Southwest Securities Found Liable for $5.45M in Texas Investment Fraud

A Dallas jury says that Southwest Securities Inc., which is a broker-dealer owned by PlainsCapital subsidiary Hilltop Holdings, and broker Leighton Stallones are liable for statutory fraud, fraud, and conspiracy and violation of securities laws related to a 2007 real estate scam. Now, the firm must pay two investors, SSST Riviera Investments Ltd. and Gerritsen Beach Investments Ltd., more than $5.45M in the Texas securities case-$2.9M and $2.55M, respectively.

According to the two entities, Stallones assisted developer Stephen Jemal in concealing the scheme by lying about how his brokerage accounts were doing. Jemal is accused of modifying account records to make it seem as if he had millions of dollars when some of his accounts held under $1,000.

The investors said that they agreed to lend funds to Jemal because of the misrepresentation made that he held millions of dollars in brokerage accounts and that the funds would be used as loan collateral. They said that Stallones helped to perpetuate the scheme by repeating these inaccuracies regarding Jemal’s accounts. They said that Jemal fudged with accounts to make it appear as if he was the owner of stock in companies like Google rather than in penny stocks.

The jury said that Jemal committed Texas securities fraud against the two investors. They ruled that, through the use of a misstatements or omissions, Stallones and Jemal committed statutory fraud and committed a securities law violation.

Shepherd Smith Edwards and Kantas, LTD LLP is a Texas securities fraud law firm.

Dallas Jury Hits Broker For $5.45M In Investment Fraud Suit, Law360, November 13, 2015
Developer Stephen Jemal Loses in Court Owes 18.9 Million, GerristsenBeach.net, May 13, 2010