“Investors trusted Woods and the Southport investment advisers working at his direction, and they stand to lose significant portions of their retirement savings when the Ponzi scheme inevitably collapses. The longer the scheme continues, the larger the losses will be for those left holding the bag,” the SEC Complaint states.

According to the SEC Complaint, advisers soliciting investments in Horizon PE allegedly told clients that they would receive returns of 6% to 7% interest, guaranteed for two to three years, and that their money would be used for nonspecific investments such as government bonds, stocks, or small real estate projects. According to the SEC Complaint, clients were not told that their money would be used to pay returns to earlier investors. The SEC also alleges that investors were told they could receive their principal investment back without penalty subject to a 30-day or 90-day waiting period. The SEC alleges that because Horizon did not follow any traditional record-keeping practices, millions of dollars’ worth of investor funds are currently unaccounted for.

In August 2021, U.S. District Judge Steven D. Grimberg reportedly allowed the appointment of a receiver for, and order a freeze of the assets of, Horizon PE, stating: “The SEC has met its burden with respect to Horizon and [promoter John J.] Woods, that there is a reasonable likelihood those defendants have engaged or are about to engage in violations of the securities laws.”

This law firm has not independently verified any of the foregoing allegations, and is relying on the SEC’s allegations in publicly filed court documents alleging that Horizon PE operated as a Ponzi scheme. A Ponzi scheme refers to purported investments in which early investors in the scheme are paid funds from later investors, thus creating the illusion of legitimacy and solvency. Ponzi schemes have historically failed once the promoter of the scheme can no longer pay out investors through newly raised money.

Ponzi schemes get their name from Charles Ponzi, a charismatic Italian immigrant and polished salesman who duped numerous investors into parting with millions of dollars in exchange for the opportunity to supposedly purchase overseas postal reply coupons at a discount, to then be sold in the U.S. at a significant profit. Unbeknownst to investors, who were promised an enormous 50% return on their investment, Ponzi was not putting investment funds to the use he had represented, but instead was paying handsome “returns” to early investors from the proceeds of later investments.

Investors in Horizon PE who may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules). The Gray firm has substantial experience representing investors in claims arising from alleged Ponzi schemes and alleged investments frauds, including representing approximately 300 clients in litigation under the Commodity Exchange Act arising out of a Futures Commission Merchant’s aiding and abetting of convicted Ponzi schemer George Hudgins. See Carey, et al. v. Hudgins, et al., U.S. District Court for the Eastern District of Texas Docket No. 6:08-cv-344. The firm also served as court-appointed co-lead counsel in a case in which plaintiffs recovered $5,100,000 from a law firm accused of violating North Dakota securities law in connection with an unregistered securities offering that turned out to be a fraudulent scheme. See Aleem, et al., v. Pearce & Durick, No. 1:15-cv-00085 (U.S. District Court for the District of North Dakota)

In mid-2017, Cardinal reportedly lost control of its interest in two oil-and-gas leases that accounted for nearly all (approximately 90%) of the company’s revenue, according to the SEC’s complaint. However, according to the SEC complaint, instead of revealing these issues, Cardinal and Crawford filed quarterly reports with the SEC that misrepresented to investors that the leases were still expected to be part of the company’s future business plans.

During this period, while allegedly concealing the setback to the business, Cardinal also allegedly raised additional money from investors, misreported stock ownership, and failed to make the required disclosures that its Crawford had sold millions of shares of Cardinal stock.

Cardinal is what is sometimes referred to as a penny stock- a publicly traded company with a low stock price per share and low market capitalization. Penny stocks, also known as microcap stocks, in general have a history of involvement with fraud and market manipulation. Penny stocks are securities issued by a small company that trade for less than $5/share. Penny stocks are always a risky investment, as there may not be enough publicly available information concerning the companies for investors to make a proper investment (due to their relatively small nature and most likely new status), and the stocks often trade in a relatively illiquid market. Penny stocks in general have historically been subject of manipulation scheme such as so-called “pump and dumps.”

Cardinal was formed in 2014 for the purpose of purchasing, developing, and operating oil and gas leases. Cardinal touts itself as an environmentally responsible oil and gas company focused on “reclaiming the vast, remaining reserves from our Nation’s producing oil fields.” The company trades over-the-counter under the ticker “CEGX” and had a last reported price of $0.0009 a share.

Brokerage firms have a duty to ensure that their business activities surrounding speculative low-priced securities are conducted in accordance with a reasonable compliance system which includes specific written supervisory procedures. Further, any recommendation by a financial advisor to invest in a speculative penny stock must conform to NASD Rule 2310 and FINRA Rule 2111 – the so-called suitability rule – which is premised on the brokerage firm and financial advisor obtaining information about the customer in order to ascertain that investor’s profile, including the investor’s age, other investments, financial situation and needs, tax status, investment experience and risk tolerance. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

Investors in speculative microcap and nanocap securities may have arbitration claims to be pursued before FINRA, in the event that the recommendation to invest lacked a reasonable basis, or if the nature of the investment, including its risk components, was misrepresented to the investor. Both FINRA and the SEC have issued ample guidance with regard to the numerous risks associated with investing in speculative microcap (or “penny”) stocks, including the potential for fraudulent schemes and market manipulation due to the lack of public information concerning the companies’ underlying business and management, as well as verifiable financials.

Attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved many cases on behalf of investors who have sustained investment losses, including losses associated with fraud and manipulation, microcap stocks and unsuitable investment recommendations. Investors who wish to discuss a possible claim may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

World Tree was co-founded in 2009 by Perkins and Gilmore and is structured as a Louisiana corporation with its principal place of business in Lafayette, LA. Until June 15, 2012, World Tree was registered with the SEC as a registered investment advisor (“RIA”), at which time it withdrew its registration. Currently, Word Tree remains registered in the State of Louisiana as an investment advisor.

As alleged by the SEC, World Tree manages all of its clients’ assets on a discretionary basis, meaning that it has authorization to trade securities on behalf of its clients. According to the Complaint, from December 2009 – October 2015, World Tree conducted all of its trades through an omnibus account at a third-party registered broker-dealer. As alleged in the Complaint: “In general, an omnibus trading account allows an investment advisor to buy and sell securities on behalf of multiple clients simultaneously, without identifying to the broker in advance the specific accounts for which a trade is intended.”

Essentially, the SEC has alleged that the Defendants misused their omnibus account from “[a]t least March 2011 through September 2015.” As further alleged by the SEC, in April 2015, World Tree’s third-party broker-dealer “[i]nternally determined, based on a sampling analysis, that when trading in the same security, accounts held by World Tree, Perkins and Gilmore performed substantially better than their clients’ accounts.” It should be noted that following this analysis, the broker purportedly requested that Defendants “[p]rovide materials showing how the firm was allocating trades”, and that when this request was allegedly ignored, the third-party broker-dealer terminated its relationship with Defendants in September 2015.

According to the SEC, World tree’s purported cherry-picking was enabled by the fact that the disfavored accounts receiving a disproportionate number of losing trades were among World Tree’s largest accounts, and thus “[w]ere large enough to absorb incremental, though steady, trading losses without arousing client suspicion that the losses were due to fraud.” As further alleged in the Complaint, World Tree’s Form ADVs, as filed with the SEC and State of Louisiana, respectively, purportedly contained materially false and misleading statements. For example, in various World Tree Form ADVs filed from March 2011 – September 2015, Defendants represented, among other allegedly false and misleading statements, that: “World Tree allocates investment opportunities among its clients on a fair and equitable basis … To the extent that World Tree determines to aggregate client orders … World Tree shall generally do so in accordance with applicable rules promulgated under the Advisers Act and non-action guidance provided by the staff of the U.S. Securities and Exchange Commission.”

Investors who wish to discuss a possible claim may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

According to the SEC, investors were allegedly defrauded in several ways. For example, the Defendants’ purportedly failed to disclose sizable up-front fees of 15-30% taken off the top of investor equity. In addition, the Defendants allegedly misrepresented the returns earned on various real estate deals, touting their “impressive returns” when, in actuality according to the SEC, investors sustained heavy losses on investments in predominantly South Side Chicago real estate deals. The SEC has further alleged that rather than inform investors of financial distress, father and son Defendants Jerome and Shaun Cohen, respectively, elected instead to continue “[t]o solicit investors with offers of safe investments and outsized returns.”

Equitybuild is structured as a Florida corporation. Since at least 2010, the company has solicited investments, promising returns that were to be generated through the purchase, renovation and development of Chicago real estate. Equitybuild Finance, f/k/a Hard Money Company, LLC, is structured as a Delaware limited liability company. Both companies were founded by Defendant Jerome Cohen, 63 years of age, and currently a resident of Naples, Florida. Defendant Shaun Cohen is a resident of New York, New York, and serves as the President and sole officer of Equitybuild Finance.

As noted in the SEC’s Complaint, none of the securities offered by Defendants were registered with the SEC. As we have discussed in prior blog posts, whenever investors are solicited to invest in an unregistered securities offering, commonly known as a private placement, they should proceed with the utmost caution. Typically, private placement deals are very complex, and furthermore, only provide investors with limited information and transparency, often marketed via a Private Placement Memorandum (“PPM”) or similar disclosure documents.

As alleged in the SEC’s Complaint, Defendants “utilized a variety of promotional methods to solicit investments in the Notes.” These Notes, sometimes referred to as Private Mortgage Notes, were offered to investors with interest rates ranging from 12-20%, with terms ranging from 6 mos. – 24 mos. According to the SEC, Defendant Shaun Cohen managed a network of salespeople who reported directly to him and who were instructed “[t]o bring in at least $50,000 in new investments each day.”

Investors who were solicited to invest in Equitybuild Private Mortgage Notes through a stockbroker or financial advisor may have viable FINRA arbitration claims or litigation options, in the event that the brokerage firm or Registered Investment Advisory (“RIA”) firm did not perform adequate due diligence before recommending the investment, or alternatively, in the event that the brokerage firm or RIA failed to properly supervise its financial advisor in connection with his or her recommendations to invest in Equitybuild securities.

Investors who wish to discuss a possible claim may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On June 19, 2018, the Securities and Exchange Commission (“SEC”) filed a Complaint against various individuals and entities — including former financial advisor John Charles Piccarreto, Jr. (CRD# 6276418) of San Antonio, TX — in furtherance of the SEC’s efforts to “stop an ongoing fraudulent scheme in which the Defendants have raised more than $102 million from at least 637 investors across the United States since 2011.” As alleged by the SEC, Defendants Perry Santillo and Christopher Parris of Rochester, NY purportedly orchestrated a fraudulent Ponzi-like scheme predicated upon first buying or taking over books of business from retiring investment professionals from around the country.

According to the Complaint, after acquiring new investors and assets, Messrs. Santillo and Parris (each formerly registered with FINRA) would coordinate their sales efforts with Defendants, including John Piccarreto, Jr., in order to allegedly persuade victims into withdrawing savings from traditional investments, in order to transfer the capital into issuers controlled by Messrs. Santillo, Parris, or certain of their associates. The SEC has alleged that the Defendants would “falsely claim that their investors’ money [would] be used to operate businesses in fields such as financial services, insurance, real estate development, and medical laboratories.” In actuality, however, the SEC has alleged that Defendants would transfer funds received into “multiple accounts held in the names of different entities” controlled by Defendants. While some of the funds were purportedly used to repay investors in typical Ponzi-fashion, the SEC has alleged that the bulk of the monies were misappropriated by the Defendants.

With regard to Mr. Piccarreto, the SEC has alleged that, in one instance, he met with an elderly investor from Austin, TX in February 2015. As alleged, Mr. Piccarreto convinced the 80 year old investor, who suffered from dementia, into putting $250,000 into an entity controlled by Defendants: Percipience. Mr. Piccarreto later emailed the investor’s daughter, in response to her concerns with the Percipience investment, that “I know this is scary for you and you are just looking out for dad but I promise you I will not let anything happen to any of the money.” In total, the SEC has alleged that Mr. Piccarreto misappropriated approximately $1.3 million in investor money.

According to FINRA BrokerCheck, former financial advisor John Piccarreto, Jr. was previously affiliated with First American Securities, Inc. (CRD# 35841) from June 2014 – July 2015. In July 2017, he voluntarily consented to a two-year suspension from the securities industry, as well as a deferred fine of $15,000, pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) accepted by FINRA Enforcement on June 20, 2017. As determined by FINRA Enforcement, Mr. Piccarreto allegedly “participated in at least 20 private securities transactions, including some transactions by elderly customers, by way of unregistered, private” offerings without providing written notice to his employer, First American Securities.

Brokerage firms including First American Securities have an affirmative obligation to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to adhering to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

Attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including cases involving Ponzi schemes and related misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

On May 30, 2018, the Securities and Exchange Commission (“SEC”) filed a civil complaint against Mr. Steven Pagartanis, alleging that the East Setauket, NY stockbroker purportedly “[d]efrauded at least nine retail investors of approximately $8 million by soliciting and selling them securities using false and misleading statements from 2013 to at least February 2018 (the ‘Relevant Period’).” During the Relevant Period, Mr. Pagartanis was affiliated with Cadaret, Grant & Co., Inc. (“Cadaret”) (CRD# 10641) from 2012 – 2017 and, thereafter, with Lombard Securities Incorporated (CRD# 27954) (“Lombard”).

As alleged by the SEC in its Complaint filed in federal court in the Eastern District of New York (SEC v Pagartanis Complaint), Mr. Pagartanis purportedly solicited certain of his customers — many of them retirees who relied upon his advice and investment recommendations — to invest in what was touted as a safe and conservative investment “[w]ith a fixed percentage return, generally between 4.5 and 8 percent annually.” Specifically, the SEC alleged that Mr. Pagartanis informed at least five investors that they were investing in the common stock of Genesis Land Development Co. (“GDC”), a Canadian real estate firm listed on the Toronto Stock Exchange. According to the SEC’s Complaint, in actuality the investment capital raised by Mr. Pagartanis was allegedly funneled to an LLC sharing the name Genesis, for which Pagartanis was the sole member and owner of the LLC.

The SEC has alleged that Mr. Pagartanis conducted a fraudulent scheme, under which he purportedly “[t]ransferred the money raised to his personal bank account, to other entities he controlled, and used around $1.8 million to make monthly interest payments to his customers.” In typical Ponzi-like fashion, the scheme reportedly collapsed in early 2018 when Mr. Pagartanis failed to pay investors their monthly interest payments.

Mr. Pagartanis’ career in the securities industry began in 1989. Since that time, he has been affiliated with numerous broker-dealers as a registered representative. Most recently, Mr. Pagartanis was associated with Cadaret from 2012 – 2017, and thereafter, Lombard. According to publicly available information through FINRA BrokerCheck, Mr. Pagartanis was discharged from his employment with Lombard following an “internal investigation” pursuant to which he purportedly “failed to respond to customer complaint questions and requests for information.”

Brokerage firms Cadaret and Lombard have a duty to ensure that their registered representatives are adequately supervised, a duty which includes monitoring their brokers in connection with outside business activities and/or sales of investments in so-called private placements. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

At Law Office of Christopher J. Gray, P.C., we have successfully resolved a number of disputes on behalf of investors, including losses sustained due to instances of fraudulent conduct such as Ponzi schemes, and related broker misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

On March 27, 2018, the Securities and Exchange Commission (“SEC”) announced formal charges against Wedbush Securities Inc. (“Wedbush”, CRD# 877) with respect to allegations that the broker-dealer failed to supervise its employee, Ms. Timary Delorme (f/k/a Timary Koller) (“Delorme”). Based on its investigation, the SEC alleged Wedbush ignored numerous red flags indicating that Ms. Delorme — who has been affiliated with Wedbush as a registered representative since 1981 — was purportedly involved in a manipulative penny stock trading scheme with Izak Zirk Englebrecht, a/k/a Zirk De Maison “(“Englebrecht”).

As alleged by the SEC, Mr. Englebrecht engaged in manipulative trading, commonly referred to as “pump and dumps”, through the use of various thinly traded microcap penny stocks. According to the SEC’s allegations, Ms. Delorme purchased stocks at Englebrecht’s behest in certain customer accounts, and in turn received undisclosed material benefits. Moreover, the SEC’s findings suggest that Wedbush ignored numerous red flags associated with Ms. Delorme’s alleged involvement in the scheme, including a customer email outlining her involvement, as well as several FINRA arbitrations regarding her penny stock trading activity.

In response to the red flags, Wedbush purportedly conducted two investigations into Ms. Delorme’s conduct. The SEC has characterized Wedbush’s investigation as “flawed and insufficient”, and that ultimately the brokerage firm failed to take appropriate action to address the alleged misconduct. The SEC’s order instituting administrative proceedings against Wedbush charges that the broker-dealer failed to reasonably supervise its broker, Ms. Delorme. The matter will come before an administrative law judge, who will hear the case and prepare an initial decision — there have not yet been any findings of misconduct.

Founded in 1955, Los Angeles based Wedbush formed its brokerage unit in July 1966. As of June 2017, Wedbush’s Wealth Management Group provides various wealth management services through approximately 400 financial advisors located in roughly 100 offices nationwide. Brokerage firms like Wedbush have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

Both the SEC and FINRA have issued ample guidance concerning trading in penny stocks, which is generally regarded as a risky proposition due to a host of factors, including the lack of transparency as to information about the investment, including financials. In addition, penny stocks, due in part to their characteristic low-price and low-volume, are particularly susceptible to fraudulent activity such as pump and dump schemes by unscrupulous stock manipulators.

Attorneys at Law Office of Christopher J. Gray, P.C. have handled a number of disputes on behalf of investors, including losses sustained due to instances of alleged fraudulent conduct and market manipulation. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

The Securities and Exchange Commission (SEC) reportedly has settled charges against the operators of a real estate investment business that caused millions in loses to investors. Up to 300 investors may have lost money on interests in a fund known as Alaska Financial Company III, LLC (“AFC III”), which two individuals named Tobias Preston and Charles Preston sold to investors via their company McKinley Mortgage Co. LLC (“McKinley”).

The SEC accused defendants of falsely portraying AFC III as a safe investment and reporting that it had profitable operations. However, according to the SEC, in reality AFC III was insolvent and unable to make interest payments as they came due. According to the SEC, although a portion of the raised funds were invested as promised to investors, Messrs. Preston and McKinley diverted millions of dollars in proceeds of outside investments to fund business and personal expenses as well as McKinley’s operations.

AFC III has made so-called Form D filings with the SEC since 2013 stating that AFC III qualifies for an exemption from registration of its securities offering under Rule 506(c), which allows for general solicitation of investors, such as through AFC III’s website and social media platforms, but limits sales to accredited investors. As a general rule, offers of securities to the public (which includes offers made over the internet) must be registered with the SEC under the Securities Act of 1933. However, under federal securities law, the SEC recognizes certain instances where companies seeking to raise capital are exempt from registering securities. Securities offerings exempt from registration are sometimes referred to as “private placements.” AFC III sought to be treated as exempt from registration by the SEC and was marketed as a private placement.

Securities exempt from registration may be offered pursuant to Regulation D (“Reg D”) as promulgated by the SEC in 1982. Essentially, Reg D sets forth a series of rules establishing certain transactional exemptions from the securities registration requirements of the ’33 Act.

One of the more commonly utilized Reg D Rules, Rule 506, is the rule that AFC III sought to use to establish its purported exemption from registration. Under Rule 506(c), a company can broadly solicit and generally advertise the securities offering, but must qualify for exemption by satisfying the following standards: (a) the investors in the offering are all accredited investors; and (b) the issuing company has taken reasonable steps to verify that its investors are accredited investors, which could include reviewing documentation, such as W-2s, tax returns, bank and brokerage statements, credit reports and the like.

The SEC alleged that the Prestons facilitated investments in AFC III from unaccredited investors since at least 2013, and accepted approximately $3 million of investments in AFC III from unaccredited investors, who reportedly received AFC III offering materials and returns consistent with AFC III’s offering materials.

The SEC’s complaint charges violations of the anti-fraud and registration provisions of the federal securities laws. Without admitting or denying the SEC’s allegations, as part of the settlement the Prestons and McKinley agreed to repay almost $30 million to the fund and to the appointment of new management at McKinley, AFC III, and their affiliates.

Public reports do not reveal whether AFC III was sold through FINRA-registered brokers or financial advisors. However, as members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors- including private placements under Regulation D. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile. Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with private placement offerings, including investments in oil and gas drilling funds and hedge funds. Investors may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On December 21, 2017, the Securities and Exchange Commission (“SEC”) formally announced charges, as well as an asset freeze, against the Woodbridge Group of Companies (“Woodbridge”) and its related unregistered investment funds, as well against Woodbridge’s owner and former CEO, Robert Shapiro. Through initiating litigation (the “Complaint”) in Florida federal court, the SEC is alleging, in sum and substance, that “[D]efendant Robert H. Shapiro used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.” As further alleged in the Complaint, “Despite receiving over one billion dollars in investor funds, Shapiro and his companies only generated approximately $13.7 million in interest income from truly unaffiliated third-party borrowers. Without real revenue to pay the monies due to investors, Shapiro resorted to fraud, using new investor money to pay the returns owed to exiting investors.”

According to Mr. Steven Peikin, Co-Director of the SEC’s Enforcement Division, “Our complaint alleges that Woodbridge’s business model was a sham. The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

If you are have invested in Woodbridge Wealth or in any of the Woodbridge Mortgage Funds, you may have questions concerning your rights in light of Woodbridge’s recent bankruptcy filing and the SEC’s recent Complaint alleging that Woodbridge is, in fact, a Ponzi Scheme.

Investors who purchased Woodbridge First Position Commercial Mortgages (“FPCMs”) through a stockbroker or financial advisor may have viable FINRA arbitration claims if the brokerage firm or Registered Investment Advisor (“RIA”) did not perform adequate due diligence before recommending the Woodbridge investment.

Some of the issuers of Woodbridge securities include the following entities:

• WMF Management, LLC (“WMF”);
• Woodbridge Group of Companies, LLC (d/b/a Woodbridge Wealth);
• Woodbridge Mortgage Investment Fund 1, LLC;
• Woodbridge Mortgage Investment Fund 2, LLC;
• Woodbridge Mortgage Investment Fund 3, LLC;
• Woodbridge Mortgage Investment Fund 3A, LLC;
• Woodbridge Mortgage Investment Fund 4, LLC;
• Woodbridge Commercial Bridge Loan Fund 1, LLC;
• Woodbridge Commercial Bridge Loan Fund 2, LLC.

As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors – including private placements under Regulation D. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile. Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

If you have invested in any of the Woodbridge Funds, or otherwise purchased a First Position Commercial Mortgage through investing in a Woodbridge promissory note, you may be able to recover investment losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On December 8, 2017, the Securities and Exchange Commission (“SEC”) issued a Cease-and-Desist Order (“Order”) against Ameriprise Financial Services, Inc. (“Ameriprise”) in connection with allegations that Ameriprise and its employees or agents purportedly misrepresented the performance of certain ETF strategies. Specifically, the SEC’s investigation focused on sales of AlphaSector strategies by ETF manager F-Squared Investments, Inc. (“F-Squared”). The F-Squared AlphaSector strategies, which were based upon an algorithm, were sector rotation strategies designed to issue a “signal” as to whether to buy or sell certain ETFs, that together, comprised the industries in the S&P 500 Index.

Pursuant to the Order, the SEC has alleged that F-Squared materially miscalculated the historical performance of its AlphaSector strategies (from April 2001 to September 2008) by incorrectly implementing signals in advance of when such signals could have occurred. In addition, the SEC alleged that F-Squared relied upon hypothetical and back-tested historical performance that was purportedly inflated substantially over what actual performance would have been had F-Squared applied the signals accurately.

In December 2014, F-Squared agreed to pay a $35 million fine to the SEC, and furthermore, admitting to wrongdoing regarding falsifying performance numbers in its advertising and marketing materials. See In the Matter of F-Squared Investments, Inc., Admin. Proceeding No. 3-16325 (Dec. 22, 2014). By July 2015, F-Squared filed for Chapter 11 bankruptcy protection.

As further alleged in the SEC’s Order, Ameriprise negligently relied upon misrepresentations made by F-Squared, including that the AlphaSector strategies had a history dating back to April 2001 and had been in use since then, and that the AlphaSector strategies’ “[t]rack record had significantly outperformed the S&P 500 Index from April 2001 through September 2008.” According to the SEC’s allegations, “[A]meriprise knew or should have known that it did not have a reasonable basis to believe that F-Squared’s advertising claims for the AlphaSector strategies were accurate.”

Moreover, the SEC has alleged that “[A]meriprise also provided its financial advisors – the primary interface between Ameriprise and its clients when soliciting investments in the AlphaSector strategies – with inaccurate information.” Notably, the Order alleges that “[A]meriprise represented inaccurately to Ameriprise financial advisors that the AlphaSector Rotation strategy was able to double investor money since 2001 and stressed the ‘proven results’ of AlphaSector strategies…”

Without admitting or denying any of the SEC’s findings encapsulated in the Order, Ameriprise is required to pay disgorgement of $6.3 million, prejudgment interest of $700,000, and a civil penalty of $1.75 million to the SEC.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with various alternative investments, including leveraged and inverse ETFs. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Paul Wescoe Smith, formerly associated with Bolton Global Capital, was the subject of a civil action and a criminal indictment filed by the United States Securities and Exchange Commission and the Department of Justice, through the United States Attorney for the Eastern District of Pennsylvania, on December 7, 2017. Smith, age 63, a resident of Wayne, Pennsylvania, has been accused of misconduct in connection with the sale and operation of a Ponzi scheme known as the Haverford Group.

Smith worked in the securities industry as a registered representative of several brokerage firms from 1982 until 2017, including with Bolton Global Capital from May 2007 to February 2017. Smith allegedly sold unregistered securities in a purported hedge fund known as The Haverford Group to more than a dozen investors.

Bolton Global Capital, Smith’s employer, reportedly notified Smith’s customers in early 2017 that their accounts were being transferred to another “financial representative” but reportedly gave no indication that Smith had been terminated and accused of wrongdoing in connection with The Haverford Group.

The SEC Complaint alleges that Smith raised approximately $2.35 million for The Haverford Group from approximately 30 unwitting investors, including some of his Bolton Global Capital customers. Smith allegedly told investors that the purported hedge fund would invest in publicly-traded securities. However, in reality, the purported hedge fund allegedly was in the nature of a Ponzi scheme, with the proceeds of new investments being used to repay earlier investors and for Smith’s own personal use. Smith reportedly attracted elderly and unsophisticated investors to his purported fund, including some members of his own country club.

Smith allegedly created account statements that were not authentic to send to customers, and wrote at least $247,400 worth of checks to himself from Haverford’s checking account, which he deposited into his personal bank accounts and used for personal expenses.

Bolton Global Capital has reportedly denied responsibility for Smith’s actions in response to a customer claim, and indicated that his activities were unauthorized. However, Financial Industry Regulatory Authority rules have established that firms must properly supervise brokers’ activities while they are registered with the firm. If they fail to do so, the firms can be held responsible for the activities of their representatives and, thus, could be ordered to compensate their clients for losses sustained for the period they were registered with the firm.

Investors who lost money as a result of recommendations to purchase purported securities of the Haverford Group may be able to recover investment losses in FINRA arbitration or through litigation if they were customers of Bolton Global Capital. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Vitale is being charged with selling unregistered securities and acting as an unregistered broker. According to the charges, Vitale and his firm (Realty Acquisitions & Trust Inc.) were able to raise $8.7 million from their investors, many of whom were seniors who may now be looking to hire securities fraud lawyers to represent them in filing their claims. In a news release, the SEC stated that Vitale allegedly led the investors to believe that their money was “100% protected” even though that was untrue. That charge (if found guilty) could give the defrauded victims and their investment fraud lawyers great leverage during arbitration.

To get investors, Vitale also allegedly claimed to hold a business degree from the University of Notre Dame, and that he was a financial expert. While Vitale did go to Notre Dame high school in West Haven, Connecticut, he did not go to the South Bend, Indiana college. Also named in the complaint was the Coral Springs Investment Group (also known as Lauderdale-by-the-Sea Company), which stands accused of holding onto assets of the investors that should have been returned.

In 2013, Florida’s Attorney General, Pam Bondi, sought an injunction against Vitale and two Broward County companies (The Cambridge Land Trust Company and The Hartford Land Trust Company) when they were accused of misleading consumers by charging upfront fees and promising better mortgage deals in exchange for consumers handing over the titles to their homes to the land trusts. In that case, Vitale and his alleged accomplices received an order from Broward Circuit Judge Michael Gates to stop doing business.

If you suffered significant losses as a result of securities fraud, you may have a valid claim to recover money with the help of a securities arbitration lawyer. To find out more about your legal rights and options, contact a stockbroker claims lawyer Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to Bloomberg, the $45,000 loss suffered by Jeff Steckbeck in TVIX, a Credit Suisse Group AG note, has set off a probe by the Securities and Exchange Commission. Reportedly, ETNs became more popular with the TVIX in February 2012. That month, Credit Suisse stopped selling the ETN and rising demand caused the investment to veer up to 89 percent from the index. When Credit Suisse began issuing the notes again in March of that year, a FINRA warning cautioned investors that ETNs could trade at a price that was higher than their underlying index.

Bloomberg data indicates that the estimated initial value of the securities is typically 2 to 4 percent less than the price investors paid. Exchange-traded notes like TVIX mimic assets through the use of derivatives and their value is based on volatility shifts in the market. However, the ETN market is small beans compared to the ETF market, which has around $2.4 trillion in assets.

In addition, the Securities and Exchange Commission recently announced that it will reconsider a 2008 rule proposal regarding ETFs. Reportedly the proposal will address the underlying and direct instrument transparency, differences between active and index funds, creative flexibility and inverse leverage. Reportedly, unauthorized trading and the unsuitable sale of inverse and leveraged ETFs increased following the 2008 economic downturn. As a result, securities arbitration lawyers have filed numerous arbitration claims on behalf of investors who suffered significant losses in inverse and leveraged ETFs.

If you purchased unsuitable ETFs or ETNs from Credit Suisse or another full-service brokerage firm, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind AwesomePennyStocks.com and PennyStocksUniverse.com. Both websites are affiliated microcap stock promotion websites and are known collectively as “ABS.” The SEC charges allege that Babikian engaged in scalping through the websites.

According to the SEC, on February 23, 2012, the websites sent emails to around 700,000 people, recommending investing in a particular penny stock, America West Resources Inc. (AWSRQ). However, the fact that Babikian held over 1.4 million shares of America West was not disclosed in the email, nor was the fact that he had positioned the shares for immediate sale via a Swiss bank.

Reportedly, the emails caused a significant increase in America West’s share price and trading value. Babikian then made more than $1.9 million when he unloaded the stock during the last hour and a half of the trading day. Before February 23, America West was low-priced and thinly traded, but on that day more than 7.8 million shares of the stock were traded and the share price was greatly increased. According to investment fraud lawyers and the SEC, if it hadn’t been for the emails, the stock would have been sold at a much lower price, and Babikian wouldn’t have been able to sell more than a few thousand shares in one day.

If you believe that you’ve been the victim of scalping, you may be able to recover your losses through a securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Recently, Jefferies LLC agreed to settle charges with the Securities and Exchange Commission (“SEC”) by paying $25 million for allegedly failing to adequately supervise traders regarding mortgage-backed securities. In addition, authorities believe some of the Jefferies staff may have lied to investors regarding pricing. The alleged supervisory failures took place between 2009 and 2011. An SEC investigation reportedly found that Jefferies had lied to customers about the prices that hte firm piad for certain mortgage-backed securities that it later sold to customers, thus misleading the customers concerning the “markups” or trading profits received by Jefferies in connection with the sales.

The SEC argued that supervisors at Jefferies could not properly supervise trading activity with what they were given by the investment bank, and that they did not find out what customers were being told regarding what prices were paid by the bank for certain securities and whether or not this information was accurate. While the bank’s policy required supervisors to view electronic conversations, Jefferies has been accused of failing to review conversations on Bloomberg terminals, and the SEC contends that even when conversations were reviewed, the policy did not ensure that misrepresentations in price would be identified.

Firms have an obligation to properly supervise brokers and financial advisors while they are registered with the firm. If it fails in this duty, securities arbitration lawyers say a firm may be held liable for customer losses. Reportedly, $11 million of the $25 million payment in connection with the Jefferies SEC settlement will go to customers.

If you suffered significant losses in mortgage-backed securities, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Specifically, potential claims involve the Icon Leasing Fund Eleven LLC and Icon Leasing Fund Twelve LLC. Allegedly, the advisor who sold the investments did not adequately explain that the funds operated as an equipment leasing program. The nature of the investment, in which capital is pooled for equipment subject to a lease, made it very risky and illiquid.

According to securities arbitration lawyers, during the offering period, the funds paid healthy distributions. However, not long after the funds were no longer for sale to new investors, the investment’s value began to rapidly decline and dividend payments became erratic. On December 31, 2012, Icon Leasing Fund 12 had suffered a 53 percent loss in value from the original offering price. For the same time period, Icon Leasing Fund Eleven suffered a staggering 84 percent decline in value.

Under FINRA rules, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. According to investment fraud lawyers, many brokers are motivated to make unsuitable recommendations because of the large commissions. In the case of the Icon Leasing Funds, SEC filings reveal that 18 percent of individuals’ investment was used to pay commissions, expenses and fees.

If you received an unsuitable recommendation of Icon Leasing Fund Eleven and/or Icon Leasing Fund Twelve and suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to a recent Bloomberg article, U.S. Securities and Exchange Commission data indicate that in dozens of managed-futures funds, 89 percent of the gains were used to pay commissions, fees and expenses instead of being returned to investors. Furthermore, securities arbitration lawyers say that in light of the fees, stcckbrokers and financial advisors who recommended such funds may have and made that recommendation despite the investment’s unsuitability.

According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. If a firm fails to make suitable recommendations, investors may be able to recover losses through FINRA arbitration.

Morgan Stanley and Ceres managed-futures funds include:

• Morgan Stanley Smith Barney Spectrum Select L.P.
• Morgan Stanley Smith Barney Spectrum Strategic L.P.
• Morgan Stanley Smith Barney Spectrum Global Balanced L.P.
• Morgan Stanley Smith Barney Spectrum Technical L.P.
• Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.
• Managed Futures Premier Aventis II L.P.
• Managed Futures Premier BMH L.P.
• Managed Futures Premier Warrington L.P.
• Managed Futures Premier Graham L.P.
• Meritage Futures Fund L.P.
• LV Futures Fund L.P.
• Polaris Futures Fund L.P.

Merrill Lynch managed-futures funds include:

• ML BlueTrend FuturesAccess LLC
• ML Aspect FuturesAccess LLC
• ML Transtrend DTP Enhanced FuturesAccess LLC
• ML AHL FuturesAccess LLC
• ML Systematic Momentum FuturesAccess LLC
• ML Winton FuturesAccess LLC

Other managed-futures funds include:

• Altegris Winton Futures Fund L.P.
• RJO Global Trust
• Grant Park Futures Fund L.P.
• Campbell Strategic Allocation Fund L.P.

If you suffered significant losses because of an unsuitable recommendation of managed-futures funds, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Allegedly, Langston made material misrepresentations about the nature of the fees, commissions and/or investments. Furthermore, he allegedly claimed that he would invest several million dollars of personal funds in an investment vehicle. According to the claim, CRL Management and Langston misrepresented an investment vehicle they were promoting. In addition, it was allegedly not registered with the Securities and Exchange Commission.

Securities arbitration lawyers say that as a result of the actions of CRL Management and Langston, one investor lost more than $3.5 million. In addition, it cost the investor more than $1 million in commissions and fees. Furthermore, a recent arbitration award from the Financial Industry Regulatory Authority ordered CRL Management to pay $1,312,949.31 for breach of contract.

According to investment fraud lawyers, the SEC announced on December 4, 2013 that it had filed a civil injunctive action for conducting illegal short sales in the securities of three companies — as well as insider trading in a different company — against Langston and his business entities. Allegations in the lawsuit include engaging in illegal short sales of equity securities prior to a public offering during a restricted period, the purchase of those same securities during the public offering and acquiring illegal profits of almost $200,000 gained by trading on inside information.

If you’ve suffered significant losses as a result of doing business with CRL Management LLC and/or Charles R. Langston III, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

According to stock fraud lawyers, principal transactions usually involve an investment adviser who uses affiliate brokerage firms to act on behalf of its account. However, conflicts of interest frequently arise between adviser and client. Therefore, securities fraud attorneys say that advisers must disclose any monetary interest or conflicted role in written form when advising the client and obtaining permission.

Parallax Investments LLC, Tri-Star Advisors and three executives — John P. Bott II, Jon C. Vaughan and William T. Payne — all based in Houston, Texas, face securities charges regarding the unauthorized transactions. According to the SEC’s orders of administrative proceedings, Bott made at least 2,000 principal transactions without disclosing or receiving permission from clients from 2009 to 2011. Furthermore, for each transaction, the broker-dealer affiliate bought mortgage-backed bonds with its inventory account and placed them in the client accounts. Bott gained almost half the $1.9 million in sales credits the firm received on the transactions. Vaughan and Payne executed similar trades and received similar benefits.

According to Marshall S. Sprung, the SEC Enforcement Division’s Asset Management Unit co-chief, clients were prevented by the firms from knowing that “running the trades through an affiliated account” could benefit their advisers.

If your broker or adviser executed principal transactions without disclosing their actions or obtaining your permission, you may be able to recover your losses through Financial Industry Regulatory Authority securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

The charges were filed by the Securities and Exchange Commission and claim that Snisky used insurance agents to sell Arete LLC interests, which he claimed were safer and more profitable than annuities. Furthermore, the SEC’s claims allege that Snisky told investors that their funds would be used to purchase government-backed agency bonds at a discount by eliminating middlemen fees, which would then be used for overnight banking sweeps. However, he allegedly misappropriated around $2.8 million, using these funds to pay commissions and mortgage payments. According to securities arbitration lawyers, scams like this are far too common and, unfortunately, many investors are either unaware or too embarrassed to come forward.

Reportedly, Snisky described Arete LLC as an “annuity plus” with up to 7 percent in guaranteed annual returns. Furthermore, he allegedly claimed that investors could earn interest and take principal from the investment without penalty, even after 10 years. According to the SEC’s allegations, Snisky stated that the investments were safe, exhibited falsified investor account statements that showed earnings to staff and drafted documents to be used as offering materials by salespeople.

Unfortunately, seniors are common targets for fraud because they often have sizeable savings or retirement funds, according to investment fraud lawyers. In addition, health problems, mental issues and a trusting disposition are other reasons they are targeted by fraudsters.

If you or a loved one has been the target of elder financial abuse through affinity fraud or other investment fraud schemes, you may be able to recover losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.