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Securities Fraud Blog

Greco & Greco, P.C.

W. Scott Greco

Fight Investment Fraud

Greco & Greco's lawyers represent investors to recover losses caused by securities fraud, churning, lack of suitability, negligence, sales of unregistered securities, unauthorized trading, and other misconduct by stock brokers, investment advisors, financial planners and their firms.

For a Free Attorney Consultation, call us at 877-821-5550 or 

State Regulators

Virginia Broker Andrew Corbman Suspended by FINRA

FINRA, a regulator of the securities industry, recently issued a Letter of Acceptance, Waiver, and Consent (AWC) regarding former FSC Securities Corporation broker, Andrew Corbman. Pursuant to the AWC, Mr. Corbman was suspended for one month from being registered with any FINRA firm.

Mr. Corbman was registered with FSC Securities from 2/2008 - 1/2011, Kovack Securities from 01/2011 – 11/2015, and Newbridge Securities from 11/2015 - 3/2016. 

The AWC may be found here:  http://disciplinaryactions.finra.org/Search/ViewDocument/64878  In the AWC, FINRA alleges that “Between April 2009 and March 2010, while registered with a FINRA member firm, Corbman made unsuitable recommendations to three customers that were inconsistent with the customers’ investment objectives and risk tolerances and resulted in overconcentration oftheir liquid net worth in these investments. From April 2009 through June 2009, Corbman improperly recommended to two ofhis customers, who were a married couple with growth objectives and moderate risk tolerances, to purchase unsuitablehighly risky leveraged, inverse Exchange-Traded Funds (Non-Traditional ETFs”).”

The AWC further states:  “The investments that Corbman recommended were unsuitable as they were over-concentrated and exposed each customer to a risk of loss that exceeded each customer’s risk tolerance and investment objectives. Therefore, Corbman’s conduct violated NASD Rule 2310 and FINRA Rule 2010. Additionally, between March 2010 and January 2011, Corbman distributed a sales brochure for an alternative mutual fund to at least 10 of his customers that contained information that was misleading and failed to provide a sound basis for evaluating the alternative mutual fund referenced in it.”

Mr. Corbman’s registered offices over the last 12 years were in Ashburn and Lansdown, Virginia.

If you believe you may have a suitability or misrepresentation case regarding your investments, and wish to speak to a local Virginia attorney, please contact Scott Greco for a free consultation (http://grecogrecolaw.com/contact.html).

Posted by W. Scott Greco on 03/25/16.
ArbitrationBrokerage FirmsKovack SecuritiesFSC SecuritiesFINRASecurities FraudState RegulatorsVirginiaSuitabilityPermalink

Investigation Regarding Randy Watts of Winchester, Virginia

Greco & Greco is currently investigating possible claims regarding a Winchester, Virginia financial advisor, Randy Watts.  Mr. Watts operated under the name Watts Financial Group, and was registered to sell securities with Lincoln Financial Securities until November, 2015.

If you believe you may have a legal claim regarding investments with Mr. Watts or Lincoln Financial, please contact Scott Greco for a free consultation:  http://www.securities-lawyers.net/contact.html

Posted by W. Scott Greco on 12/22/15.
ArbitrationBrokerage FirmsLincoln Financial SecuritiesFINRAFraudPonzi SchemeSecurities FraudState RegulatorsVirginiaSuitabilityUnregistered SecuritiesPermalink

Norfolk Virginia Financial Advisor Charged with Fraud

As reported by the Virginia Pilot, Joshua Abernathy was charged in U.S. District Court for the Eastern District of Virginia with mail fraud related to his alleged unlawful conversion of funds from customers.  Court documents filed by the government allege he defrauded and stole almost 1.3 million dollars from various customers in Texas and Virginia.  The government further alleged that he had many customers write checks to Omega Investment Group and he then converted funds for his personal use.

According to FINRA Brokercheck, Mr. Abernathy was registered with Next Financial from 2007 to 2012 and with The O.N. Equity Sales Company from 2013 to 2014.  FINRA barred him from the securities industry in February, 2015.

Greco & Greco regularly represents investors in “selling away” cases such as this where the broker sells unauthorized securities or converts funds away from his firm.  Customers may attempt to recover their losses in FINRA arbitration and/or court by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are a victim of Mr. Abernathy, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 03/05/15.
Affinity FraudArbitrationBrokerage FirmsNext FinancialO. N. Equity Sales CompanyFINRAFraudPonzi SchemeSecurities FraudState RegulatorsVirginiaPermalink

Vienna Virginia Financial Advisor Pleads Guilty to Defrauding Customers

Ismail Elmas plead guilty on October 21, 2014 to a Count of Wire Fraud in the U.S. District Court for the Eastern District of Virginia.  According to the U.S. Attorney’s Office press release (which can be found here), Mr. Elmas worked at Apple Financial Services, an affiliate of Apple Federal Credit Union during the time of the offense.

FINRA’s Brokercheck Report for Mr. Elmas states that Mr. Elmas was previously registered as a securities registered representative with CUNA Brokerage Services and CUSO Financial Services, both FINRA Broker-Dealers.  The Brokercheck Report states that he was terminated by CUSO because he “allegedly converted funds for personal use…”

The above press release references that Elmas admitted to misappropriating client funds given to him for legitimate investments, and that he defrauded more than 10 of his clients, many of whom were seniors and widows. 

Greco & Greco is currently investigating and pursuing claims against the parties involved in the Elmas case.  Greco & Greco regularly represents investors in “selling away” cases such as this where the broker sells unauthorized securities or converts funds away from his firm.  Customers may attempt to recover their losses in FINRA arbitration and/or court by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are a victim of Mr. Elmas, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 10/27/14.
ArbitrationBrokerage FirmsCUSOCUNAFINRAFraudSecurities FraudState RegulatorsVirginiaSuitabilityUnregistered SecuritiesPermalink

Virginia Regulators Require License Surrender and Fines over sale of 54 Freedom Products

A Settlement Order was recently issued by the State of Virginia (Bureau of Insurance and Division of Securities) against two insurance salespersons and their firm. The Order may be found here.

In the Order, the Virginia Regulators alleged as follows:

a.  “The Defendants, on multiple ocassions, sold over $2 million in unregistered securities in the form of qualified charitable gift annuities (“CGAs”) issued by 54 Freedom Foundation, Inc. (54 Freedom”) and promissory notes…”

b.  The brokers involved mischaracterized the investment risks involved with the investments and failed to conduct adequate due diligence.

c.  “Ultimately, principals of 54 Freedom misappropriated funds obtained through the sale of both 54 Freedom CGAs and Notes… As a result, all of the Defendants’ clients who purchased 54 Freedom CGAs or Notes appear to have lost their principal investments totaling over $2 million.”

Pursuant to the Order the salespersons surrendered their licenses to sell insurance and were required to pay monetary penalties.

If you were sold these investment products and wish to discuss your claims with an attorney, please contact Greco & Greco for a free consultation.

Posted by W. Scott Greco on 06/09/14.
FraudPonzi SchemeSecurities FraudState RegulatorsVirginiaUnregistered SecuritiesPermalink

State Securities Regulators release new list of top investor threats

NASAA (the North American Securities Adminstrators Association) has released its 2013 list of top financial product and practice threats to investors here.

The top threat is one that we at Greco & Greco see often - Private Offerings.  As stated by NASAA:  “These offerings commonly are referred to as Reg D/Rule 506 offerings, named for the exemption in federal securities laws that allows private placements to be sold to investors without registration). By definition these are limited investment offerings that are highly illiquid, generally lack transparency and have little regulatory oversight. While Reg D/Rule 506 offerings are used by many legitimate companies to raise capital, they carry high risk and may not be suitable for many individual investors.”

These private offerings are often high risk investments.  Be wary should your stockbroker or investment advisor recommend them to you as safe or low risk.

Other potential threats listed by NASAA include real estate investment schemes, high yield investment and ponzi schemes, affinity fraud, self directed IRAs, Oil and Gas Drilling Programs, and digital currency.

If your stockbroker or investment advisor has sold you a product without disclosing the risks involved, or if you think you are a victim of a fraudulent investment scheme, please contact Greco & Greco for a free consultation.

Posted by W. Scott Greco on 11/08/13.
Affinity FraudArbitrationBrokerage FirmsFraudIRAsPonzi SchemePrivate PlacementsSecurities FraudState RegulatorsSuitabilityPermalink

Consent Order in Maryland Case Against Joseph Giordano

The Securities Commissioner of Maryland entered a Consent Order against former FINRA registered representative Joseph A. Giordano in May, 2013.  The Order can be found here. 

According to the Consent Order, Giordano violated the Maryland Securities Act by “misrepresenting or omitting to disclose material facts to investors, and making unsuitable recommendations.”  The investments at issue were Empire bonds and debentures.

Giordano was a FINRA registered securities salesperson with Capital Investment Group, Inc. from October, 1992 to June, 2012.  Mr. Giordano’s FINRA Brokercheck report states that he was terminated for cause by Capital Investment Group for “selling away and making false and misleading statements to the firm.”  The Consent Order states that Capital Investment Group raised issues of concern regarding Empire Corporation debentures in 2006.

Greco & Greco regularly represents investors in “selling away” cases such as this where the broker sells unauthorized securities away from his firm.  Customers may attempt to recover their losses in FINRA arbitration by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are the victim of a fraudulent sale of securities by a FINRA registered broker, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 09/09/13.
ArbitrationBondsBrokerage FirmsCapital Investment Group, Inc.FINRAFraudSecurities FraudState RegulatorsMarylandSuitabilityUnregistered SecuritiesPermalink

David Lerner Associates Fined by FINRA for sale of Apple Reits

As shown by this FINRA Order, FINRA sanctioned David Lerner and Associates for sales of Apple REIT Ten and markups related to municipal bonds and CMO’s.  Of the $14 million in fines and restitution, approximately $12 million is to be paid to affected customers.

The wrongful conduct alleged by FINRA includes the following:  1) failure to do proper due diligence on Apple REIT Ten prior to approving its sale to customers, many of whom were elderly and unsophisticated, 2) misrepresentations of the REITs performance, value, and returns, 3) false statements in sales seminars and letters describing the REITs, 4) improper markups, and 5) supervisory violations.

David Lerner Associates has had a great incentive for the sale of the Apple REITs - it earns 10% on every sale and has sold $7 billion of the REITs since 1996.  These revenues account for 60-70% of DLA’s business according to FINRA.  As stated by FINRA:  “Many of DLAs customers are senior and/or unsophisticated, and DLA solicits customers by general means such as the internet, radio, cold callings, mailings, and open-invitation seminars at senior centers, restaurants, and country clubs.”

Details of the restitution program may be found here.  As stated, the remediation plan does not prevent investors from pursuing additional losses through arbitration.  If you suffered losses in REITs and you would like to discuss your case for free with one of our attorneys, please contact Greco & Greco.

Posted by W. Scott Greco on 10/30/12.
ArbitrationBrokerage FirmsDavid Lerner AssociatesCMOs / CDOsFINRAFraudREITsSecurities FraudState RegulatorsNew YorkSuitabilityPermalink

Insurance and Life Settlement related claims regarding California Broker Winterrowd

Greco & Greco is currently pursuing claims on behalf of investors relating to wrongful conduct in life insurance sales, life settlement sales, and variable annuity withdrawals by Neil Winterrowd.  Mr. Winterrowd was formerly a FINRA registered representative of Crown Capital Securities LP and J.P. Turner & Company LLC.  According to FINRA’s Brokercheck, J.P. Turner discharged Mr. Winterrowd for “Improper handling of customer funds” related to variable annuities.  If you believe that you may have been a victim of the above conduct, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 10/12/12.
ArbitrationBrokerage FirmsCrown CapitalJ.P. TurnerInsuranceLife SettlementsSecurities FraudState RegulatorsCaliforniaVirginiaSuitabilityVariable AnnuitiesPermalink

GUILTY PLEA IN FRAUDULENT INVESTMENT SCHEME

Michael Crosswhite of Forest, Virginia pled guilty this week to wire fraud and money laundering in U.S. District Court for the Western District of Virginia.  The Information filed in Court alleged that he engaged in a wire transfer of $113,805 from a victim’s Allianz account to a bank account Crosswhite controlled, and that he transferred $103,079 by wire from another victim’s Allianz account to a TD Ameritrade account.  According to this Lynchburg News & Advance article, the U.S. Attorney’s Office stated that “Crosswhite was working from his home as a financial consultant under the umbrella of Allianz Life Insurance Company of North America.”  The article further stated that Crosswhite admitted “he liquidated the investment accounts of several victims without their knowledge, eventually using funds himself, losing them in questionable investments or floating them back and forth to pay off victims? accounts.”  This activity describes a classic Ponzi Scheme where monies from recent victims are used to pay past victims to keep the scheme hidden.

According to the State of Virginia’s Bureau of Insurance website, Crosswhite was registered to sell insurance (Life, Annuities, Health, and Variable Contracts) until September 1, 2011.  He further is listed in FINRA’s Brokercheck as being a registered securities representative for Metlife Securities until December, 2009.

If you are a victim of a ponzi scheme, or have otherwise had your trusted investment representative transfer your monies without your knowledge, please contact Greco & Greco for a free consultation with one of our attorneys.

Posted by W. Scott Greco on 06/15/12.
Brokerage FirmsAllianzMetlife SecuritiesFINRAInsurancePonzi SchemeSecurities FraudState RegulatorsVirginiaUnauthorized TradingVariable AnnuitiesPermalink

AXA fined by FINRA Due to Broker Ponzi Scheme

As set out in this FINRA link, FINRA recently fined AXA Advisors, LLC for its failures to act in relation to the sale by its registered representative of a ponzi scheme.  The Letter of Acceptance, Waiver, and Consent documents failures to supervise by AXA including failures to follow up on red flags regarding the ponzi scheme.  One red flag was a suspicious excel spreadsheet found in an audit of the broker’s office.  The broker also had a checkered regulatory history which made him a “compliance risk.”

Greco & Greco regularly represents investors in “selling away” cases such as these where the broker engages in ponzi schemes or outright steals funds from customers.  Customers may attempt to recover their losses in FINRA arbitration by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are the victim of a ponzi scheme or broker theft by a FINRA registered broker, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 06/08/12.
ArbitrationBrokerage FirmsAXA AdvisorsFINRAPonzi SchemeSecurities FraudState RegulatorsSuitabilityUnregistered SecuritiesPermalink

Virginia Financial Fraud Task Force

As set out in this Washington Post article, federal prosecutors in Virginia have set up the Virginia Financial and Securities Fraud Task Force.  This task force is comprised of members of the FBI, the Postal Inspection Service, the Securities and Exchange Commission, the Commodities Futures Trading Commission and the Virginia State Corporation Commission.

As set out in the story, the task force’s efforts have already resulted in multiple criminal convictions.  A criminal conviction, however, does not always recoup losses for investors wronged by financial fraud.  If you are the victim of a financial crime in which the salesperson or others involved in the scheme were registered to sell securities through a FINRA brokerage firm, you may be able to seek recovery of your losses through FINRA’s arbitration system.  Please contact Greco & Greco for a free consultation with one of our lawyers.

Posted by W. Scott Greco on 11/02/11.
ArbitrationBrokerage FirmsFINRAPonzi SchemeSECSecurities FraudState RegulatorsVirginiaPermalink

Fredericksburg Virginia Registered Rep Indicted

As set out in this Fredericksburg.com article, John Robert Graves, a former FBI agent, was indicted on charges of defrauding Virginia investors out of $1,300,000.  According to the indictment filed in U.S. District Court in Richmond (Case 3:11CR246), Mr. Graves used funds obtained from investors to buy personal real estate, to pay personal expenses and credit cards, to pay himself cash, and to pay back prior investors.

Mr. Graves operated Brooke Point Management in Spotsylvania County since 2003 which provided financial planning, insurance sales, estate planning, and investment advice to customers.  According to FINRA’s Brokercheck report, Mr. Graves had been a registered securities salesperson since 1998 with various firms including, Harrison Douglas, Community Bankers Securities, Fintegra, Questar Capital Corporation, Pacific West Securities, and H. Beck.  The Brokercheck report also discloses multiple pending arbitration claims alleging fraud, negligence, breach of fiduciary duty, and unsuitable investments regarding private placements, limited partnerships and REITs. 

If you wish to discuss a potential securities fraud claim with one of our attorneys, please contact us here for a free consultation.

Posted by W. Scott Greco on 10/13/11.
ArbitrationBrokerage FirmsCommunity Bankers SecuritiesH. BeckPacific West SecuritiesQuestar Capital CorporationPonzi SchemePrivate PlacementsSecurities FraudState RegulatorsVirginiaSuitabilityPermalink

SEC Fraud Charges Regarding The Nutmeg Group LLC

As set out in the SEC Complaint which can be found here, the SEC filed civil fraud claims in Illinois against The Nutmeg Group, LLC, Randall Goulding, and others.  The SEC alleges in its Complaint that Nutmeg was an investment adviser to 15 funds which invested fund assets in private investments in public equity (PIPE) transactions.  As a basis for its fraud claims, the SEC alleges in the Complaint that Nutmeg “improperly commingled investor and fund assets,” “misappropriated over $4 million in fund assets,” “failed to maintain the required books and records,” and “overstated the performances of its Funds to investors.”  (paragraphs 2 and 3 of SEC Complaint). 

All FINRA registered representatives are required to be registered with a FINRA firm (Broker-Dealer).  FINRA firms have legal responsibilities to supervise their registered representatives, and further may be found liable for the wrongful actions of their agents.  Examples of legal grounds for liability of Broker-Dealers in these situations include:

a) under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;

b) a broker?s Broker-Dealer can also be found liable as a ?control person? of that broker under state and federal securities laws; and

c) claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, and outside business activities.

If you were sold investments in Nutmeg Group funds by a FINRA registered representative, and you would like to discuss legal options with an attorney, please contact Greco & Greco for a free consultation with one of our lawyers.

Posted by W. Scott Greco on 06/08/11.
ArbitrationBrokerage FirmsPonzi SchemePrivate PlacementsSECState RegulatorsColoradoFloridaSuitabilityUnregistered SecuritiesPermalink

QUEEN SHOALS INVESTMENT FRAUD

According to this Western District of North Carolina Department of Justice release, Sidney Hanson of Charlotte, North Carolina pleaded guilty in July, 2009 to securities fraud, mail fraud, and money laundering in relation to an investment scheme known as Queen Shoals.  The SEC has also filed a Complaint related to the investment scheme.

The SEC states in the above Complaint that the Hansons and their sales force sold almost $33 million in “private loan agreements” to investors around the country.  The investments were allegedly to be placed in a diversified portfolio? of precious metals, foreign currency and treasury notes, generating high returns while remaining safe in non-depletion accounts.  In reality according to the SEC, the investment funds were invested “in a number of very risky private investment opportunities” and funds from new investors were used to pay off old investors.

Investors who were sold Queen Shoals investments by their stockbrokers, investment advisers, retirement specialists, or financial planners may have claims to be brought against related firms based on securities fraud, suitability, failure to do due diligence, misrepresentations and omissions, and other legal grounds.  Greco & Greco is currently investigating sales by FINRA registered parties in Virginia - please contact us for a free consultation if you believe you may have a claim.

Posted by W. Scott Greco on 11/25/09.
ArbitrationBrokerage FirmsFINRAPonzi SchemeRetirementSECState RegulatorsNorth CarolinaSuitabilityUnregistered SecuritiesPermalink

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