Senior Investors

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.

Securities Fraud: Ex-Broker Gets Prison Sentence for $1.2M Elder Financial Fraud, Massachusetts Man Admits to Bilking Neighbors, & More Than Two Dozen 27 Parties Under Fire Over Alleged Stock Promotion Scams

Published on: April 17, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Former Wells Fargo and LPL Financial Broker Receives 41-Month Prison Term for Elder Financial Fraud
Robert N. Tricarico, an ex-broker for both Wells Fargo Advisors (WFC) and LPL Financial (LPLA), will serve 41 months behind bars and pay restitution of over $1.2M after he pleaded guilty to elder financial fraud. The Securities and Exchange Commission, which brought a civil case against Tricarico, has barred him from the securities industry.

Court documents note that from 1/2010 to 6/2013, Tricarico was the financial adviser for a sick and elderly investor. He misappropriated over $1.1M from her by writing a number of checks to himself without the client’s consent, misappropriated checks written to her, liquidated her coin collection, and used her funds for his own expenses.

He has also admitted to bilking two other victims of $20K when he falsely represented that their money would go toward a business venture. He kept their money for himself.

Pastor Faces Affinity Fraud Charges Alleging that He Bilked Retirees, Church Members, & Laid-Off Auto Workers

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

The US Securities and Exchange Commission filed fraud charges against Larry Holley, a pastor with the Abundant Life Ministries in Flint, Michigan. According to the regulator, the pastor used faith-based verbiage to solicit investments from his targets in what he led them to believe was a successful real estate business with hundreds of commercial and residential properties. The SEC’s affinity fraud complaint said that Holley’s scam raised about $6.7M from over 80 investors who were promised high returns.

Holley allegedly held “Blessed Life Conferences” that were actually financial presentations at churches across the US. During these gatherings, he would ask congregants to disclose their financial holdings on cards he gave them to fill out and he promised to “pray over the cards.” He is said to have called investors “millionaires in the making.”

The SEC’s complaint also claims that Holley’s business associate, Patricia Enright Gray, targeted recently laid-off auto works who were given severance packages and she offered to consult with them to help grow their finances. She purportedly promised to roll over their retirement funds into tax-advantaged IRAS and invest their money in Treasure Enterprise, which was Holley’s company. She advertised her services on a religious radio station in Flint.

SEC Uses Restraining Order Against Chicago-Based Investment Adviser, Alleges Massive Senior Fraud

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

The US Securities and Exchange Commission is accusing investment adviser Daniel H. Glick and his unregistered firm, Financial Management Strategies, of bilking older investors of millions of dollars. The regulator issued a temporary restraining order against the Chicago-based investment adviser, as well as an emergency asset freeze.

According to the Commission, Glick and his firm gave false account statements to clients to conceal his use of their money, which included paying for his own personal and business expenses. He allegedly raised millions of dollars from older investors by saying he would do their taxes, pay their bills, and make investments for them. After investors would give Glick huge sums of money to invest, he either obtained power of attorney or took over control of their bank accounts.

In its complaint, the SEC stated claims that Glick not only took advantage of seniors who trusted him with their retirement funds but also he allegedly exploited these clients’ family members. Most of his investors, said the regulator, belonged to two distinct families.

Securities Fraud: RIA and Broker Will Go to Prison Over $15M Scam, Ohio Financial Adviser Pleads Guilty in Senior Financial Abuse Case, and SEC Wants Ex-Financial Investment Broker Barred

Published on: March 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Registered Investment Adviser and Broker Convicted in $15M Pump-and-Dump Scam
A federal jury has found Sheik F. Kahn, a Nevada RIA, and Christopher Cervino, a New Jersey broker, guilty of securities fraud, conspiracy to commit securities fraud, wire fraud, and conspiracy to commit wire fraud in an over $15M stock scam that targeted 100 investors. Kahn also was convicted of aggravated identity theft crimes and investment adviser fraud. Both she and Cervino were previously affiliated with New York-based firm Primary Capital.

According to the U.S. Attorney for the Southern District of New York, the pump-and-dump scam involved VGTEL (VGTL), a publicly traded over-the-counter company. The securities scam was led by Edward Durante, who pleaded guilty last year to a number of crimes, including securities fraud, conspiracy, perjury, and money laundering involving VGTL.

Cervino and Kahn are accused of artificially inflating the stock price of VGTel from 25 cents/share to up to $1.90/share in 2012 and they also inflated trading volume, raising their ability to bring in private investments in the stock.

Dallas Financial Adviser Indicted in $3M Texas Investment Fraud

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

Carlton Chadbourne Sayers has been indictment in district court. The 51-year-old is accused of Texas investment fraud and he is charged with mail fraud, wire fraud, aggravated identity fraud, and bank fraud. The scam caused dozens of investors to lose over $3M.

According to the indictment, Sayers allegedly sought to bilk a number of fraud victims by asking that they lend or invest funds with him and Wellington & Franklin Financial. He allegedly promoted that their funds would go toward buying or renovating residential real property and would be securitized by interest in these properties. He also is accused of promising a significant return rate.

Instead, states the indictment, rather than invest the funds the way he represented they would be invested, Sayers failed to secure interests in actual property or, in instances when he and Wellington & Franklin Financial actually owned a residential property, it was one that had already been bought with a pre-existing loan from an experienced investor and to whom the property was already acting as a security. Sayers is accused of bilking dozens of inexperienced investors who thought they were getting involved in secure investments that were giving them an opportunity to make higher returns than they would have with other investments.

Elder Financial Fraud: Ex-K.C. Ward Financial Rep. Barred Over $15M in Unsuitable Investments

Published on: February 27, 2017 | by Shepherd Smith Edwards & Kantas, LLP

FINRA Bars Registered Rep For $15M In Unauthorized Trades

The Financial Industry Regulatory Authority has barred Craig David Dima, a former registered representative with KC Ward Financial, for making about $15M in unsuitable and unauthorized trades in the account of a 73-year-old retiree. According to the self-regulatory organization, there were 11 times when Dima sold nearly all of the customer’s stock in Colgate-Palmolive that she’d accrued from working with the company for nearly thirty years and he did that without permission.

After the elderly client told Dima not to sell the stock, he proceeded to sell them anyways. When the customer confronted Dima, he purportedly misrepresented that a computer or technical mistake had caused the sale. Meantime, the client was “deprived” of the “substantial dividends” from the Colgate shares she used to own. Dima charged the customer over $375K in fees, mark-downs, and mark-ups.

By settling, Dima is not denying or admitting to FINRA’s charges of elder financial fraud.

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New AARP Study Says Older Investors Involved in Unregulated Investments May Be at Higher Risk of Becoming Fraud Victims

Published on: February 22, 2017 | by Shepherd Smith Edwards & Kantas, LLP

According to the AARP Investment Fraud Vulnerability Study, published by the AARP Fraud Watch Network, active, older investors who get involved in unregulated investments may be more vulnerable to investment fraud. 214 fraud victims were interviewed, along with 814 members of the public who are considered general investors.

The study said that there are appear to be certain traits that may identify why some people are more likely to become fraud victims, including:

· Usually men, age 70 or older.

· These men are often risk-takers.

· They’re more likely to value wealth accumulation as a sign of financial success.

· They’re typically open to sales pitches and to answering remote sales pitches.

Doug Shadel, the lead researcher for the AARP Fraud Network, noted that if an older investor is able to identify whether/not she has a predisposition toward risky conduct, this could make the person more mindful of that tendency and he/she might potentially avoid becoming vulnerable to fraud.

Connecticut Investment Bank Ordered to Pay Elderly Investors $1.25M & New Study Shows Older Investors With Mild Impairment May Be Vulnerable to Fraud

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

Source Capital Group Inc. must pay three elderly investors their full investment of $810K plus $147K in interest, as well as $250K in legal fees, in a securities arbitration case accusing one of the investment bank’s brokers of selling them unsuitable investments. William Lashlee and Joyce and Keith McCrea filed their elder financial fraud claim with the Financial Industry Regulatory Authority.

According to the retirees, the broker sold them stock in a health care tech start-up in 2012. Lashlee invested $220K while the McCreas invested $590K. Unfortunately, the start-up, iPractice Group, shuttered its business in 2013.

The claimants claim that Source Capital was negligent in supervising the broker who sold them the securities. Although the broker was assigned to the firm’s Bowling Green, Kentucky branch, the manager there was purportedly never notified that this particular financial representative was under his supervision.

Retiree Files $1M Securities Arbitration Claim Against Morgan Stanley

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

An investor who is retired and suffering from health issues is seeking $1M from Morgan Stanley (MS). The investor, a former inventor, claims that the broker-dealer did not properly supervise the financial adviser who handled his multi-million dollar account. He filed a Financial Industry Regulatory Authority claim and is accusing the firm of breach of fiduciary, negligence, unauthorized trading, excessive trading, fraudulent inducement, and significant tax liability.

The investor believes that over-concentation in risky sectors and over trading in too many individual stocks occurred, causing significant damage to his retirement funds. Among the investments that were involved were oil and gas investments, including Master Limited Partnerships. The claimant claims that Morgan Stanley hid the risks involved, even as the financial adviser engaged in a purportedly deceptive investment strategy. The result was that the investor’s account became heavily concentrated in risky investments.

The alleged broker negligence also purportedly caused tax consequences for the investor while benefiting Morgan Stanley with transactions costs of over $1M. The unsuitable taxable gains that were created by led to investment losses for the investor, even as the broker claimed that the investor’s account was profiting.