Senior Investors

Woodbridge Files For Bankruptcy, Misses Payments Due to Investors

Published on: December 4, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Already under investigation by the US Securities and Exchange Commission for financial fraud, the Woodbridge Group of Companies has filed for Chapter 11 bankruptcy protection. According to InvestmentNews, this move comes a week after the luxury real estate developer missed payments due to investors on the notes they had purchased.

The company has raised over $1B from investors, including senior investors. InvestmentNews reports that many investors were told that their investments would be safe in real estate. Now, however, Woodbridge is saying that it has $750M of debt. Court documents submitted in US Bankruptcy Court state that this is how much nearly 9000 noteholders are owed.

Woodbridge Wealth sells the following investments: first positions in commercial mortgages, secondary market annuities, and a commercial bridge loan. However, reports InvestmentNews, the Financial Industry Regulatory Authority’s BrokerCheck doesn’t show any registered brokerage firm by that name.

$5.4M Senior Investment Fraud Allegedly Involved Penny Stocks

Published on: November 29, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In US district court, the Securities and Exchange Commission has filed a complaint accusing two people of senior investment fraud. According to the regulator, Angela Beckcom Rubbo Monaco and Joseph A. Rubbo of Florida bilked investors through offerings involving three of their companies.

The SEC’s complaint said that the two of them raised at least $5.4M from 11 mostly older investors. The money was supposed to go toward growing their entertainment businesses and help them develop the Spongebuddy, which was a “sponge-like” glove. Instead, claims the agency, Monacco and Rubbo misappropriated over $2.6M in investor money to pay themselves and family members, as well as to buy a car and cover other unrelated expenses. They also allegedly used the funds to pay “undisclosed sales commissions” to Steven J. Dykes, who solicited investors through cold calls.

The Commission stated that during the alleged senior investment fraud, all three defendants were not registered with the regulator. The companies owned by Rubbo and Monaco that are said to have been involved are VIP Television Inc., VIP TV LLC, and The Spongebuddy LLC.

Investment Adviser Faces Charges That He Bilked Older Investors of $5.2M

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

Daniel Glick, a Chicago investment adviser, is charged with wire fraud over allegations that he stole about $5.2M from elderly clients, including the parents of his wife. Glick was the owner of Glick & Associates Ltd., Glick Accounting Services, and Financial Management Strategies Inc.

He allegedly began bilking investors in 2011 through last April. The criminal information in his senior investor fraud case accuses Glick of promising clients that he would invest their funds and pay their bills but he instead created account statements that inflated investment balances while he used their money to buy a Mercedes, pay his mortgage, and pay back business loans. Glick is accused of making Ponzi-like payments to clients.

Among those whom he allegedly defrauded were his in-laws, whose signatures he is accused of forging to transfer their money to his own business account. They lost hundreds of thousands of dollars. Another family purportedly paid Glick $700K in fees even while he allegedly misappropriated hundreds of thousands of their dollars.

Ex- Investment Adviser is Accused of Defrauding Retirees of Over $1.85M

Published on: November 13, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed civil charges against a former broker and investment adviser. According to the regulator’s investment adviser fraud complaint, Jay Costa Kelter defrauded three retirees of over $1.856M. Meantime, prosecutors in Tennessee have filed a criminal case against him related to one of the clients. A federal grand jury indicted him on multiple counts of wire fraud, mail fraud, and security fraud.

The SEC contends that from 9/2013 through last year, Kelter, who owns insurance and investment firm BEK Consulting Partners LLC (known in the past as Kelter & Company LLC), made misrepresentations to the older investors, whom he’d persuaded in 2013 to transfer their accounts to TD Ameritrade (AMTD) after he left his former employer. The former broker had access to their new accounts and was authorized to keep giving them investment advice and make trades on their behalf while, meantime, he allegedly used the funds for himself.

For example, Kelter is accused of misappropriating $1.467M from a 75-year-old widow who was nearly totally financial dependent on her investments by engaging in fraud and forgery. The SEC’s complaint said that the client had told him she was only interested in making conservative investments.

FINRA Bars NY Broker For Excessive Trading in Blind Senior Investor’s Accounts

Published on: November 9, 2017 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority hearing panel has barred New York broker Hank Mark Werner for excessive trading and churning in the accounts of an elderly, blind widow. Now, Werner must pay over $155K in restitution to his former client, disgorge more than $10K for commissions from recommending that she buy a variable annuity (VA) that was not suitable for her, and pay an $80K fine.

Werner is accused of employing an “active trading strategy” that allowed him to charge high commissions while making it “impossible” for her to “make money.” He was the broker of the widow and her blind husband, who died in 2012, for two decades.

According to the panel, the widow was in poor health and 77 years of age when he started churning her accounts after her husband passed away. FINRA, in its 2016 complaint, said that only was the client blind, but also she required in-home care. She relied on Werner to keep her abreast of her accounts.
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Massachusetts Accuses Investment Adviser of Venture Capital Fraud

Published on: October 20, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Secretary of the Commonwealth of Massachusetts William Galvin has filed civil fraud charges against Moser Capital Management and investment adviser Nicklaus J. Moser. Galvin’s office is accusing Moser and his firm of fraud involving two venture capital funds: the Moser Capital Fund, LLC and the Moser Capital Fund II, LLC.

The state regulator claims that the respondents engaged in fraudulent conduct and breached their fiduciary duties. The breaches alleged include making misrepresentations and omissions to investors and prospective investors by providing misleading information, not getting “valid investor signatures” when receiving more capital contributions, and charging a performance fee to the non-qualified account of an advisory client.

According to Galvin’s office, Moser set up the funds to raise cash for start-up companies. The investment adviser was allegedly a sales representative at a company that sold products to startup ventures, but he did not tell investors that he had financial reasons for making sure that the start-ups in operation.

SEC Charges Investment Adviser With Defrauding Seniors Who Were His Friends

Published on: October 13, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed charges against investment adviser Tarek D. Bahgat for allegedly stealing $378K from clients. Bahgat is accused of misappropriating funds from seven investment advisory clients, most of whom were elderly investors.

According to the regulator, from December 2014 through September 2016, Bahgat, using the alias Terry Dean Bahgat, misappropriated the clients’ funds online and transferred the money to his own account and that of WealthCFO, which was the payroll and accounting company that he controlled. FINRA’s BrokerCheck database shows that Bahgat was working for two brokerage firms: Cambridge Investment Research and Gradient Securities. After exiting Gradient, he was a state-registered advisor and used the name WealthCFO Partners.

The SEC’s complaint claims that Bahgat would sometimes obtain the internet bill-paying privileges in some client accounts by pretending to be the client or having his assistant, Lauramarie Colangelo, pose as the client during phone calls with the brokerage firms that held the accounts. Colangelo was the operations manager of WealthCFO.

Barred Broker Accused of Bilking Retirees and Other Investors of $6M

Published on: October 9, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Leonard Vincent Lombardo, a former broker once employed at Stratton Oakmont, is now charged by the US Securities and Exchange Commission, along with his company and business partner, with involvement in an alleged real estate investment scam that defrauded over 100 investors, including retirees, of $6M. Lombardo, his firm The Leonard Vincent Group (TLVG), and CFO Brian Hudlin have settled the SEC charges.

According to the regulator’s complaint, investors were told that their money would be placed in “distressed real estate” and their money would grow by over 50 percent within months when, in fact, the investments did not make real earnings.

For their investments, investors were given shares or units in an LVG fund. They were under the impression that the funds were to be pooled with other investors’ money and then, according to the strategies in the LVG Funds’ Private Placement Memoranda, collectively invested in the distressed real estate.

Ex-Virginia Investment Company Owner Arrested in Nearly $20M Fraud

Published on: September 4, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Daryl Gene Bank, who is the owner of dozens of Virginia liability companies, and Raeann Gibson have been arrested in an alleged investment fraud that prosecutors believe cost investors almost $20M. They are charged with mail fraud, wire fraud, conspiracy to commit both, taking part in illegal monetary transactions, and running a number of investment scams between 2012 through July 2017.

WTVR reports that among the allegations against Bank is that he caused a number of material misrepresentations and omissions to be presented to a number of investors, including a blind elderly investor who gave Bank $20K of his retirement money. Bank allegedly placed most of the funds in Prime Spectrum, which is purportedly an investment scam.

If convicted, Bank could be ordered to serve up to 260 years behind bars. Gibson could be sentenced to up to 240 years.

FINRA Bars Ex-HSBC Securities Broker Over Alleged $200K Senior Financial Fraud

Published on: August 30, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority is barring Jaime R. Rodriguez, an ex-HSBC Securities (HSBC) broker, in the wake of a charge accusing him of bilking an older customer, who is also legally blind, of $200K. HSBC fired Rodriguez in 2014.

Rodriguez is accused of using about $70K of the client’s money in 2012 to buy an apartment that was supposed to be for the customer. However, because the man couldn’t read or see the documents related to the purchase, he did not know that Rodriguez had named himself as the sole beneficial owner.

According to InvestmentNews, Rodriguez met the man in 2010 and began helping him with his errands. Also in 2012, Rodriguez purportedly recommended to the client that they set up a joint account together so that the then-HSBC broker could assist him in paying his bills. The account was opened using about $42K of the client’s money and at one point it held $153K.