Articles Posted in Texas Securities Fraud

Accused Texas Ponzi Scammer May Have Defrauded Investors of $2M

Published on: August 3, 2011 | by Shepherd Smith Edwards & Kantas, LLP

An El Paso man accused of running a Texas Ponzi scheme may in fact be a man who was convicted of fraud in Maryland more than 10 years ago. Scott Lindemann is now charged with wire fraud for allegedly defrauding at least 25 investors of $2 million.

Prosecutors say that Lindemann’s real name may actually be Scott Yermish, who left Maryland after serving time in jail. He left the state without finishing his probated time for a theft conviction.

It is in El Paso that Lindemann is accused of using his hedge fund to set up his Texas securities fraud scam. Per court records, he gained the trust of one person, who then assisted him in bringing in more investors. Lindemann allegedly gave some of the investors money so they would think they’d earned a profit. He also generated bogus documents that caused them to believe that their investments had grown substantially.

According to the San Antonio Express-News, one victim of the alleged Texas securities fraud says that she and her husband lost over $250,000. She also claims that other investors took out mortgages on their houses to invest with Lindemann.

The FBI is calling this a “quick investigation.” Lindemann was arrested a week after the complaint was made.

Ponzi Scam
This type of investment fraud generally involves investors receiving purported returns except that the money they are “making” is actually from new investors who think that these funds are being invested. To keep the scheme going, new investors must keep joining up so that scammers can use their money to pay the earlier-stage investors. Ponzi scams can collapse when too many investors ask to cash out or bringing in new investors starts to prove challenging.

Every year, there are investors that lose money because they placed their money in a Ponzi scam. Fortunately, there may be a way to recoup your losses. It is important that you speak with a Texas securities fraud law firm about your case.

Warning Signs that You May Be Investing in a Texas Ponzi Scheme:
• Watch out for “guaranteed” investment opportunities or the promise of high investment returns with little or no risk.
• Returns are too consistent. It is natural for investment returns to go up and down-especially if there is the hope of high returns.
• The investment that isn’t registered with the state or the SEC.
• The investment professional you are working with isn’t registered or licensed.
• The investment strategy involved is too complex for you to understand or you can’t get complete information about it.
• There isn’t enough information about your investment that can be found in writing.
• Account statement errors.
• You aren’t getting promised payments.
• Cashing out on your investment is proving to be a challenge.
• Your financial adviser tries to get you to “roll over” payments that are owed to you with the promise of even higher returns.

Many Ponzi scam victims have lost their life savings, retirement, and/or kids’ college fund because they placed their trust and their money in the hands of the wrong people.

Related Web Resources:
Man arrested by FBI may have scammed millions, San Antonio Express-News, August 2, 2011
Accused Texas Ponzi Schemer May Be Fugitive Md. Fraudster, FinAlternatives, August 3, 2011
Ponzi Scams, SEC

Ponzi Scams, FBI

More Blog Posts:
Houston Securities Fraud: Ex-Citigroup Broker Accused of Stealing Millions from Wealthy Mexican Investors is Barred from FINRA, Stockbroker Fraud Blog, July 29, 2011
Basketball Benefactor Accused of Texas Securities Fraud and Ponzi Scam that Targeted High-Profile Coaches Found Dead, Stockbroker Fraud Blog, July 19, 2011
Venezuelan Workers Fall Victim to Francisco Illarramendi’s Ponzi Scam, Stockbroker Fraud Blog, March 30, 2011 Continue Reading ›

Houston Securities Fraud: Ex-Citigroup Broker Accused of Stealing Millions from Wealthy Mexican Investors is Barred from FINRA

Published on: July 29, 2011 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority is barring a former Citigroup broker from membership. The sanction comes following allegations of Texas securities fraud. According to the findings, Jose Luis Vinas converted about $3.3 million from customers while he served as a registered representative for both UBS Securities and Citigroup. The clients were primarily located in Mexico and many of them do not speak English. Vinas, who is from Houston, had also worked for Bancomer Securities International.

FINRA says that Vinas had these non-English speaking customers sign blank documents that were in English. A variable credit line account was set up at his firm in their names. He then would allegedly turn in or cause to be submitted applications from these clients asking for credit line increases even though they had never asked for credit accounts or knew they existed.

The SRO is also accusing Vinas of forging or causing the forgery of client signatures on Letters of Authorization (LOAs) . He even allegedly had customers sign ones to authorize the transfer of customer funds without their knowledge or authorization. FINRA says that Vinas submitted or caused to be turned in to another member firm, verbal LOAs that were fraudulent and again turned in without client knowledge or authorization. These verbal LOAs gave him permission to wire money to their accounts. He allegedly gave false documents showing bogus balances in accounts that he had already taken the money from and closed.

Texas Securities Fraud
For a broker to steal money from an investor without authorization or conduct transactions without their authorization is Texas securities fraud. Not only could the broker be subject to criminal charges but he/she will likely be subjected to fines or sanctions. Other examples of broker misconduct that could be grounds for a Houston securities fraud case include unsuitability, omissions and misrepresentations, churning, overconcentration, failure to execute trades, breach of promise, breach of contract, failure to supervise, breach of fiduciary duty, margin account abuse, unauthorized trading, margin account abuse, and negligence.

It is also important that brokers understand the risks involved when making an investment and have an understanding of what type of arrangements they are signing up for when working with a broker-dealer. Unfortunately, there are brokers out there who do give the rest of the industry a bad name in their efforts to make a profit while disregarding their clients’ best interests. Many investors have sustained financial losses as a result.

Our Houston securities fraud law firm represents investors statewide and nationally. We also have stockbroker fraud victims located abroad. We are committed to helping our clients get their money back and we have worked on thousands of cases that have ended with successful outcomes.

FINRA Case #2009017198901, FINRA: Disciplinary and Other FINRA Actions

More Blog Posts:
Basketball Benefactor Accused of Texas Securities Fraud and Ponzi Scam that Targeted High-Profile Coaches Found Dead, Stockbroker Fraud Blog, July 19, 2011
Former Texas Securities Regulator Says Self-Regulation of Securities Industry Does Not Work, Stockbroker Fraud Blog, July 6, 2011
Texas Securities Fraud: Planmember Securities Corp. Registered Representatives Accused of Improperly Selling Life Settlement Notes, Stockbroker Fraud Blog, June 27, 2011 Continue Reading ›

Basketball Benefactor Accused of Texas Securities Fraud and Ponzi Scam that Targeted High-Profile Coaches Found Dead

Published on: July 19, 2011 | by Shepherd Smith Edwards & Kantas, LLP

David Salinas, a well-known University of Houston and Rice athletics benefactor, was found dead in his home over the weekend. The Galveston County medical examiner’s office is calling the 60-year-old’s death a suicide. Salinas’ death comes amidst allegations of Texas securities fraud, including his suspected involvement in a Ponzi scam that allegedly victimized high-profile athletics coaches. Select Asset Management, a Houston financial services firm that worked with Salinas, notified its clients that the US Securities and Exchange Commission has subpoenaed information from its files, as well as from those of J. David Financial Group, which is a Salinas business.

Coaches that invested with or gave testimonials to Salinas include Baylor coach Scott Drew, ex-Rice coach/current Texas A & M- Corpus Christi coach Willis Wilson, ex-Arizona coach Lute Olson, Texas Tech coach Billy Gillispie, Nebraska coach Doc Sadler, and others. According to Chron.com, one ex-NCAA coach is claiming that Salinas asked him for a “significant” amount of money to invest. In return, Salinas would direct players from Houston Select to the coach’s school. The former coach says he refused to get involved.

Salinas is the founder of Houston Select Basketball. Players that have contributed include Joseph Jones from Texas A & M, Dexter Pittman from Texas and NBA’s Miami Heat, Demetri Goodson from Gonzaga, Jawann McClellan from Arizona, and Cartier Martin from Kansas State and the Washington Wizards.

J David Insurance Group, which is also a Salinas business, is associated with Select Asset Management. The latter company’s CEO Brian Bjork is a Houston Select Founder, while its vice president Greg Muse is secretary of Houston Athletics Foundation, which is a nonprofit corporation that raised donations for University of Houston Athletics. Salinas served as the foundation’s director.

Our Houston securities fraud lawyers represent investors throughout Texas who have lost money in Ponzi scams and as a result of other kinds of financial fraud.

Related Web Resources:
Basketball benefactor found dead, Chron.com, July 19, 2011
Tom Penders talks about Salinas scandal, ESPN, July 19, 2011
Houston Select Basketball

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Texas Securities Fraud: SEC Halts Alleged Ponzi Scheme in the Dallas-Fort Worth Area, Stockbroker Fraud Blog, March 2, 2011
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Michael Kenwood Capital Management, LLC Principal Pleads Guilty to Securities Fraud Involving Ponzi Scam, Institutional Investor Securities Blog, March 17, 2011 Continue Reading ›

Former Texas Securities Regulator Says Self-Regulation of Securities Industry Does Not Work

Published on: July 6, 2011 | by Shepherd Smith Edwards & Kantas, LLP

According to Ex-Texas State Securities Board Denise Voigt Crawford, giving oversight of nearly 12,000 investment advisers to the Financial Industry Regulatory Authority to cut costs is a bad idea and one for which investors will end up paying the price. FINRA is Wall Street’s self-funded regulator. Already charged with overseeing brokers, it is now pushing to take over the U.S. Securities and Exchange Commission’s role as adviser regulator.

Crawford says that having FINRA oversee the industry’s activities doesn’t make sense when FINRA is the industry. She also points out that since the SRO was established in 2007, it hasn’t been successful in protecting investors, while imposing fines that are usually a fraction of the damages they sustained from securities fraud and other misconduct. Last year, FINRA fined members just $43 million while the SEC imposed over $1 billion in penalties.

Also, according to U.S. Securities and Exchange Commission data, investors who received FINRA arbitration awards usually got under half of what they initially sought. In 2010, FINRA ordered that harmed investors get $6 million in restitution, while the SEC ordered that investors recover $1.82 billion. However, through May of this year, FINRA had already ordered that investors who sustained losses get recoup $9.8 million. The SRO believes that it is ideally suited to do the job for a number of reasons, including its technological capabilities and resources and the fact that most advisers are already affiliated with broker-dealers.

Texas Securities Fraud: Planmember Securities Corp. Registered Representatives Accused of Improperly Selling Life Settlement Notes

Published on: June 27, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Brokers Kris Bradford Rhoden and Jimmy Wayne Freeman Jr. are accused of Texas securities fraud and of bilking investors of millions. The two registered representatives allegedly took part in the improper sale of life settlement notes. They are also accused of lying to their employer, PlanMember Securities Corp, about the sales. Now, Texas State Securities Board says the two men are facing $100,000 fines and license revocation.

Between June 2008 and February 2009, the two men allegedly sold note agreements that were supposedly backed by life insurance policies and a 10% simple-interest return guarantee over five years. They also are accused of selling an Immediate Income Investment Plan, which was purported to have been backed by life insurance policies and a five-year, fixed biweekly income account. National Life Settlements LLC, which was shut down by Texas securities cops in 2009 after it sold $30M in bogus promissory notes, was the issuer both products. (A judge later ordered that the investors it defrauded get back about $20 million.)

Now, state regulators are saying that Rhoden and Freeman did not comply with PlanMember’s supervisory procedures, which doesn’t allow private-securities transactions and requires that the broker-dealer approve any securities transactions occurring outside the regular course of business. The two brokers allegedly told Planmember on their compliance questionnaire that they did not sell such products. They are also accused of using their personal email accounts to let PlanMember clients know about the investments, as well as of failing to update their U-4 forms in a timely manner to show that they were marketing the life settlement notes.

Related Web Resources:
Corpus Christi investment advisers face license hearings, fines, Caller.com, June 24, 2011
Two reps could lose securities licenses for selling life settlement notes, Investment News, June 24, 2011
Texas Stockbroker Fraud

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Texas Lawyer Pleads Guilty to Involvement in Alleged $100M Life Settlement Scheme, Stockbroker Fraud Blog, December 7, 2010
Three Houston Men Accused of $103 Million Texas Securities Fraud Involving Life Insurance Scam that Victimized at Least 800 Investors, Stockbroker Fraud Blog, September 7, 2010
Life Settlements or Viaticals should be Considered “Securities,” Recommends the SEC to Congress, Stockbroker Fraud Blog, August 5, 2010 Continue Reading ›

Texas Minister Pleads Guilty to Involvement in $7.2M “White Hat Guys” Securities Fraud that Bilked Thousands of Petro America Corporation Investors in the US and Canada

Published on: June 21, 2011 | by Shepherd Smith Edwards & Kantas, LLP

According to the US Attorney for the Western District of Missouri Beth Phillips,two ministers, a Waco, Texas minister and the other from Kansas City, Kansas, have pleaded guilty to participating in a $7.2M security fraud scheme that caused thousands of investors in Canada and the US to sustain losses. The investors had purchased shares in Petro America Corporation, which was reputed to have $284 billion in assets, including gold mines.

The two men are Texas minister Joseph Harrell and Kansas Minister Edward D. Halliburton. They pleaded guilty to conspiracy to commit securities fraud and wire fraud. They also admitted that they and others conspired together to obtain money through the bogus sale of the stock and the issuing of misrepresentations and omissions. Both men made almost $400,000 from the stock sales, selling millions of shares despite knowing that both Kansas and Missouri had put out cease and desist orders forbidding the sale of unregistered Petro stock.

Harrell, who acted as Petro America’s CFO, was affiliated with Ministers Alliance, of which Halliburton was President. The alliance was comprised of about 15 ministers who promoted and supported Petro American, sold shares to congregants, and called themselves the “White Hat Guys.” They even conducted weekly in-person meetings at a Denny’s and took part in regular calls with hundreds of investors in many US states.

Harrell, who sold stock to at least 90 investors reportedly laced many of his sales pitches with religious wording and claimed that Petro was a blessing from God. He has admitted to knowing that the company was fraudulent. He acknowledges giving investors information that was not complete and also misleading. Harrell said he agreed to sell the stock because he wanted to make a profit. According to the Justice Department, even as he was bilking investors and renting cars at $423/week, he was availing of food stamp benefits and Social Security disability.

Related Web Resources:
Texas minister’s scam had him living the high life — while collecting food stamps, June 17, 2011
Kansas City, Kansas and Texas Ministers Plead Guilty to Securities Fraud Conspiracy, Infozine, June 15, 2011

Texas Foreign Currency Trader and Developer of “Alpha One” Convicted of Securities Fraud

Published on: June 15, 2011 | by Shepherd Smith Edwards & Kantas, LLP

The owner of “Alpha One” has been convicted of Texas securities fraud for defrauding investors of millions of dollars. Robert David Watson, 50, pleaded guilty to the charge yesterday.

Watson admits that between 2003 and 2009, he employed deceptive and manipulative devices and contrivances related to the sale and purchase of investments in a series of trading enterprises that he formed. He also acknowledges that he raised tens of millions of dollars from investors and maintained custody and control of the money under the guise that he was using the funds to trade, sell, and buy foreign currencies.

Watson convinced people to put money in his ventures by making representations that he was looking to make money with the “Alpha One” model, which he developed and maintained. He claimed that the model has made high historical returns since 2000 and between June 2006 and February 2009 made an annualized return of 23.04%.

Now, however, Watson says that contrary to what he represented, he did not trade. Instead, he made minimal trades and made little-if any-profits. He also caused bogus account statements to be sent to investors through wire communication, US mail, or electronically and put together sham statements of bank accounts and trading activity to make the account statements appear legitimate. When investors took out these “returns” or their principal investments, he paid them with money from other investors rather than foreign currency trade profits. Despite not doing much trading, he paid himself hundreds of thousands of dollars yearly during the securities scam.

Alpha One: Foreign Currency Trader Convicted of Securities Fraud, LoanSafe, June 13, 2011

“Alpha One” Foreign Currency Trader Convicted of Securities Fraud, FBI, June 10, 2011

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Houston Securities Arbitration: FINRA Panel Orders Penson Financial Services, Inc. to Pay Boushy North Investments, Ltd. $500,000

Published on: June 11, 2011 | by Shepherd Smith Edwards & Kantas, LLP

In Houston, a FINRA arbitration panel has awarded Boushy North Investments, Ltd. $500,000 in its securities arbitration case against Penson Financial Services, Inc. Boushy North Investments had initially sought $4M in punitive damages and more than $3.8M in compensatory damages for negligence, unauthorized trading, breach of fiduciary duty, and gross negligence. At the Texas securities arbitration hearing, however, the Claimant amended and reduced its compensatory damages and withdrew punitive damages and legal fees.

Boushy North Investments accused Penson of failing to prevent an unsuitable and unauthorized day-trading strategy for its family limited-partnership account. Meantime, Penson denied the allegations, asserted specific defenses, and submitted a Third-Party Complaint against Thomas Cooper and Second Mile Wealth Management, Inc., which asserted causes of action over crack of contract, indemnification, and rascal linked to the Third-Party Respondents’ purported element representations about the trade and the direction of the trading in Claimant’s account. Penson eventually discharged its Third-Party Claim’s result of action for fraud.

The claim for unauthorized trading hadn’t been included in the Original Statement of Claim submitted in September 2009. The first effort to amend that was February. However, FINRA denied it because different or new pleadings cannot be turned in after a panel has been chosen and if a leave to amend hasn’t been granted. Last month, however, after the proper motions were submitted, the panel granted the unauthorized trading count.

Penson Faced Multi-Million Dollar Day-Trading Claim in FINRA Arbitration, Broke and Broker, June 1, 2011
Multi-Million Dollar Day-Trading Claim Hits Penson in FINRA Arbitration, Forbes, May 31, 2011

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District Court in Texas Decides that Credit Suisse Securities Doesn’t Have to pay Additional $186,000 Arbitration Award to Luby’s Restaurant Over ARS

Published on: June 2, 2011 | by Shepherd Smith Edwards & Kantas, LLP

The U.S. District Court for the Southern District of Texas has ruled that Credit Suisse Securities shouldn’t have to pay Luby’s Restaurants another $186,000 as part of its arbitration to the investor. The case is Luby’s Restaurants LP v. Credit Suisse Securities (USA) LLC. Shepherd Smith Edwards and Kantas Founder and Texas Securities Fraud Attorney William Shepherd had this to say about the ruling: “Attorneys for each side have the opportunity to submit language to the arbitrators that it desires to be reflected in an award. In cases where the award sought is anything more than payment of a specific amount it is wise to submit such language.”

Luby’s Restaurants LP bought over $30 million in auction-rate securities from Credit Suisse. The investor bought the ARS based on the financial firm’s representation that the instruments were very liquid, safe, and a suitable investment.

Luby’s later filed its arbitration claim with FINRA for ARS losses. By then it had gotten back everything but $8.9 million in securities. Then, after initiating the proceedings-but prior to the arbitration hearing-Luby’s redeemed another one of its securities for less than par and lost $186,000.

The arbitration panel would go on to rule in favor of Luby’s. Credit Suisse was directed to buy back the ARS from Luby’s at par and with interest. While both parties sought to confirm the award, they were in dispute over whether the $186,000 that Luby’s lost after it filed its arbitration case should be included.

The court says that Credit Suisse does not have to pay that amount to Luby’s. The court noted that the Award doesn’t mention the additional damages that Luby’s sustained when it sold some of the securities under par during pendency of the arbitration but prior to the hearing.

Related Web Resources:
$186K Under Arbitration Award, BNA Securities Law Daily, May 31, 2011
Luby’s Restaurants LP v. Credit Suisse Securities (USA) LLC, Justia

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Texas Securities Commissioner’s Emergency Cease and Decease Order Accuses Insignia Energy Group Inc. of Misleading Teachers

Published on: May 23, 2011 | by Shepherd Smith Edwards & Kantas, LLP

According to the Texas State Securities Board, Insignia Energy Group Inc. and its affiliate IEG Permian Basin LLC have violated state law because they are not registered to sell Texas securities. The Texas Securities Commissioner, which is accusing the Dallas-area emergency company of targeting laid-off teachers in the fraudulent sale of gas and oil interests, has put out an emergency cease and desist order against Insignia. The state is also accusing both companies of issuing misleading statements to potential investors.

Per the order, Insignia and IEG must cease from selling securities until they are registered with the state of Texas. The securities board is also is asking for the cessation of deceptive statements.

The state contends that Insignia is telling Texas school workers, including retired and current teachers, that investing in the oil and gas interests will “replace” income during a period of impending layoffs. Insignia is also allegedly encouraging these potential investors to spend their retirement money on these supposedly “safe” investments that the state’s securities commissioner says are actually very risky.

These prospective clients were offered interests in the Sabine Partnership, which is supposed to develop well prospects in Louisiana. The investors were to receive limited partnership interests that are the equivalent of 10% of the underlying working interest, as well as 7.3% of the underlying net revenue interest in the partnership. The order says that Insignia is claiming that investors who put in $21K will get at least $5K in returns a month, while those who put in $45K will get back a minimum of $15K monthly.

Our Texas securities fraud lawyers are here to help investors recoup their losses.

Related Web Resources:
Energy company targeting teachers in scam, Texas officials say, Yahoo/Reuters, May 16, 2011
Hot air? Oil and gas company allegedly misled teachers, Investment News, May 16, 2011

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