management, please call Pederson Law for a free consultation.  The toll-free number is 1-866-817-0201.

Shamrock Asset Management is a Dallas, Texas investment adviser.  Advertisements made by Shamrock and its advisers inappropriately inflated the investment returns of certain investments.  As a result, Shamrock received a cease and desist order from the SEC.  The relevant parts of the order are as follows:

“From July 2011 through October 1, 2013, in reliance on F-Squared’s false statements, Shamrock’s AlphaSector advertisements falsely stated that: (a) assets had been invested in the AlphaSector strategy from April 2001 to September 2008; and (b) the track record had significantly outperformed the S&P 500 Index from April 2001 to September 2008.

“In fact, no client assets had tracked the strategy from April 2001 through September 2008. In addition, F-Squared miscalculated the historical performance of AlphaSector from April 2001 to September 2008 by incorrectly implementing signals in advance of when such signals actually could have occurred. Shamrock took insufficient steps to confirm the accuracy of F-Squared’s historical data and other information contained in the materials. In addition, Shamrock did not obtain sufficient documentation that substantiated F-Squared’s advertising claims in the materials.

“As a result of this inaccurate compilation of historical data by F-Squared, Shamrock advertised the AlphaSector strategy by using hypothetical and back-tested historical performance that was inflated substantially over what performance would have been if FSquared had applied the signals accurately. 4. As a result,

“Shamrock violated Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder by publishing, circulating, and distributing advertisements that contained untrue statements of material fact. Shamrock likewise did not make and keep true, accurate and current records or documents necessary to form the basis for or demonstrate the calculation of the performance or rate of returns that it circulated and distributed, as required by Section 204(a) of the Advisers Act and Rule 204-2(a)(16) thereunder.”

Brian Candler and Ari Financial

Please call 1-866-817-0201 to speak to a lawyer if you suffered losses with Brian Candler or Ari Financial.  Ari Financial of Overland Park, Kansas and Candler of Leawood, Kansas have recently resolved regulatory actions against them concerning failures in the review and supervision of the investments sold.  Some of these investments were ultimately revealed to be Ponzi schemes, such as the investments in Bridgeport Oaks.  The regulatory settlement can be found at the following link.

Invest photo 2In summary, Ari Financial submitted an Offer of Settlement in which the firm was censured, fined $7,500 and, for a period of one year, must file with FINRA’s Advertising Regulation department all retail communications that the firm intends to permit its registered representatives to use or distribute at least 10 business days prior to use.  Candler was censured, fined $2,500, suspended from association with any FINRA member in any capacity for 10 business days, and suspended from association with any FINRA member in any principal capacity for 10 business days, to be served after the completion of the suspension in any capacity.

Without admitting or denying the allegations, the firm and Candler consented to the sanctions and to the entry of findings that Candler failed to conduct reasonable due diligence regarding a private placement that the firm sold directly to retail investors. The findings stated that as a result, the firm lacked a reasonable basis to believe that the private placement was suitable for any investor. The offering was later discovered to be a Ponzi scheme, and customers who purchased interests lost their collective investment principal of approximately $560,000.

The findings also stated that as a result of deficiencies in its supervisory system, the firm failed to identify and prevent the dissemination of misleading and imbalanced advertising and sales materials by registered brokers, and failed to ensure that the offering materials prepared and distributed contained sufficient and accurate disclosures. The findings also included that the firm failed to document the written approval of the advertising and sales material it used, and the first and last dates of use. FINRA found that Candler provided medallion signature guarantees for numerous pre-signed securities assignment forms without having the forms signed in his presence or otherwise verifying their authenticity Moreover, despite providing signature guarantees for numerous securities transfers, ARI and Candler had not previously established any supervisory system or written procedures for the firm’s medallion signature guarantee program.

Candler did not establish a supervisory system for the firm’s medallion signature guarantee program. Following the receipt of a complaint that Candler improperly provided signature guarantees in connection with certain securities transfers, he established deficient written supervisory procedures (WSPs) governing the firm’s activities as a guarantor. FINRA also found that the firm and Candler failed to retain and review certain securities business-related communications to and from its registered representatives, and failed to establish appropriate escrow accounts for contingent offerings. The firm’s WSPs did not include appropriate provisions to ensure that its standards regarding communications with the public were implemented and followed, and Candler did not enforce the WSPs that required it to preserve all business email. In addition, FINRA found that although the firm had WSPs that generally addressed the supervision of its private placement activities, they were often insufficiently tailored to the nature of its business and amounted to a supervisory system that was not reasonably designed to achieve compliance with the applicable laws and regulations.

Investor Recovery of Breitling Energy Losses

Investors in Breitling Energy may have lost their investment but are not without recourse to recover their losses.  The misdeeds and mismanagement of Breitling Energy are things that the investor’s brokerage should have spotted if sufficient due diligence was done.  Investors seeking more information can call toll-free 1-866-817-0201 for a free consultation.

guy in handcuffsThe thinly veiled fraud was recently exposed by the SEC that reasonable investigation should have exposed previously.  The Breitling Energy fraud includes interlocking companies, bad science, fake financials and an massively effective public relations campaign that turned a tech entrepreneur with a shaky record, Breitling CEO Chris Faulkner, into the “Frack Master.”

But the complaint implies that the scheme that took years of planning and execution, but basic components of the fraud were easily discoverable, such as the background of Faulkner and the tens of millions of dollars stolen by Faulkner.

The SEC account starts in 2009 when Faulkner ran a website data hosting company. At that point, “he had never managed, run, operated, or even worked in an oil-and-gas business.”

Despite this, many brokerage firms either ignored this information or failed to uncover such an important piece of information for its investors.

The Law Offices of Jeffrey Pederson, PC has helped investors recover losses for the failure of due diligence by securities brokerage firms.  Please call the number above for more information.

For more information on the Breitling Energy fraud see the following link.

Investors with Bonanza Creek Losses

Bonanza Creek has suffered deep declines lately but investors purchasing Bonanza Creek as part of their moderate to conservative portfolio may have recourse.  Please call 1-866-817-0201 for more information.

Shares of Bonanza Creek Energy were battered Wednesday, July 13, after the Colorado oil and gas producer disclosed it had hired a financial specialist to help it explore alternatives, including a restructuring.

Bonanza Creek, said it had retained Perella Weinberg Partners, a New York firm known for working with financially troubled companies to avoid bankruptcy or planning for bankruptcy.

The market didn’t react well to the news. Shares of Bonanza Creek, which closed at $2.28 on Tuesday, plunged to as low as $1.14 before crawling back to end trading Wednesday at $1.44 a share, a 36.8 percent decline.

Shares of the company had traded above $60 in August 2014, a few months before Saudi Arabia said it would no longer limit its production to support prices. That set off a steep descent in oil prices from above $100 a barrel to briefly under $30 when Iranian producers re-entered the market, forcing prices down even further.

Oil is now back around $45 a barrel. But lenders are reducing the credit they are willing to extend to producers given the lower value of their oil and gas reserves.

Bonanza Creek said in late May that the amount it could borrow under its credit agreement was cut from $475 million to $200 million. That was a problem because the company had borrowed $288 million, leaving it with a deficit of $88 million.

Bonanza Creek, like many petroleum producers, initially turned to the equity markets to help it stay afloat. The company raised more than $200 million in a secondary offering back in February 2015 to investors willing to pay $26 a share.

The Denver Post of July 14, 2016 provided information for this post.

Churchville Ponzi Scheme, Investment Fraud

If you were a victim of the Ponzi scheme or other investment fraud of Rhode Island investment adviser Patrick Churchville please call 1-866-817-0201.

Churchville has agreed to plead guilty to criminal charges for orchestrating a $21 million Ponzi scheme, according to a statement from the U.S. Attorney’s Office.

Stock handcuffsAside from that scheme, Churchville, 47, also committed investment fraud when he used $2.5 million of investor funds to help purchase his home and failed to pay more than $820,000 in personal federal income taxes, according to the statement.

Churchville, the owner and president of ClearPath Wealth Management, will plead guilty to five counts of wire fraud and one count of tax fraud.

Churchville is also a party in a civil case brought by the Securities and Exchange Commission (“SEC”) in May 2015.

Between 2008 and 2011, Mr. Churchville invested approximately $18 million of client money in JER Receivables, although by June 2010 he had become aware that ClearPath had been defrauded by that company, according to the statement.

Instead of notifying his clients of the losses, Churchville,  paid them with money obtained from new investors, misappropriating around $21 million of investor funds in the process, the statement alleges. To help carry out his scheme, he told investors JER Receivables was producing high rates of return, according to the statement.

Aequitas

If you have suffered losses with Aequitas please call 1-866-817-0201 to speak to a lawyer for a free consultation.

The sudden and stunning collapse of Aequitas Capital Management continues to unfold. The alternative investment’s platform is under investigation by both the SEC and Consumer Financial Protection Bureau. Nearly $600 million was bet on a diverse array of subprime lending strategies.

This bet was done with the funds of the Aequitas investors.  It’s unclear how much, if anything, they’ll recover.

Complicit in this matter are the financial advisors recommending this investment.  The investment was reliant upon such financial advisors for funding the investment.  It appears that the due diligence in the investment by some financial advisors, required to be completed by financial advisors, was substantially insufficient.   The financials of Aequitas evidence existing and ongoing financial weakness.

Aequitas suffered a debilitating cash shortage that has forced it to terminate 80 of its 125 workers. It has defaulted on payments due to investors. It has confirmed in letters to customers it is considering bankruptcy filings.

The SEC and the Consumer Financial Protection Bureau have launched separate investigations of the company. Brian Rice and Scott Gillis, two of the company’s six senior partners, resigned in recent weeks. The company’s general counsel just quit. As did Gillis, the CFO.  Gillis was the second Aequitas chief financial officer to depart in less than a year.