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FINRA Brings Charges Against Sandlapper Securities for Charging Over $8 million in Improper Markups on Private Placements

Posted: October 10th, 2017

FINRA Brings Charges Against Sandlapper Securities for Charging Over $8 million in Improper Markups on Private Placements

Our securities law firm is investigating Greenville, South Carolina-based Sandlapper Securities, LLC after FINRA filed a complaint alleging the firm defrauded investors by selling private placements in saltwater disposal wells at excessive, undisclosed markups.

According to FINRA’s complaint, Sandlapper Securities; two (2) of its top executives, Chief Executive Officer and owner Trevor L. Gordon (CRD# 2195122) and President of the Capital Markets Division Jack C. Bixler (CRD# 22331); and two (2) former FINRA-registered representatives formed multiple entities to invest in saltwater disposal wells in order to facilitate the scheme. All of the entities were located at Sandlapper’s main office in Greenville, South Carolina.

The Saltwater Well Scheme

According to FINRA’s complaint, Gordon and Bixler created TSWR Fund Management, LLC to manage the saltwater well funds.  TSWR Fund Management and the brokers selling interests in the Tiburon Saltwater Reclamation Fund I, LLC received commissions, fees and allowances totaling over 16 percent of investor funds with additional fees if the well was undeveloped.

While these substantial fees were disclosed, Gordon and Bixler, through their ownership and control of Sandlapper and the saltwater fund entities, purchased saltwater disposal wells at artificially inflated prices by first purchasing them through TSWR Development, LLC, exacting more fees on investors of which were undisclosed.

The fund had the money to purchase these wells outright from the source, but Gordon and Bixler inserted TSWR Development into the transaction to purchase these wells then sell them to the fund so they could charge a hidden markup.

The Tiburon Saltwater Reclamation Fund I, according to FINRA, purchased saltwater wells in this fashion on multiple occasions and charged over $8 million in fraudulent markups to investors. In fact, FINRA’s complaint alleges that on some occasions, the fund borrowed money from investors to purchase wells that were then sold right back to the investors with these markups.

Sandlapper and its Saltwater Well Investments

In total, at least five (5) entities were created, and they are as follow:

According to FINRA, the Tiburon Saltwater Reclamation Fund I has raised over $12.5 million, selling approximately 170 investors units. SEC records list numerous broker and brokerage firms as receiving compensation on the deal, including but not limited to the following brokerage firms:

  • Colorado Financial Service Corporation;
  • Dempsey Lord Smith, LLC;
  • Cape Securities Inc.;
  • Whitehall-Parker Securities, Inc.; and
  • Stephen A. Kohn & Associates, Ltd.

SEC filings indicate that the Tiburon Saltwater Reclamation Fund II has raised almost $2 million, with numerous brokers and brokerage firms receiving compensation, many of which who also received compensation on the Tiburon Saltwater Reclamation Fund I private placement, including but not limited to the following:

TSWR Development SWD Portfolio I, DST has raised over $2.5 million and features Sandlapper Securities as a brokerage firm receiving compensation, amidst others.

Background on Greenville, South Carolina-based Sandlapper Securities

Sandlapper Securities has almost 60 brokers in 13 branch offices, according to FINRA. The firm has been operating since June 2005 in Greenville, South Carolina and has licenses to do business in 51 U.S. states and territories. The firm is primarily owned by Gordon and Bixler.

According to Sandlapper Securities’ BrokerCheck report, FINRA first notified the company of its investigation in January 2017 when FINRA stated that the firm was facing a potential disciplinary action over violations of securities industry rules stemming from sales of direct investments and private placements.

Contact our Firms if You’ve Lost Money Investing with Sandlapper Securities

If you have invested with Sandlapper Securities and any of its saltwater well funds and have lost money doing so, you may be able to recover some or all of your losses.  Our lawyers are experienced in recovering investor losses due to broker and brokerage firm misconduct through FINRA arbitration.

Silver Law Group represents the interests of investors who have been the victims of investment fraud.  If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.

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