Articles Posted in Senior Investors

Former Wells Fargo and LPL Financial Broker Receives 41-Month Prison Term for Elder Financial Fraud
Robert N. Tricarico, an ex-broker for both Wells Fargo Advisors (WFC) and LPL Financial (LPLA), will serve 41 months behind bars and pay restitution of over $1.2M after he pleaded guilty to elder financial fraud. The Securities and Exchange Commission, which brought a civil case against Tricarico, has barred him from the securities industry.

Court documents note that from 1/2010 to 6/2013, Tricarico was the financial adviser for a sick and elderly investor. He misappropriated over $1.1M from her by writing a number of checks to himself without the client’s consent, misappropriated checks written to her, liquidated her coin collection, and used her funds for his own expenses.

He has also admitted to bilking two other victims of $20K when he falsely represented that their money would go toward a business venture. He kept their money for himself.

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The US Securities and Exchange Commission filed fraud charges against Larry Holley, a pastor with the Abundant Life Ministries in Flint, Michigan. According to the regulator, the pastor used faith-based verbiage to solicit investments from his targets in what he led them to believe was a successful real estate business with hundreds of commercial and residential properties. The SEC’s affinity fraud complaint said that Holley’s scam raised about $6.7M from over 80 investors who were promised high returns.

Holley allegedly held “Blessed Life Conferences” that were actually financial presentations at churches across the US. During these gatherings, he would ask congregants to disclose their financial holdings on cards he gave them to fill out and he promised to “pray over the cards.” He is said to have called investors “millionaires in the making.”

The SEC’s complaint also claims that Holley’s business associate, Patricia Enright Gray, targeted recently laid-off auto works who were given severance packages and she offered to consult with them to help grow their finances. She purportedly promised to roll over their retirement funds into tax-advantaged IRAS and invest their money in Treasure Enterprise, which was Holley’s company. She advertised her services on a religious radio station in Flint.

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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.

FINRA Bars Registered Rep For $15M In Unauthorized Trades
The Financial Industry Regulatory Authority has barred Craig David Dima, a former registered representative with KC Ward Financial, for making about $15M in unsuitable and unauthorized trades in the account of a 73-year-old retiree. According to the self-regulatory organization, there were 11 times when Dima sold nearly all of the customer’s stock in Colgate-Palmolive that she’d accrued from working with the company for nearly thirty years and he did that without permission.

After the elderly client told Dima not to sell the stock, he proceeded to sell them anyways. When the customer confronted Dima, he purportedly misrepresented that a computer or technical mistake had caused the sale. Meantime, the client was “deprived” of the “substantial dividends” from the Colgate shares she used to own. Dima charged the customer over $375K in fees, mark-downs, and mark-ups.

By settling, Dima is not denying or admitting to FINRA’s charges.

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According to the AARP Investment Fraud Vulnerability Study, published by the AARP Fraud Watch Network, active, older investors who get involved in unregulated investments may be more vulnerable to investment fraud. 214 fraud victims were interviewed, along with 814 members of the public who are considered general investors.

The study said that there are appear to be certain traits that may identify why some people are more likely to become fraud victims, including:

· Usually men, age 70 or older.

· These men are often risk-takers.

· They’re more likely to value wealth accumulation as a sign of financial success.

· They’re typically open to sales pitches and to answering remote sales pitches.

Doug Shadel, the lead researcher for the AARP Fraud Network, noted that if an older investor is able to identify whether/not she has a predisposition toward risky conduct, this could make the person more mindful of that tendency and he/she might potentially avoid becoming vulnerable to fraud.

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Source Capital Group Inc. must pay three elderly investors their full investment of $810K plus $147K in interest, as well as $250K in legal fees, in a securities arbitration case accusing one of the investment bank’s brokers of selling them unsuitable investments. William Lashlee and Joyce and Keith McCrea filed their elder financial fraud claim with the Financial Industry Regulatory Authority.

According to the retirees, the broker sold them stock in a health care tech start-up in 2012. Lashlee invested $220K while the McCreas invested $590K. Unfortunately, the start-up, iPractice Group, shuttered its business in 2013.

The claimants claim that Source Capital was negligent in supervising the broker who sold them the securities. Although the broker was assigned to the firm’s Bowling Green, Kentucky branch, the manager there was purportedly never notified that this particular financial representative was under his supervision.

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An investor who is retired and suffering from health issues is seeking $1M from Morgan Stanley (MS). The investor, a former inventor, claims that the broker-dealer did not properly supervise the financial adviser who handled his multi-million dollar account.  He filed a Financial Industry Regulatory Authority claim and is accusing the firm of breach of fiduciary, negligence, unauthorized trading, excessive trading, fraudulent inducement, and significant tax liability.

The investor believes that over-concentation in risky sectors and over trading in too many individual stocks occurred, causing significant damage to his retirement funds. Among the investments that were involved were oil and gas investments, including Master Limited Partnerships. The claimant claims that Morgan Stanley hid the risks involved, even as the financial adviser engaged in a purportedly deceptive investment strategy. The result was that the investor’s account became heavily concentrated in risky investments.

The alleged broker negligence also purportedly caused tax consequences for the investor while benefiting Morgan Stanley with transactions costs of over $1M. The unsuitable taxable gains that were created by  led to investment losses for the investor, even as the broker claimed that the investor’s account was profiting.

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The Financial Industry Regulatory Authority has barred ex-JP Turner & Co. broker Anthony Mastroianni Jr. for allegedly churning an account belonging to an older customer. Mastroianni has not denied or admitted to the regulator’s findings and he did not appear in front of FINRA to provide testimony in this case.

According to the regulator, from ’11 to ’13, Mastroianni took part in churning or excessive trading in the account of this customer, which was maintained at JP Turner and later at Alexander Capital when the broker was affiliated with the brokerage firms. He also allegedly borrowed $90K from the same customer and made another four transactions without letting either JP Turner or Alexander Capital know and/or getting their approval.

Mastroianni’s BrokerCheck reports notes that there are seven disclosure events in which he has been named, including two customer disputes that are still pending.

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