Investor Fraud: Alleged $100M Future Income Payments Fraud, Capital Investment Group to Pay One Elderly Investor $400K, and Tech Fund Adviser is Now Facing Fraud Charges

 

Over 1000 Investors May Be Victims of Alleged Future Income Payments Fraud

Dozens of stockbrokers, financial planners, financial advisers, and insurance agents are now the defendants of investor fraud lawsuits over an alleged $100M scam that may have bilked over 1000 investors. Many of these investors were retirees, which means that elder investor fraud may have been involved.

InvestmentNews reports that according to the plaintiffs, the advisers breached their fiduciary obligation and were negligent when they sold them structured cash flows offered by Future Income Payments, LLC. At least 370 investment intermediaries in the US are believed to have sold these investments to investors, with the representatives receiving 6-10% in commissions upfront.

Future Income Payments allegedly offered retirees lump-sum payments in exchange for part of their monthly pension payments, usually for over three to five years. The company then used these pension funds for the cash flows that investors purchased. Meantime, investors were promised 6-8% returns and, for their initial payment, were to receive an income each month for about 5 to 10 years.

Future Income Payments stopped paying investors what they were due in April.

Scott Kohn, who ran the company, had previously pleaded guilty in 2016 to multiple felony offenses involving counterfeit product trafficking, and he served 15 months in prison. He is currently on the run following these latest allegations.

A number of state regulators have since called these upfront payments to pensioners “unlawful loans.” In certain instances, an over 100% effective interest rate was charged.

Capital Investment Group Must Pay Investor $400K for Ignoring Alleged Broker Misconduct

In Massachusetts, Secretary of the Commonwealth William Galvin is ordering Capital Investment Group Inc. a North-Carolina based brokerage firm, to pay an investor $400K in losses she sustained while working with one of its brokers. The broker, Robert S. Graham, allegedly solicited money from a number of investors, including this particular investor, an elderly female, without telling the firm.

These investments were allegedly riskier than the kind of investments that the woman had wanted to be involved in, and she had earmarked the funds to help support her brother and mother. Capital Investment Group reportedly did not fire Graham after finding out about his handling of the investor’s account. Instead, the brokerage firm purportedly approved his actions retroactively and mandated that investors sign hold-harmless agreements that were also retroactive.

In addition to paying back the investor, The firm will pay a $50K fine. Graham, meantime, must pay a $15K fine and he is no longer allowed to register as a broker in Massachusetts.

Rothenberg Ventures Founder is Accused of Investor Fraud

The US Securities and Exchange Commission has filed fraud charges against Michael B. Rothenberg and his investment advisory firm Rothenberg Ventures LLC. The regulator contends that he and his firm misappropriated millions of dollars.

According to the SEC’s complaint, Rothenberg positioned Rothenberg Ventures as “uniquely” able to find “millennial entrepreneurs” and get involved in “frontier technology” companies. Filings with the regulator indicate that his venture capital funds had over $64M in assets and close to 200 investors.

The Commission believes that Rothenberg and his advisory firm overcharged investors and misappropriated millions of dollar from the venture capital funds, including $7M in excess fees, so that he could fund his own personal business ventures and throw lavish events and parties. He and Rothenberg Ventures are settling the SEC charges without denying or admitting to the regulator’s allegations.

However, a district court must still approve the agreement, and disgorgement and penalties have yet to be determined. Rothenberg is also barred from the investment advisory and brokerage business for five years.

At Shepherd Smith Edwards and Kantas, our investor lawyers represent retail investors, high-net worth individual investors, and institutional investors in recouping their securities fraud losses. Contact our investor fraud law firm today.

Brokers, advisers and insurance agents implicated in alleged $100 million investment fraud, April 23, 2018

The SEC Case in the Rothenberg Case (PDF)

More Blog Posts from SSEK Law Firm:

Unregistered Brokers Are Charged With Selling More Than $243M of Woodbridge Securities to Over 1600 Investors, August 24, 2018

Ex-Wells Fargo Advisors Claim Bank Pressured Them to Sell Products That Charged Higher Fees to High-Net Worth Investors, August 23, 2018

GPB Capital Holdings Stops Selling Private Placements in GPB Funds to Investors, August 20, 2018