Articles Posted in Broker Fraud

The US Attorney’s Office for the Southern District of Texas recently announced that District Court Judge Keith P. Ellison has sentenced former financial adviser Peggy Ann Fulford to 120 months in prison—that’s 10 years. Fulford defrauded a number of professional athletes, including ex-NBA basketball players Dennis Rodman and Travis Best, former Heisman trough winner Ricky Williams, as well as NFL football players Lex Hilliard and Ricky Williams, of millions of dollars. The former broker, who is from Houston and was based out of New Orleans, pleaded guilty to one count of interstate transportation of stolen property in 2018.

Fulford, who also used the last names King, Williams, Simpson, Rivers, and Barard as her aliases, along with the names Devon Cole and Devin Barard, admitted that she falsely told her former clients that she had degrees from Harvard Business School and Harvard Law School, as well as that she had made millions of dollars on Wall Street. She told her victims that they didn’t need to pay her a fee because she was already wealthy and just wanted to help them protect their funds.

Instead, Fulford, who was supposed to manage their money and pay their bills for them, diverted millions of dollars to support her own lavish spending habits. Even after pleading guilty and while out on bond in this criminal case, Fulford, as Peggy Jones, allegedly defrauded another man out of $25K.

Former Centaurus Financial Broker’s Certified Financial Planner Designation is Suspended

The Certified Financial Planner Board of Standards has suspended Texas broker’s Larry J. Templin’s CFP designation. The interim suspension comes after Templin, who is accused of bank fraud, refused to provide the Financial Industry Regulatory Authority (Finra) with information related to the allegations against him.

Templin was a Centaurus Financial broker until last year when he was fired by the Texas-based brokerage firm. Previously, he was registered with USAllianz Securities and First Global Capital, which are both headquartered in Texas. Templin worked in the securities industry for over 20 years.

Daniel Todd Levine, a former Morgan Stanley (MS) broker, has been barred by the Financial Industry Regulatory Authority after he failed to cooperate in a probe into allegations that he may have taken part in outside business activities that he did not disclose to the broker-dealer while he worked for the firm. Levine was a Morgan Stanley broker based in Denver, Colorado between 2013 and July 2018 when he stepped down. His next employer was First Financial Equity Corp., but that brokerage firm fired him a few weeks later after he did not notify them about the FINRA investigation.

According to Levine’s BrokerCheck record, he previously worked with Prudential Securities, Merrill Lynch, and UBS (UBS). He was employed in the securities industry for over 20 years.

A number of other former Morgan Stanley brokers have recently made news headlines over allegations of broker fraud. Last month, FINRA announced that it had filed a lawsuit against Ami Forte, who is accused of making unauthorized trades in the account of now deceased Home Shopping Network co-founder Roy M. Speer. In November, former Morgan Stanley financial adviser James Polese was sentenced to five years behind bars after pleading guilty to defrauding customers of over $1M.

Next Financial Group Inc. will be purchased by Atria Solutions. The Houston-based independent broker-dealer is the fourth brokerage firm that Atria, which is located in Dallas, has acquired since 2017. The other brokerage firms are Cadaret Grant & Co., Cusco Financial Services, and Sorrento Pacific Financial.

Next Financial currently has almost 540 advisers and representatives and nearly $13B in assets under management. According to InvestmentNews, Under the Next Financial deal, Atria will acquire the broker-dealer and its related companies. Following the acquisition, Atria will work with almost 2,000 advisers with about $65B in assets under administration.

Next Financial’s BrokerCheck record shows 19 disclosure events that have been settled, usually without the firm admitting to or denying the findings, for various causes, including:

The US Securities and Exchange Commission has filed civil charges against a number of companies and brokers who illegally sold Woodbridge Group of Companies securities to retail investors. Woodbridge, which filed for bankruptcy protection last year, its owner Robert H. Shapiro, and several others have since been charged with running a $1.2B Ponzi scam that defrauded nearly 8,500 investors. Many of their victims were older investors who together took almost $400M out of their IRA to invest in the securities.

Now, the SEC is charging 13 unregistered brokers that were among the top sellers of Woodbridge securities. Collectively, they allegedly sold over $350M in the unregistered securities to more than 4,400 investors. The regulator contends that the defendants promoted the Woodbridge securities as “safe” investments, making millions of dollars in commissions from the sales even though they were not registered brokers or even affiliated with a registered brokerage firm and should never have sold the Woodbridge investments to begin with. The brokers named in the SEC broker fraud case include:

• Robert S. Davis, Jr., the VP of Old Securities Financial Group

If you are an investor that has lost money because of an unsuitable margin call in your investment account, you may have grounds for filing a Financial Industry Regulatory Authority (FINRA) arbitration claim to try and recover your losses. Unfortunately, a lot of investors may not understand what they are getting into when they open a margin account.

What is A Margin Account?

Margin accounts are not suitable for every investor, especially those that can’t handle too much risk. A customer that sets up with a margin account with a broker is indicating that he or she may want to borrow money later on down the road. With a margin account, you are essentially providing the securities and money in your margin account as collateral for this possible loan. Should you decide to borrow the money to buy securities, a broker is then allowed to sell your assets if necessary to fulfill the margin loan.

The Financial Industry Regulatory Authority (FINRA) is ordering Merrill Lynch to pay $300K after finding that it did not properly supervise former broker Eva Weinberg, who went to prison for defrauding former NFL football player Dwight Freeney. Merrill, which is now a wholly-owned Bank of America (BAC) subsidiary, consented to the fine and censure imposed for not properly investigating and overseeing Weinberg even after the firm had internally flagged three of her emails and a $1.7M default judgment had been rendered against her in a civil case. (It should be noted that this case is not listed on her BrokerCheck record but was reported by InvestmentNews.)

What Weinberg’s BrokerCheck record does state is that she began working in the industry in 1988, but then in 2004 she took several years away to work at a real estate company owned by a man named Michael Stern, who is also now in prison for defrauding Freeney. Even before Freeney, however, Stern already had a criminal record.

FINRA said that when Weinberg applied to Merrill for employment in 2009, she did not mention the years she had spent working for Stern. The broker-dealer went on to hire her in their Miami office where she worked with professional athletes, including Freeney. She is the one who introduced the former NFL player to Stern.

The Financial Industry Regulatory Authority (FINRA) has suspended former Securities America broker Michael D. Jackson for six months following allegations that he traded options in one client’s account without telling the brokerage firm. Securities America has since fired Jackson.

According to the self-regulatory authority (SRO), in 2016, the ex-Securities America broker recommended that one customer set up an account at different firm to trade options. The customer followed his instructions. Over several months, Jackson allegedly:

  • Put in orders for over 42 options transactions sets—that’s over 100 orders—in the new account.

Steven Pagartanis, an ex-New York broker with Lombard Securities, has pleaded guilty to wire fraud and mail fraud in a Ponzi scam that went on for more than 18 years and caused investors to lose more than $9M of the over $13M that they invested. Many of his victims were older investors who lost a significant amount of their life savings. Many of them had worked with Pagartanis for years.

According to the release by the US Attorney’s Office for the Eastern District of New York, from 1/2000 to 3/2018, Pagartanis persuaded older individuals to get involved in investments involving real estate, including those that had affiliations with an international hotel conglomerate and publicly traded entities. Investors were told that their principal was secure and they would make a fixed return of 4.5 to 8% yearly.

Pagartanis’ victims were instructed to write checks to an entity of which he was secretly in control. The former broker used different bank accounts to launder the stolen money that he then spent on his own expenses as well as to pay other investors their “interest or dividend payments” that they were owed. He set up bogus account statements so as to encourage further investing and to hide his fraud.

A Florida-based wealth management firm is once again in the headlines over its hiring of brokers with “checkered” pasts. According to a recent Business Insider article, International Assets Advisory (IAA), which oversees approximately $2.5B in customer funds, “proudly hires” brokers that other investment firms wouldn’t even consider, including some with previous offenses on their record.

According to IAA president Ed Cofranceso, the firm’s hiring strategy lets him access a bigger talent pool while allowing some of those whom he employs to get a “second chance.” Cofranceso called his approach “American” and “Christian” and noted the adage about how every story has two sides. For example, the Business Insider article notes, one of the brokers that IAA hired had been fined and fired because his previous firm made him sell “bad products” to investors.

One headhunter interviewed for the news article notes that while the majority of employers will instantly nix any prospective applicants who respond “yes” to even one of nearly six dozen questions on the Financial Industry Regulatory Authority’s (FINRA) U4 registration form, IAA won’t disqualify these individuals right off the bat. Questions asked include whether applicants have been charged for misdemeanors or felonies and if they’ve ever had any “run-ins” with regulators. According to IAA General Counsel Myra Nicholson, candidates with such disclosures whom IAA eventually hires usually have to go through an “on-the-job” audit and may also be subject to more monitoring and certain restrictions.

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