Senior Investors

Ex-Financial Adviser Dawn Bennett Faces SEC and Criminal Charges Over Alleged $20M Investor Fraud

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

The US Securities and Exchange Commission has filed charges against ex-financial adviser Dawn Bennett accusing her of bilking investors, making Ponzi-like payments, and spending clients’ funds on herself. According to the regulator, Bennett and her DJB Holdings LLC raised over $200M through the sale of notes issued to at least 46 investors by the luxury sports apparel company. Many of her victims were unsophisticated and older investors.

During the sales, Bennett allegedly claimed that the notes were safer than they actually were, as well as that her firm could pay yearly returns of up to 15%. Investors were purportedly told that their money would go toward company use but instead she paid back earlier investors in a Ponzi-like manner and used some of the funds to pay for her expenses. Meantime, contends the SEC’s complaint, Bennett hid the alleged fraud, lied to regulators, used sham promissory notes instead of actual convertible notes, and inflated her net worth.

Now, the Commission has charged Bennett and her company with violations of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The regulator wants disgorgement, interest, and penalties for the alleged senior financial fraud.

NASAA Survey Finds That Number of Senior Financial Fraud Incidents is Growing

Published on: August 23, 2017 | by Shepherd Smith Edwards & Kantas, LLP

A new survey conducted by the North American Securities Administrators Association found that there was been an increase in senior financial fraud incidents, with 97% of incidents going unreported until serious harm has occurred. The survey respondents, all state securities regulators, noted a 29% rise in complaints or cases involving older investors who were bilked or exploited.

The Pulse Survey took place between July 24 to August 4, 2017. Among other findings:

· Three-fourth of regulators that put into effect the Model Act to Protect Vulnerable Adults from Financial Exploitation were able to stop funds from going to fraudsters who had targeted older investors.

Securities Fraud: Investment Manager is Accused of Bilking Retired Teacher of $950K, Ex-U. Va Football Player is on Trial in $9M, and Former Investment Adviser Pleads Guilty

Published on: August 16, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Wyoming Investment Manager Indicted for Allegedly Bilking Retired Investor
Tyris D. Maxey has been indicted on multiple counts of wire fraud and he was arrested this week. Maxey, a Wyoming investment manager, owns RB Mister Enterprises LLC. He allegedly convinced a retired school teacher to give him about $950K to invest and then using almost all of the funds on his own expenses.

Meantime, any investments he made with the investor’s money experienced “heavy losses.” Funds that he gave to the investor, which he claimed were returns, were actually the same funds that the teacher had given him to invest.

Maxey pleaded not guilty to the criminal charges of financial fraud.

Four Ex-Brokers Accused of Fraud that Allegedly Targeted Federal Retirees

Published on: July 31, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has filed charges against four former brokers for allegedly persuading federal employees to roll over holdings from federal retirement accounts into variable annuity products that charged higher fees. Their targets were Thrift Savings Plan (TSP) participants. The plan is administered by the Federal Retirement Thrift Investment Board, which is an independent government agency.

According to the regulator’s broker fraud case, then-brokers Jonathan Cooke, Christopher Laws, Brandon Long, and Danny Hoode promoted the VA products under the Federal Employee Benefits Counselors because they wanted the high commissions. Their alleged victims were federal employees who were 59 ½ years of age and older and with TSP account holdings that could be moved over into variable annuities, tax-free, in certain plans at annuity carriers.

Ex-Brokers Made High Commissions From the Alleged Elder Investor Fraud

Financier Who Bilked Family and Friends of $23M Investment Fraud Gets Three Years in Prison

Published on: July 15, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Haena Park, the Harvard-educated financier who pleaded guilty to the commodities fraud that bilked over 40 investors of more than $23M, is sentenced to three years in prison. Park defrauded friends and family over six years, beginning in 2008, by soliciting investments in different commodities and securities, including equities, futures, and forex transactions.

Even after she lost investors’ money, Park continued to solicit new investors, claiming up to 50% yearly returns and generating false monthly statements that concealed the large losses. Among her victims were immigrants who worked multiple jobs, older investors who saw their life savings disappear, and a paraplegic who suffered $4M in investment losses.

After Park pleaded guilty early this year, then-US Attorney Preet Bharara said that Park was not just admitting to the fraud, but also acknowledging that she lied about her trading expertise, as well as return rates, to draw in investors.

14 People Charged In $14.7M Stock Rigging Fraud That Bilked Senior Investors

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

According to prosecutors, criminal charges have been brought against 14 people over their alleged involvement in a $14.7M stock rigging investment scam that primarily targeted older investors. The US Attorney’s office alleges that between 1/2014 and 1/2017 the defendants and others sought to defraud the investors and prospective investors of certain companies by attempting to artificially manipulate the volume and price when shares were traded.

The group allegedly hid that they were behind the stock rigging fraud of these companies’ shares through a pump-and-dump boiler room scam. They are accused of manipulating share trading patterns while aggressively soliciting senior citizens by phone to try and persuade them to buy the shares.

When their targets showed a willingness to buy the stock being solicited to them, the boiler room employees would allegedly pressure them to buy, sometimes even charging them subscriptions so that they could receive future stock recommendations. Investors were not notified that the employees and others they conspired with had sold their own shares in these companies.
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Financial Representative Misconduct: Rep. Who Didn’t Disclose $100M in EB-5 Investment Sales is Barred From Securities Industry, Ex-Stifel, Nicolaus Broker is Suspended & Fined For Variable Annuity Violations, and Former Advisor is In Trouble Over Alleged Breaches Involving Senior Investors Accounts

Published on: June 7, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Former Stifel, Nicolaus Broker is Accused of Variable Annuity Violations
The Financial Industry Regulatory Authority has suspended an ex-Stifel, Nicolaus (SF) broker for four months over variable annuity transactions that he purportedly inappropriately recommended to certain investors. At the time of the alleged variable annuity fraud, James Keith Cox worked with Sterne, Agee & Leach. Stifel Financial later acquired that firm.

According to the regulator, Cox recommended a number of VA transactions even though there was no reasonable grounds for thinking they were appropriate for the investors. In addition to the suspension, Cox will disgorge the $25,460 he was paid in commissions.

FINRA Bars California Man From Industry Over $100M in Undisclosed EB-5 Investment Sales
A FINRA hearing panels has barred a California-based registered representative for taking part in private securities transactions involving $100M in EB-5 Investments that he failed to disclose to his employer financial firm. Jim Seol sold the EB-5 investments through his business Western Regional Center Incorporated.

Ex-Hedge Fund Manager Pleads Guilty to $9M Investment Scam that Defrauded Investors Nearing Retirement

Published on: May 18, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Tamer Moumen, an ex-hedge fund manager, has pleaded guilty to wire fraud. He now faces up to 20 years in prison for a $9M investment.

Moumen defrauded over 50 investors. Many of his investors were close to retirement age. He advised dozens of them to liquidate retirement accounts, among other investments, and let him handle their funds.

Moumen used their funds to support his own spending, including the purchase of a $1M home, and also to pay back earlier investors. Moumen claimed to manage tens of millions of dollars through Crescent Ridge Capital Partners. He told clients he was a successful trader even though he lacked experience managing hedge funds and had lost money investing in securities before.

Massachusetts Fines LPL Financial $1M For Advisers’ Alleged Misrepresentations, Failure to Disclose Commissions

Published on: May 6, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The office of Massachusetts Secretary of the Commonwealth William Galvin has fined LPL Financial (LPLA) $1M because the firm’s financial advisers allegedly made misrepresentations to consumers. According to the state regulator, the brokerage firm, which is based in Boston, failed to properly supervise its advisers located at Digital Federal Credit Union (DCU) branches.

LPL financial advisers are allowed to work out of the DCU in return for part of the concessions. However, noted Galvin’s office, the problem was that LPL’s advisers conducted their business as DCU Financial, a reference that could have cause customers to think that they worked for the credit union.

The Massachusetts regulator said that an undercover sting operation was put into place, during which time one LPL adviser allegedly claimed to work for DCU and said that he was not paid commissions for offering investment advice, which was a false statement. Also, DCU paid these advisers bonuses in a sales contest that LPL never authorized.

FINRA Files Complaint Against Ex-Broker Over Variable Annuity Sales to Elderly Customers

Published on: April 26, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority has put out a disciplinary complaint against Walter Marino. The former broker worked for Legend Equities Corp. in Palm Beach Gardens, Florida at the time he allegedly facilitated variable annuities sales that were unsuitable for two of his older clients. According to the regulator, Marino recommended exchanges of non-qualified VAs to the customers without having reasonable grounds to guide them toward these investments.

FINRA said that Marino earned about $60K in commissions. Meantime, the customers lost over $82K because of surrender charges they were forced to pay and they did not benefit financially. Not only that but because Marino didn’t apply the tax-free exchange provision of the Internal Revenue Code, the customers ended up with substantial tax liabilities.

Now, the regulator wants Marino to disgorge his ill-gotten gains and pay the customers full restitution for the variable annuity fraud.