Investor Fraud

SEC and CFTC File Multiple Binary Options Fraud Complaints Accusing Marketers of Defrauding Investors of Millions of Dollars

Published on: October 1, 2018 | by Shepherd Smith Edwards & Kantas, LLP

In multiple federal civil complaints alleging binary options fraud, the US Securities and Exchange Commission is accusing a number of marketers of defrauding at least 75,000 investors—including retired investors and other retail investors, through the use videos that made false promises that they could make money fast. Investors were allegedly bilked of tens of millions of dollars.

The regulator is charging All In Publishing, LLC, Berry Media Works, LLC, and 10 individuals. The regulator SEC that the marketers sought to “trick” their targets into setting up brokerage accounts and trading in binary options, which are high risk securities.

The marketing campaigns promised investors they would make a lot of money if they set up the binary options account via “free or secret software systems” and then traded in these securities. Meantime, every time an investor set up and put money in a brokerage account, the marketers made money.

Texas Investor Fraud: Investment Adviser is Barred in $6.8M Offering Fraud and Investment Promoter Gets 25 Years in Prison for Stealing from Clients

Published on: September 27, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Thomas J. Caufield, an investment advisor and the owner of and a Dallas-based investment education franchise, is now barred by the Securities and Exchange Commission. The regulator recently charged Caufield with investor fraud, accusing him of lying to over 30 investors in a $6.8M offering fraud.

According to the SEC, from at least early 2013 through December 2017, Caufield, who is from Colleyville, Texas, promised investors substantial returns if they invested in the high-yield promissory notes for what he touted was a profitable franchise. The investment advisor claimed that their money would go toward acquiring and running a franchise that would provide education programs. Instead, Caufield allegedly used a substantial portion of the over $6M in investor funds pay back earlier investors and take care of overdue franchise fees.

The Texas investment advisor is accused of providing materials with false information and making false pitches to prospective investors, including the franchise’s students and clients of DAT Capital Advisors, which was the investment adviser that Caufield owned and used to be registered in the state. Caufield allegedly did not disclose that the franchise was in poor financial health.

Investor Fraud: Barred Michigan Investment Adviser is Accused of Defrauding Retirees of $2.7M and SEC Halts Alleged $345M Ponzi Scam That Bilked Seniors, Retail Investors, and Small Business Owners

Published on: September 20, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Former Michigan Financial Adviser Faces SEC Charges in $2.7M Investment Scam that Defrauded Seniors

The US Securities and Exchange Commission has filed fraud charges against Ernest J. Romer III, a former Michigan-based financial adviser with 47 disclosures on his Broker-Check record and who was barred by FINRA last year. Romer also pleaded no contest to embezzlement in July and is awaiting his sentence. According to the regulator, between 2014 and 2016, the ex-financial adviser defrauded unsophisticated investors and older retirees of $2.7M.

The regulator contends that Romer convinced at least 30 clients to “sell securities in their brokerage accounts” and transfer their proceeds to the companies CoreCap Solutions or P & R Capital. He purportedly gave them the impression that these were affiliated brokerage firms when, in fact, they were businesses that Romer owned. Many of these investors entrusted him with their life savings.

Investor Fraud: Steele Financial is Accused of Selling Over $13M in Risky Securities, NJ Broker Allegedly Cherry Picked Trades, and the SEC Files Charges in $27M Microcap Fraud

Published on: September 15, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Steele Financial is Accused of Investor Fraud

The US Securities and Exchange Commission has filed civil charges against investment advisory firm Steele Financial Inc. and its owner Tamara Steele. According to the regulator, they allegedly sold $13M of risky securities to over 120 advisory clients. A lot of these clients are teachers, ex-teachers, or other public education employees. The SEC contends that Steele and her investment advisory firm did not tell them that Steele Financial would be making up to 18% in commissions in sales.

According to the Commission’s investment advisory fraud complaint, from 12/2012 to 10/2016, Stele Financial and Steele sold over $15M of Behavioral Recognition Systems Inc. securities. BRS is a company that the SEC has charged with fraud in the past. Meantime, Stele and her firm made over $2.5M of commissions.

Financial Firm News: Includes Lincoln Investment Planning, Grenda Group, and Massachusetts Financial Services Company

Published on: September 7, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Lincoln Investment Planning to Pay Clients For Not Giving Discounts on Mutual Fund Shares

FINRA is ordering broker-dealer Lincoln Investment Planning to pay $1.37M to clients to whom it did not give the discounts they were entitled to when they purchased mutual fund A shares between 1/2011 and 6/2018.

The self-regulatory organization contends that the firm placed certain charitable organizations and retirement plan customers at a disadvantage by charging them a front-end sales charge even when they qualified to not pay the fees.

1 Global Capital Accused of Defrauding Retail Investors in Alleged $287M Unregistered Securities Scam

Published on: September 4, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed fraud charges against 1 Global Capital LLC, a Florida-based cash advance company, and its ex-CEO Carl Ruderman. According to the regulator, they allegedly defrauded at least 3,400 investors and since 2014 have fraudulently raised over $287M through unregistered securities sales.

According to the SEC’s complaint, 1 Global worked with a network of both registered and unregistered investment advisors, brokers who were barred from the industry, and other sales agents. The company paid them millions of dollars in commissions for offering and selling the unregistered securities to investors in at least 25 US states.

Investors were promised that they would make money from loans that 1 Global would issue to companies. The investments were touted as “high-return, low-risk” and purportedly involved the issuing of short-term cash advances to businesses that didn’t qualify for financing of the “more traditional” varieties.

Transamerica Entities to Pay $97M to Investors Over Flawed Investment Models

Published on: August 28, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Four Transamerica entities have settled US Securities and Exchange Charges accusing them of misconduct involving investment models that were faulty. Collectively, the entities, AEGON USA Investment Management LLC (AUIM), its affiliated brokerage firm Transamerica Capital Inc., as well as its affiliated investment advisers Transamerica Financial Advisors Inc. and Transamerica Asset Management Inc., will pay $97M to retail investors that were impacted. However, the entities are not denying or admitting to the regulator’s findings.

The SEC’s order contends that investors placed billions of dollars into mutual funds and strategies that employed flawed investment models that AUIM developed without knowing they had errors. AUIM’s affiliated investment advisers and broker-dealer touted the quantitative models upon which their investment decisions would be made. Between July ’11 and June ’15, they purportedly offered, sold, and oversaw 15 mutual funds, variable annuity investment portfolios, variable life insurance investment portfolios, mutual funds, and separately management account strategies that were based on these quantitative models.

Unfortunately, contends the SEC’s order, the models were created by one junior analyst who was inexperienced. Not only that, but there were a number of errors in the models, which failed to operate as promised. Moreover, said the regulator, the Transamerica entities launched the Strategies and Products without first verifying that the models worked as they were meant to and without disclosing any risks identified with the models.

Investor Fraud: Alleged $100M Future Income Payments Fraud, Capital Investment Group to Pay One Elderly Investor $400K, and Tech Fund Adviser is Now Facing Fraud Charges

Published on: August 24, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Over 1000 Investors May Be Victims of Alleged Future Income Payments Fraud

Dozens of stockbrokers, financial planners, financial advisers, and insurance agents are now the defendants of investor fraud lawsuits over an alleged $100M scam that may have bilked over 1000 investors. Many of these investors were retirees, which means that elder investor fraud may have been involved.

InvestmentNews reports that according to the plaintiffs, the advisers breached their fiduciary obligation and were negligent when they sold them structured cash flows offered by Future Income Payments, LLC. At least 370 investment intermediaries in the US are believed to have sold these investments to investors, with the representatives receiving 6-10% in commissions upfront.

Investor Fraud: Four More People Charged in $34M Biozoom Stock Scam, Alternative Investment Firm Owner is Accused of Misappropriating Nearly $6M, and California Investment Adviser Settles Allegations in $71M Scheme

Published on: May 15, 2018 | by Shepherd Smith Edwards & Kantas, LLP

$34M Illegal Stock Scam Leads to New Charges

The US Securities and Exchange Commission has filed charges in an alleged nearly $34M illegal stock sale involving Biozoom Inc. stock that caused serious financial losses for retail investors. Biozoom was previously called Entertainment Art Inc..

It was in 2013 that the regulator was able to get a court order freezing proceeds made from the allegedly illegal stock sales. The SEC contends that from March to June 2013, ten people received over 20 million Entertainment Art shares. A number of these individuals then sold over 14 million of these shares in a month-long period. This resulted in around $34M in sales.

Massachusetts Hedge Fund Manager Sentenced to Prison for Investor Fraud

Published on: May 3, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Yasuna Murakami, a hedge fund manager who oversaw MC2 Capital Management LLC And MC2 Canada Capital Management LLC, is sentenced to six years in prison for fraud. Prosecutors accused him of defrauding hedge fund investors. Additionally, Murakami, must pay over $10.5M in investor restitution.

Police arrested the Massachusetts hedge fund manager last year. When pleading guilty to wire fraud, Murakami acknowledged that he diverted millions of dollars in investor monies to his own personal and business accounts, as well as used their funds to pay for a luxury sports car, make credit card payments, travel abroad, make purchases at expensive department stores, initiate investments on his own behalf, and issue Ponzi-like payments to investors.

Yasuna Murakami and Former Business Partner Were Working Together to Defraud Investors