Senior Investors

Massachusetts Investigates Wells Fargo Advisers

Published on: March 16, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US state of Massachusetts is investigating Wells Fargo Advisors (WFC) over whether the firm engaged in unsuitable recommendations, inappropriate referrals, and other actions related to its sales of certain investment products to customers. The news of the probe comes after Wells Fargo disclosed that it was evaluating whether inappropriate recommendations and referrals were made related to 401(K) rollovers, alternative investments, and the referral of customers from its brokerage unit to its own investment and fiduciary services business.

Secretary of the Commonwealth William Galvin said it would examine Wells Fargo’s own internal probe and wants to make sure that Massachusetts investors who were impacted by “unsuitable recommendations” would be “made whole.” He noted that while moving investors toward wealth management accounts brings “more revenues to firms,” these accounts are “not suitable for all investors.”

As Barrons reports, referring clients to managed accounts tend to earn fee-based advisors significantly more. The article goes on to note that Galvin is looking into the use of managed accounts related to the US Department of Labor’s Fiduciary Rule, which includes best practices standards for the protection of consumers. The Massachusetts regulator recently referred to that same rule when the state became the first one to file such related charges in its case against Scottrade over sales contests. In that case, Galvin accused the broker-dealer of improper sales practices, including contests that offered incentives to agents who targeted retiree clients and prospective retiree clients in particular.

Financial Firm News: Hilliard Lyons Must Pay $445K to Elderly Investor, Merrill Lynch Ordered to Pay Vermont $140K After Broker Makes Unauthorized Changes, and FSC Securities Settles with Montana Regulators

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

FINRA Panel Orders Hilliard Lyons to Pay Damages to Elderly Client

In a Financial Industry Regulatory Authority arbitration case, Hilliard Lyons is ordered to pay 84-year-old Elizabeth Nickens $445K in damages for losses she sustained from alleged churning and unauthorized trading. Nickens claims that advisor Christopher Bennett made transactions without her authorization in her retirement accounts, and her assets were allocated in such a way that were not suitable for her or investment goals.

Nickens, as an older investor, had a low risk tolerance and was more interested in preserving her funds. Yet, according to her attorney, more than half of her average account equity was in four stocks. She lost over $300K.

Hilliard Lyons is accused of not properly supervising the trades. The firm and Bennett deny the senior financial fraud allegations.
Continue Reading ›

Ex-Wells Fargo Broker Barred for Alleged $180K Elder Financial Fraud

Published on: February 26, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority has barred Jeffrey Palish, an ex-Wells Fargo (WFC) broker in the wake of allegations of senior investor fraud. The regulator is accusing him of stealing over $180K from an elderly client with no plans or means of paying her back.

Palish was let go by the firm last year after an internal probe found that he had made misstatements about these transactions. He was arrested last week in New Jersey and charged with theft by deception involving over $75K.

According to prosecutors, Palish may have stolen at least $600K from elderly clients and failed to pay back a $100K loan from two clients. NorthJersey.com reports that Palish took clients’ money by selling their stock holdings and putting the funds from those sales into a bank account in which he deposited checks from clients. He also is accused of making more than three dozen unauthorized wire transfers of about $300K in total to pay his credit card bills.

Massachusetts Securities Regulator Charges Investment Advisor with Defrauding Investors, including Seniors, in 26-Year-Long $1M Real Estate Scam

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

Massachusetts Secretary of the Commonwealth William Galvin has filed charges against investment adviser Thomas Riquier for allegedly defrauding investors of at least $1M in a real estate scam that has gone on for more than a quarter of a century. According to the administrative complaint, Riquier solicited funds from people, mostly older investors (some of them his firm’s clients), to buy property that was then to be sold at a profit. His employer, United Planners Financial Services of America, is charged with failure to supervise.

In its investment adviser fraud case, the regulator claims that investors’ money was used instead to buy property already belonging to Riquier. The property has yet to be improved or sold. It has not rendered any returns for investors. The state regulator notes that because the alleged scam has been going on for so long—26 years—a number of investors have passed away. The rest of them have yet to make money from the venture.

Riquier is also accused of soliciting over $830K in private loans from clients. Galvin said that this violates federal and state laws.

Texas Securities Cases: Ex-LPL Financial Adviser is Suspended for Charging Unreasonable Fees and Commissions, State Regulator Enters Cease and Desist Order Against R2B Coin, and Former Pharr Bank Worker Pleads Guilty to $1M Theft Involving Elderly Customers

Published on: January 30, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Beaumont, TX Investment Adviser is Suspended for 90 Days
In a Disciplinary Order, the Texas State Securities Board suspended former LPL Financial LLC (LPLA) investment adviser Jason N. Anderson for 90 days. The state contends that while registered with that firm, Anderson touted an active-trading program to clients that charged them unreasonable fees, which included commissions to Anderson, as well as trading costs.

For example, one client paid costs that were approximately 30% of “the value of the average equity securities” in the client’s account. The Texas regulator said that the trading program would have had to make “extraordinary returns” for investors to “offset” such fees or even, in some cases, allow them to merely “break-even.”

The order called the commissions and trading costs “inequitable practices” that violated the Texas Securities Act. The state accused Anderson of not having reasonable grounds for believing that the trading program would be appropriate for these clients.

SEC Cases: Woodbridge Agrees to Pay Legal Fees for Investors Harmed in Alleged $1.2B Ponzi Scam, Hoplon Financial Group is Accused of $2.18M Securities Offering Scheme, and Ticket Reserve Settles Investor Fraud Charges

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

Woodbridge to Appoint New Board to Run the Property Developer, Will Pay for Investor Fraud Lawyers
Woodbridge Group of Companies and the US Securities and Exchange Commission have come to an agreement that a New Board of Managers will be appointed to oversee the bankrupt property developer. The company, which is accused of running a $1.2B Ponzi scam, will pay for legal representation for its investors that continue to grapple with losses they may have sustained in the alleged fraud. Some 8,400 investors gave their money to Woodbridge.

Woodbridge owner Robert Shapiro is accused of owing over $961M to investors, many of them elderly investors, who purchased securities from the company while under the impression that they’d be guaranteed up to 8% interest. Investors were told that their money would be lent out to companies in exchange for up to 15% interest when, in fact, contends the SEC, these developers were entities that Shapiro himself controlled.

Shapiro, who is accused of taking at least $21M of investors’ funds to pay for his lavish lifestyle, denies the SEC’s allegations.

Securities Fraud: Fast Food Restaurant Employees Allegedly Posed as SEC Employees to Bilk Investors, Chicago Investment Adviser Pleads Guilty to Defrauding Senior Investors, and Man Awaiting Real Estate Investment Fraud Sentence is Arrested While Trying to Leave the US

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

Two Fast Food Restaurant Workers are Accused of Impersonating SEC Employees
Frank Gregory Cedeno and Leonel Alexis Valerio Santana, two employees at a Florida restaurant, are accused of pretending to be SEC employees who tried to get at least 95 investors to give pay them $1.3M. The men are charged with wire fraud and conspiracy.

According to the criminal complaint, Cedeno and Santana targeted investors of binary options, in particular those that bought them from Banc de Binary and other entities that had been the subject of lawsuits brought by US regulators. For example,in 2016, Banc de Binary settled with the SEC and the CFTC for $11M allegations that they illegally solicited US investors via its trading platform. But even as early as the year before that, prosecutors contend, Banc de Binary securities buyers began receiving calls and emails from supposed SEC employees wanting money related to these investments. Investor targets were purportedly told that they would have to pay money to get part of the Banc de Binary settlement. More than two dozen people reportedly gave the scammers over $235,000 collectively.

Chicago Investment Adviser Arrives at Plea Agreement in Senior Fraud Case
Daniel Glick, a former investment advisor, has pleaded guilty to wire fraud. Per the plea deal, Glick bilked clients of at least $5.2M and lied to them about their money. The majority of his victims were older investors, including his in-laws and a nursing home resident.

FINRA Awards more than $4M to Elderly Investors Bilked by Ex-First Allied Securities Broker

Published on: January 19, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority arbitration panel has awarded over $4.3M to investors in their elder financial fraud case against former First Allied Securities broker Anthony Diaz. The plaintiffs contend that he invested their retirement funds in high risk private placement investments that were unsuitable for them. They are alleging inadequate supervision, misrepresentation and omissions, unsuitability, fraud, and other violations.

Diaz is considered to be a rogue broker by the regulator, who barred him in 2015. He not only worked at 11 firms win 14 years, but also he appeared to have no problem getting another job whenever he was let go from a previous. Diaz’s BrokerCheck profile shows that he is named in 53 customer dispute and regulatory disclosures.

The arbitration award to the investors is over $1M in compensatory damages, more than $413K in legal fees, and $2.9M in punitive damages. They settled with First Allied Securities last year.

Multimillion-Dollar Investment Adviser Fraud Cases Target Widows, Older Investors, and Other Retail Investors

Published on: December 28, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Two Investment Advisers Accused of $20M Investor Scam
The US Securities and Exchange Commission has filed civil charges against investment advisors Ronald A. Fossum and Alonzo Cahoon. They are accused defrauding retail investors in an unregistered securities scam. According to the regulator, from about 3/2011 to 6/2016, Fossum raised over $20M from more than 100 investors via securities offerings in investment funds under his control or ownership, including the:

Accelerated Asset Group, LLC
Turnkey Investment Fund, LLC
Smart Money Secured Income Fund, LLC

Fossum is accused of misappropriated hundreds of thousands of dollars of investors’ money to pay his own expenses, including living in a home owned by one of the fund’s free of rent. He also allegedly used investor funds to pay for international travel and federal taxes.

Woodbridge Group and Owner Accused of $1.2B Ponzi Scam that Targeted Over 8,400 Investors, Including Senior Investors

Published on: December 21, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed financial fraud charges against the Woodbridge Group of Companies, LLC and its owner Robert H. Shapiro. The Woodbridge Group is comprised of unregistered investment companies. According to the regulator, Woodbridge and Shapiro ran a $1.2B Ponzi Scam that bilked over 8,400 investors, many of whom where older investors. At least 2,600 investors collectively spent close to $400M that came from their IRAs.

The civil fraud charges include other alleged federal securities law violations. The SEC also announced an asset freeze to keep more investor funds from dissipating. The regulator wants restoration of allegedly ill-gotten gains plus interest, as well as financial penalties.

Senior Financial Fraud

The Commission’s complaint accused Woodbridge and its owner of defrauding seniors using a “sham” business model that involved selling investments in unregistered Woodbridge funds. The company presented its main business as giving loans to third-party commercial property owners that were paying 11-15% in yearly interest for “’hard money’ short-term financing.” In fact, claims the SEC, the property owners were not third-parties but were companies belonging to Shapiro. Not only that but they had no income streams and never paid interest on these supposed loans. Woodbridge and Shapiro are said to have used investor money to buy nearly 200 commercial and residential properties in California and Colorado.