Minnesota-Based Investment Adviser Gets Six-Year Jail Term
According to the Minnesota Department of Commerce, Levi David Lindemann was ordered to serve a 74-month prison sentence—that’s six years—for bilking clients in a Ponzi scam. Lindemann owned Gershwin Financial, which did business using the name Alternative Wealth Solutions. He pleaded guilty to money laundering and federal mail fraud charges.
Minnesota Commerce Commissioner Mike Rothman said that Lindemann abused his position as a financial adviser when he defrauded clients, including older investors. He did this by promising to invest their funds in safe investments but instead used their money to make Ponzi-type payments to clients and pay for his own expenses.
Lindemann’s guilty plea states that he solicited money from about 50 investors. He attempted to hide the securities fraud by generating fake secured notes as supposed evidence of the clients’ investments. The SEC permanently barred him from the securities industry earlier this year.
SEC Accuses Barred Broker of Selling Securities to Older Investors
According to the SEC, ex-Morgan Stanley (MS) broker Rafael Calleja solicited $2.7M from 10 retiree and elderly investors after he had already been barred from the securities industry. The regulator claims that Calleja told investors their principal was insured and they would get a fixed return rate in a year. Meantime, he allegedly used at least $12K of their funds to pay for cruises, golf outings, and other personal expenses. He also purportedly failed to tell investors that his broker license had been revoked.
It was in 2012 that Calleja agreed, in a settlement reached with FINRA, to a permanent industry bar for misconduct that occurred at firms where he worked before Morgan Stanley. The alleged misconduct included making more than 67K in withdrawals from a customer’s securities account while he was a Bank of America Corp. (BAC) Merrill Lynch unit broker, and recommending a risky investment strategy for a mentally impaired customer while trading without that person’s permission.
In 2014, Calleja purportedly sold unregistered privately issued securities through Tower Trade Group USA LLC, of which he was part owner. He did this even though he was not allowed to sell these securities. The SEC said that Calleja did not give much information to the investors about the securities, including that their money would be sent abroad where a foreign company affiliate would invest the funds. The affiliate, however, waited almost a year after investors initially made their investment to invest most of the funds. The SEC said that investors have since been paid back in full.
Securities and Exchange Commission Accuses Renewable Energy Company of Bilking Investors
The SEC has filed fraud charges against 808 Renewable Energy Corp. CEO/founder Patric Carter, COO Peter Kirkbride, sales representatives Thomas Flowers and Martin Kinchloe, 808 Investments LLC, TA Flowers LLC, and West Coast Commodities LLC. The regulator contends that they were involved in a scam that started in 2009 and went on for at least five years. During that time, said the SEC, hundreds of investors handed over more than $30M.
According to the Commission, the defendants misled investor and falsely claimed that the their money would go toward expanding 808 Renewable and acquiring new equipment when, instead, millions of dollars went to “consulting fees” to 808 Investments, which Carter also controlled and owned. Millions more were purportedly paid to sales representatives’ as commission. Investor’s money was also used to support Carter’s expensive lifestyle and make Ponzi-like payments to investors. The SEC claims that in 2013, Carter falsely announced that the New York Stock Exchange had preliminarily approved 808 Renewable’s stock to trade on the AMEX. He then sold millions of his shares to investors.
The regulator is seeking disgorgement of ill-gotten gains, prejudgment interest, penalties, and permanent injunctive relief. It also wants penny stock bars imposed against the defendants, in addition to director and officer bars against Kirkbridge and Carter.
Meantime, TA Flowers and Thomas Flowers have settled the SEC action, but they are not denying or admitting to the allegations. Once a court approves their settlement, they are slated to pay disgorgement and prejudgment interest of $1.4M, a $160K penalty by Flowers, and penny stock bars.
Stillwater Adviser Gets 74 Months in Prison for Stealing from Clients, Minnesota Department of Commerce, November 23, 2016
SEC Says Ex-Broker Peddled Securities After Bar from Industry, Reuters, November 22, 2016