January 19, 2016

Securities News: Alternative Fund Manager Accused of Misleading Investors, Futures Trader Goes to Jail for Fraud, Ex-NBA Player Gets Sentence for Ponzi Scam, and 9th Circuit Upholds Investment Manager’s Conviction

Equinox Fund Management Resolves SEC Charges For Over $5.8M
A Denver-based alternative fund manager has consented to settle Securities and Exchange Commission charges accusing it of misleading investors about the way certain assets were valued and for overcharging management fees. According to the regulator, Equinox Fund Management LLC determined its management fees differently from the method it described in registration statements for The Frontier Fund, which is a managed futures fund.

Although registration statements said that management fees would be calculated based on each series’ net asset value, Equinox used the assets' national trading value instead. Also, the firm is accused of straying from the valuation methodology it had disclosed for certain holdings.

The fund manager will pay back investors about $5.4M in excessive management fees that it was paid over seven years, in addition to $600K in prejudgment interest. It also will pay a $400K penalty.


Futures Trader Goes to Jail, Pays Restitution for Securities Fraud
RXM Holdings Ltd. futures trading director Robert Scott Wiens is sentenced to one year in prison after pleading guilty to securities fraudhttp://www.stockbroker-fraud.com/legal-news.html. He also will pay $260k in restitution to investors he harmed.

Wiens was an unlicensed securities professional in 2010 and 2011. He sold fraudulent investments, which he traded on the futures market.

Wiens directed investors to open bank accounts under RXM’s name for their funds. He told them that there was zero risk and returns were guaranteed. He then used the money in the accounts to pay off earlier investments and cover his own spending.

Continue reading " Securities News: Alternative Fund Manager Accused of Misleading Investors, Futures Trader Goes to Jail for Fraud, Ex-NBA Player Gets Sentence for Ponzi Scam, and 9th Circuit Upholds Investment Manager’s Conviction " »

January 15, 2016

Securities Headlines: Ohio Financial Adviser Faces Criminal Charges, Petters Ponzi Scam Investors Still Waiting for Their Money, and FINRA Recommends Disciplinary Action Against Ex-Jefferies Bond Trader

Ohio Financial Adviser is Indicted in $15M Securities Fraud
Evolution Partners Wealth Management owner Larry Werbel has been indicted on criminal charges accusing him of involvement in a securities scam to bilk at least 100 investor of over $15M. Werbel recruited investors for shares of VgTel Inc. He and other brokers purportedly promised high dividends even though the shares were sold and purchased by companies belonging to the alleged scammers so that they could artificially inflate the share price.

According to prosecutors, over $9M of investor funds were pockets by the fraudsters. Werbel, who prosecutors say got investors to purchase $3M in VgTel shares, received over $300K in kickbacks.


He is charged with securities fraud, conspiracy to commit securities fraud and wire fraud, investment adviser fraud, wire fraud, and making false statements to federal officers. Werbel claims he is innocent.

Meantime, the man accused of masterminding the securities scam, Edward Durante, was arrested in Germany and brought back to the US last month. He previously was convicted of securities fraud in 2011. The U.S. Securities and Exchange Commission has filed a civil case against Evolution Partners, Durante, and others.


Continue reading "Securities Headlines: Ohio Financial Adviser Faces Criminal Charges, Petters Ponzi Scam Investors Still Waiting for Their Money, and FINRA Recommends Disciplinary Action Against Ex-Jefferies Bond Trader" »

December 29, 2015

Securities Fraud News: Barclays to Pay $13.5M For Unsuitable Fraud Transactions, Appeals Court Upholds Asset Freeze of Wyly Brothers’ Relatives, Ex-NBA Player to Get Sentence for Ponzi Scam Conviction

Barclays Capital Gets FINRA Fine for Unsuitable Mutual Fund Transactions

The Financial Industry Regulatory Authority said that Barclays Capital, Inc. (BARC) must pay over $10M in restitution plus interest to customers that were impacted by violations related to unsuitable mutual fund transactions. The self-regulatory organization said that the firm did not give certain customers the breakpoint discounts that applied. Aside from the restitution, Barclays must pay a $3.75M fine.

According to the SRO, from 1/10 through 6/15, the firm’s supervisory systems were not adequate enough to make sure that unsuitable transactions didn’t happen or that the firm’s duties related to mutual fund sales to retail brokerage clients were met. FINRA said that Barclays supervisory procedures wrongly defined a mutual fund switch as warranting three transactions within a specific period of frame. Because of this erroneous definition, the firm did not act on thousands of automated alerts warning of transactions that might be unsuitable, failed to include certain transactions for suitability review, and neglected to make sure that customesr got disclosure letters about transaction costs. Over 6,100 unsuitable mutual fund switches occurred, causing r about $8.63M in customer harm.

FINRA said that the Barclays did not give its supervisors enough guidance so that they could make sure that brokerage customers were engaging in mutual fund transactions that were suitable for their investment goals, holdings, and ability to tolerate risks. The SRO, which evaluated activities over a six-month period of time, said that 39% of mutual fund transactions were found unsuitable and customers suffered financial harm, including realized losses, of over $800K.

Also, during these five years, the firm’s supervisory system did not succeed in making sure that purchases were properly aggregated so eligible customers could get breakpoint discounts, including those involved in 100 Class A share mutual fund transactions.

By settling, Barclays is not denying or admitting to FINRA’s charges. It is, however, consenting to the entry of findings.

Continue reading "Securities Fraud News: Barclays to Pay $13.5M For Unsuitable Fraud Transactions, Appeals Court Upholds Asset Freeze of Wyly Brothers’ Relatives, Ex-NBA Player to Get Sentence for Ponzi Scam Conviction" »

December 12, 2015

Securities Fraud News: Texas REIT’s Share Price Drops Following Ponzi Allegations, Morgan Stanley, Ex-Broker Are Found Jointly Liable in $1M Elder Fraud Case, and Brokerage Firm Resolves Variable Annuities Claims for $475K

United Development Funding IV Shares Fall After Allegations of Texas Ponzi Scheme
United Development Funding IV (“UDF IV”), a Texas-based real estate investment trust (“REIT”), saw its share price drop after Harvest Exchange published a post that said the REIT had been run like a Ponzi scheme for years. United Development was a nontraded REIT that became traded when it listed on Nasdaq last year under the symbol “UDF”.

In the report on the Harvest site, the anonymous author said that the UDF umbrella had traits indicative of a Ponzi scam, such as, it uses new capital to pay distributions to current investors and UDF companies and gives substantial liquidity to earlier UDF companies to pay earlier investors. The article said that once the funding of retail capital to the most current UDF stops, the earlier UDF companies do not seem able to stand on their own. This purportedly indicates that the structure will likely fail and investors will be the ones sustaining losses.

After the report by the online professional network of investors, UDF IV saw its share price plunge from $17.53 to $10.10. It later dropped further to $8.55/share.

Over $1M Awarded in Senior Financial Fraud Case Against Morgan Stanley and a Former Financial Adviser
A Financial Industry Regulatory Authority Inc. arbitration panel has awarded 92-year-old Genevieve Lenehan (“Mrs. Lenehan”) over $1M in her claim against Morgan Stanley (MS) and former Morgan Stanley advisor Justin Amaral (“Amaral”). Mrs. Lenehan accused Amaral of churning and reverse churning her account. Amaral also advised Mrs. Lenehan’s husband until his death five years ago.

Continue reading "Securities Fraud News: Texas REIT’s Share Price Drops Following Ponzi Allegations, Morgan Stanley, Ex-Broker Are Found Jointly Liable in $1M Elder Fraud Case, and Brokerage Firm Resolves Variable Annuities Claims for $475K" »

October 28, 2015

Financial Adviser is Sentenced in $1.2B Rothstein Ponzi Scam

Michael Szafranski, the financial adviser of Ponzi mastermind Scott Rothstein, has been sentenced to two-and-a-half years in prison for wire fraud. Szafranski, who pled guilty, had already paid $6.5M of restitution to victims of the $1.2B financial fraud through the trustee handling the bankruptcy of Rothstein’s law firm Rothstein Rosenfeldt Adler.

The indictment against Szafranski referred to him as the "independent asset verifier" of the scam. He is accuse of persuading investors to put over $200M into the Ponzi scheme.

Meantime, Rothstein, an attorney, was sentenced to fifty years behind bars in 2010 for money laundering, wire fraud, and racketeering. He was accused of selling discounted stakes in bogus settlements of whistleblower and sexual harassment cases that ranged from hundreds of thousands to millions of dollars. Investors were told they would get the proceeds when the lawsuits were resolved. Instead, their money was used to bankroll his firm, pay for his expensive lifestyle, and purchase political influence. Rothstein would take newer investors' money to pay older investors. He and co-conspirators allegedly generated bogus bank statements, settlements, and personal guarantees.

Also, according to InvestmentNews, Rothstein directed employees of his law firm to give some of the money to the campaigns of certain state, local, and federal politicians. These employees were told to do this in a way that allowed him to avoid limits on these types of donations while concealing where the money was coming from. After the allegations against Rothstein became known to the public, many of the campaigns returned the funds.

Continue reading "Financial Adviser is Sentenced in $1.2B Rothstein Ponzi Scam" »

October 7, 2015

SEC Case Headlines: New Jersey Fund Manager Faces Charges Over $1.1M Ponzi Scam, $32M Fraud Scam Involving Amber Mining is Halted, and Executives Face Charges for Allegedly Bilking Investor in Stock Fraud

NJ Fund Managers Faces SEC Fraud Charges
The Securities and Exchange Commission is charging William J. Wells and his Promitor Capital Management LLC with bilking investors in a $1.1 million Ponzi scam. According to the regulator, Wells falsely misrepresented himself as a registered investment adviser to some investors. However, rather than invest their money in specific stock as he told them he would, Wells and his firm placed most of the funds primarily in risky options that garnered poor results. He then allegedly hid the outcomes using bogus investor account statements that recorded performance figures that were severely inflated.

Wells also allegedly tried to conceal the investment loses by making Ponzi-like payments in which he paid earlier investors using the funds of new investors. By the end of this summer, fund brokerage accounts at Promitor held under $35 while the remainder were sucked dry from the Ponzi-like payment, trading losses, or transferred into Wells’ own bank account.

Meantime, the U.S. Attorney’s Office for the Southern District of New York has filed a parallel criminal action against Wells.


Regulator Files Charges, Obtains Asset Freeze in $32M Amber Mining Scam
The SEC has gotten asset freeze and file fraud charges against Steve Chen and 13 entities based in the state of California. According to the regulator, Chen falsely promised investors they would make money in an investment venture involving amber holdings.

Continue reading "SEC Case Headlines: New Jersey Fund Manager Faces Charges Over $1.1M Ponzi Scam, $32M Fraud Scam Involving Amber Mining is Halted, and Executives Face Charges for Allegedly Bilking Investor in Stock Fraud " »

September 5, 2015

Ex-NHL Star’s Financial Manager Convicted of Multimillion-Dollar Fraud, Ponzi Scam

Joseph Zada, the man accused of bilking former Red Wings hockey player Sergei Fedorov of $43 million, was convicted of fifteen counts of mail fraud. Prosecutors say that Zada was involved in a $50 million Ponzi scam that went on for a decade.

Zada’s other victims included an ex-Olympic equestrian champion, a pawnbroker, a jeweler, a veterinarian, several hockey players, and dozens of others. He is accused of telling investors that he was placing their money in oil and currency trading via a secret board based in London. Instead, he spent their money on funding his expensive lifestyle.

Zada pretended to be a rich businessman with oil ventures in Saudi Arabia. He touted quick and substantial profits. When investors asked for their money back he claimed he was waiting for a billion dollar inheritance from Saudi Arabia’s royal family. He faces up to 20 years behind bars for each count of mail fraud.

Continue reading "Ex-NHL Star’s Financial Manager Convicted of Multimillion-Dollar Fraud, Ponzi Scam" »

August 22, 2015

FSC Securities to Be Held Accountable for $1.2M FINRA Arbitration Award Issued to Victims of Ponzi Scammer Who Faked His Death

A Financial Industry Regulatory Authority Inc. panel said that FSC Securities Corp. is responsible for a $1.2 million arbitration award for compensatory damages to investors that were bilked by Aubrey Lee Price, the infamous Ponzi scammer from Georgia who tried to fake his death to in 2012. FSC Securities is a broker-dealer with AIG Advisor Group (AIG).

The eight claimants contend that the brokerage firm did not supervise a number of brokers who sold them fraudulent securities that were part of Price’s $40 million Ponzi scam. According to their securities lawyer, Price and two other ex-FSC brokers persuaded clients to invest in the PFG fund, an unregistered investment fund, which was the main product of the scheme.

When the trading account sustained huge losses Price prepared account statements for investors that noted fake asset amounts and investment returns. The claimants believe that FSC failed to properly supervise its brokers and had numerous chances to detect that Price and the other brokers were selling away into the PFG fund while claiming “preposterous” return rates.

Price was an FSC broker from 2006 to 2008. Prior to that he worked at Citigroup Global Markets (C) and Banc of America Investment Services (BAC). Last year, a federal judge sentenced him to 30 years behind bars for bank fraud.

Continue reading "FSC Securities to Be Held Accountable for $1.2M FINRA Arbitration Award Issued to Victims of Ponzi Scammer Who Faked His Death" »

August 18, 2015

Over 14,000 Massachusetts Investors Receive Checks for Losses in $1B TelexFree Ponzi Scam

The first checks for compensation in the $1 billion global Ponzi scam involving TelexFree Inc. have gone out to over 14,000 investors in Massachusetts. Victims received $2.9 million in total as part of a settlement with Fidelity Cooperative Bank. This is only a small portion of the alleged losses.

About 1.9 million investors are still waiting to get any financial relief in the case, which affected not just people in the US as the scam spread globally and virally online and by word of mouth. The alleged Ponzi scam involved fraudsters selling inexpensive Internet phone service for long distance calls. They were recruited as members for $1,400 increments. Big financial returns were promised to investors for bringing in other investors and using Internet ads to market the business. While early investors made money, many others suffered substantial losses.

Telex-Free was shut down in Brazil in 2013, but the Ponzi operation continued in Massachusetts where it was headed up by James Merrill and Carlos Wanzeler. Both deny the criminal and civil charges.

Continue reading " Over 14,000 Massachusetts Investors Receive Checks for Losses in $1B TelexFree Ponzi Scam " »

August 5, 2015

Houston-Area Business Man Charged with Running $114M Texas Ponzi Scam

The Securities and Exchange Commission is charging Frederick Alan Voight with Texas securities fraud in running an alleged $114 million Ponzi scam that bilked investors. The regulator claims that the Houston-area man defrauded over 300 investors via multiple offerings of promissory notes that his companies DayStar Finding LP and F.A. Voight & Associates LP had issued.

In its complaint, the SEC said Voight recently raised $13.8 million that he claimed would be a loan to InterCore Inc., a company start up. The loan was supposed to fund the deployment of a DADS—a Driver Alertness Detection System.

Voight allegedly told prospective investors that the technology was to be installed in millions of buses and trucks. He promised 30 to 42% yearly interest rates on the promissory notes to be paid out by the company, which he said it could do “many, many times over.”

However, the Commission claims that Voight as aware he was making false claims because he was an InterCore board member and knew that the company was financially beleaguered and could not repay the loans. Voight allegedly used the money from new investors to pay off earlier investors or funnel them to InterCore via another two partnerships that belonged to him. The money would then be sent to subsidiary InterCore Research Canada, Inc.

Continue reading "Houston-Area Business Man Charged with Running $114M Texas Ponzi Scam" »

August 2, 2015

SEC Cases: Pennsylvania Lawyer is Charged with Insider Trading, San Diego Investment Adviser is Accused of Stealing Client Funds, and New York Man is Arrested for Fraud

SEC Accuses Pennsylvania Attorney of Insider Trading
The U.S. Securities and Exchange Commission is charging Herbert K. Sudfeld with insider trading ahead of the announcement that Nationwide Mutual Insurance Company and Harleysville were about to merge in a $760 million deal. The regulator contends that the Pennsylvania attorney illegally traded on the information, which caused Harleysville’s stock price to rise 87% when the announcement went public.

Sudfeld, who was a real estate partner at a law firm that gave Harleysville counsel on the merger, learned about the impending deal from a conversation involving a lawyer and the legal assistant they shared. That attorney was involved in the deal.

Sudfeld is accused of stealing the information and buying Harleysville stock. After the merger was announced, he purportedly sold the share he had bought, making about $79,000 in illegal profits. Prosecutors in Pennsylvania have filed a parallel criminal action against him.


San Diego Investment Adviser Accused of Stealing Client Money, Running Ponzi Scam
Paul Lee Moore and his now defunct investment advisory firm are charged with bilking client funds and operating a Ponzi scheme. According to the complaint filed by the SEC, Moore and Coast Capital Management raised $2.6 million from clients, and he allegedly siphoned almost $2 million for his personal spending.

The regulator said that Moore took the rest of the money and, in Ponzi scam-fashion, paid earlier clients with funds brought in by new clients. He is accused of sending out bogus account statements to clients, as well as sharing these statements with prospective clients. The California investment adviser purportedly lied about his educational background, employment history, as well as about how much Coast Capital managed in assets.

Continue reading "SEC Cases: Pennsylvania Lawyer is Charged with Insider Trading, San Diego Investment Adviser is Accused of Stealing Client Funds, and New York Man is Arrested for Fraud" »

July 31, 2015

Ex-Head of Chicago Investment Firm Gets 6-Year Sentence for $9M Ponzi Scam

Neal Goyal, the former head of Caldera Investment Group and Blue Blue Horizon Asset Management, has been sentenced to six years behind bars for bilking over 40 investors of more than $9 million in a Ponzi scam. Prosecutors contend that over the eight years that the 34-year-old ran the scam, pretending to be a hedge fund manager, he made just limited trades and on only some of the funds. The majority of his victims were family and friends from his Hindu community.

Goyal told investors that the four private funds he managed would employ a long-short trading strategy. Instead, he ran a Ponzi scam, paying off earlier investors with new investors' money.

He would go on to use over $2 million of their funds on his lavish lifestyle, including a $1.5 million home, luxury car leases, travel, and expensive dinners. He also put some of the money into his wife’s business ventures and his father-in-law’s failing tavern. He took his company staff on an all-expenses-paid vacation to the Dominican Republic. The group trip included a yacht and butler service at a five-star resort.

Continue reading " Ex-Head of Chicago Investment Firm Gets 6-Year Sentence for $9M Ponzi Scam " »

July 7, 2015

SEC Stops Ponzi Scam that Targeted Portuguese and Spanish Communities

The Securities and Exchange Commission is filing fraud charges against DFRF Enterprises for running a Ponzi scheme and pyramid scam that targeted investors belonging to Portuguese and Spanish-speaking communities. According to the regulator, the company claimed to run over 50 gold mines in Africa and Brazil even though its revenues came solely from selling membership interests to investors.

The alleged scammers raised over $15 million, bilking at least 1,400 investors. The owner of DFRF, Daniel Fernandes Rojo Filho, allegedly took over $6 million of this money to pay for personal expenses, including luxury vehicles and other lavish spending.

The regulator contends that in 2014, Filho and others started selling memberships in DFRF. Investors were recruited through a pyramid-like scam, with commissions paid to earlier investors for recruiting new members, much like a Ponzi scheme.

Many of these sales took place through meetings with prospective investors in hotel conference rooms, businesses, and homes, mostly in Massachusetts. The investment opportunity was also promoted on video through the Internet. In less than a year, membership sales rose from under $100,000 in June 2014 to over $4 million for the month of March 2015.

Continue reading "SEC Stops Ponzi Scam that Targeted Portuguese and Spanish Communities " »

June 27, 2015

Federal Judge in Texas Says Law Firms Must Face Lawsuit Seeking Creditor Payments in Stanford Ponzi Fraud

Four years after Allen Stanford’s $7 billion Ponzi scam was uncovered in 2009, investors who lost money in the scheme are still trying to recover their funds. The 65-year-old Stanford is serving 110-years behind bars for selling investors bogus high-yield CD’s through his Stanford International Bank based in Antigua. Prosecutors said he used customers’ money to fund his expensive lifestyle.

This week, U.S. District Judge David Godbey in Dallas said that law firms Proskauer Rose and Chadborne & Parke will have to contend with claims brought by a committee of these investors and Ralph S. Janvey, the court-appointed receiver for Allen Stanford’s companies.

Chadborne and Prosakuer had sought to have this lawsuit, which seeks to hold the two law firms liable for legal malpractice, dismissed. The plaintiffs contend that Thomas Sjoblom, who worked at the two firms, allegedly obstructed regulator probes into the Ponzi Scam and helped Stanford conceal the SEC’s investigation from auditors.

Now, the Texas-based judge has decided that Janvey and the investor committee can pursue claims of negligent supervision, professional negligence, civil conspiracy, and aiding and abetting fraud against the two firms. Judge Godbey stated that the allegations suggest that Sjobolm knew that Stanford was potentially running a Ponzi scam, and this awareness was imputed to both firms. Godbey said that the plaintiffs have alleged that the defendants knew that Stanford was engaged in sufficient wrongdoing.

Continue reading "Federal Judge in Texas Says Law Firms Must Face Lawsuit Seeking Creditor Payments in Stanford Ponzi Fraud" »

June 8, 2015

Former Stockbroker Pleads Guilty to Fraud Involving $6M Ponzi Scam

Sunil Sharma, a former stockbroker who hasn’t been part of the securities industry for over 10 years, has pleaded guilty to fraud charges. The 68-year-old is facing 20 years behind bars for starting what prosecutors claim was a $6 million Ponzi scam that ran from 2008 to 2014.

He allegedly raised $8.36 million from over 30 investors, paying old investors with new investors’ money. According to officials, Sharma misappropriated some $2.5 million of investor funds for his own spending, including a cruise trip, leases for expensive cars, and a down payment on a house.

Investors received statements showing gains even as Sharma continued to lose their funds. He falsely claimed that investors were putting their money in safe investments when really the day trading strategy he employed was high risk.

Sharma was formerly affiliated with Raymond James (RJF), Merrill Lynch (MER), and A.G. Edwards. He let go of his license following the 9/11 terror attacks after his clients suffered huge losses. According to lawyers, he became an insurance salesman. He started teaching seminars about different kinds of annuities and insurance that his clients could buy.

Following his participation in an options trading workshop in 2007, Sharma started promoting his day trading strategy using options. He established Gold Coast Holding, LLC to trade the options. At first, he started making profits of over 10%. Prosecutors say that Sharma thought he could generate a better return on his insurance clients’ money if he day traded their funds and kept the difference.

He lied to customers, falsely stating that Gold Coast was a very safe way to make retirement money every month. He claimed that the funds would be part of a diversified portfolio, pooled with the funds of others, used to purchase bonds from emerging markets broad, and overseen by Goldman Sachs (GS). Investors were guaranteed a 6-7% rate of return for up to three years. It was suggested that they liquidate their retirement accounts and annuities.

Sharma reportedly planned to buy the bonds from Brazil, Indian, China, and Russia with some of the investor money and would day trade the rest. He never bought any bonds. Instead, Gold Coast and another company that he later set up day traded options via TDAmeritrade’s (AMTD) “thinkorswim” trading platform.

Right before the investment scam failed, Sharma ceased to trade in option spreads and started buying straight “put” and “call” options. Sharma hoped that this new strategy would let him get back his investment losses. Instead, he ran out of funds earlier this year.

Investors have sustained huge losses because of Sharma’s Ponzi scam.

Ponzi Scam
Recovering funds lost in a Ponzi scam can be challenging, which is why you should speak with an experienced broker fraud law firm to explore your legal options. In certain instances, third parties, such as banks, clearing firms, and broker-dealers, can be held liable for the Ponzi scammer’s actions for their inadvertent participation, failure to properly supervise the fraudster, or another part they might have played in allowing the scheme.

The best way to maximize your chances of recovering your losses in any fraud case is to work with a Ponzi fraud lawyer.

Day Trading Broker Steals More Than $6 Million from Investors in Long-Running Ponzi Scheme, FBI, June 2, 2015

May 31, 2015

Thousands More Investors in Bernard Madoff Ponzi Scam Could Get Financial Recovery

According to Richard Breeden, the special master of the Madoff Victim Fund, about 11,000 more investors who sustained losses in the Bernard Madoff Ponzi scam could recover some of their funds. He also said that the number could possibly double as the U.S. government assesses more of the claims.

Breeden said that as of the middle of this month his office had looked at over 34,000 of the more than 63,700 claims it had received from investors who were claiming $77.3 billion of losses. They are from 135 countries.

The Madoff Victim Fund is holding $4.05 billion in investor compensation and is separate from the compensation being distributed by Irving Picard, who is the trustee of Bernard L. Madoff Investment Securities LLC. While Picard has been compensating investors who directly placed their funds with Madoff, Breeden is working to compensate investors who had accounts at feeder funds and other entities that then sent their money to Madoff for investment.

Picard has distributed about $7 billion of the $10.7 billion he has recovered. Upon court approval in July he will likely be able to distribute another $1.2 billion.

Meantime, Madoff is serving 150 years behind bars for conducting what has been dubbed the largest Ponzi fraud ever that bilked not just ordinary investors but also the rich and famous. Thousands sustained major loses even though many of them were sent statements making it appear as if their money had grown significantly. The scam fell apart in 2008. Tens of thousands of investors lost billions of dollars.

In other Bernard Madoff Ponzi scam news, his accountant, David Friehling has been sentenced to time served, two years supervised release, and home detention. Friehling, in 2009, pleaded guilty to investment adviser fraud, securities fraud, multiple counts of making false filings with the SEC, and other charges. After cooking the books for Madoff for nearly 17 decades, he later turned federal witness. Friehling's cooperation is what led to his lighter sentence.

Ponzi Scams
In a Ponzi scheme, investors are paid with the money brought in by newer investors to make it seem to the earlier investors as if a profit is being made. Because there is no real profit, eventually the money does run out and investors are left sustaining losses. Meantime, the Ponzi scam mastermind and his/her helpers profited from stealing investor funds.

Signs of a possible Ponzi scam:

• The promise of high returns with minimal risks
• Returns that are too consistent
• Mistakes in investment documents
• Unregistered investments
• Difficulties exiting an investment investment
• Investment strategies that are too complex
• Not getting an expected/scheduled payment
• Sellers that are unlicensed

At Shepherd Smith Edwards and Kantas, LTD LLP our securities lawyers are here to help investors recover their financial losses. Contact one of our Ponzi scam attorneys today.

Thousands more Madoff victims may get payouts, Reuters, May 29, 2015

Madoff sentenced to 150 years
, CNN, June 30, 2009

Bernie Madoff's Rockland accountant sentenced
, Lohud, June 2, 2015

Ponzi Scams: Madoff Victims to Get $93M, Fraud Lawsuits Name Insurance Brokerage Head in $10M Scheme, Stockbroker Fraud Blog, March 24, 2015

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014

April 29, 2015

Ex-Sonics Special Assistant Accused of $4M Wire Fraud, Ponzi Scam

Steve Gordon, who used to be the special assistant to the Seattle SuperSonics basketball team, has been charged with federal wire fraud. Gordon is accused of using false pretenses to initiate at least $4 million in business deals. The criminal charges come after a 10-month probe by the Federal Bureau of Investigation.

Gordon, who also worked with the Minnesota Timberwolves and the Portland Trail Blazers, is accused of creating a Ponzi scam that involved at least 30 investors. Newer investors’ money was allegedly used to pay earlier investors their promised returns.

The wire fraud count accuses him of using misrepresentations, fraudulent promises and false pretenses, and concealing material facts to solicit money from investors. He also purportedly used his friendship with ex-Microsoft SCEO Steve Ballmer by falsely claiming that the billionaire was his partner and financial backer. However, according to the fraud charges, Ballmer never promised to give Gordon any money.

Gordon is said to have used that relationship and his connections with NBA players to secure partnerships with financial and legal professionals to give him more credibility. During phone calls to potential investors he allegedly had someone pretend to be Ballmer, as well as different government officials who supposedly were involved in overseeing the financial and banking industries.

One investor, ex-Australian basketball player Wayne Carroll, said that he and Knox Basketball, the amateur basketball federation in Australia of which Carroll is executive director, paid Gordon $4,000 monthly for two years as a consultant. Carroll said that Gordon told him Ballmer was ready to invest in big basketball promotion ventures in China and Australia. However, the deal with Ballmer never happened.

Gordon is also accused of telling investors that Ballmer promised to help him establish a multi-million dollar fund and get him a position as a minority owner in the Sonics in the future—both were lies. In 2013, Ballmer cut all ties with Gordon.

Steve Gordon, Sonics special assistant, charged with federal wire fraud, The Seattle Times, April 20, 2015

Ponzi scam, SEC


More Blog Posts:
SEC Sues Ex-New York Giants Cornerback Over Alleged Ponzi Scam, Stockbroker Fraud Blog, April 8, 2015

Ponzi Scams: Madoff Victims to Get $93M, Fraud Lawsuits Name Insurance Brokerage Head in $10M Scheme, Stockbroker Fraud Blog, March 24, 2015

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014

April 8, 2015

SEC Sues Ex-New York Giants Cornerback Over Alleged Ponzi Scam

The U.S. Securities and Exchange Commission is suing a former New York Giants player for allegedly helping to run a Ponzi scam. According to the regulator, Will Allen and his business partner Susan Daub raised over $31 million from investors, promising them profits from loans made to professional athletes. Allen and Daub managed Capital Financial, which was compromised of several companies.

The SEC said that the alleged financial scam took place from 7/12 through 2/15 and involved over 40 people investors, who were told they could make up to 18% in interest. The Commission contends that Allen and Daub misled investors about the circumstances, terms, and the existence of certain loans.

For example, according to the complaint, last year, at least two dozen investors handed over approximately $4 million that was supposedly going to go toward a $5.6 million loan for an NHL player. They were given a copy of a promissory note and loan agreement that was supposed to have been signed by both Allen and the player. The player was to make monthly payments.

However, says the regulator, the loan was a sham and the player never signed the agreement or promissory noted nor did he ever receive a $5.65 million loan. That said, earlier this year, Capital Financial submitted proof of claim, after the NHL player filed for bankruptcy, listing the company as one of its creditors. The amount was for $3.429,750, along with a $3.4 million promissory note that the player signed, as well as a loan agreement. Still, that figure is a far cry from the $5.6 million loan that investors told they were getting involved in.

Also, some $7 million of client funds was allegedly used to fill a payment shortfall to other investors, while other of their funds is said to have gone toward personal spending at nightclubs and casinos. A federal court has since frozen the assets related to the alleged Ponzi scam and the Commission wants to impose penalties.

If you were the victim of a Ponzi scam and sustained substantial losses, contact our securities fraud law firm today.

SEC Accuses Ex-Giants Cornerback Allen of Running Ponzi Scheme
, Bloomberg, April 7, 2015

Did Ex-NFLer Will Allen's Alleged Ponzi Scheme Prey On Jack Johnson?, DeadSpin, April 7, 2015


More Blog Posts:
LPL Financial Should Pay $3.6M in Fines, Repayments for REIT Sales to Older Investors, Says NH Regulator, Stockbroker Fraud Blog, April 7, 2015

SIFMA Says White House Isn’t Entirely Right About The Cost of Abusive Trading to Investors, Stockbroker Fraud Blog, March 30, 2015

Barclays Must Pay Former Trader $9M, Ex-Raymond James Broker Gets Back $650K Award, Institutional Investor Securities, April 6, 2015

March 24, 2015

Ponzi Scams: Madoff Victims to Get $93M, Fraud Lawsuits Name Insurance Brokerage Head in $10M Scheme

Investors who were bilked in Bernard Madoff’s Ponzi scam will be getting back another $93 million. Madoff Trustee Irving Picard said that Defender Limited and related entities have consented to give back that amount, which they received from investing with the Ponzi mastermind. As part of the agreement, the $93 million will be withheld from the over $422 million that Defender is waiting to get back for its own losses in the scam.

To date, Picard has gotten back over $10.6 million of investors' $17.3 billion in principal. This is the latest deal reached between the trustee and a so-called feeder fund. These funds pooled investor money and then sent the cash Madoff’s way. Bogus returns were issued to the funds, which gave the money to their individual investors.

Picard contended that the parties behind the Defender fund were aware, or if not then they should have been, that Madoff’s company was a fraud. The $93 million is representative of all the money that Defender withdrew from its fund from its formation in 2007 until the end of 2008 when Madoff liquidation proceedings began. As part of the agreement, parties involved with Defender will cooperate with Picard to get back the $550 million. Picard has also reached deals with feeder funds Premo Fund, Herald Fund SPC, and Senator Fund SPC.

In other Ponzi scam news, A number of securities fraud lawsuits have been submitted accusing Loren Holzhueter of racketeering and fraud related to his alleged running of a $10 million Ponzi scam. The 69-year-old was the head of ISC Inc., an insurance brokerage and investment business. Many of his investors were retired and had limited financial resources.

In November, IRS investigators went to Holzhueter’s offices and confiscated records because they suspect him of running the Ponzi scheme. Earlier this year, the U.S. Securities and Exchange Commission sued Holzhueter, his assets were frozen, and a monitor was appointed to take charge of his business.

The SEC claims that Holzhueter lied to investors, who had been allowing him to handle millions of dollars over the last several years. They claim he said that investor funds would be placed in a special investment account and they could take their money out whenever they wanted. Others were purportedly told that their money went into mutual funds, Individual Retirement Accounts, or other investments. Instead, claims the agency, these investments were not executed and investors' money were mixed in with other ISC revenue.

Now ISC’s investors want their money back. According to the securities cases, they now believe that the regular financial reports given to them by Holzhueter were bogus and that the defendants—Holzhueter’s wife is one of them—misappropriated their funds for their personal use. The SEC said that Holzhueter and his family may have collected over $500,000 from accounts that contained investor money and used some $400,000 for a company that belonged to him. More than 122 investors may be entitled to financial recovery.

Last week, the SEC requested that the district court judge prevent ISC from paying its lawyers because of concerns that the company may not be capable of making any significant lump sum payments. The Commission does not believe that Holzhueter’s lawyers should get preferential treatment when so many others, including creditors and bilked investors, remain unable to get their money back.

Madoff Trustee Strikes $93 Million Deal with Feeder Fund, The Wall Street Journal, March 24, 2015

Judge freezes assets of man SEC accuses of running Ponzi scheme, Milwaukee Wisconsin Journal Sentinel, JSonline.com, January 28, 2015

The Madoff Recovery Initiative, Madoff Trustee


More Blog Posts:
SEC Judge Orders Two Investment Advisers to Pay Over $6.3M Related to Bernard Madoff-Linked Hedge Funds, Stockbroker Fraud Blog, January 9, 2015

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014

DOJ’s Fund for Madoff Victims Has Received 51,700 Claims Worth $40B, Institutional Investor Securities Blog, May 14, 2014

March 16, 2015

Ex-Green Bay Packers’ Bruce Wilkerson Awarded $2M Against Resource Horizons Group Over Ponzi Scam Involving Rogue Broker

Bruce Wilkerson, the former tackle of the Green Bay Packer, has been awarded $2 million against Resource Horizons Group. The ex-NFL player lost $650,000 in an alleged Ponzi scam run by Robert Gist, an alleged rogue broker at the Georgia-based financial firm.

Unfortunately for Wilkerson the former pro football player is unlike to get his money back, which was a substantial chunk of his net worth. The now defunct broker-dealer closed shop in November after it was slapped with more $4 million in judgments in two arbitration awards that it could not afford to pay. The Financial Industry Regulatory Authority has suspended the firm for not complying with the award, as well as canceled its license.

The arbitration awards are also linked to Gist, who in 2013 consented to pay $5.4 million to resolve Securities and Exchange Commission charges accusing him of running the Ponzi scam and converting the money for personal use over a 10-year period. At least 32 customers were allegedly bilked.

Gist is accused of using his Gist, Kennedy & Associates Inc., an entity that is not registered nor is it affiliated with Resource Horizons, to make false customer statements. The firm hired him in 2001 even though he already had customer disputes on record.

The $4 million FINRA arbitration awards were also against Resource Horizons executives David Miller and Kelly Miller. They are accused of failing to supervise Gist, not recognizing warning signs that something was amiss, as well as of negligence. The couple was held jointly liable with the firm, and they have since filed for bankruptcy protection. According to InvestmentNews, Miller is now with Kovack Securities Inc.

Unfortunately, professional athletes are among those targeted for securities fraud. Our securities fraud law firm represented many who have lost millions of dollars because their investments were improperly handled, they received bad investment advice, or were blatantly defrauded. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Ex-NFL player left out in the cold after $2 million award, InvestmentNews, March 16, 2015


More Blog Posts:
Resource Horizons Group’s Future Hangs in Balance Following $4M FINRA Arbitration Award, Stockbroker Fraud Blog, September 25, 2014

Sun Antonio Spurs Star Tim Duncan Files Texas Investment Adviser Fraud Case, Stockbroker Fraud Blog, January 31, 2015

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014