January 23, 2016

SEC Wants Lawyer to Pay $2.5M Penalty in Texas Securities Case

The U.S. Securities and Exchange Commission has filed a motion for summary judgment in its case against Gregory Jones. The Texas lawyer is facing civil charges accusing him of defrauding investors in two securities offerings, including a fracking water filtration deal and an oil and gas exploration venture.

Now, the SEC wants Jones to pay a $2.5M civil penalty, disgorgement of $985K, further disgorgement of $480K, and $17K in prejudgment interest.

The regulator, in its original complaint that it submitted last year, claims that Jones represented Swiss and French investors who invested about $6M in Edwards Exploration. The attorney had a deal with the company in which he would get paid for providing due diligence related to the investors' shares. The fees he received under the agreement were about $480K. However, claims the Commission, Jones did not tell investors that the money came from their principal cash.

The SEC also says that from ’13 through at least ’14, Jones sold and offered securities that were put out by Aquaphex, which was supposedly a business that was involved in recycling fracking water. He raised about $64K from nine investors. However, contends the Commission, the investment documents for the company included false statements, including a claim that investors could end up making over 115% a year on the securities the they bought.

Continue reading " SEC Wants Lawyer to Pay $2.5M Penalty in Texas Securities Case" »

January 22, 2016

Investors Files Texas Securities Case Alleging Violations by United Development Funding IV

Investors have filed a class action securities case claiming that the Texas nontraded real estate investment trust United Development Funding IV (NASDAQ:UDF) and certain of its officers violated federal securities laws. The complaint come a month after the Harvest Exchange website published a report accusing the Company of running a Ponzi-like scam. The UDF umbrella is accused of raising capital to bail out its earlier vintage entities.

On December 10, 2015, the day that the report went out, UDF’s shares dropped significantly. The Company then put out a press release disclosing that its UDF IV and UDF III have been cooperating for nearly two years with the U.S. Securities and Exchange Commission, which has been conducting a non-public probe since early 2014. Following that announcement, Company shares fell even further, negatively impacting investors.

The Texas securities case accuses the defendants of, from June 4 – December 10, 2015, failing to disclose that:


· New UDF companies gave older UDF companies substantial liquidity, letting them pay earlier investors.

Continue reading "Investors Files Texas Securities Case Alleging Violations by United Development Funding IV" »

January 14, 2016

FINRA Files Securities Case Against Texas Firm Over Churning Allegations

The Financial Industry Regulatory Authority claims that Caldwell International Securities Corp. engaged in the churning of customer accounts and that this purportedly resulted in $1 million in excess commissions for the firm. The self-regulatory organization says that the alleged violations began in 2011.

According to FINRA, the Texas-based company’s founder Greg Caldwell and supervisors Lennie Freiman and Paul Jacobs decided to ignore that four OSJs (offices of supervisory jurisdiction), three in New York and one in New Jersey, were churning customer accounts and making yearly commission revenues of at least 100% of the customers' equity.

The regulator said that brokers at the OSJs contacted foreign investors to persuade them to take part in speculative stock and option trading. Even after 15 customers lost $1.1M and paid over $1M in commissions and fees, Caldwell and its supervisors purportedly still did not take any action.

Cost-to-equity ratios in customer accounts are believed to have varied from 18% to over 100%. The firm is also accused of not reporting that it had been the subject over three dozen customer complaints.

Continue reading "FINRA Files Securities Case Against Texas Firm Over Churning Allegations " »

November 23, 2015

Man Pleads Guilty to $5.4M Texas Investment Fraud

Robert B. Hahn has pled guilty to wire fraud and money laundering in a $5.4M Texas financial fraud that bilked about 100 investors. He faces up to 20 years behind bars.

According to information presented before the judge, from 1/07 to 2/15, Hahn, who was an insurance agent, claimed to represent doctors in Tyler, Texas that were supposedly raising funds for the construction and renovation of health care facilities, debt retirement, and the purchase of medical equipment. Investors were told that the doctors would pay a 20% yearly interest rate on investments and loans.

Instead, Hahn took investors’ money and deposited them into his personal accounts or his insurance business. He would make cash “interest” payments to investors. This money was supposed to be a 20% return on the fake investments or loans when, in truth, the funds were, in Ponzi scam-like fashion, coming from the money given to him by other investors.

Continue reading "Man Pleads Guilty to $5.4M Texas Investment Fraud" »

November 16, 2015

Southwest Securities Found Liable for $5.45M in Texas Investment Fraud

A Dallas jury says that Southwest Securities Inc., which is a broker-dealer owned by PlainsCapital subsidiary Hilltop Holdings, and broker Leighton Stallones are liable for statutory fraud, fraud, and conspiracy and violation of securities laws related to a 2007 real estate scam. Now, the firm must pay two investors, SSST Riviera Investments Ltd. and Gerritsen Beach Investments Ltd., more than $5.45M in the Texas securities case—$2.9M and $2.55M, respectively.

According to the two entities, Stallones assisted developer Stephen Jemal in concealing the scheme by lying about how his brokerage accounts were doing. Jemal is accused of modifying account records to make it seem as if he had millions of dollars when some of his accounts held under $1,000.

Continue reading "Southwest Securities Found Liable for $5.45M in Texas Investment Fraud " »

September 26, 2015

Broker Fraud News: Ex-Dallas Broker Faces Prison, Fintegra Files for Bankruptcy, and Broker Who Promised Investors They’d Double Their Money Can No Longer Sell Securities

Ex-Dallas Broker Accused of Texas Securities Fraud Face Five Years
Wade Lawrence, a former Dallas broker, has pleaded guilty to Texas securities fraud. As part of his plea bargain the 43-year-old will have to forfeit $1.5 million and pay over $250,000 in fines. He also faces up to five years behind bars for his $2.1 million securities scam.

According to prosecutors, over the course of working for several securities firm over the last seven years, Lawrence falsely offered risky investments with the promise of 20% to 100% returns. He lost a significant amount of money and invested just a portion of investors’ funds. Lawrence used a lot of investors' cash to cover his own living expenses, personal travel, as well as pay for fancy jewelry. The Associated Press reports that to date Lawrence has given back $581,000 to investors.


Minnesota-Based Brokerage Firm Files for Bankruptcy
Broker-dealer Fintegra has filed for bankruptcy in U.S. Bankruptcy Court in Minnesota. The firm had to stop its securities business in June after it was hit with a $1.5M arbitration award that placed it under the $250,000 regulatory net capital requirements of minimum.

According to the FINRA arbitration panel, Finestra and a broker violated state anti-fraud provisions related to the sale of Miasole Investments II, an unregistered security. The securities fraud complaint, submitted by Fintegra customers, states that the broker-dealer could only pay $300,000 of the award. However, InvestmentNews reported that the attorneys for one of the clients said that to date none of the award has been paid.

Fintegra, in its FOCUS report with the SEC, admitted that it had been named in five separate lawsuits, all involving the alleged sale of securities that were either unsuitable or violated state securities laws.

Continue reading " Broker Fraud News: Ex-Dallas Broker Faces Prison, Fintegra Files for Bankruptcy, and Broker Who Promised Investors They’d Double Their Money Can No Longer Sell Securities" »

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" »

July 2, 2015

SEC Appeals Its In-House Agency Judge’s Decision to Throw Out Charges Against Financial Advisers Paid by Fidelity to Push Specific Mutual Funds

Securities and Exchange Commission employees are appealing a ruling by an administrative law judge dismissing charges against two financial advisers accused of not notifying clients that Fidelity Investments (FNF) had paid them to sell specific mutual funds. In the Texas securities case, SEC Administrative Law Judge James E. Grimes rejected claims that The Robare Group and two of its owners violated the law by failing to adequately disclose that they had a financial relationship with the brokerage firm. Grimes said that from listening to Mark L. Robare and his son-in-law Jack L. Jones Jr. testify, he was hard pressed to imagine them attempting to bilk anyone. This is one of the few cases presided over by one of its judges that the SEC has lost.

Fidelity is The Robare Group's custodian. For the last 11 years, the registered investment advisor has been part of a program in which Fidelity pays it a portion of the revenue earned from the sale of certain third-party mutual funds. The payment goes to the adviser who made the mutual fund sale happen.

Advisors are given access to the funds without any transaction fees. As the custodian, Fidelity refers to payments made to advisers not as commission but as compensation for shareholder administrative fees.

In their appeal, the SEC staffers said that they feared Grimes’ ruling in this case establishes a troubling precedent that shifts the burden of full disclosure of a conflict interest from an investment adviser to a compliance consultant. They said this could allow an investment adviser to be excused from certain securities violations as long as he has a compliance consultant that has not “affirmatively” objected to a “particular disclosure.”

Continue reading "SEC Appeals Its In-House Agency Judge’s Decision to Throw Out Charges Against Financial Advisers Paid by Fidelity to Push Specific Mutual Funds" »

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 18, 2015

San Antonio Spurs’ Tim Duncan Addresses $20M-Plus Texas Securities Case Against His Former Financial Adviser

Earlier this year, our securities law firm published a blog post reporting that San Antonio Spurs’ Tim Duncan had filed a Texas securities case against financial representative Charles Banks. Duncan contends that due to unsuitable recommendations made to him by Banks, he allegedly lost some $25 million.

Banks, a private-equity investor, was Duncan’s adviser for nearly two decades, since the beginning of his professional sports career. The NBA All-Star says that Banks persuaded him to get involved in investments that were bad for Duncan but good for the financial adviser. He also claims that Banks forged his signature and withheld his return on a loan. The San Antonio Spurs star says that over the years, he’s invested millions of dollars in products and businesses that Banks either owned or had a financial stake in.

Meantime, Banks claims that Duncan’s losses are because of the player’s own impatience or due to misunderstandings. He argued that Duncan is using the Texas securities case to exit certain limited partnership investments.

Continue reading "San Antonio Spurs’ Tim Duncan Addresses $20M-Plus Texas Securities Case Against His Former Financial Adviser" »

June 9, 2015

Trustee Says that Texas Company Life Partners Holdings Bilked Investors

According to bankruptcy trustee H. Thomas Moran II, Life Partners Holdings (LPHIQ) ran a scam to bilk its investors. The Texas company, which sold over $1.3 billion of fractional interests in individual life insurance policies to over 20,000 individuals, is accused of unnecessarily demanding that a lot of investors pay yearly premiums on policies that had enough funds to pay for future premiums. Many of these investors were forced to resell or abandon these investments while company insiders made money.

Now, Moran wants a court to give him permission to pool all of the policies and use accessible cash to pay premiums where necessary. This would relieve investors of having to continue to put more of their funds into the scam to keep their investments.

Life Partners used to be a huge player in the secondary market for life insurance. The company makes arrangements to purchase life insurance policies from people. Life Partners would then divide up the policies into fractional interests. Retail investors would buy the rights to collect on them.

Continue reading "Trustee Says that Texas Company Life Partners Holdings Bilked Investors" »

May 11, 2015

Texas-Based Retirement Planning Firm Accused of Making False Claims to Investors About Life Settlements

The Securities and Exchange Commission is charging Novus Financial and principals Brady J. Speers and Christopher A. Novinger with making false claims about life settlements. The regulator filed its claim in the U.S. District Court for the Northern District of Texas.

According to the SEC’s complaint, from ’12 – ’14, the retirement planning firm and its principals sold about $4.3 million in life settlement interests to 26 investors. Speers and Novinger are accused of describing the investments as secure and safe. Both were purportedly willing to manipulate the financial data of investors to make the sale happen.

The Commission also claims that the firm, Novinger, and Speers used a net worth calculator that was bogus. This allowed a number of prospective investors to improperly qualify to buy the interests. In one instance, the non-homestead assets of one couple were falsely inflated to $1.5 million from $263K because of the calculator.

The investors were also supposedly told that the interests were safe like CDs, guaranteed, and federally insured. However, as David Peavler, SEC Associate Director of the agency’s Forth Worth Regional Office, pointed out, life settlements are never free of risk, guaranteed, or federally insured.

The SEC also is charging Speers Financial Group LLC and ICAN Investment Group for acting as unregistered brokerage firms. The Commission wants injunctive relief, financial penalties, and the return of ill-gotten gains plus interest.

Our Texas securities fraud law firm is here to help investors recoup their losses. If you sustained losses from life settlement fraud that you suspect may be a result of broker negligence or wrongdoing, please contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Read the complaint (PDF)


More Blog Posts:
Killeen Man Accused of Texas Securities Fraud Targeting Military, Stockbroker Fraud Blog, April 23, 2015

Texas Securities Scam Allegedly Bilked Investors of $4.4M, Stockbroker Fraud Blog, April 18, 2015

Another Institutional Investor Fraud Lawsuit Accuses American Realty Capital Properties Of Violating Securities Laws, Institutional Investor Securities Blog, January 26, 2015

April 23, 2015

Killeen Man Accused of Texas Securities Fraud Targeting Military

The U.S. Securities and Exchange Commission is accusing Leroy Brown Jr. of Texas securities fraud. Brown, a U.S. army veteran, allegedly solicited ex- and current members of the military and others to invest with him and his firm LB Stocks and Trades Advice.

Among his purported wrongdoings are presenting his firm as SEC- and Financial Industry Regulatory Authority-registered, when it is neither, touting himself as holding all securities licenses, which he does not, and creating a bogus sense of success and legitimacy via numerous misrepresentations to get people to invest. Brown also allegedly persuaded investors to buy $1,000 membership certificates in the firm’s stocks to get involved in purported investments in undeveloped real estate that were purportedly “guaranteed” to double or even triple their money. Instead, said the SEC, he took investors’ funds and placed the cash in his own accounts. The Commission believes the Texas securities scam has gone on for about sixteen months.

Affinity Scams
This type of fraud targets members of an identifiable group. Often, the fraudster will be a group member or have some other affiliation. Affinity scams take advantage of the friendship and trust in the group, with members persuaded in part to invest because of the “trusted” connection.

Our Houston securities fraud law firm represents individuals and institutions that have been the victim of a Texas financial scam.

Ways to Avoid Affinity Fraud:

• Do your due diligence even if you know or trust the person with the investment opportunity
• Watch out for investments promising guaranteed or amazing returns
• Make sure that you agree to any investment opportunity in writing

Contact Shepherd Smith Edwards and Kantas, LLP today.

The SEC Complaint (PDF)

Investor Bulletin: Savings and Investing Basics for Military Personnel, SEC.gov


More Blog Posts:
Texas Securities Scam Allegedly Bilked Investors of $4.4M, Stockbroker Fraud Blog, April 18, 2015

Securities Class Action Says ARCP Made Over $900M From Acquisition Binge, Institutional Investor Securities Blog, April 20, 2015

Another Institutional Investor Fraud Lawsuit Accuses American Realty Capital Properties Of Violating Securities Laws
, Institutional Investor Securities Blog, January 26, 2015

April 18, 2015

Texas Securities Scam Allegedly Bilked Investors of $4.4M

The Securities and Exchange Commission has filed a lawsuit accusing Mieka Energy Corporation of Texas Securities Fraud. The oil and gas company and Daro Ray Blankenship, its president and founder, allegedly defrauded at least 60 investors located in different states of about $4.4 million. The regulator is also charging Vadda Energy Corporation, the publicly traded parent company of Mieka, of fraud and reporting violations, including deceptively promoting Mieka’s investments as a successful venture.

The scam is said to have taken place between 2010 and 2011, when investors were purportedly fooled into investing funds that were supposed to purchase energy-related investments while making big returns on other investments. The SEC said that Blankenship and Mieka engaged in boiler room cold calling to market these investments related to drilling, production, and oil and gas exploration.

To get around federal securities regulations, Mieka and Blankenship called their securities offering a “joint venture” and said that the investment interests were not securities, when really, under federal securities law, they were. The regulator said that Blankenship took all of the offering proceeds and spent the money on unrelated projects and expenses. He then used deceptive updates and misleading public filings to mislead investors.

Mieka salesmen Stephen Romo and Robert Myers are accused of taking part in the scam by selling and marketing the joint venture offerings to the public and receiving about $190,000 in commissions. The SEC has charged them with acting as unregistered brokers.

The Commission wants permanent injunctions against everyone, as well as penalties, disgoregement, and prejudgment interest. It is seeking to permanently bar Blankenship from serving as a director and officer of a public company.

Our Texas securities fraud lawyers are here to help investors get their money back.

SEC Charges Texas Oil Company and Its Founder with Securities Fraud, SEC, April 10, 2015


More Blog Posts:
Two Firms Charged in Texas With Running Fraudulent Commodity Pool Must Pay Over $7.5M, Texas Securities Fraud, April 6, 2015

Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations, Stockbroker Fraud Blog, March 6, 2015

Plaintiffs Appeal Federal Court’s Ruling Dismissing Their 401(K) Lawsuit Against Fidelity, Institutional Investor Securities Blog, April 13, 2015

April 6, 2015

Two Firms Charged in Texas With Running Fraudulent Commodity Pool Must Pay Over $7.5M

A district court in Texas is ordering a permanent injunction against RFF GP, LLC, KGW Capital Management, LLC, and Kevin White. The order is related to a 2013 Commodity Futures Trading Commission complaint charging them with fraud and misappropriation related to the running of a commodity pool.

The regulator says that defendants bilked participants when they got them to invest in the hedge fund and the commodity pool, named Revelation Forex Fund, LP. The fund was supposed to trade in off-exchange foreign currency. According to the CFTC, however, the defendants fraudulently solicited about $7.4 million from over 20 participants, misappropriating some $1.7 million from their money to cover personal spending and other matters. They allegedly fabricated the fund’s performance and lied about White’s experience in investing.

The Securities and Exchange Commission also filed its Texas securities case against White and the firms, along with a few other entities. The SEC said that White promoted a sophisticated forex trading strategy that was low risk but would lead to huge earnings. He also touted the Revelation Forex as a $1 billion hedge fund that managed to bring in returns of over 393% returns while earning an over 36% compound yearly return rate. White marketed himself as having 25 years of experience working in Wall Street when he had worked just six years as a licensed securities professional in Texas before the NYSE barred him.

Earlier this year, White was sentenced to eight years for mail fraud after pleading guilty to the charge in connection with his commodity trading fraud scam. He started his sentence this week.

Our Texas securities fraud lawyers are here to help investors recoup their losses. Unfortunately, there are those in the securities industry who continue to get away with wrongdoing and it is investors who suffer. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Read the Consent Order (PDF)

Federal Court Orders Texas-based RFF GP, LLC, KGW Capital Management, LLC, and Kevin G. White to Pay over $7.5 Million for Operating a Fraudulent Commodity Pool, CFTC, April 6, 2015


More Blog Posts:
Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations, Stockbroker Fraud Blog, March 6, 2015

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

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

March 6, 2015

Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations

The Securities and Exchange Commission is charging H.D. Vest Investment Securities with violating customer protection rules. The regulator contends that the Texas-based broker-dealer did not adequately supervise registered representatives that are accused of misappropriating customer monies.

H.D. Vest will pay a penalty to settle the charges. It has consented to get an independent compliance consultant that will help the firm enhance its supervisory controls.

The SEC’s order, which institutes a settled administrative proceeding, said that the firm did not have proper procedures and policies to oversee the external business activities of representatives. This allowed some of them to use outside businesses to bilk the brokerage firm’s customers. Some even deposited or moved customer brokerage funds into these external business accounts.

The Commission contends that the Texas-based brokerage firm did not abide by customer protection rules. The rules required H.D. Vest to conduct certain calculations and, if needed, place monies in a reserve account in case customers are hurt by misconduct. The firm did not make these calculations nor did it keep a reserve account. The SEC also said that the broker-dealer did not have the adequate supervisory controls that would have allowed it to track the movement of customer funds to the outside businesses run by registered representatives.

Last month, an ex-H.D. Vest broker was arrested and charged with wire fraud. Lewis Joseph Hunter allegedly contacted five elderly persons—they were his clients while he was at the firm— after he had already left the broker-dealer. He allegedly persuaded them to put their money in what ended up proving to be worthless stocks. They gave him some $661,500 to invest. He is accused of persuading one investor to let him transfer $150,000 from his account at HD Vest to an account that he controlled.

Hunter purportedly gave them investment advise, notified the individuals that he was using their money to buy securities, and gave them stock certificates to back up his statements. According to a federal prosecutor, Hunter was, in fact, using the money for personal enrichment, to cover his personal expenses, and pay back other investors who had become suspicious and demanded their funds back.

The SEC has already ordered Hunter to cease and desist from activities related to investments. The agency told him to pay a $150,000 civil penalty and $296,000 in restitution.

Our Houston securities fraud lawyers are here to help investors get their money back. We have helped thousands of individual and institutional investors recoup their funds, representing clients in arbitration and the courts. Contact our Texas securities law firm today. Your initial consultation with Shepherd Smith Edwards and Kantas, LTD LLP is a free, no obligation case assessment.

Read the SEC Order (PDF)


More Blog Posts:
Texas Wyly Brothers Must Pay SEC $299.4M for Securities Fraud, Stockbroker Fraud Blog, February 28, 2015

Jury Says Ex-Envoy Involved in Stanford Ponzi Scam Must Pay $750K, Stockbroker Fraud Blog, February 16, 2015

DOJ Gets Ready to Wrap Mortgage Bond Case Against Standard & Poor’s, Probes Moody’s, Institutional Investor Securities Blog, January 31, 2015

February 28, 2015

Texas Wyly Brothers Must Pay SEC $299.4M for Securities Fraud

Sam Wyly and his late brother Charles Wyly’s estate must pay $299.4 million for committing securities fraud. The final judgment comes months after a jury found them civilly liable.

The SEC sued the Texas billionaire brothers in 2010. The regulator accused them of making $553 million in undisclosed profits when they traded in four companies that used trusts in the Isle of Man. The companies included Scottish Annuity & Life Holdings Ltd., Sterling Commerce Inc., Michaels Stores Inc., and Sterling Software Inc.

The SEC contends that the Wylys established the complex trust system so they could make untaxed profits from concealed trades in companies that they controlled. The scam purportedly occurred over a period lasting a decade.

Charles Wyly died in 2011. The SEC is now going after his estate.

In the final judgment, U.S. District Judge Shira Scheindlin ordered Sam to pay $198.1 million in disgorged gains, in addition to interest. Charles’ estate must pay $101.2 million. The ruling could lead to an appeal in the wake of Sam Wyly’s bankruptcy case. He filed for Chapter 11 protection last year.

In a related ruling, Scheindlin found that the Wylys were entitled to receive an offset for amounts due to the IRS based on sums paid to the Commission.

Our Texas securities fraud lawyers represent investors with claims against brokers, investment advisers, and financial firms. Contact Shepherd Smith Edwards and Kantas, LTD LLP today. Your initial case consultation with our stockbroker fraud law firm is free.

Texas Wyly brothers must pay $299 million in SEC fraud case: judge
, Reuters, February 26, 2015

Wyly Brothers Ordered to Give up $299 Million in Fraud Suit
, AP/ABC News, February 27, 2015


More Blog Posts:

Jury Says Wyly Brothers From Texas Committed Fraud, Stockbroker Fraud Blog, May 14, 2014

Texas’ Wyly Brothers Ordered to pay More than $300M In Fraud Sanctions
, Stockbroker Fraud Blog, September 28, 2014

John Carris Investments Expelled by FINRA, Institutional Investor Securities Blog, January 27, 2015

February 16, 2015

Jury Says Ex-Envoy Involved in Stanford Ponzi Scam Must Pay $750K

A federal jury has decided that ex-U.S. Ambassador to Ecuador Peter Romero would not be allowed to keep over $758K in expenses, fees, and interest he earned while lending his legal counsel and credibility to Allen Stanford. Instead, he will pay that sum to the court appointed receiver.

Stanford was convicted in 2012 of fraud and money laundering, perpetuating a global multibillion-dollar scam in the process. His Houston-based empire was shut down in 2009 when the U.S. Securities and Exchange Commission accused him of running his $7 billion Stanford Ponzi scam that bilked thousands of investors. The scheme involved the sale of CDs from his bank in Antigua.

Receiver Paul Janvey contends that Romero and certain other consultants did not ask the most basic questions about Stanford’s bogus banking empire. Romero was invited to serve on Stanford’s International Advisory Board after sitting next to him at an inaugural ball for President George W. Bush in 2001.

Romero received $1 million in fees for his role as consultant-fixer over issues involving business and politics in Central America. During testimony, he claimed that he had no idea Stanford was committing fraud and said that he too was deceived.

He is not the only one that Janvey is going after. Ex-Texas Lt. Governor Ben Barnes was purportedly paid $5 million, while ex-Houston Mayor Lee Brown was paid under $300K. Both will be allowed to keep all of the money if they can persuade a jury that their work with Stanford was conducted in good faith and that the services provided were the reasonable equivalent in value to how much they were paid.

Unfortunately it is investors who lose out when they become the victims of a Ponzi scam. Please contact Shepherd Smith Edwards and Kantas, LTD LLP today. Our Texas securities fraud lawyers are here to help investors recoup their losses.

Ex-envoy who aided Ponzi schemer Stanford must pay $758,000, Dallas jury decides, The Dallas Morning News, February 13, 2015

Former U.S. diplomat implicated in Stanford Ponzi scheme, CNBC, January 22, 2015

Texas jury rules U.S. ex-diplomat must repay over $700,000 in Ponzi scheme, Reuters,


More Blog Posts:
Ex-California Insurer Charged with Running $11M Ponzi Scam, Stockbroker Fraud Blog, December 8, 2014

SEC to Dismiss Lawsuit Against SIPC Over Payments to Stanford Ponzi Scam Victims, Stockbroker Fraud Blog, September 11, 2014

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

January 31, 2015

Sun Antonio Spurs Star Tim Duncan Files Texas Investment Adviser Fraud Case

NBA All-Star Tim Duncan is suing his investment adviser for securities fraud. The San Antonio Spurs basketball player says that his financial representative, Charles Banks, made investment recommendations based on conflicts of interest. Duncan claims that because of this he sustained substantial financial losses. According to one source, the NBA star lost more than $20 million.

In his Texas securities case, Duncan says that Banks, who gave him investment advice for seventeen years, took advantage of their relationship for personal gain. Duncan claims that Banks suggested he invest several million dollars in beauty products, hotels, sporting goods, and wineries that the latter either had a financial stake in or owned. The NBA basketball player also says that Banks was able to garner a $6.5 million bank loan using Duncan’s forged signature.

Unfortunately, professional athletes are targeted by financial fraudsters. With their large incomes and, in some cases, inexperience with managing their money and investments, there are scammers who will take advantage of their investment adviser relationship with them to try to make money. Because pro athletes can only play at the NBA, NFL, MLB, and NHL levels for a certain amount of years, unexpected and substantial financial losses caused by securities fraud may prove devastating for athletes and their families.

Contact our Texas securities fraud law firm today. Shepherd Smith Edwards and Kantas, LTD LLP represent professional athletes and other individual investors in recouping their investment fraud losses. Retaining legal representation increases your chances of recovering most if not all of your bilked funds.

Tim Duncan sues former business adviser for over $20 million in losses, SBNaton, January 31, 2015

How to scam an athlete, ESPN, April 22, 2011


More Blog Posts:
St. Louis Rams Quarterback AJ Feeley and US Soccer Player Heather Mitts Are Among Professional Athletes Allegedly Targeted in Ponzi Scam, Stockbroker Fraud Blog, September 7, 2012

Professional Athletes, Celebrities Often Targeted for Securities Fraud, Stockbroker Fraud Blog, August 14, 2013

Hanson McClain Sues Investment Adviser, Ameriprise Financial Services Over Client Information, Institutional Investor Securities Blog, January 12, 2015

January 22, 2015

Texas State Securities Board Was Special Prosecutor in $1M Securities Fraud Case

Alberto Alba Villareal was sentenced to five years behind bars for defrauding investors in a $1 million Texas securities fraud. Villareal was convicted of theft of property for stealing money. The funds he procured were supposed to go toward funding a new insurance company. The Texas State Securities Board was a special prosecutor in the case. Villareal is from South Texas.

As part of his sentence, Villarreal must pay complete restitution to the investor who purchased a $1 million investment contract in Nafta Holdings LLC, which was the new insurer’s controlling company. Villareal must also serve ten years probation.

According to court testimony and his indictment, Villareal took part in a number of financial deceptions to raise funds for the controlling company, even telling the investor that the Texas Insurance Code mandated that there be $4 million in capital and additional cash to open a new insurance company—even though the amount he quoted was about twice what the law actually stipulated.

Villareal allegedly made it seem as if he had raised half of the money and that investors' funds would go into escrow until the threshold was established. Instead, he used some of their money for his personal expenses, including yacht payments and mortgage payments, which were past due. Investor funds also went toward insurance claims to policyholders with other insurers that he controlled.

The state’s Department of Insurance also gave evidence in the Texas securities case.

Shepherd Smith Edwards Kantas, LTD LLP is a Texas securities fraud law firm.

South Texas man sentenced to five years for $1 million securities fraud, theft, inForney, January 20, 2015


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