Securities Fraud: SEC Charges Unregistered California Man with Fraud, FINRA Bars Two Brokers, Second Scam Lands Man in Jail Again

SEC Files Charges in $1.9M Broker Scam
A California man is facing Securities and Exchange Commission charges. The regulator is accusing Gregory Ruehle of fraudulently selling purported stock in a medical device company and keeping investors’ money. The unregistered broker purportedly raised about $1.9M from over 100 investors but did not transfer or deliver the securities that they purchased to them. Meantime, Ruehle is said to have used the funds to cover his personal spending and pay off gambling debts.

According to the SEC, Ruehle began bilking investors in 2012. He allegedly misrepresented to investors in Minnesota and California that he would sell them securities that he owned in ICB International Inc., for which he was a former consultant.

Instead, said the regulator, Ruehle sold investors more securities than what he owned and he failed to tell them that the securities that belonged to him were not transferrable. Ruehle is accused of generating fake documents that he claimed came from the company and issuing bogus company stock certificates to investors, along with a letter that falsely stated that the stock had been transferred to them.

The SEC wants permanent injunction, disgorgement, prejudgment interest, and penalties against Ruehle. The unregistered broker is also now the subject of criminal charges in a parallel case that was brought by U.S. Attorney’s Office for the Southern District of California.

FINRA Bars Two Men for Hedge Fund Fraud
In other broker news, the Financial Industry Regulatory Authority has announced that it is barring brokers Walter F. Grenda and Timothy S. Dembski from the securities industry. The industry bar is for fraud involving the sale of the Prestige Wealth Management Fund, LP, which is a hedge fund.

According to the self-regulatory organization, the two men made material misrepresentations and omissions to mislead investors so that they would think that the hedge fund was a growth fund impacted by a computer algorithm that automatically included stop-losses and risk protections. FINRA said that, in reality, the fund was very speculative, its CIO was in total control of which investments were made, and no computer algorithm was abided by. During the last full month that the fund traded, it dropped in value by over 80%.

The men’s purported misconduct would have occurred while they were at Mid Atlantic Capital Corporation. Grenda and Dembski settled without admitting to or denying FINRA’s findings.

Ponzi Scam Lands Ex-Mortgage Broker in Jail Again
David C. Jackson has been sentenced to 17 years behind bars for a Ponzi scam that bilked 40 small business owners. Jackson had already served time in prison for mortgage fraud. Now, he has been convicted once again.

According to prosecutors, Jackson and partner Alex Hurt bilked the business owners of $4.5M in a loan scam. The Federal Bureau of Investigation says the two men promised big commercial loans in return for upfront fees that were wired to Jackson’s bogus company. When the loans didn’t happen, Hurt and Jackson would offer the investors refunds that they either didn’t pay or paid using money they’d received from other investors.

Read the complaint against Ruehle (PDF)

FINRA Bars Two Brokers for Fraudulent Sales of a Hedge Fund, FINRA, February 11, 2016

Man charged in $3 million fraud scheme in Connecticut, New Haven Register, September 10, 2014