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Articles Posted in Unregistered Securities

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Oil Rig DaytimeInvestors in Atlas Resources 28-2010 L.P. (“Atlas 28-2010” or, the “Partnership”) may be able to recover investment losses through FINRA arbitration.  Atlas 28-2010 is a Delaware limited partnership formed on April 1, 2010, with Atlas Resources, LLC serving as its Managing General Partner and Operator (“Atlas Resources” or “MGP”).  Atlas Resources is an indirect subsidiary of Titan Energy, LLC (“Titan”).  According to publicly available SEC filings, Titan is an independent developer and producer of natural gas, crude oil, and natural gas liquids, with operations throughout the United States.

As part of its business, Titan sponsors and manages certain investment partnerships, including Atlas 28-2010.  As an oil and gas partnership, Atlas 28-2010 has drilled and currently operates wells located in Pennsylvania, Indiana, and Colorado.  Atlas 28-2010 seeks to earn revenue through operation of its wells, which produce natural gas.  The Partnership raised investor capital through a private placement offering governed by Regulation D (“Reg D”) of the federal securities laws, allowing for the sale of unregistered (or exempt) securities.

Investing in a private placement carries significant risk, and for this reason, is typically only available to accredited investors (in general, to be accredited an investor must have an annual income of $200,000 or joint annual income of $300,000, for the last two years, or alternatively, have a net worth in excess of $1 million, either jointly or with a spouse).  One risk with private placements involves their high cost; many oil and gas limited partnerships have high expense ratios, making the investment a risky proposition from the outset.  Up-front expenses may be as high as 7-10%, in addition to due diligence fees that may range from 1-3%.  Furthermore, oil and gas private placements are risky because of the extreme volatility associated with the underlying commodity: oil.  Due to recent sharp declines in the oil and gas market (crude oil has significantly declined in price from recent highs in 2014), many oil and gas limited partnerships are now teetering at the brink of default.

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House in HandsOn October 11, 2017, Michael Giokas, the founder of Giokas Wealth Advisors, was reportedly arrested on fraud charges.  Mr. Giokas’ arrest was the result of an investigation by the FBI Buffalo Office concerning allegations that the Williamsville broker misappropriated $200,000 from one of his clients.  At Mr. Giokas’ arraignment before Magistrate Judge Michael J. Roemer, Assistant U.S. Attorney Paul E. Bonanno informed the Judge that the investigation suggests Giokas led his client to believe that the $200,000 would be placed in an investment that would yield 8-9% interest.  Instead, according to Attorney Bonanno “… the money was not placed in any investment and was instead spent by the defendant on personal expenses.”

According to publicly-available information as disclosed by the Financial Industry Regulatory Authority (“FINRA”), Michael Giokas (CRD# 1398674) has worked in the securities industry for over three decades.  Since 1986, he has been affiliated with the following brokerage firms: Cigna Securities, Inc. (CRD# 145) (1986-1987), FSC Securities Corporation (CRD# 7461) (1987-1991), Guardian Investor Services Corporation (CRD# 6635) (1991-1992), Linsco/Private Ledger Corp. (CRD# 6413) (1992-1999), Securities Service Network, Inc. (CRD# 13318) (1999-2001), Comprehensive Asset Management and Servicing, Inc. (CRD# 43814) (2002-2013), and Fortune Financial Services, Inc. (“Fortune Financial”) (CRD# 42150) (2013-2017).

FINRA BrokerCheck indicates that Mr. Giokas is no longer registered as a broker.  Further, in May 1991 he was permitted to resign from his employment with FSC Securities following violation of firm policy concerning an insurance related bank account.  Mr. Giokas has been the subject of several customer complaints, including two complaints in 2000 and 2001 that were settled.

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FINRA fined Carolina Financial Securities, LLC (“CFS”) of Brevard, North Carolina $60,000 and served it with a Letter of Caution in a case involving allegations that CFS made material misrepresentations and omissions in connection with the sale of securities.   FINRA  also found that that the firm recommended securities- certain senior secured notes- to customers without conducting an investigation that was sufficient to provide a reasonable basis for determining that the notes were suitable for any investor.  Further, FINRA found that CFS made false and misleading communications to the public by distributing offering materials that contained false statements.  Finally, FINRA found that CFS failed to enforce the firm’s own Written Supervisory Procedures (WSPs) by in connection with permitting brokers employed by CFS to sell the subject secured notes.


Many retail investors may buy into non-conventional investments such as the subject notes without first being fully informed of the risks.  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.  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 recommedation 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 representing investors in  non-conventional investments, including promissory notes.  Depending on the facts and circumstances, investors may be able to recover their losses in FINRA arbitration or litigation.   Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at for a no-cost, confidential consultation.


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On July 16, 2017, the Wall Street Journal published an article – From $2 Billion to Zero: A Private-Equity Fund Goes Bust in the Oil Patch – discussing the financial distress besetting Houston based EnerVest Ltd. (“EnerVest”), a private equity firm focused on energy investments.  Essentially, the article discussed how falling oil prices (to a then current price of $45 per barrel of crude) had worked against the fund managers at EnerVest, who had borrowed heavily to invest in oil and gas wells before the recent collapse in energy prices.
According to recent reports, several of EverVest’s energy funds employed leverage to purchase oil and gas wells when crude process were much higher.  As a result, investors in those funds will undoubtedly suffer significant losses on their investments.  Further, recent reports have suggested that EnerVest fund managers have engaged in discussions to recapitalize or otherwise sell assets (presumably at firesale prices) from the $1.5 billion EnerVest Energy Institutional Fund XII, which closed in 2010, as well as the $2 billion EnerVest Institutional Fund XIII, which closed in 2013.

In the way of brief background, EnerVest is a private-equity firm that focuses on energy investments, claiming to operate more U.S. oil and gas wells than any other company operating in that space.  EnerVest began raising investor capital in 2013 when oil and gas was trading at an average price of $90 per barrel; since that time, energy prices have collapsed, with crude currently trading around $50 per barrel (as of October 2017).

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On August 11, 2017, the Securities and Exchange Commission (“SEC”) filed a Complaint against Defendants David R. Greenlee, David A. Stewart, Jr., and Richard “Ric” P. Underwood, in connection with various oil limited partnerships and joint ventures.  Specifically, the SEC has alleged that the Defendants engaged in a fraudulent scheme whereby at least $15 million in limited partnership and joint venture interests were sold to more than 150 investors.
According to the SEC Complaint, Defendants Greenlee and Stewart operated the alleged scheme through two Tennessee corporations, Southern Energy Group, Inc. (“SEG”) and Black Gold Resources, Inc. (“BGR”), which later changed its name to Tennstar Energy, Inc. (“Tennstar”).  Further, the SEC Complaint alleges that Defendant Underwood substantially assisted in facilitating and perpetuating the scheme by acting as principal salesman, assisting in drafting false offering materials given to potential investors, and overseeing the operations of a ‘boiler room’ sales team that solicited the oil investments.

In soliciting funds from prospective investors, the SEC has alleged that the Defendants represented that the limited partnerships and joint ventures would use investor funds in order to acquire “working interests” in various oil wells, as well as employ enhanced oil recovery techniques, such as fracking, to develop and recover oil from the wells.  Moreover, the SEC has alleged that the Defendants represented to investors that the entities would sell enough oil to earn investors returns ranging from 15-55%, or more, per year “for decades.”

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Investors in promissory notes of Credit Nation Capital, LLC (“CN Capital”) and affiliated companies may have viable legal claims based upon allegations in cases filed by the United States Securities and Exchange Commission (“SEC”).


The SEC filed a lawsuit in 2015 alleging that CN Capital and affiliates were engaged in fraud. The companies allegedly lost massive amounts of money and stayed afloat only by raising more money from investors, according to the SEC lawsuit. According to the SEC, related entities allegedly included Credit Nation Acceptance, LLC, a Texas limited liability company in Midland, Texas; Credit Nation Auto Sales, LLC, a Georgia limited liability company in Woodstock, Georgia, American Motor Credit, LLC, a Georgia limited liability company in Woodstock, Georgia; and Spaghetti Junction, LLC, a Nevada limited liability company.

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With increasing frequency retail investors are encountering scenarios in which they are offered an opportunity to invest in a private placement. A private placement – often referred to as a non-public offering – is an offering of a company’s securities that are not registered with the Securities & Exchange Commission (“SEC”). Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration applies.


When an investor decides to purchase shares in a publicly traded company, or for that matter purchase shares in a mutual fund or exchange traded fund (“ETF”), he or she will have the opportunity to first review a comprehensive and detailed prospectus required to be filed with the SEC. When it comes to a private placement, however, no such prospectus need be filed with the SEC – rather, these securities are typically offered through a Private Placement Memorandum (“PPM”).

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Financial Industry Regulatory Authority (FINRA) records indicate that Douglas P. Simanski (Simanski), a former stockbroker who was associated with NEXT Financial Group, has been permanently barred from the brokerage industry.  Simanski’s record also shows 4 currently pending customer disputes, 1 prior final customer dispute and a recent employment separation after allegations.

FINRA is the agency that licenses and regulates stockbrokers and brokerage firms.  In response to FINRA charges, Simanski, without admitting or denying the findings, consented to a permanent bar from the securities industry and entry of findings that he failed to provide documents and information related to an investigation into allegations related to the conversion of funds.

Four customers of NEXT Financial have also filed arbitration claims involving Simanski, alleging sales of high risk investments, loans to customers, sale of unregistered securities and sale of fictitious investments as part of a scheme to steal money from a customer.

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Platinum Partners LP Funds are under scrutiny after federal agents reportedly raided the funds’ New York offices in July 2016.  Hedge fund entities sponsored by Platinum Partners include the Platinum Partners Value Arbitrage Funds, the Platinum Partners Credit Opportunities Fund, Platinum Credit Holdings LLC, Platinum Credit Management LP, Platinum Partners Value Corp., and Platinum Management (NY) LLC.

15.2.17 piggybank in a cageIn June, the New York-based hedge fund manager reportedly began liquidating its funds, after the firm’s longtime associate Murray Huberfeld (Huberfeld) was accused of arranging for a $60,000 bribe and kickback, in a Salvatore Ferragamo bag, to Norman Seabrook, President of the New York correctional officers’ union.  Seabrook allegedly directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund. Seabrook has denied that he is guilty of any charges.

Later, Cayman Islands Judge ­Andrew Jones reportedly ordered that a new advisor take control of the international arm of Platinum’s flagship fund, which is based in the Caymans, after an investor claimed he has not been able to gain access to his money since 2015.

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Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of a securities fraud related to scalping. Scalping occurs when a broker or financial advisor recommends a security and immediately sells the security to turn a profit. According to securities arbitration lawyers, when many investors purchase the security, the price rises, allowing the fraudster to gain financially.

Have You Been the Victim of Investment Scalping?

In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind and 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.

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