Elder Fraud

FINRA Bars Clark Gardner from Securities Industry for Converting Customer Funds

February 3, 2015 | Silver Law Group

Clark Smith Gardner, of Orem, Utah, submitted an AWC in which he was barred from association with any FINRA member in any capacity. Gardner was registered with Cetera Advisors, LLC until May, 2014. Without admitting or denying the findings, Gardner consented to the sanction and to the entry of findings that he used customer funds for his own benefit. An investor provided Gardner with a check for almost $250,000 for an investment opportunity sold by Gardner. Gardner put the money into his personal bank account and failed to invest any of the funds on the customer’s behalf. Instead, Gardner used the customer’s money to repay funds Gardner owed to other individuals. Gardener also engaged in an outside business activity by serving as a real estate agent of an investment company without his member firm’s knowledge or consent. Gardner facilitated the customer’s $150,000 real property investment through the company, without the firm’s permission, and received $20,000 from the company for facilitating the transaction. (FINRA Case #2014041351601) Real estate scams have become increasingly popular as advisors recommend real estate as part of an overall investment strategy or are tempted to become principals in deals with a conflict of interest to the advisor’s customers. However, brokerage firms frequently prohibit advisors from investing in deals with clients.

We are currently involved in multiple cases against brokerage firms for mismanagement of elderly investors’ accounts and/or improper conflicts of interest between the financial advisor and the customer. We routinely work closely with estate planning attorneys to help resolve disputes between family members regarding the management of an elderly family member’s financial affairs and we are frequently consulted regarding the improper sale of securities or mismanagement of the portfolio by a fiduciary, trustee or other trusted advisor.

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.

FINRA Files Disciplinary Charges against Jonathan A. Francis

January 14, 2015 | Silver Law Group

Jonathan A. Francis, of Brooklyn, New York, was named a respondent in a FINRA complaint alleging that he assisted third parties who improperly took over $200,000 in cash from customers’ accounts without the customers’ knowledge or consent. Jonathan Francis was previously registered with J.P. Morgan Securities, LLC. The complaint alleges that Francis issued automatic teller machine (ATM) cards in six dead customer’s accounts and an ATM card for the account of a customer who subsequently complained of an unauthorized withdrawal of funds from his account. Francis knew that the distribution of the unauthorized ATM cards was part of an overall scheme to convert funds from bank customers. Francis resigned from the bank and his firm before they could interview him about it hindering their investigation. The complaint also alleges that Francis failed to respond fully to FINRA’s requests for documents and information, and failed to appear for his continued on-the-record testimony. (FINRA Case #2013038988301)

We are currently involved in multiple cases against brokerage firms for mismanagement of elderly investors’ accounts and/or improper conflicts of interest between the financial advisor and the customer. We routinely work closely with estate planning attorneys to help resolve disputes between family members regarding the management of an elderly family member’s financial affairs and we are frequently consulted regarding the improper sale of securities or mismanagement of the portfolio by a fiduciary, trustee or other trusted advisor.

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.

SEC Charges Boiler Room with Being a Fraud Targeting Seniors

December 22, 2014 | Silver Law Group

The Securities and Exchange Commission alleged New York-based Premier Links, Inc., its former president, and two cold callers formed a fraudulent boiler room scheme targeting retirees and elderly to invest in speculative or high risk companies with limited or no real chance of making a profit.

The SEC alleges that Dwayne Malloy, Chris Damon, and Theirry Ruffin victimized vulnerable older investors using investors’ money for their own personal gain. Premier Links Inc. cold called investors using high-pressure sales tactics to convince seniors to invest in companies which would soon have initial public offerings (IPOs). They never disclosed to the investors that only a small fraction of the money would be transmitted to the promoted companies, and Premier Links diverted investor funds to other entities controlled by the sales representatives or other associates for their own use and benefit.

Premier Links, Malloy, Damon, and Ruffin were never registered with FINRA or as stockbrokers and fraudulently obtained over $8 million from more than 300 victims across the USA by building a relationship of purported trust and confidence with them. The SEC alleges that the defendants rarely even invested the money in the companies they were pitching.

Two Florida Businessmen Plead Guilty to a $20 Million Dollar Ponzi Scheme

December 8, 2014 | Silver Law Group

Donald Ray Babb and Ralph Ruth each face a maximum 20 years in federal prison after pleading guilty to operating a $20 million dollar Ponzi scheme.

The scheme lasted from June 2006 through the end of 2013 primarily targeting older investors including several government workers costing many investors their life savings after suffering a total loss of their investments. The victims’ money was primarily used to pay earlier investors and to purchase real estate and luxury items for the Ponzi schemers.

According to news reports, between June 2006 and December 2013, Babb and Ruth orchestrated a scheme in Brevard County that defrauded approximately 180 investors out of almost 20 million dollars. Doing business as Southeast Mutual Insurance and Investment LLC, Capstar Industries LLC, and First Merchant Capital LLC, Babb and Ruth falsely represented their businesses as licensed financial institutions whose deposits were insured by the Federal Deposit Insurance Corp. Many investors thought they were buying bank products such as Certificates of Deposits and savings accounts. Ponzi schemes targeting elderly investors are on the rise. In the instant case, some investors were in their 80’s and were solely looking for preservation of capital. Many elderly investors are being defrauded in Ponzi schemes which are promoted by offering investment products which offer a high rate of return without taking any stock market risk.

Former LPL Broker Travis Wetzel Pleads Guilty to Defrauding an Elderly Client

December 8, 2014 | Silver Law Group

Travis Wetzel of Frederick, Maryland has pleaded guilty to wire fraud relating to a fraudulent scheme to steal over 1.2 million dollars from an elderly client’s annuity account.

According to the government press release, Wetzel processed financial distribution documents for his investment advisory firm located in Rockville, Maryland. According to his plea agreement, from July 2010 to September 2012, Wetzel took a total of approximately $1,282,224 from an annuity account of an elderly client without the client’s knowledge, and used the money for his personal benefit. Wetzel knew that the client was elderly, whose age and physical condition would facilitate repeatedly taking money from the client’s account. Wetzel also laundered some of the money he took by transferring the money to other bank accounts he controlled.

We are currently involved in multiple cases against brokerage firms for mismanagement of elderly investors’ accounts and/or improper conflicts of interest between the financial advisor and the customer. We routinely work closely with estate planning attorneys to help resolve disputes between family members regarding the management of an elderly family member’s financial affairs and we are frequently consulted regarding the improper sale of securities or mismanagement of the portfolio by a fiduciary, trustee or other trusted advisor.

Silver Law Group Represents 93 year old Victim of Elder Financial Abuse

July 3, 2014 | Silver Law Group

According to the Sun Sentinel, the Palm Beach County Sheriff’s Office has charged Sultaine Valcius of Boynton Beach with fraud after taking $1.4 million from a 93 year-old man that hired her as a medical aide.

The Sun Sentinel reports Sultaine Valcius, 48, is charged with organized scheme to defraud for taking the money from her employer for at least five years. Ms. Valcius requested the money for various reasons, including, nursing school tuition, purchasing a home as an investment property, repairing a home in Haiti that had been destroyed by an earthquake and for general financial assistance due to her husband purportedly losing his job. However, Ms. Valcius was allegedly never enrolled in school, the house that was purchased was used as the primary residence by Ms. Valcius and her husband was never laid off from the job she claimed he had.

Ms. Valcius convinced the elderly gentleman to write her numerous checks ranging from a couple of hundreds of dollars to tens of thousands of dollars from two of his brokerage accounts maintained at two national broker/dealers. However, even if convicted, it is unlikely that Ms. Valcius will have the adequate resources to repay the victim.

Reuters’ Article Highlights the Risks of Variable Annuities to Investors

March 28, 2014 | Silver Law Group

Of all the guarantees, bells and whistles associated with variable annuities, perhaps the biggest guarantee is the steep up-front commission the financial advisor can earn for selling the product.

According to a recent Reuters’ article, variable annuity sales in the U.S. totaled $142.8 billion last year, and brokers can earn 7 percent or more in commissions on the insurance products. Based on simple arithmetic, the commissions earned on an annual basis exceeds a billion dollars.

However, investors may be damaged when these complex products are not properly explained, tax or liquidity factors are not considered, or the advisor engages in “twisting” of improper annuity switching. “Twisting” happens when a broker encourages a client to trade in an older annuity to buy a different one, often at significant cost to the client and benefit to the broker.