Tag Archives: Ponzi

Gregory Walter McCloskey (Meier)

The Financial Industry Regulatory Authority (FINRA) alleges that between 2008 and 2018, Respondent Gregory Walter McCloskey, also known as Gregory Meier, is alleged to have defrauded at least one and possibly more elderly investor.

While associated with FINRA member firms, including Westpark Capital and Newport Coast Securities, McCloskey participated in two undisclosed private securities transactions (“PSTs”) involving an elderly, retired widow, and then sought to conceal these transactions from his member firms and FINRA.  There are very few legitimate reasons for not disclosing such transactions and create a strong inference of fraud.

McCloskey has been alleged to have committed such actions in the past.  He previously consented to the sanctions and to the entry of findings that he participated in a series of private securities transactions without providing written notice to or receiving approval from his member firm to engage in such activity. The findings stated that specifically, McCloskey, without his firm’s approval, personally invested $50,000 in a lighting and energy networking company and introduced two of his customers to the company, and they invested a total of $50,000.   For this he received a 15-day suspension and his firms were required to give him heightened supervision.  

In October 2019, McCloskey was permitted to resign from Westpark Capital.  This was in response to allegations that he failed to abide by the heightened supervision placed upon him.

If you were sold investments suffering substantial losses or that are illiquid call 1-866-817-0201 for a free and confidential consultation.

Fraud of Keith Ashley

Parkland Securities adviser, Keith Ashley, 48, is accused of incapacitating and murdering an investor associated with Ashley’s Ponzi-type fraud.  Authorities arrested Ashley on November 4, 2020, on wire fraud charges.  These charges that stem from an FBI investigation, according to a statement by the Carrollton Police Department. Carrollton is a suburb north of Dallas.

The victim, James “Jim” Seegan, 62, an investor of Ashley’s.  He was found dead of a gunshot wound to the head by his wife when she returned to their home on the evening of Feb. 19, 2020. Next to Seegan was a typed suicide note.

Over the course of a nine-month investigation, detectives found evidence that Ashley incapacitated, then murdered his investor to gain control of Seegan’s finances.

“Ashley was a friend and financial adviser of Seegan’s who would visit the Seegan home periodically,” according to the police. “During the course of the investigation, detectives also identified several other victims of a Ponzi scheme Ashley orchestrated.”

FBI

The FBI has take Ashley into custody concerning potential wire fraud.

The fraud occurred while Ashley was a registered representative, a securities broker, of Parkland Securities.  Parkland, formerly known as Sammons Securities, terminated him on October 27, 2020.  The reason for the termination was “undisclosed outside business activity.”

Brokers are required to identify all outside business activity to their brokerage firms.  Outside business activity of a broker is an area of significant concern.  Brokers often use their status as a broker to engender trust of the investing public.  This trust leads the investors to believe the investment opportunity offered by the broker to be legitimate.

There are very few reasons for a broker to not disclose outside business activities to his brokerage.  Failing to disclose outside business activities allows a broker to perpetuate Ponzi-type frauds.  The firm is unable to conduct due diligence to prevent the sale of investments with weak financials or that have no legitimate business operations.

A brokerage firm is still required to monitor for such activities though the activities may be undisclosed.  Audits and other reasonable measures are required to identify such activities.  A firm cannot sit content with a broker’s representation of not engaging in outside business activities.

Victims of the Ashley securities fraud should call 1-866-817-0201 for a free and confidential consultation.

Attention James T. Booth Investors

If you were an investor of James T. Booth previously of LPL and Invest Financial, please call 1-866-817-0201.  Initial consultations are free and confidential.

The Department of Justice (DOJ) announced an Indictment charging Booth with securities fraud, wire fraud, and investment adviser fraud charges in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates (“Booth Financial”) which is affiliated with LPL Financial and Invest Financial.  Throughout Booth’s scheme, he solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts.  Instead, he used nearly all of the money to pay personal and business expenses.  In total, Booth fraudulently obtained approximately $5 million from his investors.

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

“As alleged, James Booth convinced his clients that he would deliver solid and secure returns on their investments.  Instead, as alleged, Booth delivered only lies and deceit, and bilked some 40 clients of nearly $5 million.  Booth is now in federal custody and will have to answer for his alleged crimes,” stated the DOJ.

The DOJ further stated, “In an elaborate scheme of false promises and deception, it is alleged that Booth attained almost $5 million by luring investors to move their assets with the guarantee of safer investments and higher returns.  Instead, Booth allegedly pocketed the money. ”

Booth provided investors fabricated account balances and statements to prevent investors from seeking a return of their money, and to induce additional investments.  He further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in a Ponzi-like fashion.

Attention Mediatrix Investors

The SEC on September 18, 2019 announced that it has filed an emergency action in federal court in Denver, Colorado and obtained an asset freeze against three individuals in connection with an alleged fraudulent, ongoing international trading program, Mediatrix Capital, that has placed at risk more than $125 million of investor funds.  Allegations include that Mediatrix, despite assertions that it has not lost investor money in five years, has been operating a Ponzi scam and inducing investors fraudulently.

Mediatrix is an investment manager and trading advisor.  It is not a hedge fund, but a manager of outside funds, and purports that its operations as being conducted in the Bahamas.

An action has been brought by the SEC in Colorado.  Colorado has jurisdiction over Mediatrix due to owner and CEO Michael Young’s home in the Denver, Colorado area.  Despite the fact that Mediatrix operates out of the Bahamas, American investors may have the opportunity to pursue losses in the federal or state court in Colorado.

According to the SEC’s complaint, beginning in March 2016, Mediatrix Capital Inc. and its three owners, Michael S. Young, Michael S. Stewart, and Bryant E. Sewall, induced investors to invest by falsely representing that their money would be invested using a highly profitable algorithmic trading strategy that had never experienced an unprofitable month and had returned more than 1,600 percent since inception. In truth, the complaint alleges, the defendants’ trading strategy consistently lost money-losing more than $18 million from its trading in 2018 alone. In addition to repeatedly misrepresenting the profitability of the trading, the complaint alleges defendants also misled investors by falsifying account statements and making Ponzi-like payments, all while misappropriating more than $35 million of investor money for defendants’ personal use, including to purchase luxury properties and vehicles.

The SEC’s complaint, filed in federal district court in Colorado on September 12, 2019 and unsealed today, charges all defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, as well as with violating the registration provisions of Section 5(a) and 5(c) of the Securities Act.

The SEC’s complaint also charges Mediatrix Capital, Young, Stewart, and Sewall with violations of the antifraud provisions of the Investment Advisers Act of 1940. The SEC has also charged 20 relief defendants who allegedly received profits from the fraud.

The SEC’s continuing investigation is being conducted by Jeffrey D. Felder and Tracy W. Bowen of the SEC’s Denver Regional Office and supervised by Kimberly L. Frederick and Jason J. Burt. The litigation is being led by Stephen C. McKenna and Mark D. Williams and supervised by Gregory A. Kasper. The SEC appreciates the assistance of the U.S. Commodity Futures Trading Commission, the U.S. Attorney’s Office for the District of Colorado, the Federal Bureau of Investigation, and the U.S. Marshals Service. The SEC also appreciates the assistance of the UK Financial Conduct Authority, the Czech National Bank, the New Zealand Financial Markets Authority, the Securities Commission of The Bahamas, the Central Bank of Armenia, and the Cayman Islands Monetary Authority.

Jeffrey Pederson is a licensed Colorado attorney.  If you have questions about Mediatrix or the ability to pursue recovery of losses in Colorado, please call 1-866-817-0201.

Paul Andrews Rinfret Victims

If you were an investor of Paul Andrews Rinfret please call 1-866-817-0201 for a free and confidential consultation with a private attorney. 

Rinfret orchestrated a years-long scheme to defraud investors.  He sold limited partnership interests in an entity purported to trade in futures relating to the S&P 500, utilizing a purported algorithm he had developed.  Rinfret touted unreasonably high returns on his trading.  In truth, Rinfret simply stole most of the investors’ money in order to fund his lavish lifestyle.  Rinfret was arrested the morning of June 28, 2019 at his home in Manhasset, New York,

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

As stated by the SEC, Paul Rinfret deceived investors at every step:  Lying about his past returns in his solicitations.  Lying about having invested all of their entrusted funds, when he was actually spending much of it on things like jewelry, cars, and a Hamptons vacation home.  After receiving the funds he lied about how their money was growing. 

Rinfret obtained more than $19 million on the false representation that he would utilize their investment funds for trading. 

Rinfret’s lies were varied and many but that does not mean that portions of investors funds cannot be recovered.   If you are a victim, please call to discuss your options.   

DC Solar Ponzi – Loss Recovery

DC Solar is accused of operating a large Ponzi-type scheme concerning  a number of tax equity investment funds from 2015-2018.  The company, whose products include solar generators as well as light towers that can be used at sports events, filed for Chapter 11 bankruptcy protection in February 2019 in Reno, Nevada.  This Ponzi scheme, as with most Ponzi schemes, is about a failure of investigation as much as the underlying fraud.

In a February 8, 2019 affidavit related to those bankruptcy proceedings, an FBI agent said the manner in which the Benecia, California-based company appeared to have operated reflected “evidence of a Ponzi-type investment fraud scheme.”

The U.S. Securities and Exchange Commission accused DC Solar’s owners by name of engaging in a Ponzi scheme, according to a separate court filing.

As late as December 20, 2018, DC Solar had been seen in the business media as an “Energy Powerhouse.”  The company was well known and sponsored a NASCAR team.  Those fortunes reversed quickly.

Sufficient investigation by advisors would have revealed insufficient lease revenue and that the funds coming in to compensate the lack of lease revenue was simply investor money.  As such, payments of profits was simply earlier investors receiving the investment funds of newer investors.  Detecting such arrangements is the charge of brokers, advisors and their firms as part of their due diligence obligations.

Civil action has been commenced against the property of DC Solar, which is considered the defendant in the case. Because it is a civil action, no criminal charges need be placed against the property’s owner, according to the U.S. Department of Justice.

However, 87 defendant items are traceable to an investment fraud and money laundering scheme run by companies described in other court documents as those associated with DC Solar.

The defendant properties listed are $62,546110.43 in multiple domestic and foreign bank accounts; $1,944,091.07 in cash seized at the Carpoffs’ Martinez home and Benicia offices; an estimated $500,000 worth of jewelry and other personal items; and a $782,949 money transfer for that luxury box at the Raiders NFL football team’s future stadium in Las Vegas, Nev.

Most of the bank accounts had been opened with China Bank and Trust, which is based in Taiwan with multiple international subsidiaries, according to its website. Other accounts were opened with E-trade, J.P. Morgan, BBVA Compass and Bank of America, the attorneys wrote.

Once of the largest victims is Berkshire Hathaway.  Warren Buffett’s Berkshire Hathaway Inc on Wednesday said a $377 million charge it incurred recently was tied to a solar generation company that U.S. authorities have linked to fraud.

 

Floyd E. Powell Victims

On February 13, 2019, a regulatory settlement was issued in which Floyd E. Powell was permanently barred from association with any stockbrokerage firm in any and all capacities.  If you are a victim of Mr. Powell, purchasing Woodbridge notes through him, call 1-866-817-0201 for a free and confidential consultation.

Without admitting or denying the findings, Powell consented to the sanction by FINRA, the Financial Industry Regulatory Authority, and to the entry of findings that he engaged in private securitiestransactions without providing notice to or obtaining approval from his member firms prior to participating in them.

The findings stated that Mr. Powell solicited investors to purchase promissory notes relating to a purported real estate investment fund. Ultimately, Powell sold $3,491,707 in the notes to investors, many of whom were customers of the securities firms for which Mr. Powell worked. Powell received a total of $103,598 in commissions in connection with these transactions. Later, the fund filed a voluntary Chapter 11 bankruptcy petition.

Powell operated primarily in the Albertville and Birmingham, Alabama areas. He worked for MML Investors, MSI Financial Services, and Metropolitan Life Insurance.  He had been a licensed stockbroker since 1992.

The sale of unapproved securities, such as the notes sold by Mr. Powell, is a significant securities violation.  Not only is the review by a firm to ensure that the prospects of a company are what the company says they are, brokers often try to circumvent a firms review to allow the sale of a fraudulent investment.

Attention Motty Mizrahi Investors

The SEC has halted an ongoing fraud perpetrated by Motty Mizrahi and targeting members of the Los Angeles Jewish community.  If you are a victim, call 1-866-817-0201 to speak to a private attorney about your rights.

FBIThe SEC filed an emergency action in federal court against Mizrahi and MBIG Company, his sole proprietorship, alleging that, since June 2012, they defrauded at least 15 investment advisory clients out of more than $3 million.

According to the SEC’s complaint, Mizrahi falsely claimed that MBIG used sophisticated trading strategies to generate “guaranteed” investment returns of between 2-3% per month risk-free, clients would not lose their money, and could withdraw their funds at any time.

Unbeknownst to his investors, however, MBIG had no bank or brokerage account of its own – rather, clients unwittingly sent money to Mizrahi’s personal bank account. Mizrahi used the money to fund his personal brokerage account, in which he engaged in high-risk options trading producing losses of more than $2.2 million, and to pay personal expenses. The SEC alleges that Mizrahi covered up his fraud by issuing MBIG’s clients fabricated account statements, showing positive account balances and profits from trading. When clients demanded proof of MBIG’s securities holdings, Mizrahi showed them brokerage statements reflecting a multi-million dollar balance for a fictitious MBIG brokerage account.

On March 27, 2019, the Honorable Judge Percy Anderson of the U.S. District Court for the Central District of California granted emergency relief, including a temporary restraining order against the defendants and an order freezing their assets.

In a parallel action, the United States Attorney’s Office for the Central District of California announced on March 29, 2019 it filed wire fraud charges against Motty Mizrahi and another individual.

Pagartanis Fraud

If you were a victim of Steven Pagartanis please call 1-866-817-0201.  The Law Offices of Jeffrey Pederson, PC is a firm that specializes in suits concerning securities brokers.

Pagartanis, the former Lombard and Cadaret broker from Long Island, N.Y., pleaded guilty Monday, December 10, 2018, in federal court to conspiracy to commit mail and wire fraud for running a Ponzi scheme over 18 years

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

Steven Pagartanis victims invested over $13 million and saw actual losses of more than $9 million,  according to the U.S. Attorney’s office.

This former licensed securities broker solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded companies and an international hotel conglomerate, according to the Department of Justice. Pagartanis promised his investors returns consistent with conservative investments-that their principal would be secure and earn a fixed return of 4.5% to 8% annually.

The victims wrote checks payable to an entity secretly controlled by Mr. Pagartanis at his direction, according to the government. He utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the phony interest or dividend payments to other victims, according to the Department of Justice. He faces up to 20 years in prison.

Recovery of these losses will focus on the employers of Pagartanis.  These employers are required to have supervisory safeguards in place to prevent such actions.  FINRA, the Financial Industry Regulatory Authority, has rules that require licensed brokerages to take steps to monitor and detect private securities transactions away from the firm.  Consequently, liability exists even if such actions were not taking place right under the nose of the firms.  FINRA offers an arbitration forum to recover such losses.

The SEC also filed a civil suit concerning this matter in May 2018.

On June 26, 2019, a FINRA arbitration panel awarded an investor a judgment in the amount of $1.46 million against Pagartanis for his role iin the multi-million dollar Ponzi scheme.

Jeffrey Pederson is an attorney who helps investors recover losses from brokerage firms through the FINRA arbitration process.  This is just one of the 17 customer complaint disclosures on his record.

Attention Matthew Eckstein investors

Investors of Matthew Eckstein please call 1-866-817-0201.  Mr. Eckstein was previously employed by Sisk Investment Services and Gould, Ambroson & Associates.   Initial consultations are free and confidential.

The Financial Industry Regulatory Authority (FINRA) recently expelled Eckstein when he failed to appear at a regulatory hearing to contest allegations of severe misdeeds in his handling of securities portfolios.

Stock handcuffsEckstein engaged in a practice referred to as “selling away.”  A form of fraud, this is a practice where a securities broker sells a private security without the approval of a licensed securities firm.  This prevents the firm from vetting the investment to determine legitimacy and that the funds received actually are used to purchase the investment.

In a selling away situation, the investment is commonly of a company that the broker either owns, has an interest or that a friend or relative owns.  This is a common form of fraud and one in which his employing firm should have had supervisory mechanisms in place to detect and prevent.

The investments at issue in the present matter were investments in Conmac Capital and Conmac Funding.

In recommending that his customers make the Conmac investment, Eckstein knowingly, or at a minimum, recklessly, made false and misleading statements regarding the investment—saying, for example, that it was “fully guaranteed,” when it was not, and describing it as comparable to a certificate of deposit with a bank (“CD”), when it was not.

Eckstein, the Respondent in the FINRA suit, also persuaded one of his customers to liquidate close to $300,000 in mutual fund holdings in order to invest in the Issuer, representing that the investment would be sufficient to fund her retirement while the mutual fund investments would not. He had no basis, however, for urging the customer to replace her mutual funds with an investment in the Issuer. He had conducted no due diligence on the investment. Moreover, he never disclosed to his customers his lack of a basis for his representations and recommendations, and his lack of due diligence—material information to any reasonable investor.

“Respondent also failed to disclose financial connections to investors that would have caused a reasonable investor to question Respondent’s objectivity and the safety of his or her money.” He did not disclose that nearly all of the money that his customers gave him to invest in the Issuer was deposited into a bank account in the name of an affiliate of the Issuer, and that Respondent had access to those investor funds as a signatory on the bank account. “Respondent also did not disclose that KB had given him over $100,000.”

Eckstein and his employer are currently defendants in multiple suits concerning the his fraud.  These suits are largely being handled through the FINRA arbitration process.  Investors waive certain rights to bring claims in court when signing account opening documents with FINRA-licensed securities brokerages.