We have represented thousands of investors nationwide and recovered losses and other damages* for them from stockbrokers and their firms *Results will vary depending on the facts of each case

The US Securities and Exchange Commission is accusing investment adviser Daniel H. Glick and his unregistered firm, Financial Management Strategies, of bilking older investors of millions of dollars. The regulator issued a temporary restraining order against the Chicago-based investment adviser, as well as an emergency asset freeze.

According to the Commission, Glick and his firm gave false account statements to clients to conceal his use of their money, which included paying for his own personal and business expenses. He allegedly raised millions of dollars from older investors by saying he would do their taxes, pay their bills, and make investments for them. After investors would give Glick huge sums of money to invest, he either obtained power of attorney or took over control of their bank accounts.

In its complaint, the SEC stated claims that Glick not only took advantage of seniors who trusted him with their retirement funds but also he allegedly exploited these clients’ family members. Most of his investors, said the regulator, belonged to two distinct families.

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Registered Investment Adviser and Broker Convicted in $15M Pump-and-Dump Scam
A federal jury has found Sheik F. Kahn, a Nevada RIA, and Christopher Cervino, a New Jersey broker, guilty of securities fraud, conspiracy to commit securities fraud, wire fraud, and conspiracy to commit wire fraud in an over $15M stock scam that targeted 100 investors. Kahn also was convicted of aggravated identity theft crimes and investment adviser fraud. Both she and Cervino were previously affiliated with New York-based firm Primary Capital.

According to the U.S. Attorney for the Southern District of New York, the pump-and-dump scam involved VGTEL (VGTL), a publicly traded over-the-counter company. The securities scam was led by Edward Durante, who pleaded guilty last year to a number of crimes, including securities fraud, conspiracy, perjury, and money laundering involving VGTL.

Cervino and Kahn are accused of artificially inflating the stock price of VGTel from 25 cents/share to up to $1.90/share in 2012 and they also inflated trading volume, raising their ability to bring in private investments in the stock.

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Carlton Chadbourne Sayers has been indictment in district court. The 51-year-old is accused of Texas investment fraud and he is charged with mail fraud, wire fraud, aggravated identity fraud, and bank fraud. The scam caused dozens of investors to lose over $3M.

According to the indictment, Sayers allegedly sought to bilk a number of fraud victims by asking that they lend or invest funds with him and Wellington & Franklin Financial. He allegedly promoted that their funds would go toward buying or renovating residential real property and would be securitized by interest in these properties. He also is accused of promising a significant return rate.

Instead, states the indictment, rather than invest the funds the way he represented they would be invested, Sayers failed to secure interests in actual property or, in instances when he and Wellington & Franklin Financial actually owned a residential property, it was one that had already been bought with a pre-existing loan from an experienced investor and to whom the property was already acting as a security. Sayers is accused of bilking dozens of inexperienced investors who thought they were getting involved in secure investments that were giving them an opportunity to make higher returns than they would have with other investments.

ClearPath Wealth Management owner and president Patrick Churchville has been sentenced to seven years in prison for bilking investors in a $21M Ponzi scam. He also must pay restitution and perform 2,000 hours of community service.

Churchville also was charged by the Securities and Exchange Commission in 2015 over the scam, which the regulator said cost investors at least $11M in losses. According to the SEC, Churchville and his company used newer investors’ money to pay earlier investors, used investor funds as loan collateral for investments, for paying back the loans, and for investments that would benefit ClearPath. He also stole about $2.5M of investors’ money to buy a waterfront home. Churchville employed misleading accounting tactics and engaged in deceptive actions to hide the fraud.

In 2013, when a lot of ClearPath investors began asking for distributions on their investments, he delayed the scam by lying to them about the investments. Meantime, investors were persuaded that at least part of their investments were still fine even though the funds were gone.

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A Financial Industry Regulatory Authority (FINRA) panel said that Stifel, Nicolaus & Co. (“Stifel”) must pay June and Perry Burns over $100K for losses they sustained from Puerto Rico bonds and oil and gas investments. The Burns are in their eighties and they invested a “substantial” amount of their life savings with Stifel.

In their Puerto Rico bond fraud arbitration claim, the couple accused Stifel of negligence, unauthorized trading, and unsuitable investments, among other violations. For that portion of their case, the FINRA panel awarded the Burns $79,709, which was everything they lost, and also fees and interest. Despite the ruling, Stifel, in its own filings, continues to deny the couple’s allegations. The broker-dealer tried to have the case thrown out and removed from its FINRA records.

Senior Investors Sustained Losses From Investing in Puerto Rico Bonds
Unfortunately, the Burns are not the only senior investors whose retirement savings were seriously harmed because brokerage firms and their brokers recommended that retirees invest in Puerto Rico bonds and Puerto Rico bond funds even though these securities were too risky for their portfolios and/or not aligned with their investment objectives. For the past few years, our senior financial fraud lawyers at Shepherd Smith Edwards and Kantas have been working with older investors in the US mainland and the island of Puerto Rico to help them get their lost investments back. Aside from Stifel, other brokerage firms are accused of inappropriately recommending Puerto Rico bonds and close-end bond funds to investors, including UBS Puerto Rico (UBS-PR), Santander Securities (SAN), Banco Popular, Merrill Lynch, Morgan Stanley (MS) and others.

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The US Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the US Treasury Department’s Financial Crimes Enforcement Network are investigating brokerage firm Aegis Capital Corp. The reason for the probe has not been disclosed.

In Aegis Capital’s latest audited financial statement, the firm said that it has responded to the joint inquiry. A lawyer for the broker-dealer said that it would not comment further. The attorney, however, did note that regulators have yet to file a complaint and that Aegis Capital is not in litigation at the moment with any of these agencies.

According to Aegis Capital’s BrokerCheck profile, the firm has 27 previous disclosures, including one in 2015 that the broker-dealer settled with FINRA, agreeing to pay $950K over the allegedly improper sales of billions of unregistered penny stock shares and purported lapses in anti-money-laundering supervision. Two ex-Aegis Capital chief compliance officers were suspended and ordered to pay related fines.

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A Financial Industry Regulatory Authority Panel has ruled that Wells Fargo Advisors (WFC) must pay investor Anthony J. Pryor $357K related to purportedly unsuitable housing and energy investments. In his securities fraud claim, Pryor alleged negligent misrepresentation, negligent supervision, breach of fiduciary, and other causes. Wells Fargo denies Pryor’s allegations.

His advisor, Jeff Wilson, who was not named as a party in the securities case, has three customer disputes on his BrokerCheck record. One of the other claims that was settled for $250K also allegedly involving unsuitable investments.

Unsuitable Investments
Not every investment is suitable for every investor. Some investments may too be risky for certain investors or are not in alignment with their investment goals or financial needs. For example, many older retail investors that are about to retire will likely require a more conservative investment plan that a much younger, single investor.

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FINRA Suspends Broker For Accepting $105K in Gifts
The Financial Industry Regulatory Authority Inc. has suspended Adam C. Smith from the securities industry for a year. The former Merrill Lynch broker, who was fired from the firm, will pay a $10K fine.

According to the self-regulatory organization, while at Merrill Lynch, Smith and his wife accepted $26K in checks from a couple whom he represented. The money was to help fund the education of Smith’s children. When one of the client’s passed away, the remaining spouse gifted Smith and his wife another $53K, again to pay for their kids’ education. Smith received $26K from other clients.

Although he is settling, Smith is not denying or admitting to FINRA’s findings.

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San Angeleno Man Goes to Prison Over Investment Scams
Stanley Jonathan Fortenberry of Texas has been sentenced to 78 months behind bars for running two investment scams and bilking investors of about $900K. He pleaded guilty to obstruction of justice and mail fraud in 2016. Now, Fortenberry must pay over $890K in restitution and forfeit more than $311K.

Fortenberry ran Premier Investment Fund and raised money for social media projects operated by another company. According to prosecutors, the Texas man misled investors about that company’s profitability and regarding what their money would be used for. He admitted to diverting about half of investors’ money to himself and to his fundraising operation.

Fortenberry also ran Wattenberg Energy Partners, a company that raised money for oil and glass drilling projects in Colorado. He admitted to establishing the company under his son’s name because the US Securities and Exchange Commission was already investigating him about the way Premier investors’ funds were being used.

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Susan C. Daub and William D. Allen have each been sentenced to six years in prison for running a Ponzi scam that involved issuing loans to professional athletes. Allen, a former NFL player with the Miami Dolphins and the New England Patriots, and Daub have been both the subject of a criminal case and an Securities and Exchange Commission case over this matter.

The two of them were arrested in 2015 on criminal charges of wire fraud, conspiracy, and charging money related to a specified illegal act. Along with their Capital Financial Partners Enterprises, Capital Financial Holdings, and Capital Financial Partners, the two of them raised nearly $32M from investors, who were told that they were providing loans professional athletes but would get back their money in full along with interest when the loans were repaid.

In its civil case, SEC said that Daub and Allen only advanced about $18M to the athletes even though they’d raised over $31M from investors. The regulator said that from 7/2012 through 2/2015, even though the defendants had only gotten back a little over $13M in loan repayments from the pro athletes, they paid back about $20M to investors by using investors’ funds to make up for the almost $7M deficit.

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