Investment Fraud

How to Help Your Parents Avoid Fraudulent Investments

April 26, 2016 | Silver Law Group

How to Help Your Parents Avoid Fraudulent Investments on silverlaw.com

Ensure your parents are properly educated when it comes to fraudulent investments.

As your parents age, there are many things to think about and consider. Their health, their living situation, and their financial situation are generally at the top of the list. You realize too that your relationship with your parents has evolved over time and you may feel that you are suddenly functioning more as the caregiver than the child. This is a tough transition for families, but a necessary one. As you think about how best to take care of your parents as they age, you must think about how best to protect them from falling victim to scams, elder financial fraud, and mistakenly trusting their money with someone who could take it or, even worse, steal their identity.

8 Steps You Can Take To Protect Your Parents

Aequitas Business Partner Corinthian Colleges Ordered to Pay Over $1 Billion for Misleading Students

April 7, 2016 | Silver Law Group

A California judge ordered the now-defunct Corinthian Colleges Inc. (“Corinthian”), business partner of Aequitas Capital Management (“Aequitas”), to pay $1 billion over claims the company misled students and investors on March 25, 2016.

This comes two weeks after the Securities and Exchange Commission (“SEC”) charged Oregon-based Aequitas with operating a “Ponzi-like” scheme. Silver Law Group is currently investigating claims against Aequitas and Registered Investment Advisor (“RIAs”) firms with respect to possible violations of federal securities.

Corinthian filed for bankruptcy on May 2015 and is unlikely to pay the $1 billion in civil penalties and damages to affected students, but the ruling has paved the way for the U.S. Department of Education to declare that loans issued to attend Corinthian can be forgiven.

SEC Halts Fraud by New Jersey-Based Fund Manager of Investments in Pre-IPO Tech Companies

March 28, 2016 | Silver Law Group

The Securities and Exchange Commission announced fraud charges and asset freezes obtained in a case filed on March 21, 2016 against a New Jersey-based fund manager and two firms he controls for orchestrating a Ponzi-like scheme that marketed shares in promising pre-IPO technology companies in the Bay Area.

The SEC alleges in its complaint that John Bivona raised over $53 million through Saddle River Advisors and SRA Management Associates (collectively, the “SRA Funds”) and used the assets to pay off earlier investors, establish and fortify other funds, and pay family-related expenses. The complaint also alleges that Bivona stole over $5.7 million from investors and diverted millions more to other improper and undisclosed uses.

According to the complaint, much of the funds were diverted to Bivona’s nephew, Frank Mazzola, who was barred from the securities industry in a prior SEC enforcement action and is also charged in the complaint. The diverted funds were used to pay, among other things, credit card bills, income taxes, a car loan, unrelated defense attorney fees, and the mortgage on a Jersey Shore vacation home, according to the complaint.

Silver Law Group Investigates CONCERT Wealth Management, Summit Advisor Solutions, Private Advisory Group and other RIAs who Sold Aequitas Securities Amidst SEC Allegations of it Running a “Ponzi-like” Scheme

March 16, 2016 | Silver Law Group

Silver Law Group is investigating numerous registered investment advisors (“RIAs”) connected to Oregon-based Aequitas Management, LLC’s (“Aequitas”) “Ponzi-like” scheme and $350 million of investor losses.

On March 10, 2016, the Securities and Exchange Commission (“SEC”) filed a complaint against Aequitas and its various subsidiaries. The complaint’s most damning allegations include Aequitas defrauded over 1,500 investors nationwide between Jan. 2014 and Jan. 2016 of more than $350 million as a last-ditch effort to raise funds to save it from complete financial collapse. This “Ponzi-like” scheme defrauded investors while the most senior executives used the investments to fund their lucrative salaries and extravagant company perks, according to the complaint.

According to news reports, numerous RIAs have been connected with the fraudulent Aequitas, including:

SEC Charges Oregon-based Aequitas Management LLC and Its Executives with Operating $350 Million Investment Fraud

March 16, 2016 | Silver Law Group

The U.S. Securities and Exchange Commission (SEC) has charged Oregon-based Aequitas Management, LLC (“Aequitas”), and several of its executives with operating a $350 million investment scheme that defrauded investors in a last-ditch effort to raise funds to save Aequitas from a complete financial collapse. Aequitas, along with CEO Robert J. Jesenik, Executive Vice President Brian A. Oliver, and former CFO and COO N. Scott Gillis, were charged with multiple violations of federal securities laws in a Complaint filed in Oregon federal court. The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil monetary penalties as well as bars prohibiting Jesenik, Oliver, and Gillis from serving as officers or directors of any public company.

According to the SEC’s Complaint, Aequitas and four of its corporate affiliates (Aequitas Holdings LLC, Aequitas Commercial Finance LLC, Aequitas Capital Management Inc., and Aequitas Investment Management LLC) defrauded more than 1,500 investors nationwide between January 2014 and January 2016 into believing they were making health care, education, and transportation-related investments. To the contrary, the Complaint alleges that invested funds were instead being used for other purposes, including to pay lucrative salaries and extravagant perks for Jesenik, Oliver, and Gillis; and to stave off the businesses’ impending financial collapse. In mid-2014, Corinthian Colleges, a for-profit education provider, defaulted on its recourse obligations to Aequitas, which significantly increased Aequitas’ already dire cash flow problems. Rather than disclose to its investors the rapidly deteriorating state of its finances, Aequitas purportedly hid that vital information and used investor funds to keep its enterprise afloat — even using some new investor funds to pay earlier investors in a classic Ponzi scheme fashion. By November 2015, Aequitas’ operations reached a point of nearly total collapse; and in February 2016, the firm dismissed two-thirds of its employees and hired a Chief Restructuring Officer.

“We alleged that Aequitas had severe and persistent cash flow shortages and top executives knew they weren’t using money raised from investors like they said they would. But they refused to disclose the true financial condition, continued to draw lucrative salaries, and roped even more unknowing investors into a losing venture,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

SEC Alleges New York-Based Lending Company and its Placement Agent Raise $8.6 million by Lying to Investors

February 9, 2016 | Silver Law Group

The Securities and Exchange Commission announced fraud charges against a Manhattan-based lending company and its placement agent for falsely stating that its financial statements were being audited and lying about the returns on the loans.

The SEC filed a complaint in federal district court in Manhattan against lending company American Growth Funding II LLC (“AGF II”) and brokerage firm Portfolio Advisors Alliance (“PAA”), as well as two of its executives, for promising investors 12-percent annual returns and concealing pertinent details about the deteriorating loan values that could jeopardize full payment of the promised returns to investors. PAA and its owner Howard Allen and president Kerri Wasserman allegedly knew the offering documents were inaccurate yet continued using them to solicit sales of AGF II securities.

The SEC’s complaint states that AGF II raised approximately $8.6 million from investors in a private placement offering from March 2011 to December 2013 and the company represented in offering documents that its financial statements had been audited and would continue to be audited each fiscal year. It further states that Ralph Johnson, AGF II’s sole managerial employee and 51 percent owner, knew AGF II’s financial statements had not been audited and would not continue to be audited each fiscal year but still caused AGF II to send out monthly account statements to investors that concealed the precariousness of its business.

Oxford City Football Club Named in $6.6M Stock Investment Fraud Case

December 18, 2015 | Silver Law Group

Oxford City Football Club Named in $6.6M Stock Investment Fraud Case on silverlaw.com

Deceptive boiler room tactics lead to trade suspension, resignation of CEO

The SEC suspended trading for the Oxford City Football Club amid allegations of fraud and conspiracy to commit fraud by their CEO, Thomas Guerriero. The SEC contends that Guerriero used pressure tactics and led thousands of inexperienced investors to put money into the Oxford City Football Club, under the false impression that the company they were investing in was a robust, diverse group of successful and popular sports teams, real estate holdings and academic institutions. The investment strategies employed were deceptive and significantly misrepresented the company’s assets.

Some of the deceptive tactics used by Mr. Guerriero included developing a script that was communicated to Investors by consultants who were charged with selling Oxford City Football Club Stock. The investors were told that shares could be purchased at a significantly reduced rate, but they were not told that the share price was inflated or that Guerriero was operating a boiler room.

FINRA Files Cease and Desist Order Against Avenir Financial Group, CEO Michael Clements, and Registered Representative Karim Ibrahim for Fraud Against Elderly Investors

August 27, 2015 | Silver Law Group

The Financial Industry Regulatory Authority (“FINRA”) announced on April 27th that Avenir Financial Group (“Avenir”), its CEO Michael Clements (“Clements”), and registered representative Karim Ibrahim a/k/a Chris Allen (“Ibrahim”), consented to an order halting further fraudulent sales of equity interests in the firm and promissory notes, pending a hearing on fraud charges related to the same offerings. The sales occurred from October 2013 through April 2015, and were often to elderly customers of the firm. According to FINRA, Avenir sold to several elderly investors including a 92 year-old customer who invested $250,000 for an equity interest in the firm, while Clements and Ibrahim falsely represented how the funds would be used, materially omitting and failing to disclose the firm’s financial difficulties, and thus willfully violated the Securities Exchange Act and FINRA rules. The misrepresentations and omissions that allegedly misled the elderly client included the fact that Avenir was in dire financial condition, as well as that he overpaid for his shares as compared to earlier investors.

Avenir is a New York, NY based full service broker-dealer. According to FINRA, during its 3-year operation as a FINRA member firm, Avenir and its branch offices raised over $730,000 in 16 issuances of equity or promissory notes, and most of the sales of equity and promissory notes were to elderly customers of the firm.

FINRA obtained the Cease and Desist Order based on its concern for ongoing customer harm and depletion of investor assets, prior to completion of a formal disciplinary proceeding against the firm and these individuals. Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, and order to pay restitution, censure, suspension or bar from the securities industry. The issuance of the disciplinary complaint represents the initiation of a formal proceeding by FINRA, in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.

J. P. Turner Associates Turning Elsewhere After Firm Closure

August 19, 2015 | Silver Law Group

Cetera Financial Group is placing advisers at Summit and other firms

Independent financial adviser network Cetera Financial Group has taken steps toward relocating advisers at J. P. Turner & Co. after making the decision to close the firm. According to Investment News, about 50 percent of its current advisers have been invited to join Summit Brokerage Services Inc. while the remainder are reportedly being redistributed elsewhere among the firms under Cetera’s umbrella.

The firm’s closure may come as little surprise to those who are aware of its reputation. Investment News InvestmentNews reports Pershing LLC did not want to allow J.P. Turner on its platform. Pershing provides “global financial solutions” to advisers and broker-dealers, according to its website.

Giovanni Acevedo, of Voya Financial Advisors, Inc., Accused of Converting Funds

August 4, 2015 | Silver Law Group

Disciplinary action pending against Wilton Manors, FL financial advisor

Giovanni Acevedo could be facing disciplinary action from FINRA after a complaint that he allegedly converted more than $160,000 in customer funds. According to the report, he allegedly told a customer he would invest a $68,000 check she wrote to the company according to her instructions. He allegedly told her to leave 21 blank signed checks with him, resulting in a total of $145,848.42 converted to what is purported to be his own personal account or one of which he is a beneficiary, according to FINRA.

The official complaint, which was filed on April 8, asks that upon the conclusion that the allegations are proven as fact Acevedo be subject to sanctions according to FINRA Rule 8310, namely disgorgement, but the FINRA manual also allows for suspension or expulsion of a member’s registration.